EX-99.2 3 exhibit992q2-2016.htm EXHIBIT 99.2 Exhibit


Exhibit 99.2
CRANE CO.
Income Statement Data
(in millions, except per share data)
 
 
 
Three Months Ended
 
 Six Months Ended
 
 
June 30,
 
June 30,
 
 
 
2016
 
 
2015
 
 
2016
 
 
2015
Net Sales:
 
 
 
 
 
 
 
 
 
 
 
 
Fluid Handling
 
$
265.9

 
$
291.8

 
$
513.9

 
$
567.3

Payment & Merchandising Technologies
 
 
192.6

 
 
186.5

 
 
364.5

 
 
358.4

Aerospace & Electronics
 
 
189.2

 
 
167.1

 
 
361

 
 
328.7

Engineered Materials
 
 
64.5

 
 
65.8

 
 
132.8

 
 
135.5

    Total Net Sales
 
$
712.2

 
$
711.2

 
$
1,372.2

 
$
1,390.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Profit (Loss):
 
 
 
 
 
 
 
 
 
 
 
 
Fluid Handling
 
$
35.4

 
$
32.5

 
$
60.8

 
$
66.8

Payment & Merchandising Technologies
 
 
34.5

 
 
26.1

 
 
62.5

 
 
47.3

Aerospace & Electronics
 
 
38.6

 
 
31.7

 
 
71.7

 
 
61.7

Engineered Materials
 
 
13.5

 
 
12.2

 
 
27.2

 
 
26.4

Corporate
 
 
(19.4
)
*
 
(12.3
)
 
 
(34.1
)
*
 
(26.1
)
    Total Operating Profit
 
 
102.6

 
 
90.2

 
 
188.1

 
 
176.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
0.5

 
 
0.5

 
 
1.0

 
 
1.0

Interest Expense
 
 
(9.2
)
 
 
(9.5
)
 
 
(18.3
)
 
 
(19.4
)
Miscellaneous- Net
 
 
(0.2
)
 
 
0.4

 
 
(0.6
)
 
 
—

Income Before Income Taxes
 
 
93.7

 
 
81.5

 
 
170.2

 
 
157.8

Provision for Income Taxes
 
 
25.2

 
 
25.7

 
 
46.6

 
 
50.6

Net income before allocation to noncontrolling interests
 
 
68.4

 
 
55.9

 
 
123.6

 
 
107.2

    Less: Noncontrolling interest in subsidiaries' earnings
 
 
0.2

 
 
0.1

 
 
0.3

 
 
0.4

Net income attributable to common shareholders
 
$
68.2

 
$
55.8

 
$
123.3

 
$
106.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Diluted Share
 
$
1.15

 
$
0.95

 
$
2.09

 
$
1.82

 
 
 
 
 
 
 
 
 
 
 
 
 
Average Diluted Shares Outstanding
 
 
59.2

 
 
58.8

 
 
59.0

 
 
58.8

Average Basic Shares Outstanding
 
 
58.3

 
 
58.0

 
 
58.3

 
 
58.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Supplemental Data:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Sales
 
$
449.1

 
$
470.8

 
$
875.2

 
$
910.8

Selling, General & Administrative
 
 
160.5

*
 
141.5

 
 
308.9

*
 
289.8

Repositioning Charges (see non-GAAP measures)
 
 
—

 
 
7.1

 
 
—

 
 
9.7

Acquisition Related Charges (see non-GAAP measures)
 
 
—

 
 
1.8

 
 
—

 
 
3.6

Depreciation and Amortization **
 
 
17.6

 
 
17.4

 
 
34.1

 
 
33.9

Stock-Based Compensation Expense **
 
 
5.3

 
 
5.0

 
 
11.4

 
 
10.8

 
 
 
 
 
 
 
 
 
 
 
 
 
* Includes a $5 million legal settlement charge.
** Amount included within cost of sales and selling, general & administrative costs.

1


CRANE CO.
Condensed Balance Sheets
(in millions)
 
 
 
June 30,
2016
 
December 31,
2015
ASSETS
 
 
 
 
Current Assets
 
 
 
 
Cash and Cash Equivalents
 
$
408.9

 
$
363.5

Accounts Receivable, net
 
435.2

 
397.6

Current Insurance Receivable - Asbestos
 
20.5

 
20.5

Inventories, net
 
389.4

 
376.9

Other Current Assets
 
54.5

 
45.0

Total Current Assets
 
1,308.5

 
1,203.5

 
 
 
 
 
Property, Plant and Equipment, net
 
281.7

 
276.0

Long-Term Insurance Receivable - Asbestos
 
100.6

 
108.7

Other Assets
 
564.7

 
580.8

Goodwill
 
1,176.9

 
1,167.9

 
 
 
 
 
Total Assets
 
$
3,432.4

 
$
3,336.9

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current Liabilities
 
 
 
 
Notes Payable and Current Maturities of Long-Term Debt
 
$
100.9

 
$
49.6

Accounts Payable
 
205.9

 
223.3

Current Asbestos Liability
 
75.0

 
75.0

Accrued Liabilities
 
215.3

 
218.6

Income Taxes
 
4.5

 
6.3

Total Current Liabilities
 
601.6

 
572.8

 
 
 
 
 
Long-Term Debt
 
745.0

 
744.6

Long-Term Deferred Tax Liability
 
52.5

 
50.0

Long-Term Asbestos Liability
 
436.7

 
470.5

Other Liabilities
 
326.8

 
348.1

 
 
 
 
 
Total Equity
 
1,269.8

 
1,150.8

 
 
 
 
 
Total Liabilities and Equity
 
$
3,432.4

 
$
3,336.9


2


CRANE CO.
Condensed Statements of Cash Flows
(in millions)
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2016
 
2015
 
2016
 
2015
Operating Activities:
 
 
 
 
 
 
 
 
Net income attributable to common shareholders
 
$
68.2

 
$
55.8

 
$
123.3

 
$
106.8

Noncontrolling interest in subsidiaries' earnings
 
0.2

 
0.1

 
0.3

 
0.4

Net income before allocations to noncontrolling interests
 
68.4

 
55.9

 
123.6

 
107.2

Restructuring - Non Cash
 
—

 
1.2

 
—

 
1.4

Depreciation and amortization
 
17.6

 
17.4

 
34.1

 
33.9

Stock-based compensation expense
 
5.3

 
5.0

 
11.4

 
10.8

Defined benefit plans and postretirement credit
 
(2.4
)
 
(2.0
)
 
(4.8
)
 
(3.6
)
Deferred income taxes
 
2.3

 
3.7

 
7.6

 
8.0

Cash provided by (used for) operating working capital
 
0.9

 
2.4

 
(81.1
)
 
(54.7
)
Defined benefit plans and postretirement contributions
 
(2.2
)
 
(5.2
)
 
(4.4
)
 
(8.2
)
Environmental payments, net of reimbursements
 
(4.6
)
 
(3.5
)
 
(6.6
)
 
(7.6
)
Other
 
(0.6
)
 
(3.0
)
 
(2.3
)
 
(16.4
)
  Subtotal
 
84.7

 
71.9

 
77.5

 
70.8

Asbestos related payments, net of insurance recoveries
 
(14.9
)
 
(14.1
)
 
(25.7
)
 
(24.8
)
  Total provided by operating activities
 
69.8

 
57.8

 
51.8

 
46.0

 
 
 
 
 
 
 
 
 
Investing Activities:
 
 
 
 
 
 
 
 
Capital expenditures
 
(15.6
)
 
(9.9
)
 
(26.6
)
 
(20.1
)
Proceeds from disposition of capital assets
 
0.2

 
0.5

 
0.7

 
1.9

 Total used for investing activities
 
(15.4
)
 
(9.4
)
 
(25.9
)
 
(18.2
)
 
 
 
 
 
 
 
 
 
Financing Activities:
 
 
 
 
 
 
 
 
Dividends paid
 
(19.3
)
 
(19.2
)
 
(38.5
)
 
(38.3
)
Reacquisition of shares on open market
 
—

 
—

 
—

 
(25.0
)
Stock options exercised - net of shares reacquired
 
3.6

 
0.3

 
2.2

 
7.0

Excess tax shortfall from stock-based compensation
 
—

 
(1.1
)
 
—

 
(0.2
)
Repayment of credit facility
 
—

 
—

 
—

 
(100.0
)
Proceeds from issuance (repayment) of commercial paper
 
22.8

 
(4.8
)
 
51.3

 
121.9

 Total provided by (used for) financing activities
 
7.1

 
(24.8
)
 
15.0

 
(34.6
)
 
 
 
 
 
 
 
 
 
Effect of exchange rate on cash and cash equivalents
 
(6.6
)
 
5.7

 
4.5

 
(13.3
)
Increase (decrease) in cash and cash equivalents
 
54.9

 
29.4

 
45.4

 
(20.0
)
Cash and cash equivalents at beginning of period
 
354.0

 
296.9

 
363.5

 
346.3

Cash and cash equivalents at end of period
 
$
408.9

 
$
326.3

 
$
408.9

 
$
326.3






3


CRANE CO.
Order Backlog
(in millions)
 
 
 
June 30, 2016
 
March 31, 2016
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
Fluid Handling
 
$
246.3

 
$
263.4

 
$
267.2

 
$
278.6

 
$
287.3

Payment & Merchandising Technologies
 
65.8

 
60.4

 
62.6

 
55.5

 
61.1

Aerospace & Electronics
 
435.9

 
418.7

 
436.4

 
459.9

 
448.1

Engineered Materials
 
15.4

 
16.0

 
15.2

 
13.7

 
15.4

    Total Backlog
 
$
763.5

 
$
758.6

 
$
781.5

 
$
807.8

 
$
811.9
















































4


CRANE CO.
Non-GAAP Financial Measures
(in millions, except per share data)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Percent Change
June 30, 2016
 
Percent Change
June 30, 2016
 
2016
 
2015
 
2016
 
2015
 
Three Months
 
Six Months
INCOME ITEMS
 
 
 
 
 
 
 
 
 
 
 
Net Sales
$
712.2

 
$
711.2

 
$
1,372.2

 
$
1,390.0

 
0.1
%
 
(1.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Profit
102.6

 
90.2

 
188.1

 
176.2

 
13.8
%
 
6.8
 %
Percentage of Sales
14.4
%
 
12.7
%
 
13.7
%
 
12.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Special Items impacting Operating Profit:
 
 
 
 
 
 
 
 
 
 
 
MEI Acquisition related integration charges
—

 
1.8

 
—

 
3.4

 
 
 
 
MEI Acquisition related restructuring charges
—

 
—

 
—

 
0.2

 
 
 
 
Repositioning charges
—

 
7.1

 
—

 
9.7

 
 
 
 
Lawsuit settlement charge
5.0

 
—

 
5.0

 
—

 
 
 
 
Operating Profit before Special Items
$
107.6


$
99.1


$
193.1


$
189.5

 
8.6
%
 
1.9
 %
 


 
 
 
 
 
 
 
 
 
 
Percentage of Sales
15.1
%
 
13.9
%
 
14.1
%
 
13.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Attributable to Common Shareholders
$
68.2

 
$
55.8

 
$
123.3

 
$
106.8

 
 
 
 
Per Share
$
1.15

 
$
0.95

 
$
2.09

 
$
1.82

 
21.6
%
 
15.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
Special Items impacting Net Income Attributable to Common Shareholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MEI Acquisition related integration charges - Net of Tax
—

 
1.2

 
—

 
2.3

 
 
 
 
Per Share
 
 
$
0.02

 
 
 
$
0.04

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MEI Acquisition related restructuring charges - Net of Tax
—

 
—

 
—

 
0.1

 
 
 
 
Per Share
 
 
 
 
 
 
$
0.00

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repositioning charges - Net of Tax
—

 
5.4

 
—

 
7.2

 
 
 
 
Per Share
 
 
$
0.09

 
 
 
$
0.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lawsuit settlement charge - Net of Tax
3.3

 
—

 
3.3

 
—

 
 
 
 
Per Share
$
0.05

 
 
 
$
0.05

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Attributable To Common Shareholders Before Special Items
$
71.5

 
$
62.3

 
$
126.5

 
$
116.4

 
14.8
%
 
8.7
 %
Per Share
$
1.21

 
$
1.06

 
$
2.14

 
$
1.98

 
14.1
%
 
8.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
Special Items Impacting Provision for Income Taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for Income Taxes - GAAP Basis
$
25.2

 
$
25.7

 
$
46.6

 
$
50.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax effect of MEI acquisition related integration charges
—

 
0.6

 
—

 
1.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax effect of MEI acquisition related restructuring charges
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax effect of repositioning charges
—

 
1.7

 
—

 
2.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax effect of legal settlement charge
1.8

 
—

 
1.8

 
—

 
 
 
 
Provision for Income Taxes - non-GAAP Basis
27.0

 
28.0

 
48.4

 
54.2

 
 
 
 
 

5



Segment Information:
For the three months ended June 30, 2016
 
Fluid Handling
 
Payment & Merchandising Technologies
 
Aerospace & Electronics
 
Engineered Materials
 
Corporate
 
Total Company
Net Sales
$
265.9

 
$
192.6

 
$
189.2

 
$
64.5

 
$
—

 
$
712.2

 
 
 
 
 
 
 
 
 
 
 
 
Operating Profit - GAAP
35.4

 
34.5

 
38.6

 
13.5

 
(19.4
)
 
102.6

Legal settlement charge
—

 
—

 
—

 
—

 
5.0

 
5.0

Operating Profit before Special Items
35.4

 
34.5

 
38.6

 
13.5

 
(14.4
)
 
107.6

Percentage of Sales
13.3
%
 
17.9
%
 
20.4
%
 
21.0
%
 
 
 
15.1
%
 
 
 
 
 
 
 
 
 
 
 
 


Segment Information:
For the three months ended June 30, 2015
 
Fluid Handling
 
Payment & Merchandising Technologies
 
Aerospace & Electronics
 
Engineered Materials
 
Corporate
 
Total Company
Net Sales
$
291.8

 
$
186.5

 
$
167.1

 
$
65.8

 
$
—

 
$
711.2

 
 
 
 
 
 
 
 
 
 
 
 
Operating Profit - GAAP
32.5

 
26.1

 
31.7

 
12.2

 
(12.3
)
 
90.2

Acquisition related integration charges
—

 
1.8

 
—

 
—

 
—

 
1.8

Repositioning Charges
5.1

 
—

 
0.8

 
—

 
1.1

 
7.1

Operating Profit before Special Items
37.7

 
28.0

 
32.5

 
12.2

 
(11.2
)
 
99.1

Percentage of Sales
12.9
%
 
15.0
%
 
19.4
%
 
18.5
%
 
 
 
13.9
%
 
 
 
 
 
 
 
 
 
 
 
 































6


CRANE CO.
Guidance
(in millions, except per share data)

 
 
2016 Full Year Guidance
2016 Earnings Per Share Guidance
 
Low
 
High
Earnings Per Share - GAAP basis
 
$
3.95

 
$
4.15

Legal settlement charge - Net of Tax
 
0.05

 
0.05

Earnings Per Share - Non-GAAP basis
 
$
4.00

 
$
4.20



 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016 Full Year Guidance
 
 
2016
 
2015
 
2016
 
2015
 
Low
 
High
CASH FLOW ITEMS
 
 
 
 
 
 
 
 
 
 
 
 
Cash Provided by Operating Activities
 
 
 
 
 
 
 
 
 
 
 
 
  before Asbestos - Related Payments
 
$
84.7

 
$
71.9

 
$
77.5

 
$
70.8

 
$
300.0

 
$
325.0

Asbestos Related Payments, Net of Insurance Recoveries
 
(14.9
)
 
(14.1
)
 
(25.7
)
 
(24.8
)
 
(55.0
)
 
(55.0
)
Cash Provided by Operating Activities
 
69.8

 
57.8

 
51.8

 
46.0

 
245.0

 
270.0

Less: Capital Expenditures
 
(15.6
)
 
(9.9
)
 
(26.6
)
 
(20.1
)
 
(50.0
)
 
(50.0
)
Free Cash Flow
 
$
54.2

 
$
47.9

 
$
25.2

 
$
26.0

 
$
195.0

 
$
220.0

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