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

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]