10-K: Crane Company Reports Strong 2023 Results Following Business Separation and Strategic Acquisitions

• Crane Company's 2023 net sales reached $2,086.4 million, a 2.5% increase compared to 2022.
• Core business sales grew by 6.9%, driven primarily by higher pricing.
• The company completed the acquisition of Baum lined piping GmbH in October 2023 and Vian Enterprises, Inc. in January 2024.
• Operating profit significantly increased to $283.8 million, a 648.8% jump from the previous year, primarily due to the absence of a loss on divestiture of asbestos-related assets and liabilities.
• Net income attributable to common shareholders was $255.9 million, compared to $401.1 million in 2022, which included a gain on sale of Crane Supply.
• The Aerospace & Electronics segment saw a sales increase of 18.3%, while Process Flow Technologies experienced a slight decrease of 3.3% and Engineered Materials decreased by 13.2%.

Score: 7

Explanation: The document presents a generally positive outlook with strong growth in key segments and strategic acquisitions. However, there are some concerns about macroeconomic risks and the performance of certain segments, which temper the overall sentiment.

• Core sales growth of 6.9% indicates strong underlying demand for Crane's products.
• The Aerospace & Electronics segment showed significant growth, driven by both commercial and military markets.
• The acquisition of BAUM and Vian are expected to contribute to future growth.
• The company's operating profit saw a substantial increase, indicating improved profitability.
• The company has a strong backlog in the Aerospace & Electronics segment, suggesting future revenue visibility.

• Process Flow Technologies segment experienced a slight decrease in sales of 3.3%.
• Engineered Materials segment sales decreased by 13.2%, primarily due to lower volumes in the recreational vehicle market.
• Selling, general and administrative expenses increased by 1.5%, primarily due to costs related to the separation.
• Net income attributable to common shareholders decreased due to the absence of a gain on sale of business in 2023.

• The company's business is subject to macroeconomic fluctuations and geopolitical risks.
• Fluctuations in raw material prices could adversely affect profitability.
• Supply chain disruptions could impact the company's ability to source components and raw materials.
• Demand for the company's products is variable and subject to factors beyond its control.
• The company faces competition for highly qualified employees.
• Failure to comply with governmental regulations could adversely affect the company.
• Cybersecurity breaches could disrupt operations and compromise sensitive data.
• International operations are subject to economic and political instability and currency fluctuations.
• The company may be unable to successfully integrate acquisitions.
• Pension costs may fluctuate significantly due to changes in actuarial assumptions and market performance.

For 2024, Crane Company expects a total year-over-year sales increase of approximately 7% to 9%, driven by approximately 3% to 5% core growth, and approximately 4% sales contribution from the Baum lined piping GmbH and the Vian Enterprises, Inc. acquisitions. The company also expects an improvement in operating profit driven primarily by lower transaction related expenses, productivity benefits, higher pricing net of inflation, operating leverages on higher volumes and contributions from the BAUM and Vian acquisitions, partially offset by unfavorable mix.

• Our strategy is to grow earnings and cash flow by focusing on the manufacturing of highly engineered industrial products for specific markets where our scale is a relative advantage.
• We continuously evaluate our portfolio, pursue acquisitions that complement our existing businesses and are accretive to our growth profile, selectively divest businesses where appropriate, and pursue internal mergers to improve efficiency.
• We strive to foster a performance-based culture focused on productivity and continuous improvement, to attract and retain a committed management team whose interests are directly aligned with those of our shareholders, and to maintain a focused, efficient corporate structure.

The report reflects the ongoing recovery in the aerospace industry, with increased demand for both commercial and military products. The company's strategic acquisitions align with industry trends of consolidation and expansion into new markets. The focus on sustainability and clean energy in the Process Flow Technologies segment also reflects broader industry trends.

• Crane's Aerospace & Electronics segment's 18.3% sales growth is strong compared to some of its peers in the aerospace industry, which are also experiencing a recovery but may not be seeing the same level of growth.
• The Process Flow Technologies segment's slight sales decrease contrasts with some competitors who are seeing growth in the chemical and pharmaceutical sectors, suggesting Crane may need to focus on market share gains in these areas.
• The Engineered Materials segment's decline in sales is likely reflective of the broader slowdown in the RV market, which is impacting other companies in this sector.
• Crane's operating profit increase of 648.8% is significantly higher than many of its peers, but this is largely due to the absence of a one-time loss in 2022, and the underlying operating performance is more in line with industry averages.
• The company's focus on acquisitions is a common strategy in the industrial sector, but the success of these acquisitions will depend on effective integration and realization of synergies, which is a challenge for many companies.

• Shareholders will benefit from the company's growth and strategic acquisitions.
• Employees may experience changes due to restructuring and integration activities.
• Customers will benefit from the company's focus on high-quality products and customer service.
• Suppliers may be affected by the company's supply chain management practices.
• Creditors will be impacted by the company's debt levels and financial performance.

• The company will focus on integrating the acquired businesses.
• Crane will continue to execute its strategy of focusing on highly engineered industrial products.
• The company will continue to evaluate opportunities to reduce costs and improve efficiency.
• Crane will monitor and respond to changes in market conditions and customer demand.

• The company is involved in various legal proceedings, including those related to product liability, government contracting violations, patent infringement, commercial, employment, employee benefits, environmental and stockholder matters.
• The company has agreed to indemnify Redco against the Goodyear, Roseland, and Crab Orchard environmental liabilities.

• The company has entered into various agreements with Crane NXT, Co. to effect the separation and provide a framework for their relationship after the separation, including a transition services agreement, an employee matters agreement, a tax matters agreement and an intellectual property matters agreement.

• April 3, 2023: Crane Holdings, Co. completed the Separation into two independent, publicly-traded companies, Crane NXT, Co. and Crane Company.
• October 4, 2023: Crane Company completed the acquisition of Baum lined piping GmbH.
• January 2, 2024: Crane Company completed the acquisition of Vian Enterprises, Inc.