Crane NXT(CXT) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Sales growth was approximately 20% in Q4 and 11% for the full year 2025, with adjusted EBITDA margin at approximately 25% in Q4 and 24% for the full year [4][11] - Adjusted EPS was $1.27 in Q4 and $4.06 for the full year [5][11] - Free cash flow conversion ratio was approximately 135% in Q4 and 94% for the full year [4][11] Business Line Data and Key Metrics Changes - CPI core sales were flat in Q4, with double-digit growth in gaming offset by softness in other markets [12] - Security and Authentication Technologies (SAT) saw core sales up approximately 11% in Q4, driven by strong performance in Crane Currency [14] - Adjusted operating margin for SAT decreased by approximately 420 basis points due to unfavorable mix and increased costs [15] Market Data and Key Metrics Changes - International currency business showed strong performance with organic backlog up over 30% year-over-year [7][25] - CPI is expected to be flat year-over-year in 2026, with mid-single-digit growth in services and low single-digit decline in vending [19][51] Company Strategy and Development Direction - The company is focused on accelerating organic revenue growth while maintaining strong margins and free cash flow [4][30] - Investments are being made in international currency business to expand capacity and meet rising demand [25][27] - The acquisition of Antares Vision is progressing, with plans to consolidate results under Crane NXT in 2026 [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sales outlook for the currency business in 2026, supported by a strong backlog and new contract wins [7][30] - The company anticipates full-year sales growth of 4%-6% in 2026, with adjusted EPS guidance in the range of $4.10-$4.40 [18][22] Other Important Information - The company announced a 6% increase in its annual dividend while maintaining capacity for future acquisitions [18] - Adjusted EBITDA margin is expected to be approximately flat year-over-year at 28% for 2026 [21] Q&A Session Summary Question: Can you discuss the margin performance in SAT and pricing strategy? - Management noted that contracts are executed from backlog, and they are focused on maximizing value and pricing power with new contracts [38][39] Question: What is the expected EPS cadence throughout the year? - EPS is expected to accelerate through the first half of the year, with a total guidance of $4.10-$4.40 reflecting continued strength in currency and authentication [41][42] Question: What are the dynamics in CPI for the first quarter? - CPI is expected to be flat in 2026, with growth in services and a decline in vending due to tariffs, with Q1 anticipated to be the lowest quarter [51][52] Question: What is the status of the $10 bill onboarding? - Management is confident that the U.S. Treasury will announce the new $10 bill mid-year, with full consumer release expected in Q4 [54][80] Question: What are the drivers for faster growth in international currency? - Growth is driven by increased counterfeiting, growth in emerging economies, and faster redesign times for currency [67][69]