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CPI Card Group(PMTS) - 2024 Q2 - Quarterly Results
PMTSCPI Card Group(PMTS)2024-08-05 20:05

Financial Performance - Net sales increased 3% year-over-year to 118.8millioninQ22024,withDebitandCreditsegmentnetsalesup3118.8 million in Q2 2024, with Debit and Credit segment net sales up 3% to 95.6 million and Prepaid Debit segment net sales up 9% to 23.8million[1][7].−Netincomedecreased823.8 million[1][7]. - Net income decreased 8% to 6.0 million, and Adjusted EBITDA decreased 6% to 21.9millioninQ22024[1][7].−Thecompanyupdateditsfull−yearnetsalesoutlooktomid−singledigitgrowth,upfromslightgrowth,drivenbystrongPrepaidgrowthandimprovedtrendsindebitandcreditcardsales[3][13].−Year−to−datenetsalesdecreased221.9 million in Q2 2024[1][7]. - The company updated its full-year net sales outlook to mid-single digit growth, up from slight growth, driven by strong Prepaid growth and improved trends in debit and credit card sales[3][13]. - Year-to-date net sales decreased 2% to 230.8 million, with Debit and Credit segment net sales down 6% to 183.6million,whilePrepaidDebitsegmentnetsalesincreased17183.6 million, while Prepaid Debit segment net sales increased 17% to 48.0 million[9][10]. - Total net sales for Q2 2024 reached 118.8million,a3.9118.8 million, a 3.9% increase from 115.0 million in Q2 2023[28]. - Product sales were 63.8million,slightlydownfrom63.8 million, slightly down from 63.9 million in the same quarter last year, while service sales increased to 55.0millionfrom55.0 million from 51.0 million, marking a 7.5% growth[28]. - For the first half of 2024, total net sales were 230.8million,adecreaseof2.4230.8 million, a decrease of 2.4% from 235.8 million in the first half of 2023[28]. - Net income for Q2 2024 was 6.0million,downfrom6.0 million, down from 6.5 million in Q2 2023, leading to diluted earnings per share of 0.51comparedto0.51 compared to 0.55 last year[28]. - The company reported a total comprehensive income of 6.0millionforQ22024,consistentwiththenetincomefigure[28].ExpensesandProfitability−Operatingexpensesincreasedto6.0 million for Q2 2024, consistent with the net income figure[28]. Expenses and Profitability - Operating expenses increased to 27.5 million in Q2 2024 from 23.3millioninQ22023,primarilyduetohigherselling,general,andadministrativeexpenses[28].−GrossprofitmarginforQ22024was35.723.3 million in Q2 2023, primarily due to higher selling, general, and administrative expenses[28]. - Gross profit margin for Q2 2024 was 35.7%, slightly up from 35.5% in the prior year[7]. - Gross profit for Q2 2024 was 42.4 million, compared to 40.8millioninQ22023,resultinginagrossmarginof35.740.8 million in Q2 2023, resulting in a gross margin of 35.7%[28]. - The cost of sales for Q2 2024 was 76.4 million, up from 74.1millioninQ22023,reflectingincreasedcostsinbothproductsandservices[28].−Thecompanyreportedagrossprofitmarginof36.474.1 million in Q2 2023, reflecting increased costs in both products and services[28]. - The company reported a gross profit margin of 36.4% for the six months ended June 30, 2024, compared to 35.6% in the same period of 2023[35]. - The prepaid debit segment saw a significant increase in EBITDA, rising 37.9% to 17,418 for the six months ended June 30, 2024, from 12,634inthesameperiodof2023[42].−TotalEBITDAforthesixmonthsendedJune30,2024,was12,634 in the same period of 2023[42]. - Total EBITDA for the six months ended June 30, 2024, was 36,976, a decrease of 19.2% from 45,763inthesameperiodof2023[40].DebtandFinancing−Thecompanycompletedarefinancingofitsdebt,issuing45,763 in the same period of 2023[40]. Debt and Financing - The company completed a refinancing of its debt, issuing 285 million of Senior Secured Notes due 2029 and entering a new 75millionasset−basedrevolvingcreditfacility[3][6].−ThecompanyendedQ22024withaNetLeverageRatioof3.3x,withexpectationsforyear−end2024NetLeverageRatiotobebetween3.0xand3.5x[5][14].−Long−termdebtincreasedto75 million asset-based revolving credit facility[3][6]. - The company ended Q2 2024 with a Net Leverage Ratio of 3.3x, with expectations for year-end 2024 Net Leverage Ratio to be between 3.0x and 3.5x[5][14]. - Long-term debt increased to 269,654 thousand as of June 30, 2024, from 264,997thousandatDecember31,2023,indicatingariseof1.0264,997 thousand at December 31, 2023, indicating a rise of 1.0%[30]. - Total current liabilities rose to 68,949 thousand as of June 30, 2024, compared to 49,445thousandatDecember31,2023,anincreaseof39.649,445 thousand at December 31, 2023, an increase of 39.6%[30]. - Total net debt as of June 30, 2024, was 281,081, resulting in a net leverage ratio of 3.3, compared to 3.1 as of December 31, 2023[46]. Cash Flow - Free Cash Flow outlook for 2024 is expected to be approximately half of the 2023 level, impacted by increased capital spending and upfront incentives related to a contract with a larger customer[14][19]. - Cash provided by operating activities for the six months ended June 30, 2024, was 4,108thousand,comparedto4,108 thousand, compared to 10,322 thousand in the same period of 2023, a decline of 60.3%[31]. - Free cash flow for the three months ended June 30, 2024, was (5,995),comparedto(5,995), compared to (128) in the same period of 2023[44]. Market Position and Strategy - The company has sold over 100 million eco-focused cards since launch in late 2019, reinforcing its position as a leader in eco-focused payment card solutions[5]. - CPI Card Group Inc. is focused on enhancing its product offerings and expanding market reach to drive future growth[25]. - The company continues to face risks related to supply chain disruptions and inflationary pressures, which may impact future performance[23]. Segment Performance - The prepaid debit segment saw a 17.2% increase in net sales for the six months ended June 30, 2024, totaling 48,013thousand,upfrom48,013 thousand, up from 40,951 thousand in 2023[33]. - The company experienced a loss from operations in the "Other" segment of (34,743)thousandforthesixmonthsendedJune30,2024,comparedto(34,743) thousand for the six months ended June 30, 2024, compared to (28,322) thousand in the same period of 2023, reflecting a deterioration of 22.7%[36]. - The company experienced a 7,180decreaseinEBITDAfromthedebitandcreditsegmentforthesixmonthsendedJune30,2024,totaling7,180 decrease in EBITDA from the debit and credit segment for the six months ended June 30, 2024, totaling 52,467 compared to 59,647inthesameperiodof2023[41].−EBITDAforthethreemonthsendedJune30,2024,was59,647 in the same period of 2023[41]. - EBITDA for the three months ended June 30, 2024, was 18,879, a decrease of 12.1% from $21,475 in the same period of 2023[37]. - The prepaid debit segment's EBITDA margin was 36.3% for the six months ended June 30, 2024, compared to 30.9% in the same period of 2023[42].