Q2 Net Sales of $93.2 Million, Up 31%
Year-Over-Year
Q2 Net Income of $6.2 Million, Up 387%
Year-Over-Year
Q2 Adjusted EBITDA of $19.3 Million, Up 91%
Year-Over-Year
New Customer Additions Contribute to Strong
Growth
Stock Begins Trading on Nasdaq
CPI Card Group Inc. (Nasdaq: PMTS; TSX: PMTS) (“CPI” or the
“Company”) today reported financial results for the second quarter
and first half ended June 30, 2021.
“Our strong second quarter and first half results reflect the
continued successful execution of our strategy, as demonstrated by
on-boarding new customers, including in the growing FinTech space,”
said Scott Scheirman, President and Chief Executive Officer of CPI.
“Our focus on meeting our customers’ needs with high quality and
differentiated products and solutions drove strong performance
across our segments.”
Scheirman continued, “Our success reflects the commitment of our
organization to be the partner of choice to our customers by
providing market-leading quality products and customer
service.”
First Half 2021 Business Highlights
- CPI’s comprehensive end-to-end solutions contributed to earning
new FinTech and traditional financial services customers.
- CPI’s market leading quality and tamper-evident prepaid
packaging solutions drove higher demand and volumes, including
earning the prepaid portfolio of another large U.S. national
chain.
- We generated incremental net sales from customer demand for
higher-priced contactless sales, as the U.S. payment card market
continues its ongoing transition to contactless solutions.
- We continued to lead the eco-focused payment card market, as
evidenced by selling over 33 million eco-focused cards, including
Second Wave®, since launch in 2019.
- Our innovative personalization services also contributed to net
sales growth over the prior year, including from our Card@Once®
Software-as-a-Service instant issuance solutions and CPI
On-Demand®.
- The Company refinanced its debt, extending maturities and
enhancing liquidity, and reduced outstanding debt by more than $30
million since December 31, 2020, resulting in net leverage ratio of
less than 4x at June 30, 2021.
Second Quarter 2021 Financial Highlights
Net sales increased 31% year-over-year to $93.2 million in the
second quarter of 2021.
- Debit and Credit segment net sales increased 25% year-over-year
to $72.9 million in the second quarter. Net sales growth was driven
by new customers, and by the ongoing transition to higher-priced
contactless card sales and related card personalization.
- Prepaid Debit segment net sales increased 51% year-over-year to
$20.4 million in the second quarter, primarily due to higher
volumes from existing customers.
Net sales in the prior year second quarter were impacted by
lower customer demand than expected in both segments, which CPI
believes was primarily attributable to the COVID-19 pandemic.
Gross profit increased 61% year-over-year in the second quarter
of 2021 to $37.1 million and gross profit margin increased to 39.8%
compared to 32.3% in the prior year, primarily due to operating
leverage.
Income from operations increased 218% year-over-year to $15.8
million in the second quarter of 2021, compared to $5.0 million in
the prior year.
Second quarter 2021 net income was $6.2 million, or $0.53
earnings per diluted share, an increase of 387% year-over-year from
net income of $1.3 million, or $0.11 earnings per diluted share, in
the second quarter of 2020.
Adjusted EBITDA increased 91% year-over-year to $19.3 million in
the second quarter as a result of net sales growth and operating
leverage.
First Half 2021 Financial Highlights
Net sales increased 25% year-over-year to $182.3 million in the
first half of 2021.
- Debit and Credit segment net sales increased 21% year-over-year
to $142.7 million in the first half of 2021. Net sales growth was
driven by new customers and the ongoing transition to contactless
card sales and related card personalization.
- Prepaid Debit segment net sales increased 42% year-over-year to
$39.8 million in the first half of 2021 due to higher volumes from
our customers including the acquisition of new customer
portfolios.
Net sales in the prior year were impacted by lower customer
demand than expected in both segments, which CPI believes was
primarily attributable to the COVID-19 pandemic.
First half 2021 gross profit increased 49% year-over-year to
$72.8 million and gross profit margin increased to 39.9% from 33.5%
in the prior year.
First half 2021 income from operations increased 169%
year-over-year to $33.6 million, compared to $12.5 million in the
prior year.
For the year-to-date period, net income was $8.6 million, or
$0.74 earnings per diluted share, in 2021 compared to net income of
$3.0 million, or $0.27 earnings per diluted share, in 2020, an
increase of 185% year-over-year. Year-to-date net income and
diluted earnings per share were adversely impacted by $5.0 million
of debt extinguishment costs and $2.6 million of make-whole
interest expense incurred during the first quarter of 2021 when the
Company refinanced its debt.
Adjusted EBITDA increased 84% year-over-year to $41.4 million in
the first half of 2021.
Balance Sheet, Liquidity, and Cash Flow
As of June 30, 2021, cash and cash equivalents was $30.7
million. Cash provided by operating activities in the first half of
2021 was $22.7 million, which is net of $15.6 million in inventory
investments to support the business and includes $6.0 million in
cash tax refunds primarily from CARES Act filings. Capital
expenditures were $3.7 million in the first half of 2021, yielding
Free Cash Flow of $19.0 million, an $8.6 million increase compared
to the first half of 2020.
During the second quarter of 2021, the Company used $15 million
of cash on hand to pay down the ABL Revolver to zero and had no
borrowings outstanding thereunder as of June 30, 2021, consistent
with the Company’s capital structure strategy to maintain ample
liquidity, invest in the business and de-leverage the balance
sheet. At quarter end, $50 million was available for borrowing
under the ABL Revolver. Total long-term debt principal outstanding
as of June 30, 2021 was comprised of the Company’s $310 million
Senior Notes.
“Our excellent financial performance in the first half drove
strong free cash flow, allowing us to reduce debt while continuing
to make investments in the business,” said John Lowe, Chief
Financial Officer. “We are proud of our first half growth and our
recent listing on the Nasdaq stock exchange, and will continue to
pursue our strategic initiatives and execute our business
plan.”
Conference Call and Webcast
CPI Card Group Inc. will hold a conference call on August 12,
2021 at 9:00 a.m. Eastern Time (ET) to review its second quarter
and first half of 2021 results. To participate in the Company's
conference call via telephone or online:
Toll-Free Dial-In Number, U.S. Participants: (844) 200-6205
United States (Local): (646) 904 5544 All Other Locations: + 44 208
0682 558 Conference ID: 716604 Webcast Link: 2Q21 Earnings
Webcast
Participants are advised to login for the webcast 10 minutes
prior to the scheduled start time.
A replay of the conference call and webcast will be available
until August 26, 2021 at: Toll-Free Dial-In Number, U.S.
Participants: (844) 200-6205 International Dial-In Number: (646)
904-5544 Conference ID: 941788 Webcast replay: 2Q21 Earnings
Webcast Replay
A webcast replay and transcript of the conference call will be
available on CPI Card Group Inc.’s Investor Relations web site:
https://investor.cpicardgroup.com/
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, Free Cash Flow, LTM Adjusted EBITDA
and Net Leverage Ratio. 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.
Adjusted EBITDA
Adjusted EBITDA is presented on a continuing operations basis
and is defined as EBITDA (which represents earnings before
interest, taxes, depreciation and amortization) adjusted for
stock-based compensation expense; estimated sales tax expense
(benefit); restructuring and other charges; loss on debt
extinguishment; foreign currency gain or loss; and other items that
are unusual in nature, infrequently occurring or not considered
part of our core operations, as set forth in the reconciliation in
Exhibit E. 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 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. Adjusted EBITDA margin
percentage as shown in Exhibit E is computed as Adjusted EBITDA
divided by total net sales.
We define LTM Adjusted EBITDA as Adjusted EBITDA (defined
previously) for the last twelve months. LTM Adjusted EBITDA is used
in the computation of Net Leverage Ratio, and is reconciled in
Exhibit E.
Free Cash Flow
We define Free Cash Flow as cash flow provided by (used in)
operating activities less capital expenditures. 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
discontinued operations. Free Cash Flow should not be considered in
isolation, or as a substitute for, cash (used in) provided by
operating activities or any other measures of liquidity derived in
accordance with GAAP.
Net Leverage Ratio
Management and various investors use the ratio of total debt,
plus finance lease obligations, less cash, divided by LTM Adjusted
EBITDA, or “Net Leverage Ratio”, as a measure of our financial
strength when making key investment decisions and evaluating us
against peers.
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 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,” “continue,” “committed,” “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, including statements
about our strategic initiatives and market opportunities, 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 indebtedness; a disruption or
other failure in our supply chain or labor pool resulting in
increased costs and inability to pass those costs on to our
customers; our inability to recruit, retain and develop qualified
personnel, including key personnel; 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; the restrictive terms of
our indebtedness 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; the effects of current or additional U.S. government
tariffs as well as economic downturns or disruptions, including
delays or interruptions in our ability to source raw materials and
components used in our products; system security risks, data
protection breaches and cyber-attacks; interruptions in our
operations, including our information technology systems, or in the
operations of the third parties that operate the data centers or
computing infrastructure on which we rely; our transition to being
an accelerated filer and complying with Section 404 of the
Sarbanes-Oxley Act of 2002 and the costs associated with such
compliance and implementation of procedures thereunder; failure to
comply with regulations, customer contractual requirements and
evolving industry standards regarding consumer privacy and data use
and security; disruptions in production at one or more of our
facilities; our failure to retain our existing customers or
identify and attract new customers; our inability to adequately
protect our trade secrets and intellectual property rights from
misappropriation, infringement claims brought against us and risks
related to open source software; defects in our software; problems
in production quality, materials and process; a loss of market
share or a decline in profitability resulting from competition; our
inability to develop, introduce and commercialize new products; new
and developing technologies that make our existing technology
solutions and products obsolete or less relevant or our failure to
introduce new products and services in a timely manner; 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, as well as potential new U.S. tax
legislation increasing the corporate income tax rate and challenges
to our income tax positions; failure to meet the continued listing
standards of the Toronto Stock Exchange or the Nasdaq Global
Market; a decrease in the value of our common stock combined with
our common stock not 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; 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 Security Standards Council security standards or other
industry standards; a decline in U.S. and global market and
economic conditions and resulting decreases in consumer and
business spending; costs relating to product defects and any
related product liability and/or warranty claims; 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 and services; the effect of legal and regulatory
proceedings; 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 majority stockholders’ ownership of our stock; the
influence of securities analysts over the trading market for and
price of our common stock; our inability to sell, exit, reconfigure
or consolidate businesses or facilities that no longer meet with
our strategy; potential conflicts of interest that may arise due to
our board of directors being comprised in part of directors who are
principals of our majority stockholders; certain provisions of our
organizational documents and other contractual provisions that may
delay or prevent a change in control and make it difficult for
stockholders other than our majority stockholders to change the
composition of our board of directors; and other risks that are
described in Part I, Item 1A – Risk Factors in our Annual Report on
Form 10-K for the year ended December 31, 2020, in Part II, Item 1A
– Risk Factors of our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2021 and our other reports filed from time to time
with the Securities and Exchange Commission (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
or other events 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 - Unaudited for the three and
six months ended June 30, 2021 and 2020
Exhibit B
Condensed Consolidated Balance Sheets –
Unaudited as of June 30, 2021 and December 31, 2020
Exhibit C
Condensed Consolidated Statements of Cash
Flows - Unaudited for the six months ended June 30, 2021 and
2020
Exhibit D
Segment Summary Information – Unaudited
for the three and six months ended June 30, 2021 and 2020
Exhibit E
Supplemental GAAP to Non-GAAP
Reconciliations - Unaudited for the three and six months ended June
30, 2021 and 2020
EXHIBIT A
CPI Card Group Inc. and
Subsidiaries
Condensed Consolidated
Statements of Operations and Comprehensive Income
(Amounts in Thousands, Except
Share and Per Share Amounts)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net sales:
Products
$
47,156
$
39,077
$
94,169
$
81,578
Services
46,063
32,301
88,142
63,769
Total net sales
93,219
71,378
182,311
145,347
Cost of sales:
Products (exclusive of depreciation and
amortization shown below)
27,928
25,911
55,215
52,290
Services (exclusive of depreciation and
amortization shown below)
25,939
19,666
49,607
38,853
Depreciation and amortization
2,264
2,711
4,680
5,466
Total cost of sales
56,131
48,288
109,502
96,609
Gross profit
37,088
23,090
72,809
48,738
Operating expenses:
Selling, general and administrative
(exclusive of depreciation and amortization shown below)
19,748
16,613
35,894
33,276
Depreciation and amortization
1,553
1,505
3,359
2,990
Total operating expenses
21,301
18,118
39,253
36,266
Income from operations
15,787
4,972
33,556
12,472
Other expense, net:
Interest, net
(7,037
)
(6,772
)
(16,013
)
(12,860
)
Other income (expense), net
4
(32
)
29
(35
)
Loss on debt extinguishment
—
—
(5,048
)
(92
)
Total other expense, net
(7,033
)
(6,804
)
(21,032
)
(12,987
)
Income (loss) from continuing operations
before income taxes
8,754
(1,832
)
12,524
(515
)
Income tax (expense) benefit
(2,522
)
3,115
(3,882
)
3,580
Net income from continuing operations
6,232
1,283
8,642
3,065
Net loss from discontinued operations, net
of tax
—
(4
)
—
(30
)
Net income
$
6,232
$
1,279
$
8,642
$
3,035
Basic and diluted earnings per share:
Basic earnings per share from continuing
operations:
$
0.55
$
0.11
$
0.77
$
0.27
Diluted earnings per share from continuing
operations:
$
0.53
$
0.11
$
0.74
$
0.27
Basic earnings per share:
$
0.55
$
0.11
$
0.77
$
0.27
Diluted earnings per share:
$
0.53
$
0.11
$
0.74
$
0.27
Basic weighted-average shares
outstanding:
11,233,002
11,229,819
11,231,742
11,227,160
Diluted weighted-average shares
outstanding:
11,762,481
11,233,852
11,720,148
11,242,272
Comprehensive income:
Net income
$
6,232
$
1,279
$
8,642
$
3,035
Total comprehensive income
$
6,232
$
1,279
$
8,642
$
3,035
EXHIBIT B
CPI Card Group Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Amounts in Thousands, Except
Share and Per Share Amounts)
(Unaudited)
June 30,
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
30,667
$
57,603
Accounts receivable, net of allowances of
$237 and $289, respectively
55,979
54,592
Inventories
40,273
24,796
Prepaid expenses and other current
assets
6,036
5,032
Income taxes receivable
2,522
10,511
Total current assets
135,477
152,534
Plant, equipment and leasehold
improvements and operating lease right-of-use assets, net
39,257
39,403
Intangible assets, net
23,909
26,207
Goodwill
47,150
47,150
Other assets
2,575
857
Total assets
$
248,368
$
266,151
Liabilities and stockholders’
deficit
Current liabilities:
Accounts payable
$
20,778
$
18,883
Accrued expenses
31,809
28,149
Current portion of long-term debt
—
8,027
Deferred revenue and customer deposits
1,157
1,868
Total current liabilities
53,744
56,927
Long-term debt
302,877
328,681
Deferred income taxes
7,447
7,409
Other long-term liabilities
13,563
11,171
Total liabilities
377,631
404,188
Commitments and contingencies
Series A Preferred Stock; $0.001 par
value—100,000 shares authorized; 0 shares issued and outstanding at
June 30, 2021 and December 31, 2020
—
—
Stockholders’ deficit:
Common stock; $0.001 par value—100,000,000
shares authorized; 11,237,056 and 11,230,482 shares issued and
outstanding at June 30, 2021 and December 31, 2020
11
11
Capital deficiency
(111,726
)
(111,858
)
Accumulated loss
(17,548
)
(26,190
)
Total stockholders’ deficit
(129,263
)
(138,037
)
Total liabilities and stockholders’
deficit
$
248,368
$
266,151
EXHIBIT C
CPI Card Group Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(Amounts in Thousands)
(Unaudited)
Six Months Ended June
30,
2021
2020
Operating activities
Net income
$
8,642
$
3,035
Adjustments to reconcile net income to net
cash provided by operating activities:
Loss from discontinued operations
—
30
Depreciation and amortization expense
8,039
8,457
Stock-based compensation expense
98
59
Amortization of debt issuance costs and
debt discount
1,393
1,565
Loss on debt extinguishment
5,048
92
Deferred income taxes
38
255
Other, net
142
1,199
Changes in operating assets and
liabilities:
Accounts receivable
(1,384
)
(2,381
)
Inventories
(15,600
)
259
Prepaid expenses and other assets
(752
)
1,136
Income taxes receivable, net
7,989
(3,799
)
Accounts payable
2,548
(1,660
)
Accrued expenses
6,530
3,275
Deferred revenue and customer deposits
(715
)
629
Other liabilities
730
(105
)
Cash provided by operating activities -
continuing operations
22,746
12,046
Cash used in operating activities -
discontinued operations
—
(30
)
Investing activities
Capital expenditures for plant, equipment
and leasehold improvements
(3,703
)
(1,644
)
Other
156
—
Cash used in investing activities
(3,547
)
(1,644
)
Financing activities
Principal payments on First Lien Term
loan
(312,500
)
-
Principal payments on Senior Credit
Facility
(30,000
)
-
Principal payments on ABL Revolver
(15,000
)
-
Proceeds from Senior Notes
310,000
-
Proceeds from ABL Revolver, net of
discount
14,750
-
Proceeds from Senior Credit Facility, net
of discount
-
29,100
Proceeds from exercises of stock
options
34
-
Debt issuance costs
(9,452
)
(2,507
)
Payments on debt extinguishment
(2,685
)
-
Payments on finance lease obligations
(1,287
)
(1,181
)
Cash (used in) provided by financing
activities
(46,140
)
25,412
Effect of exchange rates on cash
5
(21
)
Net (decrease) increase in cash and cash
equivalents
(26,936
)
35,763
Cash and cash equivalents, beginning of
period
57,603
18,682
Cash and cash equivalents, end of
period
$
30,667
$
54,445
Supplemental disclosures of cash flow
information
Cash paid (refunded) during the period
for:
Interest
$
8,604
$
11,519
Income taxes paid
$
2,284
$
275
Income taxes (refunded)
$
(6,003
)
$
(259
)
Right-to-use assets obtained in exchange
for lease obligations:
Operating leases
$
3,363
$
141
Financing leases
$
484
$
763
Accounts payable, and accrued expenses for
capital expenditures for plant, equipment and leasehold
improvements
$
399
$
528
EXHIBIT D
CPI Card Group Inc. and
Subsidiaries
Segment Summary
Information
For the Three and Six Months
Ended June 30, 2021 and June 30, 2020
(Dollars in Thousands)
(Unaudited)
Net Sales
Three Months Ended June
30,
2021
2020
$ Change
% Change
Net sales by segment:
Debit and Credit
$
72,860
$
58,306
$
14,554
25.0
%
Prepaid Debit
20,383
13,536
6,847
50.6
%
Eliminations
(24
)
(464
)
440
*
%
Total
$
93,219
$
71,378
$
21,841
30.6
%
* Calculation not meaningful
Six Months Ended June
30,
2021
2020
$ Change
% Change
Net sales by segment:
Debit and Credit
$
142,677
$
118,145
$
24,532
20.8
%
Prepaid Debit
39,841
28,076
11,765
41.9
%
Eliminations
(207
)
(874
)
667
*
%
Total
$
182,311
$
145,347
$
36,964
25.4
%
* Calculation not meaningful
Gross Profit
Three Months Ended June
30,
2021
% of Net Sales
2020
% of Net Sales
$ Change
% Change
Gross profit by segment:
Debit and Credit
$
28,263
38.8
%
$
18,553
31.8
%
$
9,710
52.3
%
Prepaid Debit
8,825
43.3
%
4,537
33.5
%
4,288
94.5
%
Total
$
37,088
39.8
%
$
23,090
32.3
%
$
13,998
60.6
%
Six Months Ended June
30,
2021
% of Net Sales
2020
% of Net Sales
$ Change
% Change
Gross profit by segment:
Debit and Credit
$
55,812
39.1
%
$
38,961
33.0
%
$
16,851
43.3
%
Prepaid Debit
16,997
42.7
%
9,777
34.8
%
7,220
73.8
%
Total
$
72,809
39.9
%
$
48,738
33.5
%
$
24,071
49.4
%
Income from Operations
Three Months Ended June
30,
2021
% of Net Sales
2020
% of Net Sales
$ Change
% Change
Income (loss) from operations by
segment:
Debit and Credit
$
20,258
27.8
%
$
10,704
18.4
%
$
9,554
89.3
%
Prepaid Debit
7,550
37.0
%
3,434
25.4
%
4,116
119.9
%
Other
(12,021
)
*
%
(9,166
)
*
%
(2,855
)
31.1
%
Total
$
15,787
16.9
%
$
4,972
7.0
%
$
10,815
217.5
%
* Calculation not meaningful
Six Months Ended June
30,
2021
% of Net Sales
2020
% of Net Sales
$ Change
% Change
Income (loss) from operations by
segment:
Debit and Credit
$
40,412
28.3
%
$
23,180
19.6
%
$
17,232
74.3
%
Prepaid Debit
14,568
36.6
%
7,550
26.9
%
7,018
93.0
%
Other
(21,424
)
*
%
(18,258
)
*
%
(3,166
)
17.3
%
Total
$
33,556
18.4
%
$
12,472
8.6
%
$
21,084
169.1
%
* Calculation not meaningful
EBITDA
Three Months Ended June
30,
2021
% of Net Sales
2020
% of Net Sales
$ Change
% Change
EBITDA by segment:
Debit and Credit
$
22,322
30.6
%
$
13,121
22.5
%
$
9,201
70.1
%
Prepaid Debit
8,106
39.8
%
3,982
29.4
%
4,124
103.6
%
Other
(10,820
)
*
%
(7,947
)
*
%
(2,873
)
36.2
%
Total
$
19,608
21.0
%
$
9,156
12.8
%
$
10,452
114.2
%
* Calculation not meaningful
Six Months Ended June
30,
2021
% of Net Sales
2020
% of Net Sales
$ Change
% Change
EBITDA by segment:
Debit and Credit
$
44,722
31.3
%
$
28,080
23.8
%
$
16,642
59.3
%
Prepaid Debit
15,679
39.4
%
8,642
30.8
%
7,037
81.4
%
Other
(23,825
)
*
%
(15,921
)
*
%
(7,904
)
49.6
%
Total
$
36,576
20.1
%
$
20,801
14.3
%
$
15,775
75.8
%
* Calculation not meaningful
Reconciliation of Income (loss)
from
Operations by Segment to EBITDA by
Segment
Three Months Ended June 30,
2021
Debit and Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
20,258
)
$
7,550
$
(12,021
)
$
15,787
)
Depreciation and amortization
2,060
558
1,199
3,817
Other income (expenses)
4
(2
)
2
4
EBITDA
$
22,322
$
8,106
$
(10,820
)
$
19,608
Three Months Ended June 30,
2020
Debit and Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
10,704
$
3,434
$
(9,166
)
$
4,972
Depreciation and amortization
2,453
549
1,214
4,216
Other (expenses)
(36
)
(1
)
5
(32
)
EBITDA
$
13,121
$
3,982
$
(7,947
)
$
9,156
Six Months Ended June 30,
2021
Debit and Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
40,412
$
14,568
$
(21,424
)
$
33,556
Depreciation and amortization
4,297
1,097
2,645
8,039
Other income (expenses)
13
14
(5,046
)
(5,019
)
EBITDA
$
44,722
$
15,679
$
(23,825
)
$
36,576
Six Months Ended June 30,
2020
Debit and Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
23,180
$
7,550
$
(18,258
)
$
12,472
Depreciation and amortization
4,946
1,097
2,413
8,456
Other (expenses)
(46
)
(5
)
(76
)
(127
)
EBITDA
$
28,080
$
8,642
$
(15,921
)
$
20,801
EXHIBIT E
CPI Card Group Inc. and
Subsidiaries
Supplemental GAAP to Non-GAAP
Reconciliation
(Dollars in Thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
EBITDA and Adjusted EBITDA:
Net income
$
6,232
$
1,279
$
8,642
$
3,035
Net loss from discontinued operations
—
4
—
30
Interest expense, net
7,037
6,772
16,013
12,860
Income tax expense (benefit)
2,522
(3,115
)
3,882
(3,580
)
Depreciation and amortization
3,817
4,216
8,039
8,456
EBITDA
$
19,608
$
9,156
$
36,576
$
20,801
Adjustments to EBITDA:
Stock-based compensation expense
47
18
98
59
Sales tax (benefit) expense (1)
(385
)
172
(465
)
293
Restructuring and other charges (2)
40
762
161
1,229
Loss on debt extinguishment (3)
—
—
5,048
92
Foreign currency (gain) loss
(4
)
25
(29
)
33
Subtotal of adjustments to EBITDA
(302
)
977
4,813
1,706
Adjusted EBITDA
$
19,306
$
10,133
$
41,389
$
22,507
Net income (% Change 2021 vs. 2020)
387.3
%
184.7
%
Adjusted EBITDA margin (% of Net
Sales)
20.7
%
14.2
%
22.7
%
15.5
%
Adjusted EBITDA growth (% Change 2021 vs.
2020)
90.5
%
83.9
%
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Free Cash Flow:
Cash provided by operating activities
$
22,602
$
8,842
$
22,746
$
12,046
Capital expenditures for plant, equipment
and leasehold improvements
(1,179
)
(706
)
(3,703
)
(1,644
)
Free Cash Flow
$
21,423
$
8,136
$
19,043
$
10,402
(1)
Represents estimated sales tax (benefit)
expense relating to a contingent liability due to historical
activity in certain states where it is probable that the Company
will be subject to sales tax plus interest and penalties. During
the year ended December 31, 2020, the Company revised its prior
period financial statements to adjust immaterial items, primarily
due to estimated sales tax expense relating to 2017 through the
second quarter of 2020. Refer to Note 1 of the Form 10-Q for the
quarter ended June 30, 2021 and Note 2 of the Form 10-K for the
year ended December 31, 2020 for an explanation of the immaterial
prior period adjustments.
(2)
Represents restructuring severance
charges.
(3)
The Company terminated and repaid its
Senior Credit Facility and First Lien Term Loan during the first
quarter of 2021 and expensed the unamortized deferred financing
costs and debt discount. Additionally, the Company terminated its
previous Revolving Credit Facility during the first quarter of 2020
and expensed the remaining unamortized deferred financing
costs.
Last Twelve Months
Ended
June 30,
December 31,
2021
2020
Reconciliation of net income to LTM
EBITDA and Adjusted EBITDA
Net income
$
21,736
$
16,129
Net loss from discontinued operations
31
61
Interest expense, net
28,550
25,397
Income tax expense (benefit)
4,157
(3,305
)
Depreciation and amortization
16,410
16,827
EBITDA
$
70,884
$
55,109
Adjustments to EBITDA:
Stock-based compensation expense
175
136
Sales tax expense (1)
168
926
Restructuring and other charges (2)
201
1,269
Loss on debt extinguishment (3)
5,048
92
Foreign currency (gain) loss
(55
)
7
Subtotal of adjustments to EBITDA
$
5,537
$
2,430
LTM Adjusted EBITDA
$
76,421
$
57,539
(1)
Represents estimated sales tax (benefit)
expense relating to a contingent liability due to historical
activity in certain states where it is probable that the Company
will be subject to sales tax plus interest and penalties. During
the year ended December 31, 2020, the Company revised its prior
period financial statements to adjust immaterial items, primarily
due to estimated sales tax expense relating to 2017 through the
second quarter of 2020. Refer to Note 1 of the Form 10-Q for the
quarter ended June 30, 2021 and Note 2 of the Form 10-K for the
year ended December 31, 2020 for an explanation of the immaterial
prior period adjustments.
(2)
Represents restructuring severance
charges.
(3)
The Company terminated and repaid its
Senior Credit Facility and First Lien Term Loan during the first
quarter of 2021 and expensed the unamortized deferred financing
costs and debt discount. Additionally, the Company terminated its
previous Revolving Credit Facility during the first quarter of 2020
and expensed the remaining unamortized deferred financing
costs.
As of
June 30,
December 31,
2021
2020
Calculation of Net Leverage
Ratio:
Debt principal outstanding
$
310,000
$
342,500
Finance lease obligations
4,380
5,192
Total Debt
314,380
347,692
Less: Cash and cash equivalents
(30,667
)
(57,603
)
Total Net Debt (a)
$
283,713
$
290,089
LTM Adjusted EBITDA (b)
$
76,421
$
57,539
Net Leverage Ratio (a)/(b)
3.7
5.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210812005239/en/
CPI Card Group Inc. Investor Relations: (877) 369-9016
InvestorRelations@cpicardgroup.com
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