Crane NXT, Co. (CXT) Earnings Call Transcript & Summary

So good afternoon. Welcome to Crane NXT's 2023 Investor Day Event. I'm Jason Feldman, Vice President of Investor Relations. Before we begin, I'd like to direct you to the disclaimers regarding forward-looking statements that are posted both in our 10-K and 10-Qs as well as in today's presentation materials, which are available on our website. And just a reminder that we'll be citing non-GAAP measures throughout the day. Those measures and their associated reconciliations to reported results can be found in our non-GAAP reconciliations in the appendix of the materials that we provided. A few brief comments on logistics. We expect the event to end before 4:00 p.m. Eastern time. We will have a Q&A session after the end of the presentations. For those listening to the webcast, slides are available for download in the Investor section of our website at www.craneco.com. The future Crane NXT website is at www.cranenxt.com, and the full site will be launched later this month. But before we begin with the presentation itself, a few quick reminders about the separation. In March of last year, Crane Holdings, Co. announced its intent to separate into 2 independent publicly traded companies. That separation is on track to be completed on April 3. Following the separation, Crane NXT will be comprised of Crane's Payment & Merchandising Technologies segment, which includes both the Crane Currency and Crane Payment Innovations business, and we expect it to trade on the New York Stock Exchange under the ticker CXT. Crane Company will include Crane's Aerospace & Electronics, Process Flow Technologies and Engineered Materials businesses and is expected to trade on New York Stock Exchange under the ticker CR. Additional details on the separation and its timing were provided in a press release that we issued last night. While both Crane NXT and Crane Company are highly attractive businesses, they're fundamentally different financial profiles and serve different end markets. This separation will permit both companies to focus on their respective growth strategies aligned with their distinct value propositions. Post-separation, Crane NXT will be a premier industrial technology business, and we believe the separation will free Crane NXT from portfolio balanced considerations in the current corporate structure that constrained investment and separation better positions Crane NXT to capitalize on the exciting growth and acquisition opportunities that you'll hear about this afternoon. And so with that, let me now introduce Aaron Saak, CEO of Crane NXT.

Well, thank you, Jason. And as Jason mentioned, my name is Aaron Saak. I'm the President and CEO of Crane NXT. And it's really my pleasure to welcome you all here today for our first Investor Day as part of the new company. It's an exciting time for NXT, and I certainly appreciate everyone taking their time here both in-person today and for those online for the event. Today, we'll be discussing the strategy for Crane NXT and where we plan to take the company over the next 5 years. I also realized that for many of you, this also might be an introduction to the company. And so today, to tell our story, I'm going to invite later throughout the afternoon to the stage 3 NXT leaders: Sam Keayes, President of Crane Currency; Kurt Gallo, SVP, who will also talk about Crane's Payment Innovations business, or CPI; and Christina Cristiano, our Senior Vice President and Chief Financial Officer. Not only am I excited to be working alongside this terrific group of leaders, I'm also excited about the vision that we're going to share with all of you today about where we want to take the company. With this in mind, I want to set the stage for what you'll be hearing today. Specifically, Crane NXT is a premier industrial technology company that provides trusted technology solutions to secure, detect and authenticate our customers' most valuable assets. Our core business is resilient, with mid-single-digit growth through multiple economic cycles. Additionally, we have verily, very clearly demonstrated our ability to drive operational improvements through the deployment of the Crane Business System over many years. This is truly a hallmark of the company and has resulted in best-in-class financials and very strong free cash flow conversion. Additionally, we're launching the company with a very strong balance sheet and substantial capital available for acquisitions. In fact, NXT has been built over many years through a series of acquisitions, and this track record of disciplined M&A and successful integrations has generated strong returns for our investments. As we look to the future, we see multiple avenues to grow our portfolio by building on our strong core businesses while diversifying the portfolio and moving into higher growth adjacencies. As part of this strategy, we've set very clear goals for the business over the next 5 years. Through a combination of organic growth and M&A, we plan to grow the business to $3 billion in revenue, growing at mid-single-digit plus. We'll maintain high 20% operating profit margins, along with free cash flow conversion of approximately 20 -- of approximately 100%. Now achieving these goals will lead to significant compounding value creation for our shareholders. We have a very strong, resilient franchise in Crane NXT, and we're beginning our journey as an independent company from a position of strength. With our strong financial profile, a history of execution and disciplined capital allocation, we believe we have a very compelling opportunity to drive shareholder value over the long term. As you'll hear today, this is a mission, the entire Crane NXT leadership team is very excited to embark upon. Now as many of you know, I joined this company about 4 months ago, having served in leadership positions in multinational, industrial companies for more than 20 years. I've long been aware of Crane and its impressive track record. And in fact, Crane Payment Innovations was a partner of my former business, Gilbarco Veeder-Root. As I learn more about Crane NXT and the opportunities for the company, I was drawn to joining this business based on 3 key factors: First is the company's long and storied track record on innovation. I'm an engineer by training and focused on material science and simply put, it is not common to be part of a company that's been innovating for over 200 years. We can track our history back to Crane Paper Co. founded by Zenas Crane in 1801. Now he was an entrepreneur to the core. He started multiple businesses in the Boston area before moving the business to Western Massachusetts. The company later won the contract to supply paper for the U.S. government's currency. That's a contract we still hold today and we're the sole supplier. Since this start, the company has continued to be an innovation leader, both with organic investments and through acquisitions. And you'll hear more about this later today given we're the leader in a number of distinct areas, including materials and surface technology for applied anti-counterfeiting applications, differentiated capabilities in the design and manufacturing of detection systems and image recognition software built on advanced algorithms to authenticate products. Crane's deep history and continued successful evolution over many decades as an industrial technology leader is really incredibly compelling story. And I can tell you this will continue to be the foundation we build upon under my leadership of NXT. The second factor that strongly resonated with me was Crane's focus on continuous improvement, which is really one of the hallmarks of the Crane culture and an aspect of the company that is really well known to all of our industrial peers. The development and deployment of the Crane Business System, or CBS, for short, is a clear example of this value in action. All of the companies I've worked for in the past have had a very strong focus on continuous improvement and a business system similar to CBS. Given my prior experiences, this focus on operational excellence, a disciplined cadence and the drive for performance comes very natural. After visiting all of the major NXT sites around the world with MAX and participating in operating reviews for the past several months, I can tell you that the skill set of this team in NXT and our focus on execution and continuous improvement is best-in-class. And this is clearly a testament to MAX and the entire Crane leadership team over the past many years to develop and instill this discipline in the company. Continuous improvement is a core value of the company, and it permeates all of our discussions. The impact of this is best illustrated simply in the margins and the margin improvement across all of Crane's businesses over the past several years. At NXT, the skill set is deeply embedded and in place across all parts of our business. So simply put, continuous improvement is an area of focus that will continue to guide the company under my leadership of NXT. The third attribute that attracted me to Crane is the focus on doing business the right way. Now many companies have core values rooted in ethics and integrity. But I can tell you, at Crane, there's really something special about this that goes back to its founding. As you might know, RT Crane started this company in Chicago in 1855 focused on industrial products. And this company he started was focused with a firm conviction to conduct business with honesty and fairness to employees, to customers and to competitors. And it was truly amazing to think about this time in the history of the United States when his credo was published and how timeless these principles still are. The R.T. Crane resolution hangs on the walls of all of our facilities and is a constant reminder of the high ground we hold ourselves to across Crane. It's also led to a focus on philanthropy and helping the communities with which we work. The Crane funds have donated to over 600 charitable organizations. And additionally, Crane's associates have volunteered more than 26,000 hours to charities. Needless to say, I am very proud to work for a company with this set of core values, deeply rooted in fairness, integrity and giving back to the community. I know I speak on behalf of all of my fellow NXT associates being very proud to take on the stewardship of this legacy. So altogether, it was these 3 factors, the dream to join NXT, and I'm very excited about our strong core values and the foundation we have for our company going forward. As I mentioned earlier, I know Crane and NXT is new to many of you. So let me take a moment to provide an overview and a snapshot of the company. NXT is an industry leader, providing trusted technology solutions to secure, detect and authenticate what matters most to our customers. Our reputation as a trusted partner to central banks go back over 150 years, and it continues today with a diverse set of global customers spanning multiple industries. We have 2 industry-leading businesses, Crane Currency, which provides proprietary technology to secure currency and other high-value physical products; and Crane Payment Innovations, or CPI, for short, which offers detection equipment and systems, aftermarket services and connectivity solutions focused on detecting and authenticating payment transactions. We finished 2022 with our strongest year in company history with revenue of $1.3 billion, approximately 40% of which comes from reoccurring and recurring revenue, adjusted operating margins of 28% and free cash flow conversion of 116%. I think these are certainly financial results you would expect of any premier industrial technology company. As you can see on this next page, CPI comprises approximately 65% of our revenue today, with the balance coming from Crane Currency. A little over 60% of our revenue comes from North America, 14% from Europe and approximately 17% from emerging markets. Among the characteristics that make NXT unique is the strong, long-term relationships we have with our customers. In fact, most of our customers have been with us for over 20 years. These customers represent leading global brands in retail, financial services, gaming and the food and beverage market. Additionally, we work with over 50 central banks around the world to provide anti-counterfeiting technology and design services along with banknote printing capabilities. The diversity and longevity of our customer base is a tremendous advantage for NXT, providing a resilient and durable business for the long term. Another advantage we have is our significant global scale. Today, Crane NXT has over 4,000 employees with sales in over 60 countries. We operate in all major geographies with a growing presence in higher growth emerging markets, led by our currency business. We have 15 major manufacturing centers and 10 R&D hubs where we focus on new product development. Our scale allows us to drive greater efficiency across these operations and the ability to leverage our technologies to serve customers that span multiple countries and geographies. These are all significant competitive advantages for us at NXT and provide a solid foundation for scaling the company with additional M&A. Now this global scale has been achieved over a long and successful history of building a portfolio through M&A. It started in the mid-1980s, and it continued through the early 2000s with a series of smaller acquisitions, all focused on coin and cash components and vending systems. Significant scale was added in 2013 with the acquisition of MEI to form the core of today's CPI business, and this is focused on detection components and systems. In 2018, Crane Currency was acquired, adding further scale to the portfolio and significantly expanding our addressable market to over $7 billion. In 2020, Cummins Allison was acquired, providing additional technology for automation solutions for financial services and gaming as well as we added a field service network. And with this acquisition of Cummins Allison, we now have over 450 technicians across the United States, serving our equipment through a combination of preventative maintenance agreements and time and material service calls. Building a portfolio like this requires a disciplined M&A process and significant skills for integration to generate strong returns on our investment. Since 2020, we put M&A on hold. This has been due in part to COVID as well as the announced intent to separate the company, but we've continued to actively cultivate our deal pipeline. As we move forward, post-separation, we will be focused on using our strong free cash flow to further expand the business. In this chart, you can see the resilience and the growth of the business over the past 2 decades. This includes our organic growth, along with the contribution of M&A, to create what is today's Crane NXT. We've achieved a CAGR of 11% from 2002 to 2022 But when we look at a more recent period, 2013 to 2022, the growth was accelerated to a 15% CAGR. This period represents not only growth in the core business but accounts for the addition of MEI, Crane Currency and the Cummins Allison acquisition of the portfolio. Now the growth rate was also inclusive of 2019, when the business declined due to sanctions imposed by the U.S. government on shipments of currency to Venezuela and in 2020, which was impacted due to COVID. We saw a very strong recovery of the business in 2021 and continued strong performance in 2022, while working through supply chain constraints. We have a proven ability to drive growth in the company over a very long period of time through multiple cycles driven by strong execution in the core, accelerated with disciplined M&A. Just as we have a history of growing revenue through execution of the Crane Business System, we also have a clear track record of structurally improving the margins of the business over time. As I mentioned earlier, prior to the acquisition of MEI in 2013, the business was a series of smaller, less integrated acquisitions. With the addition of MEI, the business added significant scale and also improved the margin profile. From 2013 to 2018, you can see the impact of continuous improvement programs to increase operating profit margins from 13% to approximately 21% through investments in core growth and productivity. In 2018, we acquired Crane Currency and subsequently drove significant impact on the margin profile of that business. At the time of the acquisition, Crane Currency was a single-digit margin business. And it was always part of the investment thesis that we could improve the margins through a disciplined and focused execution of the Crane Business System. This includes improvements in quality, productivity, product mix and pricing strategy. Exiting the COVID period in 2021, we were successful in significantly raising the operating profit for Crane Currency while at the same time, continuing to drive margin expansion in CPI. And in 2022, we had record operating profit of $376 million and operating margins of 28%. We continue to focus on projects to improve the productivity of the business and accelerate growth. We'll be highlighting some of these initiatives, as Sam and Kurt discuss Crane Currency and CPI in more detail in a few minutes. The journey of continuous improvement is never ending, and we will continue to deploy CBS to drive margin, expansion both in the core business and to acquisitions as we move forward. Looking ahead, multiple, secular trends will continue to fuel the growth of our core business for the years ahead. These include the fact that cash in circulation continues to grow. Throughout the past several decades and continuing through the pandemic, central banks around the world have increased the amount of currency they print. Additionally, the impact of inflation has increased the demand for currency across many markets and particularly in those facing high inflation. In total, we see this as a very resilient business with no expectation of a change in demand over the short or longer term. Now I'm sure many of us are also well aware of continued issues regarding labor scarcity. We've likely experienced this ourselves as consumers in retail, banking or hospitality venues. For example, today, there are over 11 million open positions in the United States, and we don't see this trend appreciably changing anytime soon. The impact of labor scarcity is driving the need for more automation in retail, financial services and gaming, and it's providing a tailwind to the CPI business. Additionally, these same customers are looking for ways to improve their profitability. This is most acute in retail where our customers operate traditionally with low single-digit operating margin. Retailers are looking for investments in new technology that have a quick return on their investment to improve their productivity and their consumers' experience. CPI is very well positioned to take advantage of this trend, given our focus on automation through our integrated systems as well as the expansion of our connected and field service capabilities. Finally, there is a growing trend across all markets for improved technologies to protect brands and payments from counterfeiting. For example, this trend has resulted in the increasing need for anti-counterfeiting technology applied to bank notes, directly benefiting Crane Currency. This has also allowed the expansion of our micro-optics technology into the broader market focused on product authentication and brand protection of clothing, OEM parts and other high-value goods. Additionally, we've seen new detection systems and software for cash and coin handling to protect retailers benefiting CPI. With these trends driving our core business, we see a $7 billion addressable market growing at mid-single digits over the long term and an additional $20 billion market opportunity focused on expansion into near adjacencies. First, as we show on the left side of this page, currency, technology, detection and printing is approximately a $3 billion addressable market, where Crane Currency is the technology leader with 3 primary competitors. This market is growing at mid-single digits, driven by the trends of increased cash in circulation and the continued focus from central banks on new anti-counterfeiting technology. As you focus on the middle of this page, we see the market for cash and coin detection and authentication technology to be approximately $4 billion, also growing at mid-single digits. CPI is the clear market leader in this highly fragmented space. As we discussed, this market is driven by the need for automation solutions as well as the ongoing update of equipment and recurring aftermarket services from the continued use of cash. Building off our core capabilities and technology that secures, detects and authenticates assets, we see a set of near adjacencies we can enter using our disciplined, proven approach to M&A. This focus opens up a larger $20 billion addressable market to NXT with mid-single-digit to low double-digit growth. And I'll provide more details on these adjacent markets, our M&A criteria as well as our capital allocation strategy later this afternoon. When you look at our strong market-leading core businesses, along with the opportunities to expand to near adjacencies, built from our technology capabilities and CBS discipline, I am confident we have a very exciting future ahead of us at Crane NXT. As we start our journey as a new public company, we set clear goals for the business over the next 5 years. This includes growing our revenue from approximately $1.3 billion to $3 billion, while having EBITDA margins in the high 20% range. To achieve these goals, we will focus on 3 priorities: first, continuing to invest and grow our core business; second, focusing on operational excellence through CBS to expand margins and driving our free cash flow conversion; third, executing our proven playbook on M&A to further expand and diversify the portfolio into near adjacencies. Through the combination of these actions, we plan to move from a mid-single digit to a mid-single-digit plus growth portfolio. Additionally, we're launching the company with very low leverage between 1.5 and 2 net debt to EBITDA. We plan to keep our leverage at less than 3 as we execute this strategy. In total, these clear measures of success position NXT both now and in the future to be a leading industrial technology company and creates significant value for our shareholders. As I discussed during my opening, I am thrilled to be part of Crane NXT, and I'm looking forward to the journey ahead. I've had the privilege of being involved with a number of separations, and I'm excited about the opportunities we have here at NXT to chart our own path as a new public company, also while utilizing the strengths of our past as part of Crane Holdings. We are built on a foundation of innovation, continuous improvement and doing business with high integrity, tremendous core values that we live every day, and they will serve us very well into the future. We're a market leader providing trusted technology solutions to secure, detect and authenticate what matters most to our customers. We have a resilient business with a very strong balance sheet. We have a long track record of disciplined M&A, which we will utilize as we focus on expanding the business into large, high-growth adjacencies. In summary, we launched the company with the vision to become a $3 billion enterprise over the next 5 years, continuing our best-in-class financial metrics and operational discipline. This presents a significant value creation opportunity for our shareholders. And so with this, I'd like to introduce Sam Keayes, the President of our Crane Currency business, to talk more about this business and his strategy.

So thank you, Aaron, and good afternoon to everybody here and indeed online. My name is Sam Keayes. I'm the President of Crane Currency, a business that literally makes money, and also provides anti-counterfeiting solutions to a range of other markets. By way of a brief personal introduction, I have about 15 years of P&L experience running high-technology manufacturing businesses. Prior to Crane Currency, I spent a decade in various executive roles at Thales, a large multinational engineering business, which serves defense and aerospace and security markets. And earlier on in my career, I worked for the British government for my sins in a bunch of international relations, roles that gave me some insights and connections into many of the customers that are now Crane Currency's staple core. I joined Crane Currency just over 4 years ago, initially to lead our international operations, and I have been President of this business for nearly 3 years. By way of an introduction to the business, Crane Currency designs and secures and manufacturers increasingly complex banknotes for central banks around the world. At our core, we are a technology business. Our proprietary solutions, generally speaking, solve 2 major problems faced by every central bank. The first is how do I ensure that the public trust and can authenticate my banknotes. And the second is how do I make my currency more durable, more cost-effective and indeed, more beautiful. Crane Currency's technology is uniquely easy for the public and for machines to authenticate. It's also uniquely resistant to counterfeiting, and it is completely customizable to fit any banknote design. Now when I researched Crane Currency prior to joining this business, I learned a few things. I learned that global cash demand is continuing to grow. I learned that banknotes are continuing to become ever more complex, technically. I learned that Crane absolutely has world-class quality and operations processes. And I learned that at least in 2019, Crane Currency was somewhat of a sleeping giant in that it had a fantastic focus on supporting the U.S. currency program, a focus that remains absolutely central to our business today, but it had untapped potential to grow in the international market by taking market share from some older, easier to counterfeit technologies like holograms. So over the last 20 years, as I would explain in this presentation, Crane Currency has achieved an average CAGR of about 9%. Our primary market remains the global demand for cash, which has grown consistently over the last 40 years and is forecast to grow in low single digits for the foreseeable future. We have a leadership position in Crane Currency in banknote security technology. Our micro-optic technology secures more than 130 banknotes in over 50 countries around the world. And mastery of this technology, this world's most secure, most advanced, most recognizable, most customizable banknote technology is absolutely at the core of our business. When our technology is specified on a banknote, it tends to stick in that banknote for years, no matter how many times that banknote is reprinted. And our services are also frequently contracted on a multiyear basis, including our contract to supply all of the banknote paper for the U.S. currency program. And this, of course, allows us to optimize our supply chains and of course, optimize our operations to improve quality for customers and indeed our own profitability. So in this presentation, what I'll do is I'll explain how Crane Currency has extended our capabilities across different banknotes, but also how we are extending into fast-growing adjacent markets. By doing that, I'll explain why we're so confident that we can maintain margins in our core business and also how we will continue to deliver mid-single-digit plus growth in our core currency market over the long term. Overall, as Aaron said, we estimate that our addressable market for commercial banknote production is about $3 billion a year. Within that, Crane Currency is a $460 million business, and we employ about 1,200 people on 5 sites across the U.S. and in Europe. You can think about us serving 3 core markets: the U.S. currency and passport market; the market for other central banks and their currency requirements; and product authentication. In the U.S., we manufacture specialist paper for the U.S. dollar and the U.S. passport. And we produce all the banknote security technology for both the U.S. and for the international markets. Internationally, we act as a one-stop shop for central banks around the world. We provide banknote design, durable banknote paper, anti-counterfeit security features, printed integrated banknotes and indeed, a range of support services, such as secure transportation, secure storage, public education, customer training and such like. We also have a fast-growing but small business that is extending these capabilities into product authentication, where our customers are typically large, often global brands, who use our solutions to protect their goods from counterfeiting or indeed use our technology to license their brand to contract manufacturers in a secure and traceable way. Now let me say a little bit more about that $3 billion market, which we believe we can address from Crane Currency in a market that fundamentally has 4 major commercial banknote suppliers. Despite the growth in digital transactions in some countries, as I said earlier, for more than 40 years, the number of banknotes printed every year has consistently continued to grow. And in part, this is due to the use of cash, not just for transactions, but also as a store of value. What we find looking at the data is that global demand for cash accelerates significantly during political or economic shocks such as a global pandemic or war or during periods of high inflation, for example. Conservatively, global demand for cash grew by 10% to 20% as a result of the COVID pandemic. The invasion of Ukraine by Russia also spiked demand for cash by way of examples. And of course, as the world's reserve currency, many people, not just in the U.S. but around the world, choose to store value in U.S. banknotes, which are printed on Crane Currency paper. I want to remind everyone in the room, there's at least 1.5 billion people in the world who have no access to bank accounts, no access to any form of electronic payments, they rely solely on cash. And cash continues to have huge advantages for everybody. It's free to use. It's widely accepted and trusted. It does not require a bank account. It works off-line perfectly, and it preserves the anonymity of people who use it. It's still the preferred and often the only form of payment for billions of people around the globe. And typically, these are in parts of the world with fast-growing economies and fast-growing populations. In fact, recently, very recently, my wife volunteered in Northern Uganda and experienced all of the Apache Wifi, on off power grids, nonexistent mobile networks that makes cash the only practical payment option for billions of people. So central banks around the world expect cash use to continue and it will, at least until robust electricity and Internet connections become ubiquitous, unless everybody decides to trust banks and accept electronic payment fees, unless everybody becomes okay with every transaction they make being traceable, unless we experience no more wars, no more global pandemics, no more financial crises, no more earthquakes, no more tsunamis, all the things, including high inflation that lead people to cash. And finally, because the supply and the use of cash is so critical to the resilience of our economy, something that was really brought home during the COVID pandemic, it is increasingly protected around the world by regulation to protect access to the use of cash and indeed, the ability to pay with it. Now the core of our business, as I mentioned earlier on, is our technology, our very differentiated security technology. Crane Currency introduced the first micro-optic security feature in Sweden in 2006. And our technologies today combine proprietary design tools, proprietary manufacturing equipment and unique materials. And together, those elements deliver striking, customizable effects that allow the public to authenticate a banknote in a fraction of a second, all whilst supporting counterfeiting efforts. Crane's micro-optic technology has relied on by 50 central banks globally and of course, is used to secure the USD 100 bill. We create high resolution, animated images using micro printing and micro lenses that are the fraction of the width of a human hair. And in doing so, we leverage a portfolio of more than 250 patents and numerous other trade secrets to develop specialized equipment, proprietary chemistries and indeed sophisticated software, all of which are necessary, essentially even to design and manufacture our products at scale. And despite counterfeiters failing to create any credible simulation of Crane's technology we don't stand still, we have mature product road maps that will secure at least the next 15 years of banknote security, keeping us several steps ahead of counterfeiters and competitors. Now Crane Currency also has other differentiated capabilities that complement these micro-optic technologies. Incredibly experienced and multinational design team, for example, works with central banks to co-create banknote designs, but critically to guide our customers through the very complex technical steps needed to turn an artistic design into a manufacturable but also counterfeit resistant banknote. Central banks tend to really need a partner to help them to design banknotes when they upgrade to stay a step ahead of the counterfeiters. Our banknote paper also uses proprietary formulations and processes. Our U.S. banknote paper is the most durable banknote paper in the world. According to published figures from the Federal Reserve, the U.S. $100 bill lasts on average for 6.6 years in circulation. And that compares with typically 6 months to 12 months for paper for low denomination notes in other parts of the world. The U.S. $100 bill last for an incredible 22.9 years on average. Again, that compares to typically 2 to 5 years for a high denomination note outside of the U.S. And in the international market, we have anti-soiling treatment technology. We have our branded ENDURANCE durable paper for the international market. Similarly, engineered for durability, similarly produced from the waste products, from the cotton industry, and so are both environmentally and sustainably recyclable and compostable at end of life. If I turn now to banknote printing, our banknote printing capabilities in Malta are simply the most flexible and efficient anywhere in the world. They allow us to print pretty much any banknotes and any specification, generally, speaking, at higher quality, at greater speed and lower costs than our competitors. That's partly because we invested in the very best, most capable, new technology when we opened the plant just 5 years ago. It's partly because our printers in Malta have on average 15 years' worth of experience in manufacturing banknotes. And of course, it's partly because of the comprehensive application of the Crane business system to all of our operations, which has greatly helped to deliver our continuous operational improvement. And then finally, we try and make it as easy as possible for central banks to work with us. If they want just our security technology that they want to design and manufacture their own banknotes, countries like Ukraine or South Korea follow this model, then we're happy to oblige. But if they need a turnkey solution, with design, security technology, durable paper and printed banknotes, such as our friends in Chile, for example, they also have the right partner in Crane Currency. Now banknote manufacturing is, as I hope, is obvious, a fairly specialized industry. There are just a handful, very small handful of companies able to compete in very significant barriers to entry. To be successful, any competitor would need a very, very highly secure facilities. They need access to security controlled and regulated manufacturing technology. They need their own substrate technology and their own security technologies, and they need all the people that are necessary to understand central bank requirements and deliver banknotes. Even then, most of our customers require multiple customer references and proof of years of banknote printing as part of their public procurement processes because banknotes are not an ordinary product. Long-term trust in suppliers and the overarching imperative for low-risk solutions are really, really important to central banks for fairly obvious reasons. And some of our trust come simply from the longevity of the business. Crane site in Tumba has been operating since 1755. Crane site in Dalton, as Aaron mentioned, was established in 1801 and has been supporting the U.S. currency program since 1879. These type of capabilities, these type of long-term reputations are extremely difficult to imitate. And it's this trust together with our technology, together with our reputation for high-quality that allows us to retain our existing customers, whilst at the same time, extending into new countries and new banknotes. And there are, in the global market, about 1,000 banknote denominations available. And so we believe there is plenty of scope for Crane Currency to expand our market share beyond the 130-or-so banknotes that currently specify our technology. And one reason we've been able to grow our market share so successfully so far has been our product development, which has expanding our market access by advancing our technology to address different types of banknotes and also to stay ahead of the competition. We've developed a range of products that can now be integrated with any substrate, including plastic polymer substrates, and this allows some of our customers. I'll choose Ghana for one to specify Crane Currency micro-optics on pretty much every banknote from the GHS 200 which is worth about $16 to the GHS 5 which is worth about $0.40. And in turn, this also helps the public to authenticate all the banknotes because there is a consistent technology and a consistent design field across the series. But our technology story started way back in 2008 with the launch of MOTION Switch, a security thread that's woven into the banknote paper. MOTION Switch continues to be one of the world's premier banknote security technology. It is the technology that secures the U.S. $100 bill, and indeed many other high denominations around the world. In 2017, this technology was adapted to provide a wide foil effect in MOTION SURFACE, which is applied on the top of a banknote paper. That allows more of the micro-optics to be seen by the public, and it also allows an even greater range of completely customizable effects to be developed. In 2019, we integrated our machine readability, our DETECT product, which then makes any banknote with Crane's micro-optics potentially fit for the automated payment environment, including the sophisticated sensors in CPI's systems. In 2020, we again increased our addressable market by launching a version of our micro-optics targeted at low-value denominations, particularly those that operate in very harsh environments because BREEZE offers very durable micro-optics with standard designs and standard colors, which help to reduce costs and reduce lead times, whilst maintaining security. Then in 2021, our RAPID HD security thread was launched that has sealed lenses for additional durability as brighter colors, it has even greater design flexibility because it's so thin, it creates even flatter banknote paper, which is important in our industry because the flatter your paper, the more efficient your banknote printing can be. And finally, we have MOTION SURFACE, a product that is now appliable on polymer and indeed on hybrid banknotes. And that ensures that our central bank customers can select our micro-optics for any substrate that they want as with MOTION, as with RAPID HD surface is completely customizable in design, in movement, in features, in color. And so Crane Currency today can provide micro-optic security technology for every and any banknote on any substrate. And it's that process that has allowed us to triple our addressable market. Excitingly, the next chapter is very shortly upon us because next week, in Malta, at our major customer event, we will have more than 50 central banks attending our facility. And this is a very highly anticipated date in our industry because we are going to be launching our next level of technology, a very significant major product release. And I know that central banks love it because we've worked very, very closely with a small number of them on developing this innovation over the last number of years. So I'm very much looking forward to that launch just next week. Now coming back to the U.S. Although the U.S. introduced upgraded micro-optic security into the $100 bill in 2013, other denominations in the U.S. were updated more than 20 years ago. And as a result, as is public knowledge, we all expect the U.S. banknotes to be redesigned and launched over the coming years at roughly 2-year increments starting in 2026. Now given significant advances in counterfeiting techniques, we expect all of these redesigns to include new and enhanced security features. And in anticipation, Crane Currency as a partner of the U.S. currency program has started to make significant investments to upgrade our own facilities to support the program. We are extremely proud to have been such a long-term domestic supplier to the U.S. currency program. We are extremely proud to design and produce the world's leading banknote security technology here in the U.S. And obviously, we are ready to offer the world's most advanced banknote security solutions for integration into this new series. And this opportunity is significant because the greater the technology content on any banknote drives additional value because, typically, margins are higher for security technology than our other offerings. And the introduction of new banknotes for any central bank also tends to increase production demand because banknotes are manufactured and built up prior to launch. And we expect the combination of these dynamics to create sustainable growth in our U.S. business for several years to come. Outside of the U.S., we continue to win new customers, and we continue to get our technology specified on new banknotes. In 2010, just 4 years after our initial success, Crane Currency was specified on just 10 denominations across 5 countries. Today, our technology is specified on more than 130 denominations in 50 countries, including the new banknote launched just last month by President Zelensky in Ukraine. And this is just a fraction, as I mentioned earlier, the total market of about 1,000 banknotes globally. Crane Currency wins on this global scale, in part because counterfeiting techniques are now spread so rapidly around the world using social media. You can find easily tutorials on how to simulate color shift threads, holograms or metallic features very rapidly, very cheaply. And this, in turn, drives -- this dynamic is very important in driving central banks to upgrade their banknotes more frequently, to make them much more complex and to protect them with much more technology. And as no commercial technology can reproduce Crane's micro-optics, central banks tend to follow each other to switch banknotes to next generation of technology protection. And as I said earlier, once the technology is specified on a banknote, typically results in recurring sales for many years until the banknote is then fundamentally upgraded or redesigned. And this repeat business, that makes Crane Currency a more predictable business, the larger it gets because the lumpiness of individual currencies, individual countries get smoothed out over a much larger number of international contracts. Now one of the great strengths about Crane has been our ability to increase the value of businesses that we own through the deployment of the Crane Business System. And our priorities of safety, quality, delivery, cost and growth are understood by every associate in Crane Currency and they're put into practice on every site. And this approach, as Aaron was talking about earlier, has transformed Crane Currency. It's enabled us to substantially improve margins to a very disciplined approach to customer value, to risk management, to operational excellence, to supply chain management, to pricing and everything else in our business. And it's partly because of this that we expect to continue to be able to achieve margins in a similar range to the last couple of years, all while reinvesting in the business to prepare for additional U.S. new series growth and international security technology growth. Now finally, I want to say a couple of words on product authentication because beyond currency, we're making strong progress in the commercial product authentication market using the capabilities, the technical capabilities, the design capabilities I've described to protect high-value goods and brands. And this new area of focus expands our addressable market. It provides about another $1 billion a year of opportunity for Crane Currency to grow outside of our banknote business. Our product authentication is a fairly broad term that's used to describe various solutions used to authenticate and prevent counterfeiting. And counterfeiting is huge business. About $3 trillion worth of products are counterfeited every year globally. So it's no surprise that industries are constantly looking for new technical solutions to authenticate genuine products. Now you may have seen labels for some years, typically with now fairly easy to counterfeit holograms on pharmaceutical packaging, on branded apparel, on credit cards, on other packaging. And over the last years, last couple of years, in particular, Crane Currency has developed a new product family, which we call Crane PROFOUND, which is specifically designed to address this market opportunity. And for those of you in the room, you may have picked up an example of PROFOUND technology with a house pattern of a butterfly integrated onto an air tech. I want to be crystal clear. This is not an indication that we will be securing Apple's products in future. But it is an illustration of the flexibility in design and color of the technology and how it might be used to authenticate but also enhance any brand for which it is applied. Now our solutions provide a quantum leap to old technologies on public engagement, all while maintaining complete separation from the unique micro-optics technology and designs that we use on banknotes. But clearly, we've got the know-how to develop secure, eye-catching labels that will help to reduce counterfeiting, that will enhance brands through greater consumer engagement and help to improve customer trust. In the very first year of really driving this area, we built a new team. We signed up new go-to-market channel partners in brand protection, in brand licensing, in pharmaceutical, in technology markets, and, of course, develop this new product portfolio. And last year, we achieved more than $5 million of revenue from this internal startup at margins that are accretive to the overall business. We expect to double revenues in this business in 2023, all the while building the capabilities and partners to continue at this growth rate for several years to come. In summary, Crane Currency is a very resilient business. We've got a great track record of consistent growth and margin improvement. We've got a full portfolio of trusted technology solutions that address every banknote in the market and that will be enhanced again by the major product launch I'm looking forward to next week in Malta. Beyond banknotes, we are now using that innovation, that technology, that know-how to develop new products and authenticate what matters most to our customers in any market. And that makes us confident that we can continue to take significant market share in currency, significant new market share in product authentication and grow our business at mid-single digit plus over the longer term. To recap, after several years of consistent growth, Crane Currency is now a global market leader in trusted solutions that secure and authenticate banknotes. Our proprietary technology is best-in-class, and we're trusted by 50 countries, including the U.S., to secure their banknotes. In our core banknote business, after 40 years of uninterrupted growth of cash in circulation, we expect that market growth to continue in the low single-digit range. We believe that Crane Currency continue to achieve mid-single-digit plus growth by expanding our market share in the international market and supporting the development of the U.S. new series of banknotes. And of course, we've also got opportunities to grow by leveraging these capabilities elsewhere such as in product authentication. And finally, I want to bring us back to, we've got this really good track record in Crane Currency of executing on the Crane Business System in a way that has delivered growth, improved operational consistency and quality and therefore, significant margin improvement. And we see that capability, in particular, as being extendable into future acquisitions, helping us to deliver synergies, grow businesses and indeed improve profitability. So thank you for your time this afternoon. I'd now like to turn the discussion over to Kurt Gallo, the Senior Vice President in Crane NXT, to provide an overview of our equally exciting CPI business. Thank you.

Thank you, Sam. Good afternoon, everyone, and thank you for taking the time today to continue learning about Crane NXT. My name is Kurt Gallo, and I am the Senior Vice President for Crane NXT, and I am responsible for both of our business units, both Crane Currency, which you just heard Sam speak about, and Crane Payment Innovations. Now I've been with Crane for 15 years, and I can honestly tell you over this period, this is the most exciting time in our history, especially as you look at our business through the lens of future and long-term growth as well as the potential opportunity to unleash the true value of the organization and continue to drive shareholder value. You've just heard from Sam about the exciting opportunities and long-term growth prospects of our currency business. And I will today focus the rest of my presentation around the opportunities and growth prospects around the CPI business. By way of a brief background about myself, as I mentioned, I first joined Crane 15 years ago with the responsibility of taking ownership of the then nascent payment business, which consists of 3 separately run businesses, totaling about $150 million in revenue, but it became very clear to me early on that strategically, we had the opportunity to not only consolidate those businesses but also the marketplace. Over the succeeding years, I led our efforts in the Payment business to drive both our organic and acquisitive growth, restructure the management team and drive necessary changes to our operating structure and the execution of CBS that ultimately led to who CPI is today. I assume my current role just 4 years ago after the acquisition of Crane Currency. Here again, with this business, we applied the same level of operational and commercial focus to extract the results that you just heard Sam speak to you about earlier. Over my years with Crane, I've been engaged with 6 separate acquisitions and integration businesses across our platform. Now prior to joining Crane, I spent nearly a decade at the Danaher Corporation, led progressively larger presidential roles, running 3 different businesses across a multitude of platforms. Today, I will focus my remarks strictly around our CPI business, the fundamentals, the global markets where we compete and why we continue to see exciting growth opportunities. CPI is the leading provider in the technology-based solutions to detect and authenticate all forms of payment transactions. Our highly specialized knowledge that we have gained over the years of developing our own centers and algorithms uniquely positions us to capitalize on a broad base of growth set solutions. It is also with this technology that we are able to maintain a market-leading position in all of the market sectors and across all 4 of our uniquely positioned solution sets. I'll elaborate on the solution sets, providing an overview of the business, our end markets, our customers as well as some insights into our go-to-market strategies. I'll also discuss the question that I'm sure is on everyone's mind today about the resilience of cash in the marketplace as well as the other strong secular market trends that are continuing to take place all of which, as you will hear and see about continue to drive long-term growth in our business. Over the years, CPI has continued to expand its available market through a combination of organic, new product development, and adjacency acquisitions. With this expanded breadth of our global offerings, we have nearly a $4 billion available window to market. We have a strong and stable leadership team, driving a healthy business with 28% adjusted margins, which is organized around 4 primary solution sets: components; systems; aftermarket services; and connectivity. We are generally the leading provider in each of the segments where we compete, and we offer solutions in over 120 countries. Our components business focuses on OEM integrated bill and coin acceptors and recyclers for automated payment solutions. The segment continues to see mid-single-digit organic growth, driven by increasing adoption in both the broader retail and gaming markets. Our systems business is newer, and it serves the larger and growing market for user-facing stand-alone products such as the consumer-facing Paypod, automated payment system for small businesses and the Cummins Allison high-speed note counting and sorting equipment found in the financial services, gaming and retail markets. We entered the preventative maintenance in field service market through the acquisition of Cummins Allison in 2020. We're excited about this business as we are continuing to see year-over-year growth in the high single-digit range. Further, with our large installed base of components and systems, we are expanding our reach across our broad customer base that will significantly grow our business over the coming years. Our Connectivity Software business was -- excuse me, our Connectivity Software Solutions business was organically grown out of the initiatives from our customers and customer demand. This business platform currently has particular strength in our vending and gaming markets, but is now beginning to be expanded into our retail market based on customer-driven demand. Now the foundation and core differentiator of CPI is our proprietary center technology and complementing algorithms, coupled with our manufacturing know-how, starting first with our sensor design. Due to the complexity of the currency and the increasing sophistication of counterfeiters, we utilize a variety of design -- in-house design sensors that measure across a range of parameters, including optical, infrared, magnetic, ultraviolet multifrequency and many others. These centers are specifically designed to look for critical characteristics across the world's currencies and to do so at extremely high speeds upwards of 20 nodes per second and operate in a wide range of environmental conditions. Now keeping in mind that the all global currencies are designed differently with different characteristics, yet, our in-house design sensors are low cost, highly robust and most importantly, uniform across the entire globe. The next essential aspect of our technology is the advanced imaging software utilizing our intelligent mathematics that complement our sensor technology. Think about sensors as the eyes of the machine taking a high-resolution snapshot of the information. Now we rely on a multitude of advanced algorithms to analyze the image and make a decision about whether to accept or reject the node in milliseconds. The CPI algorithms are unique in the industry as they are deep learning algorithms whose predictive neural networks enable adaptive machine learning. What that means is that they take the information on a node, cross reference it with our mathematical models to determine the validity and store the information for future reference. With this AI, the system automatically controls the hardware based on the learnings, thus improving the overall performance and reliability of the system. And finally, we have best-in-class manufacturing, leading to high-quality assembly components and systems. Utilizing our lean manufacturing principles and our sophisticated business systems, we are continuously improving our products, our quality and our reliability and, of course, our business productivity. I will talk more about the Crane Business System and the augmented capabilities that it brings to our business shortly. In total, this powerful combination of capabilities has earned us a trusted long-term partnerships and has propelled the CPI business to the leading position in the industry with premium pricing and profitability. Now you likely don't focus much on our products, which are typically a sophisticated element of a much larger machine, system or operating environment, but we touch your lives nearly every day. We are primarily focused on 4 vertical markets, as shown in the pie chart. Those 4 primary markets are: vending, gaming, retail and financial services. Our customer base is globally diverse, as we provide solutions, as I mentioned, in over 120 countries and process more than 5 billion transactions per week. Equally diverse is a range of customer applications from the simplest solutions that you would find in the vending machine to the most complex back-office system where we are processing hundreds and thousands of transactions daily with fully connected solutions and with long-standing service agreements. Our products sold either through original equipment manufacturers, OEMs, or directly to system integrators, many of which are household names. Now we work closely with OEMs such as NCR, Gilbarco Veeder-Root, Verifone, IGT, to name a few, to fully integrate our products, both mechanically and electronically. We also work very closely with end operators, companies like Pepsi, MGM, Walmart, Bank of America, McDonald's, again, to name a few, to ensure that our products and services address all of their productivity and automation and security needs. Our ability to grow and evolve our technology, our services and our solutions to match the ever-changing needs of our vast markets we serve can best be seen across our top 20 customers who have an average tenure with us of over 28 years. Certainly, as you know, customer buying habits and expectations over the past 30 years have changed dramatically. But with our embedded business system and our robust new product development process, we have continued to evolve with our customers and grow our business in tandem with them. I previously outlined that we participate in a broad global market. And though we have the distinct advantage of generally holding the #1 or #2 position in each of these markets that we serve, the markets are absolutely large enough to support our ongoing sustained growth. As you have already learned from Sam, cash in circulation continues to grow, and there are other strong secular trends leading to increased insulation and uses for payment automation. Most notably are the dynamics of the labor market and the shortages, high turnover and ever-increasing wage rates. And finally, the constant drive for businesses for improved productivity and profits. These dynamics are continuing to put pressure on an already tight operators' margins for our customers. As such, we are continuing to see greater adoption around payment automation, which generally has a payback of less than 18 months for our customers. Now as Sam outlined, cash in circulation continues to grow and grow at a rate of about 6% annually and is projected to do so through the foreseeable future. Equally important, though, as you can see from this chart, is monthly cash usage as an example in the U.S. post-COVID, which has rebounded and has remained stable as a percentage of transactions. Now internationally, the value of cash transactions continue to grow. And as these societies continue to experience the same market dynamics as we're seeing here in the U.S. around labor, labor rates and costs, their need for automation will accelerate. And as a market leader, CPI is very well positioned to take advantage of these growing trends. The combination of labor shortages, high turnover and significantly increasing wage rates has put significant pressure on our -- the business leaders. This is especially prevalent in the retail environment where national turnover -- nationwide turnover is in excess of 80% and where there are over 2 million open jobs between the retail and hospitality sector. Further exacerbating this issue is the cost and the strain on the businesses, including such things as rehiring and training, which in the retail environment can run upwards of $5,000 per associate. Now given these secular trends, we are seeing more and more customers turning to automation to help lessen the burden, simplify the work and improve customer satisfaction. Payment automation systems have become increasingly easy to justify with a typical payback period of an automated self-checkout system being less than 18 months, most customers have become very comfortable using these automated systems across all the market segments and have come to expect this level of ease and simplicity with checkout. The businesses have also found that even with reduced staffing, they're able to better serve their customers with more personalized attention, greater satisfaction, improved speed through checkout and importantly, still achieve stronger profitability. The new environmental norm has become even more difficult and retailers are faced with a litany of challenges to ensure that they continue to survive and grow profitably. Among the options available, technology has continued to stand out as a clear winner in their efforts to achieve profitable growth. Now notably, there are 4 areas that have been identified as key drivers that influence profitability. Now none of this information is a breakthrough or surprising, but it does reinforce and highlight the trends driving growth in this marketplace. Our automated payment connectivity and service solutions are perfectly positioned to take advantage of these industry dynamics. So as we have a deeper understanding of the CPI solution offerings of components, systems, connectivity and aftermarket services and how each of these solutions combine to work together in a complementary manner, expanding the total available market and positioning CPI for continued growth. These solution sets address each of CPI's market segments of retail, financial services, gaming and vending. Across each of these market segments, CPI holds a leadership position. And within each segment, we are either already providing or have targeted offerings that span all 4 of the solution set offerings I just referenced. Now CPI [indiscernible] has the broadest set of solutions across our primary market segments that utilize payment systems and is best positioned to continue to compete in this global market. Now let me give you an example and talk a little bit about one of our markets being retail. This market is evolving and growing quickly. Retail automation has been a trend for many, many years, driven by the never-ending pursuit of productivity, and it's even more important in the new economic environment that we're in today. Those trends have now strengthened further with wage inflation and labor availability issues. It is estimated that the current market has less than an 8% penetration of self-checkout. And over the next 5 years, we project that the market will increase to achieve about a 20% penetration, still leaving ample room for growth even beyond that. We have always been a leading provider of bill and coin components through the traditional big-box stores through OEMs like NCR and Toshiba, and we still maintain that leadership position today. But the market has continued to evolve, and we're evolving with it, not only by adding new products to our offering, but also through the addition of providing turnkey solutions, including combinations across components, systems, connectivity to best meet our customers' needs. Now many of the large customers of traditional self-checkout solutions are now seeking customized solutions, optimized for their specific needs. Retailers like Home Depot, Target, Walmart, just to name a few, have been looking for in installing custom solutions tailored to their store's footprint and product mix. For custom solutions, we are typically either the critical partner providing the high-value payment component or providing a fully customized payment system. We're also seeing growth within this category of retail that historically didn't use self-checkout. Convenience stores, discount stores, quick-serve restaurants and many small retail outlet stores are now embracing automation in an effort to improve customer service and profitability. Many of these retailers are turning to customized solutions like that offered by our Paypod system. As an example, we have recently been integrated to the Gilbarco Veeder-Root point-of-sale system that Aaron referenced earlier and are completing our integration with the Verifone POS system. Now these 2 companies alone represent greater than 50% of the convenience store market in the U.S. We've already secured wins in over 500 locations. And what's most exciting about this is that we are not only selling the hardware but we're attaching every hardware sale with installation and aftermarket service maintenance agreement. Another great example that I'd like to talk about of how we're creating more scale in providing the industry most -- the industry's most complete set of solutions is in the financial services marketplace. As CPI is already the leader in the retail environment, the acquisition of Cummins Allison in 2020 solidified our position in the banking sector and has added key technical and field service capabilities to our already strong platform of products. Most notably, the Cummins acquisition brought a complete set of offerings to the back office to complement our consumer-facing products that CPI had traditionally. With this complete hardware solution, we are now able to tie together a more complete ecosystem for our customers, linking the front office and to the back office together through our connectivity solutions, offering greater data analytics and supporting the complete package with our strong field service organization. Now our traditional customers in this space, such as Bank of America, Wells Fargo, Chase, have long been advocates of these solutions, holding a history with us that dates back over 20 years. Now these past 2 examples in retail and financial services are really no different than the reality of what we're moving forward with across all of our other vertical segments. We also continue to enhance our suite of connected solutions. We were the first to market -- to bring to market a fully connected set of applications and software for the vending management market years ago. Since then, we've launched a suite of offerings for the gaming market. Like our vending offering, this platform provides real-time data analytics and alerts. We will continue to expand the connectivity offering across our customer segment as this is a core enabling technology that drives increased productivity and improves customer satisfaction and experiences. We utilize a cloud-based architecture that is customized to our customers' needs and is a key differentiator that we bring to the marketplace. And not only does the connectivity solutions link directly to our customer systems, but it further brings greater efficiency and data analytics to our field service organization and aids in our ability to manage the routes and efficiencies. Now while we are heavily investing in new products, like our connectivity solutions that aid in driving continuous growth, we are also -- we also remain very focused on driving continuous improvement across our operations. For those of you familiar with Crane, you know that this is not just a story we tell but that the Crane Business System is a hallmark of how we, I personally drive our operating units across both CPI and Currency. Now we have a very strong history at CPI of driving results through continuous improvement and our financial results speak for themselves. But there is no better example of my team's efforts around continuous improvement than the significant gains in productivity at our facility in Mexico. At that location alone, over the past 3 years, we have run over 115 separate Kaizen events. We have 127 certified lean tool champions. We've implemented 17 cobot robotic systems with a payback of less than 1.5 years. The results, we've continued to sustain 14% year-over-year cumulative productivity improvements. We've freed up more than 25% of the floor space, and we've been able to reduce our labor by 25%, while still increasing productivity and volume by 30%. And frankly, this is really no different than the expectations that I have personally set for all of our business locations and are very consistent with the type of results that you are seeing delivered by Sam in our Currency business. As I just spoke about one example of CBS in action and the fantastic results, it's important to understand that CBS requires a disciplined process and rigorous deployment. We have a long track record of improving margins while continually driving growth across our business. The history of CPI is steeped in both acquisitive growth as well as organic growth. As I highlighted earlier in my presentation, and most importantly, the proof is in the results. Over the past 9 years, we have integrated 5 businesses, grew our top line by over 60%, which is a 6% CAGR. We have expanded the operating profit over the same period by over 180%, which is a 14% cumulative average growth rate, and there are still, trust me, plenty of opportunities for us to continue to drive growth and improvement over the coming years. In summary, CPI has an industry-leading center and algorithm technology that is designed with artificial intelligence to learn as data dictates. These systems are robustly designed to work across a broad range of environmental conditions and in a very cost-effective manner. We are the market leader in all segments that we address. We have continuously expanded our total available market through new products and acquisitions, and we have established long-term and highly valuable relationships with our customers. There are strong fundamental secular trends that are continuing to play through and are expected to do so for the foreseeable future, with the core drivers being around labor shortages, wage inflation and the continued use of cash across all of our key market segments. And finally, we utilize a holistic business system in CBS that is, in my opinion, second to none, and their consistent results continue to speak for themselves. Thank you very much. I really appreciate you giving me the time today, and I hope that you have a greater understanding and appreciation for our business, both for Crane Currency and for CPI. I hope you can see why I'm so excited about the opportunities for growth in NXT and continuing to drive long-term shareholder value. With that, I think we're now ready to take a short break and we'll get started again in about 15 minutes. Thank you. [Break]

Okay. So we're going to start again with Aaron Saak, talking about expanding beyond the core, then one final presentation on the financial overview, and then we'll move to Q&A. Thank you.

All right. Thank you again, Jason, and welcome back to everyone, both here in the room and online. So throughout the previous presentations, you've heard from Sam and Kurt on the growth plans and the strategic focus of both Crane Currency and CPI. As we mentioned, these are very resilient and durable businesses with outstanding financial profiles. And I think with these highly attractive businesses, it's a fabulous foundation from which we're going to start and launch Crane NXT. So over the next several minutes, I want to walk through in more detail our strategy to expand and diversify the company beyond the core. We start with market-leading positions in these core businesses and a very strong financial profile, as I mentioned. Our goal is to use this strength to diversify the company into near adjacencies by targeting opportunities in an approximately $20 billion market focused on technology that secures, detects and authenticates what matters most to our customers. We have a demonstrated history of being good owners of businesses improving margins over time as well as Sam and Kurt mentioned. This ability, along with our disciplined capital allocation strategy, will allow NXT to provide strong value creation for our shareholders over the long term. As we mentioned earlier, we believe NXT has a unique set of capabilities that plays at the intersection of technology to secure, detect and authenticate. As Sam and Kurt discussed, our first priority is to continue to invest in our core business with investments, specifically in new products, expansion of our connectivity solutions and continued focus on recurring services. We see the opportunity to diversify the company, moving from our core markets that represent a TAM of approximately $7 billion today to a $20 billion market focused on technologies that secure, detect and authenticate products and people. These applications include payment verification and access control technologies, industrial detection and sensing systems in niche markets, applications, physical product security capabilities like micro optics that can also extend to track and trace technologies. These are all near adjacent areas to our core, building off our existing capabilities. Additionally, this focus moves NXT into higher growth areas from mid- to high single-digit growth in markets. Finally, these markets are highly fragmented with many niche technology players. Given our M&A capacity, this provides a path to clear programmatic market leadership. The growth in these markets is driven by secular trends that we expect to continue for many years to come. Now we've already discussed labor scarcity and how this will continue to drive investments in automation and service solutions for detection and authentication technologies. Additionally, the acceleration of advanced connectivity with the ongoing growth of connected and smart devices will drive demand for equipment with new detection capabilities. A growing concern in the market is what we would call trust architecture. This applies to both products and people. There is increasing sophistication of counterfeiting and fraud technologies. This will only continue in the future and will require adoption of more advanced technologies to secure and authenticate both products and people. And finally, the focus on supply chain security and traceability is also increasing. This is driven by both increased regulation, including track and trace solutions for sustainability adherence, along with the desire of companies to understand in real time the condition and location of their goods. Together, these trends all provide a wind at our back for years to come and multiple new opportunities for our very specialized capabilities. Let me take a brief moment to explain what I mean by our differentiated capabilities, building off the prior presentations. Today, we have unique strengths and know-how in technologies that secure, detect and authenticate. This includes our micro-optic surface technology that is extendable to other applications beyond the core currency business. And as Sam highlighted earlier today, we're already doing this in the product authentication market. Additionally, our technologies in developing sensor-based systems and image recognition software for detecting and authenticating cash and coins and CPI positions us very well to expand beyond the current core. Underlying all of our technology is our expertise in manufacturing and design excellence and our position as a trusted partner to very well-known global customers, including over 50 central banks. So we think the most interesting areas for us to expand the business is at this intersection of secure, detect and authenticate technologies. For this example, this includes new technologies being used in coordination with security features to ensure products and people are identified correctly. This includes new industrial sensor technology being used with advanced imaging software to improve productivity in manufacturing operations, for example, and also technology that is track and trace-related, tracking articles across the supply chain and expanding both the use of overt and covert labeling to authenticate these products. I think these are just a few of the examples and the use cases for expanding the core, all in this area of secure, detect and authenticate. And so I'll go a little bit deeper, building off what Sam mentioned in the area of product authentication. Today, we are focused only on the overt security technology, as shown on the left-hand side of this page, and this represents an example of the product authentication value chain. There is a growing opportunity to link our physical security offerings to software that can track and trace an article and provide data on the consumer of that product, as shown on the right-hand side of the value chain. This is an example of one use case among several where we are focusing our business development activities. All of these markets have the characteristics of niche technologies, fragmented competition and a significant opportunity to expand margins through disciplined operational execution. To accomplish our strategy, we will continue to use our proven M&A framework to source, cultivate and prioritize targets. First, we start with the market. As I've discussed, we are focused on technologies and solutions that secure, detect and authenticate our customers' most valuable assets. These are niche technologies, often with proprietary features or know-how, creating very high barriers to entry. Additionally, these markets are aligned to secular tailwinds that will drive long-term durable growth above mid-single digits. Secondly, we look at the attributes of a particular company. To be of interest, a target must possess its own distinctive differentiation, which could include technology or a specific channel to market. In terms of deal size, we're targeting companies in the range of approximately $100 million to $500 million in annual revenue. Finally, we won't act unless the valuation will allow us to achieve a greater than 10% ROIC by year 5, utilizing the CBS toolkit we've described earlier to drive value. Today, we have a strong pipeline of potential targets fitting these attributes. And the impact from the execution of our M&A playbook is really best viewed by the results from our most recent acquisitions. Over the past 10 years, Crane has deployed over $1.5 billion to add scale to the NXT business. This started with the acquisition of MEI in 2013. Crane Currency was purchased in 2018 and, most recently, Cummins Allison in 2020. Each of these businesses was in a near adjacency to the existing core and help grow and extend the business into new areas. Additionally, each acquisition brought new technologies and capabilities to Crane. Through this disciplined execution of CBS, all of these acquisitions have generated double-digit ROICs by year 5 and have accelerated the growth of the portfolio. Building off this success, we will continue this approach of highly selective, near adjacent expansion utilizing our CBS toolkit for future M&A to generate similarly strong returns. Our M&A focus fits within our overall capital allocation strategy. As we discussed earlier today, our first priority is to invest in our core business to accelerate organic growth. It simply gives us the best return. This will be focused on continued investment, specifically for new products as well as capital investments needed to take advantage of growth within our core customers. And I think one of the best examples of this is our planned investment in Crane Currency to expand production of our micro-optics technology and upgrade our paper-making facilities ahead of the new series of U.S. bank notes. In total, we expect CapEx for organic investment to be in the range of 2% to 2.5% of sales over the next several years. Secondly, we will focus on M&A, as I've mentioned, to further expand and diversify the portfolio. Based on our free cash flow and net debt, we'll have approximately $3 billion of capacity through 2027, with the plan of keeping our net leverage less than 3. Additionally, we'll plan to pay a competitive dividend, similar to our small- and mid-cap industrial technology peer group. We are targeting the dividend to be in the mid-teens of our free cash flow. Finally, we'll continuously monitor the valuation of the company and opportunistically execute share repurchases. We believe this methodical, disciplined approach to capital allocation will maximize our return over the long term to our shareholders. When you put this all together, we have a clear formula for value creation. It starts at the top of this image, built on a foundation of a very resilient core business growing at mid-single digits. We continue to deploy CBS to increase margins and improve productivity in the core. This generates our strong free cash flow conversion of approximately 100%. We put this free cash flow to work through our disciplined capital allocation strategy. This includes reinvestment into the core business, paying a competitive dividend and deploying to M&A, targeting higher growth, resilient end markets. This cycle is continuous, and over time, it will position NXT as a strong compounder creating significant shareholder value. In summary, we've identified an exciting and clear path forward for growing and expanding our business. It's built from a position of strength and benefits from the excellent financial profile of our core business. We will use our strong free cash flow to continue to invest in the core, pay a competitive dividend and expand the company into higher growth adjacencies. This takes advantage of our demonstrated capabilities to acquire businesses and improve their performance, creating strong returns. With this strategy, I'm confident that NXT's future is very bright. And so with this, I'd like to now turn it over to Christina to walk through our financial performance in more detail and the key next steps in executing our separation.

Thanks, Aaron. Good afternoon. I'm Christina Cristiano, Senior Vice President and Chief Financial Officer for Crane NXT. It's great to see you all here today, and I'm excited to tell you more about the financial performance of our company. First, let me briefly tell you a little bit more about myself. I joined Crane almost 4 years ago as the Chief Accounting Officer, responsible for leading all internal and external financial reporting and overseeing enterprise risk management. During this time, I partnered with our business units to drive results and execute continuous improvement initiatives. Prior to this, I spent 14 years at EY before joining Thomson Reuters, where I spent 10 years. For the past year, I have led the separation efforts to create Crane NXT, which we will spin off on April 3, as planned. Today, I'll take you through our strong historical growth and operating performance and review our best-in-class free cash flow. We have a strong balance sheet with substantial flexibility and capacity for capital deployment. And I'll review the expected capital structure at the time of separation. I'll also provide a bridge to our goal of achieving $3 billion in revenue by 2027 and a review of our financial metrics in comparison to our industrial technology peers. Additionally, today, we are reaffirming our 2023 guidance that we provided during our quarterly earnings call in January. Finally, I'll discuss the key milestones that will occur to complete the spin on April 3. That's a lot to cover. Let's get started. Crane NXT is a resilient business with consistently strong financial performance. Sales in 2022 were $1.3 billion, and we achieved a record adjusted operating profit margin of 28%. That's an almost 700-basis-point improvement in the last 5 years. In our currency business, our historical sales growth has been driven by increased demand for anti-counterfeiting technology and share gains in international markets, both trends we expect to continue. In our CPI business, the primary growth driver is strong trends supporting automation to improve our customers' productivity and offset the impacts of labor scarcity. We consistently deliver these results by leveraging our differentiated technology and leading market positions in large and growing global markets. A key driver of stability in our earnings is our reoccurring and recurring revenue, which together make up approximately 40% of our total sales. I'll discuss this in more detail later in the presentation. In looking at our 5-year performance, the key message is that while we've had some transitionary -- transitory headwinds in late 2019 and through COVID, our businesses' resiliency resulted in a quick recovery. If you take a step back and consider our performance, we have consistently achieved mid-single-digit core sales growth over the last several years, even though the currency business does have some lumpiness from time to time. Over the long term, we expect that lumpiness to moderate as we continue to win more new denominations in our international business and expand our product authentication business, as Sam highlighted earlier. We feel confident that we will be able to continue to deliver core sales growth in the same range moving forward, and we ended 2022 with record backlog and orders up in the high single digits. So overall, our performance shows this is a strong business with resilient and durable sales growth. Our businesses generate substantial free cash flow, and the annual free cash flow conversion ratio has averaged over 100%, converting all our earnings to real cash flow, which is a testament to our capabilities and disciplined execution of the Crane Business System. As you can see, 2019 was an aberration driven by the timing of orders for 2 large currency customers. Notably, however, it was just timing. And you can see the quick bounce back in 2020 and the consistent free cash flow conversion since that time. This sustainable performance is a result of our disciplined operating cadence and focus on cash management process and inventory optimization. Paired with our very strong balance sheet, we will continue to invest in organic growth initiatives as well as pursue inorganic opportunities to expand and diversify the business, as Aaron discussed. A hallmark of our business is our durable, resilient, long-standing customer relationships, and approximately 40% of our revenue is reoccurring or recurring. First, let me highlight our strong reoccurring revenue, much of which is comprised of multiyear currency contracts and makes up about 25% of our total revenue of $1.3 billion. This includes our contract with the U.S. government, for whom we have been the sole source provider of currency paper for over 150 years and other international currency contracts. As Sam described, this is a very sticky business. Once our technology is specified, it tends to remain in the bank note for many years no matter how many times the note is reprinted. And whenever a refresh is proposed, we generally embed even more technology into the notes, which further improves our margins. This is a very durable and resilient business, which is not dependent on any one country and the switching costs are very high. Reoccurring revenue also includes our aftermarkets parts replacement business. This includes spare and replacement parts for components and systems in CPI. As with many aftermarket parts businesses, this comes at a high margin above fleet average. There's also a very long tail to this business as the part replacement cycle continues for the life of the equipment. Switching to recurring revenue. This relates to our software solutions and aftermarket services and makes up about 15% of total revenue. Our connectivity solutions improve our customers' productivity and our contracts that build like a typical software-as-a-service model. Aftermarket services come from the Cummins Allison business we acquired in 2020. The equipment we service is highly complex, designed to operate in harsh environments with very high volume and requires skilled technicians for service. This is a high-margin business, and we have an over 95% renewal rate for preventative maintenance contracts that we sell to our customers. The remaining 60% of our revenue includes our sales of components and systems in the CPI business as well as other sales of shorter-term contracts within the currency business that we consistently win based on our technology differentiation and industry-leading manufacturing capabilities. Overall, there's tremendous stability in our revenue base, along with opportunities for us to continue to grow. Turning to our capital structure. Our net debt at the time of separation is expected to be approximately $650 million, which implies a net debt-to-EBITDA ratio of between 1.5 and 2x. At the time of the spin, Crane NXT will retain from Crane Holdings Co., the existing bonds that mature in 2036 and 2048 and total $545 million. Our existing 2023 bonds will be paid primarily with the dividend Crane NXT will receive from Crane Company at the time of separation. In addition to the long-term bonds, Crane NXT will have an initial term loan in the $300 million to $350 million range. That gives us total debt of $845 million to $895 million, most of which is fixed rate and long term. This is an outstanding balance sheet with very strong liquidity. With our exceptional cash generation profile, we expect to have $1 billion of M&A capacity at the time of separation growing to approximately $3 billion in 5 years. With the strength of our core business and the optionality we have from our strong free cash flow and balance sheet, we have developed a road map to grow our core to $3 billion in revenue by 2027. We will achieve this goal by building off market tailwinds around advanced technology, automation and labor scarcity. We expect the underlying market to grow at mid-single digits. Additionally, we will continue to drive new product development, building off our differentiated technology. We expect this to contribute approximately $100 million in incremental growth in the next 5 years. Also, we will continue to invest in key growth initiatives, as Sam and Kurt mentioned. We expect to focus on these priorities to generate approximately $100 million of revenue by 2027. Finally, we will deploy capital through our disciplined M&A process as we focus on the $20 billion near adjacent market, leveraging our core capabilities to secure, detect and authenticate what matters most to our customers. In total, we see adding between $1 billion and $1.5 billion in revenue to the company by 2027 through acquisitions. This is an exciting growth strategy and presents a significant opportunity for shareholder value creation. When you look at our current financial profile, Crane NXT is well positioned as a premier industrial technology business. It is most closely aligned with other small- and mid-cap industrial technology companies that have similar margin and free cash flow conversion characteristics. Generally, this is a group of niche market leaders with differentiated technology and EBITDA in the mid-20% range. Crane NXT's growth profile is consistent with this group, driven by secular drivers with a strong base of recurring and reoccurring revenue. As we announced last night, upon separation, we will pay a competitive dividend of $0.56 annually or $0.14 per share quarterly, consistent with industrial technology peers, which reflects the payout ratio of approximately 15% of adjusted net income. In terms of net debt to EBITDA, we are in line with our peer group, with flexibility to go higher to support acquisitions and then quickly delevering that to our target ratio of less than 3x. So based on our leading market position and very strong financial and business profile, Crane NXT aligns well with other premier industrial technology peers. Looking ahead, we are reaffirming our 2023 guidance of $1.4 billion in sales in 2023, which represents 2% to 4% core sales growth and a slight decline in adjusted segment margin to a still impressive 27%. In our CPI business, we expect strong mid-single-digit core sales growth of 5%, leveraging at 35% with segment margins of 29%. Total sales growth of approximately 3.5% includes an expected 150-basis-point headwind from unfavorable foreign exchange. This mid-single-digit growth rate is consistent with CPI's historical performance and is driven by trends in automation and productivity initiatives across all verticals, with strength in retail and gaming expected. At Crane Currency, we expect flat core sales and a modest decline in margins to 24%. Related to sales, we're seeing a robust performance in our international business, supported by a strong backlog. In our U.S. business, we're seeing transitional headwinds as the Bureau of Engraving and Printing allocates production capacity to accommodate the redesign of the U.S. $10 note that is expected to enter production in 2025 with a public release in 2026. We feel very good about our opportunity to provide additional security and technology features given our historical relationship with the U.S. government. As a reminder, several other U.S. denominations will also be redesigned over the next 10 years, providing a growth tailwind to this business over the long term. Additionally, each new denomination will have the opportunity for increased margins. The margin decline at Crane Currency in reflects the decline in volumes in the U.S. business and a temporary mix impact driven by greater demand for lower denomination transactional notes as in-person transactions return to pre-COVID levels. This is opposed to the high demand over the last 2 years for store of value notes, such as the U.S. $100 bill, which provides security in times of uncertainty, yet another data point suggesting that cash transactions in the U.S. are alive and well. In terms of nonoperating costs, the key items presented include a corporate cost of approximately $50 million, net nonoperating expense of approximately $45 million related primarily to interest and related financing costs and adjusted tax rate of approximately 20%, diluted shares outstanding of approximately 57.3 million and, as I previously mentioned, free cash flow conversion of approximately 100%. Overall, adjusted EPS is expected to be in a range of $3.65 to $3.95, as previously communicated. As we look ahead, I'd like to share some key dates related to the separation. The record date for the distribution of shares will be March 23. Shareholders of record will receive 1 share of Crane Company common stock for every share of Crane Holdings co-common stock they hold on the record date. When issued, trading will begin approximately 3 business days before the distribution date on or about March 29. Crane Holdings Co shares will continue to trade regular way until the distribution date of April 3. After the distribution, Crane Holdings Co. will be renamed Crane NXT Co. And on April 4, shares of Crane NXT common stock will trade regular way under the ticker symbol CXT on the New York Stock Exchange. In summary, we are confident about the strategy we've outlined to grow Crane NXT. This is a very strong and resilient business with a track record of delivering mid-single-digit core growth, with operating margins in the high 20% range and best-in-class free cash flow. We have a stable base of reoccurring and recurring revenue and a solid capital structure with substantial flexibility for capital deployment. We have a 5-year goal to achieve $3 billion in revenue, driven by our continued growth in our core business, along with executing M&A in near adjacencies where we can leverage our differentiated capabilities. I'm very excited to be a part of this outstanding team at Crane NXT, a very compelling opportunity that will provide significant valuation for our shareholders for years to come. We're now going to pause for a minute or 2 to set up for Q&A.

We'll take a moment now for Q&A. We're going to have Sam and Kurt come up to the stage and Christina. And Jason will have the microphones, and we'll be happy to take any questions you have for the next several minutes as we get comfortable setting on the stage.

Going back to the slide that you broke out, the pie chart with the reoccurring piece of the business, the 25%, the currency contract. Is that primarily attached to the Crane Currency business? And also related to that, can you just help us understand sort of the incremental margins and the cost structure at Crane Currency? Because looking back at the appendix and going through sort of the historical revenues and adjusted EBIT, it's -- the further fluctuations are pretty erratic. So how we should think about that going forward?

Sam, do you want to talk about the currency contracts?

Yes. I think as Christina said, the principal recurring revenue in the business is our contract with the U.S. to provide all the banknote paper. Generally speaking, in the international banknote markets, many central banks will contract project by project. So when they need a new X number of banknotes, they'll have an open public tender, of which we will be invited for that tender pretty much automatically in the international market. Some of them, however, do contract on a multiyear basis, and they'll run again usually a similarly open public tender, but they'll contract for the provision of banknotes or banknote paper for the next 3 years or the next 5 years, and those would also be counted as recurring revenue. What I don't think, correct me if I'm wrong, Christina, we can as recurring revenue is the technology that's specified, which as aforementioned, will tend to generate recurring revenues, whether we're selling the banknotes or the paper or the technology itself over a number of years. In terms of the historically lumpiness of the business, as I said in my prepared remarks, I think it is certainly the case in a business where you have large single projects that there has been some historic lumpiness. However, the more customers you have, the more diversified the business, the less that lumpiness is over a period of time. So 10, 15 years ago, when we had only a couple of score of customers in the international market, one big change in demand from one of our big customers would have a very significant impact on the business. Now we're on 130 denominations in 50 countries. You should see a much more consistent and predictable outcome from the currency business. Christina, do you have anything to add?

Yes, that -- maybe I'll, and you can chime in, Christina. That's really principally and completely driven by the U.S. government contract. So that's due to the retooling that the Bureau of Engraving and Printing is going through to produce the $10 bill. So it's kind of a transitory lull for us. And just because of the margin profile of that business, it brings down the -- it's a high -- higher margin than, let's say, the rest of the fleet in currency, so we have a negative mix impact.

And if I may add, as Christina said in her remarks, during COVID, there was a particularly high demand for $100 bills around the world. You can see from the published figures from the Fed that the proportion of U.S. 100s was much, much higher for a couple of years. And we're going back to essentially more of a historic mix in the business, in fact, more than that because lower-denomination bills need a refresh after a couple of years of really not being printed.

Three quick ones. One, how many of the acquisitions in your pipeline are ones that have been RV in the pipeline for Crane for a long time and you're kind of coming into them versus how many are you bringing newly that you've discovered throughout your career you've known about? The second is on the India business, the potential India business. Is that in any of your projections? And then I have a third, but I guess I'll pause just so you don't...

Okay. I'll take the first one, and I'll pass the second one to Sam, talk about India. So the question was in terms of our M&A pipeline, how many have been there and we've been cultivating for a while. I would say it's a mix. That's the honest answer because we've had a pipeline in place for several years. As I mentioned, there's been no consummation of the deal since Cummins Allison. And those have been cultivated by this team and [ Chris Silvera ] who's there, who's led M&A inside the business for the better part of a decade and been part of all of our deals, and he's the leader of our business development for NXT going forward. So we have a lot of continuity in terms of that. Now what we've explicitly done as part of the strategy we proposed is open the aperture to look at where can we scale some of our technology capabilities. So that's added more into the pipeline over the last several months as we've done that. So again, I think it's a healthy mix, again, kind of targeting that range I mentioned in prepared remarks. Ideally between $100 million, $500 million is the sweet spot that we think is again similar to how we've executed M&A in the past. On India, Sam?

Yes, with respect to India, I mean, I tried just really hard not to give a running commentary on particular countries and particular tenders and particular opportunities. I fully understand why you asked the question because India is the largest banknote market in the world. And so for the broader group, it's public knowledge that since 2017, the Indians have been running a project to try and upgrade the top 2 denominations in that country, upgrade the security technology in that country. That's obviously a large opportunity for us. We track it and follow it extremely closely. All I would say in terms of our offering is what I'd say to you in terms of any country in the world looking to upgrade the security of their top 2 denominations, which is we've got the best, most secure, most customizable, most fantastic technology. And I'm delighted to wait the fullness of time as the Indian procurement process goes through that. And I continue to be very, very confident in my own solution.

But it's not in the explicit projections?

It is not in our -- it is not in any of our projections.

Okay. And then, sorry, the last question was just on the more security that you put into the bills, the higher the margins or the mix improves. I'm curious, you kind of are projecting it looks like kind of flattish, still high 20s EBITDA margin, which is still fantastic but flattish from here. You're doing a lot of redesign work in the 10 to 5 to 20 to 100, and you kind of map out all these opportunities. Why wouldn't there be a mix up that benefits the margins going forward? Or is it more so it just shows up in like dollar revenue instead?

Well, it shows up in both. And I think if you look, there is an incremental margin improvement over this 5-year period in Crane Currency. I think 20 -- to the question earlier, 2023 is a bit of the aberration with what the BEP is doing. So I think your line of thought, if I frame it that way, is correct, is that as you embed more technology and the density, the technology increases in the bank note, margins improve for micro-optics, and that's a consistent train of thought.

I would only add that, that is true in the U.S. market. It's also true in the international market. And this trend that I talked about earlier on banknotes tending to become more complex, more sophisticated, continues to drive the value of banknotes, not just in the U.S. but around the world.

Great. It's Bob Labick from CJS Securities. Just want to ask one question. Aaron, could you give us -- you started off with a little bit of background. But give us a little more of your background as it relates to service-oriented businesses and the opportunity to grow the services, which are now recurring 15%. Where is the attach rate? What's that attached to? And what's that opportunity over the next 3 to 5 years to grow the recurring as opposed to the reoccurring part of your business as well?

Yes. Thanks, Bob, for that question. It was actually one of the areas, as I did my own diligence on NXT, I thought was particularly fascinating with that acquisition of Cummins Allison, which brought a new capability to currency portfolio. Why I was excited about it is I spent several years running a business inside of Tyco, where I worked for almost a decade called SimplexGrinnell. It was a $2 billion service business. It's the -- was the largest service, fire and security business in the United States and North America. And we sold the entirety of the company to Johnson Controls. And since that time, that business has been integrated into the core JCI. I learned a lot about how to run a service business, how to run it well, very different than a products business, and the lucrative margins that, that can have on systems and components, which was already the core of the CPI business. So what I see today is when you compare, let's say, one of those large service businesses to what we have in Cummins Allison, it's enormous opportunities to scale that business just in terms of density and where our branch locations are at to increase that into different verticals built primarily on the core equipment and services that we already have inside the business. And I'd say Kurt and Jan and the entire CPI team has done an outstanding job in that integration, and it's grown substantially. We didn't highlight that specifically, but you could see the ROIC and -- where we've achieved that ROIC in 3 years, exceeding the white paper on that investment, and that's come from the good work expanding the service business. I think it's not fully tapped. It's not fully exhausted by any stretch. So we have density improvements. We have attach rate improvements. We have the Ts and Cs around the contracts that are good hygiene in the service business that we can execute on. And certainly, it's a business that only operates today in the United States. So there's geographic opportunities. So that's really one of our internal growth initiatives, and I don't know if you want to add to that.

Yes. The only other thing I'd add is, so today, that service business is primarily focused on the Cummins Allison equipment. And if you think about the installed base of the CPI components, which are traditionally the primary brains in a device, right, in a -- whether it be a self-checkout device or smart safe or kiosk, payment kiosks, there's a huge opportunity of installed base. CPI has roughly 10 million units installed worldwide. There's a huge opportunity to really go after those third-party OEM pieces of equipment that are currently being serviced by other third-party service agencies that are servicing not only our equipment but the rest of the kiosk for smart safe. So that's an area that we see as a real opportunity for continued growth.

I think I'd just add, Kurt, that when you look at the Cummins Allison business, it's the largest service network in this market in the country, and it's still only 450 technicians that some of you would say, by other verticals, is still small. The rest of the market is highly fragmented with smaller, call it mom-and-pops regional players. So our ability to -- back to the threat of we use our scale to grow the business, add more hubs to the network and expand, as Kurt said, the offering, there's a lot of opportunity, again, to place the strength of the business, given not only the equipment side of the business but the service side of the business is highly fragmented.

I was wondering when you quote the banknote market as being $3 billion, what the trend would the market size was. And also, is there a discernible trend as to central banks choosing to outsource this business? Or is it all over the place?

Yes. So it's a very interesting question. So in terms of the overall market level, I mean, the chart I showed you showed about a 6% increase in banknotes in circulation around the world, and that's a good number to have in the back of your mind, the reason why that 40-year trend should necessarily change or change dramatically. In terms of the extent to which some countries in the world print their own bank notes, some countries in the world print their own bank notes and make their own banknote paper and by technology office, rarely do you see very significant changes in countries that do that. Countries who print their banknotes tend to continue to do so. But certainly, at the margins, there may be opportunities if the country, for example, has been printing their banknotes for many years and decides to get out of that business and rely entirely on the commercial banknote market, we would say they might be able to get better value for money and better quality by being able to do so. So there may be some opportunities on the margin.

I guess a follow-on to that question related to currency. So maybe asked a little bit differently, so you had talked about kind of getting from 30-some central banks you're working with to 50 today. And then, obviously, some of those central banks choose to do their own thing. But just thinking about those that are working with external, where would you -- how many would you say there's maybe still some low-hanging fruit that currency can go and take that business?

Yes. So let me be clear, every central bank in the world, unless there is some political reason where we can't do business with them, is a potential opportunity for us. If they make their own banknotes and make their paper that they still need to buy their security features from the market, why not buy micro-optics from Crane? If they print their own banknotes, we can provide them with our durable paper with our micro-optics inserted. If they don't have any capabilities in country, then we can provide them with integrated banknotes. So of the 1,000 banknotes that are available globally, you could probably exclude a small number of those for fairly obvious political reasons, but the rest of them in one of those segments, selling technology direct, selling paper with technology or selling integrated banknotes are addressable to us. I think one of the ways I would think about it though is less how do we win new countries, which obviously is a focus, but also how do we deepen the value with the countries that we've got, both in terms of as they upgrade their banknotes, taking on additional technology and using our technology on all of their banknotes. And I use the example of Ghana in my prepared remarks who use our technology on the very top denominations, the ATM denominations and the change note denominations as an opportunity for us to grow similarly in a number of other existing customers around the world.

Understood. And then I think, Sam, you mentioned earlier your expectation going forward is, long term, 2% cash growth globally. Just curious how you're thinking about near -- very near term where, obviously, a lot of the central bank policy is towards -- focused on constraining inflation. So how are you thinking about kind of near-term?

Yes. So I mean I think I used the phrase low single digit. You may have heard 2%, but it's -- somehow, the 2 are connected. How do I think about it in short term? Look, high inflation has a number of impacts. And generally speaking, that's the dominant effect in the global economy at the moment. So one thing that tends to happen with high inflation is the countries that have denomination structures that get outstripped a bit by high inflation, the top denominations become printed more regularly and more -- at greater volume and greater scale. For example, central banks tend to think very carefully before introducing new top denominations to take account of that inflationary growth. So sometimes in the short run, you can see a spike in demand for certain top denominations in particular as a result of high inflation. There are many other elements of public policy that impact on cash, but they are very country-specific and central bank-specific. So we'd have to get into individual countries to discuss this.

One last question. M&A is clearly an important part of your strategy, building out that $20 billion in adjacencies. You mentioned that some of these focus areas have high barriers to entry, higher than mid-single-digit growth. So these are some quality assets that you're looking at. Curious how you're thinking about pricing valuation on the types of businesses that you're targeting.

Yes, I think that's a very reasonable question. So I would frame it as we're looking at a very niche type of technologies. Typically, these are either PE or family-owned. I think very similar profiles think back to Cummins Allison is a very good example of a business that we acquired from a family, you could argue, had a lot of opportunity to improve the margins, which we improved significantly over the last 3 years of ownership. And I think that, similar to currency, it was coming out of PE ownership. It was family-owned, just preceding that. These are the kinds of profiles that you'd look through where we get a valuation because we know we can apply our operational discipline to improve the profitability of the business. And so that's part of, again, kind of looking at the valuation, but also I think in what I mentioned in one of the slides is around how we can be good owners of the business, rightful owners of the business and ones that can improve the margins. If we can't see a path to that and we're just paying high valuations for a business, that probably doesn't fit our sweet spot in terms of where we would actually deploy capital.

Over here. I'd like to understand a little bit more about operationally how currency's margins are affected by the $10 rollout. And I know you pointed out that there's also a bill mix component to that headwind. So I don't want to forget about that. But this is not a question about the benefits of new bills. Those, I think, are well understood. Someone also probably asked you to quantify it. That's not what I'm interested in. I'm interested in you put up a slide that every 2 years, which probably won't happen, but every 2 years, the U.S. government will roll out a new bill. The $10 bill is by far the least significant from a volume perspective. That seems to be having a relatively meaningful impact on your volumes as well as your margins in the currency business. So first, is that similar to what happened in 2012 when the $100 was released? Or was that much larger in terms of an impact? Second, should we expect a similar impact every time a new bill is released? And third, is any of this obviated by the new facility that they're building in Maryland? Does that affect things at all? It's a super long question and pretty negative. Sorry.

No, I think you answered it at the end in part that the -- and I'll pass it over to you, Sam. That the redesign of the $10, exactly your point, is one of the lower-volume bills, simply for them to upgrade the technology and prepare for the subsequent series. So there's a learning curve to the upgrade, and that's what we're experiencing now. And as you've just said, others may not know, but the BEP is installing and upgrading a new facility to actually modernize their footprint, increase capacity and prepare for this launch. So our issues in 2023 in terms of that mix are due to the fact there's not the new facility. They're doing the first launch and upgrading it. And the belief is that as we roll out the next bills over the next decade, you've got this combination of know-how plus the facility that moderates what we would say is a 1-year transitory issue. Now just to be clear too, we have the mix issue this year as we talked about, with a higher skewing to $1 low-denomination, lower-margin products for us. That's worth noting in our margin mix profile for the current year. But Sam, feel free to add.

I'm not sure there's a lot more I can add other than to say the answer to your question is dependent on the technology that selected the volumes that happened on the timing of the same, none of which is yet fixed. So time will tell in a certain sense. The one thing I'll add about the new Maryland facility is what a great confidence in the future of cash in the U.S., right? The government is very, very serious. The reserve was very, very serious about investing in new printing capacity and capabilities outside the Beltway. So -- and I think that shows confidence not just in demand in the U.S. but also continued demand for the U.S. dollar as the global reserve currency around the world.

Can you talk a little bit about the competing technology to micro-optics, maybe compare and contrast with G&D, De La Rue are -- what they have in the market versus what you have? And when you compete with them and lose on the basis of security, why would that be?

Yes, I tend not to try and talk too much about my competitors' products for obvious reasons. They are different technology basis. They have different challenges for a counterfeiter, and there are different use cases for technologies overall. And you mentioned De La Rue in particular. Their focus has been on polymer banknotes and security features for polymer. Now we have our own MOTION SURFACE micro-optic security feature for polymer. But I think to answer your question in any sensible way would require a look at a particular case and a particular customer and what the particular preferences of that customer would be. I don't think it's an easy generic answer, I'm afraid.

Got it. You brought up polymers, and that was actually a follow-up question I had. How much does the micro-optic capability you've added in polymer -- how much TAM does that open up for you? And where do you see maybe the more prominent business opportunities, whether it's regions, countries, et cetera?

Yes. Again, I'm not going to get into individual countries or customers. But generally speaking, polymer banknotes were about 6% or 7% of the global market. So that answers the first part of your question. And few countries, very few countries have polymer banknotes for all of their denominations. Many countries who do use polymer tend to use it for lower denominations where security is less of an obvious issue, durability is perhaps the main focus of attention. And clearly, our micro-optic products are most obviously attuned to higher-value banknotes given the sophistication of the technology that they have. So that gives you some clues, I suspect. I think more broadly on polymer, the key thing -- the key point want to make is with our customers, with our central bank customers around the world, we, as a company, are substrate agnostic. So we design -- we have designed banknotes for customers on polymer and, indeed, other hybrid substrates as well as durable and other banknote papers. We produce and we print banknotes that are on all substrates. And of course, we've got our micro-optics security technology applicable to all substrates. So we're very much a company that's led by customer demands, and there are different preferences depending on different countries, different central banks. Now obviously, we're extremely proud of the durability of the substrate that we produce for the U.S. dollar. I'm extremely proud of our anti-soiling technology that we produce for the international market. And I'm always happy to sit on the stage and have a debate about the advantages of durable paper from a cost and durability perspective. But from a customer perspective, we support them whatever substrate they choose for whichever denominations.

Maybe I'll add a question you didn't ask [ Matt ] related to polymer and where we look at the value chain. That's not an area certainly as we think about expansion across the company or expansion backwards into the value chain that we would be pursuing. That tends to be a lower-margin part of this business. And again, as we want to move up to more differentiated technology, certainly, we'll print on polymer. But as Sam has said and reinforce here, the focus of currency is around deploying our technology substrate agnostic. That's the focus of the business. And if that's polymers, so be it. If it's paper, we'll support that as well.

A couple of questions. The first one is when you mentioned the denomination wins over the last 5 years, are these wins against competitors? Or is this in-house being moved to you guys?

It would cover both. So some of them are wins of denominations that had previously had competitor technology on them. A smaller subset, much smaller subset might be an upgrade of a banknote that we have existing technology on almost always to a more sophisticated, higher-value technology overall. And some of them will be brand new denominations that didn't exist at all previously. So a bit of the mix of the 3.

And for, if you look at the technology component or the integrated paper component, on a like-for-like basis, contractually, how much pricing are you able to command from the end customer?

I'm not sure I quite understand the question. What do you mean by how much pricing?

So let's take the USD 100 note. Under contract, if you're printing it, let's say, year 1, year 2, year 3, no incremental additional content on it, what's the pricing you get on that $100 note? Or is it the same over the 3-year time period?

Is there a price escalation in the contract over a 3-year period of time?

I mean in terms of over time, taking into account inflation and such like, it will depend on the individual contract that we have with the customer. Some contracts might include typical inflationary clauses in them. Others might offer annual or even more frequent opportunities.

I think it's fair to add, Sam, right, the currency contracts range from a few years, 3 to 5, probably tending more than 3. And there's a mix of those that are flat price and those that have price escalation just to offset typical cost of goods.

Got it. And a couple more, sorry. If you compare a USD 1 note and compare it to an equivalent $1 Ghanaian cedi, whatever, note, is your value addition the same? And is your pricing the same?

No.

Assuming that Canadian note is cheaper?

So I don't know if we're going to talk about specific customers' contracts. Specific customer contracts, particularly for the U.S. government, are highly confidential. And so we can't get it at that level of detail.

Okay. So maybe one last question is, why was the currency business, a single-digit operating margin business? And how did -- can you list out the actions you took specifically to drive it to this 20-plus percent margin business?

Kurt, do you want to -- would you like to answer that?

Certainly, Sam lived a lot of this with us as well. There's not one silver bullet that we took to approach this business. It's really a combination of approaches that really build over time, right? Certainly, there is absolutely an aspect around how we work with our customers and how we drive the share of content on each note of the technology and so forth that Sam talked about. There's absolutely an aspect of which customers we work with, right? And being a little bit more, frankly, selective in the customers that we work with, those that truly value the technology versus those that don't value it as much, right, and so there's a bit of selectivity there that we approached as well being a little bit more astute to the market and the commercial value that we brought. Then of course, there's also the aspect of operational, right? We've always had a great business. It's been a great business. But I think along with the CBS principles that we bring the lean manufacturing principles, we've really taken it to the next level. And our customer satisfaction metrics absolutely show that the reliability of the notes that we print or have to reprint has dramatically improved over the last 3 to 4 years. So I think there's really a combination of commercial changes that we made to how we ran the business as well as operational changes that really combine together to get us to where we are at today. Sam?

I've got nothing to add. I agree with all.

Any more? All right. All right. Well, thank you for those questions. I'll let the team -- yes, I go off the stage, and I'll just make a few closing comments. Well, Sam, you've won the award for the most questions. Well, we've come to the conclusion of our formal presentation today. And first of all, I'd like to thank everyone here in the room and those online for joining us this afternoon with their time, attention and their questions. Also, I'd like to thank the Crane and Crane NXT associates who have worked tirelessly on this separation over the course of more than the last year while, at the same time, keeping a focus on our customers, an excellent job, an outstanding effort and one that speaks to really who we are as a company. So today, we're just 25 days away from the separation. The time is upon us, and we'll be launching Crane NXT. We believe NXT has a unique set of capabilities that plays at this intersection of technology to secure, detect and authenticate our customers' most important assets. We start from a position of strength with outstanding financial performance in 2022, including adjusted EBITDA margins in the high 20% and over 100% free cash flow conversion. By these measures, NXT is already in the league of a premier industrial technology company. Now we've laid out today and discussed throughout the course of the afternoon an exciting future for the company over the next 5 years, built off this very strong core business, a demonstrated focus on continuous improvement and a history of disciplined, value-accretive M&A. Our goal is not only to have a more -- not only to double the size of the company but to continue to have a highly profitable, resilient NXT with very strong cash flow and low net leverage. So in summary, I believe NXT is a compelling investment opportunity as a new premier industrial technology company built on a very firm foundation from Crane Holdings. It's a technology leader, a business with best-in-class financials and a very strong balance sheet, a track record of disciplined, high-return M&A, a clear strategy to expand the business into new growth adjacencies and an express goal of driving long-term shareholder value creation. And with that, I'd like to thank all of you for your time today. This brings to an end our formal program. And for those in the room, we invite you to a reception outside the ballroom, commencing at the conclusion of this afternoon. So thank you again. Have a wonderful day, and good afternoon. Thank you.