Crane NXT, Co. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Recognized team members' dedication and noted Q3 performance was in line with expectations, with sales growing ~10% year-over-year and adjusted EPS of $1.28.
• International currency business continued strong performance, with several new customer wins in Latin America and on track to achieve 10-15 new denominations for the full year.
• U.S. currency business expected to grow in the high single digits in 2026 due to the Federal Reserve's 2026 print order, including increased demand for higher denomination banknotes with advanced security features, and the new $10 bill redesign advancing as planned.
• Announced acquisition of Antares Vision, a global leader in detection, inspection, and track and trace technologies for life sciences and food & beverage sectors, with plans to close the first phase in December.
• Authentication integration is on track, with efforts to convert more customers to advanced micro-optics technology, improving margins and customer stickiness.
• CPI service business expanded, achieving mid-single-digit ARR growth in new higher-growth end markets.

Segment Performance

• CPI: Sales were approximately $216 million, down approximately 4% year-over-year. Despite lower volume, adjusted operating margin was approximately 31%, reflecting cost reduction measures, pricing, and productivity. Full year adjusted operating margin is expected to be between 29% and 30%.
• Security and Authentication Technologies (SAT): Sales were approximately $229 million, up approximately 28% year-over-year (including acquisitions). Core sales increased approximately 9% year-over-year, driven by higher volumes and favorable product mix in currency. Adjusted segment operating profit margin was approximately 24%, up approximately 250 basis points year-over-year. International currency backlog remained at near record high levels, and third quarter sales were stronger than original forecast.

Guidance

• Raised full year sales guidance for SAT and NXT overall to a range of 9% to 11% from the previous range of 6% to 8%, reflecting outperformance in currency and reduced sales outlook for CPI.
• Narrowed adjusted EPS guidance to a range of $4 to $4.10.
• 2026 outlook: SAT expects mid-single-digit core growth driven by favorable product mix in U.S. currency and strong international currency performance; CPI expects flat to low single-digit growth overall with service growing in the mid-single digits; Antares Vision integration will be included in future guidance updates.

Risks

• Macro factors such as tariffs and broader macroeconomic uncertainties impacting CPI short-cycle businesses, particularly in the vending segment.
• Dependence on regulatory approvals for the acquisition of Antares Vision.

Question and Answer

• Q: On currency side, booking in '27, sold out for '26?

A: Not sold out, but confident in backlog, taking actions to increase production including organic investments, working with outside partners, and optimizing supply chain.

• Q: CPI vending delta?

A: Ongoing order softness due to tariffs and price increases, with vending down in high single digits in Q3 and expected to be down in Q4.

• Q: Upgrading De La Rue to micro-optics?

A: Successful transition of customers from legacy De La Rue holographic products to micro-optics, lifting gross margin and increasing customer stickiness, with the program slightly ahead of schedule.

• Q: Antares Vision business organization and guidance?

A: Antares Vision acquisition process ongoing, with no initial inclusion in 2026 guidance; will be updated after closing and public tender process.

• Q: CPI service business end markets?

A: Service business spread across many end market verticals, including financial services, gaming, retail, and kiosks, growing mid-single digits.