GGRAsia – Crane Co 1Q profit narrows due to pandemic shock

Crane Co 1Q profit narrows due to pandemic shock

Apr 28, 2020 Newsdesk Industry Talk, Latest News

Crane Co, a United States-based supplier of cash-handling technology to the casino sector, posted a net profit of US$62.8 million for the first quarter, down 23.8 percent from the prior-year period. That was on revenue that fell 4.1 percent year-on-year, to US$797.9 million, said the company in a Monday statement.

The sales decline was comprised of an US$80-million, or about 10-percent, decline in core sales and US$7 million, or roughly 1 percent, of unfavourable foreign exchange. Such declines were partially offset by a US$54-million benefit from acquisitions, added the company.

“We believe that the core-sales decline was largely attributable to Covid-19 -related factors,” stated the company.

First-quarter 2020 operating profit was US$88.6 million, down 22.1 percent from a year earlier, with the operating profit margin down to 11.1 percent, compared to 13.7 percent in the first three months of 2019.

The statement quoted Crane Co’s president and chief executive, Max Mitchell, as saying: “Our businesses all executed extremely well in the quarter despite the impacts of Covid-19 on demand, and on our supply chain and operations … 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.”

In its first-quarter results, Crane Co said that in its payment and merchandising technologies segment – which includes cash handling technology for casinos – sales declined by 2.1 percent year-on-year, to circa US$297.4 million. Operating profit for the segment declined 38.9 percent, to US$26.4 million.

Crane Co also said it was “withdrawing all elements” of its previously issued full-year 2020 earnings guidance that was originally provided on January 27, 2020. That was in light of “uncertainty regarding the potential impact of the Covid-19 pandemic on demand and operations,” it noted.

The firm’s management said it now expected full-year sales to be in the range of US$2.8 billion to US$3.0 billion, reflecting a core sales decline of approximately 17 percent to 22 percent.

The company’s cash position was US$303 million at March 31, 2020, compared to US$394 million at December 31, 2019. Total debt was US$1.2 billion at March 31, 2020, compared to US$991 million at December 31, 2019.

Rich Maue, Crane Co’s senior vice president and chief financial officer, said in prepared remarks that the company was in a “solid financial position, with a strong balance sheet and substantial liquidity”.

He added: “We recently further enhanced our liquidity position with a US$343-million term loan. As of April 16, 2020, we have liquidity of approximately US$811 million, comprised of US$549 million in cash, and US$262 million available under our revolving credit facility.”