We finished the third quarter with record adjusted earnings per share from continuing operations of $1.89 up 103% compared to last year along with extremely strong adjusted operating margins of 16.8%.
We delivered adjusted core sales growth of 19% with a number of strong leading indicators reflected in core order growth of 31% and core backlog growth of 13% compared to last year.
Based on this performance, we are raising our adjusted earnings per share from continuing operations guidance by $0.35 to a range of $6.35 to $6.45, which is effectively our 5th guidance increase this year.
Remember that our original guidance for 2021 was $4.90 to $5.10 and that guidance included $0.44 of earnings contribution from Engineered Materials.
That means we have effectively raised guidance more than $1.80 on a comparable basis since January.
Compared to 2020 on a like-for-like basis excluding Engineered Materials in both periods, our current guidance midpoint of $6.40 compares to 2020 earnings per share of approximately $3.52 reflecting more than 80% year-over-year earnings per share growth.
The midpoint of the updated guidance at $6.40 is well above our prior peak pre-COVID adjusted earnings per share of $6.02 in 2019, but with some notable differences this year compared to 2019.
Again, the $6.02 in 2019 included earnings contribution from Engineered Materials, which is now classified as discontinued operations and excluded from our '21 guidance.
And thinking about 2022 and beyond, it is worth noting that the commercial side of our Aerospace Electronics business in 2021 will still be approximately $150 million in sales and approximately $80 million in operating profit below 2019 levels this year, and the recovery to pre-COVID levels in this business alone will add about $1 per share to EPS.
At Payment & Merchandising Technologies, Crane Payment Innovations will be $200 million below pre-COVID levels in 2021 with more than half of that amount in our very high margin Payment Solutions business.
We have demonstrated an ability to balance those objectives extremely well, delivering on margins and free cash flow while maintaining 100% of our investments in strategic growth initiatives throughout the entirety of the pandemic.
At our May Aerospace & Electronics Investor Event we showed you numerous examples of how we continue to effectively drive above market growth and our expectation of a 7% to 9% sales compound average growth rate over the next ten years.
And that was one of the key factors behind our newly announced $300 million share repurchase authorization.
At Aerospace & Electronics, sales of $169 million increased 7% compared to last year.
Segment margins improved 370 basis points to 19.3%.
In the quarter, total aftermarket sales continued to gain momentum and increased 24% compared to last year after 3% of growth last quarter.
On the military side, spares and repair both improved in the 10% range but military modernization and upgrade sales were lower.
Commercial OE sales increased 31% in the quarter following 4% growth last quarter.
On a year-to-date basis, defense OE sales are down 6% after three years of double-digit growth.
Given our strong position in major project -- projects that we have already won that will be ramping up over the next few years we remain confident in our ability to grow our defense business at a high single-digit CAGR from 2021 through 2030.
On a full-year basis at Aerospace & Electronics, we should close the year with sales just down very slightly compared to last year and with margins above 7.16% both well ahead of our original guidance for this year.
For example, during the third quarter we were selected for a $60 million program over a 15 year life with our advanced high accuracy, high performance, pressure sensing technology for a newly targeted adjacent multiplatform turbofan engine application.
For example, within the last month we were awarded a $20 million contract for a low Earth orbit satellite constellation using a version of our multi-mix microwave technology with most production sales expected in 2023.
That gave us the confidence to share our 7% to 9% sales CAGR target at last May's Investor Day event.
Process Flow Technologies, sales of $299 million increased 19% driven by a 16% increase in core sales and a 3% benefit from favorable foreign exchange.
Process Flow Technologies operating profit increased by 60% to $46 million.
Operating margins increased 410 basis points to $15.5%, primarily reflecting higher volumes, favorable price cost dynamics and strong execution and productivity.
Sequentially, FX-neutral backlog increased 3% and with FX-neutral orders down 5%.
Compared to the prior year, FX-neutral backlog increased 14% and FX-neutral core orders increased 20%.
For pharmaceuticals we are seeing a number of projects we started after being put on hold, given the intense focus on vaccine production over the last 18 months.
Typically it takes years after launch to get customer approvals for a new valve design, but we believe we are on track for $5 million of sales next year, growing to $30 million within five years.
Also on the process side, our tough seat metal seated ball valve launched earlier this year focused on slurry and high cycle applications with a superior design that gives a valve a 50% longer life.
We are on track for about $3 million of sales this year, which should double in 2022.
We also have exciting developments in our municipal pump business, our chopper pump which we introduced in 2018 reduces clogging and cut -- cuts maintenance costs by 75%.
That value proposition is driving 30% growth this year, and we are adding about 10 new customers each month to our existing base of approximately 250 municipalities.
For Process Flow Technologies overall, our full year outlook continues to improve with full-year margins in the mid 14% range, full year core sales growth in the low double digits, a 4% FX benefit, and the $5 million of contribution from acquisitions that we saw in the first quarter.
At Payment & Merchandising Technologies, sales of $366 million in the quarter increased 31% compared to the prior year, driven by 29% core sales growth and a 2% benefit from favorable foreign exchange.
Segment operating profit increased 87% to $83 million.
Operating margins increased 680 basis points to 2.26%.
For customized self checkout solutions, our current funnel of opportunities is now approximately $185 million, double the size it was at the end of 2020.
To put this higher demand into perspective, our funnel of Paypod opportunities today is approximately $13 million, more than four times the size it was at the end of 2019 and more than twice the size it was at the end of last year.
We are now seeing the European and Latin American casinos beginning to recover lagging about 9 to 12 months behind North America.
In our international business, our expanding portfolio of micro optic security products has helped us double the rate of new denominations secured compared to prior years with 15 new denominations won to date this year from a wide range of countries across the Caribbean, Northern and Eastern Europe, Asia, Africa and the Middle East.
We are winning as central banks realize that our technology is more secure and difficult to counterfeit and because it is completely customizable and can be integrated into innovative and stunning banknote designs, such as the new Bahamas $100 banknote.
This is an extremely exciting potential opportunity that opens a new $800 million addressable market to us.
We now expect full year margins in the 22% range at or above the high end of our long-term target range of 18% to 22%.
Full year core sales growth is now expected to be in the high teens with a 3% favorable FX benefit.
We have had extremely strong cash flow performance year-to-date with free cash flow of $286 million compared to $177 million last year.
As a reminder, on May 24th we announced that we had signed an agreement to sell our Engineered Materials segment for $360 million.
When the transaction closes we expect proceeds net of tax to be approximately $320 million.
And at the end of the third quarter, we had approximately $450 million of cash on hand.
By the end of the year we expect adjusted gross leverage toward the bottom end of the two to three times range target for our current credit rating, and we estimate that by year-end we will have approximately $1 billion of additional capacity.
As Max mentioned, we announced Board authorization for $300 million share repurchase program.
Turning to guidance, as Max explained we are raising our adjusted earnings per share guidance by $0.35 to a range of $6.35 to $6.45 reflecting continued excellent execution and stronger end markets.
First, we now expect a tax rate of approximately 17.5% compared to our prior guidance of 20.5%.
The lower tax rate is a roughly 23% -- $0.23 per share benefit compared to prior guidance.
We continue to expect a tax rate of approximately 21% on a normalized basis.
Second, we now expect corporate cost of approximately $90 million, $10 million or $0.13 per share higher than our prior guidance.
Third, the core operational improvement reflected in the guidance is approximately $0.25 per share compared to the prior guidance.
This improvement reflects strong leverage on sales now forecast at $50 million higher, with full year core sales guidance up 300 basis points to a range of 10% to 12%, partially offset by FX translation down 100 basis points to an approximate 2.5% benefit.
Fourth, in addition to raising the midpoint of our guidance range we narrowed the range from $0.20 per share to $0.10 per share, reflecting both how close we are to the end of the year as well as ongoing supply constraints that are likely to cap further upside this year.
We also increased free cash flow guidance to a range of $340 million to $365 million, up 17.5 million from prior guidance at the midpoint, reflecting higher earnings and lower capex now forecast at $60 million.

Summary:
We finished the third quarter with record adjusted earnings per share from continuing operations of $1.89 up 103% compared to last year along with extremely strong adjusted operating margins of 16.8%.
Based on this performance, we are raising our adjusted earnings per share from continuing operations guidance by $0.35 to a range of $6.35 to $6.45, which is effectively our 5th guidance increase this year.
And that was one of the key factors behind our newly announced $300 million share repurchase authorization.
As Max mentioned, we announced Board authorization for $300 million share repurchase program.
Turning to guidance, as Max explained we are raising our adjusted earnings per share guidance by $0.35 to a range of $6.35 to $6.45 reflecting continued excellent execution and stronger end markets.
We continue to expect a tax rate of approximately 21% on a normalized basis.
This improvement reflects strong leverage on sales now forecast at $50 million higher, with full year core sales guidance up 300 basis points to a range of 10% to 12%, partially offset by FX translation down 100 basis points to an approximate 2.5% benefit.