CXT Q1 Earnings Call: M&A and Product Diversification Offset Margin Pressure

Payment technology company Crane NXT (NYSE:CXT) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 5.3% year on year to $330.3 million. Its non-GAAP profit of $0.54 per share was 4.9% above analysts’ consensus estimates.

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StockStory’s Take

Crane NXT’s first quarter results were shaped by a combination of planned production downtime, continued growth in international markets, and recent acquisitions. Management highlighted the successful completion of key equipment upgrades in its U.S. Currency operations, which temporarily reduced volumes but are expected to support future product launches. CEO Aaron Saak credited the strong backlog in the international currency business to “differentiated value of our leading anticounterfeiting technology.” The company also noted momentum in its services business, with a new multiyear contract win for retail equipment repair. Segment performance reflected both the impact of lower U.S. Currency sales and softness in gaming and vending end markets, while acquisition-driven growth from OpSec and the integration of De La Rue Authentication Solutions bolstered overall revenue.

Looking ahead, Crane NXT’s guidance rests on the integration of new acquisitions, robust international demand, and ongoing mitigation of tariff headwinds. Management is focused on realizing synergies from combining OpSec and De La Rue Authentication to accelerate growth in security and authentication technologies. CFO Christina Cristiano emphasized that “based on our strong backlog and delivery schedule, we remain on track to achieve free cash flow conversion for the full year between 90% and 110%.” The company expects its pricing and supply chain strategies to offset the impact of tariffs, while the newly upgraded U.S. production facilities position it for the upcoming launch of the redesigned U.S. $10 bill. Management reiterated its full-year adjusted EPS guidance, confident in the resiliency of its government contracts and recurring service revenue.

Key Insights from Management’s Remarks

Management attributed first quarter results to planned production downtime, acquisition-driven revenue growth, and ongoing macroeconomic pressures, while highlighting new contract wins and integration milestones.

• Production upgrades completed: Crane NXT finished upgrades to its U.S. Currency facility, which temporarily reduced sales volumes but are now back online, supporting future product launches such as the new U.S. $10 bill.
• International backlog at record high: The international currency segment achieved a record backlog and five new micro-optic technology wins, reflecting strong demand for anticounterfeiting solutions and providing confidence in full-year sales targets.
• Acquisition integration advancing: The company completed the acquisition of De La Rue Authentication Solutions and announced the combination of De La Rue with OpSec to form Crane Authentication, aimed at offering unified products and accelerating operational synergies.
• Tariff mitigation strategies: Management outlined a plan to offset approximately $25 million in tariff impacts through strategic pricing increases and supply chain adjustments, particularly in its CPI (Crane Payment Innovations) segment, which sources components from China.
• Service business momentum: The CPI segment secured a new multiyear contract with a major U.S. retailer for equipment repair, supporting recurring revenue growth despite softness in gaming and vending end markets.

Drivers of Future Performance

Crane NXT’s outlook is driven by acquisition integration, backlog conversion, and efforts to offset tariff-related cost pressures.

• Synergy realization from M&A: Management expects the consolidation of OpSec and De La Rue Authentication to drive operational efficiencies and expand the product offering in authentication, with integration activities underway to accelerate commercial and cost synergies.
• Tariff headwinds and pricing actions: The company plans to fully offset tariff impacts through price increases and productivity programs, but acknowledged that prolonged tariffs may delay equipment purchases in vending and CPI through the second quarter.
• Stable government and service contracts: A large portion of the authentication and currency businesses are anchored by government contracts and recurring service agreements, which management believes will provide resilience through economic uncertainty and support steady mid-single-digit growth.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace and effectiveness of integrating De La Rue Authentication and OpSec, (2) the ability to pass through pricing to offset tariffs without dampening demand, and (3) the conversion of record international currency backlog into revenue. Progress in expanding government and brand authentication contracts will also be key to evaluating future growth.

Crane NXT currently trades at a forward P/E ratio of 12.8×. At this valuation, is it a buy or sell post earnings? See for yourself in our full research report (it’s free).

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