Crane Co. has reported its first quarter 2020 sales of $798 million, a decline of 4 percent compared to the first quarter of 2019. The sales decline was comprised of an $80 million, or 10 percent, decline in core sales and $7 million, or 1 percent, of unfavorable foreign exchange, partially offset by a $54 million, or 7 percent, benefit from acquisitions.
Crane Co. believes that the core sales decline was largely attributable to COVID-19-related factors. Including $2.5 million of acquisition-related deferred revenue, sales in the first quarter of 2020 were $800 million, and the acquisition benefit was $56 million.
First quarter 2020 operating profit was $89 million, compared to $114 million in the first quarter of 2019. Operating profit margin was 11.1 percent, compared to 13.7 percent last year. Excluding Special Items, first quarter 2020 operating profit was $96 million, compared to $120 million last year. Excluding Special Items, operating profit margin was 12 percent, compared to 14.4 percent last year.
“Our businesses all executed extremely well in the quarter despite the impacts of COVID-19 on demand, and on our supply chain and operations,” said Max Mitchell, Crane Co. president and CEO. “In this difficult period, I have been incredibly proud of Crane’s 12,000 global associates who have responded quickly and effectively to the challenges posed by this pandemic. Crane Co. is fortunate to have a deep and experienced leadership team that has managed through multiple downturns in the past, as well as a strong balance sheet with ample liquidity, and a diverse portfolio of strong and durable businesses. I am highly confident in the strength and resilience of Crane’s portfolio, and in our long-term outlook.”
Cash used for operating activities in the first quarter of 2020 was $36 million, compared to a use of $100 million in 2019. Capital expenditures in the first quarter of 2020 were $8 million, compared to $20 million last year. First quarter 2020 free cash flow (cash provided by operating activities less capital spending) was negative $43 million reflecting normal seasonality and compared to negative $120 million last year.
“Crane Co. is in a solid financial position, with a strong balance sheet and substantial liquidity,” said Rich Maue, Crane Co. senior VP and CFO. “We recently further enhanced our liquidity position with a $343 million term loan. As of April 16, 2020, we have liquidity of approximately $811 million, comprised of $549 million in cash, and $262 million available under our revolving credit facility. We expect that we will reduce leverage naturally over the course of 2020.”
Sales of $257 million decreased $17 million, or 6 percent, driven by a $23 million, or 9 percent, decline in core sales and a $3 million, or $1 percent, impact from unfavorable foreign exchange, partially offset by a $9 million, or 3 percent, benefit from an acquisition. Operating profit margin declined to 10.9 percent, compared to 12.5 percent last year, primarily reflecting lower volumes and higher acquisition-related and integration charges related to the January 2020 I&S acquisition, partially offset by productivity and repositioning benefits.
Crane is the parent company of Crane Composites, which provides laminate sidewalls for the RV industry.