Financial Data and Key Metrics Changes - The company reported nearly 20% growth in both net sales and adjusted EBITDA for Q3 2024, marking the second largest sales quarter in its history [7][10] - Net sales increased by 18% in the quarter, with product sales, primarily debit and credit cards, growing by 25% [8][16] - Gross margins improved by 170 basis points year-over-year, with adjusted EBITDA increasing by 18% [9][20] - Net income decreased by 66% to $2.6 million due to $8.8 million in pretax debt refinancing costs [20][24] Business Line Data and Key Metrics Changes - The Debit and Credit segment saw a 19% increase in sales, driven by eco-focused contactless cards and growth in Card@Once instant issuance solutions [16][25] - The Prepaid segment grew by 13%, reflecting strong demand for higher-priced fraud-focused packaging solutions [16][25] - Income from operations for the Debit and Credit segment increased by 30% to $27 million in Q3, while Prepaid segment income rose by 7% to $7.1 million [25] Market Data and Key Metrics Changes - Cards in circulation in the U.S. increased at a 9% CAGR over the last three years, indicating a healthy card market [13] - Major issuers like JPMorgan Chase and Bank of America reported significant year-over-year increases in cards outstanding, supporting the growth outlook for the industry [13] Company Strategy and Development Direction - The company is focused on customer service, innovation, and high quality to grow its traditional businesses while expanding into adjacent markets, including digital solutions [11][35] - Recent innovations include the ability to produce cards with an advanced contactless chip that integrates the antenna within the chip, reducing carbon footprint and enhancing design flexibility [11] - The company signed an agreement with Rippleshot to offer fraud prevention tools, indicating a strategic move towards enhancing digital solutions [12] Management's Comments on Operating Environment and Future Outlook - Management noted that while channel inventories are still elevated, they are improving, and the company is winning business in the market [8][36] - The full-year outlook for 2024 has been updated to reflect increased net sales and adjusted EBITDA expectations due to strength across the portfolio [10][33] - The company anticipates solid long-term growth in core markets, supported by strong issuance trends and improving channel inventory levels [13][34] Other Important Information - The company completed a refinancing of its debt, issuing $285 million of senior secured notes due in 2029, which is expected to improve trading liquidity over time [29][30] - A secondary offering of shares was completed, resulting in a decrease in majority stockholder ownership from 56% to 43%, which is expected to benefit shareholders by increasing public float [31][32] Q&A Session Summary Question: Is the excess inventory completely behind the company now? - Management indicated that while things are improving, channel inventories are still being worked down, but market momentum remains strong [36] Question: How will the integration of the chip and antenna design impact ASPs or gross margins long term? - Management expressed excitement about the new chip technology but noted it is too early to determine the financial impact [37] Question: Can you discuss the momentum seen in the push provisioning partnership with MEA? - Management reported strong momentum but noted it is still early days, with a pipeline being developed [40] Question: What are the expectations for the growth rates of the debit and credit versus prepaid segments in Q4? - Management expects both segments to continue performing well without significant seasonality affecting their growth [44] Question: Can you provide an update on the new production facility in Indiana? - The facility is expected to be operational by mid-next year, with a significant increase in capacity and efficiency anticipated [46][47] Question: What is the composition of the recent sales growth? - Management indicated that the growth is a mix of existing customers and new programs, with new customer wins contributing to the momentum [49][50]

Core Insights - CPI Card Group Inc. reported quarterly earnings of $0.66 per share, exceeding the Zacks Consensus Estimate of $0.50 per share, and showing a significant increase from $0.33 per share a year ago, representing an earnings surprise of 32% [1] - The company achieved revenues of $124.75 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 6.90% and increasing from $105.86 million year-over-year [2] - CPI Card Group shares have increased approximately 17.5% since the beginning of the year, while the S&P 500 has gained 19.8% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.59 on revenues of $120.35 million, and for the current fiscal year, it is $2.06 on revenues of $467.8 million [7] - The estimate revisions trend for CPI Card Group has been unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expectations of underperformance in the near future [6] Industry Context - The Technology Services industry, to which CPI Card Group belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - TTEC Holdings, another company in the same industry, is expected to report a significant decline in earnings, with a projected EPS of $0.14, reflecting a year-over-year change of -70.8% [9]

Financial Performance - Total net sales for Q3 2024 reached $124.751 million, a 17.8% increase from $105.863 million in Q3 2023[4] - Gross profit for Q3 2024 was $44.698 million, compared to $36.152 million in Q3 2023, reflecting a 23.5% increase[4] - Net income for Q3 2024 decreased to $1.293 million from $3.857 million in Q3 2023, representing a decline of 66.5%[4] - Operating expenses for Q3 2024 were $26.900 million, up from $23.191 million in Q3 2023, an increase of 11.7%[4] - Basic earnings per share for Q3 2024 were $0.12, down from $0.34 in Q3 2023, a decrease of 64.7%[4] - Net income for the nine months ended September 30, 2024, was $12,749,000, compared to $21,253,000 for the same period in 2023, representing a decrease of approximately 40%[6] - Cash provided by operating activities for the nine months ended September 30, 2024, was $16,652,000, down from $22,266,000 in 2023, indicating a decline of about 25%[6] - Total net sales for the three months ended September 30, 2024, reached $355.505 million, a significant increase from $105.863 million in the same period of 2023, representing a growth of approximately 236%[10] - The gross profit for the same period was $128.604 million, with a gross profit margin of approximately 36.2%[44] - EBITDA for the nine months ended September 30, 2024, was reported at $55.406 million, reflecting a significant increase compared to the previous period[44] Assets and Liabilities - Total current assets increased to $198.814 million as of September 30, 2024, up from $165.378 million at December 31, 2023, a growth of 20.2%[3] - Total liabilities rose to $385.140 million as of September 30, 2024, compared to $345.619 million at December 31, 2023, an increase of 11.4%[3] - Long-term debt increased to $280.152 million as of September 30, 2024, up from $264.997 million at December 31, 2023, a rise of 5.7%[3] - Cash and cash equivalents increased to $14.650 million as of September 30, 2024, compared to $12.413 million at December 31, 2023, a growth of 18.0%[3] - The company reported a capital deficiency of $(105.827) million as of September 30, 2024, compared to $(102.223) million at December 31, 2023[3] - The company’s total stockholders' deficit as of September 30, 2024, was $(42,791,000), a slight improvement from $(56,720,000) as of September 30, 2023[5] Segment Performance - The company operates through three reportable segments: Debit and Credit, Prepaid Debit, and Other, focusing on comprehensive financial payment card solutions[7] - For the nine months ended September 30, 2024, total net sales reached $355.505 million, with the Debit and Credit segment contributing $283.348 million and the Prepaid Debit segment contributing $73.186 million[44] - The Debit and Credit segment reported net sales of $99.755 million for the three months ended September 30, 2024[43] - The company’s prepaid debit services generated $73.186 million in net sales for the three months ended September 30, 2024, compared to $22.335 million in the same period of 2023, reflecting a growth of about 228%[10] Debt and Financing - The company completed a private offering of $285 million aggregate principal amount of 10.000% Senior Secured Notes due 2029, with net proceeds used to redeem the entire principal balance of $267.9 million of 8.625% Senior Secured Notes due 2026[26] - The 2029 Senior Notes are secured by substantially all of the assets of the issuer and the guarantors, subject to customary exceptions, and require compliance with certain covenants[26] - The Company entered into a $75.0 million asset-based revolving credit facility (2029 ABL Revolver) with JPMorgan Chase Bank, which matures on July 11, 2029[27] - The interest rate on borrowings under the 2029 ABL Revolver ranges from SOFR plus 1.50% to 1.75%, with a commitment fee of 0.375% to 0.50% on unused portions[29] - The company reported accrued expenses totaling $52.107 million as of September 30, 2024, compared to $35.803 million as of December 31, 2023, indicating an increase of approximately 46%[23] Stock and Compensation - Stock-based compensation expense increased to $6,936,000 for the nine months ended September 30, 2024, from $4,431,000 in 2023, marking an increase of approximately 56%[6] - The company granted 157,966 restricted stock units with a weighted average grant date fair value of $22.17 during the nine months ended September 30, 2024[40] - The Company has an authorized share repurchase plan that allows for up to $20.0 million in common stock repurchases, expiring on December 31, 2024[34] - The Company repurchased 473,284 shares at an average price of $18.16 per share, totaling $8.6 million, with $11.2 million remaining under the share repurchase plan[35] Future Outlook and Strategy - The company is focused on expanding its Financial Payment Card solutions, serving a diverse customer base including fintechs and community banks[49] - Future outlook includes strategic initiatives aimed at enhancing product offerings and market presence, with a commitment to compliance with PCI Security Standards[49] - Management highlights the ongoing development of new products and services to meet evolving customer needs in the payments technology sector[49] - The company anticipates cash flows from operating activities to be negatively impacted in the fourth quarter of 2024 due to customer contract incentives[69] Tax and Legal Matters - The effective tax rates for the three months ended September 30, 2024, and 2023 were (57.9)% and 37.7%, respectively, reflecting changes in stock compensation deductibility[31] - The Company is subject to routine legal proceedings, but believes that the resolution of such matters will not materially affect its financial condition[39]

Financial Performance - Net sales increased 18% year-over-year to $124.8 million in Q3 2024, driven by strong growth in Debit and Credit segments[2] - Net income decreased 66% to $1.3 million, impacted by $8.8 million in pre-tax debt refinancing costs[2] - Adjusted EBITDA increased 18% to $25.1 million, reflecting the positive impact of sales growth[2] - Total net sales for Q3 2024 reached $124.75 million, a 17.8% increase from $105.86 million in Q3 2023[40] - Product sales amounted to $69.65 million in Q3 2024, up from $55.69 million in Q3 2023, reflecting a 25% growth[40] - Service sales increased to $55.10 million in Q3 2024, compared to $50.17 million in Q3 2023, marking a 9.7% rise[40] - Gross profit for Q3 2024 was $44.70 million, a 23.5% increase from $36.15 million in Q3 2023[40] - Income from operations for Q3 2024 was $17.80 million, compared to $12.96 million in Q3 2023, indicating a 37.5% increase[40] - Net income for Q3 2024 was $1.29 million, down from $3.86 million in Q3 2023, reflecting a decrease of 66.6%[40] - Basic earnings per share for Q3 2024 were $0.12, compared to $0.34 in Q3 2023, a decline of 64.7%[40] - The company reported total comprehensive income of $1.29 million for Q3 2024, down from $3.86 million in Q3 2023[40] Segment Performance - Debit and Credit segment net sales rose 19% to $99.8 million, supported by strong contactless card sales[11] - Prepaid Debit segment net sales increased 13% to $25.2 million, indicating strong sales to existing customers[11] - The prepaid debit segment net sales increased by 12.7% to $25,173,000 for the three months ended September 30, 2024, from $22,335,000 in 2023[43] Outlook and Guidance - The company updated its 2024 outlook to mid-to-high single-digit net sales growth and low single-digit Adjusted EBITDA growth[4] - Free Cash Flow outlook for 2024 was adjusted to be slightly below 2023 levels, primarily due to working capital improvements[24] Debt and Financing - CPI completed a debt refinancing, issuing $285 million of new 10% Senior Secured Notes due 2029[9] - The company redeemed $267.9 million of the 8.625% Senior Secured Notes due 2026 in July 2024[55] - Long-term debt increased to $280,152,000 as of September 30, 2024, compared to $264,997,000 at December 31, 2023, reflecting a rise of 5.7%[41] - Total debt increased to $305,096 from $286,003, reflecting a growth of approximately 6.7%[58] - The company experienced a loss on early extinguishment of debt amounting to $8,763,000 for the nine months ended September 30, 2024[42] Cash Flow and Assets - Cash provided by operating activities for the nine months ended September 30, 2024, was $16,652,000, down from $22,266,000 in the same period of 2023[42] - Cash and cash equivalents at the end of the period were $14,650,000, an increase from $12,413,000 at the beginning of the period[42] - Cash and cash equivalents increased to $14,650 from $12,413, marking an increase of about 18.1%[58] - Total assets increased to $342,349,000 as of September 30, 2024, up from $293,683,000 at December 31, 2023, representing a growth of 16.6%[41] Operational Metrics - Operating expenses for Q3 2024 totaled $26.90 million, up from $23.19 million in Q3 2023, representing a 11.7% increase[40] - The company reported a capital deficiency of $105,827,000 as of September 30, 2024, compared to $102,223,000 at December 31, 2023[41] - The company experienced a 26.9% increase in prepaid debit income for the nine months ended September 30, 2024, totaling $22,765 compared to $17,936 in 2023[47] Adjusted Metrics - EBITDA for the three months ended September 30, 2024, was $18,430, up 9.0% from $16,913 in the same period of 2023[53] - Adjusted EBITDA for the three months ended September 30, 2024, was $25,080, reflecting an 18.1% increase compared to $21,238 in the same period of 2023[54] - LTM Adjusted EBITDA for the latest period is $89,843, slightly up from $89,491, showing a marginal increase of 0.4%[57] - The Net Leverage Ratio increased to 3.2 from 3.1, indicating a higher level of debt relative to EBITDA[58] Other Financial Information - Stock-based compensation expense increased to $10,012 from $7,507, reflecting a rise of approximately 33.4%[57] - Subtotal of adjustments to EBITDA rose to $19,807 from $12,185, representing an increase of approximately 62.7%[57] - Loss on debt extinguishment increased to $2,987 from $243, a significant rise of about 1,131.7%[57] - Foreign currency gain remained relatively stable, with a slight change from $(26) to $(28)[57] - Restructuring and other charges showed a change from $(70) to $6,941, indicating a significant shift in expenses[57] Strategic Focus - CPI Card Group is focused on expanding its product offerings and enhancing customer relationships to navigate the evolving payments landscape[34]

| --- | --- | --- | --- | --- | --- | |--------------------------------------------|-------|-------|-------|-------|-------| | | | | | | | | Second Quarter 2024 Investor Presentation | | | | | | | | | | | | | | August 5, 2024 | | | | | | Cautionary Statements Forward Looking Statements Certain statements and information in this presentation (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 ...

Financial Performance - Total net sales for Q2 2024 reached $118.818 million, a 3.8% increase from $114.960 million in Q2 2023[5] - Gross profit for Q2 2024 was $42.388 million, compared to $40.825 million in Q2 2023, reflecting a 3.8% increase[5] - Net income for Q2 2024 was $6.001 million, a decrease of 8.0% from $6.523 million in Q2 2023[5] - Basic earnings per share for Q2 2024 were $0.54, down from $0.57 in Q2 2023[5] - The company reported total net sales of $230,754 for the six months ended June 30, 2024, compared to $235,812 for the same period in 2023, reflecting a slight decrease[14] - For the six months ended June 30, 2024, net income was $11.456 million, a decrease of 34% compared to $17.396 million for the same period in 2023[34] - The company’s net income for the six months ended June 30, 2024, was $17.396 million, down from $21.475 million in the same period of 2023, indicating a decline of about 19.5%[42] Assets and Liabilities - Total assets increased to $321.446 million as of June 30, 2024, up from $293.683 million at December 31, 2023, representing a 9.4% growth[4] - Total liabilities rose to $366.003 million as of June 30, 2024, compared to $345.619 million at December 31, 2023, indicating a 5.9% increase[4] - Current liabilities increased to $68.949 million as of June 30, 2024, from $49.445 million at December 31, 2023, a 39.6% rise[4] - Long-term debt as of June 30, 2024, was $269.654 million, up from $264.997 million as of December 31, 2023, with the 2026 Senior Notes bearing an interest rate of 8.625%[24] - Total current assets increased to $179.745 million as of June 30, 2024, compared to $165.378 million at December 31, 2023[4] Cash Flow and Operating Activities - Cash and cash equivalents decreased to $7.479 million as of June 30, 2024, down from $12.413 million at December 31, 2023[4] - Cash provided by operating activities decreased to $4.1 million for the six months ended June 30, 2024, down from $10.3 million for the same period in 2023, primarily due to lower net income and changes in working capital[64] - Total cash provided by operating activities for the six months ended June 30, 2023, was $10,322, compared to $4,108 for the six months ended June 30, 2024[9] Segment Performance - The company’s reportable segments include Debit and Credit, Prepaid Debit, and Other, with a focus on integrated card services and financial payment cards[38][39] - The Debit and Credit segment generated $183,593 in total net sales for the six months ended June 30, 2024, compared to $195,179 for the same period in 2023[14] - The company’s prepaid debit segment generated $48,013,000 in net sales for the six months ended June 30, 2024, compared to $40,951,000 in the same period of 2023, marking an increase of 17%[14] Operating Expenses - Operating expenses for the three months ended June 30, 2024, totaled $27.479 million, compared to $23.333 million in the same period of 2023, marking an increase of about 17.0%[40][42] - The company’s operating expenses for the six months ended June 30, 2024, totaled $54.852 million, compared to $45.829 million in the same period of 2023, reflecting an increase of about 19.7%[41] Share Repurchase and Stock Compensation - The company repurchased 352,750 shares of common stock at an average price of $18.14 per share, totaling $6.4 million during the six months ended June 30, 2024[31] - As of June 30, 2024, the company had an authorized amount of $11.2 million remaining under the share repurchase plan[31] - Stock-based compensation expense increased to $5,154 for the six months ended June 30, 2024, from $1,831 for the same period in 2023[9] Economic and Market Conditions - CPI Card Group Inc. reported reduced demand from customers for certain products and services during 2023 through the first half of 2024, impacting financial and operating results[51] - The company has experienced concerns in the banking and financial services industry, leading to reduced overall spending on card programs[51] - Economic uncertainties, including negative liquidity events in certain banks, have led to caution in the financial services industry, affecting demand in the Debit and Credit segment[51] Tax and Compliance - The effective tax rate for the three months ended June 30, 2024, was 27.7%, a decrease from 38.9% in the same period of 2023, primarily due to changes in executive compensation deductibility[28] - The effective income tax rate for the six months ended June 30, 2024, was 28.2%, slightly lower than 28.6% for the same period in 2023[30] - The company is committed to compliance with PCI Security Standards Council requirements, ensuring the security of its products and services[48]

Often, the direction of a stock's price movement reverses quickly after taking a position in it, making investors incur a short-term capital loss. So, it's important to ensure that there are enough factors -- such as sound fundamentals, positive earnings estimate revisions, etc. -- that could keep the momentum in the stock going. However, it's not enough to look at the price change for around three months, as it doesn't reflect any trend reversal that might have happened in a shorter time frame. It's import ...

CPI Card Group Inc. (PMTS) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, PMTS's 50-day simple moving average crossed above its 200-day simple moving average, known as a "golden cross." Considered an important signifier for a bullish breakout, a golden cross is a technical chart pattern that's formed when a stock's short-term moving average breaks above a longer-term moving average; the most common crossover involves the 50-day and ...

CPI Card Group Inc. (NASDAQ:PMTS) Q1 2024 Earnings Conference Call May 7, 2024 9:00 AM ET Company Participants Mike Salop - Head, Investor Relations John Lowe - President and Chief Executive Officer Jeff Hochstadt - Chief Financial Officer Conference Call Participants Jaeson Schmidt - Lake Street Capital Markets Andrew Scutt - Ross Capital Operator Welcome to CPI Card Group's First Quarter 2024 Earnings Call. My name is Catherine, I will be your operator today. [Operator Instructions] And now I would like t ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 For the Quarterly Period Ended March 31, 2024 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to Commission File Number: 001-37584 CPI Card Group Inc. (Exact name of the registrant as specified in its charter) Delaware 26-0344657 ...