CPI Card Group Inc. Reports Second Quarter 2024 Results
CPI Card Group reported Q2 2024 results with a 3% increase in net sales to $119 million, driven by growth in Prepaid, instant issuance, and card personalization services. However, net income decreased 8% to $6 million and Adjusted EBITDA fell 6% to $22 million. Gross profit saw a slight increase to $42 million. For the first half of 2024, net sales were down 2% year-over-year.
The company updated its 2024 outlook, expecting mid-single digit growth in net sales and maintaining Adjusted EBITDA projections. A recent debt refinancing includes $285 million in Senior Secured Notes due 2029 and a new $75 million revolving credit facility.
CPI continues to lead in eco-focused card solutions with over 100 million cards sold since 2019 and significant installations of its instant issuance solutions. The company repurchased $9 million worth of shares and aims to maintain liquidity, invest in business growth, and deleverage its balance sheet.
CPI Card Group ha riportato i risultati del secondo trimestre del 2024 con un aumento del 3% delle vendite nette a 119 milioni di dollari, grazie alla crescita delle soluzioni Prepaid, all'emissione istantanea e ai servizi di personalizzazione delle carte. Tuttavia, il reddito netto è diminuito dell'8% a 6 milioni di dollari e l'EBITDA rettificato è calato del 6% a 22 milioni di dollari. Il profitto lordo ha visto un lieve aumento a 42 milioni di dollari. Per il primo semestre del 2024, le vendite nette sono diminuite del 2% anno su anno.
L'azienda ha aggiornato le sue previsioni per il 2024, prevedendo una
CPI continua a guidare nel settore delle soluzioni ecologiche per carte con oltre 100 milioni di carte vendute dal 2019 e significative installazioni delle sue soluzioni di emissione istantanea. L'azienda ha riacquistato azioni per un valore di 9 milioni di dollari e mira a mantenere la liquidità, investire nella crescita aziendale e ridurre l'indebitamento nel suo bilancio.
CPI Card Group informó los resultados del segundo trimestre de 2024 con un aumento del 3% en las ventas netas a 119 millones de dólares, impulsado por el crecimiento en servicios de Prepagados, emisión instantánea y personalización de tarjetas. Sin embargo, el ingreso neto disminuyó un 8% a 6 millones de dólares y el EBITDA ajustado cayó un 6% a 22 millones de dólares. El beneficio bruto experimentó un ligero aumento a 42 millones de dólares. Para la primera mitad de 2024, las ventas netas disminuyeron un 2% en comparación con el año anterior.
La compañía actualizó su perspectiva para 2024, esperando un crecimiento de un solo dígito medio en las ventas netas y manteniendo las proyecciones del EBITDA ajustado. Un reciente refinanciamiento de deuda incluye 285 millones de dólares en Notas Senior Aseguradas con vencimiento en 2029 y una nueva línea de crédito rotativa de 75 millones de dólares.
CPI sigue liderando en soluciones de tarjetas enfocadas en el medio ambiente con más de 100 millones de tarjetas vendidas desde 2019 y significativas instalaciones de sus soluciones de emisión instantánea. La compañía recompró acciones por un valor de 9 millones de dólares y busca mantener liquidez, invertir en el crecimiento del negocio y reducir el apalancamiento en su balance.
CPI 카드 그룹은 2024년 2분기 실적을 발표하며 순매출이 3% 증가하여 1억 1900만 달러에 이르렀으며, 이는 선불카드, 즉시 발급 및 카드 개인화 서비스의 성장에 기인합니다. 그러나 순이익은 8% 감소하여 600만 달러로 줄어들었고, 조정 EBITDA는 6% 감소하여 2200만 달러가 되었습니다. 총 이익은 4200만 달러로 소폭 증가했습니다. 2024년 상반기 순매출은 전년 대비 2% 감소했습니다.
회사는 2024년 전망을 업데이트하며 순매출의 중간 단일 성장률을 예상하고 조정 EBITDA 전망을 유지하고 있습니다. 최근의 채무 재조정에는 2029년 만기인 2억 8500만 달러의 선순위 담보 노트와 7500만 달러의 새로운 회전 신용 시설이 포함되어 있습니다.
CPI는 2019년 이후 1억 장 이상의 카드를 판매하고 그 즉시 발급 솔루션의 상당한 설치를 통해 친환경 카드 솔루션 분야에서 선도적인 입지를 유지하고 있습니다. 이 회사는 900만 달러 규모의 자사주 매입을 단행했으며, 유동성을 유지하고 사업 성장을 위해 투자하며 재무 부담을 줄이려 하고 있습니다.
CPI Card Group a annoncé les résultats du deuxième trimestre 2024, avec une augmentation de 3 % des ventes nettes à 119 millions de dollars, tirée par la croissance des services prépayés, d'émission instantanée et de personnalisation des cartes. Cependant, le revenu net a diminué de 8 % pour atteindre 6 millions de dollars et l'EBITDA ajusté a baissé de 6 % à 22 millions de dollars. Le bénéfice brut a légèrement augmenté à 42 millions de dollars. Pour la première moitié de 2024, les ventes nettes ont baissé de 2 % par rapport à l'année précédente.
L'entreprise a mis à jour ses prévisions pour 2024, s'attendant à une croissance à un chiffre médian des ventes nettes tout en maintenant les projections de l'EBITDA ajusté. Un récent refinancement de la dette comprend 285 millions de dollars de notes senior garanties arrivant à échéance en 2029 et une nouvelle ligne de crédit renouvelable de 75 millions de dollars.
CPI continue de mener des solutions de cartes éco-responsables avec plus de 100 millions de cartes vendues depuis 2019 et des installations significatives de ses solutions d'émission instantanée. La société a racheté des actions pour une valeur de 9 millions de dollars et vise à maintenir sa liquidité, à investir dans la croissance de son activité et à réduire son endettement sur son bilan.
CPI Card Group berichtete über die Ergebnisse des zweiten Quartals 2024 mit einem Anstieg der Nettoumsätze um 3% auf 119 Millionen Dollar, was auf das Wachstum im Bereich Prepaid, Sofortausgabe und Kartenpersonalisierungsdienste zurückzuführen ist. Allerdings
Das Unternehmen aktualisierte seine Prognose für 2024 und erwartet ein Wachstum im mittleren Einzelziffernbereich bei den Nettoumsätzen und hält an den Prognosen für den bereinigten EBITDA fest. Eine kürzliche Schuldenumstrukturierung umfasst 285 Millionen Dollar an besicherten Anleihen mit Fälligkeit 2029 und eine neue revolvierende Kreditlinie über 75 Millionen Dollar.
CPI bleibt führend im Bereich umweltfreundlicher Kartenlösungen mit über 100 Millionen verkauften Karten seit 2019 und bedeutenden Installationen seiner Sofortausgabe-Lösungen. Das Unternehmen hat Aktien im Wert von 9 Millionen Dollar zurückgekauft und strebt an, die Liquidität aufrechtzuerhalten, in das Geschäftswachstum zu investieren und die Verschuldung in der Bilanz zu reduzieren.
- Net sales increased 3% to $119 million.
- Gross profit increased 4% to $42 million.
- Updated 2024 outlook to mid-single digit growth in net sales.
- Completed $285 million in debt refinancing.
- Significant adoption of eco-focused cards with over 100 million sold.
- Net income decreased 8% to $6 million.
- Adjusted EBITDA decreased 6% to $22 million.
- Net sales for the first half of 2024 decreased 2%.
- Higher SG&A expenses impacted net income and operating income.
Insights
CPI Card Group's Q2 2024 results show mixed performance. While net sales increased
Key positives include growth in both Debit and Credit (
The recent debt refinancing, including
CPI Card Group's performance reflects broader industry trends. The U.S. card market shows strong growth potential, with Visa and Mastercard U.S. debit and credit cards in circulation increasing at a 10% CAGR over the past three years. This aligns with CPI's focus on consumer card growth, eco-focused cards and contactless technology.
The company's leadership in eco-focused payment solutions, with over 100 million cards sold since 2019, positions it well in the growing sustainable finance sector. The 16,000+ Card@Once® installations across 2,000+ financial institutions demonstrate strong market penetration in instant issuance solutions.
However, the slight decline in secure card sales and lower year-to-date net sales (-
Net Sales Increased
Debit and Credit and Prepaid Debit Segments Each Deliver Growth; Card Sales Trends Continue to Improve
Company Increases Full Year Net Sales Outlook to Mid-single Digit Growth
In the second quarter net sales increased
Sales growth in the quarter was driven by continued strong performance from Prepaid, instant issuance solutions and other card personalization services, while debit and credit card sales trends improved from recent quarters. Secure card sales decreased slightly year-on-year in the quarter and increased sequentially compared to the first quarter.
For the first six months of the year total net sales declined
“We continue to execute our strategy and are pleased to deliver solid improvement in card sales and ongoing growth in our other business lines in the quarter,” said John Lowe, President and Chief Executive Officer. “We expected the first half of the year to be challenging, and our performance and momentum put us in a strong position to grow in the second half and achieve our increased full year expectations.”
The Company updated its financial outlook for 2024, increasing its outlook for net sales from slight growth to a mid-single digit increase, while retaining its Adjusted EBITDA outlook of a slight increase from prior year.
In July, the Company completed a refinancing of its debt, including the issuance of
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 16,000 Card@Once® installations across more than 2,000 financial institutions. -
The Company executed share repurchases against the
$20 million $9 million - The Company ended the second quarter with a Net Leverage Ratio of 3.3x.
-
Early in the third quarter, the Company refinanced its existing debt, issuing
$285 million 10% Senior Secured Notes due 2029 and entering into a new$75 million $268 million 8% notes due 2026.
Second Quarter 2024 Financial Highlights
Net sales increased
-
Debit and Credit segment net sales increased
3% to$95.6 million -
Prepaid Debit segment net sales increased
9% to$23.8 million
Second quarter gross profit increased
Second quarter income from operations decreased
Year-to-date 2024 Financial Highlights
Net sales decreased
-
Debit and Credit segment net sales decreased
6% to$183.6 million -
Prepaid Debit segment net sales increased
17% to$48.0 million
Year-to-date gross profit was flat at
Year-to-date income from operations decreased
Balance Sheet, Liquidity and Cash Flow
The Company generated cash from operating activities of
As of June 30, 2024, cash and cash equivalents was
In the second quarter, 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 stronger sales trends and improved gross margins in the second quarter and to complete the refinancing of our debt in July,” said Jeff Hochstadt, Chief Financial Officer of CPI. “The refinancing of our senior notes provides stability to our capital structure and supports our efforts to drive long-term growth.”
Outlook for 2024
The Company updated its net sales outlook for 2024 to a mid-single digit increase, compared to the previous outlook of a slight increase. The increase in the sales outlook was driven by strong Prepaid growth and improved trends in debit and credit card sales.
The Company maintained its Adjusted EBITDA outlook of a slight increase for the full year as profit growth in the second half is expected to be lower than sales growth due to certain anticipated impacts to SG&A, including investments to grow the business and increased performance-related compensation relative to 2023.
The Free Cash Flow outlook was maintained at approximately half of the 2023 level. The Company generated
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 August 5, 2024 at 4:30 p.m. Eastern Time (ET) to review its second quarter results. To participate in the Company's conference call via telephone or online:
International: 646-960-0677
Conference ID: 8062733
Webcast Link: CPI Q2 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 August 19, 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 website: 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 make principal payments on outstanding debt and financing lease liabilities. 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,” “affirm,” “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 and six months ended June 30, 2024 and 2023 |
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Exhibit B |
Condensed Consolidated Balance Sheets – Unaudited as of June 30, 2024 and December 31, 2023 |
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Exhibit C |
Condensed Consolidated Statements of Cash Flows – Unaudited for the six months ended June 30, 2024 and 2023 |
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Exhibit D |
Segment Summary Information – Unaudited for the three and six months ended June 30, 2024 and 2023 |
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Exhibit E |
Supplemental GAAP to Non-GAAP Reconciliations – Unaudited for the three and six months ended June 30, 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 June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net sales: |
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Products |
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$ |
63,844 |
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$ |
63,946 |
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$ |
122,002 |
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$ |
139,736 |
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Services |
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54,974 |
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51,014 |
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108,752 |
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96,076 |
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Total net sales |
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118,818 |
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114,960 |
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230,754 |
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235,812 |
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Cost of sales: |
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Products (exclusive of depreciation and amortization shown below) |
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41,893 |
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41,308 |
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79,695 |
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87,288 |
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Services (exclusive of depreciation and amortization shown below) |
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31,743 |
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|
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30,214 |
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|
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61,672 |
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|
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59,618 |
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Depreciation and amortization |
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2,794 |
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|
|
2,613 |
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|
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5,481 |
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|
|
4,987 |
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Total cost of sales |
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76,430 |
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74,135 |
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146,848 |
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151,893 |
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Gross profit |
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42,388 |
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40,825 |
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83,906 |
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83,919 |
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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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26,225 |
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21,885 |
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52,268 |
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42,951 |
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Depreciation and amortization |
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1,254 |
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1,448 |
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2,584 |
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2,878 |
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Total operating expenses |
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27,479 |
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23,333 |
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54,852 |
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45,829 |
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Income from operations |
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14,909 |
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17,492 |
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29,054 |
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38,090 |
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Other expense, net: |
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Interest, net |
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(6,530 |
) |
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(6,740 |
) |
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(12,955 |
) |
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(13,521 |
) |
Other expense, net |
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(78 |
) |
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(78 |
) |
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(143 |
) |
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(192 |
) |
Total other expense, net |
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(6,608 |
) |
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(6,818 |
) |
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(13,098 |
) |
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(13,713 |
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Income before income taxes |
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8,301 |
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10,674 |
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15,956 |
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24,377 |
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Income tax expense |
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(2,300 |
) |
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(4,151 |
) |
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(4,500 |
) |
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(6,981 |
) |
Net income |
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$ |
6,001 |
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$ |
6,523 |
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$ |
11,456 |
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$ |
17,396 |
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Basic and diluted earnings per share: |
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Basic earnings per share |
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$ |
0.54 |
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$ |
0.57 |
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$ |
1.03 |
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$ |
1.52 |
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Diluted earnings per share |
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$ |
0.51 |
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$ |
0.55 |
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$ |
0.97 |
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$ |
1.46 |
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Basic weighted-average shares outstanding |
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11,049,968 |
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11,427,404 |
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11,158,334 |
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11,411,162 |
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Diluted weighted-average shares outstanding |
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11,776,894 |
|
|
|
11,876,568 |
|
|
|
11,817,584 |
|
|
|
11,888,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
6,001 |
|
|
$ |
6,523 |
|
|
$ |
11,456 |
|
|
$ |
17,396 |
|
Total comprehensive income |
|
$ |
6,001 |
|
|
$ |
6,523 |
|
|
$ |
11,456 |
|
|
$ |
17,396 |
|
EXHIBIT B |
|||||||
CPI Card Group Inc. and Subsidiaries |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(in thousands, except share and per share amounts) |
|||||||
(Unaudited) |
|||||||
|
|
|
|
|
|
||
|
June 30, |
|
December 31, |
||||
|
2024 |
|
2023 |
||||
Assets |
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
7,479 |
|
|
$ |
12,413 |
|
Accounts receivable, net |
|
76,425 |
|
|
|
73,724 |
|
Inventories, net |
|
85,907 |
|
|
|
70,594 |
|
Prepaid expenses and other current assets |
|
9,934 |
|
|
|
8,647 |
|
Total current assets |
|
179,745 |
|
|
|
165,378 |
|
Plant, equipment, leasehold improvements and operating lease right-of-use assets, net |
|
60,773 |
|
|
|
63,053 |
|
Intangible assets, net |
|
12,245 |
|
|
|
14,122 |
|
Goodwill |
|
47,150 |
|
|
|
47,150 |
|
Other assets |
|
21,533 |
|
|
|
3,980 |
|
Total assets |
$ |
321,446 |
|
|
$ |
293,683 |
|
Liabilities and stockholders’ deficit |
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
||
Accounts payable |
$ |
20,279 |
|
|
$ |
12,802 |
|
Accrued expenses |
|
47,350 |
|
|
|
35,803 |
|
Deferred revenue and customer deposits |
|
1,320 |
|
|
|
840 |
|
Total current liabilities |
|
68,949 |
|
|
|
49,445 |
|
Long-term debt |
|
269,654 |
|
|
|
264,997 |
|
Deferred income taxes |
|
4,958 |
|
|
|
7,139 |
|
Other long-term liabilities |
|
22,442 |
|
|
|
24,038 |
|
Total liabilities |
|
366,003 |
|
|
|
345,619 |
|
Commitments and contingencies |
|
|
|
|
|
||
Series A Preferred Stock; |
|
— |
|
|
|
— |
|
Stockholders’ deficit: |
|
|
|
|
|
||
Common stock; |
|
11 |
|
|
|
11 |
|
Capital deficiency |
|
(106,300 |
) |
|
|
(102,223 |
) |
Accumulated earnings |
|
61,732 |
|
|
|
50,276 |
|
Total stockholders’ deficit |
|
(44,557 |
) |
|
|
(51,936 |
) |
Total liabilities and stockholders’ deficit |
$ |
321,446 |
|
|
$ |
293,683 |
|
EXHIBIT C |
|||||||
CPI Card Group Inc. and Subsidiaries |
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(in thousands) |
|||||||
(Unaudited) |
|||||||
|
|
|
|
|
|
||
|
Six Months Ended June 30, |
||||||
|
2024 |
|
2023 |
||||
Operating activities |
|
|
|
|
|
||
Net income |
$ |
11,456 |
|
|
$ |
17,396 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
||
Depreciation expense |
|
6,188 |
|
|
|
5,931 |
|
Amortization expense |
|
1,877 |
|
|
|
1,934 |
|
Stock-based compensation expense |
|
5,154 |
|
|
|
1,831 |
|
Amortization of debt issuance costs and debt discount |
|
917 |
|
|
|
936 |
|
Loss on debt extinguishment |
|
— |
|
|
|
218 |
|
Deferred income taxes |
|
(2,181 |
) |
|
|
426 |
|
Other, net |
|
302 |
|
|
|
253 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
||
Accounts receivable, net |
|
(2,720 |
) |
|
|
5,287 |
|
Inventories |
|
(15,584 |
) |
|
|
(7,351 |
) |
Prepaid expenses and other assets |
|
(20,316 |
) |
|
|
(1,381 |
) |
Income taxes, net |
|
1,598 |
|
|
|
(772 |
) |
Accounts payable |
|
7,079 |
|
|
|
(1,758 |
) |
Accrued expenses and other liabilities |
|
9,858 |
|
|
|
(9,784 |
) |
Deferred revenue and customer deposits |
|
480 |
|
|
|
(2,844 |
) |
Cash provided by operating activities |
|
4,108 |
|
|
|
10,322 |
|
Investing activities |
|
|
|
|
|
||
Capital expenditures for plant, equipment and leasehold improvements, net |
|
(2,744 |
) |
|
|
(6,594 |
) |
Other |
|
— |
|
|
|
128 |
|
Cash used in investing activities |
|
(2,744 |
) |
|
|
(6,466 |
) |
Financing activities |
|
|
|
|
|
||
Principal payments on 2026 Senior Notes |
|
— |
|
|
|
(14,877 |
) |
Proceeds from 2026 ABL Revolver |
|
4,000 |
|
|
|
13,000 |
|
Payments on finance lease obligations |
|
(2,413 |
) |
|
|
(1,739 |
) |
Common stock repurchased |
|
(6,481 |
) |
|
|
— |
|
Other |
|
(1,404 |
) |
|
|
(120 |
) |
Cash used in financing activities |
|
(6,298 |
) |
|
|
(3,736 |
) |
Effect of exchange rates on cash |
|
— |
|
|
|
11 |
|
Net (decrease) increase in cash and cash equivalents |
|
(4,934 |
) |
|
|
131 |
|
Cash and cash equivalents, beginning of period |
|
12,413 |
|
|
|
11,037 |
|
Cash and cash equivalents, end of period |
$ |
7,479 |
|
|
$ |
11,168 |
|
Supplemental disclosures of cash flow information |
|
|
|
|
|
||
Cash paid (refunded) during the period for: |
|
|
|
|
|
||
Interest |
$ |
12,332 |
|
|
$ |
13,135 |
|
Income taxes paid |
$ |
6,481 |
|
|
$ |
7,408 |
|
Income taxes refunded |
$ |
(272 |
) |
|
$ |
(26 |
) |
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
||
Operating leases |
$ |
1,292 |
|
|
$ |
168 |
|
Financing leases |
$ |
983 |
|
|
$ |
2,169 |
|
Accounts payable and accrued expenses for capital expenditures for plant, equipment and leasehold improvements |
$ |
500 |
|
|
$ |
368 |
|
Unsettled share repurchases included in accrued expenses |
$ |
2,197 |
|
|
$ |
— |
|
EXHIBIT D |
|||||||||||||||
CPI Card Group Inc. and Subsidiaries |
|||||||||||||||
Segment Summary Information |
|||||||||||||||
For the Three and Six Months Ended June 30, 2024 and 2023 |
|||||||||||||||
(dollars in thousands) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
Three Months Ended June 30, |
|||||||||||||
|
|
2024 |
|
2023 |
|
$ Change |
|
% Change |
|||||||
Net sales by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Debit and Credit |
|
$ |
95,620 |
|
|
$ |
93,194 |
|
|
$ |
2,426 |
|
|
2.6 |
% |
Prepaid Debit |
|
|
23,815 |
|
|
|
21,821 |
|
|
|
1,994 |
|
|
9.1 |
% |
Eliminations |
|
|
(617 |
) |
|
|
(55 |
) |
|
|
(562 |
) |
|
* |
% |
Total |
|
$ |
118,818 |
|
|
$ |
114,960 |
|
|
$ |
3,858 |
|
|
3.4 |
% |
* Calculation not meaningful |
|||||||||||||||
|
|
Six Months Ended June 30, |
|||||||||||||
|
|
2024 |
|
2023 |
|
$ Change |
|
% Change |
|||||||
Net sales by segment: |
|
|
|
|
|
|
|
|
|
|
|
||||
Debit and Credit |
|
$ |
183,593 |
|
|
$ |
195,179 |
|
|
$ |
(11,586 |
) |
|
(5.9 |
)% |
Prepaid Debit |
|
|
48,013 |
|
|
|
40,951 |
|
|
|
7,062 |
|
|
17.2 |
% |
Eliminations |
|
|
(852 |
) |
|
|
(318 |
) |
|
|
(534 |
) |
|
* |
% |
Total |
|
$ |
230,754 |
|
|
$ |
235,812 |
|
|
$ |
(5,058 |
) |
|
(2.1 |
)% |
Gross Profit |
||||||||||||||||||||||
|
|
Three Months Ended June 30, |
||||||||||||||||||||
|
|
2024 |
|
% of Net
|
|
2023 |
|
% of Net
|
|
$ Change |
|
% Change |
||||||||||
Gross profit by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Debit and Credit |
|
$ |
34,164 |
|
|
35.7 |
% |
$ |
33,038 |
|
35.5 |
% |
$ |
1,126 |
|
3.4 |
% |
|||||
Prepaid Debit |
|
|
8,224 |
|
|
|
34.5 |
% |
|
7,787 |
|
|
35.7 |
% |
|
437 |
|
|
5.6 |
% |
||
Total |
|
$ |
42,388 |
|
|
|
35.7 |
% |
$ |
40,825 |
|
|
35.5 |
% |
$ |
1,563 |
|
|
3.8 |
% |
||
|
|
Six Months Ended June 30, |
||||||||||||||||||||
|
|
2024 |
|
% of Net
|
|
2023 |
|
% of Net
|
|
$ Change |
|
% Change |
||||||||||
Gross profit by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Debit and Credit |
|
$ |
65,659 |
|
|
35.8 |
% |
$ |
71,222 |
|
36.5 |
% |
$ |
(5,563 |
) |
|
(7.8 |
)% |
||||
Prepaid Debit |
|
|
18,247 |
|
|
|
38.0 |
% |
|
12,697 |
|
|
31.0 |
% |
|
5,550 |
|
|
43.7 |
% |
||
Total |
|
$ |
83,906 |
|
|
|
36.4 |
% |
$ |
83,919 |
|
|
35.6 |
% |
$ |
(13 |
) |
|
(0.0 |
)% |
||
Income from Operations |
||||||||||||||||||||||
|
|
Three Months Ended June 30, |
||||||||||||||||||||
|
|
2024 |
|
% of Net
|
|
2023 |
|
% of Net
|
|
|
$ Change |
|
% Change |
|||||||||
Income (loss) from operations by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Debit and Credit |
|
$ |
25,389 |
|
|
|
26.6 |
% |
$ |
25,081 |
|
|
26.9 |
% |
$ |
308 |
|
|
1.2 |
% |
||
Prepaid Debit |
|
|
6,909 |
|
|
|
29.0 |
% |
|
7,628 |
|
|
35.0 |
% |
|
(719 |
) |
|
(9.4 |
)% |
||
Other |
|
|
(17,389 |
) |
|
|
* |
% |
|
(15,217 |
) |
|
* |
% |
|
(2,172 |
) |
|
14.3 |
% |
||
Total |
|
$ |
14,909 |
|
|
|
12.5 |
% |
$ |
17,492 |
|
|
15.2 |
% |
$ |
(2,583 |
) |
|
(14.8 |
)% |
||
|
|
Six Months Ended June 30, |
||||||||||||||||||||
|
|
2024 |
|
% of Net
|
|
2023 |
|
% of Net
|
|
$ Change |
|
% Change |
||||||||||
Income (loss) from operations by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Debit and Credit |
|
$ |
48,143 |
|
|
|
26.2 |
% |
$ |
55,107 |
|
|
28.2 |
% |
$ |
(6,964 |
) |
|
(12.6 |
)% |
||
Prepaid Debit |
|
|
15,654 |
|
|
|
32.6 |
% |
|
11,305 |
|
|
27.6 |
% |
|
4,349 |
|
|
38.5 |
% |
||
Other |
|
|
(34,743 |
) |
|
|
* |
% |
|
(28,322 |
) |
|
* |
% |
|
(6,421 |
) |
|
22.7 |
% |
||
Total |
|
$ |
29,054 |
|
|
|
12.6 |
% |
$ |
38,090 |
|
|
16.2 |
% |
$ |
(9,036 |
) |
|
(23.7 |
)% |
||
EBITDA |
||||||||||||||||||||||
|
|
Three Months Ended June 30, |
||||||||||||||||||||
|
|
2024 |
|
% of Net
|
|
2023 |
|
% of Net
|
|
$ Change |
|
% Change |
||||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Debit and Credit |
|
$ |
27,625 |
|
|
|
28.9 |
% |
$ |
27,455 |
|
|
29.5 |
% |
$ |
170 |
|
|
0.6 |
% |
||
Prepaid Debit |
|
|
7,803 |
|
|
|
32.8 |
% |
|
8,333 |
|
|
38.2 |
% |
|
(530 |
) |
|
(6.4 |
)% |
||
Other |
|
|
(16,549 |
) |
|
|
* |
% |
|
(14,313 |
) |
|
* |
% |
|
(2,236 |
) |
|
15.6 |
% |
||
Total |
|
$ |
18,879 |
|
|
|
15.9 |
% |
$ |
21,475 |
|
|
18.7 |
% |
$ |
(2,596 |
) |
|
(12.1 |
)% |
||
|
|
Six Months Ended June 30, |
||||||||||||||||||||
|
|
2024 |
|
% of Net
|
|
2023 |
|
% of Net
|
|
$ Change |
|
% Change |
||||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Debit and Credit |
|
$ |
52,467 |
|
|
|
28.6 |
% |
$ |
59,647 |
|
|
30.6 |
% |
$ |
(7,180 |
) |
|
(12.0 |
)% |
||
Prepaid Debit |
|
|
17,418 |
|
|
|
36.3 |
% |
|
12,634 |
|
|
30.9 |
% |
|
4,784 |
|
|
37.9 |
% |
||
Other |
|
|
(32,909 |
) |
|
|
* |
% |
|
(26,518 |
) |
|
* |
% |
|
(6,391 |
) |
|
24.1 |
% |
||
Total |
|
$ |
36,976 |
|
|
|
16.0 |
% |
$ |
45,763 |
|
|
19.4 |
% |
$ |
(8,787 |
) |
|
(19.2 |
)% |
||
Reconciliation of Income (Loss) from |
|||||||||||||||
Operations by Segment to EBITDA by Segment |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended June 30, 2024 |
||||||||||||||
|
Debit and
|
|
Prepaid
|
|
Other |
|
Total |
||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations |
$ |
25,389 |
|
|
$ |
6,909 |
|
|
$ |
(17,389 |
) |
|
$ |
14,909 |
|
Depreciation and amortization |
|
2,237 |
|
|
|
895 |
|
|
|
916 |
|
|
|
4,048 |
|
Other income (expenses) |
|
(1 |
) |
|
|
(1 |
) |
|
|
(76 |
) |
|
|
(78 |
) |
EBITDA |
$ |
27,625 |
|
|
$ |
7,803 |
|
|
$ |
(16,549 |
) |
|
$ |
18,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended June 30, 2023 |
||||||||||||||
|
Debit and
|
|
Prepaid
|
|
Other |
|
Total |
||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations |
$ |
25,081 |
|
|
$ |
7,628 |
|
|
$ |
(15,217 |
) |
|
$ |
17,492 |
|
Depreciation and amortization |
|
2,353 |
|
|
|
704 |
|
|
|
1,004 |
|
|
|
4,061 |
|
Other income (expenses) |
|
21 |
|
|
|
1 |
|
|
|
(100 |
) |
|
|
(78 |
) |
EBITDA |
$ |
27,455 |
|
|
$ |
8,333 |
|
|
$ |
(14,313 |
) |
|
$ |
21,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Six Months Ended June 30, 2024 |
||||||||||||||
|
Debit and
|
|
Prepaid
|
|
Other |
|
Total |
||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations |
$ |
48,143 |
|
|
$ |
15,654 |
|
|
$ |
(34,743 |
) |
|
$ |
29,054 |
|
Depreciation and amortization |
|
4,387 |
|
|
|
1,766 |
|
|
|
1,912 |
|
|
|
8,065 |
|
Other income (expenses) |
|
(63 |
) |
|
|
(2 |
) |
|
|
(78 |
) |
|
|
(143 |
) |
EBITDA |
$ |
52,467 |
|
|
$ |
17,418 |
|
|
$ |
(32,909 |
) |
|
$ |
36,976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Six Months Ended June 30, 2023 |
||||||||||||||
|
Debit and
|
|
Prepaid
|
|
Other |
|
Total |
||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations |
$ |
55,107 |
|
|
$ |
11,305 |
|
|
$ |
(28,322 |
) |
|
$ |
38,090 |
|
Depreciation and amortization |
|
4,514 |
|
|
|
1,328 |
|
|
|
2,023 |
|
|
|
7,865 |
|
Other income (expenses) |
|
26 |
|
|
|
1 |
|
|
|
(219 |
) |
|
|
(192 |
) |
EBITDA |
$ |
59,647 |
|
|
$ |
12,634 |
|
|
$ |
(26,518 |
) |
|
$ |
45,763 |
|
EXHIBIT E |
|||||||||||||||
CPI Card Group Inc. and Subsidiaries |
|||||||||||||||
Supplemental GAAP to Non-GAAP Reconciliation |
|||||||||||||||
(dollars in thousands) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
EBITDA and Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
$ |
6,001 |
|
|
$ |
6,523 |
|
|
$ |
11,456 |
|
|
$ |
17,396 |
|
Interest, net |
|
6,530 |
|
|
|
6,740 |
|
|
|
12,955 |
|
|
|
13,521 |
|
Income tax expense |
|
2,300 |
|
|
|
4,151 |
|
|
|
4,500 |
|
|
|
6,981 |
|
Depreciation and amortization |
|
4,048 |
|
|
|
4,061 |
|
|
|
8,065 |
|
|
|
7,865 |
|
EBITDA |
$ |
18,879 |
|
|
$ |
21,475 |
|
|
$ |
36,976 |
|
|
$ |
45,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments to EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation expense |
$ |
2,094 |
|
|
$ |
1,290 |
|
|
$ |
5,154 |
|
|
$ |
1,831 |
|
Sales tax (benefit) expense (1) |
|
— |
|
|
|
(78 |
) |
|
|
— |
|
|
|
35 |
|
Restructuring and other charges (2) |
|
939 |
|
|
|
557 |
|
|
|
2,758 |
|
|
|
557 |
|
Loss on debt extinguishment (3) |
|
— |
|
|
|
99 |
|
|
|
— |
|
|
|
218 |
|
Foreign currency gain |
|
— |
|
|
|
(21 |
) |
|
|
— |
|
|
|
(26 |
) |
Subtotal of adjustments to EBITDA |
$ |
3,033 |
|
|
$ |
1,847 |
|
|
$ |
7,912 |
|
|
$ |
2,615 |
|
Adjusted EBITDA |
$ |
21,912 |
|
|
$ |
23,322 |
|
|
$ |
44,888 |
|
|
$ |
48,378 |
|
Net income margin (% of Net sales) |
|
5.1 |
% |
|
|
5.7 |
% |
|
|
5.0 |
% |
|
|
7.4 |
% |
Net income growth (% Change 2024 vs. 2023) |
|
(8.0 |
)% |
|
|
|
|
|
(34.1 |
)% |
|
|
|
||
Adjusted EBITDA margin (% of Net sales) |
|
18.4 |
% |
|
|
20.3 |
% |
|
|
19.5 |
% |
|
|
20.5 |
% |
Adjusted EBITDA growth (% Change 2024 vs. 2023) |
|
(6.0 |
)% |
|
|
|
|
|
(7.2 |
)% |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Free Cash Flow: |
|
|
|
|
|
|
|
|
|
|
|
||||
Cash (used in) provided by operating activities |
$ |
(4,757 |
) |
|
$ |
2,321 |
|
|
$ |
4,108 |
|
|
$ |
10,322 |
|
Capital expenditures for plant, equipment and leasehold improvements, net |
|
(1,238 |
) |
|
|
(2,449 |
) |
|
|
(2,744 |
) |
|
|
(6,594 |
) |
Free Cash Flow |
$ |
(5,995 |
) |
|
$ |
(128 |
) |
|
$ |
1,364 |
|
|
$ |
3,728 |
|
____________________ |
||
(1) |
Represents estimated sales tax (benefit) expense 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 |
||||||
|
June 30, |
|
December 31, |
||||
|
2024 |
|
2023 |
||||
Reconciliation of net income to LTM EBITDA and Adjusted EBITDA: |
|
|
|
|
|
||
Net income |
$ |
18,045 |
|
|
$ |
23,985 |
|
Interest, net |
|
26,347 |
|
|
|
26,913 |
|
Income tax expense |
|
7,996 |
|
|
|
10,477 |
|
Depreciation and amortization |
|
16,131 |
|
|
|
15,931 |
|
EBITDA |
$ |
68,519 |
|
|
$ |
77,306 |
|
|
|
|
|
|
|
||
Adjustments to EBITDA: |
|
|
|
|
|
||
Stock-based compensation expense |
$ |
10,830 |
|
|
$ |
7,507 |
|
Sales tax benefit (1) |
|
(105 |
) |
|
|
(70 |
) |
Restructuring and other charges (2) |
|
6,732 |
|
|
|
4,531 |
|
Loss on debt extinguishment (3) |
|
25 |
|
|
|
243 |
|
Foreign currency gain |
|
— |
|
|
|
(26 |
) |
Subtotal of adjustments to EBITDA |
$ |
17,482 |
|
|
$ |
12,185 |
|
LTM Adjusted EBITDA |
$ |
86,001 |
|
|
$ |
89,491 |
|
|
As of |
||||||
|
June 30, |
|
December 31, |
||||
|
2024 |
|
2023 |
||||
Calculation of Net Leverage Ratio: |
|
|
|
|
|
||
2026 Senior Notes |
$ |
267,897 |
|
|
$ |
267,897 |
|
2026 ABL revolver |
|
4,000 |
|
|
|
— |
|
Finance lease obligations |
|
16,663 |
|
|
|
18,106 |
|
Total debt |
|
288,560 |
|
|
|
286,003 |
|
Less: Cash and cash equivalents |
|
(7,479 |
) |
|
|
(12,413 |
) |
Total net debt (a) |
$ |
281,081 |
|
|
$ |
273,590 |
|
LTM Adjusted EBITDA (b) |
$ |
86,001 |
|
|
$ |
89,491 |
|
Net Leverage Ratio (a)/(b) |
|
3.3 |
|
|
|
3.1 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240805035357/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
FAQ
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