UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Mark One:


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 1-1657

CRANE NXT, CO.

(Exact name of registrant as specified in its charter)



Delaware						~~13-1952290~~88-0706021
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


~~100 First Stamford Place~~950 Winter Street 4th Floor	~~Stamford~~Waltham	CTMA	~~06902~~02451
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: ~~203-363-7300~~610-430-2510

(Not Applicable)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00	CRCXT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non–accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

(check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the issuer’s classes of common stock, as of April 30, ~~2022~~2023

Common stock, $1.00 Par Value – ~~56,055,134~~56,730,163 shares

Crane NXT, Co.

Table of Contents

Form 10-Q

Page

Part I - Financial Information

Item 1.

Financial Statements

Condensed Consolidated Statements of Operations

Page 34

Condensed Consolidated Statements of Comprehensive Income

Page 45

Condensed Consolidated Balance Sheets

Page 56

Condensed Consolidated Statements of Cash Flows

Page 78

Consolidated Statements of Changes in Equity

Page 10

Notes to Condensed Consolidated Financial Statements

Page 911

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Page 3128

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Page 4138

Item 4.

Controls and Procedures

Page 4138

Part II - Other Information

Page 4239

Page 4239

Unregistered Sales of Equity Securities and Use of Proceeds

Page 4239

Item 3.

Defaults Upon Senior Securities

Page 4239

Item 4.

Mine Safety Disclosures

Page 4239

Page 4239

Page 4340

Page 4441

EXPLANATORY NOTE

As used in this Quarterly Report on Form 10-Q, the terms "we," "us," "our," "Crane Holdings, Co." and the "Company" mean Crane NXT, Co. and our subsidiaries. Prior to April 3, 2023, Crane NXT, Co. was named “Crane Holdings, Co.” Accordingly, we refer to Crane NXT, Co. as “Crane Holdings, Co.” in certain disclosures that are as of dates or related to periods ended prior to April 3, 2023.

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

CRANE HOLDINGS, CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended
March 31,
(in millions, except per share data) 2022 2021
Net sales $ 801.1 $ 779.6
Operating costs and expenses:
Cost of sales 473.8 470.5
Selling, general and administrative 193.7 182.2
Restructuring (gains) charges, net — (13.1)
Operating profit 133.6 140.0
Other income (expense):
Interest income 0.3 0.4
Interest expense (11.1) (13.6)
Miscellaneous income, net 3.5 3.9
Total other expense (7.3) (9.3)
Income from continuing operations before income taxes 126.3 130.7
Provision for income taxes 31.6 27.3
Net income from continuing operations attributable to common shareholders 94.7 103.4
Income from discontinued operations, net of tax (Note 2) 10.3 5.0
Net income attributable to common shareholders $ 105.0 $ 108.4
Earnings per basic share:
Earnings per basic share from continuing operations $ 1.66 $ 1.79
Earnings per basic share from discontinued operations 0.18 0.10
Earnings per basic share $ 1.84 $ 1.89
Earnings per diluted share:
Earnings per diluted share from continuing operations $ 1.64 $ 1.75
Earnings per diluted share from discontinued operations 0.17 0.09
Earnings per diluted share $ 1.81 $ 1.84
Average shares outstanding:
Basic 57.1 58.2
Diluted 57.9 58.9
Dividends per share $ 0.47 $ 0.43


	Three Months Ended
	March 31,
(in millions, except per share data)	2023		2022
Net sales	$	842.9	$	871.5
Operating costs and expenses:
Cost of sales	481.3		526.2
Selling, general and administrative	209.4		198.3



Operating profit	152.2		147.0
Other (expense) income:
Interest income	1.0		0.3
Interest expense	(17.0)		(11.1)

Miscellaneous (expense) income, net	(2.4)		3.5
Total other expense, net	(18.4)		(7.3)
Income before income taxes	133.8		139.7
Provision for income taxes	28.1		34.7




Net income attributable to common shareholders	$	105.7	$	105.0

Earnings per share:


Basic	$	1.87	$	1.84
Diluted	$	1.84	$	1.81





Average shares outstanding:
Basic	56.5		57.1
Diluted	57.3		57.9

Dividends per share	$	0.47	$	0.47

~~See Notes to Condensed Consolidated Financial Statements.~~

~~CRANE CO. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~(UNAUDITED)~~

Three Months Ended
March 31,
(in millions) 2022 2021
Net income before allocation to noncontrolling interests $ 105.0 $ 108.4
Components of other comprehensive income (loss), net of tax
Currency translation adjustment (21.6) (34.9)
Changes in pension and postretirement plan assets and benefit obligation, net of tax 3.3 4.9
Other comprehensive loss, net of tax (18.3) (30.0)
Comprehensive income before allocation to noncontrolling interests 86.7 78.4
Less: Noncontrolling interests in comprehensive income 0.1 0.8
Comprehensive income attributable to common shareholders $ 86.6 $ 77.6

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~BALANCE SHEETS~~STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in millions) March 31,
2022 December 31,
2021
Assets
Current assets:
Cash and cash equivalents $ 307.2 $ 478.6
Accounts receivable, net of allowance for doubtful accounts of $9.3 as of March 31, 2022 and $10.4 as of December 31, 2021 510.9 472.4
Current insurance receivable - asbestos 13.7 13.7
Inventories, net:
Finished goods 156.1 143.8
Finished parts and subassemblies 68.4 59.5
Work in process 33.3 36.9
Raw materials 213.5 200.7
Inventories, net 471.3 440.9
Other current assets 115.1 118.1
Current assets held for sale 234.1 220.5
Total current assets 1,652.3 1,744.2
Property, plant and equipment:
Cost 1,176.2 1,179.9
Less: accumulated depreciation 660.0 652.6
Property, plant and equipment, net 516.2 527.3
Long-term insurance receivable - asbestos 55.8 60.0
Long-term deferred tax assets 19.4 17.7
Other assets 254.7 259.0
Intangible assets, net 452.1 465.9
Goodwill 1,402.7 1,412.5
Total assets $ 4,353.2 $ 4,486.6


	Three Months Ended
	March 31,
(in millions)	2023		2022
Net income before allocation to noncontrolling interests	$	105.7	$	105.0
Components of other comprehensive income (loss), net of tax
Currency translation adjustment	12.7		(21.6)
Changes in pension and postretirement plan assets and benefit obligation, net of tax	2.7		3.3
Other comprehensive income (loss), net of tax	15.4		(18.3)
Comprehensive income before allocation to noncontrolling interests	121.1		86.7
Less: Noncontrolling interests in comprehensive income	(0.1)		0.1
Comprehensive income attributable to common shareholders	$	121.2	$	86.6

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except per share and share data) March 31,
2022 December 31,
2021
Liabilities and equity
Current liabilities:
Short-term borrowings $ 104.0 $ —
Accounts payable 233.9 246.7
Current asbestos liability 62.3 62.3
Accrued liabilities 333.1 430.7
U.S. and foreign taxes on income 23.0 10.6
Current liabilities held for sale 41.5 44.9
Total current liabilities 797.8 795.2
Long-term debt 842.7 842.4
Accrued pension and postretirement benefits 223.6 231.9
Long-term deferred tax liability 69.2 71.1
Long-term asbestos liability 538.1 549.8
Other liabilities 155.6 161.1
Total liabilities 2,627.0 2,651.5
Commitments and contingencies (Note 11) 0 0
Equity:
Preferred shares, par value $0.01; 5,000,000 shares authorized — —
Common shares, par value $1.00; 200,000,000 shares authorized, 72,426,139 shares issued 72.4 72.4
Capital surplus 364.7 363.9
Retained earnings 2,605.9 2,527.3
Accumulated other comprehensive loss (458.6) (440.2)
Treasury stock (861.1) (691.1)
Total shareholders’ equity 1,723.3 1,832.3
Noncontrolling interests 2.9 2.8
Total equity 1,726.2 1,835.1
Total liabilities and equity $ 4,353.2 $ 4,486.6
Share data:
Common shares issued 72,426,139 72,426,139
Less: Common shares held in treasury 16,120,215 14,590,274
Common shares outstanding 56,305,924 57,835,865


(in millions)	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	510.2	$	657.6
Accounts receivable, net of allowance for doubtful accounts of $16.9 as of March 31, 2023 and $14.1 as of December 31, 2022	499.5		474.7
Inventories, net:
Finished goods	106.0		83.3
Finished parts and subassemblies	74.5		70.7
Work in process	42.3		39.9
Raw materials	270.1		245.9
Inventories, net	492.9		439.8
Other current assets	193.2		179.8

Total current assets	1,695.8		1,751.9
Property, plant and equipment:
Cost	1,268.9		1,250.8
Less: accumulated depreciation	760.9		740.9
Property, plant and equipment, net	508.0		509.9
Long-term deferred tax assets	9.9		8.3
Other assets	184.9		176.0
Intangible assets, net	406.5		416.6
Goodwill	1,530.9		1,527.5

Total assets	$	4,336.0	$	4,390.2

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in millions, except per share and share data)	March 31, 2023		December 31, 2022
Liabilities and equity
Current liabilities:
Short-term borrowings	$	308.5	$	699.3
Accounts payable	247.1		286.6
Accrued liabilities	395.9		464.2
U.S. and foreign taxes on income	23.0		38.1
Total current liabilities	974.5		1,488.2
Long-term debt	880.7		543.7
Accrued pension and postretirement benefits	153.9		153.2
Long-term deferred tax liability	161.1		162.4
Other liabilities	148.1		138.7

Total liabilities	2,318.3		2,486.2
Commitments and contingencies (Note 10)
Equity:
Preferred shares, par value $0.01; 5,000,000 shares authorized	—		—
Common shares, par value $1.00; 200,000,000 shares authorized, 72,440,983 shares issued	72.4		72.4
Capital surplus	376.8		373.8
Retained earnings	2,901.9		2,822.8
Accumulated other comprehensive loss	(487.8)		(503.3)
Treasury stock	(848.1)		(864.3)
Total shareholders’ equity	2,015.2		1,901.4
Noncontrolling interests	2.5		2.6
Total equity	2,017.7		1,904.0
Total liabilities and equity	$	4,336.0	$	4,390.2


Share data:
Common shares issued	72,440,983		72,426,389
Less: Common shares held in treasury	15,715,676		16,101,007
Common shares outstanding	56,725,307		56,325,382

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


		Three Months Ended					Three Months Ended
		March 31,					March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Operating activities from continuing operations:
Net income from continuing operations attributable to common shareholders		$	94.7	$	103.4
Gain on sale of property		—		(12.8)
Operating activities:						Operating activities:
Net income attributable to common shareholders						Net income attributable to common shareholders	$	105.7	$	105.0

Depreciation and amortization	Depreciation and amortization	28.6		30.6		Depreciation and amortization	28.6		28.6
Stock-based compensation expense	Stock-based compensation expense	5.9		6.2		Stock-based compensation expense	6.3		5.9
Defined benefit plans and postretirement credit	Defined benefit plans and postretirement credit	(2.7)		(1.7)		Defined benefit plans and postretirement credit	5.3		(2.7)
Deferred income taxes	Deferred income taxes	(0.9)		0.3		Deferred income taxes	(0.1)		(0.9)
Cash used for operating working capital	Cash used for operating working capital	(167.1)		(51.5)		Cash used for operating working capital	(215.0)		(183.7)
Defined benefit plans and postretirement contributions	Defined benefit plans and postretirement contributions	(2.8)		(15.8)		Defined benefit plans and postretirement contributions	(1.8)		(2.8)
Environmental payments, net of reimbursements	Environmental payments, net of reimbursements	(1.3)		(1.5)		Environmental payments, net of reimbursements	(1.3)		(1.3)
Asbestos related payments, net of insurance recoveries	Asbestos related payments, net of insurance recoveries	(7.5)		(10.8)		Asbestos related payments, net of insurance recoveries	—		(7.5)

Other	Other	3.8		1.2		Other	1.5		3.9
Total (used for) provided by operating activities from continuing operations		(49.3)		47.6
Investing activities from continuing operations:
Total used for operating activities						Total used for operating activities	(70.8)		(55.5)
Investing activities:						Investing activities:

Proceeds from disposition of capital assets	Proceeds from disposition of capital assets	—		14.5		Proceeds from disposition of capital assets	0.1		—
Capital expenditures	Capital expenditures	(12.5)		(4.7)		Capital expenditures	(12.9)		(13.0)
Purchase of marketable securities		—		(10.0)
Proceeds from sale of marketable securities		—		30.0
Total (used for) provided by investing activities from continuing operations		(12.5)		29.8
Financing activities from continuing operations:

Total used for investing activities						Total used for investing activities	(12.8)		(13.0)
Financing activities:						Financing activities:
Dividends paid	Dividends paid	(26.7)		(25.0)		Dividends paid	(26.6)		(26.7)
Reacquisition of shares on open market	Reacquisition of shares on open market	(175.8)		—		Reacquisition of shares on open market	—		(175.8)
Stock options exercised, net of shares reacquired	Stock options exercised, net of shares reacquired	0.7		7.3		Stock options exercised, net of shares reacquired	12.8		0.7
Debt issuance costs						Debt issuance costs	(4.0)		—

Repayments of commercial paper with maturities greater than 90 days		—		(27.1)
Net borrowings from issuance of commercial paper with maturities of 90 days or less	Net borrowings from issuance of commercial paper with maturities of 90 days or less	104.0		—		Net borrowings from issuance of commercial paper with maturities of 90 days or less	—		104.0

Total used for financing activities from continuing operations		(97.8)		(44.8)
Discontinued operations:
Total (used for) provided by operating activities		(6.2)		2.6
Total used for investing activities		(0.5)		(0.3)
(Decrease) increase in cash and cash equivalents from discontinued operations		(6.7)		2.3
Proceeds from term loan						Proceeds from term loan	350.0		—
Repayment of term loan						Repayment of term loan	(400.0)		—
Total used for financing activities						Total used for financing activities	(67.8)		(97.8)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(5.1)		(7.5)		Effect of exchange rates on cash and cash equivalents	4.0		(5.1)
(Decrease) increase in cash and cash equivalents		(171.4)		27.4
Decrease in cash and cash equivalents						Decrease in cash and cash equivalents	(147.4)		(171.4)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	478.6		551.0		Cash and cash equivalents at beginning of period	657.6		478.6
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	307.2	$	578.4	Cash and cash equivalents at end of period	$	510.2	$	307.2

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended
March 31,
(in millions) 2022 2021
Detail of cash used for operating working capital from continuing operations:
Accounts receivable $ (41.9) $ (48.9)
Inventories (32.5) (1.7)
Other current assets (5.6) (18.5)
Accounts payable (11.2) 13.3
Accrued liabilities (94.7) (18.4)
U.S. and foreign taxes on income 18.8 22.7
Total $ (167.1) $ (51.5)
Supplemental disclosure of cash flow information:
Interest paid $ 7.4 $ 9.9
Income taxes paid $ 13.7 $ 5.7


	Three Months Ended
	March 31,
(in millions)	2023		2022
Detail of cash used for operating working capital:
Accounts receivable	$	(22.4)	$	(52.0)
Inventories	(50.3)		(35.2)
Other current assets	(16.5)		(5.9)
Accounts payable	(40.7)		(9.3)
Accrued liabilities	(69.9)		(100.1)
U.S. and foreign taxes on income	(15.2)		18.8
Total	$	(215.0)	$	(183.7)

Supplemental disclosure of cash flow information:
Interest paid	$	14.3	$	7.4
Income taxes paid	$	42.3	$	13.7

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)


(in millions, except share data)	Common Shares Issued at Par Value	Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Share- holders’ Equity		Non-controlling Interest		Total Equity
BALANCE DECEMBER 31, 2022	72.4	$	373.8	$	2,822.8	$	(503.3)	$	(864.3)	$	1,901.4	$	2.6	$	1,904.0
Net income	—	—		105.7		—		—		105.7		—		105.7
Cash dividends ($0.47 per share)	—	—		(26.6)		—		—		(26.6)		—		(26.6)

Exercise of stock options, net of shares reacquired of 297,539 shares	—	—		—		—		19.8		19.8		—		19.8
Impact from settlement of share-based awards, net of shares acquired	—	(3.3)		—		—		(3.6)		(6.9)		—		(6.9)
Stock-based compensation expense	—	6.3		—		—		—		6.3		—		6.3
Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		2.7		—		2.7		—		2.7
Currency translation adjustment	—	—		—		12.8		—		12.8		(0.1)		12.7
BALANCE MARCH 31, 2023	72.4	$	376.8	$	2,901.9	$	(487.8)	$	(848.1)	$	2,015.2	$	2.5	$	2,017.7



(in millions, except share data)	Common Shares Issued at Par Value	Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Share- holders’ Equity		Non-controlling Interest		Total Equity
BALANCE DECEMBER 31, 2021	72.4	$	363.9	$	2,527.3	$	(440.2)	$	(691.1)	$	1,832.3	$	2.8	$	1,835.1
Net income	—	—		105.0		—		—		105.0		—		105.0
Cash dividends ($0.47 per share)	—	—		(26.4)		—		—		(26.4)		—		(26.4)
Reacquisition on open market of 1,699,949 shares	—	—		—		—		(175.8)		(175.8)		—		(175.8)
Exercise of stock options, net of shares reacquired of 79,214 shares	—	—		—		—		6.1		6.1		—		6.1
Impact from settlement of share-based awards, net of shares acquired	—	(5.1)		—		—		(0.3)		(5.4)		—		(5.4)
Stock-based compensation expense	—	5.9		—		—		—		5.9		—		5.9
Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		3.3		—		3.3		—		3.3
Currency translation adjustment	—	—		—		(21.7)		—		(21.7)		0.1		(21.6)
BALANCE MARCH 31, 2022	72.4	$	364.7	$	2,605.9	$	(458.6)	$	(861.1)	$	1,723.3	$	2.9	$	1,726.2

See Notes to Condensed Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and the instructions to Form 10-Q and, therefore, reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

As used in these notes, the terms "we," "us," "our," and the "Company" mean Crane Holdings, Co., which was renamed “Crane NXT, Co.” on April 3, 2023.

Due to rounding, numbers presented throughout this report may not add up precisely to totals we provide, and percentages may not precisely reflect the absolute figures. Certain amounts in the prior periods’ condensed consolidated financial statements have been reclassified to conform to the current period presentation.

~~Pending~~ Separation

On ~~March 30, 2022, Crane Co. announced that its Board of Directors unanimously approved a plan to pursue a separation~~April 3, 2023, the Company, was separated into two independent, publicly-traded companies, in a transaction in which the Company retained its Payment & Merchandising Technologies segment and spun off its Aerospace & Electronics, Process Flow Technologies and Engineered Materials segments to the Company’s stockholders (the “Separation”). The Separation is expected to occur through a tax-free distribution and is expected to be completed within approximately 12 months, subject to the satisfaction of customary conditions and final approval by Crane Co.’s Board of Directors.

~~Discontinued Operations~~

On May 16, 2021, we entered into an agreement to sell the Engineered Materials segment to Grupo Verzatec S.A. de C.V. for $360 million on a cash-free and debt-free basis. The sale is subject to customary closing conditions and regulatory approvals. The historical results of Engineered Materials are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Throughout this Quarterly Report on Form 10-Q, unless otherwise indicated, amounts and activity are presented on a continuing operations basis. Please see Note 2, “Discontinued Operations” for additional details.

Recent Accounting Pronouncements ~~- Adopted~~

~~Simplifying~~The Company considered the applicability and impact of all Accounting ~~for Income Taxes~~

~~In December 2019,~~Standards Updates issued by the Financial Accounting Standards Board (“FASB”) issued amended guidance to simplify the accounting for income taxes. The guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Certain amendments are(FASB) and determined them to be ~~applied prospectively, while other amendments~~either not applicable or are not expected to ~~be applied retrospectively to all periods presented. We~~ have ~~adopted this standard effective January 1, 2021. The adoption~~a material impact on the Company's Condensed Consolidated Statement of ~~this new standard did not impact our consolidated financial statements.~~Operations, Balance Sheets and Cash Flows.

Note 2 ~~- Discontinued Operations~~

A business is classified as held for sale when management having the authority to approve the action commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value and certain other criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. When the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized and updated each reporting period as appropriate.

Executing on our strategy to focus our growth investments on our 3 remaining segments, on May 16, 2021, we entered into an agreement to sell our Engineered Materials segment to Grupo Verzatec S.A. de C.V. for $360 million on a cash-free and debt-free basis. The sale is subject to customary closing conditions and regulatory approvals. In the second quarter of 2021, the assets and liabilities of the segment were classified as held for sale, and the segment’s results were presented as discontinued operations. This change was applied on a retrospective basis. On March 17, 2022, the Department of Justice (DOJ) filed a complaint to enjoin the sale transaction. The parties are responding to the complaint and engaging with the DOJ in the normal course to address the DOJ’s antitrust concerns regarding a minor overlap in a narrow range of material used in certain commercial building applications. We believe that the sale is probable of closing and, as such, continue to present the segment’s results as discontinued operations as of March 31, 2022.

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Financial results from discontinued operations:~~

Three Months Ended
March 31,
(in millions) 2022 2021
Net sales $ 70.4 $ 53.9
Cost of sales 52.4 43.1
Selling, general and administrative 4.6 4.4
Income from discontinued operations $ 13.4 $ 6.4
Income tax provision 3.1 1.4
Income from discontinued operations, net of tax $ 10.3 $ 5.0

~~Major classes of assets and liabilities to be transferred in the transaction:~~

(in millions) March 31, 2022 December 31, 2021
Assets:
Accounts receivable, net $ 20.7 $ 10.6
Inventories, net 10.9 8.2
Other current assets 0.8 0.6
Current assets held for sale (a)
32.4 19.4
Property, plant and equipment, net 28.8 28.3
Other assets 0.4 0.3
Intangible assets, net 1.2 1.2
Goodwill 171.3 171.3
Long-term assets held for sale (a)
201.7 201.1
Assets held for sale $ 234.1 $ 220.5
Liabilities:
Accounts payable $ 28.9 $ 27.0
Accrued liabilities 6.7 12.0
Current liabilities held for sale (a)
35.6 39.0
Long-term deferred tax liability 5.8 5.8
Other liabilities 0.1 0.1
Long-term liabilities held for sale (a)
5.9 5.9
Liabilities held for sale $ 41.5 $ 44.9
(a) We reasonably expect to close on this transaction within one year and therefore have presented the assets and liabilities as current as of March 31, 2022.

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Note 3~~ - Segment Results

Our segments are reported on the same basis used internally for evaluating performance and for allocating resources. ~~We have 4~~As of March 31, 2023, we had four reportable segments: Aerospace & Electronics, Process Flow Technologies, Payment & Merchandising Technologies and Engineered Materials. Assets of the reportable segments exclude general corporate assets, which principally consist of cash, deferred tax assets, insurance receivables, certain property, plant and equipment, and certain other assets. Corporate consists of corporate office expenses including compensation and benefits for corporate employees, occupancy, depreciation, and other administrative costs.

A brief description of each of our segments as of March 31, 2023 are as follows:

Aerospace & Electronics

The Aerospace & Electronics segment supplies critical components and systems, including original equipment and aftermarket parts, primarily for the commercial aerospace, and the military aerospace, defense and space markets. Its brands have decades of proven experience, and in many cases invented the critical technologies in their respective markets. The business designs and delivers proven systems, reliable components, and flexible power solutions that excel in tough and mission-critical environments. Products ~~include a wide range of custom designed, highly engineered products used in landing systems, sensing~~ and ~~utility systems, fluid management, seat actuation, power~~services are organized into six integrated solutions: Sensing Components & Systems, Electrical Power Solutions, Fluid Management Solutions, Landing & Control Systems, and ~~microelectronic applications, and microwave systems.~~Microwave Solutions.

Process Flow Technologies

The Process Flow Technologies segment is a provider of highly engineered fluid handling equipment for mission critical applications that require high reliability. The segment is comprised of Process Valves and Related Products, Commercial Valves, and Pumps and Systems. Process Valves and Related Products ~~manufactures~~include on/off ~~isolation~~ valves ~~instrumentation and controls,~~ and related products for critical and demanding applications ~~primarily~~ in the chemical, oil & gas, power, and ~~petrochemical,~~ general industrial ~~energy- related and pharmaceutical~~ end markets globally. Commercial Valves ~~is engaged primarily in~~includes the manufacturing of valves and related products for the non-residential construction, general industrial, and to a lesser extent, municipal ~~markets, and the distribution of pipe, valves and fittings (PVF) for the non-residential construction market.~~markets. Pumps and Systems ~~manufactures~~include pumps and related products primarily for water and wastewater applications in the industrial, municipal, commercial and military markets.

On April 8, 2022, the Company entered into an agreement to sell Crane Supply for CAD 380 million on a cash-free and debt-free basis. The sale is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2022.

Payment & Merchandising Technologies

The Payment & Merchandising Technologies segment consists of Crane Payment Innovations (“CPI”) and Crane Currency. CPI provides ~~high technology~~electronic equipment and associated software leveraging extensive and proprietary core capabilities with various detection and sensing technologies for applications including verification and authentication of payment ~~acceptance and dispensing products to original equipment manufacturers, and for certain vertical markets, it~~transactions. CPI also provides ~~currency handling~~advanced automation solutions, and processing systems, ~~complete cash and cashless payment and merchandising solutions, equipment~~field service solutions, and ~~fully connected managed service~~remote diagnostics and productivity software solutions. Crane Currency ~~is a supplier of banknotes and highly engineered banknote~~provides advance security ~~features as well as a provider of security features for product authentication. A pioneer in advanced micro-optics~~solutions based on proprietary micro-optic technology ~~Crane Currency provides a wide range of engaging visual effects in features that increase the level of security and public trust in banknotes and~~ for the ~~product brand authentication market. Crane Currency offers uniquely designed banknotes, substrate (paper) and printing capabilities for over 50 central banks around the world.~~global banknote industry.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Engineered Materials

The Engineered Materials segment manufactures fiberglass-reinforced plastic ("FRP") panels and coils, primarily for use in the manufacturing of recreational vehicles ("RVs"), truck bodies and trailers (Transportation), with additional applications in commercial and industrial buildings applications, with some additional applications including trailers and other transportation-related products. Engineered Materials sells the majority of its products directly to RV, trailer, and truck manufacturers, and it uses distributors and retailers to serve the commercial and industrial construction markets.(Building Products). In the second quarter of ~~2021, the assets and liabilities of the~~2022, Engineered Materials segment ~~were reclassified~~was no longer classified as held for sale and as such, the results of Engineered Materials segment are presented as ~~discontinued~~continuing operations ~~and, therefore, not included in the tables below.~~from second quarter of 2022. This change was applied on ~~a retrospective~~retroactive basis. ~~Please see Note 2, “Discontinued Operations” for additional details.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Three Months Ended
March 31,
(in millions) 2022 2021
Net sales:
Aerospace & Electronics $ 157.2 $ 154.1
Process Flow Technologies 311.3 288.0
Payment & Merchandising Technologies 332.6 337.5
Total $ 801.1 $ 779.6
Operating profit:
Aerospace & Electronics $ 28.1 $ 26.0
Process Flow Technologies 49.0 49.9
Payment & Merchandising Technologies 84.2 85.9
Corporate (27.7) (21.8)
Total $ 133.6 $ 140.0
Interest income 0.3 0.4
Interest expense (11.1) (13.6)
Miscellaneous income, net 3.5 3.9
Income from continuing operations before income taxes $ 126.3 $ 130.7
Financial information by reportable segment is set forth below.


							Three Months Ended
							March 31,
(in millions)	(in millions)	March 31, 2022		December 31, 2021		(in millions)	2023		2022
Assets:
Net sales:						Net sales:
Aerospace & Electronics	Aerospace & Electronics	$	625.6	$	604.7	Aerospace & Electronics	$	180.1	$	157.2
Process Flow Technologies	Process Flow Technologies	1,282.5		1,240.4		Process Flow Technologies	271.4		311.3
Payment & Merchandising Technologies	Payment & Merchandising Technologies	2,057.6		2,096.5		Payment & Merchandising Technologies	329.1		332.6
Engineered Materials						Engineered Materials	62.3		70.4
Total						Total	$	842.9	$	871.5

Operating profit:						Operating profit:
Aerospace & Electronics						Aerospace & Electronics	$	37.7	$	28.1
Process Flow Technologies						Process Flow Technologies	63.3		49.0
Payment & Merchandising Technologies						Payment & Merchandising Technologies	79.4		84.2
Engineered Materials						Engineered Materials	11.4		13.4
Corporate	Corporate	153.4		324.5		Corporate	(39.6)		(27.7)
Assets held for sale		234.1		220.5
Total	Total	$	4,353.2	$	4,486.6	Total	$	152.2	$	147.0
Interest income						Interest income	1.0		0.3
Interest expense						Interest expense	(17.0)		(11.1)

Miscellaneous (expense) income, net						Miscellaneous (expense) income, net	(2.4)		3.5
Income before income taxes						Income before income taxes	$	133.8	$	139.7


(in millions)	March 31, 2023		December 31, 2022
Assets:
Aerospace & Electronics	$	698.9	$	663.3
Process Flow Technologies	1,073.3		1,064.7
Payment & Merchandising Technologies	2,103.5		2,125.9
Engineered Materials	231.2		218.6
Corporate	229.1		317.7
Total	$	4,336.0	$	4,390.2


(in millions)	(in millions)	March 31, 2022		December 31, 2021		(in millions)	March 31, 2023		December 31, 2022
Goodwill:	Goodwill:					Goodwill:
Aerospace & Electronics	Aerospace & Electronics	$	202.5	$	202.5	Aerospace & Electronics	$	202.3	$	202.3
Process Flow Technologies	Process Flow Technologies	346.1		349.4		Process Flow Technologies	319.5		317.3
Payment & Merchandising Technologies	Payment & Merchandising Technologies	854.1		860.6		Payment & Merchandising Technologies	837.8		836.6
Engineered Materials						Engineered Materials	171.3		171.3
Total	Total	$	1,402.7	$	1,412.5	Total	$	1,530.9	$	1,527.5

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 43 - Revenue

Disaggregation of Revenues

The following table presents net sales disaggregated by product line for each segment:


		Three Months Ended				Three Months Ended
		March 31,				March 31,
(in millions)	(in millions)	2022		2021			(in millions)	2023		2022
Aerospace & Electronics	Aerospace & Electronics						Aerospace & Electronics
Commercial Original Equipment	Commercial Original Equipment	$	58.7	$	54.7		Commercial Original Equipment	$	68.4	$	58.7
Military and Other Original Equipment	Military and Other Original Equipment	57.4		62.8			Military and Other Original Equipment	61.9		57.4
Commercial Aftermarket Products	Commercial Aftermarket Products	28.6		19.5			Commercial Aftermarket Products	37.9		28.6
Military Aftermarket Products	Military Aftermarket Products	12.5		17.1			Military Aftermarket Products	11.9		12.5
Total Aerospace & Electronics	Total Aerospace & Electronics	$	157.2	$	154.1		Total Aerospace & Electronics	$	180.1	$	157.2

Process Flow Technologies	Process Flow Technologies						Process Flow Technologies
Process Valves and Related Products	Process Valves and Related Products	$	182.9	$	174.5		Process Valves and Related Products	$	202.9	$	182.9
Commercial Valves	Commercial Valves	98.2		89.2			Commercial Valves	30.6		98.2
Pumps and Systems	Pumps and Systems	30.2		24.3			Pumps and Systems	37.9		30.2
Total Process Flow Technologies	Total Process Flow Technologies	$	311.3	$	288.0		Total Process Flow Technologies	$	271.4	$	311.3

Payment & Merchandising Technologies	Payment & Merchandising Technologies						Payment & Merchandising Technologies
Payment Acceptance and Dispensing Products	Payment Acceptance and Dispensing Products	$	211.0	$	185.0		Payment Acceptance and Dispensing Products	$	223.8	$	211.0
Banknotes and Security Products	Banknotes and Security Products	121.6		152.5			Banknotes and Security Products	105.3		121.6
Total Payment & Merchandising Technologies	Total Payment & Merchandising Technologies	$	332.6	$	337.5		Total Payment & Merchandising Technologies	$	329.1	$	332.6

Engineered Materials							Engineered Materials
FRP - Recreational Vehicles							FRP - Recreational Vehicles	$	20.3	$	35.7
FRP - Building Products							FRP - Building Products	32.3		27.4
FRP - Transportation							FRP - Transportation	9.7		7.3
Total Engineered Materials							Total Engineered Materials	$	62.3	$	70.4
Net sales	Net sales	$	801.1	$	779.6		Net sales	$	842.9	$	871.5

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations represents the transaction price of firm orders which have not yet been fulfilled, which we also refer to as total backlog. As of March 31, ~~2022,~~2023, total backlog was ~~$1,309.8~~$1,580.5 million. We expect to recognize approximately ~~85%~~84% of our remaining performance obligations as revenue in ~~2022,~~2023, an additional ~~13%~~14% in ~~2023~~2024 and the balance thereafter.

Contract Assets and Contract Liabilities

Contract assets represent unbilled amounts that typically arise from contracts for customized products or contracts for products sold directly to the U.S. government or indirectly to the U.S. government through subcontracts, where revenue recognized using the cost-to-cost method exceeds the amount billed to the customer. Contract assets are assessed for impairment and recorded at their net realizable value. Contract liabilities represent advance payments from customers. Revenue related to contract liabilities is recognized when control is transferred to the customer. We report contract assets, which are included within “Other current assets” in our Condensed Consolidated Balance Sheets, and contract liabilities, which are included within “Accrued liabilities” on our Condensed Consolidated Balance Sheets, on a contract-by-contract net basis at the end of each reporting period. Net contract assets and contract liabilities consisted of the following:

(in millions) March 31, 2022 December 31, 2021
Contract assets $ 78.0 $ 73.0
Contract liabilities $ 96.5 $ 101.1

~~We recognized revenue of $32.3 million during the three-month period ended March 31, 2022 related to contract liabilities as of December 31, 2021.~~


(in millions)	March 31, 2023		December 31, 2022
Contract assets	$	97.0	$	88.6
Contract liabilities	$	150.4	$	142.9

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We recognized revenue of $38.1 million during the three-month period ended March 31, 2023, related to contract liabilities as of December 31, 2022.

Note 54 - Earnings Per Share

Our basic earnings per share calculations are based on the weighted average number of common shares outstanding during the period. Potentially dilutive securities include outstanding stock options, restricted share units, deferred stock units and performance-based restricted share units. The effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury method. Diluted earnings per share gives effect to all potentially dilutive common shares outstanding during the period.

Three Months Ended
March 31,
(in millions, except per share data) 2022 2021
Net income from continuing operations attributable to common shareholders $ 94.7 $ 103.4
Income from discontinued operations, net of tax (Note 2) 10.3 5.0
Net income attributable to common shareholders $ 105.0 $ 108.4
Average basic shares outstanding 57.1 58.2
Effect of dilutive share-based awards 0.8 0.7
Average diluted shares outstanding 57.9 58.9
Earnings per basic share:
Earnings per basic share from continuing operations $ 1.66 $ 1.79
Earnings per basic share from discontinued operations 0.18 0.10
Earnings per basic share $ 1.84 $ 1.89
Earnings per diluted share:
Earnings per diluted share from continuing operations $ 1.64 $ 1.75
Earnings per diluted share from discontinued operations 0.17 0.09
Earnings per diluted share $ 1.81 $ 1.84


	Three Months Ended
	March 31,
(in millions, except per share data)	2023		2022


Net income attributable to common shareholders	$	105.7	$	105.0

Average basic shares outstanding	56.5		57.1
Effect of dilutive share-based awards	0.8		0.8
Average diluted shares outstanding	57.3		57.9




Earnings per basic share	$	1.87	$	1.84




Earnings per diluted share	$	1.84	$	1.81

~~The computation~~Stock options, restricted share units, deferred stock units and performance-based restricted share units that were excluded from the calculation of diluted earnings per share ~~excludes the~~because their effect ~~of the potentially anti-dilutive securities which~~is anti‑dilutive was ~~0.3~~0.4 million and ~~1.8~~0.3 million for the three months ended March 31, 2023, and 2022, ~~and 2021,~~ respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 65 - Changes in ~~Equity and~~ Accumulated Other Comprehensive Loss

~~A summary of changes in equity for the year-to-date interim periods ended March 31, 2022 and 2021 is provided below:~~

(in millions, except share data) Common
Shares
Issued at
Par Value Capital
Surplus Retained
Earnings Accumulated
Other
Comprehensive
Loss Treasury
Stock Total
Share- holders’
Equity Non-controlling
Interest Total
Equity
BALANCE DECEMBER 31, 2021 72.4 $ 363.9 $ 2,527.3 $ (440.2) $ (691.1) $ 1,832.3 $ 2.8 $ 1,835.1
Net income — — 105.0 — — 105.0 — 105.0
Cash dividends ($0.47 per share) — — (26.4) — — (26.4) — (26.4)
Reacquisition on open market of 1,699,949 shares — — — — (175.8) (175.8) — (175.8)
Exercise of stock options, net of shares reacquired of 79,214 shares — — — — 6.1 6.1 — 6.1
Impact from settlement of share-based awards, net of shares acquired — (5.1) — — (0.3) (5.4) — (5.4)
Stock-based compensation expense — 5.9 — — — 5.9 — 5.9
Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 3.3 — 3.3 — 3.3
Currency translation adjustment — — — (21.7) — (21.7) 0.1 (21.6)
BALANCE MARCH 31, 2022 72.4 $ 364.7 $ 2,605.9 $ (458.6) $ (861.1) $ 1,723.3 $ 2.9 $ 1,726.2
BALANCE DECEMBER 31, 2020 72.4 $ 330.7 $ 2,192.8 $ (466.4) $ (600.6) $ 1,528.9 $ 2.2 $ 1,531.1
Net income — — 108.4 — — 108.4 — 108.4
Cash dividends ($0.43 per share) — — (25.0) — — (25.0) — (25.0)
Impact from settlement of share-based awards, net of shares acquired — (2.3) — — 9.5 7.2 — 7.2
Stock-based compensation expense — 6.3 — — — 6.3 — 6.3
Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 4.9 — 4.9 — 4.9
Currency translation adjustment — — — (35.7) — (35.7) 0.8 (34.9)
BALANCE MARCH 31, 2021 72.4 $ 334.7 $ 2,276.2 $ (497.2) $ (591.1) $ 1,595.0 $ 3.0 $ 1,598.0

The table below provides the accumulated balances for each classification of accumulated other comprehensive income (loss), as reflected on our Condensed Consolidated Balance Sheets.


(in millions)	(in millions)		Defined Benefit Pension and Postretirement Items		Currency Translation Adjustment		Total a		(in millions)		Defined Benefit Pension and Postretirement Items		Currency Translation Adjustment		Total a
Balance as of December 31, 2021			$	(301.9)	$	(138.3)	$	(440.2)
Balance as of December 31, 2022									Balance as of December 31, 2022		$	(271.9)	$	(231.4)	$	(503.3)
		Other comprehensive income (loss) before reclassifications	—		(21.7)		(21.7)			Other comprehensive income (loss) before reclassifications	—		12.8		12.8
		Amounts reclassified from accumulated other comprehensive loss	3.3		—		3.3			Amounts reclassified from accumulated other comprehensive loss	2.7		—		2.7
Net period other comprehensive income (loss)	Net period other comprehensive income (loss)		3.3		(21.7)		(18.4)		Net period other comprehensive income (loss)		2.7		12.8		15.5
Balance as of March 31, 2022			$	(298.6)	$	(160.0)	$	(458.6)
Balance as of March 31, 2023									Balance as of March 31, 2023		$	(269.2)	$	(218.6)	$	(487.8)


a			Net of tax benefit of ~~$119.1~~$107.3 million and ~~$117.9~~$106.6 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three month ~~periods~~ ended March 31, ~~2022~~2023, and ~~2021.~~2022. Amortization of pension and postretirement components has been recorded within “Miscellaneous (expense) income, net” on our Condensed Consolidated Statements of Operations.


		Three Months Ended March 31,				Three Months Ended March 31,
(in millions)	(in millions)	2022		2021			(in millions)	2023		2022
Amortization of pension items:	Amortization of pension items:						Amortization of pension items:

Net loss	Net loss	$	4.8	$	6.5		Net loss	3.8		4.8
Amortization of postretirement items:	Amortization of postretirement items:						Amortization of postretirement items:
Prior service costs	Prior service costs	(0.3)		(0.3)			Prior service costs	(0.2)		(0.3)

Net gain							Net gain	(0.2)		—
Total before tax	Total before tax	$	4.5	$	6.2		Total before tax	$	3.4	$	4.5
Tax impact	Tax impact	1.2		1.3			Tax impact	0.7		1.2
Total reclassifications for the period	Total reclassifications for the period	$	3.3	$	4.9		Total reclassifications for the period	$	2.7	$	3.3

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 76 - Defined Benefit and Postretirement Benefits

For all plans, the components of net periodic benefit for the three months ended March 31, ~~2022~~2023, and ~~2021~~2022 are as follows:


		Pension				Postretirement					Pension				Postretirement
(in millions)	(in millions)	2022		2021		2022		2021		(in millions)	2023		2022		2023		2022
Service cost	Service cost	$	1.3	$	1.5	$	0.1	$	0.1	Service cost	$	1.3	$	1.3	$	—	$	0.1
Interest cost	Interest cost	5.2		5.1		0.2		0.2		Interest cost	9.5		5.2		0.2		0.2
Expected return on plan assets	Expected return on plan assets	(13.9)		(14.1)		—		—		Expected return on plan assets	(12.2)		(13.9)		—		—
Recognized curtailment gain		—		(0.7)		—		—

Amortization of prior service cost	Amortization of prior service cost	—		—		(0.3)		(0.3)		Amortization of prior service cost	—		—		(0.2)		(0.3)
Amortization of net loss		4.8		6.5		—		—
Net periodic benefit		$	(2.6)	$	(1.7)	$	—	$	—
Amortization of net (gain) loss										Amortization of net (gain) loss	3.8		4.8		(0.2)		—
Settlement loss										Settlement loss	1.8		—		—		—
Curtailment loss										Curtailment loss	1.1		—		—		—
Net periodic loss (benefit)										Net periodic loss (benefit)	$	5.3	$	(2.6)	$	(0.2)	$	—

The components of net periodic benefit, other than the service cost component, are included in “Miscellaneous (expense) income, net” in our Condensed Consolidated Statements of Operations. Service cost is recorded within “Cost of sales” and “Selling, general and administrative” in our Condensed Consolidated Statements of Operations.

We expect to contribute the following to our pension and postretirement plans:

(in millions) Pension Postretirement
Expected contributions in 2022 $ 18.9 $ 2.6
Amounts contributed during the three months ended March 31, 2022 $ 2.8 $ —


(in millions)	Pension		Postretirement
Expected contributions in 2023	$	20.0	$	2.3
Amounts contributed during the three months ended March 31, 2023	$	0.3	$	1.5

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 87 - Income Taxes

Effective Tax Rates

Our quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the ~~period~~periods presented.

Our effective tax rates are as follows:

Three Months Ended March 31,
2022 2021
Effective Tax Rate 25.0% 20.9%


	Three Months Ended March 31,
	2023	2022
Effective Tax Rate	21.0%	25.0%

Our effective tax rate for the three months ended March 31, 2023 is lower than the prior year’s comparable period primarily due to the greater benefit related to share-based compensation partially offset by higher non-U.S. taxes.

Our effective tax rate attributable to continuing operations for the three months ended March 31, ~~2022~~2023 is ~~higher than the prior year’s comparable period primarily due~~equal to ~~higher non-U.S. taxes, partially offset by a greater benefit related to share-based compensation.~~

~~Our effective tax rate attributable to continuing operations for the three months ended March 31, 2022 is higher than~~ the statutory U.S. federal tax rate of 21% ~~primarily due to earnings in jurisdictions with statutory~~. The effective tax ~~rates higher than~~rate is the ~~U.S., expenses~~result of permanent increases and decreases that ~~are statutorily non-deductible for income tax purposes~~net against each other and ~~U.S. state taxes, partially offset by excess share-based compensation benefits, tax credit utilization, and the statutory U.S. deduction related to our non-U.S. subsidiaries’ income.~~offset.

Unrecognized Tax Benefits

During the three months ended March 31, ~~2022,~~2023, our gross unrecognized tax benefits, excluding interest and penalties, increased by ~~$0.4~~$0.5 million, primarily due to increases in tax positions taken in the current ~~period,~~periods, partially offset by reductions ~~from expiration~~as a result of ~~statutes of limitations.~~positions taken during prior period. During the three months ended March 31, ~~2022,~~2023, the total amount of unrecognized tax benefits that, if recognized, would ~~affect~~cause our effective tax rate ~~increased~~to increase by ~~$0.6 million.~~$0.8 million . The difference between these amounts relates to (1) offsetting tax effects from other tax jurisdictions, and (2) interest expense, net of deferred taxes.

During the three months ended March 31, ~~2022,~~2023, we recognized ~~$0.3~~$0.5 million of interest expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations. As of March 31, ~~2022,~~2023 and December 31, ~~2021,~~2022, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in our Condensed Consolidated Balance Sheets was ~~$5.2~~$5.3 million and ~~$4.9~~$4.8 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by ~~$6.6~~ $13.4 million due to expiration of statutes of limitations and settlements with tax authorities. However, if the ultimate resolution of income tax examinations results in amounts that differ from this estimate, we will record additional income tax expense or benefit in the period in which such matters are effectively settled.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 98 - Goodwill and Intangible Assets

Our business acquisitions have typically resulted in the recognition of goodwill and other intangible assets. We follow the provisions under ASC Topic 350, “Intangibles – Goodwill and Other” as it relates to the accounting for goodwill in our condensed consolidated financial statements. These provisions require that we, on at least an annual basis, evaluate the fair value of the reporting units to which goodwill is assigned and attributed and compare that fair value to the carrying value of the reporting unit to determine if an impairment has occurred. We perform our annual impairment testing during the fourth quarter. Impairment testing takes place more often than annually if events or circumstances indicate a change in status that would indicate a potential impairment. We believe that there have been no events or circumstances which would more likely than not reduce the fair value for our reporting units below its carrying value. A reporting unit is an operating segment unless discrete financial information is prepared and reviewed by segment management for businesses one level below that operating segment (a “component”), in which case the component would be the reporting unit. As of March 31, ~~2022,~~2023, we had 7six reporting units. In the second quarter of 2021, the assets and liabilities of our Engineered Materials segment (which was a separate reportable segment and reporting unit) were classified as held for sale. Please see Note 2 for additional details.

Intangibles with indefinite useful lives, consisting of trade names, are tested annually for impairment, or when events or changes in circumstances indicate the potential for impairment. If the carrying amount of an indefinite lived intangible asset exceeds its fair value, the intangible asset is written down to its fair value. Fair value is calculated using relief from royalty method. We amortize the cost of definite-lived intangibles over their estimated useful lives. We also review all of our definite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Changes to goodwill are as follows:


(in millions)	(in millions)	Aerospace & Electronics		Process Flow Technologies		Payment & Merchandising Technologies		Total		(in millions)	Aerospace & Electronics		Process Flow Technologies		Payment & Merchandising Technologies		Engineered Materials		Total
Balance as of December 31, 2021		$	202.5	$	349.4	$	860.6	$	1,412.5
Balance as of December 31, 2022										Balance as of December 31, 2022	$	202.3	$	317.3	$	836.6	$	171.3	$	1,527.5

Currency translation	Currency translation	—		(3.3)		(6.5)		(9.8)		Currency translation	—		2.2		1.2		—		3.4
Balance at March 31, 2022		$	202.5	$	346.1	$	854.1	$	1,402.7

Balance as of March 31, 2023										Balance as of March 31, 2023	$	202.3	$	319.5	$	837.8	$	171.3	$	1,530.9

As of March 31, ~~2022,~~2023, we had ~~$452.1~~$406.5 million of net intangible assets, of which ~~$70.4~~$67.4 million were intangibles with indefinite useful lives. As of December 31, ~~2021,~~2022, we had ~~$465.9~~$416.6 million of net intangible assets, of which ~~$70.6~~$67.3 million were intangibles with indefinite useful lives.

Changes to intangible assets are as follows:


(in millions)	(in millions)	Three Months Ended March 31, 2022		Year Ended December 31, 2021		(in millions)	Three Months Ended March 31, 2023		Year Ended December 31, 2022
Balance at beginning of period, net of accumulated amortization	Balance at beginning of period, net of accumulated amortization	$	465.9	$	519.1	Balance at beginning of period, net of accumulated amortization	$	416.6	$	467.1

Amortization expense	Amortization expense	(10.6)		(44.5)		Amortization expense	(10.4)		(41.7)
Currency translation and other	Currency translation and other	(3.2)		(8.7)		Currency translation and other	0.3		(8.8)
Balance at end of period, net of accumulated amortization	Balance at end of period, net of accumulated amortization	$	452.1	$	465.9	Balance at end of period, net of accumulated amortization	$	406.5	$	416.6

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of intangible assets are as follows:


			March 31, 2022						December 31, 2021								March 31, 2023						December 31, 2022
(in millions)	(in millions)	Weighted Average Amortization Period of Finite Lived Assets (in years)	Gross Asset		Accumulated Amortization		Net		Gross Asset		Accumulated Amortization		Net		(in millions)	Weighted Average Amortization Period of Finite Lived Assets (in years)	Gross Asset		Accumulated Amortization		Net		Gross Asset		Accumulated Amortization		Net
Intellectual property rights	Intellectual property rights	15.2	$	131.4	$	54.4	$	77.0	$	131.9	$	54.3	$	77.6	Intellectual property rights	15.1	$	132.4	$	59.5	$	72.9	$	132.1	$	59.1	$	73.0
Customer relationships and backlog	Customer relationships and backlog	18.3	606.4		275.1		331.3		611.8		270.1		341.8		Customer relationships and backlog	18.4	636.2		338.3		297.9		635.5		329.8		305.7
Drawings	Drawings	40	11.1		10.6		0.5		11.1		10.6		0.5		Drawings	40.0	11.1		10.7		0.4		11.1		10.7		0.4
Other	Other	11.8	136.4		93.1		43.3		137.4		91.3		46.0		Other	11.7	141.8		106.5		35.3		141.3		103.8		37.5
Total	Total	17.8	$	885.3	$	433.2	$	452.1	$	892.2	$	426.3	$	465.9	Total	18.0	$	921.5	$	515.0	$	406.5	$	920.0	$	503.4	$	416.6

Future amortization expense associated with intangible assets is expected to be:


(in millions)	(in millions)			(in millions)
Remainder of 2022		$	32.0
2023		42.0
Remainder of 2023				Remainder of 2023	$	31.4
2024	2024	41.2		2024	41.1
2025	2025	35.7		2025	35.7
2026 and after		230.8
2026				2026	35.5
2027				2027	34.9
2028 and after				2028 and after	160.5

Note 109 - Accrued Liabilities

Accrued liabilities consist of:


(in millions)	(in millions)	March 31, 2022		December 31, 2021		(in millions)	March 31, 2023		December 31, 2022
Employee related expenses	Employee related expenses	$	89.0	$	175.1	Employee related expenses	$	86.3	$	156.6
Warranty	Warranty	7.3		7.3		Warranty	8.7		7.4
Current lease liabilities	Current lease liabilities	22.0		22.5		Current lease liabilities	16.2		19.0
Contract liabilities	Contract liabilities	96.5		101.1		Contract liabilities	150.4		142.9
Other	Other	118.3		124.7		Other	134.3		138.3
Total	Total	$	333.1	$	430.7	Total	$	395.9	$	464.2

We accrue warranty liabilities when it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Warranty provision is included within “Cost of sales” in our Condensed Consolidated Statements of Operations.

~~The following table summarizes warranty activity recorded during the three months ended March 31, 2022 and 2021.~~

Three Months Ended March 31,
(in millions) 2022 2021
Balance at beginning of period $ 7.3 $ 8.1
Expense 1.0 3.1
Payments / deductions (0.8) (0.9)
Currency translation (0.2) (0.1)
Balance at end of period $ 7.3 $ 10.2

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1110 - Commitments and Contingencies

~~Asbestos Liability~~

~~Information Regarding Claims and Costs in the Tort System~~

As of March 31, 2022, we were a defendant in cases filed in numerous state and federal courts alleging injury or death as a result of exposure to asbestos. Activity related to asbestos claims during the periods indicated was as follows:

Three Months Ended Year Ended
March 31, December 31,
2022 2021 2021
Beginning claims 29,958 29,138 29,138
New claims 657 733 2,975
Settlements (201) (160) (980)
Dismissals (102) (304) (1,175)
Ending claims 30,312 29,407 29,958

Of the 30,312 pending claims as of March 31, 2022, approximately 18,000 claims were pending in New York of which approximately 16,000 are non-malignancy claims that were filed over 15 years ago and have been inactive under New York court orders.

We have tried several cases resulting in defense verdicts by the jury or directed verdicts for the defense by the court. We further have pursued appeals of certain adverse jury verdicts that have resulted in reversals in favor of the defense. We have also tried several other cases resulting in plaintiff verdicts which we paid or settled after unsuccessful appeals.

The gross settlement and defense costs incurred (before insurance recoveries and tax effects) by us for the three months ended March 31, 2022 and 2021 totaled $13.0 million and $9.1 million, respectively. In contrast to the recognition of settlement and defense costs, which reflect the current level of activity in the tort system, cash payments and receipts generally lag the tort system activity by several months or more, and may show some fluctuation from period to period. Cash payments of settlement amounts are not made until all releases and other required documentation are received by us, and reimbursements of both settlement amounts and defense costs by insurers may be uneven due to insurer payment practices, transitions from one insurance layer to the next excess layer and the payment terms of certain reimbursement agreements. Our total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the three months ended March 31, 2022 and, 2021 totaled $7.5 million and $10.8 million, respectively. Detailed below are the comparable amounts for the periods indicated.

Three Months Ended Year Ended
March 31, December 31,
(in millions) 2022 2021 2021
Settlement / indemnity costs incurred (1)
$ 10.5 $ 5.5 $ 40.6
Defense costs incurred (1)
2.5 3.6 14.6
Total costs incurred $ 13.0 $ 9.1 $ 55.2
Settlement / indemnity payments $ 9.6 $ 10.1 $ 42.6
Defense payments 2.1 3.2 15.4
Insurance receipts (4.2) (2.5) (13.1)
Pre-tax cash payments, net $ 7.5 $ 10.8 $ 44.9
~~(1)~~ ~~Before insurance recoveries and tax effects.~~

~~The amounts shown for settlement and defense costs incurred, and cash payments, are not necessarily indicative of future period amounts, which may be higher or lower than those reported.~~

Cumulatively through March 31, 2022, we have resolved (by settlement or dismissal) approximately 144,000 claims. The related settlement cost incurred by us and our insurance carriers is approximately $730 million, for an average settlement cost per resolved claim of approximately $5,100. The average settlement cost per claim resolved during the years ended December 31, 2021, 2020 and 2019 was $18,800, $13,900, and $15,800, respectively. Because claims are sometimes

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

dismissed in large groups, the average cost per resolved claim, as well as the number of open claims, can fluctuate significantly from period to period. In addition to large group dismissals, the nature of the disease and corresponding settlement amounts for each claim resolved will also drive changes from period to period in the average settlement cost per claim. Accordingly, the average cost per resolved claim is not considered in our periodic review of our estimated asbestos liability. For a discussion regarding the four most significant factors affecting the liability estimate, see “Effects on the Consolidated Financial Statements.”

~~Effects on the Consolidated Financial Statements~~

We have retained an independent actuarial firm to assist management in estimating our asbestos liability in the tort system. The actuarial consultants review information provided by us concerning claims filed, settled and dismissed, amounts paid in settlements and relevant claim information such as the nature of the asbestos-related disease asserted by the claimant, the jurisdiction where filed and the time lag from filing to disposition of the claim. The methodology used by the actuarial consultants to project future asbestos costs is based on our recent historical experience for claims filed, settled and dismissed during a base reference period. Our experience is then compared to estimates of the number of individuals likely to develop asbestos-related diseases determined based on widely used previously conducted epidemiological studies augmented with current data inputs. Those studies were undertaken in connection with national analyses of the population of workers believed to have been exposed to asbestos. Using that information, the actuarial consultants estimate the number of future claims that would be filed against us and estimates the aggregate settlement or indemnity costs that would be incurred to resolve both pending and future claims based upon the average settlement costs by disease during the reference period. This methodology has been accepted by numerous courts. After discussions with us, the actuarial consultants augment our liability estimate for the costs of defending asbestos claims in the tort system using a forecast from us which is based upon discussions with our defense counsel. Based on this information, the actuarial consultants compile an estimate of our asbestos liability for pending and future claims using a range of reference periods based on claim experience and claims expected to be filed through the indicated forecast period. The most significant factors affecting the liability estimate are (1) the number of new mesothelioma claims filed against us, (2) the average settlement costs for mesothelioma claims, (3) the percentage of mesothelioma claims dismissed against us and (4) the aggregate defense costs incurred by us. These factors are interdependent, and no one factor predominates in determining the liability estimate.

In our view, the forecast period used to provide the best estimate for asbestos claims and related liabilities and costs is a judgment based upon a number of trend factors, including the number and type of claims being filed each year; the jurisdictions where such claims are filed, and the effect of any legislation or judicial orders in such jurisdictions restricting the types of claims that can proceed to trial on the merits; and the likelihood of any comprehensive asbestos legislation at the federal level. In addition, the dynamics of asbestos litigation in the tort system have been significantly affected by the substantial number of companies that have filed for bankruptcy protection, thereby staying any asbestos claims against them until the conclusion of such proceedings, and the establishment of a number of post-bankruptcy trusts for asbestos claimants, which have been estimated to provide $36 billion for payments to current and future claimants. These trend factors have both positive and negative effects on the dynamics of asbestos litigation in the tort system and the related best estimate of our asbestos liability, and these effects do not move in a linear fashion but rather change over multi-year periods. Accordingly, management continues to monitor these trend factors over time and periodically assesses whether an alternative forecast period is appropriate.

Each quarter, the actuarial consultants compile an update based upon our experience in claims filed, settled and dismissed as well as average settlement costs by disease category (mesothelioma, lung cancer, other cancer, and non-malignant conditions including asbestosis). In addition to this claims experience, we also consider additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. As part of this process, we also consider trends in the tort system such as those enumerated above. Management considers all these factors in conjunction with the liability estimate of the actuarial consultants and determines whether a change in the estimate is warranted.

~~Liability Estimate.~~ ~~In June 2016, the New York State Court of Appeals issued its opinion in~~ ~~Dummitt v. Crane Co~~., affirming a 2012 verdict for $4.9 million against us. In that opinion, the court ruled that in certain circumstances we are legally responsible for asbestos-containing materials made and sold by third parties that others attached post-sale to our equipment. This decision provided clarity regarding the nature of claims that may proceed to trial in New York and greater predictability regarding future claim activity. We also reflected the impact of the ~~Dummitt~~ ~~decision on our expected settlement values. Accordingly, on December 31, 2016, we updated and extended our asbestos liability estimate through 2059, the generally accepted end point.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Following our experience in the tort system post the~~ ~~Dummitt~~ decision, we entered into several, increasingly similar, group settlements with various plaintiff firms and we expect this new trend of these types of group settlements to continue. Accordingly, effective as of December 31, 2019, we updated our estimate of the asbestos liability, including revised costs of settlement or indemnity payments and defense costs relating to currently pending claims and future claims projected to be filed against us through the same expected end point of 2059. Our estimate of the asbestos liability for pending and future claims through 2059 is based on the projected future asbestos costs resulting from our experience using a range of reference periods for claims filed, settled and dismissed. Based on this estimate, we recorded an additional liability of $255 million as of December 31, 2019.

An aggregate liability of $712 million was recorded as of December 31, 2019 to cover the estimated cost of asbestos claims now pending or subsequently asserted through 2059, of which approximately 85% is attributable to settlement and defense costs for future claims projected to be filed through 2059. The liability is reduced when cash payments are made in respect of settled claims and defense costs. The liability was $600 million and $612 million as of March 31, 2022 and December 31, 2021, respectively. It is not possible to forecast when cash payments related to the asbestos liability will be fully expended; however, it is expected such cash payments will continue for a number of years past 2059, due to the significant proportion of future claims included in the estimated asbestos liability and the lag time between the date a claim is filed and when it is resolved. None of these estimated costs have been discounted to present value due to the inability to reliably forecast the timing of payments. The current portion of the total estimated liability at March 31, 2022 and December 31, 2021 is $62.3 million and represents our best estimate of total asbestos costs expected to be paid during the twelve-month period. Such amount is based upon the actuarial model together with our prior year payment experience for both settlement and defense costs.

We have made our best estimate of the costs through 2059. Through March 31, 2022, our actual experience during the updated reference period for mesothelioma claims filed and dismissed generally approximated the assumptions in our liability estimate. In addition to this claims experience, we considered additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. Based on this evaluation, we determined that no change in the estimate was warranted for the period ended March 31, 2022.

~~Insurance Coverage and Receivables.~~ Prior to 2005, a significant portion of our settlement and defense costs were paid by our primary insurers. With the exhaustion of that primary coverage, we began negotiations with our excess insurers to reimburse us for a portion of our settlement and/or defense costs as incurred. To date, we have entered into agreements providing for such reimbursements, known as “coverage-in-place,” with eleven of our excess insurer groups. Under such coverage-in-place agreements, an insurer’s policies remain in force and the insurer undertakes to provide coverage for our present and future asbestos claims on specified terms and conditions that address, among other things, the share of asbestos claims costs to be paid by the insurer, payment terms, claims handling procedures and the expiration of the insurer’s obligations. Similarly, under a variant of coverage-in-place, we have entered into an agreement with a group of insurers confirming the aggregate amount of available coverage under the subject policies and setting forth a schedule for future reimbursement payments to us based on aggregate indemnity and defense payments made. In addition, with ten of our excess insurer groups, we entered into agreements settling all asbestos and other coverage obligations for an agreed sum and received a total of $82.5 million in aggregate as a result of those settlements. Reimbursements from insurers for past and ongoing settlement and defense costs allocable to their policies have been made in accordance with these coverage-in-place and other agreements. All these agreements include provisions for mutual releases, indemnification of the insurer and, for coverage-in-place, claims handling procedures. With the agreements referenced above, we have concluded settlements with all but two of our solvent excess insurers with policies expected to respond to the aggregate costs included in the liability estimate. The first such insurer, which issued a single applicable policy, has been paying for many years the shares of defense and indemnity costs we have allocated to it, subject to a reservation of rights. The second insurer issued a single applicable policy in a layer of coverage that we do not anticipate reaching until many years from now, and, prior to the policy being reached, we anticipate opening a dialogue with that insurer about the execution of a suitable agreement. There are no pending legal proceedings between us and any insurer contesting our asbestos claims under our insurance policies.

In conjunction with developing the aggregate updated liability estimate referenced above, we also developed an updated estimate of probable insurance recoveries for our asbestos liabilities. In developing this estimate, we considered our coverage-in-place and other settlement agreements described above, as well as several additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits. In addition, the timing and amount of reimbursements will vary because our insurance coverage for asbestos claims involves multiple insurers, with different policy terms and certain gaps in coverage. In addition to consulting with legal counsel on these insurance matters, we retained insurance consultants to assist management in the estimation of probable insurance recoveries based upon the aggregate

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

liability estimate described above and assuming the continued viability of all solvent insurance carriers. Based upon the analysis of policy terms and other factors noted above by our legal counsel, and incorporating risk mitigation judgments by us where policy terms or other factors were not certain, our insurance consultants compiled a model indicating how our historical insurance policies would respond to varying levels of asbestos settlement and defense costs and the allocation of such costs between such insurers and us. Using the estimated liability as of December 31, 2019 (for claims filed or expected to be filed through 2059), the insurance consultant’s model forecasted that approximately 14% of the liability would be reimbursed by our insurers. While there are overall limits on the aggregate amount of insurance available to us with respect to asbestos claims, certain limits were not reached by the total estimated liability currently recorded by us, and such overall limits did not influence our determination of the asset amount to record. We allocate to ourselves the amount of the asbestos liability (for claims filed or expected to be filed through 2059) that is in excess of available insurance coverage allocated to such years. An asset of $98 million was recorded as of December 31, 2019 representing the probable insurance reimbursement for claims expected through 2059. The asset is reduced as reimbursements and other payments from insurers are received. The asset was $70 million and $74 million as of March 31, 2022 and December 31, 2021, respectively.

We review the estimated reimbursement rate with our insurance consultants on a periodic basis in order to confirm overall consistency with our established reserves. The reviews encompass consideration of the performance of the insurers under coverage-in-place agreements and the effect of any additional lump-sum payments under other insurer agreements. Actual insurance reimbursements vary from period to period, and will decline over time, for the reasons cited above.

~~Uncertainties.~~ Estimation of our ultimate exposure for asbestos-related claims is subject to significant uncertainties, as there are multiple variables that can affect the timing, severity and quantity of claims and the manner of their resolution. We caution that our estimated liability is based on assumptions with respect to future claims, settlement and defense costs based on past experience that may not prove reliable as predictors; the assumptions are interdependent and no single factor predominates in determining the liability estimate. A significant upward or downward trend in the number of claims filed, depending on the nature of the alleged injury, the jurisdiction where filed and the quality of the product identification, or a significant upward or downward trend in the costs of defending claims, could change the estimated liability, as would substantial adverse verdicts at trial that withstand appeal. A legislative solution, structured settlement transaction, or significant change in relevant case law could also change the estimated liability.

The same factors that affect developing estimates of probable settlement and defense costs for asbestos-related liabilities also affect estimates of the probable insurance reimbursements, as do a number of additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. In addition, due to the uncertainties inherent in litigation matters, no assurances can be given regarding the outcome of any litigation, if necessary, to enforce our rights under our insurance policies or settlement agreements.

Many uncertainties exist surrounding asbestos litigation, and we will continue to evaluate our estimated asbestos-related liability and corresponding estimated insurance reimbursement as well as the underlying assumptions and process used to derive these amounts. These uncertainties may result in our incurring future charges or increases to income to adjust the carrying value of recorded liabilities and assets, particularly if the number of claims and settlement and defense costs change significantly, or if there are significant developments in the trend of case law or court procedures, or if legislation or another alternative solution is implemented. Although the resolution of these claims will likely take many years, the effect on the results of operations, financial position and cash flow in any given period from a revision to these estimates could be material.

~~Other Contingencies~~

Environmental Matters

For environmental matters, we record a liability for estimated remediation costs when it is probable that we will be responsible for such costs and they can be reasonably estimated. Generally, third party specialists assist in the estimation of remediation costs. The environmental remediation liability as of March 31, ~~2022~~2023 is substantially related to the former manufacturing site in Goodyear, Arizona (the “Goodyear Site”) discussed below. On June 21, 2021, we completed the sale of substantially all of the property associated with what we have historically called the Goodyear Site for $8.7 million, retaining only a small parcel on which our remediation and treatment systems are located. We will continue to be responsible for all remediation costs associated with the Goodyear Site.

On August 12, 2022, Crane Holdings, Co., Crane Company, a then wholly-owned subsidiary of Crane Holdings, Co., and Redco Corporation (f/k/a Crane Co., (“Redco”) a then wholly-owned subsidiary of Crane Company that held liabilities including asbestos liabilities and related insurance assets, entered into the a Stock Purchase Agreement (the “Redco Purchase Agreement”) with Spruce Lake Liability Management Holdco LLC (“Redco Buyer”), an unrelated third party long-term liability management company specializing in the acquisition and management of legacy corporate liabilities, whereby Crane Company transferred to Redco Buyer all of the issued and outstanding shares of Redco (the “Redco Sale”). Pursuant to the terms of the Redco Purchase Agreement, Crane Company and Redco Buyer will each indemnify the other for breaches of representations and warranties, breaches of covenants and obligations and certain liabilities, subject to the terms of the Redco Purchase Agreement. Such covenants and obligations include obligations of Crane Company to indemnify Redco and its affiliates for all other historical liabilities of Redco, which include certain potential environmental liabilities. Crane Holdings, Co. guaranteed the full payment and performance of Crane Company’s indemnification obligations under the Redco Purchase Agreement. On April 3, 2023, Crane Holdings, Co. completed the Separation, pursuant to which, among other things, all outstanding shares of Crane Company were distributed to Crane Holdings, Co.’s stockholders. Upon completion of the Separation, pursuant to the terms of the Redco Purchase Agreement, Crane Holdings, Co was released from its guarantee of Crane Company’s indemnification obligations under the Redco Purchase Agreement. Prior to the effective date of the Redco Sale, the U.S. Department of Justice agreed that Crane Holdings, Co. and, following completion of the Separation, Crane Company will be primarily liable for the Goodyear Site. The New Jersey Department of Environmental Protection agreed to transfer the liability of the Roseland Site to Crane Holdings, Co., and to further transfer this environmental liability to Crane Company upon effectiveness of the Separation. The potential liability for the Crab Orchard Site referenced below remains a direct obligation of Redco. As noted above, however, Crane Company, and Crane Holdings, Co. (as guarantor until the completion of the Separation), agreed to indemnify Redco Buyer against the Goodyear, Roseland, and Crab Orchard environmental liabilities.Thus, references below to “we”, and “us” refer to Crane Company in its capacity as the primarily responsible party for the Goodyear and Roseland Sites, and as indemnitor to the Redco Buyer on the Crab Orchard Site.

Goodyear Site

The Goodyear Site was operated by Unidynamics/Phoenix, Inc. (“UPI”), which became an indirect subsidiary in 1985 when weCrane Co. (n/k/a Redco) acquired UPI’s parent company, UniDynamics Corporation. UPI was an indirect subsidiary of Crane Holdings, Co. pre-Separation and became an indirect subsidiary of Crane Company following completion of the Separation. UPI manufactured explosive and pyrotechnic compounds,

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

including components for critical military programs, for the U.S. ~~government~~Government at the Goodyear Site from 1962 to 1993, under contracts with the U.S. Department of Defense and other government agencies and certain of their prime contractors. In 1990, the U.S. Environmental Protection Agency (“EPA”) issued administrative orders requiring UPI to design and ~~carry out~~conduct certain remedial actions, which UPI has done. Groundwater extraction and treatment systems have been in operation at the Goodyear Site since 1994. On July 26, 2006, we entered ~~into~~ a consent decree with the EPA with respect to the Goodyear Site providing for, among other things, a work plan for further investigation and remediation activities (inclusive of a supplemental remediation investigation and feasibility study). During the third quarter of 2014, the EPA issued a Record of Decision (“ROD”) amendment permitting, among other things, additional source area remediation resulting in us recording a charge of $49.0 million, extending the accrued costs through 2022. Following the 2014 ROD amendment, we continued our remediation activities and explored an alternative strategy to accelerate remediation of the site. During the fourth quarter of 2019, we received conceptual agreement from the EPA on our alternative remediation strategy which is expected to further reduce the contaminant plume. Accordingly, in 2019, we recorded a pre-tax charge of $18.9 million, net of reimbursements, to extend our forecast period through 2027 and reflect our revised workplan. The total estimated gross liability was ~~$30.6~~$23.7 million and ~~$32.3~~$24.8 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively and as described below, a portion is reimbursable by the U.S. Government. The current portion of the total estimated liability was $7.8 million and ~~$7.1~~$7.7 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and represents our best estimate, in consultation with our technical advisors, of total remediation costs expected to be paid during the next twelve-month period. It is not possible at this point to reasonably estimate the amount of any obligation in excess of our current accruals through the 2027 forecast period because of the aforementioned uncertainties, in particular,

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the continued significant changes in the Goodyear Site conditions and additional expectations of remediation activities experienced in recent years.

On July 31, 2006, we entered into a consent decree with the U.S. Department of Justice on behalf of the Department of Defense and the Department of Energy pursuant to which, among other things, the U.S. Government reimburses us for 21% of qualifying costs of investigation and remediation activities at the Goodyear Site. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we recorded a receivable of ~~$6.6~~$4.7 million and ~~$7.3~~$4.8 million, respectively, for the expected reimbursements from the U.S. Government in respect of the aggregate liability as at that date. The receivable is reduced as reimbursements and other payments from the U.S. Government are received.

Other Environmental Matters

~~Marion, IL Site~~

We have been identified as a potentially responsible party (“PRP”) with respect to environmental contamination at the Crab Orchard National Wildlife Refuge Superfund Site (the “Crab Orchard Site”). The Crab Orchard Site is located near Marion, Illinois, and consists of approximately 55,000 acres. Beginning in 1941, the United States used the Crab Orchard Site for the production of ordnance and other related products for use in World War II. In 1947, about half of the Crab Orchard Site was leased to a variety of industrial tenants whose activities (which continue to this day) included manufacturing ordnance and explosives. A predecessor of us formerly leased portions of the Crab Orchard Site and conducted manufacturing operations at the Crab Orchard Site from 1952 until 1964. General Dynamics Ordnance and Tactical Systems, Inc. (“GD-OTS”) is in the process of conducting a remedial investigation and feasibility study for a portion of the Crab Orchard Site (the “AUS-OU”), which includes an area where we maintained operations, pursuant to an Administrative Order on Consent. A remedial investigation report was approved in February 2015, and work on the feasibility study is underway. It is unclear when the final feasibility study will be completed, or when a final Record of Decision may be issued.

GD-OTS has asked us to participate in a voluntary, multi-party mediation exercise with respect to response costs it has incurred or will incur with respect to the AUS-OU. We and other PRPs executed a non-binding mediation agreement on March 16, 2015, and the U.S. government executed the mediation agreement on August 6, 2015. The first phase of the mediation, involving certain former munitions or ordnance storage areas, began in November 2017, but did not result in a multi-party settlement agreement. Subsequently, we entered into discussions directly with GD-OTS and reached an agreement, as of July 13, 2021, to contribute toward GD-OTS’s past RI-FS costs associated with the first-phase areas for an immaterial amount. We have also agreed to pay a modest percentage of future RI-FS costs and the United States’ claimed past response costs relative to the first-phase areas, a sum that we expect in the aggregate to be immaterial. We understand that GD-OTS has also reached agreements-in-principle with the U.S. Government and the other participating PRPs related to the first-phase areas of concern. Negotiations between GD-OTS and the U.S. Government are underway with respect to resolution of the remaining areas of the site, including those portions of the Crab Orchard Site where our predecessor conducted manufacturing and research activities. We at present cannot predict whether these further negotiations will result in an agreement, or when any determination of the ultimate allocable shares of the various PRPs, including the U.S. Government, is likely to be completed. It is not possible at this time to reasonably estimate the total amount of any obligation for remediation of the Crab Orchard Site as a whole because the allocation among PRPs, selection of remediation alternatives,

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

and concurrence of regulatory authorities have not yet advanced to the stage where a reasonable estimate can be made. We notified our insurers of this potential liability and have obtained defense and indemnity coverage, subject to reservations of rights, under certain of our insurance policies.

Roseland, NJ Site

The Roseland Site was operated by Resistoflex Corporation (“Resistoflex”), which became an indirect subsidiary ~~of ours~~ in 1985 when weCrane Co. (n/k/a Redco) acquired Resistoflex’s parent company, UniDynamics Corporation. Resistoflex manufactured specialty lined pipe and fittings at the site from the 1950s until it was closed in the mid-1980s. We undertook an extensive soil remediation effort at the Roseland Site following our closure and had been monitoring the Site’s condition in the years that followed. In response to changes in remediation standards, in 2014 we began to conduct further site characterization and delineation studies at the Site. We are in the late stages of our remediation activities at the Site, which include a comprehensive delineation of contaminants of concern in soil, groundwater, surface water, sediment, and indoor air ~~testing,~~in certain buildings, all in accordance with the New Jersey Department of Environmental Protection guidelines and directives.

Marion, IL Site

Crane Co. (n/k/a Redco) has been identified as a potentially responsible party (“PRP”) with respect to environmental contamination at the Crab Orchard National Wildlife Refuge Superfund Site (the “Crab Orchard Site”). The Crab Orchard Site is located near Marion, Illinois, and consists of approximately 55,000 acres. Beginning in 1941, the United States used the Crab Orchard Site for the production of ordnance and other related products for use in World War II. In 1947, about half of the Crab Orchard Site was leased to a variety of industrial tenants whose activities (which continue to this day) included manufacturing ordnance and explosives. Unidynamics Corporation formerly leased portions of the Crab Orchard Site and conducted manufacturing operations at the Crab Orchard Site from 1952 until 1964. General Dynamics Ordnance and Tactical Systems, Inc. (“GD-OTS”) is in the process of conducting a remedial investigation and feasibility study (“RI-FS”) for a portion of the Crab Orchard Site (the “AUS-OU”), which includes an area where we maintained operations, pursuant to an Administrative Order on Consent (the “AOC”). A remedial investigation report was approved in February 2015, and work on the feasibility study is underway. It is unclear when the final feasibility study will be completed, or when a final Record of Decision (“ROD”) may be issued.As noted above, we have agreed to indemnify Redco Buyer against the Crab Orchard environmental liabilities, and accordingly we act as Redco’s agent with respect to such liabilities.

GD-OTS asked Crane Co. (n/k/a Redco) to participate in a voluntary, multi-party mediation exercise with respect to response costs that GD-OTS has incurred or will incur with respect to the AUS-OU, and Crane Co. (n/k/a Redco), the U.S. Government, and other PRPs entered into a non-binding mediation agreement in 2015. We have stepped into Redco’s position as a participant in the mediation.The first phase of the mediation, involving certain former munitions or ordnance storage areas, began in November 2017, but did not result in a multi-party settlement agreement. Subsequently, Redco entered discussions directly with GD-OTS and reached an agreement, as of July 13, 2021, to contribute toward GD-OTS’s past RI-FS costs associated with the first-phase areas for an immaterial amount. We, as indemnitor, have also agreed to pay a modest percentage of future RI-FS costs and the United States’ claimed past response costs relative to the first-phase areas, a sum that has proven to be and we expect to continue to be, in the aggregate, an immaterial amount. We understand that GD-OTS has also reached agreements with the U.S. Government and the other participating PRPs related to the first-phase areas of concern.

Negotiations between GD-OTS, the U.S. Government and remaining participants are underway with respect to resolution of the U.S. Government’s liability for, and contribution claims with respect to, RI/FS costs associated with the remaining areas of the site, including those portions of the Crab Orchard Site where Redco’s predecessor conducted manufacturing and research activities.The participants have reached agreement in principle on a framework for resolving the U.S. Government’s share of RI/FS costs, subject to consummation of a mutually-agreeable consent decree, but we at present cannot predict whetheror whenthese negotiations will result in a definitive agreement. Further, negotiations are ongoing between us and GD-OTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

regarding a potential resolution of GD-OTS’ claim for costs that it has incurred in performing its obligations under the AOC. We at present cannot predict when any determination of the ultimate allocable shares of GD-OTS and U.S. Government response costs for which we may be liable is likely to be completed. None of these discussions address responsibility for the performance of, or payment of costs incurred in connection with, any remedial design or remedial action that may be required pursuant to the ROD (when it is ultimately issued). It is not possible at this time to reasonably estimate the total amount of any obligation for remediation of the Crab Orchard Site as a whole because the allocation among PRPs, selection of remediation alternatives, and concurrence of regulatory authorities have not yet advanced to the stage where a reasonable estimate can be made. Insurers with contractual coverage obligations for this site have been notified of this potential liability and have been providing coverage, subject to reservations of rights.

Asbestos Liability

As a result of the Redco Sale, all asbestos obligations and liabilities, related insurance assets and associated deferred tax assets of Redco were removed from the Company’s condensed consolidated balance sheets effective August 12, 2022 and the Company no longer has any obligation with respect to pending and future asbestos claims.

The gross settlement and defense costs incurred for the periods presented was as follows:


	Three Months Ended
	March 31,
(in millions)	2023		2022
Settlement / indemnity costs incurred	$	—	$	10.5
Defense costs incurred	—		2.5
Total costs incurred	$	—	$	13.0

The total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the periods presented was as follows:


	Three Months Ended
	March 31,
(in millions)	2023		2022
Settlement / indemnity payments	$	—	$	9.6
Defense payments	—		2.1
Insurance receipts	—		(4.2)
Pre-tax cash payments, net	$	—	$	7.5

Other Proceedings

We regularly review the status of lawsuits, claims and proceedings that have been or may be asserted against us relating to the conduct of our business, including those pertaining to product liability, patent infringement, commercial, employment, employee benefits, environmental and stockholder matters. We record a provision for a liability for such matters when it is considered probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions, if any, are reviewed quarterly and adjusted as additional information becomes available. If either or both of the criteria are not met, we assess whether there is at least a reasonable possibility that a loss, or additional losses, may have been incurred. If there is a reasonable possibility that a loss or additional loss may have been incurred for such matters, we disclose the estimate of the amount of loss or range of loss, disclose that the amount is immaterial, or disclose that an estimate of loss cannot be made, as applicable. We believe that as of March 31, ~~2022,~~2023, there was no reasonable possibility that a material loss, or any additional material losses, may have been incurred for such matters, and that adequate provision has been made in our financial statements for the potential impact of all such matters.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1211 - Financing

Our debt consisted of the following:

(in millions) March 31,
2022 December 31,
2021
Commercial paper $ 104.0 $ —
Total short-term borrowings $ 104.0 $ —
4.45% notes due December 2023 $ 299.5 $ 299.4
6.55% notes due November 2036 198.5 198.5
4.20% notes due March 2048 346.4 346.3
Other deferred financing costs associated with credit facilities (1.7) (1.8)
Total long-term debt $ 842.7 $ 842.4
Debt discounts and debt issuance costs totaled $5.6 million and $5.7 million as of each of March 31, 2022 and December 31, 2021, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.


(in millions)	March 31, 2023		December 31, 2022
4.45% notes due December 2023 a	$	299.8	$	299.7
Term Facility	8.7		—
364-Day Credit Agreement	—		399.6
Total short-term borrowings	$	308.5	$	699.3

Term Facility a	$	339.3	$	—
6.55% notes due November 2036 a	198.6		198.6
4.20% notes due March 2048 a	346.5		346.5
Other deferred financing costs associated with credit facilities	(3.7)		(1.4)
Total long-term debt	$	880.7	$	543.7


(a) Debt discounts and debt issuance costs totaled $7.1 million and $5.6 million as of March 31, 2023 and December 31, 2022, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.

Credit Facilities – On March 17, 2023, the Company entered into a new senior secured credit agreement (the “Credit Agreement”), which provides for (i) a $500 million, 5-year revolving credit facility (the “Revolving Facility”) and (ii) a $350 million, 3-year term loan facility (the “Term Facility”), funding under each of which became available in connection with the Separation, upon the satisfaction of customary conditions of facilities of this type. On March 31, 2023, the Company borrowed the full amount of the Term Facility.

The Revolving Facility allows us to borrow, repay and re-borrow funds from time to time prior to the maturity of the Revolving Facility without any penalty or premium, subject to customary borrowing conditions for facilities of this type and the reimbursement of breakage costs. Borrowings under the Term Facility are prepayable without premium or penalty, subject to customary reimbursement of breakage costs. Interest on loans advanced under the Credit Agreement accrues, at our option, at a rate per annum equal to (1) adjusted term SOFR plus a credit spread adjustment of 0.10% for the applicable interest period plus a margin ranging from 1.50% to 2.25% or (2) a base rate plus a margin ranging from 0.50% to 1.25%, in each case, with such margin determined based on the lower of the ratings of our senior, unsecured long-term debt (the “Ratings”) and our total net leverage ratio. We are required to pay a fee on undrawn commitments under the Revolving Facility at a rate per annum that ranges from 0.20% to 0.35%, based on the lower of the Ratings and our total net leverage ratio. The Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations on our and our subsidiaries with respect to indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of all or substantially all assets, transactions with affiliates, hedging arrangements and amendments to our organizational documents or to certain subordinated debt agreements. As of the last day of each fiscal quarter, our total net leverage ratio cannot exceed 3.50 to 1.00 (provided that, at our election, such maximum ratio may be increased to 4.00 to 1.00 for specified periods following our consummation of certain material acquisitions) and our minimum interest coverage ratio must be at least 3.00 to 1.00. The Credit Agreement also includes customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by us or any of our material subsidiaries being false in any material respect, default under certain other material indebtedness, certain insolvency or receivership events affecting us and our material subsidiaries, certain ERISA events, material judgments and a change in control, in each case, subject to cure periods and thresholds where customary.

The $650 million revolving credit facility and commercial paper program disclosed below were replaced by commitments under the new $500 million, 5-year Revolving Credit Agreement, with funding available upon Separation, subject to customary conditions precedent for facilities of this type. The commercial paper program will no longer be available upon Separation.

364-Day Credit Agreement- On August 11, 2022, the Company entered into a senior unsecured 364-day credit facility (the “364-Day Credit Agreement”) under which it borrowed term loans denominated in U.S. dollars (the “Term Loans”) in an aggregate principal amount of $400 million. Interest on the Term Loans accrued at a rate per annum equal to, at the Company’s option, (a) a base rate (determined in a customary manner), plus a margin of 0.25% or 0.50% that was determined based upon the ratings by S&P and Moody’s of the Company’s senior unsecured long-term debt (the “Index Debt Rating”) or (b) an adjusted Term SOFR (determined in a customary manner) for an interest period to be selected by the Company, plus a margin of 1.25% or 1.50% that was determined based upon the Index Debt Rating. During the first quarter of 2023, the Company repaid the remaining principal of $400 million under the 364-Day Credit Agreement.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Commercial paper program - On July 28, 2021, we increased the size of the commercial paper program (“CP Program”) to permit the issuance of short-term, unsecured commercial paper notes in an aggregate principal amount not to exceed $650 million at any time outstanding. Prior to this increase, the CP Program permitted us to issue commercial paper notes in an aggregate principal amount not to exceed $550 million at any time outstanding. The ~~other terms and conditions of the CP program remain the same. Amounts available under the CP Program may be borrowed, repaid and re-borrowed from time to time. The~~ notes ~~will have maturities of up to 397 days from date of issue. The notes rank~~ranked at least pari passu with all of our other unsecured and unsubordinated indebtedness. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there ~~was $104.0 million and $0.0 million, respectively, of~~were no outstanding borrowings under the commercial paper program.

Revolving Credit Facility - On July 28, 2021, we entered into a $650 million, 5-year Revolving Credit Agreement (the “2021 Facility”). The 2021 Facility allowed us to borrow, repay, or to the extent permitted by the agreement, prepay and re-borrow funds at any time prior to the stated maturity date. Interest on loans made under the 2021 Facility accrued, at our option, at a rate per annum equal to (1) a base rate, plus a margin ranging from 0.00% to 0.50% depending upon the ratings by S&P and Moody’s of our senior unsecured long-term debt (the "Index Debt Rating"), or (2) an adjusted LIBO rate or the applicable replacement rate (determined based on “hardwired” LIBOR transition provisions consistent with those published by the Alternative References Rates Committee) for an interest period to be selected by us, plus a margin ranging from 0.805% to 1.50% depending upon the Index Debt Rating. The 2021 Facility contained customary affirmative and negative covenants for credit facilities of this type, including limitations on us and our subsidiaries with respect to indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of all or substantially all assets, transactions with affiliates and hedging arrangements. We also were required to maintain a debt to capitalization ratio not to exceed 0.65 to 1.00 at all times. The 2021 Facility also provided for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by us or any of our material subsidiaries being false in any material respect, default under certain other material indebtedness, certain insolvency or receivership events affecting us and our material subsidiaries, certain ERISA events, material judgments and a change in control of us. As of March 31, 2023 and December 31, 2022, there were no outstanding borrowings under the 2021 Facility.

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Note 1312 - Fair Value Measurements

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are to be considered from the perspective of a market participant that holds the asset or owes the liability. The standards also establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standards describe three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices in active markets for identical or similar assets and liabilities.

Level 2: Quoted prices for identical or similar assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical or similar assets and liabilities. Level 2 assets and liabilities include over-the-counter derivatives, principally forward foreign exchange contracts, whose value is determined using pricing models with inputs that are generally based on published foreign exchange rates and exchange traded prices, adjusted for other specific inputs that are primarily observable in the market or can be derived principally from or corroborated by observable market data.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Valuation Technique

The carrying value of our financial assets and liabilities, including cash and cash equivalents, accounts receivable and accounts payable approximate fair value, without being discounted, due to the short periods during which these amounts are outstanding.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We are exposed to certain risks related to our ongoing business operations, including market risks related to fluctuation in currency exchange. We use foreign exchange contracts to manage the risk of certain cross-currency business relationships to minimize the impact of currency exchange fluctuations on our earnings and cash flows. We do not hold or issue derivative financial instruments for trading or speculative purposes. Foreign exchange contracts not designated as hedging instruments had a notional value of ~~$94.0~~$4.9 million and ~~$3.0~~$89.7 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Our derivative assets and liabilities include foreign exchange contract derivatives that are measured at fair value using internal models based on observable market inputs such as forward rates and interest rates. Based on these inputs, the derivatives are classified within Level 2 of the valuation hierarchy. Such derivative receivable amounts are recorded within “Other current assets” on our Condensed Consolidated Balance Sheets and were ~~$1.6~~$0.1 million and ~~$0.0~~$5.9 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Such derivative liability amounts are recorded within “Accrued liabilities” on our Condensed Consolidated Balance Sheets and there were ~~$0.0 million and less than $0.1 million~~no derivative liabilities as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Available-for-sale securities consist of rabbi trust investments that hold marketable securities for the benefit of participants in our Supplemental Executive Retirement Plan. These investments are measured at fair value using quoted market prices in an active market and are therefore classified within Level 1 of the valuation hierarchy. The fair value of available-for-sale securities was ~~$0.6~~$0.4 million and ~~$1.6~~$0.4 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. These investments are included in “Other assets” on our Condensed Consolidated Balance Sheets.

Long-term debt rates currently available to us for debt with similar terms and remaining maturities are used to estimate the fair value for debt issues that are not quoted on an exchange. The estimated fair value of total debt, measured using Level 2 inputs, was ~~$881.2~~$779.0 million and ~~$984.9~~$753.1 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

2725

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1413 - Restructuring

Overview

~~2020~~2022 Repositioning - - In the ~~second~~fourth quarter of ~~2020, we initiated actions~~2022, in response to ~~the adverse~~ economic ~~impact of COVID-19 and integration actions related to the Cummins-Allison acquisition. These actions include~~uncertainty, we initiated modest workforce reductions of approximately ~~1,200~~300 employees, or about ~~11%~~3% of our global ~~workforce, and the exiting of two leased office facilities and one leased warehouse facility.~~workforce. We ~~have completed this program and do not~~ expect to ~~incur additional restructuring charges.~~complete the program in the first quarter of 2024.

2019 Repositioning - In the fourth quarter of 2019, we initiated actions to consolidate two manufacturing operations in Europe within our Process Flow Technologies segment. In 2020, we recorded additional severance costs related to the final negotiation with the works council/union at both locations. These actions, taken together, included workforce reductions of approximately 180 employees, or less than 1% of our global workforce. We expect to complete the program in the fourth quarter of 2023.

~~2017 Repositioning -~~ In the fourth quarter of 2017, we initiated broad-based repositioning actions designed to improve profitability. These actions included headcount reductions of approximately 300 employees, or about 3% of our global workforce, and select facility consolidations in North America and Europe. In 2020, we adjusted the estimate downward to reflect the impact of employees that chose to voluntarily terminate prior to receiving severance at the conclusion of the actions in North America. In 2021, we recorded a gain on sale of real estate related to these actions. We expect to complete the program in the first quarter of 2023.

~~Restructuring (gains) charges, net~~

~~We recorded restructuring (gains) charges, net which are reflected in the Condensed Consolidated Statements of Operations, as follows:~~
Three Months Ended March 31,
(in millions) 2022 2021
Process Flow Technologies $ — $ (12.6)
Payment & Merchandising Technologies — (0.5)
Total restructuring (gains) charges, net $ — $ (13.1)

~~The following table summarizes our restructuring gains, net by program, cost type and segment for the three months ended March 31, 2022 and 2021:~~
Three months ended
March 31, 2022 Three months ended
March 31, 2021
(in millions) Severance Other Total Severance Other Total
Payment & Merchandising Technologies $ — $ — $ — $ (0.5) $ — $ (0.5)
2020 Repositioning $ — $ — $ — $ (0.5) $ — $ (0.5)
Process Flow Technologies $ — $ — $ — $ 0.1 $ — $ 0.1
2019 Repositioning $ — $ — $ — $ 0.1 $ — $ 0.1
Process Flow Technologies 1
$ — $ — $ — $ — $ (12.7) $ (12.7)
2017 Repositioning $ — $ — $ — $ — $ (12.7) $ (12.7)
Total $ — $ — $ — $ (0.4) $ (12.7) $ (13.1)

1 ~~Reflects a pre-tax gain related to the sale of real estate in 2021~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The following table summarizes the cumulative restructuring costs, net incurred through March 31, ~~2022. We~~2023. As of March 31, 2023, we do not expect to incur additional facility consolidation costs to complete these ~~actions as of March 31, 2022.~~actions.


		Cumulative Restructuring Costs, Net							Cumulative Restructuring Costs, Net
(in millions)	(in millions)	Severance		Other		Total		(in millions)	Severance		Other		Total

Aerospace & Electronics	Aerospace & Electronics	$	6.5	$	—	$	6.5	Aerospace & Electronics	$	1.5	$	—	$	1.5
Process Flow Technologies	Process Flow Technologies	3.7		—		3.7		Process Flow Technologies	6.3		—		6.3
Payment & Merchandising Technologies	Payment & Merchandising Technologies	15.8		1.8		17.6		Payment & Merchandising Technologies	5.7		0.5		6.2
2020 Repositioning		26.0		1.8		27.8
Engineered Materials								Engineered Materials	0.4		—		0.4
2022 Repositioning								2022 Repositioning	$	13.9	$	0.5	$	14.4

Process Flow Technologies	Process Flow Technologies	16.1		—		16.1		Process Flow Technologies	$	14.9	$	(2.8)	$	12.1
2019 Repositioning	2019 Repositioning	16.1		—		16.1		2019 Repositioning	$	14.9	$	(2.8)	$	12.1

Aerospace & Electronics		1.3		(1.4)		(0.1)
Process Flow Technologies		13.1		(12.7)		0.4
Payment & Merchandising Technologies		11.5		0.7		12.2
2017 Repositioning		$	25.9	$	(13.4)	$	12.5

Restructuring Liability

The following table summarizes the accrual balances related to each restructuring program:


(in millions)	(in millions)	2019 Repositioning		2017 Repositioning		Total		(in millions)	2022 Repositioning		2019 Repositioning		Total
Severance:	Severance:							Severance:
Balance at December 31, 2021 (a)		$	11.5	$	0.7	$	12.2
Balance as of December 31, 2022 (a)								Balance as of December 31, 2022 (a)	$	14.2	$	2.4	$	16.6

Utilization	Utilization	(4.4)		(0.6)		(5.0)		Utilization	(4.1)		(1.0)		(5.1)
Balance at March 31, 2022 (a)		$	7.1	$	0.1	$	7.2
Balance as of March 31, 2023 (a)								Balance as of March 31, 2023 (a)	$	10.1	$	1.4	$	11.5



(a)			Included within Accrued Liabilities in the Condensed Consolidated Balance ~~Sheets~~Sheets.

2926

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note ~~15-~~14- Subsequent Event

Dividend from Crane Company

Prior to the consummation of the Separation, the Board of Directors of Crane Company declared a one-time cash dividend in the amount of $275 million to Crane Holdings, Co., its sole stockholder at that time, and paid such dividend on April 3, 2023, prior to the consummation of the Separation.

The Separation and Distribution

On April ~~8, 2022,~~3, 2023, the Separation was completed. In connection with the Separation, Crane Holdings, Co., which was renamed “Crane NXT, Co.,” and Crane Company entered into various agreements to effect the Separation and provide a framework for their relationship after the Separation, including a separation and distribution agreement, a transition services agreement, an employee matters agreement, a tax matters agreement and an intellectual property matters agreement. These agreements provide for the allocation between Crane NXT, Co. and Crane Company of assets, employees, liabilities and obligations (including property and employee benefits and tax-related assets and liabilities) attributable to ~~sell~~periods prior to, at, and after the consummation of the Separation and govern certain relationships between Crane ~~Supply for CAD 380~~NXT, Co. and Crane Company after the Separation.

4.45% Senior Notes due 2023

On April 4, 2023, the Company redeemed all of its outstanding 4.45% senior notes due 2023, of which $300 million ~~on a cash-free and debt-free basis. The sale is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2022.~~aggregate principal amount was outstanding upon redemption.

3027

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains information about Crane Holdings, Co. (which was renamed to Crane NXT, Co. effective as of immediately following the consummation of the Separation on April 3, 2023), some of which includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking 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.

~~Reference~~References herein to ~~“Crane,” “the Company,”~~ “we,” ~~“us”~~“us,” “our,” “Crane Holdings, Co.” and ~~“our”~~the “Company” refer to Crane NXT, Co. and ~~its subsidiaries unless the context specifically states~~our subsidiaries. Prior to April 3, 2023, Crane NXT, Co. was named “Crane Holdings, Co.” Accordingly, we refer to Crane NXT, Co.as “Crane Holdings, Co.” in certain disclosures that are as of dates or ~~implies otherwise.~~related to periods ended prior to April 3, 2023. References to “core business” or “core sales” in this report include sales from acquired businesses starting from and after the first anniversary of the acquisition but exclude currency effects. Amounts in the following discussion are presented in millions, except employee, share and per share data, or unless otherwise stated.

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. There are a number of other factors, including risks and uncertainties related to the ongoing effects of the COVID-19 pandemic, that could cause actual results or outcomes to differ materially from those expressed or implied in the forward-looking statements. Such factors also include, among others: changes in global economic conditions (including inflationary pressures) and geopolitical risks, including macroeconomic fluctuations that may harm our business, results of ~~operation~~operations and stock price; the effects of the ongoing coronavirus pandemic on our business and the global and U.S. economies generally; information systems and technology networks failures and breaches in data security, personally identifiable and other information, non-compliance with our contractual or other legal obligations regarding such information; ~~potential exposure from numerous lawsuits for asbestos-related personal injury;~~ our ability to source components and raw materials from suppliers, including disruptions and delays in our supply chain; demand for our products, which is variable and subject to factors beyond our control; governmental regulations and failure to comply with those regulations; fluctuations in the prices of our components and raw materials; loss of personnel or being able to hire and retain additional personnel needed to sustain and grow our business as planned; risks from environmental liabilities, costs, litigation and violations that could adversely affect our financial condition, results of operations, cash flows and reputation; risks associated with conducting a substantial portion of our business outside the United States; being unable to identify or complete acquisitions, or to successfully integrate the businesses we acquire, or complete ~~dispositions, including the disposition of our Engineered Materials segment;~~dispositions; adverse impacts from intangible asset impairment charges; potential product liability or warranty claims; being unable to successfully develop and introduce new products, which would limit our ability to grow and maintain our competitive position and adversely affect our financial condition, results of operations and cash flow; significant competition in our markets; additional tax expenses or exposures that could affect our financial condition, results of operations and cash flows; inadequate or ineffective internal controls; risks related to our holding company proposal to be voted on by our stockholders at our 2022 annual stockholder meeting, which are further described in the section entitled “Risk Factors Related to the Holding Company Proposal” in the registration statement on Form S-4 (File No. 333-263119) filed by our wholly-owned subsidiary, Crane Holdings, Co.; specific risks relating to our reportable segments, including Aerospace & Electronics, Process Flow Technologies, Payment & Merchandising Technologies and Engineered ~~Materials;~~Materials (as a result of the Separation, Crane Holdings, Co. retained its Payment & Merchandising Technologies segment and spun-off its Aerospace & Electronics, Process Flow Technologies and Engineered Materials segments to Crane Holdings, Co.’s stockholders); the ability and willingness of ~~the parties~~Crane NXT, Co. and Crane Company to meet and/or perform their obligations under any contractual arrangements ~~that are~~ entered into among the parties in connection with ~~our previously announced proposed business separation~~the Separation and any of their obligations to indemnify, defend and hold the other party harmless from and against various claims, litigation and liabilities; our ability to achieve some or all the benefits that we expect to achieve from ~~our proposed business separation;~~the Separation; and other risks noted in reports that we file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, and subsequent reports and other documents filed by us ~~or Crane Holdings, Co.~~ with the Securities and Exchange Commission, including any registration statement relating to our ~~proposed~~ business separation. We do not undertake any obligation to update or revise any forward-looking statements to reflect any future events or circumstances.

~~Pending Holding Company Reorganization~~

On February 28, 2022, Crane Co., a Delaware corporation (“Crane Co.”), Crane Holdings, Co., a Delaware corporation and wholly-owned subsidiary of Crane Co. (“Crane Holdings”), and Crane Transaction Company, LLC, a Delaware limited liability company and wholly-owned subsidiary of Crane Holdings (“Merger Sub”), entered into an Agreement and Plan of Merger, pursuant to which Crane Co. will merge with Merger Sub, with Crane Co. surviving the merger as a wholly-owned subsidiary of Crane Holdings (the “Reorganization Merger”). The Reorganization Merger is subject to specific conditions, including approval by Crane Co.’s stockholders at its 2022 Annual Meeting of Stockholders. Following the Reorganization Merger, Crane Holdings intends for Crane Co. (which will, as of that time, be a wholly-owned subsidiary of Crane Holdings) to convert from a Delaware corporation to a Delaware limited liability company (such conversion, together with the Reorganization Merger, the “Reorganization”).

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Pending Separation~~

On March 30, 2022, Crane Co. announced that its Board of Directors unanimously approved a plan to pursue a separation into two independent, publicly-traded companies (the “Separation”). The Separation is expected to occur through a tax-free distribution and is expected to be completed within approximately 12 months, subject to the satisfaction of customary conditions and final approval by Crane Co.’s Board of Directors.

3228

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~OUTLOOK - CONTINUING OPERATIONS~~Recent Transactions

~~Overall~~Separation

Our sales depend heavily on industries that are cyclical in nature or are subject to market conditions which may cause customer demand for our products to be volatile and unpredictable. Demand in these industries is affected by fluctuations in domestic and international economic conditions, as well as currency fluctuations, commodity costs, and a variety of other factors. As we exited 2021 and through the first quarter of 2022, we have experienced significant inflationary pressure across most businesses and have initiated pricing actions to ensure we cover the higher costs and protect our margin profile.

~~For 2022, we expect a total year-over-year sales increase of approximately 3% to 4%~~On April 3, 2023, Crane Holdings, Co., driven by approximately 5% core growth, partially offset by a 1% to 2% impact from unfavorable foreign exchange. On a year-to-date basis through March, substantially all of our core growth has been driven by price to offset the impact of inflation. We expect higher pricing on a full-year basis to approximately offset the impact of inflation. We expect a 1% to 2% improvement in operating profit driven primarily by productivity benefits and operating leverage on higher volumes, partially offset by higher transaction related costs, primarily related to the Separation and unfavorable mix.

This Outlook does not include any potential impacts from the pending Crane Supply divestiture which is expected to close in the second quarter of 2022. If such transaction closes in 2022, it would resultwas separated into two independent, publicly-traded companies in a ~~decrease~~transaction in ~~sales and operating profit relative to the Outlook described here in both the Overall and Process Flow Technologies sections.~~

~~Aerospace & Electronics~~

In 2022, we expect Aerospace & Electronics core sales to increase in the high-single digit range as compared to 2021, primarily driven by higher volumes and, to a lesser extent, price. We expect a substantial improvement in our commercial OEM business driven by higher aircraft build rates, and we expect a substantial improvement in our commercial aftermarket business given continued recovery in airline flight hours following two years of depressed demand due to the impacts of COVID-19. We expect our defense OEM business to be flat and our defense aftermarket businesses to be slightly lower given challenging comparisons to recent years where these markets exhibited very strong growth.~~We expect segment operating profit to increase in the low double-digit range as compared to 2021 driven primarily by the impact of operating leverage on higher volumes.~~

~~Process Flow Technologies~~

In 2022, we expect Process Flow Technologies sales to increase slightly driven by low- to mid-single digit core growth, partially offset by a low single-digit impact from unfavorable foreign exchange. As a result of inflationary pressures, we expect additional price to supplement volume growth during the year.

We expect Process Valves and Related Products sales to increase in the low- to mid-single digit range as compared to 2021, driven by mid-single digit core sales growth, partially offset by a low-single digit impact from unfavorable foreign exchange. We expect Commercial Valves sales to decline in the mid-single digit range with a low-single digit decline in core sales and a low-single digit impact from unfavorable foreign exchange. We expect Pumps and Systems sales to increase in the high-single digit range as compared to 2021, driven by strong demand across municipal and non-residential U.S. end markets.

We expect an improvement in the segment’s operating profit as compared to 2021 in the low-single digit range, driven by strong productivity and operating leverage on higher volumes as well as higher pricing to cover inflationary pressures.

~~Payment & Merchandising Technologies~~

~~In 2022, we expect~~which Crane Holdings, Co. retained its Payment & Merchandising Technologies ~~sales~~segment and spun-off its Aerospace & Electronics, Process Flow Technologies and Engineered Materials segments to ~~increase in~~Crane Holdings, Co. stockholders. Upon consummation of the low- to mid-single digit range as compared to 2021, driven by mid-single digit core sales growth, partially offset by a low-single digit impact from unfavorable foreign exchange. Higher pricing is expected to offset higher inflation and sustain margins.

AtSeparation, each of our stockholders received one share of Crane ~~Payment Innovations, we expect core sales growth in~~Company common stock for every one share of our common stock held on March 23, 2023, the ~~low-double digit range, driven by broad-based strength across all vertical markets, together with higher pricing. At Crane Currency, we expect core sales to decline in~~record date for the ~~high-single digit range as compared to 2021 due to lower expected sales to international customers, reflecting challenging comparisons to a record year of project activity and growth in 2021.~~

~~We expect the segment’s operating profit to be similar as compared to 2021, with higher prices and strong productivity to be approximately offset by inflationary pressures and unfavorable sales mix.~~

distribution.

3329

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results from ~~Continuing~~ Operations – Three Month Periods Ended March 31,

The following information should be read in conjunction with our condensed consolidated financial statements and related notes. All comparisons below refer to the first quarter ~~2022~~2023 versus the first quarter ~~2021,~~2022, unless otherwise specified.


		First Quarter						Change					First Quarter						Favorable/(Unfavorable) Change
(dollars in millions)	(dollars in millions)	2022			2021			$		%		(dollars in millions)	2023			2022			$		%
Net sales	Net sales	$	801.1		$	779.6		$	21.5	2.8	%	Net sales	$	842.9		$	871.5		$	(28.6)	(3.3)	%

Cost of sales	Cost of sales	473.8			470.5			3.3		0.7	%	Cost of sales	481.3			526.2			44.9		8.5	%
as a percentage of sales	as a percentage of sales	59.1		%	60.4		%					as a percentage of sales	57.1		%	60.4		%
Selling, general and administrative	Selling, general and administrative	193.7			182.2			11.5		6.3	%	Selling, general and administrative	209.4			198.3			(11.1)		(5.6)	%
as a percentage of sales	as a percentage of sales	24.2		%	23.4		%					as a percentage of sales	24.8		%	22.8		%
Restructuring gain, net		—			(13.1)			13.1		NM

Operating profit	Operating profit	133.6			140.0			(6.4)		(4.6)	%	Operating profit	152.2			147.0			5.2		3.5	%
Operating margin	Operating margin	16.7		%	18.0		%					Operating margin	18.1		%	16.9		%

Other income (expense):	Other income (expense):											Other income (expense):
Interest income	Interest income	0.3			0.4			(0.1)		(25.0)	%	Interest income	1.0			0.3			0.7		233.3	%
Interest expense	Interest expense	(11.1)			(13.6)			2.5		18.4	%	Interest expense	(17.0)			(11.1)			(5.9)		(53.2)	%
Miscellaneous income, net		3.5			3.9			(0.4)		(10.3)	%

Miscellaneous (expense) income, net												Miscellaneous (expense) income, net	(2.4)			3.5			(5.9)		(168.6)	%
Total other expense	Total other expense	(7.3)			(9.3)			2.0		21.5	%	Total other expense	(18.4)			(7.3)			(11.1)		152.1	%
Income from continuing operations before income taxes		126.3			130.7			(4.4)		(3.4)	%
Income before income taxes												Income before income taxes	133.8			139.7			(5.9)		(4.2)	%
Provision for income taxes	Provision for income taxes	31.6			27.3			4.3		15.8	%	Provision for income taxes	28.1			34.7			6.6		19.0	%

Net income from continuing operations attributable to common shareholders		$	94.7		$	103.4		$	(8.7)	(8.4)	%
Net income attributable to common shareholders												Net income attributable to common shareholders	$	105.7		$	105.0		$	0.7	0.7	%

Supplemental Data:

Transaction related expenses 1		6.1			—			6.1		NM
1 Amounts included within Selling, general & administrative costs.

Sales ~~increased~~decreased by ~~$21.5~~$28.6 million, or ~~2.8%~~3.3%, to ~~$801.1~~$842.9 million in ~~2022. Net sales by destination related to operations outside the United States were 47.7% and 48.6% of total net sales for the quarters ended March 31, 2022 and 2021, respectively.~~2023. The year-over-year change in sales included:

•an increase in core sales of ~~$35.5~~$54.2 million, or ~~4.6%~~6.2%, which ~~in aggregate which~~ was driven primarily ~~comprised of~~by higher pricing; ~~and~~

•unfavorable foreign currency translation of ~~$14.0~~$21.0 million, or ~~1.8%~~2.4%; and

•a decrease in sales related to the May 2022 divestiture of Crane Supply of $61.7 million, or 7.1%.

Cost of sales ~~increased~~decreased by ~~$3.3~~$44.9 million, or ~~0.7%~~8.5%, to ~~$473.8~~$481.3 million in ~~2022.~~2023. The ~~increase~~decrease is primarily related to the impact of the sale of Crane Supply of $46.0 million, or 8.7%, strong productivity gains of $17.2 million, or 3.3%, favorable foreign currency translation of $12.0 million, or 2.3%, the impact of lower volumes of $9.6 million, or 1.8%, partially offset by unfavorable mix of $23.9 million, or 4.5%, and an increase in material, labor and other manufacturing costs of ~~$24.6~~$17.6 million, or ~~5.2%, partially offset by productivity gains of $14.8 million, or 3.1%, and favorable foreign currency translation of $8.7 million, or 1.8%~~3.3%.

Selling, general and administrative expenses increased by ~~$11.5~~$11.1 million, or ~~6.3%~~5.6%, to ~~$193.7~~$209.4 million in ~~2022. The increase was driven~~2023 primarily ~~by an~~related to a $19.9 million, or 10.0%, increase in ~~selling costs of $7.8 million, or 4.3%,~~administrative expenses, including transaction related expenses of ~~$6.1~~$11.7 million, or ~~3.3%~~5.9%, ~~primarily related to the Separation,~~ partially offset by the impact of the sale of Crane Supply of $6.0 million, or 3.0%, and favorable foreign currency translation of ~~$2.6~~$4.0 million, or ~~1.4%~~2.0%.

Operating profit ~~decreased~~increased by ~~$6.4~~$5.2 million, or ~~4.6%~~3.5%, to ~~$133.6~~$152.2 million in ~~2022.~~2023. The ~~decrease in operating profit~~increase primarily reflected higher pricing net of inflation, and productivity, of $43.9 million, or 29.9%, partially offset by unfavorable mix of $23.9 million, or 16.3%, the impact of the sale of Crane Supply of $9.7 million, or 6.6%, and unfavorable foreign currency translation of $5.1 million, or 3.5%.

Our effective tax rate for the three months ended March 31, 2023 is lower than the prior year’s comparable period primarily due to a greater benefit related to ~~transaction related expenses~~share-based compensation.

Our effective tax rate for the three months ended March 31, 2023 is equal to the statutory U.S. federal tax rate of ~~$6.1 million,~~21%. The effective tax rate is the result of permanent increases and decreases that net ~~restructuring gain of $13.1 million related to prior repositioning actions which did not repeat in 2022, offset by $12.9 million of operational improvement across the segments.~~against each other and offset.

~~Other expense decreased $2.0 million, or 21.5%, to $7.3 million, primarily reflecting lower interest expense following the repayment of the 364-day credit facility in April 2021.~~

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our effective tax rate attributable to continuing operations for the three months ended March 31, 2022 is higher than the prior year’s comparable period primarily due to higher non-U.S. taxes, partially offset by a greater benefit related to share-based compensation.

Our effective tax rate attributable to continuing operations for the three months ended March 31, 2022 is higher than the statutory U.S. federal tax rate of 21% primarily due to earnings in jurisdictions with statutory tax rates higher than the U.S., expenses that are statutorily non-deductible for income tax purposes and U.S. state taxes, partially offset by excess share-based compensation benefits, tax credit utilization, and the statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

Comprehensive Income


		Three Months Ended					Three Months Ended
		March 31,					March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Net income before allocation to noncontrolling interests	Net income before allocation to noncontrolling interests	$	105.0	$	108.4	Net income before allocation to noncontrolling interests	$	105.7	$	105.0
Components of other comprehensive income, net of tax
Components of other comprehensive income (loss), net of tax						Components of other comprehensive income (loss), net of tax
Currency translation adjustment	Currency translation adjustment	(21.6)		(34.9)		Currency translation adjustment	12.7		(21.6)
Changes in pension and postretirement plan assets and benefit obligation, net of tax	Changes in pension and postretirement plan assets and benefit obligation, net of tax	3.3		4.9		Changes in pension and postretirement plan assets and benefit obligation, net of tax	2.7		3.3
Other comprehensive income, net of tax		(18.3)		(30.0)
Other comprehensive income (loss), net of tax						Other comprehensive income (loss), net of tax	15.4		(18.3)
Comprehensive income before allocation to noncontrolling interests	Comprehensive income before allocation to noncontrolling interests	86.7		78.4		Comprehensive income before allocation to noncontrolling interests	121.1		86.7
Less: Noncontrolling interests in comprehensive income	Less: Noncontrolling interests in comprehensive income	0.1		0.8		Less: Noncontrolling interests in comprehensive income	(0.1)		0.1
Comprehensive income attributable to common shareholders	Comprehensive income attributable to common shareholders	$	86.6	$	77.6	Comprehensive income attributable to common shareholders	$	121.2	$	86.6

For the three months ended March 31, ~~2022,~~2023, comprehensive income before ~~allocations~~allocation to noncontrolling interests was ~~$86.7~~$121.1 million compared to ~~$78.4~~$86.7 million in the same period of ~~2021.~~2022. The ~~$8.3~~$34.4 million increase was primarily driven by a ~~$13.3~~$34.3 million year-over-year favorable impact of foreign currency translation, ~~adjustments,~~ primarily related to the British pound and ~~Japanese yen, partially offset by lower net income before allocation to noncontrolling interests of $3.4 million.~~euro.

3531

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Results of Operations - Three Month Periods Ended March 31,

Aerospace & Electronics


		First Quarter						Change					First Quarter						Favorable/(Unfavorable) Change
(dollars in millions)	(dollars in millions)	2022			2021			$		%		(dollars in millions)	2023			2022			$		%
Net sales by product line:	Net sales by product line:											Net sales by product line:
Commercial Original Equipment	Commercial Original Equipment	$	58.7		$	54.7		$	4.0	7.3	%	Commercial Original Equipment	$	68.4		$	58.7		$	9.7	16.5	%
Military Original Equipment	Military Original Equipment	57.4			62.8			(5.4)		(8.6)	%	Military Original Equipment	61.9			57.4			4.5		7.8	%
Commercial Aftermarket Products	Commercial Aftermarket Products	28.6			19.5			9.1		46.7	%	Commercial Aftermarket Products	37.9			28.6			9.3		32.5	%
Military Aftermarket Products	Military Aftermarket Products	12.5			17.1			(4.6)		(26.9)	%	Military Aftermarket Products	11.9			12.5			(0.6)		(4.8)	%
Total net sales	Total net sales	$	157.2		$	154.1		$	3.1	2.0	%	Total net sales	$	180.1		$	157.2		$	22.9	14.6	%
Cost of sales	Cost of sales	$	97.4		$	99.4		$	(2.0)	(2.0)	%	Cost of sales	$	111.0		$	97.4		$	(13.6)	(14.0)	%
as a percentage of sales	as a percentage of sales	62.0		%	64.5		%					as a percentage of sales	61.6		%	62.0		%
Selling, general and administrative	Selling, general and administrative	$	31.7		$	28.7		$	3.0	10.5	%	Selling, general and administrative	$	31.4		$	31.7		$	0.3	0.9	%
as a percentage of sales	as a percentage of sales	20.2		%	18.6		%					as a percentage of sales	17.4		%	20.2		%
Operating profit	Operating profit	$	28.1		$	26.0		$	2.1	8.1	%	Operating profit	$	37.7		$	28.1		$	9.6	34.2	%

Operating margin	Operating margin	17.9		%	16.9		%					Operating margin	20.9		%	17.9		%

Supplemental Data:	Supplemental Data:											Supplemental Data:
Backlog	Backlog	$	508.4		$	481.6		$	26.8	5.6	%	Backlog	$	644.8		$	508.4		$	136.4	26.8	%

Sales increased ~~$3.1~~$22.9 million, or ~~2.0%~~14.6%, to ~~$157.2~~$180.1 million in ~~2022.~~2023, primarily due to higher volumes and strong pricing.

•Sales of Commercial Original Equipment increased ~~$4.0~~$9.7 million, or ~~7.3%~~16.5%, to ~~$58.7~~$68.4 million in ~~2022,~~2023, reflecting ~~higher shipments to~~strong demand from aircraft manufacturers as the industry ~~continues~~aircraft build rates continue to recover from the COVID-19 related ~~slowdown.~~slowdown, partially offset by material availability constraints.

•Sales of Military Original Equipment ~~decreased $5.4~~increased $4.5 million, or ~~8.6%~~7.8%, to ~~$57.4~~$61.9 million in ~~2022,~~2023, primarily reflecting ~~lower shipments due to order timing~~strong demand from defense and ~~material availability.~~space customers.

•Sales of Commercial Aftermarket Products increased ~~$9.1~~$9.3 million, or ~~46.7%~~32.5%, to ~~$28.6~~$37.9 million in ~~2022,~~2023, reflecting ~~higher~~continued strong demand from the airlines due to improving air ~~traffic as the industry continues to recover from the COVID-19 related slowdown together with higher pricing.~~traffic.

•Sales of Military Aftermarket Products decreased ~~$4.6~~$0.6 million, or ~~26.9%~~4.8%, to ~~$12.5~~$11.9 million in ~~2022,~~2023, primarily reflecting ~~lower spares sales.~~timing of government orders for certain programs.

Cost of sales ~~decreased~~increased by ~~$2.0~~$13.6 million, or ~~2.0%~~14.0%, to ~~$97.4~~$111.0 million in ~~2022,~~2023, primarily reflecting ~~$5.2~~an unfavorable mix of $9.7 million, or ~~5.2%~~10.0%, increased volumes of ~~favorable mix, $3.5~~$5.7 million, or ~~3.5%~~5.9%, partially offset by $3.1 million, or 3.2%, of productivity ~~benefits, partially offset by a $7.6 million, or 7.7%, increase in material, labor and other manufacturing costs.~~

Selling, general and administrative expense increased by $3.0 million, or 10.5%, to $31.7 million in 2022, primarily reflecting an increase of $2.0 million, or 7.0%, in engineering costs and $1.0 million, or 3.5%, in selling costs.gains.

Operating profit increased by ~~$2.1~~$9.6 million, or ~~8.1%~~34.2%, to ~~$28.1~~$37.7 million in ~~2022,~~2023. The increase primarily ~~reflecting favorable mix~~reflected higher pricing net of ~~$5.2 million~~inflation and productivity ~~benefits~~ of ~~$3.9~~$12.0 million, or 42.7%, coupled with the impact from higher volumes of $6.2 million, or 22%, partially offset by ~~higher manufacturing and engineering costs~~an unfavorable mix of ~~$6.0 million.~~$9.7 million, or 34.5%.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Process Flow Technologies


		First Quarter						Change					First Quarter						Favorable/(Unfavorable) Change
(dollars in millions)	(dollars in millions)	2022			2021			$		%		(dollars in millions)	2023			2022			$		%
Net sales by product line:	Net sales by product line:											Net sales by product line:
Process Valves and Related Products	Process Valves and Related Products	$	182.9		$	174.5		$	8.4	4.8	%	Process Valves and Related Products	$	202.9		$	182.9		$	20.0	10.9	%
Commercial Valves	Commercial Valves	98.2			89.2			9.0		10.1	%	Commercial Valves	30.6			98.2			(67.6)		(68.8)	%
Pumps and Systems	Pumps and Systems	30.2			24.3			5.9		24.3	%	Pumps and Systems	37.9			30.2			7.7		25.5	%
Total net sales	Total net sales	$	311.3		$	288.0		$	23.3	8.1	%	Total net sales	$	271.4		$	311.3		$	(39.9)	(12.8)	%

Cost of sales	Cost of sales	$	196.8		$	190.7		$	6.1	3.2	%	Cost of sales	$	150.1		$	196.8		$	46.7	23.7	%
as a percentage of sales	as a percentage of sales	63.2		%	66.2		%					as a percentage of sales	55.3		%	63.2		%
Selling, general and administrative	Selling, general and administrative	$	65.5		$	60.0		$	5.5	9.2	%	Selling, general and administrative	$	58.0		$	65.5		$	7.5	11.5	%
as a percentage of sales	as a percentage of sales	21.0		%	20.8		%					as a percentage of sales	21.4		%	21.0		%
Restructuring charges (gains)		$	—		$	(12.6)		$	12.6	NM
Operating profit	Operating profit	$	49.0		$	49.9		$	(0.9)	(1.8)	%	Operating profit	$	63.3		$	49.0		$	14.3	29.2	%
Operating margin	Operating margin	15.7		%	17.4		%					Operating margin	23.3		%	15.7		%

Supplemental Data:	Supplemental Data:											Supplemental Data:

Backlog	Backlog	$	372.4		$	325.4		$	47.0	14.4	%	Backlog	$	363.0		$	372.4		$	(9.4)	(2.5)	%

Sales ~~increased~~decreased by ~~$23.3~~$39.9 million, or ~~8.1%~~12.8%, to ~~$311.3~~$271.4 million in ~~2022,~~2023, driven by ~~higher core sales of $28.1~~a $61.7 million, or ~~9.8%~~19.8%, ~~partially offset by~~impact from the sale of Crane Supply and $8.3 million, or 2.7%, of unfavorable foreign currency translation, partially offset by core sales growth of ~~$4.8~~$30.2 million, or ~~1.7%~~9.7%. Core sales growth was driven by higher pricing and volumes.

•Sales of Process Valves and Related Products increased by ~~$8.4~~$20.0 million, or ~~4.8%~~10.9%, to ~~$182.9~~$202.9 million in ~~2022. The~~2023, reflecting an increase ~~reflected higher~~in core sales, ~~of $12.3 million, or 7.0%,~~ partially offset by unfavorable foreign currency translation ~~of $3.9 million, or 2.2%, primarily due to~~as the euro ~~weakening~~weakened against the U.S. dollar. ~~The higher core sales reflected broad-based~~Sales growth was driven primarily by strength ~~across process end markets.~~in the Chemical vertical.

•Sales of Commercial Valves ~~increased~~decreased by ~~$9.0~~$67.6 million, or ~~10.1%~~68.8%, to ~~$98.2~~$30.6 million in ~~2022,~~2023, primarily driven by ~~a core sales increase~~the impact of ~~$9.9~~the divestiture of Crane Supply of $61.7 million, or ~~11.1%~~62.8%, ~~partially offset by~~and, to a lesser extent, unfavorable foreign currency translation ~~of $0.9 million, or 1.0%,~~ as the British pound weakened against the U.S. dollar. ~~The higher core sales primarily reflected improvement in demand in Canadian non-residential construction markets.~~

•Sales of Pumps & Systems increased by ~~$5.9~~$7.7 million, or ~~24.3%~~25.5%, to ~~$30.2~~$37.9 million in ~~2022,~~2023, reflecting ~~broad-based improvement~~an increase in ~~demand~~core sales primarily driven by higher volumes across ~~municipal, non-residential construction, and military~~all key end markets.

Cost of sales ~~increased~~decreased by ~~$6.1~~$46.7 million, or ~~3.2%~~23.7%, to ~~$196.8~~$150.1 million, primarily related to ~~increased volume~~the impact of ~~$9.2~~the sale of Crane Supply of $46.0 million, or ~~4.8%~~23.4%, ~~and an increase in material, labor and other manufacturing costs~~productivity gains of ~~$3.7~~$4.9 million, or ~~1.9%, partially offset by productivity benefits of $4.3 million, or 2.2%~~2.5%, and favorable foreign currency translation of ~~$2.8~~$4.6 million, or ~~1.5%~~2.3%, partially offset by increased material, labor and other manufacturing costs and of $5.4 million, or 2.7%, and the impact of the higher volumes of $4.0 million, or 2.0%.

Selling, general and administrative expense ~~increased~~decreased by ~~$5.5~~$7.5 million, or ~~9.2%~~11.5%, to $65.5 million primarily reflecting an increase of $4.1 million, or 6.8%, in selling costs and $2.6 million, or 4.3%, in administrative costs, partially offset by favorable foreign currency translation of $1.2 million, or 2.1%.

~~Operating profit decreased by $0.9 million, or 1.8%, to $49.0 million in 2022.~~ ~~The decrease reflected the impact of higher net restructuring costs of $12.6~~$58.0 million primarily related to the impact of ~~a net restructuring gain on a~~the sale of ~~real estate recorded~~Crane Supply of $6.0 million, or 9.2%, and favorable foreign currency translation of $1.8 million, or 2.7%.

Operating profit increased by $14.3 million, or 29.2%, to $63.3 million in 2023. The increase is primarily due to higher pricing net of inflation and productivity of $18.6 million, or 38%, the ~~prior year,~~impact of higher volumes of $6.2 million, or 12.7%, partially offset by ~~productivity benefits~~the impact from the sale of ~~$5.0~~Crane Supply of $9.7 million, ~~leverage on higher sales volumes of $4.8 million and restructuring savings of $1.9 million.~~or 19.8%.

3733

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Payment & Merchandising Technologies


		First Quarter						Change					First Quarter						Favorable/(Unfavorable) Change
(dollars in millions)	(dollars in millions)	2022			2021			$		%		(dollars in millions)	2023			2022			$		%
Net sales by product line:	Net sales by product line:											Net sales by product line:
Payment Acceptance and Dispensing Products	Payment Acceptance and Dispensing Products	$	211.0		$	185.0		$	26.0	14.1	%	Payment Acceptance and Dispensing Products	$	223.8		$	211.0		$	12.8	6.1	%
Banknotes and Security Products	Banknotes and Security Products	121.6			152.5			(30.9)		(20.3)	%	Banknotes and Security Products	105.3			121.6			(16.3)		(13.4)	%
Total net sales	Total net sales	$	332.6		$	337.5		$	(4.9)	(1.5)	%	Total net sales	$	329.1		$	332.6		$	(3.5)	(1.1)	%
Cost of sales	Cost of sales	$	179.1		$	180.4		$	(1.3)	(0.7)	%	Cost of sales	$	174.4		$	179.1		$	4.7	2.6	%
as a percentage of sales	as a percentage of sales	53.8		%	53.5		%					as a percentage of sales	53.0		%	53.8		%
Selling, general and administrative	Selling, general and administrative	$	69.3		$	71.7		$	(2.4)	(3.3)	%	Selling, general and administrative	$	75.3		$	69.3		$	(6.0)	(8.7)	%
as a percentage of sales	as a percentage of sales	20.8		%	21.2		%					as a percentage of sales	22.9		%	20.8		%
Restructuring gain, net		$	—		$	(0.5)		$	0.5	NM
Operating profit	Operating profit	$	84.2		$	85.9		$	(1.7)	(2.0)	%	Operating profit	$	79.4		$	84.2		$	(4.8)	(5.7)	%
Operating margin	Operating margin	25.3		%	25.4		%					Operating margin	24.1		%	25.3		%

Supplemental Data:	Supplemental Data:											Supplemental Data:

Backlog	Backlog	$	429.0		$	337.0		$	92.0	27.3	%	Backlog	$	556.0		$	429.0		$	127.0	29.6	%

Sales decreased ~~$4.9~~$3.5 million, or ~~1.5%~~1.1%, to ~~$332.6~~$329.1 million in ~~2022,~~2023, driven by unfavorable foreign currency translation of ~~$8.9~~$12.4 million, or ~~2.6%~~3.7%, partially offset by higher core sales of ~~$4.0~~$8.9 million, or ~~1.2%~~2.7%. The higher core sales reflected higher pricing, largely offset by lower volumes.

•Sales of Payment Acceptance and Dispensing Products increased ~~$26.0~~$12.8 million, or ~~14.1%~~6.1%, to ~~$211.0~~$223.8 million in ~~2022.~~2023. The increase reflected higher core sales of ~~$29.2~~$21.7 million, or ~~15.8%~~10.3%, partially offset by unfavorable foreign currency translation of ~~$3.3~~$8.9 million, or ~~1.8%~~4.2%, primarily due to the British pound and Japanese yen ~~and British pound~~ weakening against the U.S. dollar. The core sales increase primarily reflected higher ~~sales to gaming and retail customers and higher pricing.~~component sales.

•Sales of Banknotes and Security Products decreased ~~$30.9~~$16.3 million, or ~~20.3%~~13.4%, to ~~$121.6~~$105.3 million in ~~2022.~~2023. The decrease ~~reflected~~primarily related to lower core sales of ~~$25.3~~$12.8 million, or ~~16.6%~~10.5%, and unfavorable foreign currency translation of ~~$5.6~~$3.5 million, or ~~3.7%~~2.9%, as the euro weakened against the U.S. dollar. The core sales decrease primarily reflected lower sales to ~~international customers, and to a lesser extent, lower sales to~~ the U.S. Government.

Cost of sales decreased by ~~$1.3~~$4.7 million, or ~~0.7%~~2.6%, to ~~$179.1~~$174.4 million, primarily ~~related to productivity benefits~~reflecting lower volumes of ~~$7.0~~$9.0 million, or ~~3.9%~~5.0%, strong productivity of $8.5 million, or 4.7%, and favorable foreign currency translation of ~~$5.8~~$7.4 million, or ~~3.2%, and lower volume of $5.8 million, or 3.2%~~4.1%, partially offset by an ~~increase~~unfavorable mix $14.2 million, or 7.9%, and increased in material, labor and other manufacturing costs of ~~$13.3~~$6.0 million, or ~~7.3%, and unfavorable mix of $4.1 million, or 2.3%~~3.4%.

Selling, general and administrative expense increased by $6.0 million, or 8.7%, to $75.3 million, primarily due to higher selling and administrative expenses of $9.1 million, or 13.1%, partially offset by favorable currency translation of $2.1 million, or 3.0%.

Operating profit decreased by ~~$2.4~~$4.8 million, or ~~3.3%~~5.7%, to ~~$69.3~~$79.4 million in 2023. The decrease primarily ~~reflecting favorable~~reflected an unfavorable mix of $14.2 million, or 16.9%, lower volumes of $12.0 million, or 14.3%, and unfavorable foreign currency translation of ~~$1.3~~$2.9 million, or ~~1.8%.~~

~~Operating profit decreased by $1.7 million, or 2.0%~~3.4%, ~~to $84.2 million in 2022. The decrease primarily reflected the impact of lower sales volumes,~~ partially offset by ~~favorable~~higher pricing net of inflation and ~~strong~~ productivity gains of $24.7 million, or 29.3%.

3834

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Engineered Materials


	First Quarter						Favorable/(Unfavorable) Change
(dollars in millions)	2023			2022			$		%
Net sales by product line:
FRP - Recreational Vehicles	$	20.3		$	35.7		$	(15.4)	(43.1)	%
FRP - Building Products	32.3			27.4			4.9		17.9	%
FRP - Transportation	9.7			7.3			2.4		32.9	%
Total net sales	$	62.3		$	70.4		$	(8.1)	(11.5)	%
Cost of sales	$	45.8		$	52.4		$	6.6	12.6	%
as a percentage of sales	73.5		%	74.4		%
Selling, general and administrative	$	5.1		$	4.6		$	(0.5)	(10.9)	%
as a percentage of sales	8.2		%	6.5		%
Operating profit	$	11.4		$	13.4		$	(2.0)	(14.9)	%
Operating margin	18.3		%	19.0		%

Supplemental Data:

Backlog	$	16.8		$	30.4		$	(13.6)	(44.7)	%

Sales decreased $8.1 million, or 11.5%, to $62.3 million in 2023, reflecting lower volumes, partially offset by higher pricing. The decrease was driven by lower sales to recreational vehicle manufacturers, offset by higher sales to building products customers and transportation customers.

Cost of sales decreased $6.6 million, or 12.6%, to $45.8 million in 2023, primarily related to lower volumes of $10.3 million, or 19.7%, partially offset by higher raw materials, labor, and other manufacturing costs of $5.0 million, or 9.5%.

Operating profit decreased by $2.0 million, or 14.9%, to $11.4 million in 2023, reflecting the impact from the lower volumes offset by higher pricing, net of inflation.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

Three Months Ended
March 31,
(in millions) 2022 2021
Net cash provided by (used for):
Operating activities from continuing operations $ (49.3) $ 47.6
Investing activities from continuing operations (12.5) 29.8
Financing activities from continuing operations (97.8) (44.8)
Discontinued operations (6.7) 2.3
Effect of exchange rates on cash and cash equivalents (5.1) (7.5)
(Decrease) increase in cash and cash equivalents $ (171.4) $ 27.4


	Three Months Ended
	March 31,
(in millions)	2023		2022
Net cash (used for) provided by:
Operating activities	$	(70.8)	$	(55.5)
Investing activities	(12.8)		(13.0)
Financing activities	(67.8)		(97.8)
Effect of exchange rates on cash and cash equivalents	4.0		(5.1)
Decrease in cash and cash equivalents	$	(147.4)	$	(171.4)

Our operating philosophy is to deploy cash provided from operating activities, when appropriate, to provide value to shareholders by reinvesting in existing businesses, by making acquisitions that will strengthen and complement our portfolio, by divesting businesses that are no longer strategic or aligned with our portfolio and where such divestitures can generate capacity for strategic investments and initiatives that further optimize our portfolio, and by paying dividends and/or repurchasing shares. At any given time, and from time to time, we may be evaluating one or more of these opportunities, although we cannot assure you if or when we will consummate any such ~~transaction.~~transactions.

Our current cash balance, together with cash we expect to generate from future operations along with our ~~commercial paper program or~~ borrowings available under our revolving credit facility is expected to be sufficient to finance our short- and long-term capital requirements, as well as to fund ~~payments associated with our asbestos and environmental liabilities and~~ expected pension contributions. ~~In addition, we believe our investment grade credit ratings afford us adequate access to public and private debt markets.~~

In July 2021, we entered ~~into~~ a $650 million, 5-year Revolving Credit Agreement, which replaced the existing $550 million revolving credit facility. The $650 million revolving credit facility and the CP Program were replaced by commitments under a new $500 million, 5-year Revolving Credit Agreement that was entered into on March 17, 2023, with funding available upon consummation of the Separation, subject to customary conditions precedent for facilities of this type. As of the Separation, the CP Program is no longer available.

We also ~~increased~~entered into a $350 million, 3-year term loan facility. Funding under each facility became available in connection with the ~~size~~Separation, upon the satisfaction of ~~our Commercial Paper Program (“CP Program”) to permit~~customary conditions of facilities of this type. On March 31, 2023, Crane Holdings, Co. borrowed the ~~issuance~~full amount of short-term, unsecured commercial paper notes in an aggregate principal amount outstanding not to exceed $650 million at any time (up from $550 million, previously). Please see Note 12 for additional details.the Term Facility.

In ~~April 2020, to enhance financial flexibility and maintain maximum liquidity in response to the uncertainty in the global markets resulting from the COVID-19 pandemic,~~ August 2022, we entered into a $400 million senior unsecured 364-day ~~credit facility (the “364-Day~~ Credit ~~Agreement”).~~Agreement. The proceeds were used to partially fund the $550 million contribution related to the Redco Sale. See Note 10 and Note 11 to our Condensed Consolidated Financial Statements for additional details. On ~~April 15, 2021,~~March 31, 2023, we repaid the amount outstanding under the 364-Day Credit Agreement.

On April 3, 2023, prior to the consummation of the Separation, Crane Company paid a dividend to Crane Holdings, Co. in the amount of $275 million.

On April 4, 2023, we redeemed all of our outstanding 4.45% senior notes due 2023, of which $300 million aggregate principal amount was outstanding upon redemption.

Operating Activities

Cash used for operating activities ~~from continuing operations~~ was ~~$49.3~~$70.8 million in the first three months of ~~2022,~~2023, as compared to ~~provided by $47.6~~$55.5 million during the same period last year. The increase in cash used for operating activities ~~from continuing operations~~ was primarily driven by ~~higher~~increased working capital investments supporting higher levels ~~reflecting higher inventory and higher bonus payments related to strong 2021 performance, partially offset by lower pension contributions. Net asbestos-related payments in the first three months~~ of 2022 and 2021 were $7.5 million and $10.8 million, respectively. In 2022, we expect to make payments related to asbestos settlement and defense costs, net of related insurance recoveries, of approximately $45 million.demand across most businesses.

Investing Activities

Cash flows relating to investing activities ~~from continuing operations~~ consist primarily of cash used for capital ~~expenditures.~~expenditures and cash provided by divestitures of assets. Cash used for investing activities ~~from continuing operations~~ was ~~$12.5~~$12.8 million in the first three months of ~~2022,~~2023, as compared to ~~cash provided by investing activities from continuing operations of $29.8 million~~$13.0 in the comparable period of 2021. The increase in cash used was primarily related to $20 million of net proceeds from the sale of marketable securities and $14.5 million of proceeds from the disposition of capital assets during the first three months of 2021, both of which did not repeat in the first quarter of 2022. ~~These were partially offset by a $7.8 million increase in capital expenditures.~~ Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development, and improving information systems. ~~We expect capital expenditures of approximately $60 million in 2022.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Financing Activities

Financing cash flows consist primarily of dividend payments to shareholders, share repurchases and repayments of indebtedness, proceeds from the issuance of long-term debt and commercial paper and proceeds from the issuance of common stock. Cash used for financing activities ~~from continuing operations~~ was ~~$97.8~~$67.8 million during the first three months of ~~2022,~~2023 compared to ~~$44.8~~$97.8 million in the comparable period of ~~2021.~~2022. The ~~increase~~decreased in cash used for financing activities ~~from continuing operations~~ was primarily driven by the absence of $175.8 million ofin cash used for share repurchases ~~partially offset by $104.0 million of net borrowings from~~in the ~~issuance of commercial paper.~~prior year.

Recent Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note 1 to our Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the information called for by this item since the disclosure in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 4. Controls and Procedures

Disclosure Controls and Procedures. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that the information is accumulated and communicated to the Company’s Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that these controls are effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting. During the fiscal quarter ended March 31, ~~2022,~~2023, there have been no changes in the Company’s internal control over financial reporting, identified in connection with our evaluation thereof, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

4138

Part II: Other Information

Item 1. Legal Proceedings

Discussion of legal matters is incorporated by reference from Part 1, Item 1, Note ~~11,~~10, “Commitments and Contingencies”, of this Quarterly Report on Form 10-Q, and should be considered an integral part of Part II, Item 1, “Legal Proceedings.”

Item 1A. Risk Factors

Information regarding risk factors appears in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable

(b) Not applicable

~~On October 25, 2021, the Company announced that its Board of Directors authorized the Company to purchase up to $300 million of its common stock through a~~We did not make any open-market share repurchase program (the “Program”) that calls for shares to be purchased in the open market from time-to-time at prevailing prices in accordance with federal securities laws. All remaining shares as of March 31, 2022, were repurchased in April prior to the Program expiring on April 22, 2022.

~~The following table only includes the open market~~ repurchases of our common stock during the ~~three months~~quarter ended March 31, ~~2022:~~
Total number
of shares
purchased (a)
Average
price paid per
share (b)
Total number of
shares purchased
as part of publicly
announced plans
or programs Maximum
dollar value of
shares that may yet
be purchased under
the plans or
programs (in millions)
January 1-31 628,179 $ 102.91 1,587,592 $ 137.4
February 1-28 504,792 $ 102.51 2,092,384 $ 85.7
March 1-31 660,246 $ 105.78 2,752,630 $ 15.8
Total January 1 — March 31, 2022 1,793,217 $ 103.86

~~(a)~~ ~~Shares repurchased are based on the trade date~~

~~(b)~~ ~~Excludes any fees, commissions or other expenses associated with share repurchases~~

2023. We routinely receive shares of our common stock as payment for stock option exercises and the withholding taxes due on stock option exercises and the vesting of restricted share units from stock-based compensation program participants.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable

4239

Item 6. Exhibits


Exhibit ~~10.1~~2.1						~~Agreement~~Separation and ~~Plan of Merger,~~Distribution Agreement, dated as of ~~February 28, 2022,~~April 3, 2023, by and ~~among~~between Crane ~~Co., Crane Holdings,~~NXT, Co. and Crane ~~Transaction~~ Company ~~LLC~~ (incorporated by reference to ~~the Registrant’s~~Exhibit 2.1 to Crane NXT, Co.’s Current Report on Form 8-K filed ~~February 28,~~on April 3, 2023).
Exhibit 3.1						Amended and Restated Certificate of Incorporation of Crane NXT, Co. (incorporated by reference to Exhibit 3.1 to Crane Holdings, Co.'s Current Report on Form 8-K12G3 filed on May 16, 2022).
Exhibit 3.2						Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Crane NXT, Co. (incorporated by reference to Exhibit 3.2 to Crane NXT, Co.’s Current Report on Form 8-K filed on April 3, 2023).
Exhibit 3.3						Amended and Restated By-laws of Crane NXT, Co., dated as of April 3, 2023 (incorporated by reference to Exhibit 3.3 to Crane NXT, Co.’s Current Report on Form 8-K filed on April 3, 2023).
Exhibit 10.1*						Offer Letter between Crane NXT, Co. and Christina Cristiano.
Exhibit 10.2*						Offer Letter between Crane NXT, Co. and Paul Igoe.
Exhibit 10.3*						Offer Letter between Crane NXT, Co. and Jennifer Kartono.
Exhibit 10.4*						Offer Letter between Crane NXT, Co. and Bianca Shardelow.
Exhibit 10.5*						Crane NXT, Co. Benefit Equalization Plan.
Exhibit 10.6*						Crane NXT, Co. Annual Incentive Plan.
Exhibit 10.7						Credit Agreement, dated as of March 17, 2023, by and among Crane NXT, Co., as borrower, the lenders and issuing banks party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the other agents and arrangers party thereto.
Exhibit 10.8						Transition Services Agreement, dated as of April 3, 2023, by and between Crane NXT, Co. and Crane Company (incorporated by reference to Exhibit 10.1 to Crane NXT, Co.’s Current Report on Form 8-K filed on April 3, 2023).
Exhibit 10.9						Tax Matters Agreement, dated as of April 3, 2023, by and between Crane NXT, Co. and Crane Company (incorporated by reference to Exhibit 10.2 to Crane NXT, Co.’s Current Report on Form 8-K filed on April 3, 2023).
Exhibit 10.10						Employee Matters Agreement, dated as of April 3, 2023, by and between Crane NXT, Co. and Crane Company (incorporated by reference to Exhibit 10.3 to Crane NXT, Co.’s Current Report on Form 8-K filed on April 3, 2023).
Exhibit 10.11						Intellectual Property Matters Agreement, dated as of April 3, 2023, by and between Crane NXT, Co. and Crane Company (incorporated by reference to Exhibit 10.4 to Crane NXT, Co.’s Current Report on Form 8-K filed on April 3, 2023).
Exhibit 10.12						Collateral Agreement, dated as of March 31, 2023, by and among Crane NXT, Co., the subsidiary grantors party thereto and JPMorgan Chase, N.A., as administrative agent (incorporated by reference to Exhibit 10.5 to Crane NXT, Co.’s Current Report on Form 8-K filed on April 3, 2023).
Exhibit 31.1*						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)
Exhibit 31.2*						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)
Exhibit 32.1**						Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or 15d-14(b)
Exhibit 32.2**						Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b)
101.INS						XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema (filed herewith)
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith)
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101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith)
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed with this report

** Furnished with this report

4340

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		CRANE NXT, CO.
		REGISTRANT

Date
May ~~4, 2022~~10, 2023	By	/s/ ~~Max H. Mitchell~~Aaron Saak
		~~Max H. Mitchell~~Aaron Saak
		President and Chief Executive Officer

Date	By	/s/ ~~Richard A. Maue~~Christina Cristiano
May ~~4, 2022~~10, 2023		~~Richard A. Maue~~Christina Cristiano
		Senior Vice President and Chief Financial Officer

4441


	Three Months Ended		Year Ended
	March 31,		December 31,
	2022	2021		2021
Beginning claims	29,958	29,138		29,138
New claims	657	733		2,975
Settlements	(201)	(160)		(980)
Dismissals	(102)	(304)		(1,175)

Ending claims	30,312	29,407		29,958


	Three months ended March 31, 2022						Three months ended March 31, 2021
(in millions)	Severance		Other		Total		Severance		Other		Total


Payment & Merchandising Technologies	$	—	$	—	$	—	$	(0.5)	$	—	$	(0.5)
2020 Repositioning	$	—	$	—	$	—	$	(0.5)	$	—	$	(0.5)

Process Flow Technologies	$	—	$	—	$	—	$	0.1	$	—	$	0.1
2019 Repositioning	$	—	$	—	$	—	$	0.1	$	—	$	0.1


Process Flow Technologies 1	$	—	$	—	$	—	$	—	$	(12.7)	$	(12.7)

2017 Repositioning	$	—	$	—	$	—	$	—	$	(12.7)	$	(12.7)

Total	$	—	$	—	$	—	$	(0.4)	$	(12.7)	$	(13.1)


	Total number of shares purchased (a)	Average price paid per share (b)		Total number of shares purchased as part of publicly announced plans or programs	Maximum dollar value of shares that may yet be purchased under the plans or programs (in millions)
January 1-31	628,179	$	102.91	1,587,592	$	137.4
February 1-28	504,792	$	102.51	2,092,384	$	85.7
March 1-31	660,246	$	105.78	2,752,630	$	15.8
Total January 1 — March 31, 2022	1,793,217	$	103.86