Crane Co. (NYSE:CR), a diversified manufacturer of highly engineered industrial products, reported fourth quarter 2014 earnings of $0.95per diluted share, compared to $0.84 per share in the fourth quarter of 2013. Fourth quarter 2014 results included Special Items, net, of $11.0 million in after tax charges, or $0.18 per diluted share. Fourth quarter 2013 results included Special Items, net, of $11.9 million in after tax charges, or $0.20 per diluted share. Excluding these Special Items in both years, fourth quarter 2014 earnings per diluted share increased 9% to $1.13, compared to $1.04 in the fourth quarter of 2013. As expected, fourth quarter 2014 earnings included a $0.05 per share benefit associated with the reinstatement of the R&D tax credit in the United States. (Please see the attached Non-GAAP Financial Measures tables for additional details.)
Special Items in the fourth quarter of 2014 consisted of the following after-tax charges: $9.9 million, or $0.17 per share, related to repositioning charges, reflecting both previously announced actions, as well as additional cost reduction measures in Fluid Handling; $4.6 million, or $0.08 per share, of integration-related charges associated with the MEI acquisition; and a $3.5 million gain, or $0.06 per share, related to a real estate divestiture. Special Items in the fourth quarter of 2013 included net costs of $11.9 million, or $0.20 per share, related to the acquisition of MEI.
Fourth quarter 2014 sales were $730.7 million, an increase of 7.2% compared to $681.4 in the fourth quarter of 2013. The sales growth was comprised of flat core sales; sales from acquisitions, net of divestitures, of $68.0 million, or 10.0%; partially offset by unfavorable foreign exchange of $18.8 million, or 2.8%.
Operating profit in the fourth quarter increased to $89.6 million, up 7.8% compared to the fourth quarter of 2013. Excluding Special Items, fourth quarter operating profit increased to $107.3 million, up 9.5% compared to the fourth quarter of 2013. (Please see the attached Non-GAAP Financial Measures tables.)
Full Year 2014 Results
Full year 2014 earnings per diluted share were $3.23, compared to $3.73 in 2013. Excluding Special Items, 2014 earnings per diluted share increased 6.6% to $4.45, compared to $4.18 in 2013. Full year 2014 earnings per diluted share included a $0.05 benefit associated with the reinstatement of the R&D tax credit in the United States compared to a $0.10 benefit in 2013. (Please see the attached Non-GAAP Financial Measures tables.)
Total sales in 2014 were $2.92 billion, an increase of 12.7% from 2013. The sales growth was comprised of a core sales increase of $8.6 million, or 0.3%; sales from acquisitions, net of divestitures, of $332.1 million, or 12.8%; partially offset by unfavorable foreign exchange of $11.0 million, or -0.4%.
Operating profit for the full year 2014 was $316.3 million, compared to $347.9 million in 2013. Excluding Special Items, operating profit in 2014 increased 13.5% to $426.1 million. (Please see the attached Non-GAAP Financial Measures tables.)
“Our fourth quarter results were in line with our most recent guidance,” said Max Mitchell, Crane Co. President and Chief Executive Officer. “Our adjusted full year operating margin was strong at 14.6%, reflecting solid execution and strong productivity in a challenging growth environment. I am pleased with our progress on a number of fronts, most notably with the integration of MEI, where we exceeded our $0.20 EPS accretion target. In addition, we secured several important new program wins at Aerospace & Electronics, and drove strong operating margin expansion at Fluid Handling, reaching 15.6%, excluding Special Items, reflecting a 50 basis point improvement over last year.”
“However, global growth was a challenge for us throughout the year, and we expect the difficult revenue environment to persist into 2015, driven by a decline in our process valve business in Fluid Handling. This challenge will be exacerbated by unfavorable foreign exchange and higher pension expense. In response, we have initiated incremental repositioning actions at Fluid Handling and identified additional synergy opportunities related to the MEI acquisition. Reflecting our confidence in our longer-term outlook, we repurchased $50 million of Crane shares during the fourth quarter. Considering these factors, we expect earnings per diluted share, excluding Special Items, in a range of flat to up 5% compared to 2014.” (Please see the attached Non-GAAP Financial Measures tables.)
Cash Flow and Other Financial Metrics
Cash provided by operating activities for the fourth quarter of 2014 was $150.5 million, compared to $148.4 million in the fourth quarter of 2013. Cash provided by operating activities for the full year 2014 was $264.0 million, compared to $239.4 million in 2013. Capital expenditures in the fourth quarter of 2014 were $11.6 million, compared to $10.4 million in the fourth quarter of 2013. Capital expenditures for the full year 2014 were $43.7 million, compared to $29.5 million in 2013. The Company repurchased 812,793 shares of its common stock during the fourth quarter at a cost of $50 million. The Company’s cash position was $346.3 million at December 31, 2014, compared to $270.6 million at December 31, 2013. Total debt was $850 million at December 31, 2014, compared to $875 million at December 31, 2013.
Segment Results
All comparisons detailed in this section refer to operating results for the fourth quarter 2014 versus the fourth quarter 2013, excluding Special Items.
Fluid Handling
Fourth Quarter | Change | |||||||||
(dollars in millions) | 2014 | 2013 | ||||||||
Sales | $313.9 | $319.7 | ($5.8) | -1.8% | ||||||
Operating Profit | $36.8 | $48.2 | ($11.4) | -23.6% | ||||||
Operating Profit, before Special Items* | $47.0 | $48.2 | ($1.2) | -2.4% | ||||||
Profit Margin | 11.7% | 15.1% | ||||||||
Profit Margin, before Special Items* | 15.0% | 15.1% |
*Excludes $10.2 million of repositioning charges in the fourth quarter of 2014 |
Fourth quarter 2014 sales decreased $5.8 million, or -1.8%, which included a core sales increase of $9.1 million, or 2.8%, which was more than offset by unfavorable foreign exchange of $11.7 million, or -3.7%, and the impact from the second quarter divestiture of Crane Water of $3.0 million, or -0.9%. Adjusted operating margins were strong at 15.0%, reflecting continued productivity gains, lower pension expense and the impact of the higher volume, offset by unfavorable foreign exchange and mix. Fluid Handling order backlog was $311.0 million at December 31, 2014; after adjusting for the impact of the divestiture, comparable backlog was $328.4 million at December 31, 2013.
Payment & Merchandising Technologies
Fourth Quarter | Change | |||||||||
(dollars in millions) | 2014 | 2013 | ||||||||
Sales | $177.2 | $122.7 | $54.6 | 44.5% | ||||||
Operating Profit | $17.8 | $7.9 | $9.9 | 125.1% | ||||||
Operating Profit, before Special Items* | $24.3 | $13.7 | $10.6 | 77.8% | ||||||
Profit Margin | 10.1% | 6.5% | ||||||||
Profit Margin, before Special Items* | 13.7% | 11.2% |
* Excludes $6.5 million of integration-related expenses in the fourth quarter of 2014 and $5.8 million of transaction- and integration-related expenses in the fourth quarter of 2013 |
Segment sales of $177.2 million increased $54.6 million, or 44.5%, driven primarily by $71.0 million of sales related to the MEI transaction, partially offset by a core sales decline of $9.8 million, or -8.0%, and unfavorable foreign exchange of $6.7 million, or -5.5%. Adjusted operating profit increased to $24.3 million, primarily reflecting the impact of the MEI acquisition, and adjusted operating margins expanded 250 basis points to 13.7%, driven primarily by integration synergies and the mix benefit of the MEI acquisition.
Aerospace & Electronics
Fourth Quarter | Change | |||||||||
(dollars in millions) | 2014 | 2013 | ||||||||
Sales | $182.3 | $186.7 | ($4.4) | -2.4% | ||||||
Operating Profit | $39.9 | $44.7 | ($4.9) | -10.9% | ||||||
Operating Profit, before Special Items* | $40.7 | $44.7 | ($4.0) | -8.9% | ||||||
Profit Margin | 21.9% | 23.9% | ||||||||
Profit Margin, before Special Items* | 22.3% | 23.9% |
* Excludes $0.9 million of repositioning charges in the fourth quarter of 2014 |
Fourth quarter 2014 sales decreased $4.4 million, or -2.4%, reflecting flat sales in the Aerospace Group and a sales decline of $4.2 million, or -5.9%, in the Electronics Group. Adjusted operating profit decreased $4.0 million, driven by higher levels of engineering spending and the impact of the lower sales in Electronics. Aerospace & Electronics order backlog was $422.1 million at December 31, 2014, compared to $361.3 million at December 31, 2013.
Engineered Materials
Fourth Quarter | Change | |||||||||||
(dollars in millions) | 2014 | 2013 | ||||||||||
Sales | $57.2 | $52.4 | $4.9 | 9.3% | ||||||||
Operating Profit | $7.2 | $5.8 | $1.4 | 24.1% | ||||||||
Profit Margin | 12.6% | 11.1% | ||||||||||
Sales of $57.2 million were 9.3% higher than the fourth quarter of 2013, driven by higher sales to recreational vehicle manufacturers. Adjusted operating profit increased 24.1% to $7.2 million, primarily reflecting leverage on the higher sales and strong productivity.
2015 Guidance
Sales for 2015 are expected to be approximately $2.85 billion, reflecting core sales of 0% to +2%, more than offset by unfavorable foreign exchange of -2% to -4%, and the impact from 2014 divestitures of -0.5%. Excluding Special Items, earnings are expected to be in a range of $4.45-$4.65 per diluted share which reflects growth of 0% to 5% compared to 2014 earnings of $4.45 per diluted share. On a GAAP basis, we expect earnings of $4.32-$4.52 per diluted share. Full year 2015 free cash flow (cash provided by operating activities less capital spending) is expected to be in a range of $210-$240 million. (Please see the attached Non-GAAP Financial Measures tables.)
During 2014, repositioning charges were $22.7 million, which includes previously announced actions, as well as additional repositioning actions in Fluid Handling. Repositioning charges are expected to be $4-$6 million in 2015. Total repositioning benefits are now expected to be approximately $10 million in 2015, with an annualized rate of approximately $19 million by the end of 2016.
During 2014, MEI-related Special Items included transaction, integration and restructuring related costs, and inventory step-up and backlog amortization charges. These items totaled $24.9 million, and included previously announced integration and restructuring related actions, as well as additional charges in the fourth quarter associated with incremental integration and restructuring activities to consolidate certain manufacturing facilities. Total integration and restructuring related charges are expected to be $6-$8 million in 2015. Total synergy savings were $10 million in 2014 and are expected to grow to $19 million in 2015. As a result of the newly announced plant consolidation, the total annualized synergy run-rate is now expected to reach $33 million by the end of 2016, compared to the prior forecast of $25 million. (Please see the attached Non-GAAP Financial Measures table.)
Additional guidance details will be provided at the Company’s Investor Day conference on February 26, 2015.
Additional Information
Please see the Non-GAAP Financial Measures tables 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 fourth quarter financial results on Tuesday, January 27, 2015 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. Slides that accompany the conference call will be available on 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 hydrocarbon processing, petrochemical, chemical, power generation, unattended payment, automated merchandising, aerospace, electronics, transportation and other markets. The Company has four business segments: Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials. Crane has approximately 11,500 employees in the Americas, Europe, the Middle East, 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, 2013 and subsequent reports filed with the Securities and Exchange Commission.
(Financial Tables Follow)
CRANE CO. | ||||||||||||||||
Income Statement Data | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net Sales: | ||||||||||||||||
Fluid Handling | $ | 313,910 | $ | 319,698 | $ | 1,263,722 | $ | 1,288,624 | ||||||||
Payment & Merchandising Technologies | 177,206 | 122,649 | 711,959 | 380,576 | ||||||||||||
Aerospace & Electronics | 182,326 | 186,737 | 695,998 | 693,783 | ||||||||||||
Engineered Materials | 57,216 | 52,365 | 253,318 | 232,298 | ||||||||||||
Total Net Sales | 730,658 | 681,449 | 2,924,997 | 2,595,281 | ||||||||||||
Operating Profit (Loss): | ||||||||||||||||
Fluid Handling | 36,794 | 48,191 | 181,626 | 194,879 | ||||||||||||
Payment & Merchandising Technologies | 17,829 | 7,920 | 69,054 | 34,822 | ||||||||||||
Aerospace & Electronics | 39,864 | 44,719 | 138,176 | 159,976 | ||||||||||||
Engineered Materials | 7,209 | 5,809 | 36,811 | 34,347 | ||||||||||||
Corporate * | (12,105 | ) | (23,518 | ) | (53,577 | ) | (76,148 | ) | ||||||||
Environmental Provision | - | - | (55,800 | ) | - | |||||||||||
Total Operating Profit | 89,591 | 83,121 | 316,290 | 347,876 | ||||||||||||
Interest Income | 577 | 379 | 1,713 | 1,867 | ||||||||||||
Interest Expense | (10,093 | ) | (5,809 | ) | (39,222 | ) | (26,460 | ) | ||||||||
Miscellaneous- Net | 3,751 | 2,903 | 2,375 | 2,733 | ||||||||||||
Income Before Income Taxes | 83,826 | 80,594 | 281,156 | 326,016 | ||||||||||||
Provision for Income Taxes | 27,254 | 30,482 | 87,587 | 105,065 | ||||||||||||
Net income before allocation to noncontrolling interests | 56,572 | 50,112 | 193,569 | 220,951 | ||||||||||||
Less: Noncontrolling interest in subsidiaries' earnings | 360 | 406 | 897 | 1,449 | ||||||||||||
Net income attributable to common shareholders | $ | 56,212 | $ | 49,706 | $ | 192,672 | $ | 219,502 | ||||||||
Share Data: | ||||||||||||||||
Earnings per Diluted Share | $ | 0.95 | $ | 0.84 | $ | 3.23 | $ | 3.73 | ||||||||
Average Diluted Shares Outstanding | 59,344 | 59,156 | 59,603 | 58,839 | ||||||||||||
Average Basic Shares Outstanding | 58,526 | 58,161 | 58,770 | 57,896 | ||||||||||||
Supplemental Data: | ||||||||||||||||
Cost of Sales | $ | 479,965 | $ | 454,598 | $ | 1,901,240 | $ | 1,707,105 | ||||||||
Selling, General & Administrative | 143,399 | 128,906 | 604,115 | 512,881 | ||||||||||||
Environmental Provision | - | - | 55,800 | - | ||||||||||||
Repositioning Charges (see non-GAAP measures) | 11,095 | - | 22,687 | - | ||||||||||||
Acquisition Related Charges (see non-GAAP measures) | 6,608 | 14,824 | 24,865 | 27,419 | ||||||||||||
Depreciation and Amortization ** | 17,812 | 16,678 | 75,766 | 54,837 | ||||||||||||
Stock-Based Compensation Expense | 4,914 | 6,492 | 20,858 | 22,791 | ||||||||||||
* Corporate includes $6.5 million for a settlement of a lawsuit recorded in June 2014. Corporate also included acquisition related costs of $0.1 million and $9.1 million for the three months ended December 31, 2014 and 2013, respectively and $1.3 million and $21.7 million of cost for the twelve months ended December 31, 2014 and 2013, respectively. |
** Amount included within cost of sales and selling, general & administrative costs. |
CRANE CO. | |||||||||
Condensed Balance Sheets | |||||||||
(in thousands) | |||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
ASSETS | |||||||||
Current Assets | |||||||||
Cash and Cash Equivalents | $ | 346,266 | $ | 270,643 | |||||
Accounts Receivable, net | 410,931 | 437,541 | |||||||
Current Insurance Receivable - Asbestos | 20,500 | 22,783 | |||||||
Inventories, net | 369,719 | 368,886 | |||||||
Other Current Assets | 47,602 | 49,239 | |||||||
Total Current Assets | 1,195,018 | 1,149,092 | |||||||
Property, Plant and Equipment, net | 290,264 | 305,055 | |||||||
Long-Term Insurance Receivable - Asbestos | 126,750 | 148,222 | |||||||
Other Assets | 644,437 | 707,922 | |||||||
Goodwill | 1,191,459 | 1,249,316 | |||||||
Total Assets | $ | 3,447,928 | $ | 3,559,607 | |||||
LIABILITIES AND EQUITY | |||||||||
Current Liabilities | |||||||||
Notes Payable and Current Maturities of Long-Term Debt | $ | 100,806 | $ | 125,826 | |||||
Accounts Payable | 228,822 | 229,828 | |||||||
Current Asbestos Liability | 79,000 | 88,038 | |||||||
Accrued Liabilities | 225,772 | 223,148 | |||||||
Income Taxes | 5,624 | 2,062 | |||||||
Total Current Liabilities | 640,024 | 668,902 | |||||||
Long-Term Debt | 749,213 | 749,170 | |||||||
Long-Term Deferred Tax Liability | 46,301 | 76,041 | |||||||
Long-Term Asbestos Liability | 534,515 | 610,530 | |||||||
Other Liabilities | 410,131 | 240,291 | |||||||
Total Equity | 1,067,744 | 1,214,673 | |||||||
Total Liabilities and Equity | $ | 3,447,928 | $ | 3,559,607 | |||||
CRANE CO. | |||||||||||||||||
Condensed Statements of Cash Flows | |||||||||||||||||
(in thousands) | |||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Operating Activities: | |||||||||||||||||
Net income attributable to common shareholders | $ | 56,212 | $ | 49,706 | $ | 192,672 | $ | 219,502 | |||||||||
Noncontrolling interest in subsidiaries' earnings | 360 | 406 | 897 | 1,449 | |||||||||||||
Net income before allocations to noncontrolling interests | 56,572 | 50,112 | 193,569 | 220,951 | |||||||||||||
Environmental provision | - | - | 55,800 | - | |||||||||||||
Gain on divestiture | (4,111 | ) | (2,727 | ) | (4,111 | ) | (2,727 | ) | |||||||||
Restructuring - Non Cash | - | - | 954 | - | |||||||||||||
Depreciation and amortization | 17,812 | 16,678 | 75,766 | 54,837 | |||||||||||||
Stock-based compensation expense | 4,914 | 6,492 | 20,858 | 22,791 | |||||||||||||
Defined benefit plans and postretirement (credit) expense | (2,925 | ) | 1,240 | (11,700 | ) | 4,779 | |||||||||||
Deferred income taxes | 32,797 | 30,840 | 36,483 | 48,964 | |||||||||||||
Cash provided by (used for) operating working capital | 72,012 | 62,136 | 24,702 | (26,672 | ) | ||||||||||||
Defined benefit plans and postretirement contributions | (5,122 | ) | (2,744 | ) | (27,866 | ) | (15,929 | ) | |||||||||
Environmental payments, net of reimbursements | (1,808 | ) | (4,201 | ) | (10,405 | ) | (15,403 | ) | |||||||||
Other | (4,519 | ) | 5,120 | (28,801 | ) | 10,668 | |||||||||||
Subtotal | 165,622 | 162,946 | 325,249 | 302,259 | |||||||||||||
Asbestos related payments, net of insurance recoveries | (15,104 | ) | (14,513 | ) | (61,297 | ) | (62,827 | ) | |||||||||
Total provided by operating activities | 150,518 | 148,433 | 263,952 | 239,432 | |||||||||||||
Investing Activities: | |||||||||||||||||
Capital expenditures | (11,580 | ) | (10,445 | ) | (43,732 | ) | (29,461 | ) | |||||||||
Proceeds from disposition of capital assets | 4,718 | 83 | 9,694 | 455 | |||||||||||||
Proceeds from divestiture | - | 6,836 | 2,081 | 6,836 | |||||||||||||
Proceeds from (payments for) acquisitions | - | (801,781 | ) | 6,100 | (801,781 | ) | |||||||||||
Total used for investing activities | (6,862 | ) | (805,307 | ) | (25,857 | ) | (823,951 | ) | |||||||||
Financing Activities: | |||||||||||||||||
Dividends paid | (19,125 | ) | (17,494 | ) | (73,884 | ) | (67,272 | ) | |||||||||
Reacquisition of shares on open market | (50,000 | ) | - | (50,000 | ) | - | |||||||||||
Stock options exercised - net of shares reacquired | (561 | ) | 839 | 8,186 | 24,922 | ||||||||||||
Excess tax benefit from stock-based compensation | (168 | ) | 566 | 7,701 | 6,353 | ||||||||||||
Proceeds received from credit facility | - | - | - | 125,000 | |||||||||||||
Change in short-term debt | (14,000 | ) | 1,482 | (25,000 | ) | (321 | ) | ||||||||||
Proceeds received from issuance of long-term notes | - | 550,000 | - | 550,000 | |||||||||||||
Debt issuance costs | - | (6,006 | ) | - | (6,006 | ) | |||||||||||
Repayment of long-term debt | - | - | - | (200,000 | ) | ||||||||||||
Total used for financing activities | (83,854 | ) | 529,387 | (132,997 | ) | 432,676 | |||||||||||
Effect of exchange rate on cash and cash equivalents | (15,208 | ) | (5,274 | ) | (29,475 | ) | (1,461 | ) | |||||||||
Increase (decrease) in cash and cash equivalents | 44,594 | (132,761 | ) | 75,623 | (153,304 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 301,672 | 403,404 | 270,643 | 423,947 | |||||||||||||
Cash and cash equivalents at end of period | $ | 346,266 | $ | 270,643 | $ | 346,266 | $ | 270,643 | |||||||||
CRANE CO. | |||||||||||||||
Order Backlog | |||||||||||||||
(in thousands) | |||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
2014 | 2014 | 2014 | 2014 | 2013 | |||||||||||
Fluid Handling * | $ | 310,996 | $ | 349,618 | $ | 369,483 | $ | 350,720 | $ | 333,860 | |||||
Payment & Merchandising Technologies | 68,286 | 58,832 | 69,857 | 58,787 | 51,888 | ||||||||||
Aerospace & Electronics | 422,104 | 404,833 | 396,835 | 397,541 | 361,323 | ||||||||||
Engineered Materials | 16,690 | 14,406 | 17,017 | 16,624 | 14,661 | ||||||||||
Total Backlog | $ | 818,076 | $ | 827,689 | $ | 853,192 | $ | 823,672 | $ | 761,732 | |||||
* Includes Order Backlog of $5.4 million at March 31, 2014 and $5.5 million at December 31, 2013 pertaining to a business divested in June 2014. |
CRANE CO. | |||||||||||||||||||||||||||
Non-GAAP Financial Measures | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
INCOME ITEMS | |||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | Percent Change | Percent Change | ||||||||||||||||||||||||
December 31, | December 31, | December 31, 2014 | December 31, 2014 | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | Three Months | Twelve Months | ||||||||||||||||||||||
Net Sales | $ | 730,658 | $ | 681,449 | $ | 2,924,997 | $ | 2,595,281 | 7.2 | % | 12.7 | % | |||||||||||||||
Operating Profit | 89,591 | 83,121 | 316,290 | 347,876 | 7.8 | % | -9.1 | % | |||||||||||||||||||
Percentage of Sales | 12.3 | % | 12.2 | % | 10.8 | % | 13.4 | % | |||||||||||||||||||
Special Items impacting Operating Profit: | |||||||||||||||||||||||||||
Acquisition transaction costs (a) | - | 10,170 | - | 22,765 | |||||||||||||||||||||||
Acquisition related inventory and backlog amortization (b) | - | 4,654 | 4,790 | 4,654 | |||||||||||||||||||||||
Acquisition related integration costs (c) | 2,014 | - | 9,753 | - | |||||||||||||||||||||||
Acquisition related restructuring costs (d) | 4,594 | - | 10,322 | - | |||||||||||||||||||||||
Repositioning charges (e) | 11,095 | - | 22,687 | - | |||||||||||||||||||||||
Lawsuit settlement charge (f) | - | - | 6,500 | - | |||||||||||||||||||||||
Environmental Provision (g) | - | - | 55,800 | - | |||||||||||||||||||||||
Operating Profit before Special Items | $ | 107,294 | $ | 97,945 | $ | 426,142 | $ | 375,295 | 9.5 | % | 13.5 | % | |||||||||||||||
Percentage of Sales | 14.7 | % | 14.4 | % | 14.6 | % | 14.5 | % | |||||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 56,212 | $ | 49,706 | $ | 192,672 | $ | 219,502 | |||||||||||||||||||
Per Share | $ | 0.95 | $ | 0.84 | $ | 3.23 | $ | 3.73 | 12.7 | % | -13.3 | % | |||||||||||||||
Special Items impacting Net Income Attributable to Common Shareholders: | |||||||||||||||||||||||||||
Acquisition transaction costs - Net of Tax (a) | - | 9,837 | - | 22,432 | |||||||||||||||||||||||
Per Share | $ | 0.17 | $ | 0.38 | |||||||||||||||||||||||
Acquisition related inventory and backlog amortization - Net of Tax (b) | - | 2,839 | 3,018 | 2,839 | |||||||||||||||||||||||
Per Share | $ | 0.05 | $ | 0.05 | $ | 0.05 | |||||||||||||||||||||
Acquisition related integration costs - Net of Tax (c) | 1,367 | - | 7,130 | - | |||||||||||||||||||||||
Per Share | $ | 0.02 | $ | 0.12 | |||||||||||||||||||||||
Acquisition related restructuring costs - Net of Tax (d) | 3,212 | - | 7,017 | - | |||||||||||||||||||||||
Per Share | $ | 0.05 | $ | 0.12 | |||||||||||||||||||||||
Repositioning charges - Net of Tax (e) | 9,919 | - | 17,982 | - | |||||||||||||||||||||||
Per Share | $ | 0.17 | $ | 0.30 | |||||||||||||||||||||||
Lawsuit settlement charge - Net of Tax (f) | - | - | 4,225 | - | |||||||||||||||||||||||
Per Share | $ | - | $ | 0.07 | |||||||||||||||||||||||
Environmental Provision - Net of Tax (g) | - | 36,270 | - | ||||||||||||||||||||||||
Per Share | $ | - | $ | 0.61 | |||||||||||||||||||||||
Loss on business divestiture - Net of Tax (h) | - | - | 1,055 | - | |||||||||||||||||||||||
Per Share | $ | 0.02 | |||||||||||||||||||||||||
Gain on real estate divestitures - Net of Tax (i) | (3,498 | ) | - | (4,158 | ) | - | |||||||||||||||||||||
Per Share | $ | (0.06 | ) | $ | (0.07 | ) | |||||||||||||||||||||
Withholding taxes related to acquisition funding (j) | - | 1,192 | - | 2,892 | |||||||||||||||||||||||
Per Share | $ | 0.02 | $ | 0.05 | |||||||||||||||||||||||
Acquisition remedy related gain on sale of product line (k) | - | (2,006 | ) | - | (2,006 | ) | |||||||||||||||||||||
Per Share | $ | (0.03 | ) | $ | (0.03 | ) | |||||||||||||||||||||
Net Income Attributable To Common Shareholders Before Special Items | $ | 67,212 | $ | 61,568 | $ | 265,211 | $ | 245,659 | 9.2 | % | 8.0 | % | |||||||||||||||
Per Share | $ | 1.13 | $ | 1.04 | $ | 4.45 | $ | 4.18 | 8.8 | % | 6.6 | % | |||||||||||||||
(a) During the three and twelve months ended December 30, 2013, the Company recorded transaction costs associated with the acquisition of MEI. | |
(b) During the three months ended March 31, 2014 and three months ended December 31, 2013 the Company recorded inventory step-up and backlog amortization relating to the acquisition of MEI. | |
(c) During the three and twelve months ended December 31, 2014, the Company recorded integration costs associated with the acquisition of MEI. | |
(d) During the three and twelve months ended December 31, 2014, the Company recorded restructuring costs associated with the acquisition of MEI. | |
(e) During the three and twelve months ended December 31, 2014, the Company recorded repositioning charges in our Fluid Handling and Aerospace & Electronics segments. | |
(f) During the three months ended June 30, 2014, the Company recorded a $6.5 million charge related to the settlement of the previously disclosed environmental lawsuits by certain homeowners in Roseland, New Jersey. | |
(g) During the three months ended September 30, 2014, the Company recorded two Environmental Provisions, 1) a $49.0 million charge related to an increase in the Company's liability at its Goodyear, AZ Superfund Site, and 2) $6.8 million charge for expected remediation costs associated with a previously disclosed environmental site in Roseland, New Jersey. | |
(h) During the three month ended June 30, 2014, the Company recorded a loss on the divestiture of a small business. | |
(i) During the three and twelve month ended December 31, 2014, the Company recorded gains on real estate divestitures. | |
(j) In the three and twelve months ended December 31, 2013, the Company incurred withholding taxes related to the cash marshaling activities supporting the acquisition of MEI. | |
(k) During the three months ended December 31, 2013, the Company divested a product line within the Merchandising Systems segment pertaining to the execution of remedies associated with the MEI acquisition. | |
2015 Full Year Guidance | ||||||||
2015 Earnings Per Share Guidance | Low | High | ||||||
Earnings Per Share - GAAP basis | $ 4.32 | $ 4.52 | ||||||
Acquisition integration costs - Net of Tax (l) | 0.08 | 0.08 | ||||||
Anticipated repositioning actions - Net of Tax (m) | 0.05 | 0.05 | ||||||
Earnings Per Share - Non-GAAP basis | $ 4.45 | $ 4.65 | ||||||
(l) In 2015, the Company expects to incur integration related costs in a range of $6 million to $10 million in connection with the MEI acquisition. The $0.08 represents the estimated Earnings Per Share impact for the mid-point of the $6 million to $10 million range. | |
(m) In 2015, the Company expects to incur costs associated with facility repositioning actions related to the consolidation of certain smaller manufacturing sites. | |
CRANE CO. | |||||||||||||||||||||||||||
Non-GAAP Financial Measures | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
CASH FLOW ITEMS | |||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, | December 31, | 2015 Full Year Guidance | |||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | Low | High | ||||||||||||||||||||||
Cash Provided from Operating Activities | |||||||||||||||||||||||||||
before Asbestos - Related Payments | $ | 165,622 | $ | 162,946 | $ | 325,249 | $ | 302,259 | $ | 328,500 | $ | 338,500 | |||||||||||||||
Asbestos Related Payments, Net of Insurance Recoveries | (15,104 | ) | (14,513 | ) | (61,297 | ) | (62,827 | ) | (63,500 | ) | (53,500 | ) | |||||||||||||||
Cash Provided from Operating Activities | 150,518 | 148,433 | 263,952 | 239,432 | 265,000 | 285,000 | |||||||||||||||||||||
Less: Capital Expenditures | (11,580 | ) | (10,445 | ) | (43,732 | ) | (29,461 | ) | (55,000 | ) | (45,000 | ) | |||||||||||||||
Free Cash Flow | $ | 138,938 | $ | 137,988 | $ | 220,220 | $ | 209,971 | $ | 210,000 | $ | 240,000 | |||||||||||||||
Certain non-GAAP measures have been provided to facilitate comparison with the prior year. | |
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. | |
In addition, Free Cash Flow provides supplemental information to assist management and investors in analyzing the Company’s ability to generate liquidity from its operating activities. The measure of Free Cash Flow does not take into consideration certain other non-discretionary cash requirements such as, for example, mandatory principal payments on the Company's long-term debt. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP. |
Contacts:
Jason D. Feldman, 203-363-7329
Director, Investor
Relations
www.craneco.com