Crane Company Announces Acquisition of Vian Enterprises, Inc.
- Acquisition of Vian Enterprises, Inc. expands Crane's portfolio of mission-critical aerospace flow control products
- Vian has strong positions on the most attractive commercial and military aircraft platforms, with an order backlog exceeding $100 million
- Vian's margins are expected to be accretive to the Aerospace & Electronics' segment EBITDA margins immediately, with a long-term sales growth rate in line with the segment’s previously disclosed 7% to 9% long-term CAGR
- None.
Insights
Crane Company's acquisition of Vian Enterprises represents a strategic consolidation within the aerospace and defense industry, a sector known for high barriers to entry and stringent requirements. The deal size, at $103 million, is substantial for a company with $33 million in trailing 12-month sales, indicating a price-to-sales ratio above 3, which is noteworthy given the industry's competitive pricing pressures. The acquisition is financed through Crane's revolving credit facility, suggesting confidence in Vian's future cash flows to service this debt.
From a market perspective, the acquisition enhances Crane's product portfolio in aerospace flow control, a niche but critical component in aircraft manufacturing. The mention of Vian's sole-sourced and proprietary content implies a competitive edge, likely to result in strong customer lock-in and recurring revenue streams. Furthermore, the expected accretive margins to Crane's EBITDA highlight the potential for improved profitability and shareholder value.
However, the integration of Vian into Crane's operations will be a critical factor to monitor. Successful integration can lead to synergies and cost savings, while failure to integrate could lead to write-offs and operational disruptions. Investors should also consider the long-term sales growth rate in line with the segment's 7% to 9% CAGR, which could signal steady, if not spectacular, revenue growth in the coming years.
The acquisition of Vian Enterprises by Crane Company is a financially significant event with implications for Crane's liquidity and leverage. The use of the revolving credit facility for the purchase suggests a leveraging strategy that could affect Crane's balance sheet and credit ratings. The financial metrics provided, such as Vian's adjusted EBITDA of approximately $8 million against a backdrop of $33 million in sales, demonstrate a healthy EBITDA margin that investors often look for as an indicator of operating efficiency.
Investors should note the order backlog exceeding $100 million, which is a strong indicator of future revenue and provides visibility into Vian's financial health. The backlog also suggests a robust demand for Vian's products, which could translate into stable future earnings for Crane. The accretive nature of the acquisition to EBITDA margins is a positive sign, but it is crucial to understand how this will translate into net income and earnings per share, which are key drivers of stock performance.
Moreover, the acquisition's timing and the stated alignment with Crane's strategic and financial criteria suggest a disciplined approach to M&A, which is typically well-received by the market. However, the actual realization of the projected synergies and growth rates will be essential to justify the acquisition premium and to assess the long-term value creation for shareholders.
The acquisition of Vian Enterprises by Crane Company is a strategic move within the aerospace and defense sector, emphasizing the importance of lubrication systems in aircraft performance and maintenance. Vian's multi-stage lubrication pumps and system components are critical for the proper functioning of engines, gearboxes and auxiliary power units, which are essential for aircraft operation. The proprietary nature of Vian's products on high-volume commercial and military aircraft platforms suggests a deep entrenchment in the industry and potential for sustained demand.
The reference to Vian's strong positions on attractive commercial and military aircraft platforms indicates a strategic alignment with long-term aerospace trends, such as the increasing complexity of aircraft systems and the need for reliable, high-performance components. The acquisition could provide Crane with enhanced capabilities to capitalize on future content opportunities, which is crucial in an industry driven by technological advancements and stringent regulatory standards.
Given the sector's long product development cycles and the critical importance of reliability, the integration of Vian's technology into Crane's Aerospace & Electronics segment could offer significant competitive advantages. However, it is essential to consider the challenges associated with maintaining product quality and meeting the rigorous certification processes inherent in the aerospace industry.
Significantly Strengthens Breadth of Aerospace & Electronics’ Fluid Solution Capabilities
Founded in 1968, Vian is a global designer and manufacturer of multi-stage lubrication pumps and lubrication system components technology for critical aerospace and defense applications with sole-sourced and proprietary content on the highest volume commercial and military aircraft platforms. Through August 2023, we estimate that Vian had trailing 12-month sales of approximately
Crane’s President and CEO, Max Mitchell, said: “We are very excited to announce this transaction. Vian is highly complementary to our Fluid Solution within the Aerospace & Electronics segment, significantly expanding our portfolio of mission critical aerospace flow control products. Vian has strong positions on the most attractive commercial and military aircraft platforms today, and combined with our existing fluid and thermal management capabilities, further strengthens our positioning for future content opportunities on engines, gearboxes and auxiliary power units. We expect that Vian’s margins will be accretive to the Aerospace & Electronics’ segment EBITDA margins immediately, with a long-term sales growth rate in line with the segment’s previously disclosed
Mr. Mitchell concluded: “I would like to personally thank Chris and Elizabeth Vian and the Vian family for entrusting Crane as the stewards of this great business moving forward. I also would like to welcome the Vian team to Crane, and to acknowledge the effort and success of all of Vian’s valued employees, who have grown this business into a leading industry supplier of aerospace lubrication solutions and related products. We look forward to working together in the years ahead, investing for further growth and building on the strong legacy and track record of both companies.”
Crane will provide further updates on the Vian acquisition during the fourth quarter earnings call.
Announces Date for Fourth Quarter 2023 Earnings Release and Teleconference
Crane announces the following schedule and teleconference information for its fourth quarter 2023 earnings release:
- Earnings Release: January 29, 2024 after close of market by public distribution and the Crane Company website at www.craneco.com.
- Teleconference: January 30, 2024 at 10:00 AM (Eastern) hosted by Max H. Mitchell, President & CEO, and Richard A. Maue, Executive Vice President & CFO. The call can be accessed in a listen-only mode via the Company’s website www.craneco.com. An accompanying slide presentation will also be available on the Company’s website.
- Web Replay: Will be available on the Company’s website shortly after completion of the live call.
About Crane Company
Crane Company has delivered innovation and technology-led solutions to its customers since its founding in 1855. Today, Crane is a leading manufacturer of highly engineered components for challenging, mission-critical applications focused on the aerospace, defense, space and process flow industry end markets. The Company is comprised of two strategic growth platforms, Aerospace & Electronics and Process Flow Technologies, as well as the Engineered Materials segment. Crane has approximately 7,000 employees in the
Forward-Looking Statements Disclaimer
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief, or expectations, including, but not limited to: statements regarding Crane’s portfolio following the business separation; benefits and synergies of the separation transaction; strategic and competitive advantages of Crane; future financing plans and opportunities; and business strategies, prospects and projected operating and financial results. We caution investors not to place undue reliance on any such forward-looking statements.
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Risks and uncertainties that could cause actual results to differ materially from our expectations include, but are not limited to: changes in global economic conditions (including inflationary pressures) and geopolitical risks, including macroeconomic fluctuations that may harm our business, results of operation and stock price; the continuing effects from the COVID-19 pandemic on our business and the global and
Readers should carefully review Crane’s financial statements and the notes thereto, as well as the section entitled “Risk Factors” in Item 1A of Crane’s Annual Report on Form 10-K for the year ended December 31, 2022 and the other documents Crane and its subsidiaries file from time to time with the SEC. Readers should also carefully review the “Risk Factors” section of the information statement filed as an exhibit to Crane’s registration statement on Form 10. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements.
These forward-looking statements reflect management’s judgment as of this date, and Crane assumes no (and disclaims any) obligation to revise or update them to reflect future events or circumstances.
We make no representations or warranties as to the accuracy of any projections, statements or information contained in this document. It is understood and agreed that any such projections, targets, statements and information are not to be viewed as facts and are subject to significant business, financial, economic, operating, competitive and other risks, uncertainties and contingencies many of which are beyond our control, that no assurance can be given that any particular financial projections ranges, or targets will be realized, that actual results may differ from projected results and that such differences may be material. While all financial projections, estimates and targets are necessarily speculative, we believe that the preparation of prospective financial information involves increasingly higher levels of uncertainty the further out the projection, estimate or target extends from the date of preparation. The assumptions and estimates underlying the projected, expected or target results are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the financial projections, estimates and targets. The inclusion of financial projections, estimates and targets in this press release should not be regarded as an indication that we or our representatives, considered or consider the financial projections, estimates and targets to be a reliable prediction of future events.
Non-GAAP Explanation
Crane Company reports its financial results in accordance with
Reconciliations of certain forward-looking and projected non-GAAP measures for Vian, including Adjusted EBITDA, to the closest corresponding GAAP measure are not available without unreasonable efforts due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, which could have a potentially significant impact on our future GAAP results. In the case of Vian specifically, access to certain information necessary to fully reconcile forecasts of non-GAAP measures to their nearest GAAP equivalent measure is not yet available. The forward looking and projected non-GAAP measure is calculated as follows:
"Adjusted EBITDA" adds back to net income: net interest expense, income tax expense, depreciation and amortization, and Special Items such as transaction related expenses, certain non-recurring facility move and lease expenses, and prior owner personal and discretionary expenses. We believe that adjusted EBITDA provides investors with an alternative metric that may be a meaningful indicator of Vian’s performance and provides useful information to investors regarding its financial conditions that is complementary to GAAP metrics. Further, for Vian, adjusted EBITDA may also be a useful complementary measure to GAAP metrics because it excludes certain items, namely net interest expense, income tax expense, and amortization, that could vary significantly when forecasted for Vian pre-acquisition as a standalone entity compared to what those results may be with Vian under Crane’s ownership.
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Jason D. Feldman
Vice President, Treasury & Investor Relations
203-363-7329
www.craneco.com
Source: Crane Company
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