CRANE CURRENCY ACQUISITION ANNOUNCEMENT CALL

Similar documents
CRANE CO. Q EARNINGS RELEASE CALL

Crane Co. Q Earnings Release Call

CRANE CO. Q EARNINGS RELEASE CALL

Crane Co. Q Earnings Release Call

CRANE CO. Q EARNINGS RELEASE CALL

CRANE CO. Q EARNINGS RELEASE CALL

CRANE CO. Q EARNINGS RELEASE CALL

Crane Co. Reports 2017 Results and Updates 2018 Guidance

CRANE CO. FINANCIAL OVERVIEW

Annual Investor Day. February 28, 2019

INVESTOR DAY 2018 MARCH 1, 2018

Crane Co. Financial Overview. Richard Maue, Chief Financial Officer

CRANE CO. FINANCIAL OVERVIEW

WellCare to Acquire Meridian

Pentair KeyBanc Capital Markets Industrial, Automotive & Transportation Conference

Xylem Agrees to Acquire Sensus to Broaden Portfolio and Enhance Growth Platform AUGUST 15, 2016

FY 2017 FOURTH QUARTER EARNINGS. Adient s Q4 results solidify a strong FY17; positive momentum reflected in FY18 outlook $389M $344M $3,979M $3.

Q1 FY18 Results and Acquisition of KapStone Paper & Packaging Corporation. January 29, 2018

Second Quarter 2017 Reconciliation of Non-GAAP Financial Measures

Earnings Supplement 2 nd Quarter August 5, 2016

II-VI Incorporated Reports Q1 Fiscal 2019 Results

Our Transformation Continues Sidoti NDR May 29-30, 2018

CIRCOR Reports Fourth-Quarter and Year-End 2018 Financial Results

Investor Presentation. March 2018

Our Transformation Continues. March 21, 2018

Earnings Presentation October 25, 2018

II-VI Incorporated Reports Fiscal 2017 Second Quarter Earnings; Achieves Record Bookings, Revenues and Backlog

Fiserv Investor Conference Call. January 14, 2013

Science Applications International Corporation (SAIC) Third Quarter Fiscal Year 2018 Earnings Call. December 7, 2017

Vertical Research Conference Investor Presentation. June 2018

FINANCIAL OVERVIEW AL M I S T Y S Y N

Investor Presentation. March 2018

Reconciliation of Non-GAAP Financial Measures. Adjusted Operating Income Reconciliation

FY 2017 SECOND QUARTER EARNINGS. Adient delivers strong Q2 results; increases full year earnings expectations $286M $192M $2.04 $4,212M $235M 7.

XYLEM INC. Q EARNINGS RELEASE FEBRUARY 1, 2018

Divestiture of Valves & Controls August 19, 2016

Advanced Flow Solutions Energy Fluid Handling. Fourth Quarter Investor Review. Presented February 28, 2018

A Trusted Technology Partner to Medical and Advanced Technology Equipment Manufacturers

CIRCOR Reports Third-Quarter 2018 Financial Results

Investor Presentation June 18, 2014 TE CONNECTIVITY ACQUIRES MEASUREMENT SPECIALTIES

Deutsche Bank s 9 th Annual Global Industrials & Materials Summit Chicago June 6, John D. Sheehan Chief Financial Officer

Baird Global Industrial Conference Beth Wozniak, CEO Stacy McMahan, CFO November 6, 2018

Third Quarter 2018 Financial Results. October 24, 2018

Investor Update September / October 2017

2018 FOURTH QUARTER EARNINGS CALL

JP Morgan Healthcare Conference January 13, 2016

Why Vulcan. Investor Presentation March 10, 2015

Investor Presentation. April 2017

Share Data: Earnings (loss) per Diluted Share*** $ 0.81 $ (0.14) $ 2.28 $ 2.24

February 14, Q Earnings Presentation

NEW REVENUE ACCOUNTING STANDARD (ASC 606) February 7, 2018

November 1, Q Earnings Presentation

First Quarter 2016 Earnings

Investor Presentation. November 2017

2Q 18 Earnings Call Presentation. February 5, 2018

Creating a GLOBAL PACKAGING LEADER

SECOND QUARTER 2018 EARNINGS CONFERENCE CALL

DAVE MARBERGER CHIEF FINANCIAL OFFICER

DANA HOLDING CORPORATION Quarterly Financial Information and Reconciliations of Non-GAAP Financial Measures

December 31, 2018 % Chg. December 31, 2017 (as adjusted) 1 (as adjusted) 1

February 20, Qualcomm Enters into Amended Definitive Agreement with NXP

Itron, Inc. Comparison of Key 2015 Financial Metrics to Preliminary Results Announced February 17, Total operating expenses 486, ,839

United Rentals to Acquire NES Rentals

Credit Suisse 6 th Annual Industrials Conference November 2018

Investor Deck December 2018

Aptiv Reports Record Second Quarter 2018 Financial Results; Raises Full Year Outlook

Compelling Strategic Transaction

R. W. Baird 2018 Global Industrials Conference. November 7, 2018

SS&C Technologies (NASDAQ:SSNC)

TE CONNECTIVITY THE OPPORTUNITY HAS NEVER BEEN GREATER. Terrence Curtin Chief Executive Officer

IDEX Reports Second Quarter EPS of 89 Cents and Reaffirms Full Year EPS Guidance of $3.50 $3.60

UBS Global Technology Conference November, Bob Hau Chief Financial Officer

CRANE CO. Income Statement Data (in thousands, except per share data) Three Months Ended

4Q 2017 Presentation. February 27, 2018

Plantronics to Acquire Polycom

81nidZpGqzkSDMpD. Supplemental Investor Call Materials

Second Quarter Investor Review

Investor Presentation. Second Quarter 2018 NASDAQ: BECN BECN

2

Federal Signal Q Earnings Call August 7, Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer

DANAHER TO ACQUIRE GE LIFE SCIENCES BIOPHARMA BUSINESS ( GE Biopharma ) February 25, 2019

Q Earnings Supplement. November 7, 2018

ACQUISITION OF CARAUSTAR INDUSTRIES Significantly Enhances Margins and Free Cash Flow Strengthening its Leadership in Industrial Packaging

February 1, GAAP operating loss was ($16) million and GAAP operating margin was (1.5%).

Press Release. II-VI Incorporated. for anticipated. taxes. anticipates finalizing. and recording. positioned to. communications are.

SECOND QUARTER 2015 EARNINGS CONFERENCE CALL

SS&C Technologies (NASDAQ:SSNC) Investor Presentation February 2015

Service Solutions Divestiture. January 24, 2012

Federal Signal Q Earnings Call May 8, Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer

/// The New Wabtec. February 25, 2019

Acquisition of Pumping Services Assets from Pioneer Natural Resources November 13, NYSE: PUMP

Acquisition of Signode: Global Leader In Transit Packaging. December 19, 2017

MSCI THIRD QUARTER 2016

Capturing the Opportunity

Gabelli Pump, Valve and Water Systems Symposium

2

NOVEMBER Investor Presentation

Second Quarter 2018 Results July 31, 2018

Whole Foods Market Provides Shareholder Update on Accelerated Path to Delivering Shareholder Value and Announces Second Quarter 2017 Results

Second Quarter Review. 25 / April / 2014

Transcription:

CRANE CURRENCY ACQUISITION ANNOUNCEMENT CALL DECEMBER 6, 2017 1

Forward-Looking Statements - Disclaimer The information in this presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forwardlooking statements are statements other than historical information or statements about our current condition. You can identify forward-looking statements by the use of terms such as believes, contemplates, expects, may, could, should, would, or anticipates, other similar phrases, or the negatives of these terms. We have based the forward-looking statements relating to our operations on our current expectations, estimates and projections about us and the markets we serve. We caution you that these statements are not guarantees of future performance and involve risks and uncertainties. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, actual outcomes and results may differ materially from what we have expressed or forecast in the forward-looking statements. Any differences could result from a variety of factors, including those detailed on Page 1 of our Annual Report on Form 10-K for 2016 and in our subsequent disclosures filed with the Securities and Exchange Commission. 2

Crane Currency Acquisition Transaction Overview and Strategic Rationale Financial Summary and Value Creation Crane Currency Introduction Summary 3

Acquisition Snapshot Agreement to purchase 100% of the equity of Crane & Co., Inc. ( Crane Currency )» Fully integrated global supplier of banknotes and leader in security technology for currency Purchase Price» All cash transaction» $800 million on a cash free and debt free basis» Approximately 8.5x 2017E adjusted EBITDA* Financing» Combination of cash on hand and additional debt» Commitments in place to cover 100% of required financing Contingent upon regulatory approvals and other customary conditions Expect to Close First Quarter 2018 * Please see non-gaap Financial Measures tables for details. 4

Combination of Two Historic Companies 1855 Founded 1801 Stamford Headquarters Boston Foundry based business in Chicago Global, diversified manufacturer of highly engineered industrial products ~11,000 Employees 150 Locations globally Began as Today Employees Paper mills in New England Global, fully integrated supplier of banknotes; full portfolio of security solutions ~1,100 Employees Sales in ~50 countries Nearly 380 Years of Combined History 5

Adjusted EPS* Significant Value Creation Acquisition Provides Path to Better Than 10% Adjusted EPS CAGR for Next Several Years 8 7 6 5 5.10 0.15 10%+ EPS CAGR 1.00 Accretion from Acquisition 4 3 2 1 4.50 4.95 0 2017E* 2018E* 2019 2020 2021 Further Upside Possible from Additional Capital Deployment * Based on the midpoint of 2017 and 2018 EPS guidance, excluding Special Items. Please see non-gaap Financial Measures tables for details. 6

Sophisticated Technology Highly Engineered Solutions 7

M&A Activity ($M) Substantial Addition to Our Portfolio Long History of Acquisitions 900 800 700 600 500 400 300 200 100 0 2 nd Largest Acquisition in Crane Co.'s History 8

Experienced Acquirer in the P&MT Space 1985 1997 1999 2000 2006 2010 2013 2017 9

Adjusted Margin* Track Record of Success Payment & Merchandising Technologies 21% ~1900 bps Improvement 14% 7% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E Successful M&A Execution Track Record * Excludes Special Items. Please see non-gaap Financial Measures tables for details. 10

Crane Currency Acquisition Transaction Overview and Strategic Rationale Financial Summary and Value Creation Crane Currency Introduction Summary 11

Guidance Update Reaffirming 2017 adjusted EPS guidance» GAAP EPS of $4.38-$4.48 (was $4.41-$4.51) given incremental transaction related costs» Adjusted* EPS of $4.45-$4.55 Introducing preliminary 2018 EPS guidance» Core sales +2% to +4%» EPS of $4.85-$5.05, excluding any potential impact from pending Crane Currency acquisition» Segment details to be provided on the Q4 earnings call On-Track for 2017; Expect Accelerating Core Sales in 2018 * Excludes Special Items. Please see non-gaap Financial Measures tables for details. 12

Key Transaction Details and Metrics $800 million purchase price on a cash free/debt free basis» 2017E adjusted EBITDA* of ~$94 million and Sales ~$500 million» Represents ~8.5x 2017 adjusted EBITDA» Meets all strategic and financial M&A criteria Expect $0.15 EPS accretion in Year 1, excluding Special Items» $1.00 EPS accretion by 2021, excluding Special Items Already planning for growth and productivity investments» Completion of new world-class banknote printing facility in Malta» Accelerating investment in security products» Site improvements at other facilities Attractive Multiple and Compelling Value Creation * Please see non-gaap Financial Measures tables for details. 13

Capital Allocation Target 2x 3x adjusted debt to EBITDA Adjusted Debt to EBITDA* Expect to be disciplined and maintain current investment grade rating Near-term: 4x 3x 2.7x 3.4x 3.1x 2.7x» No repurchases» Retain bolt-on M&A flexibility, particularly outside U.S. 2x Medium-term:» Acquisition gives Crane better scale, and more flexibility for capital deployment 1x 0x 2017E 2017PF 2018E 2019E Expect to De-Lever Rapidly via Short-term Debt Repayment and EBITDA Growth * Company forecasts based on rating agency methodologies. 14

Flexibility for Capital Deployment 2018 2021 Capital Deployment Incremental Debt Capacity M&A and/or Repurchases ~$1.5B Available for M&A and/or Repurchases while Retaining Investment Grade Credit Metrics Operating Cash Flow Dividends Sources Capital Expenditures Uses Additional Value Creation Potential 15

P&MT Segment Post-Acquisition Payment & Merchandising Technologies (2017E Sales of ~$770M) Payment & Merchandising Technologies (2017E Pro Forma Sales of ~$1.3B) 74% 40% 16% 26% 44% Crane Currency Nearly as Large as CPI 16

Crane Co. Post-Acquisition Crane Co. (2017E Sales of ~$2.8B) Engineered Materials Crane Co. Post-Transaction (2017E Pro Forma Sales of ~$3.3B) Engineered Materials Aerospace & Electronics 25% 10% Fluid Handling 37% Aerospace & Electronics 21% 8% 31% Fluid Handling 28% 39% Payment & Merchandising Technologies Payment & Merchandising Technologies Portfolio Increasingly Positioned for Growth 17

Crane Currency Acquisition Transaction Overview and Strategic Rationale Financial Summary and Value Creation Crane Currency Introduction Summary 18

Crane Currency at a Glance Fully integrated global currency provider» Banknote design» Substrate manufacturing» Banknote printing» Security technologies 2017E Sales» ~1/3 U.S. vs. ~2/3 International One of Three Global Fully Integrated Providers 19

Strong Position in Attractive Market ~$4.4 Billion Addressable Market Bill and Coin Validation $1.1B $1.0B Currency Security Features Banknote Printing $1.5B $0.8B Currency Substrate 2nd Largest Player in Served Market 20

Annual Global Banknote Issuance (Billions) Banknote Production Continues to Grow Global Banknote Issuance is a Steady Growth Market 200 180 160 140 4.5% CAGR 120 100 80 60 40 20 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Expect Market Trends to Remain Favorable Source: Company and industry research 21

Security Content Per Note is Growing Growing Demand for Advanced Security Features Across more and more denominations Becoming larger proportion of total banknote spend Illustrative Cost Structure Per Note 35%+ Security Thread 2x Increase Security Thread Printing Printing Ink Shipping Substrate Old Note Ink Shipping Substrate New Note Security Features Expected to Drive Revenue Growth 22

$ millions Crane Currency Has Transformed Itself 600 500 ~500 400 300 ~13% Sales CAGR 200 100 68 0 U.S. Revenue International Revenue From Substrate to a Leader in Design, Printing, and Security *Purchased Swedish Substrate Mill 23

Pioneer in Micro-Optics Global Industry Leader in Micro-Optic Security Security built into substrate and/or added at print Security features increasingly added to smaller denomination notes Full portfolio of micro-optic solutions with numerous options Never been successfully counterfeited Security Portfolio Provides Path to Growth 24

Summary 2 nd largest deal in our history Extremely attractive metrics and value creation Highly engineered solutions for a growth market Great adjacency to existing Payment business More to Come on March 1 at Investor Day 25

Appendix Non-GAAP Information 26

Non-GAAP Explanation Certain non-gaap measures have been provided to facilitate comparison with the prior year. The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-gaap financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non- GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company s reported results prepared in accordance with GAAP. 27

Non-GAAP Financial Measures Crane & Co., Inc. ("Crane Currency") Non-GAAP Financial Measures (in millions) Reconciliation of Net Income to EBITDA and Adjusted EBITDA 2017 Estimated Net Income $ 29 Income Taxes 16 Interest Expense 8 Depreciation & Amortization 25 EBITDA $ 78 EBITDA $ 78 Non-Recurring Litigation Costs 4 Non-Recurring Print Facility Costs 9 Pension, Post-Retirement, and Stock Compensation Expense 3 Adjusted EBITDA $ 94 Transaction Price $ 800 Price / Adjusted EBITDA 8.5x 28

Non-GAAP Financial Measures Payment & Merchandising Technologies Adjusted Segment Margin (in $ Millions) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E Net Sales 155 169 166 258 388 402 293 298 374 372 381 712 703 746 768 Operating Profit - GAAP 3 10 13 18 40 32 21 17 30 34 35 69 101 136 160 Restructuring and related costs - - - - - 13 (3) 3-4 - 10 (1) - - Acquisition Transaction costs - - - - - - - 1 - - 1 - - - 1 Inventory & Backlog Amortization - - - - - - - - - - 5 5 - - - Integration Costs - - - - - - - - - - - 8 7 - - Operating Profit before Special Items 3 10 13 18 40 45 18 21 30 37 41 93 108 136 161 Percentage of Sales 1.8% 5.9% 7.8% 7.0% 10.3% 11.2% 6.1% 7.0% 8.1% 10.1% 10.7% 13.0% 15.4% 18.2% 21.0% 29

Non-GAAP Financial Measures CRANE CO. Guidance 2017 Full Year Guidance 2017 Earnings Per Share Guidance Low High Earnings Per Share - GAAP basis $ 4.38 $ 4.48 Transaction related charge - Net of Tax 0.07 0.07 Earnings Per Share - Non-GAAP basis $ 4.45 $ 4.55 30