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Crane Co. Reports Strong Fourth Quarter ’09 Performance; Full Year 2009 Results at Upper End of Guidance; Sets 2010 EPS Guidance of $2.15 – $2.35

Posted by Dana in January 27th 2010

Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reported fourth quarter 2009 net income attributable to common shareholders of $47.7 million, or $0.81 per diluted share, compared to a fourth quarter 2008 net loss attributable to common shareholders of $8.3 million, or $0.14 per share. Fourth quarter 2009 included several Special Items: EPS was favorably impacted by $0.18 per share associated with a previously disclosed settlement with the Boeing Company and GE Aviation Systems LLC and a tax benefit of $0.09 per share associated with the recent divestiture of Crane’s General Technology Corporation subsidiary, partially offset by $0.03 per share of restructuring charges. Fourth quarter 2008 results were adversely impacted by an after-tax restructuring charge of $0.44 per share and an after-tax environmental provision of $0.27 per share. Excluding the above Special Items in 2008 and 2009, fourth quarter 2009 net income was $33.7 million, or $0.57 per diluted share, compared to $33.2 million, or $0.56 per diluted share in the fourth quarter of 2008.

Fourth quarter 2009 sales of $545 million decreased $44.3 million, or 8%, compared to the fourth quarter of 2008, resulting from a core sales decline of $95.0 million (16%), partially offset by favorable foreign currency translation of $16.6 million (3%), an increase in sales from acquired businesses of $15.2 million (2%), and the impact of $18.9 million (3%) of sales related to the one-time Boeing settlement.

Operating profit for the fourth quarter of 2009 was $69.4 million, compared to an operating loss of $18.7 million in 2008 and operating margins were 12.7% versus negative 3.2%, respectively. Excluding Special Items in 2009 and 2008, 2009 operating income increased 21% to $56.0 million, compared to $46.3 million in 2008 and operating margins were 10.6% versus 7.9%, respectively.

Net income excluding Special Items in the fourth quarter of 2009 of $33.7 million was impacted by a lower R&D tax benefit when compared to the fourth quarter of 2008. Specifically, the Company’s tax provision in the fourth quarter of 2008 was reduced by $5.2 million, reflecting a full year benefit pursuant to the extension of the federal R&D tax credit during the quarter. By comparison, R&D tax credits were recorded quarterly in 2009 and favorably impacted the Company’s tax provision in the fourth quarter of 2009 by $1.5 million. This results in an unfavorable year-over-year tax comparison of $3.7 million, or $0.06 per diluted share.

Full Year 2009 Results

Total sales in 2009 were $2.2 billion, a decline of 16% from $2.6 billion in 2008. Full year 2009 core business sales decreased $454.1 million (18%) and unfavorable foreign currency translation of $87.8 million (3%) was partially offset by an increase in sales from acquired businesses of $115.0 million (4%) and the impact of $18.9 million (1%) of sales related to the one-time Boeing settlement.

Operating profit for the full year 2009 was $208.3 million, compared to $197.5 million in 2008 and operating margins were 9.5% versus 7.6%, respectively. Excluding Special Items in 2009 and 2008, 2009 operating profit declined 22% to $204.4 million, compared to $262.5 million in 2008 and operating margins were 9.4% versus 10.1%, respectively.

Net income for the full year 2009 was $133.9 million, or $2.28 per diluted share. For the full year 2008, the Company reported net income of $135.2 million, or $2.24 per share. Excluding Special Items in 2009 and 2008, full year 2009 net income was $126.4 million, or $2.15 per diluted share, compared to $176.7 million, or $2.93 per diluted share in 2008.

After adjusting our GAAP earnings of $2.28 per share for the Boeing settlement ($0.18 per share) and the GTC tax benefit ($0.09 per share) which was not in our GAAP guidance for 2009, our adjusted earnings of $2.01 per share were at the upper end of our GAAP earnings guidance range of $1.90 to $2.05 per share. Non-GAAP earnings per share of $2.15 were also at the upper end of the Non-GAAP guidance range of $2.05 to $2.20.

Order backlog was $664 million at December 31, 2009 compared to $682 million at September 30, 2009, and $782 million at December 31, 2008. The backlog at December 31, 2009 was unfavorably impacted by the sale of GTC, which had backlog of $18 million at the time of the divestiture.