CXT

Crane NXT, Co. 10-Q Summary: Q3 2025

Business Context and Reporting Period

This filing covers the quarterly period ended September 30, 2025. Crane NXT, Co. operates in two segments: Crane Payment Innovations (CPI), providing payment verification and automation solutions, and Security and Authentication Technologies (SAT), offering security solutions for physical products and digital content. The company is a large accelerated filer with 57.4 million shares of common stock outstanding as of October 31, 2025.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Q3 2025 sales increased 10.3% year-over-year, driven by a $28.3M contribution from the De La Rue (DLR) acquisition, favorable currency translation ($7.6M), and core sales growth of 1.4%.
• Segment Performance:
  • SAT: Sales surged 28.1% to $228.8M, primarily due to the DLR acquisition and core growth in banknote products. Operating profit rose 34.1% to $39.3M.
  • CPI: Sales declined 3.8% to $216.3M due to lower volumes in vending and gaming, despite favorable pricing. Operating profit fell 6.0% to $60.7M.
• Profitability Pressure: While Q3 operating profit improved, the nine-month operating profit decreased 15.6% to $167.1M. This decline was driven by lower CPI volumes, dilutive acquisition impacts (amortization and fair value step-up), and restructuring charges.
• Restructuring: The company recorded $3.5M in restructuring charges for Q3 2025 (up from $0 in Q3 2024) and $10.8M for the nine months ended September 30, 2025. These costs relate to integrating DLR and OpSec and aligning CPI's cost structure.
• Debt Increase: Total debt increased significantly due to a $400.4M term loan drawn to fund the DLR acquisition.

Guidance, Outlook, and Risks

• Acquisitions:
  • Antares Vision: On September 12, 2025, Crane NXT agreed to acquire Antares Vision (enterprise value ~€445M) in a phased transaction. The first phase is expected to close in Q4 2025. A $602M bridge facility has been secured to fund this deal.
  • DLR Integration: The DLR acquisition (closed May 1, 2025) is being integrated into the SAT segment. DLR contributed $28.3M in sales in Q3 but resulted in an operating loss of $3.1M due to acquisition-related costs.
• Restructuring Outlook: The company expects to substantially complete its 2025 restructuring program by year-end, with total costs estimated between $10M and $15M.
• Tax Environment: The effective tax rate for Q3 2025 was 23.6%. The company adopted the OECD Pillar 2 global minimum tax in 2024, with an anticipated impact of ~$2.4M for fiscal 2025. The company does not expect the "One Big Beautiful Bill Act of 2025" to have a material impact.
• Risks: Key risks include macroeconomic uncertainty affecting demand (particularly in CPI vending), trade policies and tariffs, integration risks of recent acquisitions, and currency fluctuations. Management expects to mitigate most tariff impacts through pricing and productivity initiatives.

Investor Verification Checklist

• Acquisition Integration: Verify the timeline and cost synergies for the DLR and upcoming Antares Vision acquisitions, specifically regarding the dilutive impact of amortization on near-term margins.
• CPI Volume Trends: Monitor the CPI segment's volume decline in vending and gaming to assess if this is a temporary cyclical dip or a structural shift.
• Debt Servicing: Review the impact of increased interest expense ($16.2M in Q3 vs $13.4M in Q3 2024) on free cash flow, given the new term loan and bridge facility commitments.
• Restructuring Completion: Track the execution of the $10M-$15M restructuring program to ensure cost savings materialize as projected.
• Remaining Performance Obligations: Note the $557.0M in remaining performance obligations, with 57% expected to be recognized in 2025.