Crane NXT, Co. Q4 FY2024 earnings call

• Financial Results: Q4 sales growth was approximately 12% and full year ~7%; adjusted EBITDA margin was approximately 27% in both periods; adjusted free cash flow conversion was 109% in Q4 and 76% for the full year; adjusted EPS was $1.20 in Q4 and $4.26 for the full year.
• Strategic Actions: In currency business, won 13 new denominations specifying micro-optics, secured first contract selling micro-optics through OpSec channel, and completed equipment upgrades for new US banknotes. In CPI, opened first service center. Completed acquisitions of OpSec and TruTag Smart Packaging, on track to close De La Rue Authentication Solutions acquisition in Q2 2025.
• US Currency: Stopped production in a papermaking facility in late 2024 to complete equipment upgrades for new US banknotes, with the second cycle of upgrades on track to finish March 2025; expect US currency sales down ~20% in 2025.

CPI: Fourth quarter sales were flat compared to Q4 2023, with mid-single-digit growth in most end markets offset by gaming softness, maintaining an adjusted operating margin of approximately 29%. Full-year core sales decreased by approximately 1% due to gaming softness, but other end markets grew mid-single digits, maintaining an adjusted operating margin of approximately 30%. CPI ended the year with a backlog of $146 million. Security and Authentication Technologies (SAT): Fourth quarter core sales were up over 7% driven by international currency, with adjusted operating margin increased by 20 basis points. Full-year core sales growth was approximately 5% driven by international currency, offsetting production stoppages for new US banknotes, but adjusted operating margin decreased by 260 basis points due to OpSec dilution and US business mix. SAT ended the year with a segment backlog of $248 million.

• Overall sales growth expected to be 1%-3% in 2025, including FX headwinds of 1-2 points.
• CPI expected to grow in low single digits, with gaming sales returning to growth in Q3 and retail sales down high single digits.
• SAT expected mid-single-digit growth in international currency, OpSec growing mid-single digits pro forma, and US government sales down ~20%.
• Adjusted EPS range $4.00-$4.30; segment margins ~26%-27%; Q1 2025 expected lower revenue and margin due to US currency upgrades and OpSec dilution.

• Potential impact of tariffs not factored into 2025 guidance; supply chain risks related to sourcing and manufacturing.
• Softness in retail end market for CPI; continued inventory burn-down in gaming affecting sales timing.

Q: On gaming, confidence in second-half inflection?

A: End market healthy, OEMs working through inventory, lead times improved, expecting inflection in Q2.

Q: Leverage and acquisition pipeline?

A: Net leverage expected ~2.3x post-De La Rue close, M&A funnel healthy with adjacency-focused deals.

Q: Micro-optics through OpSec channel?

A: New customer, full suite of authentication solutions, sales process long, sticky contracts with recurring revenue.

Q: Retail self-checkout trends?

A: Shift to custom solutions, softness in traditional OEM orders, custom growth offsetting decline.

Q: Currency business international growth?

A: Combination of core customer renewals and new wins, high confidence based on orders in hand and funnel.