Crane Company · NYSE:CR
Crane — Q4 2022 Earnings Presentation
39 slides from Crane's earnings presentation, Jan 24, 2023
Slide 1: Crane Q4 2022 Earnings Release Call
CRANE Q4 2022 Earnings Release Call
Slide 2: Forward-Looking Statements – Disclaimer
FORWARD-LOOKING STATEMENTS – DISCLAIMER This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief, or expectations, inclu
Slide 3: Forward-Looking Statements – Disclaimer
FORWARD-LOOKING STATEMENTS – DISCLAIMER Readers should carefully review Crane’s financial statements and the notes thereto, as well as the section entitled “Risk Factors” in Item 1A of Crane’s Annual Report on Form 10-K for the year ended December 31, 2021 and the other documents Crane and its subsi
Slide 4: Q4 and FY 2022 Results
Q4 AND FY 2022 RESULTS
Slide 5: Q4 2022 Earnings Summary and Highlights
Q4 2022 EARNINGS SUMMARY AND HIGHLIGHTS $ Millions GAAP Adjusted* except per-share amounts Q4 2022 Q4 2021 Change Q4 2022 Q4 2021 Change Sales $824 $825 (0%) $824 $825 (0%) Operating Profit $129 $93 +39% $153 $99 +54% Operating Margin 15.7% 11.3% +440 bps 18.6% 12.0% +660 bps Earnings per Share $1.8
Slide 6: FY 2022 Earnings Summary and Highlights
FY 2022 EARNINGS SUMMARY AND HIGHLIGHTS $ Millions GAAP Adjusted* except per-share amounts FY 2022 FY 2021 Change FY 2022 FY 2021 Change Sales $3,375 $3,408 (1%) $3,375 $3,408 (1%) Operating Profit $370 $529 (30%) $597 $528 +13% Operating Margin 10.9% 15.5% (460 bps) 17.7% 15.5% +220 bps Earnings pe
Slide 7: Aerospace & Electronics
AEROSPACE & ELECTRONICS $ Millions GAAP Adjusted* except per-share amounts Q4 2022 Q4 2021 Change Q4 2022 Q4 2021 Change Sales $181 $158 +15% $181 $158 +15% Operating Profit $36 $21 +74% $37 $21 +81% Operating Margin 19.8% 13.1% +670 bps 20.6% 13.1% +750 bps Backlog $613 $460 +33% $613 $460 +33% Add
Slide 8: Aerospace & Electronics
AEROSPACE & ELECTRONICS $ Millions GAAP Adjusted* except per-share amounts FY 2022 FY 2021 Change FY 2022 FY 2021 Change Sales $667 $638 +5% $667 $638 +5% Operating Profit $120 $110 +9% $122 $110 +11% Operating Margin 18.0% 17.2% +80 bps 18.3% 17.2% +110 bps Backlog $613 $460 +33% $613 $460 +33% Add
Slide 9: Process Flow Technologies
PROCESS FLOW TECHNOLOGIES $ Millions GAAP Adjusted* except per-share amounts Q4 2022 Q4 2021 Change Q4 2022 Q4 2021 Change Sales $252 $299 (16%) $252 $299 (16%) Operating Profit $37 $42 (10%) $41 $43 (5%) Operating Margin 14.8% 13.9% +90 bps 16.1% 14.3% +180 bps Backlog $369 $358 +3% $369 $358 +3% A
Slide 10: Process Flow Technologies
PROCESS FLOW TECHNOLOGIES $ Millions GAAP Adjusted* except per-share amounts FY 2022 FY 2021 Change FY 2022 FY 2021 Change Sales $1,109 $1,197 (7%) $1,109 $1,197 (7%) Operating Profit $168 $183 (8%) $179 $177 +2% Operating Margin 15.2% 15.2% Flat 16.2% 14.8% +140 bps Backlog $369 $358 +3% $369 $358
Slide 11: Payment & Merchandising Technologies
PAYMENT & MERCHANDISING TECHNOLOGIES $ Millions GAAP Adjusted* except per-share amounts Q4 2022 Q4 2021 Change Q4 2022 Q4 2021 Change Sales $338 $314 +8% $338 $314 +8% Operating Profit $82 $60 +36% $88 $58 +51% Operating Margin 24.1% 19.1% +500 bps 25.9% 18.5% +740 bps Backlog $566 $438 +29% $566 $4
Slide 12: Payment & Merchandising Technologies
PAYMENT & MERCHANDISING TECHNOLOGIES $ Millions GAAP Adjusted* except per-share amounts FY 2022 FY 2021 Change FY 2022 FY 2021 Change Sales $1,340 $1,345 (0%) $1,340 $1,345 (0%) Operating Profit $333 $308 +8% $339 $304 +12% Operating Margin 24.9% 22.9% +200 bps 25.3% 22.6% +270 bps Backlog $566 $438
Slide 13: Engineered Materials
ENGINEERED MATERIALS $ Millions GAAP Adjusted* except per-share amounts Q4 2022 Q4 2021 Change Q4 2022 Q4 2021 Change Sales $52 $55 (4%) $52 $55 (4%) Operating Profit $6 $6 (6%) $6 $6 -- Operating Margin 11.0% 11.3% (30 bps) 11.8% 11.3% +50 bps Additional Details Q4 2022 Q4 2022 Recreational Vehicle
Slide 14: Engineered Materials
ENGINEERED MATERIALS $ Millions GAAP Adjusted* except per-share amounts FY 2022 FY 2021 Change FY 2022 FY 2021 Change Sales $258 $228 +13% $258 $228 +13% Operating Profit $33 $27 +21% $37 $27 +36% Operating Margin 12.6% 11.8% +80 bps 14.2% 11.8% +240 bps Additional Details FY 2022 FY 2022 Recreation
Slide 15: Cash Flow, Balance Sheet and Tax
CASH FLOW, BALANCE SHEET AND TAX $ Millions except per-share amounts Q4 2022 Q4 2021 Better / (Worse) Cash Provided from Operating Activities $226 $172 $55 Capital Expenditures ($22) ($27) $6 Free Cash Flow* $205 $144 $61 Adjusted Free Cash Flow* $220 $144 $75 Effective (GAAP) Tax Rate 5.9% 14.9% 90
Slide 16: FY 2023 Guidance and Separation Update
FY 2023 GUIDANCE AND SEPARATION UPDATE
Slide 17: Two Best-in-Class Industrial Technology Leaders
TWO BEST-IN-CLASS INDUSTRIAL TECHNOLOGY LEADERS ▪ Aerospace & Electronics and Process Flow ▪ Crane Payment Innovations (CPI) and Technologies global strategic platforms Crane Currency ▪ ~$2 billion sales in a $20+ billion market ▪ ~$1.4 billion sales in a $7+ billion market ▪ Ticker “CR” on NYSE ▪ T
Slide 18: Strategic Rationale for Separation
STRATEGIC RATIONALE FOR SEPARATION ▪ Deeper operational focus, accountability and flexibility to meet customer requirements ▪ Increased operating and financial flexibility to pursue growth opportunities ▪ Tailored capital allocation strategies ▪ Positioned to attract a shareholder base aligned with
Slide 19: Separation Update and Key Milestones
SEPARATION UPDATE AND KEY MILESTONES ✓ Organizational design for post-separation companies complete ✓ Crane NXT CEO search complete ✓ Form 10 Registration Statement publicly filed ✓ Capital structure design for both organizations complete ▪ Target Form 10 Registration Statement to become effective i
Slide 20: 2023 Non-GAAP Guidance and Reporting Changes
2023 NON-GAAP GUIDANCE AND REPORTING CHANGES Changes to improve transparency for both post-separation companies, to improve period-to-period comparability, and to improve comparability vs. peers ▪ Crane Company Pension Expense: Crane Company will continue to include Service Cost for pension and othe
Slide 21: 2022 EPS Recast Using 2023 EPS Methodology
2022 EPS RECAST USING 2023 EPS METHODOLOGY Starting in 2023, Crane Company will exclude non-operating pension benefit cost from adjusted EPS; In 2022, non-operating pension benefit cost contributed ~$0.23 to 2022 EPS. Crane Supply, which was divested in May 2022, contributed ~$0.25 to 2022 EPS. Star
Slide 22: Crane Company Highlights
CRANE COMPANY HIGHLIGHTS ▪ Highly-engineered, technology-differentiated 2022A Operating Profit products and solutions for large ($20+ billion) and attractive markets Engineered ▪ Respected brands and leadership positions Materials 10% Aerospace & ▪ Mission-critical, high cost of failure applications
Slide 23: Crane Company Initial Operational Guidance
CRANE COMPANY INITIAL OPERATIONAL GUIDANCE Additional Details ($ millions) Adjusted GAAP Adjusted Ex-Supply 2023G vs. 2022A Adj. ex-Supply Sales 2022A 2022A* 2022A** 2023G Change FX Core ▪ Guidance assumes constrained and mixed overall Aerospace & Electronics 667 667 667 735 10% (0.1%) 10% activity,
Slide 24: Crane Company Initial EPS Guidance
CRANE COMPANY INITIAL EPS GUIDANCE ($ millions, except per-share amounts) Additional Details Guidance 2023G Segment Operating Profit 345 ▪ Continue to expect separation will be completed in April 2023; Corporate (65) Consequently, first quarter will be reported on a Crane Holdings, Co. Operating Pro
Slide 25: Crane Company Post-Separation Capital Structure
CRANE COMPANY POST-SEPARATION CAPITAL STRUCTURE Additional Details ▪ Estimated Net Debt (total debt less total cash) of ~$100- $150 million ▪ 2023 Guidance Pro Forma EBITDA of ~$321 million implies net debt to EBITDA of ≤0.5x ▪ Interest rate on Term Loan expected to be variable rate (~6% in current
Slide 26: Crane NXT Highlights
CRANE NXT HIGHLIGHTS • Premier industrial technology business with significant scale, best-in-class margin profile, and strong free cash flow 2022A Operating Profit generation • Broad portfolio and technology leadership for large ($7+ Crane billion) and attractive end markets Currency • Aligned with
Slide 27: Crane NXT Initial Operational Guidance
CRANE NXT INITIAL OPERATIONAL GUIDANCE Additional Details ($ millions) Adjusted GAAP Adjusted Ex-Amort. 2023G vs. 2022A Adj. ex-Amort. • Guidance assumes constrained and mixed overall activity, Sales 2022A 2022A* 2022A** 2023G*** Change FX Core with only gradual improvement in supply chain Crane Pay
Slide 28: Crane NXT Initial EPS Guidance
CRANE NXT INITIAL EPS GUIDANCE ($ millions, except per-share amounts) Additional Details Guidance 2023G* Adjusted Segment Operating Profit 369 Corporate (50) • Continue to expect separation will be completed in April 2023; Adjusted Operating Profit 319 Consequently, first quarter will be reported on
Slide 29: Crane NXT Post-Separation Capital Structure
CRANE NXT POST-SEPARATION CAPITAL STRUCTURE Additional Details • Estimated Net Debt (total debt less total cash) of ~$650 million • 2023 Pro Forma EBITDA of ~$364 million implies initial net debt to EBITDA of ~1.5x-2.0x • Interest rate on Term Loan expected to be variable rate (~6% in current market
Slide 30: 2022 Recast Adjusted EPS vs. 2023 Guidance
2022 RECAST ADJUSTED EPS VS. 2023 GUIDANCE Corporate Cost Dis-Synergies Should Decline Over Time 30 * 2022 Recast Adjusted EPS details and reconciliation provided on slide 21 of this presentation.
Slide 31: Non-GAAP Information
NON-GAAP INFORMATION
Slide 32: Non-GAAP Explanation (1/2)
NON-GAAP EXPLANATION (1/2) Crane Holdings, Co. reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). This presentation includes certain non- GAAP financial measures, including Adjusted Operating Profit, Adjusted Operating Margin, Adjusted Net Income
Slide 33: Non-GAAP Explanation (2/2)
NON-GAAP EXPLANATION (2/2) We believe that each of the following non-GAAP measures provides useful information to investors regarding the Company’s financial conditions and operations: ▪ "Adjusted Operating Profit" and "Adjusted Operating Margin" add back to Operating Profit items which are outside
Slide 34: Non-GAAP Financial Measures (Income Items 1/2)
NON-GAAP FINANCIAL MEASURES (INCOME ITEMS 1/2) (in millions, except per share amounts) 34
Slide 35: Non-GAAP Financial Measures (Income Items 2/2)
NON-GAAP FINANCIAL MEASURES (INCOME ITEMS 2/2) (in millions, except per share amounts) 35
Slide 36: Non-GAAP Financial Measures (Segment Data 1/2)
NON-GAAP FINANCIAL MEASURES (SEGMENT DATA 1/2) (in millions) 36
Slide 37: Non-GAAP Financial Measures (Segment Data 2/2)
NON-GAAP FINANCIAL MEASURES (SEGMENT DATA 2/2) (in millions) 37
Slide 38: Non-GAAP Financial Measures (Cash Flow)
NON-GAAP FINANCIAL MEASURES (CASH FLOW) (in millions) 38
Slide 39: Jason D. Feldman, Vice President, Investor Relations
Jason D. Feldman Vice President, Investor Relations 203-363-7329