0000025445-25-000083
SEC filingCrane NXT's Q2 2025 revenue grew 9.1% to $404.4M driven by SAT acquisitions, but operating profit fell 29.1% to $47.9M due to restructuring and acquisition costs.
Crane NXT reported mixed results for the second quarter of 2025. Revenue increased 9.1% year-over-year to $404.4 million, driven primarily by the acquisitions of OpSec (May 2024) and De La Rue Authentication Solutions (May 2025), which together contributed $26.7 million. Core sales, excluding acquisitions and currency, declined 0.8%, as a 7.3% drop in the Crane Payment Innovations (CPI) segment was nearly offset by 9.1% core growth in Security and Authentication Technologies (SAT).
Gross profit rose 4.9% to $168.8 million, but gross margin contracted 170 basis points to 41.7% from 43.4% a year ago, reflecting margin dilution from acquisitions, higher material costs, and unfavorable mix in CPI.
Operating income fell 29.1% to $47.9 million, and operating margin declined 639 basis points to 11.8%. The decline was driven by $7.3 million in restructuring charges (predominantly severance in SAT for integration) and $12.4 million in acquisition-related costs recorded in SG&A. Excluding these items, adjusted operating profit would have been approximately $67.6 million, flat with the prior year.
Net income attributable to common shareholders dropped 40.1% to $24.9 million ($0.43 per diluted share) from $41.6 million ($0.72 per share) in Q2 2024, largely due to lower operating income and increased interest expense from debt used to fund acquisitions.
Total assets increased 22.3% to $2.918 billion from $2.387 billion at year-end 2024, primarily due to the DLR acquisition, which added $394 million in net assets, including $181.6 million of goodwill and $184.4 million of intangible assets. Cash and cash equivalents declined to $152.5 million from $165.8 million.
On the liability side, total debt (short-term borrowings plus long-term debt) rose to $1.129 billion from $750.6 million at December 31, 2024. The increase resulted from a £300 million ($400.4 million) delayed draw term loan used to fund the DLR acquisition, partially offset by $36.8 million in repayments. Short-term borrowings of $267.4 million include $216.0 million drawn on the revolving credit facility and $51.4 million of the term loan classified as current. Long-term debt of $861.8 million comprises the remaining term loan, $198.7 million of 6.55% notes due 2036, and $346.8 million of 4.20% notes due 2048.
Shareholders' equity increased to $1.175 billion from $1.065 billion, supported by net income and favorable currency translation adjustments ($81.1 million in OCI). The company also recorded a $1.7 million noncontrolling interest from the DLR joint venture.
Operating cash flow for the first six months of 2025 was $43.7 million, down from $66.3 million in the prior-year period. The decline was driven by lower net income and increased working capital outflows ($48.1 million vs. $58.4 million in 2024), partly offset by non-cash items like depreciation and amortization ($48.7 million) and deferred taxes.
Capital expenditures totaled $20.1 million (2.7% of sales), slightly below the prior year's $21.4 million. Free cash flow (CFO less capex) was $23.6 million, compared to $44.9 million in H1 2024.
Financing activities provided $344.8 million, primarily from the term loan draw ($400.4 million) and net revolving credit facility borrowings ($6.0 million), offset by debt repayments ($36.8 million), dividends ($19.5 million), and tax withholding on equity awards ($5.8 million).
The company ended the period with $164.5 million in cash, cash equivalents, and restricted cash (including $11.1 million non-current restricted cash), down from $173.4 million at the start of the year.
Management attributed the CPI revenue decline to anticipated lower volumes in retail and gaming end markets, partially offset by favorable pricing and productivity gains. Cost-saving actions are ongoing, including a new restructuring program in Q2 2025 with $7.3 million in charges, expected to total $10 million to $15 million. The SAT segment's margin compression reflects the dilutive impact of acquisition-related amortization, fair value step-up, and transaction costs.
Regarding trade policies, the company stated it expects to mitigate tariff impacts on operating profit through pricing and productivity initiatives. The OECD Pillar 2 global minimum tax is anticipated to have a $2.4 million impact on fiscal 2025.
No formal revenue or earnings guidance was provided in the filing.
Segment Performance:
Acquisitions: On May 1, 2025, the company acquired De La Rue Authentication Solutions for £300 million ($394.0 million net of cash acquired). The purchase was funded with a delayed draw term loan. DLR contributed $17.5 million in sales and a $6.3 million operating loss in its first two months (including acquisition-related charges). Pro forma net sales for the combined company would have been $408.2 million in Q2 2025 and $404.8 million in Q2 2024.
Revenue Backlog: Remaining performance obligations totaled $591.6 million at June 30, 2025, with 70% expected to be recognized in the remainder of 2025 and 30% in 2026.
Goodwill and Intangibles: Goodwill increased to $1.168 billion from $956.6 million at year-end, driven by the DLR acquisition ($181.6 million) and currency translation. Intangible assets net grew to $592.3 million from $419.3 million.
Restructuring: The company initiated a new restructuring plan in Q2 2025, recording $6.1 million in SAT (integration-related) and $1.2 million in CPI (severance). The total program is expected to cost $10 million to $15 million, with completion in 2025.
Income Taxes: The effective tax rate was 24.0% for Q2 2025 (25.0% in Q2 2024) and 23.4% for the six months (22.3% in 2024). The increase in the six-month rate is due to the mix of non-U.S. earnings. Gross unrecognized tax benefits were $9.3 million.