Group 1 - CPI Card Group Inc. reported quarterly earnings of $0.40 per share, missing the Zacks Consensus Estimate of $0.56 per share, and down from $0.46 per share a year ago, representing an earnings surprise of -28.57% [1] - The company posted revenues of $122.76 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.62%, compared to year-ago revenues of $111.94 million [2] - CPI Card Group shares have declined approximately 15.2% since the beginning of the year, while the S&P 500 has decreased by 4.7% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.66 on revenues of $128.75 million, and for the current fiscal year, it is $2.81 on revenues of $522.3 million [7] - The Zacks Industry Rank indicates that the Technology Services sector is currently in the top 26% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this sector [8] Group 3 - The estimate revisions trend for CPI Card Group is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Part I — Financial Information This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1 — Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201%20%E2%80%94%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' deficit, cash flows, and related notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' deficit at specific reporting dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Total assets | $351,913 | $349,657 | | Total liabilities | $381,630 | $385,278 | | Total stockholders' deficit | $(29,717) | $(35,621) | - Total assets increased by **$2,256 thousand** from December 31, 2024, to March 31, 2025, while total liabilities decreased by **$3,648 thousand**, leading to a reduction in stockholders' deficit[7](index=7&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This section details the company's financial performance over a period, including net sales, gross profit, operating income, and net income Condensed Consolidated Statements of Operations Highlights (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :----- | :----- | :--------- | :--------- | | Total net sales | $122,761 | $111,936 | $10,825 | 9.7% | | Gross profit | $40,696 | $41,518 | $(822) | (2.0)% | | Income from operations | $14,104 | $14,145 | $(41) | (0.3)% | | Net income | $4,774 | $5,455 | $(681) | (12.5)% | | Basic earnings per share | $0.42 | $0.48 | $(0.06) | (12.5)% | | Diluted earnings per share | $0.40 | $0.46 | $(0.06) | (13.0)% | - Net sales increased by **9.7%** year-over-year, driven by product sales, but net income decreased by **12.5%** due to lower gross profit and higher interest expenses[8](index=8&type=chunk) [Condensed Consolidated Statements of Stockholders' Deficit](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Deficit) This section outlines changes in the company's stockholders' deficit, reflecting net income, stock-based compensation, and share repurchases Stockholders' Deficit Changes (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $4,774 | $5,455 | | Stock-based compensation | $1,671 | $3,060 | | Shares issued under stock-based compensation plans | (541) | (109) | | Repurchase and retirement of common shares | — | (4,921) | | Total stockholders' deficit (end of period) | $(29,717) | $(48,451) | - The total stockholders' deficit improved from **$(35,621) thousand** at December 31, 2024, to **$(29,717) thousand** at March 31, 2025, primarily due to net income and stock-based compensation[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by the company across operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, in thousands) | Activity | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Cash provided by operating activities | $5,593 | $8,865 | | Cash used in investing activities | $(5,251) | $(1,506) | | Cash used in financing activities | $(2,366) | $(2,628) | | Net (decrease) increase in cash and cash equivalents | $(2,024) | $4,731 | | Cash and cash equivalents, end of period | $31,520 | $17,144 | - Cash provided by operating activities decreased by **$3,272 thousand** year-over-year, while cash used in investing activities significantly increased due to higher capital expenditures[12](index=12&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. Business Overview and Summary of Significant Accounting Policies](index=7&type=section&id=1.%20Business%20Overview%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's business, its primary revenue sources, and significant accounting policies, including recent accounting pronouncements - CPI Card Group Inc. is a payments technology company specializing in debit and credit card production, personalization, SaaS-based instant issuance, and Prepaid Debit Cards in the U.S. market[13](index=13&type=chunk) - The company's revenues are primarily generated from secure debit and credit cards issued on Payment Card Brand networks, including Prepaid Debit Cards, across its Debit and Credit, Prepaid Debit, and Other reportable segments[14](index=14&type=chunk)[17](index=17&type=chunk) - The company has elected not to early adopt ASU 2023-09 (Income Taxes) and is evaluating ASU 2024-03 (Expense Disaggregation), neither of which are anticipated to have a material impact on financial position or results of operations[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) [2. Accounts Receivable](index=11&type=section&id=2.%20Accounts%20Receivable) This note details the composition of accounts receivable, including trade and unbilled amounts, net of allowance for credit losses Accounts Receivable Composition (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Trade accounts receivable | $67,030 | $78,464 | | Unbilled accounts receivable | $8,599 | $7,213 | | Less allowance for credit losses | $(136) | $(186) | | Total accounts receivable, net | $75,493 | $85,491 | [3. Inventories](index=11&type=section&id=3.%20Inventories) This note provides a breakdown of the company's inventories, distinguishing between raw materials and finished goods Inventories Composition (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :----------- | :------------- | :---------------- | | Raw materials | $66,474 | $64,818 | | Finished goods | $8,777 | $7,842 | | Total inventories, net | $75,251 | $72,660 | [4. Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets](index=11&type=section&id=4.%20Plant%2C%20Equipment%2C%20Leasehold%20Improvements%20and%20Operating%20Lease%20Right-of-Use%20Assets) This note details the composition of the company's property, plant, and equipment, including leasehold improvements and right-of-use assets Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------------------------------- | :------------- | :---------------- | | Machinery and equipment | $72,224 | $71,781 | | Machinery and equipment under financing leases | $34,306 | $32,272 | | Leasehold improvements | $21,190 | $18,875 | | Construction in progress | $8,174 | $5,141 | | Operating lease right-of-use assets | $22,544 | $15,090 | | Less accumulated depreciation and amortization | $(79,574) | $(75,634) | | Total, net | $80,272 | $68,648 | [5. Fair Value of Financial Instruments](index=11&type=section&id=5.%20Fair%20Value%20of%20Financial%20Instruments) This note discusses the fair value measurements of the company's financial instruments, particularly its Senior Notes - The fair value of the Company's Senior Notes was **$305,036 thousand** as of March 31, 2025, and **$304,571 thousand** as of December 31, 2024, classified as Level 2 inputs due to reliance on quoted prices for similar liabilities in inactive markets[32](index=32&type=chunk) [6. Accrued Expenses](index=13&type=section&id=6.%20Accrued%20Expenses) This note provides a breakdown of accrued expenses, including payroll, performance-based incentives, interest, and lease liabilities Accrued Expenses Composition (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | | Accrued payroll and related employee expenses | $9,343 | $9,493 | | Accrued employee performance-based incentive compensation | $1,999 | $4,664 | | Accrued interest | $5,998 | $13,506 | | Current operating and financing lease liabilities | $9,776 | $9,065 | | Total accrued expenses | $41,597 | $57,979 | [7. Long-Term Debt](index=14&type=section&id=7.%20Long-Term%20Debt) This note details the company's long-term debt obligations, primarily its Senior Notes and available capacity on the ABL Revolver Long-Term Debt (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Senior Notes | $285,000 | $285,000 | | Unamortized deferred financing costs | $(4,342) | $(4,595) | | Total long-term debt | $280,658 | $280,405 | - The Company has **$285.0 million** aggregate principal amount of 10.000% Senior Secured Notes due 2029, with interest payable semi-annually[36](index=36&type=chunk)[38](index=38&type=chunk) - There were no outstanding borrowings on the **$75.0 million** ABL Revolver as of March 31, 2025[40](index=40&type=chunk) [8. Income Taxes](index=14&type=section&id=8.%20Income%20Taxes) This note explains the company's income tax provisions, including the effective income tax rate and factors influencing its changes Effective Income Tax Rates (Three Months Ended March 31) | Year | Effective Income Tax Rate | | :--- | :------------------------ | | 2025 | 25.8% | | 2024 | 28.7% | - The decrease in the effective tax rate for Q1 2025 was primarily due to increased deductibility of stock-based compensation, compared to Q1 2024 which was impacted by executive compensation deductibility limitations[42](index=42&type=chunk) [9. Stockholders' Deficit](index=16&type=section&id=9.%20Stockholders%27%20Deficit) This note provides details on changes in stockholders' deficit, including share repurchase plans and their expiration - The Company's share repurchase plan, authorizing up to **$20.0 million**, expired on December 31, 2024, with **$11.2 million** unused[44](index=44&type=chunk) - In Q1 2024, **68,258 shares** were repurchased for **$1.2 million**[45](index=45&type=chunk) [10. Earnings per Share](index=16&type=section&id=10.%20Earnings%20per%20Share) This note presents the basic and diluted earnings per share calculations, along with weighted-average shares outstanding Earnings Per Share (Three Months Ended March 31) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Basic earnings per share | $0.42 | $0.48 | | Diluted earnings per share | $0.40 | $0.46 | | Basic weighted-average shares outstanding | 11,245,844 | 11,266,699 | | Diluted weighted-average shares outstanding | 12,008,523 | 11,769,364 | [11. Commitments and Contingencies](index=18&type=section&id=11.%20Commitments%20and%20Contingencies) This note outlines the company's legal proceedings, commitments, and contingencies, including participation in voluntary disclosure programs - The Company is subject to routine legal proceedings in the ordinary course of business, with no material adverse effect anticipated[48](index=48&type=chunk) - CPI is participating in Delaware's Voluntary Disclosure Agreement Program for unclaimed property, with any potential loss not currently estimable[49](index=49&type=chunk) [12. Stock-Based Compensation](index=18&type=section&id=12.%20Stock-Based%20Compensation) This note details the company's stock-based compensation plans, including amendments to the incentive plan and recent grants - The Omnibus Incentive Plan was amended to increase available shares by **1,000,000**, totaling **3,200,000 shares**, with **831,980 shares** available for grant as of March 31, 2025[50](index=50&type=chunk) - In January 2024, **60,000 performance stock units (PSUs)** were granted to the CEO, vesting upon stock price targets (**$35, $50, $65**) over five years[51](index=51&type=chunk) - In February 2025, a **$2.0 million performance cash award (PCA)** was granted to executives, vesting based on employment and company performance goals[52](index=52&type=chunk) [13. Segment Reporting](index=20&type=section&id=13.%20Segment%20Reporting) This note provides financial information by reportable segment, including net sales, EBITDA, and capital expenditures Segment Net Sales (Three Months Ended March 31, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :------------ | :----- | :----- | :--------- | :--------- | | Debit and Credit | $96,520 | $87,973 | $8,547 | 9.7% | | Prepaid Debit | $26,713 | $24,198 | $2,515 | 10.4% | | Total net sales | $122,761 | $111,936 | $10,825 | 9.7% | Segment EBITDA (Three Months Ended March 31, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :------------ | :----- | :----- | :--------- | :--------- | | Debit and Credit | $23,967 | $24,842 | $(875) | (3.5)% | | Prepaid Debit | $9,121 | $9,615 | $(494) | (5.1)% | | Other | $(14,719) | $(16,360) | $1,641 | (10.0)% | | Total EBITDA | $18,369 | $18,097 | $272 | 1.5% | Segment Capital Expenditures (Three Months Ended March 31, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :------------ | :----- | :----- | :--------- | :--------- | | Debit and Credit | $4,712 | $750 | $3,962 | 528.3% | | Prepaid Debit | $589 | $756 | $(167) | (22.1)% | | Total | $5,301 | $1,506 | $3,795 | 252.0% | [14. Subsequent Events](index=23&type=section&id=14.%20Subsequent%20Events) This note discloses significant events occurring after the balance sheet date, such as the acquisition of Arroweye Solutions, Inc - On May 6, 2025, the Company acquired Arroweye Solutions, Inc., a provider of digitally-driven on-demand payment card solutions, for **$45.6 million**, funded by cash on hand and the ABL Revolver[68](index=68&type=chunk) - The acquired business is expected to be included in the Debit and Credit segment[68](index=68&type=chunk) [Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202%20%E2%80%94%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Company's financial condition and results of operations, including performance, segment results, liquidity, capital resources, and critical accounting policies [Company Overview](index=26&type=section&id=Company%20Overview) This section provides an overview of CPI Card Group Inc., highlighting its position as a leader in U.S. payment card solutions - CPI Card Group Inc. is a payments technology company, a leader in U.S. payment card solutions, including debit and credit card production, personalization, SaaS-based instant issuance, and Prepaid Debit Cards[75](index=75&type=chunk) - Revenues are primarily generated from the production and services related to secure debit and credit cards issued on Payment Card Brand networks, including Prepaid Debit Cards[76](index=76&type=chunk) [Segment Overview](index=26&type=section&id=Segment%20Overview) This section describes the company's reportable segments: Debit and Credit, Prepaid Debit, and Other, outlining their respective focuses - The Debit and Credit segment focuses on secure debit and credit card production and services for U.S. financial institutions, including eco-focused cards, personalization, instant issuance, and digital push provisioning[78](index=78&type=chunk)[79](index=79&type=chunk) - The Prepaid Debit segment provides integrated prepaid card services, including payment cards and secure packaging, primarily to prepaid program managers in the U.S[80](index=80&type=chunk) - The Other segment comprises corporate expenses[81](index=81&type=chunk) [Trends and Uncertainties That May Affect our Financial Performance](index=28&type=section&id=Trends%20and%20Uncertainties%20That%20May%20Affect%20our%20Financial%20Performance) This section discusses macroeconomic trends and uncertainties, including tariffs and raw material costs, that may impact financial performance - Macroeconomic trends, including recently implemented tariffs and potential additional tariffs, are being monitored for adverse effects on net sales and profitability[82](index=82&type=chunk) - Anticipated impacts include increased supply chain challenges and fluctuations in raw material costs, with the Company evaluating pricing actions and cost savings to offset these effects[82](index=82&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes the consolidated results of operations, focusing on net sales, gross profit, operating expenses, and net income Consolidated Results of Operations (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------ | :----- | :----- | :--------- | :--------- | | Total net sales | $122,761 | $111,936 | $10,825 | 9.7% | | Gross profit | $40,696 | $41,518 | $(822) | (2.0)% | | Operating expenses | $26,592 | $27,373 | $(781) | (2.9)% | | Income from operations | $14,104 | $14,145 | $(41) | (0.3)% | | Interest, net | $(7,685) | $(6,425) | $(1,260) | 19.6% | | Net income | $4,774 | $5,455 | $(681) | (12.5)% | | Gross profit margin | 33.2% | 37.1% | | | - Net sales increased by **9.7%** due to higher product sales in the Debit and Credit segment and increased services in Prepaid Debit[86](index=86&type=chunk) - Gross profit decreased by **2.0%** due to sales mix and increased production costs[87](index=87&type=chunk) - Operating expenses decreased by **2.9%** primarily due to lower compensation-related expenses, while interest expense increased by **19.6%** due to higher interest rates and increased borrowings on Senior Notes[88](index=88&type=chunk)[89](index=89&type=chunk) [Segment Discussion](index=30&type=section&id=Segment%20Discussion) This section provides a detailed discussion of the financial performance for each of the company's reportable segments [Debit and Credit Segment Performance](index=30&type=section&id=Debit%20and%20Credit%20Segment%20Performance) This section analyzes the financial performance of the Debit and Credit segment, including net sales, gross profit, and operating income Debit and Credit Segment Performance (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------ | :----- | :----- | :--------- | :--------- | | Net sales | $96,520 | $87,973 | $8,547 | 9.7% | | Gross profit | $31,254 | $31,495 | $(241) | (0.8)% | | Income from operations | $21,703 | $22,754 | $(1,051) | (4.6)% | | Gross profit margin | 32.4% | 35.8% | | | - Net sales increased by **9.7%** driven by higher volumes of contactless cards, including eco-focused products, partially offset by decreased personalization services[93](index=93&type=chunk) - Gross profit margin decreased due to sales mix and increased production costs[94](index=94&type=chunk) [Prepaid Debit Segment Performance](index=32&type=section&id=Prepaid%20Debit%20Segment%20Performance) This section analyzes the financial performance of the Prepaid Debit segment, including net sales, gross profit, and operating income Prepaid Debit Segment Performance (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------ | :----- | :----- | :--------- | :--------- | | Net sales | $26,713 | $24,198 | $2,515 | 10.4% | | Gross profit | $9,442 | $10,023 | $(581) | (5.8)% | | Income from operations | $7,999 | $8,745 | $(746) | (8.5)% | | Gross profit margin | 35.3% | 41.4% | | | - Net sales increased by **10.4%** due to higher sales of higher-priced packaging solutions and healthcare payment solutions[97](index=97&type=chunk) - Gross profit and margin decreased primarily due to negative impacts from sales mix[98](index=98&type=chunk) [Other Segment Performance](index=32&type=section&id=Other%20Segment%20Performance) This section analyzes the financial performance of the Other segment, primarily focusing on changes in operating expenses Other Segment Operating Expenses (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------- | :----- | :----- | :--------- | :--------- | | Operating expenses | $15,598 | $17,354 | $(1,756) | (10.1)% | - Operating expenses for the Other segment decreased by **10.1%** primarily due to lower compensation-related expenses, including the impact of the prior-CEO retention agreement in the prior year, partially offset by increased professional fees[102](index=102&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, liquidity sources, material cash requirements, and capital expenditures - As of March 31, 2025, the Company had **$31.5 million** in cash and cash equivalents[103](index=103&type=chunk) - Primary liquidity sources are cash from operating activities and the ABL Revolver, which had **$72.8 million** available capacity[105](index=105&type=chunk) - Cash provided by operating activities decreased to **$5.6 million** in Q1 2025 from **$8.9 million** in Q1 2024, mainly due to lower net income (excluding non-cash items) and increased working capital usage, including higher interest payments[106](index=106&type=chunk) - Material cash requirements include **$28.9 million** in interest payments on Senior Notes expected in the next 12 months, operating and finance lease payments, and purchase obligations[116](index=116&type=chunk)[117](index=117&type=chunk) - Capital expenditures for Q1 2025 totaled **$5.3 million**, including investments in machinery and IT equipment, and work on relocating and modernizing the Indiana production facility[114](index=114&type=chunk)[115](index=115&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to the critical accounting policies and estimates previously disclosed - There were no material changes to the critical accounting policies and estimates disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, as of March 31, 2025[124](index=124&type=chunk) [Item 3 — Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203%20%E2%80%94%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not required for the Company due to its status as a smaller reporting company - The Company is exempt from providing quantitative and qualitative disclosures about market risk due to its smaller reporting company status[124](index=124&type=chunk) [Item 4 — Controls and Procedures](index=38&type=section&id=Item%204%20%E2%80%94%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures, concluding they were effective with no material changes to internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=38&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures as evaluated by management - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[125](index=125&type=chunk) [Changes in Internal Control over Financial Reporting](index=38&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms no material changes to the company's internal control over financial reporting during the quarter - There were no changes during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[126](index=126&type=chunk) Part II — Other Information This part provides other information, including legal proceedings, risk factors, equity security sales, and exhibits [Item 1 — Legal Proceedings](index=38&type=section&id=Item%201%20%E2%80%94%20Legal%20Proceedings) This section refers to Note 11 of the condensed consolidated financial statements for information regarding legal proceedings - Information regarding legal proceedings is provided in Note 11, 'Commitments and Contingencies,' of the condensed consolidated financial statements[127](index=127&type=chunk) [Item 1A — Risk Factors](index=38&type=section&id=Item%201A%20%E2%80%94%20Risk%20Factors) This section updates risk factors, focusing on U.S. trade policy, tariffs, and risks associated with the recent acquisition of Arroweye Solutions, Inc [Changes in U.S. trade policy and the impact of tariffs](index=38&type=section&id=Changes%20in%20U.S.%20trade%20policy%20and%20the%20impact%20of%20tariffs) This section discusses the potential adverse effects of changes in U.S. trade policies and tariffs on the company's business and costs - Changes in U.S. trade policies, including tariffs announced in Q1 2025 and potential modifications, may adversely affect the Company's business and results of operations[129](index=129&type=chunk)[132](index=132&type=chunk) - Tariffs could lead to increased supply chain challenges, higher costs for raw materials and components, and reduced demand for products and services, potentially impacting profitability and growth opportunities[133](index=133&type=chunk)[134](index=134&type=chunk) [Risks Related to our Acquisition of Arroweye](index=40&type=section&id=Risks%20Related%20to%20our%20Acquisition%20of%20Arroweye) This section outlines risks associated with the Arroweye acquisition, including integration challenges, increased indebtedness, and diversion of management attention - The acquisition of Arroweye Solutions, Inc. on May 6, 2025, presents integration challenges, including combining logistics, marketing, IT infrastructure, and corporate cultures, which may hinder the realization of anticipated synergies[135](index=135&type=chunk) - The acquisition was funded with significant additional indebtedness, including **$35 million** from the ABL Revolver, raising risks if the Company cannot generate sufficient cash flow to service this debt or refinance it on favorable terms[139](index=139&type=chunk) - Management's attention and resources may be diverted to integration efforts, potentially disrupting ongoing business operations and incurring significant non-recurring costs[138](index=138&type=chunk) [Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202%20%E2%80%94%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item reports that there were no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities or use of proceeds to report for the period[140](index=140&type=chunk) [Item 3 — Defaults Upon Senior Securities](index=42&type=section&id=Item%203%20%E2%80%94%20Defaults%20Upon%20Senior%20Securities) This item confirms that there were no defaults upon senior securities during the period - The Company reported no defaults upon senior securities[141](index=141&type=chunk) [Item 4 — Mine Safety Disclosures](index=42&type=section&id=Item%204%20%E2%80%94%20Mine%20Safety%20Disclosures) This item states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[142](index=142&type=chunk) [Item 5 — Other Information](index=42&type=section&id=Item%205%20%E2%80%94%20Other%20Information) This item reports that no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025[143](index=143&type=chunk) [Item 6 — Exhibits](index=43&type=section&id=Item%206%20%E2%80%94%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including the merger agreement, certifications, and XBRL documents - Key exhibits include the Agreement and Plan of Merger for Arroweye Solutions, Inc., CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and various Inline XBRL Taxonomy Extension documents[145](index=145&type=chunk) [Signatures](index=44&type=section&id=Signatures) This section contains the duly authorized signatures of the Company's President and Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer - The report is signed by John Lowe (President and CEO), Jeffrey Hochstadt (CFO), and Donna Abbey Carmignani (Chief Accounting Officer) on May 7, 2025[149](index=149&type=chunk)

Q1 2025 Financial Performance - Net sales increased by 10% to $122.8 million[27] - Gross margin decreased from 37.1% to 33.2%[27] - Net income decreased by 12% to $4.8 million, with net income margin decreasing from 4.9% to 3.9%[27] - Adjusted EBITDA decreased by 8% to $21.2 million, with Adjusted EBITDA margin decreasing from 20.5% to 17.2%[27] - Free Cash Flow generation decreased to $0.3 million from $7.4 million in the prior year[27] Segment Performance - Debit and Credit net sales increased from $88.0 million to $96.5 million, while operating income decreased from $22.8 million to $21.7 million[33] - Prepaid Debit net sales increased from $24.2 million to $26.7 million, while operating income increased from $8.0 million to $8.7 million[35] Balance Sheet and Outlook - Net Leverage Ratio was 3.1x as of March 31, 2025[40] - The company affirmed its 2025 full-year outlook, expecting a mid-to-high single-digit increase in net sales and Adjusted EBITDA[11, 46] Strategic Initiatives - CPI acquired Arroweye Solutions, Inc on May 6, 2025, with expected revenues in the mid-$50 million range on an annualized basis[19, 21] - The company is focused on innovation and diversification to expand addressable markets[15]

Exhibit 2.1 EXECUTION VERSION AGREEMENT AND PLAN OF MERGER by and among CPI CG INC., as Parent APOLLO MERGER SUBSIDIARY, INC., as Merger Sub, ARROWEYE SOLUTIONS, INC., as Company, and WT REPRESENTATIVE LLC, as Holder Representative May 6, 2025 1 | | | Page | | --- | --- | --- | | | ARTICLE I. CERTAIN DEFINITIONS; CONSTRUCTION | 2 | | 1.1 | Certain Definitions | 2 | | 1.2 | Additional Terms | 14 | | 1.3 | Certain Matters of Construction | 17 | | | ARTICLE II. THE MERGER | 18 | | 2.1 | The Merger | 18 | | 2.2 ...

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. But finding a great growth stock is not easy at all.By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks ...

Core Viewpoint - CPI Card Group Inc. (PMTS) has shown a 1.3% increase in share price over the past four weeks, closing at $29.03, with a potential upside of 27.5% based on Wall Street analysts' mean price target of $37 [1] Price Targets and Analyst Estimates - The mean estimate consists of four short-term price targets with a standard deviation of $2.94, indicating variability among analysts; the lowest estimate of $33 suggests a 13.7% increase, while the highest target of $40 indicates a potential surge of 37.8% [2] - A low standard deviation in price targets suggests a high degree of agreement among analysts regarding the stock's price movement direction, which can serve as a starting point for further research [7] Earnings Estimates and Analyst Sentiment - There is increasing optimism among analysts regarding PMTS's earnings prospects, as indicated by a strong consensus in revising EPS estimates higher, which correlates with potential stock price increases [9] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 0.3%, with one estimate moving higher and no negative revisions [10] - PMTS holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for near-term upside [11] Caution on Price Targets - While consensus price targets are a popular metric, relying solely on them for investment decisions may not be prudent due to historical inaccuracies in predicting actual stock price movements [3][5][8]

Fourth Quarter 2024 Investor Presentation March 4, 2025 Cautionary Statements These risks and uncertainties include, but are not limited to: (i) risks relating to our business and industry, such as a deterioration in general economic conditions, including due to inflationary conditions, 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 anticipa ...

Financial Data and Key Metrics Changes - Net sales increased by 22% in Q4 2024, driven by strong performance in the prepaid segment and growth in debit and credit card volumes [24][25] - Adjusted EBITDA increased by 10%, while net income more than doubled [24] - Full-year net sales increased by 8%, with a 4% increase from debit and credit segments [28][32] - Gross profit for the full year increased by 10%, with gross margin rising from 35.0% to 35.6% [29] Business Line Data and Key Metrics Changes - Prepaid business grew by 26% for the year, exceeding $100 million in net sales, driven by demand for fraud prevention solutions and healthcare payment solutions [12][24] - Debit and credit business increased by 4% for the year, with strong growth in the second half, particularly in eco-focused contactless cards [12][28] - Income from operations for the prepaid segment increased by 106% in Q4, while the debit and credit segment's income decreased by 7% [33] Market Data and Key Metrics Changes - The prepaid segment saw a 59% increase in Q4, driven by strong demand for higher-priced fraud-focused packaging solutions [25] - Contactless cards represented approximately 90% of chip card volume in 2024, up from just over 80% in the prior year [28] - The total number of credit and debit cards in the US increased by 9% in 2024, indicating healthy growth in the card business [37][38] Company Strategy and Development Direction - The company aims to be the most trusted partner for innovative payment technology solutions, focusing on customer service, quality, innovation, and diversification [18][20] - Plans to expand into adjacent markets and enhance digital solutions, including healthcare payment solutions and closed-loop prepaid markets [20][21] - Investments in the Indiana factory and other initiatives to support long-term growth while balancing profitability [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid to high single-digit net sales growth in 2025, led by the debit and credit business [16][39] - The channel inventory situation is improving, and the market is expected to normalize during the year [39] - Anticipated adjusted EBITDA growth of mid to high single digits in 2025, with strong free cash flow generation [17][41] Other Important Information - The company generated over $34 million in free cash flow for the full year while increasing capital spending [14][34] - Completed several capital structure actions, including purchasing $9 million of stock and refinancing $285 million of senior notes [15][36] - The net leverage ratio improved to 3.0 times, down from 3.1 times at the end of 2023 [36] Q&A Session Summary Question: Can you provide details on the strong prepaid results and gross margins? - Management highlighted strong demand for higher-value packaging due to fraud protection and significant growth in the healthcare vertical [50][51] - Gross margins increased by 60 basis points, with operating leverage contributing to strong performance in the prepaid segment [52] Question: What is the outlook for inventory clearance and its impact? - Management indicated that inventory levels might increase slightly throughout 2025 but expect to bring the balance down by year-end [55] Question: Can you discuss the closed-loop market and its potential size? - The closed-loop market is believed to be four to five times larger than the open-loop market, presenting a significant opportunity for the company [62] Question: Update on the Indiana facility? - The Indiana facility is on track to be operational in the second half of 2025, with new equipment and automation being implemented [66][67] Question: What is the expected free cash flow for 2025? - Free cash flow is expected to be slightly below 2024 levels due to increased cash interest expense and higher capital spending [73]

Financial Data and Key Metrics Changes - Net sales increased by 22% in Q4 2024, driven by strong performance in the prepaid segment and growth in debit and credit card volumes [24][25] - Adjusted EBITDA rose by 10%, while net income more than doubled, reflecting strong sales growth and a lower effective tax rate [24][27] - Full-year net sales increased by 8%, with prepaid segment growth significantly exceeding expectations [28][32] Business Line Data and Key Metrics Changes - The prepaid business grew by 26% for the year, exceeding $100 million in net sales, driven by demand for fraud prevention solutions and healthcare payment solutions [12][24] - The debit and credit business saw a 4% increase for the year, with strong growth in the second half, particularly in eco-focused contactless cards [12][28] - Gross profit increased by 20% in Q4, although gross margins slightly decreased from 34.4% to 34.1% due to product mix issues [26][27] Market Data and Key Metrics Changes - The U.S. cards in circulation increased at a 9% CAGR over three years, with a 7% increase in general-purpose credit cards in 2024 [37][38] - The total number of credit and debit cards, including general-purpose prepaid cards, also saw a 9% increase for the year [38] Company Strategy and Development Direction - The company refined its strategy to focus on customer emphasis, quality, innovation, and diversification, aiming to expand into adjacent markets [10][18] - The total addressable market has increased from $1.5 billion to approximately $2 billion, with ongoing investments in digital solutions and closed-loop prepaid markets [20][21] - The company plans to invest in its Indiana factory to develop digital solutions and closed-loop capabilities, balancing short-term profitability with long-term growth [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in 2025, projecting mid to high single-digit net sales growth, primarily from the debit and credit segment [16][39] - The channel inventory situation is improving, and the market is expected to normalize throughout the year [39] - Free cash flow is expected to be slightly below 2024 levels due to increased cash interest expenses and capital spending [41][43] Other Important Information - The company generated over $34 million in free cash flow for the full year while increasing capital spending [14][34] - Significant capital structure actions included purchasing $9 million of stock and refinancing $285 million of senior notes, extending maturities to 2029 [15][36] Q&A Session Summary Question: Can you provide details on the strong prepaid results and gross margins? - Management highlighted strong demand for higher-value packaging in the prepaid segment, particularly in healthcare and eco-friendly cards, contributing to growth [50][51] - Gross margins increased by 60 basis points, with operating leverage in the prepaid segment, although some lower-margin sales affected the debit and credit segment [52][53] Question: What is the company's strategy for penetrating the closed-loop market? - The closed-loop market is larger than the open-loop market, and the company is making investments to expand into this area, expecting to see some impact in late 2025 [62][63] Question: Update on the Indiana facility? - The Indiana facility is on track to be operational in the second half of 2025, with new equipment and automation being implemented [66][67] Question: Expectations for free cash flow in 2025? - Free cash flow is expected to be slightly below 2024 levels due to higher capital expenditures and a return to a normal twelve months of cash interest expense [73][74]

分组1 - CPI Card Group Inc. reported quarterly earnings of $0.57 per share, exceeding the Zacks Consensus Estimate of $0.55 per share, and showing a significant increase from $0.23 per share a year ago, representing an earnings surprise of 3.64% [1] - The company achieved revenues of $125.1 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.77%, and up from $102.87 million year-over-year [2] - CPI Card Group has outperformed the S&P 500, with shares increasing about 6.7% since the beginning of the year, while the S&P 500 declined by 0.5% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.53 on revenues of $123 million, and for the current fiscal year, it is $2.94 on revenues of $516.25 million [7] - The Zacks Industry Rank indicates that the Technology Services sector is currently in the top 28% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this industry [8]