Crane NXT (CXT) Q4 2025 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Thursday, Feb. 12, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Aaron W. Saak
• Senior Vice President and Chief Financial Officer — Christina Cristiano
• Director, Investor Relations — Matt Roache

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Adjusted segment operating margin declined by 120 basis points in Q4 and by 260 basis points for the year, attributed to additional costs supporting higher international currency demand and unfavorable FX impacts.
• CPI full-year core sales decreased by 4% due to indirect tariff impacts causing customer order delays in vending, and continued end-market softness is expected through 2026.
• SAT adjusted operating margin fell by 420 basis points in Q4 and by 380 basis points for the year, driven by mix, incremental costs (including higher freight and materials), and negative FX effects in international operations.
• Management explicitly cited timing risks in U.S. banknote program deployment, with guidance based on conservative assumptions about public launch dates.

TAKEAWAYS

• Sales -- $477 million in Q4, representing 20% growth year over year, driven by acquisitions and robust performance in Crane Currency.
• Core Sales Growth -- 5% in Q4, reflecting accelerating growth in Security and Authentication Technologies (SAT) and softness in Crane Payment Innovations (CPI).
• Adjusted EBITDA Margin -- Approximately 25% in Q4 and 24% for the full year, indicating resilient profitability.
• Adjusted Segment Operating Margin -- 26% in Q4, declining 120 basis points due to additional costs and unfavorable FX, with a 260 basis point decline for the full year.
• Adjusted EPS -- $1.27 in Q4 and $4.06 for the full year, with full-year guidance for 2026 of $4.10 to $4.40.
• Adjusted Free Cash Flow Conversion -- 135% in Q4 and 94% for the year, with expected conversion of 90%-110% in 2026.
• Currency Micro-Optics Wins -- 20 new denomination wins in 2025, surpassing the 10-15 target; backlog up over 30% year over year.
• Crane Authentication Contracts -- Secured major multiyear agreements with the National Football League and Major League Baseball in 2025.
• Crane Authentication Integration -- OPSX Security and De La Rue Authentication merged to enable realized and expected margin synergies.
• CPI Segment Performance -- Flat core sales in Q4 with double-digit gaming growth offset by softness in vending; adjusted operating margin improved by 340 basis points to 32% in Q4.
• Book-to-Bill Ratio (CPI) -- Above one, supporting visibility into future demand.
• Acquisition Activity -- Closed initial 32% stake in Antares Vision in Q4 2025; regulatory approval received to proceed with majority ownership and planned take-private by mid-2026.
• Capacity Expansion (Currency) -- Investments in staff, micro-optics, and infrastructure, including new production lines in Nashua, NH, and Malta, with CapEx expected at 7% of currency revenue and $4 million in incremental operating costs for SAT in 2026.
• 2026 Guidance -- Sales growth outlook of 4%-6% with adjusted segment EBITDA margin of approximately 28%, and updated metrics to be provided once Antares Vision is consolidated.
• Dividend -- Announced 6% increase to annual dividend, reflecting ongoing financial discipline and capital allocation strategy.
• Net Leverage -- Ended the year at roughly 2.3x, with expectations to maintain the same through end of 2026.
• Revenue Phasing -- 2026 sales and profitability expected to be weighted toward the second half, with Q1 highlighted for mid-teens revenue growth in SAT and margin pressures from incremental costs.
• Product Launches -- Successful equipment upgrades completed to prepare for the new U.S. $10 bill, with full consumer release guided for late 2026.

SUMMARY

Crane NXT (NYSE:CXT) reported 20% sales growth in the quarter and robust adjusted EBITDA margins, with currency and authentication businesses delivering above-target performance and a substantial increase in contract wins that expanded the sales backlog. The acquisition of De La Rue Authentication and partial stake in Antares Vision were executed on schedule, with clear plans for full consolidation and take-private action in 2026. Management indicated that 2026 will require incremental investment to scale up capacity and introduce new product lines, while explicitly guiding for flat CPI sales and profitability headwinds in the near term tied to currency mix and external tariffs. The new U.S. $10 bill program is positioned for a late 2026 release, materially influencing segment forecasts, while a notable dividend increase signals ongoing balance sheet strength and capital discipline.

• Management projects high confidence in recurring revenue streams from professional sports leagues due to multiyear authentication contracts, though financial specifics remain undisclosed.
• “We expect adjusted segment EBITDA margin to be approximately 28%, which is approximately flat year over year,” as stated by the CFO, with planned investments expected to reduce margin headwinds in 2027.
• Accelerated hiring, training, and infrastructure expansion for international currency production are underway, with 24/7 operations targeted at key facilities to support sustained growth opportunities.
• Integration synergies from the Crane Authentication business and reduction of incremental costs in SAT are set to drive margin improvements into 2027, per management’s outlook.

INDUSTRY GLOSSARY

• SAT (Security and Authentication Technologies): Segment encompassing Crane NXT's currency and authentication technologies, including micro-optics and traceability solutions.
• CPI (Crane Payment Innovations): Business segment specializing in cash handling, hardware, vending, and service operations.
• Adjusted Free Cash Flow Conversion: The ratio of adjusted free cash flow to adjusted net income, typically expressed as a percentage, indicating operating discipline.
• Book-to-Bill Ratio: Order intake divided by billings (revenue), used to gauge demand strength and future sales pipeline stability.
• Micro-Optics: Proprietary high-security visual features embedded in currency, often used as anti-counterfeiting technology.
• 80/20 Initiatives: Operational strategy focusing on the top 20% of products or customers that deliver 80% of value, to drive productivity and profitability.
• CapEx: Capital expenditures, i.e., investments in physical assets or infrastructure.

Full Conference Call Transcript

Matt Roache: 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, Co. 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 two 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 our Form 10-Ks 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 W. Saak, our President and Chief Executive Officer, and Christina Cristiano, our Senior Vice President and Chief Financial Officer. On our call this morning, we will discuss our 2025 highlights, our financial and operational performance, and our 2026 financial guidance and outlook.

After our prepared remarks, we will open the call to analysts for questions. With that, I will turn the call over to Aaron. Thank you, Matt, and good morning. I appreciate everyone joining the call today.

Aaron W. Saak: I would like to begin by thanking our Crane NXT team members around the world for their performance through Q4. We have an exceptional team, and I am 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 would 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 am so positive about the long-term outlook for the currency business.

Notably, the new wins include five 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 are preparing for the release of the new $10 bill later this year. And we are excited, as I know many of you are, for the U.S.

Treasury unveiling of the new design we think will likely be in mid-2026. In 2025, we also secured significant contracts 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 are 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 OPSX 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 are 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 will 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 are taking meaningful steps to position the company for success, and we are 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.

Matt Roache: Christina?

Operator: Thank you, Aaron, and good morning, everyone.

Christina Cristiano: I would also like to echo Aaron's thanks to our associates for their continued hard work. I appreciate your contributions and your commitment to our customers and shareholders. Starting on slide four, 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 five. 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 six.

Core sales were flat compared with 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 one. Turning to slide seven. 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 caused customers to delay orders. Results were also impacted by the final phase of the gaming dynamic we experienced during 2025.

Through strong cost discipline and application of CVS 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 eight. 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 420 basis points from the prior year.

Matt Roache: As shown on slide nine,

Christina Cristiano: 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 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 in 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 eight 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 drew approximately $130 million to fund the initial equity investment in Antares Vision.

We expect to draw the remaining balance in 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 position, 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 toward 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, Co. has a greater than 50% ownership stake in Antares Vision, at which time its results will be consolidated within Crane NXT, Co. For 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 would 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 measure of our operating performance, as it eliminates non-cash 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, Co., and Aaron will be providing an update on this timing later in the presentation.

Matt Roache: For the full year, we expect our tax rate to be consistent versus

Christina Cristiano: 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 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, Co. sales to grow in the mid single digits in 2026, with adjusted EBITDA of approximately 25%.

This reflects a 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.

Aaron W. Saak: Thanks, Christina. Turning to slide 14. I would like to take a few moments to discuss the investments we are making to capture organic growth opportunities in international currency. 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 four primary offerings, as shown on the slide. These offerings include the designing of banknotes, substrate manufacturing, production of our proprietary micro-optics technology, and banknote printing.

To capitalize on rising demand, we are taking a variety of actions to expand our

Matt Roache: capacity.

Aaron W. Saak: First, we are 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 are 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 are 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 cost of $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 Nashua, 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, Co.'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 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 are excited about the long-term growth opportunities these actions will drive, and we will 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 am happy to report that we have received approval from the Italian regulators to move forward with step two of the transaction. We will launch a mandatory public tender offer to all remaining shareholders in February. We expect this process will be completed by Q1, at which time we will own over 50% of the shares of Antares Vision and consolidate the results under Crane NXT, Co. As Christina mentioned earlier, we will provide updated 2026 guidance based on the consolidation of Antares Vision during our Q1 earnings in May. Finally, in Q2, we will start step three of the transaction to take the company private.

As a reminder, Crane NXT, Co. 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 are continuing to execute our strategy of accelerating growth while maintaining strong margins and robust free cash flow.

Matt Roache: Second,

Aaron W. Saak: 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’s strong performance is exceeding our expectations, and we are 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 2025 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, Co. 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. I look forward to seeing many of you at our upcoming Investor Day on February 25 in New York City where we will share more details on our strategy, growth opportunities, and financial priorities. We will 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, Co. team members across the world for their commitment to our customers, our communities, and all of our stakeholders.

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

Operator: Thank you so much. Star 11 on your telephone and wait for your name to be announced. To remove yourself, press 11 again. We ask that you please keep your questions to one and one follow-up. One moment for our first question. Comes from the line of Matt J. Summerville with D.A. Davidson. Please proceed.

Matt J. Summerville: Thanks. Morning.

Aaron W. Saak: Good morning, Matt. Maybe just start with SAT. As I think about the margin performance in Q4, kind of sequentially, you got $30-plus million of additional revenue, $2 million less OP dollars.

Matt J. Summerville: And I realize you had the investments. You called that out more in the waterfall chart. But I guess I am wondering why this business, if demand is that strong, cannot do more to test price elasticity in the market, given the nature of what you are selling and kind of the criticality, especially if this decisioning is being done through an 80/20 lens.

Aaron W. Saak: Hey, thanks for that question, and good morning again. I would start by saying, as you see in our prepared remarks and as you referenced the waterfall, we are really encouraged by the growth and the backlog that we have in international currency. We strongly believe, and I am highly confident, this is setting us up for sustainable growth. And that is why we are making these investments. Now to your point on pricing and the flow-through of that, just to remind you, Matt, most, if not all, of these contracts that we are delivering in any quarter have been put into our backlog well before. So we are executing this backlog.

That is what gives us great visibility into 2026. This is not a book-and-ship business. And so with that being said, as we are 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. I feel confident that the team is doing that.

Matt J. Summerville: And then as a follow-up, obviously, there are 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 some of the pluses and minuses we see you referenced in the first quarter, and then you mentioned being able to see some cost recovery on these investments. If I look at and say $12 million in '25 that you call out in waterfall, another four that you call out in the '26 waterfall, that is 16. How much of that do you think can ultimately be recouped looking out to next year? Thank you.

Christina Cristiano: Well, maybe I will start with that one, and then Aaron can jump in if he likes to. So just in total, we feel confident 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 tariff. In terms of the phasing, as we said, we will see accelerating growth throughout the year, and the results will be slightly skewed toward 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 have taken a prudent approach, particularly with CPI, with our flat guide on sales for the full year.

Aaron W. Saak: Matt, hey. I will add in too on the recovery of some of the cost or the read-through of that on a go-forward basis. I think you know the right way to think about this is, as you have seen, we are 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 on a go-forward basis inside of SAT. Obviously, there is some mix there that will play, as you know, with our U.S. Currency, and we will wait and see the volume distribution later in 2026. But I think that is 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.

Matt J. Summerville: Got it. Thank you, guys.

Operator: Thanks. Thank you. Our next question is from Mike Halloran with Baird. Please proceed.

Mike Halloran: Hey, good morning, everyone.

Aaron W. Saak: Good morning, Mike.

Mike Halloran: Hey. Good morning. So a couple questions. Maybe you could just talk about the sequential CPI dynamics.

Aaron W. Saak: What is happening in the first quarter maybe specifically, and what type of recovery are you expecting? Seems a little light seasonally going into the first quarter. So

Mike Halloran: you know, 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?

Christina Cristiano: Hey, Mike. Thanks for that question. And I will just—it is 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, service 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 will 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 is 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 will see accelerating growth as the year progresses.

Mike Halloran: Thank you. And then

Aaron W. Saak: what is embedded in the expectations this year for the $10 bill onboarding? Is there an expectation for a second half ramp on that

Mike Halloran: business specifically? And then secondarily and related, maybe could you just talk about how you are expecting the international business to

Matt Roache: to flow as you work through the year on the currency side? Specifically, as you are working with these outside vendors and you are 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-load it and meet the need? Yeah. Yeah. Hey. Thanks for that, Matt. Why do I not take the U.S. question and Christina will jump in here on the international linearity

Aaron W. Saak: question. We are very highly, you know, very highly confident here, Mike, that the U.S. Treasury is going to make an announcement mid-year on the

Mike Halloran: 10.

Aaron W. Saak: We are, ourselves, already working on the 50, and feel, you know, again, highly confident that design will introduce, you know, sophisticated security features. And so when you think about our guide then, you know, I think we are 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 Q4. And so that is what we have kind of put in the guidance. We think that is probably prudent for 2026.

Christina Cristiano: Thank

Aaron W. Saak: you. And just in terms—

Christina Cristiano: I am sorry. We got a follow-up. I was just going to follow up on the

Aaron W. Saak: international phasing. As you know, we will have a very tough comp in 2026 based on the acceleration that we saw this year in Q4. So you will see that, you know, 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, you know, Q1 will have the lowest profit just based on these incremental costs, which are more heavily phased toward the first half of the year, and we will see that profitability improving as the year progresses.

Matt J. Summerville: Hey, I will just add as

Aaron W. Saak: I close out your question here, Mike. You know, with the actions we are taking both on productivity, the staffing, the capacity expansion, it is not really a limit to us. You know, we are going to see very nice growth in international currency. You know, just this Q4, which was exceptional for us, puts a pretty tough comp on the back half of next year. So, I think we are 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 is what is also giving us a lot of confidence here for the investments and, you know, many years of sustained growth in this business.

Operator: Thank you so much. Our next question is from Robert James Labick. Please go ahead. From CJS.

Aaron W. Saak: Good morning, Bob. Yeah. So thanks for the incremental information on the

Matt Roache: international currency capacity. I wanted to, you know, stick on that theme. I think

Aaron W. Saak: the demand or your results for international currency growth have been, you know, stronger than expected probably a year or two ago. And, you know, that is why you are adding this capacity, and we are talking about all this now. What are the drivers for the kind of faster growth in international currency for Crane? I guess it 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? Hey. Thanks, Bob, for that question.

Well, when you think about what is driving this overperformance in our international currency business, it really comes down to three things. Number one is a market driver of increased counterfeiting that is

Matt J. Summerville: occurring

Aaron W. Saak: in the market, particularly in the emerging markets and with some of our core customers. And so that is forcing them in many ways to redesign their currency. They are always putting on higher security features, and we are simply number one. We have 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 are seeing. And remember, our international currency business is predominantly operating in emerging markets. Again, we are 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 is a combination motivated by several factors. But in part of what is 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 is why we see very strong sustainable growth over the long term, and I would expect we will continue to be in that range of 10 to 15 wins, Bob, and that is the target we would put out.

But I think as you saw this year, you know, there is 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 a Latin American country that you will tell us more about, I think, in the future. I guess, any update there? And are there, you know, many more security-only opportunities that you are bidding out on, or how does that play out? Hey. 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 are just in a position given our contract with them that we cannot announce that. But it is a significant step forward for us, not only with the country, but with the security features that they have adopted that we think will be an exceptional reference customer for us going forward. But we are going to have to wait for that. As we move forward, remember,

Christina Cristiano: our

Aaron W. Saak: strategy inside of Crane Currency is to sell advanced security features. And those features are embedded in our micro-optics. They are the highest margin part of our business. And so we are out there pursuing several opportunities to sell those security features and get them into governments that may print 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 has ever been. And it is why we are 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 I feel more positive, quite frankly, Bob, than we ever thought we would feel versus, as you referenced, two years ago, based on what we see in the market.

Christina Cristiano: Thank you.

Operator: One moment for our next question. That comes from the line of Isaac Arthur Sellhausen with Oppenheimer. Please proceed.

Isaac Arthur Sellhausen: Hi. Thank you very much. Great quarter.

Matt Roache: So the 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 non-currency piece grew. I do not know if you have the exact number, but maybe just directionally, just trying to understand the different pieces in that segment. Thanks.

Aaron W. Saak: Yeah. Sure. Sure, Isaac. If you look at it, you know, currency was up high double digits in the fourth quarter. That was based really on the strength of international currency. And as I think you know, we have 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 are going to get to high single-digit growth next year on the full year for the U.S. Currency. So, you know, very strong high double-digit growth in currency.

Christina Cristiano: Currency.

Matt J. Summerville: Our

Aaron W. Saak: De La Rue acquisition performed just as we planned. And we saw lower growth, call it in the legacy business, but that was really intentional because of the 80/20 work that we did and we talked about in the third quarter. I would say it performed 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.

Isaac Arthur Sellhausen: Okay. Thanks. And then, you know, as a follow-up,

Michael J. Pesendorfer: on the $10 note, I know you talked a little bit about this. A lot about it. But, you know, how do we think about when it is going to reach run-rate production, and I guess when you are saying it is going to be back-end loaded, you know, is it based on when the government announces the launch? You know, so what are kind of the goalposts we need to look at as far as what is being communicated by the government versus what is going on with your business. And I would imagine

Aaron W. Saak: you might have a heads up on that because you would have to stock it preannouncement, or am I not thinking about that right? Thanks. No. You are

Matt J. Summerville: you are

Aaron W. Saak: —Isaac, good question. You are thinking about it exactly correctly. We are, you know, closely working with the Treasury on setting up the right levels of inventory ahead of the public launch.

Matt J. Summerville: It does

Aaron W. Saak: still depend on exactly when they decide to launch it. That is where, to the prior question, I would say we are being prudent to say, we think that starts to really hit in Q4 of this year. That is what we put in our estimates and influenced our guide.

Isaac Arthur Sellhausen: That is

Matt J. Summerville: that is

Aaron W. Saak: —you know, going to get crystallized here, I would say, in the next three months, to be precise. And what I would say, Isaac, to probably the broader question that I know you are asking and others about the impact of the U.S. Currency program and where it is at, that is something we are 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.

Operator: Thank you. Our next question comes from the line of Bobby Brooks with Northland Capital Markets. Please proceed.

Bobby Brooks: Hey guys, thank you for taking my question.

Aaron W. Saak: First one I have got is just great to hear about the multiple professional sports leagues renewing secure 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 am just trying to get a sense of maybe what the dollar-based net retention was of those leagues reupping their contracts?

Christina Cristiano: Hey, Bobby. I will take that one. And, hey, we are super excited to continue a partnership with a flagship customer like the MLB, just like we announced at the NFL last year. These are great customers that we have long-standing relationships with. We cannot reveal much of the details, as you can imagine, about their contract. But in this case, we are providing product authentication and licensee management software, and it is a great recurring revenue stream because, as you know, once we get engaged with the customer, it is very sticky. It is a very sticky arrangement that drives future recurring revenue.

So, we are very excited about this, and we will 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.

Aaron W. Saak: Got it. Appreciate that color. And then could you remind us—so the 24-hour staffing for micro-optics production and the banknote printing, that is 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? Yeah. So it varied a little bit, Bobby, based on each of the sites, quite frankly. You know, 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 we will be at here in Q1.

You know, just a reminder, you know, these are very highly complex and secure operations. So ramping up is not just something that happens with the flip of the switch. You know, we are 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, you know, just a very natural ramp-up period to get us there. Again, expect that to be completed here as we exit Q1. And I feel very good we are on the track to that.

But, you know, at that point, then is why we are 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.

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

Matt Roache: Well, thank you, operator.

Aaron W. Saak: As we conclude today's call, I again just want to thank everyone on the Crane NXT, Co. team for their strong efforts in 2025. I am excited about the direction of the company and the momentum we are building to accelerate growth. 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.

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

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.