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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 229 added, 80 removed, 477 unchanged (39% of the section changed)

3 unchanged sentences

CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in millions, except per share data) 2024 2023 2024 2023

9 unchanged sentences

Related party interest expense — — — ( 2.5 )

Miscellaneous income, net 0.6 1.4

Miscellaneous (expense) income, net ( 0.2 ) 1.0 0.4 2.4

Total other expense, net ( 12.2 ) ( 12.9 ) ( 20.9 ) ( 24.2 )

8 unchanged sentences

Diluted 57.8 57.4 57.7 57.4

Dividends per share $ 0.16 n/a

Dividends per share $ 0.16 $ 0.14 $ 0.32 $ 0.14

See Notes to Unaudited Consolidated and Combined Condensed Financial Statements.

2 unchanged sentences

CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in millions) 2024 2023 2024 2023

9 unchanged sentences

CONSOLIDATED AND CONDENSED BALANCE SHEETS

(in millions) March 31,

(in millions) June 30,

2024 December 31,

1 unchanged sentence

Cash and cash equivalents $ 175.5 $ 227.2

Accounts receivable, net of allowance for credit losses of $ 13.8 as of March 31, 2024 and $ 11.8 as of December 31, 2023

Accounts receivable, net of allowance for credit losses of $ 10.5 as of June 30, 2024 and $ 11.8 as of December 31, 2023

and foreign taxes on income 5.1 —

Inventories, net:

19 unchanged sentences

CONSOLIDATED AND CONDENSED BALANCE SHEETS

(in millions, except per share and share data) March 31,

(in millions, except per share and share data) June 30,

2024 December 31,

29 unchanged sentences

CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in millions) 2024 2023

4 unchanged sentences

Stock-based compensation expense 4.9 4.7

Unrealized loss on forward contracts 0.2 —

Defined benefit plans and postretirement credit ( 0.3 ) ( 0.4 )

Deferred income taxes 0.2 4.8

3 unchanged sentences

Investing activities:

Payment for acquisition, net of cash acquired ( 269.8 ) —

Capital expenditures ( 21.4 ) ( 8.5 )

Proceeds from settlement of forward contracts 0.1 —

Total used for investing activities ( 291.1 ) ( 8.5 )

4 unchanged sentences

Debt issuance costs — ( 5.2 )

Repayment of long-term debt — ( 300.0 )

Proceeds from revolving credit facility 280.0 —

10 unchanged sentences

1 Includes both current and non-current balances of restricted cash.

Current restricted cash, included within “Other current assets” in our Unaudited Consolidated and Combined Condensed Balance Sheets, was $ 0.1 million and $ 0.0 million as of March 31, 2024, and March 31, 2023, respectively.

Non-current restricted cash, included within “Other assets” in our Unaudited Consolidated and Combined Condensed Balance Sheets, was $ 6.2 million and $ 0.0 million as of March 31, 2024, and March 31, 2023, respectively.

Current restricted cash, included within “Other current assets” in our Unaudited Consolidated and Combined Condensed Balance Sheets, was $ 1.4 million and $ 0.0 million as of June 30, 2024, and June 30, 2023, respectively.

Non-current restricted cash, included within “Other assets” in our Unaudited Consolidated and Combined Condensed Balance Sheets, was $ 6.2 million and $ 0.0 million as of June 30, 2024, and June 30, 2023, respectively.

See Notes to Unaudited Consolidated and Combined Condensed Financial Statements.

2 unchanged sentences

CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in millions) 2024 2023

33 unchanged sentences

Balance as of March 31, 2024 $ 72.4 $ 1,715.5 $ 149.6 $ ( 145.7 ) $ ( 827.7 ) $ 964.1

(in millions) Crane Net Investment Accumulated

Net income attributable to common shareholders — — 41.6 — — 41.6

Cash dividends ($ 0.16 per share)

— — ( 9.2 ) — — ( 9.2 )

Exercise of stock options of 8,933 shares

— — — — 0.3 0.3

Impact from settlement of share-based awards, net of shares acquired — ( 1.1 ) — — 0.8 ( 0.3 )

Stock-based compensation expense — 2.4 — — — 2.4

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — ( 0.5 ) — ( 0.5 )

Currency translation adjustment — — — ( 8.6 ) — ( 8.6 )

Balance as of June 30, 2024 $ 72.4 $ 1,716.8 $ 182.0 $ ( 154.8 ) $ ( 826.6 ) $ 989.8

CRANE NXT, CO.

AND SUBSIDIARIES

CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF CHANGES IN EQUITY

(in millions) Common

Par Value Capital

Surplus Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stock Crane Net Investment Total

Balance as of December 31, 2022 $ — $ — $ — $ ( 131.5 ) $ — $ 915.3 $ 783.8

5 unchanged sentences

Balance as of March 31, 2023 $ — $ — $ — $ ( 127.1 ) $ — $ 568.2 $ 441.1

Net income attributable to common shareholders — — 43.2 — — — 43.2

Cash dividends ($ 0.14 per share)

— — ( 7.9 ) — — — ( 7.9 )

Dividend from Crane — — — — — 275.0 275.0

Net transfers from Crane — — — — — 103.9 103.9

Reclassification of Crane Net Investment to Common Stock, Treasury Stock and Capital Surplus 72.4 1,722.8 — — ( 848.1 ) ( 947.1 ) —

Exercise of stock options, net of shares reacquired, of 64,105 shares

— — — — 1.9 — 1.9

Impact from settlement of share-based awards, net of shares acquired — ( 1.8 ) — — 1.8 — —

Stock-based compensation expense — 1.9 — — — — 1.9

Stock-based compensation reclassification 1

— ( 0.3 ) — — — — ( 0.3 )

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — ( 0.5 ) — — ( 0.5 )

Currency translation adjustment — — — ( 3.1 ) — — ( 3.1 )

Balance as of June 30, 2023 $ 72.4 $ 1,722.6 $ 35.3 $ ( 130.7 ) $ ( 844.4 ) $ — $ 855.2

1 Reclassification of stock-based compensation due to modification resulting from equity award conversions.

See Note 1, “Organization and Basis of Presentation” for additional information.

See Notes to Unaudited Consolidated and Combined Condensed Financial Statements.

4 unchanged sentences

We are comprised of two reporting segments:

Crane Payment Innovations (“CPI”) and Crane Currency.

Crane Payment Innovations (“CPI”) and Security and Authentication Technologies (“SAT”).

Our primary end markets include governments and a wide range of consumer related end markets including retail and gaming.

12 unchanged sentences

Due to SpinCo’s larger operations, greater tangible assets, greater fair value and greater net sales, in each case, relative to ours, among other factors, SpinCo was considered to be the “accounting spinnor” and therefore is the “accounting successor” to Holdings for accounting purposes, notwithstanding the legal form of the Separation.

Therefore, following the Separation, our historical financial statements are comprised solely of combined carve-out financial statements representing only our operations, assets, liabilities and equity on a stand-alone basis derived from the consolidated financial statements and accounting records of Holdings.

Therefore, following the Separation, our prior historical financial statements are comprised solely of combined carve-out financial statements representing only our operations, assets, liabilities and equity on a stand-alone basis derived from the consolidated financial statements and accounting records of Holdings.

Prior to the Separation, Crane NXT employees and directors participated in Holdings equity incentive plans and received equity awards under those plans in the form of stock options, restricted share units, performance-based and time-based restricted share units and deferred stock units in respect of Holdings common shares.

3 unchanged sentences

The modification of the performance-based restricted share units resulted in a liability recorded upon Separation.

The amount of the liability was $ 1.0 million and $ 1.9 million as of March 31, 2024, and December 31, 2023, respectively.

The amount of the liability was $ 1.2 million and $ 1.9 million as of June 30, 2024, and December 31, 2023, respectively.

Separation Agreements

61 unchanged sentences

Separation Costs .

In connection with the Separation, we incurred transaction related expenses of $ 1.8 million for the three months ended March 31, 2023, recorded in “Selling, general and administrative” in the Unaudited Consolidated and Combined Condensed Statements of Operations.

In connection with the Separation, we incurred transaction related expenses of $ 15.2 million and $ 17.0 million for the three-and-six months ended June 30, 2023 recorded in “Selling, general and administrative” in the Unaudited Consolidated and Combined Condensed Statements of Operations.

Expenses primarily consisted of professional service fees.

11 unchanged sentences

After the Separation, SpinCo and its subsidiaries were identified as related parties.

As of March 31, 2024, we had net outstanding payables with SpinCo and its subsidiaries of $ 0.1 million related to the transition services agreement and net outstanding receivables with SpinCo and its subsidiaries of $ 6.6 million related to indemnification under the tax matters agreement.

As of June 30, 2024, we had net outstanding payables with SpinCo and its subsidiaries of less than $ 0.1 million related to the Transition Services Agreement and net outstanding receivables with SpinCo and its subsidiaries of $ 6.5 million related to indemnification under the Tax Matters Agreement.

As of December 31, 2023, we had net outstanding receivables with SpinCo and its subsidiaries of $ 0.3 million related to the Transition Services Agreement and $ 4.5 million related to indemnification under the Tax Matters Agreement.

Note 3 - Acquisition

Acquisitions are accounted for in accordance with ASC Topic 805, “Business Combinations” (“ASC 805”).

Accordingly, we make an initial allocation of the purchase price at the date of acquisition based upon our understanding of the fair value of the acquired assets and assumed liabilities.

OpSec Acquisition

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 customary purchase price adjustments .

The amount paid, net of cash acquired, was $ 269.8 million.

We utilized $ 210.0 million from our Revolving Facility (as defined in Note 13, “Financing”) and cash on hand to fund the acquisition.

OpSec is a global leader in authentication and brand integrity with a heritage that spans four decades.

OpSec serves brand owners, licensors, and media rights owners, helping them build intangible value and mitigate vulnerability across both physical and digital domains.

OpSec also provides high-security and compliance solutions to governments.

The acquisition of OpSec expands the Company’s capabilities across the entire authentication value chain, creating a leading brand and product authentication platform.

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

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Allocation of Consideration Transferred to Net Assets Acquired

The following amounts represent the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed from our acquisition of OpSec.

The final determination of the fair value of certain assets and liabilities will be completed within the measurement period as required by ASC 805.

The purchase price allocation is preliminary, pending our evaluation and determination of post-closing and final working capital adjustments.

Potential adjustments made are not expected to be material in relation to the preliminary values presented below:

Net assets acquired (in millions)

Total current assets $ 36.8

Property, plant and equipment 17.3

Other assets 9.8

Intangible assets 158.3

Goodwill 123.1

Total assets acquired $ 345.3

Total current liabilities $ 33.6

Other liabilities 41.9

Total assumed liabilities $ 75.5

Net assets acquired $ 269.8

The amount allocated to other assumed liabilities includes a contingent liability of $ 1.5 million related to a prior OpSec acquisition.

The amount payable is contingent upon achievement of specific revenue targets and is capped at $ 2.2 million.

The contingency conditions expire at the end of 2026, at which point if the contingency conditions have not been met, no payment will occur.

The contingent liability is measured at fair value.

See Note 14, “Fair Value Measurements” for further details.

The amount allocated to goodwill reflects expected sales synergies, manufacturing efficiency and research and development.

Goodwill from this acquisition is not deductible for tax purposes.

Th e amounts allocated to acquired intangible assets, and their associated weighted-average useful lives which were determined based on the period in which the assets are expected to contribute directly or indirectly to our future cash flows, consist of the following:

Intangible Assets (in millions) Intangible Fair Value Weighted Average Life (in years)

Intellectual property rights $ 4.3 9.0

Customer relationships 115.5 19.3

Developed technology 36.5 5.7

Backlog 2.0 0.7

Total acquired intangible assets $ 158.3

The intellectual property rights intangible asset category consists of trade names.

The fair values of the trade names were determined by using an “income approach”, specifically the relief-from-royalty approach, which is a commonly accepted valuation approach.

This approach is based on the assumption that in lieu of ownership, a company would be willing to pay a royalty in order to exploit the related benefits of this asset.

Therefore, a portion of OpSec’s earnings, equal to the after-tax royalty that would have been paid for the use of the asset, can be attributed to the Company’s ownership.

The trade names are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 9 years.

The fair values of the developed technology intangible assets were also determined by the relief-from-royalty approach.

Similarly, this approach is based on the assumption that in lieu of ownership, a company would be willing to pay a royalty in order to exploit the related benefits of the technology.

Therefore, a portion of OpSec’s earnings, equal to the after-tax royalty that would have been paid for the use of the technology, can be attributed to the Company’s ownership of the technology.

The technology assets are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 3 to 6 years.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

The fair values of the customer relationships and backlog intangible assets were determined by using an “income approach”, which is a commonly accepted valuation approach.

Under this approach, the net earnings attributable to the asset or liability being measured are isolated using the discounted projected net cash flows.

These projected cash flows are isolated from the projected cash flows of the combined asset group over the remaining economic life of the intangible asset or liability being measured.

Both the amount and the duration of the cash flows are considered from a market participant perspective.

The Company’s estimates of market participant net cash flows considered historical and projected pricing, operational performance including market participant synergies, aftermarket retention, product life cycles, material and labor pricing, and other relevant customer, contractual and market factors.

Where appropriate, the net cash flows were adjusted to reflect the potential attrition of existing customers in the future, as existing customers are expected to decline over time.

The attrition-adjusted future cash flows are then discounted to present value using an appropriate discount rate.

The customer relationship is being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 16 to 20 years.

Supplemental Pro Forma Data

OpSec’s results of operations have been included in our financial statements for the period subsequent to the completion of the acquisition on May 3, 2024.

The following unaudited pro forma consolidated and combined information assumes that the acquisition was completed on January 1, 2023.

The unaudited pro forma consolidated and combined net sales for the three-and-six months ended June 30, 2024 would have been $ 382.0 million and $ 729.4 million, respectively.

The unaudited pro forma consolidated and combined net sales for the three-and-six months ended June 30, 2023 would have been $ 379.3 million and $ 738.1 million, respectively.

The unaudited pro forma consolidated and combined net income attributable to common shareholders for the three-and-six months ended June 30, 2024 would have been $ 47.8 million and $ 88.8 million, respectively.

The unaudited pro forma consolidated and combined net income attributable to common shareholders for the three-and-six months ended June 30, 2023 would have been $ 32.7 million and $ 67.5 million, respectively.

The unaudited pro forma consolidated and combined information is provided for illustrative purposes only and is not indicative of our actual consolidated and combined results of operations or consolidated financial position.

Acquisition-Related Costs

Acquisition-related costs are expensed as incurred.

For the three-and-six months ended June 30, 2024, we recorded $ 6.1 million and $ 10.0 million, respectively, of integration and transaction costs in our Unaudited Consolidated and Combined Condensed Statements of Operations.

In addition, the Company recorded $ 4.0 million of inventory step-up amortization within “Cost of sales” in the Unaudited Consolidated and Combined Condensed Statements of Operations.

Note 4 - Segment Results

Our segments are reported on the same basis used internally for evaluating performance and for allocating resources.

As of March 31, 2024, we had two reportable segments:

Crane Payment Innovations and Crane Currency.

The CPI segment remains unchanged.

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

As of June 30, 2024, we had two reportable segments:

Crane Payment Innovations and Security and Authentication Technologies.

Assets of the reportable segments exclude general corporate assets, which principally consist of cash, deferred tax assets, certain property, plant and equipment, and certain other assets.

Corporate consists of corporate office expenses including compensation and benefits for corporate employees, occupancy, depreciation, and other administrative costs.

A brief description of each of our segments as of March 31, 2024, is as follows:

A brief description of each of our segments as of June 30, 2024, is as follows:

Crane Payment Innovations

2 unchanged sentences

Key research and development and manufacturing facilities are located in the United States, the United Kingdom, Mexico, Japan, and Germany, with additional sales offices across the world.

Crane Currency

Crane Currency provides advanced security solutions based on proprietary technology for securing physical products, including banknotes, consumer goods and industrial products.

Facilities are located in the United States, Sweden and Malta.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Security and Authentication Technologies

Security and Authentication Technologies provides advanced security solutions based on proprietary technology for securing physical products, including banknotes, consumer goods, and industrial products.

SAT also provides brand protection and authentication solutions, serving various brands, as well as government agencies and financial insti tutions.

Key research and development and manufacturing facilities are located in the United States, United Kingdom, Sweden and Malta.

Financial information by reportable segment is set forth below.

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in millions) 2024 2023 2024 2023

Crane Payment Innovations $ 224.4 $ 225.9 $ 433.4 $ 449.7

Crane Currency 104.6 105.3

Security and Authentication Technologies 146.2 126.5 250.8 231.8

Total $ 370.6 $ 352.4 $ 684.2 $ 681.5

1 unchanged sentence

Crane Payment Innovations $ 61.4 $ 64.8 $ 114.1 $ 126.6

Crane Currency 20.2 17.6

Security and Authentication Technologies 24.0 34.7 44.2 52.3

Corporate ( 17.8 ) ( 30.7 ) ( 35.3 ) ( 44.2 )

3 unchanged sentences

Related party interest expense — — — ( 2.5 )

Miscellaneous income, net 0.6 1.4

Miscellaneous (expense) income, net ( 0.2 ) 1.0 0.4 2.4

Income before income taxes $ 55.4 $ 55.9 $ 102.1 $ 110.5

(in millions) March 31, 2024 December 31, 2023

(in millions) June 30, 2024 December 31, 2023

Crane Payment Innovations $ 1,197.8 $ 1,279.1

Crane Currency 839.4 814.4

Security and Authentication Technologies 1,165.9 814.4

Corporate 23.8 35.9

Total $ 2,387.5 $ 2,129.4

(in millions) March 31, 2024 December 31, 2023

(in millions) June 30, 2024 December 31, 2023

Crane Payment Innovations $ 611.4 $ 626.7

Crane Currency 214.0 214.5

Security and Authentication Technologies 339.0 214.5

Total $ 950.4 $ 841.2

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Note 5 - Revenue

1 unchanged sentence

The following table presents net sales disaggregated by product line for each segment:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in millions) 2024 2023 2024 2023

3 unchanged sentences

Total Crane Payment Innovations $ 224.4 $ 225.9 $ 433.4 $ 449.7

Crane Currency Products $ 104.6 $ 105.3

Security and Authentication Technologies

Banknotes and Security Products $ 124.1 $ 125.5 $ 227.5 $ 229.5

Authentication Products and Solutions 22.1 1.0 23.3 2.3

Total Security and Authentication Technologies $ 146.2 $ 126.5 $ 250.8 $ 231.8

Net sales $ 370.6 $ 352.4 $ 684.2 $ 681.5

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations represents the transaction price of firm orders which have not yet been fulfilled.

As of March 31, 2024, our performance obligations were $ 422.0 million.

As of June 30, 2024, our performance obligations were $ 501.9 million.

We expect to recognize approximately 76 % of our remaining performance obligations as revenue in 2024, 20 % in 2025 and the balance thereafter.

8 unchanged sentences

Net contract assets and contract liabilities consisted of the following:

(in millions) March 31, 2024 December 31, 2023

(in millions) June 30, 2024 December 31, 2023

Contract assets $ 34.5 $ 30.3

Contract liabilities $ 98.3 $ 92.5

We recognized revenue of $ 27.7 million during the three months ended March 31, 2024, related to contract liabilities as of December 31, 2023.

We recognized revenue of $ 20.5 million and $ 48.2 million during the three-and-six months ended June 30, 2024, related to contract liabilities as of December 31, 2023.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Note 6 - Earnings Per Share

6 unchanged sentences

For periods prior to the Separation, it is assumed that there are no dilutive equity instruments as there were no Crane NXT stock-based awards outstanding prior to the Separation.

Three Months Ended

The weighted average number of common shares outstanding during the three-and-six-months ended June 30, 2023 was based on the weighted average number of common shares after the Separation.

Three Months Ended Six Months Ended

June 30, June 30,

(in millions, except per share data) 2024 2023 2024 2023

5 unchanged sentences

Earnings per diluted share $ 0.72 $ 0.75 $ 1.38 $ 1.51

Stock options, restricted share units, deferred stock units and performance-based restricted share units that were excluded from the calculation of diluted earnings per share because their effect is anti‑dilutive were 0.3 million for the three months ended March 31, 2024.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Note 7 - Changes in Accumulated Other Comprehensive Loss

6 unchanged sentences

Net period other comprehensive loss ( 0.9 ) ( 35.3 ) ( 36.2 )

Balance as of March 31, 2024 $ 3.4 $ ( 149.1 ) $ ( 145.7 )

(a) Net of tax detriment of $ 1.4 million and $ 1.5 million as of March 31, 2024 and December 31, 2023, respectively.

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three month periods ended March 31, 2024, and 2023.

Amortization of pension and postretirement components has been recorded within “Miscellaneous income, net” on our Unaudited Consolidated and Combined Condensed Statements of Operations.

Three Months Ended March 31,

Balance as of June 30, 2024 $ 2.9 $ ( 157.7 ) $ ( 154.8 )

(a) Net of tax detriment of $ 1.3 million and $ 1.5 million as of June 30, 2024 and December 31, 2023, respectively.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three-and-six month periods ended June 30, 2024, and 2023.

Amortization of pension and postretirement components has been recorded within “Miscellaneous (expense) income, net” on our Unaudited Consolidated and Combined Condensed Statements of Operations.

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2024 2023 2024 2023

9 unchanged sentences

Note 8 - Pension and Postretirement Benefits

For all plans, the components of net periodic benefit for the three months ended March 31, 2024, and 2023 are as follows:

For all plans, the components of net periodic benefit for the three months ended June 30, 2024, and 2023 are as follows:

Pension Postretirement

4 unchanged sentences

Amortization of prior service cost ( 0.2 ) ( 0.2 ) ( 0.2 ) ( 0.2 )

Amortization of net (gain) loss 0.1 — ( 0.2 ) ( 0.1 )

Amortization of net gain — — ( 0.2 ) ( 0.2 )

Net periodic expense (benefit) $ 0.1 $ — $ ( 0.2 ) $ ( 0.2 )

T he components of net periodic benefit, other than the service cost component, are included in “Miscellaneous income, net” in our Unaudited Consolidated and Combined Condensed Statements of Operations.

For all plans, the components of net periodic benefit for the six months ended June 30, 2024, and 2023 are as follows:

Pension Postretirement

(in millions) 2024 2023 2024 2023

Service cost $ 1.1 $ 0.9 $ — $ —

Interest cost 1.0 1.1 0.3 0.4

Expected return on plan assets ( 1.6 ) ( 1.6 ) — —

Amortization of prior service cost ( 0.4 ) ( 0.4 ) ( 0.4 ) ( 0.5 )

Amortization of net loss (gain) 0.1 — ( 0.4 ) ( 0.3 )

Net periodic expense (benefit) $ 0.2 $ — $ ( 0.5 ) $ ( 0.4 )

The components of net periodic benefit, other than the service cost component, are included in “Miscellaneous (expense) income, net” in our Unaudited Consolidated and Combined Condensed Statements of Operations.

Service cost is recorded within “Cost of sales” and “Selling, general and administrative” in our Unaudited Consolidated and Combined Condensed Statements of Operations.

2 unchanged sentences

Expected contributions in 2024

Amounts contributed during the three months ended March 31, 2024

Amounts contributed during the six months ended June 30, 2024

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

3 unchanged sentences

Our effective tax rates are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Effective Tax Rate 25.0 % 22.7 % 22.3 % 21.4 %

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.

Our effective tax rate for the three months ended March 31, 2024 is lower than the statutory U.S.

federal tax rate of 21% primarily due to a higher equity compensation deduction.

Our effective tax rates for the three-and-six months ended June 30, 2024 are higher than in the prior year’s comparable periods primarily due to the mix of non-U.S.

Our effective tax rates for the three-and-six months ended June 30, 2024 are higher than the statutory U.S.

federal tax rate of 21% primarily due to the mix of non-U.S.

The Organization for Economic Co-operation and Development (“OECD”) has proposed a global minimum tax of 15% of reported profits (“Pillar 2”) that has been agreed upon by over 140 member jurisdictions including the United States.

Pillar 2 addresses the risks associated with profit shifting to entities in low tax jurisdictions.

We have adopted Pillar 2 and the impact of this adoption on our business is immaterial.

We have adopted Pillar 2 and the impact of this adoption on our business was approximately $ 2 million.

The Tax Matters Agreement, among other things, governs our and SpinCo’s respective rights, responsibilities and obligations after the Separation with respect to tax liabilities and benefits (including any taxes imposed that are attributable to the failure of the Distribution and certain related transactions to qualify as a transaction that is tax-free for U.S.

1 unchanged sentence

Although enforceable as between the parties, the Tax Matters Agreement will not be binding on the Internal Revenue Service or other tax authorities.

As of March 31, 2024, we had gross unrecognized tax benefits of $ 19.3 million included in “Other liabilities” in our Unaudited Consolidated and Condensed Balance Sheets.

As of June 30, 2024 and December 31, 2023, we had gross unrecognized tax benefits of $ 18.2 million and $ 19.3 million, respectively included in “Other liabilities” in our Unaudited Consolidated and Condensed Balance Sheets.

Note 10 - Goodwill and Intangible Assets

Changes to goodwill are as follows:

(in millions) Crane Payment Innovations Crane Currency Total

(in millions) Crane Payment Innovations Security and Authentication Technologies Total

Balance as of December 31, 2023

$ 626.7 $ 214.5 $ 841.2

Additions — 123.1 123.1

Currency translation ( 15.3 ) 1.4 ( 13.9 )

Balance as of March 31, 2024

Balance as of June 30, 2024

$ 611.4 $ 339.0 $ 950.4

As of March 31, 2024, we had $ 297.0 million of net intangible assets, of which $ 45.5 million were intangibles with indefinite useful lives.

As of June 30, 2024, we had $ 443.6 million of net intangible assets, of which $ 45.5 million were intangibles with indefinite useful lives.

As of December 31, 2023, we had $ 308.9 million of net intangible assets, of which $ 45.5 million were intangibles with indefinite useful lives.

Changes to intangible assets are as follows:

(in millions) Three Months Ended March 31, 2024 Year Ended December 31, 2023

(in millions) Six Months Ended June 30, 2024 Year Ended December 31, 2023

Balance at beginning of period, net of accumulated amortization $ 308.9 $ 344.9

Additions 159.3 —

Amortization expense ( 20.2 ) ( 35.9 )

3 unchanged sentences

A summary of intangible assets are as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in millions) Weighted Average

7 unchanged sentences

Customer relationships and backlog 18.9 611.7 277.5 334.2 504.4 269.5 234.9

Developed Technology 6.9 63.6 22.6 41.0 26.3 21.2 5.1

Other 9.9 72.6 55.4 17.2 73.5 51.8 21.7

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Accrued liabilities consist of:

(in millions) March 31,

(in millions) June 30,

2024 December 31,

12 unchanged sentences

If there is a reasonable possibility that a loss or additional loss may have been incurred for such matters, we disclose the estimate of the amount of loss or range of loss, disclose that the amount is immaterial, or disclose that an estimate of loss cannot be made, as applicable.

We believe that as of March 31, 2024, there was no reasonable possibility that a material loss, or any additional material losses, may have been incurred for such matters.

We believe that as of June 30, 2024, there was no reasonable possibility that a material loss, or any additional material losses, may have been incurred for such matters.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

1 unchanged sentence

The agreement specifies the allocation of tax liabilities between us and SpinCo, and we and SpinCo agreed to indemnify each other for any amounts for which they are not responsible.

As of March 31, 2024, there were no amounts owing to SpinCo pursuant to this agreement.

As of June 30, 2024, there were no amounts owing to SpinCo pursuant to this agreement.

The Tax Matters Agreement also specifies allocation of tax liabilities in the event that the Distribution is determined not to be tax-free.

We believe that as of March 31, 2024, there was no reasonable possibility that such a tax liability will be incurred in connection with the Distribution.

We believe that as of June 30, 2024, there was no reasonable possibility that such a tax liability will be incurred in connection with the Distribution.

Note 13 - Financing

Our debt consisted of the following:

(in millions) March 31,

(in millions) June 30,

2024 December 31,

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Total short-term borrowings (a)

$ 220.2 $ 4.6

Term Facility $ 96.4 $ 98.5

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$ 638.9 $ 640.3

(a) Debt discounts and debt issuance costs totaled $ 9.5 million and $ 10.1 million as of March 31, 2024, and December 31, 2023, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above, where applicable.

(a) Debt discounts and debt issuance costs totaled $ 9.0 million and $ 10.1 million as of June 30, 2024, and December 31, 2023, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above, where applicable.

Credit Faciliti es - 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, three-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.

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

In the six months ended June 30, 2024, we drew down $ 280.0 million, primarily to fund the OpSec acquisition, and repaid $ 65.0 million on our Revolving Facility.

The Revolving Facility allows us to borrow, repay and re-borrow funds from time to time prior to the maturity of the Revolving Facility without any penalty or premium, subject to customary borrowing conditions for facilities of this type and the reimbursement of breakage costs.

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The carrying value of our financial assets and liabilities, including cash and cash equivalents, accounts receivable and accounts payable approximate fair value, without being discounted, due to the short periods during which these amounts are outstanding.

We are exposed to certain risks related to our ongoing business operations, including market risks related to fluctuation in currency exchange.

We use foreign exchange contracts to manage the risk of certain cross-currency business relationships to minimize the impact of currency exchange fluctuations on our earnings and cash flows.

We do not hold or issue derivative financial instruments for trading or speculative purposes.

Foreign exchange contracts not designated as hedging instruments had a notional value of $ 10.7 million as of June 30, 2024.

Our derivative assets and liabilities include foreign exchange contract derivatives that are measured at fair value using internal models based on observable market inputs such as forward rates and interest rates.

Based on these inputs, the derivatives are classified within Level 2 of the valuation hierarchy.

Such derivative liability amounts are recorded within “Accrued liabilities” on our Consolidated and Condensed Balance Sheets and were $ 0.2 million as of June 30, 2024.

We had no such hedging instruments as of December 31, 2023.

As a result of the Separation, all outstanding stock-based compensation awards of Holdings were exchanged for similarly valued stock-based compensation awards of either SpinCo, Crane NXT or both.

1 unchanged sentence

The amount of the liability is measured at fair value using level 1 inputs such as the quoted market price of the underlying company’s stock.

The fair value of the liability was $ 1.0 million and $ 1.9 million as of March 31, 2024, and December 31, 2023, respectively.

The fair value of the liability was $ 1.2 million and $ 1.9 million as of June 30, 2024, and December 31, 2023, respectively.

Long-term debt rates currently available to us for debt with similar terms and remaining maturities are used to estimate the fair value for debt issues that are not quoted on an exchange.

The estimated fair value of notes due, measured using Level 2 inputs, was $ 454.4 million and $ 469.5 million as of March 31, 2024, and December 31, 2023, respectively.

The estimated fair value of notes due, measured using Level 2 inputs, was $ 448.4 million and $ 469.5 million as of June 30, 2024, and December 31, 2023, respectively.

As a result of the OpSec acquisition, we assumed OpSec’s contingent liability related to a prior OpSec acquisition.

The amount of the liability is measured at fair value using level 3 inputs as the fair value is determined by estimating the net present value of the expected cash flows based on the probability of the achievement of the contingent revenue targets.

The fair value of the liability is recorded within “Other liabilities” on our Consolidated and Condensed Balance Sheets and was $ 1.5 million as of June 30, 2024.

We had no such contingent liabilities as of December 31, 2023.

See Note 3, “Acquisition” for further details.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Note 15 - Restructuring

2024 Restructuring - In the first quarter of 2024, in response to challenging industry conditions, we initiated workforce reductions in CPI, incurring $ 2.7 million of severance charges during the three months ended March 31, 2024.

2024 Restructuring - In the first quarter of 2024, in response to challenging industry conditions, we initiated workforce reductions in CPI, incurring $ 2.7 million of cumulative severance charges, net through June 30, 2024.

We do no t expect to incur additional costs to complete these actions.

We expect to substantially complete the restructuring program in 2025.

2022 Restructuring - In the fourth quarter of 2022, in response to economic uncertainty, we initiated workforce reductions in CPI, incurring $ 6.7 million of cumulative restructuring charges, net through March 31, 2024, of which $ 5.8 million related to severance and $ 0.9 million related to other costs.

2022 Restructuring - In the fourth quarter of 2022, in response to economic uncertainty, we initiated workforce reductions in CPI, incurring $ 6.7 million of cumulative restructuring charges, net through June 30, 2024, of which $ 5.8 million related to severance and $ 0.9 million related to other costs.

We do no t expect to incur additional costs to complete these actions.

We expect to substantially complete the program in 2024 in the U.S., with foreign jurisdictions extending through 2026.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

We expect to substantially complete the program in 2024.

The following table summarizes the accrual balances related to these restructuring charges by program:

3 unchanged sentences

Utilization ( 2.2 ) ( 0.4 ) ( 2.6 )

Balance as of March 31, 2024 (a)

Balance as of June 30, 2024 (a)

$ 0.5 $ 0.2 $ 0.7

1 unchanged sentence

Included within “Restructuring charges, net” in the Unaudited Consolidated and Combined Condensed Statements of Operations.

Note 15 - Subsequent Events

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 institutions.

The Company is in process of determining the purchase price allocation and therefore the related disclosure is not practicable, due to the timing of the acquisition.

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

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 1. Financial Statements