Crane (CR) Beats Q3 Earnings & Revenues; Revises '16 View
Zacks Investment Research | Oct 25, 2016 07:35AM ET
Crane Co. (NYSE:CR) reported better-than-expected results for third-quarter 2016, with an earnings beat of 5.9%. Earnings, before special items, came in at $1.07 per share, above the Zacks Consensus Estimate of $1.01 and the year-ago tally of $1.03.
Net sales generated in the quarter were $694.2 million, above the Zacks Consensus Estimate of $658.5 million. Also, Crane's top line grew 3.6% year over year on the back of core sales growth of 5.5%, partially offset by 2% adverse impact from unfavorable foreign currency movements.
At the quarter end, Crane's total order backlog was $696.5 million, down 13.8% year over year.
Segmental Details
Crane generates revenues under four heads, results of which are briefly discussed below.
Revenues from Aerospace & Electronics totaled $198.2 million, up 15.4% year over year. Order backlog was $377.1 million, down 13.5% sequentially.
Payment & Merchandising Technologies generated revenues of $186.7 million, up 9.4% year over year. Order backlog was $65.6 million, down 0.3% sequentially.
Engineered Materials’ revenues were $64.2 million, up 2.1% year over year. Order backlog for the segment decreased 20.1% sequentially to $12.3 million.
Revenues from Fluid Handling decreased 7.4% year over year to $245.1 million. Order backlog was $241.6 million, down 1.9% sequentially.
Margins
In the quarter, Crane’s cost of goods sold increased 4.2% year over year, and as a percentage of revenues came in at 64.7%, slightly above 64.4% in the prior-year quarter. Gross margin inched down 30 basis points (bps) to 35.3%. Selling, general and administrative expenses, as a percentage of revenues were 20.3% down from 21.1% in the year-ago quarter.
Operating margin, before special items, increased 50 bps year over year to 15.0%.
Balance Sheet and Cash Flow
Exiting the third quarter, Crane’s cash and cash equivalents were $436.3 million, up from $408.9 million in the previous quarter. Long-term debt was roughly flat sequentially at $745 million.
In the quarter, Crane generated cash of $116.6 million from its operating activities, above $69.7 million generated in the year-ago quarter. Capital expenditure grew 46.9% year over year to $11.9 million. Dividend paid in the quarter was approximately $19.3 million.
Get The News You Want
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 Dec 9, 2016 to shareholders of record as on Nov 30.
Outlook
For 2016, Crane now predicts non-GAAP earnings to be $4.12−$4.20 per share versus $4.00−$4.20 expected earlier. Sales are still expected to be $2.7 billion, with core sales growth to be 0−2% versus the earlier forecast of (1.5%)−1.5% year over year.
Free cash flow is anticipated within $200−$225 million versus $195−$220 million expected earlier.
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