Cpi Card Group Inc. · NASDAQ:PMTS
Cpi Card — Q4 2023 Earnings Presentation
18 slides from Cpi Card's earnings presentation, Mar 7, 2024
Slide 1: Fourth Quarter 2023 Investor Presentation
Fourth Quarter 2023 Investor Presentation March 7, 2024
Slide 2: Cautionary Statements
Cautionary Statements 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 Securities
Slide 3: Agenda
Agenda 1 Overview and Strategy 2 2023 Financial Review 3 2024 Expectations 4 Summary CPI Confidential and Proprietary | Not for distribution 3
Slide 4: Overview
Overview CEO transition complete ▪ Strong leadership team in place ▪ Strategic focus: build from strong foundation while expanding solutions and addressable market over long-term 2023 review ▪ Challenging year due to cautious customer spending and inventory management ▪ Q4 business environment as ex
Slide 5: Strategy Review
Strategy Review Build from Strong Foundation ▪ A leader in the U.S. payments market with portfolio that includes Secure Card, Personalization, Instant Issuance and Prepaid ▪ Strong value proposition from our focus on customer service, quality and innovation ▪ Strong and long-standing customer relati
Slide 6: Visa and Mastercard U.S. Cards in Circulation
Visa and Mastercard U.S. Cards in Circulation Cards in circulation have grown at a 10% CAGR over the last three years to 2.0 billion, up from 1.5 billion 1,937 1,969 1,888 1,919 1,824 1,758 1,783 1,679 1,714 1,627 1,587 1,543 720 1,483 682 698 708 656 669 645 616 636 600 606 599 577 1,206 1,221 1,22
Slide 7: 2023 Financial Review
2023 Financial Review CPI Confidential and Proprietary | Not for distribution 7
Slide 8: 2023 Highlights
2023 Highlights Q4 environment soft as expected as customers remained cautious with spending ▪ Net sales decreased 19% to $102.9 million ▪ Net income decreased 78% to $2.7 million ▪ Adjusted EBITDA¹ decreased 27% to $19.9 million Full year cash flow improvement despite Net Income decline ▪ Net sales
Slide 9: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights (in millions, except per share data) Q4 23 Q4 22 % Change Commentary Net Sales $ 102.9 $ 126.4 -19% ▪ Net sales decrease driven primarily by reduced card volumes in our Debit and Credit segment Gross Profit $ 35.4 $ 47.5 -25% ▪ Gross profit decrease driven by redu
Slide 10: Full Year Financial Highlights
Full Year Financial Highlights (in millions, except per share data) 2023 2022 % Change Commentary Net Sales $ 444.5 $ 475.7 -7% ▪ Net sales decrease driven by reduced volumes of eco- focused and contact cards, partially offset by increases Gross Profit $ 155.5 $ 175.8 -12% in other contactless cards
Slide 11: Financial Highlights - Segments
Financial Highlights - Segments $ in millions Q4 Net Sales & Operating Income Full Year Net Sales & Operating Income Debit and Credit $31.2 $110.0 $94.2 $93.2 $19.0 $94.9 $94.2 $104.9 $82.1 $93.2 29.8% 23.2% $390.6 $361.1 28.2% 24.0% 29.8% 26.3% 26.9% 26.9% 26.8% 28.2% 2022 2023 2022 2023 2022 2023
Slide 12: Balance Sheet, Liquidity, Net Leverage and Cash Flow
Balance Sheet, Liquidity, Net Leverage and Cash Flow $ in millions, except ratios Dec. 31, Dec. 31, Our capital structure and allocation Balance Sheet, Liquidity and Net Leverage Ratio strategies are focused on: 2023 2022 1. Maintaining ample liquidity Cash on hand $ 12.4 $ 11.0 2. Investing in the
Slide 13: 2024 Expectations
2024 Expectations Market expected to gradually recover over course of year Full-year outlook 2024 ▪ Slight increase in both Net Sales and Adjusted EBITDA¹; growth expected in second half of year ▪ Free Cash Flow lower due to capital investment ▪ Net Leverage Ratio between 3.0x and 3.5x at year-end L
Slide 14: Summary
Summary Challenging year in 2023 ▪ Customers cautious with spending after heavy purchasing in constrained supply-chain environment in 2022 Gradual market recovery expected in 2024 ▪ Company anticipates returning to sales growth Long-term secular trends remain intact ▪ CPI well positioned with innova
Slide 15: Contact
Contact (877) 369-9016 investorrelations@cpicardgroup.com www.cpicardgroup.com 15
Slide 16: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Adjusted EBITDA and Adjusted EBITDA Margin Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 EBITDA represents earnings before interest, taxes, depreciation and amortization, all Reconciliation of net income to EBITDA and ($ in
Slide 17: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Year Ended December 31, 2023 2022 LTM Adjusted EBITDA Reconciliation of net income to LTM EBITDA and Adjusted EBITDA: ($ in millions) Net income $ 24.0 $ 36.5 We define LTM Adjusted EBITDA as adjusted EBITDA Interest, net 26.9 29.6 Income tax expense 10
Slide 18: Supplemental Financial Measures
Supplemental Financial Measures Net Leverage Ratio As of December 31, 2023 2022 Management and various investors use the ratio of debt Calculation of Net Leverage Ratio: ($ in millions) principal outstanding, plus finance lease obligations, less cash divided by LTM Adjusted EBITDA, or “Net Leverage