Cpi Card Group Inc. · NASDAQ:PMTS
Cpi Card — Q3 2023 Earnings Presentation
18 slides from Cpi Card's earnings presentation, Nov 7, 2023
Slide 1: Third Quarter 2023 Investor Presentation
Third Quarter 2023 Investor Presentation November 7, 2023
Slide 2: Cautionary Statements
Cautionary Statements 2 Forward Looking Statements Certain statements and information in this presentation (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 Securiti
Slide 3: Agenda
3 Agenda Overview and Strategy Review 2023 Q3 Highlights 2023 Expectations Financial Review Summary 1 2 3 4 5
Slide 4: Overview
4 As anticipated, sales and profit declined in Q3 • Customers remain cautious and continue to work down inventory levels after stocking up in 2022 Full year outlook updated • Market has not yet normalized Long-term trends remain intact • Cards in circulation continue to grow New share repurchase pro
Slide 5: Strategy Review
Strategy Review Key Strategic Priorities 5 Deep Customer Focus Market-Leading Quality Products and Customer Service Continuous Innovation Market-Competitive Business Model The Contactless Indicator mark, consisting of four graduating arcs, is a trademark owned by and used with permission of
Slide 6: Visa and Mastercard U.S. Cards in Circulation
Visa and Mastercard U.S. Cards in Circulation 6 Cards in circulation have grown at a 10% CAGR over the last three years to 1.9 billion, up from 1.5 billion Cards in Millions Sources: Visa and Mastercard Quarterly Operational Performance Data 896 906 944 987 1,021 1,063 1,078 1,113 1,135 1,163 1,207
Slide 7: 2023 Q3 Highlights
2023 Q3 Highlights Market demand soft as customers remain cautious and work down inventory levels 7 Challenging comparisons with prior year also affected Q3 growth; strong cash flow improvement year-to-date • Net Sales decreased 15% to $105.9 million • Net Income decreased 68% to $3.9 million; Net I
Slide 8: 2023 Expectations
8 2023 Expectations Q4 Net Sales and Adjusted EBITDA expected to be similar to Q3 levels Full-year outlook 2023 Mid-single digit Net Sales decline (previously flat to low single-digit growth) Mid-single digit Adjusted EBITDA¹ decline (previously mid-to-high single-digit growth) Free Cash Flow
Slide 9: Financial Review
Financial Review 8 cpi.
Slide 10: Third Quarter Financial Highlights
Third Quarter Financial Highlights 10 • Net Sales decrease driven primarily by reduced card volumes in our Debit and Credit segment; timing in Prepaid. • Gross Profit decrease driven by reduced sales levels and higher production costs • Net Income, Adjusted EBITDA1 and Adjusted EBITDA margin1 decrea
Slide 11: First Nine Months Financial Highlights
First Nine Months Financial Highlights 11 • Net Sales decrease driven by reduced volumes of eco-focused cards, partially offset by increases in other contactless cards and card personalization and instant issuance services • Gross Profit decline driven by reduced sales levels and higher production c
Slide 12: Financial Highlights - Segments
Financial Highlights - Segments Debit and Credit Q3 Net Sales & Operating Income First Nine Months Net Sales & Operating Income Q3 Net Sales & Operating Income First Nine Months Net Sales & Operating Income Prepaid Debit ($ in millions) 24.0% 29.8% Net Sales Operating Income & Margin 26.8% 28.2% 37.
Slide 13: Balance Sheet, Liquidity, Net Leverage and Cash Flow
Balance Sheet, Liquidity, Net Leverage and Cash Flow ($ in millions, except ratios) 13 Balance Sheet, Liquidity and Net Leverage Ratio Sep. 30, 2023 Dec. 31, 2022 Cash on hand $ 10.5 $ 11.0 Available Liquidity1 $ 77 $ 81 Total Debt1 $ 290.9 $ 300.7 Adjusted EBITDA (LTM)2 $ 96.8 $ 97.7 Net Leverage R
Slide 14: Summary
14 Sales and profit declines in Q3 in soft market • Net Sales decreased 15% • Net Income decreased 68% • Adjusted EBITDA1 decreased 25% Updated 2023 outlook • Net Sales mid-single digit decrease • Adjusted EBITDA1 mid-single digit decrease • Net Leverage Ratio of approximately 3x at year-end • Free
Slide 15: Contact
Contact (877) 369-9016 INVESTORRELATIONS@CPICARDGROUP.COM www.CPIcardgroup.com 15
Slide 16: Reconciliations Measures
Reconciliations of Non-GAAP Financial Measures 16 Adjusted EBITDA and Adjusted EBITDA Margin EBITDA represents earnings before interest, taxes, depreciation and amortization, all on a continuing operations basis. Adjusted EBITDA is presented on a continuing operations basis and is defined as EBITDA
Slide 17: Reconciliations Measures: LTM Adjusted EBITDA
Reconciliations of Non-GAAP Financial Measures 17 LTM Adjusted EBITDA We define LTM Adjusted EBITDA as adjusted EBITDA (defined previously) for the last twelve months. Free Cash Flow We define Free Cash Flow as cash flow from operating activities less capital expenditures. We use this metric in anal
Slide 18: Supplemental Financial Measures
Supplemental Financial Measures 18 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 dec