Crane Nxt, Co. ((CXT)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Crane NXT, Co.’s recent earnings call presented a nuanced picture of the company’s current financial standing and future prospects. The call highlighted a strong sales growth trajectory and successful strategic initiatives, which are driving positive momentum. However, this optimism is tempered by significant challenges in the gaming, US currency, and retail markets. The company is proactively tackling these challenges through strategic acquisitions and cost management measures.
Strong Sales Growth
Crane NXT, Co. reported a commendable sales growth with a 12% increase in Q4 and a 7% rise for the full year 2024. Core sales growth was driven by international currency, reaching nearly 3% in Q4. This growth underscores the company’s robust market performance, despite facing currency-related challenges.
Robust Free Cash Flow
The company also showcased its strong cash generation capabilities with an impressive adjusted free cash flow conversion of 109% in Q4 and 76% for the full year. This highlights Crane NXT’s effective financial management and operational efficiency.
Successful Strategic Initiatives
Crane NXT has been actively engaged in strategic acquisitions, completing deals with OpSec and TruTag Smart Packaging. The upcoming acquisition of De La Rue Authentication Solutions, expected in Q2 2025, further cements its strategic growth agenda.
Recurring Revenue Increase
The company has successfully increased its recurring revenue streams, highlighted by a micro-optics agreement with a luxury perfume company, showcasing the effective integration of OpSec’s offerings.
Record Backlogs
Crane NXT ended the year with significant backlogs, including $146 million in the CPI segment and $248 million in security and authentication technologies. These figures reflect strong demand and a healthy order pipeline.
Decline in Gaming Revenue
Gaming revenue continues to struggle, with expectations of further declines in the first half of 2025 as customers work through existing inventories. This remains a key area of concern for the company.
Challenges in US Currency Business
The US currency segment is anticipated to face a 20% sales decline in 2025 due to production stoppages and Federal Reserve actions. This decline poses a significant challenge to the company’s revenue streams.
Retail End Market Difficulties
Retail orders continue to experience softness, with a projected high single-digit decline in retail sales year-over-year. Changing retail dynamics contribute to these challenges, impacting overall performance.
Impact of Segment Mix and Acquisition Dilution
The company reported a decrease in adjusted segment operating margin by 130 basis points year-over-year, attributed to the segment mix and dilution impacts from recent acquisitions, notably OpSec.
Forward-Looking Guidance
Looking ahead, Crane NXT, Co. provided detailed guidance for 2025, forecasting sales growth between 1% to 3%, while accounting for FX headwinds of 1 to 2 points. An adjusted EPS range of $4.00 to $4.30 is anticipated, with segment margins projected between 26% to 27%. The company expects adjusted free cash flow conversion to range from 90% to 110%, with stronger performance predicted in the latter half of the year.
In summary, Crane NXT, Co.’s earnings call reflects a mixed sentiment, balancing strong growth and strategic successes against the backdrop of market challenges. The company’s forward-looking guidance indicates cautious optimism, with expectations of continued operational efficiency and strategic growth initiatives.
