Second Quarter 2021 Highlights

• GAAP earnings from continuing operations per diluted share (EPS) of $1.87 compared to $0.23 in the second quarter of 2020.
• Excluding Special Items, record EPS from continuing operations of $1.83 increased 205% compared to $0.60 in the second quarter of 2020.
• Core year-over-year sales growth of 19% and core year-over-year order growth of 45%.
• Raising GAAP EPS from continuing operations guidance to $6.05-$6.25, from $5.75-$5.95.
• Raising EPS from continuing operations guidance, excluding Special Items, to $5.95-$6.15, from $5.65-$5.85.

STAMFORD, Conn.--(BUSINESS WIRE)--Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reported second quarter 2021 financial results and updated its full-year 2021 outlook.

Max Mitchell, Crane Co. President and Chief Executive Officer stated: “We delivered another quarter of exceptionally strong results with record adjusted operating margins of 17.6% and record adjusted EPS. All three of our strategic growth platforms continue to perform extremely well, and we continue to see strengthening underlying trends in our primary end markets as reflected in our core year-over-year order growth of 45% and core year-over-year backlog growth of 7%.”

"Considering our strong performance in the second quarter and our outlook for the balance of the year, we are raising our adjusted EPS from continuing operations guidance by $0.30 to a range of $5.95-$6.15 reflecting an approximate 70% year-over-year increase. The midpoint of our guidance range is also above our prior-peak 2019 total adjusted EPS of $6.02 despite Engineered Materials' current classification as discontinued operations, and with the majority of our end markets in the very early stages of recovery and still well below pre-COVID levels. We are also continuing our substantial investments in technology and strategic growth initiatives positioning us for continued outgrowth through the post-COVID recovery, and we expect strong operating leverage given our consistently solid execution. I am confident that we remain on a path to generate substantial and sustainable value for all of our stakeholders by continuing to drive above-market growth, paired with ongoing active portfolio management.”

Second Quarter 2021 Results from Continuing Operations

Second quarter 2021 GAAP earnings from continuing operations per diluted share (EPS) of $1.87, compared to $0.23 in the second quarter of 2020. Excluding Special Items, second quarter 2021 EPS from continuing operations was $1.83, compared to $0.60 in the second quarter of 2020. Both GAAP and Adjusted EPS from continuing operations in the second quarter of 2021 included an excess tax benefit of approximately $4 million, or $0.07 per share, related to stock options exercised during the quarter. (Please see the attached Non-GAAP Financial Measures tables for a detailed reconciliation of reported results to adjusted measures.)

Second quarter 2021 sales were $796 million, an increase of 24% compared to the second quarter of 2020. The sales increase was comprised of a $120 million, or 19%, increase in core sales, and a $32 million, or 5%, benefit from favorable foreign exchange.

Second quarter 2021 operating profit was $137 million, compared to $29 million in the second quarter of 2020. Operating profit margin was 17.2%, compared to 4.5% last year, with the improvement driven primarily by higher volumes as well as benefits from 2020 cost actions and the non-recurrence of repositioning charges. Excluding Special Items, second quarter 2021 operating profit was $140 million, compared to $58 million last year. Excluding Special Items, operating profit margin was a record 17.6%, compared to 9.0% last year. (Please see the attached Non-GAAP Financial Measures tables for a detailed reconciliation of reported results to adjusted measures.)

Summary of Second Quarter 2021 Results from Continuing Operations

Cash Flow and Other Financial Metrics

Cash provided by operating activities from continuing operations in the first half of 2021 was $198 million, compared to $76 million in the first half of 2020. Capital expenditures in the first half of 2021 were $14 million, compared to $13 million last year. First half 2021 free cash flow (cash provided by operating activities less capital spending) was $184 million, compared to $62 million last year.

During the second quarter, we received cash proceeds of approximately $9 million from the sale of real estate in Phoenix, Arizona. This follows the first quarter receipt of approximately $15 million from the sale of real estate in Long Beach, California. Both of these sales were recorded as cash from investing activities, and consequently, excluded from free cash flow. Since 2017, we have received proceeds from the sale of real estate and other assets facilitated by repositioning activities and active management of excess assets of approximately $56 million.

The Company held cash and short-term investments of $387 million at June 30, 2021, compared to $581 million at December 31, 2020. Total debt was $858 million at June 30, 2021, compared to $1,219 million at December 31, 2020.

Rich Maue, Crane Co. Senior Vice President and Chief Financial Officer, added: “Crane Co’s free cash generation continues to be robust and our balance sheet is extremely strong, with our credit metrics and financial capacity already back above pre-COVID levels. We will continue to drive shareholder return through capital deployment with strict financial discipline and a focus on long-term sustainable value creation.”

Second Quarter 2021 Segment Results

All comparisons detailed in this section refer to operating results for the second quarter 2021 versus the second quarter 2020.

Aerospace & Electronics

Sales of $158 million were approximately flat compared to the prior year. Operating profit margin improved to 19.6%, from 12.4% last year, primarily reflecting benefits from 2020 cost actions and the non-recurrence of repositioning charges. Excluding Special Items, operating profit margin improved to 19.6%, from 15.4% last year. Aerospace & Electronics' order backlog was $473 million at June 30, 2021, compared to $491 million at December 31, 2020, and compared to $506 million at June 30, 2020.

Process Flow Technologies

Sales of $311 million increased $71 million, or 30%, driven by a $53 million, or 22%, increase in core sales, and a $19 million, or 8%, benefit from favorable foreign exchange. Operating profit margin increased to 15.0%, compared to 8.4% last year, primarily reflecting higher volumes and productivity benefits. Excluding Special Items, operating margin increased to 15.7%, compared to 11.2% last year. Process Flow Technologies order backlog was $344 million at June 30, 2021, compared to $313 million at December 31, 2020, and compared to $299 million at June 30, 2020.

Payment & Merchandising Technologies

Sales of $328 million increased $81 million, or 33%, driven by a $68 million, or 27%, increase in core sales, and a $13 million, or 5%, benefit from favorable foreign exchange. Operating profit margin increased to 23.7%, from 0.8% last year, primarily reflecting higher volumes, favorable mix, the non-recurrence of repositioning charges, and benefits from 2020 cost actions. Excluding Special Items, operating profit margin increased to 23.7%, from 8.1% last year.

Updating Full Year Outlook

On May 24, 2021, Crane Co. announced that it had signed an agreement to sell its Engineered Materials segment and that Engineered Materials would be presented as discontinued operations beginning with the second quarter of 2021. Consequently, all components of guidance, both GAAP and adjusted, are provided on a continuing operations basis and exclude all contribution from Engineered Materials, consistent with our most recent prior guidance which was issued on May 24, 2021.

We are raising our 2021 full year GAAP EPS from continuing operations guidance to a range of $6.05-$6.25, compared to the prior range of $5.75-$5.95.

We are raising our 2021 full year EPS from continuing operations guidance excluding Special Items (adjusted) to a range of $5.95-$6.15, compared to the prior range of $5.65-$5.85. Revised guidance now assumes core sales growth of +7% to +9% and an adjusted tax rate of approximately 20.5%. Additional details of our revised guidance are shown in the following table (Please see the attached non-GAAP Financial Measures tables.)

Additional Information

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 second quarter financial results on Tuesday, July 27, 2021 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 under Investors, Events & Presentations. 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 Co. provides products and solutions to customers in the chemicals, oil & gas, power, automated payment solutions, banknote design and production and aerospace & defense markets, along with a wide range of general industrial and consumer related end markets. The Company has four business segments: Aerospace & Electronics, Process Flow Technologies, Payment & Merchandising Technologies, and Engineered Materials. On May 24, 2021, Crane announced that it had signed an agreement to divest its Engineered Materials segment; that sale is pending, subject to customary closing conditions and regulatory approval. Crane Co. has approximately 11,000 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 are based on the management’s current beliefs, expectations, plans, assumptions and objectives regarding Crane Co.’s future financial performance and are subject to significant risks and uncertainties. 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, including risks and uncertainties related to the ongoing COVID-19 pandemic, that could cause actual results or outcomes to differ materially from those expressed or implied in these forward-looking statements. Such factors also include, among others: uncertainties regarding the extent and duration of the impact of the COVID-19 pandemic on many aspects of our business, operations and financial performance; changes in economic, financial and end-market conditions in the markets in which we operate; fluctuations in raw material prices; the financial condition of our customers and suppliers; economic, social and political instability, currency fluctuation and other risks of doing business outside of the United States; competitive pressures, including the need for technology improvement, successful new product development and introduction and any inability to pass increased costs of raw materials to customers; our ability to value and successfully integrate acquisitions, to realize synergies and opportunities for growth and innovation, and to attract and retain highly qualified personnel and key management; the risks that any regulatory approval that may be required for the Engineered Materials divestiture is delayed or is not obtained, that the Engineered Materials divestiture does not close or that the related transaction agreement is terminated, or that the benefits expected from the Engineered Materials divestiture will not be realized or will not be realized within the expected time period; a reduction in congressional appropriations that affect defense spending and our ability to predict the timing and award of substantial contracts in our banknote business; adverse effects on our business and results of operations, as a whole, as a result of increases in asbestos claims or the cost of defending and settling such claims; adverse effects as a result of environmental remediation activities, costs, liabilities and related claims; investment performance of our pension plan assets and fluctuations in interest rates, which may affect the amount and timing of future pension plan contributions; and other risks noted in reports that we file with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and subsequent reports filed with the Securities and Exchange Commission. Crane Co. does not undertake any obligation to update or revise any forward-looking statements.

(Financial Tables Follow)

Jason D. Feldman
Vice President, Investor Relations
203-363-7329
www.craneco.com