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Crane's (CR) Earnings Beat Estimates in Q2, Sales Rise Y/Y

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Crane Co. (CR - Free Report) kept its earnings beat streak alive in the second quarter of 2022, delivering better-than-expected results for the sixth consecutive quarter. The quarterly earnings surpassed the Zacks Consensus Estimate by 5%. Sales surprise is 8%.

Adjusted earnings were $1.90 per share, surpassing the Zacks Consensus Estimate of $1.81. The bottom line increased 3.8% from the year-ago quarter’s figure of $1.83.

Revenue Details

In the quarter, Crane’s net sales were $864 million, up year over year owing to strength across its end-markets.

The quarterly net sales surpassed the Zacks Consensus Estimate of $795 million.

Crane reports net sales under four segments, namely 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 34.3% of the quarter’s total revenues) were $296 million, declining 5% from the year-ago quarter’s tally. Movements in foreign currencies had an adverse impact of 4% on sales. The divestiture of Crane Supply impacted segmental revenues by 7%. The segment’s order backlog was $348.6 million in the reported quarter, reflecting a sequential decline of 6.4%.

Revenues from Payment & Merchandising Technologies (representing 38.6% of the quarter’s total revenues) totaled $334 million, increasing 2% year over year on a 7% increase in core sales. Foreign currency movements had an adverse impact of 5% on segmental revenues. The order backlog at the end of the reported quarter was $482 million, up 12.4%, sequentially.

Revenues from the Aerospace & Electronics segment (representing 18.7% of the quarter’s total revenues) were $161.5 million, increasing 3% year over year. The order backlog at the end of the quarter was $534.4 million, up 5.1%, sequentially.

Revenues from the Engineered Materials segment (representing 8.4% of the quarter’s total revenues) were $72.8 million, increasing 23% year over year. The order backlog at the end of the quarter was $22 million, down 27.6%, sequentially.

Margin Profile

In the second quarter, Crane’s cost of sales of $535.7 million reflected a 2.3% increase from the year-ago quarter’s number. The metric represented 62% of net sales compared with 61.2% in the year-ago quarter. Selling, general and administrative expenses increased 9% to $204.2 million. The same represented 23.6% of net sales compared with 21.9% in the year-ago quarter.

Adjusted operating profit in the second quarter decreased 2% year over year to $145 million, while margin declined 50 basis points to 16.8%. Interest expenses, net, in the reported quarter were $11.4 million, in line with the year-ago figure.

Balance Sheet and Cash Flow

Exiting the second quarter, Crane had cash and cash equivalents of $650.6 million, up 35.9% from $478.6 million at the end of the fourth quarter of 2021. The long-term debt balance was $842.9 million compared with the previous quarter’s $842.7 million.

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

In the first six months of 2022, CR generated a net cash of $49 million from operating activities compared with $206.7 million generated in the year-ago-period. Capital expenditure was $25.2 million in the same period, higher than $14.6 million spent in the previous year. Free cash flow was $23.8 million in the first half of 2022 compared with $192.1 million free cash flow generated in the year-ago period.

Shareholder-Friendly Policy

In second-quarter 2022, Crane used $26.4 million for paying out dividends, up 4.8% from the year-ago quarter’s level. Share reacquisition in the quarter amounted to $27.9 million.

Concurrent with the earnings release, Crane announced a dividend of 47 cents per share for the third quarter of 2022. CR will pay out the dividend on Sep 14, 2022, to its shareholders of record as of Aug 31, 2022.

2022 Outlook

Crane adjusted its full-year GAAP earnings from continued operations to $9.80-$10.20 from the earlier issued projection of $6.80-$7.20. Management anticipates adjusted earnings per share of $7.45-$7.85 (excluding special items) for the year.

CR expects to generate $385-$425 million of cash from operating activities in the current year. Capital expenditures are estimated to be $60 million for the current year.  Adjusted free cash flow is projected to be $350-$390 million for the current year.

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:

Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

GEF’s earnings estimates have increased 17.8% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 18.6% in the past six months.

Titan International, Inc. (TWI - Free Report) presently flaunts a Zacks Rank of 1. Its earnings surprise in the last four quarters was 56.4%, on average.

In the past 60 days, TWI’s earnings estimates have increased 43.3% for 2022. The stock has surged 64.9% in the past six months.

RBC Bearings Incorporated presently has a Zacks Rank of 2. ROLL’s earnings surprise in the last four quarters was 3.4%, on average.

In the past 60 days, the stock’s earnings estimates have increased 5.9% for fiscal 2023 (ending March 2023). The stock has risen 20.4% in the past six months.


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