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Crane NXT (CXT) 7 Nov 24 2024 Q3 Earnings call transcript

AInvestThursday, Nov 7, 2024 8:20 pm ET
1min read

Crane NXT, a leading provider of technology solutions for securing, detecting, and authenticating, held its Q3 2024 earnings call, highlighting the company's strategic acquisitions, operational improvements, and financial performance. The call, led by Christina Cristiano, CFO, and Aaron Saak, President and CEO, offered insights into the company's growth trajectory and strategic initiatives.

Strategic Acquisitions and Integration

Crane NXT announced the acquisition of De La Rue Authentication Solutions, a leading global provider of digital and physical authentication technologies, in October 2024. This strategic move aligns with the company's goal of expanding its leadership in the $3 billion authentication market. The acquisition includes three strategic platforms, including government revenue solutions, identification security solutions, and brand protection products, which will further enhance Crane NXT's portfolio and capabilities.

The integration of OpSec, acquired earlier in the year, is also underway, with operational improvements being made in manufacturing and back-office processes. The company is actively engaging with customers to expand its portfolio of authentication technologies, with a positive response from the market.

Financial Performance and Guidance

The third quarter performance was in line with expectations, with sales increasing over 14% year-over-year, reaching approximately $400 million. Core sales growth, excluding OpSec, was approximately 5%, driven by higher international currency shipments. The company's adjusted EPS was $1.16, and it remains optimistic about its future growth prospects.

Crane NXT is narrowing its sales guidance for 2024 to a range of plus 6% to plus 8% growth, with a focus on its strong backlog and operational execution. The company is also expecting to narrow its full-year adjusted EPS guidance to $4.22 to $4.30, reflecting mixed headwinds from currency and continued softness in the gaming end market.

Moving Forward: Strategic M&A and Operational Execution

Crane NXT remains committed to its strategy of growing and diversifying its portfolio through strategic M&A. The company's disciplined approach to M&A, focusing on markets with secular tailwinds and technologies with a clear path to value creation, is expected to drive future growth.

The acquisition of Tru Tag's Smart Packaging technology, which enhances the ability to authenticate products through a proprietary app, is a testament to the company's strategic focus. The integration of De La Rue Authentication Solutions and OpSec is also expected to deliver high double-digit ROIC by year 3.

Conclusion

Crane NXT's Q3 earnings call underscored the company's strategic acquisitions, operational improvements, and financial performance. With a clear focus on securing, detecting, and authenticating, Crane NXT is well-positioned to capitalize on market opportunities and drive shareholder value. The company's strategic approach to M&A and operational execution, coupled with its commitment to innovation, will be key drivers of its future growth.

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