Crane NXT, Co. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Results: Strong end to 2025 with sales growth of approximately 20% in Q4 and 11% for the full year. Adjusted EBITDA margin was approximately 25% in Q4 and 24% for the full year. Adjusted free cash flow conversion was 135% in Q4 and 94% for the full year. Adjusted EPS was $1.27 in Q4 and $4.06 for the full year.
• Key Achievements:
  • Ended 2025 with 20 new micro-optics currency denomination wins, exceeding target range.
  • Successfully completed equipment upgrades for U.S. currency launch, preparing for new $10 bill release.
  • Secured contracts with major sports leagues, including renewal with NFL and new agreement with MLB.
  • Combined Crane Authentication by integrating OPSX Security and De La Rue Authentication, making progress on synergies.
  • Closed initial equity investment in Antares Vision, on track to take private in mid-2026.
  • Invested in international currency capacity with actions like increasing staffing, procuring from suppliers, and expanding production lines.
• Antares Vision: Initial 32% equity investment completed in Q4 2025, plan to take private in mid-2026, with guidance to be updated after achieving >50% ownership in Q1 2026.

Segment Performance

• CPI:
  • Q4: Core sales flat compared to 2024, with double-digit growth in gaming offset by softness in other end markets like vending. Adjusted operating margin improved approximately 340 basis points to approximately 32%.
  • Full Year: Core sales decreased by approximately 4% year over year, reflecting the indirect impact of tariffs on the vending end market and the final phase of the gaming dynamic. Adjusted operating margin was maintained at approximately 29%.
• Security and Authentication Technologies (SAT):
  • Q4: Core sales up approximately 11%, driven by 11 new micro-optics denomination wins in Crane Currency, bringing full year total to 20 new wins. Adjusted segment operating margin decreased by 420 basis points.
  • Full Year: Core sales growth of approximately 7%, driven by strength in currency. Adjusted operating margin decreased by approximately 380 basis points, impacted by acquisitions, increased costs in international currency, and unfavorable FX. Backlog was up more than 50% year over year.

Guidance

• 2026 Full Year:
  • Sales growth expected to be 4%-6%.
  • SAT: High single-digit growth in U.S. currency, low single-digit growth in international currency.
  • Crane Authentication: Mid-single-digit core growth, including full year contribution from De La Rue acquisition.
  • CPI: Sales flat, with mid-single-digit growth in service, flat revenue in hardware businesses, and low single-digit decline in vending.
  • Adjusted segment EBITDA margin expected to be approximately 28%, flat year over year.
  • EPS range $4.10-$4.40.
  • Adjusted free cash flow conversion expected in the range of approximately 90%-110%.
  • Phasing: Revenue slightly higher in second half, Q1 expected mid-teens revenue growth in SAT due to De La Rue acquisition and U.S. currency operations.

Risks

• Unfavorable foreign exchange (FX) impact on margin due to manufacturing costs in Swedish krona and euro.
• Timing variability of currency shipments affecting adjusted free cash flow conversion.
• Tough comparables for international currency growth in 2026 compared to strong 2025 performance.

Q: Matt J. Summerville asks about SAT margin performance and pricing elasticity.

A: Aaron W. Saak and Christina Cristiano respond about investments, guidance phasing, and margin recovery.

Q: Mike Halloran inquires about CPI dynamics and U.S. $10 bill onboarding.

A: Christina Cristiano and Aaron W. Saak discuss CPI phasing, tariff impact, and U.S. $10 bill launch expectations.

Q: Robert James Labick asks about drivers of international currency growth and security-only contract updates.

A: Aaron W. Saak and Christina Cristiano elaborate on market drivers, sustainability of growth, and ongoing security-only opportunities.

Q: Isaac Arthur Sellhausen asks about SAT segment breakdown and $10 note run-rate production.

A: Aaron W. Saak and Christina Cristiano provide directional breakdown of SAT and discuss U.S. $10 bill launch timing and impact.

Q: Robert Brooks asks about financial benefit from sports league contracts and 24/7 staffing for micro-optics production.

A: Christina Cristiano and Aaron W. Saak discuss recurring revenue from sports league contracts and details on ramping up 24/7 staffing for micro-optics production