Crane Company Reports Second Quarter 2024 Results and Raises Full Year EPS Guidance

Second Quarter 2024 Highlights

• Earnings per diluted share (EPS) of $1.23, up 64% and adjusted EPS of $1.30, up 18%.
• Sales of $581 million, up 14% driven by 9% core sales growth.

Full Year Outlook

• Raising the midpoint of our full-year adjusted EPS guidance by $0.15 and narrowing the full year adjusted EPS outlook to a range of $4.95-$5.15, from prior range of $4.75-$5.05.

Crane Company ((", Crane, ", NYSE:CR) today announced its financial results for the second quarter of 2024 and updated its full-year outlook.

Max Mitchell, Crane's Chairman, President and Chief Executive Officer, stated: "Our Crane team delivered 18% adjusted EPS growth in the quarter, driven by 9% core sales growth and solid core operating leverage of 40%. Our results in the quarter reflect benefits from our strategic investments in growth and commercial excellence, which continue to add value for our customers and drive above market core sales growth across both Aerospace & Electronics and Process Flow Technologies."

Mr. Mitchell concluded: "With a strong first half of 2024 behind us, we have incredible momentum across our key verticals. Our balance sheet provides significant optionality to invest in both organic opportunities and strategic acquisitions to further amplify growth. Coupled with the solid order growth and strong backlog, we are raising the midpoint of our full-year adjusted EPS guidance by $0.15 and narrowing our adjusted EPS guidance range to $4.95 to $5.15, from $4.75 to $5.05."

Second Quarter 2024 Results

Second quarter 2024 GAAP EPS of $1.23 compared to $0.75 in the second quarter of 2023. Second quarter 2024 adjusted EPS of $1.30 compared to $1.10 in the second quarter of 2023.

Second quarter sales increased 14%, with 9% core sales growth and a 6% contribution from acquisitions, partially offset by a slight headwind from unfavorable foreign exchange. Operating profit of $97 million increased 53% compared to last year, and adjusted operating profit of $103 million increased 22% compared to last year, in both cases primarily reflecting the impact from productivity, favorable volumes and net price, partially offset by unfavorable mix.

Summary of Second Quarter 2024 Results

Cash Flow, Financing Activities and Other Financial Metrics

During the second quarter of 2024, cash provided by operating activities was $62 million, capital expenditures were $7 million, and free cash flow (cash provided by operating activities less capital spending) was $55 million. Adjusted free cash flow (free cash flow excluding transaction related cash outflows) was $57 million. (Please see the attached non-GAAP Financial Measures tables.)

As of June 30, 2024, the Company's cash balance was $229 million with total debt of $377 million.

Rich Maue, Crane's Executive Vice President and Chief Financial Officer, added: "We ended the quarter with a strong balance sheet and leverage remains low, providing us with significant capital deployment optionality."

Second Quarter 2024 Segment Results

All comparisons detailed in this section refer to operating results for the second quarter 2024 versus the second quarter 2023.

Aerospace & Electronics

Sales of $231 million increased 22% compared to the prior year, driven by 16% core sales growth and a 6% benefit from the previously announced Vian acquisition. Operating profit margin of 22.8% increased 260 basis points from last year, primarily reflecting the impact of higher volumes and productivity. Adjusted operating profit margin of 23.8% increased 360 basis points from last year. Aerospace & Electronics' order backlog was $815 million as of June 30, 2024 compared to $701 million as of December 31, 2023, and $675 million as of June 30, 2023.

Process Flow Technologies

Sales of $298 million increased 13% compared to the prior year, driven by 7% core sales growth and a 7% benefit from the previously announced Baum and CryoWorks acquisitions. Operating profit margin expanded 80 basis points to 20.0% primarily due to the impact from productivity, favorable net price, and higher volumes, partially offset by unfavorable mix. Adjusted operating profit margin expanded 50 basis points to 20.5% from last year. Process Flow Technologies order backlog was $400 million as of June 30, 2024 compared to $379 million as of December 31, 2023, and $353 million as of June 30, 2023.

Engineered Materials

Sales of $53 million decreased 8% compared to the prior year. Operating profit margin declined 320 basis points to 13.9%, and adjusted operating profit margin declined 270 basis points to 13.9%, primarily driven by lower volumes.

Updating 2024 Guidance

We are raising the midpoint of our full-year adjusted EPS guidance by $0.15 and narrowing the adjusted EPS outlook to a range of $4.95 to $5.15, from the prior range of $4.75 to $5.05.

Key assumptions for our revised guidance include:

• Total sales growth of approximately 11% (prior 10%) driven by core sales growth of approximately 5% to 7% (prior 4% to 6%) and an acquisition benefit of approximately 5% (unchanged).
• Adjusted segment operating margin of ~20.7% (prior 20.5%).
• Corporate cost of $80 million (prior $75 million).
• Net non-operating expense of $20 million (prior $23 million).
• Adjusted tax rate of 23.0% (prior 23.5%).
• Diluted shares of ~58 million (unchanged).

Additional details of our outlook and guidance are included in the presentation that accompanies this earnings release available on our website at www.craneco.com in the "investors" section.

Additional Information

References to changes in "core sales" or "core growth" in this report include the change in sales excluding the impact of foreign currency translation and acquisitions and divestitures from closing up to the first anniversary of such acquisitions or divestitures.

Crane operated as part of Crane Holdings, Co. for the entire first quarter of 2023 prior to completion of the separation transaction on April 3, 2023. First quarter 2023 results, as initially reported in May 2023, were derived from Crane Holdings, Co.'s accounting records and were presented on a carve-out basis. All of Crane's subsequent financial disclosures for pre-separation periods show the financial results of Crane Holdings, Co. (now renamed Crane NXT, Co.) with the Payment & Merchandising Technologies segment presented as discontinued operations.

As a result of the change in accounting presentation required by GAAP, first quarter 2023 GAAP EPS was reported as $1.08 when initially reported on a carve-out basis, and in subsequent reports, reported as $0.98 with the Payment & Merchandising Technologies segment presented as discontinued operations. First quarter 2023 Adjusted EPS on a carve-out basis was reported as $1.25, and $1.26 with the Payment & Merchandising Technologies segment presented as discontinued operations. Segment operating profit was the same under both accounting methodologies.

Conference Call

Crane has scheduled a conference call to discuss the second quarter financial results on Tuesday, July 30, 2024 at 10:00 A.M. (Eastern). All interested parties may listen to a live webcast of the call at www.craneco.com. An archived webcast will also be available to replay this conference call directly from the Company's website under Investors, Events & Presentations. Slides that accompany the conference call will be available on the Company's website.

About Crane Company

Crane Company has delivered innovation and technology-led solutions for customers since its founding in 1855. Today, Crane is a leading manufacturer of highly engineered components for challenging, mission-critical applications focused on the aerospace, defense, space and process industry end markets. The Company has two strategic growth platforms: Aerospace & Electronics and Process Flow Technologies. Crane has approximately 7,500 employees in the Americas, Europe, the Middle East, Asia and Australia. For more information, visit www.craneco.com.

Forward-Looking Statements Disclaimer

This press release 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, including, but not limited to: benefits and synergies of the separation transaction; strategic and competitive advantages of Crane; future financing plans and opportunities; and business strategies, prospects and projected operating and financial results. We caution investors not to place undue reliance on any such forward-looking statements.

These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained.

Risks and uncertainties that could cause actual results to differ materially from our expectations include, but are not limited to: changes in global economic conditions (including inflationary pressures) and geopolitical risks, including macroeconomic fluctuations that may harm our business, results of operation and stock price; information systems and technology networks failures and breaches in data security, theft of personally identifiable and other information, non-compliance with our contractual or other legal obligations regarding such information; our ability to source components and raw materials from suppliers, including disruptions and delays in our supply chain; demand for our products, which is variable and subject to factors beyond our control; governmental regulations and failure to comply with those regulations; fluctuations in the prices of our components and raw materials; loss of personnel or being able to hire and retain additional personnel needed to sustain and grow our business as planned; risks from environmental liabilities, costs, litigation and violations that could adversely affect our financial condition, results of operations, cash flows and reputation; risks associated with conducting a substantial portion of our business outside the U.S.; being unable to identify or complete acquisitions, or to successfully integrate the businesses we acquire, or complete dispositions; adverse impacts from intangible asset impairment charges; potential product liability or warranty claims; being unable to successfully develop and introduce new products, which would limit our ability to grow and maintain our competitive position and adversely affect our financial condition, results of operations and cash flow; significant competition in our markets; additional tax expenses or exposures that could affect our financial condition, results of operations and cash flows; inadequate or ineffective internal controls; specific risks relating to our reportable segments, including Aerospace & Electronics, Process Flow Technologies and Engineered Materials; the ability and willingness of Crane Company and Crane NXT, Co. to meet and/or perform their obligations under any contractual arrangements that are entered into among the parties in connection with the separation transaction and any of their obligations to indemnify, defend and hold the other party harmless from and against various claims, litigation and liabilities; and the ability to achieve some or all the benefits that we expect to achieve from the separation transaction.

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, 2023 and the other documents Crane and its subsidiaries file from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Crane assumes no (and disclaims any) obligation to revise or update any forward-looking statements.

We make no representations or warranties as to the accuracy of any projections, statements or information contained in this press release. It is understood and agreed that any such projections, targets, statements and information are not to be viewed as facts and are subject to significant business, financial, economic, operating, competitive and other risks, uncertainties and contingencies many of which are beyond our control, that no assurance can be given that any particular financial projections ranges, or targets will be realized, that actual results may differ from projected results and that such differences may be material. While all financial projections, estimates and targets are necessarily speculative, we believe that the preparation of prospective financial information involves increasingly higher levels of uncertainty the further out the projection, estimate or target extends from the date of preparation. The assumptions and estimates underlying the projected, expected or target results are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the financial projections, estimates and targets. The inclusion of financial projections, estimates and targets in this press release should not be regarded as an indication that we or our representatives, considered or consider the financial projections, estimates and targets to be a reliable prediction of future events.

(Financial Tables Follow)

Source: Crane Company

^(a) Includes $62.3 million and $53.5 million of backlog as of June 30, 2024 and March 31, 2024, respectively, pertaining to the Vian acquisition.

^(b) Includes $11.6 million of backlog as of June 30, 2024 pertaining to the CryoWorks acquisition.

^(c) Includes $6.4 million, $8.3 million and $11.5 million of backlog as of June 30, 2024, March 31, 2024 and December 31, 2023, respectively, pertaining to the Baum acquisition.