Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 24, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | CPI Card Group Inc. | |
Entity Central Index Key | 1,641,614 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 55,592,024 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 25,906 | $ 36,955 |
Accounts receivable, net of allowances of $71 and $126, respectively | 33,955 | 31,492 |
Inventories | 23,975 | 19,369 |
Prepaid expenses and other current assets | 5,054 | 4,601 |
Income taxes receivable | 1,947 | |
Total current assets | 90,837 | 92,417 |
Plant, equipment and leasehold improvements, net | 53,470 | 53,419 |
Intangible assets, net | 45,143 | 46,348 |
Goodwill | 72,083 | 71,996 |
Other assets | 271 | 240 |
Total assets | 261,804 | 264,420 |
Current liabilities: | ||
Accounts payable | 12,799 | 10,996 |
Accrued expenses | 15,701 | 17,487 |
Income taxes payable | 64 | |
Deferred revenue and customer deposits | 10,241 | 6,729 |
Total current liabilities | 38,741 | 35,276 |
Long-term debt | 302,406 | 301,922 |
Deferred income taxes | 20,936 | 21,261 |
Other long-term liabilities | 1,599 | 1,234 |
Total liabilities | 363,682 | 359,693 |
Commitments and contingencies (Note 10) | ||
Stockholders' deficit: | ||
Common Stock; $0.001 par value—100,000,000 shares authorized; 55,592,024 and 55,359,251 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively | 56 | 55 |
Capital deficiency | (114,383) | (114,881) |
Accumulated earnings | 18,663 | 25,968 |
Accumulated other comprehensive loss | (6,214) | (6,415) |
Total stockholders' deficit | (101,878) | (95,273) |
Total liabilities and stockholders' deficit | $ 261,804 | $ 264,420 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Condensed Consolidated Balance Sheets | ||
Allowance on accounts receivable | $ 71 | $ 126 |
Common shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common shares, authorized shares (in shares) | 100,000,000 | 100,000,000 |
Common shares, issued shares (in shares) | 55,592,024 | 55,359,251 |
Common shares, outstanding shares (in shares) | 55,592,024 | 55,359,251 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Net sales: | ||
Products | $ 29,764 | $ 54,958 |
Services | 26,244 | 31,435 |
Total net sales | 56,008 | 86,393 |
Cost of sales: | ||
Products (exclusive of depreciation and amortization shown below) | 19,688 | 36,353 |
Services (exclusive of depreciation and amortization shown below) | 17,441 | 17,764 |
Depreciation and amortization | 2,784 | 2,584 |
Total cost of sales | 39,913 | 56,701 |
Gross Profit | 16,095 | 29,692 |
Operating expenses: | ||
Selling, general and administrative (exclusive of depreciation and amortization shown below) | 16,155 | 14,498 |
Depreciation and amortization | 1,749 | 1,529 |
Total operating expenses | 17,904 | 16,027 |
(Loss) income from operations | (1,809) | 13,665 |
Other expense, net | ||
Interest, net | (5,062) | (5,033) |
Foreign currency gain (loss) | 73 | (102) |
Other income (loss), net | 1 | (2) |
Total other expense, net | (4,988) | (5,137) |
(Loss) income before income taxes | (6,797) | 8,528 |
Income tax benefit (expense) | 2,291 | (2,814) |
Net (loss) income | $ (4,506) | $ 5,714 |
Basic and diluted (loss) earnings per share: | ||
Basic and diluted (loss) earnings per share: | $ (0.08) | $ 0.10 |
Weighted-average shares outstanding | ||
Basic (in shares) | 55,424,559 | 56,542,116 |
Diluted (in shares) | 55,424,559 | 56,836,082 |
Dividends declared per common share | $ 0.045 | $ 0.045 |
Comprehensive (loss) income | ||
Net (loss) income | $ (4,506) | $ 5,714 |
Currency translation adjustment | 201 | 82 |
Total comprehensive (loss) income | $ (4,305) | $ 5,796 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating activities | ||
Net (loss) income | $ (4,506) | $ 5,714 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities | ||
Depreciation and amortization expense | 4,533 | 4,113 |
Stock-based compensation expense | 546 | 745 |
Amortization of debt issuance costs and debt discount | 484 | 482 |
Excess tax benefits from stock-based compensation | (239) | |
Deferred income taxes | (351) | (58) |
Other, net | (39) | (13) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,375) | 7,711 |
Inventories | (4,551) | 1,957 |
Prepaid expenses and other assets | (485) | (532) |
Income taxes | (2,005) | 4,433 |
Accounts payable | 1,751 | (3,758) |
Accrued expenses | (1,794) | (3,980) |
Deferred revenue and customer deposits | 3,424 | 199 |
Other liabilities | 357 | (18) |
Cash (used in) provided by operating activities | (5,011) | 16,756 |
Investing activities | ||
Acquisitions of plant, equipment and leasehold improvements | (3,283) | (3,780) |
Cash used in investing activities | (3,283) | (3,780) |
Financing activities | ||
Dividends paid on common stock | (2,527) | |
Taxes withheld and paid on stock-based compensation awards | (336) | |
Excess tax benefits from stock-based compensation | 239 | |
Cash (used in) provided by financing activities | (2,863) | 239 |
Effect of exchange rates on cash | 108 | 32 |
Net (decrease) increase in cash and cash equivalents: | (11,049) | 13,247 |
Cash and cash equivalents, beginning of period | 36,955 | |
Cash and cash equivalents, end of period | 25,906 | 26,853 |
Supplemental disclosures of cash flow information | ||
Interest | 4,488 | 4,621 |
Income taxes, net payments (refunds) | $ 65 | $ (1,567) |
Business Overview and Summary o
Business Overview and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Business Overview and Summary of Significant Accounting Policies | |
Business Overview and Summary of Significant Accounting Policies | CPI Card Group Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Dollars in Thousands, Except Share and Per Share Amounts or as Otherwise Indicated) (Unaudited) 1. Business Overview and Summary of Significant Accounting Policies Business Overview CPI Card Group Inc. (which, together with its subsidiaries, is referred to herein as “CPI” or the “Company”) is a leading provider of comprehensive Financial Payment Card solutions in the United States. The Company defines Financial Payment Cards as credit, debit and prepaid debit cards issued on the networks of the Payment Card Brands (Visa, MasterCard, American Express and Discover) and Interac (in Canada). The Company serves its customers through a network of ten production and card services facilities, including eight high-security facilities in the United States and Canada that are each certified by one or more of the Payment Card Brands and Interac (in Canada) and, where required by the Company’s customers, certified to be in compliance with the standards of the Payment Card Industry (“PCI”) Security Standards Council. In addition to its eight facilities in the United States and Canada, the Company has two facilities in the United Kingdom that produce retail cards, such as gift and loyalty cards, and provide card personalization, packaging and fulfillment services for customers in the United Kingdom and continental Europe. These facilities are not certified by the Payment Card Brands or to be in compliance with the Standards of the PCI Security Standards Council, but are certified to be in compliance with International Organization for Standardization (“ISO”) 27001 standards. Basis of Presentation Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of the results of the interim periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2016 is derived from the audited financial statements as of that date. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Use of Estimates Management uses estimates and assumptions relating to the reporting of assets and liabilities in its preparation of the condensed consolidated financial statements. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and intangible assets; valuation allowances for inventories and deferred tax assets; debt; and stock-based compensation expense. Actual results could differ from those estimates. Inventories Inventories consist of raw materials, work–in-process and finished goods and are measured at the lower of cost or net realizable value (determined on the first-in, first-out or specific identification basis) in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) 2015-11, Inventory — Simplifying the Measurement of Inventory, which the Company adopted on January 1, 2017. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this standard did not impact the Company’s financial position, results of operations or cash flows during the three months ended March 31, 2017. Adoption of New Accounting Standard As of January 1, 2017, the Company adopted FASB ASU 2016-09, Compensation–Stock Compensation: Improvements to Employee Share-Based Payment Accounting ( “ASU 2016-09” ) , which simplified several aspects of the accounting for employee share based payment transactions, including classification in the statement of cash flows, the accounting for forfeitures and statutory withholding requirements. Classification in the Statement of Cash Flows As a result of the adoption of ASU 2016-09, excess tax benefits and deficiencies in connection with the Company’s stock-based compensation plans are no longer recorded directly through equity, and are recorded in “Income tax benefit” in the Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income. The impact to the Company’s condensed consolidated financial statements was not material during the three months ended March 31, 2017. See Note 7, “Income Taxes” and Note 11, “Stock-Based Compensation”. The Company has also elected to present excess tax benefits as an operating activity prospectively, commencing with the Company’s Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2017. Additionally, during the three months ended March 31, 2017, the Company paid $336 to tax authorities for shares withheld to satisfy employer income tax obligations in relation to the vesting of stock-based compensation awards. As required by ASU 2016-09, the Company classified these payments as a financing activity in the Condensed Consolidated Statement of Cash Flows. There was no impact to prior periods as a result of the required retrospective application of this requirement within ASU 2016-09. Forfeitures The Company has elected to account for forfeitures when they occur. The cumulative-effect adjustment to “Accumulated earnings” and “Capital deficiency” in the Company’s Condensed Consolidated Balance Sheet was immaterial. Recently Issued Accounting Pronouncements The FASB issued ASU 2014-09, Revenue from Contracts with Customers , in May 2014, as amended by ASU 2016-12 Narrow-scope Improvements and Practical Expedients, in May 2016. ASU 2014-09, as amended, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should also disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB deferred the effective date to annual reporting periods beginning after December 15, 2017, and interim reporting periods within those periods. The Company plans to implement the provisions of ASU 2014-09, as amended, as of January 1, 2018. The Company plans to adopt the standard using the cumulative effect transition method with the cumulative effect of initial adoption recognized at the date of initial application. The Company is currently assessing the impact that the future adoption of ASU 2014-09, as amended, may have on its condensed consolidated financial statements by analyzing its current portfolio of customer contracts, including a review of historical accounting policies and practices to identify potential differences in applying the new guidance. In February 2016, the FASB issued ASU 2016-02, Leases , which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018 (the Company’s fiscal year 2019) with early adoption permitted. The new standard is required to be adopted using a modified retrospective approach. The Company is in the process of assessing the impact of ASU 2016-02 on its results of operations, financial position and condensed consolidated financial statements. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2017 | |
Inventories | |
Inventories | 2. Inventories Inventories are summarized below: March 31, 2017 December 31, 2016 Raw materials $ 9,353 $ 8,206 Work-in-process 9,707 6,340 Finished goods 4,915 4,823 $ 23,975 $ 19,369 |
Plant, Equipment and Leasehold
Plant, Equipment and Leasehold Improvements | 3 Months Ended |
Mar. 31, 2017 | |
Plant, Equipment and Leasehold Improvements | |
Plant, Equipment and Leasehold Improvements | 3. Plant, Equipment and Leasehold Improvements Plant, equipment and leasehold improvements consist of the following: March 31, 2017 December 31, 2016 Buildings $ 2,108 $ 2,077 Machinery and equipment 60,193 59,464 Furniture, fixtures and computer equipment 6,843 6,634 Leasehold improvements 18,715 18,655 Construction in progress 3,653 1,136 91,512 87,966 Less accumulated depreciation and amortization (38,042) (34,547) $ 53,470 $ 53,419 Amounts recorded for the depreciation of plant, equipment and leasehold improvements was $3,310 and $2,973 for the three months ended March 31, 2017 and 2016, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 4. Goodwill and Other Intangible Assets The Company’s goodwill by reportable segment at March 31, 2017 and December 31, 2016 is as follows: March 31, 2017 December 31, 2016 U.S. Debit and Credit $ 64,330 $ 64,330 U.K. Limited 5,980 5,908 Other 1,773 1,758 $ 72,083 $ 71,996 The change in goodwill from December 31, 2016 to March 31, 2017 was a result of foreign currency translation adjustments. Intangible assets consist of customer relationships, technology and software, non-compete agreements and trademarks. Total intangible assets are being amortized over a weighted-average useful life of 15.6 years. The changes in the cost basis of the intangibles from December 31, 2016 to March 31, 2017 are related to foreign currency translations. Intangible amortization expense was $1,223 and $1,140 for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017 and December 31, 2016, intangible assets, excluding goodwill, were comprised of the following: March 31, 2017 December 31, 2016 Average Life Accumulated Net Book Accumulated Net Book (Years) Cost Amortization Value Cost Amortization Value Customer relationships 12 to 20 $ 59,036 $ (21,874) $ 37,162 $ 58,994 $ (20,972) $ 38,022 Technology and software 7 to 10 7,100 (2,399) 4,701 7,101 (2,167) 4,934 Non-compete agreements 5 to 8 491 (346) 145 491 (331) 160 Trademarks to 3,330 (195) 3,135 3,330 (98) 3,232 Intangible assets subject to amortization $ 69,957 $ (24,814) $ 45,143 $ 69,916 $ (23,568) $ 46,348 The estimated future aggregate amortization expense for the identified amortizable intangibles noted above as of March 31, 2017 is as follows: 2017 (remaining 9 months) $ 3,672 2018 4,895 2019 4,875 2020 4,835 2021 4,575 Thereafter 22,291 $ 45,143 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 5. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). In determining fair value, the Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: · Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. · Level 2— Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the assets or liabilities. · Level 3— Valuations based on unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The Company’s financial assets and liabilities that are not required to be remeasured at fair value in the Condensed Consolidated Balance Sheets are as follows: Value as of Fair Value as of Fair Value Measurement at March 31, 2017 March 31, March 31, (Using Fair Value Hierarchy) 2017 2017 Level 1 Level 2 Level 3 Liabilities: First Lien Term Loan $ 312,500 $ 290,625 $ — $ 290,625 $ — Value as of Fair Value as of Fair Value Measurement at December 31, 2016 December 31, December 31, (Using Fair Value Hierarchy) 2016 2016 Level 1 Level 2 Level 3 Liabilities: First Lien Term Loan $ 312,500 $ 290,625 $ — $ 290,625 $ — The aggregate fair value of the Company’s First Lien Term Loan was based on bank quotes. The carrying amounts for cash and cash equivalents approximate fair value due to their short maturities. |
Long-Term Debt and Credit Facil
Long-Term Debt and Credit Facility | 3 Months Ended |
Mar. 31, 2017 | |
Long-Term Debt and Credit Facility | |
Long-Term Debt and Credit Facility | 6. Long-Term Debt and Credit Facility As of March 31, 2017 and December 31, 2016, long-term debt and credit facilities consist of the following: Interest March 31, December 31, Rate (1) 2017 2016 First lien term loan facility (1) 5.83 % $ 312,500 $ 312,500 Unamortized discount (3,627) (3,795) Unamortized deferred financing costs (6,467) (6,783) Long-term debt $ 302,406 $ 301,922 (1) Interest rate at March 31, 2017. Interest rate at December 31, 2016 was 5.50%. First Lien Credit Facility On August 17, 2015, the Company entered into a first lien credit facility with a syndicate of lenders providing for a $435,000 first lien term loan (the “First Lien Term Loan”) and a $40,000 revolving credit facility (the “Revolving Credit Facility”). The First Lien Term Loan and the Revolving Credit Facility have maturity dates of August 17, 2022 and August 17, 2020, respectively. The First Lien Credit Facility is secured by a first-priority security interest in substantially all of the Company’s assets constituting equipment, inventory, receivables, cash and other tangible and intangible property. The First Lien Credit Facility contains customary nonfinancial covenants, including among other things, restrictions on indebtedness, issuance of liens, investments, dividends, redemptions and other distributions to equity holders, asset sales, certain mergers or consolidations, sales, transfers, leases or dispositions of substantially all of the Company’s assets and affiliate transactions. The First Lien Credit Facility also contains a requirement that, as of the last day of any fiscal quarter, if the amount the Company has drawn under the Revolving Credit Facility is greater than 50% of the aggregate principal amount of all commitments of the lenders thereunder, the Company maintain a first lien net leverage ratio not in excess of 7.0 times Adjusted EBITDA, as defined in the agreement. As of March 31, 2017, the Company was in compliance with all covenants under the First Lien Credit Facility. The First Lien Credit Facility also requires prepayment in advance of the maturity date upon the occurrence of certain customary events, including based on an annual Excess Cash Flow calculation, pursuant to the terms of the agreement. As of March 31, 2017, the Company did not have any outstanding amounts under the Revolving Credit Facility, and has $19,950 available for borrowing. Additional amounts may be available for borrowing under the term of the Revolving Credit Facility, up to the full $40,000, to the extent the Company’s net leverage ratio does not exceed 7.0 times Adjusted EBITDA, as defined in the agreement. The Company has one outstanding letter of credit for $50 relating to the security deposit on a real property lease agreement. The Company pays a fee on outstanding letters of credit at the applicable margin, which was 4.50% as of March 31, 2017 and December 31, 2016, in addition to a fronting fee of 0.125% per annum. In addition, the Company is required to pay an unused commitment fee ranging from 0.375% per annum to 0.50% per annum of the average unused portion of the revolving commitments. The unused commitment fee is determined on the basis of a grid that results in a lower unused commitment fee as the Company’s total net leverage ratio declines. Sellers Note The Company entered into a subordinated, unsecured promissory note for $9,000 with certain sellers of EFT Source as part of the EFT Source acquisition, which was fully repaid on September 2, 2016. Interest on the Sellers Note accrued at 5.0% per annum and was paid quarterly. Deferred Financing Costs Certain costs incurred with borrowings or the establishment or modification of credit facilities are reflected as a reduction to the long-term debt balance. These costs are amortized as an adjustment to interest expense over the life of the borrowing using the effective-interest rate method. As of March 31, 2017, long-term debt of $312,500 matures in 2022. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Taxes | |
Income Taxes | 7. Income Taxes During the three months ended March 31, 2017, the Company recognized an income tax benefit of $2,291 on pre-tax loss of $6,797, representing an effective income tax rate of 33.7%, compared to an income tax expense of $2,814 on pre-tax income of $8,528, representing an effective tax rate of 33.0% during the three months ended March 31, 2016. The effective tax rates for all periods presented differ from the federal U.S. statutory rate primarily due to a benefit from permanent deductions related to credits for domestic production activities and the impact of state and foreign income taxes. The Company’s tax returns are subject to audits by U.S. federal, state, and foreign tax authorities. In March 2017, the Company was notified that the Internal Revenue Service (" examine its 2014 federal income tax return. The Company is in the process of providing information requested by the IRS with respect to such tax year. As the exam process is in the early stages, the Company has not been notified of any items that are being disputed by the IRS. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2017 | |
Stockholders’ Equity | |
Stockholders’ Equity | 8. Stockholders’ Equity During the three months ended March 31, 2017, the Company paid dividends of $2,527, representing $0.045 per share. Additionally, on March 1, 2017, the Board of Directors approved a dividend of $0.045 per share, payable on April 7, 2017 to stockholders of record as of the close of business on March 17, 2017. The accrued dividend of $2,500 is reflected in “Accrued expenses” in the Condensed Consolidated Balance Sheet as of March 31, 2017. On May 11, 2016, the Board of Directors approved a stock repurchase program that authorizes repurchases of the Company’s common stock up to $20,000, limited to a maximum of 2,827,105 shares, prior to May 11, 2017. Repurchases may be executed using open market purchases, privately negotiated transactions, accelerated share repurchase programs or other transactions. During the three months ended March 31, 2017, there were no common shares repurchased. At March 31, 2017, up to $13,992 remained available under the share repurchase authorization, limited to 1,387,683 shares. |
(Loss) Earnings per Share
(Loss) Earnings per Share | 3 Months Ended |
Mar. 31, 2017 | |
(Loss) Earnings per Share | |
(Loss) Earnings per Share | 9. (Loss) Earnings per Share Basic and diluted (loss) earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. The following table sets forth the computation of basic and diluted (loss) earnings per share: Three Months Ended March 31, 2017 2016 Numerator: Net (loss) income $ (4,506) $ 5,714 Denominator: Basic-weighted-average common shares outstanding 55,424,559 56,542,116 Diluted-weighted-average common shares outstanding 55,424,559 56,836,082 (Loss) earnings per share: Basic $ (0.08) $ 0.10 Diluted $ (0.08) $ 0.10 The Company reported a net loss for the three months ended March 31, 2017. Accordingly, the potentially dilutive effect of 2,325,878 stock options and 186,763 restricted stock units has been excluded from the computation of diluted earnings per share as their inclusion would be anti-dilutive. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 10. Commitments and Contingencies Commitments The Company incurred rent expense under non-cancellable operating leases of $953 and $815 for the three months ended March 31, 2017 and 2016, respectively. Contingencies CPI Card Group Inc. Securities Litigation, Case No. 1:16-CV-04531 (S.D.N.Y.) On June 15, 2016, two purported CPI shareholders filed putative class action lawsuits captioned Vance, et al. v. CPI Card Group Inc., et al. and Chipman, et al. v. CPI Card Group Inc., in the United States District Court for the Southern District of New York against CPI and certain of its officers and directors, along with the sponsors of and the financial institutions who served as underwriters for CPI’s October 2015 initial public offering (“IPO”). The complaints, purportedly brought on behalf of all purchasers of CPI common stock pursuant to the October 8, 2015 Registration Statement filed in connection with the IPO, assert claims under §§11 and 15 of the Securities Act of 1933 (the “Securities Act”) and seek, among other things, damages and costs. In particular, the complaints allege that the Registration Statement contained false or misleading statements or omissions regarding CPI’s customers’ (i) purchases of Europay, MasterCard, and VISA chip cards (collectively, “EMV cards”) during the first half of fiscal year 2015 and resulting EMV card inventory levels, and (ii) capacity to purchase additional EMV cards in the fourth quarter of fiscal year 2015, and the remainder of the fiscal year ended December 31, 2015. The complaints allege that these actions artificially inflated the price of CPI common stock issued pursuant to the IPO. On August 30, 2016, the Court consolidated the Vance and Chipman actions and appointed lead plaintiff and lead counsel pursuant to the Private Securities Litigation Reform Act (“PSLRA”). On October 17, 2016, lead plaintiff filed a consolidated amended complaint, asserting the same claims for violations of §§11 and 15 of the Securities Act. The amended complaint is based principally on the same theories as the original complaints, but adds allegations that the Registration Statement contained inadequate risk disclosures and failed to disclose (i) small and mid-size issuers’ slower-than-anticipated conversion to EMV technology and (ii) increased pricing pressure and competition CPI faced in the EMV market. On November 16, 2016, the Company filed a motion to dismiss the amended complaint. All discovery and other proceedings in the action are stayed under the PSLRA pending the resolution of that motion. The Company believes these claims are without merit and intends to defend the action vigorously. Given the current stage of these matters, the range of potential loss is not probable or estimable and no accrual has been recognized as of March 31, 2017 and December 31, 2016. Gemalto S.A. v. CPI Card Group Inc. (2 cases) First case. This suit was initially filed by Gemalto S.A. (“Gemalto”) against the Company in the United States District Court for the Western District of Texas in October 2015. The now-stayed complaint alleges that the Company infringes a Gemalto patent by incorporating into the Company’s products microchips that allegedly practice the EMV standard. Gemalto’s patent expired in March 2017. The Company successfully moved to transfer the lawsuit to the District of Colorado. On January 28, 2016, the Company answered the complaint and filed counterclaims that the asserted patent is invalid and unenforceable, and that Gemalto’s lawsuit is a “sham” intended to interfere with the Company’s IPO and business relationships. Gemalto answered the Company’s counterclaims on February 5, 2016. On March 8, 2016, Gemalto provided specific infringement contentions, which—contrary to the complaint’s claim that all EMV-compliant products infringed upon Gemalto’s patent—only named CPI products that incorporate microchips supplied by two specific vendors. On May 31, 2016, the Company filed an Inter Partes Review petition with the United States Patent & Trademark Office’s Patent Trial & Appeal Board (“PTAB”), seeking re-examination of Gemalto’s asserted patent. In light of the Company’s petition, on July 11, 2016, the United States District Court for the District of Colorado granted the Company’s motion to stay the litigation pending the PTAB’s consideration of the Company’s challenge to the patentability of asserted claims. The petition was granted as to all of the independent claims of Gemalto’s patent on November 9, 2016. The PTAB also granted the Company’s petition as to certain dependent claims, which are claims that rely upon and incorporate an independent claim. The district court litigation remains stayed. Second case. On May 3, 2016, Gemalto filed a second patent infringement action against CPI in the United States District Court for the District of Colorado. The complaint alleges that the Company infringes a Gemalto patent on networked smartcard printing by way of the Company’s Card Once offering. Gemalto alleges that its patent will expire in 2019. Gemalto provided initial infringement contentions to the Company on July 29, 2016, and amended its contentions on October 13, 2016. The parties are presently engaged in claim construction activities, including the deposition of the patent-in-suit’s named inventor and the inspection records relating to the alleged commercial embodiment of Gemalto’s patent. During May 2017, the Company filed an Inter Partes Review petition with the United States Patent & Trademark Office’s Patent Trial & Appeal Board, seeking re-examination of Gemalto’s asserted patent. The PTAB has not yet ruled on the Company’s petition. With respect to both cases, the Company believes Gemalto’s claims are without merit and that the Company has strong legal and equitable defenses, plus meritorious counterclaims and indemnity rights. The Company intends to defend these suits vigorously. While a risk of loss is reasonably possible, given the current stage of these matters, as well as the aforementioned defenses, counterclaims and indemnity rights, the range of potential loss is not estimable and no accrual has been recognized as of March 31, 2017 and December 31, 2016. In addition to the matters described above, the Company is subject to routine legal proceedings in the ordinary course of business. The Company believes that the ultimate resolution of these matters will not have a material adverse effect on our business, financial condition or results of operations. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Stock-Based Compensation | |
Stock-Based Compensation | 11. Stock-Based Compensation CPI Card Group Inc. Omnibus Incentive Plan During October 2015, the Company adopted the CPI Card Group Inc. Omnibus Incentive Plan (the “Omnibus Plan”) pursuant to which cash and equity based incentives may be granted to participating employees, advisors and directors. The Company has reserved 4,000,000 shares of common stock for issuance under the Omnibus Plan. As of March 31, 2017, there were 1,460,029 shares available for grant under the Omnibus Plan. During the three months ended March 31, 2017, the Company granted awards of non-qualified stock options under the Omnibus Plan for 785,370 shares of common stock. The stock option awards were granted at various times during the quarter. All stock option grants have a 10-year term, and will generally vest ratably over a three-year period beginning on the first anniversary of the grant date. As of March 31, 2017, there are no exercisable options outstanding under the Omnibus Plan. Outstanding stock options under the Omnibus Plan are as follows: Weighted- Weighted- Average Average Remaining Exercise Contractual Term Options Price (in Years) Outstanding as of December 31, 2016 1,437,508 $ Granted 785,370 Forfeited (7,000) Outstanding as of March 31, 2017 2,215,878 $ 9.14 Unvested options as of March 31, 2017 will vest as follows: 2017 377,305 2018 744,389 2019 715,109 2020 366,938 2021 12,137 Total unvested options as of March 31, 2017 2,215,878 The fair value of the stock option awards was determined using a Black-Scholes option-pricing model with the following average assumptions: Three Months Ended March 31, 2017 Expected term in years 6.0 Volatility 33.7 % Risk-free interest rate 2.1 % Dividend yield 4.1 % During the three months ended March 31, 2017, the Company granted awards of restricted stock units for 114,446 shares of common stock. The restricted stock units contain conditions associated with continued employment or service, and a majority will vest three years from the date of grant. On the vesting date, shares of common stock will be issued to the award recipients. The following table summarizes the changes in the number of outstanding restricted stock units for the three month period ended March 31, 2017: Weighted- Average Grant Date Shares Fair Value Outstanding as of December 31, 2016 270,466 $ 7.13 Granted 114,446 4.32 Vested (198,149) 7.91 Forfeited — Outstanding as of March 31, 2017 186,763 $ 4.59 During the three months ended March 31, 2017, the Company granted awards of 932,837 cash performance units with a grant date fair value of $663. These awards will settle in cash in three annual payments on the first, second and third anniversaries of the date of grant. The cash performance units are based on the performance of the Company’s stock price, measured based on the Company’s stock price at each of the first, second, and third anniversaries of the grant date compared to the Company’s stock price on the date of grant. The cash performance units were valued using a Monte Carlo simulation. The Monte Carlo model used the following valuation assumptions based on the 3-year term of the awards: leverage adjusted peer volatility of 48%, risk free rate of 1.5%, and a dividend yield of 4.0%. The Company recognizes compensation expense on a straight-line basis for each annual performance period. The cash performance units are accounted for as a liability and remeasured to fair value at the end of each reporting period. As of March 31, 2017, the amount of liability recorded for cash performance units was not material. The following table summarizes the changes in the number of outstanding cash performance units for the three month period ended March 31, 2017: Weighted-Average Units Grant Date Fair Value Outstanding as of December 31, 2016 — $ — Granted 932,837 0.71 Vested — — Forfeited — — Outstanding as of March 31, 2017 932,837 $ 0.71 Compensation expense for the Omnibus Plan for the three months ended March 31, 2017 and March 31, 2016 was $689 and $422, respectively. As of March 31, 2017, the total unrecognized compensation expense related to unvested options, restricted stock units, and cash performance unit awards under the Omnibus Plan was $3,824, which the Company expects to recognize over an estimated weighted average period of 1.9 years. CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan In 2007, the Company’s Board of Directors adopted the CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan (the “Option Plan”). Under the provisions of the Option Plan, stock options may be granted to employees, directors, and consultants at an exercise price greater than or equal to (and not less than) the fair market value of a share on the date the option is granted. As a result of the Company’s adoption of the Omnibus Plan, as further described above, no further awards will be made under the Option Plan. The outstanding stock options under the Option Plan are non-qualified, have a 10-year life and are fully vested as of March 31, 2017. The following table summarizes the changes in the number of outstanding stock options under the Option Plan for the three-month period ended March 31, 2017: Weighted- Average Remaining Weighted- Average Contractual Term Options Exercise Price (in Years) Outstanding and Exercisable as of December 31, 2016 216,334 $ 0.0004 Granted — — Exercised (106,334) 0.0003 Forfeited — — Outstanding and Exercisable as of March 31, 2017 110,000 $ 0.0004 5.17 There was no compensation expense related to options previously granted under the Option Plan for the three months ended March 31, 2017, as all options were fully vested. The aggregate intrinsic value of stock option awards outstanding and exercisable under the Option Plan as of March 31, 2017 was $462. Other Stock-Based Compensation Awards During June 2015, the Company issued 191,664 restricted shares of common stock to executives with a weighted-average grant date fair value of $9.48 per share. The awards contain conditions associated with continued employment or service. The terms of the unvested restricted shares of common stock provide voting and regular dividend rights to the holders, and accordingly are included in weighted-average shares outstanding in the Company’s basic earnings per share calculation. See Note 9, “(Loss) Earnings per Share”. As of March 31, 2017, 94,864 restricted shares of common stock were outstanding, which vest over a three-year period from the grant date. The executive holding the remaining restricted shares changed employment status to a consultant during the first quarter of 2017. Accordingly, the Company remeasured the awards and reduced stock-based compensation expense by $143 during the three months ended March 31, 2017. Compensation expense for the three month period ended March 31, 2016 was $323. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting | |
Segment Reporting | 12. Segment Reporting The Company has identified reportable segments as those consolidated subsidiaries that represent 10% or more of its revenue, EBITDA (as defined below), or total assets, or when the Company believes information about the segment would be useful to the readers of the financial statements. The Company’s chief operating decision maker is its Chief Executive Officer who is charged with management of the Company and is responsible for the evaluation of operating performance and decision making about the allocation of resources to operating segments based on measures such as revenue and EBITDA. EBITDA is the primary measure used by the Company’s chief operating decision maker to evaluate segment operating performance. As the Company uses the term, EBITDA is defined as income before interest expense, income taxes, depreciation and amortization. The Company’s chief operating decision maker believes EBITDA is a meaningful measure and is superior to available GAAP measures as it represents a transparent view of the Company’s operating performance that is unaffected by fluctuations in property, equipment and leasehold improvement additions. The Company’s chief operating decision maker uses EBITDA to perform periodic reviews and comparison of operating trends and identify strategies to improve the allocation of resources amongst segments. As of March 31, 2017, the Company’s reportable segments are as follows: · U.S. Debit and Credit; · U.S. Prepaid Debit; and · U.K. Limited. The “Other” category includes the Company’s corporate headquarters and less significant operating segments that derive their revenue from the production of Financial Payment Cards and retail gift cards in Canada. Performance Measures of Reportable Segments Revenue and EBITDA of the Company’s reportable segments for the three months ended March 31, 2017 and 2016 were as follows: Revenue Three Months Ended March 31, 2017 2016 U.S. Debit and Credit $ 39,508 $ 65,091 U.S. Prepaid Debit 9,784 12,341 U.K. Limited 5,587 6,232 Other 2,503 3,142 Intersegment eliminations (1,374) (413) Total: $ 56,008 $ 86,393 EBITDA Three Months Ended March 31, 2017 2016 U.S. Debit and Credit $ 7,630 $ 18,922 U.S. Prepaid Debit 1,785 3,267 U.K. Limited 325 219 Other (6,942) (4,734) Total: $ 2,798 $ 17,674 The following table provides a reconciliation of total segment EBITDA to net (loss) income for the three months ended March 31, 2017 and 2016: Three Months Ended March 31, 2017 2016 Total segment EBITDA from continuing operations $ 2,798 $ 17,674 Interest, net (5,062) (5,033) Income tax benefit (expense) 2,291 (2,814) Depreciation and amortization (4,533) (4,113) Net (loss) income $ (4,506) $ 5,714 Balance Sheet Data of Reportable Segments Total assets of the Company’s reportable segments as of March 31, 2017 and December 31, 2016 were as follows: March 31, 2017 December 31, 2016 U.S. Debit and Credit $ 197,756 $ 205,417 U.S. Prepaid Debit 24,638 23,509 U.K. Limited 28,431 26,060 Other 10,979 9,434 Total assets: $ 261,804 $ 264,420 Plant, Equipment and Leasehold Improvement Additions of Geographic Locations Plant, equipment and leasehold improvement additions of the Company’s geographical locations for the three months ended March 31, 2017 and 2016 were as follows: Three Months Ended March 31, 2017 2016 U.S. $ 2,275 $ 2,402 Canada 72 114 Total North America 2,347 2,516 U.K. 961 624 Total plant, equipment and leasehold improvement additions $ 3,308 $ 3,140 Net Sales to Geographic Locations Net sales to the Company’s geographic locations for the three months ended March 31, 2017 and 2016 were as follows: Three Months Ended March 31, 2017 2016 U.S. $ 47,811 $ 74,436 Canada 2,028 3,999 Total North America 78,435 U.K. 3,955 6,605 Other (a) 2,214 1,353 Total net sales $ 56,008 $ 86,393 (a) Amounts in Other include sales to various countries that individually are not material. Long-Lived Assets of Geographic Segments Long-lived assets of the Company’s geographic segments as of March 31, 2017 and December 31, 2016 were as follows: March 31, 2017 December 31, 2016 U.S. $ 155,798 $ 157,773 Canada 2,903 2,899 Total North America: 158,701 160,672 U.K. 11,995 11,091 Total long-lived assets $ 170,696 $ 171,763 Net Sales by Product and Services Net sales from products and services sold by the Company for the three months ended March 31, 2017 and 2016 were as follows: Three Months Ended March 31, 2017 2016 Product net sales (a) $ 29,764 $ 54,958 Services net sales (b) 26,244 31,435 Total net sales: $ 56,008 $ 86,393 (a) Product net sales include the design and production of Financial Payment Cards in contact-EMV, Dual-Interface EMV, contactless and magnetic stripe card formats. The Company also generates product revenue from the sale of Card Once ® instant issuance systems, private label credit cards and retail gift cards. (b) Services net sales include revenue from the personalization and fulfillment of Financial Payment Cards, providing tamper-evident security packaging and fulfillment services to Prepaid Debit Card program managers, and software as a service personalization of instant issuance debit cards. The Company also generates service revenue from personalizing retail gift cards (primarily in Canada and the United Kingdom) and from click-fees generated from the Company’s patented card design software, known as MYCA, which provides customers and cardholders the ability to design cards on the internet and customize cards with individualized digital images. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events | |
Subsequent Events | 13. Subsequent Events On May 3, 2017, the Board of Directors approved a dividend of $0.045 per share. This dividend is payable on July 7, 2017, to stockholders of record as of the close of business on June 16, 2017. |
Business Overview and Summary19
Business Overview and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Business Overview and Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of the results of the interim periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2016 is derived from the audited financial statements as of that date. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. |
Use of Estimates | Use of Estimates Management uses estimates and assumptions relating to the reporting of assets and liabilities in its preparation of the condensed consolidated financial statements. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and intangible assets; valuation allowances for inventories and deferred tax assets; debt; and stock-based compensation expense. Actual results could differ from those estimates. |
Inventories | Inventories Inventories consist of raw materials, work–in-process and finished goods and are measured at the lower of cost or net realizable value (determined on the first-in, first-out or specific identification basis) in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) 2015-11, Inventory — Simplifying the Measurement of Inventory, which the Company adopted on January 1, 2017. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this standard did not impact the Company’s financial position, results of operations or cash flows during the three months ended March 31, 2017. |
Adoption of New Accounting Standards and Recently Issued Accounting Pronouncements | Adoption of New Accounting Standard As of January 1, 2017, the Company adopted FASB ASU 2016-09, Compensation–Stock Compensation: Improvements to Employee Share-Based Payment Accounting ( “ASU 2016-09” ) , which simplified several aspects of the accounting for employee share based payment transactions, including classification in the statement of cash flows, the accounting for forfeitures and statutory withholding requirements. Classification in the Statement of Cash Flows As a result of the adoption of ASU 2016-09, excess tax benefits and deficiencies in connection with the Company’s stock-based compensation plans are no longer recorded directly through equity, and are recorded in “Income tax benefit” in the Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income. The impact to the Company’s condensed consolidated financial statements was not material during the three months ended March 31, 2017. See Note 7, “Income Taxes” and Note 11, “Stock-Based Compensation”. The Company has also elected to present excess tax benefits as an operating activity prospectively, commencing with the Company’s Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2017. Additionally, during the three months ended March 31, 2017, the Company paid $336 to tax authorities for shares withheld to satisfy employer income tax obligations in relation to the vesting of stock-based compensation awards. As required by ASU 2016-09, the Company classified these payments as a financing activity in the Condensed Consolidated Statement of Cash Flows. There was no impact to prior periods as a result of the required retrospective application of this requirement within ASU 2016-09. Forfeitures The Company has elected to account for forfeitures when they occur. The cumulative-effect adjustment to “Accumulated earnings” and “Capital deficiency” in the Company’s Condensed Consolidated Balance Sheet was immaterial. Recently Issued Accounting Pronouncements The FASB issued ASU 2014-09, Revenue from Contracts with Customers , in May 2014, as amended by ASU 2016-12 Narrow-scope Improvements and Practical Expedients, in May 2016. ASU 2014-09, as amended, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should also disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB deferred the effective date to annual reporting periods beginning after December 15, 2017, and interim reporting periods within those periods. The Company plans to implement the provisions of ASU 2014-09, as amended, as of January 1, 2018. The Company plans to adopt the standard using the cumulative effect transition method with the cumulative effect of initial adoption recognized at the date of initial application. The Company is currently assessing the impact that the future adoption of ASU 2014-09, as amended, may have on its condensed consolidated financial statements by analyzing its current portfolio of customer contracts, including a review of historical accounting policies and practices to identify potential differences in applying the new guidance. In February 2016, the FASB issued ASU 2016-02, Leases , which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018 (the Company’s fiscal year 2019) with early adoption permitted. The new standard is required to be adopted using a modified retrospective approach. The Company is in the process of assessing the impact of ASU 2016-02 on its results of operations, financial position and condensed consolidated financial statements. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventories | |
Schedule of inventories | March 31, 2017 December 31, 2016 Raw materials $ 9,353 $ 8,206 Work-in-process 9,707 6,340 Finished goods 4,915 4,823 $ 23,975 $ 19,369 |
Plant, Equipment and Leasehol21
Plant, Equipment and Leasehold Improvements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Plant, Equipment and Leasehold Improvements | |
Schedule of plant, equipment and leasehold improvements | March 31, 2017 December 31, 2016 Buildings $ 2,108 $ 2,077 Machinery and equipment 60,193 59,464 Furniture, fixtures and computer equipment 6,843 6,634 Leasehold improvements 18,715 18,655 Construction in progress 3,653 1,136 91,512 87,966 Less accumulated depreciation and amortization (38,042) (34,547) $ 53,470 $ 53,419 |
Goodwill and Other Intangible22
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Other Intangible Assets | |
Schedule of goodwill by reportable segment | March 31, 2017 December 31, 2016 U.S. Debit and Credit $ 64,330 $ 64,330 U.K. Limited 5,980 5,908 Other 1,773 1,758 $ 72,083 $ 71,996 |
Schedule of intangible assets excluding goodwill | March 31, 2017 December 31, 2016 Average Life Accumulated Net Book Accumulated Net Book (Years) Cost Amortization Value Cost Amortization Value Customer relationships 12 to 20 $ 59,036 $ (21,874) $ 37,162 $ 58,994 $ (20,972) $ 38,022 Technology and software 7 to 10 7,100 (2,399) 4,701 7,101 (2,167) 4,934 Non-compete agreements 5 to 8 491 (346) 145 491 (331) 160 Trademarks to 3,330 (195) 3,135 3,330 (98) 3,232 Intangible assets subject to amortization $ 69,957 $ (24,814) $ 45,143 $ 69,916 $ (23,568) $ 46,348 |
Schedule of future aggregate amortization expense for identified amortizable intangibles | 2017 (remaining 9 months) $ 3,672 2018 4,895 2019 4,875 2020 4,835 2021 4,575 Thereafter 22,291 $ 45,143 |
Fair Value of Financial Instr23
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value of Financial Instruments | |
Schedule of financial assets and liabilities subject to fair value measurements | Value as of Fair Value as of Fair Value Measurement at March 31, 2017 March 31, March 31, (Using Fair Value Hierarchy) 2017 2017 Level 1 Level 2 Level 3 Liabilities: First Lien Term Loan $ 312,500 $ 290,625 $ — $ 290,625 $ — Value as of Fair Value as of Fair Value Measurement at December 31, 2016 December 31, December 31, (Using Fair Value Hierarchy) 2016 2016 Level 1 Level 2 Level 3 Liabilities: First Lien Term Loan $ 312,500 $ 290,625 $ — $ 290,625 $ — |
Long-Term Debt and Credit Fac24
Long-Term Debt and Credit Facility (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Long-Term Debt and Credit Facility | |
Schedule of long-term debt | Interest March 31, December 31, Rate (1) 2017 2016 First lien term loan facility (1) 5.83 % $ 312,500 $ 312,500 Unamortized discount (3,627) (3,795) Unamortized deferred financing costs (6,467) (6,783) Long-term debt $ 302,406 $ 301,922 (1) Interest rate at March 31, 2017. Interest rate at December 31, 2016 was 5.50%. |
(Loss) Earnings per Share (Tabl
(Loss) Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
(Loss) Earnings per Share | |
Computation of basic and diluted EPS | Three Months Ended March 31, 2017 2016 Numerator: Net (loss) income $ (4,506) $ 5,714 Denominator: Basic-weighted-average common shares outstanding 55,424,559 56,542,116 Diluted-weighted-average common shares outstanding 55,424,559 56,836,082 (Loss) earnings per share: Basic $ (0.08) $ 0.10 Diluted $ (0.08) $ 0.10 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Summary of changes in outstanding restricted stock units | Weighted- Average Grant Date Shares Fair Value Outstanding as of December 31, 2016 270,466 $ 7.13 Granted 114,446 4.32 Vested (198,149) 7.91 Forfeited — Outstanding as of March 31, 2017 186,763 $ 4.59 |
Summary of changes in number of outstanding restricted shares of common stock | Weighted-Average Units Grant Date Fair Value Outstanding as of December 31, 2016 — $ — Granted 932,837 0.71 Vested — — Forfeited — — Outstanding as of March 31, 2017 932,837 $ 0.71 |
Omnibus Plan | |
Summary of outstanding and exercisable stock options | Weighted- Weighted- Average Average Remaining Exercise Contractual Term Options Price (in Years) Outstanding as of December 31, 2016 1,437,508 $ Granted 785,370 Forfeited (7,000) Outstanding as of March 31, 2017 2,215,878 $ 9.14 |
Schedule of vesting for unvested options | 2017 377,305 2018 744,389 2019 715,109 2020 366,938 2021 12,137 Total unvested options as of March 31, 2017 2,215,878 |
Schedule of valuation assumptions | Three Months Ended March 31, 2017 Expected term in years 6.0 Volatility 33.7 % Risk-free interest rate 2.1 % Dividend yield 4.1 % |
Option Plan | |
Summary of outstanding and exercisable stock options | Weighted- Average Remaining Weighted- Average Contractual Term Options Exercise Price (in Years) Outstanding and Exercisable as of December 31, 2016 216,334 $ 0.0004 Granted — — Exercised (106,334) 0.0003 Forfeited — — Outstanding and Exercisable as of March 31, 2017 110,000 $ 0.0004 5.17 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting | |
Schedule of revenue and EBITDA of the company's reportable segments | Revenue Three Months Ended March 31, 2017 2016 U.S. Debit and Credit $ 39,508 $ 65,091 U.S. Prepaid Debit 9,784 12,341 U.K. Limited 5,587 6,232 Other 2,503 3,142 Intersegment eliminations (1,374) (413) Total: $ 56,008 $ 86,393 EBITDA Three Months Ended March 31, 2017 2016 U.S. Debit and Credit $ 7,630 $ 18,922 U.S. Prepaid Debit 1,785 3,267 U.K. Limited 325 219 Other (6,942) (4,734) Total: $ 2,798 $ 17,674 |
Schedule of reconciliation of total segment EBITDA to income before taxes | Three Months Ended March 31, 2017 2016 Total segment EBITDA from continuing operations $ 2,798 $ 17,674 Interest, net (5,062) (5,033) Income tax benefit (expense) 2,291 (2,814) Depreciation and amortization (4,533) (4,113) Net (loss) income $ (4,506) $ 5,714 |
Schedule of total assets of the company's reportable segments | March 31, 2017 December 31, 2016 U.S. Debit and Credit $ 197,756 $ 205,417 U.S. Prepaid Debit 24,638 23,509 U.K. Limited 28,431 26,060 Other 10,979 9,434 Total assets: $ 261,804 $ 264,420 |
Schedule of plant, equipment and leasehold improvement additions of geographic locations | Three Months Ended March 31, 2017 2016 U.S. $ 2,275 $ 2,402 Canada 72 114 Total North America 2,347 2,516 U.K. 961 624 Total plant, equipment and leasehold improvement additions $ 3,308 $ 3,140 |
Schedule of net sales of company's geographic locations | Three Months Ended March 31, 2017 2016 U.S. $ 47,811 $ 74,436 Canada 2,028 3,999 Total North America 78,435 U.K. 3,955 6,605 Other (a) 2,214 1,353 Total net sales $ 56,008 $ 86,393 (a) Amounts in Other include sales to various countries that individually are not material. |
Schedule of Long lived assets of the company's geographic segments | March 31, 2017 December 31, 2016 U.S. $ 155,798 $ 157,773 Canada 2,903 2,899 Total North America: 158,701 160,672 U.K. 11,995 11,091 Total long-lived assets $ 170,696 $ 171,763 |
Schedule of net sales from product and services sold by the company | Three Months Ended March 31, 2017 2016 Product net sales (a) $ 29,764 $ 54,958 Services net sales (b) 26,244 31,435 Total net sales: $ 56,008 $ 86,393 (a) Product net sales include the design and production of Financial Payment Cards in contact-EMV, Dual-Interface EMV, contactless and magnetic stripe card formats. The Company also generates product revenue from the sale of Card Once ® instant issuance systems, private label credit cards and retail gift cards. (b) Services net sales include revenue from the personalization and fulfillment of Financial Payment Cards, providing tamper-evident security packaging and fulfillment services to Prepaid Debit Card program managers, and software as a service personalization of instant issuance debit cards. The Company also generates service revenue from personalizing retail gift cards (primarily in Canada and the United Kingdom) and from click-fees generated from the Company’s patented card design software, known as MYCA, which provides customers and cardholders the ability to design cards on the internet and customize cards with individualized digital images. |
Business Overview and Summary28
Business Overview and Summary of Significant Accounting Policies - Business Overview and Basis of Presentation (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($)item | |
Business Overview and Summary of Significant Accounting Policies | |
Total number of production and card services facilities | 10 |
Payment to tax authorities for shares withheld to satisfy employer income tax obligations | $ | $ 336 |
United States and Canada | |
Business Overview and Summary of Significant Accounting Policies | |
Number of high-security production and card services facilities | 8 |
Number of payment card brands which certify card services | 1 |
U.K. | |
Business Overview and Summary of Significant Accounting Policies | |
Total number of production and card services facilities | 2 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Inventories | ||
Raw materials | $ 9,353 | $ 8,206 |
Work-in-process | 9,707 | 6,340 |
Finished goods | 4,915 | 4,823 |
Inventory | $ 23,975 | $ 19,369 |
Plant, Equipment and Leasehol30
Plant, Equipment and Leasehold Improvements (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | $ 91,512 | $ 87,966 | |
Less accumulated depreciation and amortization | (38,042) | (34,547) | |
Plant, equipment and leasehold improvements, net | 53,470 | 53,419 | |
Depreciation | 3,310 | $ 2,973 | |
Buildings | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | 2,108 | 2,077 | |
Machinery and equipment | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | 60,193 | 59,464 | |
Furniture, fixtures and computer equipment | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | 6,843 | 6,634 | |
Leasehold improvements | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | 18,715 | 18,655 | |
Construction in progress | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | $ 3,653 | $ 1,136 |
Goodwill and Other Intangible31
Goodwill and Other Intangible Assets - Goodwill by Reporting Segment (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Goodwill | $ 72,083 | $ 71,996 |
U.S. Debit and Credit | ||
Goodwill | 64,330 | 64,330 |
U.K. Limited | ||
Goodwill | 5,980 | 5,908 |
Other | ||
Goodwill | $ 1,773 | $ 1,758 |
Goodwill and Other Intangible32
Goodwill and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Intangible Assets [Line Items] | |||
Weighted-average useful life | 15 years 7 months 6 days | ||
Intangible amortization expense | $ 1,223 | $ 1,140 | |
Intangible assets subject to amortization, Cost | 69,957 | $ 69,916 | |
Intangible assets subject to amortization, Accumulated Amortization | (24,814) | (23,568) | |
Intangible assets subject to amortization, Net Book Value | 45,143 | 46,348 | |
Customer relationships | |||
Intangible Assets [Line Items] | |||
Intangible assets subject to amortization, Cost | 59,036 | 58,994 | |
Intangible assets subject to amortization, Accumulated Amortization | (21,874) | (20,972) | |
Intangible assets subject to amortization, Net Book Value | $ 37,162 | 38,022 | |
Customer relationships | Minimum | |||
Intangible Assets [Line Items] | |||
Weighted-average useful life | 12 years | ||
Customer relationships | Maximum | |||
Intangible Assets [Line Items] | |||
Weighted-average useful life | 20 years | ||
Technology and software | |||
Intangible Assets [Line Items] | |||
Intangible assets subject to amortization, Cost | $ 7,100 | 7,101 | |
Intangible assets subject to amortization, Accumulated Amortization | (2,399) | (2,167) | |
Intangible assets subject to amortization, Net Book Value | $ 4,701 | 4,934 | |
Technology and software | Minimum | |||
Intangible Assets [Line Items] | |||
Weighted-average useful life | 7 years | ||
Technology and software | Maximum | |||
Intangible Assets [Line Items] | |||
Weighted-average useful life | 10 years | ||
Non-compete agreements | |||
Intangible Assets [Line Items] | |||
Intangible assets subject to amortization, Cost | $ 491 | 491 | |
Intangible assets subject to amortization, Accumulated Amortization | (346) | (331) | |
Intangible assets subject to amortization, Net Book Value | $ 145 | 160 | |
Non-compete agreements | Minimum | |||
Intangible Assets [Line Items] | |||
Weighted-average useful life | 5 years | ||
Non-compete agreements | Maximum | |||
Intangible Assets [Line Items] | |||
Weighted-average useful life | 8 years | ||
Trademarks | |||
Intangible Assets [Line Items] | |||
Intangible assets subject to amortization, Cost | $ 3,330 | 3,330 | |
Intangible assets subject to amortization, Accumulated Amortization | (195) | (98) | |
Intangible assets subject to amortization, Net Book Value | $ 3,135 | $ 3,232 | |
Trademarks | Minimum | |||
Intangible Assets [Line Items] | |||
Weighted-average useful life | 7 years 6 months | ||
Trademarks | Maximum | |||
Intangible Assets [Line Items] | |||
Weighted-average useful life | 10 years |
Goodwill and Other Intangible33
Goodwill and Other Intangible Assets - Future Aggregate Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Estimated future aggregate amortization expense | ||
2017 (remaining 9 months) | $ 3,672 | |
2,018 | 4,895 | |
2,019 | 4,875 | |
2,020 | 4,835 | |
2,021 | 4,575 | |
Thereafter | 22,291 | |
Intangible assets subject to amortization, Net Book Value | $ 45,143 | $ 46,348 |
Fair Value of Financial Instr34
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Liabilities: | ||
Carrying amount | $ 312,500 | |
First Lien Credit Facility | ||
Liabilities: | ||
Carrying amount | 312,500 | $ 312,500 |
First Lien Credit Facility | Term Loan | ||
Liabilities: | ||
Carrying amount | 312,500 | |
Long-term debt | 290,625 | 290,625 |
First Lien Credit Facility | Level 2 | Term Loan | ||
Liabilities: | ||
Long-term debt | $ 290,625 | $ 290,625 |
Long-Term Debt and Credit Fac35
Long-Term Debt and Credit Facility - Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 312,500 | |
Total long-term debt | $ 302,406 | $ 301,922 |
First Lien Credit Facility | ||
Debt Instrument [Line Items] | ||
Interest rate (as a percent) | 5.83% | 5.50% |
Long-term debt | $ 312,500 | $ 312,500 |
Unamortized discount | (3,627) | (3,795) |
Unamortized deferred financing costs | $ (6,467) | $ (6,783) |
Long-Term Debt and Credit Fac36
Long-Term Debt and Credit Facility - First Lien Credit Facility (Details) - First Lien Credit Facility $ in Thousands | Aug. 17, 2015USD ($) | Mar. 31, 2017USD ($) |
Long-term Debt | ||
Maximum net leverage ratio | 7 | |
Term Loan | ||
Long-term Debt | ||
Maximum borrowing capacity | $ 435,000 | |
Term Loan | Eurodollar rate | ||
Long-term Debt | ||
Applicable margin over reference rate (as a percent) | 4.50% | |
Term Loan | Eurodollar rate | Minimum | ||
Long-term Debt | ||
Interest rate (as a percent) | 1.00% | |
Term Loan | Base rate | ||
Long-term Debt | ||
Applicable margin over reference rate (as a percent) | 3.50% | |
Revolving Credit Facility | ||
Long-term Debt | ||
Maximum borrowing capacity | $ 40,000 | |
Fee on outstanding letters of credit (as a percent) | 4.50% | |
Fronting fee for letters of credit (as a percent) | 0.125% | |
Amount drawn to trigger net leverage requirement (as a percent) | 50.00% | |
Letters of credit outstanding | $ 50 | |
Amount outstanding | $ 0 | |
Revolving Credit Facility | Minimum | ||
Long-term Debt | ||
Unused commitment fee (as a percent) | 0.375% | |
Revolving Credit Facility | Maximum | ||
Long-term Debt | ||
Unused commitment fee (as a percent) | 0.50% |
Long-Term Debt and Credit Fac37
Long-Term Debt and Credit Facility - Sellers Note (Details) - Sellers Note $ in Thousands | Sep. 02, 2016USD ($) |
Long-term Debt | |
Promissory note | $ 9,000 |
Interest rate (as a percent) | 5.00% |
Long-Term Debt and Credit Fac38
Long-Term Debt and Credit Facility - Letters of Credit (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Aug. 17, 2015USD ($) | |
Long-term Debt | |||
Long-term debt | $ 312,500 | ||
First Lien Credit Facility | |||
Long-term Debt | |||
Long-term debt | 312,500 | $ 312,500 | |
Term Loan | First Lien Credit Facility | |||
Long-term Debt | |||
Maximum borrowing capacity | $ 435,000 | ||
Long-term debt | $ 312,500 | ||
Revolving Credit Facility | First Lien Credit Facility | |||
Long-term Debt | |||
Number of outstanding letters of credit | item | 1 | ||
Letters of credit outstanding | $ 50 | ||
Remaining borrowing capacity | $ 19,950 | ||
Fee on outstanding letters of credit (as a percent) | 4.50% | ||
Fronting fee for letters of credit (as a percent) | 0.125% | ||
Maximum borrowing capacity | $ 40,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Taxes | ||
Income tax expense (benefit) | $ (2,291) | $ 2,814 |
Income before income taxes | ||
(Loss) income before income taxes | $ (6,797) | $ 8,528 |
Effective income tax rate (as a percent) | 33.70% | 33.00% |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 01, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Mar. 31, 2016 | May 11, 2016 |
Dividends, Common Stock [Abstract] | |||||
Dividends paid on common stock | $ 2,527 | $ 2,527 | |||
Cash dividend paid per common share | $ 0.045 | ||||
Cash dividends declared per common share | $ 0.045 | $ 0.045 | $ 0.045 | ||
Repurchase Program | |||||
Maximum value of shares authorized for repurchase under repurchase plan | $ 20,000 | ||||
Maximum number of shares authorized for repurchase under repurchase program | 2,827,105 | ||||
Shares repurchased and retired (in shares) | 0 | ||||
Value of remaining shares available under repurchase authorization | $ 13,992 | ||||
Maximum remaining number of shares available under repurchase authorization | 1,387,683 | ||||
Accrued expenses | |||||
Dividends, Common Stock [Abstract] | |||||
Accrued dividend | $ 2,500 |
Stockholders' Equity - Repurcha
Stockholders' Equity - Repurchase Program (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | May 11, 2016 | |
Stockholders’ Equity | ||
Maximum value of shares authorized for repurchase under repurchase plan | $ 20,000 | |
Maximum number of shares authorized for repurchase under repurchase program | 2,827,105 | |
Shares repurchased and retired (in shares) | 0 | |
Value of remaining shares available under repurchase authorization | $ 13,992 | |
Maximum remaining number of shares available under repurchase authorization | 1,387,683 |
(Loss) Earnings per Share (Deta
(Loss) Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Numerator: | ||
Net (loss) income | $ (4,506) | $ 5,714 |
Denominator: | ||
Basic - weighted average common shares outstanding | 55,424,559 | 56,542,116 |
Dilutive - weighted average common shares outstanding | 55,424,559 | 56,836,082 |
(Loss) earnings per share: | ||
Basic (in dollars per share) | $ (0.08) | $ 0.10 |
Diluted (in dollars per share) | $ (0.08) | $ 0.10 |
Stock Options | ||
Potentially dilutive effect of outstanding stock options | ||
Potential dilutive effect of share-based compensation excluded (in shares) | 2,325,878 | |
Restricted stock units | ||
Potentially dilutive effect of outstanding stock options | ||
Potential dilutive effect of share-based compensation excluded (in shares) | 186,763 |
Commitments and Contingencies -
Commitments and Contingencies - Rental Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Commitments and Contingencies. | ||
Operating leases, rent expense | $ 953 | $ 815 |
Commitments and Contingencies44
Commitments and Contingencies - Contingencies (Details) $ in Thousands | Jun. 15, 2016plaintiff | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Loss Contingencies [Line Items] | |||
Number of purported shareholders that have filed lawsuits | plaintiff | 2 | ||
Securities Litigation Case | Pending Litigation | |||
Loss Contingencies [Line Items] | |||
Loss contingency accrual | $ 0 | $ 0 | |
Gemalto Suit | Pending Litigation | |||
Loss Contingencies [Line Items] | |||
Loss contingency accrual | $ 0 | $ 0 |
Stock-Based Compensation - Omni
Stock-Based Compensation - Omnibus Incentive Plan (Details) - Omnibus Plan - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Oct. 09, 2015 | |
Valuation Assumptions: | |||
Compensation expense | $ 689 | $ 422 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized | 4,000,000 | ||
Number of shares available for grant | 1,460,029 | ||
Stock options granted (in shares) | 785,370 | ||
Stock option life (in years) | 10 years | ||
Vesting period | 3 years | ||
Number of exercisable options outstanding | 0 | ||
Number of shares | |||
Balance at beginning of year (in shares) | 1,437,508 | ||
Granted (in shares) | 785,370 | ||
Forfeited (in shares) | (7,000) | ||
Balance at end of year (in shares) | 2,215,878 | ||
Weighted-Average Exercise Price | |||
Balance at beginning of year (in dollars per share) | $ 8.62 | ||
Granted (in dollars per share) | 4.31 | ||
Forfeited (in dollars per share) | 10 | ||
Balance at end of year (in dollars per share) | $ 7.06 | ||
Weighted- Average Remaining Contractual Term (in Years) | |||
Balance (in years) | 9 years 1 month 21 days | ||
Number of unvested options scheduled to vest | |||
Unvested options (in shares) | 2,215,878 | ||
Valuation Assumptions: | |||
Expected term in years | 6 years | ||
Volatility (as a percent) | 33.70% | ||
Risk-free interest rate | 2.10% | ||
Dividend yield (as a percent) | 4.10% | ||
2017 | Stock Options | |||
Number of unvested options scheduled to vest | |||
Unvested options (in shares) | 377,305 | ||
2018 | Stock Options | |||
Number of unvested options scheduled to vest | |||
Unvested options (in shares) | 744,389 | ||
2019 | Stock Options | |||
Number of unvested options scheduled to vest | |||
Unvested options (in shares) | 715,109 | ||
2020 | Stock Options | |||
Number of unvested options scheduled to vest | |||
Unvested options (in shares) | 366,938 | ||
2021 | Stock Options | |||
Number of unvested options scheduled to vest | |||
Unvested options (in shares) | 12,137 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Restricted stock units | ||
Number of Restricted Stock Units | ||
Units outstanding at the beginning of the period (in shares) | 270,466 | |
Granted (in shares) | 114,446 | |
Vested (in shares) | (198,149) | |
Units outstanding at the end of the period (in shares) | 186,763 | |
Weighted Average Grant Date Fair Value | ||
Units outstanding at the beginning of the period (in dollars per shares) | $ 7.13 | |
Granted (in dollars per share) | 4.32 | |
Vested (in dollars per share) | 7.91 | |
Units outstanding at the end of the period (in dollars per shares) | $ 4.59 | |
Omnibus Plan | ||
Weighted Average Grant Date Fair Value | ||
Compensation expense | $ 689 | $ 422 |
Omnibus Plan | Restricted stock units | ||
Number of Restricted Stock Units | ||
Granted (in shares) | 114,446 | |
Weighted Average Grant Date Fair Value | ||
Unrecognized compensation expense | $ 3,824 | |
Period over which compensation expense expected to recognize | 1 year 10 months 24 days |
Stock-Based Compensation - Cash
Stock-Based Compensation - Cash Performance Units (Details) - Cash Performance $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Grant date fair value | $ | $ 663 |
Period over which compensation expense expected to recognize | 3 years |
Valuation Assumptions: | |
Expected term in years | 3 years |
Volatility (as a percent) | 48.00% |
Risk-free interest rate | 1.50% |
Dividend yield (as a percent) | 4.00% |
Number of Cash Performance Units | |
Granted (in shares) | shares | 932,837 |
Units outstanding at the end of the period (in shares) | shares | 932,837 |
Weighted Average Grant Date Fair Value | |
Granted (in dollars per share) | $ / shares | $ 0.71 |
Units outstanding at the end of the period (in dollars per shares) | $ / shares | $ 0.71 |
Stock-Based Compensation - Opti
Stock-Based Compensation - Option Plan (Details) - Option Plan $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Number of shares | |
Balance at beginning of year (in shares) | shares | 216,334 |
Exercised (in shares) | shares | (106,334) |
Balance at end of year (in shares) | shares | 110,000 |
Weighted-Average Exercise Price | |
Balance at beginning of year (in dollars per share) | $ / shares | $ 0.0004 |
Exercised (in dollars per share) | $ / shares | 0.0003 |
Balance at end of year (in dollars per share) | $ / shares | $ 0.0004 |
Weighted- Average Remaining Contractual Term (in Years) | |
Balance (in years) | 5 years 2 months 1 day |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock option life (in years) | 10 years |
Compensation expense | $ | $ 0 |
Weighted- Average Remaining Contractual Term (in Years) | |
Aggregate intrinsic value of stock option awards outstanding | $ | $ 462 |
Stock-Based Compensation - Re49
Stock-Based Compensation - Restricted Shares (Details) - Restricted shares - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | |
Jun. 30, 2015 | Mar. 31, 2017 | Mar. 31, 2016 | |
Number of Restricted Stock Units | |||
Granted (in shares) | 191,664 | ||
Units outstanding at the end of the period (in shares) | 94,864 | ||
Weighted Average Grant Date Fair Value | |||
Granted (in dollars per share) | $ 9.48 | ||
Vesting period | 3 years | ||
Compensation expense | $ (143) | $ 323 |
Segment Reporting - Revenue and
Segment Reporting - Revenue and EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting | ||
Revenues | $ 56,008 | $ 86,393 |
EBITDA | 2,798 | 17,674 |
U.S. Debit and Credit | ||
Segment Reporting | ||
EBITDA | 7,630 | 18,922 |
U.S. Prepaid Debit | ||
Segment Reporting | ||
EBITDA | 1,785 | 3,267 |
U.K. Limited | ||
Segment Reporting | ||
EBITDA | 325 | 219 |
Other | ||
Segment Reporting | ||
EBITDA | (6,942) | (4,734) |
Operating Segments | U.S. Debit and Credit | ||
Segment Reporting | ||
Revenues | 39,508 | 65,091 |
Operating Segments | U.S. Prepaid Debit | ||
Segment Reporting | ||
Revenues | 9,784 | 12,341 |
Operating Segments | U.K. Limited | ||
Segment Reporting | ||
Revenues | 5,587 | 6,232 |
Operating Segments | Other | ||
Segment Reporting | ||
Revenues | 2,503 | 3,142 |
Intersegment eliminations | ||
Segment Reporting | ||
Revenues | $ (1,374) | $ (413) |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of EBITDA to Income Before Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Reconciliation of total segment EBITDA to income before taxes | ||
Total segment EBITDA from continuing operations | $ 2,798 | $ 17,674 |
Interest, net | (5,062) | (5,033) |
Income tax benefit (expense) | 2,291 | (2,814) |
Depreciation and amortization | (4,533) | (4,113) |
Net (loss) income | $ (4,506) | $ 5,714 |
Segment Reporting - Balance She
Segment Reporting - Balance Sheet Data (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 261,804 | $ 264,420 |
Operating Segments | U.S. Debit and Credit | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 197,756 | 205,417 |
Operating Segments | U.S. Prepaid Debit | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 24,638 | 23,509 |
Operating Segments | U.K. Limited | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 28,431 | 26,060 |
Operating Segments | Other | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 10,979 | $ 9,434 |
Segment Reporting - Geographic
Segment Reporting - Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Total plant, equipment and leasehold improvement additions | $ 3,308 | $ 3,140 | |
Revenues | 56,008 | 86,393 | |
Total long-lived assets | 170,696 | $ 171,763 | |
Total North America | |||
Segment Reporting Information [Line Items] | |||
Total plant, equipment and leasehold improvement additions | 2,347 | 2,516 | |
Revenues | 49,839 | 78,435 | |
Total long-lived assets | 158,701 | 160,672 | |
U.S. | |||
Segment Reporting Information [Line Items] | |||
Total plant, equipment and leasehold improvement additions | 2,275 | 2,402 | |
Revenues | 47,811 | 74,436 | |
Total long-lived assets | 155,798 | 157,773 | |
Canada | |||
Segment Reporting Information [Line Items] | |||
Total plant, equipment and leasehold improvement additions | 72 | 114 | |
Revenues | 2,028 | 3,999 | |
Total long-lived assets | 2,903 | 2,899 | |
U.K. | |||
Segment Reporting Information [Line Items] | |||
Total plant, equipment and leasehold improvement additions | 961 | 624 | |
Revenues | 3,955 | 6,605 | |
Total long-lived assets | 11,995 | $ 11,091 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ 2,214 | $ 1,353 |
Segment Reporting - Net Sales b
Segment Reporting - Net Sales by Product and Services (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting | ||
Product net sales | $ 29,764 | $ 54,958 |
Services net sales | 26,244 | 31,435 |
Total net sales | $ 56,008 | $ 86,393 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | May 03, 2017 | Mar. 01, 2017 | Mar. 31, 2017 | Mar. 31, 2016 |
Subsequent Event [Line Items] | ||||
Cash dividends declared per common share | $ 0.045 | $ 0.045 | $ 0.045 | |
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Cash dividends declared per common share | $ 0.045 |