CPI Card Group(US:PMTS)2025-11-04 12:00Financial Performance - Net sales increased 11% to $138 million in Q3 2025, driven by Arroweye and instant issuance solutions [2]. - Net income rose 78% to $2.3 million, while Adjusted EBITDA decreased 7% to $23.4 million due to lower gross margins and tariff expenses [3]. - Year-to-date net sales increased 10% to $390.5 million, or 13% excluding the impact of an accounting change [11]. - Total net sales for Q3 2025 reached $137.966 million, a 10.0% increase from $124.751 million in Q3 2024 [39]. - Product sales increased by 21.2% to $84.453 million in Q3 2025, compared to $69.648 million in Q3 2024 [39]. - Service sales decreased by 2.1% to $53.513 million in Q3 2025, down from $55.103 million in Q3 2024 [39]. - Total net sales for the nine months ended September 30, 2025, were $390.480 million, up 9.8% from $355.505 million in the same period of 2024 [39]. - Consolidated net sales for the three months ended September 30, 2025, reached $137,966 million, reflecting a 10.6% increase compared to the same period in 2024 [59]. - For the nine months ended September 30, 2025, consolidated net sales amounted to $390,480 million, with a growth rate of 9.8% compared to the same period in 2024 [59]. Profitability and Margins - Gross profit decreased 8% to $41 million, with a gross profit margin of 29.7%, down from 35.8% in the prior year [8]. - Gross profit for Q3 2025 was $40.993 million, a decrease of 8.0% from $44.698 million in Q3 2024 [39]. - Net income for Q3 2025 was $2.308 million, compared to $1.293 million in Q3 2024, representing an increase of 78.3% [39]. - Basic earnings per share for Q3 2025 was $0.20, up from $0.12 in Q3 2024, reflecting a 66.7% increase [39]. - The net income margin for the three months ended September 30, 2025, was 1.7% of net sales, compared to 1.0% in 2024 [50]. Expenses and Costs - Operating expenses for Q3 2025 totaled $27.975 million, a slight increase from $26.900 million in Q3 2024 [39]. - The company incurred acquisition and integration costs of $4,110 related to the Arroweye acquisition in May 2025 [51]. - Stock-based compensation expense for the three months ended September 30, 2025, was $1,499, compared to $1,782 in 2024, reflecting a decrease of 15.8% [50]. - Depreciation and amortization for the nine months ended September 30, 2025, totaled $15,877, an increase from $12,218 in 2024 [50]. Debt and Leverage - The company reported a Net Leverage Ratio of 3.6x as of September 30, 2025, following the retirement of $20 million in Senior Notes [15]. - The net leverage ratio as of September 30, 2025, was 3.6, up from 3.0 as of December 31, 2024, indicating increased leverage [54]. - Long-term debt increased to $308,433 thousand as of September 30, 2025, up from $280,405 thousand at December 31, 2024, indicating a rise of 10.0% [41]. Strategic Initiatives and Outlook - The company updated its 2025 outlook, projecting net sales growth of low double-digit to low teens, and Adjusted EBITDA growth of flat to low single-digit [4]. - The company is focused on improving margins and achieving synergies from the Arroweye acquisition while investing in strategic growth initiatives [16]. - The company is focused on strategic initiatives and market opportunities, with a financial outlook for 2025 that includes investments in new technologies and solutions [31]. - The company continues to focus on expanding its market presence and enhancing product offerings to drive future growth [59]. Acquisitions - CPI acquired Arroweye Solutions for $45.8 million and a 20% equity interest in Karta for $10 million, enhancing its market position [9].