Net Sales Increased 25% to $111.4 Million; Net
Income Increased 149% to $6.0 Million; Adjusted EBITDA Increased 2%
to $22.5 Million
Innovative Eco-focused Card and SaaS-based
Instant Issuance Solutions Drive First Quarter Sales Growth
Company Continues to Experience Strong Customer
Demand; Updates 2022 Expectations to Reflect Higher Sales
Outlook
CPI Card Group Inc. (Nasdaq: PMTS) (“CPI” or the “Company”), a
payment technology company and leading provider of credit, debit,
and prepaid solutions, today reported financial results for the
first quarter ended March 31, 2022 and updated its financial
outlook for 2022.
First quarter net sales increased 25% to $111.4 million, a
record sales quarter for the Company since it became public in
2015. Growth was led by the Debit and Credit segment, which
benefitted from strong performance from sales of contactless cards
and instant issuance solutions. Net income increased 149% to $6.0
million, primarily due to debt refinancing costs incurred in the
prior year first quarter, and Adjusted EBITDA increased 2% to $22.5
million, driven by sales growth and operating leverage, with
offsets from inflationary impacts on materials and labor and higher
SG&A expenses.
“Our first quarter results reflect continued strong customer
demand for our high-quality and innovative payment solutions,” said
Scott Scheirman, President and Chief Executive Officer of CPI. “We
generated particularly strong growth from differentiated products
and services such as our eco-focused cards and Card@Once® instant
issuance solutions.”
Scheirman added, “We are pleased with the first quarter sales
performance and are confident in our full-year outlook, as we
continue to navigate the challenging inflation and supply-chain
environment and pursue initiatives to improve profitability.”
The Company now expects low double-digit net sales growth and
mid-to-high single-digit Adjusted EBITDA growth for the 2022 full
year. This represents an increase from the prior outlook of
mid-single digit net sales and Adjusted EBITDA growth. The
full-year Adjusted EBITDA margin is now expected to be slightly
below 20%, reflecting inflationary pressures on materials and labor
costs. The Company expects strong sales growth in its Debit and
Credit segment for the year and Prepaid Debit segment sales
slightly below the record level in 2021.
CPI is a top payment solutions provider in the U.S. serving
thousands of banks, credit unions and FinTechs. The Company is a
leader in the U.S. markets for eco-focused payment cards,
personalization and Software-as-a-Service-based instant issuance
solutions for small and medium U.S. financial institutions and
retail prepaid debit card solutions, and maintains longstanding
customer relationships.
The Company expects long-term market growth to be aided by the
gradual transition to higher-priced contactless cards, including
eco-focused cards, as well as continued financial payment card
growth. Visa and Mastercard U.S. credit, debit and prepaid cards in
circulation have increased at a compound annual growth rate of 8%
over the three-year period ended December 31, 2021, based on
figures released by the networks.
First Quarter 2022 Business
Highlights
- Generated incremental net sales from customer demand for
higher-priced contactless cards, as the U.S. payment card market
continues its gradual transition to contactless solutions.
- Continued to be a leading provider of eco-focused payment card
solutions in the U.S. Through the end of the first quarter of 2022,
the Company has sold more than 60 million eco-focused cards since
launch in late 2019.
- Experienced ongoing high demand for Card@Once®
Software-as-a-Service-based instant issuance solutions. The Company
has more than 13,000 Card@Once® installations across more than
1,800 financial institutions in the U.S.
- Reduced long-term debt in the first quarter of 2022 by
redeeming $20 million of 8.625% senior secured notes. The Company’s
Net Leverage Ratio was approximately 4x at March 31, 2022.
First Quarter 2022 Financial
Highlights
Net sales increased 25% year-over-year to $111.4 million in the
first quarter of 2022.
- Debit and Credit segment net sales increased 32% to $92.0
million. Growth was primarily driven by increased sales of
higher-priced contactless cards, including eco-focused cards;
Card@Once® instant issuance solutions; and personalization services
related to contactless cards.
- Prepaid Debit segment net sales were flat at $19.5 million.
Prior year sales benefitted from the onboarding of new customer
portfolios.
First quarter gross profit increased 10% to $39.3 million and
gross profit margin was 35.3%, which compared to 40.1% in the prior
year first quarter. The year-over-year decrease in gross profit
margin was primarily due to increased material and labor costs,
partially offset by increased operating leverage from higher net
sales. First quarter gross profit margin increased from the fourth
quarter 2021 level of 33.2% due to operating leverage from higher
sales.
Year-over-year, income from operations increased 1% to $18.0
million; net income increased 149% to $6.0 million, or $0.51
diluted earnings per share; and Adjusted EBITDA increased 2% to
$22.5 million.
Operating income, net income and Adjusted EBITDA growth
benefitted from higher net sales and the resulting operating
leverage, partially offset by increased materials and labor costs
and higher SG&A expenses, including increased compensation
expenses and costs related to Sarbanes-Oxley initiatives. The
substantial increase in net income was due to significant debt
refinancing costs incurred in the 2021 first quarter.
Balance Sheet, Liquidity, and
Cash Flow
As of March 31, 2022, cash and cash equivalents was $12.1
million. Cash from operating activities in the first quarter of
2022 was a usage of $16.0 million and capital expenditures were
$3.2 million, yielding Free Cash Flow usage of $19.1 million,
compared to a $2.4 million usage in the first quarter of 2021. The
Company anticipated significant working capital usage in the first
quarter of 2022, which was primarily driven by a $13 million
increase in inventories to support future growth and a $10 million
increase in accounts receivables as a result of higher sales, and
expects improved Free Cash Flow for the remainder of the year.
The Company had $290 million of 8.625% senior secured notes due
2026 and $30 million of borrowings from its ABL revolving credit
facility outstanding at quarter-end. The revolving credit facility
proceeds were utilized to fund the $20 million notes redemption, at
a redemption price equal to 103% of par value plus accrued and
unpaid interest, and temporary working capital needs.
The Company’s capital structure and allocation priorities are to
maintain ample liquidity; invest in the business, including
strategic acquisitions; deleverage the balance sheet; and return
funds to stockholders.
“Strong sales growth helped us deliver margin improvement from
last year’s fourth quarter levels, as expected,” said Amintore
Schenkel, Chief Financial Officer. “We remain focused on
implementing profitability initiatives, including price increases;
supporting business growth; and generating strong cash flow, as
well as further reducing net leverage.”
Conference Call and Webcast
CPI Card Group Inc. will hold a conference call on May 5, 2022
at 9:00 a.m. Eastern Time (ET) to review its first quarter 2022
results. To participate in the Company's conference call via
telephone or online:
Toll-Free Dial-In Number, U.S. Participants: (833) 420-0402
International Dial-In Number: (236) 714-4289 Conference ID: 3979407
Webcast Link: 1Q22 Webcast Link
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 May 19, 2022 at: US dial-in number (Toll Free): (800)
585-8367 US dial-in number: (Local): (416) 621-4642 Conference ID:
3979407
A webcast replay of the conference call will also 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
litigation; stock-based compensation expense; estimated sales tax
expense, restructuring and other charges; loss on debt
extinguishment; 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 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 (continuing operations) 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 our 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.
Financial Expectations for 2022
We have provided Adjusted EBITDA and Adjusted EBITDA Margin
expectations for 2022 on a non-GAAP basis because certain
reconciling items are dependent on future events that either cannot
be controlled or cannot be reliably predicted because they are not
part of the Company’s routine activities, any of which could be
significant.
Net Leverage Ratio
Management and various investors use the ratio of debt principal
outstanding, 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,” “attempt,” “target,” “guides,”
“seek,” “focus,” “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 and our guidance for
full-year 2022 results, 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 and responses thereto on our
business, including our supply chain, customer demand, workforce,
operations and ability to comply with certain covenants related to
our indebtedness; 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; our failure to maintain effective internal
control over financial reporting or remediate material weaknesses;
our inability to recruit, retain and develop qualified personnel,
including key personnel; a disruption or other failure in our
supply chain, including as a result of the Russia-Ukraine war, or
labor pool resulting in increased costs and inability to pass those
costs on to our customers and extended production lead times and
difficulty meeting customers’ delivery expectations; a decline in
U.S. and global market and economic conditions and resulting
decreases in consumer and business spending and ongoing or
accelerating inflationary pressure; our failure to retain our
existing customers or identify and attract new customers; system
security risks, data protection breaches and cyber-attacks; 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; 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; disruptions in production at one
or more of our facilities; environmental, social and governance
preferences and demands of various stakeholders and our ability to
conform to such preferences and demands and to comply with any
related regulatory requirements; the effects of climate change,
negative perceptions of our products due to the impact of our
products and production processes on the environment and other
ESG-related risks; disruptions in production due to weather
conditions, climate change, political instability or social unrest;
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; our limited ability to raise
capital in the future; problems in production quality, materials
and process; our inability to develop, introduce and commercialize
new products; 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; our inability to
successfully execute on our divestitures or acquisitions; our
inability to realize the full value of our long-lived assets; costs
relating to product defects and any related product liability
and/or warranty claims; our inability to renew licenses with key
technology licensors; the highly competitive, saturated and
consolidated nature of our marketplace; the effects of delays or
interruptions in our ability to source raw materials and components
used in our products from foreign countries; failure to comply with
regulations, customer contractual requirements and evolving
industry standards regarding consumer privacy and data use and
security; 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;
quarterly variation in our operating results; our failure to
operate our business in accordance with the Payment Card Industry
Security Standards Council security standards or other industry
standards; our failure to comply with environmental, health and
safety laws and regulations, including climate change regulations
that apply to our products and the raw materials we use in our
production processes; risks associated with the majority
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 majority
stockholders; the influence of securities analysts over the trading
market for and price of our common stock; failure to meet the
continued listing standards of the Nasdaq Global Market; 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; our ability to
comply with a wide variety of complex laws and regulations and the
exposure to liability for any failure to comply; the effect of
legal and regulatory proceedings; 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, 2021 filed with the
Securities and Exchange Commission (“SEC”) on March 8, 2022, in
Part ii, Item 1A – Risk Factors in our Quarterly Report on Form
10-Q for the quarter ended March 30, 2022 filed with the SEC on May
5, 2022, 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
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 the reports that the
Company files or furnishes with the SEC, corporate governance
information and press releases.
CPI Card Group Inc. Earnings
Release Supplemental Financial Information
Exhibit A
Condensed Consolidated Statements of
Operations and Comprehensive Income - Unaudited for the three
months ended March 31, 2022 and 2021
Exhibit B
Condensed Consolidated Balance Sheets –
Unaudited as of March 31, 2022 and December 31, 2021
Exhibit C
Condensed Consolidated Statements of Cash
Flows - Unaudited for the three months ended March 31, 2022 and
2021
Exhibit D
Segment Summary Information – Unaudited
for the three months ended March 31, 2022 and 2021
Exhibit E
Supplemental GAAP to Non-GAAP
Reconciliations - Unaudited for the three months ended March 31,
2022 and 2021
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 March
31,
2022
2021
Net sales:
Products
$
68,316
$
47,013
Services
43,108
42,079
Total net sales
111,424
89,092
Cost of sales:
Products (exclusive of depreciation and
amortization shown below)
43,094
27,287
Services (exclusive of depreciation and
amortization shown below)
26,857
23,668
Depreciation and amortization
2,195
2,416
Total cost of sales
72,146
53,371
Gross profit
39,278
35,721
Operating expenses:
Selling, general and administrative
(exclusive of depreciation and amortization shown below)
19,882
16,146
Depreciation and amortization
1,415
1,806
Total operating expenses
21,297
17,952
Income from operations
17,981
17,769
Other expense, net:
Interest, net
(7,865)
(8,976)
Other income (expense), net
(1)
25
Loss on debt extinguishment
(395)
(5,048)
Total other expense, net
(8,261)
(13,999)
Income before income taxes
9,720
3,770
Income tax expense
(3,718)
(1,360)
Net income
$
6,002
$
2,410
Basic and diluted earnings per share:
Basic earnings per share:
$
0.53
$
0.21
Diluted earnings per share:
$
0.51
$
0.21
Basic weighted-average shares
outstanding:
11,255,466
11,230,482
Diluted weighted-average shares
outstanding:
11,717,849
11,639,015
Comprehensive income:
Net income
$
6,002
$
2,410
Total comprehensive income
$
6,002
$
2,410
EXHIBIT B
CPI Card Group Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Amounts in Thousands, Except
Share and Per Share Amounts)
(Unaudited)
March 31,
December 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
12,136
$
20,683
Accounts receivable, net of allowances of
$162 and $86, respectively
71,177
60,953
Inventories
70,516
58,009
Prepaid expenses and other current
assets
6,166
5,522
Income taxes receivable
—
534
Total current assets
159,995
145,701
Plant, equipment and leasehold
improvements and operating lease right-of-use assets, net
49,963
47,251
Intangible assets, net
20,887
21,854
Goodwill
47,150
47,150
Other assets
7,740
6,184
Total assets
$
285,735
$
268,140
Liabilities and stockholders’
deficit
Current liabilities:
Accounts payable
$
30,384
$
26,443
Accrued expenses
29,672
37,150
Deferred revenue and customer deposits
498
1,182
Total current liabilities
60,554
64,775
Long-term debt
314,388
303,626
Deferred income taxes
5,895
5,253
Other long-term liabilities
18,955
15,506
Total liabilities
399,792
389,160
Commitments and contingencies
Series A Preferred Stock; $0.001 par
value—100,000 shares authorized; 0 shares issued and outstanding at
March 31, 2022 and December 31, 2021
—
—
Stockholders’ deficit:
Common stock; $0.001 par value—100,000,000
shares authorized; 11,255,466 shares issued and outstanding at
March 31, 2022 and December 31, 2021
11
11
Capital deficiency
(109,821)
(110,782)
Accumulated loss
(4,247)
(10,249)
Total stockholders’ deficit
(114,057)
(121,020)
Total liabilities and stockholders’
deficit
$
285,735
$
268,140
EXHIBIT C
CPI Card Group Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(Amounts in Thousands)
(Unaudited)
Three Months Ended March
31,
2022
2021
Operating activities
Net income
$
6,002
$
2,410
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense
3,610
4,222
Stock-based compensation expense
961
51
Amortization of debt issuance costs and
debt discount
486
887
Loss on debt extinguishment
395
5,048
Deferred income taxes
642
(177)
Other, net
768
200
Changes in operating assets and
liabilities:
Accounts receivable
(10,300)
(5,884)
Inventories
(12,579)
(8,885)
Prepaid expenses and other assets
(2,057)
107
Income taxes, net
932
1,359
Accounts payable
4,173
3,705
Accrued expenses
(8,840)
(2,790)
Deferred revenue and customer deposits
(684)
(556)
Other liabilities
530
447
Cash (used in) provided by operating
activities
(15,961)
144
Investing activities
Capital expenditures for plant, equipment
and leasehold improvements
(3,154)
(2,524)
Other
5
155
Cash used in investing activities
(3,149)
(2,369)
Financing activities
Principal payments on First Lien Term
loan
—
(312,500)
Principal payments on Senior Credit
Facility
—
(30,000)
Principal payments on Senior Notes
(20,000)
—
Proceeds from Senior Notes
—
310,000
Proceeds from ABL Revolver, net of
discount
30,000
14,750
Debt issuance costs
(262)
(9,452)
Payments on debt extinguishment and
other
(600)
(2,685)
Proceeds from finance lease financing
2,074
—
Payments on finance lease obligations
(649)
(610)
Cash provided by (used in) financing
activities
10,563
(30,497)
Effect of exchange rates on cash
—
3
Net decrease in cash and cash
equivalents
(8,547)
(32,719)
Cash and cash equivalents, beginning of
period
20,683
57,603
Cash and cash equivalents, end of
period
$
12,136
$
24,884
Supplemental disclosures of cash flow
information
Cash paid during the period for:
Interest
$
13,553
$
8,382
Income taxes paid
$
94
$
1
Right-of-use assets obtained in exchange
for lease obligations:
Operating leases
$
816
$
432
Financing leases
$
3,541
$
526
Accounts payable and accrued expenses for
capital expenditures for plant, equipment and leasehold
improvements
$
2,293
$
256
EXHIBIT D
CPI Card Group Inc. and
Subsidiaries
Segment Summary
Information
For the Three Months Ended
March 31, 2022 and March 31, 2021
(Dollars in Thousands)
(Unaudited)
Net Sales
Three Months Ended March
31,
2022
2021
$ Change
% Change
Net sales by segment:
Debit and Credit
$
92,015
$
69,817
$
22,198
31.8
%
Prepaid Debit
19,461
19,458
3
0.0
%
Eliminations
(52)
(183)
131
*
%
Total
$
111,424
$
89,092
$
22,332
25.1
%
* Calculation not meaningful
Gross Profit
Three Months Ended March
31,
2022
% of Net Sales
2021
% of Net Sales
$ Change
% Change
Gross profit by segment:
Debit and Credit
$
32,230
35.0
%
$
27,549
39.5
%
$
4,681
17.0
%
Prepaid Debit
7,048
36.2
%
8,172
42.0
%
(1,124)
(13.8)
%
Total
$
39,278
35.3
%
$
35,721
40.1
%
$
3,557
10.0
%
Income from Operations
Three Months Ended March
31,
2022
% of Net Sales
2021
% of Net Sales
$ Change
% Change
Income (loss) from operations by
segment:
Debit and Credit
$
24,110
26.2
%
$
20,154
28.9
%
$
3,956
19.6
%
Prepaid Debit
5,968
30.7
%
7,018
36.1
%
(1,050)
(15.0)
%
Other
(12,097)
*
%
(9,403)
*
%
(2,694)
28.7
%
Total
$
17,981
16.1
%
$
17,769
19.9
%
$
212
1.2
%
EBITDA
Three Months Ended March
31,
2022
% of Net Sales
2021
% of Net Sales
$ Change
% Change
EBITDA by segment:
Debit and Credit
$
26,094
28.4
%
$
22,400
32.1
%
$
3,694
16.5
%
Prepaid Debit
6,564
33.7
%
7,573
38.9
%
(1,009)
(13.3)
%
Other
(11,463)
*
%
(13,005)
*
%
1,542
(11.9)
%
Total
$
21,195
19.0
%
$
16,968
19.0
%
$
4,227
24.9
%
Reconciliation of Income (loss)
from
Operations by Segment to EBITDA by
Segment
Three Months Ended March 31,
2022
Debit and Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
24,110
$
5,968
$
(12,097)
$
17,981
Depreciation and amortization
1,980
598
1,032
3,610
Other income (expenses)
4
(2)
(398)
(396)
EBITDA
$
26,094
$
6,564
$
(11,463)
$
21,195
Three Months Ended March 31,
2021
Debit and Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
20,154
$
7,018
$
(9,403)
$
17,769
Depreciation and amortization
2,237
539
1,446
4,222
Other income (expenses)
9
16
(5,048)
(5,023)
EBITDA
$
22,400
$
7,573
$
(13,005)
$
16,968
EXHIBIT E
CPI Card Group Inc. and
Subsidiaries
Supplemental GAAP to Non-GAAP
Reconciliation
(Dollars in Thousands)
(Unaudited)
Three Months Ended March
31,
2022
2021
EBITDA and Adjusted EBITDA:
Net income
$
6,002
$
2,410
Interest expense, net
7,865
8,976
Income tax expense
3,718
1,360
Depreciation and amortization
3,610
4,222
EBITDA
$
21,195
$
16,968
Adjustments to EBITDA:
Stock-based compensation expense
961
51
Sales tax benefit (1)
(12)
(80)
Severance and other charges (2)
—
121
Loss on debt extinguishment (3)
395
5,048
Foreign currency gain
—
(25)
Subtotal of adjustments to EBITDA
1,344
5,115
Adjusted EBITDA
$
22,539
$
22,083
Net income margin (% of Net Sales)
5.4%
2.7%
Net income growth (% Change 2022 vs.
2021)
149.0%
Adjusted EBITDA margin (% of Net
Sales)
20.2%
24.8%
Adjusted EBITDA growth (% Change 2022 vs.
2021)
2.1%
Three Months Ended March
31,
2022
2021
Free Cash Flow:
Cash (used in) provided by operating
activities
$
(15,961)
$
144
Capital expenditures for plant, equipment
and leasehold improvements
(3,154)
(2,524)
Free Cash Flow
$
(19,115)
$
(2,380)
(1)
Represents estimated sales tax
benefit 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.
(2)
The 2021 amount primarily relates
to executive severance charges.
(3)
The company redeemed a portion of
the Senior Notes in the first quarter of 2022 and expensed the
associated portion of the unamortized deferred financing costs.
Additionally, 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.
Last Twelve Months
Ended
March 31,
December 31,
2022
2021
Reconciliation of net income to LTM
EBITDA and Adjusted EBITDA
Net income
$
19,533
$
15,941
Interest expense, net
29,497
30,608
Income tax expense
10,239
7,881
Depreciation and amortization
14,486
15,098
EBITDA
$
73,755
$
69,528
Adjustments to EBITDA:
Stock-based compensation expense
2,160
1,250
Sales tax benefit (1)
(546)
(614)
Severance and other charges (2)
1,129
1,250
Loss on debt extinguishment (3)
395
5,048
Foreign currency (gain) loss
10
(15)
Subtotal of adjustments to EBITDA
$
3,148
$
6,919
LTM Adjusted EBITDA
$
76,903
$
76,447
As of
March 31,
December 31,
2022
2021
Calculation of Net Leverage
Ratio:
Debt principal outstanding
$
320,000
$
310,000
Finance lease obligations
7,822
4,925
Total Debt
327,822
314,925
Less: Cash and cash equivalents
(12,136)
(20,683)
Total Net Debt (a)
$
315,686
$
294,242
LTM Adjusted EBITDA (b)
$
76,903
$
76,447
Net Leverage Ratio (a)/(b)
4.1
3.8
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220505005286/en/
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