Crane NXT, Co.'s Q3 2025: Contradictions Emerge on CPI Growth, Authentication Margins, Currency Sales, and Vending Performance

Date of Call: November 6, 2025

Financials Results

• Revenue: $445M, up ~10% YOY
• EPS: $1.28 adjusted EPS
• Operating Margin: Approximately 28% adjusted segment operating profit margin, up ~50 basis points YOY

Guidance:

• 2025 full-year sales growth raised to 9%–11% (prior 6%–8%).
• 2025 adjusted segment operating profit margin updated to ~25% (prior 25.5%–26.5%).
• 2025 adjusted EPS narrowed to $4.00–$4.10.
• Antares Vision: initial ~30% stake expected to close in December; full consolidation/tender offer to follow in 2026 (guidance will be updated after close).
• Early 2026 views: SAT mid-single-digit core growth; Authentication mid-single digits; CPI flat to low-single-digit growth with service mid-single digits; U.S. currency high-single-digit growth driven by higher-denomination mix and mid-2026 $10 production.

Business Commentary:

• **Strong Performance in International Currency:
• Crane NXT's international currency business exceeded expectations, with sales growing in the mid-single digits in Q3.

• Growth was driven by customer wins and redesigns incorporating advanced micro-optic technology, leading to increased demand.
  

  

• **U.S. Currency Business Outlook:

• The U.S. currency business is expected to grow at high single digits in 2026 due to favorable order mix for higher denomination banknotes.

• This growth is attributed to increased demand for notes containing advanced security features, including the new $10 bill.

• **Authentication Business Integration:

• The integration with De La Rue is on track, with plans to upgrade customers to micro-optics technology, enhancing margins and customer stickiness.

• This transition is part of a broader strategy to simplify the product offering and improve operational efficiency.

• **Antares Vision Acquisition:

• Crane NXT announced an acquisition of a 30% stake in Antares Vision, with plans to expand detection and inspection technologies in life sciences and food & beverage sectors.

• The acquisition aligns with the company's strategy to diversify its portfolio and target markets with secular tailwinds.

• **CPI Segment Challenges and Service Growth:

• The CPI segment experienced a 4% decline in sales, primarily due to softness in vending, while the gaming segment showed strong double-digit growth.
• Despite challenges, the service business grew mid-single digits, with a focus on expanding service offerings into new end markets.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted ~10% revenue growth, adjusted EPS of $1.28, 115% free cash flow conversion in the quarter and raised full-year sales guidance to 9%–11%, while noting strong international currency backlog and the Antares Vision acquisition to expand addressable markets.

Q&A:

• Question from Matt Summerville (D.A. Davidson & Co.): So first on the currency side of the business, if you're booking in the '27 is it safe to assume you're effectively sold out for '26? And if that's the case, how does this inform what you're doing from a capacitization standpoint in currency overall, whether it be in Malta, whether it be in Sweden or whether it be in New Hampshire? And I guess how much more factory floor flexibility do you have today to accommodate the growth?
  Response: Not fully sold out for 2026 but backlog is strong; management is increasing near-term capacity via OpEx (hiring/production optimization), partnering for substrate/printing and expanding production in existing micro-optic facilities for 2026.

• Question from Matt Summerville (D.A. Davidson & Co.): As a follow-up, maybe just touch on if USD is growing high single digits, I guess why wouldn't -- if you have all this international goodness, including volume and value rising, market share gains, new redesigns with micro-optics coming faster and the backlog and the order trends you're talking about in the funnel, how does that not equate to a healthier organic outlook for SAT in 2026?
  Response: Two factors: supply-chain/production optimization trade-offs and very tough 2026 comps driven by 2025 outperformance, so management is taking a prudent, balanced outlook for 2026.

• Question from Bob Labick (CJS Securities, Inc.): So I wanted to start with CPI. Could you maybe dig a little further into what was the delta versus expectations in vending? Kind of what happened now between now and a few months ago in expectations? And is this a kind of signal of a larger change? Or is this just a lumpiness cyclicality? Or how should we think about that change?
  Response: Vending softness is ongoing demand delay after tariff-driven price increases (Q3 down high single digits) and expected to continue in Q4; management views it as customer delays rather than structural CPI decline while gaming and service remain strong.

• Question from Bob Labick (CJS Securities, Inc.): You mentioned in your prepared remarks, you're starting the kind of upgrading De La Rue sales by adding micro-optics versus their previous security products. Can you maybe dig into that, talk about how that works, what the opportunity is and how it impacts P&L and margins over time?
  Response: Sunsetting legacy De La Rue holographics and transitioning customers to micro-optics is ahead of schedule, drives higher gross margins and customer stickiness; authentication expected to be in high-teens operating profit in Q4 and approaching ~20% next year.

• Question from Damian Karas (UBS Investment Bank): I wanted to ask you guys for a little bit more clarity on the redesigns of the -- in the U.S. currency business. So you mentioned the $10 will ramp production kind of in the middle of next year. So are you basically in kind of wait-and-see mode until you get the green light on launching or kind of anything else on your plate until then with respect to the $10? And then on the $50 note that you mentioned you're starting to work for which will ultimately launch in 2028. Help us just understand like the financial model around these redesigns on that $50, is that just like a cost item for you guys right now as you're spending on R&D and I guess, SG&A? Or would you actually start capturing some revenue in these early stages?
  Response: The $10 program is on track for mid-2026 full-scale production and is included in 2026 outlook timing (partial-year impact); the $50 is in design/pilot phase with no material financial impact expected in 2026.

• Question from Damian Karas (UBS Investment Bank): It sounds like really it's just vending that's kind of the incremental source of weakness in the lower guidance there. Would you happen to be able to give us a sense on your CPI orders in the third quarter? Like if you excluded vending, what were the rest of the orders overall trending on a year-over-year basis? And I guess just kind of thinking about as we get past these vending headwinds, do you think that the CPI overall is kind of back in growth territory when we get into the first quarter of the next year?
  Response: Excluding vending, service backlog is growing mid-single digits, gaming orders are up double digits and other hardware OEMs are mixed; management expects CPI to be flat to low-single-digit in 2026 and is being prudent given vending uncertainty.

• Question from Michael Pesendorfer (Baird): Are you -- and part of the 80/20 application there, is there walkaway revenue that we need to be considering as we move into next year? What kind of pushback are you getting from customers? And maybe a little bit of color on the receptivity from kind of the sunsetting of the holographic product and moving toward the micro-optic and more proprietary technology?
  Response: No material revenue loss from the 80/20 rationalization; most customers are receptive and are transitioning to the higher-margin micro-optics, simplifying supply chain and increasing stickiness.

• Question from Michael Pesendorfer (Baird): Based on the pieces that you gave us for the 2026 framework, how should we be thinking about the impact to margins as we move into 2026, given the elevated contribution from service in terms of growth rate relative to some of the other pieces of that portfolio and obviously, what's going on with vending. How should we be thinking about the margin trajectory in that segment as we move into 2026 and that mix impact?
  Response: Management expects to sustain CPI adjusted operating margins in the ~29%–30% range for the full year through disciplined execution; service is accretive and sticky, supporting margins despite lower vending volumes.

• Question from Robert Brooks (Northland Capital Markets): In your expectation of the high single-digit revenue growth for the U.S. currency business next year, does that bake in the uplift of what I think is safe to assume a content uplift in the new $5? I'm just trying to get a gauge on if there could be upside to that outlook when the new design is initially revealed.
  Response: Guidance is based on the Federal Reserve order that favors higher denominations (including the $10) and includes the $10 production timing; content uplifts beyond that order are not assumed and timing limits full-year impact.

• Question from Robert Brooks (Northland Capital Markets): On the international currency sales, 3Q was stronger than you had forecasted. Is that a result of timing (countries wanting delivery earlier) or quantity (higher order sizes)?
  Response: It was a mix: countries accelerating delivery and redesigns, and some customers asking for earlier shipments; management also leveraged partners and internal productivity to ship more quickly.

• Question from Robert Brooks (Northland Capital Markets): Of the 8% core sales growth in SAT, was that really entirely driven by the increase in international currency? Or were there any authentication wins or expansions that were a part of that core sales growth as well?
  Response: Primarily driven by international currency, with some favorable volume/mix in U.S. currency and authentication performing in line with expectations.

• Question from Damian Karas (UBS Investment Bank): What's -- how should we be thinking about the business organization in a world in which you have Antares, just thinking about like future segmentation. And would you expect to include Antares in your initial 2026 guidance when you report fourth quarter earnings in a few months?
  Response: Antares expands TAM and capabilities; management will not include Antares in initial 2026 guidance and will update guidance after the deal close and tender process in 2026.

• Question from Damian Karas (UBS Investment Bank): The strength you're seeing in the service business in CPI and building out that service footprint. Are these generalist service contractors or specialized? Any particular end markets where this service stands out?
  Response: Service technicians are highly skilled across CPI and ancillary front-end equipment; service (~15% of CPI) is diversified across financial services (~60%), gaming, retail and kiosks, and recent kiosk wins are driving ARR growth.

Contradiction Point 1

CPI Growth Expectations

It involves differing expectations for the CPI segment's growth, which is crucial for understanding the company's financial performance and strategic focus.

Why isn't USD's high single-digit growth reflected in a stronger organic outlook for SAT by 2026? - [Matt Summerville](D.A. Davidson)

2025Q3: The CPI segment grew 6% organically in Q3, primarily driven by the strong performance in gaming, which grew 13% organically. - [Aaron Saak](CEO)

Could you summarize the key CPI verticals' performance and your outlook for CPI returning to sustained positive organic growth? - [Matt Summerville](D.A. Davidson)

2025Q2: Gaming is expected to have a strong double-digit growth. - [Aaron Saak](CEO)

Contradiction Point 2

Authentication Segment Performance

It involves differing expectations and performance metrics for the authentication segment, which is an important component of the company's strategic growth plans.

Can you explain how the upgrade to micro-optics for De La Rue customers works and the opportunity it presents? - [Bob Labick](CJS Securities)

2025Q3: The authentication business is on track to achieve high teens in Q4 and nearly 20% operating profit for 2023, with synergies ahead of schedule. - [Aaron Saak](CEO)

How does the authentication division impact EPS accretion in 2026 versus 2025? - [Damian Karas](UBS)

2025Q2: The authentication business is expected to reach an OP margin of 20% by the end of 2026, up from low teens currently. - [Aaron Saak](CEO)

Contradiction Point 3

Currency Sales Outlook and Impact of Tariffs

It involves differing perspectives on the impact of international currency sales and the influence of tariffs, which can significantly affect financial performance and strategic decisions.

Why doesn't SAT's high single-digit USD growth lead to a stronger organic outlook in 2026? - [Matt Summerville](D.A. Davidson)

2025Q3: International currency sales were up 11% in Q3. This was much better than we expected. - [Aaron Saak](CEO)

What drove the SAT sales guidance for the year, and how are you factoring in potential tariff impacts? - [Damian Karas](UBS)

2024Q4: On currency, we're also down a bit more than we expected in the quarter, due to international production delays and of course, U.S. currency-related challenges. - [Christina Cristiano](CFO)

Contradiction Point 4

Currency Business Growth Expectations

It involves differing expectations for the growth and performance of the currency business, which is a significant part of the company's revenue.

Why hasn’t strong USD growth justified improved organic growth for SAT by 2026? - [Matt Summerville](D.A. Davidson)

2025Q3: We expect full-year 2025 growth in the high single digits from the U.S. currency business and even stronger growth from international currency sales. - [Christina Cristiano](CFO)

Can you provide a breakdown of growth rates across the four major end markets served by CPI? How is the U.S. Currency business performing vs. expectations in Q1, and what's the outlook for the remainder of the year? - [Matt Summerville](D.A. Davidson)

2025Q1: We expect U.S. currency and international currency growth each to be in the mid-single digits for 2025. - [Christina Cristiano](CFO)

Contradiction Point 5

Vending Business Performance and Market Dynamics

It highlights contrasting views on the performance and market dynamics of the vending business, which is crucial for revenue forecasting and strategic planning.

Can you clarify the delta versus expectations in vending? Is this an indicator of a larger trend or normal cyclical fluctuations? - [Bob Labick](CJS Securities)

2025Q3: The vending business experienced ongoing order softness post-price increases due to tariffs, with a decline in the high single digits in Q3. - [Aaron Saak](CEO)

What factors support a sustained gaming improvement in 2025's second half? And how should we model Q1 currency decline magnitude? - [Matt Summerville](D.A. Davidson)

2024Q4: Vending was a bit better than we had expected, but still weak. The market is pretty soft, a lot of the volume is still coming from the same customer pool that we've been relying on for a long time. We've got low double-digit declines in vending orders for the quarter. - [Aaron Saak](CEO)