Crane Co. Reports 27 Percent Third Quarter Earnings Gain

Crane Co., a diversified manufacturer of highly engineered industrial products, reported that third quarter 2011 earnings per diluted share increased 27 percent to $0.89 compared to $0.70 in the third quarter of 2010.

Third quarter 2011 sales of $659 million increased $99 million, or 17.6 percent, compared to the third quarter of 2010, resulting from a core sales increase of $63 million (11.2 percent), favorable foreign currency translation of $19 million (3.3 percent) and an increase in sales from acquisitions, net of divestitures, of $17 million (3.1 percent).

Operating profit in the third quarter of 2011 increased 31 percent to $82.1 million, compared to $62.9 million in the third quarter of 2010, and operating profit margin increased to 12.5 percent, compared to 11.2 percent in the third quarter of 2010.

"I am pleased with our results as we continue to have a successful year. We have registered double-digit core growth in each quarter thus far in 2011, driven by recovering end markets and solid execution," said Crane Co. President and Chief Executive Officer Eric C. Fast in a prepared statement. "Although there are indications of a slowing global economy, our strengthened portfolio of businesses and broad geographic exposure position us well for profitable growth."

Full year 2011 earnings per share (EPS) is expected to be in a range of $3.35 to $3.45 per diluted share, reflecting an increase of $.05 to the lower end of the company's prior guidance range. This guidance includes a $.05 per share gain recorded in miscellaneous income in the first quarter primarily related to the sale of real estate. Sales in 2011 are expected to increase in a range of 15 percent to 16 percent, the higher end of prior guidance, reflecting 9 to 10 percent core growth, 3 percent from favorable foreign exchange translation, and 3 percent from acquisitions. Free cash flow (cash provided by operating activities less capital spending) is expected to be in a range of $140 to $160 million, unchanged from prior guidance.

Cash provided by operating activities in the third quarter of 2011 was $49.8 million, compared to cash used by operating activities of $4.6 million in the third quarter of 2010 (which included a $25 million discretionary pension contribution). The company's cash position at Sept. 30, 2011 was $211 million, as compared to $231 million at June 30, 2011, reflecting the acquisition of W. T. Armatur in July for approximately $38 million.

Third quarter 2011 sales increased $29.1 million, or 20 percent, reflecting a $21.0 million (25 percent) improvement in aerospace group sales and an increase of $8.1 million (14 percent) in electronics group revenue. The aerospace group sales increase reflected higher commercial OEM shipments and continued strength in both commercial and military aftermarket sales. Electronics group sales growth was driven by power solutions and microelectronics. Segment operating profit of $35.6 million increased by $10.3 million, or 40 percent, reflecting effective leverage of the strong sales growth in both groups.

Aerospace and electronics order backlog was $409 million at Sept. 30, 2011, compared to $431 million at Dec. 31, 2010, and $402 million at Sept. 30, 2010.

Sales of merchandising systems, which includes vending and payment solutions, was $98.8 million, having increased $21.6 million, or 28 percent, including $14.4 million (19 percent) of sales associated with the December 2010 acquisition of Money Controls. Excluding the acquisition, both payment solutions and vending sales increased in the quarter. Operating profit of $10.8 million increased from the prior year driven primarily by higher sales and continued improvements in operating efficiency.

For engineered materials, segment sales of $53.1 million decreased 3 percent compared to the third quarter of 2010, as a result of a decline in sales to recreational vehicle manufacturers, partially offset by higher revenues from transportation and building products customers. Although pricing was improved from prior year levels, operating margin declined to 11.1 percent, reflecting higher raw material costs and the lower sales volume.

For fluid handling, third quarter 2011 sales increased $47.7 million, or 19 percent, which included a core sales increase of $28.2 million (11 percent), favorable foreign currency translation of $14.4 million (6 percent), and sales of $5.1 million (2 percent) from the W. T. Armatur acquisition. Sales increased and order activity remained strong, particularly in the late, long cycle energy and ChemPharma businesses. Operating margins improved 50 basis points to 13.5 percent. Backlog was $329 million at Sept. 30, 2011, compared to $272 million at Dec. 31, 2010 and $267 million at Sept. 30, 2010.

As previously announced, 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.

For controls, third quarter 2011 sales of $31.8 million increased 7 percent, primarily reflecting continuing strength in industrial, transportation, and upstream oil and gas related demand. Operating profit of $4.6 million increased significantly over 2010, reflecting strong sales leverage and the absence of operating losses associated with divested businesses.

 

 

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