CXT
Crane NXT, Co. | Secure, Detect & Authenticate
Sole-source US banknote substrate provider since 1879 | Payment acceptance hardware leader
$47.92
-30.5% from 52-wk high ($69)
52-WK: $41.54 - $69.00 | Mkt Cap: $3.0B
BUY | PT: $82-88 (Baird/DAD)
Investment Summary
CXT's underperformance stems from CPI segment weakness (vending/retail in structural decline from digital payments) compounded by temporary SAT margin compression in Q1'25 from US Currency equipment upgrades. The long-term thesis remains intact: 2026 US Currency refresh cycle (+90% high-denom volume), record international currency backlog, and authentication platform buildout. Stock is hamstrung until late Feb 2026 analyst day when formal guidance clears uncertainty. Trading at <12x 2026E earnings with high-teens EPS growth potential in 2026+.
Business Overview
CPI - Crane Payment Innovations (60% of Sales)
What they do: Payment acceptance hardware specializing in bill/coin validation for vending machines, casinos/gaming, self-checkout, ATMs, and industrial bill counters. Also provides telemetry software and maintenance/support services.
Vending
Gaming
Retail
Transport
The Problem: Vending and traditional retail are in secular decline from digital payment disruption. Gaming is the bright spot with double-digit growth, but can't fully offset vending/retail weakness. Backlog has collapsed 50% in two years ($217M → $109M).
SAT - Security & Authentication Technologies (40% of Sales)
What they do: Two businesses: (1) Crane Currency - produces banknote substrate (paper) and proprietary anti-counterfeit technologies including micro-optics (the blue stripe on the $100 bill). Sole US provider since 1879. (2) Crane Authentication - holographic and micro-optic security labels for brand protection, track/trace, and anti-counterfeit.
Currency
Authentication
The Opportunity: International currency backlog at all-time high (~$400M), bookings now extending into 2027. US Currency refresh cycle starting mid-2026 ($10 note first) will drive high-single-digit growth. Authentication expanding via De La Rue and Antares Vision acquisitions.
The Core Problem: CPI in Structural Decline
CPI has delivered 5 consecutive quarters of revenue decline, with organic sales down 2-7% each quarter. The backlog has collapsed from $217M at end of 2023 to just $109M by Q3 2025 — a 50% decline that signals sustained demand weakness, not just timing. Management has twice cut CPI guidance in 2025, most recently to -4% to -2% from an initial outlook of flat to +2%.
CPI Q3'25 Revenue
-4.0%
YoY | $216M
CPI Organic Growth
-4.5%
Core sales ex-FX/M&A
CPI Backlog
$109M
-50% from Dec'23
2025 CPI Guidance
-4% to -2%
Cut twice this year
"CPI backlog decreased by 18% to $109M, reflecting ongoing end market softness. Customers continue to navigate tariff and macroeconomic uncertainties. Demand within Vending continued to be weak due to customers delaying orders following the price increase implemented in response to tariffs."
— Q3 2025 Earnings Call
CPI Quarterly Revenue Trend (YoY %)
FY24
-1.5%
Q1'25
-2.9%
Q2'25
-5.8%
Q3'25
-4.0%
CPI Backlog Trajectory ($M)
Dec'23
$217M
Dec'24
$146M
Mar'25
$147M
Sep'25
$109M
CPI End Market Deep Dive
Vending — The Biggest Drag
Declining High Single Digits
Vending is CPI's largest end market and the primary source of weakness. Customers are delaying orders following tariff-related price increases, and the secular shift to digital payments continues to pressure the market. Management expects vending to remain ~flat in 2026, which they acknowledge is a conservative assumption. Recovery depends on macro stabilization and capex environment improving.
2026 Outlook ~Flat (was +LSD)
Gaming — The Bright Spot
Double Digit Growth
Gaming delivered double-digit YoY growth in Q3'25 as major OEM customers completed deep inventory resets following pandemic-era overbuying. Order patterns have normalized. US slot revenue grew 5.7% YoY in August per AGA. However, tougher comps in 2H'26 will moderate growth. Gaming provides favorable mix lift to CPI margins.
2026 Outlook Continued growth, tougher comps
Retail — Mixed Signals
Traditional OEM Weak, SCO Strong
Traditional OEM retail business remains weak, but custom self-checkout (SCO) through third-party integrators is showing strength. Management noted initial evidence of potential recovery in OEM demand emerging from the likes of Diebold and Verifone, but a sustained volume inflection isn't expected until sometime in 2026.
2026 Outlook ~+L-MSD% hardware ex-vending
Services — Recurring Revenue
~+MSD Growth
CPI's service business (field service, preventative maintenance agreements, parts) provides more stability than hardware. Management expects ~+MSD% service growth in 2026, driven by the installed base and increasing attach rates on maintenance contracts.
2026 Outlook ~+MSD%
The Bear Case: Digital Payment Disruption
The secular shift to digital and software-based payments undermines CPI's core hardware business. With declining use of cash in traditional transactional settings (retail, grocery, vending) and rising adoption of e-payments, this presents a structural headwind to long-term CPI growth. Management's response is to focus on gaming (regulatory-driven cash demand), transportation, and authentication markets where physical technology has staying power.
SAT Segment: Temporary Pain, Strong Future
SAT experienced a dramatic margin collapse in Q1'25 — operating profit dropped 88% and margins crashed from 19.4% to 1.9%. This was entirely expected and temporary, driven by planned equipment shutdowns at the Dalton paper mill for upgrades ahead of the US Currency redesign cycle. Combined with ~300bps of dilution from the OpSec acquisition, Q1 was a trough quarter. SAT has since recovered strongly, with Q3'25 margins back to 24% and revenue up 28% YoY.
Q1'25 Margin Collapse
1.9%
Was 19.4% | -88% Op Profit
Q3'25 Recovery
24%
Adj. Op Margin | +250bps YoY
Q3'25 Revenue
+28%
$229M | 9% core
SAT Backlog
$448M
Record High | +27% YoY
What Caused Q1'25 Margin Collapse?
US Currency equipment upgrades -40% production volume
Under-absorption of manufacturing overhead Temporary
OpSec acquisition dilution ~300bps drag
The Dalton, MA paper mill underwent planned technology upgrades for the successive physical note redesign cycle. This was a one-time event — equipment upgrades are now complete and production has resumed.
Why SAT Is Recovering
Equipment upgrades complete Done
Int'l Currency backlog at all-time high $400M+
International bookings extending into 2027 Strong visibility
De La Rue synergies ramping On Track
9 denominational wins YTD Robust pipeline
"International currency demand and authentication commercial activity appears very encouraging, including 9 denominational wins YTD. Given the company's backlog position and robust customer demand, international currency backlog and bookings are now extending into 2027, aiding outyear top-line visibility."
— D.A. Davidson, November 2025
The 2026+ Catalyst: US Currency Refresh Cycle
The Federal Reserve's CY26 print order, released in September 2025, signals a major positive inflection for CXT's US Currency business (35-40% of SAT sales). Volumes of higher denomination notes ($10, $20, $50, $100) are expected to increase approximately 90% YoY. Full-scale production of the new $10 banknote begins mid-2026, followed by the $50, $20, $5, and $100 in subsequent years. This represents a decade-long refresh cycle that will be highly accretive to CXT.
2026 US Currency Growth
+HSD%
Management guidance
High-Denom Volume
+90%
$10/$20/$50/$100 vs. 2025
2026 Print Order Range
3.8-5.1B
Total banknotes
New $10 Production
Mid-2026
First of new series
Why This Matters
CXT is the sole-source provider of US banknote substrate — they've held this position since 1879. Higher denomination notes carry substantially better margins than $1 and $5 bills. The micro-optics technology (the blue stripe on $100 bills) that CXT provides is expected to be incorporated into the new banknote series, creating a highly accretive multi-year tailwind. CXT has completed all equipment upgrades and has full capacitization capability to meet the increased demand.
US Currency Refresh Timeline
Q1 2025
Dalton paper mill shutdown for equipment upgrades (temporary margin impact)
Q2 2025
Production resumes with upgraded equipment; margins begin recovery
Mid-2026
Full-scale production of new $10 banknote begins
2027+
$50, $20, $5, and $100 notes follow in subsequent years (decade-long cycle)
M&A Strategy: Building the Authentication Platform
CXT has been actively deploying capital to build out its authentication and track/trace capabilities. The company has ~$2.5B+ in deployable capital over the next three years and is targeting ~$2B+ deployed toward M&A by 2027. Management's goal is to reach ~$3B of revenue by 2027 (vs. ~$1.5B in 2024), with M&A the primary lever.
OpSec Security
Closed 2024
Holographic security and anti-piracy solutions. Integrated into Crane Authentication. Contributed ~300bps margin dilution initially, now improving.
De La Rue Authentication
£300M | May 2025
Authentication solutions from De La Rue. Integration on track with synergies accelerating. Expected to add $80-90M revenue in May-Dec 2025.
Antares Vision
€445M | 1H 2026
Italian inspection, detection, and track/trace leader. ~€200M revenue, ~15% EBITDA margin. Focus on life sciences (60%) and F&B (40%). EPS accretive in 2027.
"Crane Authentication is executing on its planned product rationalization and 80/20 implementation, upgrading existing customers from legacy offerings to CXT's micro-optics technology, leading to improved margins and customer retention. CXT expects authentication to exit 2026 generating an EBITDA margin of ~20%."
— D.A. Davidson, November 2025
Segment Financial Comparison
Metric CPI SAT Verdict
% of Sales (2024) 60% ($873M) 40% ($614M) CPI Larger
FY24 Revenue Growth -1.5% +21.5% Diverging
Q3'25 Revenue YoY -4.0% +28.1% CPI Lagging
Q3'25 Core Sales -4.5% +9.0% CPI Lagging
Q3'25 Adj. Op Margin 31.1% 24.4% Both Healthy
Backlog Direction $109M (-50% 2yr) $448M (+27% YoY, Record) CPI Weak
2025 Guidance -4% to -2% +27% to +29% Diverging
2026 Outlook ~Flat to +LSD% +MSD% SAT Carrying
Sellside Views
Baird (Michael Halloran)
OUTPERFORM | PT: $82 (was $88)
"Estimates moving lower on incremental contract manufacturing expenses for international currency and additional CPI cyclicality. Stock likely hamstrung until late Feb analyst day. Long-term opportunity remains bright — inexpensive at <12x 2026E earnings."
Dec 2025
D.A. Davidson (Matt Summerville)
BUY | PT: $85
"Best-in-class, highly differentiated technology for securing, detecting, and authenticating. CXT has an underappreciated set of assets and exposures to significant secular tailwinds. We see potential for MSD/MSD+ organic growth over the cycle with room for margin expansion and multiple re-rating."
Nov 2025
Consensus (4 Analysts)
BUY | PT: $76.75
All 4 covering analysts rate CXT a Buy. Implies ~60% upside from current levels. Key debate is timing of CPI stabilization and magnitude of 2026 US Currency tailwind.
Jan 2026
Valuation & Estimates
Current Price
$47.92
Jan 2026
2025E Adj. EPS
$4.04
~12x P/E
2026E Adj. EPS
$4.40-4.75
+9% to +18% YoY
EV/EBITDA (NTM)
~10x
Hist. avg: 8.3x
Baird Estimates (Dec 2025)
2025E Revenue $1,631M (+9.7% YoY)
2025E Adj. EPS $4.04
2026E Revenue $1,731M (+6.1% YoY)
2026E Adj. EPS $4.40 (+9% YoY)
2027E Adj. EPS $5.00 (+14% YoY)
D.A. Davidson Estimates (Nov 2025)
2025E Revenue $1,627M
2025E Adj. EPS $4.05
2026E Revenue $1,721M (+5.8% YoY)
2026E Adj. EPS $4.65 (+15% YoY)
Key Risks & Considerations
Bear Case
Digital payment disruption Secular
CPI vending/retail decline accelerates Structural
US Currency refresh delayed Timing risk
M&A integration challenges Execution
Int'l Currency margins disappointing Per Baird
Bull Case
2026 US Currency +HSD% growth Highly visible
Int'l Currency at record backlog $400M+
CPI Gaming strength continues DD growth
Authentication platform scaling ~20% EBITDA by exit '26
Multiple expansion as growth reaccelerates Currently <12x
Bottom Line
CPI is the problem child — vending/retail payments are in structural decline with backlog down 50% in 2 years. Gaming is a bright spot but can't fully offset. Management has cut guidance twice and is guiding for -4% to -2% in 2025.

SAT had a rough Q1'25 but is now firing on all cylinders with international currency at record backlog, 9 denominational wins YTD, and bookings extending into 2027. The 2026 US Currency refresh cycle (+90% high-denom volume) is the near-term catalyst.

The stock is stuck until the late Feb 2026 analyst day clears uncertainty around 2026 guidance. Trading at <12x forward earnings with high-teens EPS growth potential in 2026+. Long-term thesis intact, but near-term patience required.