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 ~~September 30, 2022~~March 31, 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 ~~HOLDINGS,~~NXT, CO.

(Exact name of registrant as specified in its charter)



Delaware						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 ~~October 31, 2022~~April 30, 2023

Common stock, $1.00 Par Value – ~~56,144,427~~56,730,163 shares

Crane ~~Holdings,~~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 ~~(Loss)~~ 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 28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Page 4638

Item 4.

Controls and Procedures

Page 4638

Part II - Other Information

Page 4739

Page 4739

Unregistered Sales of Equity Securities and Use of Proceeds

Page 4739

Item 3.

Defaults Upon Senior Securities

Page 4739

Item 4.

Mine Safety Disclosures

Page 4739

Page 4739

Page 4840

Page 4941

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				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
(in millions, except per share data)	(in millions, except per share data)	2022		2021		2022		2021		(in millions, except per share data)	2023		2022
Net sales	Net sales	$	815.1	$	893.8	$	2,550.8	$	2,582.8	Net sales	$	842.9	$	871.5
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of sales	Cost of sales	485.6		556.3		1,547.4		1,593.5		Cost of sales	481.3		526.2
Selling, general and administrative	Selling, general and administrative	198.3		193.8		600.8		567.8		Selling, general and administrative	209.4		198.3

Loss on divestiture of asbestos-related assets and liabilities		162.4		—		162.4		—
Restructuring gains, net		—		(1.1)		—		(14.3)
Operating (loss) profit		(31.2)		144.8		240.2		435.8

Operating profit										Operating profit	152.2		147.0
Other (expense) income:	Other (expense) income:									Other (expense) income:
Interest income	Interest income	1.4		0.2		2.3		1.1		Interest income	1.0		0.3
Interest expense	Interest expense	(13.5)		(11.0)		(36.0)		(36.0)		Interest expense	(17.0)		(11.1)
Gain on sale of business		3.8		—		232.5		—
Miscellaneous income, net		4.5		3.6		22.8		17.2
Total other (expense) income		(3.8)		(7.2)		221.6		(17.7)
(Loss) Income before income taxes		(35.0)		137.6		461.8		418.1

Miscellaneous (expense) income, net										Miscellaneous (expense) income, net	(2.4)		3.5
Total other expense, net										Total other expense, net	(18.4)		(7.3)
Income before income taxes										Income before income taxes	133.8		139.7
Provision for income taxes	Provision for income taxes	24.3		21.0		157.9		54.8		Provision for income taxes	28.1		34.7

Net (loss) income attributable to common shareholders		$	(59.3)	$	116.6	$	303.9	$	363.3
Net income attributable to common shareholders										Net income attributable to common shareholders	$	105.7	$	105.0

(Loss) earnings per share:
Earnings per share:										Earnings per share:

Basic	Basic	$	(1.06)	$	1.99	$	5.38	$	6.21	Basic	$	1.87	$	1.84
Diluted	Diluted	$	(1.06)	$	1.96	$	5.30	$	6.14	Diluted	$	1.84	$	1.81

Average shares outstanding:	Average shares outstanding:									Average shares outstanding:
Basic	Basic	56.1		58.7		56.5		58.5		Basic	56.5		57.1
Diluted	Diluted	56.1		59.5		57.3		59.2		Diluted	57.3		57.9

Dividends per share	Dividends per share	$	0.47	$	0.43	$	1.41	$	1.29	Dividends per share	$	0.47	$	0.47

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

~~CRANE HOLDINGS, CO. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME~~

~~(UNAUDITED)~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2022 2021 2022 2021
Net (loss) income before allocation to noncontrolling interests $ (59.3) $ 116.6 $ 303.9 $ 363.3
Components of other comprehensive income (loss), net of tax
Currency translation adjustment (77.7) (24.8) (175.2) (52.1)
Changes in pension and postretirement plan assets and benefit obligation, net of tax 2.3 5.2 9.1 15.3
Other comprehensive (loss) income, net of tax (75.4) (19.6) (166.1) (36.8)
Comprehensive (loss) income before allocation to noncontrolling interests (134.7) 97.0 137.8 326.5
Less: Noncontrolling interests in comprehensive (loss) income (0.3) (0.1) (0.3) 0.6
Comprehensive (loss) income attributable to common shareholders $ (134.4) $ 97.1 $ 138.1 $ 325.9

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO. AND SUBSIDIARIES

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

(UNAUDITED)

(in millions) September 30,
2022 December 31,
2021
Assets
Current assets:
Cash and cash equivalents $ 438.6 $ 478.6
Accounts receivable, net of allowance for doubtful accounts of $11.2 as of September 30, 2022 and $10.4 as of December 31, 2021 486.9 483.0
Current insurance receivable - asbestos — 13.7
Inventories, net:
Finished goods 90.0 147.3
Finished parts and subassemblies 73.8 59.5
Work in process 41.6 37.0
Raw materials 230.3 205.3
Inventories, net 435.7 449.1
Other current assets 121.1 118.7
Total current assets 1,482.3 1,543.1
Property, plant and equipment:
Cost 1,219.1 1,288.5
Less: accumulated depreciation 725.2 732.9
Property, plant and equipment, net 493.9 555.6
Long-term insurance receivable - asbestos — 60.0
Long-term deferred tax assets 5.8 17.7
Other assets 233.4 259.3
Intangible assets, net 419.9 467.1
Goodwill 1,497.1 1,583.8
Total assets $ 4,132.4 $ 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) September 30,
2022 December 31,
2021
Liabilities and equity
Current liabilities:
Short-term borrowings $ 399.5 $ —
Accounts payable 241.1 273.7
Current asbestos liability — 62.3
Accrued liabilities 395.9 442.7
U.S. and foreign taxes on income 39.3 10.6
Total current liabilities 1,075.8 789.3
Long-term debt 843.2 842.4
Accrued pension and postretirement benefits 192.3 231.9
Long-term deferred tax liability 165.7 76.9
Long-term asbestos liability — 549.8
Other liabilities 144.6 161.2
Total liabilities 2,421.6 2,651.5
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, 72,426,139 shares issued 72.4 72.4
Capital surplus 368.2 363.9
Retained earnings 2,752.0 2,527.3
Accumulated other comprehensive loss (606.0) (440.2)
Treasury stock (878.3) (691.1)
Total shareholders’ equity 1,708.3 1,832.3
Noncontrolling interests 2.5 2.8
Total equity 1,710.8 1,835.1
Total liabilities and equity $ 4,132.4 $ 4,486.6
Share data:
Common shares issued 72,426,139 72,426,139
Less: Common shares held in treasury 16,289,559 14,590,274
Common shares outstanding 56,136,580 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)


		Nine Months Ended					Three Months Ended
		September 30,					March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Operating activities:	Operating activities:					Operating activities:
Net income attributable to common shareholders	Net income attributable to common shareholders	$	303.9	$	363.3	Net income attributable to common shareholders	$	105.7	$	105.0
Loss on divestiture of asbestos-related assets and liabilities		148.9		—
Gain on sale of business		(232.5)		—
Gain on sale of property		—		(18.5)

Depreciation and amortization	Depreciation and amortization	89.8		91.4		Depreciation and amortization	28.6		28.6
Stock-based compensation expense	Stock-based compensation expense	17.8		18.6		Stock-based compensation expense	6.3		5.9
Defined benefit plans and postretirement credit	Defined benefit plans and postretirement credit	(10.5)		(6.0)		Defined benefit plans and postretirement credit	5.3		(2.7)
Deferred income taxes	Deferred income taxes	20.2		(25.9)		Deferred income taxes	(0.1)		(0.9)
Cash used for operating working capital	Cash used for operating working capital	(135.0)		(39.4)		Cash used for operating working capital	(215.0)		(183.7)
Defined benefit plans and postretirement contributions	Defined benefit plans and postretirement contributions	(19.3)		(22.8)		Defined benefit plans and postretirement contributions	(1.8)		(2.8)
Environmental payments, net of reimbursements	Environmental payments, net of reimbursements	(5.4)		(4.6)		Environmental payments, net of reimbursements	(1.3)		(1.3)
Asbestos related payments, net of insurance recoveries	Asbestos related payments, net of insurance recoveries	(29.3)		(29.6)		Asbestos related payments, net of insurance recoveries	—		(7.5)
Divestiture of asbestos-related assets and liabilities		(550.0)		—

Other	Other	23.4		0.5		Other	1.5		3.9
Total (used for) provided by operating activities		(378.0)		327.0
Total used for operating activities						Total used for operating activities	(70.8)		(55.5)
Investing activities:	Investing activities:					Investing activities:

Proceeds from disposition of capital assets	Proceeds from disposition of capital assets	0.1		23.3		Proceeds from disposition of capital assets	0.1		—
Capital expenditures	Capital expenditures	(36.8)		(26.7)		Capital expenditures	(12.9)		(13.0)
Proceeds from sale of business		318.1		—
Purchase of marketable securities		—		(10.0)
Proceeds from sale of marketable securities		—		40.0
Total provided by investing activities		281.4		26.6

Total used for investing activities						Total used for investing activities	(12.8)		(13.0)
Financing activities:	Financing activities:					Financing activities:
Dividends paid	Dividends paid	(79.5)		(75.5)		Dividends paid	(26.6)		(26.7)
Reacquisition of shares on open market	Reacquisition of shares on open market	(203.7)		—		Reacquisition of shares on open market	—		(175.8)
Stock options exercised, net of shares reacquired	Stock options exercised, net of shares reacquired	3.1		9.9		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

Proceeds from term loan	Proceeds from term loan	399.4		—		Proceeds from term loan	350.0		—
Repayment of term loan	Repayment of term loan	—		(348.1)		Repayment of term loan	(400.0)		—
Total provided by (used for) financing activities		119.3		(440.8)

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	(62.7)		(13.0)		Effect of exchange rates on cash and cash equivalents	4.0		(5.1)
Decrease in cash and cash equivalents	Decrease in cash and cash equivalents	(40.0)		(100.2)		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	$	438.6	$	450.8	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)

Nine Months Ended
September 30,
(in millions) 2022 2021
Detail of cash used for operating working capital:
Accounts receivable $ (74.9) $ (106.8)
Inventories (61.5) (21.6)
Other current assets (6.4) (10.9)
Accounts payable 13.8 52.8
Accrued liabilities (21.2) 14.9
U.S. and foreign taxes on income 15.2 32.2
Total $ (135.0) $ (39.4)
Supplemental disclosure of cash flow information:
Interest paid $ 29.9 $ 31.2
Income taxes paid $ 118.1 $ 47.9


	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," ~~"Crane"~~ and the "Company" mean Crane Holdings, Co. ~~and our subsidiaries unless the context specifically states or implies otherwise.~~, 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.

~~Holding Company Reorganization~~

On May 16, 2022, Crane Co., a Delaware corporation (“Crane Co.”), completed its previously announced reorganization merger pursuant to the Agreement and Plan of Merger, dated as of February 28, 2022 (the “Reorganization Agreement”), by and among Crane Co., Crane Holdings, Co., a Delaware corporation (“Crane Holdings”), and Crane Transaction Company, LLC, a Delaware limited liability company and, as of immediately prior to the consummation of such merger, a wholly-owned subsidiary of Crane Holdings (“Merger Sub”). The Reorganization Agreement provided for the merger of Crane Co. and Merger Sub, with Crane Co. surviving the merger as a wholly-owned subsidiary of Crane Holdings (the “Reorganization Merger”).

Following the Reorganization Merger, on May 16, 2022, Crane Co. converted from a Delaware corporation into a Delaware limited liability company named “Crane LLC” (such conversion, together with the Reorganization Merger, the “Reorganization”). Following the Reorganization, substantially all of the assets of Crane LLC were distributed, assigned, transferred, conveyed and delivered to, and certain non-asbestos related liabilities of Crane LLC were assumed by, Crane Holdings. On May 17, 2022, Crane LLC converted from a Delaware limited liability company to a Delaware corporation named “Crane Co.” Subsequently, on May 26, 2022, Crane Co. filed a Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary of State of the State of Delaware, which became effective upon filing, pursuant to which the Crane Co. officially changed its name from “Crane Co.” to “Redco Corporation”. The “Crane Co.” name has been reserved for future use by Crane Holdings.

~~Divestiture of asbestos-related assets and liabilities~~

~~Sale of Crane Supply~~Separation

On April ~~8, 2022,~~3, 2023, the Company, entered into an agreement to sell the Crane Supply business for CAD 380 million on a cash-free and debt-free basis. Subsequent to net working capital and other closing adjustments, the sale closed on May 31, 2022 for CAD 402 million. In August 2022, the Company received CAD 5 million related to a final working capital adjustment. The Company recognized a total gain on sale of $232.5 million.

~~Pending Separation~~

~~On March 30, 2022, the Company announced that its Board of Directors unanimously approved a plan to pursue a separation~~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 Holdings, Co.’s Board of Directors.

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Termination of Agreement to Sell Engineered Materials~~

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. In the second quarter of 2021, the assets and liabilities of the segment were classified as held for sale. On May 26, 2022, Verzatec terminated the sale agreement and paid $7.5 million to the Company in termination fees, which is presented within Miscellaneous income, net on the Condensed Statements of Operations. As such, as of June 30, 2022 the Engineered Materials segment is no longer classified as assets held for sale and is presented herein as continuing operations for all periods presented.

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 - Segment Results

Our segments are reported on the same basis used internally for evaluating performance and for allocating resources. ~~We have~~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.~~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.

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~~provides advance security solutions based on proprietary micro-optic technology for the global banknote ~~security features as well as a provider of security features for product authentication.~~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.~~(Building Products). In the second quarter of 2022, Engineered Materials ~~sells~~segment was no longer classified as held for sale and as such, the ~~majority~~results of ~~its products directly to RV, trailer, and truck manufacturers, and it uses distributors and retailers to serve the commercial and industrial construction markets.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Engineered Materials segment are presented as continuing operations from second quarter of 2022. This change was applied on retroactive basis.

Financial information by reportable segment is set forth below.


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
(in millions)	(in millions)	2022		2021		2022		2021		(in millions)	2023		2022
Net sales:	Net sales:									Net sales:
Aerospace & Electronics	Aerospace & Electronics	$	167.2	$	168.6	$	485.8	$	480.2	Aerospace & Electronics	$	180.1	$	157.2
Process Flow Technologies	Process Flow Technologies	250.0		299.1		857.4		897.9		Process Flow Technologies	271.4		311.3
Payment & Merchandising Technologies	Payment & Merchandising Technologies	335.1		365.8		1,001.7		1,031.4		Payment & Merchandising Technologies	329.1		332.6
Engineered Materials	Engineered Materials	62.8		60.3		205.9		173.3		Engineered Materials	62.3		70.4
Total	Total	$	815.1	$	893.8	$	2,550.8	$	2,582.8	Total	$	842.9	$	871.5

Operating profit (loss):
Operating profit:										Operating profit:
Aerospace & Electronics	Aerospace & Electronics	$	28.2	$	32.5	$	84.4	$	89.3	Aerospace & Electronics	$	37.7	$	28.1
Process Flow Technologies	Process Flow Technologies	41.3		44.3		130.9		140.9		Process Flow Technologies	63.3		49.0
Payment & Merchandising Technologies	Payment & Merchandising Technologies	86.7		83.7		251.6		247.4		Payment & Merchandising Technologies	79.4		84.2
Engineered Materials	Engineered Materials	6.7		6.6		26.9		20.7		Engineered Materials	11.4		13.4
Corporate	Corporate	(194.1)		(22.3)		(253.6)		(62.5)		Corporate	(39.6)		(27.7)
Total	Total	$	(31.2)	$	144.8	$	240.2	$	435.8	Total	$	152.2	$	147.0
Interest income	Interest income	1.4		0.2		2.3		1.1		Interest income	1.0		0.3
Interest expense	Interest expense	(13.5)		(11.0)		(36.0)		(36.0)		Interest expense	(17.0)		(11.1)
Gain on sale of business		3.8		—		232.5		—
Miscellaneous income, net		4.5		3.6		22.8		17.2
(Loss) income before income taxes		$	(35.0)	$	137.6	$	461.8	$	418.1

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)	(in millions)	September 30, 2022		December 31, 2021		(in millions)	March 31, 2023		December 31, 2022
Assets:	Assets:					Assets:
Aerospace & Electronics	Aerospace & Electronics	$	642.0	$	604.7	Aerospace & Electronics	$	698.9	$	663.3
Process Flow Technologies	Process Flow Technologies	1,057.4		1,240.4		Process Flow Technologies	1,073.3		1,064.7
Payment & Merchandising Technologies	Payment & Merchandising Technologies	2,043.8		2,096.5		Payment & Merchandising Technologies	2,103.5		2,125.9
Engineered Materials	Engineered Materials	226.9		220.5		Engineered Materials	231.2		218.6
Corporate	Corporate	162.3		324.5		Corporate	229.1		317.7

Total	Total	$	4,132.4	$	4,486.6	Total	$	4,336.0	$	4,390.2


(in millions)	(in millions)	September 30, 2022		December 31, 2021		(in millions)	March 31, 2023		December 31, 2022
Goodwill:	Goodwill:					Goodwill:
Aerospace & Electronics	Aerospace & Electronics	$	202.2	$	202.5	Aerospace & Electronics	$	202.3	$	202.3
Process Flow Technologies	Process Flow Technologies	305.3		349.4		Process Flow Technologies	319.5		317.3
Payment & Merchandising Technologies	Payment & Merchandising Technologies	818.4		860.6		Payment & Merchandising Technologies	837.8		836.6
Engineered Materials	Engineered Materials	171.2		171.3		Engineered Materials	171.3		171.3
Total	Total	$	1,497.1	$	1,583.8	Total	$	1,530.9	$	1,527.5

1112

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Revenue

Disaggregation of Revenues

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


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
(in millions)	(in millions)	2022		2021		2022		2021		(in millions)	2023		2022
Aerospace & Electronics	Aerospace & Electronics									Aerospace & Electronics
Commercial Original Equipment	Commercial Original Equipment	$	63.7	$	62.2	$	182.9	$	170.5	Commercial Original Equipment	$	68.4	$	58.7
Military and Other Original Equipment	Military and Other Original Equipment	57.1		58.4		171.5		184.0		Military and Other Original Equipment	61.9		57.4
Commercial Aftermarket Products	Commercial Aftermarket Products	34.8		30.2		92.5		75.1		Commercial Aftermarket Products	37.9		28.6
Military Aftermarket Products	Military Aftermarket Products	11.6		17.8		38.9		50.6		Military Aftermarket Products	11.9		12.5
Total Aerospace & Electronics	Total Aerospace & Electronics	$	167.2	$	168.6	$	485.8	$	480.2	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	$	186.2	$	176.6	$	555.8	$	535.4	Process Valves and Related Products	$	202.9	$	182.9
Commercial Valves	Commercial Valves	30.4		95.8		205.8		283.3		Commercial Valves	30.6		98.2
Pumps and Systems	Pumps and Systems	33.4		26.7		95.8		79.2		Pumps and Systems	37.9		30.2
Total Process Flow Technologies	Total Process Flow Technologies	$	250.0	$	299.1	$	857.4	$	897.9	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	$	220.8	$	206.0	$	643.2	$	588.3	Payment Acceptance and Dispensing Products	$	223.8	$	211.0
Banknotes and Security Products	Banknotes and Security Products	114.3		159.8		358.5		443.1		Banknotes and Security Products	105.3		121.6
Total Payment & Merchandising Technologies	Total Payment & Merchandising Technologies	$	335.1	$	365.8	$	1,001.7	$	1,031.4	Total Payment & Merchandising Technologies	$	329.1	$	332.6

Engineered Materials	Engineered Materials									Engineered Materials
FRP - Recreational Vehicles	FRP - Recreational Vehicles	$	24.9	$	28.9	$	92.8	$	78.1	FRP - Recreational Vehicles	$	20.3	$	35.7
FRP - Building Products	FRP - Building Products	29.0		23.7		88.2		72.0		FRP - Building Products	32.3		27.4
FRP - Transportation	FRP - Transportation	8.9		7.7		24.9		23.2		FRP - Transportation	9.7		7.3
Total Engineered Materials	Total Engineered Materials	62.8		60.3		205.9		173.3		Total Engineered Materials	$	62.3	$	70.4
Net sales	Net sales	$	815.1	$	893.8	$	2,550.8	$	2,582.8	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 ~~September 30, 2022,~~March 31, 2023, total backlog was ~~$1,463.6~~$1,580.5 million. We expect to recognize approximately ~~40%~~84% of our remaining performance obligations as revenue in ~~the fourth quarter of 2022,~~2023, an additional ~~53%~~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)	(in millions)	September 30, 2022		December 31, 2021		(in millions)	March 31, 2023		December 31, 2022
Contract assets	Contract assets	$	85.9	$	73.0	Contract assets	$	97.0	$	88.6
Contract liabilities	Contract liabilities	$	117.6	$	101.1	Contract liabilities	$	150.4	$	142.9

1213

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We recognized revenue of ~~$19.4 million and $74.4~~$38.1 million during the ~~three-and nine-month periods~~three-month period ended ~~September 30, 2022, respectively,~~March 31, 2023, related to contract liabilities as of December 31, ~~2021.~~2022.

Note 4 - 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. ~~Potentially dilutive common shares are~~


	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

Stock options, restricted share units, deferred stock units and performance-based restricted share units that were excluded from the ~~computations~~calculation of diluted earnings per share ifbecause their effect ~~would be anti-dilutive. For the three months ended September 30, 2022, the Company had a net loss attributable to common shareholders which causes all potentially~~ is anti‑dilutive ~~securities to be anti-dilutive and are therefore not included in the calculation of earnings per share.~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except per share data) 2022 2021 2022 2021
Net (loss) income attributable to common shareholders $ (59.3) $ 116.6 $ 303.9 $ 363.3
Average basic shares outstanding 56.1 58.7 56.5 58.5
Effect of dilutive share-based awards — 0.8 0.8 0.7
Average diluted shares outstanding 56.1 59.5 57.3 59.2
(Loss) earnings per basic share $ (1.06) $ 1.99 $ 5.38 $ 6.21
(Loss) earnings per diluted share $ (1.06) $ 1.96 $ 5.30 $ 6.14

~~The computation of diluted earnings per share excludes the effect of the potentially anti-dilutive securities which~~ was ~~1.2~~0.4 million and ~~1.0~~0.3 million for the three months ended ~~September 30,~~March 31, 2023, and 2022, ~~and 2021, respectively, and 0.4 million and 1.4 million for the nine months ending September 30, 2022 and 2021,~~ respectively.

1314

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 5 - Changes in ~~Equity and~~ Accumulated Other Comprehensive Loss

~~A summary of changes in equity for the year-to-date interim periods ended September 30, 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
Net income — — 258.2 — — 258.2 — 258.2
Cash dividends ($0.47 per share) — — (26.4) — — (26.4) — (26.4)
Reacquisition on open market of 1,959,069 shares — — — — (27.9) (27.9) — (27.9)
Exercise of stock options, net of shares reacquired of 94,774 shares — — — — 1.1 1.1 — 1.1
Impact from settlement of share-based awards, net of shares acquired — (1.3) — — 1.2 (0.1) — (0.1)
Stock-based compensation expense — 5.9 — — — 5.9 — 5.9
Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 3.5 — 3.5 — 3.5
Currency translation adjustment — — — (75.8) — (75.8) (0.1) (75.9)
BALANCE JUNE 30, 2022 72.4 $ 369.3 $ 2,837.7 $ (530.9) $ (886.7) $ 1,861.8 $ 2.8 $ 1,864.6
Net loss — — (59.3) — — (59.3) — (59.3)
Cash dividends ($0.47 per share) — — (26.4) — — (26.4) — (26.4)
Exercise of stock options, net of shares reacquired of 81,642 shares — — — — 1.5 1.5 — 1.5
Impact from settlement of share-based awards, net of shares acquired — (7.0) — — 6.9 (0.1) — (0.1)
Stock-based compensation expense — 5.9 — — — 5.9 — 5.9
Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 2.3 — 2.3 — 2.3
Currency translation adjustment — — — (77.4) — (77.4) (0.3) (77.7)
BALANCE SEPTEMBER 30, 2022 72.4 $ 368.2 $ 2,752.0 $ (606.0) $ (878.3) $ 1,708.3 $ 2.5 $ 1,710.8

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

(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, 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
Net income — — 138.3 — — 138.3 — $ 138.3
Cash dividends ($0.43 per share) — — (25.2) — — (25.2) — (25.2)
Impact from settlement of share-based awards, net of shares acquired — 7.6 — — (9.5) (1.9) — (1.9)
Stock-based compensation expense — 6.1 — — — 6.1 — 6.1
Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 5.2 — 5.2 — 5.2
Currency translation adjustment — — — 7.7 — 7.7 (0.1) 7.6
BALANCE JUNE 30, 2021 72.4 $ 348.4 $ 2,389.3 $ (484.3) $ (600.6) $ 1,725.2 $ 2.9 $ 1,728.1
Net income — — 116.6 — — 116.6 — 116.6
Cash dividends ($0.43 per share) — — (25.3) — — (25.3) — (25.3)
Impact from settlement of share-based awards, net of shares acquired — 2.0 — — 2.6 4.6 — 4.6
Stock-based compensation expense — 6.0 — — — 6.0 — 6.0
Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 5.2 — 5.2 — 5.2
Currency translation adjustment — — — (24.7) — (24.7) (0.1) (24.8)
BALANCE SEPTEMBER 30, 2021 72.4 $ 356.4 $ 2,480.6 $ (503.8) $ (598.0) $ 1,807.6 $ 2.8 $ 1,810.4

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	—		(174.9)		(174.9)			Other comprehensive income (loss) before reclassifications	—		12.8		12.8
		Amounts reclassified from accumulated other comprehensive loss	9.1		—		9.1			Amounts reclassified from accumulated other comprehensive loss	2.7		—		2.7
Net period other comprehensive income (loss)	Net period other comprehensive income (loss)		9.1		(174.9)		(165.8)		Net period other comprehensive income (loss)		2.7		12.8		15.5
Balance as of September 30, 2022			$	(292.8)	$	(313.2)	$	(606.0)
Balance as of March 31, 2023									Balance as of March 31, 2023		$	(269.2)	$	(218.6)	$	(487.8)


a			Net of tax benefit of ~~$120.8~~$107.3 million and ~~$117.9~~$106.6 million as of ~~September 30, 2022~~March 31, 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 ended March 31, 2023, and ~~nine month periods ended September 30, 2022, 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 September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in millions)	(in millions)	2022		2021		2022		2021		(in millions)	2023		2022
Amortization of pension items:	Amortization of pension items:									Amortization of pension items:
Prior service costs		$	—	$	(0.1)	$	(0.1)	$	(0.2)

Net loss	Net loss	3.3		6.5		12.9		19.6		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)		(0.8)		(0.8)		Prior service costs	(0.2)		(0.3)

Net gain										Net gain	(0.2)		—
Total before tax	Total before tax	$	3.0	$	6.1	$	12.0	$	18.6	Total before tax	$	3.4	$	4.5
Tax impact	Tax impact	0.8		0.9		2.9		3.3		Tax impact	0.7		1.2
Total reclassifications for the period	Total reclassifications for the period	$	2.2	$	5.2	$	9.1	$	15.3	Total reclassifications for the period	$	2.7	$	3.3

1615

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Defined Benefit and Postretirement Benefits

For all plans, the components of net periodic benefit for the three months ended ~~September 30,~~March 31, 2023, and 2022 ~~and 2021~~ are as follows:

Pension Postretirement
(in millions) 2022 2021 2022 2021
Service cost $ 1.7 $ 1.6 $ — $ 0.1
Interest cost 6.9 5.2 0.2 0.2
Expected return on plan assets (15.7) (14.8) — —
Amortization of prior service cost — (0.1) (0.3) (0.3)
Amortization of net loss 3.3 6.5 — —
Net periodic benefit $ (3.8) $ (1.6) $ (0.1) $ —

~~For all plans, the components of net periodic benefit for the nine months ended September 30, 2022, and 2021 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	$	4.3	$	4.7	$	0.1	$	0.3	Service cost	$	1.3	$	1.3	$	—	$	0.1
Interest cost	Interest cost	17.4		15.7		0.5		0.5		Interest cost	9.5		5.2		0.2		0.2
Expected return on plan assets	Expected return on plan assets	(43.6)		(44.7)		—		—		Expected return on plan assets	(12.2)		(13.9)		—		—
Recognized curtailment gain		—		(0.6)		—		—

Amortization of prior service cost	Amortization of prior service cost	(0.1)		(0.2)		(0.8)		(0.8)		Amortization of prior service cost	—		—		(0.2)		(0.3)
Amortization of net loss		12.9		19.6		—		—
Net periodic benefit		$	(9.1)	$	(5.5)	$	(0.2)	$	—
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 $ 20.1 $ 2.6
Amounts contributed during the nine months ended September 30, 2022 $ 19.3 $ —


(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

1716

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - 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 periods presented.

Our effective tax rates are as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Effective Tax Rate (69.4)% 15.3% 34.2% 13.1%


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

During the third quarter of 2022, the Company divested its asbestos-related assets and liabilities and recorded a pre-tax loss of $162.4 million. Based on existing U.S. income tax guidance, the Company did not record an income tax benefit related to this transaction. However, the Company released a valuation allowance previously recorded against certain state deferred tax assets based on available evidence indicating it to be more likely than not the Company will realize a state income tax benefit for certain non-asbestos related future tax deductions. Specifically, the Company considered the impact of the lack of future asbestos settlement and defense payments on state taxable income, projected future state taxable income exclusive of reversing deferred taxes, the Company’s U.S. business resulting net deferred tax liability position after the asbestos-related transaction, and the lack of separate state income tax filings.

~~The combination of a loss on the asbestos-related transaction and the lack of a related tax benefit resulted in the Company’s negative~~Our effective tax rate for the three months ended ~~September 30, 2022. This negative tax rate represents a tax expense recorded against a book loss. In this context, the Company’s tax rate for the three months ended September 30, 2022~~March 31, 2023 is ~~higher~~lower than the prior year’s comparable period primarily due to the ~~absence of a tax~~greater benefit ~~recorded against the asbestos-related transaction as well as higher non-U.S. taxes,~~related to share-based compensation partially offset by ~~the aforementioned release of a valuation allowance and the statutory U.S. deduction related to our~~higher non-U.S. ~~subsidiaries’ income.~~

taxes.

Our effective tax rate ~~for the nine months ended September 30, 2022 is higher than the prior year’s comparable periods primarily due~~attributable to the absence of a tax benefit recorded against the asbestos-related transaction and the reversal of a deferred tax asset established in a prior period that relates to the sale of a subsidiary, partially offset by the aforementioned release of a valuation allowance and statutory U.S. tax credits and a deduction related to our non-U.S. subsidiaries’ income.

~~Our effective tax rates~~continuing operations for the three ~~and nine~~ months ended ~~September 30, 2022 are higher than~~March 31, 2023 is equal to the statutory U.S. federal tax rate of 21% ~~primarily due to~~. The effective tax rate is the ~~absence~~result of ~~a tax benefit recorded~~permanent increases and decreases that net against ~~the asbestos-related transaction, earnings in jurisdictions with statutory tax rates higher than the United States, expenses that are statutorily non-deductible for income tax purposes~~each other and U.S. state taxes, partially offset by the aforementioned release of valuation allowance, 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 ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, our gross unrecognized tax benefits, excluding interest and penalties, increased by ~~$0.1~~$0.5 million, ~~and $0.2 million, respectively,~~ primarily due to increases in tax positions taken in the current periods, partially offset by ~~tax~~reductions as a result of positions taken during prior ~~period and reductions from expirations of statues of limitations.~~period. During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the total amount of unrecognized tax benefits that, if recognized, would cause our effective tax rate to increase by ~~$0.3~~$0.8 million ~~and $0.6 million, respectively.~~. 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 ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, we recognized ~~$0.3 million and~~ $0.5 million ~~respectively,~~ of interest ~~and penalty~~ expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations. As of ~~September 30, 2022,~~March 31, 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 ~~$5.4~~$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 ~~$6.8~~ $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.

1817

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - 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 ~~September 30, 2022,~~March 31, 2023, we had six reporting units.

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) Aerospace & Electronics Process Flow Technologies Payment & Merchandising Technologies Engineered Materials Total
Balance as of December 31, 2021 $ 202.5 $ 349.4 $ 860.6 $ 171.3 $ 1,583.8
Currency translation (0.3) (21.8) (42.2) (0.1) (64.4)
Disposal on sale of business — (22.3) — — (22.3)
Balance as of September 30, 2022 $ 202.2 $ 305.3 $ 818.4 $ 171.2 $ 1,497.1


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


Currency translation	—		2.2		1.2		—		3.4

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

As of ~~September 30, 2022,~~March 31, 2023, we had ~~$419.9~~$406.5 million of net intangible assets, of which ~~$68.5~~$67.4 million were intangibles with indefinite useful lives. As of December 31, ~~2021,~~2022, we had ~~$467.1~~$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)	Nine Months Ended September 30, 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	$	467.1	$	520.3	Balance at beginning of period, net of accumulated amortization	$	416.6	$	467.1

Amortization expense	Amortization expense	(31.4)		(44.5)		Amortization expense	(10.4)		(41.7)
Currency translation and other	Currency translation and other	(15.8)		(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	$	419.9	$	467.1	Balance at end of period, net of accumulated amortization	$	406.5	$	416.6

1918

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of intangible assets are as follows:


			September 30, 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	15.0	$	132.3	$	57.9	$	74.4	$	136.8	$	59.2	$	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	18.4	622.1		314.0		308.1		651.7		308.8		342.9		Customer relationships and backlog	18.4	636.2		338.3		297.9		635.5		329.8		305.7
Drawings	Drawings	40.0	11.1		10.7		0.4		11.1		10.6		0.5		Drawings	40.0	11.1		10.7		0.4		11.1		10.7		0.4
Other	Other	11.7	136.3		99.3		37.0		142.1		96.0		46.1		Other	11.7	141.8		106.5		35.3		141.3		103.8		37.5
Total	Total	17.9	$	901.8	$	481.9	$	419.9	$	941.7	$	474.6	$	467.1	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		$	10.4
2023		40.7
Remainder of 2023				Remainder of 2023	$	31.4
2024	2024	40.0		2024	41.1
2025	2025	34.8		2025	35.7
2026	2026	34.6		2026	35.5
2027 and after		190.9
2027				2027	34.9
2028 and after				2028 and after	160.5

Note 9 - Accrued Liabilities

Accrued liabilities consist of:


(in millions)	(in millions)	September 30, 2022		December 31, 2021		(in millions)	March 31, 2023		December 31, 2022
Employee related expenses	Employee related expenses	$	127.1	$	181.9	Employee related expenses	$	86.3	$	156.6
Warranty	Warranty	9.1		8.6		Warranty	8.7		7.4
Current lease liabilities	Current lease liabilities	19.1		22.7		Current lease liabilities	16.2		19.0
Contract liabilities	Contract liabilities	117.6		101.1		Contract liabilities	150.4		142.9
Other	Other	123.0		128.4		Other	134.3		138.3
Total	Total	$	395.9	$	442.7	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 and nine months ended September 30, 2022, and 2021.~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2022 2021 2022 2021
Balance at beginning of period $ 8.5 $ 11.8 $ 8.6 $ 9.4
Expense 2.8 1.1 6.3 7.1
Payments / deductions (2.1) (2.1) (5.7) (5.7)
Currency translation (0.1) (0.2) (0.1) (0.2)
Balance at end of period $ 9.1 $ 10.6 $ 9.1 $ 10.6

2019

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Commitments and Contingencies

~~Asbestos Liability~~

On August 12, 2022, Crane Holdings, Co., Crane Company, a wholly-owned subsidiary of Crane Holdings, Co., and Redco, then a wholly-owned subsidiary of Crane Company that held liabilities including asbestos liabilities and related insurance assets, entered into the Redco Purchase Agreement with Redco Buyer, an unrelated third party and 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. In connection with the Redco Sale, Crane Holdings, Co., on behalf of Crane Company, contributed approximately $550 million in cash to Redco, which was funded by a combination of short-term borrowings and cash on hand. Concurrent with the completion of the Redco Sale, Redco Buyer contributed $83 million in cash to Redco. 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. While indemnification by each of Crane Company and Redco Buyer to the other party for breach of representations and warranties is capped at $83 million, in each case, based on the terms and subject to certain limitations as set forth in the Redco Purchase Agreement, liability of each of Crane Company and Redco Buyer for breaches of covenants and obligations and for indemnified liabilities is generally uncapped. Such covenants and obligations include that Redco has agreed to indemnify Crane Company and its affiliates for all claims arising out of asbestos liabilities, and Crane Company has agreed to indemnify Redco and its affiliates for all other historical liabilities of Redco, which include certain potential environmental liabilities. Crane Holdings, Co. has guaranteed the full payment and performance of Crane Company’s indemnification obligations under the Redco Purchase Agreement. Upon consummation of the previously announced separation transaction pursuant to which, among other things, all outstanding shares of Crane Company will be distributed to Crane Holdings, Co.’s stockholders, Crane Holdings, Co. will be released from its guarantee of Crane Company’s indemnification obligations under the Redco Purchase Agreement.

As a result of the Redco Sale, all asbestos obligations and liabilities, related insurance assets and associated deferred tax assets of Redco have been removed from Crane Holdings, Co.’s consolidated balance sheets effective August 12, 2022 and the Company no longer has any obligation with respect to pending and future asbestos claims. As such, Redco has been deconsolidated from our 2022 financial results, as we no longer maintain control of the entity. Therefore, for the period ending September 30, 2022, all asbestos obligations and liabilities, related insurance assets and associated deferred tax assets of Redco are no longer reported on the condensed consolidated balance sheet. The Company recorded a loss on the divestiture of asbestos-related assets and liabilities of $162.4 million in the third quarter of 2022, including transaction expenses of $13.5 million.

~~The following is a summary of the loss on divestiture of asbestos-related assets and liabilities:~~


~~(in millions)~~
~~Cash~~	$	~~(550.0)~~
~~Current insurance receivable~~	~~(13.8)~~
~~Long-term insurance receivable~~	~~(49.4)~~
~~Deferred tax asset~~	~~(107.9)~~
~~Current asbestos liability~~	~~62.5~~
~~Long-term asbestos liability~~	~~509.7~~
~~Loss on divestiture of asbestos-related assets and liabilities, before transaction costs~~	~~(148.9)~~
~~Transaction costs~~	~~(13.5)~~

~~Loss on divestiture of asbestos-related assets and liabilities~~	$	~~(162.4)~~

The gross settlement and defense costs incurred (before insurance recoveries and tax effects) by us as of August 11, 2022 and reflected in the nine-month period ended September 30, 2021 totaled $35.8 million and $35.7 million, respectively. Our total pre-tax payments for settlement and defense costs, net of funds received from insurers, as of August 11, 2022 and reflected in

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~the nine-month period ended September 30, 2021 totaled $29.3 million and $29.6 million, respectively. Detailed below are the comparable amounts for the periods indicated.~~

Quarter-to-Date Period Ended Year-to-Date Period Ended
(in millions) August 11, 2022 September 30, 2021 August 11, 2022 September 30, 2021
Settlement / indemnity costs incurred (1)
$ 6.3 $ 10.6 $ 29.4 $ 24.5
Defense costs incurred (1)
1.0 3.8 6.4 11.2
Total costs incurred $ 7.3 $ 14.4 $ 35.8 $ 35.7
Settlement / indemnity payments $ 6.6 $ 8.9 $ 33.8 $ 28.4
Defense payments 1.1 3.9 6.1 11.3
Insurance receipts (1.8) (3.4) (10.6) (10.1)
Pre-tax cash payments, net $ 5.9 $ 9.4 $ 29.3 $ 29.6
~~(1)~~ ~~Before insurance recoveries and tax effects.~~

~~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 ~~September 30, 2022~~March 31, 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.

~~As a preliminary matter, we note that on~~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 ~~holds~~held liabilities including asbestos liabilities and related insurance assets, entered into the ~~Redco~~a Stock Purchase Agreement (the “Redco Purchase Agreement”) with Spruce Lake Liability Management Holdco LLC (“Redco ~~Buyer,~~Buyer”), an unrelated third party ~~and a~~ 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 ~~that~~ obligations of Crane Company ~~has agreed~~ to indemnify Redco and its affiliates for all other historical liabilities of Redco, which include certain potential environmental liabilities. Crane Holdings, Co. ~~has~~ guaranteed the full payment and performance of Crane Company’s indemnification obligations under the Redco Purchase Agreement. ~~Upon consummation of~~On April 3, 2023, Crane Holdings, Co. completed the ~~previously announced separation transaction~~Separation, pursuant to which, among other things, all outstanding shares of Crane Company ~~will be~~were distributed to Crane Holdings, Co.’s ~~stockholders,~~stockholders. Upon completion of the Separation, pursuant to the terms of the Redco Purchase Agreement, Crane Holdings, ~~Co. will be~~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, ~~ultimately~~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 ato further transfer of this environmental liability to Crane Company upon effectiveness of the ~~separation transaction is expected.~~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 ~~time~~completion of the ~~separation transaction)~~Separation), ~~have~~ agreed to indemnify Redco Buyer against the Goodyear, Roseland, and Crab Orchard environmental liabilities.Thus, references below to “we”, and “us” refer to Crane ~~Holdings, Co.~~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 Crane Co. (n/k/a Redco) acquired UPI’s parent company, UniDynamics Corporation. UPI ~~is now~~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, including components for critical military programs, for the U.S. 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”)

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

issued administrative orders requiring UPI to design and 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 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 ~~$26.0~~$23.7 million and ~~$32.3~~$24.8 million as of ~~September 30, 2022~~March 31, 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 ~~September 30, 2022~~March 31, 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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we recorded a receivable of ~~$5.7~~$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

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 ~~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 (“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.~~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,

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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. WeThe 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 ~~further~~ negotiations will result in a definitive ~~agreement, or~~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 ~~defense and indemnity~~ 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 ~~September 30, 2022,~~March 31, 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 11 - Financing

Our debt consisted of the following:


(in millions)	(in millions)	September 30, 2022		December 31, 2021		(in millions)	March 31, 2023		December 31, 2022

364-Day Credit Agreement		399.5		—
4.45% notes due December 2023 a						4.45% notes due December 2023 a	$	299.8	$	299.7
Term Facility						Term Facility	8.7		—
364-Day Credit Agreement						364-Day Credit Agreement	—		399.6
Total short-term borrowings	Total short-term borrowings	$	399.5	$	—	Total short-term borrowings	$	308.5	$	699.3

4.45% notes due December 2023		$	299.6	$	299.4
6.55% notes due November 2036		198.6		198.5
4.20% notes due March 2048		346.5		346.3
Term Facility a						Term Facility a	$	339.3	$	—
6.55% notes due November 2036 a						6.55% notes due November 2036 a	198.6		198.6
4.20% notes due March 2048 a						4.20% notes due March 2048 a	346.5		346.5
Other deferred financing costs associated with credit facilities	Other deferred financing costs associated with credit facilities	(1.5)		(1.8)		Other deferred financing costs associated with credit facilities	(3.7)		(1.4)
Total long-term debt	Total long-term debt	$	843.2	$	842.4	Total long-term debt	$	880.7	$	543.7

Debt discounts and debt issuance costs totaled $5.9 million and $5.7 million as of September 30, 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.
(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.						(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 ~~new~~ 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 ~~accrues~~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 iswas 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.

2423

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~margin of 1.25% or 1.50% that is determined based upon the Index Debt Rating. The 364-Day Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type.~~

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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, there 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.

Note 12 - 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 ~~$81.6~~$4.9 million and ~~$3.0~~$89.7 million as of ~~September 30, 2022~~March 31, 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 ~~$13.8~~$0.1 million and ~~$0.0~~$5.9 million as of ~~September 30, 2022~~March 31, 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 ~~September 30, 2022~~March 31, 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 $0.4 million and ~~$1.6~~$0.4 million as of ~~September 30, 2022~~March 31, 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 ~~$757.8~~$779.0 million and ~~$984.9~~$753.1 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 13 - 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 included~~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. We recorded restructuring gains of $1.1 million and $1.5 million~~complete the program in the ~~three month and nine month periods ended September 30, 2021, respectively.~~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. There were no charges recorded in the three month periods ended September 30, 2022 or 2021 related to these actions. We recorded a charge of $0.1 million in the nine months ended September 30, 2021 related to these actions.

~~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. There were no charges recorded in the three month periods ended September 30, 2022 or 2021 related to these actions. We recorded a gain of $12.9 million in the nine months ended September 30, 2021 related to these actions.

~~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 September 30, Nine Months Ended September 30,
(in millions) 2022 2021 2022 2021
Process Flow Technologies $ — $ — — (12.6)
Payment & Merchandising Technologies — (1.1) — (1.7)
Total restructuring (gains) charges, net $ — $ (1.1) $ — $ (14.3)

~~The following table summarizes our restructuring gains, net by program, cost type and segment for the nine months ended September 30, 2022 and 2021:~~

Nine Months Ended September 30,2022 Nine Months Ended September 30,2021
(in millions) Severance Other Total Severance Other Total
Payment & Merchandising Technologies $ — $ — $ — $ (0.7) $ (0.8) $ (1.5)
2020 Repositioning $ — $ — $ — $ (0.7) $ (0.8) $ (1.5)
Process Flow Technologies $ — $ — $ — $ 0.1 $ — $ 0.1
2019 Repositioning $ — $ — $ — $ 0.1 $ — $ 0.1
Process Flow Technologies 1
$ — $ — $ — $ — $ (12.7) $ (12.7)
Payment & Merchandising Technologies — — — (0.2) — (0.2)
2017 Repositioning $ — $ — $ — $ (0.2) $ (12.7) $ (12.9)
Total $ — $ — $ — $ (0.8) $ (13.5) $ (14.3)

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 ~~September 30, 2022. We~~March 31, 2023. As of March 31, 2023, we do not expect to incur additional facility consolidation costs to complete these ~~actions as of September 30, 2022.~~actions.


		Cumulative Restructuring Costs, Net							Cumulative Restructuring Costs, Net
(in millions)	(in millions)	Severance		Other		Total		(in millions)	Severance		Other		Total
Aerospace & Electronics		$	6.5	$	—	$	6.5
Process Flow Technologies		3.7		—		3.7
Payment & Merchandising Technologies		15.8		1.8		17.6
2020 Repositioning		$	26.0	$	1.8	$	27.8

Process Flow Technologies		$	16.1	$	—	$	16.1
2019 Repositioning		$	16.1	$	—	$	16.1

Aerospace & Electronics	Aerospace & Electronics	$	1.3	$	(1.4)	$	(0.1)	Aerospace & Electronics	$	1.5	$	—	$	1.5
Process Flow Technologies	Process Flow Technologies	13.1		(12.7)		0.4		Process Flow Technologies	6.3		—		6.3
Payment & Merchandising Technologies	Payment & Merchandising Technologies	11.5		0.7		12.2		Payment & Merchandising Technologies	5.7		0.5		6.2
2017 Repositioning		$	25.9	$	(13.4)	$	12.5
Engineered Materials								Engineered Materials	0.4		—		0.4
2022 Repositioning								2022 Repositioning	$	13.9	$	0.5	$	14.4

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

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 as of 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	(7.1)		(0.6)		(7.7)		Utilization	(4.1)		(1.0)		(5.1)
Balance as of September 30, 2022 (a)		$	4.4	$	0.1	$	4.5
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.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 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 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 periods prior to, at, and after the consummation of the Separation and govern certain relationships between Crane 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 aggregate principal amount was outstanding upon redemption.

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 ~~Holdings,~~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 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; 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 ~~successfully complete our pending separation as planned; being unable to~~ identify or complete acquisitions, or to successfully integrate the businesses we acquire, or complete 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; 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.

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

~~OUTLOOK~~Recent Transactions

~~Overall~~

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 nine months of 2022, we have experienced supply chain disruptions impacting timely access to certain components and raw materials, as well as significant inflationary pressure across most businesses; in response, we have initiated pricing actions to ensure that we cover the higher costs and protect our margin profile.

For 2022, we expect a total year-over-year sales decline of approximately 1% to 2%, driven by a 4% unfavorable impact from the divestiture of Crane Supply and a 3% impact from unfavorable foreign exchange, partially offset by approximately 5% to 6% core growth. On a year-to-date basis through September 30 2022, stronger pricing has been the primary contributor to our core growth across most businesses. We continue to expect higher pricing on a full-year basis to approximately offset the impact of inflation. From a total earnings point of view, we expect a substantial decrease in operating profit driven primarily by the loss on divestiture of asbestos-related assets and liabilities, higher transaction costs related to the separation, lost earnings from the Crane Supply divestiture, and unfavorable mix, partially offset by the impact of core growth, net of inflation and productivity benefits.

~~Aerospace & Electronics~~

In 2022, we expect Aerospace & Electronics core sales to increase in the mid-single digit range as compared to 2021. 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 business to decline given material availability challenges, and difficult 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 price and strong productivity, partially offset by unfavorable mix.~~

~~Process Flow Technologies~~

In 2022, we expect Process Flow Technologies sales to decrease approximately 10%, driven by a 12% unfavorable impact from the divestiture of Crane Supply and a low- to mid-single digit impact from unfavorable foreign exchange, partially offset by mid-single digit core growth. We expect stronger pricing to offset inflationary pressures.

We expect Process Valves and Related Products sales to be approximately flat compared to 2021, with mid-single digit core sales growth approximately offset by a mid-single digit impact from unfavorable foreign exchange. We expect Commercial Valves sales to decline substantially driven primarily by the impact of the Crane Supply divestiture, and to a lesser extent, the impact of unfavorable foreign exchange and slightly weaker demand in Europe. 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 a mid-single digit decline in the segment’s operating profit as compared to 2021, driven primarily by the impact of the Crane Supply divestiture and higher repositioning costs, largely offset by core growth, inclusive of higher pricing, as well as strong productivity.

~~Payment & Merchandising Technologies~~

In 2022, we expect Payment & Merchandising Technologies sales to increase in the low-single digit range as compared to 2021, driven by mid-single digit core sales growth, partially offset by a low- to mid-single digit impact from unfavorable foreign exchange. Higher pricing is expected to offset higher inflation.

At Crane Payment Innovations, we expect core sales growth in the mid-teens range, driven by strength across most vertical markets, together with higher pricing. At Crane Currency, we expect core sales to decline in the high-single digit to the low-double 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 modestly higher compared to 2021, with the impact of core growth inclusive of higher prices, together with strong productivity, to be approximately offset by inflationary pressures and unfavorable sales mix.

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

~~Engineered Materials~~

In 2022, we expect Engineered Materials sales to increase in the low-double digit range as compared to 2021, driven by core growth which includes notable pricing gains to offset the impact of inflation. We expect the core growth to be driven primarily by higher sales to recreational vehicle and building product customers.

~~We expect the segment’s operating profit to increase in the low-teens range driven primarily by higher pricing.~~

~~Holding Company Reorganization~~Separation

On May 16, 2022, Crane Co., a Delaware corporation (“Crane Co.”), completed its previously announced reorganization merger pursuant to the Agreement and Plan of Merger, dated as of February 28, 2022 (the “Reorganization Agreement”), by and among Crane Co.,April 3, 2023, Crane Holdings, Co., a Delaware corporation (“Crane Holdings”), and Crane Transaction Company, LLC, a Delaware limited liability company and, as of immediately prior to the consummation of such merger, a wholly-owned subsidiary of Crane Holdings (“Merger Sub”). The Reorganization Agreement provided for the merger of Crane Co. and Merger Sub, with Crane Co. surviving the merger as a wholly-owned subsidiary of Crane Holdings (the “Reorganization Merger”).

Following the Reorganization Merger, on May 16, 2022, Crane Co. (which, as a result of the Reorganization Merger, became a wholly-owned subsidiary of Crane Holdings) converted from a Delaware corporation into a Delaware limited liability company named “Crane LLC” (such conversion, together with the Reorganization Merger, the “Reorganization”). Following the Reorganization, substantially all of the assets of Crane LLC were distributed, assigned, transferred, conveyed and delivered to, and related liabilities of Crane LLC were assumed by, Crane Holdings. On May 17, 2022, Crane LLC converted from a Delaware limited liability company to a Delaware corporation named “Crane Co.” Subsequently, on May 26, 2022, Crane Co. filed a Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary of State of the State of Delaware, which became effective upon filing, pursuant to which the Company officially changed its name from “Crane Co.” to “Redco Corporation.” The “Crane Co.” name has been reserved for future use by Crane Holdings.

~~Divestiture of asbestos-related assets and liabilities~~

On August 12, 2022, Crane Holdings, Co., Crane Company, a wholly-owned subsidiary of Crane Holdings, Co., and Redco Corporation (“Redco”), then a wholly-owned subsidiary of Crane Company that held liabilities including asbestos liabilities and related insurance assets, entered into a Stock Purchase Agreement (the “Redco Purchase Agreement”) with Spruce Lake Liability Management Holdco LLC (“Redco Buyer”), a 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”). In connection with the Redco Sale, Crane Holdings, Co., on behalf of Crane Company, contributed approximately $550 million in cash to Redco, which was funded by a combination of short-term borrowings and cash on hand. Concurrent with the completion of the Redco Sale, Redco Buyer contributed $83 million in cash to Redco. 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. While indemnification by each of Crane Company and Redco Buyer to the other party for breach of representations and warranties is capped at $83 million, in each case, based on the terms and subject to certain limitations as set forth in the Redco Purchase Agreement, liability of each of Crane Company and Redco Buyer for breaches of covenants and obligations and for indemnified liabilities is generally uncapped. Such covenants and obligations include that Redco has agreed to indemnify Crane Company and its affiliates for all claims arising out of asbestos liabilities, and Crane Company has agreed to indemnify Redco and its affiliates for all other historical liabilities of Redco, which include certain potential environmental liabilities. Crane Holdings, Co. has guaranteed the full payment and performance of Crane Company’s indemnification obligations under the Redco Purchase Agreement. Upon consummation of the previously announced separation transaction pursuant to which, among other things, all outstanding shares of Crane Company will be distributed to Crane Holdings, Co.’s stockholders, Crane Holdings, Co. will be released from its guarantee of Crane Company’s indemnification obligations under the Redco Purchase Agreement.

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

~~The following is a summary of the loss on divestiture of asbestos-related assets and liabilities:~~


~~(in millions)~~
~~Cash~~	$	~~(550.0)~~
~~Current insurance receivable~~	~~(13.8)~~
~~Long-term insurance receivable~~	~~(49.4)~~
~~Deferred tax asset~~	~~(107.9)~~
~~Current asbestos liability~~	~~62.5~~
~~Long-term asbestos liability~~	~~509.7~~
~~Loss on divestiture of asbestos-related assets and liabilities, before transaction costs~~	~~(148.9)~~
~~Transaction costs~~	~~(13.5)~~

~~Loss on divestiture of asbestos-related assets and liabilities~~	$	~~(162.4)~~

~~Sale of Crane Supply~~

On April 8, 2022, the Company entered into an agreement to sell the Crane Supply business for CAD 380 million on a cash-free and debt-free basis. Subsequent to net working capital and other closing adjustments, the sale closed on May 31, 2022 for CAD 402 million. In August 2022, the Company received CAD 5 million related to a final working capital adjustment. The Company recognized a total gain on sale of $232.5 million.

~~Pending Separation~~

~~On March 30, 2022, the Company announced that its Board of Directors unanimously approved a plan to pursue a separation~~separated into two independent, publicly-traded companies ~~(the “Separation”). The Separation is expected to occur through~~in 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~~transaction in which Crane Holdings, Co.~~’s Board~~ retained its Payment & Merchandising Technologies segment and spun-off its Aerospace & Electronics, Process Flow Technologies and Engineered Materials segments to Crane Holdings, Co. stockholders. Upon consummation of ~~Directors.~~

the Separation, each of our stockholders received one share of Crane Company common stock for every one share of our common stock held on March 23, 2023, the record date for the distribution.

3129

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

Results from Operations – Three Month Periods Ended ~~September 30,~~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 ~~third~~first quarter ~~2022~~2023 versus the ~~third~~first quarter ~~2021,~~2022, unless otherwise specified.


		Third Quarter						Change					First Quarter						Favorable/(Unfavorable) Change
(dollars in millions)	(dollars in millions)	2022			2021			$		%		(dollars in millions)	2023			2022			$		%
Net sales	Net sales	$	815.1		$	893.8		$	(78.7)	(8.8)	%	Net sales	$	842.9		$	871.5		$	(28.6)	(3.3)	%

Cost of sales	Cost of sales	485.6			556.3			(70.7)		(12.7)	%	Cost of sales	481.3			526.2			44.9		8.5	%
as a percentage of sales	as a percentage of sales	59.6		%	62.2		%					as a percentage of sales	57.1		%	60.4		%
Selling, general and administrative	Selling, general and administrative	198.3			192.7			5.6		2.9	%	Selling, general and administrative	209.4			198.3			(11.1)		(5.6)	%
as a percentage of sales	as a percentage of sales	24.3		%	21.6		%					as a percentage of sales	24.8		%	22.8		%
Loss on divestiture of asbestos-related assets and liabilities		162.4			—			162.4		NM
Operating (loss) profit		(31.2)			144.8			(176.0)		(121.5)	%

Operating profit												Operating profit	152.2			147.0			5.2		3.5	%
Operating margin	Operating margin	(3.8)		%	16.2		%					Operating margin	18.1		%	16.9		%

Other income (expense):	Other income (expense):											Other income (expense):
Interest income	Interest income	1.4			0.2			1.2		NM		Interest income	1.0			0.3			0.7		233.3	%
Interest expense	Interest expense	(13.5)			(11.0)			(2.5)		(22.7)	%	Interest expense	(17.0)			(11.1)			(5.9)		(53.2)	%
Gain on sale of business		3.8			—			3.8		NM
Miscellaneous income, net		4.5			3.6			0.9		25.0	%

Miscellaneous (expense) income, net												Miscellaneous (expense) income, net	(2.4)			3.5			(5.9)		(168.6)	%
Total other expense	Total other expense	(3.8)			(7.2)			3.4		NM		Total other expense	(18.4)			(7.3)			(11.1)		152.1	%
(Loss) income before income taxes		(35.0)			137.6			(172.6)		(125.4)	%
Income before income taxes												Income before income taxes	133.8			139.7			(5.9)		(4.2)	%
Provision for income taxes	Provision for income taxes	24.3			21.0			3.3		NM		Provision for income taxes	28.1			34.7			6.6		19.0	%

Net (loss) income attributable to common shareholders		$	(59.3)		$	116.6		$	(175.9)	(150.9)	%
Net income attributable to common shareholders												Net income attributable to common shareholders	$	105.7		$	105.0		$	0.7	0.7	%

Sales decreased by $~~78.7~~28.6 million, or ~~8.8%~~3.3%, to ~~$815.1~~$842.9 million in ~~2022. Net sales related to operations outside the United States were 29.3% and 38.1% of total net sales for the quarters ended September 30, 2022, and 2021, respectively.~~2023. The year-over-year change in sales included:

•an increase in core sales of ~~$17.2~~$54.2 million, or ~~1.9%~~6.2%, which was driven primarily ~~comprised of~~by higher pricing;

•unfavorable foreign currency translation of ~~$36.4~~$21.0 million, or ~~4.1%~~2.4%; and

•a decrease in sales ~~of $59.5 million, or 6.7%, primarily~~ related to the ~~sale~~May 2022 divestiture of Crane ~~Supply.~~Supply of $61.7 million, or 7.1%.

Cost of sales decreased by ~~$70.7~~$44.9 million, or ~~12.7%~~8.5%, to ~~$485.6~~$481.3 million in ~~2022.~~2023. The decrease is primarily related to ~~the sale of Crane Supply of $43.2 million, or 7.8%, and favorable foreign currency translation of $21.9 million, or 3.9%.~~

Selling general and administrative expenses increased by $5.6 million, or 2.9%, to $198.3 million in 2022 primarily related to an $10.9 million, or 5.7%, increase in transaction related expenses supporting the planned Separation, partially offset by favorable foreign currency translation of $6.8 million, or 3.5%.

Operating profit decreased by $176.0 million, to a $31.2 million operating loss in 2022. The decrease in operating profit is primarily related to the loss on divestiture of asbestos-related assets and liabilities of $162.4 million, and the impact of the sale of Crane Supply of ~~$11.3 million.~~$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 $17.6 million, or 3.3%.

~~During the third quarter of 2022, the Company completed the divestiture of asbestos-related assets~~Selling, general and ~~liabilities and recorded a loss of $162.4M. Based on existing U.S. income tax guidance, the Company did not record an income tax benefit~~administrative expenses increased by $11.1 million, or 5.6%, to $209.4 million in 2023 primarily related to ~~this transaction. However, the Company released~~ a valuation allowance previously recorded against certain state deferred tax assets based on available evidence indicating it to be more likely than not the Company will realize a state income tax benefit for certain non-asbestos$19.9 million, or 10.0%, increase in administrative expenses, including transaction related ~~future tax deductions. Specifically, the Company considered~~expenses of $11.7 million, or 5.9%, partially offset by the impact of the ~~lack~~sale of ~~future asbestos settlement~~Crane Supply of $6.0 million, or 3.0%, and ~~defense payments on state taxable income, projected future state taxable income exclusive~~favorable foreign currency translation of ~~reversing deferred taxes,~~$4.0 million, or 2.0%.

Operating profit increased by $5.2 million, or 3.5%, to $152.2 million in 2023. The 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 ~~Company’s~~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 share-based compensation.

Our effective tax rate for the three months ended March 31, 2023 is equal to the statutory U.S. ~~business resulting~~federal tax rate of 21%. The effective tax rate is the result of permanent increases and decreases that net ~~deferred tax liability position after the asbestos-related transaction,~~against each other and ~~the lack of separate state income tax filings.~~offset.

3230

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

The combination of a loss on the asbestos-related transaction and the lack of a related tax benefit resulted in the Company’s negative tax rate for the three months ended September 30, 2022. This negative tax rate represents a tax expense recorded against a book loss. In this context, the Company’s tax rate for the three months ended September 30, 2022, is higher than the prior year’s comparable period primarily due to the absence of a tax benefit recorded against the asbestos-related transaction as well as higher non-U.S. taxes, partially offset by the aforementioned release of valuation allowance and the statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

Our effective tax rate for the three months ended September 30, 2022 is higher than the statutory U.S. federal tax rate of 21% primarily due to the absence of a tax benefit recorded against the asbestos-related transaction, earnings in jurisdictions with statutory tax rates higher than the United States, expenses that are statutorily non-deductible for income tax purposes and U.S. state taxes, partially offset by the aforementioned release of valuation allowance, 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
September 30,
(in millions) 2022 2021
Net (loss) income before allocation to noncontrolling interests $ (59.3) $ 116.6
Components of other comprehensive income, net of tax
Currency translation adjustment (77.7) (24.8)
Changes in pension and postretirement plan assets and benefit obligation, net of tax 2.3 5.2
Other comprehensive loss, net of tax (75.4) (19.6)
Comprehensive (loss) income before allocation to noncontrolling interests (134.7) 97.0
Less: Noncontrolling interests in comprehensive income (0.3) (0.1)
Comprehensive (loss) income attributable to common shareholders $ (134.4) $ 97.1


	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

For the three months ended ~~September 30, 2022,~~March 31, 2023, comprehensive ~~loss~~income before allocation to noncontrolling interests was ~~$134.7~~$121.1 million compared to ~~comprehensive income of $97.0~~$86.7 million in the same period of ~~2021.~~2022. The ~~$231.7~~$34.4 million ~~decrease~~increase was primarily driven by ~~lower net income before allocation to noncontrolling interests of $175.9 million driven by the loss on the divestiture of asbestos-related assets and liabilities, and~~ a ~~$52.9~~$34.3 million year-over-year ~~unfavorable~~favorable impact of foreign currency translation, ~~adjustments,~~ primarily related to the British pound and euro.

3331

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

Segment Results of Operations - Three Month Periods Ended ~~September 30,~~March 31,

Aerospace & Electronics


		Third 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	$	63.7		$	62.2		$	1.5	2.4	%	Commercial Original Equipment	$	68.4		$	58.7		$	9.7	16.5	%
Military Original Equipment	Military Original Equipment	57.1			58.4			(1.3)		(2.2)	%	Military Original Equipment	61.9			57.4			4.5		7.8	%
Commercial Aftermarket Products	Commercial Aftermarket Products	34.8			30.2			4.6		15.2	%	Commercial Aftermarket Products	37.9			28.6			9.3		32.5	%
Military Aftermarket Products	Military Aftermarket Products	11.6			17.8			(6.2)		(34.8)	%	Military Aftermarket Products	11.9			12.5			(0.6)		(4.8)	%
Total net sales	Total net sales	$	167.2		$	168.6		$	(1.4)	(0.8)	%	Total net sales	$	180.1		$	157.2		$	22.9	14.6	%
Cost of sales	Cost of sales	$	106.8		$	102.3		$	4.5	4.4	%	Cost of sales	$	111.0		$	97.4		$	(13.6)	(14.0)	%
as a percentage of sales	as a percentage of sales	63.9		%	60.7		%					as a percentage of sales	61.6		%	62.0		%
Selling, general and administrative	Selling, general and administrative	$	32.2		$	33.8		$	(1.6)	(4.7)	%	Selling, general and administrative	$	31.4		$	31.7		$	0.3	0.9	%
as a percentage of sales	as a percentage of sales	19.3		%	20.0		%					as a percentage of sales	17.4		%	20.2		%
Operating profit	Operating profit	$	28.2		$	32.5		$	(4.3)	(13.2)	%	Operating profit	$	37.7		$	28.1		$	9.6	34.2	%

Operating margin	Operating margin	16.9		%	19.3		%					Operating margin	20.9		%	17.9		%

Supplemental Data:	Supplemental Data:											Supplemental Data:
Backlog	Backlog	$	591.6		$	478.5		$	113.1	23.6	%	Backlog	$	644.8		$	508.4		$	136.4	26.8	%

Sales ~~decreased $1.4~~increased $22.9 million, or ~~0.8%~~14.6%, to ~~$167.2~~$180.1 million in ~~2022, with~~2023, primarily due to higher ~~pricing more than offset by lower volumes.~~volumes and strong pricing.

•Sales of Commercial Original Equipment increased ~~$1.5~~$9.7 million, or ~~2.4%~~16.5%, to ~~$63.7~~$68.4 million in ~~2022,~~2023, reflecting strong demand from aircraft manufacturers as the industry aircraft build rates continue to recover from the COVID-19 related slowdown, partially offset by material availability constraints.

•Sales of Military Original Equipment ~~decreased $1.3~~increased $4.5 million, or ~~2.2%~~7.8%, to ~~$57.1~~$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 ~~$4.6~~$9.3 million, or ~~15.2%~~32.5%, to ~~$34.8~~$37.9 million in ~~2022,~~2023, reflecting continued strong demand from the airlines due to improving air ~~traffic as the industry continues to recover from the COVID-19 related slowdown, along with higher pricing.~~traffic.

•Sales of Military Aftermarket Products decreased ~~$6.2~~$0.6 million, or ~~34.8%~~4.8%, to ~~$11.6~~$11.9 million in ~~2022,~~2023, primarily reflecting timing of government orders for certain programs.

Cost of sales increased by ~~$4.5~~$13.6 million, or ~~4.4%~~14.0%, to ~~$106.8~~$111.0 million in ~~2022,~~2023, primarily reflecting an unfavorable ~~mix.~~

~~Selling, general and administrative expense decreased by $1.6~~mix of $9.7 million, or ~~4.7%~~10.0%, ~~to $32.2 million in 2022, primarily reflecting a decrease~~increased volumes of ~~$2.6~~$5.7 million, or ~~7.7%~~5.9%, ~~in administrative and engineering costs~~ partially offset by ~~higher selling costs.~~$3.1 million, or 3.2%, of productivity gains.

Operating profit ~~decreased~~increased by ~~$4.3~~$9.6 million, or ~~13.2%~~34.2%, to ~~$28.2~~$37.7 million in ~~2022,~~2023. The increase primarily ~~reflecting~~reflected higher pricing net of inflation and productivity of $12.0 million, or 42.7%, coupled with the impact from higher volumes of $6.2 million, or 22%, partially offset by an unfavorable mix of ~~$4.5~~$9.7 million, or ~~13.8%~~34.5%. ~~Pricing actions and strong productivity approximately offset higher material, labor, and other manufacturing costs.~~

3432

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

Process Flow Technologies


		Third 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	$	186.2		$	176.6		$	9.6	5.4	%	Process Valves and Related Products	$	202.9		$	182.9		$	20.0	10.9	%
Commercial Valves	Commercial Valves	30.4			95.8			(65.4)		(68.3)	%	Commercial Valves	30.6			98.2			(67.6)		(68.8)	%
Pumps and Systems	Pumps and Systems	33.4			26.7			6.7		25.1	%	Pumps and Systems	37.9			30.2			7.7		25.5	%
Total net sales	Total net sales	$	250.0		$	299.1		$	(49.1)	(16.4)	%	Total net sales	$	271.4		$	311.3		$	(39.9)	(12.8)	%

Cost of sales	Cost of sales	$	153.0		$	197.2		$	(44.2)	(22.4)	%	Cost of sales	$	150.1		$	196.8		$	46.7	23.7	%
as a percentage of sales	as a percentage of sales	61.2		%	65.9		%					as a percentage of sales	55.3		%	63.2		%
Selling, general and administrative	Selling, general and administrative	$	55.7		$	57.6		$	(1.9)	(3.3)	%	Selling, general and administrative	$	58.0		$	65.5		$	7.5	11.5	%
as a percentage of sales	as a percentage of sales	22.3		%	19.3		%					as a percentage of sales	21.4		%	21.0		%
Operating profit	Operating profit	$	41.3		$	44.3		$	(3.0)	(6.8)	%	Operating profit	$	63.3		$	49.0		$	14.3	29.2	%
Operating margin	Operating margin	16.5		%	14.8		%					Operating margin	23.3		%	15.7		%

Supplemental Data:	Supplemental Data:											Supplemental Data:

Backlog	Backlog	$	353.7		$	351.4		$	2.3	0.7	%	Backlog	$	363.0		$	372.4		$	(9.4)	(2.5)	%

Sales decreased by ~~$49.1~~$39.9 million, or ~~16.4%~~12.8%, to ~~$250.0~~$271.4 million in ~~2022,~~2023, driven by a ~~$59.5~~$61.7 million, or ~~19.9%~~19.8%, impact from the sale of Crane Supply and ~~$15.4~~$8.3 million, or ~~5.1%~~2.7%, of unfavorable foreign currency translation, partially offset by core sales growth of ~~$25.7~~$30.2 million, or ~~8.6%~~9.7%. Core sales growth was driven by higher pricing ~~partially offset by slightly lower volumes due to material availability constraints.~~and volumes.

•Sales of Process Valves and Related Products increased by ~~$9.6~~$20.0 million, or ~~5.4%~~10.9%, to ~~$186.2~~$202.9 million in ~~2022,~~2023, reflecting an increase in core sales, ~~driven by higher pricing,~~ partially offset by unfavorable foreign currency translation as the euro weakened against the U.S. dollar. ~~Demand remained generally strong~~Sales growth was driven primarily by strength in the Chemical ~~Pharmaceutical and General Industrial end markets.~~vertical.

•Sales of Commercial Valves decreased by ~~$65.4~~$67.6 million, or ~~68.3%~~68.8%, to ~~$30.4~~$30.6 million in ~~2022,~~2023, primarily driven by the impact of the divestiture of Crane Supply of ~~$59.5~~$61.7 million, or ~~62.1%~~62.8%, and, to a lesser extent, unfavorable foreign currency translation as the British pound weakened against the U.S. dollar.

•Sales of Pumps & Systems increased by ~~$6.7~~$7.7 million, or ~~25.1%~~25.5%, to ~~$33.4~~$37.9 million in ~~2022,~~2023, reflecting an increase in core sales primarily driven by higher ~~sales to municipal customers.~~volumes across all key end markets.

Cost of sales decreased by ~~$44.2~~$46.7 million, or ~~22.4%~~23.7%, to ~~$153.0~~$150.1 million, primarily related to the impact of the sale of Crane Supply of ~~$43.2~~$46.0 million, or ~~21.9%~~23.4%, ~~increased~~ productivity gains of ~~$4.0~~$4.9 million, or ~~2.0%~~2.5%, and favorable foreign currency translation of ~~$9.8~~$4.6 million, or ~~5.0%~~2.3%, partially offset by increased material, labor and other manufacturing costs and of ~~$13.0~~$5.4 million, or ~~6.6%~~2.7%, and the impact of the higher volumes of $4.0 million, or 2.0%.

Selling, general and administrative expense decreased by ~~$1.9~~$7.5 million, or ~~3.3%~~11.5%, to ~~$55.7~~$58.0 million primarily related to the impact of the sale of Crane Supply of ~~$5.0~~$6.0 million, or ~~8.7%~~9.2%, and favorable foreign currency translation of ~~$3.3~~$1.8 million, or ~~5.7%, offset by increased administrative and selling costs of $7.1 million, or 12.3%~~2.7%.

Operating profit ~~decreas~~increased by ~~$3.0~~$14.3 million, or ~~6.8%~~29.2%, to ~~$41.3~~$63.3 million in ~~2022.~~2023. The ~~decrease~~increase is primarily ~~reflected $11.3~~due to higher pricing net of inflation and productivity of $18.6 million, or ~~25.5%~~38%, the impact of higher volumes of $6.2 million, or 12.7%, partially offset by the impact from the sale of Crane Supply ~~and unfavorable foreign currency translation~~ of ~~$2.4~~$9.7 million, or ~~5.4%, partially offset by higher pricing net of inflation, and productivity gains of $11.7 million, or 26.4%~~19.8%.

3533

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

Payment & Merchandising Technologies


		Third 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	$	220.8		$	206.0		$	14.8	7.2	%	Payment Acceptance and Dispensing Products	$	223.8		$	211.0		$	12.8	6.1	%
Banknotes and Security Products	Banknotes and Security Products	114.3			159.8			(45.5)		(28.5)	%	Banknotes and Security Products	105.3			121.6			(16.3)		(13.4)	%
Total net sales	Total net sales	$	335.1		$	365.8		$	(30.7)	(8.4)	%	Total net sales	$	329.1		$	332.6		$	(3.5)	(1.1)	%
Cost of sales	Cost of sales	$	174.9		$	208.4		$	(33.5)	(16.1)	%	Cost of sales	$	174.4		$	179.1		$	4.7	2.6	%
as a percentage of sales	as a percentage of sales	52.2		%	57.0		%					as a percentage of sales	53.0		%	53.8		%
Selling, general and administrative	Selling, general and administrative	$	73.5		$	73.7		$	(0.2)	(0.3)	%	Selling, general and administrative	$	75.3		$	69.3		$	(6.0)	(8.7)	%
as a percentage of sales	as a percentage of sales	21.9		%	20.1		%					as a percentage of sales	22.9		%	20.8		%
Operating profit	Operating profit	$	86.7		$	83.7		$	3.0	3.6	%	Operating profit	$	79.4		$	84.2		$	(4.8)	(5.7)	%
Operating margin	Operating margin	25.9		%	22.9		%					Operating margin	24.1		%	25.3		%

Supplemental Data:	Supplemental Data:											Supplemental Data:

Backlog	Backlog	$	499.8		$	387.9		$	111.9	28.8	%	Backlog	$	556.0		$	429.0		$	127.0	29.6	%

Sales decreased ~~$30.7~~$3.5 million, or ~~8.4%~~1.1%, to ~~$335.1~~$329.1 million in ~~2022,~~2023, driven by unfavorable foreign currency translation of ~~$20.5~~$12.4 million, or ~~5.6%~~3.7%, ~~and lower~~partially offset by higher core sales of ~~$10.2~~$8.9 million, or ~~2.8%~~2.7%. The ~~lower~~higher core sales reflected ~~lower volumes,~~higher pricing, largely offset by ~~higher pricing.~~lower volumes.

•Sales of Payment Acceptance and Dispensing Products increased ~~$14.8~~$12.8 million, or ~~7.2%~~6.1%, to ~~$220.8~~$223.8 million in ~~2022.~~2023. The increase reflected higher core sales of ~~$25.9~~$21.7 million, or ~~12.6%~~10.3%, partially offset by unfavorable foreign currency translation of ~~$11.1~~$8.9 million, or ~~5.4%~~4.2%, primarily due to the British pound and Japanese yen weakening against the U.S. dollar. The core sales increase primarily reflected higher ~~sales to Gaming customers and strong pricing across all end markets.~~component sales.

•Sales of Banknotes and Security Products decreased ~~$45.5~~$16.3 million, or ~~28.5%~~13.4%, to ~~$114.3~~$105.3 million in ~~2022.~~2023. The decrease primarily related to lower core sales of ~~36.1~~$12.8 million, or ~~22.6%~~10.5%, and unfavorable foreign currency translation of ~~$9.4~~$3.5 million, or ~~5.9%~~2.9%, as the euro weakened against the U.S. dollar. The core sales decrease primarily reflected ~~a year-over-year comparison against record~~lower sales into the ~~third quarter of 2021.~~U.S. Government.

Cost of sales decreased by ~~$33.5~~$4.7 million, or ~~16.1%~~2.6%, to ~~$174.9~~$174.4 million, primarily reflecting lower volumes of ~~$26.4~~$9.0 million, or ~~12.7%~~5.0%, strong productivity of $8.5 million, or 4.7%, and favorable foreign currency translation of ~~$12.0~~$7.4 million, or ~~5.8%, and strong productivity of $6.5 million, or 3.1%~~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 ~~$14.2~~$6.0 million, or ~~6.8%~~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 ~~increased~~decreased by ~~$3.0~~$4.8 million, or ~~3.6%~~5.7%, to ~~$86.7~~$79.4 million in ~~2022.~~2023. The ~~increase~~decrease primarily 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 $2.9 million, or 3.4%, partially offset by higher pricing net of inflation and productivity gains of ~~$29.3~~$24.7 million, or ~~35.0%, and favorable mix of $2.8 million, or 3.3%, partially offset by lower volumes of $23.0 million, or 27.5%, and unfavorable foreign currency translation of $5.1 million, or 6.1%~~29.3%.

3634

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

Engineered Materials


		Third 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:
FRP - Recreational Vehicles	FRP - Recreational Vehicles	$	24.9		$	28.9		$	(4.0)	(13.8)	%	FRP - Recreational Vehicles	$	20.3		$	35.7		$	(15.4)	(43.1)	%
FRP - Building Products	FRP - Building Products	29.0			23.7			5.3		22.4	%	FRP - Building Products	32.3			27.4			4.9		17.9	%
FRP - Transportation	FRP - Transportation	8.9			7.7			1.2		15.6	%	FRP - Transportation	9.7			7.3			2.4		32.9	%
Total net sales	Total net sales	$	62.8		$	60.3		$	2.5	4.1	%	Total net sales	$	62.3		$	70.4		$	(8.1)	(11.5)	%
Cost of sales	Cost of sales	$	51.2		$	47.2		$	4.0	8.5	%	Cost of sales	$	45.8		$	52.4		$	6.6	12.6	%
as a percentage of sales	as a percentage of sales	81.5		%	78.3		%					as a percentage of sales	73.5		%	74.4		%
Selling, general and administrative	Selling, general and administrative	$	4.9		$	6.5		$	(1.6)	(24.6)	%	Selling, general and administrative	$	5.1		$	4.6		$	(0.5)	(10.9)	%
as a percentage of sales	as a percentage of sales	7.8		%	10.8		%					as a percentage of sales	8.2		%	6.5		%
Operating profit	Operating profit	$	6.7		$	6.6		$	0.1	1.5	%	Operating profit	$	11.4		$	13.4		$	(2.0)	(14.9)	%
Operating margin	Operating margin	10.7		%	10.9		%					Operating margin	18.3		%	19.0		%

Supplemental Data:	Supplemental Data:											Supplemental Data:

Backlog	Backlog	$	18.5		$	18.0		$	0.5	2.8	%	Backlog	$	16.8		$	30.4		$	(13.6)	(44.7)	%

Sales ~~increased $2.5~~decreased $8.1 million, or ~~4.1%~~11.5%, to ~~$62.8~~$62.3 million in ~~2022, with~~2023, reflecting lower volumes, partially offset by higher ~~pricing more than offsetting a decline in volume.~~pricing. The ~~increase reflected~~decrease was driven by lower sales to recreational vehicle manufacturers, offset by higher sales to building products customers and ~~to a lesser extent,~~ transportation ~~customers, offset by lower sales to recreational vehicle manufacturers.~~customers.

Cost of sales ~~increased $4.0~~decreased $6.6 million, or ~~8.5%~~12.6%, to ~~$51.2~~$45.8 million in ~~2022,~~2023, primarily related ~~primarily~~ to lower volumes of $10.3 million, or 19.7%, partially offset by higher raw ~~material costs and, to a lesser extent, higher~~materials, labor, and other manufacturing costs of ~~$8.8~~$5.0 million, or ~~18.6%, offset by lower volumes of $4.9 million, or 10.4%~~9.5%.

~~Selling, general and administrative expense decreased by $1.6 million, or 24.6%, to $4.9 million primarily due to lower administrative costs.~~

~~Operating profit increased by $0.1 million, or 1.5%, to $6.7 million in 2022, reflecting strong pricing offset by lower volumes and inflation.~~

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

~~Results from Operations – Nine Month Periods Ended September 30,~~

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

Year-to-Date Change
(dollars in millions) 2022 2021 $ %
Net sales $ 2,550.8 $ 2,582.8 $ (32.0) (1.2) %
Cost of sales 1,547.4 1,593.5 (46.1) (2.9) %
as a percentage of sales 60.7 % 61.7 %
Selling, general and administrative1
600.8 553.5 47.3 8.5 %
as a percentage of sales 23.6 % 21.4 %
Loss on divestiture of asbestos-related assets and liabilities 162.4 — 162.4 NM
Operating profit 240.2 435.8 (195.6) (44.9) %
Operating margin 9.4 % 16.9 %
Other income (expense):
Interest income 2.3 1.1 1.2 109.1 %
Interest expense (36.0) (36.0) — — %
Gain on sale of business 232.5 — 232.5 NM
Miscellaneous income, net 22.8 17.2 5.6 32.6 %
Total other income (expense) 221.6 (17.7) 239.3 NM
Income before income taxes 461.8 418.1 43.7 10.5 %
Provision for income taxes 157.9 54.8 103.1 188.1 %
Net income attributable to common shareholders $ 303.9 $ 363.3 $ (59.4) (16.4) %
1 2021 includes restructuring gains of $14.3 million.

Sales decreased by $32.0 million, or 1.2%, to $2,550.8 million in 2022. Net sales related to operations outside the United States were 33.1% and 37.5% of total net sales for the nine months ended September 30, 2022 and 2021, respectively. The year-over-year change in sales included:

•~~an increase in core sales of $129.3 million, or 5.0%;~~

•~~unfavorable foreign currency translation of $80.1 million, or 3.1%; and~~

•~~a decrease in sales of $81.3 million, or 3.1%, related to the sale of Crane Supply.~~

Cost of sales decreased by $46.1 million, or 2.9%, to $1,547.4 million in 2022. The decrease is primarily related to the sale of Crane Supply of $59.4 million, or 3.7%, favorable foreign currency translation of $50.4 million, or 3.2%, lower volumes of $46.7 million, or 2.9%, and strong productivity of $43.6 million, or 2.7%, partially offset by an increase in material, labor and other manufacturing costs of $136.7 million, or 8.6%, and unfavorable mix of $23.3 million, or 1.5%.

Selling general and administrative expenses increased by $47.3 million, or 8.5%, to $600.8 million in 2022. The increase was driven primarily by increased costs of $63.7 million, or 11.5%, including transaction costs o~~f $33.8~~ ~~million, or 5.9%, supporting the Crane Supply and asbestos divestiture as well as the planned Separation, partially offset by favorable foreign currency translation of $15.4 million, or 2.8%.~~

Operating profit decreased by ~~$195.6~~$2.0 million, or ~~44.9%~~14.9%, to ~~$240.2~~$11.4 million in ~~2022. The decrease in operating profit is primarily related to~~2023, reflecting the loss on divestiture of asbestos-related assets and liabilities of $162.4 million, or 37.2%, lower volumes of $51.0 million, or 11.7%, higher transaction costs of $35.7 million, or 8.2%, unfavorable mix of $23.3 million, or 5.3%, and lost profitimpact from the ~~sale of Crane Supply of $15.1 million, or 3.5%,~~lower volumes offset by higher pricing, net of ~~inflation, and productivity gains, of $77.4 million, or 17.8%. Operating profit in 2021 included net restructuring gains of $14.3 million.~~

~~Other income increased $239.3 million to $221.6 million reflecting the gain on the sale of the Crane Supply business of $232.5 million.~~inflation.

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

Our effective tax rates for the nine months ended September 30, 2022 is higher than the prior year’s comparable period primarily due to the absence of a tax benefit recorded against the asbestos-related transaction and the reversal of a deferred tax asset established in a prior period that relates to the sale of a subsidiary, partially offset by the aforementioned release of valuation allowance and statutory U.S. tax credits and a deduction related to our non-U.S. subsidiaries’ income.

Our effective tax rate for the nine months ended September 30, 2022 is higher than the statutory U.S. federal tax rate of 21% primarily due to the absence of a tax benefit recorded against the asbestos-related transaction, earnings in jurisdictions with statutory tax rates higher than the United States, expenses that are statutorily non-deductible for income tax purposes and U.S. state taxes, partially offset by the aforementioned release of valuation allowance, excess share-based compensation benefits, tax credit utilization, and the statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

~~Comprehensive Income~~

Nine Months Ended
September 30,
(in millions) 2022 2021
Net income before allocation to noncontrolling interests $ 303.9 $ 363.3
Components of other comprehensive income (loss), net of tax
Currency translation adjustment (175.2) (52.1)
Changes in pension and postretirement plan assets and benefit obligation, net of tax 9.1 15.3
Other comprehensive loss, net of tax (166.1) (36.8)
Comprehensive income before allocation to noncontrolling interests 137.8 326.5
Less: Noncontrolling interests in comprehensive income (0.3) 0.6
Comprehensive income attributable to common shareholders $ 138.1 $ 325.9

For the nine months ended September 30, 2022, comprehensive income before allocations to noncontrolling interests was $137.8 million compared to $326.5 million in the same period of 2021. The $188.7 million decrease was primarily driven by a $123.1 million unfavorable impact of foreign currency translation adjustments primarily related to the British pound and euro, and lower net income before allocation to noncontrolling interests of $59.4 million.

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

~~Segment Results of Operations - Nine Month Periods Ended September 30,~~

~~Aerospace & Electronics~~

Year-to-Date Change
(dollars in millions) 2022 2021 $ %
Net sales by product line:
Commercial Original Equipment $ 182.9 $ 170.5 $ 12.4 7.3 %
Military Original Equipment 171.5 184.0 (12.5) (6.8) %
Commercial Aftermarket Products 92.5 75.1 17.4 23.2 %
Military Aftermarket Products 38.9 50.6 (11.7) (23.1) %
Total net sales $ 485.8 $ 480.2 $ 5.6 1.2 %
Cost of sales $ 305.4 $ 298.2 $ 7.2 2.4 %
as a percentage of sales 62.9 % 62.1 %
Selling, general and administrative $ 96.0 $ 92.7 $ 3.3 3.6 %
as a percentage of sales 19.8 % 19.3 %
Operating profit $ 84.4 $ 89.3 $ (4.9) (5.5) %
Operating margin 17.4 % 18.6 %

~~Sales increased $5.6 million, or 1.2%, to $485.8 million in 2022, with higher pricing more than offsetting lower volumes.~~

•Sales of Commercial Original Equipment increased $12.4 million, or 7.3%, to $182.9 million in 2022, reflecting strong demand from aircraft manufacturers as the industry aircraft build rates continue to recover from the COVID-19 related slowdown, partially offset by material availability constraints.

•~~Sales of Military Original Equipment decreased $12.5 million, or 6.8%, to $171.5 million in 2022, primarily reflecting lower shipments due to order timing and material availability.~~

•Sales of Commercial Aftermarket Products increased $17.4 million, or 23.2%, to $92.5 million in 2022, reflecting strong demand from the airlines due to improving air traffic as the industry continues to recover from the COVID-19 related slowdown, along with higher pricing.

•~~Sales of Military Aftermarket Products decreased $11.7 million, or 23.1%, to $38.9 million in 2022, primarily reflecting timing of government orders for certain programs.~~

Cost of sales increased by $7.2 million, or 2.4%, to $305.4 million in 2022, primarily reflecting $22.0 million, or 7.4%, of increased material, labor and other manufacturing costs, partially offset by $10.3 million, or 3.5%, of productivity gains, and lower volumes of $5.3 million, or 1.8%.

~~Selling, general and administrative expense increased by $3.3 million, or 3.6%, to $96.0 million in 2022, primarily reflecting higher selling costs of $3.4 million, or 3.7%.~~

~~Operating profit decreased by $4.9 million, or 5.5%, to $84.4 million~~ in 2022, primarily reflecting higher costs of $7.7 million, or 8.6%, lower volumes of $7.1 million, or 8.0%, partially offset by higher pricing, net of inflation and increased productivity of $11.6 million, or 13.0%.

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

~~Process Flow Technologies~~

Year-to-Date Change
(dollars in millions) 2022 2021 $ %
Net sales by product line:
Process Valves and Related Products $ 555.8 $ 535.4 $ 20.4 3.8 %
Commercial Valves 205.8 283.3 (77.5) (27.4) %
Pumps and Systems 95.8 79.2 16.6 21.0 %
Total net sales $ 857.4 $ 897.9 $ (40.5) (4.5) %
Cost of sales $ 541.1 $ 593.2 $ (52.1) (8.8) %
as a percentage of sales 63.1 % 66.1 %
Selling, general and administrative1
$ 185.4 $ 163.8 $ 21.6 13.2 %
as a percentage of sales 21.6 % 18.2 %
Operating profit $ 130.9 $ 140.9 $ (10.0) (7.1) %
Operating margin 15.3 % 15.7 %
12021 includes net restructuring gains of $12.7 million.

Sales decreased by $40.5 million, or 4.5%, to $857.4 million in 2022, driven by the impact of the sale of Crane Supply of $81.3 million, or 9.1%, and unfavorable foreign currency translation of $32.6 million, or 3.6%, partially offset by higher core sales of $73.0 million, or 8.1%. Core sales growth was driven primarily by pricing, with modestly higher volumes.

•Sales of Process Valves and Related Products increased by $20.4 million, or 3.8%, to $555.8 million in 2022. The increase reflected higher core sales of $41.7 million, or 7.8%, driven by higher pricing, offset by unfavorable foreign currency translation of $21.7 million, or 4.1%,as the euro weakened against the U.S. dollar. Demand remained generally strong in the Chemical, Pharmaceutical and General Industrial end markets.

•Sales of Commercial Valves decreased by $77.5 million, or 27.4%, to $205.8 million in 2022, primarily driven by the impact of the divestiture of Crane Supply of $81.3 million, or 28.7%, and unfavorable foreign currency translation of $10.7 million, or 3.8%, as the British pound weakened against the U.S. dollar, partially offset by an increase in core sales of $14.5 million, or 5.1%.

•~~Sales of Pumps & Systems increased by $16.6 million, or 21.0%, to $95.8 million in 2022, primarily driven by higher sales to municipal customers.~~

Cost of sales decreased by $52.1 million, or 8.8%, to $541.1 million, primarily related to the impact of the sale of Crane Supply of $59.4 million, or 10.0%, favorable foreign currency of $20.5 million, or 3.5%, and productivity gains of $12.8 million, or 2.2%, partially offset by a $32.4 million, or 5.5%, increase in material, labor and other manufacturing costs and unfavorable mix of $8.0 million, or 1.4%.

Selling, general and administrative expense increased by $21.6 million, or 13.2%, to $185.4 million primarily reflecting higher administrative and selling costs of $25.3 million, or 15.4%, including transaction related expenses of $4.2 million, and the absence of a prior year net restructuring gain of $12.7 million, or 7.7 %, partially offset by favorable currency translation of $7.5 million, or 4.6%, and the sale of Crane Supply of $6.8 million, or 4.2%.

Operating profit decreased by $10.0 million, or 7.1%, to $130.9 million in 2022, primarily reflecting the impact of the sale of Crane Supply of $15.1 million, or 10.7%, and the absence of the prior year restructuring gain of $12.7 million, or 9.0%, partially offset by productivity gains of $15.1 million, or 10.7%.

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

~~Payment & Merchandising Technologies~~

Year-to-Date Change
(dollars in millions) 2022 2021 $ %
Net sales by product line:
Payment Acceptance and Dispensing Products $ 643.2 $ 588.3 $ 54.9 9.3 %
Banknotes and Security Products 358.5 443.1 (84.6) (19.1) %
Total net sales $ 1,001.7 $ 1,031.4 $ (29.7) (2.9) %
Cost of sales $ 536.8 $ 563.7 $ (26.9) (4.8) %
as a percentage of sales 53.6 % 54.7 %
Selling, general and administrative $ 213.3 $ 220.3 $ (7.0) (3.2) %
as a percentage of sales 21.3 % 21.4 %
Operating profit $ 251.6 $ 247.4 $ 4.2 1.7 %
Operating margin 25.1 % 24.0 %

Sales decreased $29.7 million, or 2.9%, to $1,001.7 million in 2022, driven by unfavorable foreign currency translation of $46.3 million, or 4.5%, offset by higher core sales of $16.6 million, or 1.6%. The higher core sales were driven by higher pricing, partially offset by lower volumes.

•Sales of Payment Acceptance and Dispensing Products increased $54.9 million, or 9.3%, to $643.2 million in 2022. The increase reflected higher core sales of $77.7 million, or 13.2%, offset by unfavorable foreign currency translation of $22.8 million, or 3.9%, primarily reflecting the weakening of the British pound and Japanese Yen against the U.S. dollar. The core sales growth primarily reflected higher sales to Gaming customers and and strong pricing across all end markets.

•Sales of Banknotes and Security Products decreased $84.6 million, or 19.1%, to $358.5 million in 2022. The decrease reflected lower core sales of $61.1 million, or 13.8%, and unfavorable foreign currency translation of $23.5 million, or 5.3%, as the euro weakened against the U.S. dollar. The core sales decline primarily reflected lower volumes following a record year in 2021.

Cost of sales decreased by $26.9 million, or 4.8%, to $536.8 million, primarily related to lower volumes of $40.8 million, or 7.2%, favorable foreign currency translation of $29.5 million, or 5.2%, and productivity gains of $19.3 million, or 3.4%, partially offset by an increase in material, labor and other manufacturing costs of $50.6 million, or 9.0%, and unfavorable mix of $12.1 million, or 2.1%.

~~Selling, general and administrative expense decreased by $7.0 million, or 3.2%, to $213.3 million, primarily reflecting favorable foreign currency translation of $7.6 million, or 3.4%.~~

Operating profit increased by $4.2 million, or 1.7%, to $251.6 million in 2022. The increase primarily reflected higher pricing net of inflation, and productivity, of $66.7 million, or 27.0%, partially offset by lower volumes of $39.6 million, or 16.0%, unfavorable mix of $12.1 million, or 4.9%, and unfavorable foreign currency translation of $9.2 million, or 3.7%.

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

~~Engineered Materials~~

Year-to-Date Change
(dollars in millions) 2022 2021 $ %
Net sales by product line:
FRP - Recreational Vehicles $ 92.8 $ 78.1 $ 14.7 18.8 %
FRP - Building Products 88.2 72.0 16.2 22.5 %
FRP - Transportation 24.9 23.2 1.7 7.3 %
Total net sales $ 205.9 $ 173.3 $ 32.6 18.8 %
Cost of sales $ 164.5 $ 137.0 $ 27.5 20.1 %
as a percentage of sales 79.9 % 79.1 %
Selling, general and administrative $ 14.5 $ 15.6 $ (1.1) (7.1) %
as a percentage of sales 7.0 % 9.0 %
Operating profit $ 26.9 $ 20.7 $ 6.2 30.0 %
Operating margin 13.1 % 11.9 %

Sales increased by $32.6 million, or 18.8%, to $205.9 million in 2022 with higher pricing more than offsetting a decline in volume. The increase reflected higher sales to building products customers and recreational vehicle manufacturers.

Cost of sales increased by $27.5 million, or 20.1%, to $164.5 million, primarily related to higher increase in material, labor and other manufacturing costs of $33.1 million, or 24.2%, including transaction related expenses of $3.6 million, offset by lower volumes of $6.7 million, or 4.9%.

~~Selling, general and administrative expense decreased by $1.1 million, or 7.1%, to $14.5 million primarily reflecting lower administrative costs.~~

Operating profit increased by $6.2 million, or 30.0%, to $26.9 million in 2022, primarily reflecting higher pricing net of inflation, and productivity gains, of $14.2 million, or 68.6%, offset by lower volumes of $5.8 million, or 28.0%.

4335

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

Liquidity and Capital Resources


		Nine Months Ended					Three Months Ended
		September 30,					March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Net cash (used for) provided by:	Net cash (used for) provided by:					Net cash (used for) provided by:
Operating activities	Operating activities	$	(378.0)	$	327.0	Operating activities	$	(70.8)	$	(55.5)
Investing activities	Investing activities	281.4		26.6		Investing activities	(12.8)		(13.0)
Financing activities	Financing activities	119.3		(440.8)		Financing activities	(67.8)		(97.8)

Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(62.7)		(13.0)		Effect of exchange rates on cash and cash equivalents	4.0		(5.1)
Decrease in cash and cash equivalents	Decrease in cash and cash equivalents	$	(40.0)	$	(100.2)	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 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 environmental liabilities and~~ expected pension contributions.

In ~~addition,~~July 2021, we ~~believe our investment grade~~entered a $650 million, 5-year Revolving Credit Agreement, which replaced the existing $550 million revolving credit ~~ratings afford us adequate access~~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 ~~public and private debt markets.~~customary conditions precedent for facilities of this type. As of the Separation, the CP Program is no longer available.

We also entered into a $350 million, 3-year term loan facility. Funding under each facility became available in connection with the Separation, upon the satisfaction of customary conditions of facilities of this type. On March 31, 2023, Crane Holdings, Co. borrowed the full amount of the Term Facility.

In August 2022, we entered into a $400 million senior unsecured 364-day Credit Agreement. The proceeds were used to partially fund the $550 million contribution related to the Redco Sale. ~~Please see~~See Note 10 and Note 11 to our Condensed Consolidated Financial Statements for additional details.

In July 2021, we entered a $650 million, 5-year Revolving Credit Agreement, which replaced the existing $550 million revolving credit facility. We also increased the size of our Commercial Paper Program (“CP Program”) to permit the issuance 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 11 ~~to our Condensed Consolidated Financial Statements~~ ~~for additional details.~~

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, we entered a senior unsecured 364-day credit facility (the “364-Day Credit Agreement”). 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 was ~~$378.0~~$70.8 million in the first ~~nine~~three months of ~~2022,~~2023, as compared to ~~cash provided by activities of $327.0~~$55.5 million during the same period last year. The increase in cash used for operating activities was primarily driven by ~~the $550.0 million payment related to the divestiture of the asbestos-related assets and liabilities, together with~~ increased working capital investments supporting higher levels of demand across most businesses. Net asbestos-related payments for the first nine months of 2022 and 2021 were $29.3 million and $29.6 million, respectively. As a result of the Redco sale, the Company no longer has any obligation with respect to pending and future asbestos-related claims.

Investing Activities

Cash flows relating to investing activities consist primarily of cash used for ~~acquisitions and~~ capital expenditures and cash provided by divestitures of ~~businesses or~~ assets. Cash ~~provided by~~used for investing activities was ~~$281.4~~$12.8 million in the first ~~nine~~three months of ~~2022,~~2023, as compared to ~~$26.6 million~~$13.0 in the comparable period of ~~2021. The increase in cash provided by investing activities was primarily related to proceeds from the sale of Crane Supply of $318.1 million.~~2022. 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 ~~provided by~~used for financing activities was ~~$119.3~~$67.8 million during the first ~~nine~~three months of ~~2022,~~2023 compared to ~~cash used for financing activities of $440.8~~$97.8 million in the comparable period of ~~2021.~~2022. The ~~increase~~decreased in cash ~~provided by~~used for financing activities was primarily driven by the ~~$399.4~~absence of $175.8 million in net borrowings from the 364-Day Credit Agreement, compared to a $348.1 million repayment of the outstanding amount under the 364-Day Credit Agreement in the first nine months of 2021. This was partially offset by the $203.7 million ofcash used for share repurchases in the ~~first nine months of 2022.~~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 ~~September 30, 2022,~~March 31, 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.

4638

Part II: Other Information

Item 1. Legal Proceedings

Discussion of legal matters is incorporated by reference from Part 1, Item 1, Note 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 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 availability under the Program as of March 31, 2022 was repurchased in April 2022 prior to the Program expiring on April 22, 2022. We did not make any open-market share repurchases of our common stock during the quarter ended ~~September 30, 2022.~~March 31, 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

4739

Item 6. Exhibits


Exhibit 2.1						Separation and Distribution Agreement, ~~and Plan~~dated as of ~~Merger, dated February 28, 2022,~~April 3, 2023, by and ~~among~~between Crane NXT, Co.~~, Crane Holdings, Co.,~~ and Crane ~~Transaction~~ Company LLC (included as Appendix A to the proxy statement/prospectus included in Amendment No. 2 to Crane Holdings, Co.’s Registration Statement on Form S-4 (Registration No. 333-263119) filed on April 14, 2022) (incorporated by reference to Exhibit 2.1 to Crane ~~Holdings,~~NXT, Co.~~'s Current Report on Form 8-K12G3 filed on May 16, 2022).~~
~~Exhibit 2.2~~						Stock Purchase Agreement, dated as of August 12, 2022, by and among Crane Holdings, Co., Crane Company, Redco Corporation and Spruce Lake Liability Management Holdco LLC (incorporated by reference to Exhibit 2.1 to Crane Holdings, Co.'s’s Current Report on Form 8-K filed on ~~August 15, 2022)~~April 3, 2023).
Exhibit 3.1						Amended and Restated Certificate of Incorporation of Crane ~~Holdings,~~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 ~~By-laws~~Certificate of Incorporation of Crane ~~Holdings,~~NXT, Co. (incorporated by reference to Exhibit 3.2 to Crane ~~Holdings,~~NXT, Co.'s’s Current Report on Form ~~8-K12G3~~8-K filed on ~~May 16, 2022)~~April 3, 2023).
Exhibit ~~4.1~~3.3						~~First Supplemental Indenture to the Indenture dated December 13, 2013,~~Amended and Restated By-laws of Crane NXT, Co., dated as of ~~May 16, 2022, between Crane Holdings, Co. and U.S. Bank Trust Company, National Association~~April 3, 2023 (incorporated by reference to Exhibit ~~4.2~~3.3 to Crane ~~Holdings,~~NXT, Co.'s’s Current Report on Form ~~8-K12G3~~8-K filed on ~~May 16, 2022)~~April 3, 2023).
Exhibit ~~4.2~~10.1*						~~First Supplemental Indenture to the Indenture dated April 1, 1991, dated as of May 16, 2022,~~Offer Letter between Crane ~~Holdings,~~NXT, Co. and ~~U.S. Bank Trust Company, National Association (incorporated by reference to Exhibit 4.5 to Crane Holdings, Co.'s Current Report on Form 8-K12G3 filed on May 16, 2022).~~Christina Cristiano.
Exhibit ~~4.3~~10.2*						~~First Supplemental Indenture to the Indenture dated February 5, 2018, dated as of May 16, 2022,~~Offer Letter between Crane ~~Holdings,~~NXT, Co. and ~~U.S. Bank Trust Company, National Association (incorporated by reference to Exhibit 4.8 to Crane Holdings, Co.'s Current Report on Form 8-K12G3 filed on May 16, 2022).~~Paul Igoe.
Exhibit ~~10.1~~10.3*						~~Amendment No. 1,~~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 ~~May 16, 2022,~~March 17, 2023, by and among Crane ~~Holdings,~~NXT, Co., ~~Crane Co., CR Holdings C.V., each Lender~~as borrower, the lenders and issuing banks party thereto, ~~and~~ 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 ~~Holdings,~~NXT, Co.'s’s Current Report on Form 8-K filed on ~~May 16, 2022)~~April 3, 2023).
Exhibit ~~10.2~~10.9						~~Form~~Tax Matters Agreement, dated as of ~~Commercial Paper Dealer Agreement~~April 3, 2023, by and between Crane ~~Holdings,~~NXT, Co. and ~~the respective commercial paper dealer party thereto~~Crane Company (incorporated by reference to Exhibit 10.2 to Crane ~~Holdings,~~NXT, Co.'s’s Current Report on Form ~~8-K12G3~~8-K filed on ~~May 16, 2022)~~April 3, 2023).
Exhibit ~~10.3~~10.10						~~364-Day Credit~~Employee Matters Agreement, dated as of ~~August 11, 2022,~~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 ~~Holdings,~~NXT, Co., ~~as borrower,~~ the ~~financial institutions~~subsidiary grantors party thereto ~~as lenders,~~ and JPMorgan Chase, ~~Bank,~~ N.A., as administrative agent (incorporated by reference to Exhibit ~~10.1~~10.5 to Crane ~~Holdings,~~NXT, Co.'s’s Current Report on Form 8-K filed on ~~August 15, 2022)~~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)
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase (filed herewith)
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

4840

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 ~~HOLDINGS,~~NXT, CO.
		REGISTRANT

Date
~~November 1, 2022~~May 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
~~November 1, 2022~~May 10, 2023		~~Richard A. Maue~~Christina Cristiano
		Senior Vice President and Chief Financial Officer

4941


	Quarter-to-Date Period Ended				Year-to-Date Period Ended
(in millions)	August 11, 2022		September 30, 2021		August 11, 2022		September 30, 2021
Settlement / indemnity costs incurred (1)	$	6.3	$	10.6	$	29.4	$	24.5
Defense costs incurred (1)	1.0		3.8		6.4		11.2
Total costs incurred	$	7.3	$	14.4	$	35.8	$	35.7

Settlement / indemnity payments	$	6.6	$	8.9	$	33.8	$	28.4
Defense payments	1.1		3.9		6.1		11.3
Insurance receipts	(1.8)		(3.4)		(10.6)		(10.1)
Pre-tax cash payments, net	$	5.9	$	9.4	$	29.3	$	29.6


	Nine Months Ended September 30,2022						Nine Months Ended September 30,2021
(in millions)	Severance		Other		Total		Severance		Other		Total


Payment & Merchandising Technologies	$	—	$	—	$	—	$	(0.7)	$	(0.8)	$	(1.5)
2020 Repositioning	$	—	$	—	$	—	$	(0.7)	$	(0.8)	$	(1.5)

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


Process Flow Technologies 1	$	—	$	—	$	—	$	—	$	(12.7)	$	(12.7)
Payment & Merchandising Technologies	—		—		—		(0.2)		—		(0.2)
2017 Repositioning	$	—	$	—	$	—	$	(0.2)	$	(12.7)	$	(12.9)

Total	$	—	$	—	$	—	$	(0.8)	$	(13.5)	$	(14.3)


	Year-to-Date						Change
(dollars in millions)	2022			2021			$		%
Net sales	$	2,550.8		$	2,582.8		$	(32.0)	(1.2)	%

Cost of sales	1,547.4			1,593.5			(46.1)		(2.9)	%
as a percentage of sales	60.7		%	61.7		%
Selling, general and administrative1	600.8			553.5			47.3		8.5	%
as a percentage of sales	23.6		%	21.4		%
Loss on divestiture of asbestos-related assets and liabilities	162.4			—			162.4		NM
Operating profit	240.2			435.8			(195.6)		(44.9)	%


Operating margin	9.4		%	16.9		%
Other income (expense):
Interest income	2.3			1.1			1.2		109.1	%
Interest expense	(36.0)			(36.0)			—		—	%
Gain on sale of business	232.5			—			232.5		NM
Miscellaneous income, net	22.8			17.2			5.6		32.6	%
Total other income (expense)	221.6			(17.7)			239.3		NM
Income before income taxes	461.8			418.1			43.7		10.5	%
Provision for income taxes	157.9			54.8			103.1		188.1	%


Net income attributable to common shareholders	$	303.9		$	363.3		$	(59.4)	(16.4)	%


1 2021 includes restructuring gains of $14.3 million.