Crane NXT, Co. Q2 FY2025 earnings call

• Q2 performance was in line with expectations, with sales growth of approximately 9% year-over-year and adjusted EPS of $0.97, and 120% free cash flow conversion. - Integrated De La Rue Authentication and OpSec to form Crane Authentication, deploying the Crane Business System to drive operational improvements. - Launched new products: Fortress in Authentication (an advanced proprietary security feature) and JetScan Ultra in CPI (a high-speed currency scanner). - U.S. currency business resumed production in Q2 after technology upgrades, on track for 2026 launch. - International currency business continued strong performance with a record high backlog of $400 million in Q2.

CPI: Core sales were down approximately 7% year-over-year, outperforming expectations due to timing of shipments. Adjusted operating margin decreased approximately 300 basis points year-over-year, but expects margin accretion in the second half of the year driven by improved product mix from gaming sales growth, productivity programs, and disciplined cost management. CPI ended the quarter with a backlog of approximately $144 million, with gaming orders up approximately 10% sequentially and 30% year-over-year. Security and Authentication Technologies: Sales grew approximately 32% year-over-year including acquisitions. Core sales increased approximately 9% year-over-year driven by higher international currency volumes. The international currency business had a new record high backlog of approximately $400 million in the second quarter.

• Reaffirmed full year EPS guidance in the range of $4 to $4.30. - SAT sales growth expected to be between 19% and 21%, including approximately $80 million to $90 million of De La Rue sales in 2025. - CPI full year sales growth expected to be between negative 2% and flat. - Adjusted segment operating margin anticipated to be in the range of 25.5% and 26.5%. - Full year free cash flow conversion expected to be in the range of approximately 90% to 110%.

• Tariff and macro uncertainties, which are being mitigated through various pricing and supply chain actions.

Q: Couple of questions. First, color on orders and demand with respect to gaming and other CPI verticals, and conviction on CPI returning to sustained positive organic trajectory.

A: Aaron Saak responded on CPI's gaming segment and other verticals, expressing confidence in CPI's long-term outlook.

Q: Margin phasing in the back half.

A: Christina Cristiano and Aaron Saak discussed phasing of revenue and operating profit, with a slight step-up in Q3 and more weighted to Q4.

Q: Details on Fortress product.

A: Aaron Saak explained Fortress is a materials technology applied to product surfaces/labels for real-time authentication and origin tracing.

Q: 2026 currency order outlook and timing.

A: Aaron Saak and Christina Cristiano discussed mix being key for U.S. currency volumes and the 2026 launch of the U.S. currency redesign program.

Q: Actions to elevate margins in Crane Authentication.

A: Aaron Saak discussed deploying Crane Business System, rationalizing product offerings, consolidating sites, and leveraging scale for supply chain savings.

Q: Product authentication opportunity in luxury goods.

A: Aaron Saak agreed with the logic that product authentication is in its infancy with sizable opportunity, and Crane is driving adoption with brands.

Q: International currency growth drivers.

A: Christina Cristiano mentioned differentiated technology, recurring revenue from existing customers, and a pipeline of 10-15 micro-optic wins for the full year.