Christina Cristiano: Yes. I’m sorry, Isaac, can I just ask you to repeat the first half of your question? I just didn’t follow what you said.
Isaac Sellhausen: Yes. Just on the currency investments in terms of the equipment upgrades, could you just touch on the level of investment required there and do you anticipate other facilities have to be upgraded or any downtime maybe, internationally?
Christina Cristiano: Yes. Thanks for that, and thanks for the clarification. So I mean, in terms of the CapEx investment we’re making in the U.S. new series this year, which is, again, is such a tremendous program for long-term growth for the company that we’re so excited about. We’ll see CapEx be a little bit higher this year than we’ve historically expected. So generally, CapEx around 2% of sales, and now it will be a little bit closer to 3%, so still not very significant, but a change for us in the business specific to this problem, excuse me, this project. And that investment will pay off over the decade-long cycle that the new series will bring to us. We are continuously doing maintenance across all our facilities, right?
Our continuous improvement initiatives are ongoing. And so you’ll see normal CapEx in every year, again, approximately 2% of sales there’s not anything specific that’s happening internationally, certainly, nothing like the magnitude of what we’re doing in the U.S. series today that we’re forecasting.
Isaac Sellhausen: Okay. Great. Thanks so much.
Operator: Thank you. [Operator Instructions] Our next question comes from Matt Summerville with D.A. Davidson. You may proceed.
Matt Summerville: Just a quick follow-up. This migration that we expect down denomination with the U.S. government redesign cycle. Are you starting to see a heightened level down denomination migration with the other 50 central banks you deal with? And if not, when do you think you start to see that inflection? Does it – is it coincidental to the U.S. government cycle? Does it maybe happen obviously, it’s an extended cycle, right? It works into the next decade? Is it more front-end loaded relative to the U.S. government? I don’t see how the same sort of playbook isn’t run with the other major central banks in the world, given what they’re trying to combat in with these upgrades. Thank you.
Aaron Saak: Yes. Hey, thanks for that question, Matt. I think the way you’re framing that is exactly right. If I zoom up a little bit or go back to the history of the U.S. program, and let’s say it’s 2013, the introduction of micro-optics to the U.S. $100 bill, set off what we’re seeing today is this very strong demand for increased anti-counterfeiting technology across the world. And that obviously, as you know and allude to here, starts with the higher denominations and it moves down market, if you will, because fundamentally, the concern on anti-counterfeiting is still unchanged regardless of the denomination and some lower denominations have just as big as anti-counterfeiting risk. And the U.S. $20 bill and $50 bill are good examples of that.
So we are seeing exactly the phenomena you outlined. And I think that’s reinforced by our other – your other question of the win, the wins we’re seeing at micro-optics, which is consistently 10 to 15 denominations a year, and arguably, Q1 was a very strong start for us to your question. So I think that is the phenomenon that’s playing out. It’s been playing out for several years. And I would say it’s a consistent philosophy central banks are adopting to increase more anti-counterfeiting technology in the every new bill redesign. That’s what’s happening in the United States in a big way, which will benefit us. And that’s what’s happening denomination by denomination in central banks around the world. Now just remember that these are typically slower processes that central banks will not redesign bills very often.
That’s very deliberate process. And so it takes a number of years to go through not only the full fleet of the denominations but also the redesign process. So I think that really plays to our advantages as more people adopt technology, our technology, specifically, they get accustomed to it and understand its advantages that you see this continual increase that’s a virtuous cycle for us that we, again, think has a lot of tailwinds to the Currency business, and you see it, Matt, playing out in the numbers.
Operator: Thank you. [Operator Instructions] And our last question comes from Bobby Brooks with Northland Capital Markets. You may proceed.
Bobby Brooks: Hey, thanks for taking the follow-up question. So just going back to OpSec, on cross-selling micro-optics into OpSec customers, I’m just trying to frame it better for myself. Obviously, OpSec has really good hologram technology. But am I right to assume that your guys’ micro-optics technology is a notable step-up in terms of the durability of the physical authentication piece. And then let’s say, an OpSec customer switched over all his physical authentication pieces to micro-optics. What would that drive a notable boost in revenues and expand margins? Just trying to help frame that opportunity?
Aaron Saak: Yes. No, that’s a really good question, Bobby. Thanks for that. I would view it a little – at least we’re talking about it and many customers are viewing it as it’s a portfolio of solutions that’s dependent on what you’re looking at, particularly for the aesthetics. There are different features and aesthetic properties that OpSec’s really terrific hologram technology can provide that micro-optics can’t. They’re both very durable. I would not really argue one over the other. There’s different form factors and certain grades of the products. But from a true anti-counterfeiting perspective, of what we can provide with micro-optics, it’s truly at the high end of that type of feature set of – if that’s your primary function.
So most customers are going to weigh a very a variety of different features to make a decision. It’s not just anti-counterfeiting, it could be the color fit format of the label that they’re looking for. So we think having this broad portfolio is the right answer for the customer. It’s not always a migration to micro-optics, it’s probably a combination of both for most customers, depending on their product or depending where they want to take their brand and their brand image. And I think that’s what now very few, in fact, no other competitor can offer in the market, and that’s the moat and the differentiation that OpSec will have going forward. So again, it’s a little bit of the best of both worlds in some ways. And to answer your question on margins, both the OpSec’s physical margins are very robust as is our micro-optics.
On a net-net basis, it’s more accretive on the micro-optics, but both are very good, quite frankly.
Operator: Thank you. I would now like to turn the call back over to Aaron Saak for any closing remarks.
Aaron Saak: All right. Thank you very much, operator. And again, this quarter, I couldn’t be more excited by our announcement that came out earlier this week for a major milestone in the history of Crane NXT as we completed the acquisition of OpSec and its reflected in the questions here this morning of how important this is, this first acquisition for Crane NXT in adding to our portfolio. I’d again like to thank all of our NXT associates around the world for their efforts in Q1, just an outstanding focus and dedication to the business, all while closing our first acquisition. And it’s hard to believe it was just 13 months ago that we launched the company. And our first full year, I think has been very rewarding. Needless to say, as I look forward, I am excited by the journey ahead in 2024. So thank you again to everyone who joined us today. Thank you for your questions, and I hope you all have a great rest of your week.
Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
