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Crane NXT, Co. (CXT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $399.1M (+11.8% YoY; slightly below Q3’s $403.5M), GAAP EPS $1.00 and Adjusted EPS $1.20; adjusted operating margin was 23.7% and adjusted EBITDA margin 27.4% .
  • Security & Authentication Technologies (SAT) grew strongly (net sales $184.2M, +29.9% YoY), while CPI was flat (net sales $214.9M, -0.1% YoY); OpSec drove most SAT growth and diluted margins as expected .
  • 2025 guidance introduced: Adjusted EPS $4.00–$4.30; sales growth +1% to +3% (FX headwind -1% to -2%); segment margin ~26%–27%; corporate expense ~$55M; non-operating expense ~$43M; tax rate ~21.5%; FCF conversion ~90%–110%; diluted shares ~58M .
  • Near-term headwinds from U.S. currency upgrades and mix (USG sales down ~20% in 2025; Q1 segment OP margin ~20% expected), offset by strong international currency backlog and OpSec integration; dividend raised 6% to $0.17 for Q1 2025 .

What Went Well and What Went Wrong

  • What Went Well

    • SAT momentum: net sales $184.2M (+29.9% YoY), core sales +7.3%; adjusted OP margin up 20 bps YoY to 24.7% .
    • International currency strength with record backlog and 13 new denominations specifying micro‑optics; first commercial micro‑optics win via OpSec channel (luxury perfume) expands recurring revenue and validates synergy strategy (“full suite of authentication solutions”) .
    • Strong cash generation in Q4 with adjusted FCF conversion 109% and net leverage at ~1.5x; secured £300M term loan commitment to fund De La Rue Authentication .

  • What Went Wrong

    • CPI softness: net sales $214.9M (-0.1% YoY); operating margin down 320 bps YoY to 23.1% (restructuring and mix), though adjusted margin held at 29.0% .
    • Company GAAP operating margin contracted YoY to 17.7% (from 20.3%) due to product mix and OpSec dilution; adjusted OP margin 23.7% (+30 bps) but sequentially slightly below Q3 (23.9%) .
    • U.S. currency production shutdown and unfavorable mix drive high double‑digit decline in Q1 USG currency and ~20% decline for full‑year 2025; retail OEM remains soft with expected high‑single‑digit decline in 2025 .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Net Sales ($USD Millions)$370.6 $403.5 $399.1
GAAP EPS ($USD)$0.72 $0.81 $1.00
Adjusted EPS ($USD)$1.06 $1.16 $1.20
Operating Profit Margin (%)18.2% 18.6% 17.7%
Adjusted Operating Profit Margin (%)24.1% 23.9% 23.7%
Adjusted EBITDA Margin (%)26.8% 26.6% 27.4%

Segment breakdown

Segment MetricQ2 2024Q3 2024Q4 2024
CPI Net Sales ($M)$224.4 $224.9 $214.9
CPI Operating Profit ($M)$61.4 $64.6 $49.7
CPI Adjusted Operating Profit ($M)$67.3 $70.0 $62.4
CPI OP Margin (%)27.4% 28.7% 23.1%
CPI Adjusted OP Margin (%)30.0% 31.1% 29.0%
SAT Net Sales ($M)$146.2 $178.6 $184.2
SAT Operating Profit ($M)$24.0 $29.3 $37.4
SAT Adjusted Operating Profit ($M)$34.1 $39.2 $45.5
SAT OP Margin (%)16.4% 16.4% 20.3%
SAT Adjusted OP Margin (%)23.3% 21.9% 24.7%

KPIs and balance sheet

KPIQ2 2024Q3 2024Q4 2024
Total Backlog ($M)$501.9 $484.8 $394.1
CPI Backlog ($M)$166.5 $133.4 $145.8
SAT Backlog ($M)$335.4 $351.4 $248.3
Net Leverage Ratio (x)1.8x 1.7x 1.5x
Cash from Operations ($M)$56.8 $66.7 $81.1
Capital Expenditures ($M)$8.9 $13.2 $10.8
Free Cash Flow ($M)$47.9 $53.5 $70.3
Adjusted FCF Conversion (%)88.4% 88.5% 109%
Cash & Cash Equivalents ($M)$175.5 $174.0 $173.4
Total Debt ($M)$859.1 $793.2 $750.6

Estimates vs actuals (S&P Global)

MetricQ4 2024 Consensus (S&P Global)Q4 2024 Actual
EPS ($USD)Unavailable (SPGI data limit)$1.00 GAAP; $1.20 Adjusted
Revenue ($USD Millions)Unavailable (SPGI data limit)$399.1
Note: S&P Global consensus data was unavailable at the time of query due to API limits; no beat/miss assessment can be made.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY 2025n/a (first issuance)$4.00–$4.30 Introduced
CPI Sales GrowthFY 2025n/a0% to +2% Introduced
SAT Sales GrowthFY 2025n/a+3% to +5% Introduced
Company Sales GrowthFY 2025n/a+1% to +3% (incl. FX impact -1% to -2%) Introduced
Adjusted Segment MarginFY 2025n/a~26% to ~27% Introduced
Corporate ExpenseFY 2025n/a~$55M Introduced
Non-Operating Expense (Net)FY 2025n/a~$43M Introduced
Adjusted Tax RateFY 2025n/a~21.5% Introduced
Adjusted FCF ConversionFY 2025n/a~90% to ~110% Introduced
Diluted SharesFY 2025n/a~58M Introduced
Quarterly DividendQ1 2025$0.16 (Q4 2024 declared) $0.17 (+6% YoY) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4)Trend
U.S. currency upgrades and mixQ2: First equipment upgrade cycle completed; second cycle planned for Q4/Q1 . Q3: Upgrade to extend through Q1 2025; US print order down ~18% YoY with lower denominations .Q4: Production shutdown continues through Q1; USG currency sales down ~20% in 2025; Q1 segment OP margin ~20% .Near-term headwind; normalization thereafter .
International currency backlogQ2: Record-high backlog; currency core sales +3%–5% guide . Q3: Backlog +57% YoY; core sales +10% .Q4: Strong backlog; 13 new denominations specifying micro‑optics .Improving/strong.
OpSec integration & synergiesQ2: Integration on track; path to low‑20s margins over time . Q3: Pilot with major sports league; synergy execution .Q4: First commercial micro‑optics sale via OpSec; recurring digital brand protection services emphasized .Positive progress.
Gaming inventory normalizationQ2: Inventories normalized; new orders returning later in year . Q3: Orders slower than expected; OEMs lowering inventory .Q4: Declines in H1’25; growth returning in H2’25 .Recovery delayed to H2’25.
Retail self‑checkoutQ2: Growth via custom projects; OEM channel soft . Q3: Continued OEM softness; custom offset .Q4: High single‑digit decline expected in 2025; custom solutions offset .Mixed/soft.
VendingQ2: Mid‑single‑digit growth . Q3: Strength continues .Q4: Expected low single‑digit growth 2025 .Stable/modest growth.
Tariffs/macro—Guidance excludes tariff impacts; minimal expected impact; supply chain optionality .Monitor; limited risk stated.
AI/digital brand protection—OpSec algorithms are AI‑enabled for online brand protection; escalation workflows .Emerging capability.

Management Commentary

  • “Sales growth was approximately 12% in the fourth quarter and approximately 7% for the full year… adjusted EPS of $1.20 in the fourth quarter and $4.26 for the full year” .
  • “We ended 2024 winning a total of 13 new denominations, specifying micro‑optics… first contract selling micro‑optics through the OpSec channel… labels containing micro‑optic technology along with digital authentication and online brand protection services” .
  • “We secured a term loan commitment… used to fund the acquisition of De La Rue Authentication… net leverage will be approximately 2.3x after the close… increased our annual dividend by 6%” .
  • “We expect U.S. currency sales to be down approximately 20% in 2025… confident in our position as the U.S. government’s sole supplier of currency paper since 1879” .

Q&A Highlights

  • Gaming outlook: Market healthy; OEM inventory burn taking longer; expect inflection in orders in Q2 and growth resuming in H2’25 .
  • Q1 phasing: Segment OP margin ~20% in Q1; high double‑digit decline in U.S. currency offset by international strength; margins return to high‑20s for rest of year .
  • SAT margin dilution: OpSec diluted SAT margins ~250 bps in 2024 and similar in 2025; margins expected to rise to low‑20s over time via CBS synergies .
  • Leverage & M&A: Net leverage ~1.5x exiting 2024; ~2.3x post De La Rue; willing to flex modestly above 3x temporarily; pipeline healthy with $100M–$500M revenue targets and double‑digit ROIC by year 5 .
  • Retail & vending: Retail OEM soft; shift to custom solutions; vending benefits from automation and low shrink with stable low‑single‑digit 2025 growth .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was not retrievable due to API limits; therefore, beats/misses versus consensus cannot be assessed at this time. Once available, compare actual EPS ($1.00 GAAP; $1.20 Adjusted) and revenue ($399.1M) to consensus to update the narrative .

Key Takeaways for Investors

  • Near-term pressure in Q1 2025 from U.S. currency shutdowns and unfavorable mix will weigh on margins (company guiding to ~20% segment OP margin in Q1), but margins are expected to rebound to high‑20s for the remainder of the year; plan position sizes accordingly for phasing .
  • International currency and OpSec are the core growth engines; SAT strength offsets U.S. currency headwinds and supports multi‑year authentication thesis with recurring revenue expansion .
  • Watch H2’25 for CPI reacceleration as gaming returns to growth; confirmation of OEM order inflection in Q2 is a key catalyst .
  • 2025 guide (Adj. EPS $4.00–$4.30; segment margin ~26%–27%) embeds FX headwinds and U.S. currency decline; upside paths include tariff neutrality and further authentication wins .
  • Balance sheet supports continued M&A (post De La Rue net leverage ~2.3x, target <3x), with bolt‑ons likely to extend authentication capabilities; dividend increased to $0.17 reflects confidence in cash generation .
  • Margin dilution from OpSec near term is expected; CBS-led integration should lift SAT margins over time; monitor synergy execution and adjusted margin trajectory .
  • Keep an eye on guidance phasing: revenue and OP more weighted to second half; trading setups may favor buying weakness into Q1/Q2 and reassessing into H2 .