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

[Audio Gap] Matt Summerville, senior analyst with D.A. Davidson. Alongside with me today, we have leadership from Crane NXT including Aaron Saak, the company's President and CEO; Christina Cristiano, the company's CFO. I think in the interest of time, given I have a pretty good number of questions here, the preference was to just dive into Q&A.

So with that, I think a good starting point, recent acquisition announcement with respect to Antares, if I'm pronouncing that right. Can you touch on the strategic rationale of the TAM and how this business is differentiated versus competitors in the space?

Sure. Thanks, Matt. It's good to be here again. Thank you for the invitation. Well, we're incredibly excited about Antares Vision, the newest acquisition that we announced just a few days ago for Crane NXT. We've been looking at this property, and I have been in conversations with the team for over two years. It's part of our diligence in really cultivating a rich M&A funnel, as you've seen with what we've executed in the last two years with Crane NXT. Antares itself is a market leader in life sciences and food and beverage end markets around inspection, detection and track and trace technology and really fits perfectly into our strategy of growing -- continuing to grow Crane NXT into the leader in technology around secure, detect and authenticate platforms in multiple end markets. And there are many, many over links with our current core businesses. So maybe I can walk through a little bit of what Antares does to your question. Think about these two markets: life sciences and food and beverage. I'll start in life sciences, it's really pharmaceuticals is the primary in focus. So take a Lilly production facility where we're making pharmaceuticals in a plant. Lilly and the governments in any country that's distributing those pharmaceuticals wants to ensure that, that product is real and authentic, cannot be counterfeited through the course of its lifetime until consumer takes it. So Antares creates the equipment that helps to apply tracking labeling onto that, let's say, vial of a particular drug, helps also provide equipment that takes it into the casing and the packaging containering of that product. And then also at what we call aggregation of that product into larger containers, ultimately shipment to a pharmacy or to a hospital where it's been obviously prescribed. Underneath all of that, it also provides the software that actually enables that track and tracing of the product. And it's uniquely positioned as the only provider in the industry that makes both the equipment and provides the software. So that's really part of the core differentiation of the company. Now along with that equipment, it offers aftermarket services and commissioning services for the equipment. And this can range from anywhere between a $50,000 piece of equipment all the way up to over $1 million. So this is a very sophisticated capital that's going into either food and beverage or pharmaceutical manufacturing companies. We find that very similar with a lot of overlays to our current businesses. So if you think about Crane Authentication, where we're making labeling technology to keep products from being counterfeited. Some of that technology goes into the pharmaceutical and food and beverage market today is actually applied with Antares Vision equipment. When you think about the equipment itself, it's very similar to what we make in CPI, large form factors of sensor and detection technology. And then we have a larger service business today than Antares, but functionally the same, providing aftermarket field services. And what Antares brings to us really accentuates us is the software, the track and trace software. So we see a lot of synergies across the portfolio. And really, my last comment will be how it opens up the TAM for Crane NXT, adding about $2 billion of TAM in life sciences and food and beverage that continues our ability to expand and grow. So when you put that together, it's going to be a mid- to mid-single-digit plus grower. EBITDA margins at about 15%, and we see getting those into the low 20s over the next several years.

Sticking with the same topic, can you talk about expected cost synergies and where there might be commercial synergy opportunity with respect to this business and the core operating segments of Crane NXT?

Yes. It's part of the thesis, just like we've had with our two other larger acquisitions that we're buying companies that are coming in at mid-teens EBITDA -- adjusted EBITDA margins with a clearly defined path to synergies to get them into the low 20s. And we see that over the next 3 to 5 years. For us, that's really our special sauce, if you will, of deploying the Crane Business System in to drive productivity in the factories where they're making the equipment to optimize how they do service dispatch. Again, we're a much bigger provider of that than they are, so we can bring some efficiencies into that operation. And then the classics of scale, of rooftop consolidation, procurement, all of those have led us to synergy targets that are around EUR 12 million is our target that we've discussed. Now there's also commercial synergies. When you think about where the life science market is headed, particularly around government regulations that is growing in emerging markets where we are also very close to those governments as their currency provider. Now while those are different divisions of the government, they're typically very interested in leveraging trusted relationships. So we see some really interesting channel relationships as well as applying our authentication technology into the packaging.

Very good. Maybe moving to authentication. Can you remind us the size and the current profitability of the two businesses that you're sort of combining to form that authentication platform and actions you've taken in order to drive the businesses towards your stated profit target of 20% OPM, I think, exiting '26?

Yes. Sure. So just as a reminder for those who know the company, it was a little over a year ago, we announced the acquisition of OpSec. That was our first major acquisition for Crane NXT and then in May of this year, we closed De La Rue Authentication Solutions. Combined, that's a roughly $260 million annual run rate revenue business. And at the time we closed De La Rue, we rebranded the business as Crane Authentication. And that was always part of the thesis to bring these businesses together helps us lower SG&A costs, combined management teams and sales teams, also rationalizing products and some rooftop consolidation as well. So if you look through kind of the classic operational synergies, those are the things we started doing in haste in May. That is bringing the business from today about a 15-or-so percent EBITDA business, up to exiting next year, we have very high confidence we'll be approaching 20% EBITDA as we exit next year from these synergy actions. So going exactly as we had planned, a lot of work by the team and response from the customers has been very positive to bring these two brands together under the Crane Authentication banner.

Maybe just spend a second discussing what you're doing in authentication in terms of the three buckets, right, which are brand, government and ID security, maybe size up those relative TAMs and what you see from an organic growth standpoint?

Yes. In total, we -- and this will be true in all three of those segments. We think the market is growing about mid-single digits, and we'll align to those markets, perhaps a little bit better as the future unfolds. Probably the most interesting part of it arguably is the brand authentication business because that's what many of us go out and buy day to day, and we use the products. In fact, many people here in this room today are using the product. If they turn over their laptop, if it's a Microsoft system laptop, you'll see our product on the bottom, as the hologram and the authentication label with the serialization of your operating system. That's a Crane Authentication product. It's also in hats and the paraphernalia of most of the major sports leagues around, particularly here in the United States and into industrial products now increasingly as well. All because the brands want to avoid counterfeiting. And they also want to understand the licensing revenue streams and how those are playing out from the point of manufacturer to the point of consumption with the consumer. So those are all products that Crane Authentication in the brand space. TAM, in that case, several hundred million dollars. And we're a major player, if not the preeminent player in that space today and growth coming mainly from share of wallet expansion with the existing customers as they add more on to their products, but also a lot of white space of people and products that the brands that have not yet authenticated their particular articles. The second is Government Solutions. This is a market that is primarily focused on tax stamps. That's almost exclusively outside the United States. So if you bought a wine bottle per se, and it's got a label around it and some interesting kind of authentication label could be a hologram, could be a QR code. That's our product and we're the leader in that market. Again, a couple of hundred million dollar plus TAM, growing because the fundamental value prop there is governments want to retain their tax revenue. And they want to make sure that they're collecting that on the sale of certain products and applying our authentication label with the software that tracks it is the way that they do that and ensures compliance. And then the third and really the biggest TAM and the one we're the smallest in is ID verification. So through the De La Rue acquisition, we now make passports with security features in for a few countries and also the what are called national ID cards. It's the equivalent of driver's license here in the United States, but for different countries. That, we think, is over $1 billion plus TAM of which we are always looking at ways to expand in that market and the combination of what De La Rue brought with our authentication technology is a natural fit and one we think is going to continue to grow. Again, government clients, very similar to our currency business, looking to add increasing technology to prevent the counterfeiting of their IDs. So those are really the three go-to-market offerings inside of Crane Authentication.

Sticking with authentication for another couple of minutes. What sort of penetration rate do you see across the three authentication verticals? And what end markets do you find the most meaningful lack of penetration and how you plan to address that?

Yes, I'll take that and go market by market. Inside of brand authentication, it's the industrial space by far. It's very -- it's negative -- you can round almost to 0 in terms of penetration that we think is going to continue to grow, particularly in high-value assets that the OEMs are worried about counterfeiting and also warranty claims on products should they fail because of counterfeit products. So I think that's a really interesting growth area for us in the brand space. Tax stamps, it's interesting. Everywhere in the world, governments want more revenue. And what you're finding is they're starting in the Middle East and Africa and Southeast Asia where that business is really centered to go further into other types of products. So it used to be vices. It used to be your alcohol, cigarettes, things of that nature. Now it's going into more specialty food products and things that are really unique to those countries and they want to get increased tax revenue, and this is a way to do it. So that I think that's got a healthy growth to it. And then IDs, what's interesting there is it kind of scales with GDP and population growth, but it's very similar to the growth algorithm of currency. So you have a volume growth dynamic, but you have this worry of counterfeiting occurring on the IDs. And I think that's a space where the sophistication of our anticounterfeiting features with embedded chips that are in those products, updating the paper pages in passports is really yet to be exploited. We have a belief that's going to be a very nice growth vector for the company long term.

When you think about brand, are you able to quantify for brand owners, the amount of theft, et cetera, or whatever the right term is, counterfeiting that CXT has effectively stifled with your technology? And have you thought about pricing to that level of value you're providing?

Christina, do you want to take that?

Sure. I mean we work with several of our customers to create basically the ROI on our proposition and just explain to them, in fact, it's a big part of our sales pitch, here's what you've been missing out on by not having these authentication tools in place and lost sales. So that's definitely a part of the value prop of what we offer. And that's something that once you get somebody on board, once they're aware of what they're missing out on in terms of lost sales, it's very sticky now, once they introduce our software and tracking technology that they're not going to switch out, right? It's something that will stay with them now. It's embedded into their own ERP in some cases, into their process, which gives us a lot of recurring revenue in that regard.

Perfect. Can you elaborate on last quarter, you talked about a new product launch in your authentication business called Fortress. I don't recall you talking about too many of those at least historically in the past. So maybe the significance of that product and customer feedback.

Yes. Sure. We talked about it, we launched that. It came actually out of the pipeline of what was being developed in De La Rue, and we knew about that, obviously, through our diligence, found it particularly exciting. And I'll take a step back, Matt, maybe just talk about kind of where we see technology going in this authentication space and always trying to be ahead of it by a step. If you go back many years, you would just have a simple label on a product. It would have a brand. And you would know that that's real. And of course, it's easy to counterfeit. Then we've introduced holograms two decades ago. Again, a good feature. Progressively, you can get more advanced. But again, there are some folks who can copy those. That led to the creation of what we call our micro-optics technology that's in the U.S. currency that's never been counterfeited, much more sophisticated, but it's a physical visual recognition by the consumer. The next step is applying surface treatments and coatings that are in addition to all of those other features. You still have labels, you still have holograms, micro-optics that can be verified by a different source. You can think of RFID kind of plays in this journey. But what brands want is something that doesn't disturb the look and feel of the product. So that led us to our TruTag technology that we acquired a little over 1.5 years ago that uses a smartphone to identify if something is authentic or not on top of these other features. Fortress is the next step. And what it brings is not only the identification using a smartphone that the product is real and genuine, you can trace it all the way back to the point of manufacturer because that technology, it's a material surface coating is put on the product at the moment of manufacture. So there's a time stamp on it as well. So you effectively have two types of authentication occurring, the label, then the Fortress materials technology that reinforces it and requires them to be fully authenticated and makes it very hard to counterfeit. And so that's being rolled out and trialed with customer in the Middle East. It's gone very well for us. And we think over the next year or so, we'll roll that out to some more customers that are looking for that next level of protection. Ultimately, it leads into digital fingerprint of products where you're looking at just the digital characteristics of a product and authenticating it simply based on its different patterns that you'll recognize with your smartphone. So we see all of that as the trajectory that we're headed in. All of those are technologies that we want to be the leader in. And I think we're in a very, very good position to follow that and even drive that technology evolution.

Very good. Maybe let's switch gears over to the U.S. government side of currency. How has demand played out this year with respect to executing to the 2025 print order midpoint of the range? And most likely -- what do you view as maybe the most likely scenario, both for volume and mix as we start thinking about the '26 release?

Yes, I'll take that. For this year, demand is playing out as we expected it. And so the year was very significant in that at the beginning of the year, we took some of our production offline to upgrade our equipment in preparation for this new series of currency, they'll begin to launch next year. And now we've upgraded our technology to support this whole 10-year program. So that was the headwind in the first quarter that was well communicated, completed successfully, and we're right back on track with production after that planned shutdown. And so the year played out -- is playing out as we expected. And as we think about the order for next year, that order of -- from the federal government of their demand for 2026 is not yet public. So there's not anything that we know or can share at this time about that. But as we look ahead and we think about just in terms of volume and mix, you can assume a flattish volume, let's say, to this year. And what really is the differentiator for us is the mix component. So if the higher denomination notes like a $100 bill or a $50 bill for example, has a higher mix, that's more revenue and profit for us because of the technology content. And so what we're really looking for as we wait to see for the new order to come out for next year is what will the mix be? And when you look at the cycle over the last five or so years, you've seen that in some cases, there's been a larger print of higher-denomination notes, for example, during and after COVID. And then right after that, a lower print of -- a lower demand for those higher denomination notes because now they needed more transactional notes. And so if you continue to follow that cycle, it would be reasonable to expect, Matt, that the mix would start to trend up again simply because for the last few years, we've been doing more of the lower denomination notes.

So I guess the bottom line on that, when that release comes out, people should be paying much more attention to mix inside of that print order as opposed to the absolute volume?

That's right.

That's right. What I tell you I'll be looking for is volume of $10s, $20s, $50s and $100s. That's where you get to more technology in the note. It's not just the micro-optics, it's also the inside the substrate that's different. And of course, the $10 is a revalidation of the launch of the new $10 bill, which is incredibly important as a proof point for us next year as well.

So let's talk a little bit about that. Can we assume that the incremental content on the $10 will be more than the incremental content you have on the current gen $100 and -- versus, say, the $15 (sic) [$50] and $20. As I think about the variable cost to produce this next Gen $10, I would think that the micro-optic feature is something that probably hasn't been released yet. I would think the width might vary. The number of features ultimately put into these notes may vary as well. We obviously don't know that. But talk about that to the extent that you can.

Yes. Matt, knows a lot about our currency business. So he's typically right all of the time, generally. The U.S. denominations will certainly take a same approach as we've seen in our international business. Central banks tend to operate in some ways collectively in terms of how they design currency and advance it. And the one thing that's always true is when you go through a redesign, you always put more technology into it for counterfeiting. There's no exception to that rule. And when you look at what's happening in the international business, you're seeing exactly this. It's probably why you get to that conclusion of wider security features, more security features, both overt and covert in the bill. So I think that's exactly correct. And I think the math on why you would see an incremental increase in our own -- the cost to the U.S. government, let's say, is directionally correct, too. We'll wait until the specifics come out. Those will obviously be published. But that's exactly how I would think about it.

Well, this is in the rearview mirror, can you help us understand the impact of the shutdown that you incurred in the first quarter of '25 in terms of the hit to operating profit? Because obviously, that won't repeat in 2026. And there was something I went back and actually looked at this. In the 2024 print order, it actually indicated that $10 would start to print in late '25. Is that still the case?

The new $10s.

The new $10s.

Do you want to take the first part?

You bet. Yes. So when you think about this equipment upgrade cycle that we went through in the first quarter, which had a shutting down a big part of our production -- our U.S. production, that caused a year-over-year reduction in revenue in that Q1 period of about 40%, which was expected. And so the result of that was our SAT segment margin was in, let's say, the mid-single digits versus the low 20s percent, which we would normally expect. And so you're correct to assume next year, there won't be a shutdown in the first quarter, and we'll expect to see that related margin improvement back to those low 20%.

I'm sure you've done a similar analysis that I've done to the annual print orders and what actually gets produced. Are you taking the over under that mix starts to normalize again this year?

Yes.

Over?

We're assuming it goes back to a normal -- towards the normal, same assumptions you're making.

Yes. Okay. Let's talk about the international currency business.

I didn't answer the second part.

I'm sorry, you're right. You didn't, very good.

On the $10s. So we have been piloting the design of the new $10 since last year. That's actually part of the upgrade cycle that occurred in the first quarter of this year to kind of take the last tranche of that through our paper making facility and in some of our other facilities. The BEP is doing there last, call it, pilot qualification runs. I would expect we will be in full production of the new $10 sometime in the middle part of '26.

Okay. That's helpful. So international currency, help us understand how you think about the underlying international growth algorithm with respect to volume and value in circulation, denominational print trends, high-tech security features, market capture and price, how fast should this business work?

All of those, all of those, all right. The international currency business, our international currency business is fantastic. It is at an all-time high in backlog. It's been there, been hovering above $400 million for the last few quarters, as we've disclosed. The amount of quoting volume and funnel has never been higher in this business. And it's fundamentally based, this growth getting to your question on the growth algorithm, is central bankers are worried about counterfeiting. They're watching their fellow central bankers redesign currency to higher security features. If you don't do that, by the way, then you're the country with the lowest, easiest counterfeit currency which no central banker wants to be in that camp. And when they go to make the redesign, they will always look at the cost to apply the highest grade technology, which is really incrementally a little bit higher than where they're at today, in general, and that leads them to Crane Currency. And to really one other major competitor that competes at the high end of the technology. And that's why you've seen every year us win 10 to 15 new denominations. We are on track to do that again this year. I have very high confidence as we close out '25, we'll hit that number again. And again, increasing our share of wallet. What's driving it is the counterfeiting concern. What's also driving it is simply the growth volume continues in the market. And for us, the algorithm for our business is when you take these three components of volume growth plus as we redesign more technology in the bank note, which raises revenue and margins for us, plus probably now an increased cycle of people doing the redesign, you get to a very robust business that we have incredibly high confidence in 2026. We're going to see nice growth in that business, and we're booking into '27 and it's based on this technology leadership and these two other dynamics.

Do you hear international central banks talking about an acceleration in redesign work given the upcoming U.S. government redesign cycle? And does that -- or does that not set something more broad in motion?

I don't think it's a -- it is not at least from what I've heard an explicit reason they're going to be doing the redesign, but I think it does play a factor. And what's also true are other central banks doing redesign. So sometimes it's more regional in nature. In, say, the Middle East or Africa or Southeast Asia. If other central banks are going through their redesign and upgrade, it tends to influence adjacent neighbors.

To that trend, specifically, I often get questions on where things like this stand with the ECB in the U.K. and Canada with potential redesigns and competitively, would you be able to maybe participate where I don't think Crane Currency has in the past?

Yes. I think all of those are in play, and we will -- we have a right to play in all of those jurisdictions, simply put.

Thank you. Would you say, just from a market standpoint, compare and contrast your technology to G&D, De La Rue Authentication and OvaTure. And is De La Rue still the primary -- De La Rue Currency, not De La Rue Authentication obviously. Is De La Rue Currency still the primary share donor here? And how long can that continue?

Of those three other competitors, we -- I believe, very strongly would be viewed as the high end of the technology closely followed by G&D. And I would say they're our #1 competitor. Again, that's a private company based out of Germany. Clearly, in the lower tier now is De La Rue and OvaTure. That is -- those bottom two are where most of the share gains would be occurring. It's also occurring, though, Matt, from, call it, lower protection to a higher protection through the redesign process. So it's similar to what's happening in the United States, where you have five denominations, only one had micro-optics. The country is going to go through a redesign and add more security features. Sometimes that's improving upon our own, call it, share of wallet. It's an existing customer that didn't have micro-optics that's going to apply them now or it's a customer that could have been coming from one of those other competitors. That's the bottom two that's where most of the share gain is. And when you look at the total TAM for us, call it, 1,000 denominations in the world, we're going to end now above 160 at the end of this year. There's a lot of runway for us. So I don't see really in the next five years, any real headwinds to our ability to continue growth in international.

Inside that 1,000 denomination TAM, what -- you said your count is about 160. How does that compare to the top competitors?

So it's going to likely be skewed a little more higher to G&D and De La Rue, mainly based on their heritage. And that's kind of to your point, that's where our wins come from, particularly De La Rue, that typically had all the commonwealth countries, which are a high number of denominations in total. So we would be in that second probably place in total number of advanced technology, but growing the fastest without question.

Then lastly on international. How are you thinking about capacity needs for this business?

Well, this is the interesting, let's say, opportunity we have. I hope every business has this challenge of an all-time high backlog and a need to potentially expand capacity if we continue to win. So obviously, if that's the case, in any situation, our capital deployment will first be to grow our core existing businesses. I know, Matt, you've been to our production facility in Nashua, New Hampshire, for our micro-optics. We've effectively doubled the footprint of that site in the last two years. We have space on the floor to put in additional lines, and we'll consider that. That still makes it a very CapEx-light business even with that kind of capital deployment. But these are very good decisions to have to make because the backlog is so high.

Excellent. We have just under 10 minutes left. So maybe let's go over to CPI. Help us think about the go-forward secular drivers across the four main verticals here? And what's the right kind of volume plus price top line algorithm that you think about going forward?

Yes. CPI for us, I think long term, as you look out, I would characterize as a low single-digit revenue business. It occupies the #1, #2 space in a very mature market with only one or two competitors in any vertical, high barriers to entry, fantastic margins, right? We're trading at about a 30% operating profit in that business and over 100% free cash flow, if you look at CPI in and of itself. So take that low single-digit growth at the aggregated level and we can break that down to each of our individual markets. Gaming for us in the back half of this year will show double-digit growth because of the comp, coming off of COVID. That will continue to be a low single-digit growth market, we believe, for us, mainly driven by casino gaming demand and machine -- slot machines. Financial services, particularly with our field service business that goes along with that will continue to be in that low to mid-single-digit growth when you aggregate equipment and services together. The field service business for us is a real differentiator. It's growing in mid-single digits this year. It's where we have about 400 to 500 technicians around the United States that we attach a service contract on to our more sophisticated equipment. And it's an area where, as we announced in Q1, we're growing that business outside of even our own CPI existing manufactured content. So we see more growth in services, and I think you're going to continue to see us talking more about that and making investments in that business. Then you get to retail space you know well. There, we're seeing a tale of two worlds play out. Self-checkout is growing. We know that. It's even growing with cash and coin recycling that we provide, at low single digits is our belief on that part of the market. But we're seeing a shift in the channel between OEMs historically now to about 50-50 custom self-checkout integrators where the stores themselves are doing that. And then finally, we have vending. Vending is where we make the entire machine. We provide all the payments from credit card to cash and coin and we're the #1 provider of that in the country to the major bottlers. Again, long term, a low single-digit type growth business.

One of the things that came up earlier today when thinking about this U.S. government redesign cycle, what are the implications that may have for what I would assume is a massive installed base of hardware for CPI?

Yes. Yes. So every cash reader in the United States is going to have to go through a process. And then you can even argue outside that can accept the new U.S. currency. That's primarily going to result in a software upgrade. But as history has told us, when you start going through the software upgrades, and that comes at a price for most customers that it's going to help accelerate or forces a bit of an acceleration of the equipment replay cycle. So we think that's something that will probably naturally play out in '27 and beyond once we get the new $10 bill in circulation and folks see the path to the new $50 and $20 coming over the next few years.

When you look at the four verticals through an 80-20 type of lens in CPI, is there a strategic nature of anything changed here since -- when you joined Crane NXT a couple of years ago now?

I don't -- I wouldn't say it changed, Matt. There's always natural synergies between the currency business and the CPI business. One creates the currency, the other detects it and authenticates it, hence the nature of the company. So I think in the hardware and the aftermarket services, we like that very much. Certainly, when you start to look at the vending segment, that's a different comp set of competitors and technologies and what we do. You could argue maybe that's a little different than the rest of the core. But right now, our focus is on continuing to grow those businesses, take the free cash flow, deploy it into areas that will grow as fast or faster than the core. So always something and from a portfolio perspective, we're going to keep looking at.

Very good. I know we just have a couple of minutes left here, but I want to talk more about services. That's something you mentioned. You've been announcing more chunkier, for lack of a better word, win in services. Talk a little more broadly about the scope of what you're providing and where ultimately you see share donation.

Yes. Well, let me talk about a win. It's best through a use case of where we're winning and kind of the thesis we have is if you go back to Q1, we announced a very substantial win with a big box retailer here in the U.S. where we had started our service business providing repair and maintenance, time and material type services for our own equipment. They were not happy with their local service provider that was effectively servicing the entire front end of their store. So the entire checkout environment from the point-of-sale hardware to the credit card terminals and all the ancillary products, the scanners, et cetera, that we all use when we go through a checkout. We -- because of, I think, very good service we had and a national presence, which not all service providers have, we're able to offer to them a regional coverage they could not get from a patchwork of local providers with better SLAs that actually cover all of that equipment. So it was a -- it's a unique differentiator for us to compete against, call it, a local mom-and-pop or a regional player where we can go to a national level, provide SLAs and report out on those and guarantee those for the retailer and really compete and win at a very attractive price point for us because what they really want is uptime in their equipment, right? It's less price sensitive if you can guarantee uptime, which we can do. So we see a lot of opportunities to win in that area and consolidate the market around our national presence and ability to service the entire front end of the store. So that's where we've got some wins. Again, the business is growing at healthy mid-single digits this year, and I don't see that changing actually in the year ahead.

So we talked about technology and authentication, talked about technology and currency. This business recently launched a new product that you felt worthy to call out as well called JetScan. Can you maybe spend a moment on that?

Do you want to take that?

Sure, yes. I mean when you think about just the life cycle of products and what we're offering in the market, this JetScan Ultra is just the next level of technology that just gives greater efficiency, greater speed to our customers. And so really, it's just showing the investment we continue to make in our products to stay competitive in the CPI marketplace. And so we're really excited about what this will do for our financial services customers specifically, which is just give them, again, a higher-performing machine that will continue to service, as Aaron said earlier, our offering goes all the way through service in the aftermarket as well.

And then lastly, just maybe to close out here. Let's talk about balance sheet, free cash flow. I think the leverage profile of the company is going to approach 2.9x following the deal you recently announced. What's your sort of plan for deleveraging to kind of get back into more of your comfort zone, I guess?

I think we're in our comfort zone to be quite honest. We've always said we would take leverage, we've deployed the capital, first to organic investment. You've seen that with the upgrades we've made to currency, and you've seen that firsthand through some of your facility tours. We pay a competitive dividend. We do that. It's about -- it winds up to be about a 1% yield, and we've increased that each year. So we're committed to that. The balance really today has gone to M&A, and we want to make sure that we're always staying below 3. We said kind of only under an extraordinary case would we go above 3. So we really want to stay below 3. So what Antares Vision does is by the time we close the deal, it will bring us to 2.9 and then we will just use our free cash flow to pay down the debt. And I would expect by the time we exit 2026, we'll be down back into the low 2s. As we get into -- assuming no more deal flow, we get into 2027, we'll get below 2 and again, our free cash flow is very strong. So high, high confidence. We're going to continue to use the balance sheet to go between 2 and 3 and continue to add really strategic acquisitions on that elevate the growth profile of the company and drive up margins in the process. And so I think we're doing exactly what we said we were going to do 2.5 years ago when we were here, our first time to say we're going to one to two acquisitions a year. We're in year 2.5 of the company. We've closed three. We've announced our fourth. So I think we're right on target. We've invested in the core, and we're going to keep the balance sheet below 3x net leverage.

Very good. I think with that, we'll go ahead and wrap up as we're at time. Thank you, everyone, for joining us. Thank you, Aaron. Thank you.

Thank you.

Thank you.