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Crane NXT, Co. (CXT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was consistent with internal expectations: sales rose 5.3% year over year to $330.3M, but margins contracted on lower U.S. Currency volumes and OpSec dilution; Adjusted EPS was $0.54 and GAAP EPS $0.38 .
  • Management completed final U.S. papermaking equipment upgrades (production resumed in April) and announced the De La Rue Authentication acquisition (closed May 1), raising full-year sales growth guidance to 6–8% while maintaining EPS guidance at $4.00–$4.30 .
  • SAT backlog reached record highs; International Currency backlog ~$370M with book-to-bill 2.4, underpinning full-year confidence despite tariffs and U.S. Currency mix headwinds .
  • Tariffs sized at ~$25M unmitigated operating profit impact (majority from China) are expected to be fully offset via pricing, supply chain optimization, and productivity (CBS); CPI demand push-outs are expected near-term, then recovery in H2’25 led by gaming .

What Went Well and What Went Wrong

  • What Went Well

    • Record SAT/International Currency momentum: “record high backlog of approximately $370 million with book-to-bill 2.4” ; five new micro‑optic wins in Q1, tracking to 10–15 for the year .
    • Strategic portfolio build: closed De La Rue Authentication; combining with OpSec to form Crane Authentication; targeted ~$80–$90M sales in 2025 with ~20% EBITDA margin profile over time .
    • Operational milestones: “upgrades were successfully completed... full production has resumed” in U.S. Currency; management reaffirmed full-year adjusted EPS despite tariffs via pricing and CBS productivity .

  • What Went Wrong

    • Margin compression: GAAP operating margin fell to 11.3% (−640 bps YoY); adjusted operating margin to 14.9% (−780 bps), driven by lower U.S. volumes, unfavorable mix, OpSec dilution .
    • SAT profit pressure: SAT operating margin dropped to 1.9% (from 19.4% YoY) as planned equipment shutdown led to under-absorption; adjusted SAT margin 6.6% vs 22.8% YoY .
    • Cash flow soft: Cash from operations was −$19.1M and adjusted FCF −$30.5M, reflecting lower net income and higher working capital tied to late-quarter shipments .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$313.6 $399.0 $330.3
Adjusted EPS ($)$0.85 $1.20 $0.54
GAAP EPS ($)$0.66 —$0.38
GAAP Operating Margin (%)17.7% —11.3%
Adjusted Operating Margin (%)22.7% ~27% (segment) 14.9%
Adjusted EBITDA Margin (%)25.7% ~27% 18.5%

Segment breakdown (Q1 2025 vs Q1 2024)

SegmentQ1 2024 Net Sales ($M)Q1 2025 Net Sales ($M)YoY %Q1 2024 Op Margin (GAAP)Q1 2025 Op Margin (GAAP)
Crane Payment Innovations (CPI)$209.0 $202.9 −2.9% 25.2% 24.5%
Security & Authentication Technologies (SAT)$104.6 $127.4 +21.8% 19.4% 1.9%
Total Company$313.6 $330.3 +5.3% 17.7% 11.3%

KPIs and balance sheet

KPIQ1 2024Q1 2025
Intl. Currency backlog ($M)—~$370
SAT book-to-bill—2.4
Total backlog ($M)$422.0 (Dec’23) $547.8 (Mar’25)
CPI backlog ($M)—~$147
Cash and Equivalents ($M)$226.9 (Mar’24) $173.8 (Mar’25)
Total Debt ($M)$750.6 (Dec’24) $804.6 (Mar’25)
Net Leverage (x)—1.7x
Cash from Operations ($M)$9.5 $(19.1)
Adjusted Free Cash Flow ($M)$(1.7) $(30.5)

Guidance Changes

MetricPeriodPrevious Guidance (Feb 12, 2025)Current Guidance (May 7, 2025)Change
Crane NXT Sales GrowthFY 2025+1% to +3% +6% to +8% Raised
CPI Sales GrowthFY 20250% to +2% −2% to 0% Lowered
SAT Sales GrowthFY 2025+3% to +5% (Currency mid-single-digit; OpSec MSD) +19% to +21% incl. De La Rue; SAT ex-DLR +5% to +7% Raised (segment)
Adjusted EPSFY 2025$4.00–$4.30 $4.00–$4.30 Maintained
Adjusted Segment Operating MarginFY 2025~26% to ~27% ~25.5% to ~26.5% Slightly Lower
Corporate Expense ($M)FY 2025~$55 ~$55 Maintained
Non-Operating Expense, Net ($M)FY 2025~$43 ~$54 (higher interest for DLR) Raised
Adjusted Tax RateFY 2025~21.5% ~21.5% Maintained
Adjusted FCF ConversionFY 2025~90%–110% ~90%–110% Maintained
Diluted Shares (MM)FY 2025~58 ~58 Maintained
DividendQ2 2025—$0.17 per share; payable Jun 11; record May 30 Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
U.S. Currency upgradesPlanned Q4–Q1 shutdown for upgrades; 2026 $10 launch path Q1 lowest revenue/margin; phasing step-up after Q1 Upgrades completed; production resumed in April Positive execution
International Currency backlogBacklog up >40% YoY; strong wins Strong backlog and sales funnel Record backlog ~$370M; 5 micro-optic wins Strengthening
Authentication M&A & integrationAnnounced De La Rue & Tru Tag acquisitions -Expected close of DLR; low-20% margin target over time DLR closed; Crane Authentication formed; synergies accelerating -Advancing
Tariffs/macroMonitoring; limited expected impact Guidance excluded tariff impacts $25M unmitigated OP impact sized; expect full mitigation via pricing/CBS Managed headwind
CPI gaming cadenceOEM inventory drawdown slower than expected Return to growth H2’25 Strong H2’25 gaming growth expected; CPI Q2 ~flat seq. Improving H2
Retail self-checkoutOEM softness; custom offerings offset High single-digit decline expected OEM soft; custom solutions growth continues Mixed
Services/recurring revenueExpanding CPI services; repair center Service business investments in FS New multi‑year retail service contract (450 locations) Expanding

Management Commentary

  • “Our first quarter results were in line with our expectations as we completed the final equipment upgrades needed to prepare for the decade-long growth opportunity from the new U.S. banknote series.” — CEO Aaron Saak .
  • “We have further solidified our position as a trusted technology leader in the global authentication market… confident in our ability to continue diversifying and expanding our portfolio.” — CEO Aaron Saak on DLR .
  • “Based on the tariffs announced to date, we've sized the full year unmitigated impact to operating profit at approximately $25 million… which we expect to fully mitigate with pricing and other cost reduction and productivity measures.” — CFO Christina Cristiano .

Q&A Highlights

  • CPI verticals and tariff push-outs: Vending most impacted by China tariffs; price increases implemented; expecting demand deferment in Q2; gaming healthy and returning to growth in H2; retail OEM soft but custom solutions offset .
  • Currency cadence: U.S. played to plan; international slightly better; backlog supports raised SAT sales outlook; ~65% backlog delivers in 2025, remainder in 2026 .
  • Authentication integration priorities: Combining OpSec and DLR into Crane Authentication; commercial and SG&A synergies; 80/20 and lean programs to accelerate margin accretion .
  • Phasing and guidance: Q2 CPI roughly flat sequentially; H2 stronger revenue and OP; SAT margins low 20s for full year with step-up in H2 .
  • M&A pipeline: Healthy funnel; focus on disciplined returns (>10% ROIC by year 5) and adjacencies; expectation of another deal within 12 months .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2025 EPS and revenue was not reliably available for Crane NXT’s reported structure this quarter; therefore, estimate comparison is not provided. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term margin pressure is transitory: under-absorption from U.S. upgrades and OpSec dilution compressed Q1 margins, but production resumed and H2 mix/volume should improve margins, especially in CPI gaming .
  • International Currency strength is the anchor: record backlog and continued micro‑optic wins underpin SAT sales and cash generation visibility into 2026, supporting maintained EPS guidance .
  • Authentication scaling is a multi‑year catalyst: DLR close and integration with OpSec creates a leading platform; synergy realization and CBS deployment target ~20% OP margin by exiting 2026 .
  • Tariff program is being proactively mitigated: ~$25M OP headwind sized; pricing and supply chain reconfiguration expected to neutralize 2025 impact; watch CPI demand phasing into Q2 .
  • Cash flow/bookings timing matters: late‑quarter shipments skewed Q1 working capital and FCF; management still targets 90–110% adjusted FCF conversion for the year, with H2 stronger .
  • Guidance signals confidence: Sales growth raised to 6–8% with unchanged EPS; non‑operating expense higher from DLR financing, but core execution offsets .
  • Trading implications: Potential positive catalysts include H2 CPI gaming rebound, continued Intl Currency orders/backlog adds, visible synergy delivery in Authentication, and any updates on U.S. $10 note features/mix; monitor tariff developments and retail OEM dynamics for near‑term volatility .