Crane Co. reported third quarter 2013 earnings of $0.97 per diluted share, compared to $0.99 in the third quarter of 2012. Third quarter 2013 results included transaction-related costs of $4.1 million, or $0.07 per share, related to the pending acquisition of MEI Conlux Holdings. Third quarter 2012 results included a $0.02 per share gain associated with divestitures, offset by $0.02 per share of repositioning charges. Excluding special items in both years, third quarter 2013 earnings per diluted share increased 5 percent to $1.04, compared to $0.99 in the third quarter of 2012.
Third quarter 2013 sales of $637.5 million decreased $8.5 million, or 1.3 percent, compared to $646.0 million in the third quarter of 2012, resulting from a core sales decline of $6.2 million, or 1.0 percent, and unfavorable foreign exchange of $2.3 million, or 0.3 percent.
Operating profit in the third quarter increased 2.8 percent to $89.0 million, compared to $86.6 million in the third quarter of 2012. Excluding special items, third quarter operating profit increased 4.5 percent to $91.9 million, compared to $87.9 million in the third quarter of 2012, and operating profit margin increased to 14.4 percent, compared to 13.6 percent in the third quarter of 2012.
Merchandising systems sales of $83.6 million decreased $8.9 million, or 9.6 percent, with slightly higher sales in payment solutions, more than offset by a decline in vending solutions. The decline in vending solutions sales and operating profit was the result of lower capital spending by certain bottler customers and, to a lesser extent, continued weakness in Europe. Operating profit and margins increased in payment solutions, reflecting the impact of higher sales and continued productivity gains.
"In spite of a difficult revenue growth environment, we are pleased to report third quarter EPS of $1.04 per share, excluding the MEI transaction costs," said Crane Co. Chief Executive Officer, Eric C. Fast, in a prepared statement. "On a 1 percent decline in revenues, total company operating margins grew to 14.4 percent, with solid performance in our fluid handling, payment solutions and engineered materials businesses. In connection with the pending acquisition of MEI, we are actively engaged in satisfying the remedies required by the European Commission and expect to close the acquisition late in the fourth quarter."
Updated 2013 Guidance
2013 EPS is now expected to be in a range of $4.10 to $4.20 per share, excluding special items, compared to the company's previous guidance range of $4.10 to $4.25 per share, reflecting lower than anticipated revenue growth. The 2013 guidance does not include potential impacts from the pending acquisition of MEI. Full year 2013 free cash flow is now expected to be in a range of $190 to $210 million, compared to the company's previous guidance of $190 to $220 million, reflecting the impact of the lower sales and transaction costs associated with the pending acquisition of MEI.
Cash Flow and Financial Position
Cash provided by operating activities in the third quarter of 2013 was $80.5 million, compared to $63.2 million in the third quarter of 2012. For the nine months ended Sept. 30, 2013, cash provided by operating activities was $91.0 million, compared to $79.3 million in 2012. Free cash flow (cash provided by operating activities less capital spending) for the third quarter of 2013 was $73.5 million, compared to $57.0 million in the third quarter of 2012. The company's cash position was $403.4 million at Sept. 30, 2013, compared to $423.9 million at Dec. 31, 2012, and $280.5 million at Sept. 30, 2012. During the quarter, the company repaid its $200 million 5.50 percent notes, which came due in Sept. 2013.