Net Sales of $82.7 Million, Up 15% and 11%
Year-over-Year in the Third Quarter and First Nine Months
Net Income of $5.8 Million, Up 984% and 425%
Year-over-Year in the Third Quarter and First Nine Months
Adjusted EBITDA of $17.5 Million, Up 43% and
39% Year-over-Year in the Third Quarter and First Nine Months
Cash of $50 Million at Quarter End
CPI Card Group Inc. (OTCQX: PMTS; TSX: PMTS) (“CPI” or the
“Company”) today reported financial results for the third quarter
and nine months ended September 30, 2020.
“As we continue to navigate these unprecedented times, we are
pleased with our strong third quarter performance,” said Scott
Scheirman, President and Chief Executive Officer of CPI. “Our 15%
top-line growth underscores the resilience of the business, our
ability to capitalize on the dual interface card demand in the U.S.
and the strong market for our innovative and differentiated
products, including our eco-focused solutions. Operating margins
also expanded significantly in the quarter, driven by operating
leverage and ongoing efficiency initiatives. We continue to win new
business with our existing customers, add new customers and pursue
opportunities.”
Scheirman continued, “We remain steadfast and intensely focused
on our strategies of deep customer focus, providing market-leading
quality products and customer service, delivering innovative
solutions and a market-competitive business model.”
Third Quarter and First Nine Months 2020 Financial
Highlights
Net sales increased 15% and 11% year-over-year to $82.7 million
and $228.0 million in the third quarter and first nine months of
2020, respectively. Gross profit increased 21% and 15%
year-over-year in the third quarter and first nine months of 2020,
respectively. Gross profit margins increased to 37.0% in the third
quarter of 2020, compared to 35.4% in the prior year period,
primarily due to higher net sales and operating leverage in the
Debit and Credit segment. Gross profit margins increased to 34.8%
from 33.7% in the first nine months of 2020 compared to the prior
year.
Income from operations was $13.5 million and $26.0 million in
the third quarter and first nine months of 2020, respectively,
compared with $7.7 million and $21.1 million in the third quarter
and first nine months of 2019, respectively. In the first nine
months of 2019, the Company recognized a $6.0 million gain related
to the cash settlement of litigation, which was included in income
from operations.
Third quarter 2020 net income was $5.8 million, or $0.52 per
diluted share, compared to a net loss of $0.7 million, or a $0.06
loss per diluted share, in the third quarter of 2019. For the first
nine months, net income was $8.8 million, or $0.79 per diluted
share, in 2020 compared to a net loss of $2.7 million, or a $0.24
loss per diluted share, in 2019.
Adjusted EBITDA increased 43% and 39% year-over-year to $17.5
million and $40.0 million in the third quarter and first nine
months of 2020, respectively.
Third Quarter and First Nine Months 2020 Segment
Information
Debit and Credit:
Net sales increased 22% and 19% year-over-year to $62.7 million
and $180.9 million in the third quarter and first nine months of
2020, respectively. Growth for the third quarter and first nine
months of 2020 was driven primarily by higher volumes of
dual-interface EMV® card sales, including Second WaveTM cards
featuring a core made with recovered ocean bound plastic. In
addition, net sales increased from CPI On-Demand card
personalization due to new customer wins and higher volumes from
our existing customers, and from COVID-19 related government
disbursement work. This growth was partially offset by COVID-19
impacts, including reduced volumes in card personalization stemming
from fewer new accounts and requests for replacement cards.
Card@Once® product sales were also impacted by COVID-19 due to
reduced hours of operation, lack of access or closure of certain
bank branches.
Prepaid Debit:
Net sales were up 1% and down 8% year-over-year to $20.6 million
and $48.7 million for the third quarter and first nine months of
2020, respectively. Growth for the third quarter was primarily due
to timing of certain customer sales, partially offset by reduced
sales volumes primarily associated with COVID-19 impacts, including
lower retail store traffic, which also impacted the decline in net
sales for the first nine months of 2020.
Balance Sheet, Liquidity, and Cash Flow
As of September 30, 2020, cash and cash equivalents was $50.3
million. Cash used in operating activities was $1.8 million and
capital expenditures were $1.7 million in the third quarter of
2020, yielding Adjusted Free Cash Flow use of $3.5 million. For the
first nine months of 2020, cash provided by operating activities
was $10.2 million and capital expenditures were $3.3 million,
yielding Adjusted Free Cash Flow of $6.9 million. This compares
with the first nine months of 2019 when cash used in operating
activities was $3.0 million, or a $9.0 million cash usage when
excluding the $6.0 million cash received from a litigation
settlement, and capital expenditures were $3.3 million, resulting
in Adjusted Free Cash Flow use of $12.3 million. For the first nine
months of 2020, cash provided by operating activities and Adjusted
Free Cash Flow increased $13.2 million and $19.2 million
year-over-year, respectively.
Total long-term debt principal outstanding, comprised of the
Company’s $30 million Senior Credit Facility and its $312.5 million
First Lien Term Loan, was $342.5 million at September 30, 2020. Net
of debt issuance costs and discount, total long-term debt was
$335.8 million as of September 30, 2020. The Company’s Senior
Credit Facility matures in May 2022 and the First Lien Term Loan
matures in August 2022.
John Lowe, Chief Financial Officer, stated, “Top-line net sales
growth and our commitment to operating efficiently resulted in
strong year-over-year growth in Net Sales, Net Income, and Adjusted
EBITDA. We are sharply focused on continuing to execute on our
strategy and capitalizing on market opportunities.”
Additional Investor Commentary
The Company has provided additional written commentary regarding
its quarterly performance and other business matters. This earnings
press release and additional written commentary are available at
investor.cpicardgroup.com.
EMV® is a registered trademark in the U.S. and other countries
and an unregistered trademark elsewhere. The EMV trademark is owned
by EMVCo, LLC.
Non-GAAP Financial Measures
In addition to financial results reported in accordance with
U.S. generally accepted accounting principles (“GAAP”), we have
provided the following non-GAAP financial measures in this release,
all reported on a continuing operations basis: EBITDA, Adjusted
EBITDA, Adjusted EBITDA margin, and Adjusted Free Cash Flow. These
non-GAAP financial measures are utilized by management in comparing
our operating performance on a consistent basis between fiscal
periods. We believe that these financial measures are appropriate
to enhance an overall understanding of our underlying operating
performance trends compared to historical and prospective periods
and our peers. Management also believes that these measures are
useful to investors in their analysis of our results of operations
and provide improved comparability between fiscal periods. Non-GAAP
financial measures should not be considered in isolation from, or
as a substitute for, financial information calculated in accordance
with GAAP. Our non-GAAP measures may be different from similarly
titled measures of other companies. Investors are encouraged to
review the reconciliation of these historical non-GAAP measures to
their most directly comparable GAAP financial measures included in
Exhibit E to this press release.
EBITDA
EBITDA represents earnings before interest, taxes, depreciation
and amortization, all on a continuing operations basis. EBITDA is
presented because it is an important supplemental measure of
performance, and it is frequently used by analysts, investors and
other interested parties in the evaluation of companies in our
industry. EBITDA is also presented and compared by analysts and
investors in evaluating our ability to meet debt service
obligations. Other companies in our industry may calculate EBITDA
differently. EBITDA is not a measurement of financial performance
under GAAP and should not be considered as an alternative to cash
flow from operating activities or as a measure of liquidity or an
alternative to net (loss) income or net (loss) income from
continuing operations as indicators of operating performance or any
other measures of performance derived in accordance with GAAP.
Because EBITDA is calculated before recurring cash charges,
including interest expense and taxes, and is not adjusted for
capital expenditures or other recurring cash requirements of the
business, it should not be considered as a measure of discretionary
cash available to invest in the growth of the business.
Adjusted EBITDA
Adjusted EBITDA is presented on a continuing operations basis
and is defined as EBITDA adjusted for litigation and related
charges incurred in connection with certain patent and shareholder
litigation; stock-based compensation expense; estimated sales tax
expense (benefit); restructuring and other charges; loss on
Revolving Credit Facility termination; foreign currency gain or
loss; litigation settlement gain; and other items that are unusual
in nature, infrequently occurring or not considered part of our
core operations, as set forth in the reconciliation on Exhibit E.
Adjusted EBITDA is also a defined computation in our First Lien
Term Loan and Senior Credit Facility agreements, which generally
conforms to the definition above, and impacts certain credit
measures and covenants, including a covenant requiring the Company
to have at least $25 million Adjusted EBITDA (as defined in our
Senior Credit Facility) for the previous four consecutive fiscal
quarters in total, at the end of each quarterly period ending on or
after March 31, 2020. Adjusted EBITDA is intended to show our
unleveraged, pre-tax operating results and therefore reflects our
financial performance based on operational factors, excluding
non-operational, unusual or non-recurring losses or gains. Adjusted
EBITDA has important limitations as an analytical tool, and you
should not consider it in isolation, or as a substitute for,
analysis of our results as reported under GAAP. For example,
Adjusted EBITDA does not reflect: (a) our capital expenditures,
future requirements for capital expenditures or contractual
commitments; (b) changes in, or cash requirements for, our working
capital needs; (c) the significant interest expenses or the cash
requirements necessary to service interest or principal payments on
our debt; (d) tax payments that represent a reduction in cash
available to us; (e) any cash requirements for the assets being
depreciated and amortized that may have to be replaced in the
future; (f) the impact of earnings or charges resulting from
matters that we and the lenders under our credit agreement may not
consider indicative of our ongoing operations; or (g) the impact of
any discontinued operations. In particular, our definition of
Adjusted EBITDA allows us to add back certain non-operating,
unusual or non-recurring charges that are deducted in calculating
net (loss) income, even though these are expenses that may recur,
vary greatly and are difficult to predict and can represent the
effect of long-term strategies as opposed to short-term
results.
In addition, certain of these expenses represent the reduction
of cash that could be used for other purposes. Further, although
not included in the calculation of Adjusted EBITDA presented in
this release, the measure as defined in our credit facilities may
at times allow us to add estimated cost savings and operating
synergies related to operational changes ranging from acquisitions
to dispositions to restructurings and/or exclude one-time
transition expenditures that we anticipate we will need to incur to
realize cost savings before such savings have occurred. Adjusted
EBITDA margin percentage as shown in Exhibit E is computed as
Adjusted EBITDA divided by total net sales.
Adjusted Free Cash Flow
We define Adjusted Free Cash Flow as cash flow provided by (used
in) operating activities - continuing operations, less capital
expenditures from continuing operations, adjusted for cash received
from a litigation settlement gain in the second quarter of 2019. We
use this metric in analyzing our ability to service and repay our
debt. However, this measure does not represent funds available for
investment or other discretionary uses since it does not deduct
cash used to service our debt, nor does it reflect the cash impacts
of our discontinued operations. Adjusted Free Cash Flow should not
be considered in isolation, or as a substitute for, cash (used in)
provided by operating activities - continuing operations or any
other measures of liquidity derived in accordance with GAAP.
About CPI Card Group Inc.
CPI Card Group® is a payment technology company and leading
provider of credit, debit and prepaid solutions delivered
physically, digitally and on-demand. CPI helps our customers foster
connections and build their brands through innovative and reliable
solutions, including financial payment cards, personalization, and
Software-as-a-Service (SaaS) instant issuance. CPI has more than 20
years of experience in the payments market and is a trusted partner
to financial institutions and payments services providers. Serving
customers from locations throughout the United States, CPI has a
large network of high security facilities, each of which is
registered as PCI compliant by one or more of the payment brands:
Visa, Mastercard®, American Express® and Discover®. Learn more at
www.cpicardgroup.com.
Forward-Looking Statements
Certain statements and information in this earnings release (as
well as information included in other written or oral statements we
make from time to time) may contain or constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as
amended. The words “believe,” “estimate,” “project,” “expect,”
“anticipate,” “plan,” “intend,” “foresee,” “should,” “would,”
“could,” “guides,” “provides guidance,” “provides outlook,” or
other similar expressions are intended to identify forward-looking
statements, which are not historical in nature. These
forward-looking statements are based on our current expectations
and beliefs concerning future developments and their potential
effect on us, and other information currently available. Such
forward-looking statements, because they relate to future events,
are by their very nature subject to many important risks and
uncertainties that could cause actual results or other events to
differ materially from those contemplated.
These risks and uncertainties include, but are not limited to:
the potential effects of COVID-19 on our business, including our
supply-chain, customer demand, workforce, operations and ability to
comply with certain covenants in our credit facilities; a decline
in U.S. and global market and economic conditions and resulting
decreases in consumer and business spending; our lack of
eligibility to participate in government relief programs related to
COVID-19 or inability to realize material benefits from such
programs; our substantial indebtedness, including inability to make
debt service payments or refinance such indebtedness; costs and
impacts to our financial results relating to the obligatory
collection of sales tax and claims for uncollected sales tax in
states that impose sales tax collection requirements on
out-of-state businesses, and challenges to our income tax
positions; the restrictive terms of our credit facilities and
covenants of future agreements governing indebtedness and the
resulting restraints on our ability to pursue our business
strategies; our limited ability to raise capital in the future;
system security risks, data protection breaches and cyber-attacks;
failure to comply with regulations, customer contractual
requirements and evolving industry standards regarding consumer
privacy and data use and security, including with respect to
possible exposure to litigation and/or regulatory penalties under
applicable data privacy and other laws for failure to so comply;
interruptions in our operations, including our IT systems, or in
the operations of the third parties that operate the data centers
or computing infrastructure on which we rely; disruptions in
production at one or more of our facilities; our inability to
adequately protect our trade secrets and intellectual property
rights from misappropriation or infringement, claims that our
technology is infringing on the intellectual property of others,
and risks related to open source software; defects in our software;
problems in production quality, materials and process; a disruption
or other failure in our supply chain; our failure to retain our
existing customers or identify and attract new customers; a loss of
market share or a decline in profitability resulting from
competition; our inability to recruit, retain and develop qualified
personnel, including key personnel; our inability to sell, exit,
reconfigure or consolidate businesses or facilities that no longer
meet with our strategy; our inability to develop, introduce and
commercialize new products; the effect of legal and regulatory
proceedings; failure to meet the continued listing standards of the
Toronto Stock Exchange or the rules of the OTCQX® Best Market; a
continued decrease in the value of our common stock combined with
our common stock no longer being traded on a United States national
securities exchange, which may prevent investors or potential
investors from investing or achieving a meaningful degree of
liquidity; developing technologies that make our existing
technology solutions and products obsolete or less relevant or a
failure to introduce new products and services in a timely manner;
quarterly variation in our operating results; our inability to
realize the full value of our long-lived assets; our failure to
operate our business in accordance with the Payment Card Industry
(“PCI”) Security Standards Council security standards or other
industry standards; costs relating to product defects and any
related product liability and/or warranty claims; maintenance and
further imposition of tariffs and/or trade restrictions on, or
slow-downs or interruptions in our ability to obtain, goods
imported into the United States; our dependence on licensing
arrangements; risks associated with international operations;
non-compliance with, and changes in, laws in the United States and
in foreign jurisdictions in which we operate and sell our products;
our ability to comply with a wide variety of environmental, health
and safety laws and regulations and the exposure to liability for
any failure to comply; risks associated with the controlling
stockholders’ ownership of our stock; potential conflicts of
interest that may arise due to our board of directors being
comprised in part of directors who are principals of our largest
stockholder; and other risks that are described in Part I, Item 1A
– Risk Factors of our Annual Report on Form 10-K for the year ended
December 31, 2019 and filed with the Securities and Exchange
Commission (the “SEC”) on March 6, 2020, Part II, Item 1A – Risk
Factors of our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2020, and filed with the SEC on November 3, 2020, and
our other reports filed from time to time with the SEC.
We caution and advise readers not to place undue reliance on
forward-looking statements, which speak only as of the date hereof.
These statements are based on assumptions that may not be realized
and involve risks and uncertainties that could cause actual results
to differ materially from the expectations and beliefs contained
herein. We undertake no obligation to publicly update or revise any
forward-looking statements after the date they are made, whether as
a result of new information, future events or otherwise.
For more information:
CPI encourages investors to use its investor relations website
as a way of easily finding information about the company. CPI
promptly makes available on this website, free of charge, the
reports that the company files or furnishes with the SEC, corporate
governance information and press releases. CPI uses its investor
relations site (http://investor.cpicardgroup.com) as a means of
disclosing material information and for complying with its
disclosure obligations under Regulation FD.
CPI Card Group Inc. Earnings Release Supplemental
Financial Information
Exhibit A
Condensed Consolidated Statements of
Operations and Comprehensive Income (Loss) - Unaudited for the
three and nine months ended September 30, 2020 and 2019
Exhibit B
Condensed Consolidated Balance Sheets –
Unaudited as of September 30, 2020 and December 31, 2019
Exhibit C
Condensed Consolidated Statements of Cash
Flows - Unaudited for the nine months ended September 30, 2020 and
2019
Exhibit D
Segment Summary Information – Unaudited
for the three and nine months ended September 30, 2020 and 2019
Exhibit E
Supplemental GAAP to Non-GAAP
Reconciliations - Unaudited for the three and nine months ended
September 30, 2020 and 2019
EXHIBIT A
CPI Card Group Inc. and
Subsidiaries
Condensed Consolidated
Statements of Operations and Comprehensive Income (Loss)
(Amounts in Thousands, Except
Share and Per Share Amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Net sales:
Products
$
43,462
$
33,963
$
125,040
$
99,845
Services
39,240
37,718
103,009
105,603
Total net sales
82,702
71,681
228,049
205,448
Cost of sales:
Products (exclusive of depreciation and
amortization shown below)
27,490
22,182
79,780
65,769
Services (exclusive of depreciation and
amortization shown below)
22,133
21,329
60,986
62,142
Depreciation and amortization
2,472
2,813
7,938
8,403
Total cost of sales
52,095
46,324
148,704
136,314
Gross profit
30,607
25,357
79,345
69,134
Operating expenses, net:
Selling, general and administrative
(exclusive of depreciation and amortization shown below)
15,617
16,104
48,893
49,541
Depreciation and amortization
1,508
1,513
4,498
4,539
Litigation settlement gain
—
—
—
(6,000
)
Total operating expenses, net
17,125
17,617
53,391
48,080
Income from operations
13,482
7,740
25,954
21,054
Other expense, net:
Interest, net
(6,298
)
(6,085
)
(19,158
)
(18,847
)
Foreign currency gain (loss)
23
(40
)
(10
)
(1,320
)
Other income (expense), net
4
14
(90
)
25
Total other expense, net
(6,271
)
(6,111
)
(19,258
)
(20,142
)
Income from continuing operations before
income taxes
7,211
1,629
6,696
912
Income tax (expense) benefit
(1,402
)
(2,258
)
2,178
(3,618
)
Net income (loss) from continuing
operations
5,809
(629
)
8,874
(2,706
)
Net (loss) income from discontinued
operation, net of tax
—
(28
)
(30
)
(16
)
Net income (loss)
$
5,809
$
(657
)
$
8,844
$
(2,722
)
Basic and Diluted net income (loss) per
share from continuing operations:
$
0.52
$
(0.06
)
$
0.79
$
(0.24
)
Basic and Diluted net income (loss) per
share:
$
0.52
$
(0.06
)
$
0.79
$
(0.24
)
Basic weighted-average shares
outstanding:
11,230,028
11,223,715
11,228,116
11,187,550
Diluted weighted-average shares
outstanding:
11,231,821
11,223,715
11,235,098
11,187,550
Comprehensive income (loss):
Net income (loss)
$
5,809
$
(657
)
$
8,844
$
(2,722
)
Currency translation adjustment
—
—
—
31
Reclassification adjustment to foreign
currency loss
—
—
—
1,329
Total comprehensive income (loss)
$
5,809
$
(657
)
$
8,844
$
(1,362
)
Note: The Company revised its prior period
financial statements to adjust immaterial items, primarily due to
estimated sales tax expense relating to 2017 to 2020. Refer to Note
1 of the Form 10-Q for the quarter ended September 30, 2020 for an
explanation of the immaterial prior period adjustments.
EXHIBIT B
CPI Card Group Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Amounts in Thousands, Except
Share and Per Share Amounts)
(Unaudited)
September 30,
December 31,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
50,349
$
18,682
Accounts receivable, net of allowances of
$291 and $395, respectively
59,093
42,832
Inventories
20,166
20,192
Prepaid expenses and other current
assets
4,267
6,345
Income taxes receivable
7,795
4,164
Total current assets
141,670
92,215
Plant, equipment, leasehold improvements
and operating lease right-of-use assets, net
35,473
41,612
Intangible assets, net
27,355
30,802
Goodwill
47,150
47,150
Other assets
2,040
1,232
Total assets
$
253,688
$
213,011
Liabilities and stockholders’
deficit
Current liabilities:
Accounts payable
$
17,223
$
16,482
Accrued expenses
29,527
24,735
Deferred revenue and customer deposits
885
468
Total current liabilities
47,635
41,685
Long-term debt
335,759
307,778
Deferred income taxes
6,656
6,366
Other long-term liabilities
9,012
11,478
Total liabilities
399,062
367,307
Commitments and contingencies
Series A Preferred Stock; $0.001 par
value—100,000 shares authorized; 0 shares issued and outstanding at
September 30, 2020 and December 31, 2019
-
-
Stockholders’ deficit:
Common stock; $0.001 par value—100,000,000
shares authorized; 11,230,482 and 11,224,191 shares issued and
outstanding at September 30, 2020 and December 31, 2019,
respectively
11
11
Capital deficiency
(111,910
)
(111,988
)
Accumulated loss
(33,475
)
(42,319
)
Total stockholders’ deficit
(145,374
)
(154,296
)
Total liabilities and stockholders’
deficit
$
253,688
$
213,011
EXHIBIT C
CPI Card Group Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(Amounts in Thousands)
(Unaudited)
Nine Months Ended September
30,
2020
2019
Operating activities
Net income (loss)
$
8,844
$
(2,722
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Loss from discontinued operations
30
16
Depreciation and amortization expense
12,436
12,942
Stock-based compensation expense
84
316
Amortization of debt issuance costs and
debt discount
2,503
1,469
Deferred income taxes
290
2,531
Reclassification adjustment to foreign
currency loss
—
1,329
Other, net
1,345
(6
)
Changes in operating assets and
liabilities:
Accounts receivable
(16,165
)
(2,605
)
Inventories
(1,109
)
(12,279
)
Prepaid expenses and other assets
49
1,659
Income taxes receivable, net
(3,630
)
331
Accounts payable
921
(358
)
Accrued expenses
4,112
(5,167
)
Deferred revenue and customer deposits
417
(472
)
Other liabilities
81
17
Cash provided by (used in) operating
activities - continuing operations
10,208
(2,999
)
Cash used in operating activities -
discontinued operations
(30
)
(16
)
Investing activities
Acquisitions of plant, equipment and
leasehold improvements
(3,320
)
(3,298
)
Cash received for sale of Canadian
subsidiary
—
1,451
Cash used in investing activities -
continuing operations
(3,320
)
(1,847
)
Financing activities
Proceeds from Senior Credit Facility, net
of discount
29,100
—
Debt issuance costs
(2,507
)
—
Proceeds from Revolving Credit
Facility
—
11,500
Payments on Revolving Credit Facility
—
(11,500
)
Payments on finance lease obligations
(1,782
)
(1,175
)
Cash provided by (used in) financing
activities
24,811
(1,175
)
Effect of exchange rates on cash
(2
)
36
Net increase (decrease) in cash and cash
equivalents
31,667
(6,001
)
Cash and cash equivalents, beginning of
period
18,682
20,291
Cash and cash equivalents, end of
period
$
50,349
$
14,290
Supplemental disclosures of cash flow
information
Cash paid during the period for:
Interest
$
17,454
$
17,315
Income taxes
$
946
$
675
Right-to-use assets obtained in exchange
for lease obligations:
Operating leases
$
141
$
8,533
Financing leases
$
1,618
$
5,196
Accounts payable, and accrued expenses for
acquisitions of plant, equipment and leasehold improvements
$
127
$
159
EXHIBIT D
CPI Card Group Inc. and
Subsidiaries
Segment Summary
Information
For the Three and Nine Months
Ended September 30, 2020 and 2019
(Dollars in Thousands)
(Unaudited)
Net Sales
Three Months Ended September
30,
2020
2019
$ Change
% Change
Net sales by segment:
Debit and Credit
$
62,710
$
51,502
$
11,208
21.8
%
Prepaid Debit
20,604
20,452
152
0.7
%
Eliminations
(612
)
(273
)
(339
)
*
%
Total
$
82,702
$
71,681
$
11,021
15.4
%
* Calculation not meaningful
Nine Months Ended September
30,
2020
2019
$ Change
% Change
Net sales by segment:
Debit and Credit
$
180,855
$
151,517
$
29,338
19.4
%
Prepaid Debit
48,680
53,162
(4,482
)
(8.4
)
%
Other
—
1,679
(1,679
)
(100.0
)
%
Eliminations
(1,486
)
(910
)
(576
)
*
%
Total
$
228,049
$
205,448
$
22,601
11.0
%
* Calculation not meaningful
Gross Profit
Three Months Ended September
30,
2020
% of Net Sales
2019
% of Net Sales
$ Change
% Change
Gross profit by segment:
Debit and Credit
$
21,720
34.6
%
$
16,441
31.9
%
$
5,279
32.1
%
Prepaid Debit
8,887
43.1
%
8,916
43.6
%
(29
)
(0.3
)
%
Total
$
30,607
37.0
%
$
25,357
35.4
%
$
5,250
20.7
%
* Calculation not meaningful
Nine Months Ended September
30,
2020
% of Net Sales
2019
% of Net Sales
$ Change
% Change
Gross profit by segment:
Debit and Credit
$
60,681
33.6
%
$
47,460
31.3
%
$
13,221
27.9
%
Prepaid Debit
18,664
38.3
%
21,771
41.0
%
(3,107
)
(14.3
)
%
Other
—
-
%
(97
)
*
%
97
*
%
Total
$
79,345
34.8
%
$
69,134
33.7
%
$
10,211
14.8
%
* Calculation not meaningful
Income from Operations
Three Months Ended September
30,
2020
% of Net Sales
2019
% of Net Sales
$ Change
% Change
Income (loss) from operations by
segment:
Debit and Credit
$
14,734
23.5
%
$
8,628
16.8
%
$
6,106
70.8
%
Prepaid Debit
7,829
38.0
%
7,815
38.2
%
14
0.2
%
Other
(9,081
)
*
%
(8,703
)
*
%
(378
)
(4.3
)
%
Total
$
13,482
16.3
%
$
7,740
10.8
%
$
5,742
74.2
%
* Calculation not meaningful
Nine Months Ended September
30,
2020
% of Net Sales
2019
% of Net Sales
$ Change
% Change
Income (loss) from operations by
segment:
Debit and Credit
$
37,914
21.0
%
$
24,037
15.9
%
$
13,877
57.7
%
Prepaid Debit
15,379
31.6
%
18,505
34.8
%
(3,126
)
(16.9
)
%
Other
(27,339
)
*
%
(21,488
)
*
%
(5,851
)
(27.2
)
%
Total
$
25,954
11.4
%
$
21,054
10.2
%
$
4,900
23.3
%
* Calculation not meaningful
EBITDA
Three Months Ended September
30,
2020
% of Net Sales
2019
% of Net Sales
$ Change
% Change
EBITDA by segment:
Debit and Credit
$
16,993
27.1
%
$
11,249
21.8
%
$
5,744
51.1
%
Prepaid Debit
8,332
40.4
%
8,342
40.8
%
(10
)
(0.1
)
%
Other
(7,836
)
*
%
(7,551
)
*
%
(285
)
(3.8
)
%
Total
$
17,489
21.1
%
$
12,040
16.8
%
$
5,449
45.3
%
* Calculation not meaningful
Nine Months Ended September
30,
2020
% of Net Sales
2019
% of Net Sales
$ Change
% Change
EBITDA by segment:
Debit and Credit
$
45,073
24.9
%
$
31,992
21.1
%
$
13,081
40.9
%
Prepaid Debit
16,974
34.9
%
20,001
37.6
%
(3,027
)
(15.1
)
%
Other
(23,757
)
*
%
(19,292
)
*
%
(4,465
)
(23.1
)
%
Total
$
38,290
16.8
%
$
32,701
15.9
%
$
5,589
17.1
%
* Calculation not meaningful
Reconciliation of Income (loss)
from
Operations by Segment to EBITDA by
Segment
Three Months Ended September
30, 2020
Debit and Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
14,734
$
7,829
$
(9,081
)
$
13,482
Depreciation and amortization
2,261
502
1,217
3,980
Other (expenses) income
(2
)
1
28
27
EBITDA
$
16,993
$
8,332
$
(7,836
)
$
17,489
Three Months Ended September
30, 2019
Debit and Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
8,628
$
7,815
$
(8,703
)
$
7,740
Depreciation and amortization
2,625
527
1,174
4,326
Other (expenses) income
(4
)
—
(22
)
(26
)
EBITDA
$
11,249
$
8,342
$
(7,551
)
$
12,040
Nine Months Ended September
30, 2020
Debit and Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
37,914
$
15,379
$
(27,339
)
$
25,954
Depreciation and amortization
7,207
1,599
3,630
12,436
Other (expenses) income
(48
)
(4
)
(48
)
(100
)
EBITDA
$
45,073
$
16,974
$
(23,757
)
$
38,290
Nine Months Ended September
30, 2019
Debit and Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
24,037
18,505
(21,488
)
21,054
Depreciation and amortization
7,966
1,515
3,461
12,942
Other (expenses) income
(11
)
(19
)
(1,265
)
(1,295
)
EBITDA
$
31,992
$
20,001
$
(19,292
)
$
32,701
EXHIBIT E
CPI Card Group Inc. and
Subsidiaries
Supplemental GAAP to Non-GAAP
Reconciliations
(Dollars in Thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Reconciliation of net income (loss)
from continuing operations (GAAP) to EBITDA and Adjusted
EBITDA:
Net income (loss) from continuing
operations
$
5,809
$
(629
)
$
8,874
$
(2,706
)
Interest expense, net
6,298
6,085
19,158
18,847
Income tax expense (benefit)
1,402
2,258
(2,178
)
3,618
Depreciation and amortization
3,980
4,326
12,436
12,942
EBITDA
$
17,489
$
12,040
$
38,290
$
32,701
Adjustments to EBITDA:
Stock-based compensation expense
25
9
84
316
Litigation and related charges (1)
—
—
—
28
Sales tax expense (2)
—
168
293
396
Restructuring and other charges (3)
—
—
1,229
—
Loss on Revolving Credit Facility
termination (4)
—
—
92
—
Litigation settlement gain (5)
—
—
—
(6,000
)
Foreign currency (gain) loss (6)
(23
)
40
10
1,320
Subtotal of adjustments to EBITDA
2
217
1,708
(3,940
)
Adjusted EBITDA
$
17,491
$
12,257
$
39,998
$
28,761
Adjusted EBITDA margin (% of net
sales)
21.1
%
17.1
%
17.5
%
14.0
%
Adjusted EBITDA growth (% Change 2020 vs.
2019)
42.7
%
39.1
%
Net income (% Change 2020 vs. 2019)
984.2
%
424.9
%
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Reconciliation of cash (used in)
provided by operating activities - continuing operations (GAAP) to
Adjusted Free Cash Flow:
Cash (used in) provided by operating
activities - continuing operations
$
(1,838
)
$
(2,042
)
$
10,208
$
(2,999
)
Acquisitions of plant, equipment and
leasehold improvements
(1,676
)
(612
)
(3,320
)
(3,298
)
Cash received from litigation settlement
(5)
—
—
—
(6,000
)
Adjusted free cash flow (use) - continuing
operations
$
(3,514
)
$
(2,654
)
$
6,888
$
(12,297
)
Note that tables in this exhibit are
presented on a continuing operations basis.
(1)
Represents net legal costs incurred with
certain patent and shareholder litigation.
(2)
The Company revised its prior period
financial statements to adjust immaterial items, primarily due to
estimated sales tax expense relating to 2017 to 2020. Refer
to Note 1 of the Form 10-Q for the quarter ended September 30, 2020
for an explanation of the immaterial prior period
adjustments.
(3)
Represents restructuring severance charges
in 2020.
(4)
The Company terminated the Revolving
Credit Facility during the first quarter of 2020 and expensed the
remaining unamortized deferred financing costs.
(5)
During the second quarter of 2019, the
Company recognized in operating income a $6.0 million gain related
to the cash settlement of litigation.
(6)
Foreign currency loss includes the release
of the cumulative translation adjustment from the balance sheet to
the statement of operations, done in connection with the
disposition of the Company’s Canadian subsidiary during the first
nine months of 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201103005380/en/
CPI Card Group Inc. Investor Relations: (877) 369-9016
InvestorRelations@cpicardgroup.com
CPI Card Group Inc. Media Relations:
Media@cpicardgroup.com
CPI Card (NASDAQ:PMTS)
Historical Stock Chart
From Apr 2024 to May 2024
CPI Card (NASDAQ:PMTS)
Historical Stock Chart
From May 2023 to May 2024