Crane Co. Reports Fourth Quarter Results and Provides 2015 EPS Guidance

Fourth Quarter 2014 Highlights:

  • Excluding Special Items, earnings per diluted share (EPS) of $1.13 increased 9% compared to 2013 (GAAP EPS of $0.95 increased 13% compared to 2013)
  • Sales of $731 million increased 7.2% compared to 2013, with flat core sales
  • Introducing 2015 EPS guidance of $4.45-$4.65, excluding Special Items (GAAP EPS guidance of $4.32-$4.52)
  • Incremental repositioning actions announced in Fluid Handling
  • Raising 2016 MEI synergy target to $33 million, from $25 million
  • Completed $50 million of share repurchases during the fourth quarter of 2014
Monday, January 26, 2015 5:05 pm EST

STAMFORD, Conn.--(BUSINESS WIRE)--Crane Co. (NYSE:CR), a diversified manufacturer of highly engineered industrial products, reported fourth quarter 2014 earnings of $0.95 per diluted share, compared to $0.84 per share in the fourth quarter of 2013. Fourth quarter 2014 results included Special Items, net, of $11.0 million in after tax charges, or $0.18 per diluted share. Fourth quarter 2013 results included Special Items, net, of $11.9 million in after tax charges, or $0.20 per diluted share. Excluding these Special Items in both years, fourth quarter 2014 earnings per diluted share increased 9% to $1.13, compared to $1.04 in the fourth quarter of 2013. As expected, fourth quarter 2014 earnings included a $0.05 per share benefit associated with the reinstatement of the R&D tax credit in the United States. (Please see the attached Non-GAAP Financial Measures tables for additional details.)

Special Items in the fourth quarter of 2014 consisted of the following after-tax charges: $9.9 million, or $0.17 per share, related to repositioning charges, reflecting both previously announced actions, as well as additional cost reduction measures in Fluid Handling; $4.6 million, or $0.08 per share, of integration-related charges associated with the MEI acquisition; and a $3.5 million gain, or $0.06 per share, related to a real estate divestiture. Special Items in the fourth quarter of 2013 included net costs of $11.9 million, or $0.20 per share, related to the acquisition of MEI.

Fourth quarter 2014 sales were $730.7 million, an increase of 7.2% compared to $681.4 in the fourth quarter of 2013. The sales growth was comprised of flat core sales; sales from acquisitions, net of divestitures, of $68.0 million, or 10.0%; partially offset by unfavorable foreign exchange of $18.8 million, or 2.8%.

Operating profit in the fourth quarter increased to $89.6 million, up 7.8% compared to the fourth quarter of 2013. Excluding Special Items, fourth quarter operating profit increased to $107.3 million, up 9.5% compared to the fourth quarter of 2013. (Please see the attached Non-GAAP Financial Measures tables.)

Full Year 2014 Results

Full year 2014 earnings per diluted share were $3.23, compared to $3.73 in 2013. Excluding Special Items, 2014 earnings per diluted share increased 6.6% to $4.45, compared to $4.18 in 2013. Full year 2014 earnings per diluted share included a $0.05 benefit associated with the reinstatement of the R&D tax credit in the United States compared to a $0.10 benefit in 2013. (Please see the attached Non-GAAP Financial Measures tables.)

Total sales in 2014 were $2.92 billion, an increase of 12.7% from 2013. The sales growth was comprised of a core sales increase of $8.6 million, or 0.3%; sales from acquisitions, net of divestitures, of $332.1 million, or 12.8%; partially offset by unfavorable foreign exchange of $11.0 million, or -0.4%.

Operating profit for the full year 2014 was $316.3 million, compared to $347.9 million in 2013. Excluding Special Items, operating profit in 2014 increased 13.5% to $426.1 million. (Please see the attached Non-GAAP Financial Measures tables.)

“Our fourth quarter results were in line with our most recent guidance,” said Max Mitchell, Crane Co. President and Chief Executive Officer. “Our adjusted full year operating margin was strong at 14.6%, reflecting solid execution and strong productivity in a challenging growth environment. I am pleased with our progress on a number of fronts, most notably with the integration of MEI, where we exceeded our $0.20 EPS accretion target. In addition, we secured several important new program wins at Aerospace & Electronics, and drove strong operating margin expansion at Fluid Handling, reaching 15.6%, excluding Special Items, reflecting a 50 basis point improvement over last year.”

“However, global growth was a challenge for us throughout the year, and we expect the difficult revenue environment to persist into 2015, driven by a decline in our process valve business in Fluid Handling. This challenge will be exacerbated by unfavorable foreign exchange and higher pension expense. In response, we have initiated incremental repositioning actions at Fluid Handling and identified additional synergy opportunities related to the MEI acquisition. Reflecting our confidence in our longer-term outlook, we repurchased $50 million of Crane shares during the fourth quarter. Considering these factors, we expect earnings per diluted share, excluding Special Items, in a range of flat to up 5% compared to 2014.” (Please see the attached Non-GAAP Financial Measures tables.)

Cash Flow and Other Financial Metrics

Cash provided by operating activities for the fourth quarter of 2014 was $150.5 million, compared to $148.4 million in the fourth quarter of 2013. Cash provided by operating activities for the full year 2014 was $264.0 million, compared to $239.4 million in 2013. Capital expenditures in the fourth quarter of 2014 were $11.6 million, compared to $10.4 million in the fourth quarter of 2013. Capital expenditures for the full year 2014 were $43.7 million, compared to $29.5 million in 2013. The Company repurchased 812,793 shares of its common stock during the fourth quarter at a cost of $50 million. The Company’s cash position was $346.3 million at December 31, 2014, compared to $270.6 million at December 31, 2013. Total debt was $850 million at December 31, 2014, compared to $875 million at December 31, 2013.

Segment Results

All comparisons detailed in this section refer to operating results for the fourth quarter 2014 versus the fourth quarter 2013, excluding Special Items.

Fluid Handling

    Fourth Quarter     Change
(dollars in millions) 2014   2013  
 
Sales $313.9 $319.7 ($5.8) -1.8%
 
Operating Profit $36.8 $48.2 ($11.4) -23.6%
Operating Profit, before Special Items* $47.0 $48.2 ($1.2) -2.4%
 
Profit Margin 11.7% 15.1%
Profit Margin, before Special Items* 15.0% 15.1%
*Excludes $10.2 million of repositioning charges in the fourth quarter of 2014
 

Fourth quarter 2014 sales decreased $5.8 million, or -1.8%, which included a core sales increase of $9.1 million, or 2.8%, which was more than offset by unfavorable foreign exchange of $11.7 million, or -3.7%, and the impact from the second quarter divestiture of Crane Water of $3.0 million, or -0.9%. Adjusted operating margins were strong at 15.0%, reflecting continued productivity gains, lower pension expense and the impact of the higher volume, offset by unfavorable foreign exchange and mix. Fluid Handling order backlog was $311.0 million at December 31, 2014; after adjusting for the impact of the divestiture, comparable backlog was $328.4 million at December 31, 2013.

Payment & Merchandising Technologies

    Fourth Quarter     Change
(dollars in millions) 2014   2013  
 
Sales $177.2 $122.7 $54.6 44.5%
 
Operating Profit $17.8 $7.9 $9.9 125.1%
Operating Profit, before Special Items* $24.3 $13.7 $10.6 77.8%
 
Profit Margin 10.1% 6.5%
Profit Margin, before Special Items* 13.7% 11.2%
* Excludes $6.5 million of integration-related expenses in the fourth quarter of 2014 and $5.8 million of transaction- and integration-related expenses in the fourth quarter of 2013
 

Segment sales of $177.2 million increased $54.6 million, or 44.5%, driven primarily by $71.0 million of sales related to the MEI transaction, partially offset by a core sales decline of $9.8 million, or -8.0%, and unfavorable foreign exchange of $6.7 million, or -5.5%. Adjusted operating profit increased to $24.3 million, primarily reflecting the impact of the MEI acquisition, and adjusted operating margins expanded 250 basis points to 13.7%, driven primarily by integration synergies and the mix benefit of the MEI acquisition.

Aerospace & Electronics

    Fourth Quarter     Change
(dollars in millions) 2014   2013  
 
Sales $182.3 $186.7 ($4.4) -2.4%
 
Operating Profit $39.9 $44.7 ($4.9) -10.9%
Operating Profit, before Special Items* $40.7 $44.7 ($4.0) -8.9%
 
Profit Margin 21.9% 23.9%
Profit Margin, before Special Items* 22.3% 23.9%
* Excludes $0.9 million of repositioning charges in the fourth quarter of 2014
 

Fourth quarter 2014 sales decreased $4.4 million, or -2.4%, reflecting flat sales in the Aerospace Group and a sales decline of $4.2 million, or -5.9%, in the Electronics Group. Adjusted operating profit decreased $4.0 million, driven by higher levels of engineering spending and the impact of the lower sales in Electronics. Aerospace & Electronics order backlog was $422.1 million at December 31, 2014, compared to $361.3 million at December 31, 2013.

Engineered Materials

        Fourth Quarter     Change
(dollars in millions) 2014   2013  
 
Sales $57.2 $52.4 $4.9 9.3%
 
Operating Profit $7.2 $5.8 $1.4 24.1%
 
Profit Margin 12.6% 11.1%
 

Sales of $57.2 million were 9.3% higher than the fourth quarter of 2013, driven by higher sales to recreational vehicle manufacturers. Adjusted operating profit increased 24.1% to $7.2 million, primarily reflecting leverage on the higher sales and strong productivity.

2015 Guidance

Sales for 2015 are expected to be approximately $2.85 billion, reflecting core sales of 0% to +2%, more than offset by unfavorable foreign exchange of -2% to -4%, and the impact from 2014 divestitures of -0.5%. Excluding Special Items, earnings are expected to be in a range of $4.45-$4.65 per diluted share which reflects growth of 0% to 5% compared to 2014 earnings of $4.45 per diluted share. On a GAAP basis, we expect earnings of $4.32-$4.52 per diluted share. Full year 2015 free cash flow (cash provided by operating activities less capital spending) is expected to be in a range of $210-$240 million. (Please see the attached Non-GAAP Financial Measures tables.)

During 2014, repositioning charges were $22.7 million, which includes previously announced actions, as well as additional repositioning actions in Fluid Handling. Repositioning charges are expected to be $4-$6 million in 2015. Total repositioning benefits are now expected to be approximately $10 million in 2015, with an annualized rate of approximately $19 million by the end of 2016.

During 2014, MEI-related Special Items included transaction, integration and restructuring related costs, and inventory step-up and backlog amortization charges. These items totaled $24.9 million, and included previously announced integration and restructuring related actions, as well as additional charges in the fourth quarter associated with incremental integration and restructuring activities to consolidate certain manufacturing facilities. Total integration and restructuring related charges are expected to be $6-$8 million in 2015. Total synergy savings were $10 million in 2014 and are expected to grow to $19 million in 2015. As a result of the newly announced plant consolidation, the total annualized synergy run-rate is now expected to reach $33 million by the end of 2016, compared to the prior forecast of $25 million. (Please see the attached Non-GAAP Financial Measures table.)

Additional guidance details will be provided at the Company’s Investor Day conference on February 26, 2015.

Additional Information

Please see the Non-GAAP Financial Measures tables attached to this press release for supporting details. Additional information with respect to the Company’s asbestos liability and related accounting provisions and cash requirements is set forth in the Current Report on Form 8-K filed with a copy of this press release.

Conference Call

Crane Co. has scheduled a conference call to discuss the fourth quarter financial results on Tuesday, January 27, 2015 at 10:00 A.M. (Eastern). All interested parties may listen to a live webcast of the call at http://www.craneco.com. An archived webcast will also be available to replay this conference call directly from the Company’s website. Slides that accompany the conference call will be available on the Company’s website.

Crane Co. is a diversified manufacturer of highly engineered industrial products. Founded in 1855, Crane provides products and solutions to customers in the hydrocarbon processing, petrochemical, chemical, power generation, unattended payment, automated merchandising, aerospace, electronics, transportation and other markets. The Company has four business segments: Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials. Crane has approximately 11,500 employees in the Americas, Europe, the Middle East, Asia and Australia. Crane Co. is traded on the New York Stock Exchange (NYSE:CR). For more information, visit www.craneco.com.

This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements present management’s expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and subsequent reports filed with the Securities and Exchange Commission.

(Financial Tables Follow)

CRANE CO.
Income Statement Data
(in thousands, except per share data)
       

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

2014 2013 2014 2013
Net Sales:
Fluid Handling $ 313,910 $ 319,698 $ 1,263,722 $ 1,288,624
Payment & Merchandising Technologies 177,206 122,649 711,959 380,576
Aerospace & Electronics 182,326 186,737 695,998 693,783
Engineered Materials 57,216   52,365   253,318   232,298  
Total Net Sales 730,658   681,449   2,924,997   2,595,281  
 
Operating Profit (Loss):
Fluid Handling 36,794 48,191 181,626 194,879
Payment & Merchandising Technologies 17,829 7,920 69,054 34,822
Aerospace & Electronics 39,864 44,719 138,176 159,976
Engineered Materials 7,209 5,809 36,811 34,347
Corporate * (12,105 ) (23,518 ) (53,577 ) (76,148 )
Environmental Provision -   -   (55,800 ) -  
Total Operating Profit 89,591 83,121 316,290 347,876
 
Interest Income 577 379 1,713 1,867
Interest Expense (10,093 ) (5,809 ) (39,222 ) (26,460 )
Miscellaneous- Net 3,751   2,903   2,375   2,733  
Income Before Income Taxes 83,826 80,594 281,156 326,016
Provision for Income Taxes 27,254   30,482   87,587   105,065  
Net income before allocation to noncontrolling interests 56,572 50,112 193,569 220,951
 
Less: Noncontrolling interest in subsidiaries' earnings 360 406 897 1,449
       
Net income attributable to common shareholders $ 56,212   $ 49,706   $ 192,672   $ 219,502  
 
Share Data:
Earnings per Diluted Share $ 0.95 $ 0.84 $ 3.23 $ 3.73
 
Average Diluted Shares Outstanding 59,344 59,156 59,603 58,839
Average Basic Shares Outstanding 58,526 58,161 58,770 57,896
 

Supplemental Data:

Cost of Sales $ 479,965 $ 454,598 $ 1,901,240 $ 1,707,105
Selling, General & Administrative 143,399 128,906 604,115 512,881
Environmental Provision - - 55,800 -
Repositioning Charges (see non-GAAP measures) 11,095 - 22,687 -
Acquisition Related Charges (see non-GAAP measures) 6,608 14,824 24,865 27,419
Depreciation and Amortization ** 17,812 16,678 75,766 54,837
Stock-Based Compensation Expense 4,914 6,492 20,858 22,791
 
* Corporate includes $6.5 million for a settlement of a lawsuit recorded in June 2014. Corporate also included acquisition related costs of $0.1 million and $9.1 million for the three months ended December 31, 2014 and 2013, respectively and $1.3 million and $21.7 million of cost for the twelve months ended December 31, 2014 and 2013, respectively.
** Amount included within cost of sales and selling, general & administrative costs.
 
 
CRANE CO.
Condensed Balance Sheets
(in thousands)
         
December 31, December 31,
2014 2013
 
ASSETS
Current Assets
Cash and Cash Equivalents $ 346,266 $ 270,643
Accounts Receivable, net 410,931 437,541
Current Insurance Receivable - Asbestos 20,500 22,783
Inventories, net 369,719 368,886
Other Current Assets 47,602 49,239
Total Current Assets 1,195,018 1,149,092
 
Property, Plant and Equipment, net 290,264 305,055
Long-Term Insurance Receivable - Asbestos 126,750 148,222
Other Assets 644,437 707,922
Goodwill 1,191,459 1,249,316
 
Total Assets $ 3,447,928 $ 3,559,607
 
LIABILITIES AND EQUITY
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt $ 100,806 $ 125,826
Accounts Payable 228,822 229,828
Current Asbestos Liability 79,000 88,038
Accrued Liabilities 225,772 223,148
Income Taxes 5,624 2,062
Total Current Liabilities 640,024 668,902
 
Long-Term Debt 749,213 749,170
Long-Term Deferred Tax Liability 46,301 76,041
Long-Term Asbestos Liability 534,515 610,530
Other Liabilities 410,131 240,291
 
Total Equity 1,067,744 1,214,673
 
Total Liabilities and Equity $ 3,447,928 $ 3,559,607
 
 

CRANE CO.

Condensed Statements of Cash Flows

(in thousands)

       
Three Months Ended Twelve Months Ended
December 31, December 31,
  2014     2013     2014     2013  

Operating Activities:

Net income attributable to common shareholders $ 56,212 $ 49,706 $ 192,672 $ 219,502
Noncontrolling interest in subsidiaries' earnings   360     406     897     1,449  
Net income before allocations to noncontrolling interests 56,572 50,112 193,569 220,951
Environmental provision - - 55,800 -
Gain on divestiture (4,111 ) (2,727 ) (4,111 ) (2,727 )
Restructuring - Non Cash - - 954 -
Depreciation and amortization 17,812 16,678 75,766 54,837
Stock-based compensation expense 4,914 6,492 20,858 22,791
Defined benefit plans and postretirement (credit) expense (2,925 ) 1,240 (11,700 ) 4,779
Deferred income taxes 32,797 30,840 36,483 48,964
Cash provided by (used for) operating working capital 72,012 62,136 24,702 (26,672 )
Defined benefit plans and postretirement contributions (5,122 ) (2,744 ) (27,866 ) (15,929 )
Environmental payments, net of reimbursements (1,808 ) (4,201 ) (10,405 ) (15,403 )
Other   (4,519 )   5,120     (28,801 )   10,668  
Subtotal 165,622 162,946 325,249 302,259
Asbestos related payments, net of insurance recoveries   (15,104 )   (14,513 )   (61,297 )   (62,827 )
Total provided by operating activities   150,518     148,433     263,952     239,432  
 

Investing Activities:

Capital expenditures (11,580 ) (10,445 ) (43,732 ) (29,461 )
Proceeds from disposition of capital assets 4,718 83 9,694 455
Proceeds from divestiture - 6,836 2,081 6,836
Proceeds from (payments for) acquisitions   -     (801,781 )   6,100     (801,781 )
Total used for investing activities   (6,862 )   (805,307 )   (25,857 )   (823,951 )
 

Financing Activities:

Dividends paid (19,125 ) (17,494 ) (73,884 ) (67,272 )
Reacquisition of shares on open market (50,000 ) - (50,000 ) -
Stock options exercised - net of shares reacquired (561 ) 839 8,186 24,922
Excess tax benefit from stock-based compensation (168 ) 566 7,701 6,353
Proceeds received from credit facility - - - 125,000
Change in short-term debt (14,000 ) 1,482 (25,000 ) (321 )
Proceeds received from issuance of long-term notes - 550,000 - 550,000
Debt issuance costs - (6,006 ) - (6,006 )
Repayment of long-term debt   -     -     -     (200,000 )
Total used for financing activities   (83,854 )   529,387     (132,997 )   432,676  
 

Effect of exchange rate on cash and cash equivalents

  (15,208 )   (5,274 )   (29,475 )   (1,461 )

Increase (decrease) in cash and cash equivalents

44,594 (132,761 ) 75,623 (153,304 )

Cash and cash equivalents at beginning of period

    301,672     403,404     270,643     423,947  

Cash and cash equivalents at end of period

  $ 346,266   $ 270,643   $ 346,266   $ 270,643  
 
 
CRANE CO.
Order Backlog
(in thousands)
         
December 31, September 30,

    June 30,    

    March 31,    

December 31,
2014 2014

2014

2014 2013
 
Fluid Handling * $ 310,996 $ 349,618 $ 369,483 $ 350,720 $ 333,860
Payment & Merchandising Technologies 68,286 58,832 69,857 58,787 51,888
Aerospace & Electronics 422,104 404,833 396,835 397,541 361,323
Engineered Materials   16,690   14,406   17,017   16,624   14,661
Total Backlog $ 818,076 $ 827,689 $ 853,192 $ 823,672 $ 761,732
 
* Includes Order Backlog of $5.4 million at March 31, 2014 and $5.5 million at December 31, 2013 pertaining to a business divested in June 2014.
 
 
CRANE CO.
Non-GAAP Financial Measures
(in thousands)

INCOME ITEMS

           
  Three Months Ended Twelve Months Ended Percent Change Percent Change
December 31, December 31,

December 31, 2014

December 31, 2014
  2014     2013     2014     2013   Three Months Twelve Months
 
Net Sales $ 730,658 $ 681,449 $ 2,924,997 $ 2,595,281 7.2 % 12.7 %
 
 
Operating Profit 89,591 83,121 316,290 347,876 7.8 % -9.1 %
Percentage of Sales 12.3 % 12.2 % 10.8 % 13.4 %
 

Special Items impacting Operating Profit:

 
Acquisition transaction costs (a) - 10,170 - 22,765
 
Acquisition related inventory and backlog amortization (b) - 4,654 4,790 4,654
 
Acquisition related integration costs (c) 2,014 - 9,753 -
 
Acquisition related restructuring costs (d) 4,594 - 10,322 -
 
Repositioning charges (e) 11,095 - 22,687 -
 
Lawsuit settlement charge (f) - - 6,500 -
 
Environmental Provision (g) - - 55,800 -
       
Operating Profit before Special Items $ 107,294   $ 97,945   $ 426,142   $ 375,295   9.5 % 13.5 %
 
Percentage of Sales 14.7 % 14.4 % 14.6 % 14.5 %
 
 
Net Income Attributable to Common Shareholders $ 56,212 $ 49,706 $ 192,672 $ 219,502
Per Share $ 0.95 $ 0.84 $ 3.23 $ 3.73 12.7 % -13.3 %
 

Special Items impacting Net Income Attributable to Common Shareholders:

 
Acquisition transaction costs - Net of Tax (a) - 9,837 - 22,432
Per Share $ 0.17 $ 0.38
 
Acquisition related inventory and backlog amortization - Net of Tax (b) - 2,839 3,018 2,839
Per Share $ 0.05 $ 0.05 $ 0.05
 
Acquisition related integration costs - Net of Tax (c) 1,367 - 7,130 -
Per Share $ 0.02 $ 0.12
 
Acquisition related restructuring costs - Net of Tax (d) 3,212 - 7,017 -
Per Share $ 0.05 $ 0.12
 
Repositioning charges - Net of Tax (e) 9,919 - 17,982 -
Per Share $ 0.17 $ 0.30
 
Lawsuit settlement charge - Net of Tax (f) - - 4,225 -
Per Share $ - $ 0.07
 
Environmental Provision - Net of Tax (g) - 36,270 -
Per Share $ - $ 0.61
 
Loss on business divestiture - Net of Tax (h) - - 1,055 -
Per Share $ 0.02
 
Gain on real estate divestitures - Net of Tax (i) (3,498 ) - (4,158 ) -
Per Share $ (0.06 ) $ (0.07 )
 
Withholding taxes related to acquisition funding (j) - 1,192 - 2,892
Per Share $ 0.02 $ 0.05
 
Acquisition remedy related gain on sale of product line (k) - (2,006 ) - (2,006 )
Per Share $ (0.03 ) $ (0.03 )
       
Net Income Attributable To Common Shareholders Before Special Items $ 67,212 $ 61,568 $ 265,211 $ 245,659 9.2 % 8.0 %
Per Share $ 1.13 $ 1.04 $ 4.45 $ 4.18 8.8 % 6.6 %
 
(a) During the three and twelve months ended December 30, 2013, the Company recorded transaction costs associated with the acquisition of MEI.
 
(b) During the three months ended March 31, 2014 and three months ended December 31, 2013 the Company recorded inventory step-up and backlog amortization relating to the acquisition of MEI.
 
(c) During the three and twelve months ended December 31, 2014, the Company recorded integration costs associated with the acquisition of MEI.
 
(d) During the three and twelve months ended December 31, 2014, the Company recorded restructuring costs associated with the acquisition of MEI.
 

(e) During the three and twelve months ended December 31, 2014, the Company recorded repositioning charges in our Fluid Handling and Aerospace & Electronics segments.

 
(f) During the three months ended June 30, 2014, the Company recorded a $6.5 million charge related to the settlement of the previously disclosed environmental lawsuits by certain homeowners in Roseland, New Jersey.
 
(g) During the three months ended September 30, 2014, the Company recorded two Environmental Provisions, 1) a $49.0 million charge related to an increase in the Company's liability at its Goodyear, AZ Superfund Site, and 2) $6.8 million charge for expected remediation costs associated with a previously disclosed environmental site in Roseland, New Jersey.
 
(h) During the three month ended June 30, 2014, the Company recorded a loss on the divestiture of a small business.
 
(i) During the three and twelve month ended December 31, 2014, the Company recorded gains on real estate divestitures.
 
(j) In the three and twelve months ended December 31, 2013, the Company incurred withholding taxes related to the cash marshaling activities supporting the acquisition of MEI.
 

(k) During the three months ended December 31, 2013, the Company divested a product line within the Merchandising Systems segment pertaining to the execution of remedies associated with the MEI acquisition.

 
        2015 Full Year Guidance
 
2015 Earnings Per Share Guidance Low High
 
Earnings Per Share - GAAP basis $ 4.32 $ 4.52
 
Acquisition integration costs - Net of Tax (l) 0.08 0.08
 

Anticipated repositioning actions - Net of Tax (m)

0.05 0.05
 
   
Earnings Per Share - Non-GAAP basis $ 4.45 $ 4.65
 
(l) In 2015, the Company expects to incur integration related costs in a range of $6 million to $10 million in connection with the MEI acquisition. The $0.08 represents the estimated Earnings Per Share impact for the mid-point of the $6 million to $10 million range.
 
(m) In 2015, the Company expects to incur costs associated with facility repositioning actions related to the consolidation of certain smaller manufacturing sites.
 
 
CRANE CO.
Non-GAAP Financial Measures
(in thousands)
                 

CASH FLOW ITEMS

 
Three Months Ended Twelve Months Ended
December 31, December 31, 2015 Full Year Guidance
  2014     2013     2014     2013   Low High
Cash Provided from Operating Activities
before Asbestos - Related Payments $ 165,622 $ 162,946 $ 325,249 $ 302,259 $ 328,500 $ 338,500
Asbestos Related Payments, Net of Insurance Recoveries   (15,104 )   (14,513 )   (61,297 )   (62,827 )   (63,500 )   (53,500 )
Cash Provided from Operating Activities 150,518 148,433 263,952 239,432 265,000 285,000
Less: Capital Expenditures   (11,580 )   (10,445 )   (43,732 )   (29,461 )   (55,000 )   (45,000 )
Free Cash Flow $ 138,938   $ 137,988   $ 220,220   $ 209,971   $ 210,000   $ 240,000  
 
Certain non-GAAP measures have been provided to facilitate comparison with the prior year.
 
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance.
 
In addition, Free Cash Flow provides supplemental information to assist management and investors in analyzing the Company’s ability to generate liquidity from its operating activities. The measure of Free Cash Flow does not take into consideration certain other non-discretionary cash requirements such as, for example, mandatory principal payments on the Company's long-term debt. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.

Contact:

Crane Co.
Jason D. Feldman, 203-363-7329
Director, Investor Relations
www.craneco.com