Financial Data and Key Metrics Changes - Sales grew approximately 10% year over year, reaching approximately $445 million, with adjusted EPS of $1.28 [4][13] - Free cash flow conversion was 115% in the quarter, on track for a full-year target range of 90%-110% [4][14] - Adjusted segment operating profit margin was approximately 28%, up 50 basis points year over year [13] Business Line Data and Key Metrics Changes - CPI segment sales were approximately $216 million, down 4% year over year, primarily due to declines in vending [15] - Security and authentication technologies segment sales were approximately $229 million, growing 28% year over year, with core sales increasing 9% [16] - The international currency business backlog remains at near record high levels, with approximately 20% organic backlog growth year over year [16] Market Data and Key Metrics Changes - The U.S. currency business is expected to grow in the high single digits next year, driven by increased demand for higher denomination banknotes [5][11] - The Federal Reserve's print order for 2026 indicates a significant increase in demand for higher denomination banknotes [5][11] Company Strategy and Development Direction - The company is focused on expanding its market-leading positions and has signed an agreement to acquire Antares Vision, enhancing its portfolio in life sciences and food and beverage sectors [7][9] - The strategy includes upgrading existing customers from legacy products to advanced micro-optics technology, improving margins and customer retention [8][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the backlog and the position for 2026, indicating strong demand in international currency [24] - The company is taking a prudent approach to its outlook for CPI, anticipating continued softness in vending but growth in gaming and service segments [31][32] Other Important Information - The company is on track to achieve adjusted free cash flow conversion of approximately 90%-110% for the full year [17] - The integration of Antares Vision is expected to strengthen the company's position in markets with secular tailwinds [9][66] Q&A Session Summary Question: Currency business capacity for 2026 - Management indicated strong confidence in the backlog and is exploring both organic investments and partnerships to increase production capacity [24][25] Question: CPI vending business outlook - Management noted ongoing order softness in vending due to price increases and macroeconomic factors, expecting this trend to continue into Q4 [31][32] Question: Transitioning De La Rue customers to micro-optics - Management reported good customer receptivity to the transition, expecting significant margin improvements and increased customer stickiness [35][46] Question: U.S. currency redesigns impact - Management clarified that the $10 bill production is on track for mid-2026, with no immediate financial impact expected from the $50 redesign [39][40] Question: Antares Vision integration and guidance - Management expressed excitement about the Antares acquisition but will not include it in initial 2026 guidance until the transaction closes [64][66]

QR Code Evolution & Application - QR codes have evolved from extraordinary to ordinary due to innovation, scalability, problem-solving (contactless payments), and cultural inheritability [4][5][7][8] - QR codes are now widely used in ticketing, marketing, and various other applications [6] - The journey from extraordinary to ordinary consists of innovative technology, cheap scalability, serving a major problem, and cultural inheritability [7][8] Genifi's Solution: Digital Product Passports (DPPs) - Genifi focuses on providing enterprise SaaS solutions to consumer brands, addressing the need for trust and transparency in packaging [11][12] - Genifi innovates QR codes into hyperlinks, creating Digital Product Passports (DPPs) for product tracking and authentication [12][13] - DPPs provide origin, material traceability, process traceability, and post-purchase care information [15] - Genifi is working with brands to solve anti-counterfeiting, warranty activation, and retail loyalty challenges using DPPs [16][17][18][20] Addressing Counterfeiting & Enhancing Authenticity - Genifi's "genuine mark" aims to combat counterfeiting by providing authentic QR codes that consumers can scan to verify product genuineness [21] - Genifi adds layers to the supply chain, benefiting brands and consumers by solving retail loyalty and traceability challenges [22][23] - Genifi is developing unclonable QR codes by combining them with digital fingerprints to prevent copying and ensure product authenticity [24][25] Market Focus - Consumer Packaged Goods (CPG) constitute one-third of the Indian economy, highlighting the importance of regulated and trustworthy packaging [11] - There is a significant challenge in the CPG supply chain across India, particularly concerning the role of retailers [18][19]

Core Viewpoint - Tobacco packaging plays a crucial role in brand promotion, product protection, and compliance with strict government regulations across various countries. The market is influenced by factors such as regulatory requirements, anti-counterfeiting needs, the shift towards low-risk products, sustainability pressures, emerging market growth, and trends in personalization and branding [1][2][3][4]. Regulatory Environment - Governments in countries like Australia, France, and the UK enforce plain packaging laws requiring graphic health warnings that cover 50-90% of the packaging area, prohibiting brand logos and colors [1]. - Increasing graphic and text warnings necessitate redesigning packaging and limit brand visibility [2]. - Regulations mandate child-safe packaging with tamper-evident seals or complex opening mechanisms [2]. Anti-Counterfeiting Demand - The rise of illegal tobacco trade has increased the demand for advanced security features such as holograms, QR codes, and invisible ink to verify product authenticity and comply with the WHO's Framework Convention on Tobacco Control [3]. Shift to Low-Risk Products - The growing popularity of e-cigarettes, heated tobacco products (e.g., IQOS), and nicotine pouches requires specialized packaging, including heat-resistant materials and moisture barriers [3]. Sustainability Pressures - There is a demand from governments and consumers for eco-friendly solutions, such as biodegradable films and recyclable cardboard, to reduce plastic waste and carbon footprints [3]. Emerging Market Growth - The increasing tobacco consumption in regions like Asia-Pacific (e.g., India, Indonesia) and Africa drives the demand for cost-effective, high-capacity packaging [4]. Personalization and Branding Trends - Despite regulatory constraints, there is a growing trend towards personalized and premium packaging designs, including limited edition packaging and unique opening mechanisms to attract consumers seeking exclusive experiences [4]. Market Size and Growth Projections - According to QYResearch, the global tobacco packaging market is projected to reach USD 10.15 billion by 2031, with a compound annual growth rate (CAGR) of 1.9% in the coming years [4]. Market Composition - Paper is the dominant material in the tobacco packaging market, accounting for approximately 75.8% of the market share [13]. - Traditional tobacco products represent the primary demand source, holding about 91.2% of the market share [15]. Key Manufacturers - Major players in the global tobacco packaging market include Amcor, WestRock, Delfort, TANN GROUP, and Jinjia Group, with the top five manufacturers holding around 36.0% of the market share in 2024 [10].