Crane Co [CR] Filings

10-Q 1 cr-20240630.htm 10-Q cr-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Mark One:


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 1-41570

CRANE COMPANY

(Exact name of registrant as specified in its charter)



Delaware						88-2846451
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


100 First Stamford Place	Stamford	CT	06902
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: 203-363-7300

(Not Applicable)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00	CR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non–accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

(check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the issuer’s classes of common stock, as of July 30, 2024

Common stock, $1.00 Par Value – 57,210,051 shares

Crane Company

Table of Contents

Form 10-Q

Page

Part I - Financial Information

Item 1.

Financial Statements

Condensed Consolidated Statements of Operations

Page 3

Condensed Consolidated Statements of Comprehensive Income

Page 4

Condensed Consolidated Balance Sheets

Page 5

Condensed Consolidated Statements of Cash Flows

Page 7

Condensed Consolidated Statements of Changes in Equity

Page 9

Notes to Condensed Consolidated Financial Statements

Page 11

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Page 28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Page 42

Item 4.

Controls and Procedures

Page 42

Part II - Other Information

Page 43

Page 43

Unregistered Sales of Equity Securities and Use of Proceeds

Page 43

Item 3.

Defaults Upon Senior Securities

Page 43

Item 4.

Mine Safety Disclosures

Page 43

Page 43

Page 44

Page 45

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

CRANE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions, except per share data)	2024		2023		2024		2023
Net sales	$	581.2	$	509.6	$	1,146.5	$	1,023.4
Operating costs and expenses:
Cost of sales	357.3		308.5		702.1		615.4
Selling, general and administrative	127.3		138.0		258.4		267.4


Operating profit	96.6		63.1		186.0		140.6
Other (expense) income:
Interest income	1.3		0.8		2.5		1.7
Interest expense	(7.4)		(5.3)		(14.6)		(11.8)

Miscellaneous income (expense), net	1.1		(1.3)		(0.2)		(1.9)
Total other expense, net	(5.0)		(5.8)		(12.3)		(12.0)
Income from continuing operations before income taxes	91.6		57.3		173.7		128.6
Provision for income taxes	20.0		14.0		37.3		29.4
Net income from continuing operations attributable to common shareholders	71.6		43.3		136.4		99.2
Income from discontinued operations, net of tax (Note 3)	—		2.3		—		52.1
Net income attributable to common shareholders	$	71.6	$	45.6	$	136.4	$	151.3

Earnings per basic share:
Earnings per basic share from continuing operations	$	1.25	$	0.76	$	2.39	$	1.75
Earnings per basic share from discontinued operations	—		0.04		—		0.92
Earnings per basic share	$	1.25	$	0.80	$	2.39	$	2.67

Earnings per diluted share:
Earnings per diluted share from continuing operations	$	1.23	$	0.75	$	2.34	$	1.73
Earnings per diluted share from discontinued operations	—		0.04		—		0.91
Earnings per diluted share	$	1.23	$	0.79	$	2.34	$	2.64

Average shares outstanding:
Basic	57.2		56.7		57.1		56.6
Diluted	58.3		57.4		58.2		57.4

Dividends per share	$	0.205	$	0.18	$	0.41	$	0.18

See Notes to Condensed Consolidated Financial Statements.

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CRANE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2024		2023		2024		2023
Net income before allocation to noncontrolling interests	$	71.6	$	45.6	$	136.4	$	151.3
Components of other comprehensive (loss) income, net of tax
Currency translation adjustment	(3.3)		0.7		(15.7)		13.4
Changes in pension and postretirement plan assets and benefit obligation, net of tax	3.0		2.6		6.0		5.3
Other comprehensive income, net of tax	(0.3)		3.3		(9.7)		18.7
Comprehensive income before allocation to noncontrolling interests	71.3		48.9		126.7		170.0
Less: Noncontrolling interests in comprehensive income	—		(0.1)		(0.1)		(0.2)
Comprehensive income attributable to common shareholders	$	71.3	$	49.0	$	126.8	$	170.2

See Notes to Condensed Consolidated Financial Statements.

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CRANE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in millions)	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	229.3	$	329.6
Accounts receivable, net of allowance for doubtful accounts of $7.5 as of June 30, 2024 and $8.4 as of December 31, 2023	370.9		306.4
Inventories, net:
Finished goods	65.7		67.0
Finished parts and subassemblies	51.3		49.9
Work in process	53.1		40.6
Raw materials	219.5		195.6
Inventories, net	389.6		353.1
Other current assets	119.4		101.7

Total current assets	1,109.2		1,090.8
Property, plant and equipment:
Cost	778.5		776.3
Less: accumulated depreciation	504.9		505.8
Property, plant and equipment, net	273.6		270.5
Long-term deferred tax assets	2.5		2.7
Other assets	141.3		134.0
Intangible assets, net	156.0		87.9
Goodwill	824.1		747.7

Total assets	$	2,506.7	$	2,333.6

See Notes to Condensed Consolidated Financial Statements.

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CRANE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in millions, except per share and share data)	June 30, 2024		December 31, 2023
Liabilities and equity
Current liabilities:
Short-term borrowings	$	130.0	$	—
Accounts payable	157.4		179.1
Accrued liabilities	229.3		273.7
U.S. and foreign taxes on income	3.9		14.3

Total current liabilities	520.6		467.1
Long-term debt, net	246.9		248.5
Accrued pension and postretirement benefits	102.1		115.0
Long-term deferred tax liability	49.1		37.1
Other liabilities	112.3		105.6

Total liabilities	1,031.0		973.3
Commitments and contingencies (Note 12)
Equity:

Common shares, par value $1.00; 66,475,307 shares authorized; 57,186,163 and 56,919,443 shares issued and outstanding, respectively	57.2		56.9
Capital surplus	410.0		398.2
Retained earnings	1,073.7		960.7
Accumulated other comprehensive loss	(67.6)		(58.0)

Total shareholders’ equity	1,473.3		1,357.8
Noncontrolling interests	2.4		2.5
Total equity	1,475.7		1,360.3
Total liabilities and equity	$	2,506.7	$	2,333.6

See Notes to Condensed Consolidated Financial Statements.

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CRANE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended
	June 30,
(in millions)	2024		2023
Operating activities:
Net income attributable to common shareholders	$	136.4	$	151.3
Less: Income from discontinued operations, net of tax	—		52.1
Net income from continuing operations attributable to common shareholders	136.4		99.2


Depreciation and amortization	26.7		19.0
Stock-based compensation expense	13.5		14.0
Defined benefit plans and postretirement cost	1.9		4.8
Deferred income taxes	—		(3.7)
Cash used for operating working capital	(186.4)		(183.3)
Defined benefit plans and postretirement contributions	(6.0)		(5.7)
Environmental payments, net of reimbursements	(2.8)		(1.9)
Other	(1.2)		4.6
Total used for operating activities from continuing operations	(17.9)		(53.0)
Investing activities:
Payment for acquisitions - net of cash acquired	(166.3)		—
Capital expenditures	(16.5)		(20.5)
Other investing activities	5.7		(0.3)


Total used for investing activities from continuing operations	(177.1)		(20.8)
Financing activities:
Dividends paid	(23.4)		(36.8)

Net (payments) proceeds related to employee stock plans	(5.1)		13.7
Debt issuance costs	—		(7.5)



Proceeds from long-term debt	190.0		300.0


Proceeds from term facility of discontinued operations	—		350.0
Repayments of long-term debt	(61.9)		(436.9)
Distribution of Crane NXT, Co.	—		(578.1)
Total provided by (used for) financing activities from continuing and discontinued operations	99.6		(395.6)
Discontinued Operations:
Total provided by operating activities	—		34.6
Total used for investing activities	—		(4.1)
Increase in cash and cash equivalents from discontinued operations	—		30.5
Effect of exchange rates on cash and cash equivalents	(4.9)		0.2
Decrease in cash and cash equivalents	(100.3)		(438.7)
Cash and cash equivalents at beginning of period (a)	329.6		657.6
Cash and cash equivalents at end of period	$	229.3	$	218.9


(a) 2023 Includes cash and cash equivalents of discontinued operations.

See Notes to Condensed Consolidated Financial Statements.

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CRANE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended
	June 30,
(in millions)	2024		2023
Detail of cash used for operating working capital from continuing operations:
Accounts receivable	$	(58.2)	$	(28.1)
Inventories	(22.6)		(63.9)
Other current assets	(11.3)		(20.5)
Accounts payable	(24.3)		(20.6)
Accrued liabilities	(46.8)		(23.5)
U.S. and foreign taxes on income	(23.2)		(26.7)
Total	$	(186.4)	$	(183.3)

Supplemental disclosure of cash flow information:
Interest paid	$	12.8	$	10.2
Income taxes paid	$	60.6	$	58.7

See Notes to Condensed Consolidated Financial Statements.

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CRANE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)


(in millions, except share data)	Common Shares Issued at Par Value	Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Loss		Total Share- holders’ Equity		Non-controlling Interest		Total Equity
BALANCE DECEMBER 31, 2023	56.9	$	398.2	$	960.7	$	(58.0)	$	1,357.8	$	2.5	$	1,360.3
Net income	—	—		64.8		—		64.8		—		64.8
Cash dividends ($0.205 per share)	—	—		(11.7)		—		(11.7)		—		(11.7)

Exercise of stock options	0.1	2.4		—		—		2.5		—		2.5
Impact from settlement of share-based awards, net of shares acquired	0.1	(11.1)		—		—		(11.0)		—		(11.0)
Impact from settlement of liability PRSUs (Note 1)	—	6.1		—		—		6.1		—		6.1
Stock-based compensation expense	—	5.4		—		—		5.4		—		5.4
Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		3.0		3.0		—		3.0
Currency translation adjustment	—	—		—		(12.3)		(12.3)		(0.1)		(12.4)
BALANCE MARCH 31, 2024	57.1	$	401.0	$	1,013.8	$	(67.3)	$	1,404.6	$	2.4	$	1,407.0
Net income	—	—		71.6		—		71.6		—		71.6
Cash dividends ($0.205 per share)	—	—		(11.7)		—		(11.7)		—		(11.7)
Exercise of stock options	0.1	3.5		—		—		3.6		—		3.6
Impact from settlement of share-based awards, net of shares acquired	—	(0.2)		—		—		(0.2)		—		(0.2)
Stock-based compensation expense	—	5.7		—		—		5.7		—		5.7
Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		3.0		3.0		—		3.0
Currency translation adjustment	—	—		—		(3.3)		(3.3)		—		(3.3)
BALANCE JUNE 30, 2024	57.2	$	410.0	$	1,073.7	$	(67.6)	$	1,473.3	$	2.4	$	1,475.7

See Notes to Condensed Consolidated Financial Statements.

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(in millions, except share data)	Common Shares Issued at Par Value	Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Share- holders’ Equity		Non-controlling Interest		Total Equity
BALANCE DECEMBER 31, 2022	72.4	$	373.8	$	2,822.8	$	(503.3)	$	(864.3)	$	1,901.4	$	2.6	$	1,904.0
Net income	—	—		105.7		—		—		105.7		—		105.7
Cash dividends ($0.47 per share)	—	—		(26.6)		—		—		(26.6)		—		(26.6)
Exercise of stock options, net of shares reacquired of 297,539 shares	—	—		—		—		19.8		19.8		—		19.8
Impact from settlement of share-based awards, net of shares acquired	—	(3.3)		—		—		(3.6)		(6.9)		—		(6.9)
Stock-based compensation expense	—	6.3		—		—		—		6.3		—		6.3
Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		2.7		—		2.7		—		2.7
Currency translation adjustment	—	—		—		12.8		—		12.8		(0.1)		12.7
BALANCE MARCH 31, 2023	72.4	$	376.8	$	2,901.9	$	(487.8)	$	(848.1)	$	2,015.2	$	2.5	$	2,017.7
Net income	—	—		45.6		—		—		45.6		—		45.6
Cash dividends ($0.18 per share)	—	—		(10.2)		—		—		(10.2)		—		(10.2)
Exercise of stock options	—	1.0		—		—		—		1.0		—		1.0

Stock-based compensation expense	—	2.5		—		—		—		2.5		—		2.5
Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		2.6		—		2.6		—		2.6
Currency translation adjustment	—	—		—		0.8		—		0.8		(0.1)		0.7
Capital effect of spin-off	(15.7)	—		(832.4)		—		848.1		—		—		—
Distribution of Crane NXT, Co.	—	—		(1,236.8)		414.5		—		(822.3)		—		(822.3)
BALANCE JUNE 30, 2023	56.7	$	380.3	$	868.1	$	(69.9)	$	—	$	1,235.2	$	2.4	$	1,237.6

See Notes to Condensed Consolidated Financial Statements.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and the instructions to Form 10-Q and, therefore, reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023.

Due to rounding, numbers presented throughout this report may not add up precisely to totals we provide, and percentages may not precisely reflect the absolute figures. Certain amounts in the prior periods’ condensed consolidated financial statements have been reclassified to conform to the current period presentation.

Separation

On April 3, 2023, Crane Holdings, Co. completed a separation into two independent, publicly-traded companies, Crane NXT, Co. and Crane Company (the “Separation”), through a pro-rata distribution (the "Distribution") of all of the outstanding common stock of Crane Company to the stockholders of Crane Holdings, Co., which on April 3, 2023 was renamed “Crane NXT, Co.” Therefore, following the Separation, the historical consolidated financial statements of Crane Company reflect the historical consolidated financial statements of Crane Holdings, Co. with the Payment & Merchandising Technologies segment and other distributed assets and liabilities classified as discontinued operations. See Note 3 for additional information.

In connection with the Separation Crane NXT, Co. and Crane Company entered into various agreements to effect the Separation and provide a framework for their relationship after the Separation, including a separation and distribution agreement, a transition services agreement, an employee matters agreement, a tax matters agreement and an intellectual property matters agreement. These agreements provide for the allocation between Crane NXT, Co. and Crane Company of assets, employees, liabilities and obligations (including property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at, and after the consummation of the Separation and govern certain relationships between Crane NXT, Co. and Crane Company after the Separation.

The Company had a payable of $0.2 million as of June 30, 2024 and a receivable of $2.2 million as of December 31, 2023, related to the transition services agreement and tax matters agreement. Additionally, as part of the Separation, to a limited extent, the Company has agreed to indemnify Crane NXT, Co. for uncertain tax benefits, which are attributable to the Company’s business. Such total liability amounts are included in other liabilities on our Condensed Consolidated Balance Sheets and were $6.4 million and $7.0 million as of June 30, 2024 and December 31, 2023, respectively.

Liability Performance-Based Restricted Share Units

As a result of the Separation, certain executives hold performance-based restricted share units (“PRSUs”) that have undergone an equity-to-liability modification and are denominated in Crane NXT, Co. stock. As of June 30, 2024 and December 31, 2023, the liability balance was $6.3 million and $10.0 million, respectively.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Updates (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amended guidance is required to be applied on a retrospective basis to all periods presented. We are currently evaluating this guidance to determine the impact on our disclosures.

In December 2023, FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU require that public business entities disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income by the applicable statutory income tax rate). The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in this Update should be applied on a prospective basis. We are currently evaluating this guidance to determine the impact on our disclosures.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company considered the applicability and impact of all ASUs issued by the FASB and determined them to be either not applicable or are not expected to have a material impact on the Company's Condensed Consolidated Statement of Operations, Balance Sheets and Cash Flows.

Note 2 - Acquisitions

CryoWorks Acquisition

On May 1, 2024, the Company completed the acquisition of CryoWorks, Inc. (“CryoWorks”) for $60.7 million on a cash-free and debt-free basis, subject to a net working capital adjustment.

CryoWorks, is a leading supplier of vacuum insulated pipe systems for hydrogen and cryogenic applications. CryoWorks has been integrated into the Process Flow Technologies segment.


Net assets acquired (in millions)
Total current assets	$	6.6
Property, plant and equipment	0.5
Other assets	1.9
Intangible assets	24.0
Goodwill	32.7
Total assets acquired	$	65.7

Total current liabilities	$	3.5
Other liabilities	1.5
Total assumed liabilities	$	5.0
Net assets acquired	$	60.7

The amounts allocated to acquired intangible assets, and their associated weighted-average useful lives which were determined based on the period in which the assets are expected to contribute directly or indirectly to our future cash flows, consist of the following:


Intangible Assets (dollars in millions)	Intangible Fair Value		Weighted Average Life (in years)
Trademarks/Trade names	$	5.0	16.0
Customer relationships	17.5		12.0

Backlog	1.5		1.0
Total acquired intangible assets	$	24.0

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Vian Acquisition

On January 2, 2024, the Company completed the acquisition of Vian Enterprises, Inc. (“Vian”) for $102.5 million on a cash-free and debt-free basis, subject to a net working capital adjustment and potential additional payments of up to $7.5 million depending on the resolution of outstanding contingencies.

Vian is a global designer and manufacturer of multi-stage lubrication pumps and lubrication system components technology for critical aerospace and defense applications with sole-sourced and proprietary content on commercial and military aircraft platforms. Vian has been integrated into the Aerospace & Electronics segment.


Net assets acquired (in millions)
Total current assets	$	21.0
Property, plant and equipment	6.8
Other assets	7.4
Intangible assets	53.4
Goodwill	49.5
Total assets acquired	$	138.1

Total current liabilities	$	6.2
Other liabilities	29.4
Total assumed liabilities	$	35.6
Net assets acquired	$	102.5


Intangible Assets (dollars in millions)	Intangible Fair Value		Weighted Average Life (in years)
Trademarks/trade names	$	2.0	17.0
Customer relationships	43.0		29.0
Manufacturing know-how	3.2		4.0
Backlog	5.2		1.0
Total acquired intangible assets	$	53.4

BAUM Acquisition

On October 4, 2023, the Company completed the acquisition of Baum lined piping GmbH (“BAUM”) for $93.5 million on a cash-free and debt-free basis. During the first quarter of 2024, the Company paid $3.1 million to the seller related to a final working capital adjustment.

Valuation of Intangible Assets

For all acquisitions, the fair values of the trade name and manufacturing know-how intangible assets were determined by using an income approach, specifically the relief-from-royalty approach, which is a commonly accepted valuation approach. This approach is based on the assumption that in lieu of ownership, a firm would be willing to pay a royalty in order to exploit the related benefits of this asset. Therefore, a portion of earnings, equal to the after-tax royalty that would have been paid for the use of the asset, can be attributed to our ownership.

The fair values of the customer relationships and backlog intangible assets were determined by using an income approach which is a commonly accepted valuation approach. Under this approach, the net earnings attributable to the asset or liability being measured are isolated using the discounted projected net cash flows. These projected cash flows are isolated from the projected cash flows of the combined asset group over the remaining economic life of the intangible asset or liability being measured. Both the amount and the duration of the cash flows are considered from a market participant perspective. Our estimates of market participant net cash flows considered historical and projected pricing, operational performance including market participant synergies, aftermarket retention, product life cycles, material and labor pricing, and other relevant customer, contractual and market factors. Where appropriate, the net cash flows were adjusted to reflect the potential attrition of existing customers in the future, as existing customers are expected to decline over time. The attrition-adjusted future cash flows are then discounted to present value using an appropriate discount rate. The useful life of the customer

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

relationship intangible asset related to Vian of 29 years is primarily driven by large customer relationships tied to long-duration aircraft platforms.

Intangible assets are being amortized on a straight-line basis (which approximates the economic pattern of benefits).

Supplemental Pro Forma Data

The results of operations of CyoWorks, Vian and BAUM have been included in our financial statements for the period subsequent to the completion of the respective acquisition dates. Consolidated pro forma revenue and net income attributable to common shareholders related to these acquisitions have not been presented since their impact is not material to our financial results for the period.

Note 3 - Discontinued Operations

As discussed in Note 1, Crane Company has reflected the historical consolidated financial statements of Crane Holdings, Co. with the Payment & Merchandising Technologies segment classified as discontinued operations.

Financial results from discontinued operations:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2024		2023		2024		2023
Net sales	$	—	$	—	$	—	$	329.1
Cost of sales	—		—		—		174.4
Selling, general and administrative	—		—		—		80.0
Operating profit	—		—		—		74.7
Other income (expense), net	—		1.0		—		(11.2)
Net income from discontinued operations before income taxes	—		1.0		—		63.5
(Benefit from) Provision for income taxes	—		(1.3)		—		11.4
Income from discontinued operations, net of tax	$	—	$	2.3	$	—	$	52.1

Note 4 - Segment Results

Our segments are reported on the same basis used internally for evaluating performance and for allocating resources. As of June 30, 2024, we had three reportable segments: Aerospace & Electronics, Process Flow Technologies, and Engineered Materials. Assets of the reportable segments exclude general corporate assets, which principally consist of cash, deferred tax assets, certain property, plant and equipment, and certain other assets. Corporate consists of corporate office expenses including compensation and benefits for corporate employees, occupancy, depreciation, and other administrative costs.

A brief description of each of our segments are as follows:

Aerospace & Electronics

The Aerospace & Electronics segment supplies critical components and systems, including original equipment and aftermarket parts, primarily for the commercial aerospace, and the military aerospace, defense and space markets. Its brands have decades of proven experience, and in many cases invented the critical technologies in their respective markets. The business designs and delivers systems, reliable components, and flexible power solutions that excel in tough and mission-critical environments. Products and services are organized into integrated solutions: Sensing Components & Systems, Electrical Power Solutions, Fluid Management Solutions, Landing & Control Systems, and Microwave Solutions.

Process Flow Technologies

The Process Flow Technologies segment is a provider of highly engineered fluid handling equipment for mission critical applications that require high reliability. The segment is comprised of Process Valves and Related Products, Pumps and Systems and Commercial Valves. Process Valves and Related Products include on/off valves and related products for critical and demanding applications primary focused on chemical, pharmaceutical and general industrial end markets. Commercial Valves includes the manufacturing of valves and related products for the non-residential construction, gas utility and municipal markets. Pumps and Systems include pumps and related products primarily for water and wastewater applications in the industrial, municipal and commercial markets.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Engineered Materials

The Engineered Materials segment manufactures fiberglass-reinforced plastic ("FRP") panels and coils, primarily for use in the manufacturing of recreational vehicles (RV), commercial and industrial buildings (Building Products), with additional applications in truck bodies and trailers (Transportation).

Financial information by reportable segment is set forth below.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2024		2023		2024		2023
Net sales:
Aerospace & Electronics	$	230.9	$	189.2	$	456.8	$	369.3
Process Flow Technologies	297.7		263.2		582.0		534.6
Engineered Materials	52.6		57.2		107.7		119.5
Total	$	581.2	$	509.6	$	1,146.5	$	1,023.4

Operating profit:
Aerospace & Electronics	$	52.7	$	38.3	$	101.0	$	75.9
Process Flow Technologies	59.5		50.6		116.4		113.9
Engineered Materials	7.3		9.8		15.4		21.2
Corporate	(22.9)		(35.6)		(46.8)		(70.4)
Total	$	96.6	$	63.1	$	186.0	$	140.6
Interest income	1.3		0.8		2.5		1.7
Interest expense	(7.4)		(5.3)		(14.6)		(11.8)

Miscellaneous income (expense), net	1.1		(1.3)		(0.2)		(1.9)
Income from continuing operations before income taxes	$	91.6	$	57.3	$	173.7	$	128.6


(in millions)	June 30, 2024		December 31, 2023
Assets:
Aerospace & Electronics	$	921.8	$	744.6
Process Flow Technologies	1,223.9		1,164.5
Engineered Materials	224.8		191.8
Corporate	136.2		232.7
Total	$	2,506.7	$	2,333.6


(in millions)	June 30, 2024		December 31, 2023
Goodwill:
Aerospace & Electronics	$	251.8	$	202.4
Process Flow Technologies	401.0		374.0
Engineered Materials	171.3		171.3
Total	$	824.1	$	747.7

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 5 - Revenue

Disaggregation of Revenues

The following table presents net sales disaggregated by product line for each segment:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2024		2023		2024		2023
Aerospace & Electronics
Commercial Original Equipment	$	88.6	$	69.8	$	174.1	$	138.2
Military Original Equipment	66.9		62.8		138.3		124.8
Commercial Aftermarket Products	52.3		40.8		103.0		78.6
Military Aftermarket Products	23.1		15.8		41.4		27.7
Total Aerospace & Electronics	$	230.9	$	189.2	$	456.8	$	369.3

Process Flow Technologies
Process Valves and Related Products	$	226.8	$	197.4	$	440.8	$	400.3
Commercial Valves	33.7		28.8		66.6		59.4
Pumps and Systems	37.2		37.0		74.6		74.9
Total Process Flow Technologies	$	297.7	$	263.2	$	582.0	$	534.6

Engineered Materials
FRP - Recreational Vehicles	$	16.6	$	17.1	$	35.7	$	37.4
FRP - Building Products	29.4		31.4		58.2		63.7
FRP - Transportation	6.6		8.7		13.8		18.4
Total Engineered Materials	$	52.6	$	57.2	$	107.7	$	119.5
Net sales	$	581.2	$	509.6	$	1,146.5	$	1,023.4

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations represents the transaction price of firm orders which have not yet been fulfilled, which we also refer to as total backlog. As of June 30, 2024, total backlog was $1,225.8 million. We expect to recognize approximately 61% of our remaining performance obligations as revenue in 2024, an additional 33% in 2025 and the balance thereafter.

Contract Assets and Contract Liabilities

Contract assets represent unbilled amounts that typically arise from contracts for customized products or contracts for products sold directly to the U.S. government or indirectly to the U.S. government through subcontracts, where revenue recognized using the cost-to-cost method exceeds the amount billed to the customer. Contract assets are assessed for impairment and recorded at their net realizable value. Contract liabilities represent advance payments from customers. Revenue related to contract liabilities is recognized when control is transferred to the customer. We report contract assets, which are included within “Other current assets” in our Condensed Consolidated Balance Sheets, and contract liabilities, which are included within “Accrued liabilities” on our Condensed Consolidated Balance Sheets, on a contract-by-contract net basis at the end of each reporting period. Net contract assets and contract liabilities consisted of the following:


(in millions)	June 30, 2024		December 31, 2023
Contract assets	$	74.3	$	63.5
Contract liabilities	$	49.4	$	56.2

We recognized revenue of $8.2 million and $21.9 million during the three and six-month periods ended June 30, 2024, respectively, related to contract liabilities as of December 31, 2023.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Earnings Per Share

Our basic earnings per share calculations are based on the weighted average number of common shares outstanding during the period. Potentially dilutive securities include outstanding stock options, restricted share units, deferred stock units and performance-based restricted share units. The effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury method. Diluted earnings per share gives effect to all potentially dilutive common shares outstanding during the period.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions, except per share data)	2024		2023		2024		2023
Net income from continuing operations attributable to common shareholders	$	71.6	$	43.3	$	136.4	$	99.2
Income from discontinued operations, net of tax (Note 3)	—		2.3		—		52.1
Net income attributable to common shareholders	$	71.6	$	45.6	$	136.4	$	151.3

Average basic shares outstanding	57.2		56.7		57.1		56.6
Effect of dilutive share-based awards	1.1		0.7		1.1		0.8
Average diluted shares outstanding	58.3		57.4		58.2		57.4

Earnings per basic share:
Earnings per basic share from continuing operations	$	1.25	$	0.76	$	2.39	$	1.75
Earnings per basic share from discontinued operations	—		0.04		—		0.92
Earnings per basic share	$	1.25	$	0.80	$	2.39	$	2.67

Earnings per diluted share:
Earnings per diluted share from continuing operations	$	1.23	$	0.75	$	2.34	$	1.73
Earnings per diluted share from discontinued operations	—		0.04		—		0.91
Earnings per diluted share	$	1.23	$	0.79	$	2.34	$	2.64

Stock options, restricted share units, deferred stock units and performance-based restricted share units that were excluded from the calculation of diluted earnings per share because their effect is anti‑dilutive was 0.2 million and 0.4 million for the three months ended June 30, 2024, and 2023, respectively and 0.2 million and 0.4 million for the six months ended June 30, 2024, and 2023, respectively.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Changes in Accumulated Other Comprehensive Loss

The table below provides the accumulated balances for each classification of accumulated other comprehensive loss, as reflected on our Condensed Consolidated Balance Sheets.


(in millions)		Defined Benefit Pension and Postretirement Items		Currency Translation Adjustment		Total (a)
Balance as of December 31, 2023		$	(270.8)	$	212.8	$	(58.0)
	Other comprehensive income (loss) before reclassifications	—		(15.6)		(15.6)
	Amounts reclassified from accumulated other comprehensive loss	6.0		—		6.0
Net period other comprehensive income (loss)		6.0		(15.6)		(9.6)
Balance as of June 30, 2024		$	(264.8)	$	197.2	$	(67.6)

(a) Net of tax benefit of $101.4 million and $103.0 million as of June 30, 2024 and December 31, 2023, respectively.

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three and six months ended June 30, 2024 and 2023. Amortization of pension and postretirement components has been recorded within “Miscellaneous income (expense), net” on our Condensed Consolidated Statements of Operations.


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2024		2023		2024		2023
Amortization of pension items:
Prior service costs	$	0.2	$	—	$	0.4	$	—
Net loss	3.7		3.8		7.5		7.6
Amortization of postretirement items:
Prior service benefit(a)	—		(0.2)		—		(0.5)
Net gain(b)	(0.1)		(0.2)		(0.2)		(0.3)
Total before tax	$	3.8	$	3.4	$	7.7	$	6.8
Tax impact	0.8		0.8		1.7		1.5
Total reclassifications for the period	$	3.0	$	2.6	$	6.0	$	5.3

(a) Includes benefit from discontinued operations of $0.2 million and 0.5 million for the three months and six months ended June 30, 2023, respectively.

(b) Includes net activity from discontinued operations of $0.2 million and $0.3 million for the three months and six months ended June 30, 2023, respectively.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Defined Benefit and Postretirement Benefits

For all plans, the components of net periodic benefit for the three months ended June 30, 2024, and 2023 are as follows:


	Pension				Postretirement
(in millions)	2024		2023		2024		2023
Service cost	$	0.9	$	0.8	$	—	$	—
Interest cost	8.7		8.9		—		—
Expected return on plan assets	(12.5)		(11.4)		—		—

Amortization of prior service cost	0.2		0.2		—		—
Amortization of net loss (gain)	3.7		3.8		(0.1)		—
Curtailment and Settlement loss from discontinued operations	—		(1.0)		—		—
Net periodic loss (benefit)	$	1.0	$	1.3	$	(0.1)	$	—

For all plans, the components of net periodic benefit for the six months ended June 30, 2024, and 2023 are as follows:
	Pension				Postretirement
(in millions)	2024		2023		2024		2023
Service cost	$	1.8	$	1.7	$	—	$	—
Interest cost	17.3		17.8		0.1		—
Expected return on plan assets	(25.0)		(22.8)		—		—
Amortization of prior service cost	0.4		0.4		—		—
Amortization of net loss (gain)	7.5		7.6		(0.2)		—
Curtailment and Settlement loss from discontinued operations	—		1.9		—		—
Net periodic loss (benefit)	$	2.0	$	6.6	$	(0.1)	$	—

The components of net periodic benefit, other than the service cost component, are included in “Miscellaneous income (expense), net” in our Condensed Consolidated Statements of Operations. Service cost is recorded within “Cost of sales” and “Selling, general and administrative” in our Condensed Consolidated Statements of Operations.

We expect to contribute the following to our pension and postretirement plans:


(in millions)	Pension		Postretirement
Expected contributions in 2024	$	17.9	$	0.4
Amounts contributed during the six months ended June 30, 2024	$	5.9	$	0.1

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 9 - Income Taxes

Effective Tax Rates

Our quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the periods presented.

Our effective tax rates are as follows:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Effective Tax Rate	21.8%	24.4%	21.4%	22.8%

Our effective tax rate for the three and six months ended June 30, 2024, is lower than the prior year’s comparable period primarily due to lower non-U.S. taxes and lower statutorily non-deductible costs.

Our effective tax rate for the three and six months ended June 30, 2024 is slightly higher than the statutory U.S. federal tax rate of 21% primarily due to earnings in jurisdictions with statutory tax rates higher than the United States, expenses that are statutorily non-deductible for income tax purposes and the impact of U.S. state taxes, partially offset by excess share-based compensation benefits, tax credit utilization, and the statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

Unrecognized Tax Benefits

During both the three months and six months ended June 30, 2024, our gross unrecognized tax benefits, excluding interest and penalties, increased by $0.2 million, and $0.7 million, respectively, primarily due to increases in tax positions taken in the current period, partially offset by decreases in tax positions taken during a prior period and reductions from expiration of statutes of limitations.

During the three and six months ended June 30, 2024, the total amount of unrecognized tax benefits that, if recognized, would cause our effective tax rate to increase by $0.3 million and $0.9 million, respectively. The difference between these amounts relates to (1) offsetting tax effects from other tax jurisdictions, and (2) interest expense, net of deferred taxes.

During the three and six months ended June 30, 2024, we recognized $0.1 million and $0.3 million, respectively, of interest expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations. As of both June 30, 2024 and December 31, 2023, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in our Condensed Consolidated Balance Sheets was $2.5 million and $2.2 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by $0.6 million due to expiration of statutes of limitations and settlements with tax authorities. However, if the ultimate resolution of income tax examinations results in amounts that differ from this estimate, we will record additional income tax expense or benefit in the period in which such matters are effectively settled.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Goodwill and Intangible Assets

Our business acquisitions have typically resulted in the recognition of goodwill and other intangible assets. We follow the provisions under ASC Topic 350, “Intangibles – Goodwill and Other” as it relates to the accounting for goodwill in our condensed consolidated financial statements. These provisions require that we, on at least an annual basis, evaluate the fair value of the reporting units to which goodwill is assigned and attributed and compare that fair value to the carrying value of the reporting unit to determine if an impairment has occurred. We perform our annual impairment testing during the fourth quarter. Impairment testing takes place more often than annually if events or circumstances indicate a change in status that would indicate a potential impairment. We believe that there have been no events or circumstances which would more likely than not reduce the fair value for our reporting units below its carrying value. A reporting unit is an operating segment unless discrete financial information is prepared and reviewed by segment management for businesses one level below that operating segment (a “component”), in which case the component would be the reporting unit. As of June 30, 2024, we had four reporting units.

Intangibles with indefinite useful lives, consisting of trade names, are tested annually for impairment, or when events or changes in circumstances indicate the potential for impairment. If the carrying amount of an indefinite lived intangible asset exceeds its fair value, the intangible asset is written down to its fair value. Fair value is calculated using the relief from royalty method. We amortize the cost of definite-lived intangibles over their estimated useful lives. We also review all of our definite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Changes to goodwill are as follows:


(in millions)	Aerospace & Electronics		Process Flow Technologies		Engineered Materials		Total
Balance as of December 31, 2023	$	202.4	$	374.0	$	171.3	$	747.7
Acquisition(a) (b)	49.5		32.7		—		82.2
Currency translation	(0.1)		(5.7)		—		(5.8)

Balance as of June 30, 2024	$	251.8	$	401.0	$	171.3	$	824.1

(a) For the period ended June 30, 2024, adjustments within the Aerospace & Electronics segment of $49.5 million relate to the acquisition of Vian. See Note 2 for further information.

(b) For the period ended June 30, 2024 adjustments within the Process Flow Technologies segment of $32.7 million relate to the acquisition of CryoWorks. See Note 2 for further information.

As of June 30, 2024, we had $156.0 million of net intangible assets, of which $21.8 million were intangibles with indefinite useful lives. As of December 31, 2023, we had $87.9 million of net intangible assets, of which $22.1 million were intangibles with indefinite useful lives.

Changes to intangible assets are as follows:


(in millions)	Six Months Ended June 30, 2024		Year Ended December 31, 2023
Balance at beginning of period, net of accumulated amortization	$	87.9	$	71.7
Additions (a)	77.4		21.1

Amortization expense	(8.2)		(6.3)
Currency translation and other	(1.1)		1.4
Balance at end of period, net of accumulated amortization	$	156.0	$	87.9

(a) For the period ended June 30, 2024, additions include $24.0 million related to the acquisition of CryoWorks and $53.4 million related to the acquisition of Vian. See Note 2 for further information.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of intangible assets are as follows:


		June 30, 2024						December 31, 2023
(dollars in millions)	Weighted Average Amortization Period of Definite Lived Assets (in years)	Gross Asset		Accumulated Amortization		Net		Gross Asset		Accumulated Amortization		Net
Intellectual property rights	16.9	$	82.4	$	46.1	$	36.3	$	72.6	$	45.4	$	27.2
Customer relationships and backlog	21.0	219.7		101.6		118.1		152.9		93.9		59.0
Drawings	40.0	11.1		10.8		0.3		11.1		10.8		0.3
Other	25.8	42.6		41.3		1.3		42.7		41.3		1.4
Total	21.3	$	355.8	$	199.8	$	156.0	$	279.3	$	191.4	$	87.9

Future amortization expense associated with intangible assets is expected to be:


(in millions)
Remainder of 2024	$	9.2
2025	11.6
2026	11.0
2027	10.2
2028	9.1
2029 and after	83.1

Note 11 - Accrued Liabilities

Accrued liabilities consist of:

(in millions)

June 30,
2024

December 31,
2023