Crane NXT, Co. (CXT) is a leading provider of trusted technology solutions, securing, detecting, and authenticating its customers' most valuable assets. The company operates two reportable segments: Crane Payment Innovations (CPI) and Crane Currency.
In the fiscal year 2023, Crane NXT reported annual net income of $255.9 million and annual revenue of $2,086.4 million. The company generated annual operating cash flow of $193.6 million and annual free cash flow of $150.9 million.
For the first quarter of 2024, Crane NXT reported net sales of $313.6 million, a decrease of 4.7% compared to the same period in 2023. The company's net income attributable to common shareholders was $37.8 million in the first quarter of 2024.
Business Overview
Crane NXT's Crane Payment Innovations (CPI) segment provides electronic equipment and associated software leveraging extensive and proprietary core capabilities with various detection and sensing technologies for applications including verification and authentication of payment transactions. CPI also provides advanced automation solutions, processing systems, field service solutions, and remote diagnostics and productivity software solutions.Crane Currency, the company's other reportable segment, provides advanced security solutions based on proprietary technology for securing physical products, including banknotes, consumer goods, and industrial products.
The company's key research and development and manufacturing facilities are located in the United States, the United Kingdom, Mexico, Japan, and Germany, with additional sales offices across the world.
Financials
In the first quarter of 2024, Crane NXT's Crane Payment Innovations (CPI) segment reported net sales of $209.0 million, a decrease of 6.6% compared to the same period in 2023. The decrease was driven by lower core sales of $12.6 million, or 5.6%, and unfavorable foreign currency translation of $2.2 million, or 1.0%. Sales of Payment Acceptance and Dispensing Products decreased $16.3 million, or 8.5%, to $176.4 million, while service revenue increased by $1.5 million, or 4.8%, to $32.6 million.Crane Currency reported net sales of $104.6 million in the first quarter of 2024, a decrease of 0.7% compared to the same period in 2023. The decrease was driven by lower core sales of $1.4 million, or 1.3%, predominantly driven by lower volumes in the U.S. Currency business.
Across the company, cost of sales decreased by $13.2 million, or 7.6%, to $161.2 million in the first quarter of 2024, primarily due to productivity gains net of inflation, lower manufacturing costs, and the impact of lower sales volumes, partially offset by unfavorable mix. Selling, general, and administrative expenses increased by $5.5 million, or 6.2%, to $94.3 million, driven primarily by professional services, including higher transaction-related expenses.
Operating profit decreased by $10.5 million, or 15.9%, to $55.4 million in the first quarter of 2024. The decrease was primarily driven by lower volumes and unfavorable mix in the CPI segment, partially offset by favorable pricing net of inflation and productivity gains.
Liquidity
As of March 31, 2024, Crane NXT had total debt of approximately $357 million and $219 million of cash on hand. The company expects to draw on its revolving credit facility to help finance the $61 million purchase price for the recent acquisition of CryoWorks.Crane NXT's operating philosophy is to deploy cash provided from operating activities to reinvest in existing businesses, make strategic acquisitions, pay dividends, and repay debt. In the first three months of 2024, the company generated $9.5 million in cash from operating activities and used $12.5 million for investing activities, primarily for capital expenditures.
Outlook
For the full year 2024, Crane NXT has raised its guidance. The company now expects total core sales growth of 4% to 6%, up from its prior guidance of 3% to 5%. Acquisitions, including the recent CryoWorks acquisition, are expected to contribute approximately 5% to the company's full-year growth rate.The company has also raised its adjusted earnings per share (EPS) guidance to a range of $4.75 to $5.05, reflecting 14% EPS growth at the midpoint. This guidance assumes continued strong demand in the company's Aerospace & Electronics segment and a modest acceleration in sales growth in the Process Flow Technologies segment over the course of the year.
Crane NXT's management remains cautiously optimistic about the company's prospects, citing the potential for upside if certain macroeconomic assumptions prove conservative. The company is also well-positioned to pursue additional strategic acquisitions, with significant financial flexibility and an M&A capacity of up to $4 billion by 2028.