Net Sales Up 11% Year Over Year
Net Income from Continuing Operations of $2.4
Million, an Improvement of 179% Year Over Year
Adjusted EBITDA of $12.4 Million Up 55% Year
Over Year
Cash of $46.9 Million at Quarter End
CPI Card Group Inc. (OTCQX: PMTS) (TSX: PMTS) (“CPI Card Group”
or the “Company”) today reported financial results for the first
quarter ended March 31, 2020.
“Our hearts go out to those who have been impacted by the
COVID-19 pandemic,” said Scott Scheirman, President and Chief
Executive Officer of CPI. “As this pandemic continues to evolve,
the health and safety of our employees remains paramount. We
continue to follow the safety precautions and other appropriate
measures recommended by the Centers for Disease Control and
Prevention. I want to thank our employees for their dedication and
commitment to continuing to serve our customers through these
unprecedented times. All of CPI’s operations remain open and
continue to provide direct and essential support to the financial
services industry, including the production, personalization and
fulfillment of debit, credit, and prepaid cards such as payroll,
government benefit, and health savings account cards. In addition,
we have made COVID-19 support-related contributions to
organizations in the communities in which we operate and source
materials.”
Scheirman added, “We delivered strong results to start the year,
though we did see some impact from the pandemic late in the first
quarter. During the first quarter, our differentiated products and
solutions such as our dual-interface EMV® products, including our
Second Wave™ card, experienced strong demand by our customers. This
drove an 11% year-over-year improvement in the top-line and allowed
us to further leverage our business model, yielding significant
improvement in bottom-line performance in the quarter. We remain
focused on being a partner of choice through the continued
execution of our strategic priorities and, like most companies, we
are taking certain steps to reduce or defer spending as we navigate
through this uncertainty.”
First Quarter 2020 Financial Highlights
Net sales of $74.0 million in the first quarter of 2020
represented an increase of 11% year over year. First quarter gross
profit increased 19% year over year and gross margins increased to
34.8% from 32.2% in the first quarter of 2019. First quarter income
from operations improved to $7.7 million, up from $3.6 million in
the first quarter of 2019.
First quarter 2020 net income from continuing operations was
$2.4 million, or $0.22 per share, an improvement of 179% from the
net loss from continuing operations of $3.1 million, or $0.28 per
share loss in the first quarter of 2019. First quarter Adjusted
EBITDA improved 55% year over year to $12.4 million.
First Quarter Segment Information
Debit and Credit:
Net sales increased 22% year over year to $59.8 million in the
first quarter driven by strong demand for dual interface EMV®
cards, including Second Wave™, and continued strength in
personalization, including CPI On-Demand™ and Card@Once®.
Prepaid Debit:
As expected, first quarter net sales declined when compared with
the 2019 first quarter, which benefited from stronger sales as the
Company supported customers through changing regulatory
requirements in the industry. Net sales for the first quarter of
2020 were down 13% year over year.
Balance Sheet, Liquidity, and Cash Flow from Continuing
Operations
As of March 31, 2020, cash and cash equivalents was $46.9
million. Cash provided by operating activities was $3.2 million and
cash outflows for capital expenditures was $0.9 million in the
first quarter, yielding positive adjusted free cash flow of $2.3
million. This compares with the first quarter of 2019, when cash
used in operating activities was $10.2 million, capital
expenditures were $2.1 million and adjusted free cash flow was
negative $12.3 million. Year over year, adjusted free cash flow
increased $14.6 million.
As previously reported, during the first quarter, the Company
entered into a new $30 million Senior Credit Facility and
terminated its revolving credit facility, each effective on March
6, 2020. For the first quarter of 2020, cash provided by financing
activities was $26 million. 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 March 31, 2020. Net of debt issuance costs and discount,
total debt was $333.9 million as of March 31, 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, said, “During the first
quarter, solid execution led to top-line growth, further leveraging
of our business model and margin expansion, which enabled us to
significantly improve our bottom line and generate positive free
cash flow. As the COVID-19 pandemic unfolds, we continue to provide
essential support to our customers and execute on our strategic
plan, while carefully managing our spending.”
2020 Strategy and Market Outlook
The Company’s vision is to be the partner of choice by providing
market-leading quality products and customer service with a
market-competitive business model. The Company will continue to
execute on its four key strategies:
- Deep customer focus,
- Market-leading quality products and customer service,
- Continuous innovation, and
- Market-competitive business model.
While our strategy remains the same, given the rapidly evolving
nature of the COVID-19 pandemic and its economic impacts, it is
challenging to predict the potential impact this pandemic will have
and, therefore, the Company is withdrawing its market outlook
issued on March 9, 2020.
Additional Investor Commentary
Beginning with the release of its first quarter 2020 results, in
lieu of an earnings call, the Company has provided written
commentary regarding its quarterly performance and other business
matters. Such commentary is consistent with information
historically discussed on the Company’s earnings calls and has been
provided concurrently with the issuance of the Company’s quarterly
earnings press release. The earnings press release and additional
written commentary is available at
http://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 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; restructuring and
other charges; loss on Revolving Credit Facility termination;
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 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 compliance targets including an associated required
covenant of at least $25 million adjusted EBITDA for the previous
four consecutive fiscal quarters in total for 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, non-cash 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-cash,
non-operating 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 can represent the
reduction of cash that could be used for other purposes. Further,
although not included in the calculation of Adjusted EBITDA, the
measure 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.
Further, management and various investors use the ratio of total
debt less cash to Adjusted EBITDA, or "net debt leverage," as a
measure of our financial strength and ability to incur incremental
indebtedness when making key investment decisions and evaluating us
against peers. The metric “total debt less cash” includes borrowed
long term debt, letters of credit, and finance lease obligations,
less cash. Adjusted EBITDA margin percentage as shown in Exhibit E
is computed as Adjusted EBITDA divided by total net sales.
Free Cash Flow
We define Free Cash Flow as cash flow from continuing operations
less capital expenditures from continuing operations. 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.
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 our accompanying written or oral
statements) 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 (the
“1933 Act”) and Section 21E of the Securities Exchange Act of 1934,
as amended (the “1934 Act”). 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 generally 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 statements reflect our current views with respect
to future events and are subject to certain risks, uncertainties
and assumptions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as
anticipated, believed, estimated, expected or intended. We are
making investors aware that such forward-looking statements,
because they relate to future events, are by their very nature
subject to many important factors that could cause actual results
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, 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 substantial indebtedness,
including inability to make debt service payments or refinance such
indebtedness; 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 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
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; 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 retailers, and challenges to our
income tax positions; 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 of directors who are principals of our largest
stockholder; 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, 2019 filed with the SEC on March 6, 2020, 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
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 months ended March 31, 2020 and 2019
Exhibit B
Condensed Consolidated Balance Sheets –
Unaudited as of March 31, 2020 and December 31, 2019
Exhibit C
Condensed Consolidated Statements of Cash
Flows - Unaudited for the three months ended March 31, 2020 and
2019
Exhibit D
Segment Summary Information – Unaudited
for the three months ended March 31, 2020 and 2019
Exhibit E
Supplemental GAAP to Non-GAAP
Reconciliations - Unaudited for the three months ended March 31,
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 March
31,
2020
2019
Net sales:
Products
$
42,501
$
32,757
Services
31,468
34,109
Total net sales
73,969
66,866
Cost of sales:
Products (exclusive of depreciation and
amortization shown below)
26,379
21,489
Services (exclusive of depreciation and
amortization shown below)
19,187
21,166
Depreciation and amortization
2,693
2,690
Total cost of sales
48,259
45,345
Gross profit
25,710
21,521
Operating expenses:
Selling, general and administrative
(exclusive of depreciation and amortization shown below)
16,542
16,418
Depreciation and amortization
1,485
1,533
Total operating expenses
18,027
17,951
Income from operations
7,683
3,570
Other expense, net:
Interest, net
(6,088
)
(6,324
)
Foreign currency (loss) gain
(8
)
41
Other (expense) income, net
(87
)
19
Total other expense, net
(6,183
)
(6,264
)
Income (loss) from continuing operations
before income taxes
1,500
(2,694
)
Income tax benefit (expense)
943
(403
)
Net income (loss) from continuing
operations
2,443
(3,097
)
Net (loss) income from discontinued
operation, net of tax
(26
)
42
Net income (loss)
$
2,417
$
(3,055
)
Net income (loss) per share from
continuing operations - Basic:
$
0.22
$
(0.28
)
Net income (loss) per share from
continuing operations - Diluted:
$
0.22
$
(0.28
)
Net income (loss) per share - Basic:
$
0.22
$
(0.27
)
Net income (loss) per share - Diluted:
$
0.21
$
(0.27
)
Basic weighted-average shares
outstanding:
11,224,500
11,160,473
Diluted weighted-average shares
outstanding:
11,262,359
11,160,473
Comprehensive income (loss):
Net income (loss)
$
2,417
$
(3,055
)
Currency translation adjustment
—
31
Total comprehensive income (loss)
$
2,417
$
(3,024
)
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,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
46,904
$
18,682
Accounts receivable, net of allowances of
$338 and $395, respectively
43,790
42,832
Inventories
19,146
20,192
Prepaid expenses and other current
assets
4,548
6,345
Income taxes receivable
5,590
4,164
Total current assets
119,978
92,215
Plant, equipment and leasehold
improvements and operating lease right-of-use assets, net
39,928
42,088
Intangible assets, net
29,653
30,802
Goodwill
47,150
47,150
Other assets
681
1,232
Total assets
$
237,390
$
213,487
Liabilities and stockholders’
deficit
Current liabilities:
Accounts payable
$
13,772
$
16,482
Accrued expenses
20,973
22,820
Deferred revenue and customer deposits
645
468
Total current liabilities
35,390
39,770
Long-term debt
333,890
307,778
Deferred income taxes
7,495
6,896
Other long-term liabilities
10,598
11,478
Total liabilities
387,373
365,922
Commitments and contingencies
Series A Preferred Stock; $0.001 par
value—100,000 shares authorized; 0 shares issued and outstanding at
March 31, 2020 and December 31, 2019
—
—
Stockholders’ deficit:
Common stock; $0.001 par value—100,000,000
shares authorized; 11,229,819 and 11,224,191 shares issued and
outstanding as of March 31, 2020 and December 31, 2019,
respectively
11
11
Capital deficiency
(111,953
)
(111,988
)
Accumulated loss
(38,041
)
(40,458
)
Total stockholders’ deficit
(149,983
)
(152,435
)
Total liabilities and stockholders’
deficit
$
237,390
$
213,487
EXHIBIT C
CPI Card Group Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(Amounts in Thousands)
(Unaudited)
Three Months Ended March
31,
2020
2019
Operating activities
Net income (loss)
$
2,417
$
(3,055
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Loss (income) from discontinued
operation
26
(42
)
Depreciation and amortization expense
4,178
4,223
Stock-based compensation expense
41
147
Amortization of debt issuance costs and
debt discount
634
489
Deferred income taxes
599
250
Other, net
582
(45
)
Changes in operating assets and
liabilities:
Accounts receivable
(911
)
(1,420
)
Inventories
521
(4,382
)
Prepaid expenses and other assets
1,138
309
Income taxes receivable, net
(1,384
)
114
Accounts payable
(2,747
)
403
Accrued expenses
(1,981
)
(6,716
)
Deferred revenue and customer deposits
177
(551
)
Other liabilities
(86
)
80
Cash provided by (used in) operating
activities - continuing operations
3,204
(10,196
)
Cash provided by (used in) operating
activities - discontinued operation
(26
)
42
Investing activities
Acquisitions of plant, equipment and
leasehold improvements
(938
)
(2,146
)
Cash used in investing activities -
continuing operations
(938
)
(2,146
)
Financing activities
Proceeds from Senior Credit Facility, net
of discount
29,100
—
Debt issuance costs
(2,507
)
—
Proceeds from Revolving Credit
Facility
—
5,000
Payments on Revolving Credit Facility
—
(5,000
)
Payments on finance lease obligations
(593
)
(143
)
Cash provided by (used in) financing
activities
26,000
(143
)
Effect of exchange rates on cash
(18
)
34
Net increase (decrease) in cash and cash
equivalents
28,222
(12,409
)
Cash and cash equivalents, beginning of
period
18,682
20,291
Cash and cash equivalents, end of
period
$
46,904
$
7,882
Supplemental disclosures of cash flow
information
Cash paid (refunded) during the period
for:
Interest
$
5,538
$
5,736
Income taxes, net refunds
$
(232
)
$
(41
)
Right-to-use assets obtained in exchange
for lease obligations:
Operating leases
$
141
$
—
Financing leases
$
251
$
—
Accounts payable, and accrued expenses for
acquisitions of plant, equipment and leasehold improvements
$
345
$
1,238
EXHIBIT D
CPI Card Group Inc. and
Subsidiaries
Segment Summary
Information
For the Three Months Ended
March 31, 2020 and March 31, 2019
(Dollars in Thousands)
(Unaudited)
Net Sales
Three Months Ended March
31,
2020
2019
$ Change
% Change
Net sales by segment:
Debit and Credit
$
59,839
$
48,929
$
10,910
22.3
%
Prepaid Debit
14,540
16,744
(2,204
)
(13.2
)%
Other
—
1,679
(1,679
)
(100.0
)%
Eliminations
(410
)
(486
)
76
*
%
Total
$
73,969
$
66,866
$
7,103
10.6
%
* Calculation not meaningful
Gross Profit
Three Months Ended March
31,
2020
% of Net
Sales
2019
% of Net
Sales
$ Change
% Change
Gross profit by segment:
Debit and Credit
$
20,470
34.2
%
$
15,272
31.2
%
$
5,198
34.0
%
Prepaid Debit
5,240
36.0
%
6,346
37.9
%
(1,106
)
(17.4
)%
Other
—
-
%
(97
)
(5.8
)%
97
*
%
Total
$
25,710
34.8
%
$
21,521
32.2
%
$
4,189
19.5
%
* Calculation not meaningful
Income from Operations
Three Months Ended March
31,
2020
% of Net
Sales
2019
% of Net
Sales
$ Change
% Change
Income (loss) from operations by
segment:
Debit and Credit
$
12,659
21.2
%
$
7,776
15.9
%
$
4,883
62.8
%
Prepaid Debit
4,116
28.3
%
5,316
31.7
%
(1,200
)
(22.6
)%
Other
(9,092
)
*
%
(9,522
)
*
%
430
(4.5
)%
Total
$
7,683
10.4
%
$
3,570
5.3
%
$
4,113
115.2
%
* Calculation not meaningful
EBITDA
Three Months Ended March
31,
2020
% of Net
Sales
2019
% of Net
Sales
$ Change
% Change
EBITDA by segment:
Debit and Credit
$
15,080
25.2
%
$
10,380
21.2
%
$
4,700
45.3
%
Prepaid Debit
4,660
32.0
%
5,779
34.5
%
(1,119
)
(19.4
)%
Other
(7,974
)
*
%
(8,306
)
*
%
332
(4.0
)%
Total
$
11,766
15.9
%
$
7,853
11.7
%
$
3,913
49.8
%
* Calculation not meaningful
Reconciliation of Income (loss)
from
Operations by Segment to EBITDA by
Segment
Three Months Ended March 31,
2020
Debit and
Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
12,659
$
4,116
$
(9,092
)
$
7,683
Depreciation and amortization
2,431
548
1,199
4,178
Other (expenses) income
(10
)
(4
)
(81
)
(95
)
EBITDA
$
15,080
$
4,660
$
(7,974
)
$
11,766
Three Months Ended March 31,
2019
Debit and
Credit
Prepaid Debit
Other
Total
EBITDA by segment:
Income (loss) from operations
$
7,776
$
5,316
$
(9,522
)
$
3,570
Depreciation and amortization
2,605
463
1,155
4,223
Other (expenses) income
(1
)
—
61
60
EBITDA
$
10,380
$
5,779
$
(8,306
)
$
7,853
EXHIBIT E
CPI Card Group Inc. and
Subsidiaries
Supplemental GAAP to Non-GAAP
Reconciliation
(Dollars in Thousands)
(Unaudited)
Three Months Ended March
31,
2020
2019
EBITDA and Adjusted EBITDA:
Net income (loss) from continuing
operations
$
2,443
$
(3,097
)
Interest expense, net
6,088
6,324
Income tax (benefit) expense
(943
)
403
Depreciation and amortization
4,178
4,223
EBITDA
$
11,766
$
7,853
Adjustments to EBITDA:
Stock-based compensation expense
41
147
Litigation and related charges (1)
—
20
Restructuring and other charges (2)
467
—
Loss on Revolving Credit Facility
termination (3)
92
—
Foreign currency loss (gain)
8
(41
)
Subtotal of adjustments to EBITDA
608
126
Adjusted EBITDA
$
12,374
$
7,979
Adjusted EBITDA margin (% of Net
Sales)
16.7
%
11.9
%
Adjusted EBITDA growth (% Change 2020 vs.
2019)
55.1
%
Net income from continuing operations (%
Change 2020 vs. 2019)
178.9
%
Three Months Ended March
31,
2020
2019
Reconciliation of cash provided by
(used in) operating activities - continuing operations (GAAP) to
free cash flow:
Cash provided by (used in) operating
activities - continuing operations
$
3,204
$
(10,196
)
Acquisitions of plant, equipment and
leasehold improvements
(938
)
(2,146
)
Free cash flow - continuing operations
$
2,266
$
(12,342
)
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)
Represents restructuring severance charges
in 2020.
(3)
The Company terminated the Revolving
Credit Facility during the first quarter of 2020 and expensed the
remaining unamortized deferred financing costs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200506005199/en/
CPI Card Group Inc. Investor Relations: (877) 369-9016
InvestorRelations@cpicardgroup.com
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