CR
Crane CO
NYSE
8-K: Crane Company to Divest Engineered Materials Segment for $227 Million
Sentiment:
Divestiture Announcement
2 December 2024 4:36 PM
Crane Company has agreed to sell its Engineered Materials business to KPS Capital Partners for $227 million, marking a significant step in its portfolio simplification strategy.
Worse than expected
The company has lowered its full-year 2024 adjusted EPS guidance from continuing operations to $4.71 to $4.86, reflecting the impact of the divestiture.
Summary
- Crane Company has entered into an agreement to sell its Engineered Materials segment to KPS Capital Partners for $227 million.
- This divestiture is part of Crane's ongoing strategy to simplify its portfolio and focus on its core growth platforms: Aerospace & Electronics and Process Flow Technologies.
- The transaction is expected to close in the first quarter of fiscal year 2025, subject to customary closing conditions and regulatory approvals.
- Crane will present Engineered Materials as discontinued operations starting with the fourth quarter of 2024 results, with retrospective adjustments for prior periods.
- The company has revised its full-year 2024 adjusted EPS guidance from continuing operations to $4.71 to $4.86, down from the previous range of $5.05 to $5.20, to reflect the discontinued operations.
- For the fourth quarter of 2024, Crane expects adjusted EPS from continuing operations to be between $1.10 and $1.25.
Sentiment
Score: 6
Explanation: The sentiment is moderately positive as the divestiture is part of a strategic move to focus on core growth areas, but the reduced EPS guidance is a negative factor.
Positives
- The divestiture allows Crane to focus on its strategic growth platforms, Aerospace & Electronics and Process Flow Technologies.
- The sale of Engineered Materials simplifies Crane's portfolio, aligning with its long-term strategy.
- The company has successfully divested non-core assets and strengthened its core businesses through strategic acquisitions.
- The transaction provides Crane with $227 million in capital.
Negatives
- The sale of the Engineered Materials segment will result in a reduction in Crane's overall revenue and earnings.
- The company has lowered its full-year 2024 adjusted EPS guidance from continuing operations to $4.71 to $4.86, reflecting the impact of the divestiture.
Risks
- The transaction is subject to customary closing conditions, including regulatory approvals, which may not be obtained.
- There is a risk that the company may not be able to successfully realize the expected benefits from the divestiture.
- The company's future financial performance will be impacted by the loss of the Engineered Materials segment's contribution.
Future Outlook
Crane Company will focus on its two strategic growth platforms, Aerospace & Electronics and Process Flow Technologies, and will continue to actively manage its portfolio to drive sustainable, profitable growth. The company expects the divestiture to close in the first quarter of fiscal year 2025.
Management Comments
- Max Mitchell, Chairman of the Board, President and Chief Executive Officer of Crane Company, stated that the divestiture is an important step in simplifying the portfolio and focusing on strategic growth platforms.
- Mr. Mitchell also expressed pride in the Engineered Materials team and wished them well under new ownership.
Industry Context
This divestiture is part of a broader trend of industrial companies streamlining their portfolios to focus on core businesses and higher-growth segments. Crane's move aligns with this trend, as it seeks to concentrate on its Aerospace & Electronics and Process Flow Technologies divisions.
Comparison to Industry Standards
- Many industrial companies are divesting non-core assets to improve profitability and focus on strategic growth areas, similar to Crane's move.
- Companies like Honeywell and General Electric have also undergone significant portfolio restructuring in recent years, selling off divisions to concentrate on core businesses.
- The valuation of $227 million for the Engineered Materials segment will likely be compared to similar transactions in the industrial materials sector to assess its fairness.
- KPS Capital Partners' investment strategy of improving the strategic position and profitability of its portfolio companies is a common approach in private equity.
Stakeholder Impact
- Shareholders will see a change in the company's structure and financial results due to the divestiture.
- Employees of the Engineered Materials segment will transition to new ownership under KPS Capital Partners.
- Customers of Crane will continue to be served by the remaining business segments.
- Suppliers and creditors will need to adjust to the new structure of the company.
Next Steps
- Crane Company will work to complete the sale of the Engineered Materials segment to KPS Capital Partners.
- The company will present Engineered Materials as discontinued operations starting with the fourth quarter of 2024 results.
- Crane will focus on growing its Aerospace & Electronics and Process Flow Technologies segments.
Key Dates
- December 2, 2024: Crane Company announced the agreement to sell its Engineered Materials segment.
- October 28, 2024: Crane's last full-year 2024 adjusted earnings per diluted share (EPS) guidance was published.
- September 30, 2024: KPS Capital Partners reported $21.4 billion of assets under management.
- First quarter of fiscal year 2025: Anticipated closing date of the Engineered Materials divestiture.
Keywords
divestiture, engineered materials, KPS Capital Partners, portfolio simplification, adjusted EPS, discontinued operations, strategic growth platforms, aerospace & electronics, process flow technologies
CR
Crane CO
NYSE
Sector: Industrials
Filings with Classifications
Better than expected
1 May 2025 3:31 PM
Quarterly Report
- The company's net sales, operating profit, and earnings per share all increased compared to the same period last year.
- The company's operating margin improved significantly.
- The company completed the sale of its Engineered Materials segment, which is expected to improve future profitability.
Better than expected
14 March 2025 6:38 AM
Proxy Statement
- Final 2024 financial and operational results, adjusted for strategic actions, were substantially above our original financial targets for the year driven by a combination of a better-than-expected recovery in certain end markets, consistent and strong operational execution, and substantial benefits from strategic growth investments.
Better than expected
27 February 2025 9:47 PM
Annual Report
- The company's net sales increased by 14.5% to $2,131.2 million.
- Operating profit increased by 42.1% to $355.8 million.
Better than expected
27 January 2025 4:31 PM
Quarterly Report
- The company's Q4 2024 EPS and adjusted EPS both increased by 58%, significantly exceeding expectations.
- The company's full year 2024 adjusted EPS grew by 28%, significantly exceeding expectations.
- The company's 2025 adjusted EPS guidance of $5.30-$5.60, representing 12% growth at the midpoint, is better than expected.
Worse than expected
2 December 2024 4:36 PM
Divestiture Announcement
- The company has lowered its full-year 2024 adjusted EPS guidance from continuing operations to $4.71 to $4.86, reflecting the impact of the divestiture.
Better than expected
31 October 2024 4:14 PM
Quarterly Report
- The company's net sales, operating profit, and net income from continuing operations all showed significant year-over-year increases, indicating better than expected performance.
- The company's core sales growth and contributions from acquisitions exceeded expectations, driving the positive results.
- The company's operating profit margin improved due to higher pricing, productivity gains, and operating leverage, indicating better than expected profitability.
Better than expected
28 October 2024 4:39 PM
Quarterly Report
- The company's earnings per share and adjusted earnings per share exceeded expectations.
- Sales growth was higher than anticipated, driven by strong core sales.
- The company raised its full-year adjusted EPS guidance, indicating confidence in future performance.
Better than expected
31 July 2024 4:09 PM
Quarterly Report
- The company's net sales, operating profit, and net income from continuing operations all showed significant increases compared to the same period last year, indicating better than expected results.
Better than expected
29 July 2024 4:45 PM
Quarterly Report
- The company's second-quarter results exceeded expectations with a 64% increase in GAAP EPS and an 18% increase in adjusted EPS.
- The company raised its full-year adjusted EPS guidance, indicating better-than-expected performance and future outlook.
Better than expected
1 May 2024 4:28 PM
Quarterly Report
- The company's net sales, operating profit, and net income from continuing operations all showed significant year-over-year increases, indicating better than expected performance.
- The Aerospace & Electronics segment's 25.4% sales growth was particularly strong, exceeding expectations.
- The company's strategic acquisitions contributed positively to the overall results, further driving better than expected performance.
Better than expected
22 April 2024 4:27 PM
Quarterly Report
- The company raised its full-year adjusted EPS guidance, indicating better than expected performance.
- The company reported a 5% core sales growth and an 11% increase in core orders and backlog, exceeding previous expectations.
Better than expected
7 March 2024 5:02 PM
Proxy Statement
- Final 2023 financial and operational results, adjusted for strategic actions, were substantially above our original financial targets for the year, driven by a combination of a better-than-expected recovery in certain end markets, consistent and strong operational execution, and substantial benefits from strategic growth investments.
Better than expected
26 February 2024 4:49 PM
Annual Results
- The company's operating profit increased significantly due to the absence of a loss on divestiture of asbestos-related assets and liabilities.
- The Aerospace & Electronics segment saw strong sales growth, driven by higher volumes and pricing.
- The company's core business sales grew by 6.9%, indicating strong underlying demand.
Better than expected
29 January 2024 4:20 PM
Quarterly Report
- The company's Q4 results exceeded expectations with a 38% increase in operating profit and a 14% increase in adjusted operating profit.
- The company's 2024 guidance indicates a 10% growth in adjusted EPS, which is a positive outlook.
- The company's record backlog in Aerospace & Electronics and strong margins in Process Flow Technologies suggest better than expected performance.
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