CRANE NXT, CO. (CXT) Business, 2018

We are a diversified manufacturer of highly engineered industrial products comprised of four segments: Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials. Our primary markets are chemicals, oil & gas, power, non-residential construction, automated payment solutions, banknote design and production and aerospace & defense, along with a wide range of general industrial and certain consumer related end markets.

We have been committed to the highest standards of business conduct since 1855 when our founder, R.T. Crane, resolved “to conduct my business in the strictest honesty and fairness; to avoid all deception and trickery; to deal fairly with both customers and competitors; to be liberal and just toward employees; and to put my whole mind upon the business.”

Our strategy is to grow earnings and cash flow by focusing on the manufacturing of highly engineered industrial products for specific markets where our scale is a relative advantage, and where we can compete based on our proprietary and differentiated technology, our deep vertical expertise, and our responsiveness to unique and diverse customer needs. We continuously evaluate our portfolio, pursue acquisitions that complement our existing businesses and are accretive to our growth profile, selectively divest businesses where appropriate, and pursue internal mergers to improve efficiency. We strive to foster a performance-based culture focused on productivity and continuous improvement, to attract and retain a committed management team whose interests are directly aligned with those of our shareholders, and to maintain a focused, efficient corporate structure.

We deploy a comprehensive set of business processes, philosophies and operational excellence tools to drive continuous improvement throughout our businesses. Beginning with a core value of integrity, we incorporate “Voice of the Customer” teachings (specific processes designed to capture our customers’ requirements) and a broad range of tools into a disciplined strategy deployment process that drives profitable growth by focusing on continuously improving safety, quality, delivery, cost and growth. An embedded intellectual capital development process ensures that we attract, develop, promote and retain talent to drive continuity and repeatable results.

For additional information on recent business developments and other information about us and our business, you should refer to the information set forth under the captions, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Part II, Item 7 of this report, as well as in Part II, Item 8 under Note 3, “Segment Information,” in the Notes to Consolidated Financial Statements for sales, operating profit and assets employed by each segment.

The Fluid Handling segment is a provider of highly engineered fluid handling equipment for critical performance applications that require high reliability. The segment is comprised of Process Valves and Related Products, Commercial Valves and Other Products.

Process Valves and Related Products includes on/off valves and related products for critical and demanding applications in the chemical, oil & gas, power and general industrial end markets globally. Products are sold under the trade names Crane, Saunders, Jenkins, Pacific, Xomox, Krombach, DEPA, ELRO, REVO, Flowseal, Centerline, Resistoflex, Duochek, Barksdale, Westlock and WTA. Manufacturing locations, along with sales and service centers, are located across the Americas, Europe, the Middle East, Asia and Australia.

Commercial Valves is engaged primarily in the manufacturing and distribution of valves and related products for the non-residential construction, general industrial, and to a lesser extent, municipal markets. The primary geographies served include Canada, the United Kingdom, the Middle East and continental Europe. Brands include Stockham, Wask, Viking Johnson, IAT, Hattersley, NABIC, Sperryn, Wade, Rhodes and Brownall. Manufacturing facilities are located in the United Kingdom and China, with additional sales offices in continental Europe and the Middle East; distribution facilities are located throughout Canada.

Other Products includes pumps and related products for water and wastewater applications in the industrial, municipal, commercial and military markets, primarily in the United States. Products are sold under the trade names Deming, Weinman, Burks and Barnes. Facilities are located in the United States and Canada.

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The Payment & Merchandising Technologies segment consists of Crane Payment Innovations (“CPI”), Crane Merchandising Systems ("CMS") and Crane Currency.

CPI provides high technology payment acceptance products that improve our customers’ productivity in numerous global markets including retail self-checkout, vending, casino gaming, government lotteries, parking, transit fare collection, payment kiosks and banking. Products for these markets include coin acceptors and dispensers, coin hoppers, coin recyclers, bill validators, bill recyclers and cashless systems. Facilities are located in the United States, Mexico, Japan, Switzerland, Germany and the Ukraine, with additional sales offices across the world.

CMS is primarily engaged in the design and manufacture of vending equipment and related solutions. CMS’ innovative products and solutions create value by improving the consumer experience, and driving higher same store, or vendor machine, profitability. Products include a full line of vending equipment that dispenses food, snack, and hot and cold beverages. Other solutions include vending management software, cashless payment products, and wireless connectivity to enable our customers to operate their businesses more profitably. Primary customers include vending operators and food and beverage companies, primarily in the United States and Europe. Facilities are located in the United States and the United Kingdom.

On January 10, 2018, we completed the acquisition of Crane & Co., Inc. (“Crane Currency”), a supplier of banknotes and highly engineered banknote security features. The base purchase price of the acquisition was $800 million on a cash-free, debt-free basis, subject to a later adjustment reflecting Crane Currency’s net working capital, cash, the assumption by Crane of certain debt-like items, and Crane Currency’s transaction expenses. Founded in 1801, Crane Currency is a pioneer in advanced micro-optic security technology, and a fully integrated supplier of secure and highly engineered banknotes for central banks all over the world. Facilities are located in the United States, Sweden and Malta.

The Aerospace & Electronics segment supplies critical components and systems, including original equipment and aftermarket parts, primarily for the commercial aerospace and military aerospace and defense markets. The commercial market and military market accounted for 66% and 34%, respectively, of total segment sales in 2018. Sales to original equipment manufacturers ("OEM") and aftermarket customers were 73% and 27%, respectively, in 2018.

Crane Aerospace & Electronics has strong brands which have been supplying products to these end markets for several decades. Brands include Hydro-Aire, ELDEC, Lear Romec, P.L. Porter, Keltec, Interpoint, Signal Technology, Merrimac Industries, and Polyflon.

Products include a wide range of custom designed, highly engineered products used in landing systems, sensing and utility systems, fluid management, seat actuation, power and microelectronic applications, and microwave systems.

Our products are sold directly to aircraft manufacturers, commercial Tier 1 integrators (companies which make products specifically for an aircraft manufacturer), defense and space prime contractors, airlines, government agencies including the United States ("U.S.") Department of Defense, foreign allied defense organizations, aircraft seat manufacturers, and aircraft maintenance, repair and overhaul organizations.

Facilities are located in the United States, Taiwan, and France.

The Engineered Materials segment manufactures fiberglass-reinforced plastic ("FRP") panels and coils, primarily for use in the manufacturing of recreational vehicles ("RVs"), truck bodies, truck trailers, with additional applications in commercial and industrial buildings. Engineered Materials sells the majority of its products directly to RV, trailer, and truck manufacturers, and it uses distributors and retailers to serve the commercial and industrial construction markets. Manufacturing facilities are located in the United States.

Our businesses participate in markets that are highly competitive. Because of the diversity of products manufactured and sold, our businesses typically have a different set of competitors in each geographic area and end market in which they participate. Accordingly, it is not possible to estimate the number of competitors, or precise market share; however, we believe that we are a principal competitor in most of our markets. Our primary basis of competition is providing high quality products, with technological differentiation, at competitive prices, with superior customer service and timely delivery.

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Our products are sold into markets, including chemicals, oil & gas, power, non-residential construction, automated payment solutions, banknote design and production, and aerospace & defense, along with a wide range of general industrial and certain consumer related end markets. As such, our revenues depend on numerous unpredictable factors, including changes in market demand, general economic conditions, customer capital spending, timing and amount of contract awards and credit availability. Since our products are sold in such a wide variety of markets, we do not believe that we can reliably quantify or predict the potential effects of changes in any of the aforementioned factors.

Our engineering and product development activities are focused on improving existing products, customizing existing products for particular customer requirements, as well as the development of new products. We own numerous patents, trademarks, copyrights, trade secrets and licenses to intellectual property, no one of which is of such importance that termination would materially affect our business. From time to time, however, we do engage in litigation to protect our intellectual property.

Research and development costs are expensed when incurred. These costs were $58.4 million, $58.5 million and $61.5 million in 2018, 2017 and 2016, respectively, and were incurred primarily by our Aerospace & Electronics and Payment & Merchandising Technologies segments.

No customer accounted for more than 10% of our consolidated revenues in 2018, 2017 or 2016.

The following sets forth the unfulfilled orders attributable to each of our segments as of the indicated dates:

(in millions) December 31, 2018 December 31, 2017 Fluid Handling $ 279.6 $ 262.1 Payment & Merchandising Technologies 331.5 76.4 Aerospace & Electronics 446.6 373.6 Engineered Materials 14.9 13.6 Total Backlog $ 1,072.6 $ 725.7

As of December 31, 2018, we employed approximately 12,000 people in the Americas, Europe, the Middle East, Asia and Australia. For a discussion of risks related to employee relations, please refer to Item 1A. “Risk Factors.”

Our manufacturing operations employ a wide variety of raw materials, including steel, copper, cast iron, electronic components, aluminum, plastics, cotton, flax and various petroleum-based products. We purchase raw materials from a large number of independent sources around the world. Although market forces have at times caused increases in the costs of steel, copper and petroleum-based products, there have been no raw materials shortages that have had a material adverse impact on our business, and we believe that we will generally be able to obtain adequate supplies of major raw material requirements or reasonable substitutes at acceptable costs. For a further discussion of risks related to raw materials; please refer to Item 1A. “Risk Factors.”

In aggregate, our business does not experience significant seasonality.

We have agreements relating to the sale of products to government entities, primarily involving products in our Aerospace & Electronics and Payment & Merchandising Technologies segments and, to a lesser extent, our Fluid Handling segment. As a result, we are subject to various statutes and regulations that apply to companies doing business with the government. The laws and regulations governing government contracts differ from those governing private contracts. For example, some government contracts require disclosure of cost and pricing data and impose certain sourcing conditions that are not applicable to private contracts. Our failure to comply with these laws could result in suspension of these contracts, criminal or civil sanctions, administrative penalties and fines or suspension or debarment from government contracting or subcontracting for a period of

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time. For a further discussion of risks related to compliance with government contracting requirements; please refer to Item 1A. “Risk Factors.”

We are regulated by federal, state and international environmental laws governing our use, transport and disposal of substances and control of emissions. Our manufacturing facilities generally do not produce significant volumes or quantities of byproducts, including greenhouse gases, that would be considered hazardous waste or otherwise harmful to the environment. Accordingly, compliance with these existing laws has not had a material impact on our capital expenditures or earnings.

However, we occasionally engage in environmental remediation activities pursuant to federal and state laws. In addition, we may be exposed to other environmental costs including participation in superfund sites. When it is reasonably probable we will pay remediation costs at a site, and those costs can be reasonably estimated, we accrue a liability for such future costs with a related charge against our earnings. For a further discussion of environmental related risks; please refer to Item 1A. “Risk Factors.”

On December 20, 2017, we entered into a $150 million 364-day credit agreement (the "364-day Credit Agreement") and a $200 million 3-year term loan credit agreement (the "3-year Term Loan Credit Agreement") to fund our acquisition of Crane Currency. On January 10, 2018, we completed the acquisition of Crane Currency. To fund the acquisition, we issued $340 million of commercial paper under our commercial paper program, drew $100 million and $200 million from each of our 364-day Credit Agreement and 3-year Term Loan Credit Agreement, respectively, and used cash on hand.

On February 5, 2018, we completed a public offering of $350 million aggregate principal amount of 4.20% Senior Notes due March 2048 (the “Public Offering”). In March 2018, we used the net proceeds from the Public Offering, together with cash on hand, to repay all of the $100 million outstanding under our 364-day Credit Agreement as well as $250 million of outstanding 2.75% notes due in December 2018.

On October 23, 2018, we increased the size of our commercial paper program to permit the issuance of commercial paper notes in an aggregate principal amount not to exceed $550 million at any time outstanding. Prior to this increase, the commercial paper program permitted us to issue commercial paper notes in an aggregate principal amount not to exceed $500 million at any time outstanding.

See Part II, Item 8 under Note 12, “Financing,” in the Notes to Consolidated Financial Statements.

We file annual, quarterly and current reports and amendments to these reports, proxy statements and other information with the U.S. Securities and Exchange Commission (“SEC”). You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers, like us, that file electronically with the SEC. The address of the SEC’s website is www.sec.gov.

We also make our filings available free of charge through our Internet website, as soon as reasonably practicable after filing such material electronically with, or furnishing such material, to the SEC. Also posted on our website are our Corporate Governance Guidelines, Standards for Director Independence, Crane Co. Code of Ethics and the charters and a brief description of each of the Audit Committee, the Management Organization and Compensation Committee and the Nominating and Governance Committee. These items are available in the “Investors – Corporate Governance” section of our website at www.craneco.com. The content of our website is not part of this report.

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Name Position Business Experience During Past Five Years Age ExecutiveOfficer Since Max H. Mitchell President and Chief Executive Officer Chief Executive Officer since January 2014. President since January 2013. Chief Operating Officer from 2011 through January 2013. 55 2004 Curtis A. Baron, Jr. Vice President, Controller Vice President, Controller since 2011. 49 2011 Anthony M. D'Iorio Vice President, GeneralCounsel and Secretary Vice President, General Counsel and Secretary since February 2018. Deputy General Counsel from January 2014 through February 2018. Assistant General Counsel from 2005 through January 2014. 55 2018 Bradley L. Ellis Senior Vice President Senior Vice President since December 2014. Group President, Merchandising Systems from 2003 through December 2014. 50 1997 - 20032007 - present James A. Lavish Vice President, CBS, People & Performance Vice President, CBS, People & Performance since January 2016. Vice President, Crane Business System from March 2013 through January 2016. President, Crane Pumps & Systems from 2008 to March 2013. 52 2016 Richard A. Maue Senior Vice President and Chief Financial Officer Senior Vice President since January 2019. Vice President - Finance from 2013 through January 2019. Chief Financial Officer since January 2013. Principal Accounting Officer since 2007. 48 2007 Louis V. Pinkham Senior Vice President Senior Vice President since December 2014. Group President, Fluid Handling from 2012 through December 2014. 47 2012 Kristian R. Salovaara Vice President of Business Development and Strategy Vice President of Business Development and Strategy since March 2014. Vice President, Business Development from 2011 to March 2014. 58 2011 Edward S. Switter Vice President, Treasurer and Tax Vice President, Treasurer and Tax since September 2016. Vice President, Tax from 2011 through September 2016. 44 2011

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