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Crane's (CR) Q4 Earnings Surpass Estimates, Revenues Miss

Crane Co. CR reported mixed results for fourth-quarter 2022. CR’s earnings beat the Zacks Consensus Estimate by 12.7%, whereas sales missed the same by 0.2%.

Adjusted earnings came in at $2.13 per share, surpassing the Zacks Consensus Estimate of $1.89. The bottom line increased 70.4% from the year-ago quarter’s figure of $1.25.

Revenue Details

Crane’s net sales were $824 million in the quarter, a slight decline compared to the $825 million reported in the year-ago quarter.

The quarterly net sales missed the Zacks Consensus Estimate of $826 million.

Crane reports net sales under four segments: Process Flow Technologies, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials (presented as continuing operations as of Jun 30, 2022).

The segmental information is briefly discussed below:

Revenues from Process Flow Technologies (representing 30.6% of the quarter’s total revenues) were $252 million, declining 16% from the year-ago quarter. Movement in foreign currencies had an adverse impact of 5% on sales. The divestiture of Crane Supply impacted segmental revenues by 19%. The segment’s order backlog was $369 million in the reported quarter, reflecting sequential growth of 4.2%.

Revenues from Payment & Merchandising Technologies (representing 41% of the quarter’s total revenues) totaled $338 million, increasing 8% year over year on a 14% increase in core sales. Foreign currency movement had an adverse impact of 6% on segmental revenues. The order backlog at the end of the reported quarter was $566 million, up 13.2% sequentially.

Revenues from the Aerospace & Electronics segment (representing 22% of the quarter’s total revenues) were $181 million, up 15% year over year. The order backlog at the end of the quarter was $613 million, up 3.5% sequentially.

Revenues from the Engineered Materials segment (representing 6.4% of the quarter’s total revenues) were $52 million, decreasing 4% year over year.

Crane Holdings, Co. Price, Consensus and EPS Surprise

 

 

Crane Holdings, Co. Price, Consensus and EPS Surprise
Crane Holdings, Co. Price, Consensus and EPS Surprise

Crane Holdings, Co. price-consensus-eps-surprise-chart | Crane Holdings, Co. Quote

Margin Profile

In the fourth quarter, Crane’s sales cost of $487.7 million reflected a 7.4% decline from the year-ago quarter. The metric represented 59.2% of net sales compared with 63.9% a year ago. Selling, general and administrative expenses increased 1% to $207.1 million. The same represented 25.1% of net sales compared with 24.8% in the year-ago quarter.

Adjusted operating profit in the fourth quarter increased 54.1% year over year to $153 million, while the margin increased 660 basis points to 18.6%. Interest expenses in the reported quarter were $16.2 million, increasing 48.6% from the year-ago figure.

Balance Sheet and Cash Flow

While exiting 2022, Crane had cash and cash equivalents of $657.6 million, up 37.4% from $478.6 million at the end of 2021. The long-term debt balance was $543.7 million compared with $842.7 million at the end of 2021.

In 2022, Crane made no repayment of commercial paper (maturity >90 days).

In the same period, CR used net cash of $151.6 million for operating activities against $498.5 million generated in the year-ago period. Capital expenditure was $58.4 million in the period, higher than the $53.9 million spent in the previous year. Free cash flow was $210 million in 2022 against the $444.6 million free cash flow generated in the year-ago period.

Shareholder-Friendly Policy

In fourth-quarter 2022, Crane used $26.4 million for paying out dividends, up 5.2% from the year-ago quarter’s level. The company did not make any share reacquisition in the quarter.

2023 Outlook

The separation of Crane Company and Crane NXT is expected to be completed in April 2023. So, the first quarter will be reported on a Crane Holdings, Co. consolidated basis. Guidance items for 2023 are provided on post-separation basis.

The company expects pro-forma Crane Company EPS in the range of $3.40-$3.70. It anticipates annualized post-separation corporate costs of $65 million in 2023. Non operating expense is expected to be $16 million for the year.

The post-separation adjusted tax rate is anticipated to be 23% in 2023. The company anticipates diluted shares of 57.3 million for 2023. Average free cash flow conversion is expected to be 90%-100% after adjusting for separation-related cash items.

Zacks Rank & Other Stocks to Consider

CR currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:

Allegion plc ALLE presently carries a Zacks Rank of 2. ALLE’s earnings surprise in the last four quarters was 8.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.

In the past 60 days, Allegion’s earnings estimates have remained steady for 2022. The stock has gained 8.8% in the past six months.

Valmont Industries, Inc. VMI presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 12.5%, on average.

In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 27.8% in the past six months.

IDEX Corporation IEX presently has a Zacks Rank of 2. IEX’s earnings surprise in the last four quarters was 5.7%, on average.

In the past 60 days, IDEX’s earnings estimates have increased 0.1% for 2022. The stock has rallied 19.7% in the past six months.

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