Attached files
| file | filename |
|---|---|
| 8-K - 8-K - CRANE CO /DE/ | a8-kxq42014asbestosander.htm |
| EX-99.1 - EXHIBIT 99.1 - CRANE CO /DE/ | ex991-pressreleasexq42014.htm |
CRANE CO.
Income Statement Data
(in thousands, except per share data)
Three Months Ended December 31, | Twelve Months Ended 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. | ||||||||||||||||
1
CRANE CO.
Condensed Balance Sheets
(in thousands)
December 31, 2014 | December 31, 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 | ||||
2
CRANE CO.
Condensed Statements of Cash Flows
(in thousands)
Three Months Ended December 31, | Twelve Months Ended 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 | ||||||||
3
CRANE CO.
Order Backlog
(in thousands)
December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 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. | ||||||||||
4
CRANE CO.
Non-GAAP Financial Measures
(in thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | Percent Change December 31, 2014 | Percent Change December 31, 2014 | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | Three Months | Twelve Months | |||||||||||||||||
INCOME ITEMS | ||||||||||||||||||||||
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 | ||||||||||||||||||||
5
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. | |||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
December 31, | December 31, | 2015 Full Year Guidance | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | Low | High | |||||||||||||||||||
CASH FLOW ITEMS | ||||||||||||||||||||||||
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 | ||||||||||||
6
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. |
7