Crane NXT’s Balanced Q1 2025 Earnings Call Insights

Crane Nxt, Co. ((CXT)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Crane NXT, Co. reflected a balanced sentiment, highlighting both significant achievements and notable challenges. The company reported impressive sales growth, a record high backlog, and strategic acquisitions, particularly the completion of De La Rue. However, it also faced challenges such as a decline in core sales, market-specific issues, and tariff impacts.

Sales Growth and EPS Achievement

Crane NXT achieved a commendable sales growth of 5% and an adjusted EPS of $0.54 for the first quarter of 2025, aligning with market expectations. This growth underscores the company’s resilience and strategic focus in navigating a complex market environment.

Record High Backlog in Crane Currency

The Crane Currency division reported a record high backlog, with a book-to-bill ratio of 2.4. This achievement was driven by the company’s differentiated anticounterfeiting technology, highlighting its leadership in currency security solutions.

Completion of De La Rue Acquisition

The strategic acquisition of De La Rue Authentication Solutions was finalized, significantly enhancing Crane’s capabilities in security and authentication technology. This move is expected to bolster the company’s market position and drive future growth.

Successful Equipment Upgrade

Crane NXT successfully completed the planned shutdown and upgrade of key manufacturing equipment for its U.S. Currency business. This upgrade has allowed the company to resume full production, ensuring operational efficiency and capacity.

New Contract in CPI Services

CPI, a division of Crane NXT, secured a multiyear contract with a major retailer for on-site equipment repair services across approximately 450 U.S. locations. This contract is a testament to CPI’s service capabilities and market reach.

OpSec Integration and Crane Authentication Launch

The integration of OpSec and De La Rue Authentication will form Crane Authentication, offering a unified set of products and services. This strategic move aims to streamline operations and enhance product offerings.

Strong International Currency Performance

Crane’s International Currency business demonstrated robust performance, achieving a record high backlog of approximately $370 million and securing five new micro-optic wins in the quarter. This success underscores the division’s global competitiveness.

Core Sales Decline

Despite overall growth, core sales excluding OpSec declined by 4%, primarily due to lower volumes in the U.S. Currency business. This decline was attributed to the planned equipment shutdowns for upgrades.

Gaming and Vending Market Challenges

CPI faced challenges in the gaming and vending markets, experiencing lower volumes. The gaming sector, in particular, is expected to see a decline in the first half of the year, impacting overall performance.

Impact of Tariffs

Crane NXT is navigating the potential impact of tariffs, which could affect operating profit by approximately $25 million, with $20 million related to China. The company is implementing strategic pricing and supply chain initiatives to mitigate these effects.

Dilution from OpSec

The adjusted operating margin was impacted by dilution from OpSec, contributing to a 300 basis point decrease. This highlights the challenges associated with integrating new acquisitions.

Forward-Looking Guidance

Crane NXT reaffirmed its full-year adjusted EPS guidance despite the challenges posed by tariffs. The company expects the De La Rue acquisition to contribute significantly to revenue, with projections of $80 million to $90 million and an adjusted EBITDA margin of around 20% in 2025. The Security and Authentication Technologies segment is projected to see sales growth of 19% to 21%.

In summary, Crane NXT’s earnings call presented a nuanced picture of the company’s current standing and future prospects. While the company celebrates achievements in sales growth and strategic acquisitions, it remains vigilant in addressing challenges such as core sales decline and tariff impacts. The reaffirmed guidance and strategic initiatives underscore Crane NXT’s commitment to sustaining growth and enhancing shareholder value.