What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-06 · 76 added, 156 removed, 94 unchanged (71% of the section changed)

14 unchanged sentences

Following the consummation of the Separation, our common stock is listed under the symbol “CXT” on the New York Stock Exchange.

References to "core sales," "core backlog" and "core growth" exclude currency effects and, where applicable, the first-year impacts of acquisitions and divestitures.

References to "core sales” exclude currency effects and, where applicable, the first-year impacts of acquisitions and divestitures.

Amounts in the following discussion are presented in millions, except employee, share and per share data, or unless otherwise stated.

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Such factors also include, among others:

changes in global economic conditions (including inflationary pressures) and geopolitical risks, including macroeconomic fluctuations that may harm our business, results of operations and stock price;

business and economic disruptions associated with extraordinary public health issues such as large-scale health epidemics or pandemics;

information systems and technology networks failures, breaches in data security, personally identifiable and other information, and non-compliance with our contractual or other legal obligations regarding such information;

our ability to source components and raw materials from suppliers, including disruptions and delays in our supply chain;

demand for our products, which is variable and subject to factors beyond our control;

changes in global economic conditions (including inflationary pressures) and geopolitical risks, including macroeconomic fluctuations;

demand for its products, which is variable and subject to factors beyond its control;

fluctuation in the prices of, or disruption in its ability to source, components and raw materials, and delays in the distribution of its products;

information systems and technology networks failures, breaches in data security, theft of personally identifiable and other information, and non-compliance with its contractual or other legal obligations regarding such information;

risks associated with conducting a substantial portion of its business outside the U.S.;

being unable to successfully develop and introduce new products, which would limit its ability to grow and maintain its competitive position;

loss of personnel or being able to hire and retain additional personnel needed to sustain and grow its business as planned;

being unable to identify or complete acquisitions, or to successfully integrate the businesses the Company acquires;

governmental regulations and failure to comply with those regulations;

fluctuations in the prices of our components and raw materials;

loss of personnel or being able to hire and retain additional personnel needed to sustain and grow our business as planned;

risks from environmental liabilities, costs, litigation and violations that could adversely affect our financial condition, results of operations, cash flows and reputation;

risks associated with conducting a substantial portion of our business outside the United States;

being unable to identify or complete acquisitions, or to successfully integrate the businesses we acquire, or complete dispositions;

risks from litigation, claims and investigations, including those related to product liability and warranties, and employee, commercial, intellectual property and environmental matters;

risks related to its ability to improve productivity, reduce costs and align manufacturing capacity with customer demand;

the ability to protect its intellectual property;

significant competition in the Company's markets;

adverse impacts from intangible asset impairment charges;

potential product liability or warranty claims;

being unable to successfully develop and introduce new products, which would limit our ability to grow and maintain our competitive position and adversely affect our financial condition, results of operations and cash flow;

significant competition in our markets;

additional tax expenses or exposures that could affect our financial condition, results of operations and cash flows;

additional tax expenses or exposures;

inadequate or ineffective internal controls;

specific risks relating to our reportable segments;

the ability and willingness of Crane NXT, Co.

and SpinCo to meet and/or perform their obligations under any contractual arrangements entered into among the parties in connection with the Separation and any of their obligations to indemnify, defend and hold the other party harmless from and against various claims, litigation and liabilities;

our ability to achieve some or all the benefits that we expect to achieve from the Separation;

and risks related to the Separation, including not obtaining the intended tax treatment of the Separation transaction, failure of Crane Company to perform under the various transaction agreements and actual or potential conflicts of interest with Crane Company;

and other risks noted in reports that we file with the Securities and Exchange Commiss ion, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and subsequent reports and other documents filed with the Securities and Exchange Commission.

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Recent Transactions

On April 3, 2023, Holdings completed the Separation, as described in Note 1, “Organization and Basis of Presentation,” in the accompanying Unaudited Consolidated and Combined Condensed Financial Statements above, through the Distribution of all the issued and outstanding common stock of SpinCo to the stockholders of Holdings.

Immediately following the consummation of the Separation on April 3, 2023, Holdings was renamed “Crane NXT, Co.”

In connection with the Separation, SpinCo paid a one-time cash dividend in the amount of $275 million to Holdings on April 3, 2023, prior to the consummation of the Separation.

The proceeds of the dividend, along with cash on hand, was used to repay the $300 million of 4.45% senior notes due in December 2023.

In addition, Holdings transferred $84 million of cash to Crane NXT as part of the Separation.

Credit Facilities

We are party to a new senior secured credit agreement (the “Credit Agreement”) entered into on March 17, 2023, which provides for (i) a $500 million, five-year revolving credit facility (the “Revolving Facility”) and (ii) a $350 million, 3-year term loan facility (the “Term Facility”), funding under each of which became available in connection with the Separation, upon the satisfaction of customary conditions of facilities of this type.

On March 31, 2023, we borrowed the full amount of the Term Facility.

During the three-and-nine months ended September 30, 2023, we repaid $125 million and $175 million, respectively, of the Term Facility.

Related Party Agreements

On April 3, 2023, we entered into definitive agreements with SpinCo in connection with the Separation.

The agreements set forth the terms and conditions of the Separation and provide a framework for our relationship with SpinCo following the Separation, including the allocation between us and SpinCo of our and SpinCo’s assets, liabilities and obligations attributable to periods prior to, at and after the Separation.

These agreements include the Separation and Distribution Agreement, which contains certain key provisions related to the Separation, as well as a Transition Services Agreement, a Tax Matters Agreement, an Employee Matters Agreement and an Intellectual Property Matters Agreement.

Transactions under the Transition Services Agreement were not material for the three-and-nine-months ended September 30, 2023.

We are party to a senior secured credit agreement (the “Credit Agreement”) entered into on March 17, 2023, which provides for (i) a $500 million, five-year revolving credit facility (the “Revolving Facility”) and (ii) a $350 million, 3-year term loan facility (the “Term Facility”), funding under each of which became available in connection with the Separation, upon the satisfaction of customary conditions of facilities of this type.

As of March 31, 2024, we drew down $25.0 million on our Revolving Facility .

2024 Restructuring

In the first quarter of 2024, in response to challenging industry conditions, we initiated workforce reductions in Crane Payment Innovations (“CPI”), incurring $2.7 million of severance charges during the three months ended March 31, 2024.

We expect to substantially complete these restructuring actions in 2025.

On May 3, 2024, we acquired the OpSec Security business (“OpSec”), for a base purchase price of $270 million on a cash-free and debt-free basis, subject to a later adjustment reflecting OpSec’s net working capital, cash, the assumption of certain debt-like items, and OpSec's transaction expenses.

We utilized $210 million from our Revolving Facility and cash on hand to fund the acquisition.

Transaction costs incurred for the quarter ended March 31, 2024 were $3.9 million.

OpSec is a global leader in brand protection and authentication solutions, serving the world’s most recognized brands, as well as government agencies and financial insti tutions.

2024 Segment Update

In connection with our acquisition of OpSec, we renamed our “Crane Currency” reportable segment to “Security and Authentication Technologies,” which will consist of the Crane Currency business and the acquired OpSec business.

Our CPI segment will remain unchanged.

This updated structure is consistent with how the Chief Operating Decision Maker will allocate resources and assess performance, and better aligns with our mission to secure, detect and authenticate our customers’ most valuable assets.

The updated segment presentation will be effective in the second quarter of 2024 and has no effect on the first quarter’s financial results presented herein.

Basis of Presentation

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results from Operations – Three Month Periods Ended September 30,

The following information should be read in conjunction with our Unaudited Consolidated and Combined Condensed financial statements and related notes.

All comparisons below refer to the third quarter 2023 versus the third quarter 2022, unless otherwise specified.

Three Months Ended September 30, Favorable/(Unfavorable) Change

(dollars in millions) 2023 2022 $ %

Net sales $ 352.9 $ 335.1 $ 17.8 5.3 %

Cost of sales $ 187.4 $ 174.9 $ (12.5) (7.1) %

as a percentage of sales 53.1 % 52.2 %

Selling, general and administrative $ 85.8 $ 82.2 $ (3.6) (4.4) %

as a percentage of sales 24.3 % 24.5 %

Operating profit $ 79.7 $ 78.0 $ 1.7 2.2 %

Operating margin 22.6 % 23.3 %

Other income (expense):

Interest income 0.3 — 0.3 NM

Interest expense (12.8) (10.4) (2.4) (23.1) %

Related party interest expense — (3.6) 3.6 NM

Miscellaneous income, net 0.7 0.4 0.3 75.0 %

Total other expense, net (11.8) (13.6) 1.8 13.2 %

Income before income taxes 67.9 64.4 3.5 5.4 %

Provision for income taxes 16.0 19.8 3.8 19.2 %

Net income attributable to common shareholders $ 51.9 $ 44.6 $ 7.3 16.4 %

Sales increased by $17.8 million, or 5.3%, to $352.9 million in 2023.

The change in sales included:

• an increase in core sales of $13.2 million, or 3.9%, driven primarily by higher volumes in our international Currency business;

• favorable foreign currency translation of $4.6 million, or 1.4%.

Cost of sales increased by $12.5 million, or 7.1%, to $187.4 million in 2023.

The increase was driven primarily by unfavorable mix and unfavorable foreign currency translation, partially offset by lower manufacturing and shipping costs, and productivity gains.

Selling, general and administrative expenses increased by $3.6 million, or 4.4%, to $85.8 million in 2023.

Higher compensation and benefit costs, and professional services to support the Separation , including $2.7 million, or 3.3%, of transaction related expenses, were partially offset by restructuring savings of $2.6 million, or 3.2%, in our Crane Payment Innovations segment.

Operating profit increased by $1.7 million, or 2.2%, to $79.7 million in 2023.

The increase was driven primarily by favorable pricing, lower manufacturing and shipping costs, and productivity gains in the Crane Payment Innovations segment, partially offset by higher corporate costs related to the Separation.

Favorable pricing, lower manufacturing and shipping costs, and productivity gains in our Currency segment were predominantly offset by unfavorable mix related to sales to the U.S.

Our effective tax rate for the three months ended September 30, 2023 is lower than the prior year’s comparable period primarily due to a foreign tax credit return to provision adjustment recorded in the prior year’s comparable period.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Results of Operations - Three Month Periods Ended September 30,

Crane Payment Innovations

Three Months Ended September 30, Favorable/(Unfavorable) Change

(dollars in millions) 2023 2022 $ %

Net sales by product line:

Payment Acceptance and Dispensing Products $ 189.1 $ 189.0 $ 0.1 0.1 %

Services 32.5 31.8 0.7 2.2 %

Total net sales $ 221.6 $ 220.8 $ 0.8 0.4 %

Cost of sales $ 111.1 $ 114.1 $ 3.0 2.6 %

as a percentage of sales 50.1 % 51.7 %

Selling, general and administrative $ 50.8 $ 51.4 $ 0.6 1.2 %

as a percentage of sales 22.9 % 23.3 %

Operating profit $ 59.7 $ 55.3 $ 4.4 8.0 %

Operating margin 26.9 % 25.0 %

Sales increased by $0.8 million, or 0.4%, to $221.6 million in 2023, driven by favorable foreign currency translation of $1.1 million, or 0.5%.

Core sales declined slightly as favorable pricing was more than offset by lower volumes primarily driven by customers adjusting inventory levels to reflect reduced lead times.

• Sales of Payment Acceptance and Dispensing Products increased by $0.1 million, or 0.1%, to $189.1 million in 2023.

The increase reflected favorable foreign currency translation of $1.1 million, or 0.6%, primarily due to the strengthening of the British pound against the U.S.

dollar, partially offset by the weakening of the Japanese yen against the U.S.

dollar, and lower core sales of $1.0 million, or 0.5%.

• Service revenue increased by $0.7 million, or 2.2%, to $32.5 million in 2023, primarily driven by favorable pricing.

Cost of sales decreased by $3.0 million, or 2.6%, to $111.1 million, primarily due to productivity gains, lower volumes and lower manufacturing and shipping costs, partially offset by unfavorable mix.

Selling, general and administrative expense decreased by $0.6 million, or 1.2%, to $50.8 million, primarily due to restructuring savings of $2.6 million, or 5.1%, partially offset by an increase in selling expenses primarily due to higher compensation and benefit costs, and unfavorable foreign currency translation.

Operating profit increased by $4.4 million, or 8.0%, to $59.7 million in 2023.

The increase is primarily due to favorable pricing, lower manufacturing and shipping costs, and productivity gains, of $10.5 million, or 19.0%, and restructuring savings of $2.8 million, or 5.1%, partially offset by unfavorable mix of $5.6 million, or 10.1%, and lower volumes of $3.1 million, or 5.6%.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Crane Currency

Three Months Ended September 30, Favorable/(Unfavorable) Change

(dollars in millions) 2023 2022 $ %

Net sales $ 131.3 $ 114.3 $ 17.0 14.9 %

Cost of sales $ 76.3 $ 60.8 $ (15.5) (25.5) %

as a percentage of sales 58.1 % 53.2 %

Selling, general and administrative $ 22.2 $ 21.1 $ (1.1) (5.2) %

as a percentage of sales 16.9 % 18.5 %

Operating profit $ 32.8 $ 32.4 $ 0.4 1.2 %

Operating margin 25.0 % 28.3 %

Banknote and security product sales increased by $17.0 million, or 14.9%, to $131.3 million in 2023, reflecting higher core sales of $13.5 million, or 11.8%, predominantly driven by higher volumes in international markets, and favorable foreign currency translation of $3.5 million, or 3.1%, as the euro strengthened against the U.S.

Cost of sales increased by $15.5 million, or 25.5%, to $76.3 million in 2023, primarily due to unfavorable mix, higher volumes and unfavorable foreign currency translation, partially offset by lower manufacturing and shipping costs, and productivity gains.

Selling, general and administrative expense increased by $1.1 million, or 5.2%, to $22.2 million in 2023, predominantly in administrative expenses, partially offset by engineering expenses.

Operating profit increased by $0.4 million, or 1.2%, to $32.8 million in 2023, reflecting favorable pricing, lower manufacturing and shipping costs, and productivity gains of $11.3 million, or 34.9%, higher volumes of $6.5 million, or 20.1%, and favorable foreign currency translation of $1.0 million, or 3.1%.

These increases were partially offset by unfavorable mix of $18.3 million, or 56.5%, as anticipated, related to higher U.S.

demand for lower denomination banknotes which is expected to continue into next quarter.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results from Operations – Nine Month Periods Ended September 30,

Results from Operations – Three Month Periods Ended March 31,

The following information should be read in conjunction with our Unaudited Consolidated and Combined Condensed Financial Statements and related notes.

All comparisons below refer to the first nine months of 2023 versus the first nine months of 2022, unless otherwise specified.

Nine Months Ended September 30, Favorable/(Unfavorable) Change

All comparisons below refer to the first three months of 2024 versus the first three months of 2023, unless otherwise specified.

Three Months Ended March 31, Favorable/(Unfavorable) Change

(dollars in millions) 2024 2023 $ %

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as a percentage of sales 30.1 % 27.0 %

Restructuring charges, net $ 2.7 $ — $ (2.7) NM

Operating profit $ 55.4 $ 65.9 $ (10.5) (15.9) %

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Interest expense (9.9) (10.4) 0.5 4.8 %

Related party interest expense (2.5) (10.9) 8.4 77.1 %

Related party interest expense — (2.5) 2.5 NM

Miscellaneous income, net 0.6 1.4 (0.8) (57.1) %

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Net income attributable to common shareholders $ 37.8 $ 43.7 $ (5.9) (13.5) %

Sales increased by $32.7 million, or 3.3%, to $1,034.4 million in 2023.

Sales decreased by $15.5 million, or 4.7%, to $313.6 million in 2024.

The change in sales included:

• an increase in core sales of $43.5 million, or 4.3%, driven primarily by favorable pricing across both segments, and

• a decrease in core sales of $13.9 million, or 4.2%, driven primarily by lower volumes at Crane Payment Innovations (“CPI”), and

• unfavorable foreign currency translation of $1.6 million, or 0.5%.

Cost of sales increased by $9.0 million, or 1.7%, to $545.8 million in 2023.

The increase was driven primarily by unfavorable mix of $53.7 million, or 10.0%, partially offset by productivity gains net of inflation, lower volumes and favorable foreign currency translation.

Cost of sales decreased by $13.2 million, or 7.6%, to $161.2 million in 2024.

The decrease was driven primarily by productivity gains net of inflation, lower manufacturing costs, and the impact of lower sales volumes, partially offset by unfavorable mix.

Selling, general and administrative expenses increased by $5.5 million, or 6.2%, to $94.3 million in 2024.

The increase was driven primarily by increased administrative expenses related to higher compensation and benefit costs, and professional services to support the Separation, including transaction related expenses of $19.7 million, or 8.3%, partially offset by restructuring savings of $6.8 million, or 2.9%.

The increase was driven primarily by professional services, including higher transaction related expenses of $2.3 million, or 2.6%.

Operating profit decreased by $10.5 million, or 15.9%, to $55.4 million in 2024.

The decrease was primarily driven by increased corporate costs related to the Separation and unfavorable mix in the Currency segment, partially offset by favorable pricing and productivity gains in the Crane Payment Innovations segment.

Our effective tax rate for the nine months ended September 30, 2023 is lower than the prior year’s comparable period primarily due to a foreign tax credit return to provision adjustment recorded in the prior year’s comparable period.

The decrease was primarily driven by CPI lower volumes and unfavorable mix, partially offset by favorable pricing net of inflation and productivity gains.

Our effective tax rate for the three months ended March 31, 2024 is lower than the prior year’s comparable period primarily due to a higher equity compensation deduction.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Results of Operations - Nine Month Periods Ended September 30,

Segment Results of Operations - Three Month Periods Ended March 31,

Crane Payment Innovations

Nine Months Ended September 30, Favorable/(Unfavorable) Change

Three Months Ended March 31, Favorable/(Unfavorable) Change

(dollars in millions) 2024 2023 $ %

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as a percentage of sales 23.3 % 24.4 %

Restructuring charges, net $ 2.7 $ — $ (2.7) NM

Operating profit $ 52.7 $ 61.8 $ (9.1) (14.7) %

Operating margin 25.2 % 27.6 %

Sales increased by $28.1 million, or 4.4%, to $671.3 million in 2023, driven by higher core sales of $38.3 million, or 6.0%, offset by unfavorable foreign currency translation of $10.2 million, or 1.6%.

• Sales of Payment Acceptance and Dispensing Products increased $22.9 million, or 4.1%, to $574.9 million in 2023.

The increase reflected higher core sales of $33.1 million, or 6.0%, primarily due to favorable pricing, partially offset by unfavorable foreign currency translation of $10.2 million, or 1.8%, primarily reflecting the weakening of the Japanese Yen, British pound and Australian dollar against the U.S.

Sales decreased by $14.8 million, or 6.6%, to $209.0 million in 2024, driven by lower core sales of $12.6 million, or 5.6%, and unfavorable foreign currency translation of $2.2 million, or 1.0%.

• Sales of Payment Acceptance and Dispensing Products decreased $16.3 million, or 8.5%, to $176.4 million in 2024.

The decrease reflected lower core sales of $14.1 million, or 7.3%, primarily in gaming as customers adjust inventory levels to reflect reduced lead times.

Included in the sales decrease is unfavorable foreign currency translation of $2.2 million, or 1.1%, primarily reflecting the weakening of the Japanese Yen against the U.S.

dollar, partially offset by the strengthening of the British pound against the U.S.

• Service revenue increased by $1.5 million, or 4.8%, to $32.6 million in 2024, primarily driven by favorable pricing.

Cost of sales decreased by $2.5 million, or 0.8%, to $330.3 million, as favorable foreign currency translation, lower volumes and productivity gains were partially offset by increased manufacturing costs and unfavorable mix.

Selling, general and administrative expense decreased by $0.1 million, or 0.1%, to $154.7 million in 2023, primarily reflecting restructuring savings of $6.8 million, or 4.4%, and favorable foreign currency translation of $1.1 million, or 0.7%, offset by increased administrative and selling costs primarily including higher compensation and benefit costs.

Operating profit increased by $30.7 million, or 19.7%, to $186.3 million in 2023.

The increase primarily reflected favorable pricing net of inflation, and productivity gains of $41.6 million, or 26.7%, and restructuring savings of $7.2 million, or 4.6%, partially offset by unfavorable mix of $12.4 million, or 8.0%, unfavorable foreign currency translation of $3.3 million, or 2.1%, and lower volumes of $2.0 million, or 1.3%.

Cost of sales decreased by $2.6 million, or 2.4%, to $104.8 million in 2024, as unfavorable mix was more than offset by the impact of lower sales volumes, lower manufacturing costs and productivity gains.

Selling, general and administrative expense decreased by $5.8 million, or 10.6%, to $48.8 million in 2024, primarily due to lower reserves on customer receivables driven by higher collections.

Operating profit decreased by $9.1 million, or 14.7%, to $52.7 million in 2024.

The decrease primarily reflected unfavorable mix of $11.2 million, or 18.1%, lower volumes of $10.7 million, or 17.3%, partially offset by favorable pricing and productivity gains of $14.0 million, or 22.7%.

Restructuring charges of $2.7 million, or 4.4%, were mostly offset by cost saving actions.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Crane Currency

Nine Months Ended September 30, Favorable/(Unfavorable) Change

Three Months Ended March 31, Favorable/(Unfavorable) Change

(dollars in millions) 2024 2023 $ %

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Operating margin 19.4 % 16.7 %

Banknote and security product sales increased by $4.6 million, or 1.3%, to $363.1 million in 2023, reflecting higher core sales of $5.2 million, or 1.5%, predominantly driven by higher volumes in international markets, partially offset by unfavorable foreign currency translation of $0.6 million, or 0.2%.

Cost of sales increased by $11.5 million, or 5.6%, to $215.5 million in 2023, primarily due to unfavorable mix, partially offset by productivity gains net of inflation, and favorable fixed cost leverage resulting from increased backlog.

Unfavorable mix related to higher U.S.

demand for lower denomination banknotes is expected to continue through the remainder of 2023.

Selling, general and administrative expense increased by $5.0 million, or 8.7%, to $62.5 million in 2023, primarily in administrative and selling costs including higher compensation and benefit costs.

Operating profit decreased by $11.9 million, or 12.3%, to $85.1 million in 2023, reflecting unfavorable mix of $41.2 million, or 42.5%, and lower volumes of $2.5 million, or 2.6%, both driven by lower sales to the U.S.

government, as anticipated, partially offset by favorable pricing net of inflation, and productivity gains, of $31.5 million, or 32.5%.

Banknote and security product sales decreased by $0.7 million, or 0.7%, to $104.6 million in 2024, reflecting lower core sales of $1.4 million, or 1.3%, predominantly driven by lower volumes in the U.S.

Currency business.

Cost of sales decreased by $10.6 million, or 15.8%, to $56.4 million in 2024, primarily due to favorable mix, the impact of lower sales volumes and productivity gains net of inflation.

Selling, general and administrative expense increased by $7.3 million, or 35.3%, to $28.0 million in 2024, primarily due to higher compensation and benefits, and higher engineering costs associated with the U.S.

Currency redesign program.

Operating profit increased by $2.6 million, or 14.8%, to $20.2 million in 2024, reflecting favorable mix of $5.0 million, or 28.4%, partially offset by lower volumes of $2.8 million, or 15.9%.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2024 2023

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Financing activities 10.6 (46.6)

Effect of exchange rates on cash and cash equivalents (6.9) (35.0)

(Decrease) increase in cash and cash equivalents $ (1.7) $ 95.1

Our operating philosophy is to deploy cash provided from operating activities, when appropriate, to provide value to stockholders by reinvesting in existing businesses, by making acquisitions that will strengthen and complement our portfolio, by divesting businesses that are no longer strategic or aligned with our portfolio and where such divestitures can generate capacity for strategic investments and initiatives that further optimize our portfolio, and by paying dividends and/or repurchasing shares.

Effect of exchange rates on cash, cash equivalents and restricted cash (7.9) 2.6

Decrease in cash, cash equivalents and restricted cash $ (0.3) $ (12.5)

Our operating philosophy is to deploy cash provided from operating activities, when appropriate, to provide value to stockholders by reinvesting in existing businesses, by making acquisitions that will strengthen and complement our portfolio, by divesting businesses that are no longer strategic or aligned with our portfolio and where such divestitures can generate capacity for strategic investments and initiatives that further optimize our portfolio, by paying dividends and/or repurchasing shares, and by repaying prepayable debt.

At any given time, and from time to time, we may be evaluating one or more of these opportunities, although we cannot assure you if or when we will consummate any such transactions.

Our current cash balance, together with cash we expect to generate from future operations along with our borrowings available under our revolving credit facility, is expected to be sufficient to finance our short- and long-term capital requirements.

In the three months ended September 30, 2023, we drew down and subsequently repaid $20 million on our revolving credit facility.

In March 2023, we entered into a new senior secured credit agreement, which provides for a $500 million, five-year revolving credit facility and a $350 million, three-year term loan facility.

Funding under each facility became available in connection with the Separation, upon the satisfaction of customary conditions of facilities of this type.

On March 31, 2023, we borrowed the full amount of the Term Facility.

During the three-and-nine months ended September 30, 2023, we repaid $125 million and $175 million, respectively, of the Term Facility.

On April 3, 2023, prior to the consummation of the Separation, SpinCo paid a dividend to Holdings in the amount of $275 million.

On April 4, 2023, we redeemed all our outstanding 4.45% senior notes due 2023, of which $300 million aggregate principal amount was outstanding upon redemption.

Our current cash balance, together with cash we expect to generate from future operations along with our borrowings available under our revolving credit facility and our term facility, is expected to be sufficient to finance our short- and long-term capital requirements.

In the three months ended March 31, 2024, we drew down $30.0 million and repaid $5.0 million on our Revolving Facility.

Operating Activities

Cash provided by operating activities was $197.8 million in the first nine months of 2023, as compared to $230.9 million during the same period last year.

The decrease in cash provided by operating activities was primarily driven by higher cash used for operating working capital supporting higher levels of demand.

Cash provided by operating activities was $9.5 million in the first three months of 2024, as compared to $35.5 million during the same period last year.

The decrease in cash provided by operating activities was primarily driven by increased working capital requirements.

Investing Activities

Cash provided by investing activities consists of cash used for capital expenditures.

Cash used for investing activities consists of cash used for capital expenditures.

Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development, and improving information systems.

Cash used for investing activities was $16.1 million in the first nine months of 2023, as compared to $12.2 million in the comparable period of 2022.

Cash used for investing activities was $12.5 million in the first three months of 2024, as compared to $4.0 million in the comparable period last year.

The increase in cash used for investing activities was primarily driven by higher cash used for capital expenditures to support the U.S.

Currency redesign program and other capital projects.

Financing Activities

Cash used for financing activities consists primarily of repayments of indebtedness, proceeds from the issuance of long-term debt and debt issuance cost on new credit facilities .

Cash used for financing activities was $176.5 million during the first nine months of 2023 compared to $88.6 million in the comparable period of 2022.

The increase in cash used for financing activities was primarily driven by repayments of debt.

Cash provided by (used for) financing activities consists primarily of d ividend payments to shareholders, repayments of indebtedness, proceeds from the issuance of long-term debt and debt issuance cost on new credit facilities .

Cash provided by financing activities was $10.6 million during the first three months of 2024 compared to cash used for financing activities of $46.6 million in the comparable period last year.

The increase in cash provided by financing activities was primarily driven by lower net transfers to Crane, partially offset by lower debt proceeds and higher dividend payments.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis