管理層發言
Good day. And thank you for standing by. Welcome to the Crane NXT Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Matt Roache, Vice President, Investor Relations. Please go ahead.
Thank you, operator, and good morning, everyone. Welcome to Crane NXT's Second Quarter 2026 Earnings Conference Call. Before we begin, I would like to remind you that the presentation slides we will reference today are available in the Investor Relations section of our website at cranenxt.com. A replay of today's call will also be available on our website following the conclusion of our remarks. Before we discuss our results, I encourage all participants to review the legal notice on Slide 2 regarding forward-looking statements, which are subject to risks, uncertainties, and other important factors that may cause actual results to differ materially. Additionally, we refer you to the note on Slide 2 on the use of non-GAAP financial measures. I also refer you to the cautionary language included in our earnings release, our Form 10-K, and subsequent SEC filings. During today's call, we will discuss certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures can be found in the tables accompanying our earnings release and slide presentation, both of which are available in the Investor Relations section of our website. Joining me today are Aaron W. Saak, our President and Chief Executive Officer, and Christina Cristiano, our Senior Vice President and Chief Financial Officer. During the call, we will review our second quarter highlights, discuss our financial and operational performance, and provide an update on our 2026 financial guidance. After our prepared remarks, we will open the call for questions. With that, I will turn the call over to Aaron.
Thank you, Matt, and good morning to everyone joining us today to discuss our second quarter results. I would like to begin by thanking our Crane NXT team members around the world for their strong operating performance throughout the quarter. The key message I want to reinforce today is that we are executing against our value-creation priorities: delivering growth, building on our leadership positions, and driving operational excellence through organic margin expansion and strong free cash flow. You can see that progress reflected in our second quarter results on Slide 3. Organic sales grew by approximately 3% and total sales increased approximately 22% year over year, reflecting both continued strong performance in our SAT segment and the contribution from Antares Vision in our DTT segment. I am very pleased with the progress we have made in Q2 with the integration of Antares. We are quickly implementing the Crane Business System, including training and holding Kaizen events to improve productivity and drive growth. We are off to a strong start in our first 100 days and remain confident in our ability to achieve our full-year estimates. Importantly, given the strong first-half performance and confidence in our continued momentum, we are increasing our full-year adjusted EPS guidance to a range of $4.22 to $4.42. So with that, let me now hand the call over to Christina to review our second quarter performance in more detail and our updated guidance. Christina?
Thank you, Aaron, and good morning, everyone. I would also like to express my appreciation to our associates around the world for their hard work in the second quarter. Turning to Slide 4: Sales were $493 million, an increase of 22% year over year. Organic sales grew 3%, driven by continued strong performance in SAT. Adjusted EBITDA was $115 million with an adjusted EBITDA margin of approximately 23%, representing 150 basis points of organic margin expansion. For the full year, we continue to expect adjusted EBITDA margin of approximately 24%. We delivered adjusted EPS of $1.10, an increase of 13% year over year and ahead of our prior expectations. Finally, adjusted free cash flow was $79 million, resulting in a conversion ratio of approximately 124%. We continue to expect full-year free cash flow conversion of 90% to 110% supported by our robust backlog and operating discipline. Moving to our segments and starting with Security and Authentication Technologies on Slide 5: Second quarter sales were $227 million, an increase of approximately 17% year over year, including one month of inorganic contribution from the De La Rue Authentication acquisition, which closed in May 2025. Organic sales increased approximately 10%, driven by sustained demand in international currency. In the second quarter, we celebrated the 225th anniversary of Crane Currency, which was founded in 1801 and has been the sole source provider of secure currency paper to the U.S. federal government since 1888. We marked the occasion at a celebration in Dalton, Massachusetts with the Director of the Bureau of Engraving and Printing, whose remarks highlighted our partnership on the development of the new U.S. currency utilizing the next generation of micro-optic security technology. This event also highlighted our more than 75-year relationship with the U.S. Government Publishing Office, with whom we partner to make the U.S. passport paper. In Q2, we renewed our contract, extending our relationship with the U.S. for another 10 years. We are incredibly proud to serve as the trusted partner to the U.S. government on these important programs. Returning to our results, adjusted EBITDA was $59 million in the second quarter with an adjusted EBITDA margin of 26%, an increase of 30 basis points over the prior year. On an organic basis, adjusted EBITDA margin increased approximately 200 basis points year over year, reflecting the positive impact of productivity programs in the currency business and the execution of synergies in Authentication as planned. Finally, SAT backlog of approximately $500 million reflects a new record high. This backlog provides meaningful visibility into customer demand and supports our confidence in the updated SAT sales outlook. We have a healthy pipeline of opportunities and are investing in future growth. Turning to Detection and Traceability Technologies on Slide 6: Second quarter sales were $267 million, an increase of 26% year over year, reflecting a full quarter contribution from Antares Vision. Despite softer hardware demand in CPI, DTT expanded organic EBITDA margin by approximately 240 basis points through pricing discipline and productivity actions. We expect to see further margin accretion in DTT as the year progresses and are on track to end the year with adjusted EBITDA margin of approximately 27%. Segment backlog was $257 million, including $125 million of Antares Vision backlog, which we expect to deliver over the next 12 months. As we integrate Antares, we are focused on converting this backlog, deploying CBS, and realizing the margin expansion opportunities that supported the strategic rationale for the transaction. CPI backlog of approximately $132 million reflects sequential growth of approximately 10%, driven by order timing, with a book-to-bill ratio of approximately 1.1x. Turning to our balance sheet on Slide 7: We ended the second quarter with net leverage of approximately 2.7x. Looking ahead, we anticipate deploying free cash flow toward debt reduction and expect to end 2026 with net leverage of approximately 2.3x. As we further strengthen our balance sheet, we will continue to evaluate capital allocation through a disciplined framework focused on the highest-return uses of cash and long-term shareholder value creation. Moving now to Slide 8: We are updating our 2026 guidance to reflect increased SAT sales and an improvement in non-operating expense. For the full year, we continue to expect total sales growth of 15% to 17%. In SAT, we now expect high single-digit to low double-digit sales growth based on the strength of international currency backlog and continued strong demand. In DTT, we continue to expect sales growth in the low 20s percent range, with Antares Vision contributing approximately $200 million to $210 million and with the fourth quarter representing the largest contribution of the year, in line with their historic seasonality. In CPI, we expect sales to be slightly down for the full year, reflecting mid-single-digit growth in services, low single-digit growth in vending, and a mid-single-digit decline in hardware. We are also updating our forecast for non-operating expense to approximately $80 million from $85 million, reflecting the favorable impact of expected debt paydown and lower borrowing costs. As a result of these updates, we are raising our full-year EPS guidance range to $4.22 to $4.42 per share. Looking ahead to the third quarter, we expect low double-digit sales growth. In SAT, we expect sales to be flat to slightly down year over year given the very strong comparison to Q3 2025. In DTT, we expect sales growth in the mid-20s percent range, with Antares Vision contributing approximately $55 million to $60 million of sales, while CPI sales are expected to decline in the low single digits year over year. Now I will turn it back to Aaron to provide closing remarks.
Thank you, Christina. To wrap up, we delivered a solid second quarter and continue to execute against our key value-creation priorities: accelerating organic growth, building on our leadership positions, and driving operational excellence. Based on our continued momentum, I am pleased that we are in a position to raise our full-year adjusted EPS guidance. We are confident in our ability to deliver against the commitments we have laid out—strengthening the portfolio and converting our competitive advantages into sustainable growth, margin expansion, and strong free cash flow. Thank you again for your time this morning, and I would also like to again thank our Crane NXT team members around the world for their commitment to our customers, our communities, and all of our stakeholders. With that, operator, we will take our first question.
分析師問答
Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Please note that speakers will accept one question and one follow-up question on today's call. Please standby while we compile the Q&A roster. Our first question comes from the line of Matt Summerville of D.A. Davidson. Your line is now open.
Thanks. Good morning.
Hey. Good morning.
A couple, Aaron. A couple of quick questions. How much capacity is being added either organically through your own footprint or through partners for security, substrate, and printing as it pertains to the currency business? And can you give a little bit more granularity as to what we should read through the fact that you are now booking out into 2028? And then I have a follow-up.
Yeah. Hey. Thanks for that, Matt. We feel incredibly bullish about this currency business, both domestically and internationally, and you see that in the backlog again, reaching another all-time high this quarter. We are adding capacity very quickly, both as you alluded to through some partnerships this year, and that is going very well, as well as the build-out, particularly of our micro-optics facilities both here in the United States and in Europe. That work is already underway and is going to continue for the next several years as we see the volume both coming into our backlog and what we see getting tendered that we feel we have a very high probability of winning. That being said, we are in a place to sustain high mid-single-digit growth in the international currency business for the next few years. That will ultimately lead to doubling over the next several years the size particularly of our micro-optics capabilities. I think that puts us in a very good position both for the rest of 2026 and into 2027, 2028, and beyond. And that is what we are investing for.
Thank you. Maybe just as a follow-up, can you give a little bit more granularity and detail around how we should expect third- and fourth-quarter revenue and earnings cadence to look across the two reportable business segments?
I will start there, Matt. I think it is worth noting that we had a strong first half of the year, and that gives us the confidence to raise our full-year guidance. In the third quarter, we will see low double-digit sales growth overall with a mid-20s percent EBITDA margin. In SAT, we will see a low single-digit decline, and that is largely driven by the comp to 2025 in currency; we had a very strong end to last year. Authentication will perform as expected in Q3, which is a mid-single-digit revenue grower. In DTT, we will see mid-20s percent growth; Antares will contribute $55 million to $60 million of sales. In CPI, we will be down in the low single digits, reflecting continued softness in our hardware end markets. The phasing of revenue in the back half of the year will be a little more skewed toward Q4, which is aligned with our normal seasonality. But overall, for the full year, we are expecting mid-teens sales growth with an adjusted EBITDA margin of about 24%, which is roughly 100 basis points of organic margin expansion year over year.
Thank you. One moment for our next question. Our next question comes from the line of Michael Halloran of Baird. Your line is now open.
Hey, guys. Good morning. This is Trent on for Mike.
Morning, Trent. Hey.
So quick question on Antares moving higher right out of the gates. Any color on the confidence there and what you saw to raise expectations into this year?
Bottom line, my confidence is very high in how we are executing Antares. It is about 150 days in now post the close of the acquisition. As I mentioned in the prepared remarks, we have had a lot of good early success implementing and driving the Crane Business System to get after our synergies, and that is going very well. Antares opens up new markets for us in pharmaceutical track and trace technology and food and beverage inspection and detection, and I am more confident than ever that this is going to play out well for us over the long term. We could not be more pleased with how the team is integrating into the company and how we are executing, which gives us high confidence as we look at the second half of the year.
That's great. As a follow-up, on the flip side, it's not terribly surprising to see some pressure in the core CPI hardware and vending business. Any thoughts on the state of the end markets and what gives you confidence in the outlook there based on the backlog or anything else you are seeing? I know book-to-bill was kind of flattening out, and you're starting to see sequential backlog growth. Any help there would be helpful.
You're right: a little softer in the top line of CPI in Q2 driven by vending and hardware, and really in hardware that was in retail where we have seen a little slowness in some of our larger projects. The key points are: one, sequential build in the backlog; two, book-to-bill well above 1; and three, excellent execution by our team to drive organic margin expansion of over 200 basis points in the quarter. I think that's best-in-class execution. When you look at where we are on the top line and over 100% free cash flow conversion, CPI is driving great free cash flow and high margins for us. We continue to invest in areas we see growth, like services, which continues to grow in mid-single digits. Putting that together, we have adjusted the forecast for the rest of the year and have high confidence in the outlook, which is why we are raising guidance for the full year.
Great. Thanks, guys. I will pass it on.
Thank you. One moment for our next question. Our next question comes from the line of Bob Labick of CJS Securities. Your line is now open.
Great. Good morning. Thanks for taking our questions, and congratulations on strong execution.
Good morning, Bob. Thanks for that.
The portfolio is really taking shape here, and one of the benefits of creating NXT is the Crane Business System, CBS. You have alluded to it, but can you elaborate a little more on some of the CBS actions taken in OpSec and De La Rue to date and some of your intentions for Antares?
I appreciate you mentioning that, because sometimes it can get lost. What really matters with CBS is not just saying we have tools and resources; it has to drive outcomes, and those outcomes must drive quality, delivery, cost, and productivity in the P&L. That's what you are seeing in the Authentication business, where we had organic margin expansion in Authentication of over 300 basis points in the quarter, and that is CBS in action. It comes from how we are doing 80/20 on the product lines to reduce the lower-margin SKUs and move up to higher gross margins. We're also seeing consolidation of the footprint of the business, and that is very tangible when you go to the business. Christina and I were there earlier this week at a facility in the United States, and it is a transformation—optimization on the factory floor, the CBS daily management boards, and the Kaizen schedule being run. For example, in our facility in the U.S., we will run about one Kaizen a month for the next several months focusing on productivity, and that is what's driving the hundreds of basis points of margin improvement in Authentication. The exact same thing is happening in Antares Vision. I was there two weeks ago with Christina and toured the floor; you already see the transformation occurring in the operation. That is what gives us high confidence in the margin expansion we will see through the balance of 2026 and onwards through the implementation of Kaizens in that business. So we feel very good about it: it is tangible, it is real, and you see it in our outcomes.
Okay. That is wonderful. In the past, you've given a sense of Authentication assets margins. It sounds like you may be a little ahead of schedule. Could you remind us where they started the year, where you expect them to finish in Authentication, and whether that should be a tailwind to next year's margins as well?
Yes. I will take that one. We are on track and executing as planned. The 80/20 initiatives in the first half will drive margin expansion to the end of the year. We expect to end the year at roughly a mid-teens EBITDA margin for Authentication, and we will have mid-single-digit revenue growth in the back half of the year to support that. For the full year at the SAT segment level, you will see about a 100 basis points of margin expansion, which is driven by the synergies we are realizing in Authentication.
Great. Thank you.
Thank you. One moment for our next question. Our next question comes from the line of Bob Brooks of Northland Capital Markets. Your line is now open.
Hey, good morning team and thank you for taking my question.
Good morning.
With DTT, I wanted to unpack that a little bit. Hardware and vending continue to be a bit of a drag. Can you give a sense of your comfort or visibility to that inflecting back to positive growth? Is it just a year-over-year comp issue? Just trying to get a better sense.
As you look at the back half of the year, and as Christina mentioned, in Q3 for CPI inside of the DTT segment, you will see a low single-digit decline in Q3 and then building and accelerating to low single-digit growth in Q4. We see sequential backlog growth, book-to-bill above 1, and we have line of sight to projects that typically take a quarter or two to deliver. The team is executing extremely well on margin expansion, which gives us confidence that the top-line softness will normalize into the back half of the year and drive strong flow-through into EBITDA and free cash flow.
Got it. So is it fair to think the backlog gives you pretty good visibility over the next three quarters, or is it really just over the next two?
It's shorter, Bobby. CPI is more of a book-and-bill business, so backlog visibility is more near-term, but the backlog is at a normal level and is sequentially higher coming out of Q2, so that feels good.
Got it. And on Antares Vision, things seem to be going well. Any early signs of benefits that might not have been initially expected—whether cost synergies or cross-sell opportunities that have popped up now that you've had it for 150 days?
Let me start with what is in our control: executing CBS. Culturally, the work to execute CBS and get at operational synergies has gone as well as we could have expected and is in parts the best I've seen. That is a testament to the Antares Vision team's embrace of continuous improvement and why we were excited about the acquisition. We have inserted Crane NXT talent into the business to help capture synergies early, and that is going well. On cross-sell, we are seeing opportunities between Authentication and Antares—especially importing authentication technology into pharmaceutical markets—and we are working diligently on that. We also see opportunities to use our contacts in currency in emerging markets to foster access into governments as they look at track-and-trace for pharmaceuticals in markets where we also supply currency. Those efforts take longer to play out, but directionally they are correct and will likely produce dividends in 2027 and beyond.
Really appreciate the color. Great. Congrats on a strong quarter.
Thank you. One moment for our next question. Our next question comes from the line of Ian Zaffino of Oppenheimer. Your line is now open.
My question would be again on DTT. How are we thinking about the rest of the business? I know you called out vending, but maybe give us a sense as far as the other parts of the legacy CPI business and how you expect margins to move, since each component has different margin profiles.
Sure, Ian. We break CPI into three components: vending, hardware, and services. Vending is a flat to low single-digit grower for the year and sits a little below the fleet average in EBITDA margin. The hardware business provides components into gaming, financial services, and retail. The slowness in the quarter was really in retail, where some custom projects took a little longer. We have visibility into that backlog, and that is where sequential backlog growth is coming from. Hardware includes our high-margin gaming franchise, where we are the number one player globally. Services is growing in mid-single digits; we have made investments to expand outside of servicing our own components to service third-party hardware, and that is proceeding as expected with software upgrades and operational efficiencies. When you put that together, we expect continued margin expansion in CPI and ultimately in DTT this year—both organically from CPI and through work in Antares—which is why you saw strong margin expansion in the quarter and why we expect healthy margin expansion as we exit the year.
And thinking about legacy CPI, how do you view that business in the portfolio going forward? Recent acquisitions have been in a different direction, and while legacy assets are performing, how do you see that business evolving and fitting into the overall portfolio?
That's a great question. Our strategy, which we discussed at Investor Day, is to build the market leader in authentication and traceability technologies in large, growing TAMs where we are number one or two in key markets. As we pursue that, we continually assess the portfolio to optimize shareholder value. That is an active, ongoing discussion. Our focus today and for the next few quarters is executing well, assessing the portfolio to maximize value, and maintaining a healthy pipeline of M&A targets—likely more active in 2027—to extend our verticals. So it's an active process, and we are focused on execution now.
All right. Thank you very much.
Thank you. One moment for our final question. Our final question comes from the line of Zachary Walljasper of UBS. Your line is now open.
Thank you. I just had one quick question on SAT and the quarter. It performed well organically despite the tough comps. Can you talk a little about the strength there and whether there was any pull-forward that explains Q2 strength versus the full year? Also, on Antares Vision, EBITDA margins seemed to come in in the low-double to mid-teens range—what is the expectation for what it could be by year-end?
I will take that. In Q2, SAT had another strong quarter with 10% organic sales growth and approximately 200 basis points of organic margin expansion. For the full year, we expect SAT organic sales growth of about 3% to 4% and an EBITDA margin around 25% at the segment level. Again, remember the phasing is skewed toward Q4 for the back half of the year, so keep that in mind. We continue to see strong demand and are on track to achieve the planned synergies in Authentication, which is driving margin improvement.
And on Antares Vision, to clarify: we expect Antares to be in the mid-teens adjusted EBITDA margin for the year. Over the next several years, our plan is to grow that into the low twenties—that was always the investment case for the acquisition, and that is how it is playing out.
Got it. That is what I was expecting. Appreciate it, thank you.
This concludes the question-and-answer session. I would now like to turn it back to Aaron Saak for closing remarks.
All right. Well, thank you very much, operator, and thank you for all the questions today. I would like to end the call where I started: again thanking all of our Crane NXT team members around the world for the results they achieved in Q2. It was their hard work and dedication that made it possible and why I have high confidence in raising our guidance for the full year. I think Q2 was another important proof point in delivering on our value-creation priorities. I look forward to giving you an update next quarter on our progress. Thank you again, and have a great day.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.