Hi, everybody. Thank you for joining, attending our Oppenheimer Annual Internet and Communications Conference. With me today is Crane NXT. I have an outperformed rating on the stock. And presenting from the company today would be Aaron Seik, who's the company's CEO, and then also Christina Cristiano, who is the company's CFO. Aaron's going to have a bit of a slideshow to begin with, and after that, we'll go into our Q&A. If anyone has a question on the line, you can put it into the chat, and I'll ask that question, or you can email me at ian.zafino at opco.com. With that, Aaron, you want to take it away?

Well, thank you, Ian, and appreciate the invitation to be here at the Oppenheimer Conference, and good afternoon to everyone joining us today to learn more about Crane NXT. If we could go to the next slide, I'll just remind everyone about our normal forward-looking statements and disclosures, and I'll let you read those at your own choosing. But let me move to the next slide to talk about our company, which I'm very excited to be here today to speak about and the transformation that we've been undertaking at Crane NXT to build what I think is a fantastic global technology leader in the industrial space. We're going to end this year close to $1.9 billion in revenue with approximately 24% EBITDA margins and 100% free cash flow conversion, financial statistics that we're very proud of. But what we've really done over the last several years is build a portfolio that's become the leader in authentication and traceability technologies with over 100 years of history, 6,000 employees around the world, over 16,000 customers, and a portfolio that's more diverse and more resilient than ever, focused in a variety of end markets, as you can see on this slide, and playing in a number of geographies. about 50% here in North America, but 25% coming from emerging markets as we've grown and expanded the company through M&A, and about 15% in Europe. So this is a quick snapshot of who we are and the markets we serve as Crane NXT, but I'd like to dive into our businesses and how we report our numbers and what we've constructed in terms of being this leader in authentication and traceability technologies. And the way we talk about the company are in these two segments. The first is security and authentication technology is a leader in providing advanced materials and technology that goes onto products to prevent counterfeiting and help our customers ensure that their products and the identities of their citizens are secure. And we have two leading businesses under this segment, Crane Currency, which is the world's leader in advanced technology to governments providing currency, and Crane Authentication, which provides similar leading technology, but to brands and governments around the world for identities and tax stamp type solutions. So that first segment, which is approaching $1 billion in sales in 2026 provides the core technology for authenticating products and securing them. And then our second segment now called detection and traceability technologies is made up of companies that are providing the equipment and the services to help authenticate those products. And it starts with Antares Vision, our newest acquisition, which we closed just about 150 days ago, that's taking us into the pharmaceutical and food and beverage markets, again, providing for the quality and authenticity of products and tracking and tracing those through the supply chain. And then CPI, a business that is providing detection and inspection equipment for currency and payment transactions that includes both a hardware business, aftermarket services, and Vendi. In total, this is the portfolio today of Crane NXT with these two segments and four market-leading businesses. And if we go to the next slide, what you'll see here is very deliberately, over the last several years as we've expanded the company, we've purposely honed in on key capabilities and the interplay between those across the portfolio. And you can see those five key capabilities here in the verticals with the businesses and where they play in the horizontal rows. So first is our focus on providing the world's best security technology to stop counterfeiting. And that's really the hallmark of our crane currency and crane authentication businesses. Then we move into the software. And this is a really important part of our value proposition and what helps create wide moats around our business in that the software works with the security features to be able to track and trace products from the point of manufacture all the way to the point of consumption, oftentimes by a consumer. And that's really the focus of Crane Authentication and Antares Vision in their respective end markets. Then we move into the equipment that helps to ensure the quality and read and detect our authentication labels. That's, again, the focus of Antares Vision and CPI, along with field service capabilities to go out and commission and service those pieces of equipment at the customer sites. And then last, but really not least, and maybe what's less understood and not just about our portfolio, but the importance we have across each of our companies in dealing with governments, between crane currency, crane authentication, and Antares Vision. We're selling, in many cases, direct to governments and agencies within those governments, different sets of technologies to ensure the quality or the authenticity of products and identities, all the way from currency to pharmaceuticals transacting in different countries around the world. And this capability of being able to sell to governments is a growing part of what makes our portfolio stronger together. So that's Crane NXT today, and we've set out a vision for the company to really drive and increase the value creation to our shareholders in three major areas. One is accelerating organic growth, built on our differentiated technologies, positioning our portfolio where we can capture market tailwinds. The second is continuing to expand on these leadership positions. We've done three large acquisitions since going public, most recently Antares Vision, and we've created anchor positions that we can continue to build on and become this leader in authentication and traceability technologies. And finally, what's been a longstanding hallmark of the company is driving operational excellence through what we call the crane business system. And this is something that's not new to the company, but that's been part of our fabric and our DNA for a long period of time. and you can see it most importantly in our financial results, including what we presented just last week on our Q2, where we expanded margins through the deliberate and intentional use of CBS. So those are our value creation priorities as we look at the next three years, and here are the metrics by which we're going to judge success that we announced at our investor day earlier this year. So first is accelerating organic growth, And our target is to consistently be at around mid-single digits with the portfolio. Second is to continue to build the portfolio up to about $2.5 billion in revenue by 2028. And the important thing here is to keep our net leverage below three. So we're utilizing our balance sheet, but we're keeping leverage in check. And right now, you can see over the last several months, we've consistently paid down our net leverage. we now stand at about 2.7 times and are well on our way to the low twos by the end of 2026. And then finally, as I mentioned before, driving operational excellence, it comes through in our adjusted EBITDA margins in the mid-20% range, which we'll maintain even though we have acquisitions that are typically a little dilutive. We bring those margins up through the application of our business system. And again, you saw that on display with our Q2 results, where we had several hundred basis points expansion in our authentication acquisition. And then finally, a hallmark of the company has been our strong free cash flow. It allows us to go out and expand the portfolio, keep our leverage in place, and pay a competitive dividend. And our adjusted free cash flow is around 100% and has historically been there for the last three years since we went public. So, Ian, those are our priorities as well as the metrics that we're focused on to drive success over the next three years. I sincerely appreciate the time for Christina and I to join you here today and happy to dive in a little deeper with questions.

Yeah, very good. I mean, maybe I'll kind of kick it off and maybe give us an update on the U.S. currency refresh and, you know, general thoughts on the upcoming Fed order of the new $10 note and then the higher value denominations.

Yeah, thanks for that, Ian. So the currency business for us inside our SAT segment has been a standout for the last three years. And in Q2, we announced an all-time high backlog for that business where we're booking orders now into 2028, which is a position we've never been in to have this strong of a visibility into the backlog and the orders that we believe are going to come really in 2028 and beyond. And that's why we're investing in this business, building out new production lines for our proprietary micro-optic technology here in the United States and expanding into Europe. Again, based on the demand we see not only in our backlog, but what we see coming. Now, a key part of that to answer your question or part of your question is the U.S. currency. We see the new $10 bill really launching at scale in 2027, meaning going out en masse to all of us as consumers. That's what we anticipated this year. So it's really a 2027 benefit to the business. And we're busy at work on the design of the next $50 bill, which we expect to come out about a year or so later from the 10. And then there'll be the 20 and ultimately the $100 bill here in the U.S. So we see this U.S. currency business as a tailwind for us for the next really better part of a decade, and we see the international currency business performing better than probably any of us would have even expected three years ago, and we're investing more to capture that growth. And then to answer your last question about volumes you mentioned for the U.S. currency, we expect to get that update sometime in the late September, early October time frame. That'll be a public announcement from the Federal Reserve. The key thing to watch there for us is the mix. We want to see more 100s and 50s and 20s year over year than last year. We think volume overall will probably be pretty consistent with what we saw in 2026.

Good. And that actually kind of dovetails nicely into one of the questions we have online. So I'll read you the question. So as you've spoken about strong international currency demand and a record backlog, as you think about future investments in the currency business, can you help us understand what level of demand visibility gives you confidence to deploy incremental capital? and more broadly, how should investors think about the relationship between capacity investments today and the revenue growth opportunity they could support over the next several years?

Sure. Well, thanks for the question from the gentleman online. I would tell you a few things to kind of break that down. First of all, just a reminder that in general, Crane NXT is a pretty CapEx-like business. About 5% of sales go into CapEx. For a currency business, it's going to be closer to 7 due to this visibility we have on the growth of our international and U.S. business over the next decade. Now, what gives us a lot of confidence is not only what you see in the backlog that we reported last week at near $500 million for the segment, but also this visibility into new tenders or new contracts being proposed by governments around the world to redesign their currency. As we talked about at our investor day, if you look at what's coming, that we have high confidence is going to be types of currencies that we can design and win with our technology, we see an incremental potential $100 million of growth in this business between 2026 and 2030. So it gives us high confidence that the investments we're making are going to have a very good return to the shareholder. And once we win those contracts, I think, as you know, Ian, they're like an annuity stream. So once you win it, you have a five to 10-year window to continue to service that customer, governments around the world, as the case may be. And you're typically in a very good position then to win the next iteration of that contract. So it's a fabulous you know, annuity stream of business that comes at a high margin. And we feel very good about the future.

Okay, good. And then if we return to authentication, maybe talk about your expectations for growth for the year, maybe across brand authentication, government solutions, ideas, just, yeah, any color you could give us.

Yeah, I think overall, we would look at that business in totality at about mid-single digits, and we're on track to get to that number this year. That's what we've always said and what was in our underwriting case for the acquisitions. I think the really key point of our authentication business is we're capturing that higher or that mid-single-digit growth, but we're able to improve our margins substantially through 80-20 work, work, rationalization of rooftops, rationalization of the SG&A structure in the business. And this quarter, we saw a few hundred basis point margin expansion. We'll see that again next quarter on a year-over-year basis. And we're going to move the margins of that business into the low 20s over the next two to three years.

Very high confidence we're on trajectory to do that okay good um and then any um potential wins or targets of brand authentication that you'd like to call out yeah christina do you want to take sure i'd be happy to so you know first i'll just say we continue to have great relationships with our marquee customers including all the major sporting leagues like nfl and mlb where we've recently re-signed longer term multi-year agreements But we're also now driving the cross synergies, part of the thesis for the acquisitions, where we're taking our legacy micro optics technology and selling it into authentication customers. And a great example of that this quarter was us selling into a major electronics retailer that is now going to upgrade their security technology to micro optics technology in a multi-year agreement. And so that's a great example of a win. And we hope to see more of those cross-selling opportunities reading through in the years to come.

Okay, good. And then, you know, any operational improvements you'd like to highlight over at OPSEC or Delarue authentication or any kind of margin uplift you expect there and maybe talk about that a little bit more?

Yeah, well, I'll take it, Ian. Those are the first two acquisitions we made, and we've merged them together to now form what is Crane Authentication. And so that's how we run them today as a unified business. There's really no longer an OPSEC or a De La Rue. There's one Crane Authentication, one leadership team. And what that's given us is the opportunity to rationalize manufacturing footprints and product lines where there could have been some overlap. That was always part of the deal thesis. So, you know, case in point, we've taken one of the legacy De La Rue product lines and sunset it and moved over the last year those customers to our micro optics. So we've been able to optimize our manufacturing footprint and move the customer to a higher gross margin product, which is exactly, you know, the kind of synergy work when we talk about operational improvements that we had in the deal thesis. And that's played out pretty much on plan. We're busy doing those same kind of activities, you know, through the rest of this year and continue to look at ways to optimize the footprint of the authentication business. It's why we have a high confidence you're going to see the margin lift. And it's a margin lift of a few hundreds of basis points over this year and next year based on the actions we're already taking.

OK. And then let me just see here. On CPI, maybe we talk about that a little bit more. And maybe tell us kind of the hardware trends that you're seeing there. and then any other kind of color you'd like to tell us?

So CPI now sits in our DTT segment, biggest part of it, along with Antares Vision. And we run that business as three really separate business units. I'll speak to each one to give you a little color on what we see in the business and the in-markets. The first is our vending business, where, as a reminder, we make the entire vending machine. We're number one by far here in North America in that business, and that's playing out this year pretty much as we expected. It's kind of a low single-digit grower with incremental margin expansion inside that P&L. Next, we have our services business. That's really where we're investing inside the CPI portfolio in differentiated systems and processes to upgrade the client experience and our dispatch of technicians. It's a businesses that's servicing our own equipment, as well as third-party equipment at retailers, financial institutions, casinos, et cetera. That business has grown mid-single digits, and again, seeing some nice margin expansion as well. And then lastly, you have the hardware part of CPI. This is where we make components that go inside slot machines to accept and validate bills and transactions into self-checkouts and into financial institutions. So think about a cash in transit type customer who has processing a lot of cash that perhaps they picked up for their client through the course of a day or a week. That business, we always expected to kind of be a flat to down for this full year. It was down low single digits in Q2. We expect it to be down slightly in Q3 and then move to positive growth in Q4. And that's based on what we see kind of coming through in orders. We had sequential backlog growth in the business quarter over quarter and a book to bill that was above or right around 1.1 times. So we're seeing kind of the business us go from kind of this negative growth into positive growth as we exit the year, and we've updated our guidance to reflect that last week.

Okay, and then how do you think, how do you feel about each component of the business as far as just remaining part of the long-term portfolio?

Well, it's a good question. I think we're at an interesting point now where we built out these positions in our two segments. We feel very good about the properties that are inside from the acquisitions that we've done. And there's more we can add to those. The M&A pipeline remains very healthy. And it gives us the time now that we're approaching $2 billion in sales, I think, Ian, to look at the portfolio, always determine if what we have today is purpose-built for the future and evaluate if there's ways to generate more value for the shareholders. I would hope our shareholders are asking us to do that. That's what we're doing. And we're constantly evaluating it. So I think you can assume safely that those are the kind of discussions that we're having inside the company.

Okay, okay. That's helpful. And I guess when you think about this additional M&A, how would that – is it dependent on what you do on CPI or anything in CPI? Is it really mutually exclusive? How do we kind of think about it?

I may take that a little to talk about capital allocation broadly. Then, Ian, to say our priority right now, at least from an M&A perspective, is to execute the integration of Antares, which you saw from our results last week's going very well. It's a right-on plan, and we feel good about the full year. That is the focus, at least here for the next several months. Secondly, it's to pay down the debt. You know, we want to get our debt well below two and a half times before we consider doing anything else. We think that's just the prudent thing to do. And we'll be there by the end of Q3 just based on our strong free cash flow. And we'll end the year at probably 2.3 times if you just model out our free cash flow. So we'll be in a position to say the debt's, you know, in a very good place, well below two and a half. We'll have firepower to probably do M&A perhaps in 27. There certainly won't be any here in the rest of 26. And then you start to get to the place below 2.5 times in net leverage where you could start to look opportunistically at share buyback depending where the equity is trading at. And we'll always be, again, kind of putting it through the lens of shareholder value if the balance sheet's in a good place and we have this excess free cash.

OK, thanks. And then, you know, maybe, you know, we talked about the U.S. currency refresh for one part of the business. But can you maybe talk about how it might impact CPI and what we should expect there? Because I know you touch a lot of the old notes, I imagine.

Yeah, I think it's, you know, it's a second order benefit from the new U.S. currency upgrade that may not be obvious that we highlighted at our investor day. But once the new U.S. currency comes into circulation with some advanced security features, it will require an upgrade of the infrastructure to read that currency. And we stand to benefit from that as CPI, as the number one provider of cash and coin currency readers across the world. So we would expect, probably on a lag, more of like a 28-type timeframe, 29, that you'll start to get into an equipment upgrade cycle that will also require ongoing software support to read the new U.S. currency. So that'll ultimately be a tailwind for our CPI business. Sorry, Ian, I can't hear you if you're asking a question.

Sorry, I'm on mute. Thank you. And maybe we also then switch back to Antari's vision a little bit. Maybe give us an update on the integration there and then basically what you're seeing for growth in life sciences, food and beverage, et cetera.

Yeah, I'll take some and then maybe hand it to you, Christina. You can chat as well. Maybe I'll just start with those two end markets. We're expecting mid-single-digit growth from the company overall this year. In total for us, once we've acquired it, it'll be about $200 to $210 million in top line. Food and beverage probably performing a little better than we actually originally thought, just due to some strength, not only in the market, but in people adopting some of our equipment solutions. So that feels pretty good. That's why we have a high confidence we're going to land at the range we guided to. But, Christina, I'll let you talk more about the integration.

Happy to talk about it. And if anything, you know, certainly on track, if anything, maybe a little bit ahead of where we expect it to be. And I think what's really the most exciting is to see the Antares team fully embracing CBS, right? The culture, the hallmark of of Crane NXT and our continuous improvement environment. And so they're already having Kaizen events and driving initiatives for productivity. And this will be a big part of how we expect to achieve the synergies that we've identified through improved productivity over the next few years. So off to a great start. We've owned the business for a little over 150 days and feeling really confident in the guidance that we gave for this year.

OK, thanks. And then when you're just digging into the trends a little bit more on Antares and maybe F&B in particular, what are you seeing as far as the end markets? I mean, our coverage includes some of the makers of the machines that go into a lot of these facilities. You know, here are different things from them, but kind of what are you guys seeing as far as that? Or is this just much more of a solution that's providing, you know, a better mousetrap? And therefore, even whether no matter how they're doing, they're still amenable to take on your products and innovative products.

Yeah, it depends a little on that in customer, right? There's several larger customers, but this business, it's a little bit more of a, it has some project work, but it's more flow. So these are, you know, a typical order is hundreds of thousands, maybe to a few million. These aren't enormous orders by any stretch. And so you get kind of a combination of replacement installs, you get some new installs, and then remember 30% of the business they're in is software and services. So you have some nice resiliency in the business of a very sticky revenue base that's reoccurring based on equipment sales that occurred in the past. So that's why we're not going to have big inflections one way or the other. It's a very steady, you know, visibility out into the next few quarters.

Just from one of the other companies we cover, you know, they do talk a lot about, especially international, you know, push to just more consumers eating, factory produced food, food safety increasing. And it just kind of seems like you're playing all into those talents.

And the other thing goes back to that center or the portfolio synergies that I discussed around selling to governments. More and more of the governments are regulating protocols on the manufacturers in those, you know, in their jurisdiction. And that plays to our strengths as well, because they have to pick a certified software that links to the equipment in those facilities that can track and trace and verify the quality of the product, you know, down to the day and time of manufacture. So exactly your point, we feel like we've really positioned the portfolio with some resilient tailwinds in strong technology positions. And you're starting to see the benefit of that. And you can see it as organic growth will start to accelerate in the total for Crane NXT over the coming years.

And how do you feel about Antares' competitive position in food and beverage? And, you know, how does sales work? Is it kind of full-on solutions? Is it single a la carte? And any opportunities there?

It's more of a solution sale that includes the equipment with the software for a particular function in a line. You know, so we're typically selling in, let's say, a piece of equipment for an inspection or quality check or to serialize a product. That could be anything from a soft drink to, you know, a canned food product or what have you. So it's a solution for whatever the product is being made by that manufacturer. Now, the beauty is typically it replicates itself across other factories or other lines that that manufacturer might have. So it's rarely just a one-time sale opportunity. And the technology itself with Antares is, you know, best in class. We believe that. There's still fragmentation in this market. That's why we like it. And there's other opportunities in our M&A funnel to keep adding to it and helping to consolidate the market that I think that gives us more scale. It also leads to better SG&A structure and margin improvements.

And I know we talked about some trends, but any other emerging trends that we should be on the lookout for that might help this business, whether it's like GLP-1s or peptides or anything like that in life sciences?

Well, I think GLP-1s is a really good example. And when you start to look at these higher-end drugs that are both expensive and incumbent volume, those are the most susceptible to counterfeiting. And you see a desire not just by governments to mandate some type of traceability, but of the brands themselves, because they don't want the risk of counterfeiting that hurts both the equity of the brand or, more importantly, the consumer who's using it, should it be a bad compound. So those are the kind of applications that not only help Antares' vision, they also help create authentication with the label technology that goes on the outside of those containers. So we're positioning both of those businesses to benefit from those kinds of trends that you just mentioned, Ian.

Okay. And I know we kind of jumped the gun a little bit on capital allocation, but if we circle back to that a little bit more, walk us through the M&A strategy. How do you evaluate what you want to buy? Christina, how do you know what you want to pay for it? And how do you kind of assess that? And then maybe also just the pipeline you're seeing out there.

Would you want to start, Christina?

You bet. You know, our M&A framework has been unchanged since we started the acquisition. I think we've been very consistent in executing that, right? So first, we've been looking for niche technologies. And markets that are growing at mid-single digits are higher, right? So to expand our organic growth once they get fully integrated into our portfolio. And then in terms of size, we've been focused on acquisitions that are about $100 million to $500 million of revenue. So not anything transformational, things that we can absorb into the portfolio and integrate successfully within a year. And then just from a financial perspective, we're looking for a double-digit return on invested capital within five years. And that's really our financial criteria, to answer your specific question, to ensure that we're driving that right amount of shareholder value. Aaron, anything else you wanted to add to that?

Well, I would just end with the pipeline to your question, Ian, remains as strong and robust as it has been, if anything, gets better over time, because we've expanded our TAM, about doubled it from $7 billion to $13 billion since we started the company. So that just naturally brings more opportunities into the funnel. Most of these are private companies, although every now and then, like Antares, there's kind of a public company, albeit in the case of Antares was a European public company. But I think the secret to us executing the deals and getting these kind of properties has been it's cultivated over a long period of time. All three of our transactions, the large ones, have been direct relationships with the seller, that we would be the right home for the property, and they shared the vision for what we wanted to build in this portfolio. We have a very robust list of other companies out there that we think could add in to creating an XT, and we can start, you know, in the way we've done it with OPSEC, De La Rue, and Alantaris is cadence them in at a pace, a little bit of our choosing so that we can absorb them and keep our balance sheet in check.

And that's what you'll see coming in 2027. open okay um and then you know just maybe staying on capital allocation i know you guys just generate a ton of free cash flow right that 100 conversion ratio um so obviously you'll delever pretty quickly um and then what do we do from there like how do you decide really what to do with it right because there's a great organic stuff you want to do buybacks potentially m&a so yeah i mean how do how do you kind of figure that one out?

Well, I mean, to be fair, there's probably two options for us after we delever to down to the low twos, mid to low twos. You know, you could argue there's a dividend. You know, we've increased that every year by a few pennies. We want to maintain that, but we're not going to significantly increase that. So I don't see that as a real viable option. The next is share buyback or M&A. You know, M&A will be a little bit dependent on the timing, both for us and for the seller. And if we're at a place where we think the equity still is trading at, you know, a low level, I would say, you know, in the low 50s, it's getting into that level. You know, I think it's incredible value for where we're headed. And, you know, we would definitely look at use of capital for strategic share repurchase if the equity was, you know, trading, you know, let's say at or below anywhere in the vicinity of where we're at today. I think that would be a good use of cash and would generate a lot of shareholder return.

Okay. Understood. This was very helpful. I mean, those are my questions. I don't know if you have anything that you wanted to mention or something in closing that you wanted to say. But you've been more than generous with your time and answered my questions and the audiences.

Well, thanks, Ian. Maybe I'll just end it here and end with, once again, a thank you for you and for everyone joining to hear about Crane NXT. And it's hard for me to believe, Ian, we're on to our third year. And you've been with us here from the beginning and have seen the changes in the portfolio. And we're in a better position, if not the best position we've ever been in, as you look at where the portfolio is at, how the companies are performing, how the acquisitions are being executed. And you saw it in our Q2 results where we felt confident that, you know, we're at a position to raise guidance for the rest of this year. And we're producing EPS growth of, you know, into the teams year over year and in a very good place to do that in 2027, as you've suggested in your coverage as well. So we feel like we've, you know, we've turned here and we're heading quite literally with the wind at our back. and are looking to a strong finish in 26 and continued evolution of the portfolio in 27. I feel that and think the stock is an exceptional deal at this value, Ian.

So, I mean, we haven't outperformed, so we're in agreement.

I appreciate your confidence there.

All right, guys. Well, thank you very much, and I'll let you go back to more important things.

Have a great day.