Crane NXT, Co. Oppenheimer 29th Annual Technology, Internet & Communications Conference

Excellent. Well, thank you, Ian, and appreciate the invitation to be here at the Oppenheimer Conference. Good afternoon to everyone joining us today, to learn more about Crane NXT. If we could go to the next slide, I will just remind everyone about our normal forward-looking statements and disclosures, and I will let you read those at your own choosing. Let me move to the next slide to talk about our company, which I am very excited to be here today to speak about, and the transformation that we have been undertaking at Crane NXT to build what I think is a fantastic global technology leader in the industrial space. We are 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 are very proud of.

What we have really done over the last several years is build a portfolio that has 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 is 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 have grown and expanded the company through M&A, and about 15% in Europe. This is a quick snapshot of who we are and the markets we serve as Crane NXT, but I would like to dive into our businesses and how we report our numbers and what we have constructed in terms of being this leader in authentication and traceability technologies.

The way we talk about the company are in these two segments. The first is Security and Authentication Technologies, 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. 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. 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.

It starts with Antares Vision, our newest acquisition, which we closed just about 150 days ago, that is 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. 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 vending. In total, this is the portfolio today of Crane NXT with these two segments and four market-leading businesses. If we go to the next slide, what you will see here is very deliberately, over the last several years as we have expanded the company, we have purposely honed in on key capabilities and the interplay between those across the portfolio.

You can see those five key capabilities here in the verticals with the businesses and where they play in the horizontal rows. First is our focus on providing the world's best security technology to stop counterfeiting, and that is 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. That is 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 is, 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. Then last, but really not least, and maybe what is 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 are 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. This capability of being able to sell to governments is a growing part of what makes our portfolio stronger together.

That is Crane NXT today, and we have set out a vision for the company to really drive and increase the value creation to our shareholders in three major areas. One is in 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 have done three large acquisitions since going public, most recently Antares Vision, and we have created anchor positions that we can continue to build on and become this leader in authentication and traceability technologies. Finally, what has been a longstanding hallmark of the company is driving operational excellence through what we call the Crane Business System.

This is something that is not new to the company, but that has 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. Those are our value creation priorities as we look at the next three years, and here are the metrics by which we are going to judge success that we announced at our investor day earlier this year. 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.

The important thing here is to keep our net leverage below 3, so we are utilizing our balance sheet, but we are keeping leverage in check. Right now, you can see over the last several months, we have consistently paid down our net leverage. We now stand at about 2.7 times and are well on our way to the low 2s by the end of 2026. Then finally, as I mentioned before, driving operational excellence, it comes through in our adjusted EBITDA margins in the mid-20% range, which we will maintain even though we have acquisitions that are typically a little dilutive. We bring those margins up through the application of our business system. Again, you saw that on display with our Q2 results, where we had several hundred basis points expansion in our authentication acquisition.

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. Our adjusted free cash flow is around 100% and has historically been there for the last three years since we went public. Ian, those are our priorities as well as the metrics that we are 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. Thanks for that, Ian. The currency business for us inside our SAT segment has been a standout for the last 3 years. In Q2, we announced an all-time high backlog for that business, where we are booking orders now into 2028, which is a position we have 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. That is why we are investing in this business, building out new production lines for our proprietary micro-optic technology here in the U.S. and expanding into Europe. Again, based on the demand we see, not only in our backlog, but what we see coming. 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 is what we anticipated this year. So it is really a 2027 benefit to the business, and we are 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 will 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 3 years ago, and we are investing more to capture that growth. To answer your last question about volumes you mentioned for the U.S.