CPI Card Group Inc. · NASDAQ:PMTS
CPI Card — Q2 2018 Earnings Presentation
19 slides from CPI Card's earnings presentation, Aug 9, 2018
Slide 1: Second Quarter 2018 Earnings Conference Call
Second Quarter 2018 Earnings Conference Call August 9, 2018 Copyright 2018 CPI Card Group
Slide 2: Safe Harbor
Safe Harbor Forward-Looking Statements Statements in this presentation that are not statements of historical fact are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements may be identified by terms such as statement
Slide 3: Business Summary
Business Summary Scott Scheirman President and CEO Copyright 2018 CPI Card Group
Slide 4: Results Summary
Results Summary Second Quarter 2018 Highlights from Continuing Operations* • Second quarter results in-line with expectations • Total net sales of $61.5 million, up 12% year-over-year, reflecting growth in both the US Debit and Credit and Prepaid Debit Segments • Delivered sequential and year/year g
Slide 5: Strategy: Continued Execution in Q2 2018
Strategy Continued Execution in Q2 2018 • CPI executing a strategy and plan that will enable us to better serve the needs of our customers, further capitalize on our addressable market, and deliver shareholder value • Goal is to be the partner of choice by providing market- leading quality products
Slide 6: Four Strategic Priorities to Enable CPI to Reach our Objectives
Strategy Four Strategic Priorities to Enable CPI to Reach our Objectives #1 Deep customer focus Ensure the customer is at the center of all that we do • Focused on delighting our customers every day • Debit Card Portfolio win with Hancock Whitney Bank #2 Market-leading quality products and customer
Slide 7: Four Key Strategic Priorities to Enable CPI to Reach our Objectives
Strategy Four Key Strategic Priorities to Enable CPI to Reach our Objectives #3 Market competitive business model While ensuring the highest quality and market-competitiveness • Continue to focus on process improvements and efficiencies, direct and indirect procurement savings, footprint optimizatio
Slide 8: The Market
The Market U.S. Market Conditions • Expect U.S. industry card manufacturing volume will be about flat in 2018 versus 2017 levels • EMV® card average selling prices expected to decline similar to 2017 • Expect personalization and fulfillment services to be characterized by more modest levels of deman
Slide 9: Summary
Summary • Pleased with second quarter results • Winning new business with existing customers and new customers • Continued progress on strategic priorities • Tracking in line with our business plan through the first half of 2018 Copyright 2018 CPI Card Group 9
Slide 10: Financial Summary
Financial Summary John D. Lowe Chief Financial Officer Copyright 2018 CPI Card Group
Slide 11: Financial Results: Second Quarter 2018
Financial Results Second Quarter 2018* ($ in millions, except EPS) Three Months Ended June 30, 2017 2018 Change ($) Change (% ) Net sales: Products $ 26.6 $ 31.5 $ 4.9 18.2% Services 28.2 30.0 1.8 6.3% Total net sales $ 54.8 $ 61.5 $ 6.6 12.1% Gross Profit $ 16.7 $ 19.9 $ 3.2 19.3% gross margin 30.4
Slide 12: Second Quarter 2018 Segment Review
Financial Results Second Quarter 2018 Segment Review Net Sales EBITDA* ($ in millions) $42.4 $43.8 U.S. Debit and Credit** $7.9 $9.9 * See Appendix for definitions of Q2 2017 Q2 2018 Q2 2017 Q2 2018 our Non-GAAP financial measures Margin 18.7% 22.7% and reconciliations to the most comparable GAAP fi
Slide 13: Operating and Free Cash Flow
Financial Results Operating and Free Cash Flow ($ in millions) Three Months Ended June 30, 2017 2018 Change Net loss from continuing operations $ (2.2) $ (16.7) $ (14.5) Loss (income) from the discontinued operation (1.1) 16.0 17.1 Depreciation and amortization 4.3 5.0 0.7 Stock-based compensation e
Slide 14: Debt and Liquidity
Financial Results Debt and Liquidity • Term Loan Has No Financial Covenants • Borrowing Under Revolver limited to $20 million above 7.0x Net Debt / LTM Adj. EBITDA • Term Loan matures August 2022 and Undrawn Revolver matures August 2020 ($ in millions) Second Quarter 2018 Cash $17.8 Debt $312.5 Net
Slide 15: Appendix
Appendix Copyright 2018 CPI Card Group
Slide 16: Non-GAAP Measures
Non-GAAP Measures Non-GAAP Financial Information 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 presentation all on a continuing operations basis: Adjusted Net (Loss
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended June 30, 2017 2018 (in millions) EBITDA and Adjusted EBITDA - continuing operations: Net loss from continuing operations $ (3.3) $ (0.8) Interest expense, net 5.2 5.6 Income tax (benefit) (1.0) (2.6) Depreciation and amortization 4.3 5.0 EBITDA $ 5.2 $ 7.2
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended June 30, 2017 2018 (in millions) Weighted-average number of shares outstanding: Basic 11.1 11.1 Effect of dilutive equity awards — 0.1 Weighted-average diluted shares outstanding 11.1 11.2 Three Months Ended June 30, 2017 2018 Reconciliation of diluted (los
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation As of June 30, 2018 LTM EBITDA and Adjusted EBITDA - continuing operations: Net loss from continuing operations $ (22.2) Interest expense, net 21.6 Income tax benefit (17.9) Depreciation and amortization 18.2 EBITDA (0.3) Adjustments to EBITDA: Stock-based compensation expens