Engineered industrial products maker Crane Co. (CR) Monday reported a year-over-year drop in profit for the first quarter, hurt by a lawsuit settlement charge and an 18.2% drop in quarterly sales. However, the company's quarterly earnings per share topped analysts' expectations by four cents. At the same time, the company also reaffirmed its full-year 2009 earnings forecast.
In a statement, president and chief executive officer, Eric Fast said, "While our sales and earnings declined significantly from our record first quarter 2008 results, our earnings were in line with our expectations. Sales and orders were lower than expected, as core sales declined 16% and orders declined more sharply resulting in backlog decreasing 7% compared to year end 2008."
The Stamford, Connecticut-based company reported net income of $23.31 million or $0.40 per share for the first quarter, lower than $48.38 million or $0.79 per share for the year-ago quarter.
The results for the latest quarter results include an after-tax $5.04 million or $0.09 per share related to a lawsuit settlement. Excluding the item, adjusted net income for the latest quarter was $28.06 million or $0.48 per share.
On average, three analysts polled by Thomson Reuters expected the company to earn $0.44 per share for the first quarter. Analysts' estimates typically exclude special items.
Total net sales for the quarter fell 18.2% to $555.14 million from $678.87 million in the same quarter last year. The decline was primarily due to a 16% drop in core business and a 7% negative impact of a stronger US dollar, partially offset by a 5% increase in sales from acquired businesses.
Order backlog at the end of the first quarter totaled $724.47 million, which is 7% lower than the backlog of $781.89 million at the end of the previous quarter, and also lower than $768.66 million at the end of the year-ago quarter.
Sales for the aerospace & electronics totaled $151.95 million, down 4% from $158.45 million in the prior-year quarter. For Engineered Materials, sales plunged 54% to $38.15 million from $82.77 million in the year-ago quarter.
Merchandising Systems sales dropped 37% to $71.69 million from $113.50 million in the comparable quarter a year ago. Fluid Handling segment sales decreased 8% to $266.50 million from $288.50 million in the prior-year quarter. For the Controls division, sales declined 25% to $26.85 million from $35.64 million in the year-ago quarter.
Operating profit for the quarter plunged to $37.88 million from $75.35 million in the same quarter of the preceding year. Selling, general and administrative expenses decreased to $135.25 million from $150.99 million in the prior-year quarter.
Interest expenses grew to $6.77 million from $6.51 million in the year-ago quarter. Provision for income taxes was $10.24 million, lower than $23.08 million in the same quarter of last year.
The company ended the first quarter with cash and cash equivalents of $210.32 million, compared to $294.73 million at end of the prior-year quarter.
Excluding the two acquisitions in 2008, headcount has been reduced by 1,600 people, or 13%, since year end 2007, of which 700 occurred in the first quarter of this year.
"While sales were lower than anticipated in certain businesses, we are pleased with the impact of our cost reduction efforts. We continue to pursue further opportunities to ensure our cost structure is properly aligned to demand and expect to substantially exceed our previously announced 2009 cost savings goal of $75 million," Fast added.
Separately, Crane also announced that on Friday, it reached agreement to settle a previously disclosed lawsuit brought by Coachmen Industries (COHM.PK) alleging failure of the company's fiberglass-reinforced plastic material. Pursuant to mediation, Crane agreed to pay Coachmen an aggregate of $17.75 million in several installments through July 1, 2009.
"We anticipate that our expanded cost reduction program will allow us to offset the impact of lower than expected sales, and excluding the impact of the legal settlement we are re-affirming earnings guidance," the company noted.
Looking ahead to fiscal 2009, Crane re-affirmed its GAAP earnings forecast in a range of $2.01 to $2.31 per share and non-GAAP guidance in a range of $2.10 to $2.40 per share, excluding the $0.09 per share impact of a legal settlement. However, the guidance includes $0.15 per share for planned restructuring and integration activities. Analysts expect the company to report earnings of $2.07 per share for the full-year 2009.
CR closed Monday's regular trading session at $18.87, down $1.47 or 7.23% on a volume of 0.38 million shares, lower than the three-month average volume of 0.50 million shares. In the past 52-week period, the stock has been trading in a range of $10.87 to $46.29.
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