CPI Card Group(PMTS) - 2024 Q3 - Quarterly Report

Financial Performance - Total net sales for Q3 2024 reached $124.751 million, a 17.8$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$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$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$52.107 million as of September 30, 2024, compared to $35.803 million as of December 31, 2023, indicating an increase of approximately 46$6,936,000 for the nine months ended September 30, 2024, from $4,431,000 in 2023, marking an increase of approximately 56$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]