Crane Co'

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Crane Co. Citi 21st Annual Global
Industrial Manufacturing Conference March 4,
2008
Eric C. Fast President CEO Crane Co.
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• I. Strategy and Overview
• II. 08 Guidance
• III. Segment Comments

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Crane Co.Strategy for Profitable Growth

• Diversified manufacturer of engineered industrial
  products.
• - Substantial presence in focused niche markets
• - Businesses with high returns and excess cash
  flow
• Above all conduct business with integrity and
  honest dealings.
• Transitioning to a more integrated Operating Co.
• to
• Grow EVA.
• Acquisitions to strengthen existing businesses.

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Crane Co. Strategy for Profitable Growth
Grow Profits from Existing Operations

• Materially Improving Operations
• Leveraging Intellectual Capital
• Improving Customer Focus
• Executing Operational Excellence
• Strategic Linkages
• Portfolio Trimming
• Internal Mergers
• Synergistic Acquisitions

Integrated Operating Company
Redeploy Free Cash Flow for Acquisitions
Strengthen Existing Business Units
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Crane Co. Growth
( millions)
Growth 12 / yr
Growth 12 / yr
07 vs. 06 Sales 16
07 vs. 06 OP 19
Operating profit before charges for asbestos,
environmental, gain on restructuring foundry
operations and other special items in 2002, 2004,
2006 and 2007. For further details see non-GAAP
reconciliation on Crane website at
www.craneco.com.
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Strategy for Profitable Growth
Core growth 6 / yr

• Solid internal acquisition growth

1. Acquisitions completed in 02-07
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Grow Existing BusinessesCrane Business System

• Integrated Operating Company
• with a common
• Culture
• Intellectual Capital Process
• Prescriptive Operational Excellence
• Reporting Cycle Review Process

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Operational Excellence
Fluid Handling OP Margins
12
Operating Margin
6

• Broad-based improvement across units
• Significant opportunity remains

Operating profit excludes the gain on the
Foundry Restructuring in 4Q07.
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More Integrated Operating Co.Operational
Excellence
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23
22
21
20
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Cash from working capital 02-07 130M
Inventory, receivables, payables
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More Integrated Operating CompanyStrategic
Linkages

• Portfolio Trimming
• 2006
• Westad Valves Norway / 50 people / Marine
  Market
• Resistoflex Aerospace flexible fittings / 100
  people
• 26M cash proceeds / net gain
• 2007
• Ipswich, England Land and Building sale,
  foundry restructuring
• Industrial Motion Control, JV with Emerson
  Electric
• 70 million cash proceeds / net gain
• Internal Mergers
  Complete
• Aerospace Group
  100
• Engineered Materials
  75
• Merchandising Systems / Electronics 50
  
• Fluid Handling
  25
• Benefits
• Smaller number of larger units
• Stronger / deeper management teams

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Crane Valve GroupIntegrated Operating Company
Chemical / Pharmaceutical
Oil, Gas Power
UK
Services
Crane Valve Services
Crane Fluid Systems
Pacific Valves
CPFT
Resistoflex
CVNA
Australia
Xomox
Distributor of industrial brands and products
(Industrial)
(Commercial)
Center Line RS

• 8 businesses to 4
• Organized by Chemical/Pharmaceutical and Oil, Gas
  Power focuses

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Strategic Acquisitions
Annual Acquisition Spending
( millions)
Cash Code AP Telequip Noble Dixie M.S. Eng. Mat
Xomox Saunders F.H.
Significant Acquisitions Segment
Lasco Eng. Mat.
Signal Tech. Etex Elect. F.H.
P.L. Porter Hattersley Aero.
Edlon F.H.
Dolch Fabwel .
Controls Eng. Mat.
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2006 Acquisitions Summary

• Invested 283 million for five strategic
  acquisitions
• Merchandising Systems - 209 Million
• Engineered Materials - 74 Million
• Strong 2007 financial performance from 2006
  acquisitions
• Sales 264 Million
• Operating Profit 39 Million
• Operating Margin 14.8
• EBITDA 55 Million
• Achieved significant consolidation within
  merchandising industry
• Expanding Noble Composites facility to
  accommodate strong product demand

Price 5.1 x EBITDA
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Crane Vending Solutions positioned for long-term
growth and profitability
Cranes market position

• Vending Machines 1
• Bottle / Can 1
• Snack 1
• Food 1
• Coffee 1
• Frozen 2
• Combo 3
• Payment Systems 4
• Vending Management Software 1

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2006 2007 FinancialsBefore Special Items

• Sales effectively leveraged to operating profit
• Operating profit driven by Fluid Handling,
  Merchandising Systems and Engineered Materials
• Record EPS in 2007 before special items.

Before special items. See Non-GAAP table for
details
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2007 Special Items
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Crane Co.Late Cycle Portfolio
2007 Segment Sales

• 67 of Portfolio Late Cycle
• Aerospace Electronics
• Commercial OEM
• Defense Electronics
• Fluid Handling
• Chemical Process Industry
• Oil Gas Industry
• Non Residential Construction

Merch. Sys. 15
Engr. Mat. 13
Controls 5
Aerospace Electronics 24
Fluid Handling 43
Late Cycle
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2008 Guidance (Non-GAAP)

• Table is based on the midpoint of the guidance of
  2008 EPS of 3.45-3.60 and EBITDA of 411-425
  million

Non-GAAP
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Crane Co. 2008 Sales Guidance vs. 07
Sales Bridge
1.5
10
40M
1.5
5
40M
2830 M
8 Growth
131 M
2619 M
FX
Acq. / Disp.
Core
2007
2008E
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Crane Co. 2008 Guidance vs. 07
Operating Profit Bridge (Non-GAAP)
-4M
4M
22M
10
5
332M
5M
5M
10M
2006E
290M
Merchandising Systems
Engineered Materials
Aerospace Electronics
Fluid Handling
Controls
Corporate
2007
2008E
(1) 2007 included a number of special items. See
Non-GAAP table for details.
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Aerospace and Electronics

• Aerospace Group
• Strong Niche Market Shares
• Heavy Investment in New Programs
• Long Term Margin goal 20

• Electronics Group
• Strong Custom Power Position
• Strengthened Management Team
• AEP Transfer to Electronics in 08

• 08 Engr. Spending Starts to Decline in 2H08
  as 787 and A400M Completed

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Engineered Materials

• Mid Cycle Business with Soft End Markets
• Strong Market Shares Metrics
• Acquired Noble Composites (72 million) Sep.06
• Acquired Owens Corning Composites (38 million)
  Sep.07
• Improved Margins in 07
• Reduced Customer Support Costs
• Higher Productivity and Yields
• Noble Performance

• 08 OP increases from RV share gains,
  productivity initiatives and price increases

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Merchandising Systems

• 4 Acquisitions in 06 Totaling 209 million
• Two Vending - 76 million
• Two Payment Systems - 131 million
• The Industry Leader in Vending
• AP Consolidation Dixie Narco Integration
• Quality New Product Development Focus
• Solutions to Revitalize 24B Distribution Channel
• Solid Payment Systems Results
• Vending Channel Payment System

• 08 Execution of growth initiatives market
  share gains drive OP increase

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Fluid Handling

• Robust Global Demand Chem Pharma / Energy /
  Commercial Construction
• Improved Performance Margins Across Units
• New Goal 15 Operating Margin
• Foundry restructuring started in 07
• More Integrated Operating Co. / Align to End-
  Market Focus
• People / New Products / ERP investments

• 08 Global demand continues from infrastructure
  build, targeted end-market focus, new products
  and continued productivity improvement

Excludes 19M gain on Foundry Restructuring
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Controls

• Management Teams Customer Metrics in Place
  Growth Focus
• Mobile Rugged Business (computers) Acquired
  Aug.07
• 27 M 07 integration costs 1.2 M
• Investment in New Product New Geography

• 08 Full year of MRB and broad based growth
  initiative drive OP increase

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2008 Cash Flow Guidance
See Non-GAAP table for impact of special items
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Crane Co.Investing for Future Growth
Capital Expenditures
( millions)

• 08 vs. 07
• New products
• Machine center
• ERP
• Noble expansion
• Ipswich integration to WOFE

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Capital Structure
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Dividends

• Crane Co. has increased its quarterly dividend
  for the past 3 years

• 2007 Dividend payout ratio of 21 (before special
  items) is in line with peer group
• Dividend yield of 1.7 is competitive with peers

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Share Repurchase

• Share repurchases have roughly offset the impact
  of incentive stock plan related activity

(MM)
(MM)
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Asbestos Background

• Crane never manufactured asbestos
• Certain valves, pumps and boilers contained
  gaskets, packing and seals manufactured by others
  with asbestos
• In 2004, liability estimated through 2011
• After-tax liability of 204 million remaining
• Insurance estimated to cover 40 of liability
• In 2007, reserve extended to 2017
• Additional after tax provision of 250 million
• Includes insurance recoveries of 33
• Net asbestos payments after insurance are
  tax-deductible at 35 rate

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Impact of Asbestos Provision
( Millions)

• More Stable Outlook
• Substantial Decline In Claims Filed / Judge Jack
  Decision
• State Tort Reform
• Reflects National Trends

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Ample Cash Flow To Fund Growth
Cash Flow from Operations, after capital
expenditures, before asbestos (net of taxes and
insurance)
FCF 170M
Free Cash Flow after Asbestos
Asbestos Payments after insurance and taxes
(a)

• Guidance Asbestos after insurance and taxes
  30-40 million per year 08-17

(a) Includes insurance settlements of 42
million, pre-tax
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Crane Co. Summary
2007
2008

• Positive Momentum
• 06 EPS - 2.59
• 07 EPS - 3.19
• Free Cash Flow 186 M
• Capital Deployed
• Dividend increased 20
• Stock repurchases 50M
• Acquisitions - 65M
• Investing for Growth
• Capital expenditures
• Aerospace engineering

• EPS Growth Continues
• 08 EPS - 3.45-3.60
• Increase of 8 13
• Free Cash Flow 170 M
• OP Increases in all segments
• Continuing Growth Investments
• Capital expenditures
• Aerospace engineering

• Significant Room For Future Growth

excl. special items
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Earnings Per Share
3.45 - 3.60
3.19
2.59
2.25
1.98
1.75
Year to Year Improvement
13 14 15
23 8-13
Note 2002, 2004, 2006 and 2007 before
special items. For further details see
non-GAAP reconciliation on Crane website at
www.craneco.com.
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(No Transcript)
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Non-GAAP Reconciliation for Net Income
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Non-GAAP Reconciliation for Crane Co. Operating
Profit
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Free Cash Flow ChartNon-GAAP Reconciliation

• In 2007 The Company received an asbestos-related
  insurance from Equitas for 31.5 M, which lowered
  the payments in that year to 10.2M.

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Non-GAAP Reconciliation for Free Cash Flow
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Non-GAAP Reconciliation for Segment Operating
Profit
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2008 EBITDA Guidance