Crane NXT, Co. (CXT) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, including improved operating margins and core sales growth. The Q&A section provides insights into strategic initiatives, such as the $10 bill launch and international currency growth, which are seen as sustainable. Although there are some concerns about SAT operating margins and management's lack of specific disclosures, the positive elements outweigh the negatives. The company's market cap suggests moderate sensitivity to news, leading to a likely positive stock price reaction.
Key Financial Performance
Sales Growth (Q4) Sales growth was approximately 20% in the fourth quarter year-over-year, driven by acquisitions and continued strong performance in Crane Currency.
Sales Growth (Full Year) Sales growth was approximately 11% for the full year, driven by acquisitions and strong performance in Crane Currency.
Adjusted EBITDA Margin (Q4) Adjusted EBITDA margin was approximately 25% in Q4, reflecting strong operational performance.
Adjusted EBITDA Margin (Full Year) Adjusted EBITDA margin was approximately 24% for the full year, reflecting consistent operational performance.
Free Cash Flow Conversion (Q4) Free cash flow conversion was approximately 135% in the fourth quarter, driven by robust operating discipline.
Free Cash Flow Conversion (Full Year) Free cash flow conversion was approximately 94% for the full year, in line with expectations.
Adjusted EPS (Q4) Adjusted EPS was $1.27 in the fourth quarter, reflecting strong financial performance.
Adjusted EPS (Full Year) Adjusted EPS was $4.06 for the full year, reflecting consistent financial performance.
CPI Core Sales (Q4) Core sales were flat compared with the fourth quarter of 2024, with double-digit growth in gaming offset by softness in other end markets, including vending.
CPI Core Sales (Full Year) Core sales decreased by approximately 4% year-over-year, reflecting the indirect impact of tariffs on demand in the vending end market and gaming destocking dynamics.
CPI Adjusted Operating Margin (Q4) Adjusted operating margin improved approximately 340 basis points to approximately 32%, driven by disciplined cost management and productivity initiatives.
CPI Adjusted Operating Margin (Full Year) Adjusted operating margin was approximately 29%, maintained through strong cost discipline and productivity.
SAT Core Sales (Q4) Core sales were up approximately 11%, driven by strong performance in Crane Currency and 11 new micro-optics denomination wins in Q4.
SAT Core Sales (Full Year) Core sales growth was approximately 7%, driven by strength in currency and the acquisition of De La Rue Authentication.
SAT Adjusted Operating Margin (Q4) Adjusted operating margin decreased by approximately 420 basis points, impacted by unfavorable mix, additional costs to meet demand, and FX impact.
SAT Adjusted Operating Margin (Full Year) Adjusted operating margin decreased by approximately 380 basis points, driven by acquisitions, increased costs in international currency, and FX impact.
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Operating Highlights
New Currency Denomination Wins: Crane NXT achieved 20 new currency denomination wins in 2025, exceeding the target range of 10-15. This includes 5 new denominations for Fiji, featuring micro-optics integrated into polymer substrates.
U.S. Currency Series Launch: Completed final equipment upgrades for the new U.S. currency series, with the $10 bill set to release in 2026.
Crane Authentication Contracts: Secured significant contract renewals, including multiyear agreements with the NFL and MLB for authentication and security technology.
International Currency Business: Organic backlog increased by over 30% year-over-year, with investments in capacity expansion and productivity initiatives to meet rising demand.
Antares Vision Acquisition: Initial equity investment completed in Q4 2025, with plans to take the company private by mid-2026, expanding presence in life sciences and food and beverage markets.
Adjusted EBITDA Margin: Achieved approximately 25% in Q4 and 24% for the full year 2025, with strong free cash flow conversion of 135% in Q4.
Cost Management: Implemented disciplined cost management and productivity initiatives, particularly in CPI, leading to improved operating margins.
Crane Authentication Integration: Combined optic security and De La Rue Authentication into one integrated business, driving synergies and margin improvements.
Capacity Expansion: Investing in new micro-optics production lines and increasing staffing to support international currency demand.
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Risk or Challenges
Adjusted segment operating margin: Declined approximately 120 basis points in Q4 and 260 basis points for the full year due to additional costs and investments to support increased demand in international currency and unfavorable FX impacts.
CPI core sales: Decreased by approximately 4% year-over-year due to the indirect impact of tariffs on demand in the vending end market and gaming destocking dynamics.
International currency business: Faced increased costs to meet demand, including hiring and training additional production staff, higher freight, procurement of substrates from third-party suppliers, and outsourcing of banknote printing. Also impacted by unfavorable FX.
SAT adjusted segment operating margin: Decreased by approximately 380 basis points for the full year due to increased costs in international currency, unfavorable FX, and the impact of acquisitions.
Vending end market: Order softness continues following price increases to offset the impact of Chinese tariffs.
Antares Vision acquisition: Involves significant financial commitments, including a $500 million term loan and additional debt, which could impact leverage and financial flexibility.
Capacity expansion in international currency: Requires significant investments, including new production lines and increased CapEx, which could strain resources and increase operational costs in the short term.
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Guidance & Outlook
Sales Growth: For 2026, full-year sales growth is expected to be 4% to 6%. SAT (Security and Authentication Technologies) is projected to achieve high single-digit growth, driven by U.S. currency demand and low single-digit growth in international currency. CPI (Currency Products International) sales are expected to remain flat year-over-year.
Adjusted EBITDA Margin: The adjusted segment EBITDA margin is expected to be approximately 28%, flat year-over-year. This includes high profitability in CPI and synergy realization in Crane Authentication, offset by capacity expansion costs in international currency.
Adjusted EPS: Full-year adjusted EPS is projected to range between $4.10 and $4.40.
Free Cash Flow Conversion: Adjusted free cash flow conversion is expected to range from 90% to 110%, with specific timing of currency shipments potentially causing quarterly variations.
Capital Expenditures: CapEx is expected to increase to approximately 7% of currency revenue in 2026, driven by investments in micro-optics production lines and capacity expansion. Overall CapEx for Crane NXT is projected to remain in the range of 3% to 5% of sales.
Antares Vision Acquisition: The acquisition process is on track, with consolidation of Antares Vision's results expected in Q1 2026 and the company being taken private by mid-2026.
U.S. Currency Series Launch: The new U.S. $10 bill is set to launch in 2026, with design and testing finalized.
International Currency Growth: 20 new micro-optic wins in 2025 and a 30% year-over-year increase in organic backlog are expected to drive growth in 2026. Additional costs of $4 million are anticipated for capacity expansion, with significant reductions expected in 2027.
Crane Authentication Growth: Mid-single-digit core growth is expected, including a full-year contribution from the De La Rue Authentication acquisition. Synergy realization is projected to drive significant margin accretion in 2026.
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Shareholder Return Plan
Dividend Increase: Announced a 6% increase to the annual dividend, maintaining a competitive dividend while preserving capacity for future acquisitions.
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Key Q&A
Q:Why can't the SAT business test price elasticity in the market despite strong demand?
A:Aaron Saak explained that most contracts in the backlog were established well before execution, providing visibility into 2026. As new contracts are added, the company focuses on maximizing value and pricing power with leading technology.
Q:Can you provide more details about the EPS cadence throughout the year and cost recovery on investments?
A:Christina Cristiano stated that EPS will accelerate in the first half of the year and level off in the second half, with guidance of $4.10 to $4.40. Aaron Saak added that adjusted EBITDA margins in the SAT segment are expected to increase by about 120 basis points in 2026, with continued incremental improvement.
Q:What are the sequential CPI dynamics in Q1 and expectations for recovery?
A:Christina Cristiano mentioned that CPI is expected to be flat in 2026 with a 30% EBITDA margin. Services will grow mid-single digits, vending will be down low single digits but improve in the second half, and hardware businesses will be flat for the year with growth skewed to the back half.
Q:What is the expectation for the $10 bill onboarding and international currency flow?
A:Aaron Saak stated that the U.S. Treasury is expected to announce the $10 bill midyear, with full consumer release likely in Q4. Christina Cristiano added that international demand will accelerate during the year but face tough comps in Q4 due to strong performance in the previous year.
Q:What are the drivers for faster growth in international currency, and how sustainable is it?
A:Aaron Saak identified increased counterfeiting, growth in emerging economies, and faster redesign times as drivers. These trends are seen as durable, supporting sustainable growth and the target of 10-15 new micro-optics wins per year.
Q:Is there an update on the international currency security-only contract win with a Latin American country?
A:Aaron Saak stated that the company cannot yet announce the country due to contractual obligations but emphasized the significance of the win and its potential as a reference customer. The company is pursuing several opportunities to sell advanced security features.
Q:Can you provide a breakout of currency and non-currency growth in the SAT segment for Q4?
A:Aaron Saak reported high double-digit growth in currency, driven by international currency strength, while U.S. currency faced headwinds. The De La Rue acquisition performed as planned, and lower growth in the legacy OpSec business was intentional due to 80/20 work.
Q:What is the timeline for the $10 note to reach run-rate production?
A:Aaron Saak explained that the timeline depends on the U.S. Treasury's launch decision, with production ramp-up expected in Q4. The company is working closely with the Treasury to set up inventory levels ahead of the public launch.
Q:What is the financial benefit of renewing authentication and security contracts with professional sports leagues?
A:Christina Cristiano highlighted the recurring revenue stream from these sticky arrangements, which include product authentication and licensee management software. The company continues to explore additional offerings for these customers.
Q:What is the status of transitioning micro-optics production to 24/7 staffing?
A:Aaron Saak stated that the transition to 24/7 staffing is expected to be completed by the end of Q1. Investments are being made to add capacity in Nashua and Malta, enhancing redundancy and proximity to customers.
Q:Review of Unclear Management Responses
A:Management avoided providing specific financial details about the renewals with professional sports leagues, citing contractual limitations. Additionally, they did not disclose the name of the Latin American country involved in the security-only contract win, citing contractual obligations.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Crane Currency
De La
Full
La Rue
League
President Investor
Rue Authentication
SAT digit
acquisition De
acquisition currency
announcement
banknote
capacity
capital
contract
contribution
core sale
creation
currency FX
currency demand
demand currency
design
digit currency
digit decline
dividend
equity investment
hardware
increase
interest expense
metric
mid
outlook
point acquisition
profitability
realization
sale digit
softness
stake
substrate
success
CXT Transcript
Crane NXT, Co. (CXT) Q4 2025 Earnings Call Transcript
Positive2-12
The earnings call highlights strong financial performance, including improved operating margins and core sales growth. The Q&A section provides insights into strategic initiatives, such as the $10 bill launch and international currency growth, which are seen as sustainable. Although there are some concerns about SAT operating margins and management's lack of specific disclosures, the positive elements outweigh the negatives. The company's market cap suggests moderate sensitivity to news, leading to a likely positive stock price reaction.
Crane NXT, Co. (CXT) Presents at CJS Securities 26th Annual "New Ideas for the New Year" Investor Conference Transcript
Neutral1-14
Crane NXT, Co. (CXT) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call indicates strong performance in gaming and SAT sales, with growth and improved margins. The company maintains a positive outlook with a strong backlog in international currency and plans for U.S. currency redesigns. While there are concerns in vending and unclear guidance on some fronts, the overall sentiment is positive due to optimistic guidance, strong financial metrics, and strategic acquisitions. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction.
Crane NXT, Co. (CXT) Presents at 24th Annual Diversified Industrials & Services Conference Transcript
Neutral9-18
CXT Slides
Crane NXT Q4 2025 slides: 20% sales growth driven by acquisitions, margins under pressure2026-02-11
Crane NXT Q3 2025 slides: 10% sales growth, narrows full-year guidance2025-11-05
Crane NXT Q2 2025 slides: record currency backlog offsets payment segment decline2025-08-06
Crane NXT Q1 2025 slides: 5% sales growth amid strategic authentication push2025-05-07
CXT Report
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