Crane Co. CR reported lower-than-expected results for first-quarter 2015. Adjusted earnings came in at 92 cents per share, missing the Zacks Consensus Estimate of $1.01 per share. Also, the bottom line was 12.2% below the year-ago earnings of $1.05 per share.
Revenues
Crane generated net sales of $678.8 million, reflecting a year-over-year decrease of 5.3%. The decline was due to an unfavorable foreign currency impact of 5%.
At quarter-end, total order backlog was $837.2 million, up 2.3% year over year.
Crane generates revenues under four heads, results of which are briefly discussed below.
Revenues from the Aerospace & Electronics segment were $161.6 million, down 4.4% year over year. Order backlog was $446.1 million, up 5.7% sequentially.
The Payment & Merchandising Systems segment generated revenues of $171.9 million, up 1.7% year over year. Oder backlog was $68.1 million, down 0.3% sequentially.
The Engineered Materials segment reported revenues of $69.7 million, climbing 2.7% year over year. Order backlog for the segment increased 11.4% sequentially to settle at $18.6 million.
Revenues from the Fluid Handling segment decreased 11.4% year over year to $275.5 million. Order backlog was $304.3 million, down 2.2% sequentially.
Margins
Crane’s cost of goods sold decreased 3.9% year over year and, as a percentage of revenues, stood at 64.8% versus 63.9% in the prior-year quarter. Gross margin came in at 35.2%. Selling, general and administrative (SG&A) expenses, as a percentage of revenues, were 21.8% as against 22% in the year-ago quarter.
Adjusted operating margin from continuing operations contracted 80 basis points (bps) year over year to 13.3%.
Balance Sheet/ Cash Flow
Exiting first-quarter 2015, Crane had cash and cash equivalents of $296.9 million, down compared with $346.3 million in the previous quarter. Long-term debt remained stable at $749.2 million.
In the quarter, Crane used cash of $11.6 million for its operating activities, down from $18.9 million used in the year-ago quarter. Capital expenditure totaled $10.2 million as against $9.4 million in the year-ago quarter.
During the quarter, the company paid dividends worth $19.1 million to its shareholders.
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. The dividend will be paid on Jun 9, 2015 to shareholders of record as on May 29.
Outlook
For 2015, Crane anticipates adjusted earnings within $4.30−$4.50 per share, down from the previous forecast of $4.45−$4.65 per share. The prediction excludes 8 cents of integration costs and 5 cents of costs related to facility-repositioning actions.
Sales are predicted to decline 4−6% due to adverse foreign currency impact, compared with fall of 2−4% projected earlier. Core sales will be flat to up 2%. Free cash flow is anticipated in a range of $200−$230 million versus $210−$240 million expected earlier.
With a market capitalization of $3.5 billion, Crane currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include Thermon Group Holdings, Inc. THR, Compass Diversified Holdings CODI and Icahn Enterprises, L.P. IEP. While Thermon Group sports a Zacks Rank #1 (Strong Buy), both Compass Diversified and Icahn Enterprises carry a Zacks Rank #2 (Buy).
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