Crane NXT, Co. (NYSE:CXT) Q3 2025 Earnings Call Transcript

Crane NXT, Co. (NYSE:CXT) Q3 2025 Earnings Call Transcript November 6, 2025

Operator: Good day, and thank you for standing by. Welcome to the Crane NXT Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Matt Roache, Vice President of Investor Relations. Please go ahead.

Matt Roache: Thank you, operator, and good morning, everyone. I want to welcome you all to the third quarter 2025 earnings call for Crane NXT. Before we begin, let me remind you that the slides we will reference during this presentation can be accessed via the Investor Relations section of our website at cranenxt.com and a replay of today’s call will also be available on our website. Before we discuss our results, I encourage all participants to review the legal notice on Slide 2, which explains the risk of forward-looking statements and the use of non-GAAP financial measures. Additionally, we refer you to the cautionary language at the bottom of our earnings release and in our Form 10-K and subsequent filings pertaining to forward-looking statements.

During the call, we will also be using non-GAAP financial measures, which are reconciled to the comparable GAAP measures in the tables at the end of our press release and accompanying slide presentation, both of which are available on our website in the Investor Relations section. With me today are Aaron Saak, our President and Chief Executive Officer; and Christina Cristiano, our Senior Vice President and Chief Financial Officer. On our call this morning, we’ll discuss our third quarter highlights and our operational and financial performance. We will also provide an update on our 2025 financial guidance as well as some initial thoughts on our 2026 outlook for each segment. After our prepared remarks, we will open the call to analysts for questions.

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

Aaron Saak: Thank you, Matt, and good morning. I appreciate everyone joining today’s call to review our third quarter results. I’d like to start by recognizing our NXT team members around the world for their continued dedication and for delivering another quarter of strong execution. As shown in the highlights on Slide 3, our third quarter performance was in line with our expectations with sales growing approximately 10% year-over-year and adjusted EPS of $1.28. Our strong free cash flow resulted in a conversion ratio of 115% in the quarter, which puts us on track for our full year target range of 90% to 110% conversion. In Q3, we continue to build momentum in strategic growth areas. Growth in our international currency business continues to exceed our expectations.

And in the third quarter, we saw several new customer wins, including a prominent country in Latin America. This raises the total number of new denominations that specify our micro-optics technology to 9 year-to-date, putting us on track to achieve the high end of our target of 10 to 15 new denominations for the full year. Additionally, our international currency backlog remains at near record high levels, and our third quarter sales were stronger than our original forecast. As we continue to see growth in orders, we’re taking several co-actions to increase production to support our customers. Given this sustained momentum, we’re raising our full year sales guidance for SAT and NXT overall. In our U.S. currency business, the Federal Reserve recently released its print order for 2026, including a significant increase in demand for higher denomination banknotes containing our advanced security features.

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

The acquisition of Antares Vision is another important step, building out our portfolio with differentiated technology offerings and aligning NXT to markets with secular tailwinds. We also continue to make strong progress in our integration efforts within the authentication business. As part of our planned product rationalization and 80/20 actions, we’re in the process of upgrading several existing customers from the legacy De La Rue Authentication offerings to our micro-optics technology, improving our margins and our customer stickiness over the long term. Finally, like many other companies, we continue to manage the impact that tariffs and broader macroeconomic uncertainties are having, particularly in our CPI short-cycle businesses. Balancing the strong performance in SAT with the outlook for demand in CPI, we’re narrowing our full year EPS guidance to a range of $4 to $4.10.

Moving to the next slide, I’d like to spend a few minutes discussing the significant announcements we made since our Q2 earnings call. First is our announcement to acquire Antares Vision, providing Crane NXT with a leading position in the $2 billion life science and food and beverage track and trace and detection technologies market. These markets benefit from strong tailwinds driven by the continuous rise of counterfeiting and the need for greater quality assurance and compliance with government regulations. Antares Vision brings to NXT a differentiated portfolio of advanced detection and inspection systems. It also offers field and remote service capabilities for new equipment, commissioning and aftermarket services, very similar to our service business in CPI.

Finally, the company offers market-leading track and trace software to ensure the safety and authenticity of products to consumers, brands and governments. We’re moving forward with customary regulatory approvals and expect to close the first phase of the transaction in December. In this first transaction, Crane NXT will acquire an approximate 30% stake in Antares Vision from its largest shareholders. After this closing, we will launch a mandatory public tender offer to all remaining shareholders. Now as a reminder, Crane NXT has secured voting agreements with the largest shareholders of Antares Vision, which assures our ability to take the company private after the completion of the mandatory tender process. Antares Vision is another key milestone in our journey as we continue to build a resilient company through our disciplined M&A process.

Over the past 2.5 years, we’ve taken significant actions to reduce our exposure to cash-centric end markets. And with the acquisition of Antares Vision, we’ll have approximately 60% of the portfolio focused on cash-related products and services, down from approximately 80% at the time of separation. These steps strengthen the long-term durability of Crane NXT and align our portfolio to secular tailwinds to accelerate growth. Moving to Slide 5. Another key announcement we made in September was our outlook for the U.S. currency business based on the Federal Reserve Board’s release of their annual currency order for 2026. We’re very encouraged by the projected increase in volumes for higher denomination banknotes, specifically $10s, $20s, $50s and $100 bills.

These notes contain higher levels of security features in the substrate and in the case of the $100 bill contain our proprietary micro-optics technology. The expected order volumes of these notes, partially offset by a reduction in volumes for lower denomination banknotes will result in our U.S. currency business growing at high single digits in 2026. Additionally, we continue to move forward with scaling up for the launch of the new $10 bill with production scheduled for mid-2026 ahead of the expected public launch. Finally, I’m excited to announce our team has made significant progress working with the Bureau of Engraving and Printing on the design of the new $50 bill scheduled for release in 2028. As a reminder, the design of each bill is a multiyear process, starting with design and pilot production before moving to full-scale production ahead of the release to the public.

More to come on these developments as we move into 2026. So with that, let me now hand the call over to Christina to review our third quarter performance in more detail.

Christina Cristiano: Thank you, Aaron, and good morning, everyone. I’d also like to start by saying thank you to our associates around the world and to express our appreciation for your continued efforts. Starting on Slide 6, we delivered third quarter results that were in line with our expectations. Sales were approximately $445 million, an increase of approximately 10% year-over-year, driven by the impact of acquisitions, favorable FX and continued strong performance in currency. Core sales increased approximately 1%, reflecting accelerating growth in SAT, partially offset by expected softness in CPI. Adjusted segment operating profit margin of approximately 28% was up approximately 50 basis points year-over-year, driven by higher SAT volume and improved mix in currency.

Free cash flow conversion was approximately 115% in the quarter, and we continue to expect full year conversion to be in the range of approximately 90% to 110%. Finally, we delivered adjusted EPS of $1.28. Moving to our segments and starting with CPI on Slide 7. Sales of approximately $216 million were down approximately 4% year-over-year as double-digit year-over-year growth in gaming was more than offset by declines in other short-cycle end markets, primarily vending, where like other companies, we continue to face headwinds related to the ongoing macroeconomic and tariff uncertainty. Even with this lower volume, we were able to maintain an adjusted operating margin of approximately 31%, reflecting the benefits of cost reduction measures, pricing and productivity.

Looking ahead, we expect sequential margin accretion in the fourth quarter, driven by continued operating discipline, resulting in CPI’s full year adjusted operating margin to be between 29% and 30%. Turning to Security and Authentication Technologies on Slide 8. In the third quarter, sales were approximately $229 million and grew approximately 28% year-over-year, including acquisitions. Core sales increased approximately 9% year-over-year, driven by higher volumes and favorable product mix in currency. The volume growth in currency was driven by our ability to optimize our supply chain to produce more banknotes. We are also benefiting from the recent investments we made in our facilities to increase production. Adjusted segment operating profit margin of approximately 24% increased by approximately 250 basis points year-over-year, reflecting the benefit of acquisitions and strong performance in currency.

We continue to outperform in currency, maintaining record high backlog levels with approximately 20% organic backlog growth year-over-year. This, along with our strong supply chain execution and ongoing investments to increase production gives us confidence to raise our full year sales guidance. Moving to our balance sheet on Slide 9. We ended the third quarter with net leverage of approximately 2.3x, which we expect will be approximately 2.9x at the full close of the Antares Vision transaction. As we mentioned earlier, we are on track to achieve adjusted free cash flow conversion of approximately 90% to 110% for the full year. This strong free cash flow generation will enable us to pay down debt while continuing to invest in organic growth.

Now I’d like to provide an update to our 2025 guidance as shown on Slide 10. Given our continued momentum in SAT, we are increasing our full year sales growth guidance to a range of 9% to 11% from the previous range of 6% to 8%, reflecting the outperformance in currency, partially offset by a reduced sales outlook for CPI. We are also updating our adjusted segment operating profit margin to approximately 25% for the full year from approximately 25.5% to 26.5%, primarily driven by the flow-through of lower CPI volumes and additional costs we are incurring as we increase our international currency production. With these updates, we are narrowing our adjusted EPS guidance to a range of $4 to $4.10. Looking ahead, I’d like to provide our early thoughts on 2026 sales.

In SAT, we expect mid-single-digit core growth, driven by favorable product mix in our U.S. currency business and continued strong performance in international currency, supported by our robust backlog and investments to increase our production. We expect core growth in the Authentication business to be mid-single digits, benefiting from increased pricing discipline and cross-selling opportunities. In CPI, we expect flat to low single-digit growth overall with service growing in the mid-single digits. In our hardware products business, where we serve the gaming, retail and financial services markets, we expect flat to low single-digit growth. Finally, we expect vending to be approximately flat year-over-year, reflecting the ongoing impact of tariffs on demand.

We’ll provide additional guidance for 2026 during our Q4 earnings call early next year. Now I’ll turn it back to Aaron for his closing remarks.

Aaron Saak: Thank you, Christina. In closing, I want to reiterate a few key points from our call today. First, our Q3 performance was in line with our expectations with strong revenue growth, healthy margins and excellent free cash flow conversion. Second, we continue to build momentum in our strategic growth areas. International currency continues its strong performance, and we’re taking actions to maintain our momentum. We’re very excited about the trajectory of the U.S. currency business with high single-digit growth expected in 2026, along with the launch of the new $10 bill. Our authentication integration is on track, and we’re converting more customers to our advanced micro-optics technology. In CPI, we’re making good progress growing ARR in our service business into new higher-growth end markets.

And finally, we’re taking meaningful steps to expand NXT into adjacent markets with growth tailwinds with our recent announcement to acquire Antares Vision. Well, we’ve been busy, and we’re focused on executing our strategy to be a market leader, providing trusted technology solutions that secure, detect and authenticate our customers’ most valuable assets. With all of these actions, we are well positioned to accelerate growth in 2026 and beyond. And I’m excited to share that we’ll host an Investor Day on February 25 in New York City, where we’ll share more details on our strategy, growth opportunities and financial priorities. And I look forward to seeing many of you there. In closing, thank you for your time this morning, and I’d like to again thank our dedicated team around the world for their commitment to our customers, our communities and all of our stakeholders.

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

Q&A Session

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

Aaron Saak: Matt, a couple please.

Matt Summerville: So first on the currency side of the business, if you’re booking in the ’27 is it safe to assume you’re effectively sold out for ’26? And if that’s the case, how does this inform what you’re doing from a capacitization standpoint in currency overall, whether it be in Malta, whether it be in Sweden or whether it be in New Hampshire? And I guess how much more factory floor flexibility do you have today to accommodate the growth?

Aaron Saak: Thanks for that question, Matt. And you’re right, currency and particularly international currency has just been a standout for us here in 2025. And we’re really bullish on the outlook as we look forward. Some customers are wanting orders now shipped into ’27. So we’re taking that. So I wouldn’t quite say to use your words, we’re sold out for ’26. I would say we are very confident in the backlog and the position it’s put us in, in ’26 to actually take some of these actions you’re referring to. And it’s really due to a combination of things. It’s both customers reordering their current micro-optic designs. It’s also customers moving forward faster to redesign their currency to get ahead of counterfeiting and specking in our micro-optics.

And so where we’re at today is we’re looking at both organic investments in the near term. That’s primarily OpEx in terms of adding people and optimizing our own production. It’s also working with outside partners. And to your question, that’s procuring substrate materials where that makes sense for us, that’s a lower margin part of the business. So that’s where we’d want to go out to the market with partners. And then also looking at partners as they would do some printing of banknotes for us as well. I believe as we look forward, and as you know, Matt, we’re going to look at continued investments in those core micro-optic facilities where we’ve already made investments and have the ability and space to increase production. And that’s something we’re certainly looking at for 2026 and beyond.

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

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

Aaron Saak: It’s really 2 things, Matt, and it’s a good question. It’s the balance of your first question, which is looking at how we’re optimizing the supply chain and just overall production. So those are trade-off decisions that we’re making. And then the second, and it’s simply the math is, we’re going to have really strong comps to compete against in 2026 just due to this overperformance and how international currency is exceeding our expectations. So in that way, it’s just simply the comps. And we just want to have a very prudent, balanced approach as we’re setting this outlook going into 2026.

Operator: Our next question is from Bob Labick of CJS Securities.

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

Aaron Saak: Yes. Thanks, Bob, for that. And maybe I’ll just put that in context the CPI overall to give you some added color. And I think the real point we want to make is we’re taking just a very prudent approach to the outlook going forward, particularly in Q4 and to Christina’s prepared remarks for 2026. To your question, when we think about vending, this has just been ongoing order softness after the price increases that we enacted due to tariffs. And in Q3, that business was down in the high single digits. And so we expect it to be down in Q4 as well. And it’s just continuing delays of customers sweating the assets, pushing out the decisions to buy as we raise prices. So our assumption here, and again, to take a prudent approach is that’s not going to change into Q4.

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

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

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

And what we’re finding is very good success, moving these customers from a very good technology that De La Rue had, but into really the leading, most differentiated anticounterfeiting technology in our micro-optics. And with that, we’re going to see a significant lift in gross margin with those customers as well as increased stickiness because they moved into a very proprietary product. When you put that all together, Bob, we’re on track for our synergies that we have communicated. In fact, this program is slightly ahead of schedule and feels very good in the traction that we’re getting. And we expect to your question on margins, as we get into the fourth quarter, our authentication business is going to be in the high teens in the fourth quarter in terms of OP.

And for all of next year, we’re going to be exiting the year approaching 20% operating profit on track to what we said we were going to do last quarter.

Operator: Our next question is from Damian Karas of UBS.

Damian Karas: I wanted to ask you guys for a little bit more clarity on the redesigns of the — in the U.S. currency business. So you mentioned the $10 will ramp production kind of in the middle of next year. So are you basically in kind of wait-and-see mode until you get the green light on launching or kind of anything else on your plate until then with respect to the $10? And then on the $50 note that you mentioned you’re starting to work for which will ultimately launch in 2028. Help us just understand like the financial model around these redesigns on that $50, is that just like a cost item for you guys right now as you’re spending on R&D and I guess, SG&A? Or would you actually start capturing some revenue in these early stages?

Aaron Saak: Yes. Thanks, Damian. And again, we’re just — I appreciate the question, incredibly excited about what’s happening in this U.S. currency business. As you know and have been following us for a while, which we appreciate, it’s been a long time coming, but we’re at that inflection point as we get into 2026. The $10 program is just really on track. We have upgraded our equipment, as you know, in the first quarter. We’ve been running qualification pilot runs as we’re exiting this year and working closely with the BEP on the order forecast. So we’re all ready mid next year to go in what I would just call full-scale production mode of the new $10 bill. That’s going as planned, right on target. And I had the opportunity just a week ago to visit our facility in Dalton, Massachusetts with the team, and they’ve just done a phenomenal job getting ready for the launch of the $10.

So again, I would just say going as planned. We consider that in the outlook Christina mentioned for 2026. As it relates to the new $50, I think this is just an important milestone in the continued decade-long progression of this new U.S. currency series and another key proof point in what it’s going to mean as we progress for the SAT segment. In terms of where we’re at right now, Damian, I don’t expect or should you expect or anyone any real financial impact from it in 2026 or even as we get a little bit into ’27. What’s important here is that we’re in the design phase, working with the Bureau of Engraving and Printing and the Fed on incorporating more advanced security features into that bill than currently exists today in the 50, very similar to what we did with them for the 20.

And I think that will be more apparent once the BEP and the Fed announces the new design, which we would expect sometime, let’s say, in the middle part of 2026. In terms of just what it means for us, I always go back as we’ve discussed to you just look at the variable printing cost of the current denominations where the current $100 cost about $0.10 in variable cost. The $50 and $20 are somewhere between $0.05 and $0.06. That delta, while it’s just a few pennies, obviously, on several billion banknotes is a material number, and most of that is due to advanced security features, some of which are ours. So that just gives you some bookends on how to think about it. As we get into certainly ’26 and in our Investor Day, we’ll provide a little more context on what that means for us when you look out these next few years.

We feel very good, very excited about where this is headed, Damian.

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

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

So that feels good. So really the balance is — and the biggest to the point you made is vending. So again, if we see some positivity, whether that be from tariffs or just generally needing to trigger buys for normal wear and tear, that will have some positivity for us, but we’re, again, being prudent on that outlook. And then I think retail for us has been a little bit of a mixed results with the OEMs. Some are performing better than others, and you could see that in some public results this week, still strengthen our customs go-to-market, but net-net, that OEM business is the biggest and the results are mixed, making them down for us to be specific here in Q3. And financial service in terms of the equipment orders down a little bit in Q3 as well.

And we think that’s just what a lot of other companies are seeing in some shorter cycle businesses just a little uneasiness in the macro environment, and that’s playing out in just some incremental delays in ordering in those 3 areas.

Operator: Our next question is from Michael Pesendorfer of Baird.

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

Aaron Saak: Yes. Thanks, [indiscernible]. I think this is a really good area to your question of just how we’re executing the integration as we had expected. In terms of the 80/20 process, which I think you’re very familiar with, — in terms of material impact on revenue, there is none. It rounds to 0 effectively because we’re seeing not only most customers transitioning to the new technology, which comes at a better price point and better margins, those who won’t be, again, nets out effectively for us. So the beauty here is we simplified the offering. We have a better and more simplified supply chain, higher margins and create stickiness with the customers. Generally, with very few exceptions, the receptivity is excellent. And most customers are happy for us to be bringing more advanced technology to them and walking them through what it can mean for their products.

And that’s been true of the entire authentication integration from the first acquisition of OpSec to now putting OpSec and De La Rue together to form a holistic one company. The customer receptivity to this has been very good, and that gives us a lot of confidence that the thesis here is correct as we’ve created a true market leader in authentication technologies.

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

Christina Cristiano: Well, maybe I’ll start and then I’ll turn it over to Aaron. And just — it’s worth repeating that we have high confidence in our full year target of 29% to 30% margin for CPI. So continuing to have very disciplined operating execution even with the lower volumes that we’re experiencing. And as we said in our prepared remarks, we expect that softness to continue. We’re taking a prudent approach to our outlook for next year. But we also expect to continue driving this very disciplined CBS cadence. And so you can expect to see our margins in the same range, if not just a little bit higher with accretion from the synergies that we’re driving and the execution of pricing and productivity initiatives.

Aaron Saak: Yes. Thanks, Christina. Just to add a little more to what she said. As a service business is very profitable for us. And so that is a positive impact for us in and across CPI as well as it’s a very sticky ARR business. So we like that very much, and we’re going to keep growing that, as you can see in our results and our outlook. The focus for the hardware business and our vending business is really about maintaining the high operating margins that we have in that 29% to 30% range. As Christina said, I think this is excellent work by the team despite some softness in the top line that we’re maintaining this near 30% margin. And that’s execution of productivity, cost, CBS toolkit, et cetera. And then I’d be remiss not to say that another hallmark of this business that comes from hardware and bidding is great free cash flow, really an excellent free cash flow profile.

And that’s another key metric as we look at CPI to maintain the high margins, continue to generate this very strong free cash flow and continue to invest and grow our service business and drive recurring revenue. That’s really the playbook of CPI as we get into ’26.

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

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

Christina Cristiano: Bobby, I’ll start on that one. And let me just for a point of clarification, it’s the $10 note that we’re redesigning right now that will be launched next year, that we’re super excited about. And so the high single-digit guidance is really based on the order that came out earlier in the quarter from the Federal Reserve, which had that favorable product mix, as you remember, toward the higher denomination notes. And that includes the $10 note in there as well as increased volumes for the $20, $50 and $100 bill. So we’re super excited for that program to launch next year. And as a reminder, the timing of that is out of our control. We’re not controlling that release, but we are prepared to do our production, as Aaron said in the prepared remarks, towards the middle of the year. And so we’ll expect to start seeing that production happening in the back half of next year.

Robert Brooks: Got it. So it seems like it doesn’t necessarily bake in what an uplift in content might look like on $10?

Christina Cristiano: Yes. No, it does include the $10 note based on that order. And it’s — remember, it’s a small piece of what’s happening next year just based on the timing of the launch, right? So if we bring in production in the middle of the year, it’s not a full year. But we have high confidence in that sales guidance range that we gave of high single digits for U.S. currency.

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

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

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

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

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

Operator: Our next question is from Damian Karas of UBS.

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

Aaron Saak: Thanks, Damian. And I’ll answer the first part and hand it over to Christina for the second. I’d tell you, I just am incredibly excited by the announcement we made a few weeks ago on Antares. I think it’s a very key milestone that I think you know in this evolution of the company that’s further strengthening our position and it’s not only expanding our TAM, but aligning us in the markets with very clear secular tailwinds with a clear technology leadership position in both equipment services and software. So we’re on track to the normal process of regulatory approvals that we discussed. When that comes to an end, we’ll make our first tranche of investment that will be about 30% of the company. We want to wait, see that through and really not get ahead of ourselves into any segment or alignment discussions, just let that process naturally play out, as you can probably appreciate.

And as we get into certainly early next year in our Investor Day and our Q4 earnings call, as that progresses, we’ll solidify the alignment as well as some of the guidance. But Christina, I’ll let you take the other half of that.

Christina Cristiano: Yes. And I’ll just reiterate how excited we are to bring Antares into our portfolio. In terms of guidance, I think we will not include Antares in our initial guidance. We’ll wait until the close happens at some point in 2026 after that public tender process is completed, and then we’ll do an update to the guidance at that time.

Damian Karas: Okay. Great. That all makes sense. And then, Aaron, I wanted to ask you a little bit about the strength you’re seeing in the service business in CPI and building out that service footprint. Could you just remind us, are these kind of like generalist service contractors that are kind of doing service across the various end markets and customer base? Or are there any particular end markets where you’re seeing a lot of this service stand out?

Aaron Saak: Yes. Thanks, Damian. I would say these are not — perhaps based on the definition, general service technicians. These are very highly skilled and trained not only in CPI equipment, but in ancillary equipment, other people’s equipment, typically in the front end of stores, checkout areas, kiosks and things of that nature. When you look at our service business today, again, it’s about 15% of CPI growing mid-single digits. It’s actually spread across many end market verticals. So — and that’s the key to the margins and the optimization of the business that we have good density in a geographic area where we’re deploying the service technicians. So today, based on the legacy of that business, about 60% of it is concentrated in financial services.

That’s really aligned to the legacy CPI and Cummins-Allison products that came into the portfolio in 2019. The rest, though, are in other areas like gaming, retail, vending even end markets. So it’s really a nice breadth of offerings that we have kind of with the same type of equipment. And our key wins this — that we announced this quarter are all with kiosks. So these have nothing to do with cash and coin operations. These are the type of kiosks you see, whether you’re at a doctor’s office or a retail establishment, a checkout in a particular restaurant, et cetera, that just being normal service contracts and maintenance. And so it’s an ARR type business for us now, growing and actually diversifying with all of these wins, which is why I’m particularly optimistic about what the team is doing.

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

Aaron Saak: Thank you very much, operator. Well, as we conclude today’s call, I’d just like to again thank the entire Crane NXT team for all of their hard work and their dedication over the past quarter. As you’ve seen today, we’ve taken and continue to take significant steps to evolve the company, and that will continue as we go forward. And as a reminder, we look forward to telling you more about this in our journey ahead during our upcoming Investor Day on February 25 in New York, and I look forward to welcoming you all there. So thank you again for your time this morning and all of your questions, and I hope you have a wonderful week.

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