Apr 24, 2018 • 10:00 am ET



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Good day everyone and welcome to Crane's First Quarter 2018 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Director of Investor Relations, Mr. Jason Feldman. Please go ahead sir.

Jason D. Feldman

Thank you operator and good day everyone. Welcome to our first quarter 2018 earnings release conference call. I'm Jason Feldman, Director of Investor Relations. On our call this morning, we have Max Mitchell, President and Chief Executive Officer; and Rich Maue, our Chief Financial Officer. We will start off our call with a few prepared remarks, after which we will respond to questions.

Just a reminder that the comments we make on this call may include some forward-looking statements. We refer you to the cautionary language at the bottom of our earnings release and also in our annual report 10-K and subsequent filings pertaining to forward-looking statements. Also during the call, we will be using some non-GAAP numbers, which are reconciled the comparable GAAP numbers in tables at the end of our press release and the accompanying slide presentation, both of which are available on our website at www.craneco.com in the investor Relations section.

Now, let me turn the call over to Max.

Max H. Mitchell

Thank you Jason. Good morning everyone. After our record setting 2017 results, we are off to another solid start this year. You may recall that last year we delivered record adjusted EPS of $4.53, record adjusted operating margins of 15.2% and record free cash flow of $269 million. This year, we are on track for further adjusted EPS growth of more than 20% and we are also making substantial progress on our various initiatives from repositioning and accelerated growth investments to acquisition/integration and plans for future capital deployment, all of which will keep us on a strong EPS and free cash flow growth trajectory in the years ahead.

We share that multi-year growth story with all of you at our Investor Day earlier this year. And we remain confident in our ability to execute on that plan. There have been a few changes in our outlook over the last two months since Investor Day. Specifically, we are incrementally positive on the likelihood of receiving some repeat business from one of Crane Currency's largest customers last year. That benefit is being partially offset by RV sales at Engineered Materials that are a little softer than we expected, and we are also facing some modest headwinds from higher commodity costs.

On balance, however, we have greater confidence in our 2018 outlook. Although it is still early in the year, we are raising our EPS guidance, excluding special items, by $0.10 at the midpoint to a range of $5.45 to $5.65. We are also raising our free cash flow guidance to $240 million to $270 million compared to our prior range of $220 million to $250 million.

I will now briefly review this quarter's results and then discuss some of the highlights followed by Rich providing additional financial details. Starting