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Crane Co. Reports Strong Earnings in First Quarter; Raises Full Year EPS Guidance Range to $3.05-$3.25

Dépèche transmise le 18 avril 2011 par Business Wire

Crane Co. Reports Strong Earnings in First Quarter; Raises Full Year EPS Guidance Range to $3.05-$3.25

Crane Co. Reports Strong Earnings in First Quarter; Raises Full Year EPS Guidance Range to $3.05-$3.25

STAMFORD, Conn.--(BUSINESS WIRE)--Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reported that first quarter 2011 earnings per diluted share increased 45% to $0.81 compared to $0.56 in the first quarter of 2010.

“With our late-cycle Aerospace and Fluid Handling businesses clearly gaining momentum, we are raising our full year sales, EPS and cash flow guidance.”

First quarter 2011 sales of $611 million increased $81 million, or 15%, compared to the first quarter of 2010, resulting from a core sales increase of $58 million (11%), an increase in sales from acquisitions, net of divestitures, of $16 million (3%), and favorable foreign currency translation of $7 million (1%).

First quarter 2011 operating profit increased 37% to $72.9 million, compared to $53.3 million in the first quarter of 2010, and operating profit margin increased to 11.9%, compared to 10.0% in the first quarter of 2010.

During the quarter, the Company sold a building and divested a small product line. The associated gain of $4.3 million ($0.05 per share) is included in Miscellaneous–Net on the accompanying Income Statement.

“I am pleased with our first quarter results as strong core revenue growth of 11% and solid execution produced a quarter that was considerably better than we anticipated. The significant sequential improvement in our monthly sales and earnings during the quarter gives us increasing confidence about the year,” said Crane Co. president and chief executive officer Eric C. Fast. “With our late-cycle Aerospace and Fluid Handling businesses clearly gaining momentum, we are raising our full year sales, EPS and cash flow guidance.”

Increased Full Year 2011 Guidance

Sales for 2011 are now expected to increase approximately 10% - 12%, compared to our prior guidance of 7% - 9%, driven by strong core sales growth. Our 2011 earnings guidance is now a range of $3.05 - $3.25 per diluted share, compared to our previous guidance of $2.80 - $3.00 per diluted share, reflecting strengthening revenue and profit growth across all of our segments. Free cash flow (cash provided by operating activities less capital spending) is now expected to be in a range of $130 - $150 million, compared to our previous estimate of $130 million. (Please see the Condensed Statement of Cash Flows and Non-GAAP table.)

Cash Flow and Financial Position

Cash used for operating activities in the first quarter of 2011 was $16.2 million, which included higher working capital needs to support improving sales trends, compared to cash provided by operating activities of $16.8 million in the first quarter of 2010 (which included $19 million of cash received in connection with the Boeing agreement). During the first quarter of 2011, the Company repurchased 634,900 shares of its common stock for approximately $30 million. The Company’s cash position at March 31, 2011 was $233 million, as compared to $273 million at December 31, 2010.

Segment Results

All comparisons detailed in this section refer to the first quarter 2011 versus the first quarter 2010.

Aerospace & Electronics

  First Quarter   Change
(dollars in millions) 2011   2010  
 
Sales $ 161.9 $ 133.6 $ 28.3 21 %
 
Operating Profit $ 34.0 $ 24.5 $ 9.6 39 %
 
Profit Margin 21.0 % 18.3 %

First quarter 2011 sales increased $28.3 million, or 21%, reflecting a $19.8 million (25%) improvement in Aerospace Group sales and an increase of $8.5 million (16%) in Electronics Group revenue. The Aerospace Group sales increase reflected higher OEM and aftermarket shipments while Electronics Group sales growth was primarily driven by strength in Power Solutions. Segment operating profit of $34.0 million increased by $9.6 million, or 39%, reflecting strong sales growth and margin improvement in both Aerospace and Electronics.

Aerospace & Electronics order backlog strengthened to $455 million at March 31, 2011, as compared to $431 million at December 31, 2010 and $388 million at March 31, 2010.

Engineered Materials

  First Quarter   Change
(dollars in millions) 2011   2010  
 
Sales $ 61.8 $ 53.8 $ 8.1 15 %
 
Operating Profit $ 10.1 $ 8.5 $ 1.6 19 %
 
Profit Margin 16.4 % 15.9 %

Segment sales of $61.8 million increased 15% compared to the first quarter of 2010, as a result of significantly higher demand from transportation customers, as well as higher revenues across recreational vehicle and building products end markets. Operating profit grew 19%, and margins improved 50 basis points as higher sales more than offset the impact of increased raw material costs. The Company implemented price increases during the first quarter and continues to monitor the impact of higher input costs.

Merchandising Systems

  First Quarter   Change
(dollars in millions) 2011   2010  
 
Sales $ 94.9 $ 70.2 $ 24.7 35 %
 
Operating Profit $ 4.7 $ 5.0 ($0.3 ) (6 %)
 
Profit Margin 4.9 % 7.1 %

Merchandising Systems sales of $94.9 million increased $24.7 million, or 35%, primarily reflecting $16.4 million of sales associated with the December 2010 acquisition of Money Controls (23%) and positive core sales growth in our Payment Solutions and Vending businesses. Operating profit of $4.7 million declined slightly from the prior year as purchase accounting charges associated with Money Controls more than offset the impact of higher sales.

Fluid Handling

  First Quarter   Change
(dollars in millions) 2011   2010  
 
Sales $ 264.1 $ 247.8 $ 16.4 7 %
 
Operating Profit $ 35.5 $ 28.0 $ 7.5 27 %
 
Profit Margin 13.4 % 11.3 %

First quarter 2011 sales increased $16.4 million, or 6.6%, which included a core sales increase of $10.9 million (4.4%), and favorable foreign currency translation of $5.5 million (2.2%). Orders strengthened across Fluid Handling end markets and were particularly strong in ChemPharma and Energy. Sales, operating profit and margin improvement was broad based across the Group. The sales increase was effectively leveraged with operating margins improving from 11.3% to 13.4%. Backlog increased to $305 million at March 31, 2011, compared to $272 million at December 31, 2010 and $254 million at March 31, 2010.

Controls

  First Quarter   Change
(dollars in millions) 2011   2010  
 
Sales $ 28.2 $ 24.9 $ 3.3 13 %
 
Operating Profit $ 3.1 $ 0.1 $ 3.0 NM
 
Profit Margin 11.0 % 0.5 %

First quarter 2011 sales of $28.2 million increased 13%, primarily reflecting improvement in industrial, transportation and upstream oil and gas related demand. Operating profit of $3.1 million increased significantly over 2010, reflecting strong leverage and the absence of the operating losses associated with divested businesses.

Additional Information

Please see the condensed financial statements and the Non-GAAP Financial Measures table attached to this press release for supporting details. Additional information with respect to the Company’s asbestos liability and related accounting provisions and cash requirements is set forth in the Current Report on Form 8-K filed with a copy of this press release.

Conference Call

Crane Co. has scheduled a conference call to discuss the first quarter financial results on Tuesday, April 19, 2011 at 10:00 A.M. (Eastern). All interested parties may listen to a live webcast of the call at http://www.craneco.com. An archived webcast will also be available to replay this conference call directly from the Company’s website.

Crane Co. is a diversified manufacturer of highly engineered industrial products. Founded in 1855, Crane provides products and solutions to customers in the aerospace, electronics, hydrocarbon processing, petrochemical, chemical, power generation, automated merchandising, transportation and other markets. The Company has five business segments: Aerospace & Electronics, Engineered Materials, Merchandising Systems, Fluid Handling, and Controls. Crane has approximately 11,000 employees in North America, South America, Europe, Asia and Australia. Crane Co. is traded on the New York Stock Exchange (NYSE:CR). For more information, visit www.craneco.com.

This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements present management’s expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and subsequent reports filed with the Securities and Exchange Commission.

   
CRANE CO.
Income Statement Data
(in thousands, except per share data)
 
Three Months Ended
March 31,
2011 2010
Net Sales:
Aerospace & Electronics $ 161,936 $ 133,645
Engineered Materials 61,832 53,755
Merchandising Systems 94,878 70,171
Fluid Handling 264,142 247,789
Controls 28,232   24,931  
Total Net Sales $ 611,020   $ 530,291  
 
Operating Profit (Loss):
Aerospace & Electronics $ 34,042 $ 24,489
Engineered Materials 10,143 8,540
Merchandising Systems 4,673 4,969
Fluid Handling 35,453 27,989
Controls 3,111 126
Corporate (14,562 ) (12,833 )
Total Operating Profit 72,860 53,280
 
Interest Income 290 225
Interest Expense (6,622 ) (6,726 )
Miscellaneous- Net 3,625   * (21 )
Income Before Income Taxes 70,153 46,758
Provision for Income Taxes 21,775   13,574  
Net income before allocations to noncontrolling interests 48,378 33,184
Less: Noncontrolling interest in subsidiaries' losses (89 ) (50 )
Net income attributable to common shareholders $ 48,467   $ 33,234  
 
Share Data:
Earnings per Diluted Share $ 0.81   $ 0.56  
 
Average Diluted Shares Outstanding 59,552 59,570
Average Basic Shares Outstanding 58,330 58,650
 

Supplemental Data:

Cost of Sales $ 397,850 $ 352,271
Selling, General & Administrative 140,310 124,740
Depreciation and Amortization ** 15,774 14,437
Stock-Based Compensation Expense 3,503 3,172
 
* Primarily related to the sale of a building and the divestiture of a small product line in the three months ended March 31, 2011.
 
** Amount included within cost of sales and selling, general & administrative costs.
 
   
CRANE CO.
Condensed Balance Sheets
(in thousands)
     
March 31, December 31,
2011 2010
 
ASSETS
Current Assets
Cash and Cash Equivalents $ 233,162 $ 272,941
Accounts Receivable, net 356,257 301,918
Current Insurance Receivable - Asbestos 33,000 33,000
Inventories, net 347,813 319,077
Other Current Assets 75,708 61,725
Total Current Assets 1,045,940 988,661
 
Property, Plant and Equipment, net 283,006 280,746
Long-Term Insurance Receivable - Asbestos 174,253 180,689
Other Assets 424,481 446,316
Goodwill 822,516 810,285
 
Total Assets $ 2,750,196 $ 2,706,697
 
LIABILITIES AND EQUITY
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt $ 916 $ 984
Accounts Payable 173,798 157,051
Current Asbestos Liability 100,000 100,000
Accrued Liabilities 217,685 229,462
Income Taxes 13,605 11,057
Total Current Liabilities 506,004 498,554
 
Long-Term Debt 398,780 398,736
Long-Term Deferred Tax Liability 49,482 48,852
Long-Term Asbestos Liability 600,506 619,666
Other Liabilities 146,964 147,859
 
Total Equity 1,048,460 993,030
 
Total Liabilities and Equity $ 2,750,196 $ 2,706,697
 
     
CRANE CO.
Condensed Statements of Cash Flows
(in thousands)
 
Three Months Ended
March 31,
2011 2010
Operating Activities:
Net income attributable to common shareholders $ 48,467 $ 33,234
Noncontrolling interest in subsidiaries' losses   (89 )   (50 )
Net income before allocations to noncontrolling interests 48,378 33,184
Gain on divestiture (4,258 ) -
Depreciation and amortization 15,774 14,437
Stock-based compensation expense 3,503 3,172
Defined benefit plans and postretirement expense 2,749 2,375
Deferred income taxes 6,893 6,682
Cash used for operating working capital (67,250 ) (31,687 )
Defined benefit plans and postretirement contributions (4,779 ) (1,076 )
Environmental payments, net of reimbursements (4,593 ) (3,200 )
Other   142     4,056  
Subtotal (3,441 ) 27,943
Asbestos related payments, net of insurance recoveries   (12,725 )   (11,125 )
Total (used for) provided from operating activities   (16,166 )   16,818  
 
Investing Activities:
Capital expenditures (8,138 ) (4,119 )
Proceeds from disposition of capital assets 4,553 -
Payment for acquisition, net of cash acquired - (51,167 )
Proceeds from divestiture   1,000     -  
Total used for investing activities   (2,585 )   (55,286 )
 
Financing Activities:
Dividends paid (13,474 ) (11,743 )
Reacquisition of shares on open market (29,999 ) -
Stock options exercised - net of shares reacquired 12,552 4,714
Excess tax benefit from stock-based compensation 3,952 391
Change in short-term debt   (76 )   (3,046 )
Total used for financing activities   (27,045 )   (9,684 )
 
Effect of exchange rate on cash and cash equivalents   6,017     (4,978 )
Decrease in cash and cash equivalents (39,779 ) (53,130 )

Business Wire

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