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Crane Tops Expectations
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ShareCrane Co. (CR - Snapshot Report) posted first-quarter 2010 results after the closing bell on Monday. The company recorded a 43% growth in net income to $33.2 million from $23.3 million in the year-ago period. Earnings per share came in at 56 cents, which surpassed the Zacks Consensus Estimate by 6 cents and was primarily driven by management initiatives to control costs.
During the quarter, Crane recorded a 4.5% decline in sales to $530.3 million, compared with $555.1 million in the year-ago quarter. The decrease was primarily attributable to an 8% decline in core sales (excluding the impact of currency, acquisitions and divestitures) partially offset by favorable currency translations.
Segment Details
Fluid Handling: Sales decreased 7% year-over-year to $247.8 million due to sluggish performance in later-cycle energy, chemical and pharmaceutical businesses reflecting continued weakness in project activity levels. Crane also recorded a 24% decrease in segmental operating profit to $28.0 million from $36.8 million in the year-ago period.
Aerospace & Electronics: Sales from this segment dipped 12% to $133.6 million from $151.9 million in the year-ago period mainly due to lower commercial OEM demand and sluggish aftermarket activity. However, operating profit surged 42% to $24.5 million primarily due to several development programs moving into final stage, lower engineering spending in Aerospace and improved operating performance in Electronics.
Merchandising Systems: The segment reported a 2% decline in sales to $70.2 million from $71.7 million in the year-ago period primarily due to flat sales in vending solutions and a modest decrease in payment solutions. However, operating profit grew 67% to $5.0 million from $3.0 million in the year-ago quarter, mainly due to reduced cost structure stemming from a consolidation in vending machine production.
Engineered Materials: During the quarter, sales recorded a growth of 41% to $53.8 million from $38.5 million in the prior year quarter. The growth was mainly the result of a robust recreational vehicle market coupled with a slight growth in transportation. Operating profit soared to $8.5 million from $1.5 million in the year-ago period due to increased sales volume and efforts to reduce costs.
Controls: Crane posted a 7% decline in sales in this segment to $24.9 million from $26.8 million in the prior year quarter, while operating profit slumped 70% to $0.1 million mainly due to weak end markets.
Balance Sheet and Cash Flow
At the end of the quarter, Crane had cash and cash equivalents of $319.6 million, compared with $210.3 million of cash in the prior year quarter. During the quarter, the company generated $16.8 million of cash from operations and deployed $51.2 million towards the acquisition of Merrimac Industries Inc., a maker of RF Microwave components, assemblies and micro-multifunction modules; $11.7 million towards dividend payments; and $4.1 million towards capital expenditure.
Guidance & Zacks Consensus
Buoyed by the better-than-expected quarterly results, Crane has predicted earnings in 2010 to reach the higher end of its previously announced guidance of $2.15 to $2.35 per share. The Zacks Consensus Estimate is currently pegged at $2.33 per share, which moved up 2 cents in the past week as 1 of the 4 covering analysts raised expectation.
Crane is a diversified manufacturer of engineered industrial products. The company offers products and solutions to customers in the aerospace, electronics, hydrocarbon processing, petrochemical, chemical, power generation, automated merchandising, transportation and other markets.
Read the full analyst report on CR
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