Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 02, 2023 | |
Cover Abstract | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-37584 | |
Entity Registrant Name | CPI Card Group Inc. | |
Entity Central Index Key | 0001641614 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-0344657 | |
Entity Address, Address Line One | 10368 W. Centennial Road | |
Entity Address, City or Town | Littleton | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80127 | |
City Area Code | 720 | |
Local Phone Number | 681-6304 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | PMTS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,426,670 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 14,157 | $ 11,037 |
Accounts receivable, net | 76,231 | 80,583 |
Inventories, net | 69,715 | 68,399 |
Prepaid expenses and other current assets | 8,229 | 7,551 |
Total current assets | 168,332 | 167,570 |
Plant, equipment, leasehold improvements and operating lease right-of-use assets, net of accumulated depreciation of $64,580 and $61,922, respectively | 60,215 | 57,178 |
Intangible assets, net of accumulated amortization of $48,864 and $47,897, respectively | 17,021 | 17,988 |
Goodwill | 47,150 | 47,150 |
Other assets | 5,490 | 6,780 |
Total assets | 298,208 | 296,666 |
Current liabilities: | ||
Accounts payable | 25,915 | 24,371 |
Accrued expenses | 29,430 | 40,070 |
Deferred revenue and customer deposits | 2,115 | 3,571 |
Total current liabilities | 57,460 | 68,012 |
Long-term debt | 285,984 | 285,522 |
Deferred income taxes | 6,537 | 6,808 |
Other long-term liabilities | 18,959 | 18,401 |
Total liabilities | 368,940 | 378,743 |
Commitments and contingencies (Note 11) | ||
Series A Preferred Stock; $0.001 par value-100,000 shares authorized; 0 shares issued and outstanding at March 31, 2023 and December 31, 2022 | ||
Stockholders' deficit: | ||
Common stock; $0.001 par value-100,000,000 shares authorized; 11,424,628 and 11,390,355 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 11 | 11 |
Capital deficiency | (107,907) | (108,379) |
Accumulated earnings | 37,164 | 26,291 |
Total stockholders' deficit | (70,732) | (82,077) |
Total liabilities and stockholders' deficit | $ 298,208 | $ 296,666 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Condensed Consolidated Balance Sheets | ||
Accumulated depreciation and amortization | $ 64,580 | $ 61,922 |
Intangible assets accumulated amortization | $ 48,864 | $ 47,897 |
Preferred shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred shares, authorized shares (in shares) | 100,000 | 100,000 |
Preferred shares, issued shares (in shares) | 0 | 0 |
Preferred shares, outstanding shares (in shares) | 0 | 0 |
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) | 11,424,628 | 11,390,355 |
Common shares, outstanding shares (in shares) | 11,424,628 | 11,390,355 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Net sales: | ||
Net Sales | $ 120,852 | $ 111,424 |
Cost of sales: | ||
Depreciation and amortization | 2,374 | 2,195 |
Total cost of sales | 77,758 | 72,146 |
Gross profit | 43,094 | 39,278 |
Operating expenses: | ||
Selling, general and administrative (exclusive of depreciation and amortization shown below) | 21,066 | 19,882 |
Depreciation and amortization | 1,430 | 1,415 |
Total operating expenses | 22,496 | 21,297 |
Income from operations | 20,598 | 17,981 |
Other expense, net: | ||
Interest, net | (6,781) | (7,865) |
Other expense, net | (114) | (396) |
Total other expense, net | (6,895) | (8,261) |
Income before income taxes | 13,703 | 9,720 |
Income tax expense | (2,830) | (3,718) |
Net income | $ 10,873 | $ 6,002 |
Basic earnings per share: (in dollar per share) | $ 0.95 | $ 0.53 |
Diluted earnings per share: (in dollar per share) | $ 0.91 | $ 0.51 |
Basic weighted-average shares outstanding (in shares) | 11,394,919 | 11,255,466 |
Diluted weighted-average shares outstanding (in shares) | 11,901,581 | 11,717,849 |
Comprehensive income: | ||
Net income | $ 10,873 | $ 6,002 |
Total comprehensive income | 10,873 | 6,002 |
Products | ||
Net sales: | ||
Net Sales | 75,790 | 68,316 |
Cost of sales: | ||
Products and Services (exclusive of depreciation and amortization shown below) | 45,980 | 43,094 |
Services | ||
Net sales: | ||
Net Sales | 45,062 | 43,108 |
Cost of sales: | ||
Products and Services (exclusive of depreciation and amortization shown below) | $ 29,404 | $ 26,857 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | Common Stock | Capital deficiency | Accumulated loss | Total |
Beginning balance at Dec. 31, 2021 | $ 11 | $ (110,782) | $ (10,249) | $ (121,020) |
Beginning balance (in shares) at Dec. 31, 2021 | 11,255,466 | |||
Stock-based compensation | 961 | 961 | ||
Components of comprehensive income: | ||||
Net income | 6,002 | 6,002 | ||
Ending balance at Mar. 31, 2022 | $ 11 | (109,821) | (4,247) | (114,057) |
Ending balance (in shares) at Mar. 31, 2022 | 11,255,466 | |||
Beginning balance at Dec. 31, 2022 | $ 11 | (108,379) | 26,291 | $ (82,077) |
Beginning balance (in shares) at Dec. 31, 2022 | 11,390,355 | 11,390,355 | ||
Shares issued under stock-based compensation plans | (69) | $ (69) | ||
Shares issued under stock-based compensation plans (in shares) | 34,273 | |||
Stock-based compensation | 541 | 541 | ||
Components of comprehensive income: | ||||
Net income | 10,873 | 10,873 | ||
Ending balance at Mar. 31, 2023 | $ 11 | $ (107,907) | $ 37,164 | $ (70,732) |
Ending balance (in shares) at Mar. 31, 2023 | 11,424,628 | 11,424,628 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating activities | ||
Net income | $ 10,873 | $ 6,002 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation expense | 2,837 | 2,643 |
Amortization expense | 967 | 967 |
Stock-based compensation expense | 541 | 961 |
Amortization of debt issuance costs and debt discount | 473 | 486 |
Loss on debt extinguishment | 119 | 395 |
Deferred income taxes | (271) | 642 |
Other, net | 12 | 768 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 4,335 | (10,300) |
Inventories | (1,464) | (12,579) |
Prepaid expenses and other assets | 310 | (2,057) |
Income taxes, net | 550 | 932 |
Accounts payable | 1,533 | 4,173 |
Accrued expenses and other liabilities | (11,358) | (8,310) |
Deferred revenue and customer deposits | (1,456) | (684) |
Cash provided by (used in) operating activities | 8,001 | (15,961) |
Investing activities | ||
Capital expenditures for plant, equipment and leasehold improvements | (4,145) | (3,154) |
Other | 50 | 5 |
Cash used in investing activities | (4,095) | (3,149) |
Financing activities | ||
Principal payments on Senior Notes | (7,903) | (20,000) |
Proceeds from ABL Revolver | 8,000 | 30,000 |
Payments on debt extinguishment and other | (69) | (862) |
Proceeds from finance lease financing | 2,074 | |
Payments on finance lease obligations | (820) | (649) |
Cash (used in) provided by financing activities | (792) | 10,563 |
Effect of exchange rates on cash | 6 | |
Net increase (decrease) in cash and cash equivalents | 3,120 | (8,547) |
Cash and cash equivalents, beginning of period | 11,037 | 20,683 |
Cash and cash equivalents, end of period | 14,157 | 12,136 |
Supplemental disclosures of cash flow information | ||
Cash paid during the period for: Interest | 12,608 | 13,553 |
Cash paid during the period for: Income taxes paid | 28 | 94 |
Right-of-use assets obtained in exchange for lease obligations- Operating leases | 168 | 816 |
Right-of-use assets obtained in exchange for lease obligations- Financing leases | 2,169 | 3,541 |
Accounts payable and accrued expenses for capital expenditures for plant, equipment and leasehold improvements | $ 422 | $ 2,293 |
Business Overview and Summary o
Business Overview and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
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 (Unaudited) 1. Business Overview and Summary of Significant Accounting Policies Business Overview CPI Card Group Inc. (which, together with its subsidiary companies, is referred to herein as “CPI” or the “Company”) is a payment technology company and leading provider of comprehensive Financial Payment Card solutions in the United States. CPI is engaged in the design, production, data personalization, packaging and fulfillment of Financial Payment Cards, which the Company defines as credit, debit and Prepaid Debit Cards (defined below) issued on the networks of the Payment Card Brands (Visa, Mastercard ® ® ® CPI serves its customers through a network of high-security production and card services facilities in the United States, each of which is audited for compliance with the standards of the Payment Card Industry Security Standards Council (the “PCI Security Standards Council”) by one or more of the Payment Card Brands. CPI’s network of high-security production facilities allows the Company to optimize its solutions offerings and serve its customers. The Company’s business consists of the following reportable segments: Debit and Credit, Prepaid Debit and Other. The Debit and Credit segment primarily produces Financial Payment Cards and provides integrated card services for card-issuing financial institutions primarily in the United States. The Prepaid Debit segment primarily provides integrated card services to Prepaid Debit Card program managers primarily in the United States. The Company’s “Other” segment includes corporate expenses. 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 8 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, 2022 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, 2022. Use of Estimates Management uses estimates and assumptions relating to the reporting of assets and liabilities at the date of the financial statements, the reported revenues and expenses recognized during the reporting period, and certain financial statement disclosures in the 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, leases, valuation allowances for inventories and deferred taxes, revenue recognized for work performed but not completed and uncertain tax positions. Actual results could differ from those estimates. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ ASU”) 2016 - 13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments methodology. Effective January 1, 2023, the Company adopted the CECL model. The adoption of the model did not have a material impact on the Company’s consolidated financial position or results of operations. |
Net Sales
Net Sales | 3 Months Ended |
Mar. 31, 2023 | |
Net Sales. | |
Net Sales | 2. Net Sales The Company disaggregates its net sales by major source as follows: Three Months Ended March 31, 2023 Products Services Total (dollars in thousands) Debit and Credit $ 76,032 $ 25,953 $ 101,985 Prepaid Debit — 19,130 19,130 Intersegment eliminations (242) (21) (263) Total $ 75,790 $ 45,062 $ 120,852 Three Months Ended March 31, 2022 Products Services Total (dollars in thousands) Debit and Credit $ 68,348 $ 23,667 $ 92,015 Prepaid Debit — 19,461 19,461 Intersegment eliminations (32) (20) (52) Total $ 68,316 $ 43,108 $ 111,424 Products Net Sales “Products” net sales are recognized when obligations under the terms of a contract with a customer are satisfied. In most instances, this occurs over time as cards are produced for specific customers and have no alternative use and the Company has an enforceable right to payment for work performed. For unbilled work performed but not completed, the Company estimates revenue by taking actual costs incurred and applying historical margins for similar types of contracts. Items included in “Products” net sales are the design and production of Financial Payment Cards, including contact-EMV ® ® ® ® EMV ® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMV Co, LLC Services Net Sales Net sales are recognized for “Services” as the services are performed. Items included in “Services” net sales include the personalization and fulfillment of Financial Payment Cards, providing tamper-evident secure packaging and fulfillment services to Prepaid Debit Card program managers, and software-as-a-service personalization of instant issuance debit cards. As applicable, for unbilled work performed but not completed, the Company estimates revenue by taking actual costs incurred and applying historical margins for similar types of contracts. Customer Contracts The Company often enters into Master Services Agreements (“MSAs”) with its customers. Generally, enforceable rights and obligations for goods and services occur only when a customer places a purchase order or statement of work to obtain goods or services under an MSA. The contract term as defined by ASC 606, Revenue from Contracts with Customers, is the length of time it takes to deliver the goods or services promised under the purchase order or statement of work. As such, the Company's contracts are generally short term in nature. |
Accounts Receivable
Accounts Receivable | 3 Months Ended |
Mar. 31, 2023 | |
Accounts Receivable | |
Accounts Receivable | 3. Accounts Receivable Accounts receivable consisted of the following: March 31, December 31, 2023 2022 (dollars in thousands) Trade accounts receivable $ 64,910 $ 68,886 Unbilled accounts receivable 11,556 11,915 76,466 80,801 Less allowance (235) (218) $ 76,231 $ 80,583 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2023 | |
Inventories | |
Inventories | 4 Inventories Inventories consisted of the following: March 31, December 31, 2023 2022 (dollars in thousands) Raw materials $ 63,739 $ 61,434 Finished goods 9,459 10,300 Inventory reserve (3,483) (3,335) $ 69,715 $ 68,399 |
Plant, Equipment, Leasehold Imp
Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets | 3 Months Ended |
Mar. 31, 2023 | |
Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets | |
Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets | 5 5. Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets Plant, equipment, leasehold improvements and operating lease right-of-use assets consisted of the following: March 31, December 31, 2023 2022 (dollars in thousands) Machinery and equipment $ 68,575 $ 64,786 Machinery and equipment under financing leases 16,733 15,717 Furniture, fixtures and computer equipment 3,005 3,072 Leasehold improvements 15,032 14,703 Construction in progress 3,764 3,304 Operating lease right-of-use assets 17,686 17,518 124,795 119,100 Less accumulated depreciation and amortization (64,580) (61,922) $ 60,215 $ 57,178 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 6. 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 the measurement date. The Company’s financial assets and liabilities that are not required to be re-measured at fair value in the condensed consolidated balance sheets were as follows: Carrying Estimated Value as of Fair Value as of Fair Value Measurement at March 31, 2023 March 31, March 31, (Using Fair Value Hierarchy) 2023 2023 Level 1 Level 2 Level 3 (dollars in thousands) Liabilities: Senior Notes $ 277,000 $ 272,499 $ — $ 272,499 $ — ABL Revolver $ 13,000 $ 13,000 $ — $ 13,000 $ — Carrying Estimated Value as of Fair Value as of Fair Value Measurement at December 31, 2022 December 31, December 31, (Using Fair Value Hierarchy) 2022 2022 Level 1 Level 2 Level 3 (dollars in thousands) Liabilities: Senior Notes $ 285,000 $ 281,438 $ — $ 281,438 $ — ABL Revolver $ 5,000 $ 5,000 $ — $ 5,000 $ — The aggregate fair value of the Company’s Senior Notes (as defined in Note 8, “Long-Term Debt”) was based on bank quotes. The fair value measurement associated with the ABL Revolver (as defined in Note 8, “Long-Term Debt”) approximates its carrying value as of March 31, 2023, given the applicable variable interest rates and nature of the security interest in Company assets. The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable each approximate fair value due to their short-term nature. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Expenses. | |
Accrued Expenses | 7. Accrued Expenses Accrued expenses consisted of the following: March 31, December 31, 2023 2022 (dollars in thousands) Accrued payroll and related employee expenses $ 9,552 $ 7,727 Accrued employee performance bonuses 2,391 8,576 Employer payroll taxes 217 1,092 Accrued rebates 1,997 2,668 Estimated sales tax liability 716 622 Accrued interest 1,076 7,275 Current operating and financing lease liabilities 6,034 5,697 Other 7,447 6,413 Total accrued expenses $ 29,430 $ 40,070 Other accrued expenses as of March 31, 2023 and December 31, 2022 consisted primarily of sales and income tax accruals, miscellaneous accruals for invoices not yet received, and other items such as self-insurance claims that have yet to be reported and accrued royalties. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2023 | |
Long-Term Debt. | |
Long-Term Debt | 8. Long-Term Debt At March 31, 2023 and December 31, 2022, long-term debt consisted of the following: Interest March 31, December 31, Rate (1) 2023 2022 (dollars in thousands) Senior Notes 8.625 % $ 277,000 $ 285,000 ABL Revolver 6.387 % 13,000 5,000 Unamortized deferred financing costs (4,016) (4,478) Total long-term debt 285,984 285,522 Less current maturities — — Long-term debt, net of current maturities $ 285,984 $ 285,522 (1) The Senior Notes bear interest at a fixed rate and the ABL Revolver bears interest at a variable rate. Senior Notes On March 15, 2021, the Company completed a private offering by its wholly-owned subsidiary, CPI CG Inc., of $310.0 million aggregate principal amount of 8.625% Senior Secured Notes due 2026 (the “Senior Notes”) and related guarantees. The Senior Notes bear interest at a rate of 8.625% per annum and mature on March 15, 2026. Interest is payable on the Senior Notes on March 15 and September 15 of each year. The Company has obligations to make an offer to repay the Senior Notes, requiring prepayment in advance of the maturity date, upon the occurrence of certain events including a change of control, certain asset sales and based on an annual excess cash flow calculation. The annual excess cash flow calculation is determined pursuant to the terms of that certain Indenture, dated as of March 15, 2021, by and among CPI CG Inc., the Company, the subsidiary guarantors and U.S. Bank National Association, as trustee, with any required prepayments to be made after the issuance of the Company’s annual financial statements. No such payment is required to be made in 2023 based on the Company’s operating results for the year ended December 31, 2022. During the three months ended March 31, 2023, the Company used cash on hand and available borrowing capacity under the ABL Revolver (defined below) to retire a portion of the Senior Notes totaling $8.0 million of the principal amount thereof plus accrued and unpaid interest thereon to the retirement dates. ABL On March 15, 2021, the Company and CPI CG Inc., as borrower, entered into a Credit Agreement with Wells Fargo Bank, National Association, as lender, administrative agent and collateral agent, providing for an asset-based, senior secured revolving credit facility of up to $50.0 million (the “ABL Revolver”). The ABL Revolver matures on the earliest to occur of March 15, 2026 and the date that is 90 days prior to the maturity of the Senior Notes. On March 3, 2022, the Company and CPI CG Inc. entered into Amendment No. 1 to the Credit Agreement (the “Amendment”), which amended the ABL Revolver. The Amendment, among other things, increased the available borrowing capacity under the ABL Revolver to $75.0 million, increased the uncommitted accordion feature to $25.0 million from $15.0 million, and revised the interest rate provisions to replace the prior LIBOR benchmark with updated benchmark provisions using the secured overnight financing rate (“SOFR”) as administered by the Federal Reserve Bank of New York. On October 11, 2022, the Company and CPI CG Inc. entered into Amendment No. 2 to the Credit Agreement, which amended the ABL Revolver to adjust certain monthly document delivery terms and to clarify the treatment of certain inventory. Borrowings under the amended ABL Revolver bear interest at a rate per annum equal to the applicable term SOFR adjusted for a credit spread, plus an applicable interest rate margin. The Company may select a one, three or six month term SOFR, which is adjusted for a credit spread of 0.10% to 0.30% depending on the term selected. Through March 31, 2023, the applicable interest rate margin ranges from 1.50% to 1.75% depending on the average excess availability of the facility for the most recently completed quarter. The unused portion of the ABL Revolver commitment accrues a monthly unused line fee, 0.50% per annum through March 31, 2023, multiplied by the aggregate amount of Revolver commitments less the average Revolver usage during the immediately preceding month. The interest rate margin and unused line fee percentage changed, effective April 1, 2023, to between 1.25% and 1.75% (interest rate margin) and 0.375% and 0.50% (unused line fee). Deferred Financing Costs and Discount Certain costs and discounts incurred with borrowings 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. The remaining unamortized debt issuance costs recorded on the Senior Notes were $4.0 million and are reported as a reduction to the long-term debt balance as of March 31, 2023. The remaining unamortized net discount and debt issuance costs on the ABL Revolver and related Amendment were $1.4 million and are recorded as other assets (current and long-term) on the condensed consolidated balance sheet as of March 31, 2023. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | 9. Income Taxes The Company’s effective tax rate on pre-tax income was 20.7% and 38.2% for the three months ended March 31, 2023 and 2022 respectively. The Company’s effective tax rate decreased as a result of increased deductibility of interest costs due to a tax election made by the Company in the third quarter of 2022 and the reduction of a valuation allowance in the first quarter of 2023 related to state taxes. For the three months ended March 31, 2023 and 2022, the effective tax rate differs from the U.S. federal statutory income tax rate as follows: March 31, 2023 2022 Tax at federal statutory rate 21.0 % 21.0 % State taxes, net 4.7 8.9 Valuation allowance (5.2) 6.3 Permanent items 1.2 1.7 Other (1.0) 0.3 Effective income tax rate 20.7 % 38.2 % |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings per Share | |
Earnings per Share | 10. Earnings per Share Basic and diluted earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. For the three months ended March 31, 2023 and 2022, 28,831 and 54,050 potentially dilutive securities, respectively, are excluded from the calculation of diluted earnings per share because their inclusion would be anti-dilutive. The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended March 31, 2023 2022 (dollars in thousands) Numerator: Net income $ 10,873 $ 6,002 Denominator: Basic weighted-average common shares outstanding 11,394,919 11,255,466 Dilutive shares 506,662 462,383 Diluted weighted-average common shares outstanding 11,901,581 11,717,849 Basic earnings per share $ 0.95 $ 0.53 Diluted earnings per share $ 0.91 $ 0.51 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11 Commitments During the normal course of business, the Company enters into non-cancellable agreements to purchase goods and services, including production equipment and information technology systems. The Company leases real property for its facilities under non-cancellable operating lease agreements. Land and facility leases expire at various dates between 2023 and 2029 and contain various provisions for rental adjustments and renewals. The leases typically require the Company to pay property taxes, insurance and normal maintenance costs. The Company’s financing leases expire at various dates between 2023 and 2028 and contain purchase options which the Company may exercise to keep the machinery in use. Contingencies In accordance with applicable accounting guidance, the Company establishes an accrued expense when loss contingencies are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. As a matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. Once the loss contingency is deemed to be both probable and estimable, the Company will establish an accrued expense and record a corresponding amount of expense. The Company expenses professional fees associated with litigation claims and assessments as incurred. Smart Packaging Solutions SA v. CPI Card Group Inc. On April 20, 2021, Smart Packaging Solutions, SA (“SPS”) filed a patent infringement lawsuit against the Company in the United States District Court for the District of Delaware seeking an unspecified amount of damages and equitable relief. In the complaint, SPS alleges that the Company infringed four patents that SPS has exclusively licensed from Feinics AmaTech Teoranta. The patents all relate to antenna technology. SPS alleges that the Company incorporates the patented technology into its products that use contactless communication. The Company does not produce antennas; it purchases certain antenna-related components from SPS and a number of other suppliers. The Company’s motion to dismiss the complaint is currently pending. Additionally, a third party, Infineon, has filed requests for Inter Parties Review (“IPR”) proceedings concerning each of the four patents. As a result, the Delaware District Court stayed the case pending resolution of the requests for review. The United States Patent Office has instituted proceedings with respect to all of the IPR requests. The current proceedings in the patent office are scheduled to run through September 2023. Should the patents survive review by the United States Patent Office, the Company intends to defend the suit vigorously. However, no assurance can be given that this matter will be resolved favorably. Due to the stage of this matter, the Company is unable to predict the outcome or the possible loss or range of loss, if any, associated with this matter, and no liability has been recorded as of March 31, 2023. In addition to the matter described above, the Company may be subject to routine legal proceedings in the ordinary course of business. The Company believes that the ultimate resolution of any such matters will not have a material adverse effect on its business, financial condition or results of operations. Voluntary Disclosure Program The Company is subject to unclaimed or abandoned property (escheat) laws which require it to turn over to state governmental authorities the property of others held by the Company that has been unclaimed for specified periods of time. Property subject to escheat laws generally relates to uncashed checks, trade accounts receivable credits and unpaid payable balances. During the second quarter of 2022, the Company received a letter from the Delaware Secretary of State inviting the Company to participate in the Delaware Secretary of State’s Abandoned or Unclaimed Property Voluntary Disclosure Agreement Program to avoid being sent an audit notice by the Delaware Department of Finance. On August 31, 2022, the Company entered into Delaware’s Voluntary Disclosure Agreement Program in order to voluntarily comply with Delaware’s abandoned property law in exchange for certain protections and benefits. The Company intends to work in good faith to complete a review of its books and records related to unclaimed or abandoned property during the periods required under the program. Any potential loss, or range of loss, that may result from this matter is not currently reasonably estimable. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | 12. Stock-Based Compensation In 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. On May 27, 2021, the Company’s stockholders approved an amendment and restate of the Omnibus Plan, to among other things, increase the total number of shares of the Company’s Common Stock reserved and available for issuance, resulting in a total of 2,200,000 shares of Common Stock issuable under the Omnibus Plan. Beginning in the first quarter of 2023, certain of the Company’s employees are eligible to receive a quarterly grant comprising one-fourth of the annual equity-based incentive component of their total compensation. These awards will be in the form of a mix of restricted stock units and stock options granted under the Omnibus Plan. The number of shares awarded will be determined based on the grant-date fair value for options and on a value tied to the monthly average closing price of the Company’s common stock for restricted stock awards. All equity awards are contingent and issued only upon quarterly approval by the compensation committee of the Company’s board of directors. The Company accounts for stock-based compensation pursuant to ASC 718, Share-Based Payments. All stock-based compensation to employees is measured at fair value and expensed on a straight-line basis over the requisite service period for each tranche of the award. During the three months ended March 31, 2023, the Company granted 8,307 options at a weighted average exercise price of $45.01 . As of March 31, 2023, there were 783,769 options outstanding at a weighted average exercise price of $18.40 . During the three months ended March 31, 2023, the Company granted 24,003 restricted stock units at a weighted average grant date fair value of $45.01, and as of March 31, 2023 there were 88,576 outstanding restricted stock units at a weighted average grant date fair value of $29.54. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting | |
Segment Reporting | 13. Segment Reporting The Company has identified reportable segments that represent 10% or more of its net sales, 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 net sales 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 useful as a supplement to 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 to identify strategies to improve the allocation of resources amongst segments. As of March 31, 2023, the Company’s reportable segments were as follows: ● Debit and Credit; ● Prepaid Debit; and ● Othe r. Debit and Credit Segment The Debit and Credit segment primarily produces Financial Payment Cards and provides integrated card services for card-issuing financial institutions primarily in the United States. Products produced by this segment primarily include EMV and non-EMV Financial Payment Cards, including contact and contactless cards, and Earth Elements TM Eco-Focused Cards. The Company also sells Card Once instant card issuance solutions, and private label credit cards that are not issued on the networks of the Payment Card Brands. The Company provides print-on-demand services, where images, personalized payment cards, and related collateral are produced on a one-by-one, on demand basis for customers. This segment also provides a variety of integrated card services, including card personalization and fulfillment services and instant issuance services. The Debit and Credit segment facilities and operations are audited for compliance with the standards of the PCI Security Standards Council by multiple Payment Card Brands. Prepaid Debit Segment The Prepaid Debit segment primarily provides integrated prepaid card services to Prepaid Debit Card program managers primarily in the United States, including tamper-evident security packaging. This segment also produces Financial Payment Cards issued on the networks of the Payment Card Brands that are included in the tamper-evident security packages. The Prepaid Debit segment facilities and operations are audited for compliance with the standards of the PCI Security Standards Council by multiple Payment Card Brands. Other The Other segment includes corporate expenses. Performance Measures of Reportable Segments Net sales and EBITDA of the Company’s reportable segments, as well as a reconciliation of total segment EBITDA to income from operations and net income for the three months ended March 31, 2023 and 2022, were as follows: Three Months Ended March 31, 2023 Debit and Credit Prepaid Debit Other Intersegment Eliminations Total (dollars in thousands) Net sales $ 101,985 $ 19,130 $ — $ (263) $ 120,852 Cost of sales 63,801 14,220 — (263) 77,758 Gross profit 38,184 4,910 — — 43,094 Operating expenses 8,158 1,233 13,105 — 22,496 Income from operations $ 30,026 $ 3,677 $ (13,105) $ — $ 20,598 EBITDA by segment: Income from operations $ 30,026 $ 3,677 $ (13,105) $ — $ 20,598 Depreciation and amortization 2,161 624 1,019 — 3,804 Other income (expenses) 5 — (119) — (114) EBITDA $ 32,192 $ 4,301 $ (12,205) $ — $ 24,288 Three Months Ended March 31, 2022 Debit and Credit Prepaid Debit Other Intersegment Eliminations Total (dollars in thousands) Net sales $ 92,015 $ 19,461 $ — $ (52) $ 111,424 Cost of sales 59,785 12,413 — (52) 72,146 Gross profit 32,230 7,048 — — 39,278 Operating expenses 8,120 1,080 12,097 — 21,297 Income from operations $ 24,110 $ 5,968 $ (12,097) $ — $ 17,981 EBITDA by segment: Income from operations $ 24,110 $ 5,968 $ (12,097) $ — $ 17,981 Depreciation and amortization 1,980 598 1,032 — 3,610 Other income (expenses) 4 (2) (398) — (396) EBITDA $ 26,094 $ 6,564 $ (11,463) $ — $ 21,195 Three Months Ended March 31, 2023 2022 (dollars in thousands) Total segment EBITDA $ 24,288 $ 21,195 Interest, net (6,781) (7,865) Income tax expense (2,830) (3,718) Depreciation and amortization (3,804) (3,610) Net income $ 10,873 $ 6,002 |
Business Overview and Summary_2
Business Overview and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
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 8 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, 2022 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, 2022. |
Use of Estimates | Use of Estimates Management uses estimates and assumptions relating to the reporting of assets and liabilities at the date of the financial statements, the reported revenues and expenses recognized during the reporting period, and certain financial statement disclosures in the 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, leases, valuation allowances for inventories and deferred taxes, revenue recognized for work performed but not completed and uncertain tax positions. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ ASU”) 2016 - 13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments methodology. Effective January 1, 2023, the Company adopted the CECL model. The adoption of the model did not have a material impact on the Company’s consolidated financial position or results of operations. |
Net Sales (Tables)
Net Sales (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Net Sales. | |
Schedule of disaggregation of net sales by major source | Three Months Ended March 31, 2023 Products Services Total (dollars in thousands) Debit and Credit $ 76,032 $ 25,953 $ 101,985 Prepaid Debit — 19,130 19,130 Intersegment eliminations (242) (21) (263) Total $ 75,790 $ 45,062 $ 120,852 Three Months Ended March 31, 2022 Products Services Total (dollars in thousands) Debit and Credit $ 68,348 $ 23,667 $ 92,015 Prepaid Debit — 19,461 19,461 Intersegment eliminations (32) (20) (52) Total $ 68,316 $ 43,108 $ 111,424 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounts Receivable | |
Schedule of accounts receivable | March 31, December 31, 2023 2022 (dollars in thousands) Trade accounts receivable $ 64,910 $ 68,886 Unbilled accounts receivable 11,556 11,915 76,466 80,801 Less allowance (235) (218) $ 76,231 $ 80,583 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventories | |
Schedule of inventories | March 31, December 31, 2023 2022 (dollars in thousands) Raw materials $ 63,739 $ 61,434 Finished goods 9,459 10,300 Inventory reserve (3,483) (3,335) $ 69,715 $ 68,399 |
Plant, Equipment, Leasehold I_2
Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets | |
Schedule of plant, equipment, leasehold improvements and operating lease right-to-use assets | March 31, December 31, 2023 2022 (dollars in thousands) Machinery and equipment $ 68,575 $ 64,786 Machinery and equipment under financing leases 16,733 15,717 Furniture, fixtures and computer equipment 3,005 3,072 Leasehold improvements 15,032 14,703 Construction in progress 3,764 3,304 Operating lease right-of-use assets 17,686 17,518 124,795 119,100 Less accumulated depreciation and amortization (64,580) (61,922) $ 60,215 $ 57,178 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value of Financial Instruments | |
Schedule of financial assets and liabilities subject to fair value measurements | The Company’s financial assets and liabilities that are not required to be re-measured at fair value in the condensed consolidated balance sheets were as follows: Carrying Estimated Value as of Fair Value as of Fair Value Measurement at March 31, 2023 March 31, March 31, (Using Fair Value Hierarchy) 2023 2023 Level 1 Level 2 Level 3 (dollars in thousands) Liabilities: Senior Notes $ 277,000 $ 272,499 $ — $ 272,499 $ — ABL Revolver $ 13,000 $ 13,000 $ — $ 13,000 $ — Carrying Estimated Value as of Fair Value as of Fair Value Measurement at December 31, 2022 December 31, December 31, (Using Fair Value Hierarchy) 2022 2022 Level 1 Level 2 Level 3 (dollars in thousands) Liabilities: Senior Notes $ 285,000 $ 281,438 $ — $ 281,438 $ — ABL Revolver $ 5,000 $ 5,000 $ — $ 5,000 $ — |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Expenses. | |
Schedule of Accrued Expenses | March 31, December 31, 2023 2022 (dollars in thousands) Accrued payroll and related employee expenses $ 9,552 $ 7,727 Accrued employee performance bonuses 2,391 8,576 Employer payroll taxes 217 1,092 Accrued rebates 1,997 2,668 Estimated sales tax liability 716 622 Accrued interest 1,076 7,275 Current operating and financing lease liabilities 6,034 5,697 Other 7,447 6,413 Total accrued expenses $ 29,430 $ 40,070 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Long-Term Debt. | |
Schedule of long-term debt | Interest March 31, December 31, Rate (1) 2023 2022 (dollars in thousands) Senior Notes 8.625 % $ 277,000 $ 285,000 ABL Revolver 6.387 % 13,000 5,000 Unamortized deferred financing costs (4,016) (4,478) Total long-term debt 285,984 285,522 Less current maturities — — Long-term debt, net of current maturities $ 285,984 $ 285,522 (1) The Senior Notes bear interest at a fixed rate and the ABL Revolver bears interest at a variable rate. |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Schedule of effective income tax rate reconciliation | March 31, 2023 2022 Tax at federal statutory rate 21.0 % 21.0 % State taxes, net 4.7 8.9 Valuation allowance (5.2) 6.3 Permanent items 1.2 1.7 Other (1.0) 0.3 Effective income tax rate 20.7 % 38.2 % |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings per Share | |
Computation of basic and diluted earnings per share | Three Months Ended March 31, 2023 2022 (dollars in thousands) Numerator: Net income $ 10,873 $ 6,002 Denominator: Basic weighted-average common shares outstanding 11,394,919 11,255,466 Dilutive shares 506,662 462,383 Diluted weighted-average common shares outstanding 11,901,581 11,717,849 Basic earnings per share $ 0.95 $ 0.53 Diluted earnings per share $ 0.91 $ 0.51 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting | |
Schedule of revenue and EBITDA of the company's reportable segments | Three Months Ended March 31, 2023 Debit and Credit Prepaid Debit Other Intersegment Eliminations Total (dollars in thousands) Net sales $ 101,985 $ 19,130 $ — $ (263) $ 120,852 Cost of sales 63,801 14,220 — (263) 77,758 Gross profit 38,184 4,910 — — 43,094 Operating expenses 8,158 1,233 13,105 — 22,496 Income from operations $ 30,026 $ 3,677 $ (13,105) $ — $ 20,598 EBITDA by segment: Income from operations $ 30,026 $ 3,677 $ (13,105) $ — $ 20,598 Depreciation and amortization 2,161 624 1,019 — 3,804 Other income (expenses) 5 — (119) — (114) EBITDA $ 32,192 $ 4,301 $ (12,205) $ — $ 24,288 Three Months Ended March 31, 2022 Debit and Credit Prepaid Debit Other Intersegment Eliminations Total (dollars in thousands) Net sales $ 92,015 $ 19,461 $ — $ (52) $ 111,424 Cost of sales 59,785 12,413 — (52) 72,146 Gross profit 32,230 7,048 — — 39,278 Operating expenses 8,120 1,080 12,097 — 21,297 Income from operations $ 24,110 $ 5,968 $ (12,097) $ — $ 17,981 EBITDA by segment: Income from operations $ 24,110 $ 5,968 $ (12,097) $ — $ 17,981 Depreciation and amortization 1,980 598 1,032 — 3,610 Other income (expenses) 4 (2) (398) — (396) EBITDA $ 26,094 $ 6,564 $ (11,463) $ — $ 21,195 |
Schedule of reconciliation of total segment EBITDA to income before taxes | Three Months Ended March 31, 2023 2022 (dollars in thousands) Total segment EBITDA $ 24,288 $ 21,195 Interest, net (6,781) (7,865) Income tax expense (2,830) (3,718) Depreciation and amortization (3,804) (3,610) Net income $ 10,873 $ 6,002 |
Net Sales (Details)
Net Sales (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue | ||
Net Sales | $ 120,852 | $ 111,424 |
Operating Segments | Debit and Credit | ||
Disaggregation of Revenue | ||
Net Sales | 101,985 | 92,015 |
Operating Segments | Prepaid Debit | ||
Disaggregation of Revenue | ||
Net Sales | 19,130 | 19,461 |
Intersegment eliminations | ||
Disaggregation of Revenue | ||
Net Sales | (263) | (52) |
Products | ||
Disaggregation of Revenue | ||
Net Sales | 75,790 | 68,316 |
Products | Operating Segments | Debit and Credit | ||
Disaggregation of Revenue | ||
Net Sales | 76,032 | 68,348 |
Products | Intersegment eliminations | ||
Disaggregation of Revenue | ||
Net Sales | (242) | (32) |
Services | ||
Disaggregation of Revenue | ||
Net Sales | 45,062 | 43,108 |
Services | Operating Segments | Debit and Credit | ||
Disaggregation of Revenue | ||
Net Sales | 25,953 | 23,667 |
Services | Operating Segments | Prepaid Debit | ||
Disaggregation of Revenue | ||
Net Sales | 19,130 | 19,461 |
Services | Intersegment eliminations | ||
Disaggregation of Revenue | ||
Net Sales | $ (21) | $ (20) |
Accounts Receivable - Balance (
Accounts Receivable - Balance (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accounts Receivable | ||
Trade accounts receivable | $ 64,910 | $ 68,886 |
Unbilled accounts receivable | 11,556 | 11,915 |
Accounts receivable, gross | 76,466 | 80,801 |
Less allowance | (235) | (218) |
Accounts receivable, net | $ 76,231 | $ 80,583 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Inventories | ||
Raw materials | $ 63,739 | $ 61,434 |
Finished goods | 9,459 | 10,300 |
Inventory reserve | (3,483) | (3,335) |
Inventory | $ 69,715 | $ 68,399 |
Plant, Equipment, Leasehold I_3
Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | $ 124,795 | $ 119,100 | |
Less accumulated depreciation and amortization | (64,580) | (61,922) | |
Total property, equipment and leasehold improvements, net | 60,215 | 57,178 | |
Depreciation | 2,837 | $ 2,643 | |
Machinery and equipment | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | 68,575 | 64,786 | |
Machinery and equipment under financing leases | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | 16,733 | 15,717 | |
Furniture, fixtures and computer equipment | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | 3,005 | 3,072 | |
Leasehold improvements | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | 15,032 | 14,703 | |
Construction in progress | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | 3,764 | 3,304 | |
Operating right-of-use assets | |||
Plant, Equipment and Leasehold Improvements | |||
Plant, equipment and leasehold improvements, gross | $ 17,686 | $ 17,518 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 15, 2021 |
Senior Notes | |||
Liabilities: | |||
Carrying amount | $ 277,000 | $ 285,000 | $ 310,000 |
ABL Revolver | |||
Liabilities: | |||
Carrying amount | 13,000 | 5,000 | |
Level 2 | Senior Notes | |||
Liabilities: | |||
Long-term debt | 272,499 | 281,438 | |
Level 2 | ABL Revolver | |||
Liabilities: | |||
Long-term debt | 13,000 | 5,000 | |
Estimate of Fair Value | Senior Notes | |||
Liabilities: | |||
Long-term debt | 272,499 | 281,438 | |
Estimate of Fair Value | ABL Revolver | |||
Liabilities: | |||
Long-term debt | $ 13,000 | $ 5,000 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accrued Expenses. | ||
Accrued payroll and related employee expenses | $ 9,552 | $ 7,727 |
Accrued employee performance bonuses | 2,391 | 8,576 |
Employer payroll taxes | 217 | 1,092 |
Accrued rebates | 1,997 | 2,668 |
Estimated sales tax liability | 716 | 622 |
Accrued interest | 1,076 | 7,275 |
Current operating and financing lease liabilities | 6,034 | 5,697 |
Other | 7,447 | 6,413 |
Total accrued expenses | $ 29,430 | $ 40,070 |
Long-Term Debt - Long-Term Debt
Long-Term Debt - Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 15, 2021 |
Long-term Debt | |||
Unamortized deferred financing costs | $ (4,016) | $ (4,478) | |
Total debt | 285,984 | 285,522 | |
Total long-term debt | $ 285,984 | 285,522 | |
Senior Notes | |||
Long-term Debt | |||
Interest rate (as a percent) | 8.625% | ||
Long-term debt | $ 277,000 | 285,000 | $ 310,000 |
ABL Revolver | |||
Long-term Debt | |||
Interest rate (as a percent) | 6.387% | ||
Long-term debt | $ 13,000 | $ 5,000 |
Long-Term Debt - First Lien Cre
Long-Term Debt - First Lien Credit Facility (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Apr. 01, 2023 | Mar. 03, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 15, 2021 | |
Senior Notes | |||||
Long-term Debt | |||||
Interest rate (as a percent) | 8.625% | ||||
Repayment of debt | $ 8,000,000 | ||||
Long-term debt | 277,000,000 | $ 285,000,000 | $ 310,000,000 | ||
Prepayment of debt | 0 | ||||
Debi issuance cost | 4,000,000 | ||||
ABL Revolver | |||||
Long-term Debt | |||||
Maximum borrowing capacity | $ 75,000,000 | 50,000,000 | |||
Maximum uncommitted accordion feature amount | $ 25,000,000 | $ 15,000,000 | |||
Long-term debt | 13,000,000 | $ 5,000,000 | |||
Debi issuance cost | $ 1,400,000 | ||||
ABL Revolver | Minimum | |||||
Long-term Debt | |||||
Unused commitment fee (as a percent) | 0.375% | ||||
ABL Revolver | Maximum | |||||
Long-term Debt | |||||
Unused commitment fee (as a percent) | 0.50% | 0.50% | |||
ABL Revolver | SOFR | Minimum | |||||
Long-term Debt | |||||
Applicable margin over reference rate (as a percent) | 1.25% | 0.10% | |||
ABL Revolver | SOFR | Maximum | |||||
Long-term Debt | |||||
Applicable margin over reference rate (as a percent) | 1.75% | 0.30% | |||
Senior Credit Facility | Minimum | |||||
Long-term Debt | |||||
Unused commitment fee (as a percent) | 1.50% | ||||
Senior Credit Facility | Maximum | |||||
Long-term Debt | |||||
Unused commitment fee (as a percent) | 1.75% |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Effective Income Tax Rate Reconciliation | ||
Tax at federal statutory rate (as a percent) | 21% | 21% |
State taxes, net (as a percent) | 4.70% | 8.90% |
Valuation allowance (as a percent) | (5.20%) | 6.30% |
Permanent items (as a percent) | 1.20% | 1.70% |
Other (as a percent) | (1.00%) | 0.30% |
Effective income tax rate (as a percent) | 20.70% | 38.20% |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net income | $ 10,873 | $ 6,002 |
Denominator: | ||
Basic weighted-average common shares outstanding (in shares) | 11,394,919 | 11,255,466 |
Dilutive shares | 506,662 | 462,383 |
Diluted weighted-average shares outstanding (in shares) | 11,901,581 | 11,717,849 |
Basic earnings per share: (in dollar per share) | $ 0.95 | $ 0.53 |
Diluted earnings per share: (in dollar per share) | $ 0.91 | $ 0.51 |
Outstanding stock based awards | ||
Potential antidilutive effect of share-based compensation excluded (in shares) | 28,831 | 54,050 |
Commitments and Contingencies -
Commitments and Contingencies - Contingencies (Details) - Smart Packaging Solutions SA v. CPI Card Group, Inc. - Pending Litigation | Mar. 31, 2023 USD ($) | Apr. 20, 2021 item |
Commitments and Contingencies | ||
The number of patents involved in lawsuit | item | 4 | |
Loss contingency accrual | $ | $ 0 |
Stock-Based Compensation - Omni
Stock-Based Compensation - Omnibus Incentive Plan (Details) - Omnibus Plan - Stock Options - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | May 27, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares available for grant | 2,200,000 | |
Stock options granted (in shares) | 8,307 | |
Granted (in dollars per share) | $ 45.01 | |
Outstanding (in shares) | 783,769 | |
Exercise price (in dollars per share) | $ 18.40 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - Omnibus Plan - Restricted stock units | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted (in units) | shares | 24,003 |
Granted (in dollars per unit) | $ / shares | $ 45.01 |
Outstanding (in units) | shares | 88,576 |
Outstanding (in dollars per unit) | $ / shares | $ 29.54 |
Segment Reporting - Revenue and
Segment Reporting - Revenue and EBITDA from Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting | ||
Net Sales | $ 120,852 | $ 111,424 |
Cost of sales | 77,758 | 72,146 |
Gross Profit | 43,094 | 39,278 |
Operating expenses | 22,496 | 21,297 |
Income from operations | 20,598 | 17,981 |
EBITDA by segment: | ||
Net income from operations | 20,598 | 17,981 |
Depreciation and amortization | 3,804 | 3,610 |
Other (expense) income, net | (114) | (396) |
Total segment EBITDA | 24,288 | 21,195 |
Operating Segments | Debit and Credit | ||
Segment Reporting | ||
Net Sales | 101,985 | 92,015 |
Cost of sales | 63,801 | 59,785 |
Gross Profit | 38,184 | 32,230 |
Operating expenses | 8,158 | 8,120 |
Income from operations | 30,026 | 24,110 |
EBITDA by segment: | ||
Net income from operations | 30,026 | 24,110 |
Depreciation and amortization | 2,161 | 1,980 |
Other (expense) income, net | 5 | 4 |
Total segment EBITDA | 32,192 | 26,094 |
Operating Segments | Prepaid Debit | ||
Segment Reporting | ||
Net Sales | 19,130 | 19,461 |
Cost of sales | 14,220 | 12,413 |
Gross Profit | 4,910 | 7,048 |
Operating expenses | 1,233 | 1,080 |
Income from operations | 3,677 | 5,968 |
EBITDA by segment: | ||
Net income from operations | 3,677 | 5,968 |
Depreciation and amortization | 624 | 598 |
Other (expense) income, net | (2) | |
Total segment EBITDA | 4,301 | 6,564 |
Operating Segments | Other | ||
Segment Reporting | ||
Operating expenses | 13,105 | 12,097 |
Income from operations | (13,105) | (12,097) |
EBITDA by segment: | ||
Net income from operations | (13,105) | (12,097) |
Depreciation and amortization | 1,019 | 1,032 |
Other (expense) income, net | (119) | (398) |
Total segment EBITDA | (12,205) | (11,463) |
Intersegment eliminations | ||
Segment Reporting | ||
Net Sales | (263) | (52) |
Cost of sales | $ (263) | $ (52) |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of EBITDA to net income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
EBITDA by segment: | ||
Total segment EBITDA | $ 24,288 | $ 21,195 |
Interest, net | (6,781) | (7,865) |
Income tax benefit | (2,830) | (3,718) |
Depreciation and amortization | (3,804) | (3,610) |
Net income | $ 10,873 | $ 6,002 |