QUOTE AND NEWS
Cranes Today  Nov 20  Comment 
Singapore-based crane company MS Holdings has launched its initial public offering as part of its proposed listing on the Catalist Board of the Singapore Exchange Securities Trading Limited.
Cranes Today  Oct 17  Comment 
German crane company Steil has added two 500t Liebherr telescopic mobile cranes to its fleet to assist with jobs in the wind power sector.
Cranes Today  Oct 13  Comment 
German crane company Karl Scholl has targeted the chemicals industry with the addition of a 300t Liebherr LTM 1300-6.2 mobile crane to its fleet.
Cranes Today  Oct 13  Comment 
Benzinga  Feb 28  Comment 
Analysts at Credit Suisse upgraded BanColombia SA (NYSE: CIB) from “neutral” to “outperform.” The price target for BanColombia has been lowered from $69 to $61. BanColombia's shares closed at $49.34 yesterday. Analysts at Brean Capital...
DailyFinance  Dec 10  Comment 
Crane Co. (NYSE:CR), a diversified manufacturer of highly engineered industrial products, announced today the pricing of an underwritten public offering of $250 million of 2.750% Senior Notes due 2018 and $300 million of...
Sydney Morning Herald  Aug 21  Comment 
Debt collector Mick Gatto and business partner Matt Thomas settle dispute with subcontractor over debt on the court house steps.     
Sydney Morning Herald  Jul 29  Comment 
A Brooklyn-based crane company owned by prominent debt collector Mick Gatto and business partner Matt Tomas is on the brink of collapse after failing to pay its own debts.     
Market Intelligence Center  Jul 17  Comment 
Crane Co. (NYSE: CR) closed Tuesday's trading session at $63.46. In the past year, the stock has hit a 52-week low of $35.75 and 52-week high of $64.68. Crane (CR) stock has been showing support around $62.53 and resistance in the $65.13 range....
Market Intelligence Center  Jul 8  Comment 
Crane Co. (NYSE: CR) closed Friday's trading session at $62.51. In the past year, the stock has hit a 52-week low of $34.89 and 52-week high of $62.74. Crane (CR) stock has been showing support around $61.02 and resistance in the $63.48 range....
Market Intelligence Center  Jul 1  Comment 
Crane Co. (NYSE: CR) closed Friday's trading session at $59.92. In the past year, the stock has hit a 52-week low of $34.89 and 52-week high of $60.91. Crane (CR) stock has been showing support around $57.76 and resistance in the $61.00 range....




 
TOP CONTRIBUTORS

Crane Company (NYSE: CR) makes engineered industrial products, such as fiberglass composites for recreational vehicles (RVs), airplane components and fluid handling valves. Fluid handling valves control the flow of coolant, chemicals, and water and are used in facilities ranging from nuclear power plants to chemical and pharmaceutical production facilities and water filtration plants. [1] In 2007, fluid valves were responsible for 43% of Crane's revenues.

Gas prices play a significant role in determining company's ability to sell its fiber glass products. In 2007, higher oil prices led to a drop in RV production, reducing demand for the company's fiberglass paneling. During the same year, a 23% decline in transportation industry demand for new vehicles reduced Crane's sales of materials for production of truck bodies and refrigerated trucks.[2] Nevertheless, price increases in 2006 and sales from companies acquired in 2006 led to a net increase in revenue for the engineered materials segment.[3]

As a result of its use of asbestos in its products over the past century, Crane is the target of many personal injury claims for asbestos-related health problems. As of December 31, 2007, the company faced 80,999 asbestos liability claims. In 2007, Crane set aside $390 million for predicted asbestos liability costs through 2017, which reflects a $37 million/year expected liability. As asbestos is in many products and asbestos-related health issues only arise many years after exposure, the company remains vulnerable to new claims in the coming years.

Business and Finances

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The company has five business segments: [4]

  • Fluid handling ($1,136 million in revenues, 43% of revenues) - valves for industrial use
  • Aerospace and electronics ($629 million in revenues, 23% of revenues) - commercial and military aircraft components
  • Merchandising systems ($388 million in revenues, 15% of revenues) - vending machines
  • Engineered materials ($331 million in revenues, 13% of revenues) - fiberglass composites for vehicles and construction
  • Controls ($135 million in revenues, 5% of revenues) - sensors and controls for industrial use
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Crane had a net loss of $62.3 million dollars in 2007, although it was profitable in 2006 and 2005. Revenues grew by 16% in 2007, from $2.26 billion to $2.62 billion.[5] Nevertheless, due to a one-time charge of $390 million intended to cover future asbestos liabilities through 2017, the company recorded a loss margin of 4.1%, a decline from the 2006 net income margin of 11%.[6]

In fluid handling, Crane's largest segment, revenues increased by 14% in 2007.[7] This was accompanied by an increase in profit margins to 14% in 2007 from 10.7% in 2006.[8]

In 2007, Crane spent $106.8 million on research and development, mostly in its aerospace and electronics segment. This is a significant increase from 2005 research and development spending of $53.1 million. Most research is funded by company initiatives, with just $8.4 million coming from customers in 2007.[9]

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Trends and Forces

Personal Injury Claims for Asbestos Liability are an Ongoing Concern

Crane Company previously used asbestos in a number of its products, primarily from the engineered materials business segment. As of December 31, 2007, the company was facing a total of 80,999 asbestos-related liability claims, dealing with them in the judicial tort system. In 2007, the company spent a total of $87.5 million on legal costs and settlements.[10] The company is unable to accurately predict the future cost of these lawsuits, but is insured for damages and in 2007 set aside a $390 million pre-tax provision to account for future claims through 2017.[11] While most cases are handled by settlements out of court, in May of 2008, Crane paid $3.9 million dollars for a verdict in one case.[12] The company has observed a decrease in the number of new cases.[13]

Decreasing Popularity of Recreational Vehicles (RVs)

Crane sells fiberglass materials for recreational vehicles, such as high-gloss exterior paneling. Demand for recreational vehicles fell by 9% in 2007, resulting in smaller demand for crane's fiberglass materials for RV construction and maintenance.[14] The fall in RV demand was largely the result of rising oil and gas prices.

Aerospace and Electronics Segment is Affected by Aerospace Industry Cyclicality

23% of Crane's revenue in 2007 came from its Aerospace and Electronics segment. [15] The segment's revenue was up 11% or $63MM for the year due to increase in new commercial airline construction, led by the Airbus A400M and the Boeing 787. Since these two aircraft type are new, however, the company's engineering costs increased by 70%, reducing the company's operating margin for this company from 17.5% to 13.5%.[16] The aerospace industry continued to report strong sales in 2008, with Boeing showing a better-than-expected 43% increase in sales year-over-year for Q1, and sticking to a new release schedule for the 787.[17] Crane supplies only particular airplane components, not completed aircraft.

Competition

Because Crane produces products for several different markets, it has different competitors in each of these markets, as well as competition from other industrial conglomerates that cover several markets. Some major competitors include Dover (DOV), which competes in the fluid handling industry; Honeywell International (HON), which competes with Crane in control and sensing systems, as well as airplane components; and Tyco International (TYC), which produces aircraft control mechanisms to compete with Crane. Flowserve (FLS), a company focused on fluid control systems, is also a competitor for Crane.

The following table shows a comparison of some of Crane's competitors:[18]

Company Net Income Margin 2007 Revenue Growth 2007 Revenues
Crane Company (CR) -2.4% 16.1% $2.6 billion
Dover Corporation (DOV) 9.0% 14.2% $7.2 billion
Honeywell International (HON) 7.1% 10.3% $34.6 billion
Tyco International (TYC) -9.3% 8.3% $18.8 billion
Flowserve (FLS) 6.8% 22.9% $3.8 billion


In general, Crane faces the most competition in fluid handling, where many other large companies are participating in the market. [19]




References

  1. CR 2007 Annual Report, page 3.
  2. Crane Company - Company Update, Lehman Brothers, February 22, 2008.
  3. CR 2007 10-K, Management's Discussion and Analysis of Financial Condition and Results of Operations, page 24.
  4. CR 2007 Annual Report, pages 2-3.
  5. CR 2007 10-K, Selected Financial Data, page 17.
  6. CR 2007 10-K, Selected Financial Data, page 20.
  7. CR 2007 10-K, Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 21.
  8. CR 2007 10-K, Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 25.
  9. CR 2007 10-K, Business, page 7.
  10. CR 2007 10-K, Financial Statements and Supplementary Data, pages 48-49.
  11. CR 2007 10-K, Risk Factors, page 11.
  12. Asbestos Verdict Upheld by California Court of Appeals, Announces Baron & Budd, BNET, May 16, 2008.
  13. CR 2007 10-K, Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 18.
  14. CR 2007 10-K, Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 21.
  15. CR 2007 10-K, Item 7, pg 22
  16. CR 2007 10-K, pg 27
  17. Boeing's a Buy, Motley Fool, April 24, 2008.
  18. Companies' respective 10-K reports
  19. CR 2007 10-K, page 3.
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