Crane NXT(US:CXT)2023-08-12 17:39Financial Data and Key Metrics Changes - The company reported $352 million in sales with a 6% core sales growth, exceeding expectations [4] - Adjusted EBITDA was $104 million, with adjusted EPS of $1.12 and adjusted EBITDA margins over 29% [4][25] - Adjusted operating margins were above 30% in both segments, reflecting significant sequential improvement [4] - Adjusted free cash flow was $70 million, supporting $50 million of debt repayment, reducing net debt-to-EBITDA to approximately 1.5 times [23][27] Business Line Data and Key Metrics Changes - Crane Payment Innovations (CPI) achieved core sales growth of 8%, driven by end-customer demand and easing supply chain constraints [25] - Crane Currency reported core sales growth of 3.7% with an adjusted segment operating margin of 30.2%, a 330 basis point improvement [26] Market Data and Key Metrics Changes - Solid demand was noted in the gaming sector, with new casino wins contributing to market share growth [7] - The service business showed continued strength, increasing recurring revenue through a large order from a financial services customer [7] Company Strategy and Development Direction - The company aims to grow to $3 billion in revenue and maintain high adjusted EBITDA margins while achieving approximately 100% free cash flow conversion [29] - A key component of the strategy includes introducing new products to enhance customer productivity and consumer experience, such as the Paypod Compact [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook for 2023, citing strong orders and backlog at Crane Currency [5][7] - The normalization of order rates to pre-COVID levels is expected as customers adjust inventories [7][12] Other Important Information - The company is on track with its separation from Crane Company and winding down transitional service agreements [5] - The backlog is nearly twice the size compared to the same time last year, indicating strong market positioning [8] Q&A Session Summary Question: Can you talk about the backlog burn in CPI? - Management indicated that the backlog burn is a normalization process rather than a concern, with customers adjusting orders due to shorter lead times [12] Question: How is the gaming vertical performing? - The gaming sector is performing strongly, with a rich installed base and growth in service business expected [33] Question: What is the outlook for international sales in Crane Currency? - The upside in international sales is attributed to new country wins and increased volume at existing customers, driven by technology superiority [34][42] Question: How is the M&A activity evolving? - The company remains disciplined in its M&A approach, focusing on opportunities that align with its strategy and can generate strong returns [46]