CXT

Crane NXT, Co. 10-Q Summary: Period Ended June 30, 2026

Business Context and Reporting Period

This Form 10-Q covers the quarterly and six-month periods ended June 30, 2026, for Crane NXT, Co., a global leader in authentication and traceability technologies. The company operates through two reportable segments: Security and Authentication Technologies (SAT) and Detection and Traceability Technologies (DTT). A significant development during the period was the completion of the multi-phase acquisition of Antares Vision S.p.A. on March 31, 2026, which was consolidated into the DTT segment.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased 22.0% in Q2 2026 and 19.9% for the six months ended June 30, 2026. Growth was driven primarily by acquisitions (Antares Vision and De La Rue), contributing $74.6 million in Q2 and $101.1 million for the six months, alongside organic growth in the Currency business.
• Profitability: Operating profit rose 43.8% in Q2 2026 to $68.9 million, driven by volume increases in SAT, favorable pricing, and cost-saving actions. However, for the six-month period, operating profit increased only 6.9% due to acquisition-related amortization and unfavorable mix in the DTT segment.
• Segment Performance:
  • SAT: Sales grew 17.5% in Q2, with operating profit surging 116.7% to $39.0 million due to productivity gains and higher volumes.
  • DTT: Sales grew 26.1% in Q2, but operating profit declined 10.2% to $44.0 million. This decline was attributed to acquisition-related amortization, stock-based compensation, and lower volumes in the CPI business.
• Debt and Liquidity: Total debt increased significantly due to the Antares Vision acquisition. The company borrowed $366.9 million under Term Loan B and assumed $123.5 million of target debt. Despite this, cash provided by operating activities increased to $72.7 million for the six months ended June 30, 2026.

Guidance, Outlook, and Risks

• Acquisition Integration: Management is integrating Antares Vision, which has resulted in significant non-cash amortization and stock-based compensation expenses impacting DTT margins in the near term.
• Restructuring: The company recorded $3.4 million in restructuring charges in Q2 2026, primarily related to severance and facility exit activities for DLR and OpSec integration, as well as CPI cost alignment. Cumulative charges for the 2025 restructuring initiative are expected to reach approximately $25 million.
• Market Risks: The company is monitoring the conflict in the Middle East, which has caused supply chain pressures, higher freight costs, and extended lead times. While operational continuity was maintained, further escalation could adversely affect future results.
• Tax Environment: The effective tax rate for the six months ended June 30, 2026, was 24.7%, higher than the prior year due to the mix of non-U.S. earnings and the adoption of the OECD Pillar 2 global minimum tax, which is expected to impact the fiscal year by approximately $2.5 million.
• Subsequent Event: On July 2, 2026, the company amended its Credit Agreement to reprice and increase its Term Loan B facility to €480.0 million to repay existing debt and fund working capital.

Investor Verification Checklist

• Acquisition Impact: Verify the sustainability of DTT margins given the heavy amortization and stock-based compensation charges associated with the Antares Vision acquisition.
• Debt Servicing: Review the increased interest expense ($21.0 million in Q2 vs. $16.4 million in Q2 2025) and the company's ability to service the expanded debt load from operating cash flows.
• Organic Growth: Assess the organic sales growth rate (2.8% in Q2) to determine if underlying demand is strengthening independent of M&A activity.
• Restructuring Costs: Monitor the remaining expected costs for the 2025 restructuring program and any potential new initiatives in CPI.
• Geopolitical Exposure: Evaluate the specific exposure to Middle East supply chain disruptions and potential long-term cost inflation.