CPI Card Group(US:PMTS)2021-08-12 15:18Financial Data and Key Metrics Changes - CPI Card Group reported a 31% increase in net sales year-over-year, reaching $93 million in Q2 2021, driven by new customer acquisition and the transition to contactless cards [9][31] - Diluted earnings per share rose to $0.53, nearly five times the $0.11 from the same quarter last year, with net income increasing by 387% to $6.2 million [10][34] - Adjusted EBITDA increased by 91% to $19.3 million, with an adjusted EBITDA margin of 20.7%, up 650 basis points year-over-year [10][34] Business Line Data and Key Metrics Changes - The Debit and Credit segment saw a 25% increase in net sales to nearly $73 million, with income from operations rising 89% to $20 million [31][40] - The Prepaid Debit segment experienced a 51% increase in net sales to $20.4 million, with income from operations more than doubling to $7.6 million [42][43] - For the first half of 2021, net sales in the Debit and Credit segment increased by 21% to nearly $143 million, while the Prepaid Debit segment achieved a 42% growth, totaling nearly $40 million [35][41] Market Data and Key Metrics Changes - The U.S. payment card market is transitioning to contactless solutions, with an estimated 30% of debit and credit cards being contactless-enabled by the end of 2020, expected to rise to 50% by the end of 2021 [25] - CPI's eco-focused card portfolio has sold over 33 million cards since its introduction in 2019, establishing the company as a market leader in this segment [20] Company Strategy and Development Direction - CPI's strategic priorities include deep customer focus, market-leading quality products, continuous innovation, and a competitive business model [14][29] - The company aims to enhance its position in the growing FinTech space and maintain strong relationships with financial institutions [16][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as labor shortages and global supply chain constraints, which are expected to impact costs and operations in the second half of 2021 [51][52] - The company remains committed to investing in equipment and inventory to address these challenges and enhance operational efficiency [52][53] Other Important Information - CPI successfully refinanced its debts and paid down its ABL revolver to zero, improving its balance sheet and liquidity [12][45] - The company reported a cash balance of $30.7 million as of June 30, 2021, with total available liquidity exceeding $80 million [45] Q&A Session Summary Question: What are the expectations for net sales growth in the second half of 2021? - Management indicated that while strong net sales growth from new customer onboarding may not repeat in the second half, they are focused on maintaining growth through existing customer relationships [50] Question: How is CPI addressing supply chain constraints? - The company is investing in inventory and equipment to mitigate supply chain issues and enhance operational capabilities [52]