Sign in

You're signed outSign in or to get full access.

CN

Crane NXT, Co. (CXT)·Q2 2025 Earnings Summary

Executive Summary

  • Sales rose 9.1% year over year to $404.4M, with adjusted operating margin at 21.2%; GAAP EPS was $0.43 and adjusted EPS was $0.97 .
  • Management reaffirmed full-year 2025 adjusted EPS guidance of $4.00–$4.30, SAT sales growth of +19–21%, CPI sales growth of -2% to 0%, and adjusted segment operating margin of ~25.5–26.5% .
  • Operational catalysts: record international currency backlog ($447.2M) and total backlog ($591.6M), CPI gaming orders up sequentially and ~30% YoY, and launch of “Fortress” authentication and Jetscan Ultra products .
  • Management guided margin accretion in 2H’25 and accelerated Crane Authentication synergies, targeting 20% operating margin exiting 2026, supported by CBS execution; tariff impacts ($25M OP headwind) are being mitigated via pricing, supply chain shifts and productivity .

What Went Well and What Went Wrong

What Went Well

  • International currency strength: SAT sales +32% YoY with core +9% and record international currency backlog (~$400M cited in remarks; backlog in press tables $447.2M), underscoring differentiated micro-optics wins and robust project deliveries .
  • New product launches and integration: Fortress launched with a major customer; Jetscan Ultra introduced; De La Rue Authentication integration with OpSec forming Crane Authentication, with accelerated synergy realization underway .
  • Cash generation and balance sheet: adjusted free cash flow $67.4M and ~120% conversion; net leverage 2.6x supports continued M&A capacity .

Quote: “We achieved another record high backlog in our international currency business… and are accelerating the realization of operating synergies… exiting 2026 with operating profit margins of approximately 20%” .

What Went Wrong

  • Margin dilution and mix: adjusted operating margin fell 290 bps YoY to 21.2% due to lower CPI volumes and acquisition dilution; CPI adjusted OP margin declined 300 bps YoY to 27.0% in Q2 .
  • Tariff-related headwinds: China tariffs slowed vending orders and stressed CPI margins (book-and-ship ahead of price increases at lower-margin vending; gaming mix improving in 2H) .
  • SAT GAAP margin compressed (9.3% vs. 16.4% YoY) on acquisition dilution, higher manufacturing costs, and restructuring charges despite higher volumes and productivity .

Financial Results

Consolidated P&L and EPS vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$399.1 $330.3 $404.4
GAAP EPS ($)$1.00 $0.38 $0.43
Adjusted EPS ($)$1.20 $0.54 $0.97
Adjusted Operating Margin (%)23.7% 14.9% 21.2%

Segment Breakdown

SegmentMetricQ4 2024Q1 2025Q2 2025
Crane Payment Innovations (CPI)Net Sales ($M)$214.9 $202.9 $211.4
Adjusted OP Margin (%)29.0% 27.1% 27.0%
Security & Authentication Technologies (SAT)Net Sales ($M)$184.2 $127.4 $193.0
Adjusted OP Margin (%)24.7% 6.6% 20.6%

KPIs and Balance Sheet

KPIQ4 2024Q1 2025Q2 2025
Total Backlog ($M)$394.1 $547.8 $591.6
CPI Backlog ($M)$145.8 $146.6 $144.4
SAT Backlog ($M)$248.3 $401.2 $447.2
Adjusted Free Cash Flow ($M)$75.2 $(30.5) $67.4
Adjusted FCF Conversion (%)109% (97.4)% 120.1%
Net Leverage (x)1.5x 1.7x 2.6x
Cash & Equivalents ($M)$165.8 $173.8 $152.5
Total Debt ($M)$750.6 $804.6 $1,129.2

Wall Street Consensus vs Actual (S&P Global)

MetricQ4 2024Q1 2025Q2 2025
EPS Consensus Mean ($)1.208*1.305*1.334*
EPS Actual ($)1.20 0.54 0.97
Revenue Consensus Mean ($M)533.6*547.9*567.8*
Revenue Actual ($M)399.1 330.3 404.4

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious Guidance (May 7, 2025)Current Guidance (Aug 6, 2025)Change
Adjusted EPSFY 2025$4.00–$4.30 $4.00–$4.30 Maintained
CPI Sales GrowthFY 2025-2% to 0% -2% to 0% Maintained
SAT Sales GrowthFY 2025+19% to +21% (incl. $80–$90M DLR) +19% to +21% (incl. $80–$90M DLR) Maintained
Adjusted Segment OP MarginFY 2025~25.5%–~26.5% ~25.5%–~26.5% Maintained
Corporate ExpenseFY 2025~$55M ~$55M Maintained
Non-Operating Expense, NetFY 2025~$54M ~$54M Maintained
Adjusted Tax RateFY 2025~21.5% ~21.5% Maintained
Adjusted FCF ConversionFY 2025~90%–~110% ~90%–~110% Maintained
Diluted SharesFY 2025~58M ~58M Maintained
DividendQ3 2025—$0.17 per share (payable Sept 10; record Aug 29) Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
International Currency Backlog & Micro-opticsCore growth in international; OpSec acquisition benefits Record backlog (~$370M), book-to-bill 2.4; 5 micro-optic wins; ~65% backlog to deliver in 2025 New record backlog; SAT core +9% YoY; high confidence in sales; project timing drove Q2 strength Strengthening
US Currency Upgrades/RedesignU.S. prep for new series; 2025 guidance introduced Equipment upgrades completed; production resumed; $10 bill on track for 2026 Program on track; resumed production supports 2026 launch On plan
CPI Gaming & MixCPI adj margin stable; modest core declines Gaming softness expected; 2H recovery; services contract win with major retailer Gaming orders +10% seq and +~30% YoY; 2H double-digit gaming growth; margin accretion ahead Improving
Tariffs & Supply ChainMacro/mix pressures; restructuring in CPI ~$25M OP tariff headwind sized; China ~$20M; pricing & in-region supply chain mitigation Vending pushouts and margin stress already visible; pricing actions enacted; mitigation continuing Managed headwind
Authentication Strategy & SynergiesOpSec integration progressed; DLR planned Closed DLR; formed Crane Authentication; mid-single-digit growth target; $80–$90M DLR 2025 sales Accelerating synergies; ~20% OP margin exit 2026; Fortress launch; brand/government/ID pillars Scaling
M&A PipelineRobust capacity; dividend raised Low leverage supports M&A; pipeline healthy “Another transaction within the next year” confidence; strong funnel Active

Management Commentary

  • Strategic focus: “Providing confidence… that the products they buy and the way they buy them are authentic and secure” .
  • Integration pace: “Accelerated realization of operating synergies… operating profit margins of approximately 20% as we exit 2026” .
  • Product innovation: “Launched Fortress… authenticate the product in real time… trace the origin… Jetscan Ultra… counterfeit detection” .
  • Guidance tone: “Reaffirming our full year EPS guidance in the range of $4 to $4.30” .

Q&A Highlights

  • Back-half phasing: Revenue and OP slightly more weighted to Q4 vs Q3; CPI margins to end year ~29–30%; SAT full-year OP margin ~21% with 2H accretion from authentication synergies and seasonality .
  • Authentication margin trajectory: Integration “line of sight” to approach ~20% OP margin exiting 2026; EPS accretion specifics to be provided with 2026 guidance .
  • CPI verticals: Gaming robust and recovering; vending impacted by China tariffs with pricing actions; retail mixed with custom self-checkout strength; financial services in line .
  • Fortress details: Smartphone-enabled materials tech providing provenance back to manufacturing; broad end-market applicability (food & beverage, consumer goods) .

Estimates Context

  • S&P Global consensus for Q2 2025: EPS 1.334*, revenue $567.8M*; actual adjusted EPS $0.97 and revenue $404.4M. Direct comparison appears non-comparable versus company-reported basis this quarter; treat with caution. Values retrieved from S&P Global.*
  • Given portfolio mix shifts (DLR/OpSec acquisition dilution, restructuring, tariff effects) and potential normalization differences in consensus, estimates may need recalibration toward company guidance ranges for EPS and segment margins .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • SAT momentum and backlog underpin revenue visibility into 2H’25 and 2026; mix should normalize, supporting margin accretion as authentication synergies accelerate .
  • CPI margin trajectory improving on gaming mix and pricing; watch vending tariff pushouts and the cadence of gaming OEM orders in Q3/Q4 as a near-term trading catalyst .
  • Guidance intact despite tariff/macros; FY25 adjusted EPS $4.00–$4.30 and adjusted segment margin ~25.5–26.5% reaffirm confidence; dividend continuity adds yield support .
  • Crane Authentication is a medium-term value driver: mid-single-digit growth profile, synergy execution, and a path to ~20% OP margin by 2026; product innovation (Fortress) expands TAM and pricing power .
  • Balance sheet capacity (net leverage 2.6x) and free cash flow generation support disciplined M&A; management expects another deal within 12 months—potential upside to scale and margins if executed within framework .
  • Near-term stock narrative: backlog strength and 2H margin uplift vs. tariff/mix headwinds; monitor quarterly phasing and authentication synergy updates for inflection signals .