CPI Card Group Inc. · NASDAQ:PMTS
CPI Card — Q3 2018 Earnings Presentation
19 slides from CPI Card's earnings presentation, Nov 7, 2018
Slide 1: Third Quarter 2018 Earnings Conference Call
Third Quarter 2018 Earnings Conference Call November 7, 2018 Copyright 2018 CPI Card Group
Slide 2: Safe Harbor
Safe Harbor Forward-Looking Statements: Certain statements and information in this presentation may 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 2
Slide 3: Business Summary
Business Summary Scott Scheirman President and CEO Copyright 2018 CPI Card Group
Slide 4: Results Summary
Results Summary Third Quarter 2018 Highlights from Continuing Operations* • Third quarter results reflect continued improved performance • Performing well relative to objectives through the first nine months of 2018 • Total net sales of $71 million, up 16% year-over-year, reflecting double-digit net
Slide 5: Strategy
Strategy Continued Focus and Execution in Q3 2018 • CPI is executing a strategy and plan that will enable us to better serve the needs of our customers, further capitalize on our addressable market, and deliver shareholder value • Goal is to be the partner of choice by providing market- leading qual
Slide 6: Strategy: Four Strategic Priorities
Strategy Four Strategic Priorities to Enable CPI to Reach our Objectives #1 Deep customer focus Ensure the customer is at the center of all that we do • Extended agreement with PSCU to serve as primary card manufacturer • New business wins with a leading financial institution and major retailer #2 M
Slide 7: Strategy: Four Key Strategic Priorities
Strategy Four Key Strategic Priorities to Enable CPI to Reach our Objectives #3 Market competitive business model While ensuring the highest quality and market-competitiveness • Focused on increased productivity and efficiency through business process improvements and direct and indirect procurement
Slide 8: Summary
Summary • Pleased with third quarter results and momentum • Continue to win business with current customers and new customers • Performing well relative to our objectives • Continue to focus on being the partner of choice by providing market-leading quality products and customer service with a marke
Slide 9: Financial Summary
Financial Summary John D. Lowe Chief Financial Officer Copyright 2018 CPI Card Group
Slide 10: Financial Results
Financial Results Third Quarter 2018* ($ in millions, except EPS) Three Months Ended Sept. 30, 2017 2018 Change ($) Change (% ) Net sales: Products $ 26.8 $ 34.7 $ 7.9 29.5% Services 34.2 36.3 2.1 6.1% Total net sales $ 61.0 $ 71.0 $ 10.0 16.4% Gross Profit $ 19.4 $ 23.3 $ 3.9 19.9% gross margin 31.
Slide 11: Third Quarter 2018 Segment Review
Financial Results Third Quarter 2018 Segment Review Net Sales EBITDA* ($ in millions) $48.0 $40.1 +10.7% $9.1 $6.5 0% U.S. Debit and Credit** +40. * See Appendix for definitions of our Q3 2017 Q3 2018 Q3 2017 Q3 2018 Non-GAAP financial measures and reconciliations to the most comparable Margin 16.3%
Slide 12: Operating and Free Cash Flow
Financial Results Operating and Free Cash Flow ($ in millions) Three Months Ended Sept. 30, 2017 2018 Change Net loss $ (0.7) $ (6.1) $ (5.4) Loss (income) from the discontinued operation (0.1) 5.0 5.1 Depreciation and amortization 4.2 4.3 0.1 Stock-based compensation expense 0.5 (0.0) (0.6) Amortiz
Slide 13: 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) Third Quarter 2018 Cash $12.8 Debt $312.5 Net D
Slide 14: The Market: U.S. Market Conditions
The Market U.S. Market Conditions • Expect U.S. industry card manufacturing volume will be about flat in 2018 versus 2017 levels and then return to modest growth in 2019 • Non-premium EMV® product average selling prices expected to decline in 2018 similar to 2017 • Expect personalization and fulfill
Slide 15: Appendix
Appendix Copyright 2018 CPI Card Group
Slide 16: Non-GAAP Measures
Non-GAAP Measures Non-GAAP Financial Informa2on In addi1on to financial results reported in accordance with U.S. generally accepted accoun1ng principles (GAAP), we have provided the following non-GAAP financial measures in this presenta1on all on a con1nuing opera1ons basis: Adjusted Net (Loss) Income
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended Sept 30, 2017 2018 (in millions) EBITDA and Adjusted EBITDA - continuing operations: Net loss from continuing operations $ (0.8) $ (1.1) Interest expense, net 5.3 6.2 Income tax (benefit) (0.8) (0.4) Depreciation and amortization 4.2 4.3 EBITDA $ 7.9 $ 9.0
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended Sept 30, 2017 2018 (in millions) Weighted-average number of shares outstanding: Basic 11.1 11.2 Effect of dilutive equity awards — — Weighted-average diluted shares outstanding 11.1 11.2 Three Months Ended Sept 30, 2017 2018 Reconciliation of diluted (loss)
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation As of Sept. 30, 2018 LTM EBITDA and Adjusted EBITDA - continuing operations: Net loss from continuing operations $ (23.0) Interest expense, net 22.4 Income tax benefit (16.3) Depreciation and amortization 18.3 EBITDA 1.4 Adjustments to EBITDA: Stock-based compensation expense