STAMFORD, Conn.--(BUSINESS WIRE)-- Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reported full year and fourth quarter 2017 financial results, and provided an update on its 2018 outlook.
"We delivered three new records in 2017: adjusted EPS of $4.53, adjusted operating margins of 15.2%, and free cash flow of $269 million," said Max Mitchell, Crane Co. President and Chief Executive Officer. "I am very proud of our 2017 performance, and I have never been more excited about Crane's multi-year earnings outlook than I am today. Our core business is executing extremely well; the recently completed Crane Currency acquisition is off to a great start; the recent tax reform legislation will not only improve our profitability, but it will enable us to accelerate investments for future growth; and we continue to focus on margin improvement through productivity and certain new repositioning actions.
"While there is a lot of exciting activity in our core business, including strong execution on growth and productivity initiatives, several other developments are also contributing to our positive outlook. Earlier this month, we closed on the Crane Currency acquisition, the second largest transaction in Crane's history. Crane Currency is the fastest growing, fully integrated global currency provider in the global banknote supply and security industry, and it is an excellent fit to complement our expanding presence in the currency and payment markets, bringing proprietary and differentiated technology. We believe that the combined businesses will be stronger together, offering end-to-end currency and security solutions, from substrate manufacturing and banknote design and printing to micro-optics and banknote validation. The integration is well underway, and we expect Crane Currency to contribute $0.15 of adjusted EPS in 2018, growing to approximately $1.00 of EPS annually by 2021.
"We also view the recently enacted Tax Cuts and Jobs Act (TCJA) as a very favorable development with an annual EPS benefit of approximately $0.50. The TCJA should also improve our global competitiveness by enabling increased flexibility to deploy capital in the United States. Because of the benefits and related flexibility we expect from this legislation, we have decided to accelerate strategic growth investments across several of our businesses over the next two years. These investments will offset approximately $0.25 per share of the tax benefit in 2018, and then decline to approximately $0.15 in 2019, with the full $0.50 annual EPS benefit from the TCJA reading through by 2020.
"In addition, our relentless focus on continuously improving our operations has resulted in a significant opportunity to execute proactive facility consolidations within our Fluid Handling, Aerospace & Electronics, and Payment & Merchandising businesses. We believe that these actions will not only improve our cost position, but enable us to meet higher expected future demand and provide the footprint that best serves our customers. These actions should contribute approximately$0.10 of EPS, excluding Special Items, in 2018, growing to an annualized EPS run-rate of approximately $0.35 by the end of 2020."
Mr. Mitchell concluded, "The growth potential of our core business, combined with the benefits from the Crane Currency acquisition, tax reform, accelerated growth investments, and repositioning activities, will position Crane for double-digit annual adjusted earnings growth for at least the next several years, with further upside possible from additional capital deployment. We also announced today that we are raising our dividend for the first time since 2014, further reflecting confidence in our outlook."
