Crane Company Reports Third Quarter 2024 Results and Raises Full Year EPS Guidance

Business Wire 28-Oct-2024 4:15 PM

Third Quarter 2024 Highlights

• Earnings per diluted share (EPS) of $1.33, up 39%, and adjusted EPS of $1.38, up 34%.
• Sales of $597 million, up 13% driven by 6% core sales growth.
• Core order growth up 6% and core backlog growth up 10%, driven primarily by ongoing strength at Aerospace & Electronics.
• Declaring fourth quarter 2024 regular dividend of $0.205 per share.

Full Year Outlook

• Raising and narrowing our full year adjusted EPS outlook to a range of $5.05-$5.20, up from $4.95-$5.15.

Crane Company ((", Crane, ", NYSE:CR) today announced its financial results for the third quarter of 2024 and raised and narrowed its adjusted full-year EPS outlook.

Max Mitchell, Crane's Chairman, President and Chief Executive Officer, stated: "We delivered another quarter of excellent results, with 34% adjusted EPS growth driven by 6% core sales growth, reflecting continued strong execution by our teams globally. Furthermore, demand trends across our strategic growth platforms were also encouraging in the quarter, with 6% year-over-year core order growth and 10% year-over-year core backlog growth, giving us confidence as we close out the year and increasingly look toward 2025. Taken together, we are raising our 2024 adjusted EPS outlook to a range of $5.05-$5.20, up from our prior view of $4.95-$5.15."

Mr. Mitchell concluded: "While our updated full year guidance represents yet another record year for Crane, our outperformance is tempered by the impact of Hurricane Helene on one of our Process Flow Technologies facilities in Marion, North Carolina, and accordingly, our underlying performance is even stronger. I am incredibly proud of our team's efforts on executing on recovery actions which we expect to be completed in the fourth quarter."

Third Quarter 2024 Results

Third quarter 2024 GAAP EPS of $1.33 compared to $0.96 in the third quarter of 2023. Third quarter 2024 adjusted EPS of $1.38 compared to $1.03 in the third quarter of 2023.

Third quarter sales increased 13%, with 6% core sales growth, a 6% contribution from acquisitions, and a slight contribution from favorable foreign exchange. Operating profit of $105 million increased 38% compared to last year, and adjusted operating profit of $109 million increased 35% compared to last year, in both cases primarily reflecting the impact from net price and productivity.

Summary of Third Quarter 2024 Results

Cash Flow, Financing Activities and Other Financial Metrics

During the third quarter of 2024, cash provided by operating activities was $82 million, capital expenditures were $9 million, and free cash flow (cash provided by operating activities less capital spending) was $73 million. Adjusted free cash flow (free cash flow excluding transaction related cash outflows) was $75 million. (Please see the attached non-GAAP Financial Measures tables.)

As of September 30, 2024, the Company's cash balance was $258 million with total debt of $332 million.

Rich Maue, Crane's Executive Vice President and Chief Financial Officer, added: "For the full year, we now expect free cash flow to fall at the lower end of our estimated $255-$275 million range, primarily due to working capital headwinds commercial aerospace suppliers are facing, now coupled with the timing of hurricane-related insurance recoveries.

However, these items are transitory, and our strong balance sheet gives us the flexibility to continue investing strategically, while providing the opportunity for further capital deployment. As always, we will deploy our capital with the same strict financial and strategic discipline that we have always employed. We see numerous opportunities for value-creating acquisitions to further accelerate our growth, and with the ability to generate enhanced returns given our lengthy track record of successful acquisition integration and synergy generation."

Third Quarter 2024 Segment Results

All comparisons detailed in this section refer to operating results for the third quarter 2024 versus the third quarter 2023.

Aerospace & Electronics

Sales of $239 million increased 15% compared to the prior year, driven by 10% core sales growth and a 5% benefit from the previously announced Vian acquisition. Operating profit margin of 23.0% increased 360 basis points from last year, primarily reflecting the impact of higher price net of inflation, productivity, and higher volumes partially offset by unfavorable mix. Adjusted operating profit margin of 23.5% increased 410 basis points from last year. Aerospace & Electronics' order backlog was $833 million as of September 30, 2024 compared to $701 million as of December 31, 2023, and $678 million as of September 30, 2023.

Process Flow Technologies

Sales of $309 million increased 16% compared to the prior year, driven by 7% core sales growth and a 9% benefit from the previously announced Baum and CryoWorks acquisitions. Operating profit margin expanded 200 basis points to 21.2% primarily due to favorable net price, productivity, and higher volumes, partially offset by unfavorable mix. Adjusted operating profit margin expanded 260 basis points to 21.8% from last year. Process Flow Technologies order backlog was $392 million as of September 30, 2024 compared to $379 million as of December 31, 2023, and $353 million as of September 30, 2023.

Engineered Materials

Sales of $49 million decreased 13% compared to the prior year. Operating profit margin declined 100 basis points to 12.7%, and adjusted operating profit margin declined 80 basis points to 12.9%, primarily driven by lower volumes.

Updating 2024 Guidance

We are raising and narrowing our full-year adjusted EPS outlook to a range of $5.05 to $5.20, up from our prior view of $4.95 to $5.15.

Key assumptions for our revised guidance include:

• Total sales growth of approximately 11% (unchanged), driven by core sales growth of approximately 5% to 7% (unchanged, but now expected to be at the higher end of the range) and an acquisition benefit of approximately 5% (unchanged).
• Adjusted segment operating margin of ~20.8% (up from 20.7%).
• Corporate cost of $80 million (unchanged).
• Net non-operating expense of $20 million (unchanged).
• Adjusted tax rate of 22.5% (prior 23.0%).
• Diluted shares of ~58 million (unchanged).
• Includes the negative impact from the production downtime resulting from Hurricane Helene.

Additional details of our outlook and guidance are included in the presentation that accompanies this earnings release available on our website at www.craneco.com in the "investors" section.

Declaring Fourth Quarter Dividend

Crane announced its regular quarterly dividend of $0.205 per share for the fourth quarter of 2024. The dividend is payable on December 11, 2024 to shareholders of record as of November 29, 2024.

Additional Information

References to changes in "core sales" or "core growth" in this report include the change in sales excluding the impact of foreign currency translation and acquisitions and divestitures from closing up to the first anniversary of such acquisitions or divestitures.

Crane operated as part of Crane Holdings, Co. for the entire first quarter of 2023 prior to completion of the separation transaction on April 3, 2023. First quarter 2023 results, as initially reported in May 2023, were derived from Crane Holdings, Co.'s accounting records and were presented on a carve-out basis. All of Crane's subsequent financial disclosures for pre-separation periods show the financial results of Crane Holdings, Co. (now renamed Crane NXT, Co.) with the Payment & Merchandising Technologies segment presented as discontinued operations.

As a result of the change in accounting presentation required by GAAP, first quarter 2023 GAAP EPS was reported as $1.08 when initially reported on a carve-out basis, and in subsequent reports, reported as $0.98 with the Payment & Merchandising Technologies segment presented as discontinued operations. First quarter 2023 Adjusted EPS on a carve-out basis was reported as $1.25, and $1.26 with the Payment & Merchandising Technologies segment presented as discontinued operations. Segment operating profit was the same under both accounting methodologies.

Conference Call

Crane has scheduled a conference call to discuss the third quarter financial results on Tuesday, October 29, 2024 at 10:00 A.M. (Eastern). All interested parties may listen to a live webcast of the call at www.craneco.com. An archived webcast will also be available to replay this conference call directly from the Company's website under Investors, Events & Presentations. Slides that accompany the conference call will be available on the Company's website.

About Crane Company

Crane Company has delivered innovation and technology-led solutions for customers since its founding in 1855. Today, Crane is a leading manufacturer of highly engineered components for challenging, mission-critical applications focused on the aerospace, defense, space and process industry end markets. The Company has two strategic growth platforms: Aerospace & Electronics and Process Flow Technologies. Crane has approximately 7,500 employees in the Americas, Europe, the Middle East, Asia and Australia. Crane Company is traded on the New York Stock Exchange (NYSE:CR). For more information, visit www.craneco.com.

Forward-Looking Statements Disclaimer

This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief, or expectations, including, but not limited to: benefits and synergies of the separation transaction; strategic and competitive advantages of Crane; future financing plans and opportunities; and business strategies, prospects and projected operating and financial results. We caution investors not to place undue reliance on any such forward-looking statements.

These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained.

Risks and uncertainties that could cause actual results to differ materially from our expectations include, but are not limited to: changes in global economic conditions (including inflationary pressures) and geopolitical risks, including macroeconomic fluctuations that may harm our business, results of operation and stock price; information systems and technology networks failures and breaches in data security, theft of personally identifiable and other information, non-compliance with our contractual or other legal obligations regarding such information; our ability to source components and raw materials from suppliers, including disruptions and delays in our supply chain; demand for our products, which is variable and subject to factors beyond our control; governmental regulations and failure to comply with those regulations; fluctuations in the prices of our components and raw materials; loss of personnel or being able to hire and retain additional personnel needed to sustain and grow our business as planned; risks from environmental liabilities, costs, litigation and violations that could adversely affect our financial condition, results of operations, cash flows and reputation; risks associated with conducting a substantial portion of our business outside the U.S.; being unable to identify or complete acquisitions, or to successfully integrate the businesses we acquire, or complete dispositions; adverse impacts from intangible asset impairment charges; potential product liability or warranty claims; being unable to successfully develop and introduce new products, which would limit our ability to grow and maintain our competitive position and adversely affect our financial condition, results of operations and cash flow; significant competition in our markets; additional tax expenses or exposures that could affect our financial condition, results of operations and cash flows; inadequate or ineffective internal controls; specific risks relating to our reportable segments, including Aerospace & Electronics, Process Flow Technologies and Engineered Materials; the ability and willingness of Crane Company and Crane NXT, Co. to meet and/or perform their obligations under any contractual arrangements that are entered into among the parties in connection with the separation transaction and any of their obligations to indemnify, defend and hold the other party harmless from and against various claims, litigation and liabilities; and the ability to achieve some or all the benefits that we expect to achieve from the separation transaction.

Readers should carefully review Crane's financial statements and the notes thereto, as well as the section entitled "Risk Factors" in Item 1A of Crane's Annual Report on Form 10-K for the year ended December 31, 2023 and the other documents Crane files from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to di?er materially from those contained in the forward-looking statements. Crane assumes no (and disclaims any) obligation to revise or update any forward-looking statements.

We make no representations or warranties as to the accuracy of any projections, statements or information contained in this press release. It is understood and agreed that any such projections, targets, statements and information are not to be viewed as facts and are subject to significant business, financial, economic, operating, competitive and other risks, uncertainties and contingencies many of which are beyond our control, that no assurance can be given that any particular financial projections ranges, or targets will be realized, that actual results may differ from projected results and that such differences may be material. While all financial projections, estimates and targets are necessarily speculative, we believe that the preparation of prospective financial information involves increasingly higher levels of uncertainty the further out the projection, estimate or target extends from the date of preparation. The assumptions and estimates underlying the projected, expected or target results are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to di?er materially from those contained in the financial projections, estimates and targets. The inclusion of financial projections, estimates and targets in this press release should not be regarded as an indication that we or our representatives, considered or consider the financial projections, estimates and targets to be a reliable prediction of future events.

(Financial Tables Follow)

Source: Crane Company