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Crane Co. (CR - Free Report) reported better-than-expected results for fourth-quarter 2016. The company’s earnings, before special items, came in at $1.02 per share, above the Zacks Consensus Estimate of 98 cents. However, the bottom-line was below the year-ago tally of $1.12.
In the fourth quarter, the company’s asbestos provision (after-tax) amounted to $125 million or $2.13 per share. The company has extended its asbestos liability estimates through 2059.
For 2016, Crane’s earnings before special items was $4.23, above the Zacks Consensus Estimate of $4.18 and the year-ago tally of $4.13.
In the fourth quarter, Crane’s net sales totaled $681.4 million, surpassing the Zacks Consensus Estimate of $659.7 million and increasing 0.1% year over year. The company’s core sales grew 2.5%, offset by 2.4% adverse impact from unfavorable foreign currency movements.
At the quarter end, total order backlog was $691.4 million, down 11.5% year over year.
Crane generates revenues under four heads, results of which are briefly discussed below.
Revenues from Aerospace & Electronics totaled $186.5 million, down 2% year over year. Order backlog was $353.4 million, down 19% year over year.
Payment & Merchandising Technologies generated revenues of $194.6 million, up 12% year over year. Order backlog was $94 million, up 50.2% year over year.
Engineered Materials’ revenues were $59.9 million, up 6% year over year. Order backlog for the segment increased 3.3% year over year to $15.7 million.
Revenues from Fluid Handling decreased 7% year over year to $240.4 million. Order backlog was $228.3 million, down 14.6% year over year.
In 2016, Crane generated revenues of $2,748 million, slightly above the Zacks Consensus Estimate of $2.73 billion and up 0.3% year over year.
Margins
In the quarter, Crane’s cost of goods sold decreased 1.7% year over year, and as a percentage of revenues came in at 63.6%, below 64.9% in the prior-year quarter. Gross margin grew 130 basis points (bps) to 36.4%. Selling, general and administrative expenses, as a percentage of revenues were 21.6% compared with 19.8% in the year-ago quarter.
Operating margin, before special items, decreased 50 bps year over year to 14.8%.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Crane had cash and cash equivalents of $509.7 million, above $436.3 million at previous-quarter end. Long-term debt was roughly flat sequentially at $745.3 million.
In the quarter, Crane generated cash of $149.7 million from its operating activities, above $113.6 million generated in the year-ago quarter. Capital expenditure increased 14% year over year to $13 million. Dividend paid in the quarter was approximately $19.4 million.
Concurrent with the earnings release, Crane announced that its board of directors has approved the payment of a quarterly dividend of 33 cents per share for first-quarter 2017. The dividend will be paid on Mar 9, to shareholders on record as of Feb 28.
Outlook
For 2017, Crane anticipates earnings to be within $4.30−$4.55 per share range. Sales are expected to be $2.7 billion, with core sales to be flat to up 2%. Unfavorable foreign currency movements will adversely impact sales by 3% while divestitures will reduce sales growth by 0.5%.
Free cash flow is anticipated within $220−$250 million.
Also, in the years ahead, Crane anticipates benefiting from increasing demand for productivity solutions in Payment & Merchandising Technologies segment, high growth aerospace programs in Aerospace & Electronics, recovering orders in Fluid Handling and strengthening end-markets in Engineered Materials.
With a market capitalization of $4.3 billion, Crane currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the diversified operations industry include Leucadia National Corporation , Barloworld Limited (BRRAY - Free Report) and Swire Pacific Limited (SWRAY - Free Report) . While Leucadia National sports a Zacks Rank #1 (Strong Buy), both Barloworld Limited and Swire Pacific Limited carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Leucadia National Corporation and Swire Pacific Limited’s earnings estimates for 2017 have been revised upward over the last 60 days. Similarly, Barloworld Limited’s earnings estimates for fiscal 2017 have increased over the last 60 days.
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Crane (CR) Beats Q4 Earnings & Revenues; Provides '17 View
Crane Co. (CR - Free Report) reported better-than-expected results for fourth-quarter 2016. The company’s earnings, before special items, came in at $1.02 per share, above the Zacks Consensus Estimate of 98 cents. However, the bottom-line was below the year-ago tally of $1.12.
In the fourth quarter, the company’s asbestos provision (after-tax) amounted to $125 million or $2.13 per share. The company has extended its asbestos liability estimates through 2059.
For 2016, Crane’s earnings before special items was $4.23, above the Zacks Consensus Estimate of $4.18 and the year-ago tally of $4.13.
Revenues
In the fourth quarter, Crane’s net sales totaled $681.4 million, surpassing the Zacks Consensus Estimate of $659.7 million and increasing 0.1% year over year. The company’s core sales grew 2.5%, offset by 2.4% adverse impact from unfavorable foreign currency movements.
At the quarter end, total order backlog was $691.4 million, down 11.5% year over year.
Crane generates revenues under four heads, results of which are briefly discussed below.
Revenues from Aerospace & Electronics totaled $186.5 million, down 2% year over year. Order backlog was $353.4 million, down 19% year over year.
Payment & Merchandising Technologies generated revenues of $194.6 million, up 12% year over year. Order backlog was $94 million, up 50.2% year over year.
Engineered Materials’ revenues were $59.9 million, up 6% year over year. Order backlog for the segment increased 3.3% year over year to $15.7 million.
Revenues from Fluid Handling decreased 7% year over year to $240.4 million. Order backlog was $228.3 million, down 14.6% year over year.
In 2016, Crane generated revenues of $2,748 million, slightly above the Zacks Consensus Estimate of $2.73 billion and up 0.3% year over year.
Margins
In the quarter, Crane’s cost of goods sold decreased 1.7% year over year, and as a percentage of revenues came in at 63.6%, below 64.9% in the prior-year quarter. Gross margin grew 130 basis points (bps) to 36.4%. Selling, general and administrative expenses, as a percentage of revenues were 21.6% compared with 19.8% in the year-ago quarter.
Operating margin, before special items, decreased 50 bps year over year to 14.8%.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Crane had cash and cash equivalents of $509.7 million, above $436.3 million at previous-quarter end. Long-term debt was roughly flat sequentially at $745.3 million.
In the quarter, Crane generated cash of $149.7 million from its operating activities, above $113.6 million generated in the year-ago quarter. Capital expenditure increased 14% year over year to $13 million. Dividend paid in the quarter was approximately $19.4 million.
Concurrent with the earnings release, Crane announced that its board of directors has approved the payment of a quarterly dividend of 33 cents per share for first-quarter 2017. The dividend will be paid on Mar 9, to shareholders on record as of Feb 28.
Outlook
For 2017, Crane anticipates earnings to be within $4.30−$4.55 per share range. Sales are expected to be $2.7 billion, with core sales to be flat to up 2%. Unfavorable foreign currency movements will adversely impact sales by 3% while divestitures will reduce sales growth by 0.5%.
Free cash flow is anticipated within $220−$250 million.
Also, in the years ahead, Crane anticipates benefiting from increasing demand for productivity solutions in Payment & Merchandising Technologies segment, high growth aerospace programs in Aerospace & Electronics, recovering orders in Fluid Handling and strengthening end-markets in Engineered Materials.
Crane Company Price and Consensus
Crane Company Price and Consensus | Crane Company Quote
Zacks Rank & Stocks to Consider
With a market capitalization of $4.3 billion, Crane currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the diversified operations industry include Leucadia National Corporation , Barloworld Limited (BRRAY - Free Report) and Swire Pacific Limited (SWRAY - Free Report) . While Leucadia National sports a Zacks Rank #1 (Strong Buy), both Barloworld Limited and Swire Pacific Limited carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Leucadia National Corporation and Swire Pacific Limited’s earnings estimates for 2017 have been revised upward over the last 60 days. Similarly, Barloworld Limited’s earnings estimates for fiscal 2017 have increased over the last 60 days.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>