CPI Card Group Inc. Reports First Quarter 2024 Results
CPI Card Group Inc. reported a 7% decrease in net sales to $112 million, a 50% decrease in net income to $5 million, and an 8% decrease in Adjusted EBITDA to $23 million in the first quarter of 2024. Despite the declines, all metrics improved from the previous quarter. The company foresees a gradual market recovery in 2024 and affirmed its full-year net sales and Adjusted EBITDA outlook. CPI continues to lead in eco-focused payment cards and Software-as-a-Service-based instant issuance solutions in the U.S. market.
Company anticipates market recovery and affirms full-year net sales and Adjusted EBITDA outlook
Strong growth in Prepaid and personalization services businesses offset card volume declines
Signed multi-year contract with a large customer to generate incremental sales
7% decrease in net sales, 50% decrease in net income, and 8% decrease in Adjusted EBITDA in the first quarter of 2024
CEO transition-related expenses impacted net income
Free Cash Flow outlook adjusted due to up-front incentives related to a new contract and increased capital spending
Insights
The report from CPI Card Group indicates a contraction in net sales by
Additionally, the
The company's outlook remains positive, anticipating growth in the latter half of the year. Engagement in a multi-year contract and a focus on market share and product innovation may be drivers for future growth. However, this optimistic outlook must be weighed against the backdrop of the reported declines.
The detail regarding the commitment to purchasing
The broader industry trends highlighted in the report, such as the growth in consumer card usage and eco-focused card adoption, suggest a favorable environment for CPI's products and services. With a
Nevertheless, the company's performance does not seem to align with these positive market trends, as indicated by the reported declines in sales and income. It's critical for investors to consider whether CPI’s strategies to tap into these trends, such as eco-focused payment solutions and Software-as-a-Service offerings, will be sufficient to offset current challenges and leverage market opportunities.
The commitment to a new card production facility also suggests long-term strategic investment in their operational capabilities, which may improve competitiveness but will require monitoring for its impact on future financial performance and capital expenditures.
Net Sales Decreased
Net Sales, Net Income, and Adjusted EBITDA Increased from Fourth Quarter Levels
Company Continues to Anticipate Gradual Market Recovery in 2024; Affirms Full Year Net Sales and Adjusted EBITDA Outlook
As anticipated, first quarter Debit and Credit segment sales were impacted by cautious customer spending as customers continued their focus on managing inventory levels, while Prepaid segment sales posted strong growth. Compared to the prior year first quarter, net sales decreased
Net sales, net income, and Adjusted EBITDA each increased from fourth quarter 2023 levels. As previously noted, the Company anticipates sales declines in the first half of 2024 to be offset by growth in the second half of the year from share gains and improved market demand.
“We are pleased with the overall improvement in results compared to recent trends,” said John Lowe, President and Chief Executive Officer. “We were able to deliver strong growth in our Prepaid and personalization services businesses in the quarter, which partially offset the anticipated declines in card volumes.”
Lowe added, “Card issuance remains healthy and we continue to expect a market recovery in the second half of the year. Strategically, our teams remain focused on gaining market share by providing innovative solutions and leading customer service and quality, as well as expanding into adjacent markets, including digital solutions, for our base of thousands of customers.”
In the first quarter, the Company signed a multi-year contract with one of its larger customers, gaining share which will generate incremental sales over the next several years. The Company adjusted its Free Cash Flow outlook for 2024 to reflect up-front incentives related to this contract.
CPI is a top payment solutions provider in the
The Company believes long-term growth trends for the
2024 Business Highlights
- CPI continues to be a leading provider of eco-focused payment card solutions in the U.S. market, with more than 100 million eco-focused cards sold since launch in late 2019.
-
CPI continues to be a leading provider of Software-as-a-Service-based instant issuance solutions in the
U.S. , with more than 15,000 Card@Once® installations across more than 2,000 financial institutions. -
The Company executed share repurchases against the
$20 million $6 million - The Company ended the first quarter with a Net Leverage Ratio of 3.1x.
First Quarter 2024 Financial Highlights
Net sales decreased
-
Debit and Credit segment net sales decreased
14% to$88.0 million -
Prepaid Debit segment net sales increased
26% to$24.2 million
First quarter gross profit decreased
First quarter income from operations decreased
Balance Sheet, Liquidity and Cash Flow
The Company generated cash from operating activities of
As of March 31, 2024, cash and cash equivalents was
The Company spent
The Company’s capital structure and allocation priorities are to maintain ample liquidity; invest in the business, including strategic acquisitions; deleverage the balance sheet; and return funds to stockholders.
“We were pleased to deliver gross margin improvement and solid cash flow generation in the first quarter,” said Jeff Hochstadt, Chief Financial Officer of CPI. “We also made significant progress executing our share repurchase program, consistent with our capital allocation priorities.”
Outlook for 2024
The Company affirmed its net sales and Adjusted EBITDA financial outlook for 2024, which was previously provided in March. The Company continues to expect slight increases in both net sales and Adjusted EBITDA for the full year, with declines in the first half of the year offset by growth in the second half.
The Company has adjusted its Free Cash Flow outlook to be approximately half of the 2023 level, which compares to the previous outlook of
The Company continues to expect its year-end 2024 Net Leverage Ratio to be between 3.0x and 3.5x.
Conference Call and Webcast
CPI Card Group Inc. will hold a conference call on May 7, 2024 at 9:00 a.m. Eastern Time (ET) to review its first quarter results. To participate in the Company's conference call via telephone or online:
International: 646-960-0677
Conference ID: 8062733
Webcast Link: CPI Q1 Webcast or at https://investor.cpicardgroup.com
Participants are advised to login for the webcast 10 minutes prior to the scheduled start time.
A replay of the conference call will be available until May 21, 2024 at:
International: 609-800-9909
Conference ID: 8062733
A webcast replay of the conference call will also be available on CPI Card Group Inc.’s Investor Relations web site: https://investor.cpicardgroup.com
Non-GAAP Financial Measures
In addition to financial results reported in accordance with
Adjusted EBITDA
Adjusted EBITDA is presented on a continuing operations basis and is defined as EBITDA (which represents earnings before interest, taxes, depreciation and amortization) adjusted for litigation; stock-based compensation expense; estimated sales tax expense; restructuring and other charges, including executive retention and severance; costs related to production facility modernization efforts; loss on debt extinguishment; foreign currency gain or loss; and other items that are unusual in nature, infrequently occurring or not considered part of our core operations, as set forth in the reconciliation in Exhibit E. Adjusted EBITDA is intended to show our unleveraged, pre-tax operating results and therefore reflects our financial performance based on operational factors, excluding non-operational, unusual or non-recurring losses or gains. Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for, analysis of our results as reported under GAAP. For example, Adjusted EBITDA does not reflect: (a) our capital expenditures, future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expenses or the cash requirements necessary to service interest or principal payments on our debt; (d) tax payments that represent a reduction in cash available to us; (e) any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; (f) the impact of earnings or charges resulting from matters that we and the lenders under our credit agreement may not consider indicative of our ongoing operations; or (g) the impact of any discontinued operations. In particular, our definition of Adjusted EBITDA allows us to add back certain non-operating, unusual or non-recurring charges that are deducted in calculating net income, even though these are expenses that may recur, vary greatly and are difficult to predict and can represent the effect of long-term strategies as opposed to short-term results. In addition, certain of these expenses represent the reduction of cash that could be used for other purposes. Adjusted EBITDA margin percentage as shown in Exhibit E is computed as Adjusted EBITDA divided by total net sales.
We define LTM Adjusted EBITDA as Adjusted EBITDA (defined previously) for the last twelve months. LTM Adjusted EBITDA is used in the computation of Net Leverage Ratio, and is reconciled in Exhibit E.
Free Cash Flow
We define Free Cash Flow as cash flow provided by (used in) operating activities less capital expenditures. We use this metric in analyzing our ability to service and repay our debt. However, this measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt. Free Cash Flow should not be considered in isolation, or as a substitute for, cash (used in) provided by operating activities or any other measures of liquidity derived in accordance with GAAP.
Financial Expectations for 2024
We have provided Adjusted EBITDA expectations for 2024 on a non-GAAP basis because certain reconciling items are dependent on future events that either cannot be controlled or cannot be reliably predicted because they are not part of the Company’s routine activities, any of which could be significant.
Net Leverage Ratio
Management and various investors use the ratio of debt principal outstanding, plus finance lease obligations, less cash, divided by LTM Adjusted EBITDA, or “Net Leverage Ratio,” as a measure of our financial strength when making key investment decisions and evaluating us against peers.
About CPI Card Group Inc.
CPI Card Group is a payments technology company providing a comprehensive range of credit, debit, and prepaid card and digital solutions, including Software-as-a-Service (SaaS) instant issuance. With a focus on building personal relationships and earning trust, we help our customers navigate the constantly evolving world of payments, while delivering innovative solutions that spark connections and support their brands. We serve clients across industry, size, and scale through our team of experienced, dedicated employees and our network of high-security production and card services facilities—located in
Forward-Looking Statements
Certain statements and information in this release (as well as information included in other written or oral statements we make from time to time) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “believe,” “estimate,” “project,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “continue,” “committed,” “attempt,” “aim,” “target,” “objective,” “guides,” “seek,” “focus,” “provides guidance,” “provides outlook” or other similar expressions are intended to identify forward-looking statements, which are not historical in nature. These forward-looking statements, including statements about our strategic initiatives and market opportunities, are based on our current expectations and beliefs concerning future developments and their potential effect on us and other information currently available. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important risks and uncertainties that could cause actual results or other events to differ materially from those contemplated.
These risks and uncertainties include, but are not limited to: a deterioration in general economic conditions, including inflationary conditions and resulting in reduced consumer confidence and business spending, and a decline in consumer credit worthiness impacting demand for our products; the unpredictability of our operating results, including an inability to anticipate changes in customer inventory management practices and its impact on our business; a disruption or other failure in our supply chain, including as a result of foreign conflicts and with respect to single source suppliers, or the failure or inability of suppliers to comply with our code of conduct or contractual requirements, or political unrest in countries in which our suppliers operate, or inflationary pressures, resulting in increased costs and inability to pass those costs on to our customers and extended production lead times and difficulty meeting customers’ delivery expectations; our failure to retain our existing customers or identify and attract new customers; our inability to recruit, retain and develop qualified personnel, including key personnel, and implement effective succession processes; adverse conditions in the banking system and financial markets, including the failure of banks and financial institutions; system security risks, data protection breaches and cyber-attacks; interruptions in our operations, including our information technology systems, or in the operations of the third parties that operate computing infrastructure on which we rely; our inability to develop, introduce and commercialize new products and services; the usage, or lack thereof, of artificial intelligence technologies; our substantial indebtedness, including inability to make debt service payments or refinance such indebtedness; the restrictive terms of our indebtedness and covenants of future agreements governing indebtedness and the resulting restraints on our ability to pursue our business strategies; our status as an accelerated filer and complying with the Sarbanes-Oxley Act of 2002 and the costs associated with such compliance and implementation of procedures thereunder; our failure to maintain effective internal control over financial reporting; disruptions in production at one or more of our facilities; problems in production quality, materials and process and costs relating to product defects and any related product liability and/or warranty claims; environmental, social and governance (“ESG”) preferences and demands of various stakeholders and our ability to conform to such preferences and demands and to comply with any related regulatory requirements; the effects of climate change, negative perceptions of our products due to the impact of our products and production processes on the environment and other ESG-related risks; damage to our reputation or brand image; disruptions in production due to weather conditions, climate change, political instability or social unrest; our inability to adequately protect our trade secrets and intellectual property rights from misappropriation, infringement claims brought against us and risks related to open source software; defects in our software and computing systems; our limited ability to raise capital; costs and impacts to our financial results relating to the obligatory collection of sales tax and claims for uncollected sales tax in states that impose sales tax collection requirements on out-of-state businesses or unclaimed property, as well as potential new
We caution and advise readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof. These statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results or other events to differ materially from the expectations and beliefs contained herein. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
For more information:
CPI encourages investors to use its investor relations website as a way of easily finding information about the Company. CPI promptly makes available on this website the reports that the Company files or furnishes with the SEC, corporate governance information and press releases.
CPI Card Group Inc. Earnings Release Supplemental Financial Information |
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Exhibit A |
Condensed Consolidated Statements of Operations and Comprehensive Income - Unaudited for the three months ended March 31, 2024 and 2023 |
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Exhibit B |
Condensed Consolidated Balance Sheets – Unaudited as of March 31, 2024 and December 31, 2023 |
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Exhibit C |
Condensed Consolidated Statements of Cash Flows – Unaudited for the three months ended March 31, 2024 and 2023 |
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Exhibit D |
Segment Summary Information – Unaudited for the three months ended March 31, 2024 and 2023 |
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Exhibit E |
Supplemental GAAP to Non-GAAP Reconciliations – Unaudited for the three months ended March 31, 2024 and 2023 |
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EXHIBIT A |
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CPI Card Group Inc. and Subsidiaries |
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Condensed Consolidated Statements of Operations and Comprehensive Income |
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(in thousands, except share and per share amounts) |
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(Unaudited) |
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Three Months Ended March 31, |
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2024 |
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2023 |
||||
Net sales: |
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|
|
|
|
||
Products |
|
$ |
58,158 |
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$ |
75,790 |
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Services |
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53,778 |
|
|
|
45,062 |
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Total net sales |
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111,936 |
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|
120,852 |
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Cost of sales: |
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Products (exclusive of depreciation and amortization shown below) |
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37,802 |
|
|
|
45,980 |
|
Services (exclusive of depreciation and amortization shown below) |
|
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29,929 |
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|
|
29,404 |
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Depreciation and amortization |
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2,687 |
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2,374 |
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Total cost of sales |
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70,418 |
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77,758 |
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Gross profit |
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41,518 |
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43,094 |
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Operating expenses: |
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Selling, general and administrative (exclusive of depreciation and amortization shown below) |
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26,043 |
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21,066 |
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Depreciation and amortization |
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1,330 |
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1,430 |
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Total operating expenses |
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27,373 |
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22,496 |
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Income from operations |
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14,145 |
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20,598 |
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Other expense, net: |
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Interest, net |
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(6,425 |
) |
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(6,781 |
) |
Other expense, net |
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(65 |
) |
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(114 |
) |
Total other expense, net |
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(6,490 |
) |
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(6,895 |
) |
Income before income taxes |
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7,655 |
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13,703 |
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Income tax expense |
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(2,200 |
) |
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(2,830 |
) |
Net income |
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$ |
5,455 |
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$ |
10,873 |
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Basic and diluted earnings per share: |
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Basic earnings per share |
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$ |
0.48 |
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$ |
0.95 |
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Diluted earnings per share |
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$ |
0.46 |
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$ |
0.91 |
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Basic weighted-average shares outstanding |
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11,266,699 |
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11,394,919 |
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Diluted weighted-average shares outstanding |
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11,769,364 |
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11,901,581 |
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Comprehensive income: |
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Net income |
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$ |
5,455 |
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$ |
10,873 |
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Total comprehensive income |
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$ |
5,455 |
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$ |
10,873 |
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EXHIBIT B |
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CPI Card Group Inc. and Subsidiaries |
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Condensed Consolidated Balance Sheets |
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(in thousands, except share and per share amounts) |
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(Unaudited) |
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March 31, |
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December 31, |
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2024 |
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2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ |
17,144 |
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$ |
12,413 |
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Accounts receivable, net |
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68,539 |
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73,724 |
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Inventories, net |
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83,381 |
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70,594 |
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Prepaid expenses and other current assets |
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11,862 |
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8,647 |
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Total current assets |
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180,926 |
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165,378 |
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Plant, equipment, leasehold improvements and operating lease right-of-use assets, net |
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61,033 |
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63,053 |
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Intangible assets, net |
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13,154 |
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14,122 |
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Goodwill |
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47,150 |
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47,150 |
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Other assets |
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17,517 |
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3,980 |
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Total assets |
$ |
319,780 |
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$ |
293,683 |
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Liabilities and stockholders’ deficit |
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Current liabilities: |
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Accounts payable |
$ |
23,643 |
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$ |
12,802 |
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Accrued expenses |
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49,203 |
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35,803 |
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Deferred revenue and customer deposits |
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1,172 |
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|
840 |
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Total current liabilities |
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74,018 |
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49,445 |
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Long-term debt |
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265,326 |
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264,997 |
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Deferred income taxes |
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6,742 |
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|
7,139 |
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Other long-term liabilities |
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22,145 |
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24,038 |
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Total liabilities |
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368,231 |
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345,619 |
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Commitments and contingencies |
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Series A Preferred Stock; |
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— |
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— |
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Stockholders’ deficit: |
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Common stock; |
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11 |
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11 |
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Capital deficiency |
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(104,193 |
) |
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(102,223 |
) |
Accumulated earnings |
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55,731 |
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50,276 |
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Total stockholders’ deficit |
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(48,451 |
) |
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(51,936 |
) |
Total liabilities and stockholders’ deficit |
$ |
319,780 |
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$ |
293,683 |
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EXHIBIT C |
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CPI Card Group Inc. and Subsidiaries |
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Condensed Consolidated Statements of Cash Flows |
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(in thousands) |
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(Unaudited) |
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Three Months Ended March 31, |
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2024 |
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2023 |
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Operating activities |
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Net income |
$ |
5,455 |
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$ |
10,873 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation expense |
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3,049 |
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2,837 |
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Amortization expense |
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968 |
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|
967 |
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Stock-based compensation expense |
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3,060 |
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|
541 |
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Amortization of debt issuance costs and debt discount |
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459 |
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|
|
473 |
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Loss on debt extinguishment |
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— |
|
|
|
119 |
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Deferred income taxes |
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(397 |
) |
|
|
(271 |
) |
Other, net |
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223 |
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|
|
12 |
|
Changes in operating assets and liabilities: |
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|
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Accounts receivable, net |
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5,171 |
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|
|
4,335 |
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Inventories |
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(12,984 |
) |
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(1,464 |
) |
Prepaid expenses and other assets |
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(17,610 |
) |
|
|
310 |
|
Income taxes, net |
|
728 |
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|
|
550 |
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Accounts payable |
|
10,681 |
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|
|
1,533 |
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Accrued expenses and other liabilities |
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9,730 |
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|
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(11,358 |
) |
Deferred revenue and customer deposits |
|
332 |
|
|
|
(1,456 |
) |
Cash provided by operating activities |
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8,865 |
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|
|
8,001 |
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Investing activities |
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Capital expenditures for plant, equipment and leasehold improvements, net |
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(1,506 |
) |
|
|
(4,145 |
) |
Other |
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— |
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|
50 |
|
Cash used in investing activities |
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(1,506 |
) |
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|
(4,095 |
) |
Financing activities |
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Principal payments on Senior Notes |
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— |
|
|
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(7,903 |
) |
Proceeds from ABL Revolver |
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— |
|
|
|
8,000 |
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Other |
|
(109 |
) |
|
|
(69 |
) |
Payments on finance lease obligations |
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(1,269 |
) |
|
|
(820 |
) |
Common stock repurchased |
|
(1,250 |
) |
|
|
— |
|
Cash used in financing activities |
|
(2,628 |
) |
|
|
(792 |
) |
Effect of exchange rates on cash |
|
— |
|
|
|
6 |
|
Net increase in cash and cash equivalents |
|
4,731 |
|
|
|
3,120 |
|
Cash and cash equivalents, beginning of period |
|
12,413 |
|
|
|
11,037 |
|
Cash and cash equivalents, end of period |
$ |
17,144 |
|
|
$ |
14,157 |
|
Supplemental disclosures of cash flow information |
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Cash paid (refunded) during the period for: |
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Interest |
$ |
11,903 |
|
|
$ |
12,608 |
|
Income taxes paid |
$ |
16 |
|
|
$ |
28 |
|
Income taxes refunded |
$ |
(163 |
) |
|
$ |
— |
|
Right-of-use assets obtained in exchange for lease obligations: |
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Operating leases |
$ |
— |
|
|
$ |
168 |
|
Financing leases |
$ |
— |
|
|
$ |
2,169 |
|
Accounts payable and accrued expenses for capital expenditures for plant, equipment and leasehold improvements |
$ |
263 |
|
|
$ |
422 |
|
Unsettled share repurchases included in accrued expenses |
$ |
4,404 |
|
|
$ |
— |
|
|
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EXHIBIT D |
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CPI Card Group Inc. and Subsidiaries |
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Segment Summary Information |
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For the Three Months Ended March 31, 2024 and 2023 |
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(dollars in thousands) |
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(Unaudited) |
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Net Sales |
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Three Months Ended March 31, |
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2024 |
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2023 |
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$ Change |
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% Change |
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Net sales by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debit and Credit |
|
$ |
87,973 |
|
|
$ |
101,985 |
|
|
$ |
(14,012 |
) |
|
(13.7 |
) |
% |
Prepaid Debit |
|
|
24,198 |
|
|
|
19,130 |
|
|
|
5,068 |
|
|
26.5 |
|
% |
Eliminations |
|
|
(235 |
) |
|
|
(263 |
) |
|
|
28 |
|
|
* |
|
% |
Total |
|
$ |
111,936 |
|
|
$ |
120,852 |
|
|
$ |
(8,916 |
) |
|
(7.4 |
) |
% |
* Calculation not meaningful |
||||||||||||||||
|
|||||||||||||||||||||
Gross Profit |
|||||||||||||||||||||
|
|
Three Months Ended March 31, |
|||||||||||||||||||
|
|
2024 |
|
% of Net
|
2023 |
|
% of Net
|
$ Change |
|
% Change |
|||||||||||
Gross profit by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debit and Credit |
|
$ |
31,495 |
|
|
35.8 |
% |
$ |
38,184 |
|
37.4 |
% |
$ |
(6,689 |
) |
|
(17.5 |
) |
% |
||
Prepaid Debit |
|
|
10,023 |
|
|
41.4 |
% |
|
4,910 |
|
25.7 |
% |
|
5,113 |
|
|
104.1 |
|
% |
||
Total |
|
$ |
41,518 |
|
|
37.1 |
% |
$ |
43,094 |
|
35.7 |
% |
$ |
(1,576 |
) |
|
(3.7 |
) |
% |
||
|
|||||||||||||||||||||||
Income from Operations |
|||||||||||||||||||||||
|
|
Three Months Ended March 31, |
|||||||||||||||||||||
|
|
2024 |
|
% of Net
|
2023 |
|
% of Net
|
|
$ Change |
|
% Change |
||||||||||||
Income (loss) from operations by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Debit and Credit |
|
$ |
22,754 |
|
|
|
25.9 |
% |
$ |
30,026 |
|
|
29.4 |
% |
$ |
(7,272 |
) |
|
(24.2 |
) |
% |
||
Prepaid Debit |
|
|
8,745 |
|
|
|
36.1 |
% |
|
3,677 |
|
|
19.2 |
% |
|
5,068 |
|
|
137.8 |
|
% |
||
Other |
|
|
(17,354 |
) |
|
|
* |
% |
|
(13,105 |
) |
|
* |
% |
|
(4,249 |
) |
|
32.4 |
|
% |
||
Total |
|
$ |
14,145 |
|
|
|
12.6 |
% |
$ |
20,598 |
|
|
17.0 |
% |
$ |
(6,453 |
) |
|
(31.3 |
) |
% |
||
|
|||||||||||||||||||||||
EBITDA |
|||||||||||||||||||||||
|
|
Three Months Ended March 31, |
|||||||||||||||||||||
|
|
2024 |
|
% of Net
|
2023 |
|
% of Net
|
$ Change |
|
% Change |
|||||||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Debit and Credit |
|
$ |
24,842 |
|
|
|
28.2 |
% |
$ |
32,192 |
|
|
31.6 |
% |
$ |
(7,350 |
) |
|
(22.8 |
) |
% |
||
Prepaid Debit |
|
|
9,615 |
|
|
|
39.7 |
% |
|
4,301 |
|
|
22.5 |
% |
|
5,314 |
|
|
123.6 |
|
% |
||
Other |
|
|
(16,360 |
) |
|
|
*% |
|
(12,205 |
) |
|
*% |
|
(4,155 |
) |
|
34.0 |
|
% |
||||
Total |
|
$ |
18,097 |
|
|
|
16.2 |
% |
$ |
24,288 |
|
|
20.1 |
% |
$ |
(6,191 |
) |
|
(25.5 |
) |
% |
||
|
|||||||||||||||
Reconciliation of Income (Loss) from |
|||||||||||||||
Operations by Segment to EBITDA by Segment |
|||||||||||||||
|
Three Months Ended March 31, 2024 |
||||||||||||||
|
Debit and
|
|
Prepaid
|
|
Other |
|
Total |
||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations |
$ |
22,754 |
|
|
$ |
8,745 |
|
|
$ |
(17,354 |
) |
|
$ |
14,145 |
|
Depreciation and amortization |
|
2,150 |
|
|
|
871 |
|
|
|
996 |
|
|
|
4,017 |
|
Other income (expenses) |
|
(62 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(65 |
) |
EBITDA |
$ |
24,842 |
|
|
$ |
9,615 |
|
|
$ |
(16,360 |
) |
|
$ |
18,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended March 31, 2023 |
||||||||||||||
|
Debit and
|
|
Prepaid
|
|
Other |
|
Total |
||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations |
$ |
30,026 |
|
|
$ |
3,677 |
|
|
$ |
(13,105 |
) |
|
$ |
20,598 |
|
Depreciation and amortization |
|
2,161 |
|
|
|
624 |
|
|
|
1,019 |
|
|
|
3,804 |
|
Other income (expenses) |
|
5 |
|
|
|
— |
|
|
|
(119 |
) |
|
|
(114 |
) |
EBITDA |
$ |
32,192 |
|
|
$ |
4,301 |
|
|
$ |
(12,205 |
) |
|
$ |
24,288 |
|
|
|||||||
|
|
|
|
|
EXHIBIT E |
||
CPI Card Group Inc. and Subsidiaries |
|||||||
Supplemental GAAP to Non-GAAP Reconciliation |
|||||||
(dollars in thousands) |
|||||||
(Unaudited) |
|||||||
|
|||||||
|
|||||||
|
|||||||
|
Three Months Ended March 31, |
||||||
|
2024 |
|
2023 |
||||
EBITDA and Adjusted EBITDA: |
|
|
|
|
|
||
Net income |
$ |
5,455 |
|
|
$ |
10,873 |
|
Interest, net |
|
6,425 |
|
|
|
6,781 |
|
Income tax expense |
|
2,200 |
|
|
|
2,830 |
|
Depreciation and amortization |
|
4,017 |
|
|
|
3,804 |
|
EBITDA |
$ |
18,097 |
|
|
$ |
24,288 |
|
|
|
|
|
|
|
||
Adjustments to EBITDA: |
|
|
|
|
|
||
Stock-based compensation expense |
$ |
3,060 |
|
|
$ |
541 |
|
Sales tax expense (1) |
|
— |
|
|
|
113 |
|
Restructuring and other charges (2) |
|
1,819 |
|
|
|
— |
|
Loss on debt extinguishment (3) |
|
— |
|
|
|
119 |
|
Foreign currency gain |
|
— |
|
|
|
(5 |
) |
Subtotal of adjustments to EBITDA |
$ |
4,879 |
|
|
$ |
768 |
|
Adjusted EBITDA |
$ |
22,976 |
|
|
$ |
25,056 |
|
Net income margin (% of Net sales) |
|
4.9 |
% |
|
|
9.0 |
% |
Net income growth (% Change 2024 vs. 2023) |
|
(49.8 |
)% |
|
|
|
|
Adjusted EBITDA margin (% of Net sales) |
|
20.5 |
% |
|
|
20.7 |
% |
Adjusted EBITDA growth (% Change 2024 vs. 2023) |
|
(8.3 |
)% |
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
Three Months Ended March 31, |
||||||
|
2024 |
|
2023 |
||||
Free Cash Flow: |
|
|
|
|
|
||
Cash provided by operating activities |
$ |
8,865 |
|
|
$ |
8,001 |
|
Capital expenditures for plant, equipment and leasehold improvements, net |
|
(1,506 |
) |
|
|
(4,145 |
) |
Free Cash Flow |
$ |
7,359 |
|
|
$ |
3,856 |
|
(1) |
Represents estimated sales tax expense (benefit) relating to a contingent liability due to historical activity in certain states where it is probable that the Company will be subject to sales tax plus interest and penalties. |
|
(2) |
Represents executive retention and severance costs, as well as costs related to production facility modernization efforts. |
|
(3) |
The Company redeemed a portion of the |
|
|||||||
|
Last Twelve Months Ended |
||||||
|
March 31, |
|
December 31, |
||||
|
2024 |
|
2023 |
||||
Reconciliation of net income to LTM EBITDA and Adjusted EBITDA: |
|
|
|
|
|
||
Net income |
$ |
18,567 |
|
|
$ |
23,985 |
|
Interest, net |
|
26,557 |
|
|
|
26,913 |
|
Income tax expense |
|
9,847 |
|
|
|
10,477 |
|
Depreciation and amortization |
|
16,144 |
|
|
|
15,931 |
|
EBITDA |
$ |
71,115 |
|
|
$ |
77,306 |
|
|
|
|
|
|
|
||
Adjustments to EBITDA: |
|
|
|
|
|
||
Stock-based compensation expense |
$ |
10,026 |
|
|
$ |
7,507 |
|
Sales tax benefit(1) |
|
(183 |
) |
|
|
(70 |
) |
Restructuring and other charges (2) |
|
6,350 |
|
|
|
4,531 |
|
Loss on debt extinguishment (3) |
|
124 |
|
|
|
243 |
|
Foreign currency gain |
|
(21 |
) |
|
|
(26 |
) |
Subtotal of adjustments to EBITDA |
$ |
16,296 |
|
|
$ |
12,185 |
|
LTM Adjusted EBITDA |
$ |
87,411 |
|
|
$ |
89,491 |
|
|
|||||||
|
As of |
||||||
|
March 31, |
|
December 31, |
||||
|
2024 |
|
2023 |
||||
Calculation of Net Leverage Ratio: |
|
|
|
|
|
||
Senior Notes |
$ |
267,897 |
|
|
$ |
267,897 |
|
Finance lease obligations |
|
16,839 |
|
|
|
18,106 |
|
Total debt |
|
284,736 |
|
|
|
286,003 |
|
Less: Cash and cash equivalents |
|
(17,144 |
) |
|
|
(12,413 |
) |
Total net debt (a) |
$ |
267,592 |
|
|
$ |
273,590 |
|
LTM Adjusted EBITDA (b) |
$ |
87,411 |
|
|
$ |
89,491 |
|
Net Leverage Ratio (a)/(b) |
|
3.1 |
|
|
|
3.1 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240507734928/en/
CPI Card Group Inc. Investor Relations:
(877) 369-9016
InvestorRelations@cpicardgroup.com
CPI Card Group Inc. Media Relations:
Media@cpicardgroup.com
Source: CPI Card Group
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