Crane pany(CR) - 2023 Q1 - Quarterly Report

Part I - Financial Information Unaudited condensed consolidated financial statements and management's analysis for Crane Holdings, Co. and Crane Company Item 1: Financial Statements Presents unaudited condensed consolidated financial statements for Crane Holdings, Co. and supplemental combined statements for Crane Company - On April 3, 2023, Crane Holdings, Co. separated into two independent companies, spinning off its Aerospace & Electronics, Process Flow Technologies, and Engineered Materials segments into a new entity named Crane Company, with Crane Holdings, Co. subsequently renamed Crane NXT, Co[39] - For accounting purposes, this is treated as a "reverse spin-off," where Crane Company is considered the accounting successor to Crane Holdings, Co., and the historical financial statements of Crane Holdings, Co. are presented as the primary financial statements of Crane Company[459][226] Crane Holdings, Co. Condensed Consolidated Financial Statements Consolidated financial statements for Crane Holdings, Co. for Q1 2023, detailing key financial performance and position metrics Q1 2023 Consolidated Statement of Operations Highlights | Metric | Q1 2023 ($ millions) | Q1 2022 ($ millions) | | :--- | :--- | :--- | | Net Sales | $842.9 | $871.5 | | Operating Profit | $152.2 | $147.0 | | Net Income | $105.7 | $105.0 | | Diluted EPS | $1.84 | $1.81 | Consolidated Balance Sheet Highlights | Metric | March 31, 2023 ($ millions) | Dec 31, 2022 ($ millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $510.2 | $657.6 | | Total Current Assets | $1,695.8 | $1,751.9 | | Goodwill | $1,530.9 | $1,527.5 | | Total Assets | $4,336.0 | $4,390.2 | | Total Liabilities | $2,318.3 | $2,486.2 | | Total Equity | $2,017.7 | $1,904.0 | Consolidated Cash Flow Highlights | Metric | Q1 2023 ($ millions) | Q1 2022 ($ millions) | | :--- | :--- | :--- | | Cash used for operating activities | ($70.8) | ($55.5) | | Cash used for investing activities | ($12.8) | ($13.0) | | Cash used for financing activities | ($67.8) | ($97.8) | | Decrease in cash | ($147.4) | ($171.4) | Notes to Condensed Consolidated Financial Statements Details the basis of presentation, segment performance, revenue disaggregation, and key events like the Redco Sale and new financing Q1 2023 Segment Performance | Segment | Net Sales ($ millions) | Operating Profit ($ millions) | | :--- | :--- | :--- | | Aerospace & Electronics | $180.1 | $37.7 | | Process Flow Technologies | $271.4 | $63.3 | | Payment & Merchandising Technologies | $329.1 | $79.4 | | Engineered Materials | $62.3 | $11.4 | - Total backlog (remaining performance obligations) was $1,580.5 million as of March 31, 2023, with 84% expected to be recognized as revenue in 2023[94] - As a result of the Redco Sale in August 2022, all asbestos obligations and related assets were removed from the company's balance sheet, and the company no longer has obligations for pending and future asbestos claims[119] - In March 2023, the company entered into a new senior secured credit agreement, including a $500 million revolving facility and a $350 million term loan facility, to support the post-Separation entity[123] Crane Company Supplemental Condensed Combined Financial Statements Supplemental combined financial statements for Crane Company in Q1 2023, detailing key financial performance and position metrics Q1 2023 Combined Statement of Operations Highlights | Metric | Q1 2023 ($ millions) | Q1 2022 ($ millions) | | :--- | :--- | :--- | | Net Sales | $513.8 | $538.9 | | Operating Profit | $86.3 | $70.2 | | Net Income | $61.8 | $54.1 | Combined Balance Sheet Highlights | Metric | March 31, 2023 ($ millions) | Dec 31, 2022 ($ millions) | | :--- | :--- | :--- | | Total Assets | $2,231.7 | $2,265.2 | | Total Liabilities | $668.8 | $1,123.5 | | Total Crane net investment | $1,562.9 | $1,141.7 | - The financial statements include allocated corporate costs from the parent company, Crane, amounting to $25.8 million in Q1 2023 and $19.6 million in Q1 2022[442][4] Notes to Condensed Combined Financial Statements Details the stand-alone basis of presentation, allocation of centralized costs, segment results, and specific contingencies for Crane Company Q1 2023 Combined Segment Performance | Segment | Net Sales ($ millions) | Operating Profit ($ millions) | | :--- | :--- | :--- | | Aerospace & Electronics | $180.1 | $37.7 | | Process Flow Technologies | $271.4 | $63.3 | | Engineered Materials | $62.3 | $11.4 | - Total backlog for the combined business was $1,024.4 million as of March 31, 2023[208] - The business is responsible for environmental remediation liabilities, notably at the Goodyear, Arizona site, for which it has an estimated gross liability of $23.7 million as of March 31, 2023[10][448] - A one-time cash dividend of $275 million was declared and paid to the parent, Crane Holdings, Co., on April 3, 2023, prior to the Separation[296] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's analysis of financial condition and results of operations for Crane Holdings, Co. and Crane Company for Q1 2023 MD&A of Crane Holdings, Co. Management discusses Q1 2023 consolidated results for Crane Holdings, Co., highlighting sales trends, operating profit changes, and key drivers - Q1 2023 sales decreased by $28.6 million (3.3%) year-over-year, driven by the divestiture of Crane Supply and negative foreign currency effects, partially offset by a $54.2 million (6.2%) increase in core sales[324][302] - Operating profit increased by $5.2 million (3.5%) to $152.2 million, mainly due to higher pricing net of inflation and productivity gains totaling $43.9 million[303] - Aerospace & Electronics sales grew 14.6% to $180.1 million, driven by strong demand in both commercial and military markets[358][306] - Process Flow Technologies sales decreased 12.8% to $271.4 million, largely due to the Crane Supply divestiture, but saw core sales growth of 9.7%[333] MD&A of Crane Company (Supplemental) This supplemental MD&A for Crane Company highlights Q1 2023 sales trends, operating profit changes, and key performance drivers - Q1 2023 combined sales decreased by $25.1 million (4.7%) year-over-year, with the divestiture of Crane Supply being the primary driver, partially offset by an 8.4% increase in core sales[403][375] - Operating profit for the combined businesses increased by $16.1 million (22.9%) to $86.3 million, reflecting strong pricing and productivity gains of $27.1 million[404] - Cash used for operating activities decreased slightly to $71.6 million in Q1 2023 from $74.3 million in Q1 2022, due to higher adjusted net income and lower asbestos-related payments[389] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk disclosures have occurred since the Annual Report on Form 10-K for December 31, 2022 - There have been no material changes in market risk since the last Annual Report on Form 10-K[394] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[395] - There were no changes in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, its internal controls[418] Part II - Other Information This section covers legal proceedings, risk factors, and a list of exhibits filed with the Form 10-Q Item 1. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 10, "Commitments and Contingencies," in the financial statements - Information regarding legal proceedings is incorporated by reference from Note 10 of the financial statements[422] Item 1A. Risk Factors Risk factors are referenced from the Annual Report on Form 10-K for December 31, 2022, with no material changes noted - Risk factor information is referenced from the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[397] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including key agreements related to the company's separation and executive certifications - Key exhibits filed include the Separation and Distribution Agreement, Transition Services Agreement, Tax Matters Agreement, and Employee Matters Agreement related to the spin-off from Crane Holdings, Co[400]