Crane NXT, Co. (CXT) is a premier industrial technology company that provides trusted solutions to secure, detect, and authenticate what matters most to its customers. With a rich history dating back to 1845, the company has evolved over the decades, transforming itself into a leading provider of innovative technologies across diverse end markets.
Headquartered in Waltham, Massachusetts, Crane NXT operates through two reportable segments: Crane Payment Innovations (CPI) and Security and Authentication Technologies (SAT). The CPI segment offers electronic equipment and associated software for applications including verification and authentication of payment transactions, as well as advanced automation solutions and field service offerings. The SAT segment, on the other hand, provides advanced security solutions for securing physical products, including banknotes, consumer goods, and industrial products, as well as brand protection and authentication solutions.
Company History and Evolution
Crane NXT's journey began as a segment within Crane Holdings, Co., specifically the Payment and Merchandising Technologies business segment, which focused on providing electronic equipment and associated software for payment transactions, automation solutions, and security technology. In April 2023, a significant milestone was reached when Crane Holdings separated into two independent companies - Crane NXT, Co. and Crane Company SpinCo. As part of this separation, Crane NXT retained the Payment and Merchandising Technologies business, which was later renamed Crane Payment Innovations (CPI).
Throughout its history, Crane NXT has faced and overcome various challenges, including softness in certain end markets like retail. The company successfully navigated these headwinds through cost-saving initiatives, productivity improvements, and strategic pricing actions. By leveraging the Crane business system, CPI maintained strong operating margins during challenging periods, demonstrating the company's resilience and adaptability.
Strategic Acquisitions and Growth
Crane NXT's journey of growth and diversification has been marked by strategic acquisitions that have strengthened its technological capabilities and market presence. In 2024, the company completed the acquisition of OpSec Security, a global leader in brand protection and authentication solutions, and the Smart Packaging assets of TruTag Technologies, further expanding its capabilities in product security and authentication. More recently, in 2025, Crane NXT announced the anticipated acquisition of De La Rue Authentication Solutions, a leading provider of digital and physical security and authentication technologies, further solidifying its position as a premier provider of trusted technology solutions.
Financials and Performance
Financially, Crane NXT has demonstrated resilience and discipline in navigating challenging market conditions. For the full year 2024, the company reported sales of $1.5 billion, a 7% increase year-over-year, with core sales growth of approximately 1%. Adjusted segment operating margin was 26.4%, reflecting the company's focus on operational efficiency and productivity initiatives. Adjusted earnings per share (EPS) for the year came in at $4.26, in line with the company's guidance.
In the third quarter of 2024, Crane NXT reported revenue of $399.1 million, representing a 14.3% increase year-over-year. However, net income decreased by 9.2% to $57.6 million. The company generated operating cash flow of $81.1 million and free cash flow of $70.3 million during the quarter. As of September 30, 2024, Crane NXT had a cash balance of $165.1 million and maintained a current ratio of 1.38 and a quick ratio of 0.88.
Looking ahead to 2025, Crane NXT provided guidance for overall sales growth of 1% to 3%, including foreign exchange headwinds of 1 to 2 percentage points. The company expects CPI to grow in the low single digits, while SAT is anticipated to see mid-single-digit growth in international currency, offset by a decline of approximately 20% in US government sales. Adjusted EPS is forecasted to be in the range of $4.00 to $4.30, with segment margins expected to be approximately 26% to 27%. Adjusted free cash flow conversion is projected to be between 90% and 110%.
Strategic Roadmap and Market Positioning
One of the key drivers of Crane NXT's strategic roadmap is its focus on reducing exposure to cash-centric end markets. By the end of the second quarter of 2025, the company expects its exposure to cash-related products and services to decrease from approximately 80% to 65% of its portfolio, with the acquisition of De La Rue Authentication Solutions playing a crucial role in this diversification. Additionally, the company aims to increase the percentage of revenue from recurring and contract-based sources to approximately 50% as it exits the second quarter of 2025.
Crane NXT's commitment to innovation and technological leadership is exemplified by its continued investment in the US currency program. The company is currently completing the final equipment upgrades to support the launch of the new US banknotes, which are scheduled to enter production in 2026. This decade-long growth opportunity positions Crane NXT as a trusted partner to the Bureau of Engraving and Printing and provides a solid foundation for its future success.
Liquidity and Balance Sheet Strength
The company's strong balance sheet and free cash flow generation have enabled it to maintain low debt levels and pursue strategic acquisitions that align with its vision of becoming a premier industrial technology company. As of the end of 2024, Crane NXT reported net leverage of 1.5 times, providing ample capacity for future investments and acquisitions. The company has access to a $500 million revolving credit facility and a $350 million term loan facility, further enhancing its financial flexibility.
Recent Achievements and Market Expansion
Crane NXT's diversification strategy and technological expertise have not gone unnoticed. In 2024, the company made significant strides in expanding its product and brand authentication capabilities through the acquisition of OpSec and the TruTag Smart Packaging assets. The recent announcement of the De La Rue Authentication Solutions acquisition further strengthens Crane NXT's position as a leading provider of comprehensive security and authentication solutions.
One notable achievement in 2024 was the company's successful integration of OpSec, which has enabled Crane NXT to leverage its proprietary micro-optics technology to win a contract with a luxury perfume company. This agreement involves providing labels containing micro-optic technology, along with digital authentication and online brand protection services, showcasing the company's ability to deliver a full suite of authentication solutions to its customers.
Segment Performance and Outlook
Despite some headwinds in the retail self-checkout market, Crane NXT's CPI segment has maintained strong operational performance, with adjusted operating margins of approximately 30% for the full year 2024. The company's vending business, which represents around 35% of CPI revenue, continues to be a source of strength, growing at low single digits in 2024 and expected to sustain this momentum in 2025.
In the third quarter of 2024, CPI reported net sales of $224.9 million, up 1.5% year-over-year. This included a 1% increase in sales of Payment Acceptance and Dispensing Products to $190.9 million, driven by higher core sales. Service revenue increased 4.6% to $34 million, primarily due to favorable pricing. Operating profit for CPI increased 8.2% to $64.6 million, driven by favorable pricing, lower costs, and productivity gains, partially offset by unfavorable product mix.
For the first nine months of 2024, CPI's net sales were $658.3 million, down 1.9% year-over-year. Sales of Payment Acceptance and Dispensing Products decreased 3% to $557.9 million, due to lower core sales volume primarily in gaming, partially offset by favorable pricing. Service revenue increased 4.1% to $100.4 million. Operating profit for CPI decreased 4.1% to $178.7 million, mainly reflecting lower volumes, unfavorable mix, and foreign currency translation headwinds, partially offset by the positive impact of pricing, lower costs, and productivity gains.
In the SAT segment, Crane NXT's international currency business has been a consistent performer, with the company winning 13 new denominations specifying micro-optics in 2024. The strong backlog in this business gives the company high confidence in its sales outlook for 2025. However, the segment has faced some challenges related to the ongoing upgrades for the new US banknote series, which have resulted in a temporary decline in US government sales.
In the third quarter of 2024, SAT's net sales were $178.6 million, an increase of 36% year-over-year. This was driven by $32.3 million in sales from the OpSec acquisition completed in May 2024, as well as a 10.2% increase in core sales. Banknote and security product sales increased 11.8% to $145.4 million, while authentication products and solutions sales grew to $33.2 million, primarily due to the OpSec acquisition. Operating profit for SAT decreased 10.7% to $29.3 million, reflecting the unfavorable product mix and the impact of the OpSec acquisition, partially offset by productivity gains.
For the first nine months of 2024, SAT's net sales were $429.4 million, up 18.3% year-over-year. This included a $52.7 million benefit from the OpSec acquisition and a 3.4% increase in core sales. Banknote and security product sales increased 3.7% to $372.9 million, while authentication products and solutions sales grew to $56.5 million. Operating profit for SAT decreased 13.6% to $73.5 million, driven by the impact of the OpSec acquisition, higher material and engineering costs, partially offset by productivity gains.
Long-term Prospects and Investment Thesis
Crane NXT's commitment to innovation and its focus on reducing exposure to cash-centric end markets have positioned the company well for long-term success. With a strong balance sheet, a diversified portfolio, and a talented leadership team, Crane NXT is poised to capitalize on emerging trends and deliver sustainable value for its shareholders.
While the company faces some near-term headwinds, such as the temporary decline in US government sales and the ongoing softness in the retail self-checkout market, Crane NXT's long-term growth prospects remain compelling. The company's strategic acquisitions, technological leadership, and disciplined execution of the Crane business system provide a solid foundation for continued success.
As Crane NXT navigates the dynamic industrial technology landscape, investors should closely monitor the company's ability to successfully integrate its recent acquisitions, drive operational efficiencies, and capitalize on emerging opportunities in its core and adjacent markets. The company's diversification efforts, coupled with its focus on innovation and technological leadership, make Crane NXT a compelling investment opportunity for those seeking exposure to the industrial technology sector.
It's worth noting that the phasing of revenue and operating profit in 2025 is not expected to be linear, with the first quarter anticipated to have lower revenue and margin performance compared to the rest of the year. This guidance, along with the company's track record of meeting its financial targets, provides investors with a clear picture of Crane NXT's near-term outlook and long-term potential.