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]

Core Insights - A significant increase in new ETF launches has raised concerns among investors, with Citigroup's Drew Pettit indicating that the current launch rate is at an "unsustainable level" which may lead to "product rationalization and closures" [1] ETF Market Dynamics - The growth of ETFs has intensified competition, potentially leading to closures as investors have limited capital to allocate, and smaller ETFs often have higher expense ratios, reducing the incentive for investors to try new funds [2] - An ETF issuer is required to announce a fund's closing date in advance, allowing investors time to exit before the fund liquidates its assets and distributes cash to shareholders, which is a taxable event [3] Impact of ETF Closures - The closure of a single ETF is unlikely to significantly impact the stock market; however, if multiple ETFs shut down, it could lead to high liquidation and lower stock prices, although investors would receive their money and could reinvest in similar ETFs or individual stocks [4] - A large ETF, such as the Vanguard S&P 500 ETF (NYSE: VOO), with over $1 trillion in net assets, would create a significant liquidity event if it were to shut down, while a smaller ETF with $100 million in assets would have a minimal impact [5] Market Risks Associated with ETFs - Large outflows from ETFs can negatively affect the stock market, particularly if investor panic occurs during market downturns, as seen during President Trump's tariff announcements [6] - ETFs may contribute to overvaluation of equities, especially those that track benchmarks like the S&P 500 or Nasdaq Composite, which weight companies by market capitalization [6]