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Crane Co. Reports Second Quarter Earnings Increased 27%; Raises Full Year EPS Guidance Range to $3.30-$3.45; Increases Dividend 13%

Dépèche transmise le 25 juillet 2011 par Business Wire

Crane Co. Reports Second Quarter Earnings Increased 27%; Raises Full Year EPS Guidance Range to $3.30-$3.45; Increases Dividend 13%

Crane Co. Reports Second Quarter Earnings Increased 27%; Raises Full Year EPS Guidance Range to $3.30-$3.45; Increases Dividend 13%

STAMFORD, Conn.--(BUSINESS WIRE)--Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reported that second quarter 2011 earnings per diluted share increased 27% to $0.85 compared to $0.67 in the second quarter of 2010.

“Reflecting the strong performance of our late-cycle Aerospace and Fluid Handling businesses, we are raising our full year sales, EPS and cash flow guidance. In addition, given our confidence in the Company’s future, we are increasing our quarterly dividend by 13%.”

Second quarter 2011 sales of $644 million increased $91 million, or 16%, compared to the second quarter of 2010, resulting from a core sales increase of $57 million (10%), favorable foreign currency translation of $24 million (4%) and an increase in sales from acquisitions, net of divestitures, of $10 million (2%).

Second quarter 2011 operating profit increased 22% to $79.9 million, compared to $65.3 million in the second quarter of 2010, and operating profit margin increased to 12.4%, compared to 11.8% in the second quarter of 2010.

“I am pleased with our second quarter results as strong core revenue growth and continued solid execution are sustaining the momentum that we carried into 2011. I expect our earnings to continue to improve in the second half of the year,” said Crane Co. president and chief executive officer Eric C. Fast. “Reflecting the strong performance of our late-cycle Aerospace and Fluid Handling businesses, we are raising our full year sales, EPS and cash flow guidance. In addition, given our confidence in the Company’s future, we are increasing our quarterly dividend by 13%.”

Increased Full Year 2011 Guidance

Sales for 2011 are now expected to increase approximately 14% - 16%, compared to our prior guidance of 10% - 12%, driven by strong core sales growth. Our 2011 earnings guidance is now a range of $3.30 - $3.45 per diluted share, compared to our previous guidance of $3.05 - $3.25 per diluted share. Free cash flow (cash provided by operating activities less capital spending) is now expected to be in a range of $140 - $160 million, compared to our previous estimate of $130 - $150 million. (Please see the Condensed Statement of Cash Flows and Non-GAAP table.)

Cash Flow and Financial Position

Cash provided by operating activities in the second quarter of 2011 was $31.4 million, which included investment in working capital to support improving sales trends, compared to $47.1 million in the second quarter of 2010. During the second quarter of 2011, the Company repurchased 421,300 shares of its common stock for approximately $20 million. The Company’s cash position at June 30, 2011 was $231 million, as compared to $233 million at March 31, 2011.

Segment Results

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

           
Aerospace & Electronics
 
Second Quarter Change
(dollars in millions)   2011   2010
 
Sales $ 171.5 $ 139.3 $ 32.2 23%
 
Operating Profit $ 37.2 $ 26.2 $ 10.9 42%
 
Profit Margin 21.7% 18.8%
 

Second quarter 2011 sales increased $32.2 million, or 23%, reflecting an $18.1 million (21%) improvement in Aerospace Group sales and an increase of $14.1 million (26%) in Electronics Group revenue. The Aerospace Group sales increase reflected higher OEM and aftermarket shipments while Electronics Group sales grew across all business solutions. Segment operating profit of $37.2 million increased by $10.9 million, or 42%, reflecting effective leverage of the strong sales growth in both groups.

Aerospace & Electronics order backlog was $432 million at June 30, 2011, compared to $431 million at December 31, 2010, and $395 million at June 30, 2010.

           
Engineered Materials
 
Second Quarter Change
(dollars in millions)   2011   2010
 
Sales $ 60.1 $ 58.6 $ 1.5 2%
 
Operating Profit $ 9.1 $ 10.2 ($1.0) -10%
 
Profit Margin 15.2% 17.3%
 

Segment sales of $60.1 million increased 2% compared to the second quarter of 2010, as a result of higher revenues from transportation and building products customers, partially offset by a decline in sales to recreational vehicle manufacturers, as OEMs reduced production in late June. Overall, the sales increase was driven by higher selling prices. Although the full effect of price increases implemented in the first quarter positively impacted the quarter, operating margin declined modestly to 15.2%, as raw material cost increases were greater than anticipated.

           
Merchandising Systems
 
Second Quarter Change
(dollars in millions)   2011   2010
 
Sales $ 94.0 $ 74.5 $ 19.5 26%
 
Operating Profit $ 7.1 $ 8.1 ($1.0) -12%
 
Profit Margin 7.6% 10.9%
 

Merchandising Systems sales of $94.0 million increased $19.5 million, or 26%, reflecting $13.2 million of sales associated with the December 2010 acquisition of Money Controls (18%). Excluding the acquisition, both Payment Solutions and Vending sales increased in the quarter. Operating profit of $7.1 million declined from the prior year as 2010 was favorably impacted by the receipt of a patent litigation settlement.

           
Fluid Handling
 
Second Quarter Change
(dollars in millions)   2011   2010
 
Sales $ 289.0 $ 254.6 $ 34.4 14%
 
Operating Profit $ 36.9 $ 32.2 $ 4.8 15%
 
Profit Margin 12.8% 12.6%
 

Second quarter 2011 sales increased $34.4 million, or 13.5%, which included a core sales increase of $16.2 million (6.4%), and favorable foreign currency translation of $18.2 million (7.1%). Sales increased in each major business unit. Operating margins improved from 12.6% to 12.8%. Quote activity continues to increase and order trends continue to strengthen across the Fluid Handling businesses. Backlog increased to $323 million at June 30, 2011, compared to $272 million at December 31, 2010 and $258 million at June 30, 2010.

On July 12, 2011, Crane purchased W. T. Armatur GmbH & Co. KG (“WTA”) for approximately $38 million. WTA is primarily a manufacturer of bellows sealed globe valves for chemical, fertilizer and thermal oil applications, with 2010 sales of approximately $21 million. This acquisition will strengthen and broaden Fluid Handling’s portfolio by providing valves with zero fugitive emissions used in severe service applications.

Controls            
 
Second Quarter Change
(dollars in millions)

 

2011   2010
 
Sales $ 29.2 $ 25.8 $ 3.4 13%
 
Operating Profit $ 3.7 $ 0.8 $ 2.9 351%
 
Profit Margin 12.7% 3.2%
 

Second quarter 2011 sales of $29.2 million increased 13%, primarily reflecting improvement in industrial, transportation, and upstream oil and gas related demand. Operating profit of $3.7 million increased significantly over 2010, reflecting strong leverage and the absence of 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 second quarter financial results on Tuesday, July 26, 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 Six Months Ended
June 30, June 30,
2011   2010   2011   2010  
Net Sales:
Aerospace & Electronics $ 171,538 $ 139,299 $ 333,474 $ 272,944
Engineered Materials 60,101 58,646 121,933 112,401
Merchandising Systems 94,010 74,527 188,888 144,698
Fluid Handling 288,965 254,587 553,107 502,376
Controls 29,159   25,755   57,391   50,686  
Total Net Sales $ 643,773   $ 552,814   $ 1,254,793   $ 1,083,105  
 
Operating Profit (Loss):
Aerospace & Electronics $ 37,157 $ 26,215 $ 71,199 $ 50,704
Engineered Materials 9,130 10,172 19,273 18,712
Merchandising Systems 7,114 8,110 11,787 13,079
Fluid Handling 36,943 32,152 72,396 60,141
Controls 3,717 825 6,828 951
Corporate (14,118 ) (12,170 ) (28,680 ) (25,003 )
Total Operating Profit 79,943 65,304 152,803 118,584
 
Interest Income 389 236 679 461
Interest Expense (6,429 ) (6,657 ) (13,051 ) (13,383 )
Miscellaneous- Net (290 ) (604 ) 3,335   * (625 )
Income Before Income Taxes 73,613 58,279 143,766 105,037
Provision for Income Taxes 23,076   18,116   44,851   31,690  
Net income before allocations to noncontrolling interests 50,537 40,163 98,915 73,347
Less: Noncontrolling interest in subsidiaries' earnings 100   122   11   72  
Net income attributable to common shareholders $ 50,437   $ 40,041   $ 98,904   $ 73,275  
 
Share Data:
Earnings per Diluted Share $ 0.85   $ 0.67   $ 1.66   $ 1.23  
 
Average Diluted Shares Outstanding 59,348 59,894 59,457 59,716
Average Basic Shares Outstanding 58,173 58,909 58,259 58,777
 

Supplemental Data:

Cost of Sales $ 423,041 $ 361,779 $ 820,891 $ 714,050
Selling, General & Administrative 140,789 125,731 281,099 250,471
Depreciation and Amortization ** 15,853 15,408 31,627 29,845
Stock-Based Compensation Expense 3,771 3,172 7,274 6,344
* 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.

Business Wire

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CRANE CO.
Condensed Balance Sheets
(in thousands)
           
June 30, December 31,
2011 2010
 
ASSETS
Current Assets
Cash and Cash Equivalents $ 231,365 $ 272,941
Accounts Receivable, net 377,948 301,918
Current Insurance Receivable - Asbestos 33,000 33,000
Inventories, net 362,113 319,077
Other Current Assets 67,442 61,725
Total Current Assets 1,071,868 988,661
 
Property, Plant and Equipment, net 284,101 280,746
Long-Term Insurance Receivable - Asbestos 167,412 180,689
Other Assets 422,438 446,316
Goodwill 824,318 810,285
 
Total Assets $ 2,770,137 $ 2,706,697
 
LIABILITIES AND EQUITY
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt $ 464 $ 984
Accounts Payable 180,216 157,051
Current Asbestos Liability 100,000 100,000
Accrued Liabilities 221,972 229,462
Income Taxes 18,882 11,057
Total Current Liabilities 521,534