Crane NXT, Co. (CXT) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, with expected high single-digit growth in U.S. currency sales and mid-single-digit growth in authentication. The Antares acquisition is set to boost EPS by 2027, and the U.S. $10 bill rollout is a positive catalyst. Despite some dilution from Antares this year, the outlook remains optimistic, with positive momentum in international currency and solid shareholder returns. The market cap suggests a moderate stock reaction, resulting in a positive sentiment.
Key Financial Performance
Organic Sales Growth Approximately 6% year-over-year. Driven by strong performance in SAT and partially offset by expected softness in CPI hardware.
Total Sales Growth Approximately 17% year-over-year. Reflects strong performance in SAT and the inclusion of Antares Vision acquisition.
Adjusted EBITDA Margin Increased by 80 basis points to 19%. Driven by SAT volume flow-through and realization of operating synergies in authentication.
Adjusted EPS $0.60, an increase of approximately 11%. On track with full-year guidance expectations.
Free Cash Flow Reflects normal seasonality and timing of payments. Expected to accelerate throughout the year with a full-year conversion ratio between 90% and 110%.
Security and Authentication Technologies (SAT) Sales Growth 51% year-over-year. Driven by the De La Rue Authentication acquisition and 22% organic growth due to robust demand in international currency and favorable U.S. currency comparisons.
SAT Adjusted EBITDA Margin Increased by 600 basis points to 20%. Reflects higher U.S. currency volume and execution of synergies in the authentication business.
Detection and Traceability Technologies (DTT) Sales Declined approximately 4% year-over-year. Mid-single-digit growth in CPI service was offset by lower hardware sales.
DTT Adjusted EBITDA Margin Decreased by 160 basis points year-over-year. Reflects lower hardware volume and product mix.
Segment Backlog (DTT) $221 million, including $100 million from Antares Vision. CPI backlog grew sequentially by approximately 8%.
Net Leverage Approximately 2.9x, including financing for Antares Vision. Expected to reduce to approximately 2.3x by the end of 2026.
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Operating Highlights
Antares Vision Acquisition: Successfully completed the acquisition of Antares Vision ahead of schedule, expanding Crane NXT's reach into the $3 billion life sciences and food and beverage markets. Antares Vision provides advanced detection and inspection equipment, track and trace software, and field services.
New $10 Banknote: Crane NXT is preparing for the launch of the new $10 banknote, expected to be announced this year, featuring advanced micro-optics technology.
Market Expansion into Life Sciences and Food & Beverage: The acquisition of Antares Vision positions Crane NXT as a global leader in authentication and traceability technologies, expanding its presence in the life sciences and food and beverage markets.
International Currency Growth: Achieved 22% organic sales growth in international currency, driven by robust demand and favorable comparisons to 2025.
Operational Synergies: Integration of Antares Vision with Crane NXT's CPI business to realize operational synergies, leveraging the Crane Business System.
Adjusted EBITDA Margin Improvement: Increased adjusted EBITDA margin by 80 basis points year-over-year, reflecting operational improvements and synergies.
Focus on Authentication and Traceability: Crane NXT is building on its leadership in authentication and traceability technologies, aiming to deliver sustainable mid-single-digit organic growth and expand its total addressable market.
Long-term Growth Strategy: Targeting $2.5 billion in sales by 2028 through organic growth and disciplined M&A, while maintaining net leverage below 3x.
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Risk or Challenges
Integration and Synergy Execution: The integration and synergy plans for Antares Vision are critical. Any delays or inefficiencies in executing these plans could impact operational performance and financial outcomes.
Supply Chain Challenges: Expected lower hardware sales in the CPI segment indicate potential supply chain or demand challenges that could affect revenue and margins.
Debt and Leverage: Net leverage increased to 2.9x due to the Antares Vision acquisition. While plans are in place to reduce this, higher leverage could limit financial flexibility and increase vulnerability to economic uncertainties.
Market Demand Variability: Softness in CPI hardware sales and dependency on international and U.S. currency demand highlight risks tied to market demand fluctuations.
Economic and Regulatory Risks: The company’s expansion into life sciences and food and beverage markets through Antares Vision exposes it to new regulatory and economic risks specific to these industries.
Operational Efficiency: Achieving expected margin improvements in CPI and SAT segments depends on productivity programs and cost management, which could face execution risks.
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Guidance & Outlook
2026 Financial Guidance: Updated guidance includes total sales growth of 15% to 17%. Adjusted segment EBITDA margin is expected to be approximately 27%, including contributions from Antares Vision. Full-year EPS guidance remains at $4.10 to $4.40.
Antares Vision Contribution: Antares Vision is expected to add approximately $200 million to $210 million of revenue for 9 months in 2026, with Q4 being the highest quarter. Antares Vision backlog of approximately $100 million is expected to be delivered in 2026.
Security and Authentication Technologies (SAT) Segment: High single-digit sales growth is expected, driven by U.S. currency demand and low single-digit growth in international currency. Adjusted EBITDA margin is projected to end the year at approximately 25%.
Detection and Traceability Technologies (DTT) Segment: Sales growth in the low 20s percent is expected, including contributions from Antares Vision. CPI sales are projected to be flat year-over-year, with mid-single-digit growth in service offset by flat to slightly down hardware and vending sales.
Free Cash Flow and Leverage: Free cash flow conversion ratio is expected to be between 90% and 110% for the full year. Net leverage is projected to decrease to approximately 2.3x by the end of 2026.
Second Quarter 2026 Outlook: Mid-teens sales growth is expected in the SAT segment, driven by international currency shipments. DTT segment sales are projected to grow in the mid-20s percent, with Antares Vision contributing $60 million to $70 million in sales.
Long-Term Targets (2028): The company aims to achieve approximately $2.5 billion in sales by 2028, with sustainable mid-single-digit organic growth, adjusted EBITDA margins in the mid-20% range, and net leverage below 3x.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you quantify or qualify the go-forward funnel of opportunity in the international currency business compared to a year ago?
A:The international currency business has a backlog through this year, with bookings extending into 2027 and 2028. The company is adding 10 to 15 new micro-optic wins annually, projecting 200 denominations using micro-optics by 2028 compared to 150 in 2024. Over 70 denominations are expected to be quoted and designed by 2030, with strong momentum anticipated for the next 4-5 years.
Q:Can you quantify the magnitude of dilution from Antares this year and its potential accretive impact in 2027?
A:Antares will cause a few million dollars of dilution this year due to added interest expenses, partially offset by increased margins in core businesses. By 2027, Antares is expected to be accretive to EPS, with updated guidance to be provided later.
Q:What are the underlying dynamics between currency and authentication sales, and why was there a difference in performance?
A:Currency sales were stronger than expected due to favorable mix and strong U.S. performance, while authentication sales were weaker due to CBS and synergy activities. Currency sales are expected to grow mid-single digits for the year, with high single-digit growth in the U.S. and low single-digit growth internationally. Authentication is expected to grow mid-single digits for the year.
Q:What are the growth drivers for Antares, and has it been impacted by macroeconomic factors like the war or higher transportation costs?
A:Antares has not been significantly impacted by macroeconomic factors. Its growth drivers include exposure to secular growth markets like pharmaceuticals, life sciences, and food and beverage, expanding the TAM to $13 billion. These markets are expected to grow mid-single digits with leading authentication and traceability technologies.
Q:Has anything changed in growth expectations for CPI hardware and services, and when is vending expected to normalize?
A:CPI performed as expected in Q1, with adjusted EBITDA margins of about 30% and mid-single-digit growth in services driven by expanded offerings. Hardware and vending are expected to recover through the year, ending flat. Services growth is driven by recurring maintenance across the installed base.
Q:How do you see U.S. currency volumes progressing with the new $10 bill rollout, and will there be benefits in 2027?
A:The new $10 bill rollout is set, and focus is shifting to the $50 bill. U.S. currency is expected to grow high single digits this year due to favorable mix, with material benefits from the new currency expected in 2027.
Q:What is happening below the line in the model, and what is the appetite for further M&A?
A:The guidance includes Antares Vision, with increased sales for DTT and adjustments for lower operating margins. Interest expenses from Antares financing are offset by productivity in the core business, maintaining EPS guidance of $4.10 to $4.40. Future M&A is not expected until 2027, focusing on authentication and traceability technologies.
Q:What incremental capabilities does Antares bring to the portfolio, and how does it integrate with existing products?
A:Antares brings the DIAMIND platform, a sophisticated track-and-trace software for regulated markets like pharmaceuticals and food and beverage. It complements existing authentication capabilities and elevates tracking from manufacturing to consumption. Early focus is on integrating Crane Authentication products with Antares' channels.
Q:What are the targeted organic growth initiatives, and how are they being implemented?
A:Targeted organic growth initiatives focus on the international currency business, with increased CapEx and OpEx for new production lines and outsourcing to meet demand. CapEx remains at 3-5% of sales, with investments in freight, supplies, and capacity expansion.
Q:What are the key factors to consider for modeling EPS progression through the year?
A:EPS is expected to accelerate linearly through the year, maintaining guidance of $4.10 to $4.40. CPI is expected to improve incrementally, Antares will have seasonality with stronger Q4 performance, and currency will face tougher comps in the second half. Core price increases are expected to be low to mid-single digits.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact magnitude of dilution from Antares this year and its precise accretive impact in 2027, stating that updated guidance would be provided later. Additionally, they did not disclose specific pricing details for the new $10 bill or the exact timeline for vending normalization in CPI.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Authentication Technologies
Bank Note
Crane
DTT
De La
Detection Traceability
La Rue
Rue Authentication
Security Authentication
Technologies segment
Traceability Technologies
Vision CPI
Vision sale
authentication traceability
banknote
chain
contribution De
creation priority
detection inspection
digit currency
field service
hardware
improvement
inspection equipment
leader authentication
percent
product quality
sale margin
schedule
start
synergy authentication
technology security
traceability technology
CXT Transcript
Crane NXT, Co. (CXT) Q1 2026 Earnings Call Transcript
Positive5-7
The earnings call highlights strong financial performance, with expected high single-digit growth in U.S. currency sales and mid-single-digit growth in authentication. The Antares acquisition is set to boost EPS by 2027, and the U.S. $10 bill rollout is a positive catalyst. Despite some dilution from Antares this year, the outlook remains optimistic, with positive momentum in international currency and solid shareholder returns. The market cap suggests a moderate stock reaction, resulting in a positive sentiment.
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.
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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