CPI Card Group(US:PMTS)2024-08-05 20:05Financial Performance - Net sales increased 3% year-over-year to $118.8 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 $23.8 million[1][7]. - Net income decreased 8% to $6.0 million, and Adjusted EBITDA decreased 6% to $21.9 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 $183.6 million, while Prepaid Debit segment net sales increased 17% to $48.0 million[9][10]. - Total net sales for Q2 2024 reached $118.8 million, a 3.9% increase from $115.0 million in Q2 2023[28]. - Product sales were $63.8 million, slightly down from $63.9 million in the same quarter last year, while service sales increased to $55.0 million from $51.0 million, marking a 7.5% growth[28]. - For the first half of 2024, total net sales were $230.8 million, a decrease of 2.4% from $235.8 million in the first half of 2023[28]. - Net income for Q2 2024 was $6.0 million, down from $6.5 million in Q2 2023, leading to diluted earnings per share of $0.51 compared to $0.55 last year[28]. - The company reported a total comprehensive income of $6.0 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 $23.3 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 $40.8 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 $74.1 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 $12,634 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 $45,763 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 $75 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 $264,997 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 $49,445 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 $4,108 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), 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 $48,013 thousand, up from $40,951 thousand in 2023[33]. - The company experienced a loss from operations in the "Other" segment of $(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 $7,180 decrease in EBITDA from the debit and credit segment for the six months ended June 30, 2024, totaling $52,467 compared to $59,647 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].