Crane Co. Reports Second Quarter Results; Increases Dividend 8%; Announces Repositioning Actions To Improve 2013 Performance; Adjusts 2012 EPS Guidance To $3.75–$3.85, Excluding Special Items
“The Company executed well in the second quarter, with continued operating improvement year over year as well as targeted actions to drive further improvements in 2013. Reflecting our confidence in the Company’s future, we are increasing the quarterly dividend by 8%,” said Crane Co. president and chief executive officer Eric C. Fast. “We have narrowed our EPS guidance range and reduced the midpoint by $0.05, reflecting two small divestitures in the second quarter. Our repositioning actions directly address costs in our European Fluid Handling businesses, strengthening our confidence for 2013.”
In June 2012, the Company divested two businesses, positively impacting second quarter 2012 EPS by $0.31. The associated gain of $18.3 million on an after-tax basis is included in the “Gain from Discontinued Operations” section on the accompanying income statement. The divested businesses had profit from operations in the second quarter of 2012 of $1.6 million on an after-tax basis, or $0.03 per share, which is included in the “Profit from Discontinued Operations” section on the accompanying income statement.
- Azonix Corporation was sold to Cooper Industries (NYSE: CBE) on June 19, 2012 for $43.4 million. Azonix designs and manufactures intrinsically safe computer devices for extreme environments and was formerly part of the Controls segment. In the first half of 2012, Azonix had sales and pre-tax profit from operations of $17.1 million and $2.5 million, respectively.
- Certain assets and operations of Crane’s valve service center in Houston, TX were sold to Furmanite Corporation (NYSE: FRM) on June 28, 2012 for $9.3 million. This service center, formerly part of the Fluid Handling segment, had sales and pre-tax profit from operations in the first half of 2012 of $8.4 million and $1.3 million, respectively.
Repositioning ActionsThe Company recorded pre-tax repositioning charges of $14.7 million in the second quarter of 2012, or $11.9 million on an after-tax basis. Of these repositioning charges, $11.4 million (on a pre-tax basis) is associated with actions to improve Fluid Handling profitability. The charges, which negatively impacted second quarter 2012 EPS by $0.20, included severance and other costs related to the anticipated transfer of certain manufacturing operations from higher cost to lower cost Company facilities, and other staff reduction actions. The actions include an expected reduction of approximately 200 employees, or about 2% of Crane’s global workforce. Within the European portion of the Fluid Handling segment, the Company expects a reduction of approximately 150 employees, or 7% of that workforce. In addition to the amounts recorded in the second quarter, the Company expects to incur additional pre-tax charges related to these actions in the second half of 2012 of approximately $5 million, or $0.06 per share, associated with equipment relocation and personnel costs primarily in Fluid Handling. Pre-tax savings associated with all of these repositioning actions are expected to approximate $12 million annually for the Company beginning in 2013, of which $10 million relates to Fluid Handling.
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