Crane NXT (CXT) Q2 2026 Earnings Call Transcript

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DATE

Thursday, Aug. 6, 2026 at 10:00 a.m. ET

CALL PARTICIPANTS

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

TAKEAWAYS

• Net Sales -- $493.2 million, an increase of 22.0% year over year reflecting the acquisition of Antares Vision and strong international currency demand.
• Organic Sales Growth -- 2.8%, driven by a 9.6% organic increase in the security and authentication technologies segment.
• Adjusted EPS -- $1.10, an increase of 13.4% year over year due to higher volumes and operational productivity improvements.
• Adjusted EBITDA -- $115.5 million, up 18.0% year over year as acquisition contributions offset lower volumes in certain hardware markets.
• Adjusted EBITDA Margin -- 23.4%, representing 150 basis points of organic margin expansion through the Crane Business System.
• SAT Segment Sales -- $226.7 million, up 17.5% year over year including organic growth of 9.6% in international currency.
• DTT Segment Sales -- $266.5 million, an increase of 26.1% year over year driven by a full quarter of results from Antares Vision.
• SAT Backlog -- $498.1 million, a record high reflecting sustained demand for secure currency and authentication features.
• CPI Sequential Backlog Growth -- 10%, with a book-to-bill ratio of 1.1x despite softer demand in retail hardware.
• Antares Vision Backlog -- $124.7 million, which management expects to deliver over the following 12 months.
• Adjusted Free Cash Flow -- $79.4 million, reflecting a conversion ratio of 124.3% relative to adjusted net income.
• Net Leverage Ratio -- 2.7x, with management projecting a reduction to approximately 2.3x by the end of 2026.
• Full Year Adjusted EPS Guidance -- $4.22 to $4.42, raised from the prior range of $4.10 to $4.40 based on first half momentum.
• SAT Sales Guidance -- high single-digit to low double-digit growth for the full year, an increase from previous high single-digit expectations.
• Antares Vision Revenue Guidance -- $200 million to $210 million, with significant revenue weighting expected in the fourth quarter.
• Nonoperating Expense Guidance -- approximately $80 million, reduced from the prior forecast of $85 million due to lower borrowing costs.
• Quarterly Dividend -- $0.18 per share, payable on Sept. 9, 2026, to shareholders of record as of Aug. 31, 2026.
• CPI Hardware Sales -- projected to decline in the mid-single-digit range for the full year due to retail and vending project timing.
• Total Backlog -- $755.5 million, compared to $591.6 million one year ago.
• GAAP Operating Profit Margin -- 14.0%, up from 11.8% in the prior year period.

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RISKS

• Cristiano warned that "CPI sales are expected to decline in the low single digits year over year" in the third quarter due to continued softness in hardware end markets and project timing.

SUMMARY

Management reported that second quarter performance was driven by the integration of Antares Vision and strong organic growth in the security segment. The company stated that operational efficiency initiatives under the Crane Business System are contributing to organic margin expansion despite volatility in specific hardware end markets. Executives highlighted the renewal of long-term government contracts and record backlog levels as factors providing visibility into the second half of the year and beyond.

• CEO Saak stated that the company expects to "sustain high mid-single-digit growth in the international currency business for the next few years."
• Management noted that investments are underway to double the company's micro optics manufacturing capacity to support record SAT backlog levels.
• The company confirmed the 10-year renewal of its partnership with the US Government Publishing Office for the production of US passport paper.
• CFO Cristiano projected that authentication EBITDA margins would improve to the "mid-teens" by year-end as 80/20 product line initiatives and footprint consolidation continue.
• CEO Saak reported that the company is utilizing its "contacts in our currency business in emerging markets to foster access into governments" for pharmaceutical track and trace sales.
• Management indicated that the fourth quarter is expected to be the largest contributor for Antares Vision sales, aligning with historic seasonality in that business.

INDUSTRY GLOSSARY

• Antares Vision: A company acquired by Crane NXT specialized in track and trace, inspection, and detection technologies for regulated markets.
• CBS (Crane Business System): The company's proprietary operational framework focused on continuous improvement, Kaizen events, and productivity.
• CPI (Crane Payment Innovations): A division of Crane NXT providing hardware and software for secure payment processing and automation.
• DTT (Detection and Traceability Technologies): A segment focused on inspection and tracing products across supply chains.
• Micro Optics: Advanced security technology used in currency and documents to create visual anti-counterfeiting features.
• SAT (Security and Authentication Technologies): A segment providing high-security paper and micro-optic features for currency and government documents.
• Track and Trace: Technology used to monitor the location and status of products throughout the pharmaceutical and food supply chains.

Full Conference Call Transcript

Operator: Good day. And thank you for standing by. Welcome to the Crane NXT second quarter 26 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Matt Roache, Vice President, Investor Relations. Please go ahead.

Matt Roache: Thank you, operator, and good morning, everyone. To Crane NXT's Second Quarter 26 Earnings Conference Call. Before we begin, I would like to remind you that the presentation slides we will reference today are available in the Investor Relations section of our website at cranenxt.com. A replay of today's call will also be available on our website following the conclusion of our remarks. Before we discuss our results, I encourage all participants to review the legal notice on Slide 2 regarding forward looking statements. Which are subject to risks, uncertainties, and other important factors that may cause actual results to differ materially. Additionally, we refer you to the note on Slide 2 on the use of non GAAP financial measures.

I also refer you to the cautionary language included in our earnings release our Form 10-K, and subsequent SEC filings. During today's call, we will discuss certain non GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures can be found in the tables accompanying our earnings release. And slide presentation both of which are available in the Investor Relations section of our website. Joining me today are Aaron W. Saak, our President and Chief Executive Officer Christina Cristiano, our Senior Vice President and Chief Financial Officer. During the call, we will review our second quarter highlights, discuss our financial and operational performance, and provide an update on our 2026 financial guidance.

After our prepared remarks, we will open the call for questions. With that, I will turn the call over to Aaron.

Aaron W. Saak: Thank you, Matt, and good morning to everyone joining us today to our second quarter results. I would like to begin by thanking our Crane NXT team members around the world for their strong operating performance throughout the quarter. The key message I want to reinforce today is that we are executing against our value creation priorities. Delivering growth building on our leadership positions, and driving operational excellence through organic margin expansion and strong free cash flow. And you can see that progress reflected in our second quarter results on Slide 3. Organic sales grew by ~3% and total sales increased ~22% year over year.

Reflecting both continued strong performance in our SAT segment and the contribution from Antares Vision in our DTT segment. And I am very pleased with the progress we have made in Q2 with the integration of Antares We are quickly implementing the Crane business system including training and holding Kaizen events to improve productivity and drive growth. And we are off to a strong start in our first 100 days and remain confident in our ability to achieve our full year estimates. Importantly, given the strong first half performance and confidence in our continued momentum, we are increasing our full year adjusted EPS guidance to a range of $4.22 to $4.42.

So with that, let me now hand the call over to Christina to review our second quarter performance in more detail and our updated guidance. Christina?

Christina Cristiano: Thank you, Aaron, and good morning, everyone. I would also like to express my appreciation to our associates around the world for their hard work in the second quarter. Turning to Slide 4. Sales were $493 million an increase of 22% year over year. Organic sales grew 3%, driven by continued strong performance in SAT. Adjusted EBITDA was $115 million with adjusted EBITDA margin of ~23%, representing 150 basis points of organic margin expansion. For the full year, we continue to expect adjusted EBITDA margin of ~24%. We delivered adjusted EPS of $1.10 an increase of 13% year over year and ahead of our prior expectations.

Finally, adjusted free cash flow was $79 million resulting in a conversion ratio of ~124%. We continue to expect full year free cash flow conversion of 90% to 110% supported by our robust backlog and operating discipline. Moving to our segments and starting with security and authentication technologies on Slide 5. Second quarter sales were $227 million an increase of ~17% year over year, including 1 month of inorganic contribution from the De La Rue authentication acquisition which closed in May 2025. Organic sales increased ~10% driven by sustained demand in international currency.

In the second quarter, we celebrated the 2 hundred and 20-fifth anniversary of Crane Currency, which was founded in 1.8 thousand and has been the sole source provider of secure currency paper to the US federal government since 1.88 thousand. We marked the occasion at a celebration in Dalton, Massachusetts with the director of the Bureau of Engraving and Printing. Whose remarks highlighted our partnership on the development of the new US currency utilizing the next generation of microoptic security technology. This event also highlighted our more than 75-year relationship with the US government publishing office. With whom we partner to make the US passport paper.

In Q2, we renewed our contract, extending our relationship for the US for another 10 years. We are incredibly proud to serve as the trusted partner to the US government on these important programs. Returning to our results, adjusted EBITDA was $59 million in the second quarter with adjusted EBITDA margin of 26%. An increase of 30 basis points over the prior year. On an organic basis, adjusted EBITDA margin increased ~200 basis points year over year, reflecting the positive impact of productivity programs in the currency business and the execution of synergies in authentication as planned.

Finally, SAT backlog of approximately $500 million reflects a new record high This backlog provides meaningful visibility into customer demand and supports our confidence in the updated SAT sales outlook. We have a healthy pipeline of opportunities and are investing in future growth. Turning to detection and traceability technologies on Slide 6. Second quarter sales were $267 million an increase of 26% year over year, reflecting a full quarter contribution from Antares Vision. Despite softer hardware demand in CPI, DTT expanded organic EBITDA margin by approximately 240 basis points through pricing discipline and productivity actions. We expect to see further margin accretion in DTT as the year progresses.

And are on track to end the year with adjusted EBITDA margin of ~27%. Segment backlog was $257 million, including $125 million of Antares Vision backlog, which we expect to deliver over the next 12 months. As we integrate Antares, we are focused on converting this backlog deploying CBS and realizing the margin expansion opportunities that supported the strategic rationale for the transaction. CPI backlog of approximately $132 million reflects sequential growth of ~10%, driven by order timing, with a book to bill ratio of ~1.1x. Turning to our balance sheet on Slide 7. We ended the second quarter with net leverage of ~2.7x.

Looking ahead, we anticipate deploying free cash flow toward debt reduction, and expect to end 2026 with net leverage of ~2.3x. As we further strengthen our balance sheet, we will continue to evaluate capital allocation through a disciplined framework focused on the highest return uses of cash and long term shareholder value creation. Moving now to Slide 8. We are updating our 2026 guidance to reflect increased SAT sales and an improvement in nonoperating expense. For the full year, we continue to expect total sales growth of 15% to 17%. In SAT, we now expect high single digit to low double digit sales growth based on the strength of international currency backlog and continued strong demand.

In DTT, we continue to expect sales growth in the low 20s percent range, with Antares Vision contributing approximately $200 million to $210 million and with the fourth quarter representing the largest contribution of the year, in line with their historic seasonality. In CPI, we expect sales to be slightly down for the full year, reflecting mid single digit growth in services, low single-digit growth in vending, and a mid-single-digit decline in hardware. We are also updating our forecast for non operating expense to approximately $80 million from $85 million reflecting the favorable impact of expected debt paydown and lower borrowing costs.

As a result of these updates, we are raising our full year EPS guidance range to $4.22 to $4.42 per share. Looking ahead to the third quarter, we expect low double digit sales growth. In SAT, we expect sales to be flat to slightly down year over year given the very strong comparison to Q3 2025. In DTT, we expect sales growth in the mid-20s percent range, with Antares Vision contributing approximately $55 million to $60 million of sales while CPI sales are expected to decline in the low single digits year over year. Now I will turn it back to Aaron to provide closing remarks.

Aaron W. Saak: Thank you, Christina. To wrap up, we delivered a solid second quarter and continue to execute against our key value creation priorities. Of accelerating organic growth, building on our leadership positions, and driving operational excellence. Based on our continued momentum, I am pleased that we are in a position to raise our full year adjusted EPS guidance. We are confident in our ability to deliver against the commitments we have laid out strengthening the portfolio and converting our competitive advantages into sustainable growth margin expansion, and strong free cash flow.

Thank you again for your time this morning, and I would also like to again thank our Crane NXT team members around the world for their commitment to our customers, our communities, and all of our stakeholders. And with that, operator, we will take our first question.

Operator: Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Please note that speakers will accept 1 question and 1 follow-up question on today's call. Please standby while we compile the Q and A roster. Our first question comes from the line of Matt Summerville of D. A. Davidson. Your line is now open.

Matt Summerville: Thanks. Good morning.

Aaron W. Saak: Hey. Good morning.

Matt Summerville: A couple, Aaron. A couple of quick questions. How much capacity is being added either organically through your own footprint or through partners for security, substrate, and printing as it pertains to the currency business, And can you give a little bit more granularity as to what we should read through the fact that you are now booking out into 2028. And then I have a follow-up.

Aaron W. Saak: Yeah. Hey. Thanks for that, Matt. And we just feel incredibly bullish about this currency business, both domestically and internationally, and you see that in the backlog again, reaching another all time high this quarter. We are adding capacity very quickly. Both as you alluded to and we have mentioned in the past through some partnerships here this year, and that is going very well. As well as the build out, particularly of our micro optics facilities both here in The United States and in Europe.

And that is already going on and is going to continue for the next several years as we see, the volume both coming into our backlog and what we see getting tendered that we feel we have a very high probability of winning. So that being said, we are in a place to sustain high mid single digit growth in the international currency business for the next few years, that will ultimately lead to doubling over the next several years the size particularly of our micro optics capabilities. So that I think that puts us in a very good position both for obviously, the rest of 2026, but into 2027, 2028, and beyond.

And that is what we are investing for.

Matt Summerville: Thank you. Maybe just as a follow-up, can you give a little bit more granularity and detail around how we should expect third and fourth quarter revenue and earnings cadence to look across the 2 reportable business segments.

Analyst: Obviously, there is a little bit of volatility in demand impacting CPI.

Christina Cristiano: Yeah. I will start there, Matt. And, you know, I think it is just worth noting that we had a strong first half of the year. And that gives us the confidence to raise our full year guidance. So in the third quarter, we will see a low double digit sales growth overall with a mid-20s percent EBITDA margin. Now in SAT, we will see a low single digit decline. And that is largely driven by the comparative to 2025 in currency. As you know, we had a very strong end of the year last year. Authentication will perform as expected in Q3, which is a mid single digit revenue grower. In DTT, we will see a mid-20s percent growth.

Antares will contribute 55 million to $60 million of sales. And then in CPI, we will be down in the low single digits, which is continued softness in our hardware end markets. I do just want to point out the phasing of the revenue in the back half of the year will be a little more skewed toward Q4, which is aligned with our normal seasonality. But overall, if you look ahead to the full year, we are expecting a mid teen sales growth. With an adjusted EBITDA margin of about 24%. And that is 100 basis points of organic margin expansion year over year.

Matt Summerville: Understood. Thank you.

Operator: Thank you. 1 moment for our next question. Thank you. Our next question comes from the line of Michael Halloran of Baird. Your line is now open.

Trent: Hey, guys. Good morning. This is Trent on for Mike.

Aaron W. Saak: Morning, Trent. Hey.

Trent: So quick question on the first 1 here. Just good to see Antares moving higher right out of the gates Just any color on the confidence there and what you saw to raise expectations into this year?

Aaron W. Saak: Yeah. Hey. Thanks for that, Trent. Bottom line is my confidence is very high. In how we are executing Antares. It is 150 days in now. Post the close of the acquisition as I mentioned in the prepared remarks, we have really had a lot of good early success in implementing and driving CBS. To get after our synergies, and that is going very well. And as you know, it opens up for us here at Crane NXT these new exciting markets in pharmaceutical, track and trace technology, and food and beverage, inspection and detection that I am more confident than ever. that is going to play out for us very well over the long term.

So could not be more pleased with how the team is integrating into the company. How we are executing, and, again, gives us really high confidence as we look at the second half of the year.

Trent: that is great. And then you know, as a follow-up, kind of on the flip side of here, it is not terribly surprising to see some pressure as it relates to the core CPI hardware and vending business. Just any thoughts to the state of the union where we are by end market? And what gives you kind of confidence in the outlook there based on the backlog or anything else you are seeing? I know book to bill was kind of flattening out, and you are starting to see sequential backlog growth. Just any help there would be helpful.

Aaron W. Saak: Yeah. Thanks for that, Trent. So, you are right. You know, a little bit softer in the top line of CPI in Q2 driven by vending and hardware. And really in hardware that was in retail. Where we have just seen a little slowness in some of our larger projects. I think the key point here and you mentioned a few of these that I want to reiterate, are 1, sequential build in the backlog book to bill well above 1. And excellent execution by our team to drive organic margin expansion of over 200 basis points of margin expansion in the quarter. I think that is really best in class execution.

When you look at where we are at on the top line, and over 100% free cash flow conversion. So, you know, CPI for us in this portfolio is driving this great free cash flow and high margins. And we are continuing to invest in areas we see growth, like services which continues to grow in mid single digits. So when you put that together, you know, we have adjusted the forecast. You saw that for the rest of the year. And have high confidence in the outlook. and, again, why we are overall raising guidance for the full year.

Trent: Great. Great. Thanks, guys. I will pass it on.

Operator: Thank you. 1 moment for our next question. Our next question comes from the line of Bob Labick of CJS Securities. Your line is now open.

Bob Labick: Great. Good morning. Thanks for taking our questions, and congratulations on strong execution.

Aaron W. Saak: Good morning, Bob. Thanks for that. Yeah.

Bob Labick: So the portfolio is really taking shape here, and 1 of the benefits of creating NXT is the Crane Business System, CVS. And you have alluded to it, but can you maybe, like, elaborate a little bit more on some of the CBS actions taken in OPSEC and De La Rue to date some of your intentions for Antares? Absolutely, Bob.

Aaron W. Saak: And I appreciate you mentioning that because sometimes it can get lost What really matters with CBS not as just saying that we have tools and resources, but it is got to drive outcomes. And that is gotta drive quality, delivery, cost and productivity in the P&L. And that is what you are seeing in the authentication business. Where we had organic margin expansion in authentication over 300 basis points. In the quarter, and that CBS in action. And it is coming from how we are doing 80/20 on the product lines to reduce those at lower margins and move up to higher gross margins, we are seeing that come through.

We are also seeing it in consolidation of the footprint of the business. And that is very tangible when you go to the business. In fact, Christina and I were just there earlier this week to our facility in The United States and I would say it is a transformation. that is occurred and how we are running the business day to day as you walk through those factories, the optimization that is occurred on the factory floor and you see it, in our CBS daily management boards and the Kaizen schedule that is being run.

Case in point in our facility here in The US, we are going to run about 1 Kaizen a month for the next several months all around driving productivity, and that is what is driving the hundreds of basis points of margin improvement in authentication. The exact same thing is happening in Antares Vision. I was there 2 weeks ago again with Christina, and we toured the floor, and you already see the transformation occurring in the operation. And that is what gives us high confidence in the margin expansion we are going to see through the balance of 2026 and onwards through the implementation of Kaizen's in that business.

So feel very good about it. it is tangible. it is real. it is not hypothetical. And you see it in our outcomes.

Bob Labick: Okay. Yeah. that is wonderful. And then I think in the past, you have given us a sense of the authentication assets margins. It sounds like you may be even a little ahead of schedule. But could you remind us kind of where they started the year, where you expect them to finish an authentication and how that sounds like it should be a tailwind to next year's margins as well if that is the case.

Christina Cristiano: Yes. I will take that 1 to start here, Bob, and just want to repeat what Aaron said, is that we are on track and we are executing as planned. And the eightytwenty initiatives that we are doing in the first half will drive margin expansion to the end of the year. So we expect to end the year as a mid-teens EBITDA margin for authentication. And we will have mid single-digit revenue growth in the back half of the year to support that.

So I think for the full year in SAT, what is important here is you will see at the segment level, a 100 basis points of margin expansion which is driven by the synergies that we are realizing in authentication.

Bob Labick: Great. Thank you.

Operator: Thank you. 1 moment for our next question. Thank you. Our next question comes from the line of Bob Brooks of Northland Capital Markets. Your line is now open.

Bobby Brooks: Hey, good morning team and thank you for taking my question.

Aaron W. Saak: Good morning.

Christina Cristiano: Good morning.

Bobby Brooks: With DTT just wanted to unpack that a little bit. So the hardware and vending kind of continues to be a bit of a drag. And just wanted to kinda get your sense of comfort or the level of visibility you have to that inflecting back to positive growth? Is something with the year over year comps? Just trying to get a better sense of that.

Aaron W. Saak: Yeah. I appreciate the question. So I think as you look at the back half of the year, and as Christina mentioned, in Q3 for CPI inside of the DTT segment, you will see kind of a low single digit decline in Q3 and then building and accelerating to a low single digit growth in the Q4 period. So feel very good about that. that is why we made the adjustment. We see it in the fact that we are seeing sequential backlog growth Book to bills are above 1. We have the line of sight to some of the projects that typically take, you know, a quarter or 2 to deliver.

So, again, feel very confident there, and the team's executing really in a brilliant way with driving the margin expansion. Which gives us high confidence in great flow through into the EBITDA line and very strong free cash flow which is the hallmark of this business. So I think we feel very good. About where we are going to go in the second half.

Bobby Brooks: Got it. So is it fair to think that the that backlog gives you pretty good visibility over the next 3 quarters, or is it just really over the next 2?

Aaron W. Saak: it is shorter, Bob. Yeah. You know, CPI is a little bit more of a book and bill business. So backlog is at a normal level. Has been for the last few quarters. I think a key point is it is sequentially higher, so it is building coming out of Q2, and that feels good.

Bobby Brooks: Got it. And then just on Ontarius Vision, seems like things really going well there. Could you maybe just touch on, like, any early signs of benefits that might have not initially been expected, whether that is cross sell like, cross selling probably cross selling opportunities have not occurred yet, but just whether it is synergies on the on the cost side or maybe some cross selling opportunities you fit that you did not necessarily maybe appreciate enough after but now having it under your belt for a hundred and 50 days, those have popped up. Just wanted to hear more there.

Aaron W. Saak: Yeah. Thanks for that, Bob. Let me let me start first kind of with what is easier in our control, and it goes back to Bob Labick's question around CBS. I think culturally, the work that is been done here to execute CVS and get at the operational synergies has gone as well as we could have ever expected and is, in parts, the best I have seen. And that is really a testament to the culture of the team at Antares vision. of really embracing with open arms the of continuous improvement with CBS and seeing the opportunity we saw and why we got so excited about the acquisition over the last 2 years. that is gone very well.

We have inserted talent from Crane NXT into the business to get at those synergies and get at them early. Again, going well. Now the second part of your question is a really good 1 because we are seeing opportunities both between our authentication business of using and importing technology from authentication in particularly to the pharmaceutical in markets that we knew was possible and we are really working very diligently on that.

Between both businesses as well as using some of the contacts we have in our currency business in emerging markets to foster access into governments as they look at better ways to do the track and tracing of their pharmaceuticals in the markets where we also supply those governments currency. So those take longer to play out, but directionally, they are correct. And that sales motion and product development motion is occurring. And those are dividends that are going to play out in 2027 and beyond.

Bobby Brooks: Really appreciate the color. Great. Congrats on a strong quarter.

Operator: Thank you. 1 moment for our next question. Thank you. Our next question comes from the line of Ian Zaffino of Oppenheimer. Your line is now open.

Ian Zaffino: My question would be again on DTT. How are we thinking about the rest of the business? I know you kind of called out vending, but maybe give us a sense as far as the other parts of the legacy CPI business I am talking about.

Aaron W. Saak: So specifically. Yeah. And how we expect margins to kind of move. Right? Because It gives different margin profiles of each component of legacy CPI.

Ian Zaffino: Thank you.

Aaron W. Saak: Sure thing, Ian. Thanks for the question. So, you know, the way we run CPI and talk about it are in 3 components. there is our vending business, which is, call it, a flat to low single digit grower for the year. No real change in the outlook that we see long term for that or over the course of the next 2 quarters in vending, but it is a little bit below the fleet average. In terms of EBITDA margins.

Then you have our hardware business, which is providing components into gaming, financial services, and retail. that is where, again, the slowness came this quarter really in the retail segment from some of the custom projects just taking a little bit longer. We have visibility into that backlog. that is where we are seeing the sequential backlog growth. And brings with it a very high margin, particularly on gaming. Where we are by far the number 1 player in the world. In a very, you know, small market of competitors. So a fantastic franchise of high margin, high free cash flow from that business and then finally, services.

Services growing in mid single digits. it is where we have made investments to expand outside of our servicing of our own components and the third party components. And that is going as expected. And we are doing upgrades in our software and in ways we are driving efficiency in that market. And we will see margin expansion. When you put that all together, to your last point, we expect again to see continued margin expansion in CPI and then ultimately in DTT this year. Both organically from the CPI business and then through some of the work that I alluded to in the other questions inside of Antares.

So, hence, you saw this quarter really strong, over 100 basis points of margin expansion, in the quarter. We are gonna continue to see healthy margin expansion as we exit this year. In DTT.

Ian Zaffino: Okay. And then just kind of staying on legacy CPI, how are you thinking about just that business and how it fits in your portfolio going forward? I mean, I just look at some of recent acquisitions you have done have been in a different kind of direction. They are performing well. But, you have the kind of some of this legacy stuff. So how are you thinking about it as far as where do you wanna be in this business? You know, going forward? How do you think the portfolio is going to look? And any other color you could give us there?

Aaron W. Saak: Yeah. Well, I appreciate that question, Ian. So I am gonna go back to what we have been talking about now for the better part of a few years and we really honed in on that at our Investor Day in February that we are building the market leader in authentication and traceability technologies in TAMs that are big and growing with market tailwinds and we are positioned as the number 1 or number 2 provider of that technology into the end markets we are playing in. that is fundamentally the strategy, and we are building on those leadership positions we already had.

In the legacy businesses with now Crane Authentication and Antares Vision and double the TAM of the company. Now, as you go on that journey, as you would expect, we are always assessing what is in our portfolio and how to best optimize that to drive shareholder value creation? And you can be assured that is something very topical and something we are always thinking about.

Our focus today and for the next few quarters is making sure that we are executing well, that we are always assessing that portfolio to maximize value, and that we are cultivating and continuing to cultivate a very healthy list of M and A targets which we have in place, again, looking maybe more into 2027. Most likely for a next type of transaction for us to extend on some of our verticals. So it is a very active conversation and 1 where we are focused again on execution here.

Ian Zaffino: All right. Thank you very much.

Operator: Thank you. 1 moment for our final question. Our final question comes from the line of Zachary Walljasper of UBS. Your line is now open.

Zach Walljasper: Thank you. I just had 1 quick question on SAT and the quarter. It performed well organically despite the tough comps. So can you just talk a little bit of the strength there? And then just trying to understand also the 2Q strength versus full year was there any pull ahead. And then just my other question is around Antares Vision. EBITDA margins seem to come in like that low double, mid teens range. Is there what is there an expectation out there for what it could be by year end or so? Thank you.

Christina Cristiano: Yeah. I will throw in that 1, Zach. And just in terms of Q2 performance, another strong quarter. In SAT with 10% organic sales growth. And as Aaron said earlier, ~200 basis points of organic margin expansion. And we expect the full year organic sales growth to be about 3% to 4% in this segment with an EBITDA margin of about 25%. So the 1 thing to point out here, again, is the phasing in the back half, which is a little more skewed towards Q4. So just keep that in mind for the full year.

But we continue to see strong demand, and most notably, we are on track to achieve the planned synergies that we outlined for authentication, and that is what is driving the margin improvement.

Aaron W. Saak: I do not know, And, Zach, on Antares Vision, I am happy to take that on Antares. You know, again,, really executing as expected, perhaps a little bit better there to your point on the margins. Just to correct maybe 1 point there, we expect this to be in the kind of the teens adjusted EBITDA for the year. And over the next several years, we are going to grow that into the low twenties. That was always the investment case, and that is how it is playing out for us. It relates to Antares. So I just wanted to make sure that is how you are seeing adjusted EBITDA margins.

Zach Walljasper: Got it. No, that is perfectly good and what I was expecting for us. So appreciate it. Thank you.

Aaron W. Saak: Yeah. Thank you.

Operator: This concludes the question-and-answer session. I would now like to turn it back to Aaron Saak for closing remarks.

Aaron W. Saak: All right. Well, thank you very much, operator,, and thank you for all the questions today. I would like to end the call where I started with again thanking all of our Crane NXT team members around the world for the results they achieved. In Q2. It was their hard work and dedication that made it possible and why I have high confidence in raising our guidance for the full year. I think Q2 was another important proof point in delivering on our value creation priorities. I look forward to giving you an update next quarter on our progress. So thank you again, and have a great day.

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

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