Crane NXT, Co.

Good day, and thank you for standing by. Welcome to the Crane NXT Q3 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Christina Cristiano, CFO. Please go ahead.

Thank you, Operator, and good morning, everyone. I want to welcome you all to the third quarter 2024 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 two, 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 numbers which are reconciled to the comparable GAAP numbers in the tables at the end of our press release and accompanying slide presentation, both of which are available on our website at craneNXT.com in the Investor Relations section. With me today is Aaron Sake, our President and Chief Executive Officer. On our call this morning, we will discuss our Q3 financial and operational performance and provide commentary on recent M&A transactions. We will also provide an update on our 2024 guidance. After our prepared remarks, we will open the call to analysts for questions. Now let me turn the call over to Aaron.

Thank you, Christina, and good morning. I appreciate everyone joining the call to discuss our third quarter results. As we begin, I'd like to take a moment to acknowledge our associates. particularly those that were impacted by the recent hurricanes and other global events. I know many associates are still working through those challenges. Our teams did an excellent job ensuring that our colleagues and their families were safe, which is always our priority, and aligned with one of our core values, that people matter. Also, I would like to extend a big thank you and my gratitude to all NXT associates around the world for their hard work and efforts every day, but especially in times like these. Well, the last few months have been very busy for NXT as we continue to execute our strategy to grow and diversify our portfolio of technology solutions that secure, detect, and authenticate. Specifically, we announced two acquisitions. We continue to successfully integrate OPSEC, and we delivered strong results in the third quarter. Starting with our results, Our third quarter performance was in line with our expectations. Sales increased over 14% versus the prior year, reaching approximately $400 million. Excluding OPSEC, core sales growth was approximately 5%, with adjusted EPS of $1.16. In addition, we also had several exciting M&A announcements this quarter that will drive future growth in the business and shareholder value. These include our announcements to acquire De La Rue authentication solutions and TruTag smart packaging technology. Both transactions are great examples of how we are expanding our portfolio of market-leading technologies that secure, detect, and authenticate. We also continue to integrate OPSEC into our business, and this process is on track with our expectations. It's been about five months since we closed on the OPSEC acquisition And we are already driving operational improvements in manufacturing and back office processes utilizing the crane business system. Additionally, we're actively engaged with our customers as we expand the portfolio of authentication technologies we offer. And the response continues to be very positive. In the third quarter, we also published our first ESG report. This report highlights our commitment to philanthropy, sustainability, and good governance. anchored in our Crane NXT values. This is an important step in our journey as a new public company, and I am very appreciative of the work from the teams across NXT to drive meaningful progress in this area. And I encourage all of you to take a moment to read the ESG report, which you can find in the investor relations section of our website. Finally, I'd also like to once again welcome Alita Richards to the Crane NXT team as the president of Crane Currency reporting to Sam Keys, who is now leading the security and authentication technology segment. Alita is on the road visiting our sites and customers, and we welcome her leadership and enthusiasm that she brings to the company. It was a busy quarter, and I remain excited about the opportunities ahead as we continue to drive operational execution, diversify our portfolio, and add talent to our team. Turning to slide four, In October, we signed a definitive agreement to acquire De La Rue Authentication Solutions, a leading global provider of digital and physical authentication technologies. This transaction aligns well with our strategy of expanding our leadership in the growing $3 billion authentication market. As a reminder, De La Rue Authentication goes to market with three strategic platforms as shown on this slide. Government Revenue Solutions provides digital and physical tax stamp technologies that link unique identifiers to products, enabling the full traceability of goods that enable governments to collect tax revenues. Second, Identification Security Solutions provides products to secure the government issued identity documents of individuals, including polycarbonate passport pages with embedded security features. Finally, brand protection products provide serialized, highly secure physical labels combined with software to track and trace products through the supply chain and provide critical consumer insights to brand owners through data analytics. In summary, the acquisition of De La Rue authentication builds on our acquisition of OPSEC earlier this year to provide advanced protection for ID documents, tax stamps, and security labels. Like OPSEC, Daylaroo authentication has an attractive financial profile comprised of a high percentage of digital and reoccurring and recurring revenue, longstanding customer relationships, and a stable and growing revenue base, generating mid-single-digit revenue growth year over year. Turning to slide five, we also recently announced the acquisition of TruTag's Smart Packaging technology, which enhances the ability of brand owners and consumers to assure the authenticity of their products. This patented technology utilizes a proprietary transparent coating that can be applied on a label or directly on the surface of a product, making it ideal for authentication in both consumer and industrial end markets. Once scanned by a smartphone using a proprietary app, the article can be instantly authenticated. TruTag Smart Packaging Technology is a natural fit to our portfolio and will drive commercial synergies when linked with OPSEC software, which provides serialization and track and trace capabilities. This is an exciting expansion to our offerings and further enhances our ability to provide differentiated and innovative solutions to our customers. It also represents our disciplined approach to M&A, first focusing on markets with secular tailwinds, identifying companies with differentiated technologies, and having a clear path to value creation. We expect the TruTax Smart Packaging Acquisition to deliver a high double-digit ROIC by year three. The acquisition of OPSEC earlier in the year, the recent acquisition of TruTax Technology, and the planned acquisition of De La Rue Authentication Solutions are clear steps forward in the execution of our strategy to grow NXT and build a resilient portfolio aligned with secular tailwinds. We continue to explore additional M&A opportunities to diversify our business and our funnel remains very healthy. With that, let me now hand the call over to Christina to provide more detail on our third quarter financial and operational performance, as well as updates to our 2024 guidance. Christina.