Crane Nxt, Co. ((CXT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Crane NXT, Co. recently held its earnings call, revealing a strong quarter characterized by significant sales growth and strategic advancements. The company showcased its ability to navigate challenges in the CPI segment and margin impacts from acquisitions, while maintaining a robust outlook for future growth.
Strong Sales Growth
Crane NXT reported an impressive sales growth of approximately 9% year-over-year in the second quarter. This growth was primarily driven by strategic acquisitions and a strong performance in the international currency sector, highlighting the company’s effective expansion strategies.
Record High Backlog
The international currency business achieved a new milestone with a record high backlog of approximately $400 million in the second quarter. This achievement underscores the growing demand and the company’s strong market position in this segment.
Free Cash Flow Conversion
The company demonstrated continued operational discipline with a 120% free cash flow conversion in the quarter. This reflects Crane NXT’s efficient management and ability to convert revenue into cash, supporting further growth and investment.
Launch of Innovative Products
Crane NXT launched two innovative products: Fortress in the Authentication segment and JetScan Ultra in CPI. These launches are expected to enhance the company’s technology leadership and position it for future growth in these segments.
Successful Integration of De La Rue Authentication
Significant progress has been made in integrating the De La Rue Authentication acquisition. This integration is anticipated to lead to operating profit margins of approximately 20% by 2026, demonstrating the company’s strategic acquisition capabilities.
Strong M&A Pipeline
With a strong balance sheet, Crane NXT is well-positioned for additional mergers and acquisitions. The company expressed confidence in announcing another transaction within the next year, indicating a proactive approach to growth.
Core Sales Decline in CPI
The CPI segment experienced a core sales decline of approximately 1%, attributed to anticipated lower volume. Additionally, the adjusted operating margin decreased due to lower CPI volume and an unfavorable product mix.
Impact of Acquisitions on Margins
The adjusted segment operating profit margin decreased by approximately 350 basis points year-over-year. This decline was driven by the expected impact of dilution from recent acquisitions, highlighting the challenges of integrating new businesses.
Challenges in Vending Segment
The vending segment faced headwinds due to China tariffs, which are expected to lead to some sales challenges in the latter half of the year. This reflects the broader macroeconomic challenges impacting the segment.
Forward-Looking Guidance
During the earnings call, Crane NXT reaffirmed its full-year guidance, projecting adjusted EPS in the range of $4 to $4.30 and SAT sales growth between 19% and 21%. This includes contributions from the De La Rue acquisition. The company remains confident in its strategic growth initiatives despite macroeconomic uncertainties.
In summary, Crane NXT’s earnings call highlighted a strong quarter with significant sales growth and strategic advancements. Despite challenges in certain segments, the company demonstrated strong operational execution and maintained a positive outlook for future growth, supported by a robust M&A pipeline and innovative product launches.