Crane Nxt Aktie

Good day, and thank you for standing by. Welcome to the Crane NXT Q1 2026 Earnings Call. [Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Matt Roache, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. I want to welcome you all to the first quarter 2026 Earnings Call for Crane NXT.

Before we begin, let me remind you that the slides we will reference during this presentation can be accessed via the Investor Relations section of our website at cranenxt.com, and a replay of today's call will also be available on our website.

Before we discuss our results, I encourage all participants to review the legal notice on Slide 2, which explains the risk of forward-looking statements and the use of non-GAAP financial measures. Additionally, we refer you to the cautionary language at the bottom of our earnings release and in our Form 10-K and subsequent filings pertaining to forward-looking statements.

During the call, we will also be using non-GAAP financial measures, which are reconciled to the comparable GAAP measures in the table at the end of our press release and accompanying slide presentation, both of which are available on our website at cranenxt.com in the Investor Relations section.

With me today are Aaron Saak, our President and Chief Executive Officer; and Christina Cristiano, our Senior Vice President and Chief Financial Officer.

On our call this morning, we'll discuss our first quarter highlights the early completion of the Antares Vision acquisition, our financial and operational performance, and our updated 2026 financial guidance. After our prepared remarks, we'll open the call for questions.

With that, I'll turn the call over to Aaron.

Thank you, Matt, and good morning. I appreciate everyone joining the call today to discuss our first quarter results. I'd like to start by thanking our Crane NXT team members around the world for their strong performance, which helped us begin the year with solid momentum.

Starting on Slide 3. In Q1, we delivered on our 3 value creation priorities of accelerating organic growth, building on our leadership positions and driving operational excellence through CBS.

In the quarter, we had organic sales growth of approximately 6%, with total sales growth of approximately 17% year-over-year. Also in the first quarter, we further built on our leadership positions, successfully completing the acquisition of Antares Vision ahead of schedule. I would like to extend a special welcome to our new team members from Antares Vision, and we're excited to have you part of the Crane NXT team.

Finally, through our focus on continuous improvement, we increased adjusted EBITDA margin by 80 basis points, a 22% improvement over the prior year.

In summary, I'm pleased with our start to the year and delivering on our value creation priorities.

Moving to Slide 4. I'd like to provide an overview of Antares Vision and why we're so excited by the technology and expanded end markets it brings to the company. At the end of March, we successfully completed all key milestones related to closing the transaction, which was ahead of our original schedule.

Now as part of Crane NXT, Antares Vision meaningfully expands our reach into the $3 billion life sciences and food and beverage end markets and further positions Crane NXT as a global leader in authentication and traceability technologies. As shown on this slide, Antares Vision provides advanced detection and inspection equipment, field and remote services and track and trace software that ensures the quality and traceability of products from manufacturing through distribution to consumers. Its core end markets are life sciences and food and beverage with sales primarily coming from the Americas and Western Europe and a growing list of customers in emerging markets.

With the transaction now complete, our focus is on executing our integration and synergy plans.

Moving to Slide 5. With the addition of Antares Vision, we've successfully built on our core positions and created an integrated and differentiated portfolio, providing customers a full suite of authentication and traceability technologies. These include proprietary security features applied to physical products, the ability to track and trace those products through the supply chain, detection and inspection equipment to authenticate products and ensure their quality, a field service organization for commissioning and maintenance of the equipment and unique capabilities to bring these solutions to governments around the world. These technologies and operational capabilities are a key differentiator, allowing us to truly be a trusted partner to our customers and their consumers.

Moving to Slide 6. Antares Vision now sits alongside our CPI business and our newly established Detection and Traceability Technologies segment, or DTT. We see clear and actionable opportunities for operational synergies between Antares Vision and CPI as both businesses are centered on equipment manufacturing, advanced detection system design, and field services. We are confident we can realize these synergies, leveraging our established integration and operational improvement playbook through the Crane Business System.

DTT is also highly complementary to our existing Security and Authentication Technologies segment, or SAT. Put simply, DTT focuses on ensuring product quality, authenticity, and traceability across global supply chains. And SAT is focused on helping to prevent the counterfeiting of products and identities through our proprietary security technologies.

Together, both segments position Crane NXT as a differentiated global leader across the full authentication and traceability value chain.

Now with that, let me hand the call over to Christina to review our first quarter performance in more detail and our updated guidance.

Thank you, Aaron, and good morning, everyone. I'd also like to express my appreciation to our associates around the world for their hard work this quarter.

Starting on Slide 7. We're off to a good start to the year with sales of $388 million, an increase of approximately 17%. Organic sales increased approximately 6% year-over-year, driven by continued strong performance in SAT partially offset by expected softness in CPI hardware.

Adjusted EBITDA margin increased approximately 80 basis points to 19%, driven by the SAT volume flow-through and the realization of operating synergies in authentication. We delivered adjusted EPS of $0.60, an increase of approximately 11%, which is on track with our full year guidance expectations.

Finally, free cash flow reflects normal seasonality and timing of payments in the quarter. Based on our strong backlog and delivery schedule, we expect to accelerate free cash flow throughout the year and to achieve a full year conversion ratio between 90% and 110% on track with our guidance.

Moving to our segments and starting with Security and Authentication Technologies on Slide 8. In the first quarter, we achieved sales growth of 51% year-over-year, including the contribution from the De La Rue Authentication acquisition that closed in May 2025. Organic sales grew by approximately 22% driven by continued robust demand in international currency and a favorable comparative to 2025 in U.S. currency.

This quarter, we were excited to welcome the U.S. Treasurer, Brandon Beach to our currency facilities in Dalton, Massachusetts and Nashua, New Hampshire to learn more about the advanced technology and security measures that go into manufacturing the U.S. currency, and we look forward to the launch of the new $10 banknote, which is expected to be announced this year.

We also ended the quarter with 3 new micro-optics wins in our international currency business and are on track to achieve our full year target of 10 to 15 new denominations.

I'd like to congratulate our currency team on their continued success, including their work for Curaçao and Sint Maarten Central Bank, which was recently named the 2025 Bank Note of the Year by the International Bank Note Society. These notes, which were released last year are beautifully designed and feature our advanced micro-optics technology on both sides of each banknotes.

Adjusted EBITDA margin increased approximately 600 basis points to 20% reflecting the benefit from higher U.S. currency volume and execution of synergies in the authentication business as planned. Looking forward, we expect to see continued margin expansion in SAT and are on track to end the year with an adjusted EBITDA margin of approximately 25%.

Finally, SAT backlog continues to be robust and this, along with a healthy funnel of opportunities, gives us high confidence in achieving our full year sales target.

Moving to Detection and Traceability Technologies on Slide 9. I'd like to highlight that our first quarter sales and adjusted EBITDA reflects CPI only, as the Antares Vision transaction closed at the end of the quarter. Additionally, as of March 31, we have consolidated Antares's balance sheet into Crane NXT and are now including its backlog in the DTT total as presented on this page.

Sales declined approximately 4% year-over-year as mid-single-digit growth in CPI service was more than offset by expected lower hardware sales. Adjusted EBITDA margin decreased approximately 160 basis points year-over-year, reflecting the lower hardware volume and product mix.

We expect accelerating sales growth and margin accretion in CPI throughout the year, driven by productivity programs and disciplined cost management. These factors will drive an incremental improvement to CPI's expected full year adjusted EBITDA margin of approximately 20 to 30 basis points.

Segment backlog was $221 million, including approximately $100 million of Antares Vision backlog, which we expect to deliver in 2026. CPI backlog of approximately $120 million reflects sequential growth of approximately 8% with a book-to-bill ratio of approximately 1.

Turning to our balance sheet on Slide 10. We ended the first quarter with net leverage of approximately 2.9x, including the financing for Antares Vision. Looking ahead, we anticipate deploying free cash flow toward debt reduction and expect to end 2026 with net leverage of approximately 2.3x. This low leverage and our substantial liquidity provide us with ample capacity to deploy capital to M&A in 2027, further building on our leadership position.

Moving now to Slide 11. We are updating our 2026 guidance to reflect the inclusion of Antares Vision. For the full year, we now expect total sales growth of 15% to 17%. In SAT, we continue to expect high single-digit sales growth, driven by high single-digit growth in U.S. currency from a favorable mix of banknote demand and low single-digit growth in international currency over a very strong performance in 2025.

In Crane Authentication, we expect mid-single-digit organic growth with total growth in the low 20s percent, including a full year contribution from De La Rue Authentication. In DTT, we expect sales growth in the low 20s percent, including Antares Vision. In CPI, we continue to expect sales to be flat year-over-year, reflecting mid-single-digit growth in service, offset by approximately flat to slightly down sales in hardware and vending. Antares Vision will add approximately $200 million to $210 million of revenue for 9 months in 2026, with Q4 being the highest quarter.

We now expect our full year adjusted segment EBITDA margin to be approximately 27% including Antares Vision. We are maintaining our full year EPS guidance range of $4.10 to $4.40 as we expect the benefit of productivity initiatives in the core businesses and the EBITDA contribution from Antares to offset the expected incremental interest expense.

Looking ahead to the second quarter, we expect mid-teens sales growth in the SAT segment, driven by timing of international currency shipments. In DTT, we expect mid-20s percent sales growth with CPI sales approximately flat to slightly down year-over-year and Antares Vision contributing approximately $60 million to $70 million of sales in the quarter.

Now I'll turn it back to Aaron to provide closing remarks.

Thank you, Christina. To wrap up, we delivered a strong start to the year, delivering on our value creation priorities. First, we're accelerating our organic growth, achieving mid-single digits in Q1. Second, we're building on our leadership positions in authentication and traceability technologies by closing the Antares Vision acquisition ahead of schedule, and it's expanding our TAM into the life science and food and beverage end markets.

And third, we drove operational improvements, expanding our adjusted EBITDA margins by 80 basis points. Putting this all together, we continue building momentum as we progress toward our longer-term targets as shown on the next slide. As we outlined at our recent Investor Day, our first priority is focused on accelerating organic growth with the goal of delivering sustainable mid-single-digit growth over the coming years.

Second, we plan to continue strengthening our core businesses through targeted organic investments alongside a disciplined approach to M&A, with acquisitions that build on our leadership positions in authentication and traceability technologies. Taken together, these initiatives are expected to grow the company to approximately $2.5 billion in sales in 2028, while maintaining net leverage below 3x.

Third, we're committed to driving operational excellence, and we expect to sustain adjusted EBITDA margins in the mid-20% range and to generate approximately 100% free cash flow conversion. We're building a technology-driven leader with durable advantages, strong cash generation and a clear road map for long-term value creation.

So thank you again for your time this morning. And I'd also like to again thank our Crane NXT team members around the world for their commitment to our customers, to our communities, and to all of our stakeholders.

And with that, operator, we're ready to take our first question.

[Operator Instructions]

Our first question comes from the line of Matt Summerville with D.A. Davidson.

I just want to focus on the international portion of the currency business for a moment. Is there a way for you to either quantify or qualify how the go-forward funnel of opportunity looks in that business today versus maybe a year ago? And we're aware of a significant amount of oncoming redesign activity internationally. I'm wondering if you can sort of pencil out through the end of the decade, whether you envision that peaking or still extending further beyond that?

Yes. Thanks, Matt. And I appreciate the question. I think, as you know and we've talked about, we're just incredibly confident in the performance of the international currency business. We have a backlog in place that takes us through this year. We're building out for '27 and even some bookings into '28. So very high confidence in how we're performing.

I'd go back, Matt, to what we talked about at our Investor Day. We're adding between 10 to 15 new micro-optic wins a year. With that, when you pull that out to 2028, we're going to be approaching 200 denominations under -- or using our micro optics versus just 150 in 2024. So significant increase there.

And to your point, we see a number of opportunities. In fact, over 70 denominations that are going to come to being quoted and designed between now and 2030. And that momentum, we do not see abating here over the next coming years.

My crystal ball may not be good enough to -- for a decade. But I can tell you for the next 4, 5 years out to 2030, this is a very strong business with a lot of optimism and tailwinds to it.

In terms of Antares, can you maybe help quantify, obviously, that's going to be dilutive this year. Can you maybe help quantify the magnitude of dilution and maybe if you have an early kind of prognostication on how accretive that deal may be in '27 as you reduce indebtedness and drive efficiencies, et cetera?

Yes. Thanks, Matt. So exactly as you've indicated here. We do have added interest expense coming in because we've closed the deal and closed it earlier than we originally expected. That's going to be partially offset by the increased profit that Antares Vision brings in 2026. Net-net, we're seeing a few million dollars that are going to be offset though, by increased margins in our core businesses. And as Christina said in our prepared remarks, we're seeing that coming out of CPI with 20 to 30 bps of improvement in margin. So we're able to cover that several million dollars -- a couple of million dollars of net headwind out of that in Antares.

In '27, it will be accretive to our EPS and certainly, we'll wait to give updated guidance later in this year, early next in reality on exactly what that means in '27. Exactly as we expected other than we were able to successfully close the deal earlier, Matt. So we feel good about that and the margins that we're seeing in the core are really coming through to hold that EPS range for us.

Our next question comes from the line of Bob Labick with CJS Securities.

Congrats on a good start to the year.

Thanks, Bob. Good to hear you.

So looking at SAT and kind of digging in a little deeper and maybe we were a little off, but currency sales were much stronger than we expected and authentication were a little bit weaker than expected. Could you talk about the underlying dynamics between the 2? Because you didn't really -- I think you maintained your full year guidance. So maybe timing, it may be something else. But if you could just give us a sense of the strength in currency.

And I think it looks like OpSec may have been down year-over-year, but you still have mid-single-digit organic growth as part of your guidance for authentication.

Yes. Why don't I hand it over to Christina. We can talk about currency, and I'll take authentication.

Yes. Sure, that sounds great. Bob, so starting with currency, I just want to start by saying, as Aaron just said, we have very high confidence in our 2026 sales guidance. So we'll expect to see mid-single-digit growth in currency for the full year. That's a high single-digit growth in the U.S. based on favorable mix and a low single-digit growth in international based on a very difficult comp to 2025, as you know, where we had just a blowout year, particularly at the end of the year last year.

Now if you step back, that creates a linearity dynamic this year. So the phasing of the sales will not be linear this year in currency, we'll have exceptionally strong performance in the first half driven by U.S. currency and then less strong performance in the second half driven by that difficult comp in international.

And so overall, just on currency, as Aaron said, we've got over 90% of our sales in backlog for 2026, and we have high confidence in that sales guidance.

Yes. And let me pick up on that on the rest of the segment in authentication. Bob really performed as we expected in Q1. We've been going through a lot of CBS and synergy activities. That's on track ahead of schedule from what we originally said a few years ago when we first did OpSec and then last year when we closed De La Rue. And what you're seeing run through is some of the 80/20 work and again, the rationalization of the products. And that's what we expected. So as Christina said in her prepared remarks, we're expecting mid-single-digit growth in authentication this year.

And I do want to point out, Bob, and congratulate our authentication team and may be hard to believe, but just this last week, we celebrated the 1-year anniversary of Crane Authentication, where we brought the businesses together. And that's what's really driving a lot of this great 80/20 work in CBS. So congratulations to that team. And I know we're all excited about the next few years ahead.

Super. Okay. And then congrats on closing Antares early. And as it relates to Antares, could you just remind us of some of the growth drivers and let us know, has -- given the European exposure and everything, has it been impacted at all by the war, higher transportation, fuel costs? Any kind of impacts from the macro on Antares?

Sure. Let me take that last part first, Bob, the simple answer here is, no. Well, we don't really see any significant or material impact to Antares from the war or any of the macro events occurring. What really excites us by it by bringing it into the portfolio is exposure to secular growth in end markets like pharmaceuticals, life sciences and food and beverage that expand our TAM up to now $13 billion and really put us in the position of market-leading authentication and traceability technologies.

And we see these as a long-term secular growing markets at mid-single digits. With the leading products in an integrated portfolio. So we're excited to have Antares in the portfolio. And I'd say in the last 30 days since we closed, we've really hit the ground running.

Our next question comes from the line of Ian Zaffino with Oppenheimer.

This is Isaac Sellhausen on for Ian. Question would be on the DTT side as far as CPI hardware, has anything changed as far as growth expectations across end markets? And maybe when you would expect to see some normalization in vending? And then the second part would just be on the CPI services growth. Maybe what's driving that? Is it mainly more recurring maintenance across some of the installed base?

Yes. Thanks, Isaac, for that question. Really pleased here with CPI. Performed exactly as expected in Q1. The team did a really good job. And as you know, Isaac, we're focused in that business on driving and maintaining our high margins. We're going to end this year with adjusted EBITDA margins of about 30%. And as Christina said, we're increasing that incrementally by 20 to 30 bps based on productivity programs and cost actions going on inside that business and maintaining approximately 100% free cash flow. So really strong, as expected, consistent performance here from CPI.

To your question on the different subcomponents of that business, and we think about that first is services, hardware and vending. Services is growing mid-single digits in the quarter. We expect that for the year, and that's where we're growing last year. And it's where we're targeting investment and the build-out of the capabilities. And it's coming from expanding our service offering, not only inside of our CPI equipment portfolio with a better attach rate but also to third-party equipment. And that's where we see the ARR or recurring revenue growth continuing to occur in that business. And as you know, that's a very resilient, sticky revenue base that we like quite a bit. So good performance there.

Hardware and vending largely as expected, we had some seasonality here in the first quarter that we talked about and guided to. That played out as expected, and as Christina mentioned, we expect some recovery there as we go through the year, net-net being about flat for the last part of the year. So hopefully, that helps, Isaac. In summary, really feel good about the performance in Q1 and performing as expected.

Yes, that's helpful. And then just as a follow-up on U.S. currency, obviously, with the new $10 bill rolling out. Maybe if you could -- I think you walked through a little bit of the growth trajectory in the business earlier, but maybe how you see volumes progressing through the year? And then if we should see a benefit rolling into 2027?

Yes. Thanks, Isaac. So hey, we're ready to go with the new $10 bill. Our team has done a great job. And our part of that is largely set. What we're really focused on now is with our engineering and designing team is getting ready for the $50. And getting ahead of that so that we're ready to go when the BEP is ready to start their pilot production.

So when you look at what's been designed for the $10, which obviously hasn't been announced, with what we're doing on the $50, very confident that the U.S. government is going to include advanced security features, similar, if not better, than what other governments are doing around the world. And we see that playing out in the international currency business.

Now in terms of this year, we're benefiting from a nice mix improvement in the U.S. currency, and that's going to read through to high single-digit growth this year. Very confident in that, and we typically follow what the Fed order has projected, and that's what we're seeing. So really, the uplift as we talked about with you and others for the new U.S. currency materially occurs really more in 2027 for us.

But feel very confident in the long-term prognosis of this business with what we're seeing.

Our next question comes from the line of Zach Walljasper with UBS.

I guess the first question I had, which is something around the model. Can you just help parse out what's happening below the line? Because it looks like tax was a little high 1Q and then the nonoperating expense is going up relative to the previous guide.

And then the other question I had was just around Antares Vision just closed. Anything you guys can share around like the appetite for further M&A and the M&A funnel? Like should we expect more deals within the next year or so? I know it's part of the long-term outcome, but I'm just curious about maybe more near term now that it just closed.

Yes. Thanks, Zach. So why don't I hand it over to Christina on the modeling question, and then I'll take the M&A part of your question.

Yes. And I'll just make a note that there are no changes to our core business guidance. The only changes to the guidance were to include Antares Vision. So just to be clear on that. And the impact of Antares, as you see reading through there's an increase in the sales for DTT. And then an adjustment to margin just for the dilution that Antares brings because it comes into the portfolio at a lower operating margin, but we expect to execute CBS to drive that margin back up to the low 20s percent as we've done with our other acquisitions over the next few years. So feel very confident that we'll get that margin up to the low 20s percent.

Then what you're seeing in nonoperating is the addition of interest expense related to the Antares Vision financing. And so that, in total, gets offset with the profitability that Antares brings into the company as well as the productivity that Aaron mentioned in the core business. When you put all that together, we're able to maintain our EPS guidance range of $4.10 to $4.40 and we have high confidence in that guidance range.

And Zach, let me take the second part there, the question on M&A. Right now, our focus, as you can probably imagine, is on integrating Antares Vision. We're on track and really my compliments to our team and in the Antares Vision team, we've hit the ground running on that here in the month of April. And as it relates to future M&A, I would frame that more as we're really not looking to anything until 2027. And that's also so that we keep our balance sheet well below 3. So as you saw, we're at 2.9, we're going to deploy our cash flow to pay down that debt, get into the low 2s as we go through 2026.

And then we'll be ready to go. In 2027, the funnel remains healthy. We're going to continue to use our disciplined framework around markets that are focused on authentication and traceability technologies and feel very good about where we're positioned to potentially do something in 2027.

Our next question comes from the line of Bobby Brooks with Northland Capital Markets.

I get it's still early days on the ownership of Antares, but I know one of the pieces they brought into the portfolio that's really exciting is the tracking equipment paired with the software. So I was hoping you could discuss what sort of incremental capabilities that brings into your portfolio? Because I think some folks might not appreciate that enough given you already had some hardware and software for tracking and tracing. So curious to hear more there.

Yes. Thanks, Bobby. I appreciate that question. And it really is a key jewel inside the Antares portfolio. We call that the DIAMIND platform. And you're right. And it's actually part of the integrated portfolio we now have when you link this to some of the capabilities we had in our authentication business, tracking and tracing of products more through the brand and sports leagues and luxury good channels.

What Antares brings, it's really a step-up in the capabilities because now we're moving into markets like pharmaceutical and food and beverage that, in some cases, are regulated by the government. And that's a whole step-up in sophistication to track the product from the point of manufacturer, all the way through the consumption of that product by the consumer and every step in between. So I would just say it's a, again, more sophisticated, more detailed type of track and trace software that really brings and elevates our capabilities. And why we're excited by it Bobby, is just, first, the underlying growth in that market that more governments are regulating this for their pharmaceutical products and food and beverage as well as the ability to take the core capabilities of it into other markets.

And of course, as you just said, it's very early days for that, but that's strategically where we want to go with the technology.

Super helpful. Maybe just a follow-up there. Do you think there's -- do you think it's more likely to take that higher -- the higher-end tracking and trace from Antares to some of the markets that you were already in previously in SAT? Or is it maybe more taking some of the SAT products and layering them into the customers that Antares is already serving?

It could be both. I'll tell you what's our focus right now, and it's a little bit due to it's faster to take the products from Crane Authentication and start to partner those with the Antares sales and products into their channel. And we're already doing that. That's a key part of where we saw commercial synergies. And so that's the early focus area here in 2026.

That's super helpful. And then just last one for me. You've mentioned, Aaron, I think in the prepared remarks, you targeted growth or targeted organic growth initiatives. And I was just curious if we could hear more about what those look like? Is it similar to the facility expansions in Malta and domestically within SAT, or is it hiring more sales folks to go after those cross-sell opportunities or break it into new markets? Or maybe it's something completely different?

No. Thanks, Bobby. I appreciate getting a little more precise on that. It really is what you referred to. It's this increase in CapEx and OpEx in our primarily international currency business to take advantage of the just increased win rate we're having and what we see in the coming years. And maybe, Christina, you can talk to some of that in more detail.

Yes. We spoke about this last quarter a little bit. So just to reframe, the international currency demand right now is exceeding our expectations. And so we're prioritizing organic growth and investing in that area. And in total, our CapEx will still stay in the same range of about 3% to 5%, but we'll see a greater allocation toward currency and right now, this is focused on building new production lines and outsourcing with partners so that we can just increase our capacity.

So as Aaron said, we'll be spending more, you're seeing a little bit of cost coming through in OpEx right now related to freight and supplies and outsourcing, and that will be a few million dollars this year. And then later this year, we'll ramp up more on CapEx which will take 1 to 2 years to build the facility -- the production lines that we're working on.

Overall, I think the key point here is we're actively managing our working capital and focusing our CapEx on the areas that will drive organic growth and the highest return.

Our next question comes from the line of Matt Summerville with D.A. Davidson.

I think it makes a lot of sense to take a minute and just kind of talk through maybe the pluses and minuses that you would want us to be thinking about from a modeling standpoint as we kind of progress through the rest of the year and $0.60 in EPS in Q1, how should we be thinking about kind of the sequential build in earnings through the year to, say, the midpoint of your guidance range? What are the more pronounced things you want us to all be aware of and kind of just a little bit of help with that earnings build?

Yes. Maybe I'll start and then Aaron, you can jump in. And again, just confirming that we are maintaining our full year guidance range -- or full year EPS guidance range of $4.10 to $4.40. And so you can expect an acceleration throughout the year. So a linear progression of EPS throughout the year. Antares comes into the portfolio and is a little bit dilutive, as Aaron said, a few million dollars to EPS, but we plan to offset that with productivity in the core. So there's really not a change to the core EPS guidance.

Yes. I would add, Matt, on the top line, which will definitely flow through, right? In terms of the pluses, you're going to see an acceleration here of CPI exiting Q1, as we've talked about, really unchanged from how we talked about that last quarter. With a little bit of incremental improvement in our margins, as we said in the prepared remarks.

For the rest of DTT, which is Antares, the phasing of that, as you think about the year is a little more skewed into the fourth quarter. That's the normal seasonality of their business, where they typically ship large projects, particularly in the pharma space at the end of the calendar year. That's something not new but normal in that business. And with that comes a little bit of an improvement in operating profit or EBITDA margins in the fourth quarter.

The one thing I would point out, and we've talked about this, but we will see it as currency inside of the SAT business continues to grow in Q2, we're going to face some tougher comps as we get to the back half of the year. And I really want to point that out, particularly in late through Q3 into Q4, where we just had outstanding performance in Q4 of last year, that's going to tend to become a negative top line growth for us in Q4, but it's just due to the strength that we had in 2025. So, hopefully, that helps, Matt to give you a little bit more color.

Yes. And then maybe if you can just comment a bit on what kind of magnitude of relative price capture you expect incrementally in '26 across the 2 businesses?

Yes. Again, I'd like to think about it ex currency, Matt, because of that being a project business and you kind of see it though come through in the margin rates in that business. When you think about CPI, authentication, let's stick to the core there. We're going to see kind of a low mid-single-digit price increase year-over-year. And we're more than offsetting the inflation we're seeing. And that does not include, though, some of the actions we've taken, like many companies right now to offset freight increases that are coming through. The team has done a great job there. We're offsetting those. So kind of core price of, call it, low to mid-single digits across the portfolio.

I'm showing no further questions at this time. I would now like to turn it back to Aaron Saak for closing remarks.

All right. Well, thank you, operator, and thanks again for all the questions today. So as we conclude our call, I'd like to once again thank our NXT team around the world for their solid start to the year. And I also want to take another moment to welcome our new Antares Vision colleagues to the company. We're excited to have you, and welcome aboard.

As I mentioned in my earlier remarks, Q1 was an important proof point on delivering on our value creation priorities. And I look forward to giving you all an update on our progress next quarter. So thank you again for joining today, and I hope you have a wonderful week.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good morning, everyone. I'm Matt Roache, Vice President of Investor Relations, and it's a pleasure to welcome you to Crane NXT's 2026 Investor Day.

Before we get started, just a few housekeeping items. First and foremost, safety is our top priority. There are no planned fire drills today. So if you do hear an alarm, please treat it as a real event and follow the instructions from the venue staff. The exits are located the way you entered, as well as to my left. Restrooms are just outside the event space in the common area. Please take a moment to silence your for mobile devices and computers.

Today's presentations are being webcast, and a replay will be available on our website following the event. As shown on this slide, the presentations contain forward-looking statements and references to certain non-GAAP financial measures. Please review the legal notice, as well as our Form 10-K and subsequent SEC filings for important risk factors. Reconciliations of all non-GAAP measures to the comparable GAAP measures can be found in the presentation appendix and in our financial filings. After today's event, you'll receive a short survey by e-mail. We value your feedback as it helps us assess the effectiveness of today's program and understand whether we cover the areas you are hoping to hear about.

Now moving to the agenda. We'll begin with remarks from our President and CEO, Aaron Saak, who will provide a high-level look at Crane NXT and the compelling reasons why the company is positioned to accelerate growth. Next, you'll hear from Sam Keayes, who leads our Security and Authentication Technology segment; and from Michael Mahan, President of CPI. We will then have the first of two Q&A sessions.

After a short break, Aaron will talk about how we're accelerating growth with strategic M&A. And then Christina Cristiano, our Chief Financial Officer, will discuss our financial performance, our capital allocation priorities and our outlook. Following Christina's presentation, we'll have our second Q&A session, and Aaron will wrap up the presentation portion of today's event with some closing remarks. After we wrap up, we invite you to join us just down the hall for our innovation showcase and lunch.

So with that, let's get things started with a short video, and then Aaron will take the stage for his opening remarks.

[Presentation]

Well, good morning. Good morning, and welcome to our Investor Day. And again, I sincerely appreciate everyone who's here with us in person and with us online this morning. Thank you for taking your time.

Well, it's hard to believe, but in a few weeks, we will be celebrating the third anniversary of Crane NXT as a public company. And over that time, we've been very intentional in building the company into a focused, technology-led leader with positions in resilient and growing end markets while also maintaining our attractive margins and excellent free cash flow generation. In 2026, we're entering the next phase of the company's evolution from a position of strength with a clear strategy, a strong balance sheet, disciplined capital allocation and a high-performing team that executes with consistency and with purpose.

Today is focused on providing you all details on our strategic vision and financial targets going forward, clearly articulating what we do, why we win and how that translates into durable value creation for our investors. You'll hear more about how we continue to invest in differentiated technology, extend our market leadership positions and use the Crane Business System to expand margins and deliver strong free cash flow. For those reasons and for those here in person, you'll also get to see our technology up close at our innovation showcase after the presentations. I'm confident at the conclusion of today, you will see why I'm incredibly optimistic about where we're positioned to accelerate growth and the opportunity for significant value creation over the coming years.

Our value creation framework is focused on 3 areas: first, accelerating organic growth by providing solutions to meet high-value customer needs through our differentiated authentication and traceability technologies. Second, on building on our leadership positions as we continue to expand our portfolio, both in our core and in near adjacent markets while leveraging our existing customer relationships, scale advantages and technology breadth. Third, driving operational excellence through the deployment of the Crane Business System, or CBS, as we call it, to drive margin expansion and strong free cash flow. These priorities are at the core of our strategy as we move into the next phase of growth of Crane NXT.

And I think it's helpful to remember where we've come from in building this company over the past several years. Prior to our separation from Crane Company, we established leadership positions in advanced security technology for currency and detection equipment to authenticate payment transactions. In April of 2023, we launched Crane NXT. And over the past 3 years, we've been focused on expanding our position in resilient, higher-growth end markets, leveraging our capabilities and technologies that secure, detect and authenticate products. Over this time, we've grown revenue to approximately $1.7 billion and increased our addressable market size to $10 billion.

In 2026, we start this next chapter in the evolution of the company, positioned to accelerate growth as we create a scaled global leader in authentication and traceability technologies. Following the close of the Antares Vision acquisition, our addressable market expands to $13 billion, and we expect revenue of approximately $1.9 billion in 2026. We're continuing to build a more resilient, high-quality company positioned in growing markets and providing solutions to our customers and their consumers that ensure trust.

And it's really trust that's at the core of our purpose, giving people confidence every day in moments that matter. Our technology gives people confidence that the pharmaceuticals they take are safe, the products they buy are genuine, their identity is protected, the currency they use is authentic and the transactions they make using it are valid and secure. And we take this purpose very seriously, and I believe it's a clear differentiator with our customers. And our purpose is built on the foundation of a company that goes back over 150 years, starting with paper mills here in the United States and in Sweden. Today, Crane NXT operates at global scale with over 5,000 associates, approximately 16,000 customers and roughly 1,300 patents protecting our differentiated technology.

In 2025, we had sales of approximately $1.7 billion with adjusted EBITDA margin of approximately 24% and 94% free cash flow conversion. We have leadership positions in all of the markets we serve, spanning currency, brand and government authentication, payment hardware and services and vending. We've also have a very diversified geographic mix, led by North America and with a growing presence in higher-growth emerging markets. This combination of market leadership through our technology, global scale and strong cash generation provides an excellent position for our continued growth.

We've successfully expanded the company over the past 3 years to build on our core positions and create a more integrated and differentiated portfolio. With the acquisition of Antares Vision, we take another important step in being able to provide a full suite of authentication and traceability technologies, including proprietary security features for physical products, the ability to track and trace those products through the supply chain, detection and inspection equipment to authenticate products and ensure their quality, a field service organization for commissioning, the maintenance -- and maintenance of that equipment and unique capabilities to bring these solutions to governments all over the world. These technology and operational capabilities are a key differentiator, allowing us to truly be a trusted partner to our customers and to their consumers.

Upon completion of the Antares Vision acquisition, the business will become part of a new segment called Detection and Traceability Technologies, or DTT. We see numerous operational synergies with our CPI business, with both businesses focused on equipment manufacturing, advanced detection system design and field services. This segment is highly complementary to our existing Security and Authentication Technologies segment. In short, DTT ensures the quality, authenticity and traceability of products across the supply chain, while SAT prevents the counterfeiting of products, identities and other types of counterfeiting on products using our proprietary security features and software.

As we look ahead, our portfolio benefits from durable market trends, including the need to protect brands and products and identities from increased and more sophisticated counterfeiting, both governments and businesses wanting digitized and transparent supply chains to ensure the safety and authenticity of their products and the continued growth of populations and increased GDP in emerging economies. In total, these trends provide underlying market tailwinds of mid- to high single-digit growth. And we continue to align our organic and inorganic investments to build on our leadership positions that benefit from these secular trends.

There we go. As we continue to expand the company, a key to delivering on our value creation priorities is driving operational excellence through the deployment of the Crane Business System. Now CBS is not new to the company since our launch, and it's been embedded in our culture for well over a decade. It's how we work every day with more than 140 Kaizen events annually.

At its core, the purpose of CBS is to accelerate profitable growth to the benefit of our associates, our customers, our communities and, of course, our shareholders. And you see this represented at the center of the diagram on the left. And we achieved this result through the use of specific tools that ensure we focus on markets where we can play and win. We develop new products and technologies that satisfy high-value customer needs, and we improve the safety, quality, delivery and cost of our operations every day.

And at the top of this diagram is a very critical element to CBS, the training of our team and deploying them to tackle our biggest opportunities to accelerate profitable growth. And I'm very proud that we have over 200 CBS tool champions across the company, a number that's grown by about 10% each year. And these are experts in the application of the CBS toolkit and often travel to different sites and businesses to apply their expertise. We also invest in more than 80,000 hours of training for our team members each year in the CBS tools. Additionally, CBS is critical to achieving the financial returns of our acquisitions, and we deploy key talent and train our new team members on CBS to achieve our synergies. When all of these elements, as shown in this diagram, move together, we create momentum and build energy to accelerate profitable growth. And that's why we call this image our CBS flywheel. As it spins faster, we generate more energy and more impact from CBS.

Now at the bottom of this flywheel is a set of actions that say live our values. And I'm very proud of the core values that we have here in Crane NXT of people matter, do the right thing, trust your partner, innovate for growth and always improving. They shape our decisions, they help us strengthen our partnerships with customers. It ensures we give back to our communities, like you see here in the picture, and align our teams around collaborating for success.

And so as we look ahead to the next 3 years, today, we're setting clear goals for what success looks like, aligned to our value creation priorities. First, our goal is to accelerate organic growth, sustainably growing at mid-single digits over the period. Second, we intend to build on our core businesses through investments to accelerate organic growth and continued M&A, both as bolt-ons and expansion into near adjacencies. And from these actions, we expect to grow the company to approximately $2.5 billion in sales while keeping net leverage below 3x. Third, we will continue to focus on driving operational excellence, maintaining our adjusted EBITDA margins in the mid-20s and driving approximately 100% free cash flow conversion. These goals reflect confidence in our strategy and in our teams, and they are reinforced by our proven track record over these past 3 years.

So now I'd like to turn the presentation over to Sam Keayes, our Senior Vice President and leader of our Authentication -- our Security and Authentication Technologies segment, to discuss the growth opportunities that we have in our currency business and in authentication. Sam?

So good morning. Once again, thank you again for those of you who managed to struggle through the weather to join us here in person, and a very warm welcome also to those of you joining us online. We sincerely appreciate each and every one of you taking the time to join us this morning.

My name, as Aaron just said, is Sam Keayes. I'm the leader of the Security and Authentication Technologies segment. And I've been at Crane for about 7 years. Prior to my current role, in fact, I was President of the Crane Currency business. And prior to Crane, I worked for more than a decade in executive roles at Thales, a big international security technologies business. And earlier in my career, for my sins, I worked for the British government.

So let me start by talking about how far the Security and Authentication Technology segment has come over the last couple of years. And in doing so, I'll try and explain why we are so confident that it will be a strong organic growth engine for Crane NXT over the coming years. Because over the last 18 months, we've been extremely busy in SAT. We've built a global leader in advanced security and authentication technologies.

And within the segment, we have 2 market-leading businesses. Crane Authentication equips global brands and governments with solutions that protect products, that secure identities and that enable the efficient collection of excise taxes by governments. And Crane Currency integrates the world's most advanced banknote security technology with award-winning designs and state-of-the-art manufacturing so that the public can ultimately authenticate and trust their banknotes. And I'll explain in this presentation how each business is benefiting from strong market tailwinds, for example, from the surge in global counterfeiting and smuggling, to the upgrade opportunity, which will be at least a decade long in terms of the upgrade of the U.S. currency program. I will also, as Aaron was discussing, explain how we use the Crane Business System to underpin everything that we do, accelerating the successful integration of Crane Authentication, for example, removing complexity and cost, and most importantly, driving safety, quality, customer delivery and productivity across all parts of our business.

So before I dive into each of those businesses in turn, let me give you an overview about the customers of the SAT segment and indeed, some of the key financials. In 2025, the SAT segment delivered about $810 million in sales at about 25% adjusted EBITDA and 85% free cash flow conversion. That's a very strong foundation for sustained and profitable future growth. And as you can see on this slide, the majority of revenues within SAT come from governments and central banks, with the balance from leading global brands. Our customer relationships are exceptionally durable in SAT. About 2/3 of our customers have chosen to work with us for more than a decade. And SAT is also a truly global business. More than half of SAT sales come from outside North America and Europe. And we support those customers with a truly multinational set of leadership teams, account management teams and service teams with service centers based in the U.S., in Europe, in the Middle East, in India and indeed, in China.

So let's now look in a little tighter focus at Crane Authentication, a business that provides solutions that protects tax revenues and secures identity documents for governments and also protects intellectual property and delivers licensing revenues for global brands. Over the last 18 months, we've built a global market leader in Crane Authentication, which has more than 1,000 associates globally and a portfolio of differentiated security and authentication technologies.

This business operates across 3 distinct and fast-growing markets. In brand authentication, our technologies protect the public by preventing counterfeiting and product tampering and support businesses by strengthening customer trust in their brands and boosting their licensing revenues. In government solutions, our advanced track and trace software monitors billions of individual items, giving tax authorities the intelligence and insights that they need to combat smuggling and to ensure ultimately that taxes are paid. And in identification security, we provide unique security technologies that authenticate passports and national ID cards, helping governments to establish people's identities at border crossings and other checkpoints. Crane Authentication's largest customer segment overall is in brand authentication. And investors may wish to take note that more than half of Crane Authentication's revenues come from higher growth emerging markets.

Now the addressable market for Crane Authentication is both large and is fragmented between many different suppliers. To put the scale of the problem that this business is addressing into some kind of perspective, about 2% of all world commerce, that's nearly $500 billion worth of global trade, is estimated to be in counterfeited goods. On top of that, roughly $1.5 trillion worth of illicit products are smuggled across borders every year to avoid paying excise taxes.

And so against this backdrop, that scale of problem, the demand for high-performing authentication solutions continues to grow, creating a market that's currently estimated at about $5 billion a year, but certainly expanding at, at least mid-single-digit rates. And each of the end markets that I've been talking about has its own strong growth characteristics. Global brands are battling more and more counterfeits of every conceivable product. Counterfeits, of course, reduce genuine sales for companies, and poor quality counterfeits also present reputational and potential consumer safety risks.

Governments also want to protect the public from dangerous counterfeits. And in addition, they need to raise tax revenues. And this is why many countries are expanding their current excise schemes from traditional areas like alcohol and cigarettes to new product categories, including bottled water and sugary soft drinks. And finally, governments also need more effective security technology solutions to fight international criminal gangs, for whom a high-quality counterfeited passport or a national ID card is absolutely critical to enable cross-border criminal operations.

Now Crane Authentication truly stands apart in this market for a couple of reasons. First, the sheer breadth of the technologies that we have within Crane Authentication, many of which you can have a look at in the innovation showcase after these presentations. And secondly, our ability to integrate those technologies, the multiple overt and covert physical technologies with very sophisticated and large-scale track and trace and licensing management software. And it's the integration of these solutions that solves the higher value problems for governments and for global brands.

To give you a few examples, pretty much all U.S. major sports leagues and many international sports franchises, including English Premier League soccer teams and Formula 1 teams, rely on Crane Authentication solutions to maximize their licensing revenues and to protect their licensed products from counterfeiting. Pharmaceutical companies also use our authentication technologies to give patients confidence that the medicines they receive are genuine and that they have not been tampered with. National tax authorities rely on our software and security technology to combat smuggling and collect billions of dollars in revenue every year. Governments use our passport and ID security technology, including the polycarbonate data pages that are becoming more and more common in passports and incorporate multiple embedded high-security features.

And to illustrate how this Crane Authentication business is expanding, in just the past couple of months, we've reached agreement with a major oil company and with a leading global perfume brand to protect their revenues by helping to reduce their counterfeiting. And a point I want you to take away is across all of these markets, counterfeiters are adopting more and more sophisticated techniques. And in addition to the improvement in counterfeiting, there is also increasing regulation and increasing global standards, especially in sectors where a counterfeit good can put consumers at safety risk. Both of these factors work together to amplify demand for our solutions. And these trends all reinforce Crane Authentication's positioning in the market as the trusted, scalable, globally deployed solutions that lead the market.

A little bit more on the markets and the tailwinds that Crane Authentication is enjoying, because those markets are expanding both because global brands want to protect their revenue base and because governments want to increase their tax base. Now as Aaron noted earlier on, counterfeiting is accelerating worldwide. And the only logical response to accelerated counterfeiting is to deliver the turnkey solutions I've been talking about that integrate the best-of-breed technologies with the best-of-breed software electronic tracking systems.

Aaron also noted the rapid digitization of supply chains. And the market has rapidly discovered that basic barcodes or basic QR codes are very, very easily counterfeited. So Crane Authentication solves these problems by embedding counterfeit resilient security features into the packaging, very frequently with trust anchor technologies like secure QR codes or covert [ tag ons ] that can create a trusted digital identity for a product. And then that trusted identity can be tracked using our sophisticated software platforms. The result in the example Aaron gave, in the medical field, both patients and indeed, pharmacists, can instantly confirm that a medicine is both genuine and that it has not been tampered with.

And then finally, Crane Authentication is a global leader in supporting excise tax programs in both developed and in emerging markets. Our counterfeit-resistant tax stamps prove that companies have paid the correct excise duty, and our scalable software platforms track billions of units. Again, that's very important for tax authorities to be able to focus their enforcement efforts to curb illicit trade and ultimately to protect consumers from dangerous counterfeits.

So let me now try and show you how this translates into growth in some of these fast-growing markets. A powerful example is in the Gulf Cooperation Council, where most GCC member states rely on Crane Authentication's technology to generate excise revenue. Our advanced anti-counterfeit technologies in this region provide proof of duty paid and an assurance that products are genuine and safe, and our software helps these authorities in the way that I've described.

Now in our innovation showcase later on, you can see for yourself, one of the critical technologies that we use in these solutions. We call it Fortress. It is one of the latest and certainly the most secure technology in the industry used in the fight against smuggling. Fortress fuses invisible covert features with overt security elements to allow customs investigators and indeed, the public, to verify authenticity using a standard mobile phone app.

So this part of Crane Authentication, I think the real takeaway is benefiting from a couple of macro trends. First, more countries are adopting excise tracking solutions to strengthen the collection of their revenues. And secondly, many of our existing customers are considering expanding these programs to cover additional product categories, such as soft drinks, sugar, vapes and bottled water. Both of these vectors provide additional long-term growth opportunities for the business. And as important as technical innovations are, our margin expansion story is equally compelling, driven as it is by the implementation of the Crane Business System, and it's to that, that I want to turn next.

Now since integrating 2 major acquisitions together last year to form Crane Authentication, we have applied the Crane Business System across Crane Authentication to simplify the organization, to streamline the cost base of the business and to position it ultimately for strong and profitable growth. One of the most powerful CBS tools that we've used is the 80/20 tool, which we've used to optimize product lines in the business, reducing complexity, helping us to reset customer pricing strategies and thus set up the business for growth.

For example, we have phased out entirely a legacy hologram product and transitioned many of those customers to other solutions, including our PROFOUND line of advanced authentication micro-optics. And through the application of CBS, Crane Authentication has already delivered very significant changes in the business. We've reduced headcount overall in the business by about 20%. We've reduced other infrastructure costs by rationalizing several sites across the business, including 1 major manufacturing facility. We've optimized the supply chain, optimized research and development spending.

But most importantly, simplifying the business has allowed us to refocus product and engineering and sales and marketing on accelerating the growth of our most differentiated and most profitable solutions. So we've used CBS to accelerate acquisition synergies within Crane Authentication. And we've also deployed more broadly CBS across the business, embedding the cadence and the process and the tools and the expertise for every part of the business to deliver on the ambitious productivity targets. And taken together, the application of CBS is driving future growth, and it's driving margin expansion.

Indeed, based on actions already taken, in 2026, we expect to deliver about $20 million of margin improvement for Crane Authentication. We also expect to deliver about 300 basis points in annual margin improvement in 2027 and in 2028, allowing us to deliver an adjusted EBITDA in the low 20% by the end of this period. This progression is fully consistent, of course, with our guidance and sets the business up for accelerated profitable growth over the next several years.

So let's now perhaps turn to Crane Currency, the other part of SAT and a business that designs, secures and manufactures banknotes using our own proprietary security technologies that are easy for the public to recognize and indeed, easy for CPI's equipment to authenticate. And at the heart of Crane Currency's unique capabilities is our micro-optics technology, which I will talk a lot about in this presentation, showcased here on some stunning new banknote series for Curacao and St. Martin. This is, in short, technology that is uniquely resistant to counterfeiting, is fully customizable and is thus highly in demand from central banks.

Now over the past decade, Crane Currency as a business has delivered consistent mid-single-digit growth, driven both by the steady expansion of banknotes in circulation and by our success in taking market share. Now let me give you an overview of the business and explain why I believe its fundamentals remain exceptionally strong. Crane Currency employs about 1,200 associates across 5 sites in the United States and in Europe. We leverage, as I said, security technology, design expertise and other capabilities across 2 markets, the U.S. currency program, and in support of central banks around the world. About 1/3 of our revenue comes from the United States, where we produce unique Crane Currency paper with embedded security features for both the U.S. currency program and indeed, the U.S. passport program. The remaining 2/3 of revenue come from international central banks, for whom we provide a one-stop shop of banknote design, of durable banknote paper, of advanced anti-counterfeit security features, of printed banknotes and indeed, a comprehensive suite of support services, for example, secure transport, secure storage, public education programs and the like.

The key takeaway, I think, from this slide is that Crane Currency is a highly predictable and highly stable business. And this is primarily because banknote designs do not change very frequently. Once our security technology is specified in a banknote, that specification typically remains in place for many years regardless of how many more times that banknote is reprinted. There is, in essence, an annuity of increasing technology sales as we get our banknotes specified with our micro-optics technology. It's also the case that where we provide banknote paper or banknote printing services, those contracts are also frequently secured through multiyear arrangements. As a result, Crane Currency has by value, more than a year of sales in backlog, providing very, very clear visibility of our future sales and ensuring that we can deliver highly dependable future performance.

Now the addressable market for commercial banknote production is estimated at roughly $2 billion per year. This market is served by a small handful of accredited commercial suppliers, supported by some other substrate and technology providers in the industry. And for more than 40 years, you can see the last 10 on this slide, that for more than 40 years, the number of banknotes in circulation has grown consistently. This is a long-term trend that reflects the enduring role of banknotes as a safe and convenient store of value, but also the growth in economic populations around the world. It's also a truism that cash tends to accelerate sharply during periods of political and economic instability and especially during periods of high inflation.

And despite the rise of digital payments, in many regions, it's worth remembering that cash remains the preferred or indeed, the only means of payment. More than 1 billion people worldwide have no access to any bank accounts or electronic payments at all. They rely entirely on cash for their daily transactions and indeed, their savings. And even in developed economies, cash remains important for financial inclusion, for privacy and for resilience in the face of cyber attacks or other major digital outages.

And even highly digital societies are reaffirming this. Sweden, which happens to be the first country to adopt Crane Currency's micro-optics technology way back in 2006, is an example of a country actively promoting the use of cash both to support financial inclusion, but also to guard against digital infrastructure failure, including providing advice to citizens in Sweden to keep a substantial reserve of cash at home at all times. And this reinforces a simple point. There's no evidence of a slowdown in the long-term global demand for banknotes growing. And with nearly 1,000 banknote denominations worldwide, Crane Currency also has significant opportunities to expand the use of our security technologies across this global market.

So the main market tailwinds for Crane Currency come from 2 directions: a rise in counterfeiting and the growth of emerging economies. One point I'd like to make about counterfeiting is that the Internet is democratizing counterfeiting. Techniques that used to be the reserve of very specialist counterfeiters can now be learned through online tutorials, and you can buy the counterfeit materials directly from online vendors. This kind of open source counterfeiting, if you like, has made it much easier for bad actors, in particular, to mimic older and less secure features. And that trend is one of the things driving central banks around the world to accelerate upgrades of their existing banknotes and to invest more in technologies that are most likely to remain counterfeit resilient for many, many years.

And secondly, Crane Currency has trusted long-standing relationships with pretty much every major central bank in the world and is particularly strong in parts of the world where banknote requirements are accelerating fastest, for example, in Africa and in Latin America. It's also the case if we look historically that when our motion security technology was specified on the USD 100 bill in 2013, it triggered a surge of demand in the international market for Crane Currency's micro-optics. And so the upcoming redesign of the U.S. dollar certainly has potential to spark a similar wave of interest and create another multiyear cycle of accelerated growth in emerging markets. In short, we think Crane Currency is extremely well positioned to capitalize on these macro trends. It has strong relationships across the central bank community and a product portfolio that is purpose-built for today's threat environment.

Now with these growth catalysts in place, the next major inflection point for Crane Currency begins right here in the United States. Crane Currency, as I'm sure many of you know, has supplied the unique banknote paper with embedded security features for the Bureau of Engraving and Printing since 1879. This paper is produced using a secret Crane Currency recipe and proprietary manufacturing processes that give the U.S. banknotes their instantly recognizable feel. And this U.S. dollar paper is also the most durable banknote substrate in the world. Durability really matters to central banks because it reduces the cost of replacing banknotes and also reduce their environmental impact.

So according to published Federal Reserve data, a $1 bill, to give you an illustration, lasts an average of 7.2 years in circulation. And that compares with typically 12 to 18 months for a normal low denomination note elsewhere in the world. It's an extraordinarily high-performing substrate. The Federal Reserve also publishes the chart that you can see replicated on this slide, which shows 2025 print volumes and the approximate variable cost of each banknote denomination. What this chart really does is it illustrates a simple truth: that for any country, the higher the value of the banknote, the higher the risk of counterfeiting, and therefore, the more sophisticated and more costly the security features must be.

As a result, as you can see from this slide, a $20 bill currently costs nearly twice as much to produce as a $1 bill. And a $100 bill, incorporating also our advanced micro-optics, costs an additional $0.04 per banknote on top. Now at this point, it's important that I remind you that no central bank will ever disclose the future designs or security features of an upgraded banknote before they launch it. So there is 0 possibility that I will comment on any specific design or technology decisions being made at the moment by the Federal Reserve.

However, for purely illustrative purposes, if you were to assume that the other U.S. denominations were raised to the same security level as the current $100 bill, and of course, print volumes remain pretty constant, then the incremental annual cost of the enhanced security in those banknotes would be roughly $15 million annually for the relatively low volume $10 bill and closer to $50 million annually for the high-volume $20 bill. What that means is if the $10, the $20 and the $50 note were all upgraded to that level, the level of the current USD 100 bill, then hypothetically, this technology upgrade opportunity could be worth an incremental $100 million of revenue per year.

So with that in mind, let's look at where the U.S. redesign cycle stands today and how indeed, we are positioned to win. The Federal Reserve introduced micro-optic security on the $100 bill way back in 2013, but the other U.S. denominations have not been upgraded in more than 20 years. The Federal Reserve has stated publicly that it will begin rolling out new upgraded banknotes in 2026, starting with a redesigned $10 bill. And the remaining denominations will follow in roughly 2-year intervals. A primary goal of this redesign cycle is clearly to improve counterfeit deterrence of U.S. banknotes.

And so to prepare for this, Crane Currency completed major investments in 2025 to upgrade both our Dalton, Massachusetts facility, where we manufacture U.S. banknote paper, and our facility in Nashua, New Hampshire, which is our primary site for manufacturing micro-optics security technology. And as a result of these investments, Crane Currency's capabilities to support the U.S. new series are fully proven, and they are ready to go.

Beyond Crane Currency, we expect this banknote redesign cycle, as I said earlier, to create a growth tailwind for other parts of Crane NXT. For example, the shift to new machine readability standards will inevitably drive demand for CPI as note acceptance machines, sensors and software will need to be upgraded to handle the new banknotes. And Michael Mahan will speak more about that opportunity in the next presentation.

Now let's take a moment just to unpack some of the technology, some of the next wave of innovation that will drive the future of banknote security because Crane Currency's micro-optics technologies are today, the world's leading banknote security features. They enable the public to authenticate a banknote in a fraction of a second, in a glance, without any training and any tools. They're fully customizable. They allow our incredibly talented design team to create highly engaging 3-dimensional moving interactive visual effects that reinforce authenticity and enhance the banknote's design.

Critically, of course, Crane's micro-optics deliver strong anti-counterfeit protection, together with that customizable design. I want to stress that the materials, the processes, the software, the very equipment used to produce our micro-optics, simply does not exist outside of Crane Currency, making this technology highly resistant to counterfeiters. We can also integrate forensic level security features that are detectable only by law enforcement or by the issuing central bank. And our technology is protected by more than 250 patents, by extensive trade secrets, by proprietary chemistry and indeed, proprietary design software.

As you can see on this slide, we produce 2 broad product families of micro-optics. MOTION delivers complex, dynamic visual effects that appear to float and move with striking realism. RAPID offers super sharp high-speed movements designed to catch the eye immediately. Either can be combined with our DETECT technology to make our micro-optics securely machine readable.

But the breakthrough that excites me the most is our latest innovation. It's one that truly redefines what is possible in banknote design and security. We call this latest innovation VISION. For the first time, we can individually color each of the several million micro-optic lenses on a single banknote with its own color. Now that unlocks a completely new level of security and design possibilities that the industry has never seen before. And being no doubt that VISION is a quantum leap forward -- not an incremental improvement, it's a quantum leap forward in banknote design and security -- it opens up this entirely new world of multicolor micro-optics that will bring banknotes to life in astonishing ways whilst also providing a step change in anti-counterfeit protection. VISION's multicolor effects are so sophisticated that they push way beyond anything that counterfeiters or our competitors can hope to replicate.

I also want to stress that we've innovated on the form factors in which we can supply these micro-optics. Historically, we have woven our micro-optics into the banknote paper, as is the case with the 3D blue stripe on the $100 bill. But our technology can now alternatively be securely applied on the surface of a banknote. That allows us to take on a new part of the market, expensive foil competitors, and it extends the use case for micro-optics from paper banknotes to paper and hybrid and polymer banknotes. Being able to address polymer banknotes alone extends our access to another 7% of the global market. And last year, Fiji became the first country in the world to launch a full series of polymer banknotes featuring MOTION SURFACE technology on all of their banknotes. You can, of course, see those banknotes in our innovation area.

So if you'll indulge me, let me just take you a little bit deeper into the capabilities of this technology by talking about this Beauty of Life house note. A house note is a banknote that we design and print in-house to showcase the full power of our designs and security technology. And everyone in the room here today will get your own Beauty of Life banknote to take home with you before you leave. And when you examine it, notice the shimmering skin of the salamander, notice the flapping wings of the lady bird, the spiral movements in the snail's shell, the frogs swimming in the background. These are all fluid, organic motions that our eyes instinctively recognize. And they're important because independent research shows that people are incredibly good at authenticating banknotes, especially when natural life-like movements are present. And as this shows, when micro-optics are seamlessly integrated into the overall design of a banknote, the brain can recognize authenticity in the fraction of a second.

Let's click a little bit deeper than that. This MOTION SURFACE stripe contains about 5 million tiny lenses. Each of those lenses is perfectly aligned with encrypted layer of nanotext. This complexity is part of what makes this technology so incredibly difficult to reverse engineer. And as we dive into the technology, you can even see that how we can add in forensic features like microtext that are not at all visible to the naked eye. We can include, as I mentioned, an encrypted layer to make the technology even harder to replicate.

Now this technology is made possible in part by software that has been developed by Crane Currency in-house. It's the software that allows our designers to show customers animations like this and then to rapidly adjust designs through a consumer-friendly design process. And as I mentioned, by placing the micro-optics on the surface of the banknote, we can showcase the full capability of the technology. And that means we can apply it to all sorts of substrates. And in the innovation showcase, in addition to the banknote you'll get to take home, we'll be delighted to show you a very special version of this banknote manufactured in full multicolor VISION technology to give you a true glimpse of where the future of banknote security is headed.

Now these innovations are redefining what is possible in a banknote. They're also very directly expanding our addressable market and accelerating the adoption of our technology globally. As a result of these product innovations, for the first time in our history, we can offer multicolor micro-optic security technology for every banknote on any substrate. This has significantly enhanced our ability to drive future growth.

And being no doubt, our technology continues to drive new customers -- new customer wins at a solid pace. In 2013, as you can see on this slide, when Crane Currency had only a MOTION product -- and this was prior to the specification in the USD 100 bill -- our micro-optics was specified in just 29 banknote denominations worldwide. Today, our technology is specified in 170 denomination, with 20 new denominations converting to our micro-optics during 2025, 11 of those in the final quarter of last year. And as I mentioned earlier, we believe that the

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I believe, the best team in the industry, and we have a clear line of sight as this slide shows, to more than 70 banknotes that we are targeting to upgrade over the next 4 years, and that includes 15 central banks who plan to upgrade their entire new series.

The map on this slide breaks down those opportunities roughly by region. It reinforces the point that the largest opportunities for growth for Crane Currency internationally are in regions such as Africa and in Latin America and in the Middle East, where Crane Currency has excellent references and has historically been most successful. So even using conservative assumptions, converting a historically reasonable proportion of these qualified opportunities represents an annualized growth opportunity of more than $100 million per year. And with our technology leadership and our global reach, Crane Currency is very well positioned to capture this growth.

So to support this demand, we are naturally investing. Investing in capacity, in resilience and in speed to market. Manufacturing banknotes, to remind you, is a highly specialized business. Suppliers must operate from audited, secure access controlled facilities. We must use accredited technologies. We must be able to convert very complex requirements from central banks into banknotes that meet exacting manufacturability standards and so on. In short, central banks will only work with partners that can demonstrate years of proven capability and have multiple strong references in this industry.

And of course, we've got this extraordinary history within Crane Currency, which dates back to 1755 in Sweden and 1879 in the U.S. But our focus isn't on the past, it's on future profitable growth. We are ready to support the U.S. currency upgrade. We have recently launched this breakthrough multicolor VISION technology. And as such, we are moving key sites immediately to 24/7 staffing to meet the expanding demand from international currency customers.

And the next step is to expand our capacity to produce micro-optics still further. And to achieve this, we will be installing a new micro-optics production line in Nashua in New Hampshire and another in Europe. These investments will increase capacity further. They will strengthen our operational resilience. They'll improve our operational flexibility. And most importantly, they will position us to meet the needs of the new international customers that we expect to win over the next 4 years.

So stepping back, what does all of this mean for SAT's performance? Well, we expect to convert 10 to 15 new banknotes every year to our micro-optics technology. And additionally, if you look at the actions that were taken last year to optimize Crane Authentication, together with the disciplined execution of the Crane Business System, we expect to expand margins in that business by approximately 300 basis points each year.

And why are we confident that we can deliver this growth and improvement in margins? Because Crane Authentication is very well positioned to capture growth in brand protection and in the expansion of government tax recovery schemes and to meet the surging demand for passports and more secure identity documents. And as I hope I've convinced you, Crane Currency is positioned very strongly on the back of the U.S. currency upgrade and due to the growth of market-leading VISION and SURFACE technologies to continue to take more market share.

In short, we expect SAT to deliver mid-single-digit plus growth from 2025 to 2028 due to the currency program in the U.S., complemented by more profitable growth in international currency and indeed, in Crane Authentication. And as a result, by 2028, we expect the SAT segment to be a $1 billion revenue business, delivering 28% adjusted EBITDA even as we continue to invest in the additional capacity that is needed to take advantage of the growth opportunities ahead.

So let me close by returning to my main headline, which is that in SAT, we are accelerating organic growth through technology leadership. Crane NXT's SAT segment is already a global leader in overt and covert security technologies and in the track and trace and licensing management software needed to support both global brands and government tax schemes. It is these highly differentiated technologies that position these businesses for accelerated profitable growth in a world where, let's not forget, counterfeiting is growing and smuggling is expanding.

Both of the businesses in SAT have market-leading positions. Both operate in markets with real tailwinds. Both have significant opportunities to gain market share. And both are strengthened by the disciplined execution of the Crane Business System and by the best security technology available anywhere in our industries. And for our guests in the room this morning, I strongly encourage you to visit the innovation showcase so that you can see firsthand, many of these extraordinary technologies that are protecting brands, protecting governments and protecting central banks and their currency around the world.

Thank you for your patience and time today. I'd now like to hand over to Michael Mahan, who will provide an update on our excellent CPI business. Thank you.

Good morning, everyone. I want to echo Aaron and Sam in thanking all of you for joining us today, both here in the room as well as online virtually. I'm Michael Mahan, President of CPI, and it's a pleasure to walk you through our business, our strategy and the opportunities ahead of us. I've been leading CPI for almost 2 years after a long career managing global industrial technology businesses at GE, Haier Appliances and Schneider Electric.

At CPI, we've built a reputation grounded in best-in-class detection technologies and a relentless focus on operational excellence. Over the next several minutes, my goal is to give you a clear picture of why CPI is positioned not just to compete, but to lead through technological differentiation, disciplined execution and a strategy designed to expand our margins and strengthen our free cash flow profile.

You'll hear today that we're at a particularly exciting point in our journey. Several structural tailwinds, most notably the upcoming U.S. currency refresh that Sam just described, create opportunities uniquely suited to CPI's capabilities and scale. At the same time, the evolution of our service platform, the continued demand for automation and disciplined use of the Crane Business System, are all accelerating our performance.

So with that as our starting point, let me walk you through where we're going to focus today. Here are the 4 key messages that I want to leave you with. First, CPI is and remains the market leader in the detection equipment and services that underpin the secure, reliable currency handling across a wide range of industries. These themes will come together across the next several slides.

Second, the U.S. currency refresh represents a significant and multiyear tailwind. This is not just a product upgrade cycle. It's a once-in-a-generation modernization of the nation's currency infrastructure. CPI is exceptionally well positioned to benefit because of our scale, our installed base and our leadership in detection technologies.

Third, our service business continues to expand into attractive higher-growth adjacencies. As more industries digitize and automate payment and authentication processes, the need for reliable, high uptime service grows with it. Finally, our disciplined execution of the Crane Business System continues to drive operating efficiency and margin expansion throughout CPI. This system has become an engine of continuous improvement, allowing us to simplify processes, strengthen quality and enhance delivery performance.

Now that I've outlined some of the core dynamics, let's dig into CPI's business profile and the fundamentals that support these themes. CPI has been the market leader in the spaces where we play for decades. Our hardware portfolio spans banknote validators, coin recyclers and increasingly, cashless solutions. These products have become mission-critical for customers whose operations depend on accuracy, durability and security. And our solutions are recognized for their unmatched detection capability, truly the best technology in the industry, a key reason we've sustained leadership across gaming, retail and financial services for decades. Complementing that is our service platform, which includes in-field services, depot repair, preventative maintenance contracts and on-demand support. This recurring revenue engine strengthens customer stickiness and contributes to margin stability.

Our vending business is set apart by our ability to deliver a truly end-to-end solution. We don't just manufacture the machine. We provide the software that runs it and the payment technologies that power every transaction. And we do this across all 3 major categories: cold drinks, snacks and coffee. Altogether, we ended 2025 at $850 million in revenue, supported by a diversified global footprint across the Americas, Western Europe and the rest of the world.

My key point here is that our strength isn't tied to 1 product or 1 region. It's the combination of hardware, service, technology and global presence that positions us as a durable market-leading business, enabling consistent free cash flow generation over the long term.

Now that you've got a sense of how the business fits together, let's talk a little bit about the markets where we operate and exactly what's shaping them. Across all 3 segments, CPI is strategically aligned to secular drivers: automation, security, uptime and multichannel payment acceptance. Within each segment, Payment Hardware, Services and Vending, the underlying market dynamics remain positive.

Starting with Payment Hardware. This is a $1.5 billion global market that's growing in the low single digits. The growth is driven by continued automation in gaming and retail, as well as the need for more advanced counterfeit detection technologies. Even with the consolidation of physical banking locations, demand remains strong in areas such as kiosks, cash automation and smart safes.

Our Services segment, a $500 million market, is growing at mid-single digits and is highly attractive from a profitability standpoint. As more self-checkout and kiosks systems deploy globally, uptime becomes critical. That creates strong demand for high reliability field service capabilities that CPI can deliver. This is a market where our expertise and network density give us real structural advantage in the market.

Finally, the Vending market, roughly $400 million, also continues to grow at low single digits. The consolidation of vending operators has driven standardization, and that standardization favors vendor partners capable of delivering scalable, interoperable solutions across hardware, software and payment, like us here at CPI.

And while those market trends are important, 1 major catalyst deserves its own focus, the U.S. new series banknote refresh. The U.S. new series program is one of the most important opportunities on CPI's horizon. As Sam showed, this program represents a significant technology upgrade to the nation's banknotes and detection systems, including enhancements in AI imaging, infrared, magnetic and fluorescence detection. These new technologies will require the replacement of older equipment and substantial updates to software platforms across the entire installed base.

For CPI, this is a multiphase opportunity. In the fourth quarter of 2025, we began customer engagement and readiness activities. In 2026, the Federal Reserve launches its public education campaign, and new authentication software begins rolling out. From 2027 through 2028, we expect a heavy cycle of equipment upgrades and new hardware deployments. From 2029 onward, annual enterprise software revenue will continue throughout the multiyear rollout of new notes. Importantly, more than 25,000 currently installed units must be replaced in the field, as they're not compatible with the new banknotes. This replacement cycle is not discretionary. It is mandatory for all currency handling operations, and it represents a roughly $50 million revenue opportunity for CPI in the 2027 and 2028 cycle.

This program provides not only a major uplift in hardware demand, but also recurring software and service opportunities extending all the way through 2034. This program ties directly into the growing importance of our service franchise, as they'll be an important part of the field upgrade process. They're becoming an increasingly critical differentiator for CPI and our customers.

So let's turn to that next. Our Service business is focused on 3 strategic pillars: one, solidifying our core service revenue with an attach rate above 80% and a growing depot repair model; two, expanding into profitable high-growth adjacencies such as smart safes, kiosk systems and self-checkout, which are increasingly proliferating around the world; and three, leveraging the Crane Business System to improve operating efficiency, including optimized routing, faster response times and better first-time fix rates. Collectively, these initiatives position our Service segment to deliver sustained mid-single-digit growth, high contribution margins and industry-leading reliability.

For investors, the message is clear. Our Service platform is a proven and durable growth engine with both margin and free cash flow benefits. And a big reason we're able to scale the service business so effectively is the Crane Business System. So let me talk a little bit about what that looks like in action across all of CPI. As Aaron shared earlier, one of CPI's most important strengths is our disciplined use of the Crane Business System. CBS is embedded in our culture and how we operate. It has allowed us to drive meaningful improvements across manufacturing, quality, supply chain and commercial processes.

Let me highlight a few concrete examples. In our U.S. factory, we've improved vending line rates by roughly 160% following a series of targeted Kaizen events. We've reduced line labor requirements in Mexico by over 25% through implementation of robotics while also eliminating repetitive stress points. And in the U.K., we've used automated track assembly, which has led to measurable reductions in field quality issues. On the commercial side, we've used CBS to improve pricing discipline, delivery consistency and contract management. These are not small adjustments, and they compound year over year over year. The result is a steady climb in profitability here at CPI. EBITDA margins have increased from 28% in 2022 to 31% in 2025, with a clear line of sight to 32% by 2028. CBS is one of the most durable competitive advantages that we have, and it's working.

And with CBS driving sustained operational and financial improvement, let's turn to what this means for CPI's outlook over the next several years. Looking forward, CPI's financial outlook is strong, and we are confident in our targets. By 2028, we expect revenue to reach roughly $890 million, supported by the U.S. new series refresh, growth in our services portfolio, continued pricing and commercial discipline and platform simplification and operational improvements. Adjusted EBITDA is expected to grow to around $280 million, with margins expanding to approximately 32%. Free cash flow conversion remains above 100%, reflecting the capital-light nature of our business model and our disciplined operating structure. In addition, our productivity initiatives contribute around 30 basis points of annual margin improvement, providing a stable tailwind to earnings. We are committed to maintaining market leadership while delivering consistent, high-quality earnings and cash flow.

With that, let me close by bringing it all together and wrapping up on a few key takeaways from today. CPI remains the industry leader in detection equipment and services, supported by unrivaled technology and a globally diversified footprint. The U.S. currency refresh creates a powerful tailwind that extends across nearly a decade. Our Service business continues to scale into high-growth adjacencies with strong profitability. And the Crane Business System is delivering repeatable, disciplined margin expansion. Taken together, I'm confident that this business is positioned to deliver best-in-class margin and strong free cash flow for years to come.

Thank you for your time today, and I'll turn it over to Matt Roache to moderate our first Q&A session.

Thanks, Michael. At this time, we're going to move into the first of our 2 Q&A sessions. If you have a question, please raise your hand, and a microphone will be brought to you. Please stand and state your name and the name of your firm before asking your question. The first session will focus on questions related to Aaron, Sam and Michael's presentations and what you've heard so far this morning. We'll dedicate the second Q&A session following Christina's presentation to our financials and M&A priorities. So we'll plan to take those questions then.

With that, I'm glad to welcome Aaron, Sam and Michael back to the stage. Let's take our first question.

Rob Davis from ACK. Just two questions for Aaron and for Sam on currency. I guess the first is, if you could talk about your assumptions for the mix of volumes for international and U.S. in terms of how much currency you'd expect in circulation for the United States, it's been arguably defining medium, and then the converse for international. And then also, if you could just discuss competitively, what you're seeing? Obviously, you're not necessarily the only game in town, what your advantages are, where you see other competition potentially coming in that's putting some restraint on maybe $0.113 not going to $0.12 or $0.13?

So the mix we see between U.S. and international, I think, will remain pretty similar to it is at the moment. You see we have the growth coming through the U.S. currency program, but we'll also have significant growth coming through on the international side of Crane Currency as well.

In terms of the competitive position in the market, one thing it's important to realize -- and I hinted at this in some of the prepared remarks -- this is an industry with very, very high barriers to entry. I mean, it's a bit of a truism to say central banks will happily work with you to print their banknotes if you have at least 100 years of experience of printing banknotes and you have accredited secured facilities and you have references from at least a dozen other central banks. Other than that, they're not really going to talk too much. So it's a pretty stable industry in terms of competitive position.

Within that industry, the main change is as technologies come and go within the industry, and as I said, the big trend in the industry is older, less secure security features becoming much easier for counterfeiters to attack, and that creating the catalyst for central banks to upgrade their banknote series in order to maintain the trust of the public in the banknotes that they use. I didn't hear all of your questions. So if I didn't address everything...

I can add a little, Sam. To your question, Rob, on the U.S. mix question, I think as Sam alluded to, we're just, I think, taking a very prudent approach to assume it doesn't change on a go-forward basis that it's similar to what we're seeing for 2026. And that will continue both in mix and volume for that matter. That's our assumption. So really, the lift in the business comes from the increase in technology or the technology density on every note.

And I think with that, what makes this business so exciting is it's an incredibly -- there's an incredibly wide moat around the business. I think as many of you have commented to me, as wide as any have seen with the amount of requirements needed. And it keeps new entrants out of the market, quite frankly. And with our technology leadership, it's accelerating our growth and share.

As Sam alluded to and we talked on our fourth quarter earnings, 20 micro-optics wins for us exceeded our expectations for the year. And we see a very robust pipeline of countries accelerating their redesigns in the next 3 years and have a high confidence that we will continue to have our unfair share to a certain extent of those wins. So hopefully, that helps, Rob. We can do a quick...

Just to follow up quickly. You mentioned in terms of volume, you'd expect that to stay flattish. Can you compare that with what you've seen for volume printed over the last several years? Is there a risk that as people use more credit and alternative payments, that just volume in circulation would come down and therefore, the Treasury would...

Maybe I'll talk to the U.S., and I think there's some very good reporting on this that certainly through COVID and what happened with COVID, we're finally coming out of that cycle and it's normalizing the volumes in the U.S. So it's a little bit of a difficult picture when you look back of what happened during that period. I would probably point, Sam, your comment here to the international market and what you see is a very steady growth of banknotes in circulation. That's probably the more common.

Yes. The one thing to remember about the use of the U.S. dollar is that it's not just used in the United States. As the world's reserve currency, this is -- these banknotes are used around the world in transactions and as savings. People's savings will often be a $20 note or $50 note in parts of the world. And so there's very strong international demand for U.S. banknotes continuing as well.

But Aaron is completely correct. In the international market, at any one time, you have one country's demand up and down, up and down, but the macro trend internationally is continued steady growth.

Bob Labick, CJS Securities. Nice to see you, and thanks for having us today. I want to start with a big picture question for Aaron. First, congratulations on the almost 3 years of being public and everything you guys have accomplished. Looking back over the 3 years, could you tell us the biggest surprises positively and negatively? And how those may have changed your road map that you originally put out?

Yes. Thank you, Bob, and thanks for being with us on this journey over the last 3 years. I think clearly, the biggest surprise for us and a wonderful strength of the company is what's happening in the international currency business. Our team knew about, as many of you did, this upgrade cycle in the U.S., and we've executed, I think, flawlessly in those upgrades to be ready for the U.S. But the strength of the international currency business has exceeded our expectations. And that's why we stand here today highly confident in the outlook and some of the information Sam showed that this business is going to continue to grow and has a durable, sustainable growth trajectory with margin expansion into the future.

I think also, perhaps a surprise for many folks, as Michael alluded to, is the benefit of this to the CPI business. That if you would say what is the other side of our learnings, certainly, we had to navigate different headwinds in the CPI business over these first 3 years, of which they've abated. That included the gaming business destock -- gaming vertical destocking through COVID. That has now passed, and that business has executed exactly as we had forecasted coming out of '25. And we now have our Service business growing, and now we have this added catalyst in CPI with the U.S. new series. So again, a lot to be optimistic for, Bob, I think, as we look ahead, built on some of these tailwinds as we exited '25.

Matt Summerville with D.A. Davidson. What determines if a CPI unit needs to be replaced or upgraded? And what verticals stand to benefit the most from the reset?

Yes. Thank you for the question, Matt. Appreciate that. I think there's a range of features. So as Sam mentioned, within the new U.S. currency series or any new banknote series globally, there's often the addition of new machine readable features. So in some cases, that can be accomplished with a software upgrade that we do appropriately monetize in the field, and that provides us some real nice uplift. In other cases, the age of the machine may dictate that the sensor stack that was built into that machine 7 or 8 or 9 years ago just can't hit the new machine readability standards.

So that requires a whole new hardware refresh. So we see it's a real tailwind that's going to drive a lot of hardware replacement cycles, but also is going to drive a lot of service contract renewals because as the new equipment goes in, of course, we have a very high attach rate in our Service business. So that will continue to pay an annuity as well.

Charlie Rose with Cruiser Capital Advisors. This may be a stupid question, so I apologize if it's stupid. Is there any correlation, Sam, or Aaron, to your business as the dollar has been going through a degradation and there's been a migration to physical assets like gold or silver? Does that have any negative consequence to your long-term growth rate and to the business model itself? I'm just -- maybe it's a stupid question, I don't know, because it's something I see as a -- both from a macro perspective and from a -- just from an earnings perspective. So give me your thoughts there, please. I really respect what you're doing, but I'm just wondering if there's something there that is sort of a macro issue we should be concerned about.

I think it's a great question. The honest answer is there is a very limited amount of understanding on the detail of exactly why demand for banknotes grows and shrinks within different economies. And that's due to the very simple fact that these banknotes are anonymous and not tracked and the data that we have to rely on to understand why people are holding on to banknotes, why they're spending them, why they're using other payments has to come from surveys, kind of secondary level.

But the direct answer to your question is I certainly see no evidence to suggest that there has been any significant impact from a flight, if indeed a flight is happening towards other types of assets like gold. The macro trends that the data suggests are most important are the ones I talked about in my remarks, which is as the GDP of a given country grows, as population grows, whatever the share of the payments that are banknotes within that country grows with the overall size of the pie. And in particular, high inflation environments drive very significant increases in banknote usage overall. So no, I'm not aware of any research, but I'll ask the team and if we find any, I'll get back to you.

Bob Labick again. You had a slide talking about the currency CapEx. So obviously, there's a lot of significant growth and opportunity internationally for you, and you're expanding your capacity. I think you said 7% of sales for the next few years.

Two questions. What has it been? And what are the kind of risks and milestones ahead of putting in this incremental capacity? And why not 15% next year and just get ahead of it? So I guess 3 questions.

Thanks, Bob. I'll start, and Sam, you can add in. Historically, for Crane NXT, we've been in this 3%, 4% range of CapEx. And by the way, we expect that to continue into a 3% to 5% range. That will obviously be higher in currency, for the reasons Sam walked us through, and lower for CPI. So that's how we arrive at this 3% to 5% range. We think that's the right range for us, Bob, to meet our growth targets.

When you think about the currency investment, the last few years has also been in that 5% range as we really focused on the U.S. upgrade, as Sam alluded to and some of you have seen, as you visited our facilities, particularly in Dalton, Massachusetts and then in Nashua, New Hampshire, where we make our micro-optics. And there, we've doubled the footprint of the site and allowed enough room to continue to add lines in every year.

Now there's simple logistics, some of which Sam alluded to of a typical line for our proprietary micro-optics takes anywhere between 18 to 24 months to install. It also requires us to bring on talent and the operators of those lines, train them. That obviously has a little bit of a productivity hit when you do that. It also requires all of our operators to have U.S. government security clearance, which is a real moat around this business, quite frankly, to have an entire workforce underneath the security blanket to produce this product for central banks. So there is just a natural cadence in time. That's why we're working with outside partners in other areas of the business in substrate manufacturing and banknote manufacturing as well to help, just given the demand from our international customers.

So I think we're pacing this accordingly. Our idea here is to make sure we're meeting this demand and the growth targets we set out through '28. And we'll continue to feed the investment in the currency business, commensurate with the growth, and keep CapEx in this range between 3% and 5%.

Yes. Just to build on that, I'd just add a couple of points. The first is what a high-class problem to have as a business. This is a great position to be in that we're taking so much market share that we need to continue to invest to expand our production capacity.

The second thing is the Crane Currency team have done a really good job. And those of you who've been to visit Dalton or Nashua recently will have seen this for yourselves in the investments that we've made over the last couple of years in executing on that CapEx investment to get ready for the U.S. currency program. These are complex things, upgrading paper machines, installing new micro-optics lines, very complicated technology, and the team has just executed on those programs brilliantly.

And the third point, just to reinforce, is we're choosing to invest this additional capacity in our micro-optics production. We will be gaining additional productivity from our international paper mill in Sweden, from our banknote production in Malta by applying all of the Crane Business System tools that we've talked about, getting more uptime, getting more speed through the machine. So there will be additional capacity. But the new CapEx that we're spending is principally, almost exclusively on the micro-optics because that's where the demand is. And also that's the highest margin products that we produce in the business. So it gives you an idea of where we're allocating the capital within Crane Currency.

Ryan Thorpe from AllianceBernstein. A question on the CPI side. It seemed like a lot of your organic growth was tied to the idea that there will be a hardware refresh cycle due to incompatible units with new currency. And specifically, you said we're going to refresh the hardware, and then we're also going to sell services packages on that hardware.

Bridge me from now to the -- I think it was a $50 million opportunity. How much of that comes from hardware and how much of it comes from services? And where is your attach rate now relative to the 80% attach rate that you targeted? And what's changing that's allowing you to increase that? I think there were probably 5 questions in there. You can pick whichever one.

Yes. Thanks. Why don't I start, Michael, and I'll pass it over to you. So the number that Michael showed for the hardware upgrade, Ryan, is embedded in the growth target at the final slide of his presentation. So we're expecting hardware -- or just to zoom up a moment, as we think about CPI, we have the hardware business, services and vending. We're expecting that hardware business to be a low single-digit grower over the period over the next 3 years. Embedded in that assumption is the $50-or-so million of the currency upgrade.

Services will not only benefit from the U.S. currency upgrade, but it also benefits from the third-party services that are being extended that are beyond and distinctly different from the U.S. upgrade equipment program. That's where we're sustainably growing at mid-single digits. And you've seen us do that, quite frankly, over the last few years as we've invested in the service business in its capabilities and its infrastructure, IT systems is continuing. And so we're exiting 2025, growing already that business at mid-single digits. That has, again, nothing to do with the U.S. currency because of this expansion into new areas in the same footprint of the stores and shops we're operating in today. I'll let you comment on attach rates, Michael.

Yes. I think -- and thanks for the question. I think the short answer is we already have outstanding attach rates in the Service business today. So in our large-format pieces of equipment, the big [ MPX ] machines that go in the back of casinos or central banks, our attach rate on service is 100%. And in our smaller format pieces of equipment that go into bank branches and retailers, even that attach rate is north of 70%. So it nets out to a roughly 80% attach rate for the business, and we think that continues and maybe even improves a little bit. But we haven't assumed any improvement of that attach rate in the $50 million number. We just assume that we continue to get the great attach rate and annuity that we get already.

On the brand authentication, you had some examples up there. And one of them was like the sports leagues, whether it's the NBA or others. Can you just walk me through how that works, how the process works in terms of the customer, what you're providing? Is this a fixed fee type of thing? Is this a variable per unit of merchandise? Or what exactly is important here, how long the contracting is? And just kind of get a little bit closer flavor of how that business works.

Yes, very happy to. Thanks for the question. So it depends, customer by customer. So perhaps if I describe the suite of services that we might provide, each individual customer might have different elements of this. On the brand protection side, there may be some physical security technologies that we're attaching to a particular product to allow the brand themselves or the law enforcement agencies to be able to authenticate those products. Those will typically be on a per unit basis, selling the technology per unit.

Perhaps the more interesting business model, which was referred to in the original video, is around licensing management solutions. And for many, particularly of our sports customers, what we're doing is helping them to manage all of their licensees around the world that produce their products and sell them in different regions. And to do that, we provide the underlying software that supports all of that service as a service. And usually, there will also then be a physical token, a stamp, a secure technology of some description that will then be sold to those licensees for them to affix on those products not just to secure the products, but also to prove that they've paid the licensing royalty to be able to produce that merchandise overall.

And then there are additional higher-level services that, that licensing management system can provide. So for example, you can add a QR code onto the label to allow you to get consumer feedback so that when somebody buys a U.S. sports jersey in South Africa, they can get instant feedback on the quality of the product that's being produced. You may also be able to get some feedback on the data of the people who are buying your products, which can be extremely valuable from a marketing perspective. And you can also understand if -- and this really happens, of course -- licensees sell their products outside of their region because you're getting feedback from the end customer about where they're buying the products, and you know exactly where they're being sold. So all of these elements of value can be swept up in our licensing management solution, which usually consists of a software solution that's integrated tightly with our customers and some physical security technology as well. The precise business models can change a little bit between customer and customer.

But to your last point, a large number of these systems and solutions have been in operation with sports customers, in particular, for a very long period of time, for decades. And that's partly because the integration of our systems are pretty tight with our customers. It's mainly because we invest a lot of time and effort in understanding their needs and responding to them, and it's partly because we also have to have the best security technology in the world.

So that's -- you get a bit of brand protection, bit of licensing management, and very often, those 2 things work together. Final thought is that there are other services such as we do online brand protection solutions for many of our customers finding counterfeits online being sold on websites, on social media or marketplaces. Again, that can be integrated as an additional service that we provide. So some products, some services together.

I'd just add to what Sam said, just as a reminder for those who have listened to our last few earnings calls. Again, this is a business of wide moats. The switching cost is high. We are very proud of the long-standing relationships we've had here in the U.S. with major sports leagues that included the NFL, which we announced in our 3Q call that we've renewed for a multiyear contract. And in the fourth quarter, just a few weeks ago, in that earnings call, we announced an extension and a renewal of our contract with Major League Baseball. So very long-standing premier global brands that attract more of those brands. And again, a flywheel effect back to the core business.

I have a question that came in online. Thanks for laying out the opportunity and laying out the dollar opportunity within SAT when it comes to the increase in variable cost per note in the U.S. with currency refresh cycle, the expected wins internationally, the greater than 15 refresh cycles and the positive impact of the refresh cycle on CPI. Could you put that in context of your 2028 targets and help us understand how much of these catalysts are embedded in your guidance already versus an incremental opportunity?

Sure. Sure. Well, thanks for the question from those online. Appreciate it. I'll hold the bulk of that answer actually until after our break. That's a wonderful setup. Thank you for that, where Christina will be going into more detail on the consolidated view of Crane NXT over the next few years.

What I will say is as we go forward, and we talk about both the SAT numbers and Michael's on CPI, we have assumed or embedded those into our projections. So while there certainly could be more wins in international currency or a faster refresh cycle in CPI, we've tried to make the outlook prudent like we've done in all of our forecasting to ensure the numbers we're putting forward, very importantly, allow us to do what we say we're going to do, which is incredibly important in the company, and I know for all of our investors.

And just a follow-up from the same person asking the question. Can you give us context on what prior U.S. currency refresh cycles have done for CPI and what would be different this time that allows for a greater opportunity?

The question was around the last refresh cycle for U.S. currency. I think it's interesting to point out, in most of our professional lifetime, there really hasn't been one of any scale. The last upgrade was 2013, and that was the introduction of micro-optics, that's obviously 13 years ago. And there's been no update in any substantial way of the rest of the currency.

So I think we're in a little bit of an uncharted water in a very positive way, knowing, again, having the advantage, let's say, of designing and working with BEP and the Treasury on the new currency to understand what kind of technology is needed to read it in our equipment business, again, is a unique and durable advantage for our company. We suspect it will be, as Michael alluded to, like nothing we quite experienced before inside the business. There was a follow-up, I think?

A question for Michael on CPI. Rob Davis from ACK again. Just a question. As you look at equipment, payments equipment, consumer, I'm just thinking there's more of a growth in self-checkout. You're seeing more iOS devices, just a much different state of technology as we see it. How does it impact your business? And also, what are the risks to your business? Are you going to see certain technologies, certain hardware move away from those that you traditionally service? Whether it's driver or otherwise? Not really sure how to answer that.

Yes. Thanks for the question. So as we look at the CPI hardware business, we think that entire business, all the segments, gaming, retail, financial services, all mix together to kind of low single-digit growth over the next couple of years. And we think that, that's durable, and it's a combination of equipment refresh cycles that are happening in the field. So in the gaming space and the retail space, all of these equipment that have been deployed in the past 5 or 6 years, they start to come up on a natural refresh cycle. And we think the uplift from the U.S. new series currency upgrade factors into that as well in financial services, in retail and in gaming. So when you look at it all together, it kind of mixes to a low single-digit growth trajectory over the next couple of years.

Any more questions? Okay. That wraps up our first of our 2 Q&A sessions. At this time, we're going to take a short break. We'll resume in approximately 15 minutes. Thank you.

[Break]

Well, good morning again, and welcome back. We'll wait just a few more seconds, and we'll get started. All right. Well, let's get started with the second half of our program this morning. Again, thank you all for coming. And for those online, thank you for rejoining after our break.

I'd like to go ahead and move to our next section, which is focused on how we are building on our leadership positions with programmatic M&A. Specifically, I'm going to focus on what we've accomplished in our first 3 years, how Antares Vision accelerates our strategy and how we are going to continue creating value with our M&A priorities.

Since the launch of the company, we've focused on building a leadership position in authentication technologies, expanding into higher growth adjacent markets that enhance the resiliency of our portfolio. Secondly, with the acquisition of Antares Vision, we're adding market-leading detection, inspection and traceability technologies while also expanding our reach into the life sciences and food and beverage markets. And as we move forward, we have the funnel to continue programmatic M&A, funded by strong free cash flow and a very solid balance sheet. Our pace is intentional, and our M&A framework is disciplined to ensure we are creating shareholder value over the long term.

Now over the past really 2 years, we've executed our strategy with 4 acquisitions, adding technology capabilities and expanding our end market reach, with each acquisition having clear synergies to deliver value creation for our shareholders. We started with OpSec in May of 2024 as our first transaction to expand into the brand authentication market. Shortly thereafter, we added TruTag's novel Covert authentication technology to our product lines. And in May of last year, we completed the acquisition of De La Rue's Authentication business, merging it with OpSec to create the new Crane Authentication. And as Sam mentioned earlier this morning, we're incredibly excited about the growth opportunities for this business and the value we've created through the realization of our synergies. Finally, in September, we announced our intention to acquire Antares Vision, the next key milestone in executing our strategy.

Our progression over these past 3 years has been very deliberate. It's been systematic, utilizing our disciplined M&A framework to expand our addressable market, build clear leadership positions and create a more resilient portfolio. We started the company from a position of strength with Crane Currency and CPI, both leaders in their respective industries, as you heard earlier this morning, playing in the roughly $7 billion currency and payment equipment and services market. Next, we took actions to expand our reach to the approximately $3 billion product authentication and identity solutions markets through the formation of Crane Authentication. And most recently, with the announcement to acquire Antares Vision, we've expanded our addressable market an additional $3 billion focused on supply chain assurance technologies for life sciences and food and beverage.

I'd like to take a moment now to dive a little bit deeper into Antares Vision and walk through why we're so excited to welcome Antares into the Crane NXT family. Antares Vision provides advanced detection and inspection equipment, field service and remote services and track and trace software that ensures the quality and traceability of products from manufacturing through distribution to consumers. Its core markets are life science and food and beverage, with sales coming primarily from the Americas and Western Europe and with a growing list of customers in the emerging markets.

What makes Antares very special and compelling as part of Crane NXT is its exposure to these higher-growth markets and its position as a fully integrated provider of technologies into life sciences and food and beverage. Specifically in life sciences, the market is growing due to a variety of factors. These include the reshoring of manufacturing and the rise of complex biologics requiring more sophisticated packaging and transport. In the food and beverage market, packaging continues to evolve to more complex materials and shapes, while at the same time, safety and quality expectations continue to rise. Finally, track and trace regulations for pharma products continue to grow in the world. And this is really led by adoption here in the United States and in the EU. These also include increasing requirements for batch level traceability for food, slated to broaden here in the U.S. by 2028.

So as we look at this competitive set, it's composed of several companies most focused in their specific products or defined market niche. A clear advantage of Antares Vision is its ability to span the markets and core technologies, providing the ability for customers to harmonize on the equipment and software from a single global supplier. Combined with the underlying market growth drivers, these advantages provide a clear rationale to why Antares wins.

First, increased counterfeiting continues to require companies to put an emphasis on product integrity in pharmaceutical and food and beverage markets, elevating demand for authentication, inspection and serialization. Secondly, governments are requiring the digitization of supply chains to ensure traceability from manufacturer through to the pharmacies where consumer pharmaceuticals are distributed. And third, the growth occurring in emerging markets is accelerating the need for Antares's products as consumption increases and the need for the quality assurance in those markets grows.

Antares brings leading detection and inspection equipment, the diamond traceability platform and established customers, amplified by Crane NXT's commercial reach and technology offerings. As we discussed during our recent earnings call, we're on track with the next steps to acquire the company. As a reminder, in Q4 of 2025, we acquired approximately 32% of Antares Vision, funded via a euro-denominated term loan. We received regulatory approval in early February for the next step of the process, and we launched a mandatory public tender offer on February 16 to all existing shareholders. We expect this process to be completed by the end of March, at which point we will consolidate the results of Antares Vision into Crane NXT.

In the final step of the process, we intend to take the company private, which should conclude sometime in mid-2026. Our integration planning is well underway. The teams are working very well together. And I'm excited for everyone here today, in particular, to be able to see some of the Antares products on display at our innovation showcase later this afternoon. So please have a look at those products and interface with the team. I know they're excited to show you the wonderful technology that exists in the portfolio.

Now Antares aligns very well with our disciplined M&A framework, and it's the same framework that we will continue to use going forward. As you see on this slide, we first start with looking at the market and particular segments focused on authentication and traceability technologies that have growth tailwinds and are fragmented with multiple competitors. Second, we dive deeper into the specific companies that are category leaders, possessing a moat around their business through either differentiated technology or channels. And third, for any transaction, we must have high confidence in our path to value creation, including clear synergies with Crane NXT, where CBS can expand our margins and accelerate growth.

Leveraging this framework, we see several areas to build on our leadership positions through a series of multiple smaller acquisitions with revenue in the range of $100 million to $500 million. This is a repeatable process that we call programmatic M&A, resulting in acquisitions that are meaningful to the sales and profitability of Crane NXT and are also actionable based on our balance sheet capacity. As shown on this next slide, we see multiple areas to expand our portfolio and build on our leadership positions. These include advanced security features in currency, brand protection and government solutions, including additional expansion into emerging markets and new verticals. Identity verification is another area where we play today with a fragmented set of competitors, and this is an area where we can further build a leadership position based on the foundation of our differentiated security technology.

And finally, with Antares Vision, we have new opportunities to build upon our capabilities in supply chain assurance and software, detection and inspection equipment, all in the life sciences and food and beverage end markets. As we've shown over the past 2 years, this strategy is actionable. We have the M&A pipeline in place. We have due diligence and integration expertise in our organization and a balance sheet capacity in place to execute this strategy.

And as I mentioned earlier, our immediate focus here in 2026 is to successfully close and integrate Antares Vision into Crane NXT. Once the transaction is fully complete, our net leverage will be approximately 2.9x. We continue to actively cultivate our M&A pipeline, and we'll be likely ready for our next potential acquisition in 2027. Going forward, we'll be targeting approximately 1 to 2 transactions per year while keeping our net leverage below 3x.

So wrapping up this section, I want to return to where I started. First, over the past 3 years, we've built market-leading positions in authentication technologies. Second, we're focused on building upon these leadership positions, and we're excited by the additional technology and capabilities that Antares Vision brings to Crane NXT. And third, we have a strong pipeline in place and capacity to continue on our journey of programmatic M&A over the coming years. So I'm proud of what we've accomplished over these past 3 years in expanding the portfolio. And I'm excited about the future ahead, driving meaningful shareholder value creation with this strategy.

And so with that, I'd like to turn the presentation over to Christina to discuss our financial targets going forward. Christina?

Good morning. Thank you, Aaron, and hello to everyone here today and on our webcast. I'm very happy to be here today and excited to share more about our financial performance and our outlook for the future, which provides a compelling investment thesis.

Today, I'll discuss our strong performance since the separation. We've delivered durable sales growth, sustained high margins and robust free cash flow as we've executed M&A into higher-growth end markets. I'll also review our capital allocation priorities. We follow a disciplined approach to capital allocation, and we're prioritizing organic growth and strategic M&A to strengthen our leadership positions and maximize shareholder returns. Additionally, I'll provide a bridge to our 2028 sales and EBITDA targets. We have a clear path to margin expansion in the core, including in SAT, where we are accelerating the realization of synergies in our Authentication business and in CPI, where we're driving margin accretion through productivity initiatives using CBS.

Crane NXT is a resilient business with strong financial performance. Over the past 3 years, we've achieved total sales growth of approximately 9% and core sales growth of approximately 4%. We're proud of this durable sales growth as we navigated a dynamic environment post-COVID and through other macro uncertainties. Most notably, we've had significant growth in our international currency business, where demand exceeds our expectations, and we're making investments to drive the decade-long growth cycle that Sam described earlier. Along with mid-single-digit core sales growth during the last 3 years, we achieved an average adjusted EBITDA margin of approximately 26%, including the expected impact of acquisitions. On a core basis, average adjusted EBITDA was approximately 27%, reflecting disciplined operating performance in CPI, where we ended 2025 with operating profit margin above 32%.

Moving to free cash flow. Our businesses generate substantial free cash flow, and our annual conversion ratio has been just under 100%. This sustainable performance is a result of our disciplined operating cadence and our focus on working capital management. Overall, Crane NXT is a durable and resilient business, and we feel confident in our ability to accelerate growth.

We maintain a disciplined capital allocation strategy and are focused on 3 areas to optimize our portfolio and maximize shareholder return. First, we're investing to accelerate organic growth. As Sam discussed earlier, we'll increase our CapEx spend in currency over the next 2 years to build 2 new micro-optics production lines. These investments will enable us to increase capacity to deliver sustainable mid-single-digit sales growth. We'll also continue to invest in new technologies in Crane Authentication and in CPI. Altogether, we expect to maintain CapEx spend of approximately 3% to 5% of NXT sales, balancing investments in growth with sustaining activities.

Second, we're building our leadership positions through disciplined M&A. As Aaron discussed, we've expanded our portfolio into higher-growth end markets, and Antares Vision will add further capabilities and new end markets to our mix. We have approximately $1 billion of available capital to deploy over the next 3 years, and we expect most of this capital will go toward M&A.

Third, we'll return cash to our shareholders. We'll continue to pay a competitive dividend with a target payout ratio of approximately 15% of adjusted free cash flow, and we will opportunistically repurchase shares. We have a strong balance sheet with substantial flexibility and capacity for capital deployment. And approximately half of our outstanding debt is long term and at attractive fixed rates.

We've effectively managed our net leverage over the past 3 years, increasing net leverage for M&A and then using our strong free cash flow to pay down debt and maintain net leverage of less than 3x. As Aaron discussed earlier, after the close of the Antares Vision transaction, we expect net leverage will be approximately 2.9x, and we expect that ratio to be approximately 2.3x at the end of 2026. We have an outstanding balance sheet with very strong liquidity, and our exceptional cash generation will provide us with ample capacity for future M&A.

Looking ahead, we're well positioned to accelerate organic growth. In SAT, we expect mid-single-digit plus growth over the next 3 years, driven by the U.S. currency refresh, further expansion of our market share in international currency and growth in emerging markets in authentication. In CPI, we expect low single-digit growth, driven by the refresh of payment hardware to accommodate the new U.S. currency and continued expansion of our Service business into adjacent markets. In total, we expect Crane NXT to have sustainable mid-single-digit organic sales growth.

With the strength of our core business and capacity from our strong free cash flow and capital structure, we've developed a road map to grow Crane NXT to approximately $2.5 billion by 2028. We'll achieve this goal by building off the secular tailwinds we discussed today, including increased counterfeiting, digitization of the supply chain and emerging market growth.

Let me take you through our sales bridge, starting with $1.7 billion in sales in 2025. First, we expect the underlying markets to grow in the mid-single digits, generating approximately $190 million of revenue. Next, we expect to close the Antares Vision transaction in mid-2026, and it's expected to grow in the mid-single digits, generating revenue of approximately $260 million by 2028. We also have approximately $40 million of sales from De La Rue that is noncore in 2026. This totals approximately $300 million from current M&A. Finally, we'll deploy capital through our disciplined M&A framework, and we expect to add approximately $350 million in sales to the company by 2028 through future acquisitions. Overall, we're targeting approximately 15% sales growth CAGR through 2028. This exciting growth strategy presents a significant opportunity for shareholder value creation.

Let's talk now about margin expansion. We ended 2025 with EBITDA of approximately $400 million or approximately 24% EBITDA margin. We expect mid-single-digit growth in the core, which will generate approximately $85 million of EBITDA at a margin of approximately 26%. Antares Vision will add approximately $260 million in revenue growth with approximately 15% margin to start, and we expect to improve that margin to approximately 20% in 2028 through the deployment of CBS. This, along with the EBITDA contribution from De La Rue, will add approximately $55 million in EBITDA related to current M&A.

Finally, we expect to do 1 to 2 future M&A transactions, which will add approximately $350 million in revenue with approximately $60 million in EBITDA or a 15% EBITDA margin. As we expected, the acquisitions we're adding to the portfolio come in at a lower margin, which is one of the reasons why their valuations are so attractive. And we have high confidence in our ability to drive operational synergies through 80/20 and other CBS principles, as we're doing this year in our Authentication business.

Putting this all together, we expect EBITDA of approximately $600 million in 2028, which is a 15% CAGR and reflects a margin of approximately 24%, including the acquired companies. We expect core EBITDA margin of approximately 26% in 2028 with approximately 150 basis points of segment margin expansion through 2028. We have a clear path to margin expansion in the core, bolstered by the synergies we're driving in our Authentication business and productivity initiatives.

We have compelling targets for growth with clear opportunity for shareholder value creation. We expect a mid-single-digit organic sales growth over the next 3 years, augmented with M&A. Additionally, we expect a mid-20s percent adjusted EBITDA margin in 2028, with margin expansion in the core partially offset by the expected impact of acquisitions. Finally, we expect free cash flow conversion to continue to be in the range of 90% to 110%.

I'd like to now reaffirm our 2026 financial guidance. We are confident in our 2026 guidance of 4% to 6% sales growth and approximately 25% adjusted EBITDA margin. In CPI, we expect to be flat year-over-year, reflecting mid-single-digit growth in Service, where we're expanding our offerings, offset by approximately flat revenue year-over-year in our Hardware businesses and a low single-digit decline in Vending. In SAT, we expect high single-digit sales growth, driven by high single-digit sales growth in U.S. currency from a favorable mix of banknote demand and a low single-digit growth in international currency, even with a very tough comparison to a strong 2025.

In Crane Authentication, we expect continued mid-single-digit growth, including a full year contribution from De La Rue. We expect adjusted segment EBITDA margin to be approximately 28%. This reflects continued high profitability in CPI and the benefit of synergy realization in Crane Authentication, partially offset by the actions we're taking to expand capacity to meet international currency demand. In total, we expect to deliver full year adjusted EPS in the range of $4.10 to $4.40, and we expect adjusted free cash flow conversion in the range of approximately 90% to 110%.

In summary, we're well positioned to accelerate growth. This is a durable and resilient business with a track record of delivering high margin and strong free cash flow. We are prioritizing investments in organic growth and M&A to strengthen our leadership positions and maximize shareholder return. We have a clear path to core margin expansion and accelerating the realization of acquisition synergies and driving productivity initiatives through CBS. I'm excited for our future growth opportunities that will provide significant value creation for our shareholders.

Thank you for your time today, and we'll now pause to begin our second Q&A session, followed by Aaron's closing remarks.

Thanks, Christina. At this time, we're going to move to our second Q&A session. As a reminder, if you have a question, please raise your hand, and a mic will be brought to you. Please state your name and the name of your firm before asking the question. This session will focus on questions related to the second half of today's presentations. Of course, the entire team is on stage and available for any broader questions as well.

With that, I'm glad to welcome Aaron, Christina, Sam and Michael back to the stage. Let's take our first question.

Bob Labick with CJS Securities. I just wanted to dig a little further on margins. So we have strong margin, I think it was 600 basis point margin expansion out of SAT. And I was hoping you could kind of walk through the components? I know there's Authentication synergies. There's, I guess, getting back to previous. But anyway, help us walk through that 600 basis points from this year or '26 to '28 margin expansion, please?

Yes. Thanks for that question, Bob. And I think first, I'd just like to acknowledge our team, who's done a fantastic job post the integration of both OpSec and De La Rue to form Crane Authentication and really set us up for success in driving these synergies, which we had identified at the time of acquisition. And so as you know, we've taken significant action in 2025 in order to improve the profitability of the authentication businesses. And Sam discussed this a little bit earlier in the presentation.

So De La Rue closed in the second quarter of 2025. So starting in the back half of '25, we began those actions. And now we'll begin to see the benefit in 2026, and we'll exit 2026 with approximately 20% margin in Authentication, which is really ahead of schedule from where we plan to be. We'll see approximately $20 million of synergy realization in 2026. And then over the next 2 years, you'll continue to see the benefit of those synergies and additional CBS actions that we're taking to drive productivity. And that's really what's going to drive Authentication to be a consistently low 20s percent EBITDA margin part of our portfolio.

[indiscernible] And so how does that play into that 600 basis points?

Yes. So that 600 basis points was only related to Authentication. But you're exactly right. We're investing now, as you know, in the future demand for Crane Currency, particularly the international currency business. And those costs are going to be primarily in the first part of the year, particularly in Q1. So you'll see a lower margin in Q1 and then an improving margin for SAT as the year progresses.

Another stupid question. I learned how to ask these type of questions when I was growing up. When you go from $400 million to the $600 million of EBITDA in '28, I'm assuming that half of that is basically M&A or some good proportion of it is M&A. Do you sort of have the targets in mind? And are you having the conversations already? And what gives you the conviction of getting to that? Because when you start throwing out these type of numbers, I mean, I hate to say I'm going to be bothering you. I'm sure other people will bother you too. So what gives you that sort of that texture of...

Yes, I'll take that. As Christina walked through on the walk, there's the last bucket that is future M&A, about $350 million in the top line that's flowing through at about a 15% adjusted EBITDA. And what I would point to is that's -- what we've outlined here is exactly what we've done during our first 3 years as Crane NXT. It's exactly what we've done. We -- in fact, we're ahead of that plan if you add in Antares Vision, adding on almost $400 million of M&A in our first 3 years since we started actually doing M&A in the company.

So we're simply laying out a plan to continue to do what we've already done over the next 3 years, and that comes from cultivating a funnel that takes quite a long time. And we'll be meeting and visiting with the Antares Vision team here later today. As I've said to many of you, that has been over a 2-year process of cultivating Antares Vision. The same is true of OpSec and De La Rue. None of these 3 larger deals for us that we've done have been processes. They've been going out, talking about our purpose, talking about the values of Crane NXT, where we want to take the company and create this true leader in authentication and traceability technologies, talking to entrepreneurs who have had incredibly successful companies or private equity firms, as the case was in OpSec, that we're looking for the next step of their journey and building a relationship of trust that ultimately led to a bilateral discussion on a transaction.

And I have incredibly high confidence, given the state of our funnel, given the state of our conversations with others in the industry, that the number we put out is incredibly achievable and is commensurate with programmatic M&A. A healthy diet, as I like to say, of 1 to 2 acquisitions a year that we can absorb, we can drive CBS and improve those EBITDA margins exactly like you've seen us do with now Crane Authentication and as we're embarking on with high confidence with Antares Vision. So the goal is actually just to continue what we've been doing at the same pace.

It just looks like the multiple that your own shares are trading at are similar to the multiple ranges you're paying for acquisitions, in that same 10x.

That's right. That's right.

You're paying roughly whatever it is. It looks like you were putting up multiples for what you paid for things. So there isn't like necessarily an arbitrage. So it looks like the game is to -- I mean, I'm not trying to put words in your mouth, but it looks like what you're doing is you believe that 1 and 1 is 3?

Well, I think if you -- so your point is very well taken by the way of -- as you look at where we've acquired companies with our synergies, we're getting them at about 10x EBITDA. Now our comp set, if you look at where we're positioning the company with those acquisitions, and some of the logos on that page would suggest we have an opportunity for significant multiple expansion simply if we start to trade at the level of the peers in our comp set.

And I would argue that if you looked at our core financials, 4% underlying core organic growth, 100% free cash flow conversion, adjusted EBITDA in the range of the mid-20s, that compared to other people that would be in a comp set from different certainly sell-side or buy-side folks, we're at a very attractive multiple. Our belief is that as we expand the portfolio and move and you see the growth that we're showing here and we're committing to that we have a fantastic opportunity for multiple expansion.

It just looks like in summary -- just the last point I'd make, it looks like in summary, what you're really arguing is if you scale up the company, you're going to become more diversified and more relevant. That's your argument?

Well, I may take pause there. I think we're very relevant in...

I mean -- that's not the right word. That's not the right word.

Yes, I understand your point. Yes, I think there's some -- joking aside, there's some real advantages to scale in this market in consolidating a fragmented market and keeping your leverage below 3x and deploying our operating discipline to improve margins. I think you can look at a lot of true leaders over the last 20, 30 years that have been doing that and compounding value. We're in the -- arguably starting our second inning, to use Major League Baseball, one of our good customer analogy, of where we're at in that journey of value creation in Crane NXT. And I'm highly confident that we'll get there.

It's Matt again with Davidson. Just real quick, Aaron, you were mentioning during the Antares discussion, batch level traceability in the U.S. by 2028. How much do known regulations, either in process of being rolled out or to be rolled out in the future, how much can that add to the TAM of that business, looking out to, pick a year, 2028, 2030?

Yes. Thanks for that, Matt. Our underlying growth assumptions for Antares are assuming that primarily, the regulations that are in place or we know with high certainty are coming. And you can look at some of the disclosures from Antares over the last year, particularly growth coming in emerging markets where those regulations are coming in and Antares is winning with its suite of software and hardware combinations. Some of those other regulations, such as the U.S., there are some others coming, are certainly additional tailwinds to the market that we want to be prudent and not necessarily include in the outlook for the next 3 years.

I'm just curious -- this is [ Dave Neil ] with [ Conestoga ]. Curious, where you have nice catalysts on both sides of the business, especially with the U.S. currency refresh. Maybe, where you baked in conservatism? What -- or maybe what are the risks as we look forward? Does vending come back? Or maybe highlight you baked in more conservatism in the guide for '28?

Do you want to take that?

Yes. I mean, we took -- thanks for that, Dave. We took a prudent approach to setting our guidance, and we feel confident in 4% to 6% sales growth and adjusted EBITDA margin of approximately 25%. Certainly, if there were a change in some of the end markets -- and Michael can speak to this -- there's potential there for -- to be on the higher end of our guidance, for example. But right now, we believe that the approach we took to setting the guidance was prudent.

I think, Dave, you could probably go through each of the businesses because they're unique. As you've seen, some commonalities. And you take international currency, the win rate continues -- if it continues or accelerates, that's a positive tailwind. You can see the pipeline is there. So again, we're being prudent in the guide on our win rate. You take CPI, could the hardware refresh go a little faster? Could tariffs benefit us and not become the headwind it was in '25 and maybe flip to a relief? That would benefit us.

And of course, you take a look at Authentication and you see with some of the large global brands we have coming online, that typically opens up more opportunities with other brands when you have these truly marquee brands using your technology. So I think you can go through every one of the businesses in the portfolio, and you can point to some areas where you could argue if the winds blow in the right direction, it's actually better.

I have an online question, a financial question for Christina. Would you ever flex up to over 3x net leverage for the right deal? And how far would you go?

Well, I'll start that one, but I'm also going to maybe pass it to Aaron because I'm sure you're going to want to comment on that as well. We're comfortable keeping net leverage below 3x. And we feel confident at that rate that we can use our very strong free cash flow to pay that down within 12 to 18 months of an acquisition and then prepare to do the rest of our organic investment and M&A as part of our capital allocation strategy. So our comfortable range is below 3x.

I would just add, it's the core of our philosophy. And we demonstrated that over the last 3 years to make sure we're very deliberate and methodical in how we're expanding the portfolio, keeping the balance sheet fortified. Not looking for large transformative type of acquisitions, but building one adjacency at a time.

And what's occurring when you do that, as you saw, I think, in the diagram that I showed of the TAM expanding, is by nature of that, you have more adjacencies to go after that actually add to the M&A opportunities and add to niche areas where you can invest. And that's what we're seeing, back to the question on our M&A funnel, of why it's stronger now than it's ever been because we've actually almost doubled the TAM of the company in the last 3 years, and we're finding more opportunities with wide moats, niche differentiated technologies that we can bring into the portfolio. So it's very philosophical as much as it is mathematical about the leverage of the balance sheet.

Another online question related to M&A. Will you be doing any M&A in CPI?

Well, I think CPI, as Michael alluded to, sits in the portfolio as a very important part of Crane NXT due to its high margins and strong free cash flow. And I really compliment the entire CPI team through the last few years of maintaining these margins that I think are world-class through the application of CBS.

So if there is an area, as we've always talked about and as Michael alluded to, Services is a very interesting place for us to continue to grow. We're investing in that organically. Certainly, if there was a way that M&A could be an accelerator to that strategy, we could always look at that. That's probably the one area we'd be thinking about.

It's Ryan again. You mentioned earlier that you didn't feel you were getting the multiple that you deserve. And that's -- generally, most CEOs I've spoken to feel that way. But I think there's an argument for it here. I'm curious, imagine you do what you say you want to do over the next 2 years. So 2028, what companies would you say -- and they can be companies that do exactly what you do or companies that you're trying to be like. Who should we be comparing you to? What are the metrics that you feel justify that comparison? And you don't have to say what multiples they get. We can look that up on our own, but I'm curious, if this all goes right, who are we putting you in the same league as?

Yes. Thanks, Ryan. I share that strong belief that we are underrepresented in the multiple category. It's in part, Ryan -- I'll answer the question with some of the slides that we presented, which showed competitors that we see in each of these markets. And I think you can take 2 approaches here. One is you can look at the sum of the parts of these businesses against their competitors. And you can look at some of those competitor logos and where they're trading. And I think you'll find out that to the math I know you've run that we're at an undervaluation versus those.

I think the second approach you can take is look at the [ SMID-cap ] type in premier industrials, erase the names, look at our financials, look at the financials we've just committed to that Christina put up, core mid-single-digit growth, 15% growth CAGR over the next 3 years. Adjusted EBITDA margins in the mid-20% range, growing at 15%, 100% free cash flow. You look at those [ SMID-cap ] industrial techs that have those type of financials. By the way, you won't find many. There's one called Crane NXT that I'm particularly excited about. And that will put you at a multiple that's getting closer, starting in the high teens and 2s, quite frankly.

I strongly believe our conviction is we have moved this portfolio into a different set of end markets than when we -- many of us were talking 3 years ago. That's resilient. It's durable. Wide moats continue with niche positions and tailwinds that are very credible. And that should put us in the category that we're alluding to.

It's Rand Gesing from Neuberger Berman. On CPI -- it's actually a first half question, so I hope I don't get in trouble. But in the CPI slides, you talk about the margin improvement, very modest. I mean the margins are great there, which is interesting. But I would have thought with the mix around services, which I'm assuming is the highest margin, obviously, CBS and maybe the currency refresh, you would have a mix benefit, which would give you some leverage to get more than 100 basis points. So maybe there's something going on with hardware or something sort of a leaky boat type of a scenario. Why aren't you getting more out of the segment from those pretty positive drivers?

Yes, I'll take it. So thank you for the question. I think when we look at CPI over the next couple of years and you break it down to kind of the 3 constituent parts, we think Hardware is a low single-digit grower. It's got the tailwind from the currency refresh in there. And we think that will enable us to be able to go out there, leverage our very sticky relationships with customers, make sure that we continue to be their premier service provider and get the same kind of attractive margins that we've been able to generate in that business for years.

In the Service business, because of the currency refresh, but also just structurally what's going on in what I would call the broader retail automation market, we think that's very naturally a mid-single-digit grower. Because as you see everywhere you go, there's just more and more automation out in the field and it needs field service and repair. And we've become kind of a natural answer for that because we have great density and footprint all over the U.S. Big customers, big logos come to us because we can solve their problem across a variety of geographies. And we think using CBS, we can continue to run that business very profitably.

And then lastly, in the Vending business, I think last year, tariffs pushed out some of the buying behavior. But as we look forward, we think that comes back, and that's also a low single-digit grower, where we very effectively deployed CBS last year to exit at a much better margin rate than we started, and we think that continues. So the 3 of them together I think lead us to this kind of 30 to 50 bps of margin expansion very predictably year-over-year in a low single-digit growth market with greater than 100% free cash flow, and we feel really good about that.

Isaac Sellhausen, Oppenheimer. I just want to ask on the authentication piece with identification solutions and De La Rue acquisition that you did. That's growing pretty nicely. Maybe if you could talk about what's driving that? Is there like a certain refresh cycle on the passport side? And then talk a little bit about the ID, just growth internationally or in the U.S. here?

Yes. Thank you for the question. Yes, we feel very positive about the identity and verification part of Crane Authentication. There's a general global growth in the number of people traveling and a very significant trend in the market about the need to upgrade anti-counterfeit technology solutions.

I mentioned in my prepared remarks, the growth of the polycarbonate data pages and the extension of that technology across different passports around the world. That's one area of expertise and specialism within the Crane Authentication business. And in fact, in the innovation showcase after this plenary session, I'd be delighted to show you a couple of the unique security technologies that we've got embedded in that type of technology. So we feel very good about the growth of the market. Just as importantly, we feel very good about the unique differentiated security technologies we've got in that area.

One more question from online. What do you think your exposure to cash will be in about 5 years?

Why don't I take that? I think it may even go to one of Ryan's points weaved in to how the company has been viewed from the beginning of Crane NXT to where we're at today. If you look at where we started, for those who were in the room 3 years ago at our first Investor Day, our exposure to cash was almost 85% of the portfolio. Today, at -- or let me say at the close of Antares Vision, we're going to be approximately 60%. And the reason actually that, that's still above 50% is simply due to the fantastic growth we've had in our international currency business, which we're excited about.

As you look at that extra -- or the planned $350 million revenue and the deployment of M&A, you can see by the 2028 period, we will exit with far less than 50% of the portfolio exposed to cash in markets. And that's the journey we're on, diversifying into markets that leverage our proprietary technology, all around authentication and traceability while still maintaining our leadership positions in the core currency and CPI businesses. And even in that case, diversifying CPI, particularly in services, into new areas that actually don't have exposure to cash end markets.

So that's the trajectory we've already -- that's the trajectory we're on. It's what we've already executed. It's what we said we were going to do. And I would argue it's exactly what we've done over these last 3 years. And as we come to you in 2028, I will expect that to be well below 50%.

Any final questions? Okay. That wraps up our second Q&A session. I'd like to welcome Aaron back to the podium for his closing remarks.

All right. Thank you again very much for those questions, both here in the room and online, and for spending your time with us this morning. And so I do want to take a few moments, as Matt alluded to, just to close out our session before we head to the innovation showcase and to lunch.

So we set out this morning to give you a clear view of Crane NXT, of who we are, where we're going and our strategy to create shareholder value over the long term. So I hope you leave this morning with the same conviction that I have: that Crane NXT is a technology leader with momentum, discipline and a clear plan to win. Our solutions are helping customers protect identities and products and ensure the quality, authenticity and traceability of products across an increasingly complex supply chain.

As I mentioned earlier today, we're focused on 3 key priorities: first, accelerating organic growth by investing in differentiated technology and capabilities. We're directing capital and talent to the innovations that extend our edge in authentication and traceability, where our intellectual property, consumer and customer expertise and installed base compound our advantage over time. Second, we're building on our leadership positions, applying our disciplined capital allocation framework to pursue M&A that strengthens our focus in authentication and traceability technologies and generates attractive returns. And third, we're driving operational excellence through the Crane Business System. CBS is our operating foundation and core to our culture. We're deploying it across the portfolio to expand margins, enhance quality and convert our earnings to cash.

The portfolio is increasingly integrated and aligned to growing markets with sustainable tailwinds. Our businesses provide advanced technologies that prevent counterfeiting of products and identities and enable end-to-end product integrity and traceability capabilities that matter more each year as regulations increase, counterfeiting risks evolve and customers and their consumers want confidence in the authenticity of their products that they purchase. And as we move forward, we're focused on delivering our 2028 targets. We're proud of the progress that we've made and very optimistic about the opportunity ahead. We're building a technology-driven leader with durable advantages, strong cash generation and a very clear road map for long-term value creation. And as we execute this plan, I'm confident that we will deliver strong returns for our shareholders for the long term.

In closing, I'd like to express my very sincere thank you to all of our presenters and to the many team members here who made today possible. For those here in person, please join us outside for the innovation showcase and lunch. You'll have the chance to see many of the innovations and products we talked about today and meet more of our Crane NXT team members who are anxious and excited to share what they do with you. So thank you again for your time, and I hope you have a wonderful rest of your day.

Good day, everyone, and welcome to Crane NXT Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please note this conference is being recorded.

Now it's my pleasure to turn the call over to the Vice President of Investor Relations, Matt Roache. Please begin.

Thank you, operator, and good morning, everyone. I want to welcome you all to the Fourth Quarter and Full Year 2025 Earnings Call for Crane NXT.

Before we begin, let me remind you that the slides we will reference during this presentation can be accessed via the Investor Relations section of our website at cranenxt.com, and a replay of today's call will also be available on our website.

Before we discuss our results, I encourage all participants to review the legal notice on Slide 2, which explains the risks of forward-looking statements and the use of non-GAAP financial measures. Additionally, we refer you to the cautionary language at the bottom of our earnings release and our Form 10-K and subsequent filings pertaining to forward-looking statements.

During the call, we will also be using non-GAAP financial measures which are reconciled to the comparable GAAP measures in the tables at the end of our press release and accompanying slide presentation, both of which are available on our website in the Investor Relations section.

With me today are Aaron Saak, our President and Chief Executive Officer; and Christina Cristiano, our Senior Vice President and Chief Financial Officer. On our call this morning, we'll discuss our 2025 highlights, our financial and operational performance and our 2026 financial guidance and outlook. After our prepared remarks, we'll open the call to analysts for questions.

With that, I'll turn the call over to Aaron.

Thank you, Matt, and good morning. I appreciate everyone joining the call today. I'd like to begin by thanking our Crane NXT team members around the world for their performance during Q4. We have an exceptional team, and I'm proud of our accomplishments throughout 2025.

Starting with our financial results. We had a strong end to the year, executing our strategy of accelerating organic revenue growth while maintaining strong margins and free cash flow. Sales growth was approximately 20% in the fourth quarter and 11% for the full year. Adjusted EBITDA margin was approximately 25% in Q4 and 24% for the full year. Additionally, our strong free cash flow resulted in a conversion ratio of approximately 135% in the fourth quarter and 94% for the full year, in line with our expectations. Finally, we delivered adjusted EPS of $1.27 in the fourth quarter and $4.06 for the full year.

We continue to build momentum in executing our strategy to accelerate organic growth and I'd like to highlight a few of our key achievements this year. We ended 2025 with a total of 20 new currency denomination wins specifying our micro-optics technology. This result exceeded our target range of 10 to 15 wins and is one reason why I'm so positive about the long-term outlook for the currency business. Notably, the new wins include 5 new denominations for the nation of Fiji, which unveiled a new series of currency in December, featuring micro-optics integrated into polymer substrates. With our currency team's continued streak of wins and organic backlog up more than 30% year-over-year, we are highly confident in our sales outlook for this business in 2026.

Also, in 2025, we successfully completed the final equipment upgrades to support the launch of the new U.S. currency series. With design and testing finalized, we're preparing for the release of the new $10 bill later this year. And we're excited, as I know many of you are for the U.S. treasury announcement of the new design, which we think will likely be in mid-2026.

In 2025, we also secured significant contract renewals in our Crane Authentication business across major customers, including the world's most recognized sports leagues. As a reminder, earlier last year, we announced that we renewed our multiyear contract with the National Football League to provide physical product authentication and online brand protection services. And in Q4, we signed a multiyear agreement with Major League Baseball to provide security technology for their consumer products. We're confident that these partnerships together with other contracts we have with some of the world's most recognized brands, will continue to drive growth.

We also continue to build upon our market-leading positions in authentication and traceability technologies. In 2025, we further strengthened our leadership in global authentication through the creation of Crane Authentication, combining optic security and De La Rue Authentication into one integrated business. We made significant progress executing on our synergies, including 80/20 initiatives, which will drive significant margin accretion in this business in 2026.

Additionally, in the fourth quarter, we closed our initial equity investment in Antares Vision, a global leader in providing advanced detection systems and track and trace software, expanding our presence in higher growth end markets including life sciences and food and beverage. And we're on track to complete this acquisition and take the company private in mid-2026. Finally, to capitalize on increasing demand, we are investing in the future growth in our international currency business, and I'll provide more details on this later in the call.

In summary, throughout 2025, we continue to execute our strategy, accelerating revenue growth, building momentum in key strategic areas and expanding our market-leading positions. We're taking meaningful steps to position the company for success, and we're in a strong position to deliver long-term shareholder value creation. So thank you again to our entire Crane NXT team for your dedication in 2025 and commitment to continued success in 2026.

Now with that, let me hand the call over to Christina to review our fourth quarter and full year financial performance in detail as well as our 2026 guidance. Christina?

Thank you, Aaron, and good morning, everyone. I'd also like to echo Aaron's thanks to our associates for their continued hard work. We appreciate your contributions and your commitment to our customers and shareholders.

Starting on Slide 4. Sales were $477 million in the quarter, an increase of approximately 20% year-over-year, driven by acquisitions and continued strong performance in Crane Currency. Core sales increased approximately 5%, reflecting accelerating growth in SAT, partially offset by expected softness in CPI. Adjusted segment operating margin of approximately 26% declined approximately 120 basis points versus the prior year, reflecting additional costs and investments to support increased demand in international currency as well as unfavorable FX, which I will speak more about in a few moments. Adjusted free cash flow conversion was very strong at approximately 135%, underscoring our robust operating discipline, and we delivered adjusted EPS of $1.27.

Moving to Slide 5. Full year sales were approximately $1.7 billion, an increase of approximately 11% year-over-year with core sales growth of approximately 1%. Adjusted segment operating margin decreased approximately 260 basis points year-over-year, reflecting the expected impact of acquisitions and additional costs in international currency to deliver on increased demand. Finally, adjusted free cash flow conversion was approximately 94% for the full year, and we delivered adjusted EPS of $4.06.

Moving to our segments and starting with CPI on Slide 6. Core sales were flat compared with the fourth quarter of 2024, with double-digit growth in gaming, offset by expected softness in other end markets, including vending. Adjusted operating margin improved approximately 340 basis points to approximately 32%, reflecting the impact of disciplined cost management and productivity initiatives. Finally, there was a modest increase in backlog sequentially, and the book-to-bill ratio was above 1.

Turning to Slide 7. For the full year, CPI core sales were in line with expectations, decreasing by approximately 4% year-over-year, reflecting the indirect impact of tariffs on demand in our vending end market as pricing actions cause customers to delay orders. Results were also impacted by the final phase of the gaming destocking dynamic we experienced during the first half of 2025. Through strong cost discipline and application of CBS to drive productivity, we maintained adjusted operating margin at approximately 29%. These results reflect excellent work by our CPI team.

Moving to security and authentication Technologies on Slide 8. In the fourth quarter, core sales were up approximately 11%, driven by strong performance in Crane Currency, where we achieved 11 new micro-optics denomination wins in Q4, bringing our full year total to 20 new wins. As a reminder, total sales growth of over 40% includes the acquisition of De La Rue Authentication, which closed in May.

Adjusted segment operating margin decreased by approximately 420 basis points from the prior year. As shown on Slide 9, we had strong volume growth year-over-year, increasing our margins. However, this impact was partially offset by several items. First, we experienced unfavorable mix in our international business as compared to the fourth quarter of 2024 based on the specific shipments from our backlog to central banks.

Second, we incurred additional costs to meet increased demand, including hiring and training of additional production staff, higher freight, procurement of substrates from third-party suppliers and selected outsourcing of banknote printing. Additionally, there was an unfavorable FX impact on margin as we experienced higher operating costs to manufacture and print our international currency products in Sweden and Malta, incurring costs in Swedish krona and euro.

We also made additional investments in Q4 to support anticipated future growth as we continue to execute the development of the next generation of micro-optic products with very high customer interest. Finally, the contribution from the acquisition of De La Rue and the execution of our synergies across Crane Authentication performed as expected in the quarter.

Turning to Slide 10. For the full year, SAT delivered core sales growth of approximately 7%, driven by strength in currency, which exceeded our expectations. Crane Authentication performed as expected, with results including 8 months of De La Rue Authentication in 2025. Adjusted operating margin decreased by approximately 380 basis points driven by the expected impact of acquisitions, and as discussed earlier, the increased costs in international currency and the unfavorable impact of FX. Finally, backlog was up more than 50% year-over-year, which gives us high confidence in our growth outlook for SAT in 2026.

Moving to our balance sheet on Slide 11. We ended the year with net leverage of approximately 2.3x. During the fourth quarter, we secured a term loan of roughly $500 million and grew approximately $130 million to fund the initial equity investment in Antares Vision. We expect to draw the remaining balance in the first half of 2026 to fund the rest of the Antares Vision transaction, which is on track to be fully completed in mid-2026.

Looking ahead, we anticipate using our free cash flow to pay down our outstanding debt and end 2026 with net leverage of approximately 2.3x. We have an excellent balance sheet, attractive fixed-rate, long-term debt and substantial liquidity. Our strong free cash flow generation enables us to invest in organic growth, pursue M&A to build on our leadership positions and maintain a competitive dividend.

Continuing our commitment to a disciplined and balanced capital allocation strategy, yesterday, we announced a 6% increase to our annual dividend, while preserving ample capacity to deploy capital towards acquisitions in the future that meet our financial criteria.

Moving now to 2026 guidance on Slide 12. I would like to highlight that this guidance only includes the interest expense associated with our initial approximately 32% investment in Antares Vision. We anticipate updating guidance in our first quarter earnings announcement after Crane NXT has a greater than 50% ownership stake in Antares Vision, at which time its results will be consolidated within Crane NXT.

In 2026, we expect full year sales growth of 4% to 6%. In SAT, we expect high single-digit growth driven by high single-digit growth in U.S. currency from a favorable mix of banknote demand and low single-digit growth in international currency, even with a tough comparison to a very strong 2025. In Crane Authentication, we expect mid-single-digit core growth, including a full year contribution from the De La Rue Authentication acquisition.

In CPI, we expect sales to be flat year-over-year, reflecting mid-single-digit growth in service, where we are expanding our offering, offset by approximately flat revenue year-over-year in our hardware businesses and a low single-digit decline in vending as order softness continues following price increases to offset the impact of Chinese tariffs.

Before I discuss our profit guidance, I'd like to note that we have changed our profitability metric to adjusted EBITDA from adjusted operating profit. We believe adjusted EBITDA is a more meaningful representation of our operating performance as it eliminates noncash expenses, including depreciation, and we will be using this metric going forward. We expect adjusted segment EBITDA margin to be approximately 28%, which is approximately flat year-over-year. This reflects continued high profitability in CPI and the benefit of synergy realization in Crane Authentication, partially offset by actions we are taking to expand capacity for international currency.

Continuing with full year guidance, we expect corporate expenses of approximately $58 million. We also expect nonoperating expenses of roughly $60 million, which includes a noncontrolling interest associated with the Crane Authentication joint venture and interest expense associated with our initial stake in Antares Vision. We will update our guidance to reflect the impact from Antares Vision once we consolidate the company into Crane NXT, and Aaron will be providing an update on this timing later in the presentation.

For the full year, we expect our tax rate to be consistent versus 2025 at approximately 21.5%, and we expect to deliver full year adjusted EPS in the range of $4.10 to $4.40. Finally, we expect adjusted free cash flow conversion in the range of approximately 90% to 110%, recognizing that the specific timing of currency shipments can vary quarter-by-quarter.

Turning to Slide 13. I want to point out that the phasing of revenue in 2026 will be slightly higher in the second half of the year. In the first quarter, we expect to see revenue growth in the mid-teens, reflecting the impact of the acquisition of De La Rue Authentication and full operations in our U.S. currency business, which will drive 45% to 50% growth in SAT year-over-year. This growth will be partially offset by a mid-single-digit decline in CPI, reflecting the timing of hardware shipments based on the expected customer order pattern.

Adjusted EBITDA margin of approximately 19% will be flat in the first quarter year-over-year, reflecting the realization of acquisition synergies in Crane Authentication, partially offset by the flow-through impact of lower CPI volume, mix impact of the De La Rue acquisition and increased currency costs to meet the higher demand.

For the full year, we expect Crane NXT sales to grow in the mid-single digits in 2026, with adjusted EBITDA of approximately 25%. This reflects the continued high adjusted EBITDA margin in CPI of approximately 30% and an approximately 120 basis points improvement year-over-year in SAT to an adjusted EBITDA margin of approximately 25%.

Now let me turn the call back to Aaron to provide further details about the actions we are taking to capture growth opportunities in international currency and an update on the Antares Vision transaction.

Thanks, Christina. Turning to Slide 14, I'd like to take a few moments to discuss the investments we're making to capture organic growth opportunities in international currency, where demand continues to be very strong, with 20 new micro-optic wins in 2025 and organic backlog up over 30% year-over-year. This is a particularly exciting growth area for us, and we see tremendous potential for it to continue in the years ahead.

Now as a reminder, we deliver value to our international currency customers through 4 primary offerings as shown on this slide. These offerings include the designing of banknotes, substrate manufacturing, production of our proprietary micro-optics technology in banknote printing. To capitalize on rising demand, we're taking a variety of actions to expand our capacity. First, we're leveraging our CBS discipline, which we expect will continue to drive increased productivity annually from continuous improvement initiatives.

Second, to supplement these productivity initiatives, we're adding resources to our design team and increasing staffing in our micro optics and banknote printing facilities to increase capacity and move to 24/7 operations. Additionally, we are also increasing the amount of products and services we're procuring from a select group of suppliers and partners. This includes purchasing additional substrates beyond our current capacity and partnering with select government print works for banknote printing.

We significantly increased these activities in Q4 and expect them to continue into 2026 to meet the growing demand. For 2026 in total, we expect additional costs of approximately $4 million in SAT related to these actions, but reducing substantially in 2027 as our internal productivity programs are executed. Finally, we are investing in capacity expansion with new micro-optics production lines in our Nashville, New Hampshire facility and in our facility in Malta. Based on these investments in organic growth, we expect CapEx to increase to approximately 7% of currency's revenue in 2026.

Even with these investments, we expect Crane NXT's CapEx spending to continue to be in the range of 3% to 5% of sales in total. Additionally, for 2026, we expect approximately $4 million of added OpEx to support micro-optic product development, design and these capacity expansion programs. In total, we expect adjusted EBITDA margins to improve by approximately 120 basis points in SAT. And a more detailed bridge of the 2026 year-over-year SAT margins is provided in a slide in the appendix. In summary, we're excited about the long-term growth opportunities these actions will drive and we'll share more about those programs at our upcoming Investor Day.

Moving to Slide 15. I want to provide an update on the Antares Vision transaction. In Q4 2025, we completed the first step of the transaction, acquiring approximately 32% of the company from its largest shareholders. And I'm happy to report that we've received approval from the Italian regulators to move forward with step 2 of the transaction and will launch a mandatory public tender offer to all remaining shareholders in February. We expect this process will be completed by the end of Q1, at which time we will own over 50% of the shares of Antares Vision and consolidate the results under Crane NXT.

As Christina mentioned earlier, we'll provide updated 2026 guidance based on the consolidation of Antares Vision during our Q1 earnings in May. Finally, in Q2, we will start step 3 of the transaction to take the company private. As a reminder, Crane NXT has secured voting agreements with the largest shareholders of Antares Vision which ensures our ability to take the company private after the completion of the mandatory tender process. We expect the take private process will be completed in mid-2026.

In closing, I want to reiterate a few key points from our call today. First, we're continuing to execute our strategy of accelerating growth while maintaining strong margins and robust free cash flow. Second, we continue to build momentum in our strategic growth areas. Our team is ready for the launch of the U.S. new series of banknotes starting with the $10 bill in 2026. International currency strong performance is exceeding our expectations, and we're taking actions to drive further growth opportunities and expand our leadership in this market based on our technology.

In Crane Authentication, we took actions in '25 to accelerate the realization of synergies, and we expect to see significant margin accretion in 2026 as a result. And finally, the Antares Vision acquisition is on track, and we look forward to welcoming the entire Antares Vision team to Crane NXT in 2026.

With all of these actions, I believe we are well positioned to accelerate growth in 2026 and beyond and deliver significant value creation to our shareholders. And I look forward to seeing many of you at our upcoming Investor Day on February 25 in New York City, where we'll share more details on our strategy, growth opportunities and financial priorities. We'll also be showcasing some of our advanced technologies and solutions during the event.

So thank you again for your time this morning, and I would like to also thank our Crane NXT team members across the world for their commitment to our customers, our communities and all of our stakeholders.

And now operator, we're ready to take our first question.

[Operator Instructions] First question comes from the line of Matt Summerville with D.A. Davidson.

Maybe just start with SAT. As I think about the margin performance in Q4, a kind of sequentially, you got $30-plus million of additional revenue, $2 million less OP dollars. And I realize you had the investments you called that out in the waterfall chart. But I guess I'm wondering why this business, if demand is that strong, can't do more to test price elasticity in the market, given the nature of what you're selling and kind of the criticality especially if this decisioning is being done through an 80/20 lens?

Thanks for that question, Matt. I'd start by saying as you see in our prepared remarks and as you referenced the waterfall, we're really encouraged by the growth and the backlog that we have in international currency. We strongly believe, and I'm highly confident this is setting us up for sustainable growth. And that's why we're making these investments. Now to your point on pricing and flow-through of that, just to remind you, Matt, most, if not all of these contracts that we're delivering in any quarter have been put into our backlog well before. So we're executing this backlog. That's what gives us great visibility into 2026. This is not a book-and-ship business. And so with that being said, as we're looking forward here, as new contracts come into the backlog, we are very focused on ensuring we are maximizing our value and the pricing power we have with our leading technology. So I feel confident that the team is doing that.

And then as a follow-up, obviously, there's a few moving pieces, two things. One, can you talk a little more explicitly about the EPS cadence as we move throughout the year, particularly given from the pluses and minuses we see you referenced in the first quarter. And then you mentioned being able to see some cost recovery on some of these investments. If I look at it and say, $12 million in '25 that you call out in waterfall, another $4 million that you call out in the '26 waterfall, that's $16 million. How much of that do you think can ultimately be recouped looking out to next year?

Well, maybe I'll start with that one and then Aaron can jump in if he likes to. So I mean just in total, we feel confidence in our guidance for 2026, and the outlook that we set. And so our range of $4.10 to $4.40 reflects continued strength in currency and sales and authentication continuing at MSD and softness in CPI, driven mostly by the hardware businesses and vending, which continues to experience softness as a result of the tariffs.

In terms of the phasing, as we said, we'll see accelerating growth throughout the year, and the results will be slightly skewed towards the second half from the first half. So specific to your question, Matt, EPS will accelerate through the first half. And then level off a little bit in the back half of the year to get to that total of $4.10 to $4.40. Overall, the guidance is balanced. And we think we've taken a prudent approach, particularly with CPI with our flat guide on sales for the full year.

Matt, I'll add into on the recovery of some of the costs or the read-through of that on a go-forward basis. I think the right way to think about this, as you've seen, we're going to increase adjusted EBITDA margins in the SAT segment by about 120 basis points in 2026. We should expect to see that kind of continued incremental improvement directionally on a go-forward basis inside of SAT. Obviously, there's some mix there that will play, as you know, with our U.S. currency, and we'll wait and see the volume distribution later in 2026. But I think that's the kind of frame I would put on it. So we are going to continue to be on this march now of increasing EBITDA margin and significant expansion in SAT on a go-forward basis, highly confident of that.

Our next question is from Mike Halloran with Baird.

So a couple of questions. Maybe you could just talk to about the sequential CPI dynamics. What's happening in the first quarter, maybe specifically? And what type of recovery are you expecting? It seems a little light seasonally going into the first quarter. So obviously, the gaming commentary Christina highlighted earlier, but is there any other destocking going on in the broader piece there? And how do you expect that dynamic to trend out through the year?

Mike, thanks for that question. And I'll just -- it's worth repeating that CPI is expected to be flat in 2026 with a 30% EBITDA margin and continued very strong free cash flow conversion. And so if we just go through CPI overall, services will continue to grow at mid-single digits, and that will be consistent throughout the year. We expect vending to be down in the low single digits with that continued softness from tariffs, and that will improve in the second half based on the comp to 2025. If you remember, the tariff headwind that we experienced began really toward the back half of 2025. So we'll get a better comp in '26 as a result of that.

Now lastly, our hardware businesses will be approximately flat for the full year. And the phasing here is more skewed to the back half of the year, and that's just based on customer order patterns. So overall, we have high visibility into that hardware ordering pattern and feel confident in the full year guide. Q1 will be the lowest quarter, and we'll see accelerating growth as the year progresses.

And then what's embedded in the expectations this year for the $10 bill onboarding? Is there an expectation for a second half ramp on that business specifically? And then secondarily and related, maybe could you just talk about how you're expecting the international business to flow as you work through the year on the currency side? Specifically, as you're working with these outside vendors and you're ramping your own capacity, is that a constraint at all in the short term in meeting demand? And does that accelerate as you work through the year? Or because of these arrangements, are you allowed to maybe more level loaded and meet the need?

Yes. Thanks for that, Matt. Why don't I take the U.S. question and Christina will jump in here on the international linearity question. We're very highly confident here, Mike, that the U.S. Treasury is going to make an announcement in midyear on the 10. We are ourselves are already working on the 50, and feel we're -- again, highly confident that, that design will introduce sophisticated security features. And so when you think about our guide then, I think we're just being prudent here on when they actually make the announcement. We look at it to be probably going into full consumer release more at the end of the year, call it, 4Q. And so that's what we've kind of put in the guidance. We think that's probably prudent for 2026.

Sorry, we got a follow-up.

I was just going to follow up on the international phasing. As you know, we'll have a very tough comp in Q4 of 2026 based on the acceleration that we saw this year in Q4. So you'll see that international demand accelerating in the year, but a very tough comp in the end of the year. And then just on cost, just a reminder that Q1 will have the lowest profitability just based on these incremental costs, which are more heavily phased towards the first half of the year, and we'll see that profitability improving as the year progresses.

I'll just add as close out your question here, Mike. With the actions we're taking, both on productivity, the staffing, the capacity expansion, it's not really a limit to us. We're going to see very nice growth in international currency. Just this Q4, which was exceptional for us, puts a pretty tough comp on the back half of next year. So I think we're in a really good position to continue to meet the customer demand. And we see a very healthy pipeline of opportunities going forward. And that's what's also giving us a lot of confidence here for the investments and many years of sustained growth in this business.

Our next question is from Bob Labick from CJS.

So thanks for the incremental information on the kind of international currency capacity. I wanted to stick on that theme. I think the demand or your results for international currency growth have been stronger than expected probably a year or 2 ago, and that's why you're adding this capacity, and we're talking about all this now. What are the drivers for the kind of faster growth in international currency for Crane? I guess, is question number one, how sustainable? And how does this impact your goal of 10 to 15 new micro-optics per year? Was there a pull forward? Or do you still think you can do that going forward? How are you seeing the market?

Thanks, Bob, for that question. Well, when you think about what's driving this overperformance in our international currency business, it really comes down to three things. Number one is a market driver of increased counterfeiting is occurring in the market, particularly in the emerging markets and with some of our core customers. And so that's forcing them in many ways to redesign their currency and they're always putting on higher security features, and we're simply #1. We've got the best set of security features in the market, and we are a natural net winner when that occurs.

Secondly is simply the growth in emerging economies, coupled with the inflation that they're seeing. And remember, our international currency business is predominantly operating in emerging markets. So again, we're kind of a net beneficiary of that dynamic. And then finally, third is the time to redesign that most governments typically go through is accelerating. And that's a combination motivated by several factors. But in part of what's happening is one country redesigns their currency, the neighboring countries then start the process to do that. And we think the U.S. redesign process helps that as well as new security features are going to get rolled out in the U.S.

So we see all three of these from increased counterfeiting, growth in emerging economies and faster redesign times as durable trends in this currency business. And it's why we see very strong sustainable growth over the long term. And I would expect we'll continue to be in that range of 10 to 15 wins, Bob, and that's what the target we would put out. But I think as you saw this year, there's momentum in our business. And certainly, this year, we exceeded that target.

Okay. Super. I appreciate that. And then on last call, you discussed international currency security only, I believe, contract win with the Latin American country that you'll tell us more about, I think, in the future. I guess, any update there? And are there many more security-only opportunities that you're bidding out on? Or how does that play out?

Thanks again for that, Bob. I will be the first to tell you, I cannot wait to tell you what that country is. And we're just in a position given our contract with them that we cannot announce that. But it's a significant step forward for us, not only with the country, but with the security features that they've adopted that we think will be an exceptional reference customer for us going forward. But we're going to have to wait for that.

As we move forward, remember, our core strategy inside of Crane Currency is to sell advanced security features. And those features are embedded in our micro-optics. They're the highest margin part of our business. And so we're out there pursuing several opportunities to sell those security features and get them into governments that may put their currency like we do here in the U.S. or print the currency for them, provided they incorporate our micro-optic features. And the pipeline here is as strong as it's ever been, and it's why we're making the investments that we have to make right now in our design capabilities and engineering capabilities to answer those tenders and win them in the future. So feel as more positive, quite frankly, Bob, than we ever thought we would feel versus, as you referenced 2 years ago based on what we see in the market.

One moment for our next question that comes from the line of Ian Zaffino with Oppenheimer.

Great quarter. So a question would be on SAT. If we look at the fourth quarter, is there a way you could give us a breakout of maybe what the currency piece grew and maybe what the noncurrency piece grew? I don't know if you have the exact number, but maybe just directionally, just trying to understand the different pieces in that segment.

Yes. Sure. Ian, if you look at it, currency was up high double digits in the fourth quarter. That was based on really on the strength of international currency. And as I think you know, we've had headwinds on a comp basis with the U.S. just due to the volume in 2025. So the good news there is that, obviously, that corrects itself and we're going to get to high single-digit growth next year on the full year for the U.S. currency. So very strong high double-digit growth in currency. Our De La Rue acquisition performed just as we planned. And we saw lower growth, call it, in the legacy OpSec business, but that was really intentional because of the 80/20 work that we did and we talked about in the third quarter. So I would say to perform kind of on our plan and with the synergy activities that you see in the bridge, we actually read through some nice incremental margin simply on the execution of the synergies, which are coming in, as Christina said, ahead of our schedule.

Okay. And then as a follow-up, on the $10 note, I know you talked a little bit about this or a lot about it. But how do we think about when it's going to reach run rate production? And I guess when you're saying it's going to be back end -- is it based on when the government announces the launch? So what are kind of the goalposts we need to look at as far as what's being communicated by the government versus what's going on with your business? And I'd imagine you might have a heads up on that because you would have to stock it pre-announcement? Or am I not thinking about that right?

No, you're -- Ian, good question. You're thinking about it exactly correctly. We are closely working with the treasury on setting up the right levels of inventory ahead of the public launch. It does still depend on exactly when they decide to launch it. That's where to the prior question, I would say we're being prudent to say we think that starts to really hit in Q4 of this year. That's what we put in our estimates and influenced our guide. That's going to get crystallized here, I would say, in the next 3 months to be precise.

And what I would say, Ian, to probably the broader question that I know you're asking and others about the impact of the U.S. currency program and where it's at. That's something we're obviously going to spend a little more time and dive deeper into at our Investor Day and provide some more insights of how we see the impact of that playing out.

Our next question comes from the line of Bobby Brooks with Northland Capital Markets.

First one I've got is just great to hear about the multiple professional sports leagues renewing authentication and security contracts. But I was curious if we could try to get a sense on the financial benefit from that. And then secondly, did those renewals see additional tech or services layered on? I'm just trying to get a sense of maybe what the dollar-based net retention was of those leagues re-upping their contracts?

Bobby, I'll take that one. And hey, we're super excited to continue a partnership with a flagship customer like the MLB, just like we announced with the NFL last year. These are great customers that we have long-standing relationships with. We can't reveal too much of the details, as you can imagine, about their contract. But in this case, we're providing product authentication and licensee management software. And it's a great recurring revenue stream because as you know, once we get engaged with the customer, it's very sticky. It's a very sticky arrangement that drives future recurring revenue. So we're very excited about this, and we'll continue to work with them to partner on our offerings and what more we can offer them as part of the portfolio and just continue our relationship with them.

Got it. I appreciate that color. And then could you remind us of the 24-hour staffing for micro-optics productions in the bank, no printing, that's great to hear. But could you remind us. Was that from like previously were they just doing a 40-hour work week or was it more like an 80-hour work week? And secondly, could you just remind us like when those transition to 24/7 shifts?

Yes. So it varies a little bit, Bobby, based on each of the sites, quite frankly, you could probably think of it as more of like 24/5 directionally. And we are in the process of ramping up to the 24/7, which will be at here in Q1. Just a reminder, these are very highly complex and secure operations. So ramping up is not just something that happens with the flip of the switch. We're hiring our direct labor. They have to go through a security clearance as well as some fairly intense training to be operating on our micro-optics and banknote printing lines. So there is, with that, just a very natural ramp-up period to get us there. Again, expect that to be completed here as we exit Q1 and feel very good we're on the track to that. But at that point then is why we're making the investments to add another line in Nashua and particularly excited about the expansion in Malta, which gives us more obvious capacity, creates redundancy in our operation, which is very good and quite frankly, puts us closer to our customers with a flag planted now in Europe for micro-optics and very close to our emerging market customers, all of which we see as an excellent setup for sustaining the growth of this business long term.

Thank you so much, and this will conclude our Q&A session for today, and I will pass it back to Aaron Saak, President and CEO, for closing comments.

Well, thank you, operator. As we conclude today's call, I again just want to thank everyone on the Crane NXT team for their strong efforts in 2025. I'm excited about the direction of the company and the momentum we're building to accelerate growth. And I look forward to seeing many of you at our upcoming Investor Day on February 25 in New York to tell you more about our plans for 2026 and beyond. And so until then, take care, and I hope you all have a great day.

This concludes our conference. Thank you all for participating. You may now disconnect.

Good morning, and welcome to the 26th Annual CJS Securities New Ideas for the New Year conference. I'm Bob Labick, President of CJS. I'm pleased to have with us Crane NXT here today. Crane NXT is an industrial technology company focused on securing, detecting and authenticating critical items for its customers.

With us presenting from management are President and CEO, Aaron Saak; Senior Vice President and CFO, Christina Cristiano and VP of Investor Relations, Matt Roache. We'll start with the 10- to 15-minute overview management, and then we'll move on to a fireside chat. For clients interested in asking management questions, you can send them through the portal, and we'll try to weave those into the fireside chat. And with that, it's my pleasure to hand it off to Aaron to talk about Crane NXT. Aaron?

Good morning, Bob, and thank you for the invitation here to join our conference. We certainly appreciate that and happy New Year to everyone as well joining us today. And appreciate the opportunity to talk about Crane NXT and really our plan ahead not only for '26, but I'm sure we'll talk to our Q&A, Bob, of the growth vector that we're on and started on a few years ago with the company.

Now before I get into some formal presentation and comments, I just want to remind everyone of the forward-looking statement disclosure that you see here on the screen, and I'll leave that for you all to read at your pleasure. So with that, let me just take a moment to introduce Crane NXT to you if you're not familiar with the company. As we close out 2025 based on our guidance, we will be at about $1.6 billion of sales with approximately 50% is recurring and reoccurring revenue and very strong adjusted segment operating margins in the mid-20% range with leverage slightly above 2%. And we're very proud of that financial profile. It's the strength of the company, from our margins to free cash flow. And now with increasing growth in our revenue as we've deployed capital to move the portfolio into new adjacent markets. And these are really all centered around our core strategy of providing technology that secures, detects and authenticates our customers' products.

The company, as many of you may know, now, was launched what will soon be 3 years ago from a separation of Crane Holdings and core to what we do is a philosophy of continuous improvement, best embodied through our Crane Business System, or CBS. And we apply that every day through hundreds of Kaizens through the course of the year and particularly to our new acquisitions. And that's really where we've been focused over the last few years of following a disciplined capital allocation strategy, to continue to expand the portfolio in near adjacent markets in a very programmatic fashion, and solidify our position as a leading provider of technologies in authentication and soon traceability technologies.

So as I move to the next slide, just again to break down the company in a little more detail. When you look today as we close out 2025 on a pro forma basis, both segments that we report publicly will be about 50-50 in terms of the portfolio. When you look at our geography, 60% in the Americas, but with a very nice and continuing growing part of our portfolio in emerging markets in Middle East, Africa and APAC, where our currency and authentication businesses have a very nice stronghold. And then I think what's unique to this company. And as many of you know who followed it, particularly in our currency business is the strength and depth of our customer relationships that span many, many years. And so that adds resiliency overall to the portfolio, and we're particularly proud of that.

Now as we talk about the company, with our mission here of trusted technology solutions that secure detect and authenticate what matters most to our customers, it really transcends now both our reportable segments. Security and authentication technologies, which will be approaching $800 million as we close out 2025 and Crane Payment Innovations, or CPI at about $850 million, again, tied together now with a common set of technologies and applications for our customers, all around secure detect and authenticate and then bridge at the bottom by the application, the rigorous application of the Crane Business System. And we're building this portfolio, both organically from the original 2 assets when we separated the company, but through M&A, which led us to the formation of Crane Authentication in May of 2025 just, call it, 6, 7 months ago, and we have a very healthy M&A funnel in place and a strong balance sheet to continue the evolution of the company.

And we're already doing that as we announced in September with our next acquisition, which is Antares Vision. This company fits squarely on our strategy of providing detection, inspection and track and trace software for the life sciences and food and beverage markets primarily. And it's very similar to other parts of our portfolio where Antares makes equipment, and you can see a picture of that on this slide, which is representative of equipment sold into the pharma market, and that would be advanced inspection and detection technology. It provides aftermarket services as well as commissioning services for those large pieces of equipment like displayed in the picture. And then it brings to us an increasingly important software capability for tracking and tracing of products from the moment a manufacturer all the way through the moment the product is sold to a consumer. And particularly in life sciences, that's very important as more governments are regulating that for their pharmaceutical products within a country.

The company overall fits very nicely in the portfolio for us. It's a meaningful addition which will bring approximately EUR 200 million of revenue. This is based on their 2024 financials, about 15% EBITDA margin which is consistent with our other acquisitions. We typically are dilutive at the beginning to the overall Crane NXT margins and our plan through the application of CBS is to walk those up over the next several years. And moves us further into markets like life sciences and food and beverage in this track and trace market that has clear tailwinds that are long term and resilient. And so really adding a nice addition to the Crane NXT portfolio, very consistent with our programmatic M&A.

Now we just announced as we closed out 2025, the completion of the first step of our acquisition of Antares Vision that will continue to proceed through the first part here of 2026. And then we'll eventually be taking the company private and fully consolidated as part of Crane NXT throughout the early part of 2026. So on track and very excited about what this does for our portfolio. So with that, Bob, hopefully, that's a little overview of kind of who we are or what we've been up to in the last few months, and we're happy to move to Q&A.

I appreciate that overview. That's great to set the stage. And so obviously, lots of good things happened in 2025 for Crane NXT. There's also -- there's a fair bit of volatility in shares. So I wanted to kind of set the stage here to ask a question and a quick overview in our mind of 2025 was a really strong performance in SAT, particularly driven by international currency and even U.S Currency bounced and it was very strong after the planned shutdown for the machining and then there was some lumpiness in CPI, and it was tariff related and pricing related. But overall, kind of Q1 through Q3 were solid meets or beats and then Q4, you raised revenue guidance, but you lowered the margin guidance.

And I think kind of international currency was responsible for a bit of both of those as well as some little headwinds in vending. And so -- and then the preliminary outlook for 2026, which you gave in Q4 was for solid growth in SAT and a recovery in CPI. So revenue remains strong. That outlook is really positive. And I just wanted to dig into kind of margins there and that. And so why don't we start with international currency as that's been a big driver. You said on the Q3 earnings call, there were some kind of pull forwards of redesigns and some new wins that led to some outsourcing or partnering for international printing plus you're having some investments to add capacity. So I wanted to break that down. Let's talk about the pull forward of international currency orders. How do you schedule these and do you have to scramble if customers come first and ways to address them? We'll start there. I'll stop talking and I'll let you talk for a minute.

There's a lot there. I think on a high level, if I go back to kind of your first comments, I think that's correct. I think you've got it. We're really pleased actually with the -- particularly the performance of SAT this year holistically and the growth we've seen. And CPI, like many other companies, has had to navigate some direct impacts and indirect impacts from tariffs. And we think we've zoomed in on what that is, and it's -- as we said, led to some changes in the profile of where we saw revenue growth in '25 in CPI. But I think that, that's well understood now to us. Still with fantastic margins, by the way, as you know, in that segment.

So to double-click a little on international currency, truly is the standout for us in 2025. And it gives us very high confidence in 2026, given the strength of our backlog. And in fact, as we mentioned in the Q3 call, we're booking now into 2027. And I believe fundamentally, what we're hearing from our customers is consistent with what we've been talking about now with you, Bob, for 3 years is we're the technology leader undisputed in a world that central banks are more and more worried about counterfeiting. I would also say we're, by and large, the company designing the most beautiful bank notes providing good quality as well to our customers, which is an added benefit that further reinforces our brand.

And so as we look at our pipeline, we see these -- the ability to continue at, now we say record high backlog is just the backlog. Now it was kind of at this high clip and it's exceeded our expectations from where you and I were having this conversation a year ago. That's a good thing for us. And it suggests a very strong future for Crane Currency. And what we want to do when currency bids come up for renewal, just to walk through that process, governments typically bid on a new design every 5 to 10 years. And what we want to do is when that comes up, we want to lock in particularly the countries and central banks we want to work with, they're designed because that becomes then an annuity stream for the next decade, let's say, for us. And if we do our job well, it just keeps continuing.

And so that's why it's a really important metric, as Christina and I talked about now for many -- for a few years, how many micro-optics wins we're getting in a year and we're always targeting 10 to 15. And we felt, as we said in Q3, very confident we're going to be on that track here in 2026. So that sets us up. Now what it also means is we have governments who need currency and our backlog is growing and they want us to deliver that when they need it. And that sometimes is with very careful planning, sometimes it's not on their side.

And so we're trying to adjust and make sure these economies and central banks give what they need. That's -- as we're looking at the backlog, that's really triggered and catalyzed us to make some investments starting in the back half of '25 to increase capacity both through deployment of OpEx, which some -- which you've seen, Bob, at our Nashua facility and micro-optics to add shifts and staff to train more people, to go through what may not be obvious, government security processes that take months and require money and cost and time to get a workforce ready to go, to be able to execute at a higher continuous backlog. It's also led us to work more with some outside partners to make sure the central banks get what they need, maybe faster than we originally anticipated, that comes with some margin compression because we're working with other folks.

We see this as a relatively, I would say, short term. It's not -- meaning over the next 12 months, we're going to be working through this we'll be adding more ships, more trained employees that take and, in some cases, more CapEx into the business. That takes 12 to 18 months to work through and do. It's not something we can just go out and snap our fingers and do. We started it a few months ago and it's going to continue through most of 2026. We'll be in a really strong place to have an even higher performing currency business long term, really just meeting the growth of our international customers.

Got it. So yes. So digging into that, just a little more, I appreciate that answer very much. The part -- when you say partners, I don't know how much you can say, but basically, you're outsourcing the printing to another facility? And is that generally, is this the right way to think about it? Like you take the, whatever it is, 12, 18 months at a low margin because you're going to get a 5- to 10-year contract. So over the life of the contract, even if it was no margin, it's well worth it to win the contract or to maintain the contract. And get the total cash flow of the contract. Is that how we should think about the...

That's the right way. Directionally, that's the right way to think about it, Bob. I'll even break it down a little more for you. When you think about the constituents of our currency business we have our micro-optics, which is really the core of the technology for us. That is a place there's no such thing as outsourcing or partnering. We will make that, and we will protect that IP. We continue to issue new patents and new products like our surface technology that we're very excited about, and we'll expand through CapEx and hiring, and adding more ships to our factories to produce more. So that's pillar #1.

Secondly, we make paper and substrate at the point where we get at the limit of our own capacity, we will go out and work with partners to procure other substrate. That is the lower margin part of the business. And I think from a disciplined capital allocation point of view, we would not invest more in building out more papermaking facilities. We have partners we can work with there. And then third is the actual printing of the bank notes where it all kind of comes together. There, we print, as many people know, for our international business in Malta. That facility has been going through a lot of CBS Kaizens and activities to increase capacity within the footprint. The team has done an excellent job in that. But there is a natural place where we start to get to that edge faster than we thought in terms of capacity, and it takes 12 to 24 months to get everything in place there to expand.

The other side of that is partners and some of those partners or states that are our customers for a part of our business that are happy to work with us and some of our customers to use their capacity to print the notes. And so those are the -- between the paper and the printing. Those are the kind of partners we're working with. And as you said, over time, though, that should go away over a long enough time, but what we've done is we've locked in the business for a decade, and we don't want to lose that.

Great. No, that makes sense. And so effectively, I guess, just to finish on international currency, demand is a little higher than expected, and you're adding capacity, it sounds like in Malta over time to be able to do some of that printing, you won't add paper making capacity but printing capacity. And obviously, micro-optics, you're adding shifts in people and we understand, I think, that part. So what does this mean overall for the long-term outlook for kind of revenue and margins for international currency now versus maybe what you thought a year ago?

Yes. In terms of growth, it's going to continue as we believe the market is growing at kind of low single digits for international currency. We're going to be a mid-single-digit grower. So we're going to outpace the market. I think next year, as we talked about, we've set a high bar on the comps given just the growth of international currency in 2025. So it becomes a little bit more of a comp issue on a year-over-year basis as we look at '26. But long term, we've got a strong mid-single-digit, mid-single-digit-plus grower.

When you look at the margin, we're going to see that a little -- I don't want to say artificially, but it will be compressed next year as we're going through the investments that we mentioned. And when I say compressed, it's probably maybe the expectations. Long term, with our continuous improvement methodologies and the increased sales of micro-optics, that will naturally drift higher over time. But we're going to balance that to try to make sure we're locking in the contracts in '26 as we make the investments long term.

Great. And you touched on in your opening remarks the Antares acquisition, the 30-plus percent that closed in December. And can you remind us the kind of once this is folded in, you mentioned as you make these acquisitions, they'll come in at a lower margin and then over time, you'll grow that margin. That's been part of the formula you told us about for 3 years. Can you remind us the kind of target margins for authentication I guess, now? And then over time, how do you expect that to grow?

Yes. Christina, do you want to take that one? Or I can add?

Yes, sure. Yes. Actually, we're really excited about the initiatives that we've already taken since we closed De La Rue in the second quarter of this year, to be able to put these 2 businesses together as 1 unified Crane Authentication platform. And as a result of that, we're able to execute and actually accelerate on the synergies that we identified during the diligence process for the acquisitions, including things like product rationalization, site rationalization, optimizing the supply chain and our manufacturing operations. And all of these actions are already in place now.

And because we've taken the actions, we have a clear line of sight to what the margin accretion will be next year, and we'll exit the year next year in authentication at near 20% operating margin, which is actually ahead of the schedule that we anticipated in our investment thesis, let's say, for the acquisitions. Now what that means over the longer term though is now we'll continue to drive CBS and also synergies with our existing technology in the currency business. And as you saw, we've already begun selling micro-optics into the channel, into the authentication channel, which is a great, again, affirmation of our business case for putting these businesses together. And with that over time, you'll see those margins start to get up into the mid-20s percent similar to the rest of the business, which we're really excited about and have a very clear path to achieve.

Great. And then just kind of rounding out currency margins. We talked about the short-term headwinds right now, but you also have 2 things. I think you mentioned the security only Latin American country currency win. And then obviously, the U.S. upgrade cycle, which includes more security in the 10s and then the 50s, et cetera, et cetera, et cetera. So how long or when do you anticipate that, I guess, to learn more about the Latin American country and that opportunity, and then the U.S. upgrade has the positive lift for margins in currency? How does that play out kind of timing-wise?

Yes. Well, I'll start, I guess, Aaron, if you want to jump in afterwards. We're super excited for the Investor Day that we're hosting on February 25th, where we'll share a lot more information about what we're expecting. But of course, international growth, as you know, just based on our backlog is very exciting, and we've got a few really exciting wins to share more information about. I think the key here, Bob, is that increased technology content drives revenue growth and margin accretion for us.

And so whether it's an international currency win or the U.S. new series and the launch -- starting with the launch of the $10 bill next year, these are all things that over time now will improve revenue growth and our profitability. And so we're very excited to kick that off in 2026, and we'll talk more about that in Investor Day.

Great. Fair enough.

Bob, I can't escape though that the opening to talk about U.S. currency as well. And I'll -- as Christina said, we're excited about international, but U.S. is set up for a strong year, as we've mentioned, we'll have high single-digit growth in that business, just simply based on the mix that the Fed put out on their order and the new $10 program, the redesign on track, progressing from exactly as we would expect as we talked in Q3 and that's unchanged. And we're actively working with the BEP on the designs of the next bills, most notably the $50.

So we feel like this is a probably arguably slow train of it from a lot of people's perspective of how long this is taking, but one that's picking up steam and headed in the right direction, and it will start showing in the performance of the company over the next several years.

Yes. Very excited to -- we've been teased about the upgrade cycle and seeing the new $10 bill note. And I know that's not up to you when we get to see it. That's up to the U.S. government, but we're excited to see it as well.

We'd like you all to use it.

So you mentioned -- we talked about entires a little bit. And I think you said kind of from a balance sheet perspective, pro forma leverage should be around 2.9x after the close. And I'm assuming that for our calculation purposes, that's at [ 630 at June 30 ] is like an easy way to think about that. And then you obviously always have strong free cash flow. So you'll probably be a little lower than that by calendar year-end '26. So with that context, where does that leave you for M&A?

You target 1 to 2 a year? Are there holes in the portfolio where you're looking? Has the criteria changed on that you've made and announced 3 meaningful acquisitions in authentication? Just kind of put us back between your current leverage outlook and how you're thinking about M&A?

Yes. Thanks, Bob. Right now, obviously, for the next several months, our focus is on closing Antares. That's where we won all of our efforts and then to start to drive the synergies once we actually get to the close. But our philosophy here to the core of your question is unchanged from what we've been doing. I like to say, hey, we said what we were going to do and then we did it. And I think in the view of M&A, that's exactly true. We said we would do 1 to 2 deals a year. That's the -- as you said, that's the pace we're on. And we really like this disciplined framework that says, let's do them very programmatically so we can absorb them into the portfolio. They're meaningful to the portfolio.

In the case of OpSec De La Rue now Antares, and they just continue to expand the TAMs one-step adjacencies from our core that have put us in higher growth, very interesting niche markets. And the M&A funnel beyond Antares remains very strong, as strong as it's ever been, quite frankly. I think because we're expanding with each one into a new TAM or expanding our TAM. But we want to keep the leverage in place, ideally, as we've said, below 3. So when you play that out, we'd probably be looking for a next larger acquisition should opportunistically that come along, early part of '27, it probably the earliest it could -- plus or minus 6 months, these things are not science, there's some art. But we're actively cultivating and maintaining relationships with several targets. So we feel very good about that, but we want to do it in a very thoughtful, disciplined way and make sure that we keep the balance sheet in check.

Perfect. And then moving on to CPI, as we kind of mentioned in our opening, the year was a little more impacted by tariffs and pricing and hopefully, some of that uncertainty is mostly behind us now. So maybe just give us kind of an updated outlook on '26 for each of the subsegments and how we're thinking about it without stealing too much of your own thunder from your upcoming Analyst Day.

Yes. And obviously, given where we're at, maybe I'll start and let Christina add anything to it, we'll reiterate what we said in Q3 to a large extent because CPI is kind of performing as expected, Bob, from what we said over the course of the last few quarters. We looked as the tariffs started to play out, which had an effect mainly on our vending and short-cycle businesses to take a prudent approach to that outlook which we updated in Q3. Our focus has always been to maintain the high margins of that business and the great free cash flow that it kicks off. So it's -- over 100% free cash flow conversion in that business, just excellent performance there by the team.

And as we said in Q3, we expect margins to come in between the 29% and 30% operating -- segment operating margins, which is fantastic. So the team is managing that situation, I would agree with you on that I think we've kind of bottomed out exactly where that business is at and performing. And as we said in Q3, as we look forward based on the portfolio and the markets it plays in, we expect it to be kind of a flat to low single-digit core growth type business with great free cash flow, great operating margins, and that's the expectation we're setting on a go-forward basis.

Terrific. And then let's say one question that came in here. Maybe I'll try to make it so you can hopefully answer it. But broadly speaking, can you discuss kind of expectations for free cash flow in '26 versus '25 based on the incremental, I guess, capacity and growth that -- the capacity you're going to put in for growth in currency and how outsourcing may or may not impact that? Just -- obviously, I'm not looking for a free cash flow number, but how do those changes impact kind of year-over-year free cash flow, how should we think about that?

Yes, that's a great question. I mean in general, we expect to be in that range of, let's say, 90% to 110%, which we guided this year. And we're evaluating now the plan for 2026. So we'll have more to say about that on our earnings call, which will be in early February. But I think in general, you can still expect us to be in that general range, just based on the very strong performance, particularly in CPI, which drives really strong free cash flow.

Great. And then one of the questions that we're asking most companies are trying to weave into all of our questions today is, obviously, a market theme throughout the last couple of years has been AI, and the build-out of AI, and how it impacts various companies. And I guess my question is, how do you guys perceive using AI in your business, how might it impact you or your businesses going forward? How does it impact counterfeiting? How does it -- where are you thinking about the impact of AI on Crane NXT over the next few years? And how are you positioning the company based on that?

Yes. Thanks, Bob. It's very topical, and I'm sure on the minds of most management teams and investors even for investors themselves within their own companies. The way we're thinking about it is really in 3 different phases. The first is taking tools that are out there that many of us use today and deploying those into our functions to help our associates just improve core productivity, call that like a further application of the tools of CBS that we have that is elevated or accelerated through the tools of AI, which I think is fantastic, right?

One of our, I think, hallmarks here is the CBS toolkit. And so AI is kind of an accentuation of that quite frankly, it's an accelerator of it. So that's how we're thinking about it and actually deploying it into training, into different functions. The second step is how we're thinking about reshaping processes to really drive even deeper productivity or improved customer experience. And that's really around the core of what is in our CBS discipline of safety, quality, delivery and cost. So we want to find -- from where I sit, an application that drives a business outcome, it's not AI for AI's sake which I think a lot of companies are trying to work through today. So we've got to see business outcome, safety, quality, delivery cost.

And then finally, you get into, I think, this last comment you made around the innovation of products and what's happening. And call that software. I think that's really where Antares brings a fantastic new capability to our business with the track and trace software at scale that is using AI tools and algorithms to help ensure the traceability of products and counteract counterfeiting in the journey. So I think I'm particularly excited to get that acquisition over the line in part for that capability that it brings to Crane NXT.

But I think we'll keep talking about it as driving and deploying for core productivity, reshaping our processes to drive safety, quality, delivery cost and then these ways we can improve the product development cycle and improve the products themselves. So a very active conversation in the company. And we're doing that. That's how we're thinking about it. And then in each of those 3 areas, there are things we're looking at to deploy.

Terrific. And I think I can sneak in one last question from the audience, and then I will -- then we can wrap up and I'll give it back to you for closing remarks as well. But the question was as it relates to currency, international currency. Obviously, we've been talking about your record backlog and winning more and more. Has the competitive landscape change that's accelerating your wins? Or what's the overall market like? And how should people think about that?

Yes, that's a good question. I would frame it in 2 ways. One is it's kind of a classic trend that's been in existence. It's just we're seeing it more now of technology adoption moving to the higher-end technology. So I would say that's unchanged. If you look back over 3 or 5 years, we know we're the leader in more and more people. We've always said, Bob, we're going to keep adopting our technology. The proof point is in the number of micro-optic wins we have every year, that 10 to 15. So that hasn't changed so much.

I think one thing that has changed is a bit of the, call it, the neighborhood effect or a tipping point effect that as countries watch their neighboring countries adopt more sophisticated technologies, they feel we're compelled to do that as -- and they also become, if they don't, a focus for counterfeiters. And so not only is counterfeiting increasing, and we know that it's getting more sophisticated, you have this effect if you don't want to be a country in a region of the world with the most -- the lowest level of security. So I think that's increased a little bit of the pace of redesigns for maybe where we thought it would be 5 years ago. And I would assume that we would assume that the fact the U.S. is now going to be introducing the new currency and upgrading that very visibly will be another nice tailwind to that narrative of other countries wanting to continue to upgrade the technology.

So one part of that trend has been unchanged. One, a little bit accelerated incrementally over the last year or 2.

Super. That brings us to the end of our time for this session. I know you have a very busy day, and I appreciate you very much spending time with CJS and clients. So thank you. And I'll just pass it back to you for any closing remarks.

Well, thanks, Bob. I know Christina and I always appreciate getting together with your -- both your team, but your clients to talk about Crane NXT. And I think, for those who've been with us these first 3 years in separation, you've seen the changes. Bob, we made to this portfolio, kind of putting it on a course to be a leader in authentication and traceability technologies. Antares will come to fruition in a few months, and we're well on that path.

And I think the next 3 years, with what we've discussed here get even more exciting for the company. and we're in a very good position. And I look forward, as I know Christina does with many of our leaders to continue to tell that story in more detail at our upcoming Investor Day, which will be February 25th in New York. And I think we'll have a lot of exciting things to share about the future of Crane NXT. So thank you again.

Super. We'll see you there. Thanks.

Good day, and thank you for standing by. Welcome to the Crane NXT Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Matt Roache, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. I want to welcome you all to the Third Quarter 2025 Earnings Call for Crane NXT. Before we begin, let me remind you that the slides we will reference during this presentation can be accessed via the Investor Relations section of our website at cranenxt.com, and a replay of today's call will also be available on our website.

Before we discuss our results, I encourage all participants to review the legal notice on Slide 2, which explains the risk of forward-looking statements and the use of non-GAAP financial measures. Additionally, we refer you to the cautionary language at the bottom of our earnings release and in our Form 10-K and subsequent filings pertaining to forward-looking statements.

During the call, we will also be using non-GAAP financial measures, which are reconciled to the comparable GAAP measures in the tables at the end of our press release and accompanying slide presentation, both of which are available on our website in the Investor Relations section. With me today are Aaron Saak, our President and Chief Executive Officer; and Christina Cristiano, our Senior Vice President and Chief Financial Officer.

On our call this morning, we'll discuss our third quarter highlights in our operational and financial performance. We will also provide an update on our 2025 financial guidance as well as some initial thoughts on our 2026 outlook for each segment. After our prepared remarks, we will open the call to analysts for questions.

With that, I'll turn the call over to Aaron.

Thank you, Matt, and good morning. I appreciate everyone joining today's call to review our third quarter results. I'd like to start by recognizing our NXT team members around the world for their continued dedication and for delivering another quarter of strong execution. As shown in the highlights on Slide 3, our third quarter performance was in line with our expectations with sales growing approximately 10% year-over-year and adjusted EPS of $1.28.

Our strong free cash flow resulted in a conversion ratio of 115% in the quarter, which puts us on track for our full year target range of 90% to 110% conversion. In Q3, we continued to build momentum in strategic growth areas. Growth in our international currency business continues to exceed our expectations. And in the third quarter, we saw several new customer wins including a prominent country in Latin America.

This raises the total number of new denominations that specify our micro optics technology to 9 year-to-date putting us on track to achieve the high end of our target of 10 to 15 new denominations for the full year. Additionally, our international currency backlog remains at near record high levels, and our third quarter sales were stronger than our original forecast. As we continue to see growth in orders, we're taking several actions to increase production to support our customers. Given the sustained momentum, we're raising our full year sales guidance for SAT and NXT overall.

In our U.S. currency business, the Federal Reserve recently released its print order for 2026, including a significant increase in demand for higher denomination banknotes containing our advanced security features. Based on this favorable mix, we expect this business to grow in the high single digits next year.

Additionally, we're excited for the release of the new $10 bill with the redesign program advancing as planned. In CPI, our service business continues to expand its offerings outside of traditional cash equipment. And in the quarter, we achieved 2 significant wins with customers for installation and ongoing service of kiosks. These wins are contributing to mid-single-digit ARR, our annual recurring revenue growth in service and building a resilient business for the long term. We're also continuing to execute our strategy to expand upon our market-leading positions. In September, we signed an agreement to acquire Antares Vision, a global leader in detection, inspection and track and trace technologies for the life sciences and food and beverage sectors.

The acquisition of Antares vision is another important step, building out our portfolio with differentiated technology offerings and aligning NXT to markets with secular tailwinds. We also continue to make strong progress in our integration efforts within the authentication business. As part of our planned product rationalization and 80/20 actions, we're in the process of upgrading several existing customers from the legacy Delarue authentication offerings to our micro-optics technology, improving our margins and our customer stickiness over the long term.

Finally, like many other companies, we continue to manage the impact that tariffs and broader macroeconomic uncertainties are having, particularly in our CPI short-cycle businesses, balancing the strong performance in SAT with the outlook for demand in CPI, we're narrowing our full year EPS guidance to a range of $4 to $4.10.

[Audio Gap]

The safety and authenticity of products to consumers, brands and governments. We're moving forward with customary regulatory approvals and expect to close the first phase of the transaction in December. In this first transaction, Crane NXT will acquire an approximate 30% stake in Antare's vision from its largest shareholders. After this closing, we will launch a mandatory public tender offer to all remaining shareholders.

Now as a reminder, Crane NXT has secured voting agreements with the largest shareholders of Antares vision, which assures our ability to take the company private after the completion of the mandatory tender process. Antare's vision is another key milestone in our journey as we continue to build a resilient company through our disciplined M&A process. Over the past 2.5 years, we've taken significant actions to reduce our exposure to cash-centric end markets. And with the acquisition of Antares vision, we'll have approximately 60% of the portfolio focused on cash related products and services. down from approximately 80% at the time of separation. These steps strengthen the long-term durability of Crane NXT and align our portfolio to secular tailwinds to accelerate growth.

Moving to Slide 5. Another key announcement we made in September was our outlook for the U.S. currency business based on the Federal Reserve Board's release of their annual currency order for 2026. We're very encouraged by the projected increase in volumes for higher denomination bank notes, specifically 10s, 20s, 50s and $100 bills. These notes contain higher levels of security features in the substrate and in the case of the $100 bill contain our proprietary microoptics technology. The expected order volumes of these notes partially offset by a reduction in volumes for lower denomination bank notes will result in our U.S. currency business growing at high single digits in 2026.

Additionally, we continue to move forward with scaling up for the launch of the new $10 bill with production scheduled for mid-2026, ahead of the expected public launch. Finally, I'm excited to announce our team has made significant progress working with the Bureau of Engraving and Printing on the design of the new $50 bill scheduled for release in 2028. As a reminder, the design of each bill is a multiyear process, starting with design and pilot production before moving to full scale production ahead of the release to the public. More to come on these developments as we move into 2026.

So with that, let me now hand the call over to Christina to review our third quarter performance in more detail.

Thank you, Aaron, and good morning, everyone. I'd also like to start by saying thank you to our associates around the world and to express our appreciation for your continued efforts.

Starting on Slide 6. We delivered third quarter results that were in line with our expectations. Sales were approximately $445 million, an increase of approximately 10% year-over-year, driven by the impact of acquisitions, favorable FX and continued strong performance in currency. Core sales increased approximately 1%, reflecting accelerating growth in SAT partially offset by expected softness in CPI. Adjusted segment operating profit margin of approximately 28% was up approximately 50 basis points year-over-year, driven by higher SAP volume and improved mix in currency.

Free cash flow conversion was approximately 115% in the quarter, and we continue to expect full year conversion to be in the range of approximately 90% to 110%. Finally, we delivered adjusted EPS of $1.28. Moving to our segments and starting with CPI on Slide 7. Sales of approximately $216 million were down approximately 4% year-over-year, as double-digit year-over-year growth in gaming was more than offset by declines in other short-cycle end markets, primarily vending where like other companies, we continue to face headwinds related to the ongoing macroeconomic and tariff uncertainty.

Even with this lower volume, we were able to maintain an adjusted operating margin of approximately 31%, reflecting the benefits of cost reduction measures, pricing and productivity. Looking ahead, we expect sequential margin accretion in the fourth quarter, driven by continued operating discipline, resulting in CPI's full year adjusted operating margin to be between 29% and 30%.

Turning to security and authentication Technologies on Slide 8. In the third quarter, sales were approximately $229 million and grew approximately 28% year-over-year, including acquisitions. Core sales increased approximately 9% year-over-year, driven by higher volumes and favorable product mix in currency. The volume growth in currency was driven by our ability to optimize our supply chain to produce more bank notes. We are also benefiting from the recent investments we made in our facilities to increase production. Adjusted segment operating profit margin of approximately 24% increased by approximately 250 basis points year-over-year reflecting the benefit of acquisitions and strong performance in currency. We continue to outperform in currency, maintaining record high backlog levels with approximately 20% organic backlog growth year-over-year.

This, along with our strong supply chain execution and ongoing investments to increase production gives us confidence to raise our full year sales guidance.

Moving to our balance sheet on Slide 9. We ended the third quarter with net leverage of approximately 2.3x, which we expect will be approximately 2.9x at the full close of the Antares Vision transaction. As we mentioned earlier, we are on track to achieve adjusted free cash flow conversion of approximately 90% to 110% for the full year. This strong free cash flow generation will enable us to pay down debt while continuing to invest in organic growth.

Now I'd like to provide an update to our 2025 guidance as shown on Slide 10. Given our continued momentum in SAC, we are increasing our full year sales growth guidance to a range of 9% to 11% from the previous range of 6% to 8%, and reflecting the outperformance in currency, partially offset by a reduced sales outlook for CPI. We are also updating our adjusted segment operating profit margin to approximately 25% for the full year from approximately 25.5% to 26.5%. Primarily driven by the flow-through of lower CPI volumes and additional costs we are incurring as we increase our international currency production. With these updates, we are narrowing our adjusted EPS guidance to a range of $4 to $4.10.

Looking ahead, I'd like to provide our early thoughts on 2026 sales -- in SAT, we expect mid-single-digit core growth, driven by favorable product mix in our U.S. currency business and continued strong performance in international currency, supported by our robust backlog and investments to increase our production. We expect core growth in the authentication business to be mid-single digits, benefiting from increased pricing discipline and cross-selling opportunities.

In CPI, we expect flat to low single-digit growth overall with service growing in the mid-single digits. In our hardware products business where we serve the gaming, retail and financial services markets, we expect flat to low single-digit growth.

Finally, we expect vending to be approximately flat year-over-year, reflecting the ongoing impact of tariffs on demand. We'll provide additional guidance for 2026 during our Q4 earnings call early next year.

Now I'll turn it back to Aaron for his closing remarks.

Thank you, Christina. In closing, I want to reiterate a few key points from our call today. First, our Q3 performance was in line with our expectations with strong revenue growth, healthy margins and excellent free cash flow conversion. Second, we continue to build momentum in our strategic growth areas. International currency continues its strong performance, and we're taking actions to maintain our momentum.

We're very excited about the trajectory of the U.S. currency business with high single-digit growth expected in 2026, along with the launch of the new $10 bill. Our authentication integration is on track, and we're converting more customers to our advanced microoptics technology. In CPI, we're making good progress, growing ARR in our service business into new higher-growth end markets. And finally, we're taking meaningful steps to expand NXT into adjacent markets with growth tailwinds with our recent announcement to acquire Antares vision. While we've been busy, and we're focused on executing our strategy to be a market leader, providing trusted technology solutions that secure, detect and authenticate our customers' most valuable assets.

With all of these actions, we are well positioned to accelerate growth in 2026 and beyond. And I'm excited to share that we'll host an Investor Day on February '25 in New York City, where we'll share more details on our strategy, growth opportunities and financial priorities. And I look forward to seeing many of you there.

In closing, thank you for your time this morning, and I'd like to again thank our dedicated team around the world for their commitment to our customers, our communities and all of our stakeholders.

And so with that, operator, we're now ready to take our first question.

[Operator Instructions] Our first question is from Matt Summerville of D.A. Davidson.

A couple of things. First, -- so first, on the premise side of the business, if you're booking in the '27, is it safe to assume you're effectively sold out for '26. And if that's the case, how does this inform what you're doing from a capacitization standpoint in curves you overall, whether it be in multi, whether it be in Sweden, will it be in New Hampshire.

And I guess how much more factory floor flexibility do you have today to accommodate the growth?

Thanks for that question, Matt. And you're right, currency and particularly international currency has just been a standout for us here in 2025. And we're really bullish on the outlook as we look forward. Some customers are wanting orders now shipped into '27. So we're taking that. So I wouldn't quite say to use your words were sold out for '26. I would say we are very confident in the backlog and the position it's put us in, in '26 to actually take some of these actions you're referring to. And it's really due to a combination of things.

It's both customers reordering their current micro-optic designs. There's also customers moving forward faster redesign their currency to get ahead of counterfeiting and specking in our micro optics. And so where we're at today is we're looking at both organic investments in the near term. That's primarily OpEx in terms of adding people and optimizing our own production. It's also working with outside partners. And to your question, that's procuring substrate materials, where that makes sense for us, that's a lower margin part of the business.

So that's where we'd want to go out to the market with partners. And then also looking at partners as they would do some printing of bank notes for us as well. I believe as we look forward, and as you know, Matt, we're going to look at continued investments in those core micro-optic facilities where we've already made investments and have the ability and space to increase production. And that's something we're certainly looking at for 2026 and beyond. And quite frankly, it's a great investment and a great return for our shareholders, investing in core growth.

So we're really excited about that as well. So I think we're in a very good place. But as you can appreciate, we're taking it very seriously our role here of keeping governments fully loaded with their currency. And that's really coming in our international business and through primarily emerging markets and while the backlog is high, the funnel and the sales outlook is equally high, which gives us high confidence in this business as well.

As a follow-up, maybe just touch on if USD is growing high single digits, I guess, why wouldn't -- if you have all this international goodness, including volume and value rising market share gains, new redesign with micro optics coming faster and the backlog and the order trends you're talking about in the funnel, how does that not equate to a healthier organic outlook for SAP in 2026?

It's really 2 things, Matt. And it's a good question. It's the balance of your first question, which is looking at how we're optimizing the supply chain and just overall production. So those are trade-off decisions that we're making. And then the second, and it's simply the math is we're going to have really strong comps to compete against just due to this overperformance and how international currency is exceeding our expectations.

So in that way, it's just simply the comps. And we just want to have a very prudent, balanced approach as we're studying this outlook going into 2026.

Our next question is from Bob Labick of CJS Securities.

So I wanted to start with -- could you maybe dig a little further into what was the delta versus expectations in vending? Kind of what happened now between now and a few months ago and expectations? And is this a kind of signal of a larger change? Or is this just a lumpiness cyclicality? Or how should we think about that change?

Yes. Thanks, Bob for that. And maybe I'll just put that in context to CPI overall to give you give you some added color. And I think the real point we want to make is we're taking just a very prudent approach to the outlook going forward, particularly in Q4 and to Christina's prepared remarks for 2026.

To your question, when we think about vending, this has just been ongoing order softness after the price increases that we enacted due to tariffs. And in Q3, that business was down in the high single digits. And so we expect it to be down in Q4 as well. And it's just continuing delays of customers sweating the asset, pushing out the decisions to buy as we raise prices. So our assumption here and again, to take a prudent approach is that's not going to change into Q4.

At some point, that dynamic does have to change. But again, we just want to level set for 2026. I think the real stand out here for us in the quarter when you back up to CPI is gaming with strong double-digit growth in Q3, performed as expected and good order growth. in gaming as well. And then our services business, where we've done a lot of investment to improve productivity and add some new service tools in is growing at mid-single digits. And we expect that for the full year. We expect full single-digit growth next year as we're winning new service contracts, improving our ARR outside of the legacy CPI equipment. And that's a very optimistic outlook than we have for our CPI service business going forward.

I think the other hardware businesses and vending will continue just to have a very balanced prudent approach to the outlook based on what's happening macroeconomically.

Okay. Great. And then just, I guess, for my follow-up, you mentioned in your prepared remarks, you're starting the kind of upgrading De La Rue sales by adding micro optics versus their previous security products. Can you maybe dig into that, talk about how that works, what the opportunity is and how it impacts P&L and margins over time?

Yes, Bob, and I appreciate that. This is an area I'm really excited where we're heading in appreciate the hard work the team and authentication has done since we closed De La Rue in May. So through Q3, it's really just 4 months that we had De La Rue in the portfolio. And from day 1, really pre day 1, we've always focused on synergies and executing those both operational and commercial. And this one that we're talking about here is a little bit of a combination of both, where we originally came in and identified some legacy De La Rue holographic products and went in and did our CBS approach here using our 80/20 toolkit to decide to sunset some products and transition customers to micro optics that will be complete as we exit midyear next year.

What we're finding is very good success, moving these customers from a very good technology that De La Rue had but into really the leading, most differentiated anti-counterfeiting technology in our micro optics and with that, we're going to see a significant lift in gross margin with those customers as well as increased stickiness because they moved into a very proprietary product. When you put that all together, Bob, we're on track for our synergies that we have communicated.

In fact, this program is slightly ahead of schedule and feels very good in the traction that we're getting, and we expect to your question on margins, as we get into the fourth quarter, our authentication business is going to be in the high teens in the fourth quarter in terms of OP. And for all of next year, we're going to be exiting the year approaching 20% operating profit on track to what we said we were going to do last quarter.

Our next question is from Damian Karas of UBS.

I wanted to ask you guys for a little bit more clarity on the redesigns of the -- in the U.S. currency business -- so you mentioned the $10 will ramp production kind of in the middle of next year. So are you basically in kind of wait-and-see mode until you get the green light on launching or kind of anything else on your plate until then with respect to the $10 dollar and then on the $50 note that you mentioned you're starting to work for which will ultimately launch in 2028.

Help us just understand like the financial model around these redesigns on that $50, is that just like a cost item for you guys right now as you're spending on R&D and I guess, SG&A? Or would you actually start capturing some revenue at these early stages?

Yes. Thanks, Damian. And again, we're just -- I appreciate the question incredibly excited about what's happening in this U.S. currency business. As you know and have been following us for a while, which we appreciate, it's been a long time coming, but we're at that inflection point as we get into 2026.

The $10 program is just really on track. We have upgraded our equipment, as you know, in the first quarter. We've been running qualification pilot runs as we're exiting this year and working closely with the BEP on the order forecast -- so we're already mid next year to go in what I would just call full-scale production mode of the new $10 bill, that's going as planned, right on target. And I had the opportunity just a week ago to visit our facility in Dalton, Massachusetts with the team, and they've just [ done ] a phenomenal job getting ready to the launch of the $10.

So again, I would just say, going as planned, we consider that in the outlook Christina mentioned for 2026. As it relates to the new $50, I think this is just an important milestone in the continued decade-long progression of this new U.S. currency series and another key proof point in what it's going to mean as we progress for the SAT segment. In terms of where we're at right now, Damian, I don't expect nor should you expect or anyone any real financial impact from it? In 2026 or even as we get a little bit into '27, what's important here is that we're in the design phase working with the Bureau in grading and printing and the Fed on incorporating more advanced security features into that build and currently exist today in the $50, very similar to what we did with them for the '20. And I think that will be more apparent once the BEP and the Fed announces the new design, which we would expect sometime let's say, in the middle part of 2026.

In terms of just what it means for us, I always go back as we've discussed to you just look at the variable printing cost of the current denominations where the current 100 cost about $0.10 in variable cost, the $50 and $20 are somewhere between $0.05 and $0.06, that delta, while it's just a few pennies, obviously, on several billion bank notes is a material number, and most of that is due to advanced security features, some of which are ours.

So let's just give you some bookends on how to think about it. As we get into certainly '26 in our Investor Day, we'll provide a little more context on what that means for us when you look out these next few years. But feel very good, very excited about where this is headed, Damian.

That's really helpful. And then I'd like to follow up on CPI. It sounds like really it's just vending to kind of the incremental source of weakness in the lower guidance there. would you happen to be able to give us a sense on your CPI orders in the third quarter. Like if you excluded vending, what were the rest of the orders overall trending on a year-over-year basis? And I guess just kind of thinking about as we get past these vending headwinds, do you think that the CPI overall is kind of back in growth territory when we get into the first quarter of next year?

Yes. That's a good question, Damian. I think I'd go back to Christina's comments that we just want to be prudent on the outlook to your last point there in 2026 with kind of a flat to low single-digit growth dynamic in CPI. More specifically, when you think about the orders that came in again, our service business, I'll start with that is going well. There's always a backlog of service orders that's growing, condenser with the mid-single-digit growth that we're seeing in the business. We expect to fully see that and keep investing in it going forward. Gaming, which is part of our hardware business, up double-digit orders which, again, is consistent with where we were expecting and how that market is playing out.

So that feels good. So really, the balance is in the biggest to the point you made is vending. So again, if we see some positivity, whether that be from tariffs or just generally needing to trigger buys for normal wear and tear that will have some positivity for us, but we're, again, being prudent on that outlook. And then I think retail for us has been a little bit of a mixed result with the -- some are performing better than others, and you could see that in some public results this week, still strengthen our custom scope market, but net-net, that OEM business is the biggest and the results are mixed, making them down for us to be specific here in Q3. And financial service in terms of the equipment orders down a little bit in Q3 as well. And we think that's just what a lot of other companies are seeing in some shorter cycle businesses, just a little uneasiness in the macro environment, and that's playing out in just some incremental delays in ordering in those 3 areas.

Our next question is from Michael Pasendorfer of Baird.

This is [indiscernible] on for Mike. So I just wanted to follow up on the upgrading of some of the De La Rue to microoptics, are you -- and part of the 80/20 application there, is there walkaway revenue that we need to be considering as we move into next year? -- what kind of pushback are you getting from customers? And maybe a little bit of color on the receptivity from kind of the sunsetting of the holographic product and moving toward the micro-optic and more proprietary technology?

Yes. Thanks, [indiscernible]. I think this is a really good area to your question of just how we're executing the integration as we had expected. In terms of the 80/20 process, which I think you're very familiar with, in terms of material impact on revenue, there is none. It rounds to zero effectively because we're seeing not only most customers transitioning to the new technology, which comes at a better price point and better margins. Those who won't be again, nets out effectively for us.

So the beauty here is we've simplified the offering. We have a better and more simplified supply chain, higher margins and increased stickiness with the customers. generally, with very few exceptions, the receptivity is excellent. And most customers are happy for us to be bringing more advanced technology to them and walking them through what it can mean for their products. And that's been true the entire authentication integration from the first acquisition of OpSec to now putting OpSec and De La Rue together to form a holistic one company. The customer receptivity to this has been very good, and that gives us a lot of confidence that the thesis here is correct as we've created a true market leader in authentication technologies.

Got it, Aaron. That color is super helpful. Maybe switching gears to CPI. Just based on the pieces that you gave us for the 2026 framework. How should we be thinking about the impact to margins as we move into elevated contribution from service in terms of growth rate relative to some of the other pieces of that portfolio. and obviously, what's going on with vending.

How should we be thinking about the margin trajectory in that segment as we move into 2026 and that mix impact?

Well, maybe I'll start and then I'll turn it over to Aaron. And just worth repeating that we have high confidence in our full year target of 29% to 30% margin for CPI. So continuing to have very disciplined operating execution even with lower volumes that we're experiencing. And as we said in our prepared remarks, we expect that softness to continue. We're taking a prudent approach to our outlook for next year.

We also expect to continue driving this very disciplined CBS cape and so you can expect to see our margins in the same if not a little bit higher with accretion from the synergies that we're driving and the execution of pricing and productivity initiatives.

Yes. Thanks, Christine. I'd add a little more to what you said. The service business very profitable for us. And so that is a positive impact for us in and across CPI as well as it's a very sticky business. So we like that very much. And we're going to keep growing that, as you can see in our results and our outlook. The focus for the hardware business and our vending businesses it's really about maintaining the high operating margins that we have in that 20% to 29% to 30% range.

As Christina said, I think this is excellent work by the team despite some softness in the top line that we're maintaining this near 30% margin. And that's execution of productivity, cost CBS toolkit, et cetera. And then I'd be remiss not to say that another hallmark of this business that comes from hardware in vending is great free cash flow, really an excellent free cash flow profile. And that's another key metric as we look at CPI to maintain the high margins, continue to generate this very strong free cash flow and continue to invest and grow our service business and drive recurring revenue.

That's really the playbook of CPI as we get into '26.

Our next question is from Bobby Brooks of Northland Capital Markets.

In your expectation of the high single-digit revenue growth for the U.S. currency business next year, does that bake in the uplift of what I think is safe to assume a content uplift in the new 5. I'm just trying to get a gauge on if there could be upside to that outlook when the new design is initially revealed.

Bobby, I'll start on that one. And let me just for a point of clarification. It's the $10 note that we're redesigning right now that will be launched next year, right, that we're super excited about. And so the high single-digit guidance really based on the order that came out earlier in the quarter from the Federal Reserve, which had that favorable product mix, as you remember, toward the higher denomination notes. And that includes the $10 note in there as well as increased volumes for the $50 and $100 bill. So we're super excited for that program to launch next year. And as a reminder, the timing of that is is out of our control. We're not controlling that release. But we are prepared to do production, as Aaron said in the prepared remarks, toward the middle of the year. And so we'll expect to start seeing that production happening in the back half of next year.

Got it. So it seems like it doesn't necessarily bake in what uplifting content might look like on TAM.

.

Yes. No, it does include the $10 node based on that order. And it's -- remember, it's a small piece of what's happening next year just based on the timing of the launch, right? So if we bring it into preproduction in the middle of the year, it's not a full year. but we have high confidence in that sales guidance range that we gave of high single digits for U.S. currency.

Got it. I appreciate the color. And then -- so on the international currency sales, obviously, that remains red-hot. And in your prepared remarks, you had mentioned that 3Q was stronger than you had forecasted. And I was just curious, is that really a result of just timing, like country saying, what we wanted in November, we actually want delivered in September? Or is it them having more, let's say, 100,000 notes, and then they're coming back to you and say, "Hey, we actually want 100,000, 110,000 nodes. I'm just trying to understand the drivers of the upside there intra-quarter.

Yes. Bobby, I'll take it and hand it over to Christina. It's a little bit of customers wanting the currency faster -- and we've been working to find ways to get it to them earlier. And that goes back to my comments, I think in 1 of the questions around the different actions we're taking to just improve shipments or increase shipments both using our own internal productivity tools and adding resources and also increasingly working with some partners, which come at a little bit of a higher cost. Which is what you're seeing in the segment financials. We don't think this is changing, and it's simply based on the facts of this backlog remaining. And as you can see, we're getting orders to fill the backlog that we're shipping in our sales funnel is incredibly strong.

So what's happening here, we strongly believe is a dynamic where more customers, particularly in emerging markets, are needing more currency to the first part of your question. At the same time, operating the redesign process to have more anticounterfeitting features and that was a key reason for the big win that we announced in our prepared remarks in Latin America was to help a country that was motivated and accelerated their redesign to get our very high-end anti-counterfeiting features. And we're seeing that play out in particularly emerging markets all over the world. Hope that helps, Bobby.

Extremely helpful. I appreciate the color. And if I could just squeeze in 1 more. Of the 8% core sales growth in SAT, that was really strong, but was that really entirely driven by the increase in international currency? Or were there any authentication wins or expansions that were a part of that core sales growth as well?

Yes. Thanks for that question. It's primarily international currency, Bobby, but we did see some favorability in volume and mix in the U.S. currency side of the business, and authentication continues to perform as we expected.

Our next question is from Damian Karas of UBS.

Just a few follow-up questions. First, I wanted to ask you about Antares. What's -- how should we be thinking about the business organization in a world in which you have Antares just thinking about like future segmentation. And would you expect to include Antares in your initial 2026 guidance when you report fourth quarter earnings in a few months?

Thanks, Damian. And I'll answer the first part and hand it over to Christina for the second. I'd tell you, I just am incredibly excited by the announcement we made a few weeks ago on Antares. I think it's a very key milestone that you know in this evolution of the company that's further strengthening our position -- it's not only expanding our TAM, but aligning us in the market is very clear secular tailwinds with a clear technology leadership position in both equipment, services and software.

So we're on track to the normal process of regulatory approval that we discussed when that comes to an end, -- we'll make our first tranche of estimates that it will be above 30% of the company. We want to wait -- see that through and really not get ahead of ourselves into any segment alignment discussions, just let that process naturally play out as you can probably -- and as we get into certainly early next year in our Investor Day and our Q4 earnings call, as that progresses, we'll solidify the alignment as well as some of the guidance.

But Christina, I'll let you take the other half of that.

Yes. And I'll just reiterate how excited we are to bring on tries into our portfolio. In terms of guidance, setting, we will not include our initial guidance. We'll wait until at some point in 2026 after that, public tender process is completed, and then we'll do an off of at the guide. And so that's [indiscernible]

And Aaron [indiscernible] ask you a little bit about the strength you're seeing in the service business at CPI and building out that sort of footprint. Could you just remind us -- are these kind of like generalist service contractors that are kind of doing service across the various end markets and customer base? Or are there any particular end markets where you're seeing a lot of it service stand out?

Yes. Thanks, Damian. I would say these are not general perhaps based on the definition in general of the service technicians. These are very highly skilled and trained not only in CPI equipment but in ancillary equipment, other people's equipment, typically, in the front end of the stores, fitting-out areas, kiosks, things of that nature. When you look at our services business today, about 15% of CP growing mid-single digits, it's actually spread across many end market verticals.

So -- and that's the key to the margins and the optimization of the business that we have good density in a geographic area where we're deploying the service technicians. So today, based on the legacy of that business, about 60% of it is concentrated in financial services -- and it's really aligned to the legacy CDI and Cummins Allison products that came into the portfolio in 2019. The rest though are in other areas like gaming, retail, vending even in market. So it's really a nice breadth of offerings that we have kind of with the same type of equipment and our key wins this -- that we announced this quarter are all with kiosks. So these have nothing to do with cash and coin operations. These are the type of kiosks you see, whether you're at a doctor's office or a retail establishment a checkout in a particular restaurant, et cetera, that just need normal service contracts and maintenance.

And so it's an ARR type business for us now, growing and very -- and actually diversifying with all of these wins, which is why I'm particularly optimistic about what team is doing.

I am showing no further questions at this time. I would now like to turn it back to Aaron Saak for closing remarks.

Thank you very much, operator. As we conclude today's call, I'd just like to again thank the entire Crane NXT team for all of their hard work and their dedication over the past quarter. As you've seen today, we've taken and continue to take significant steps to evolve the company, and that will continue as we go forward.

And as a reminder, we look forward to telling you more about this in our journey ahead during our upcoming Investor Day on February 25 in New York, and I look forward to welcoming you all there. So thank you again for your time this morning and all of your questions, and I hope you have a wonderful week.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

[Audio Gap] Matt Summerville, senior analyst with D.A. Davidson. Alongside with me today, we have leadership from Crane NXT including Aaron Saak, the company's President and CEO; Christina Cristiano, the company's CFO. I think in the interest of time, given I have a pretty good number of questions here, the preference was to just dive into Q&A.

So with that, I think a good starting point, recent acquisition announcement with respect to Antares, if I'm pronouncing that right. Can you touch on the strategic rationale of the TAM and how this business is differentiated versus competitors in the space?

Sure. Thanks, Matt. It's good to be here again. Thank you for the invitation. Well, we're incredibly excited about Antares Vision, the newest acquisition that we announced just a few days ago for Crane NXT. We've been looking at this property, and I have been in conversations with the team for over two years. It's part of our diligence in really cultivating a rich M&A funnel, as you've seen with what we've executed in the last two years with Crane NXT.

Antares itself is a market leader in life sciences and food and beverage end markets around inspection, detection and track and trace technology and really fits perfectly into our strategy of growing -- continuing to grow Crane NXT into the leader in technology around secure, detect and authenticate platforms in multiple end markets. And there are many, many over links with our current core businesses. So maybe I can walk through a little bit of what Antares does to your question.

Think about these two markets: life sciences and food and beverage. I'll start in life sciences, it's really pharmaceuticals is the primary in focus. So take a Lilly production facility where we're making pharmaceuticals in a plant. Lilly and the governments in any country that's distributing those pharmaceuticals wants to ensure that, that product is real and authentic, cannot be counterfeited through the course of its lifetime until consumer takes it. So Antares creates the equipment that helps to apply tracking labeling onto that, let's say, vial of a particular drug, helps also provide equipment that takes it into the casing and the packaging containering of that product. And then also at what we call aggregation of that product into larger containers, ultimately shipment to a pharmacy or to a hospital where it's been obviously prescribed.

Underneath all of that, it also provides the software that actually enables that track and tracing of the product. And it's uniquely positioned as the only provider in the industry that makes both the equipment and provides the software. So that's really part of the core differentiation of the company. Now along with that equipment, it offers aftermarket services and commissioning services for the equipment. And this can range from anywhere between a $50,000 piece of equipment all the way up to over $1 million. So this is a very sophisticated capital that's going into either food and beverage or pharmaceutical manufacturing companies.

We find that very similar with a lot of overlays to our current businesses. So if you think about Crane Authentication, where we're making labeling technology to keep products from being counterfeited. Some of that technology goes into the pharmaceutical and food and beverage market today is actually applied with Antares Vision equipment. When you think about the equipment itself, it's very similar to what we make in CPI, large form factors of sensor and detection technology. And then we have a larger service business today than Antares, but functionally the same, providing aftermarket field services.

And what Antares brings to us really accentuates us is the software, the track and trace software. So we see a lot of synergies across the portfolio. And really, my last comment will be how it opens up the TAM for Crane NXT, adding about $2 billion of TAM in life sciences and food and beverage that continues our ability to expand and grow. So when you put that together, it's going to be a mid- to mid-single-digit plus grower. EBITDA margins at about 15%, and we see getting those into the low 20s over the next several years.

Sticking with the same topic, can you talk about expected cost synergies and where there might be commercial synergy opportunity with respect to this business and the core operating segments of Crane NXT?

Yes. It's part of the thesis, just like we've had with our two other larger acquisitions that we're buying companies that are coming in at mid-teens EBITDA -- adjusted EBITDA margins with a clearly defined path to synergies to get them into the low 20s. And we see that over the next 3 to 5 years. For us, that's really our special sauce, if you will, of deploying the Crane Business System in to drive productivity in the factories where they're making the equipment to optimize how they do service dispatch. Again, we're a much bigger provider of that than they are, so we can bring some efficiencies into that operation.

And then the classics of scale, of rooftop consolidation, procurement, all of those have led us to synergy targets that are around EUR 12 million is our target that we've discussed. Now there's also commercial synergies. When you think about where the life science market is headed, particularly around government regulations that is growing in emerging markets where we are also very close to those governments as their currency provider. Now while those are different divisions of the government, they're typically very interested in leveraging trusted relationships. So we see some really interesting channel relationships as well as applying our authentication technology into the packaging.

Very good. Maybe moving to authentication. Can you remind us the size and the current profitability of the two businesses that you're sort of combining to form that authentication platform and actions you've taken in order to drive the businesses towards your stated profit target of 20% OPM, I think, exiting '26?

Yes. Sure. So just as a reminder for those who know the company, it was a little over a year ago, we announced the acquisition of OpSec. That was our first major acquisition for Crane NXT and then in May of this year, we closed De La Rue Authentication Solutions. Combined, that's a roughly $260 million annual run rate revenue business. And at the time we closed De La Rue, we rebranded the business as Crane Authentication. And that was always part of the thesis to bring these businesses together helps us lower SG&A costs, combined management teams and sales teams, also rationalizing products and some rooftop consolidation as well.

So if you look through kind of the classic operational synergies, those are the things we started doing in haste in May. That is bringing the business from today about a 15-or-so percent EBITDA business, up to exiting next year, we have very high confidence we'll be approaching 20% EBITDA as we exit next year from these synergy actions. So going exactly as we had planned, a lot of work by the team and response from the customers has been very positive to bring these two brands together under the Crane Authentication banner.

Maybe just spend a second discussing what you're doing in authentication in terms of the three buckets, right, which are brand, government and ID security, maybe size up those relative TAMs and what you see from an organic growth standpoint?

Yes. In total, we -- and this will be true in all three of those segments. We think the market is growing about mid-single digits, and we'll align to those markets, perhaps a little bit better as the future unfolds. Probably the most interesting part of it arguably is the brand authentication business because that's what many of us go out and buy day to day, and we use the products. In fact, many people here in this room today are using the product. If they turn over their laptop, if it's a Microsoft system laptop, you'll see our product on the bottom, as the hologram and the authentication label with the serialization of your operating system. That's a Crane Authentication product.

It's also in hats and the paraphernalia of most of the major sports leagues around, particularly here in the United States and into industrial products now increasingly as well. All because the brands want to avoid counterfeiting. And they also want to understand the licensing revenue streams and how those are playing out from the point of manufacturer to the point of consumption with the consumer. So those are all products that Crane Authentication in the brand space.

TAM, in that case, several hundred million dollars. And we're a major player, if not the preeminent player in that space today and growth coming mainly from share of wallet expansion with the existing customers as they add more on to their products, but also a lot of white space of people and products that the brands that have not yet authenticated their particular articles. The second is Government Solutions. This is a market that is primarily focused on tax stamps. That's almost exclusively outside the United States. So if you bought a wine bottle per se, and it's got a label around it and some interesting kind of authentication label could be a hologram, could be a QR code. That's our product and we're the leader in that market. Again, a couple of hundred million dollar plus TAM, growing because the fundamental value prop there is governments want to retain their tax revenue.

And they want to make sure that they're collecting that on the sale of certain products and applying our authentication label with the software that tracks it is the way that they do that and ensures compliance. And then the third and really the biggest TAM and the one we're the smallest in is ID verification. So through the De La Rue acquisition, we now make passports with security features in for a few countries and also the what are called national ID cards. It's the equivalent of driver's license here in the United States, but for different countries. That, we think, is over $1 billion plus TAM of which we are always looking at ways to expand in that market and the combination of what De La Rue brought with our authentication technology is a natural fit and one we think is going to continue to grow.

Again, government clients, very similar to our currency business, looking to add increasing technology to prevent the counterfeiting of their IDs. So those are really the three go-to-market offerings inside of Crane Authentication.

Sticking with authentication for another couple of minutes. What sort of penetration rate do you see across the three authentication verticals? And what end markets do you find the most meaningful lack of penetration and how you plan to address that?

Yes, I'll take that and go market by market. Inside of brand authentication, it's the industrial space by far. It's very -- it's negative -- you can round almost to 0 in terms of penetration that we think is going to continue to grow, particularly in high-value assets that the OEMs are worried about counterfeiting and also warranty claims on products should they fail because of counterfeit products. So I think that's a really interesting growth area for us in the brand space.

Tax stamps, it's interesting. Everywhere in the world, governments want more revenue. And what you're finding is they're starting in the Middle East and Africa and Southeast Asia where that business is really centered to go further into other types of products. So it used to be vices. It used to be your alcohol, cigarettes, things of that nature. Now it's going into more specialty food products and things that are really unique to those countries and they want to get increased tax revenue, and this is a way to do it. So that I think that's got a healthy growth to it.

And then IDs, what's interesting there is it kind of scales with GDP and population growth, but it's very similar to the growth algorithm of currency. So you have a volume growth dynamic, but you have this worry of counterfeiting occurring on the IDs. And I think that's a space where the sophistication of our anticounterfeiting features with embedded chips that are in those products, updating the paper pages in passports is really yet to be exploited. We have a belief that's going to be a very nice growth vector for the company long term.

When you think about brand, are you able to quantify for brand owners, the amount of theft, et cetera, or whatever the right term is, counterfeiting that CXT has effectively stifled with your technology? And have you thought about pricing to that level of value you're providing?

Christina, do you want to take that?

Sure. I mean we work with several of our customers to create basically the ROI on our proposition and just explain to them, in fact, it's a big part of our sales pitch, here's what you've been missing out on by not having these authentication tools in place and lost sales. So that's definitely a part of the value prop of what we offer. And that's something that once you get somebody on board, once they're aware of what they're missing out on in terms of lost sales, it's very sticky now, once they introduce our software and tracking technology that they're not going to switch out, right? It's something that will stay with them now. It's embedded into their own ERP in some cases, into their process, which gives us a lot of recurring revenue in that regard.

Perfect. Can you elaborate on last quarter, you talked about a new product launch in your authentication business called Fortress. I don't recall you talking about too many of those at least historically in the past. So maybe the significance of that product and customer feedback.

Yes. Sure. We talked about it, we launched that. It came actually out of the pipeline of what was being developed in De La Rue, and we knew about that, obviously, through our diligence, found it particularly exciting. And I'll take a step back, Matt, maybe just talk about kind of where we see technology going in this authentication space and always trying to be ahead of it by a step.

If you go back many years, you would just have a simple label on a product. It would have a brand. And you would know that that's real. And of course, it's easy to counterfeit. Then we've introduced holograms two decades ago. Again, a good feature. Progressively, you can get more advanced. But again, there are some folks who can copy those. That led to the creation of what we call our micro-optics technology that's in the U.S. currency that's never been counterfeited, much more sophisticated, but it's a physical visual recognition by the consumer.

The next step is applying surface treatments and coatings that are in addition to all of those other features. You still have labels, you still have holograms, micro-optics that can be verified by a different source. You can think of RFID kind of plays in this journey. But what brands want is something that doesn't disturb the look and feel of the product. So that led us to our TruTag technology that we acquired a little over 1.5 years ago that uses a smartphone to identify if something is authentic or not on top of these other features.

Fortress is the next step. And what it brings is not only the identification using a smartphone that the product is real and genuine, you can trace it all the way back to the point of manufacturer because that technology, it's a material surface coating is put on the product at the moment of manufacture. So there's a time stamp on it as well. So you effectively have two types of authentication occurring, the label, then the Fortress materials technology that reinforces it and requires them to be fully authenticated and makes it very hard to counterfeit.

And so that's being rolled out and trialed with customer in the Middle East. It's gone very well for us. And we think over the next year or so, we'll roll that out to some more customers that are looking for that next level of protection. Ultimately, it leads into digital fingerprint of products where you're looking at just the digital characteristics of a product and authenticating it simply based on its different patterns that you'll recognize with your smartphone. So we see all of that as the trajectory that we're headed in. All of those are technologies that we want to be the leader in. And I think we're in a very, very good position to follow that and even drive that technology evolution.

Very good. Maybe let's switch gears over to the U.S. government side of currency. How has demand played out this year with respect to executing to the 2025 print order midpoint of the range? And most likely -- what do you view as maybe the most likely scenario, both for volume and mix as we start thinking about the '26 release?

Yes, I'll take that. For this year, demand is playing out as we expected it. And so the year was very significant in that at the beginning of the year, we took some of our production offline to upgrade our equipment in preparation for this new series of currency, they'll begin to launch next year. And now we've upgraded our technology to support this whole 10-year program. So that was the headwind in the first quarter that was well communicated, completed successfully, and we're right back on track with production after that planned shutdown.

And so the year played out -- is playing out as we expected. And as we think about the order for next year, that order of -- from the federal government of their demand for 2026 is not yet public. So there's not anything that we know or can share at this time about that. But as we look ahead and we think about just in terms of volume and mix, you can assume a flattish volume, let's say, to this year. And what really is the differentiator for us is the mix component. So if the higher denomination notes like a $100 bill or a $50 bill for example, has a higher mix, that's more revenue and profit for us because of the technology content.

And so what we're really looking for as we wait to see for the new order to come out for next year is what will the mix be? And when you look at the cycle over the last five or so years, you've seen that in some cases, there's been a larger print of higher-denomination notes, for example, during and after COVID. And then right after that, a lower print of -- a lower demand for those higher denomination notes because now they needed more transactional notes. And so if you continue to follow that cycle, it would be reasonable to expect, Matt, that the mix would start to trend up again simply because for the last few years, we've been doing more of the lower denomination notes.

So I guess the bottom line on that, when that release comes out, people should be paying much more attention to mix inside of that print order as opposed to the absolute volume?

That's right.

That's right. What I tell you I'll be looking for is volume of $10s, $20s, $50s and $100s. That's where you get to more technology in the note. It's not just the micro-optics, it's also the inside the substrate that's different. And of course, the $10 is a revalidation of the launch of the new $10 bill, which is incredibly important as a proof point for us next year as well.

So let's talk a little bit about that. Can we assume that the incremental content on the $10 will be more than the incremental content you have on the current gen $100 and -- versus, say, the $15 (sic) [$50] and $20. As I think about the variable cost to produce this next Gen $10, I would think that the micro-optic feature is something that probably hasn't been released yet. I would think the width might vary. The number of features ultimately put into these notes may vary as well. We obviously don't know that. But talk about that to the extent that you can.

Yes. Matt, knows a lot about our currency business. So he's typically right all of the time, generally. The U.S. denominations will certainly take a same approach as we've seen in our international business. Central banks tend to operate in some ways collectively in terms of how they design currency and advance it. And the one thing that's always true is when you go through a redesign, you always put more technology into it for counterfeiting. There's no exception to that rule. And when you look at what's happening in the international business, you're seeing exactly this. It's probably why you get to that conclusion of wider security features, more security features, both overt and covert in the bill.

So I think that's exactly correct. And I think the math on why you would see an incremental increase in our own -- the cost to the U.S. government, let's say, is directionally correct, too. We'll wait until the specifics come out. Those will obviously be published. But that's exactly how I would think about it.

Well, this is in the rearview mirror, can you help us understand the impact of the shutdown that you incurred in the first quarter of '25 in terms of the hit to operating profit? Because obviously, that won't repeat in 2026. And there was something I went back and actually looked at this. In the 2024 print order, it actually indicated that $10 would start to print in late '25. Is that still the case?

The new $10s.

The new $10s.

Do you want to take the first part?

You bet. Yes. So when you think about this equipment upgrade cycle that we went through in the first quarter, which had a shutting down a big part of our production -- our U.S. production, that caused a year-over-year reduction in revenue in that Q1 period of about 40%, which was expected. And so the result of that was our SAT segment margin was in, let's say, the mid-single digits versus the low 20s percent, which we would normally expect. And so you're correct to assume next year, there won't be a shutdown in the first quarter, and we'll expect to see that related margin improvement back to those low 20%.

I'm sure you've done a similar analysis that I've done to the annual print orders and what actually gets produced. Are you taking the over under that mix starts to normalize again this year?

Yes.

Over?

We're assuming it goes back to a normal -- towards the normal, same assumptions you're making.

Yes. Okay. Let's talk about the international currency business.

I didn't answer the second part.

I'm sorry, you're right. You didn't, very good.

On the $10s. So we have been piloting the design of the new $10 since last year. That's actually part of the upgrade cycle that occurred in the first quarter of this year to kind of take the last tranche of that through our paper making facility and in some of our other facilities. The BEP is doing there last, call it, pilot qualification runs. I would expect we will be in full production of the new $10 sometime in the middle part of '26.

Okay. That's helpful. So international currency, help us understand how you think about the underlying international growth algorithm with respect to volume and value in circulation, denominational print trends, high-tech security features, market capture and price, how fast should this business work?

All of those, all of those, all right. The international currency business, our international currency business is fantastic. It is at an all-time high in backlog. It's been there, been hovering above $400 million for the last few quarters, as we've disclosed. The amount of quoting volume and funnel has never been higher in this business. And it's fundamentally based, this growth getting to your question on the growth algorithm, is central bankers are worried about counterfeiting. They're watching their fellow central bankers redesign currency to higher security features. If you don't do that, by the way, then you're the country with the lowest, easiest counterfeit currency which no central banker wants to be in that camp.

And when they go to make the redesign, they will always look at the cost to apply the highest grade technology, which is really incrementally a little bit higher than where they're at today, in general, and that leads them to Crane Currency. And to really one other major competitor that competes at the high end of the technology. And that's why you've seen every year us win 10 to 15 new denominations. We are on track to do that again this year. I have very high confidence as we close out '25, we'll hit that number again. And again, increasing our share of wallet.

What's driving it is the counterfeiting concern. What's also driving it is simply the growth volume continues in the market. And for us, the algorithm for our business is when you take these three components of volume growth plus as we redesign more technology in the bank note, which raises revenue and margins for us, plus probably now an increased cycle of people doing the redesign, you get to a very robust business that we have incredibly high confidence in 2026. We're going to see nice growth in that business, and we're booking into '27 and it's based on this technology leadership and these two other dynamics.

Do you hear international central banks talking about an acceleration in redesign work given the upcoming U.S. government redesign cycle? And does that -- or does that not set something more broad in motion?

I don't think it's a -- it is not at least from what I've heard an explicit reason they're going to be doing the redesign, but I think it does play a factor. And what's also true are other central banks doing redesign. So sometimes it's more regional in nature. In, say, the Middle East or Africa or Southeast Asia. If other central banks are going through their redesign and upgrade, it tends to influence adjacent neighbors.

To that trend, specifically, I often get questions on where things like this stand with the ECB in the U.K. and Canada with potential redesigns and competitively, would you be able to maybe participate where I don't think Crane Currency has in the past?

Yes. I think all of those are in play, and we will -- we have a right to play in all of those jurisdictions, simply put.

Thank you. Would you say, just from a market standpoint, compare and contrast your technology to G&D, De La Rue Authentication and OvaTure. And is De La Rue still the primary -- De La Rue Currency, not De La Rue Authentication obviously. Is De La Rue Currency still the primary share donor here? And how long can that continue?

Of those three other competitors, we -- I believe, very strongly would be viewed as the high end of the technology closely followed by G&D. And I would say they're our #1 competitor. Again, that's a private company based out of Germany. Clearly, in the lower tier now is De La Rue and OvaTure. That is -- those bottom two are where most of the share gains would be occurring. It's also occurring, though, Matt, from, call it, lower protection to a higher protection through the redesign process. So it's similar to what's happening in the United States, where you have five denominations, only one had micro-optics. The country is going to go through a redesign and add more security features.

Sometimes that's improving upon our own, call it, share of wallet. It's an existing customer that didn't have micro-optics that's going to apply them now or it's a customer that could have been coming from one of those other competitors. That's the bottom two that's where most of the share gain is. And when you look at the total TAM for us, call it, 1,000 denominations in the world, we're going to end now above 160 at the end of this year. There's a lot of runway for us. So I don't see really in the next five years, any real headwinds to our ability to continue growth in international.

Inside that 1,000 denomination TAM, what -- you said your count is about 160. How does that compare to the top competitors?

So it's going to likely be skewed a little more higher to G&D and De La Rue, mainly based on their heritage. And that's kind of to your point, that's where our wins come from, particularly De La Rue, that typically had all the commonwealth countries, which are a high number of denominations in total. So we would be in that second probably place in total number of advanced technology, but growing the fastest without question.

Then lastly on international. How are you thinking about capacity needs for this business?

Well, this is the interesting, let's say, opportunity we have. I hope every business has this challenge of an all-time high backlog and a need to potentially expand capacity if we continue to win. So obviously, if that's the case, in any situation, our capital deployment will first be to grow our core existing businesses. I know, Matt, you've been to our production facility in Nashua, New Hampshire, for our micro-optics. We've effectively doubled the footprint of that site in the last two years. We have space on the floor to put in additional lines, and we'll consider that.

That still makes it a very CapEx-light business even with that kind of capital deployment. But these are very good decisions to have to make because the backlog is so high.

Excellent. We have just under 10 minutes left. So maybe let's go over to CPI. Help us think about the go-forward secular drivers across the four main verticals here? And what's the right kind of volume plus price top line algorithm that you think about going forward?

Yes. CPI for us, I think long term, as you look out, I would characterize as a low single-digit revenue business. It occupies the #1, #2 space in a very mature market with only one or two competitors in any vertical, high barriers to entry, fantastic margins, right? We're trading at about a 30% operating profit in that business and over 100% free cash flow, if you look at CPI in and of itself. So take that low single-digit growth at the aggregated level and we can break that down to each of our individual markets. Gaming for us in the back half of this year will show double-digit growth because of the comp, coming off of COVID. That will continue to be a low single-digit growth market, we believe, for us, mainly driven by casino gaming demand and machine -- slot machines.

Financial services, particularly with our field service business that goes along with that will continue to be in that low to mid-single-digit growth when you aggregate equipment and services together. The field service business for us is a real differentiator. It's growing in mid-single digits this year. It's where we have about 400 to 500 technicians around the United States that we attach a service contract on to our more sophisticated equipment. And it's an area where, as we announced in Q1, we're growing that business outside of even our own CPI existing manufactured content.

So we see more growth in services, and I think you're going to continue to see us talking more about that and making investments in that business. Then you get to retail space you know well. There, we're seeing a tale of two worlds play out. Self-checkout is growing. We know that. It's even growing with cash and coin recycling that we provide, at low single digits is our belief on that part of the market. But we're seeing a shift in the channel between OEMs historically now to about 50-50 custom self-checkout integrators where the stores themselves are doing that.

And then finally, we have vending. Vending is where we make the entire machine. We provide all the payments from credit card to cash and coin and we're the #1 provider of that in the country to the major bottlers. Again, long term, a low single-digit type growth business.

One of the things that came up earlier today when thinking about this U.S. government redesign cycle, what are the implications that may have for what I would assume is a massive installed base of hardware for CPI?

Yes. Yes. So every cash reader in the United States is going to have to go through a process. And then you can even argue outside that can accept the new U.S. currency. That's primarily going to result in a software upgrade. But as history has told us, when you start going through the software upgrades, and that comes at a price for most customers that it's going to help accelerate or forces a bit of an acceleration of the equipment replay cycle. So we think that's something that will probably naturally play out in '27 and beyond once we get the new $10 bill in circulation and folks see the path to the new $50 and $20 coming over the next few years.

When you look at the four verticals through an 80-20 type of lens in CPI, is there a strategic nature of anything changed here since -- when you joined Crane NXT a couple of years ago now?

I don't -- I wouldn't say it changed, Matt. There's always natural synergies between the currency business and the CPI business. One creates the currency, the other detects it and authenticates it, hence the nature of the company. So I think in the hardware and the aftermarket services, we like that very much. Certainly, when you start to look at the vending segment, that's a different comp set of competitors and technologies and what we do. You could argue maybe that's a little different than the rest of the core.

But right now, our focus is on continuing to grow those businesses, take the free cash flow, deploy it into areas that will grow as fast or faster than the core. So always something and from a portfolio perspective, we're going to keep looking at.

Very good. I know we just have a couple of minutes left here, but I want to talk more about services. That's something you mentioned. You've been announcing more chunkier, for lack of a better word, win in services. Talk a little more broadly about the scope of what you're providing and where ultimately you see share donation.

Yes. Well, let me talk about a win. It's best through a use case of where we're winning and kind of the thesis we have is if you go back to Q1, we announced a very substantial win with a big box retailer here in the U.S. where we had started our service business providing repair and maintenance, time and material type services for our own equipment. They were not happy with their local service provider that was effectively servicing the entire front end of their store. So the entire checkout environment from the point-of-sale hardware to the credit card terminals and all the ancillary products, the scanners, et cetera, that we all use when we go through a checkout.

We -- because of, I think, very good service we had and a national presence, which not all service providers have, we're able to offer to them a regional coverage they could not get from a patchwork of local providers with better SLAs that actually cover all of that equipment. So it was a -- it's a unique differentiator for us to compete against, call it, a local mom-and-pop or a regional player where we can go to a national level, provide SLAs and report out on those and guarantee those for the retailer and really compete and win at a very attractive price point for us because what they really want is uptime in their equipment, right?

It's less price sensitive if you can guarantee uptime, which we can do. So we see a lot of opportunities to win in that area and consolidate the market around our national presence and ability to service the entire front end of the store. So that's where we've got some wins. Again, the business is growing at healthy mid-single digits this year, and I don't see that changing actually in the year ahead.

So we talked about technology and authentication, talked about technology and currency. This business recently launched a new product that you felt worthy to call out as well called JetScan. Can you maybe spend a moment on that?

Do you want to take that?

Sure, yes. I mean when you think about just the life cycle of products and what we're offering in the market, this JetScan Ultra is just the next level of technology that just gives greater efficiency, greater speed to our customers. And so really, it's just showing the investment we continue to make in our products to stay competitive in the CPI marketplace. And so we're really excited about what this will do for our financial services customers specifically, which is just give them, again, a higher-performing machine that will continue to service, as Aaron said earlier, our offering goes all the way through service in the aftermarket as well.

And then lastly, just maybe to close out here. Let's talk about balance sheet, free cash flow. I think the leverage profile of the company is going to approach 2.9x following the deal you recently announced. What's your sort of plan for deleveraging to kind of get back into more of your comfort zone, I guess?

I think we're in our comfort zone to be quite honest. We've always said we would take leverage, we've deployed the capital, first to organic investment. You've seen that with the upgrades we've made to currency, and you've seen that firsthand through some of your facility tours. We pay a competitive dividend. We do that. It's about -- it winds up to be about a 1% yield, and we've increased that each year. So we're committed to that. The balance really today has gone to M&A, and we want to make sure that we're always staying below 3.

We said kind of only under an extraordinary case would we go above 3. So we really want to stay below 3. So what Antares Vision does is by the time we close the deal, it will bring us to 2.9 and then we will just use our free cash flow to pay down the debt. And I would expect by the time we exit 2026, we'll be down back into the low 2s. As we get into -- assuming no more deal flow, we get into 2027, we'll get below 2 and again, our free cash flow is very strong. So high, high confidence. We're going to continue to use the balance sheet to go between 2 and 3 and continue to add really strategic acquisitions on that elevate the growth profile of the company and drive up margins in the process.

And so I think we're doing exactly what we said we were going to do 2.5 years ago when we were here, our first time to say we're going to one to two acquisitions a year. We're in year 2.5 of the company. We've closed three. We've announced our fourth. So I think we're right on target. We've invested in the core, and we're going to keep the balance sheet below 3x net leverage.

Very good. I think with that, we'll go ahead and wrap up as we're at time. Thank you, everyone, for joining us. Thank you, Aaron. Thank you.

Thank you.

Thank you.

Good day, and thank you for standing by. Welcome to the conference call to discuss Crane NXT's agreement to acquire Antares Vision. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Matt Roche, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thank for joining us today to discuss Crane NXT's agreement to acquire Antares Vision. With me today are Aaron Saak, our President and Chief Executive Officer; and Christina Cristiano, our Senior Vice President and Chief Financial Officer.

Following the prepared remarks, we will open the call to analysts for questions. The slides we will reference during today's call can be accessed via the Investor Relations section of our website at cranenxt.com and a replay of the call will also be available on our website.

I encourage all listeners to review the legal notice on Slide 2, which explains the risks of forward-looking statements. Additionally, we refer you to the cautionary language at the bottom of the announcement press release issued this morning and also in our forms 10-K and 10-Q filings pertaining to forward-looking statements.

With that, I'll turn the call over to Aaron.

Thank you, Matt, and good morning to everyone joining us. Earlier today, we announced a significant step forward in executing our strategy with an agreement to acquire Antares Vision, a global leader in inspection, detection and track and trace technologies.

Antares Vision provides Crane NXT with a leading position in the $2 billion track and trace and inspection technologies market and expands our portfolio into the life sciences and food and beverage end markets, which are robust and have strong secular tailwinds. These tailwinds are driven by the continuous rise of counterfeiting and the need for greater quality assurance and compliance with government regulations.

Now as shown on Slide 3, Antares Vision designs and manufactures advanced inspection and detection systems utilized by life science and food and beverage companies to ensure high quality and provide the ability to track and trace products throughout the supply chain.

The company also offers field and remote service capabilities for new equipment commissioning and aftermarket services. And finally, Antares offers market-leading track and trace software to ensure the safety and authenticity of products.

In total, these offerings are highly complementary to Crane NXT and further expand our customer base and technology portfolio. Additionally, Antares Vision has an attractive financial profile with revenue of approximately EUR 200 million in 2024 and adjusted EBITDA margin of approximately 15%.

Now we expect Antares Vision to generate mid-single-digit revenue growth in 2026 and beyond. And finally, this acquisition will add approximately 1,200 employees to Crane NXT.

Moving on to Slide 4 and as illustrated in the chart on the left, Antares operates in the attractive life sciences and food and beverage industries with approximately 60% of revenue coming from life sciences with the balance from food and beverage. Across these end markets, increasing government regulation is driving demand for greater product transparency, compliance and safety, all areas where Antares Vision solutions are utilized.

As shown in the middle chart, Antares Vision has a global footprint with a strong presence across Europe and the Americas. And we're excited about the opportunity to leverage Crane NXT's commercial relationships and our global footprint to accelerate the company's growth, particularly in new and emerging markets.

Finally, as shown in the chart on the right, you can see that Antares Vision's offerings complement Crane NXT's existing portfolio with approximately 60% of revenue generating from the sale of equipment, 20% from services and the remaining 20% from software.

Turning to Slide 5. I want to highlight how the acquisition complements Crane NXT's existing capabilities. Antares Vision manufactures hardware systems very similar to the manufacturing operations we have today in our CPI segment. Additionally, Antares's customers are using authentication labeling technology produced within our SAT segment applied to their product packaging.

Antares Vision also provides field and remote service for the installation and commissioning of new equipment, ongoing technical support and training and aftermarket maintenance services. And these offerings are very similar to the similar services we provide by CPI to our existing customers.

Finally, Antares provides software sold with the equipment that helps enable product traceability. And this software model is similar to the embedded software sold within our CPI Equipment segment. Finally, Antares Vision offers stand-alone track and trace software, similar to our offerings within Crane authentication, where we use that software in the government solutions and brand authentication markets.

So overall, we're very confident that we can further build upon these common capabilities across the NXT portfolio once the acquisition is complete, helping us to accelerate growth and improve margins.

Now let me move on to Slide 6 to tell you a little bit more about the financial terms of the deal and our expected returns. We've agreed with the key shareholders of Antares Vision to purchase their shares at EUR 5 per share, representing an enterprise value of approximately EUR 445 million. Based on Antares's full year 2025 adjusted EBITDA guidance, this implies an EV/EBITDA multiple of approximately 12x.

We have very high conviction in the opportunity to drive margin improvement through the application of the Crane Business System over the coming years. When accounting for these synergies, we expect an EV/EBITDA multiple of approximately 10x attributed to the transaction.

Consistent with our M&A targets, we expect a double-digit ROIC by year 5 and the acquisition to be accretive to EPS in the first full year after closing. Finally, the deal will be financed using cash as well as existing and new credit facilities.

At the close of the full transaction, we expect our net leverage to be approximately 2.9x. Given our strong balance sheet position and robust cash generation profile, we expect to have capacity to pay down debt and deploy further capital in the future.

Now moving to Slide 7. I want to point out that this transaction is another example of our disciplined M&A process where we evaluate the market growth opportunity and alignment to our strategy, the specific position and differentiation of the target company. And finally, we ensure that we have a path to clear value creation. And Antares's Vision meets all of these criteria.

Specifically, it offers highly complementary technology solutions that secure, detect and authenticate products in end markets that we think are very durable and resilient in the long term. The company is a market leader with clear product and technology differentiation and squarely fits within our target revenue range of $100 million to $500 million and offers a strong and actionable path to value creation utilizing the Crane Business System.

Turning to Slide 8. I want to walk through the transaction time line in a little more detail. As announced today, Crane NXT has entered into an agreement to acquire an approximate 30% stake in Antares Vision from its largest shareholders at a price of EUR 5 per share. And we expect to close on this first transaction sometime in Q4 of 2025. After the closing on this approximate 30% stake, we will launch a mandatory public tender offer to all remaining shareholders at the same price of EUR 5 per share.

Crane NXT has secured voting agreements with the largest shareholders of Antares Vision, which will assure our ability to take the company private after the the completion of the mandatory tender process. We expect to complete taking the company private in the first half of 2026.

Given this time line, there will be no impact to the financial results of Crane NXT in 2025. Now before we move to questions, I want to take a moment to thank everyone, both at Antares Vision and Crane NXT, who have spent many hours working collaboratively to make today's announcement possible.

I sincerely look forward to meeting and working with the entire Antares Vision team in the years ahead. Also, I want to reiterate how excited I am about today's announcement and what it means for the future of Crane NXT. Antares Vision is a global leader in inspection, detection and track and trace technology, servicing some of the world's largest life science and food and beverage companies.

The company is an excellent fit with Crane NXT's growth strategy and further expands our portfolio of inspection and detection technologies into large, resilient and growing end markets aligned to secular tailwinds.

Additionally, Antares's Vision allows us to deliver an even stronger and highly differentiated offering for our customers, solidifying our position as a leader providing trusted technology solutions that secure, detect and authenticate what matters most to our customers.

Now as we move forward, we remain focused on executing our strategy to create value for our shareholders. We continue to invest in and grow our existing businesses. We're driving operational excellence to expand margins and continue our best-in-class free cash flow conversion. And as you can see with today's announcement, we are leveraging our strong balance sheet to further expand and diversify our portfolio through disciplined M&A.

In summary, today's announcement is another proof point of doing what we said we were going to do, continuing to expand and diversify the company and executing on our growth strategy.

And so with that, operator, we're now ready for our first question.

[Operator Instructions]. Our first question comes from the line of Matt Summerville from D.A. Davidson.

A couple of questions. Can you talk about the relative penetration rates in the market today for hardware and software for these types of applications? And can you frame up the competitive environment a bit? You're identifying a $2 billion TAM. This business is roughly USD 250 million in sales. So help me understand the competition as well, please? And then I have a follow-up.

Sure, Matt. Thanks for the question. Well, you're correct. As we said, the TAM that we see we're expanding into is about $2 billion. That's a new TAM. So that's additive to Crane NXT. And it's divided about half and half between life sciences at $1 billion and food and beverage at $1 billion.

And really, the driver for penetration of new equipment or software is just increasing quality standards or government regulations, particularly in life sciences, where governments are requiring better track and trace capabilities through the point of manufacturer to the pharmacy or the point of consumption with the consumer. So it's really a technology regulatory and quality driver in life sciences.

And what's interesting is you're seeing that come into food and beverage as well. And that's, again, based on quality standard improvements and different government regulations. So that's really the underlying driver of what's increasing penetration of more software, more share of wallet and more hardware in the market.

Now when you talk about competitors, it is a fragmented market. That's one of the reasons we like it. There are regional companies that play and also a few bigger names, particularly in the software area. And actually, Antares Vision is one of the leaders with a fully integrated software and hardware offering. The rest are oftentimes some more niche software or hardware players, again, often with a regional footprint. So hopefully, that helps, Matt.

Yes. And then as a follow-up, can you talk about -- when you think about the mid-teens EBITDA margin profile of the company, talk about the relative profitability around that between hardware or equipment, software and services, where you see the most compelling commercial excellence opportunity therein? And then maybe just polish it off with your thoughts on whether or not pharmaceutical onshoring could be an incremental catalyst for this business?

Sure. I'll take the first question just is on the margin improvement. I would say this deal structure or the structure that we've announced is very similar in how we expect our authentication business to expand margins over time. starting at mid-teens EBITDA margins. And here, we expect, just like in authentication, it to grow into the low 20s over the next several years.

Primarily, the margin improvement is coming from productivity we see in the equipment business. That's where we think we can really add a lot of our CBS discipline and scale to the company as well as general productivity in the SG&A lines of the company as well. So that's our thesis, and that's where, obviously, once we take the company private, we'll be focused on the integration activities.

To your second question on pharmaceutical onshoring, I think the beauty for us is Antares Vision has production capabilities in Europe as well as in the United States. And of course, we do as the legacy holdings of Crane NXT. So we have an ability to flex our supply chain and be able to meet demand in the jurisdictions where it's needed. So we see that as an opportunity in general for us.

Our next question comes from the line of Bob Labick from CJS Securities.

It's Pete Lukas for Bob. You guys covered a lot. Maybe if you could just give a couple of examples of the products that Antares sells and some of the major customers. And also in terms of revenue, how much is recurring versus reoccurring and any contractual revenue?

And then finally, as a follow-up, in terms of the equipment, how -- what's the upgrade cycle there? How often is that done?

Sure. We'll try to take each one of those with a little detail. So -- in terms of the types of equipment and customers are using, I think you can see from the pictures in the prepared slides visually what some of that equipment looks like. I would also say the Antares website itself gives some excellent examples, both in life sciences and food and beverage. These are typically pieces of equipment that can range from $20,000 to $30,000 all the way up to over $1 million, particularly when it gets into the pharmaceutical application. So a wide range there.

On both sets of equipment, services are attached for commissioning of the equipment, particularly the larger pharma equipment and then ongoing preventative maintenance agreements, again, particularly for the larger CapEx pieces of equipment.

At this point in time, we're not going to disclose anything other than what the organization already is done in terms of customers. What I would say is of the 20 largest pharmaceutical companies in the world, most are customers of Antares Vision, the same for the 20 largest food and beverage companies of the world.

So it's really focused on the big brands, their production facilities that are producing pharmaceuticals in the case of the life science vertical and drinks and liquid products in food and beverage. So a really nice blue chip customer base.

And then in terms of the recurring reoccurring revenue, Christina, I'll pass it over to you maybe to talk about that and some of the other metrics.

Yes. So the recurring revenue is about 40% of their revenue, which relates both to the services offering that they have as well as the software offering that comes with that.

Our next question comes from the line of Damian Karas from UBS.

Congrats on the deal. So my first question is related to the synergy opportunities. I think if my math is correct, just thinking about the valuation multiple pre and post synergy, we're talking kind of like high single-digit millions. Could you just maybe elaborate a little bit on that and the time horizon over which you think you can realize those different buckets of the synergies?

Sure, Damian. I'll start and I'll pass it over to Christina. I think directionally, you're right. Actually, our target here is a little bit north of what you suggested, kind of low double-digit synergy targets. Most of those coming from productivity and operational improvements, a little bit in the cost structure.

And similar to what we've done with OpSec and De La Rue, those will play out over the next 3 to 4 years to get fully implemented. And that's where we take it from the implied multiple now based on 2025 guidance that the company has provided of about 12x EV/EBITDA down to about 10 with those synergies. But Christina, feel free to add in more on any details of those.

No, I think you said it exactly right, run rate synergies in the low double digits expected after about 3 years of the closing. So in year 3 post close around 2029. And I would just say we have high conviction based on what we're seeing already in our authentication business that we'll be able to execute on those operating synergies.

Very helpful. Yes. One more question, if you don't mind. So it seems like a nice move here to kind of diversify a bit out of retail and to move into these food and beverage and life science markets. But I wanted to ask you kind of about the growth profile. On the slide, you kind of say mid-single digits. But I guess if I look at the filings for Antares, it hasn't grown sales that much since 2021. So why is that? What gives you confidence in the mid-single-digit outlook? And I also did see that in the first half of the year, though, Antares saw a nice really positive inflection in their orders. So what's been driving that change?

Yes. Thanks, Damian, for asking that. It is a little bit more when you look at their filings of a complex story.

Let me start with the last few years. So there was an acquisition that occurred at Antares a few years ago that created a lot of headwind where they had to take some restructuring charges and some other events occurred. So that really complicated the financials for them, and you could see it in the performance, quite frankly, of the company.

I think the management team has done an excellent job the last 1.5 years in driving productivity, improving the operational performance of the company. And that's what you see coming out now of, say, the last 1.5 years because the end markets are robust, their technology is outstanding. And again, there's demand for their products oftentimes reoccurring from the same customers who are just expanding their operations, these big global brands.

And so to your last comment, that's what you're seeing in the order book. In the first half of the year, the order book is up significantly. Revenue is trending right on their guidance. And if you look at their guidance for the year, they're talking about high single-digit growth. And again, we're just quoting their guidance here, but there's a lot of optimism when you see what they've done with the cost structure. And as Christine and I just talked about, what we think we can do, bringing in CBS to improve it further, all with healthy end markets.

So I would look backwards with some blips that occurred due mainly to some acquisitions. They're well past that now, and you can see the trajectory that they're on to the point you just mentioned, Damian.

Our next question comes from the line of Bobby Brooks from Northland Capital Markets.

It seems like there's a lot of blue-chip customers from both the pharma and food and bev side. And I was just curious to get a sense on, is it normal for -- in the industry, is it normal for these larger players to use kind of multiple providers for their inspection detection and track and trace technologies? Or is it often like they'll just go with one provider? I'm just trying to get a sense of kind of following up on the pro side of things.

Yes, it's a good question, Bobby. Thanks for that. It's typical for a large company to use 1 or 2. They'll probably go with 2, to be quite honest, just to have some redundancy. But once they pick the certain equipment for a line or for a factory, they won't necessarily diversify after that, again, provided performance is there. So oftentimes, it's yet inside a factory, there may be one predominant supplier.

Got it. That's super helpful. And then could you maybe just remind us, I know you had -- how much exposure did you guys already have to the food and bev and life sciences prior to adding Antares to the mix?

Yes. The simple answer, Bobby, is very little and only in our Crane Authentication business where we supply labeling technology, as I know you're very familiar with, inside of consumer goods. We talked about cosmetics. Some of our new technologies going into food and beverage, but it's a very, very small sub-$10 million size of that business. Same for life sciences, where we're providing some labeling technology. In fact, the customers who are utilizing Crane Authentication labels are applying those, and it's Antares Vision equipment that's further serializing and aggregating the product through the production line.

And that's really where we see this full now product offering coming together under Crane NXT, where customers are already using both technologies. So for us, effectively, Bobby, that whole $2 million or $2 billion TAM is new and a TAM expansion for Crane NXT, which is very exciting for us. It gives us a lot of runway to keep doing more in some very resilient end markets.

Our next question comes from the line of Michael Pesendorfer, the second, from Baird.

Congrats on the announcement. Quick one for me. When we look at Antares's targets, they're talking to a low 20s EBITDA margin in 2027. So can you maybe give us a little bit of understanding how much they already have in the hopper in terms of internal improvement versus assumption for volume leverage and your confidence in being able to maybe accelerate that time line given the synergies in CBS implementation?

Yes. I think you're thinking about that the right way. Again, I would give them a lot of credit in the current management team that's come on to put a series of actions in place to improve EBITDA margins just in the last 12 months and a road map to get there to what they publicly disclosed. It's exactly why you said we see some additional opportunities to add in with our Crane Business System methodology.

We see that when we walk the factories, look at the cost structure. We also see ways to accelerate or add on to their plan. So I think the focus we've had is to get into those low 20% EBITDA margins over the coming few years. Again, I'd just say we have very high confidence that we can execute to that, and that's what's driving the deal returns, on top of mid-single-digit top line growth.

Yes. No. And speaking of growth, maybe talk a little bit about how you're thinking about the growth opportunity from here. How much of that is going to be expanding wallet share within those top 20 blue-chip customers that you mentioned versus maybe getting incremental wins outside of those top 20?

Yes. The vast majority will be the continued, call it, wallet share expansion in existing customers as they upgrade equipment, replace equipment, add-on services and expand themselves into new geographies. That will be the vast majority. There are opportunities for new software wins, which is being driven effectively by governments as they add new regulations in for track and trace, particularly in the pharma space that is true new customers, new products over the coming years. So that will be a minority of the growth.

Our next question comes from the line of Bobby Brooks from Northland Capital Markets.

Just wanted to jump back on and that was super helpful context on my last question, and I think the guy from Baird kind of ask this follow-up a little bit, but just to expand on it more. If I kind of take your comments that usually there's only 1 or 2 providers in a plant and these customers don't necessarily really change after that plant is put up. But now -- but put that in contrast, now you sort of have a full suite of packaging tracking equipment and software. Do you think you might have an opportunity to win sort of brownfield opportunities since you kind of can be this full suite provider? Or would the expansion of your market share in that $2 billion TAM mostly be on greenfield opportunities?

Yes. That's a good question, Bobby. I think there's -- I hate to be too generic, but it's probably a combination of both here, quite frankly. And I think there's opportunities when you pull in the Crane Authentication offerings into the front end and create combined packages. There's no one in the industry today. And this is a real strength of Antares Vision that has the entire software through the complete hardware and software offering. That's unique to them. That helps them win.

Now we add on additional capabilities in the front end. We haven't built those extra wins into the synergy targets of the deal, but I think that is upside kind of the nature of your question that would help us get past call it, general market growth of mid-single digits. So certainly, that's what we're going to be out driving, Bobby, as you said, but it's probably been an equal business balance back of greenfield, brownfield sites.

Thank you. At this time, I would now like to turn the conference back over to Aaron Saak, CEO, for closing remarks.

All right. Thank you very much. Thanks to everybody who joined today for their questions. It's an exciting announcement for us here at Crane NXT as again, we're executing our strategy, doing what we said we were going to do to continue to grow the company and grow in near adjacent markets where we're leveraging best-in-class technology and positioning the company for a future where secure, detect and authenticate technologies are really at the core of everything we do now and into the future of Crane NXT.

As I said in my prepared remarks, I'd like to end by again thanking everyone, both across Antares Vision and Crane NXT who helped get us to this day. I know both teams are very excited, and I welcome the chance to get out and meet and continue to visit with the Antares team as we go through the transaction. So again, thanks, everybody, for joining today. Appreciate the questions, and I hope you have a wonderful weekend.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Hello to everyone. Thanks for joining us today for the Oppenheimer Conference. We are really pleased that Christina and I are here to talk about Crane NXT. And for many of you, I know that may be a new name and for some, you've been with us on the journey since separation. So I'll introduce myself. I'll pass it to Christina, and then I'll jump into a few slides, and then we'll go to questions.

So with that, my name is Aaron Saak. I'm the P President and CEO of Crane NXT. And Christina, I'll hand it over to you for a brief introduction.

Thank you, Aaron, and I'm Christina Cristiano, Chief Financial Officer.

Great. Well, of course, before we jump in, and I know you have these slides, we're going to go through the normal forward-looking statements, and I'll let you read those on your own time, but standard fair for discussions like this.

So let's talk a little bit about Crane NXT, a premier industrial technology company that is really 2.5 years old since our separation in April of 2023 from Crane Company. And really, we positioned the company over these last 2.5 years to be a leader in technologies that we say secure, detect and authenticate our customers' most important assets. And I believe as you look at the financials of the company and our products, you'll find a lot to like in what we're creating in this portfolio.

Sales last year and projected for this year around $1.6 billion with about 50% of that revenue being recurring or reoccurring, very good segment operating profit margins in the mid-20% range, high free cash flow, which helps us keep our leverage in a very nice place to keep doing M&A. Today, we stand at about 2.6x net leverage. But when you put all this together of who we are, a technology leader around authentication and anti-counterfeiting technology, underpinning what we do is all the Crane Business System and a drive for operational excellence and continuous improvement. And I think you see that playing out in how we run the company day-to-day.

So as I think about who we are from segmenting the portfolio, we have 2 reportable segments, Security & Authentication Technologies, and I'll talk about that in a little more detail, particularly with one of our acquisitions more recently, that's about 25 -- or excuse me, about 45% of our revenue and the balance being Crane Payment Innovations or CPI at about 55% or the balance. We have a high degree of geography disbursement in terms of our revenue. Little over half comes from North America, about 25% from emerging markets. And that's an area that's been growing for us, particularly in our SAT segment.

And then I think what's really unique about the company and makes us special is the longevity of our customers and how they've been with us, in some cases, not just for decades but for a century or more. And you'll find that, I think, very unique to the portfolio of Crane NXT, the stickiness we have with our customers and the longevity of our relationships. Now when you talk about the company and how we report, we report in these 2 segments. Security & Authentication Technologies. This year will be about $735 million in sales with 2 operating companies, Crane Currency and now the new Crane Authentication that we've just put together with our 2 acquisitions that we've done over the last 1.5 years. That would be OpSec and De La Rue Authentication. And this really coming together to form Crane Authentication just about 100 days ago when we closed our De La Rue acquisition.

Now the second segment, as I referred to before, is Crane Payment Innovations, about $860 million in revenue. But both of these companies, all focused on technology that secures, detects and authenticates our customers' assets and both of these segments with leadership positions, being #1 or #2 in most of the markets they play in around the world. And what binds us together at the bottom here is this Crane Business System. It's operational discipline and rigor to drive continuous improvement, pricing process discipline as well as operational discipline. And you see that, particularly as we talk about our new acquisitions.

So all of this together, creating a portfolio that we really believe is the market leader in authentication technologies. So let me take a moment and talk about our newest acquisition and the formation of Crane Authentication. For us, this is a major step forward in the evolution of our portfolio since our separation, where now we have the market leader in authentication technology, leveraging outstanding technology that's come from our currency business put together with our first acquisition, OpSec and then De La Rue Authentication, which closed May 1, to form this unified portfolio.

And it's really focused in 3 areas. The first is brand protection, which makes up about 60% of the revenue of this business. This is selling our technology to major customers, think about sports leagues and apparel companies around the world that provides both physical authentication and track and trace online software to help make sure that their products are real and authentic not only through their supply chain, but to the consumers.

Then we have government solutions. You can see in this picture, these are roles of tax stamps. This is what goes on wine bottles and other kind of articles so that governments can track shipments through their countries and collect their tax revenues. And then finally, identification security. This is really looking at making passports and national IDs secure and preventing counterfeiting of identities. So 3 pillars in this business, all of this now coming from the combination of OpSec and De La Rue to form this new brand. And we're off to the races in terms of the integration, very actively deploying the Crane Business System that includes 80/20 to do product rationalization, supply chain and rooftop optimization, simplifying the organization as we brought the 2 companies together and updating our pricing and, what we call, pricing standard work.

So I'm really excited about where this company is going in terms of the portfolio, even more excited about where we're going to end in profitability as we exit 2026 with a company that's going to move from low to mid-single-digit operating profit to one that's going to be close to 20% operating profit as we exit 2026, all from the diligent execution of the Crane Business System.

So with that, let me talk a little bit about the company holistically and where we're at. So if you look at our Q2 results, 9% sales growth, that was in line with our expectations for the full year where we maintained our guidance. Excited about the performance of the company and particularly both CPI, where we're seeing some strength returning in some of our key segments. And then in SAT, an international currency business that's just done fantastic through the first half of this year. We're deploying the Crane Business System to execute on our integrations.

And again, free cash flow has been strong, 120% in Q2 that's led us to be able to be in a very good position on our balance sheet with net debt at -- net leverage at 2.6x with a lot of firepower for M&A and very confident in the activity in our M&A funnel that we'll see another deal transpire here over the next 12 months. So high conviction that we're pivoting as we exit 2025, actually midway through '25 into higher growth and operating improvements in OP, great free cash flow and position for a great 2026.

So with that, hopefully, that's a little bit of an overview of where we're at, where we're going. And Ian, good to see you, and happy to go to some questions here.

So thanks for the overview, especially on the product portfolio. So if I was to kind of summarize this, how do you think about just like your overall growth strategy across brands and commercial and government IDs? How do we kind of like synthesize that strategy into what you're doing going forward?

Yes. And I assume, Ian, you're specific to Crane Authentication with that?

Yes, yes, because, OpSec and De La Rue, et cetera.

Yes. Well, I think about them in these 3 pillars or these 3 segments as we laid out in the slides. And in total, I believe the company of authentication is going to be about a mid-single-digit grower. Some of that is dependent on each customer and each segment adopting the technology. If you start at brands, this is the area where the value prop is very clear because brands are getting counterfeited and they know it to some degree. It's just a question of how quickly they can implement our technology into their supply chain, both the software and the hardware, the hardware being the label technology, the software being the track and tracing of that article through the supply chain.

Now the beauty of the business is once you get that customer, it's like an ERP implementation. It's very hard to dislodge us because it's sticky. And you want to keep having the reporting of the goods and where they're manufactured and how -- and where they're sold through the supply chain. So again, a mid-single-digit grower with the potential always for some upside depending on how brands adopt the technology. Similar in governments. Now this business is primarily in emerging markets. So think the Middle East, Africa, Southeast Asia, where governments are trying to find ways to ensure that their tax revenue is being collected. And that's where we're seeing growth as those economies grow.

So think about that as kind of a mid-single digit, mid-single-digit plus type opportunity, very large projects typical in that business, similar to our currency business. So when you win a book of business from a government, you tend to stick -- have that be very sticky, and those tend to come in larger wins time over time. And then finally, in ID. ID, definitely a mid-single-digit growth type business, growing with GDP plus accelerated beyond kind of GDP growth with the need for governments to add more authentication technology to their IDs, very similar again to the dynamic we see in our currency business, where you kind of have a lower growth in volume, but you have this additive effect of people upgrading the core product based on the need to prevent counterfeiting. So in full summary, a mid-single-digit growth business, but one that's again going to get sequentially more profitable every quarter based on our deployment of the Crane Business System.

Okay. And also, when we think about the partnerships, I know you have some professional sports partnerships. What's been the receptivity by other leagues? And what's sort of the opportunity just either whether it's domestically or internationally? How do you view that?

Yes. I think in the domestic leagues, if we just talk about sports leagues, for example, that's going to be expansion within those leagues to more products and think about a good, better, best strategy where very high-value products, one increasing authentication. Take the example of like Aaron Judge's bat versus a key chain. You're going to have very different levels of authentication security on those. Why I say it this way, Ian, is because we own most of the sports leagues already today. So there aren't too many more for us to get. All the big ones have been using our solution for some period of time.

And in the first quarter, we announced a major renewal of the NFL during the Q1 earnings call. Now your point, though, is correct on international. I think that's a real opportunity for us as we look at leagues in other regions of the world. And that's one the team is actively exploring, particularly when you think about -- the geographic dispersity of those leagues, some of which aren't even aware to us here in the U.S., same dynamic, same amount of counterfeiting going on, same opportunity for us that we appreciate here in the U.S.

Okay. And I know you've referenced here on the CBS a bunch already. But can you maybe give us some like tangible examples? Maybe we pick on either OpSec or De La Rue. What are you doing? Like where is CBS helping you? And what's the real potential for that? And what are the levers?

Well, I'll give you 2 examples. They'll both be operational in nature. One is in OpSec where we hosted several kaizens in each of the factories to go through and look at how we can improve the layout and what we call the standard flow of the factory to improve overall productivity. And that's true in the factories here in the U.S. and in the U.K. And so each of those kaizens will last about a week with the team, with the operators on the line, with the leaders of those factories and some coming from the corporate CBS office that we have here in the company to put forward, what we call, a future factory vision and then a vision for that particular production line with a goal for productivity.

And in the case of OpSec, what that's doing is driving several points of incremental productivity inside of the factory, particularly on the manufacture of some of the holograms that are used. So that's kind of the traditional example. Now that we have De La Rue in place, we've also run an 80/20 process, which is a different tool in our CBS toolkit that probably many folks are familiar with, to look at how do we rationalize 2 product lines, one from OpSec, one from De La Rue, understand what we should be doing on driving pricing in those product lines or which ones we should eliminate and rationalize to improve the cost structure.

So we've done that already in the first 100 days to go in and look at a particular type of products inside of OpSec and De La Rue and stop manufacturing one, move to the other, lowers the cost structure and also allows us to get some pricing out of the customer. So those are 2 examples just in the last, call it, 100 or so days since we've done the acquisition that are going to drive real value for us. And those happen over and over in the company. We're going to do over 100 kaizens this year inside of Crane NXT. So imagine that, a week of people's time out to simply drive continuous improvement in the process, that's just the DNA of the company. And I'd say, Ian, that's not always true. As many folks on this line probably know, that's not true of every company. So when we get into an OpSec that's not used to that, we can drive real meaningful improvements in the operating performance of the business.

Okay. And then if we were to shift to the currency for a second. When we think about the new launch cycle of the new bills coming out of the U.S. government, if we were maybe to look at the revenue opportunities what do the revenue opportunities look like by year? Like what's going to be the biggest opportunity? What's going to be really kind of the home opportunity? And also maybe when you talk about that, talk about margins as well amongst the different denominators?

Yes. Maybe I'll start, Christina, and hand it over to you. The way the U.S. currency program works just for a little [primer] is you want to look at the total volume of bills being produced. But what's more important is you want to look at the mix of those bills because as we all know, the $100 bill has a lot more security features on it than the $1 bill. So it's worth quite a bit more to us on the order of 2 to 2.5x the amount of technology in it. And you can see that in the variable cost to produce that's published by the U.S. Treasury Department.

So the growth algorithm for this business is going to be probably flat, low single-digit volume growth over the next 5 or 10 years. However, the amount of technology adding into this is going to get not just incrementally higher, but when you look at the step-up from the redesign, it's a real opportunity for us, to your point, to drive both revenue and margin growth. So let's take the $10 bill as an example. The upgrade of that bill will include new security features that will allow us to have a product that looks closer to like in the range of what the hundreds are looking like than what the existing 10.

And on a variable cost basis, while we can't disclose that at this point in time, the cost difference in these security features is almost double, depending on the exact design that gets chosen. So what we see happening is this accelerator every 2 years as a new bill is launched, that the incremental improvement over the prior bill is going to bring a significant step-up in revenue for us as well as increased operating profit because the margin of those security features is very high.

Now I can't speak to a specific model because we haven't released the designs of the new 10 and certainly the 50, the 20 and the 100 that will be coming. But if you follow what's happened in our international currency business over the last 4 or 5 years, I think that's a very good proxy for what's going to happen in the U.S. business. That's a business that's expanded operating profit by hundreds of basis points over the last several years and one that's growing at mid-single-digit plus consistently. I think that's how we should be framing the U.S. business over the next 4 or 5 years.

Okay. And then when we think about the launch, is this just a launch where the new notes will just replace the old ones coming out of retirement on a natural basis? Is there an acceleration of that? How do we -- how does that work?

You're not going to see any kind of cliff, Ian, where the old notes are called back in. So think of it more like a gradual as notes are returned back into the bank, then new notes will be released. So there won't be any step change, let's say, in the volume of notes out there. But over time, you'll start to see that change.

Right. So you won't have like a big spike followed by like you were saying, a cliff.

That's correct.

Okay. That makes sense. And then I know we did talk about international a little bit, especially on the league side. But is there any other opportunities internationally to grow? I know that's actually been a big driver of some of the margin expansion opportunity that you've recognized already. But maybe talk a little bit more about the international opportunity and how we think about recurring versus new wins and then just adoption of micro-optics?

Yes. Maybe I'll start that one, Aaron, and then you can jump in. When you think of our share today in the international currency market, we're actually in the early innings. We estimate between 15% and 20% market share in the world. So plenty of room for us to grow, and we are winning share. And what you're seeing now is a record-high backlog level, which gives us very high confidence in our sales forecast for this year and also sets us up well for success in 2026.

In terms of the mix between existing customers and new wins, Ian, I think this is a very sticky business and so once you've got your technology spec-ed in on a banknote, the customer tends to renew. And when they're reprinting, they'll keep the same technology and design in the note. And so that means a lot of, what we call, reoccurring revenue for us. And so we're seeing significant growth in reoccurring revenue, meaning repeat orders from existing customers, and we also expect to win 10 to 15 new denominations each year from new customers that haven't been doing business with us in the past. And we're on track to hit that target for this year.

Okay. And then we're going to shift to CPI. Maybe give us around the world of the different segments, what you're seeing as far as order patterns and inventory levels and just sort of overall underlying market growth in those...

Yes. Well, thanks, Ian. I would just start by saying I'm very encouraged by particularly what we're seeing with CPI and gaming. I think for a lot of investors, that's been a question mark for us as we've come through the COVID inventory normalization cycle. We said a few quarters ago now, probably about a year -- a little less than a year ago, we thought inventory would get normalized somewhere in the second quarter, third quarter. We start to see a return of orders and we'd be on a positive growth trajectory as we got to the second half of this year. That's exactly what's happening.

And we've seen orders now up significantly year-over-year, and we have very high confidence. We're going to see double-digit sales growth in the second half of the year in gaming because the end market is healthy, growing, call it, low single digits. Our OEMs are healthy. They've drawn down their inventory, and we're the #1 provider still with leading technology position. So now the orders are just following the recovery from this very high level of inventory. So that feels very good to us, and you're going to see that positive growth in the back half of the year that's going to help our margins too because gaming is the highest margin part of the CPI portfolio. So that feels good.

The next area I'd talk to is vending where we had a lot more commentary on that in Q1, where that's the one area of the portfolio that's been impacted, particularly in demand by tariffs. So we put in price increases in the 2Q time period to get ahead of the tariffs. We saw some pull forward in customer orders getting ahead of the price increases that landed in Q2. That's going to come out of Q3. And it's really the China tariffs that is what we're looking at. That's really what affects the vending business.

We'll make up for them in price. The question will be on demand. And so we're hopeful for a resolution there on the China tariffs. The rest of the business performing as we expected, both our retail business, doing what we thought for the balance of the year, no change. Same for financial services. When you back up, I think, Ian, you look at CPI as a technology leader, #1 technology position in its market, low single-digit type growth dynamic in that market long term with fantastic free cash flow that we use to deploy in the rest of the portfolio. So that's how I would frame CPI, but feel good really where we're headed exiting this year back to growth.

Okay. Any trends you'd like to kind of call out there, whether it's like adoption of self-checkout or how is self-checkout going or any other kind of category?

No. I think each one of those, you could pick on something a little nuanced in each vertical. Let's talk retail first that you mentioned it. Self-checkout is continuing to get adopted. The form factor or the design of the self-checkout system has changed from where it was 5 to 10 years ago to be less the standard box that just gets put at the end of a checkout line to something more custom and designed. So what we're seeing is a real change in the channel for our products, where 3 or 4 years ago, it was 70% to 80% OEMs that we're selling our components to that are putting those in their standard self-checkout lanes, and those are getting sold to the Walmarts and Targets and CVSs of the world.

Today, we're going to move very quickly to that being about 50-50 as we exit this year, which is a big change. And that's because custom self-checkout is now the growth in this market where the big retailers are disaggregating the OEMs and are putting together the products themselves. So they get the best of breed of what they want to look at or have their checkout look like for their consumer. So they're picking their own PoS or point of sale, they're picking their own credit card terminal, they're picking our cash and coin components, someone else's scanner, and they have their own teams developing it.

So it's a real change in the channel. But for us, it almost doesn't matter because we're agnostic in many ways to the channel. We'll sell to either the OEM or to the retailer or their integrator, really doesn't matter because we're still the #1 technology leader. And that's the key to CPI is to maintain that technology leadership.

Okay. So speaking of that, maybe touch upon the competitive dynamics that you're seeing in CPI, market share shifts or anything else along those lines?

Market share is pretty stable. And you like that in, what I would say, is a mature business. It's an oligopoly. There's maybe 1 or 2 other major competitors, very rational competitors. One is a company out of Japan called JCM. The other is a company out of Japan called Glory. They play in different parts of our market. What I would say is we're always occupying that #1 leadership position in technology, and we're investing there.

You can see it still as we talked about in our Q2 earnings, where we've launched new products in CPI, one called the JetScan Ultra that's gone very, very well in terms of initial sales into the financial services sector that offers higher speeds, more automation and a better sensor package to pick out counterfeits and soiled currency. So we're going to continue to launch new products like that in CPI. It's critical. Again, share, not too much changes in share, very incremental just due to the maturity of the market.

Okay. Okay. And then -- and I know you mentioned tariffs, but can you maybe talk about what you're doing to mitigate them and what the impact is going to be?

I'll let Christina.

Yes. Just a reminder, Ian, that tariffs were not material for us overall, about 4% of our COGS and primarily related, as Aaron said earlier, to tariffs out of China that impact our vending end market within CPI. So we sized the direct impact originally at about $25 million, and we updated that to about $15 million in our most recent earnings call just based on the changes in tariffs. So overall, not material, primarily related to China, and we're mitigating that direct impact with pricing and productivity.

Now what that does do, though, on an indirect impact is it causes some changes in buying behavior, primarily again in vending just based on customers trying to get ahead of pricing increases which we saw in Q2 and perhaps even pushing out some orders because there's too much uncertainty, which we're anticipating in Q3 and we signaled in this quarter's earnings call. So I think overall, you'll see a little bit of noise around the underlying demand as people weighted out what's happening with tariffs, but on a direct basis, fully mitigating with pricing and productivity.

Okay. So Christina, since I have you here, it just looks like things are like on the upward for you here. It seems like backlog and gaming is getting better. We're getting closer to the launch of the redesigns from a currency perspective. So how are you thinking about like capital allocation here, your free cash flow and anything else, more deals? How are you thinking about that?

Yes. I appreciate the question. And I would say, you're right. The year is unfolding as we expected it would. And we're starting to see positivity in gaming, which will return back to double-digit growth in the second half of the year. International currency continues to be very strong, very high backlog levels. And this is all really as we planned. So we feel really great about that. In terms of capital allocation, in general, we're CapEx light, right? So we'll be approximately around 3% of sales in CapEx. Over the last 2 years, as you know, we've made significant investments in upgrading our U.S. currency equipment, and that's going to support the whole new series for 10 years to come.

So we're not going to see another big investment coming out of the U.S. But of course, we're highly focused on investing in organic growth. So we will make investments into other programs as we continue to evaluate the businesses. So you're going to see that we're going to continue to pay a competitive dividend as we always have, targeting a yield of approximately 1%. And then, of course, I know Aaron loves to talk about M&A. And so that will be a primary focus for us in the future as well. So Aaron, I don't know if you want to maybe end on that note.

No, I think that's right. Number one priority is invest in the core; number two, pay a competitive dividend; and three is M&A. And we've done 2 deals in the last 1.5 years or so. Funnel, Ian, is active and robust as it's ever been for us, and we feel very good about that. So that's where I think there's high, high confidence that in the next 12 months, we'll have another deal coming through. But we want to stay disciplined in the framework, right?

We're looking at M&A that is a one-step adjacency from our core. It's very clear how we can add value either commercially or operationally off the existing portfolio we have, continues to diversify us to be less reliant on cash in markets and can generate a good return. And of course, last but not least, I would say, that financial criteria keeps our net debt below 3. That's our target. So those are going to be deals of $100 million -- couple of hundred million dollar revenue, probably lower OP or EBIT than we have today.

But that's because we see this opportunity to improve it, and that's where the value gets created over the next 3 to 5 years. So I feel very good about that, Ian. And of course, should M&A not be there for us, we're in this very nice position to think about share buyback as well. But I would just put that as the level of priority. And again, the funnel is strong and most of our deals that we really spend a lot of time on are all cultivated. They're not getting shopped around. There are things we're in, negotiating with the owner that we think we can get a very good deal on for our shareholder and add a lot of value to.

Okay. Well, this is really helpful. And I know we're pretty much out of time. So I want to say thank you again for this. And I think the outlook is very, very favorable here, especially kind of with things getting better.

Yes. Thanks, Ian. It's good to see you again. Appreciate it.

Thank you.

Thank you.

Good day, and thank you for standing by. Welcome to the Crane NXT Second Quarter 2025 Earnings Call.

[Operator Instructions] Please be advised that today's call is being recorded. I would now like to hand it over to your first speaker today, Matt Roache, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. I want to welcome you all to the second quarter 2025 earnings call for Crane NXT.

Before we begin, let me remind you that the slides we will reference during this presentation can be accessed via the Investor Relations section of our website at cranenxt.com, and a replay of today's call will also be available on our website.

Before we discuss our results, I encourage all participants to review the legal notice on Slide 2, which explains the risks of forward-looking statements and the use of non-GAAP financial measures. Additionally, we refer you to the cautionary language at the bottom of our earnings release and our Form 10-K and subsequent filings pertaining to forward-looking statements. During the call, we'll also be using non-GAAP financial measures, which are reconciled to the comparable GAAP measures in the tables at the end of our press release and accompanying slide presentation, both of which are available on our website in the Investor Relations section.

With me today are Aaron Saak, our President and Chief Executive Officer; and Christina Cristiano, our Senior Vice President and Chief Financial Officer.

On our call this morning, we'll discuss our second quarter highlights, our financial and operational performance and our 2025 financial guidance. After our prepared remarks, we'll open up the call to analysts for questions.

With that, I'll turn the call over to Aaron.

Thank you, Matt, and good morning. I appreciate everyone joining today's call to review our second quarter results. I'd like to start by recognizing our NXT team members around the world for their continued dedication and for delivering another quarter of strong execution.

As shown in the highlights on Slide 3. Our second quarter performance was in line with our expectations, with sales growth of approximately 9% year-over-year and adjusted EPS of $0.97. We achieved 120% free cash flow conversion in the quarter, reflecting continued operating discipline. In Q2, we continued to build momentum in our strategic growth areas. Our currency business delivered another standout quarter, again, achieving a record high backlog. We also recently introduced new innovative products in our authentication and CPI businesses which position us well for future growth.

In authentication, we launched Fortress an advanced proprietary security feature that can be applied to a product surface or label to authenticate the product in real time and to trace the origin of the product to the point of manufacturing. This product was introduced to a major customer and has a strong pipeline for additional applications. And at CPI, we launched several next-generation products that will enhance our leadership position using advanced imaging and detection technology. This includes the new Jet scan Ultra, a high-speed currency scanner that provides counterfeit detection for the banking, gaming and retail markets.

Since the close of the De La Rue Authentication acquisition on May 1, we have made significant progress integrating this business with OpSec to form the new crane authentication. I'll provide more detail about our actions in this area in a few moments.

We continue to have a strong balance sheet with ample capacity for additional M&A. Given the strength and activity in our M&A pipeline, I am confident we will have another transaction to announce within the next year. Finally, we continue to navigate tariff and macro uncertainties and are mitigating these impacts through a variety of pricing and supply chain actions. Given these initiatives, we remain confident in our outlook and are reaffirming our full year EPS guidance in the range of $4 to $4.30.

Now turning to Slide 4. I want to take a moment to review our strategy of building a leading industrial technology company focused on solutions that secure, detect and authenticate. Ultimately, what we do here at Crane NXT is focused on providing confidence to our customers and their consumers that the products they buy and the way they buy them are authentic and secure.

Over the past quarter, we've integrated Da Le Rue Authentication and OpSec to form Crane Authentication. With this business, we have created a leading position in the authentication market. And a key to our success is utilizing the Crane Business System or CBS, to drive operational improvements in both our existing businesses and those we acquire.

And so with this in mind, I'd like to move to Slide 5 to discuss the actions we've taken over the last 100 days since closing the De La Rue acquisition. As shown on the left side of this page, we now have a market-leading portfolio focused in 3 areas: first, brand authentication, where we sell advanced security technology for labels, track and trace software and provide additional online services to the world's leading brands to protect them and their consumers from counterfeiting.

Second, government solutions, where we work with governments to ensure collection of tax revenue and authentication of products. And finally, identification security, where we design and manufacture ID documents for governments incorporating new security features to prevent counterfeiting.

Over the past 100 days, we hit the ground running, deploying the Crane business system to integrate the business and achieve our planned synergies. These actions include utilizing the 80/20 process to rationalize product offerings, consolidating our site footprint, leveraging scale to drive supply chain savings, integrating the organization to simplify and reduce the cost structure and implementing improved pricing processes.

I would like to thank the entire Crane authentication team for their hard work during the past quarter. Thanks to their efforts, we are now anticipating accelerated realization of operating synergies, which will lead to operating profit margins of approximately 20% as we exit 2026 ahead of our original expectations.

So with that, let me now hand the call over to Christina to review our second quarter performance in more detail.

Thank you, Aaron, and good morning, everyone. I would also like to start by saying thank you to our associates around the world. We appreciate your hard work.

Starting on Slide 6. We delivered second quarter results that were in line with our expectations. Sales increased approximately 9% year-over-year, driven by acquisitions and strong performance in international currency. Core sales declined approximately 1%, reflecting the anticipated lower volume in CPI. Adjusted segment operating profit margin of approximately 24% was down approximately 350 basis points year-over-year driven by the lower CPI volume and the expected impact of dilution from acquisitions. Free cash flow conversion was approximately 120% in the quarter, and we continue to expect the full year conversion to be in a range of approximately 90% to 110%. We Finally, we delivered adjusted EPS of $0.97.

Moving to our segments and starting with CPI on Slide 7. Core sales were down approximately 7% year-over-year, outperforming our expectations driven by timing of shipments. Adjusted operating margin decreased approximately 300 basis points year-over-year, reflecting the lower volume and unfavorable product mix, partially offset by productivity gains. We expect margin accretion in the second half of the year, driven by improved product mix from gaming sales growth as well as productivity programs and disciplined cost management. These factors will result in CPI's full year operating margin to be between 29% and 30%.

CPI ended the quarter with a backlog of approximately $144 million. Most notably, gaming orders were up approximately 10% sequentially and up by approximately 30% year-over-year. Our gaming OEM customers are at normal inventory levels, and we expect gaming to have a strong double-digit growth in the third quarter.

Turning to security and authentication technologies on Slide 8. In the second quarter, sales grew approximately 32% year-over-year, including acquisitions. Core sales increased approximately 9% year-over-year driven by higher international currency volumes. As a reminder, our U.S. currency business resumed production in Q2 after successfully completing the technology upgrades that will support the new currency series, which we expect to begin release in 2026. This was a significant milestone, and we are very proud of the accomplishments of our team.

As Aaron noted, our international currency business continues to perform well with a new record high backlog of approximately $400 million in the second quarter. We continue to expect mid-single-digit growth for the full year despite the tough comparison to a strong second half of 2024. Finally, adjusted operating margin of approximately 21% reflects acquisition dilution as expected.

Moving to our balance sheet on Slide 9. Net leverage at the end of the second quarter was approximately 2.6x, reflecting the term loan used to fund the De La Rue Authentication acquisition. Importantly, our strong free cash flow generation will enable us to continue to invest in organic growth while also paying down debt. We expect to end the year with net leverage of approximately 2x, which provides flexibility for additional M&A.

Moving now to Slide 10. We are reaffirming our full year guidance. We continue to expect SAT sales growth to be between 19% and 21%, including approximately $80 million to $90 million of De La Rue sales in 2025. We expect CPI full year sales growth to be between negative 2% and flat. Adjusted segment operating margin is anticipated to be in the range of 25.5% and 26.5%, reflecting dilution from De La Rue, offset by our continued strong focus on pricing and productivity. Finally, we are maintaining adjusted EPS in the range of $4 to $4.30.

Now I'll turn it back to Aaron for his closing remarks.

Thanks, Christina. Moving to our final slide, I want to highlight a few key points. First, we continue to drive strong operational execution. Our Q2 performance was in line with expectations, and we are utilizing CBS to drive productivity initiatives throughout the company. This includes accelerating the realization of synergies with the integration of crane authentication and continuing to drive high free cash flow conversion. Additionally, we continue to build momentum in our strategic growth areas, led by our technology leadership.

In Q2, we achieved another record high backlog in our international currency business, providing confidence in our full year sales outlook and giving us strong momentum heading into 2026. Also, as Christina mentioned, the U.S. currency redesign program continues to be on track for a 2026 launch.

We are also launching new products across the portfolio, extending our technology leadership position. These include the new Fortress product in authentication and the JetScan Ultra in CPI.

And finally, our M&A funnel is active, and our strong balance sheet gives us ample capacity to continue building our portfolio of differentiated technology solutions, delivering long-term value for our shareholders.

So thank you again for your time this morning, and I'd also like to thank our dedicated team around the world for their commitment to our customers, our communities and all of our stakeholders.

And with that, operator, we're ready to take our first question.

[Operator Instructions] Our first question will come from the line of Matt Summerville from D.A. Davidson.

A couple of questions. First, you gave some really helpful color on orders and demand with respect to gaming. Can you go through sort of a similar analysis of the other main CPI verticals? And then maybe comment around how your level of conviction that you can see CPI returned to a sustained positive organic trajectory? And then I have a follow-up.

Sure. Matt, thanks for the question. Well, for CPI, I'm very encouraged by where we're at now in gaming. We know this end market continues to remain healthy, the casino and gaming end market, and we feel very confident in our #1 market position as well. And now we're in the position where the inventory, our inventory at our OEMs has normalized. And we talked about that coming out of the last few quarters, we expected this pivot as we got to the second half of the year, and we're seeing it.

So we have high confidence here based on the order book and the outlook that we're going to see strong double-digit growth in the second half of the year in gaming, and that's playing out just as we expected.

So to go to the other verticals, I think in total, they're playing out largely as we expected and really as we talked about last quarter. So vending, as you know, we talked about headwinds really from the China tariffs, slowing some orders. We discussed that in Q1, leading to some headwinds in sales that we see there for the back half of the year. Retail, some positivity, particularly with custom self-checkout. And I think it's a mixed bag a little bit among the OEMs, and you could see that in some results earlier this week.

And then financial services, playing out in line with expectations. I think what's really encouraging here to CPI to get to your second part of your question about the long-term outlook, is this is a business always in a #1 or #2 market position and technology differentiation and leadership is it's key, and we're now in the process of launching new products. And we talked about that in some of the prepared remarks.

So I feel very good about where we're at with CPI. You can see the corner turned. And I think long term, we look at this as a low single-digit growth business going into 2026.

And then as a follow-up, Can you maybe talk a little bit about we should be thinking about the back half cadence in terms of revenue and earnings between Q3 and Q4, if there's anything you would want to call out there? And then you referenced on the slides and in your prepared remarks, Aaron, you see -- well, I was call it the authentication-related division inside of SAT generating the 20% OP margin. What would that equate to in terms of incremental EPS accretion in '26 versus '25 in the acquired businesses.

Yes. Thanks, Matt. Why don't I let Christina take the first 1 on the phasing in the back half of the year, and I'll take the authentication question.

Yes. Great. It's worth repeating that we expect full year sales growth of 6% to 8% in the SAT segment with segment operating margin of approximately -- excuse me, 6% to 8% overall with segment operating margin of approximately 25.5% to 26.5%, which is unchanged from our previous guidance. So in terms of the phasing, we'll expect a slight step-up in core revenue in Q3, driven by CPI and also a full quarter of DLR in our SAT results, so in our nonorganic results. And we'll also have higher segment operating profit, driven by the pricing and productivity actions that Aaron mentioned as well as cost reduction measures and continued operating discipline.

In terms of the phasing between Q3 and Q4, the phasing of both revenue and OP will be slightly more weighted to Q4. And so based on our outlook, again, we have confidence in the full year guidance range and the expected sales growth of 6% to 8%.

Yes. Thanks, Christina. I'd just add, again, think of revenue and OP as Christina said, 1% to 2% kind of weighted to the back half to the fourth quarter versus the third quarter. And to your question on authentication, Matt, I think the work here by the teams have been fantastic deploying CBS very quickly. We're 100 days basically into the acquisition of Da La Rue and integrating that with OpSec. So I'm very encouraged by the speed of that execution. And that's where we have line of sight based on the actions we've taken operationally to really exit '26 with an OP margin that's going to be approaching 20%. That's a very nice step-up from where we're going to end this year, which will be in the low teens. And again, that's based on our business case and our execution of our synergy profile.

So in terms of what that means for accretion in 2026, I think that's too early to say. We'll make that part of the 2026 guidance, which we'll do in the first part of the year.

Our next question will come from the line of Damian Karas from UBS.

I wanted to ask you about your SAT guidance, holding the sales growth for the year unchanged, despite a really nice solid second quarter. If I'm just accounting for the De La Rue deal and FX, it seems like you're implying kind of like a mid-single-digit year-over-year decline in the back half and a pretty notable step down from the second quarter. So could you just help us understand why maybe you're a little bit less optimistic on -- in the second half of the year for SAT?

Yes. Thanks, Team. We'll have to go through kind of that -- the sequential numbers you cited there. But I think the overall takeaway that you started with is right. We really have had excellent performance particularly in the international currency business, both in new orders and then a strong Q2, which was really some projects, as you know, very project-focused business when central banks want their shipment of their currency and that came into Q2.

So that's where we're not making a change to the full year. We're just seeing that movement into Q2 and out of part of the second half. So it's really a balance, and that's really often driven by our customers and their timing and their request dates. But also, just for context, with the international shipments in Q2 being up, put some stress on the mix of the SAT margins. So for the full year, we still fully expect SAT margins for the segment to be in the range of around 21%.

But I think overall, I'm very, very encouraged by this performance and currency overall and particularly with the U.S. program being on track. So the particulars of the phasing, I think we can do the math on that, but there's really no change to our outlook, just a little bit of timing.

Okay. Got it. And then this is the first time I'm hearing about Fortress. Aaron, I was wondering if you could maybe just tell us a little bit more about that this customer win and what specifically Fortress is, what service is providing them. And I'd love to hear kind of like the other relevant applications you alluded to.

Yes. No, I appreciate that. So Fortress came into the portfolio as actually part of the De Le Rue acquisition. And it was part of why we were very excited about the technology that they're bringing in. And at the same time, it was just recently launched. So it is new into the market with this first customer. It is fundamentally a materials technology that's applied to the surface of either a label or the product that has a unique identifier that when you take a picture of it with a smartphone camera and use our proprietary app, you can identify the product all the way back to the point of origin and manufacturing or when the marker was applied.

So the beauty here, Damian, is it gets providence all the way back, let's say, to the manufacturing line of the product in a very simple, easy-to-use way. for either a consumer or in most cases, it's the person buying the product, a B2B type customer.

So fundamentally, it's a core technology based on materials. It's simple to use. And you can see it as kind of part of this good, better, best technology portfolio we're providing, this would really be at the high end of our authentication type applications.

So in terms of pipeline, given what it is, it can be applied to a whole host of end markets, it's more -- it can be applied to any label or any product service. So I think food and beverage think consumer goods, and we've just rolled it out to a very large customer in one of our emerging markets and pretty excited about the pipeline for it as well. Happy to show it to you on day 2, Damian, when we meet you in person.

One moment for our next question. The next question will come from the line of Mike Halloran from Baird.

You got on Pez, on for Mike. Just hoping you can help a little bit with the margin phasing in the back half. It feels like a pretty meaningful swing, Aaron, I know you mentioned the stress of the margin from the international shipments that came in, in 2Q. But can you help us a little bit maybe with the puts and takes, specifically to the margins in the back half?

Yes. Why don't I start, and I'll pass it over to Christina. Maybe I'll take CPI because I think it's the 2 segments independently. In CPI, we had a really nice quarter and top line sales. A lot of that came from vending, where we had customers that placed orders and we had a book and ship in the quarter, getting ahead of our price increase for the tariffs. Vending is at a lower margin profile than the rest of the business. So that created some compression, some stress on the margins. With what we see happening in gaming and obviously that moving that vending moving out of the, let's say, third quarter into the second, you're going to see a natural accretion in margins along with the other pricing actions we've taken in productivity.

So pretty high conviction there, pads and line of sight. -- to our CPI margins on a full year basis to end the year between 29% and 30%. So Christina, I'll pass it to you for...

And just bridging the gap text. So we expect SAT margins to be in the low 20s percent for the full year, as Aaron said, in terms of currency, continued strong performance driven by international, and the year was pretty evenly weighted. It will be slightly more weighted towards the second half. in terms of margin, as Aaron said, we had a little bit of unfavorable mix coming through in the quarter that will kind of resolve itself before the end of the year.

As you know, we're seeing dilution from the acquisitions about a few hundred basis points, which was expected. And now with the closing of the De La Rue transaction, as Aaron discussed earlier, we're accelerating the realization of operating synergies. And so that will drive margin accretion in the second half in the authentication business. There's also some normal seasonality in OpSec where revenue and OP are typically just a little bit more weighted towards the second half.

So considering all those factors, we have high confidence that we'll get to that OP margin target of 21% for the full year with a step-up in the second half, driven mostly by the actions that we've already taken in Q2.

Excellent. That's super helpful, color. I appreciate that. Switching gears a little bit on the M&A front. Obviously, as we continue to work through the Crane Authentication and the integration of the assets, maybe talk a little bit about how some of the vectors of opportunity have changed if at all, and maybe some technologies that are more interesting than they were 2 years ago. And then lastly, maybe just give us a little color on how you view the funnel. I know, Aaron, you said you feel confident about closing a deal in the next 12 months, but maybe more broadly talk about how you feel about the funnel.

Yes. Thanks, [indiscernible]. I'll start with the last part is I feel very optimistic, as I said, and confident that we're going to have another deal in the next year. Just based on the strength of the funnel, the activity we have going on things where we've looked at and continue to prosecute. So it's as healthy as it's ever been for us. in the last 2.5 years. So that feels very good. And as you saw in Christina's remarks, the balance sheet is in very good shape with our free cash flow. So we have sufficient firepower to do exactly what we said we were going to do.

I think the key here, and maybe to the first part of your question is we want to continue to apply the same framework, right? This is a hallmark has got to be disciplined M&A that's focused on a very clear framework that we put out that I think will serve us well. So we don't want that to change. And that's around assessing the market, first of all, and looking at technology leadership positions. And to your point, with the new acquisitions that we now have with Authentication, that opens up new near adjacencies to us around extending our brand authentication portfolio. ID verification now is a one-step adjacency we couldn't have said 2 years ago when we started the company.

So I think there is a broader adjacency set that's fueling our funnel. And then we look at these companies, right? That's step 2 to make sure they have wide moats that have defensible IP, and we could be better or very good owners of those companies. And then third, the criteria is around value creation. We've got to find a path that we can always apply CBS and synergies to generate very good returns.

So we're going to continue to be prudent, opportunistic as we see targets emerge and keep on this very clear framework that we've established that I think is going to serve us well and be consistent in this approach.

Our next question will come from the line of Bob Labick from CJS Securities.

I wanted to start with Crane Authentication. Now with De La Rue closed, you've very rapidly built this segment up to scale. And could you talk about the core drivers for this business going forward and maybe break it down between the physical security and tags and then the online security and brand management and digital sales as well? And what drives each of those, the physical and the kind of online digital sales for authentication?

Yes. Well, thanks, Bob. I agree with you here that I'm excited by the leadership position we've created and the scale really by integrating these 2 together and adding in, again, our core technology that came over from the currency business in micro-optics. And it's been a very busy 100 days. since the close. And I've had an opportunity in that time, too, to go around to most of the De La Rue major sites visit the team, meet with customers, and it's really been fantastic. I think we -- we've done a very good job in the launch of a new Crane Authentication brand.

To get a little more precise on your question, I would really think about the business as we showed on those slides in these 3 buckets. One is around brand authentication, which is a combination of physical and track and trace software, that grows not only with the growth of the market of branded goods, which is depending on the brand, call it, a mid-single digit to high single-digit grower, but also on the fact brands continue to ask for more authentication solutions. So you have this ability to be a really strong single-digit growth market in brand. We're seeing a mid-single-digit plus growth in the brand market.

When you get to the government section that we talked about, government solutions, that's really primarily tax stamps for governments. And there, it's really about expansion to not only new products within the governments that we already sell to but also new governments that want to increase their tax revenues. So again, I think a very solid, consistent mid-single-digit grower and a lot of synergies there commercially with our currency business because we're a trusted partner already to the central banks. And you see that and you feel that playing out under the SAT segment and some of the work Sam Keayes is doing.

And then finally, government ID, that's a new segment for us. Back to one of the questions from Pez right before you. Now we have an ID portfolio that presents opportunities to add more sophisticated technology, upsell technology just like we do in the currency business, it provides more adjacencies for both organic and inorganic expansion. So again, I see that as a lot of nice tailwinds for the business. So that's how I'm thinking about it. We're thinking about it, Bob, in these 3 segments. And again, that's also where organic investment and M&A could play.

Okay. Great. And then shifting gears a little to the 2026 -- yearly currency order outlook and timing. There's a lot of numbers out there. There's the budget, then there's the currency order itself, which is going to be wide enough to drive a truck through. And then ultimately, the final order will come out at some point later, and we'll find out the real number. So my question is, can you give us a sense for your expectations towards this. I guess we'll learn the next thing maybe September, October, but give us a sense what you're working towards in calendar in terms of U.S. volumes and how we should think about it?

Yes. Thanks, Bob. So first on the timing, I think you're right. There will be somewhere September, October time frame, we don't know precisely. We'll find that out when the Fed publishes it. In terms of the outlook, what we're thinking for our base case is volume is probably in the same range as we've been in this year. The key thing we want to look at is mix. That's really the big driver for our business. And so that's what we're going to have our eyes on is that mix between, call it, the $1 bill and the $100 bill in the varieties, denominations in between.

So again, we'll know in the next 60, 90 days where that sits, Mix will be the key for us. And maybe, Christina, if you want to add just about the U.S. currency redesign program, where that sits or any more color on that?

Yes. I mean, we're super excited about the launch, which we're expecting to start next year. And as you know, we resumed production in our U.S. currency paper making processes in the second quarter, which was very successful and a very significant milestone for our team. So I'll take the opportunity to say congrats to our currency team on a job well done. So we're feeling really excited about the trajectory of currency.

Our next question will come from the line of Bobby Brooks from Northland Capital Markets.

Aaron and Cristina, now that you've had De La Rue under your ownership for about 100 days now and you're on your way to applying or already on your way of applying CBS and even mentioned accelerating those actions. I was just curious to hear maybe some actions that you've already taken or plan to take to elevate the margins there? Or maybe where you see the most opportunity for enhancements.

Yes. Thanks, Bobby. So yes, it's 100 days, and we're not on our way to apply, and we were ready to go on day 1, and they're well in flight. As a reminder, when you looked at the entire 2 deals of form Crane authentication, we targeted about $16 million combined in run rate synergies. We typically target that by year 3 to achieve those as we apply them. And most of those, the vast majority are operational synergies.

So to answer your question, those come out of simplification of the cost structure, so putting together sales, marketing, the management teams of the companies, there's a natural cost structure reduction from doing that. So that has been executed to a large extent. There's also rooftop consolidation, and that's in -- some has been executed, some is coming, and we've indicated that to the teams in respective lease holders.

And then also, you get into synergies around product rationalization. So this is trying to take the best that was Crane, the best that was OpSec and De La Rue creating a portfolio that simplified and still has options for customers at different price points. So that also allows for some cost structure rationalization as well. So those are 3 examples, all of which are being done, all of which fall under our mantra of deploying CBS. Kaizens, different kinds of productivity initiatives, the application of 80/20 to the product lines, all of these tools in the toolkit are getting deployed in real time.

And again, high confidence then because we've deployed and taken those actions that you're going to continue to see the margin increasing in the authentication business steadily through the rest of '25 and into exiting next year with a business that's right at about 20% OP.

That's super helpful color. And kind of jump into the authentication. So there was a Wall Street Journal article out about a month ago that detailed the rising trend of super luxury handbag and the stat that really stuck out to me was that LBMA spent about $11 billion on advertising last year, but that compared to only $45 million in counter -- anti-counterfeit efforts. So as it pertains to you guys with those stats in mind, my logic leads me to believe that, 1 that valids that product authentication is really in its infancy stage and two, that there is a pretty sizable opportunity for SAT. Do you feel like my logic here is fair? And maybe just any additional comments you'd add or any detail you'd you could disclose about how the team is pursuing the broader opportunity for product authentications in luxury goods.

Thanks, Bobby. I mean, I think that logic is incredibly sound. In fact, that's the entire strategic pillars that this business is standing on because we see the same thing. And exactly to your point. You see it reported about I believe the gap here that we always talk about is it takes these brands maybe surprisingly, given the numbers like you just quoted, longer to adopt the technology and to implement it than maybe we would all like, but we know the trajectory that this is headed on because counterfeitting is not getting better and the sophistication of the counterfeiters is only increasing and we occupy the high ground as the leading technology provider in this space.

So that's put it into another 1 of our customers' analogies. That's where the ball is headed, where the puck is headed. We know it's going there. We just -- it's we're waiting and driving it with those brands to bring up the issues you're seeing and actively working with those customers to adopt different features, whether that's embedded, whether that's, call it, covert over. But you're exactly correct, Bobby. That's where this market is going.

Our next question will come from the line of Ian Zaffino from Oppenheimer.

This is Isaac Sellhausen, onfor Ian. I just had 1 question on international currency. I know you're limited on what you can say on customers and activity. But maybe if you could help us understand what's driving growth on the international side in terms of mix and volume, if you're seeing higher denominations and then it's just overall trends around uptake on micro-optics.

Yes. Great. Thanks, Isaac. So we have very high confidence in our full year sales guidance, particularly related to international currency. And some important data points. So it's just looking at our core backlog, which is up almost 20% year-over-year, and we expect about 60% of that will deliver in 2025. And -- and we expect our backlog to stay in the range of above approximately $300 million for the rest of the year based on our strong orders funnel.

So what's driving that? It's our differentiated technology. We believe we're the world's leading provider of technology, and we continue to win in the market. This quarter, the growth in the backlog was primarily related to recurring revenue, as we call it, order existing customers that continue to order from us because they trust us to provide the world's leading technology. But we have a pipeline to expect 10 to 15 micro-optic wins with new customers for the full year, and we have high confidence that we're going to achieve that target.

So we're super excited about the trajectory, as I said earlier, and the pipeline is very rich for opportunities for the rest of the year.

[Operator Instructions] I'm not showing any further questions in the queue. I would now like to turn it back over to Aaron Saak for any closed remarks.

All right. Thank you, operator. Well, I think you can see from what we provided in the last day that our Q2 was another strong quarter of execution and performance for the Crane NXT team. And I again would like to thank all of our associates around the world for their hard work and dedication to the company. I remain confident in our future as we continue to build and grow this company, the leader in technology that secures, detects and authenticate.

So thank you again for all the questions this morning. Thank you to everyone who joined us, and we hope you have a great day, and we'll see you next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.