Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 29, 2024 | Jun. 30, 2023 | |
Cover Abstract | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Transition Report | false | ||
Entity File Number | 001-37584 | ||
Entity Registrant Name | CPI Card Group Inc. | ||
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 | ||
Title of 12(b) Security | Common Stock, $0.001 par value | ||
Trading Symbol | PMTS | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Public Float | $ 109.3 | ||
Entity Common Stock, Shares Outstanding | 11,400,845 | ||
Entity Central Index Key | 0001641614 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | KPMG LLP | ||
Auditor Firm ID | 185 | ||
Auditor Location | Denver, Colorado |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 12,413 | $ 11,037 |
Accounts receivable, net | 73,724 | 80,583 |
Inventories, net | 70,594 | 68,399 |
Prepaid expenses and other current assets | 8,647 | 7,551 |
Total current assets | 165,378 | 167,570 |
Plant, equipment, leasehold improvements and operating lease right-of-use assets, net | 63,053 | 57,178 |
Intangible assets, net | 14,122 | 17,988 |
Goodwill | 47,150 | 47,150 |
Other assets | 3,980 | 6,780 |
Total assets | 293,683 | 296,666 |
Current liabilities: | ||
Accounts payable | 12,802 | 24,371 |
Accrued expenses | 35,803 | 40,070 |
Deferred revenue and customer deposits | 840 | 3,571 |
Total current liabilities | 49,445 | 68,012 |
Long-term debt | 264,997 | 285,522 |
Deferred income taxes | 7,139 | 6,808 |
Other long-term liabilities | 24,038 | 18,401 |
Total liabilities | 345,619 | 378,743 |
Commitments and contingencies (Note 14) | ||
Series A Preferred Stock; $0.001 par value-100,000 shares authorized; 0 shares issued and outstanding at December 31, 2023 and 2022 | ||
Stockholders' deficit: | ||
Common stock; $0.001 par value-100,000,000 shares authorized; 11,446,155 and 11,390,355 shares issued and outstanding at December 31, 2023 and 2022, respectively | 11 | 11 |
Capital deficiency | (102,223) | (108,379) |
Accumulated earnings | 50,276 | 26,291 |
Total stockholders' deficit | (51,936) | (82,077) |
Total liabilities and stockholders' deficit | $ 293,683 | $ 296,666 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
Consolidated Balance Sheets | ||
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) | 11,446,155 | 11,390,355 |
Common shares, outstanding shares (in shares) | 11,446,155 | 11,390,355 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Net sales: | ||
Net sales | $ 444,547 | $ 475,745 |
Cost of sales: | ||
Depreciation and amortization | 10,287 | 9,031 |
Total cost of sales | 289,058 | 299,978 |
Gross profit | 155,489 | 175,767 |
Operating expenses: | ||
Selling, general and administrative (exclusive of depreciation and amortization shown below) | 88,255 | 90,782 |
Depreciation and amortization | 5,644 | 5,855 |
Total operating expenses | 93,899 | 96,637 |
Income from operations | 61,590 | 79,130 |
Other expense, net: | ||
Interest, net | (26,913) | (29,616) |
Other expense, net | (215) | (367) |
Total other expense, net | (27,128) | (29,983) |
Income before income taxes | 34,462 | 49,147 |
Income tax expense | (10,477) | (12,607) |
Net income | $ 23,985 | $ 36,540 |
Basic earnings per share: (in dollars per share) | $ 2.10 | $ 3.24 |
Diluted earnings per share: (in dollars per share) | $ 2.01 | $ 3.11 |
Basic weighted-average shares outstanding (in shares) | 11,426,124 | 11,291,202 |
Diluted weighted-average shares outstanding (in shares) | 11,917,556 | 11,749,105 |
Comprehensive income: | ||
Net income | $ 23,985 | $ 36,540 |
Total comprehensive income | 23,985 | 36,540 |
Products | ||
Net sales: | ||
Net sales | 249,354 | 281,190 |
Cost of sales: | ||
Products and Services (exclusive of depreciation and amortization shown below) | 161,374 | 171,017 |
Services | ||
Net sales: | ||
Net sales | 195,193 | 194,555 |
Cost of sales: | ||
Products and Services (exclusive of depreciation and amortization shown below) | $ 117,397 | $ 119,930 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | Common Stock | Capital deficiency | Accumulated earnings | 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 | |||
Shares issued under stock-based compensation plans | (1,076) | (1,076) | ||
Shares issued under stock-based compensation plans (in shares) | 134,889 | |||
Stock-based compensation | 3,479 | 3,479 | ||
Components of comprehensive income: | ||||
Net income | 36,540 | 36,540 | ||
Ending balance at Dec. 31, 2022 | $ 11 | (108,379) | 26,291 | $ (82,077) |
Ending balance (in shares) at Dec. 31, 2022 | 11,390,355 | 11,390,355 | ||
Shares issued under stock-based compensation plans | (368) | $ (368) | ||
Shares issued under stock-based compensation plans (in shares) | 68,980 | |||
Stock-based compensation | 7,507 | 7,507 | ||
Repurchase and retirement of common shares | (983) | $ (983) | ||
Repurchase and retirement of common shares (in shares) | 13,180 | (13,180) | ||
Components of comprehensive income: | ||||
Net income | 23,985 | $ 23,985 | ||
Ending balance at Dec. 31, 2023 | $ 11 | $ (102,223) | $ 50,276 | $ (51,936) |
Ending balance (in shares) at Dec. 31, 2023 | 11,446,155 | 11,446,155 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating activities | ||
Net income | $ 23,985 | $ 36,540 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 12,065 | 11,020 |
Amortization expense | 3,866 | 3,866 |
Stock-based compensation expense | 7,507 | 3,479 |
Amortization of debt issuance costs and debt discount | 1,855 | 1,931 |
Loss on debt extinguishment | 243 | 474 |
Deferred income taxes | 331 | 1,555 |
Other, net | (655) | 1,094 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 6,795 | (19,745) |
Inventories | (1,638) | (10,702) |
Prepaid expenses and other assets | 2,346 | (2,700) |
Income taxes, net | (1,162) | 362 |
Accounts payable | (11,260) | (453) |
Accrued expenses and other liabilities | (7,506) | 2,226 |
Deferred revenue and customer deposits | (2,731) | 2,389 |
Cash provided by operating activities | 34,041 | 31,336 |
Investing activities | ||
Capital expenditures for plant, equipment and leasehold improvements, net | (6,405) | (17,867) |
Other | 183 | 95 |
Cash used in investing activities | (6,222) | (17,772) |
Financing activities | ||
Principal payments on Senior Notes | (16,954) | (24,938) |
Principal payments on ABL Revolver | (18,000) | (30,000) |
Proceeds from ABL Revolver | 13,000 | 35,000 |
Payments on debt extinguishment and other | (368) | (1,939) |
Proceeds from finance lease financing | 2,074 | |
Payments on finance lease obligations | (3,871) | (3,360) |
Common stock repurchased | (250) | |
Cash used in financing activities | (26,443) | (23,163) |
Effect of exchange rates on cash | (47) | |
Net increase (decrease) in cash and cash equivalents | 1,376 | (9,646) |
Cash and cash equivalents, beginning of period | 11,037 | 20,683 |
Cash and cash equivalents, end of period | 12,413 | 11,037 |
Supplemental disclosures of cash flow information | ||
Cash paid (refunded) during the period for: Interest | 25,738 | 27,714 |
Cash paid (refunded) during the period for: Income taxes paid | 10,462 | 12,584 |
Cash paid (refunded) during the period for: Income taxes refunded | (86) | (451) |
Right-of-use assets obtained in exchange for lease obligations- Operating leases | 3,091 | 816 |
Right-of-use assets obtained in exchange for lease obligations- Financing leases | 11,285 | 9,124 |
Accounts payable and accrued expenses for capital expenditures for plant, equipment and leasehold improvements | $ 102 | $ 462 |
Business
Business | 12 Months Ended |
Dec. 31, 2023 | |
Business | |
Business | 1. Business CPI Card Group Inc. (which, together with its subsidiary companies, is referred to herein as “CPI” or the “Company”) is a payments 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 issued on the networks of the Payment Card Brands (Visa, Mastercard, American Express and Discover). CPI also offers an instant card issuance solution, which provides customers the ability to issue a personalized debit or credit card within the bank branch to individual cardholders. 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 (“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 to 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying Consolidated Financial Statements include the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents and they are stated at cost, which approximates fair value. Trade Accounts Receivable and Concentration of Credit Risk Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company performs ongoing credit evaluations of its customers and generally requires no collateral to secure accounts receivable. December 31, 2023 2022 Trade accounts receivable $ 69,245 $ 68,886 Unbilled accounts receivable 4,725 11,915 73,970 80,801 Less allowance (246) (218) $ 73,724 $ 80,583 The Company maintains an allowance for potential credit losses based upon its assessment of the collectability of accounts receivable. Accounts are written off against the allowance when it is determined collection will not occur. The provision for credit losses was immaterial for both the years ended December 31, 2023 and 2022. For the years ended December 31, 2023 and 2022, one customer represented 18% and 16%, respectively, of the Company’s consolidated net sales. Inventories Inventories consist of raw materials and finished goods, and are measured at the lower of cost or net realizable value (determined on a first-in, first-out or specific identification basis). Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Finished goods inventory represents primarily stock cards and Card Once printers. The stock cards are not produced for a specific customer, but are ready to be personalized and sold as customer orders are received. The Company monitors inventory for events or circumstances that may indicate the net realizable value is less than the carrying value of inventory, such as negative margins, expiration of material usage and other forms of obsolescence, and records adjustments to the valuation of inventory, as necessary. For the year ended December 31, 2023 approximately 96% of the total value of our purchased microchips and antennas came from four main suppliers, and approximately 72% came from one supplier. Approximately 97% of the total value of our purchased microchips and antennas for the year ended December 31, 2022 came from four main suppliers, and approximately 68% came from one supplier. Plant, Equipment and Leasehold Improvements Plant, equipment and leasehold improvements are recorded at cost. Accumulated depreciation is computed using the straight-line method over the lesser of the estimated useful life of the related assets (generally 3 to 10 years for machinery and equipment, furniture, computer equipment, and leasehold improvements) or, when applicable, the lease term. Maintenance and repairs that do not extend the useful life of the respective assets are charged to expense as incurred. Capital expenditures are presented net of lessor reimbursements on the consolidated statement of cash flows for assets acquired when corresponding financing leases were contemplated to be executed at the asset purchase date and such financing leases are entered into shortly after asset acquisition. Any financing leases executed for the acquisition of right-of-use machinery and equipment assets are presented in the supplemental disclosures of non-cash information on the statement of cash flows. Financing leases are further described in Note 9, “Financing and Operating Leases.” Long-lived assets with finite lives are reviewed for impairment whenever events indicate that the carrying amount of the asset or the carrying amounts of the asset group containing the asset may not be recoverable. In such reviews, estimated undiscounted future cash flows associated with these assets or asset groups are compared with their carrying value to determine if a write-down to fair value is required. Goodwill and Intangible Assets The Company accounts for its goodwill under the authoritative guidance for goodwill and other intangible assets (ASC 350) and the provisions of ASU 2017-04, Simplifying the Test for Goodwill Impairment and tests at least annually or more frequently when an event occurs or circumstances change that indicates the carrying value may not be recoverable. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. The Company performs its goodwill impairment test by comparing the fair value of the reporting unit with the carrying amount. If this qualitative assessment indicates it is more likely than not the fair value of a reporting unit is less than the carrying amount, a one-step quantitative test is then performed. Factors management considers in this assessment include macroeconomic, industry and market considerations, overall financial performance (both current and projected), cost increases impacting earnings and cash flows, changes in management and strategy, and changes in the composition or carrying amount of net assets. In the event a reporting unit’s carrying value exceeds its fair value, the Company recognizes an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value. Acquired finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets, and are reviewed for impairment whenever events indicate that the carrying amount of the asset may not be recoverable. In such reviews, estimated undiscounted future cash flows associated with these assets are compared with their carrying value to determine if a write-down to fair value is required. Sales Tax The Company records sales tax collected from its customers on a net basis, and therefore excludes it from net sales as defined in ASC 606, Revenue from Contracts with Customers Income Taxes The Company accounts for income taxes using an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. The Company has deferred tax assets and liabilities and maintains valuation allowances where it is more likely than not that all or a portion of deferred tax assets will not be realized. To the extent the Company determines that it will not realize the benefit of some or all of its deferred tax assets, then these deferred tax assets will be adjusted through the Company’s income tax expense in the period in which this determination is made. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. The reserves are established when the Company believes that certain positions are likely to be challenged and may not be fully sustained on review by tax authorities. The Company adjusts uncertain tax positions in light of changing facts and circumstances, such as the closing of a tax audit or refinement of an estimate. Stock - Based Compensation The Company accounts for stock-based compensation pursuant to ASC 718, Share-Based Payments. Net Sales 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 work performed but not completed and unbilled, 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, contactless dual-interface EMV, contactless and magnetic stripe cards, CPI’s eco-focused solutions, including Second Wave and Earthwise cards made with upcycled plastic, metal cards, private label credit cards and retail gift cards. Card Once printers and consumables are also included in “Products” net sales, and their associated revenues are recognized at the time of shipping. The Company includes gross shipping and handling revenue in net sales, and shipping and handling costs in cost of sales . Europay, Mastercard and Visa (“EMV®”) is a global technical standard maintained by EMV Co, LLC. 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 SaaS personalization of instant issuance debit cards. As applicable, for work performed but not completed and unbilled, 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 Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These accounting principles require management to make assumptions and estimates relating to the reporting of assets and liabilities in its preparation of the 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, which changes the criteria under which credit losses on financial instruments (such as the Company’s trade receivables) are measured. The ASU introduces a new credit reserve model known as the Current Expected Credit Loss (“CECL”) model, which replaces the incurred loss impairment methodology previously used under GAAP with an expected loss 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. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which will require enhanced segment disclosures. Adoption of this accounting standard is effective for the Company for fiscal years beginning after December 15, 2023. The Company has elected not to early adopt this accounting standard in 2023. The Company is evaluating the impact of adoption of this standard and does not anticipate that the application of ASU 2023-07 will change which segments are currently reported or will have a material impact on the Company’s consolidated financial position and results of operations. In December 2023, the Financial Accounting Standards Board issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures which will require a disaggregated rate reconciliation disclosure as well as additional information regarding taxes paid. Adoption of this accounting standard is effective for the Company for fiscal years beginning after December 15, 2024. The Company has elected not to early adopt this accounting standard in 2023. The Company is evaluating the impact of adoption of this standard and does not anticipate that the application of ASU 2023-09 will have a material impact on the Company’s consolidated financial position and results of operations. |
Net Sales
Net Sales | 12 Months Ended |
Dec. 31, 2023 | |
Net Sales. | |
Net Sales | 3. Net Sales The Company disaggregates its net sales by major source as follows: For the year ended December 31, 2023 Products Services Total Debit and Credit $ 250,047 $ 111,010 $ 361,057 Prepaid Debit — 84,237 84,237 Intersegment eliminations (693) (54) (747) Total $ 249,354 $ 195,193 $ 444,547 For the year ended December 31, 2022 Products Services Total Debit and Credit $ 282,081 $ 108,478 $ 390,559 Prepaid Debit — 86,136 86,136 Intersegment eliminations (891) (59) (950) Total $ 281,190 $ 194,555 $ 475,745 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2023 | |
Inventories | |
Inventories | 4. Inventories Inventories are summarized below: December 31, 2023 2022 Raw materials $ 66,210 $ 61,434 Finished goods 7,162 10,300 Inventory reserve (2,778) (3,335) $ 70,594 $ 68,399 |
Plant, Equipment, Leasehold Imp
Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets | 12 Months Ended |
Dec. 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. 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: December 31, 2023 2022 Machinery and equipment $ 67,506 $ 64,786 Machinery and equipment under financing leases 23,774 15,717 Furniture, fixtures and computer equipment 107 3,072 Leasehold improvements 16,335 14,703 Construction in progress 1,778 3,304 Operating lease right-of-use assets 19,989 17,518 129,489 119,100 Less accumulated depreciation and amortization (66,436) (61,922) $ 63,053 $ 57,178 Operating lease right-of-use assets, net of accumulated amortization, are further described in Note 9, “Financing and Operating Leases.” There were no impairments of the Company’s plant, equipment, leasehold improvements and operating leases right-of-use assets for the years ended December 31, 2023 and 2022. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 6. Goodwill and Other Intangible Assets The Company reports all of its goodwill in the Debit and Credit segment at December 31, 2023 and 2022. The Company completed its goodwill impairment testing as of October 1, 2023 and did not identify any goodwill impairment during the years ended December 31, 2023 and 2022. Intangible assets consist of customer relationships, acquired technology, and trademarks. There were no impairments of the Company’s amortizable intangible assets for the years ended December 31, 2023 and 2022. At December 31, 2023 and 2022, intangible assets, excluding goodwill, were comprised of the following: December 31, 2023 December 31, 2022 Weighted Average Accumulated Net Book Accumulated Net Book Life (Years) Cost Amortization Value Cost Amortization Value Customer relationships 17.2 $ 55,454 $ (41,971) $ 13,483 $ 55,454 $ (38,695) $ 16,759 Acquired technology 10.0 7,101 (6,967) 134 7,101 (6,767) 334 Trademarks 8.7 3,330 (2,825) 505 3,330 (2,435) 895 Intangible assets subject to amortization $ 65,885 $ (51,763) $ 14,122 $ 65,885 $ (47,897) $ 17,988 The estimated future aggregate amortization expense for the identified amortizable intangibles noted above as of December 31, 2023 was as follows: 2024 $ 3,630 2025 3,440 2026 2,471 2027 1,947 2028 1,580 Thereafter 1,054 $ 14,122 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 7. 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 consolidated balance sheets were as follows: Carrying Fair Value Measurement at Value as of Fair Value as of December 31, 2023 December 31, December 31, (Using Fair Value Hierarchy) 2023 2023 Level 1 Level 2 Level 3 Liabilities: Senior Notes $ 267,897 $ 261,834 $ — $ 261,834 $ — ABL Revolver $ — $ — $ — $ — $ — Carrying Fair Value Measurement at Value as of Fair Value as of December 31, 2022 December 31, December 31, (Using Fair Value Hierarchy) 2022 2022 Level 1 Level 2 Level 3 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 10, “Long-Term Debt”) was based on bank quotes. The fair value measurement associated with the ABL Revolver (as defined in Note 10, “Long-Term Debt”) approximates its carrying value as of December 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 | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Expenses. | |
Accrued Expenses | 8. Accrued Expenses Accrued expenses consisted of the following: December 31, 2023 2022 Accrued payroll and related employee expenses $ 11,431 $ 7,727 Accrued employee performance bonuses 667 8,576 Employer payroll taxes 298 1,092 Accrued rebates 2,919 2,668 Estimated sales tax liability 351 622 Accrued interest 6,830 7,275 Current operating and financing lease liabilities 7,318 5,697 Other 5,989 6,413 Total accrued expenses $ 35,803 $ 40,070 Other accrued expenses as of December 31, 2023 and 2022 consisted primarily of federal income tax accruals, self-insurance claims that have yet to be reported, and the current portion of uncertain tax position reserves. |
Financing and Operating Leases
Financing and Operating Leases | 12 Months Ended |
Dec. 31, 2023 | |
Financing and Operating Leases | |
Financing and Operating Leases | 9. Financing and Operating Leases Right-of-use (“ROU”) represents the right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. A lease is deemed to exist when the Company has the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Company has the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets. Certain leases contain escalation provisions and/or renewal options, giving the Company the right to extend the leases by up to 10 years The components of operating and finance lease costs were as follows: Year Ended December 31, 2023 2022 Operating lease costs $ 3,191 $ 3,064 Variable lease costs 741 642 Total expense from operating leases $ 3,932 $ 3,706 Finance lease costs: Right-of-use amortization expense $ 2,314 $ 1,718 Interest on lease liabilities 784 482 Total financing lease costs $ 3,098 $ 2,200 The following table reflects balances for operating and financing leases: December 31, 2023 2022 Operating leases: Operating lease right-of-use assets, net of amortization $ 11,234 $ 10,705 Current operating lease liabilities $ 2,539 $ 2,355 Non-current operating lease liabilities 9,384 8,905 Total operating lease liabilities $ 11,923 $ 11,260 Financing leases: Property, equipment and leasehold improvements $ 23,774 $ 15,717 Accumulated depreciation (3,335) (3,135) Total financing leases in property, equipment and leasehold improvements, net $ 20,439 $ 12,582 Current financing lease liabilities $ 4,779 $ 3,342 Non-current financing lease liabilities 13,327 7,355 Total financing lease liabilities $ 18,106 $ 10,697 Finance and operating lease ROU assets are recorded in “Plant, equipment, leasehold improvements, and operating lease right-of-use assets, net.” Financing and operating lease liabilities are recorded in “Accrued expenses” and “Other long-term liabilities.” Components of lease expense were as follows: December 31, 2023 2022 Weighted-average remaining lease term: Operating leases 4.70 5.06 Financing leases 3.98 3.60 Weighted-average discount rate: Operating leases 7.19% 7.93% Financing leases 6.28% 6.62% Future cash payment with respect to lease obligations as of December 31, 2023 were as follows: Operating Financing Lease Leases Year Ending 2024 $ 3,310 $ 5,777 2025 2,851 5,472 2026 2,684 4,111 2027 2,518 3,180 2028 2,185 1,919 Thereafter 574 — Total lease payments 14,122 20,459 Less imputed interest (2,199) (2,353) Total $ 11,923 $ 18,106 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2023 | |
Long-Term Debt. | |
Long-Term Debt | 10. Long - Term Debt At December 31, 2023 and 2022, long-term debt consisted of the following: December 31, 2023 2022 Senior Notes (1) $ 267,897 $ 285,000 ABL Revolver — 5,000 Unamortized deferred financing costs (2,900) (4,478) Total long-term debt 264,997 285,522 Less current maturities — — Long-term debt, net of current maturities $ 264,997 $ 285,522 (1) The Senior Notes bear interest at a fixed rate of 8.625% . Senior Notes On March 15, 2021, the Company completed an 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 2024 and was not required to be made in 2023 based on the Company’s operating results for the years ended December 31, 2023 and 2022, respectively. During the year ended December 31, 2023, the Company used cash on hand and available borrowing capacity under the Company’s asset-based, senior secured revolving credit facility (described in more detail below, the “ABL Revolver”) to retire a portion of the Senior Notes totaling $17.1 million of the principal amount thereof plus accrued and unpaid interest thereon to the retirement dates. During the year ended December 31, 2022, the Company used cash on hand and available borrowing capacity under the ABL Revolver to fund the redemption and purchase of a portion of the Senior Notes totaling $25.0 million of the principal amount thereof plus accrued and unpaid interest thereon to the retirement dates. The difference between the par value and the purchase price of $0.5 million is recorded in “Interest, net” on the consolidated statement of comprehensive income for the year ended December 31, 2022. The Senior Notes are guaranteed by the Company and certain of its current and future wholly-owned domestic subsidiaries (other than CPI CG Inc. as the issuer of the Senior Notes) that guarantee the ABL Revolver. The Senior Notes are secured by substantially all of the assets of CPI CG Inc. and the guarantors, subject to customary exceptions. The ABL Revolver is guaranteed by the Company and its subsidiaries (other than CPI CG Inc. as borrower and excluded subsidiaries), and is secured by substantially all of the assets of CPI CG Inc. and the guarantors, subject to customary exceptions. The Senior Notes and the ABL Revolver contain covenants limiting the ability of the Company, CPI CG Inc. and the Company’s restricted subsidiaries to, among other things, incur or guarantee additional debt or issue disqualified stock or certain preferred stock; create or incur liens; pay dividends, redeem stock or make other distributions; make certain investments; create restrictions on the ability of CPI CG Inc. and its restricted subsidiaries to pay dividends to the Company or make other intercompany transfers; transfer or sell assets; merge or consolidate; and enter into certain transactions with affiliates, subject to a number of important exceptions and qualifications as set forth in the respective agreements. ABL Revolver 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 the ABL Revolver with revolving credit. 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 ranged 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 accrued 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). The ABL Revolver includes limitations on the Company’s ability to borrow in certain situations, including limitations based on the calculation of a borrowing capacity and further limitations that are triggered if the amount available to borrow under the ABL Revolver is less than $7.5 million. The borrowing capacity represents the net availability under the ABL Revolver and is calculated as the lesser of a) the total of certain eligible assets, including cash, accounts receivable and inventories, further reduced by stated contribution percentages and adjustments or b) the $75.0 million of available borrowing capacity under the ABL Revolver (“Borrowing Base”). The Borrowing Base is further reduced by credit line reserves, letters of credit, as well as the loan ledger balance outstanding on the ABL Revolver. Additionally, commencing with the month immediately following a date on which borrowing capacity is below $7.5 million and until such time that borrowing capacity equals or exceeds $7.5 million for 30 consecutive days, the Company must maintain a fixed charge coverage ratio (as defined in the Credit Agreement for the ABL Revolver) greater than 1.00, calculated for the trailing 12 months, in order to borrow under the ABL Revolver. 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 $2.9 million and are reported as a reduction to the long-term debt balance as of December 31, 2023. The remaining unamortized net discount and debt issuance costs on the ABL Revolver and related Amendment were $1.0 million and are recorded as other assets (current and long-term) on the consolidated balance sheet as of December 31, 2023. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Income Taxes | 11. Income Taxes Income tax expense and effective income tax rates consist of the following: December 31, 2023 2022 Current taxes: Domestic $ 10,126 $ 11,047 Foreign 20 5 10,146 11,052 Deferred taxes: Domestic 331 1,554 Foreign — 1 331 1,555 Income tax expense $ 10,477 $ 12,607 Income before income taxes: Domestic income $ 34,400 $ 49,108 Foreign income 62 39 Total $ 34,462 $ 49,147 Effective income tax rate 30.4 % 25.7 % The Company’s effective tax rates on pre-tax income were 30.4% and 25.7% for the years ended December 31, 2023 and 2022, respectively. The increase in the Company’s effective tax rate for the year ended December 31, 2023, compared to the prior year was primarily due to tax deductibility limitations on executive compensation and a decrease in unrecognized tax benefits liabilities during the year ended December 31, 2022 due to the lapse of the statute of limitations. For the year ended December 31, 2023 and 2022, the effective tax rate differs from the U.S. federal statutory income tax rate as follows: December 31, 2023 2022 Tax at federal statutory rate 21.0 % 21.0 % State taxes, net 4.4 5.4 Unrecognized tax benefits 0.1 (2.0) Deductibility limitations on excess compensation 3.3 0.4 Tax credits (0.5) (0.1) Permanent items 2.0 1.0 Other 0.1 — Effective income tax rate 30.4 % 25.7 % For the year ended December 31, 2023, the effective tax rate differs from the federal statutory rate primarily due to state income taxes, which had a tax rate impact of 4.4%. Other items impacting the effective tax rate in 2023 include tax deductibility limitations on executive compensation and permanent items. For the year ended December 31, 2022, the effective tax rate differs from the federal statutory rate primarily due to state income taxes, which had a tax rate impact of 5.4%, and a decrease in unrecognized tax benefits primarily relating to an asset basis tax position and research and development tax credits as a result of a lapse of the statute of limitations. The components of the deferred tax assets and liabilities are as follows: December 31, 2023 2022 Deferred tax assets: Accrued expense $ 1,928 $ 3,830 Net operating loss carryforward 130 257 Stock compensation 1,798 1,303 Interest limitation 1,689 2,474 Lease liability 3,026 2,891 Capital loss carryover 2,110 2,135 Research and development costs 1,350 1,434 Other 3,244 3,609 Total gross deferred tax assets 15,275 17,933 Valuation allowance (2,616) (2,791) Net deferred tax assets 12,659 15,142 Deferred tax liabilities: Plant, equipment and leasehold improvements (8,825) (9,510) Intangible assets (6,745) (8,020) Right-of-use assets (2,851) (2,749) Other (1,377) (1,671) Total gross deferred tax liabilities (19,798) (21,950) Net deferred tax liabilities $ (7,139) $ (6,808) The valuation allowance as of December 31, 2023, is primarily relating to a capital loss realized on the sale of a foreign subsidiary whereby the Company does not anticipate a capital gain in the foreseeable future that would allow for the recognition of the capital loss carryover. In addition, the Company has a partial valuation allowance on certain state interest deduction limitations, which the Company estimates may not be fully utilized. Under a provision in the 2017 U.S. Tax Cuts and Jobs Act, beginning in 2022, research and development costs incurred are no longer allowed as an immediate deduction for federal income tax purposes. Rather, these expenditures incurred must be capitalized and amortized over a five-year period for activities conducted in the United States and a 15 year period for activities conducted outside the United States. The Company has a minimal amount of state and local operating loss carryforwards which will expire at various dates from 2032 to 2038. The Company does expect to be able to utilize these losses prior to expiration. The Company has recorded compensation for certain covered employees in excess of $1.0 million per year. Under Internal Revenue Code (IRC) Section 162(m), the Company is prohibited from deducting the amount of tax compensation that exceeds $1.0 million per year for these employees. The covered employees are defined as the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), and the three next-highest-compensated officers of the Company. The Company considers the impact of the estimated IRC Section 162(m) limitations on the future deductibility of existing temporary differences. Unrecognized Tax Benefits Unrecognized tax benefits represent the aggregate tax effect of differences between the tax return positions and the amounts otherwise recognized in the Company’s consolidated financial statements, and are reflected in “Accrued expenses” and “Other long-term liabilities” in the Company’s consolidated balance sheets. The Company accounts for uncertain tax positions by recognizing the financial statement effects of a tax provision only when based upon the technical merits, it is “more-likely-than-not” that the tax position will be sustained upon examination. Balance as of December 31, 2022 $ 1,395 Increase related to current year tax position 42 Increase related to prior year tax position 22 Decrease related to prior year tax position (62) Decrease related to settlements with tax authorities, net of federal benefit (80) Balance as of December 31, 2023 $ 1,317 The Company recognizes interest and penalties with respect to unrecognized tax benefits as a component of income tax expense. The amount of accrued interest and penalties related to unrecognized tax benefits was $0.3 million for the years ended December 31, 2023 and 2022, respectively. The Company believes that it is reasonably possible that approximately $0.9 million of its unrecognized tax benefits may be recognized by the end of 2024 as a result of a lapse of the statute of limitations, which is reflected in “Accrued expenses” in the Company’s consolidated balance sheet as of December 31, 2023. |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders' Deficit | |
Stockholders' Deficit | 12. Stockholders’ Deficit Common Stock Common Stock has a par value of $0.001 per share. Holders of Common Stock are entitled to receive dividends and distributions subject to the participation rights of holders of all classes of stock at the time outstanding, as such holders may have prior rights as to dividends pursuant to the rights of any series of Preferred Stock. Upon any liquidation, dissolution, or winding up of the Company, after required payments are made to holders of any series of Preferred Stock, any remaining assets of the Company will be distributed ratably to the holders of Common Stock. Holders of Common Stock are entitled to one vote per share. Share Repurchases On November 2, 2023, the Company's board of directors approved a share repurchase plan authorizing the Company to repurchase up to $20.0 million of the Company's common stock, par value $0.001 per share. This authorization expires on December 31, 2024. During the year ended December 31, 2023, the Company repurchased 13,180 shares, on a trade date basis, of its common stock at an average price of $18.93 per share, excluding commissions, or $0.3 million in aggregate. In accordance with the Stock Repurchase Agreement entered into on December 6, 2023, the Company is obligated to purchase 39,540 shares from Tricor Pacific Capital Partners (Fund IV) US, LP, which is one of the Company’s majority stockholders and affiliated with Parallel49 Equity, at an average price of $18.55 per share as of December 31, 2023, payment for which is due in the second quarter of 2024. |
Earnings per Share
Earnings per Share | 12 Months Ended |
Dec. 31, 2023 | |
Earnings per Share | |
Earnings per Share | 13. 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. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested. For the years ended December 31, 2023 and 2022, 72,049 and 27,813 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: Year Ended December 31, 2023 2022 Numerator: Net income $ 23,985 $ 36,540 Denominator: Basic weighted-average common shares outstanding 11,426,124 11,291,202 Dilutive shares 491,432 457,903 Diluted weighted-average common shares outstanding 11,917,556 11,749,105 Basic earnings per share $ 2.10 $ 3.24 Diluted earnings per share $ 2.01 $ 3.11 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14. Commitments and Contingencies Commitments Refer to Note 9 “Financing and Operating Leases” for details on the Company’s future cash payments with respect to financing and operating leases. 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 2024 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 2024 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, 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; three of the patents have been invalidated in the IPR proceedings and one remains under review. The patent owner, Feinics AmaTech Teoranta, initially appealed the invalidation of the three patents but subsequently elected to dismiss those appeals. Should the remaining patent 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 December 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. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2023 | |
Employee Benefit Plan | |
Employee Benefit Plan | 15. Employee Benefit Plan The Company maintains a qualified defined-contribution plan under the provisions of the Internal Revenue Code Section 401(k), which covers substantially all employees in the United States who meet certain eligibility requirements. Under the plan, participants may defer their salary subject to statutory limitations and may direct the contributions among various investment options. The Company matches 100% of the participant’s first 3% of deferrals and 50% matching on each of the 4 th th The aggregate amounts charged to expense in connection with the plan were $2.1 million and $1.9 million for the years ended December 31, 2023 and 2022, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | 16. Stock-Based Compensation CPI Card Group Inc. Omnibus Incentive Plan In October 2015, the Company adopted the CPI Card Group Inc. Omnibus Incentive Plan (as amended and supplemented, the “Omnibus Plan”) pursuant to which cash and equity-based incentives may be granted to participating employees, advisors and directors. As of December 31, 2023, there were 2,200,000 shares issuable under the Omnibus Plan, and there were 111,737 shares of Common Stock available for grant under the Omnibus Plan. Options have 7-year terms and are issued with exercise prices equal to the fair market value of the Company’s common stock on the grant date. The following is a summary of the activity in outstanding stock options under the Omnibus Plan: Weighted-Average Weighted-Average Remaining Aggregate Exercise Contractual Term Intrinsic Options Price (in Years) Value Outstanding as of December 31, 2022 780,623 $ 18.12 4.65 $ 15,902 Granted 139,648 22.23 6.26 Exercised (8,295) 12.36 — Expired (1,409) 23.72 — Forfeited (1,129) 20.09 — Outstanding as of December 31, 2023 909,438 $ 18.79 4.06 $ 6,482 Options vested and exercisable as of December 31, 2023 749,317 $ 18.26 3.62 $ 6,326 Options vested and expected to vest as of December 31, 2023 909,438 $ 18.79 4.06 $ 6,482 The following is a summary of the activity in unvested stock options under the Omnibus Plan: Weighted-Average Grant-Date Number Fair Value Unvested as of December 31, 2022 100,059 $ 6.02 Granted 139,648 11.21 Vested (78,457) 15.19 Forfeited (1,129) 12.09 Unvested as of December 31, 2023 160,121 $ 10.92 Unvested stock options of 160,121 as of December 31, 2023 have a seven-year The fair value of the stock option awards granted for the years ended December 31, 2023, were determined using a Black-Scholes option-pricing model with the following weighted-average assumptions: December 31, 2023 2022 Expected term in years (1) 2.90 4.25 Volatility (2) 73.16 % 77.58 % Risk-free interest rate (3) 4.46 % 2.86 % Dividend yield (4) — % — % (1) The Company estimated the expected term based on the average of the weighted-average vesting period and the contractual term of the stock option awards by utilizing the “simplified method,” as the Company does not have sufficient available historical data to estimate the expected term of these stock option awards. (2) Volatility was based on a weighting of the Company’s historical volatility and its peer group, which is comprised of companies with similar industry, size and financial leverage. (3) The risk-free interest rate was determined by using the United States Treasury rate for the period consistent with the expected option term described above. (4) The Company’s expected annual dividend yield was zero based on current practice. The following table summarizes the changes in the number of outstanding restricted stock units for the year ended December 31, 2023 under the Omnibus Plan: Weighted-Average Remaining Weighted-Average Amortization Grant-Date Period Shares Fair Value (in Years) Outstanding as of December 31, 2022 98,664 $ 25.23 Granted 699,281 21.39 Vested (80,580) 27.07 Forfeited (4,005) 26.85 Outstanding as of December 31, 2023 713,360 $ 21.25 2.18 The restricted stock unit awards contain conditions associated with continued employment or service. Restricted stock units granted in 2023 are expected to vest ratably over a two Beginning in the first quarter of 2023, the Company’s employees that participate in the Company’s long-term incentive program received a quarterly grant comprising one-fourth of the annual equity-based incentive component of their total compensation. Executive awards are awarded as a mix of restricted stock units and nonqualified stock options, and other employee awards are comprised solely of restricted stock units. The number of shares awarded will be determined based on the grant-date fair value for nonqualified stock options and on a value tied to the monthly average closing price of the Company’s common stock for restricted stock units. In June 2023, the Company implemented an additional long-term incentive program under the Omnibus Plan, independent of the quarterly awards described above, designed to retain and incentivize executive officers and certain key employees, excluding the Company’s President and CEO, comprised of restricted stock units. The first tranche was awarded in June 2023, the second tranche was awarded in August 2023, and the third and final tranche was awarded in November 2023. The awards vest ratably over a three-year period, subject to continued employment. In June 2023, the Company also announced an award comprised of 25% nonqualified stock options and 75% restricted stock units to its CEO as an incentive to remain employed by the Company through February 28, 2024. The first one -third of the awards was granted in June 2023, the second one -third was granted in August 2023, and the remainder was granted in November 2023. All of these awards will vest ratably over a two-year period irrespective of employment status with expense related to these awards to be recognized by the Company through February 28, 2024. As part of the CEO’s incentive package, the requisite service and exercise periods for his awards granted in 2023 prior to June 2023 were also modified with expense related to the modification being recognized in June 2023 through February 2024. Compensation expense for the Omnibus Plan for the years ended December 31, 2023 and 2022 was $7.5 million and $3.5 million, respectively. As of December 31, 2023, the total unrecognized compensation expense related to unvested options and restricted stock units was $10.2 million, which the Company expects to recognize over an estimated weighted-average period of approximately 2.0 years. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting | |
Segment Reporting | 17. 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 CEO, 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 December 31, 2023, the Company’s reportable segments were as follows: ● Debit and Credit; ● Prepaid Debit; ● Other. Debit and Credit Segment The Debit and Credit segment primarily produces Financial Payment Cards and provides integrated card services, including digital 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 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 providers 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 year ended December 31, 2023 and 2022, were as follows: Year Ended December 31, 2023 Debit and Credit Prepaid Debit Other Intersegment Eliminations Total Net sales $ 361,057 $ 84,237 $ — $ (747) $ 444,547 Cost of sales 234,281 55,524 — (747) 289,058 Gross profit 126,776 28,713 — — 155,489 Operating expenses 31,870 3,786 58,243 — 93,899 Income (loss) from operations $ 94,906 $ 24,927 $ (58,243) $ — $ 61,590 EBITDA by segment: Income (loss) from operations $ 94,906 $ 24,927 $ (58,243) $ — $ 61,590 Depreciation and amortization 9,025 2,860 4,046 — 15,931 Other income (expenses) 29 (1) (243) — (215) EBITDA $ 103,960 $ 27,786 $ (54,440) $ — $ 77,306 Year Ended December 31, 2022 Debit and Credit Prepaid Debit Other Intersegment Eliminations Total Net sales $ 390,559 $ 86,136 $ — $ (950) $ 475,745 Cost of sales 246,345 54,583 — (950) 299,978 Gross profit 144,214 31,553 — — 175,767 Operating expenses 34,169 5,976 56,492 — 96,637 Income (loss) from operations $ 110,045 $ 25,577 $ (56,492) $ — $ 79,130 EBITDA by segment: Income (loss) from operations $ 110,045 $ 25,577 $ (56,492) $ — $ 79,130 Depreciation and amortization 8,440 2,310 4,136 — 14,886 Other income (expenses) (7) (43) (317) — (367) EBITDA $ 118,478 $ 27,844 $ (52,673) $ — $ 93,649 December 31, 2023 2022 Net income $ 23,985 $ 36,540 Interest, net 26,913 29,616 Income tax expense 10,477 12,607 Depreciation and amortization 15,931 14,886 EBITDA $ 77,306 $ 93,649 Balance Sheet Data of Reportable Segments Total assets of the Company’s reportable segments as of December 31, 2023 and 2022 were as follows: December 31, 2023 2022 Debit and Credit $ 235,680 $ 238,610 Prepaid Debit 38,265 38,138 Other 19,738 19,918 Total assets $ 293,683 $ 296,666 Capital Expenditures of Reportable Segments Total capital expenditures of the Company’s reportable segments as of December 31, 2023 and 2022 were as follows: December 31, 2023 2022 Debit and Credit $ 5,116 $ 15,283 Prepaid Debit 963 2,309 Other 326 275 Total company capital expenditures $ 6,405 $ 17,867 Net Sales by Product and Services Net sales from products and services sold by the Company for the years ended December 31, 2023 and 2022 were as follows: December 31, 2023 2022 Product net sales (1) $ 249,354 $ 281,190 Services net sales (2) 195,193 194,555 Total net sales $ 444,547 $ 475,745 (1) “Products” net sales include the design and production of Financial Payment Cards in contact-EMV, contactless EMV, metal, contactless and magnetic stripe card formats. The Company also generates “Products” revenue from the sale of Card Once printers and consumables, private label credit cards and retail gift cards. (2) “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 SaaS personalization of instant issuance cards. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying Consolidated Financial Statements include the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents and they are stated at cost, which approximates fair value. |
Trade Accounts Receivable and Concentration of Credit Risk | Trade Accounts Receivable and Concentration of Credit Risk Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company performs ongoing credit evaluations of its customers and generally requires no collateral to secure accounts receivable. December 31, 2023 2022 Trade accounts receivable $ 69,245 $ 68,886 Unbilled accounts receivable 4,725 11,915 73,970 80,801 Less allowance (246) (218) $ 73,724 $ 80,583 The Company maintains an allowance for potential credit losses based upon its assessment of the collectability of accounts receivable. Accounts are written off against the allowance when it is determined collection will not occur. The provision for credit losses was immaterial for both the years ended December 31, 2023 and 2022. For the years ended December 31, 2023 and 2022, one customer represented 18% and 16%, respectively, of the Company’s consolidated net sales. |
Inventories | Inventories Inventories consist of raw materials and finished goods, and are measured at the lower of cost or net realizable value (determined on a first-in, first-out or specific identification basis). Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Finished goods inventory represents primarily stock cards and Card Once printers. The stock cards are not produced for a specific customer, but are ready to be personalized and sold as customer orders are received. The Company monitors inventory for events or circumstances that may indicate the net realizable value is less than the carrying value of inventory, such as negative margins, expiration of material usage and other forms of obsolescence, and records adjustments to the valuation of inventory, as necessary. For the year ended December 31, 2023 approximately 96% of the total value of our purchased microchips and antennas came from four main suppliers, and approximately 72% came from one supplier. Approximately 97% of the total value of our purchased microchips and antennas for the year ended December 31, 2022 came from four main suppliers, and approximately 68% came from one supplier. |
Plant, Equipment and Leasehold Improvements | Plant, Equipment and Leasehold Improvements Plant, equipment and leasehold improvements are recorded at cost. Accumulated depreciation is computed using the straight-line method over the lesser of the estimated useful life of the related assets (generally 3 to 10 years for machinery and equipment, furniture, computer equipment, and leasehold improvements) or, when applicable, the lease term. Maintenance and repairs that do not extend the useful life of the respective assets are charged to expense as incurred. Capital expenditures are presented net of lessor reimbursements on the consolidated statement of cash flows for assets acquired when corresponding financing leases were contemplated to be executed at the asset purchase date and such financing leases are entered into shortly after asset acquisition. Any financing leases executed for the acquisition of right-of-use machinery and equipment assets are presented in the supplemental disclosures of non-cash information on the statement of cash flows. Financing leases are further described in Note 9, “Financing and Operating Leases.” Long-lived assets with finite lives are reviewed for impairment whenever events indicate that the carrying amount of the asset or the carrying amounts of the asset group containing the asset may not be recoverable. In such reviews, estimated undiscounted future cash flows associated with these assets or asset groups are compared with their carrying value to determine if a write-down to fair value is required. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company accounts for its goodwill under the authoritative guidance for goodwill and other intangible assets (ASC 350) and the provisions of ASU 2017-04, Simplifying the Test for Goodwill Impairment and tests at least annually or more frequently when an event occurs or circumstances change that indicates the carrying value may not be recoverable. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. The Company performs its goodwill impairment test by comparing the fair value of the reporting unit with the carrying amount. If this qualitative assessment indicates it is more likely than not the fair value of a reporting unit is less than the carrying amount, a one-step quantitative test is then performed. Factors management considers in this assessment include macroeconomic, industry and market considerations, overall financial performance (both current and projected), cost increases impacting earnings and cash flows, changes in management and strategy, and changes in the composition or carrying amount of net assets. In the event a reporting unit’s carrying value exceeds its fair value, the Company recognizes an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value. Acquired finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets, and are reviewed for impairment whenever events indicate that the carrying amount of the asset may not be recoverable. In such reviews, estimated undiscounted future cash flows associated with these assets are compared with their carrying value to determine if a write-down to fair value is required. |
Sales Tax | Sales Tax The Company records sales tax collected from its customers on a net basis, and therefore excludes it from net sales as defined in ASC 606, Revenue from Contracts with Customers |
Income Taxes | Income Taxes The Company accounts for income taxes using an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. The Company has deferred tax assets and liabilities and maintains valuation allowances where it is more likely than not that all or a portion of deferred tax assets will not be realized. To the extent the Company determines that it will not realize the benefit of some or all of its deferred tax assets, then these deferred tax assets will be adjusted through the Company’s income tax expense in the period in which this determination is made. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. The reserves are established when the Company believes that certain positions are likely to be challenged and may not be fully sustained on review by tax authorities. The Company adjusts uncertain tax positions in light of changing facts and circumstances, such as the closing of a tax audit or refinement of an estimate. |
Stock-Based Compensation | Stock - Based Compensation The Company accounts for stock-based compensation pursuant to ASC 718, Share-Based Payments. |
Net Sales | Net Sales 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 work performed but not completed and unbilled, 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, contactless dual-interface EMV, contactless and magnetic stripe cards, CPI’s eco-focused solutions, including Second Wave and Earthwise cards made with upcycled plastic, metal cards, private label credit cards and retail gift cards. Card Once printers and consumables are also included in “Products” net sales, and their associated revenues are recognized at the time of shipping. The Company includes gross shipping and handling revenue in net sales, and shipping and handling costs in cost of sales . Europay, Mastercard and Visa (“EMV®”) is a global technical standard maintained by EMV Co, LLC. 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 SaaS personalization of instant issuance debit cards. As applicable, for work performed but not completed and unbilled, 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 |
Use of Estimates | Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These accounting principles require management to make assumptions and estimates relating to the reporting of assets and liabilities in its preparation of the 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, which changes the criteria under which credit losses on financial instruments (such as the Company’s trade receivables) are measured. The ASU introduces a new credit reserve model known as the Current Expected Credit Loss (“CECL”) model, which replaces the incurred loss impairment methodology previously used under GAAP with an expected loss 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. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which will require enhanced segment disclosures. Adoption of this accounting standard is effective for the Company for fiscal years beginning after December 15, 2023. The Company has elected not to early adopt this accounting standard in 2023. The Company is evaluating the impact of adoption of this standard and does not anticipate that the application of ASU 2023-07 will change which segments are currently reported or will have a material impact on the Company’s consolidated financial position and results of operations. In December 2023, the Financial Accounting Standards Board issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures which will require a disaggregated rate reconciliation disclosure as well as additional information regarding taxes paid. Adoption of this accounting standard is effective for the Company for fiscal years beginning after December 15, 2024. The Company has elected not to early adopt this accounting standard in 2023. The Company is evaluating the impact of adoption of this standard and does not anticipate that the application of ASU 2023-09 will have a material impact on the Company’s consolidated financial position and results of operations. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of accounts receivable | December 31, 2023 2022 Trade accounts receivable $ 69,245 $ 68,886 Unbilled accounts receivable 4,725 11,915 73,970 80,801 Less allowance (246) (218) $ 73,724 $ 80,583 |
Net Sales (Tables)
Net Sales (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Net Sales. | |
Schedule of disaggregation of net sales by major source | For the year ended December 31, 2023 Products Services Total Debit and Credit $ 250,047 $ 111,010 $ 361,057 Prepaid Debit — 84,237 84,237 Intersegment eliminations (693) (54) (747) Total $ 249,354 $ 195,193 $ 444,547 For the year ended December 31, 2022 Products Services Total Debit and Credit $ 282,081 $ 108,478 $ 390,559 Prepaid Debit — 86,136 86,136 Intersegment eliminations (891) (59) (950) Total $ 281,190 $ 194,555 $ 475,745 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Inventories | |
Schedule of inventories | December 31, 2023 2022 Raw materials $ 66,210 $ 61,434 Finished goods 7,162 10,300 Inventory reserve (2,778) (3,335) $ 70,594 $ 68,399 |
Plant, Equipment, Leasehold I_2
Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets (Tables) | 12 Months Ended |
Dec. 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 | December 31, 2023 2022 Machinery and equipment $ 67,506 $ 64,786 Machinery and equipment under financing leases 23,774 15,717 Furniture, fixtures and computer equipment 107 3,072 Leasehold improvements 16,335 14,703 Construction in progress 1,778 3,304 Operating lease right-of-use assets 19,989 17,518 129,489 119,100 Less accumulated depreciation and amortization (66,436) (61,922) $ 63,053 $ 57,178 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Other Intangible Assets | |
Schedule of intangible assets excluding goodwill | December 31, 2023 December 31, 2022 Weighted Average Accumulated Net Book Accumulated Net Book Life (Years) Cost Amortization Value Cost Amortization Value Customer relationships 17.2 $ 55,454 $ (41,971) $ 13,483 $ 55,454 $ (38,695) $ 16,759 Acquired technology 10.0 7,101 (6,967) 134 7,101 (6,767) 334 Trademarks 8.7 3,330 (2,825) 505 3,330 (2,435) 895 Intangible assets subject to amortization $ 65,885 $ (51,763) $ 14,122 $ 65,885 $ (47,897) $ 17,988 |
Schedule of future aggregate amortization expense for identified amortizable intangibles | 2024 $ 3,630 2025 3,440 2026 2,471 2027 1,947 2028 1,580 Thereafter 1,054 $ 14,122 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value of Financial Instruments | |
Schedule of financial assets and liabilities subject to fair value measurements | Carrying Fair Value Measurement at Value as of Fair Value as of December 31, 2023 December 31, December 31, (Using Fair Value Hierarchy) 2023 2023 Level 1 Level 2 Level 3 Liabilities: Senior Notes $ 267,897 $ 261,834 $ — $ 261,834 $ — ABL Revolver $ — $ — $ — $ — $ — Carrying Fair Value Measurement at Value as of Fair Value as of December 31, 2022 December 31, December 31, (Using Fair Value Hierarchy) 2022 2022 Level 1 Level 2 Level 3 Liabilities: Senior Notes $ 285,000 $ 281,438 $ — $ 281,438 $ — ABL Revolver $ 5,000 $ 5,000 $ — $ 5,000 $ — |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Expenses. | |
Schedule of accrued expenses | December 31, 2023 2022 Accrued payroll and related employee expenses $ 11,431 $ 7,727 Accrued employee performance bonuses 667 8,576 Employer payroll taxes 298 1,092 Accrued rebates 2,919 2,668 Estimated sales tax liability 351 622 Accrued interest 6,830 7,275 Current operating and financing lease liabilities 7,318 5,697 Other 5,989 6,413 Total accrued expenses $ 35,803 $ 40,070 |
Financing and Operating Leases
Financing and Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Financing and Operating Leases | |
Schedule of operating and finance lease costs | Year Ended December 31, 2023 2022 Operating lease costs $ 3,191 $ 3,064 Variable lease costs 741 642 Total expense from operating leases $ 3,932 $ 3,706 Finance lease costs: Right-of-use amortization expense $ 2,314 $ 1,718 Interest on lease liabilities 784 482 Total financing lease costs $ 3,098 $ 2,200 |
Schedule of balances for operating and financing leases | December 31, 2023 2022 Operating leases: Operating lease right-of-use assets, net of amortization $ 11,234 $ 10,705 Current operating lease liabilities $ 2,539 $ 2,355 Non-current operating lease liabilities 9,384 8,905 Total operating lease liabilities $ 11,923 $ 11,260 Financing leases: Property, equipment and leasehold improvements $ 23,774 $ 15,717 Accumulated depreciation (3,335) (3,135) Total financing leases in property, equipment and leasehold improvements, net $ 20,439 $ 12,582 Current financing lease liabilities $ 4,779 $ 3,342 Non-current financing lease liabilities 13,327 7,355 Total financing lease liabilities $ 18,106 $ 10,697 |
Schedule of components of lease expense | December 31, 2023 2022 Weighted-average remaining lease term: Operating leases 4.70 5.06 Financing leases 3.98 3.60 Weighted-average discount rate: Operating leases 7.19% 7.93% Financing leases 6.28% 6.62% |
Schedule of future cash payment of operating lease obligations | Future cash payment with respect to lease obligations as of December 31, 2023 were as follows: Operating Financing Lease Leases Year Ending 2024 $ 3,310 $ 5,777 2025 2,851 5,472 2026 2,684 4,111 2027 2,518 3,180 2028 2,185 1,919 Thereafter 574 — Total lease payments 14,122 20,459 Less imputed interest (2,199) (2,353) Total $ 11,923 $ 18,106 |
Schedule of future cash payment of financing lease obligations | Operating Financing Lease Leases Year Ending 2024 $ 3,310 $ 5,777 2025 2,851 5,472 2026 2,684 4,111 2027 2,518 3,180 2028 2,185 1,919 Thereafter 574 — Total lease payments 14,122 20,459 Less imputed interest (2,199) (2,353) Total $ 11,923 $ 18,106 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Long-Term Debt. | |
Schedule of long-term debt | December 31, 2023 2022 Senior Notes (1) $ 267,897 $ 285,000 ABL Revolver — 5,000 Unamortized deferred financing costs (2,900) (4,478) Total long-term debt 264,997 285,522 Less current maturities — — Long-term debt, net of current maturities $ 264,997 $ 285,522 (1) The Senior Notes bear interest at a fixed rate of 8.625% . |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Schedule of income tax (benefit) expense from continuing operations and effective income tax rates | December 31, 2023 2022 Current taxes: Domestic $ 10,126 $ 11,047 Foreign 20 5 10,146 11,052 Deferred taxes: Domestic 331 1,554 Foreign — 1 331 1,555 Income tax expense $ 10,477 $ 12,607 Income before income taxes: Domestic income $ 34,400 $ 49,108 Foreign income 62 39 Total $ 34,462 $ 49,147 Effective income tax rate 30.4 % 25.7 % |
Schedule of effective income tax rate reconciliation | December 31, 2023 2022 Tax at federal statutory rate 21.0 % 21.0 % State taxes, net 4.4 5.4 Unrecognized tax benefits 0.1 (2.0) Deductibility limitations on excess compensation 3.3 0.4 Tax credits (0.5) (0.1) Permanent items 2.0 1.0 Other 0.1 — Effective income tax rate 30.4 % 25.7 % |
Schedule of components of deferred tax assets and liabilities | December 31, 2023 2022 Deferred tax assets: Accrued expense $ 1,928 $ 3,830 Net operating loss carryforward 130 257 Stock compensation 1,798 1,303 Interest limitation 1,689 2,474 Lease liability 3,026 2,891 Capital loss carryover 2,110 2,135 Research and development costs 1,350 1,434 Other 3,244 3,609 Total gross deferred tax assets 15,275 17,933 Valuation allowance (2,616) (2,791) Net deferred tax assets 12,659 15,142 Deferred tax liabilities: Plant, equipment and leasehold improvements (8,825) (9,510) Intangible assets (6,745) (8,020) Right-of-use assets (2,851) (2,749) Other (1,377) (1,671) Total gross deferred tax liabilities (19,798) (21,950) Net deferred tax liabilities $ (7,139) $ (6,808) |
Unrecognized Tax Benefits | Balance as of December 31, 2022 $ 1,395 Increase related to current year tax position 42 Increase related to prior year tax position 22 Decrease related to prior year tax position (62) Decrease related to settlements with tax authorities, net of federal benefit (80) Balance as of December 31, 2023 $ 1,317 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings per Share | |
Computation of basic and diluted earnings per share | Year Ended December 31, 2023 2022 Numerator: Net income $ 23,985 $ 36,540 Denominator: Basic weighted-average common shares outstanding 11,426,124 11,291,202 Dilutive shares 491,432 457,903 Diluted weighted-average common shares outstanding 11,917,556 11,749,105 Basic earnings per share $ 2.10 $ 3.24 Diluted earnings per share $ 2.01 $ 3.11 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Stock-Based Compensation | |
Summary of outstanding and exercisable stock options | Weighted-Average Weighted-Average Remaining Aggregate Exercise Contractual Term Intrinsic Options Price (in Years) Value Outstanding as of December 31, 2022 780,623 $ 18.12 4.65 $ 15,902 Granted 139,648 22.23 6.26 Exercised (8,295) 12.36 — Expired (1,409) 23.72 — Forfeited (1,129) 20.09 — Outstanding as of December 31, 2023 909,438 $ 18.79 4.06 $ 6,482 Options vested and exercisable as of December 31, 2023 749,317 $ 18.26 3.62 $ 6,326 Options vested and expected to vest as of December 31, 2023 909,438 $ 18.79 4.06 $ 6,482 |
Schedule of vesting for unvested options | Weighted-Average Grant-Date Number Fair Value Unvested as of December 31, 2022 100,059 $ 6.02 Granted 139,648 11.21 Vested (78,457) 15.19 Forfeited (1,129) 12.09 Unvested as of December 31, 2023 160,121 $ 10.92 |
Schedule of valuation assumptions | December 31, 2023 2022 Expected term in years (1) 2.90 4.25 Volatility (2) 73.16 % 77.58 % Risk-free interest rate (3) 4.46 % 2.86 % Dividend yield (4) — % — % (1) The Company estimated the expected term based on the average of the weighted-average vesting period and the contractual term of the stock option awards by utilizing the “simplified method,” as the Company does not have sufficient available historical data to estimate the expected term of these stock option awards. (2) Volatility was based on a weighting of the Company’s historical volatility and its peer group, which is comprised of companies with similar industry, size and financial leverage. (3) The risk-free interest rate was determined by using the United States Treasury rate for the period consistent with the expected option term described above. (4) The Company’s expected annual dividend yield was zero based on current practice. |
Summary of changes in outstanding restricted stock units | Weighted-Average Remaining Weighted-Average Amortization Grant-Date Period Shares Fair Value (in Years) Outstanding as of December 31, 2022 98,664 $ 25.23 Granted 699,281 21.39 Vested (80,580) 27.07 Forfeited (4,005) 26.85 Outstanding as of December 31, 2023 713,360 $ 21.25 2.18 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting | |
Schedule of revenue and EBITDA of the company's reportable segments | Year Ended December 31, 2023 Debit and Credit Prepaid Debit Other Intersegment Eliminations Total Net sales $ 361,057 $ 84,237 $ — $ (747) $ 444,547 Cost of sales 234,281 55,524 — (747) 289,058 Gross profit 126,776 28,713 — — 155,489 Operating expenses 31,870 3,786 58,243 — 93,899 Income (loss) from operations $ 94,906 $ 24,927 $ (58,243) $ — $ 61,590 EBITDA by segment: Income (loss) from operations $ 94,906 $ 24,927 $ (58,243) $ — $ 61,590 Depreciation and amortization 9,025 2,860 4,046 — 15,931 Other income (expenses) 29 (1) (243) — (215) EBITDA $ 103,960 $ 27,786 $ (54,440) $ — $ 77,306 Year Ended December 31, 2022 Debit and Credit Prepaid Debit Other Intersegment Eliminations Total Net sales $ 390,559 $ 86,136 $ — $ (950) $ 475,745 Cost of sales 246,345 54,583 — (950) 299,978 Gross profit 144,214 31,553 — — 175,767 Operating expenses 34,169 5,976 56,492 — 96,637 Income (loss) from operations $ 110,045 $ 25,577 $ (56,492) $ — $ 79,130 EBITDA by segment: Income (loss) from operations $ 110,045 $ 25,577 $ (56,492) $ — $ 79,130 Depreciation and amortization 8,440 2,310 4,136 — 14,886 Other income (expenses) (7) (43) (317) — (367) EBITDA $ 118,478 $ 27,844 $ (52,673) $ — $ 93,649 |
Schedule of reconciliation of total segment EBITDA to income before taxes | December 31, 2023 2022 Net income $ 23,985 $ 36,540 Interest, net 26,913 29,616 Income tax expense 10,477 12,607 Depreciation and amortization 15,931 14,886 EBITDA $ 77,306 $ 93,649 |
Schedule of total assets of the company's reportable segments | December 31, 2023 2022 Debit and Credit $ 235,680 $ 238,610 Prepaid Debit 38,265 38,138 Other 19,738 19,918 Total assets $ 293,683 $ 296,666 |
Total capital expenditures of the Company's reportable segments | December 31, 2023 2022 Debit and Credit $ 5,116 $ 15,283 Prepaid Debit 963 2,309 Other 326 275 Total company capital expenditures $ 6,405 $ 17,867 |
Schedule of net sales from product and services sold by the company | December 31, 2023 2022 Product net sales (1) $ 249,354 $ 281,190 Services net sales (2) 195,193 194,555 Total net sales $ 444,547 $ 475,745 (1) “Products” net sales include the design and production of Financial Payment Cards in contact-EMV, contactless EMV, metal, contactless and magnetic stripe card formats. The Company also generates “Products” revenue from the sale of Card Once printers and consumables, private label credit cards and retail gift cards. (2) “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 SaaS personalization of instant issuance cards. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Trade Accounts Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Trade Accounts Receivable | ||
Trade accounts receivable | $ 69,245 | $ 68,886 |
Unbilled accounts receivable | 4,725 | 11,915 |
Trade and unbilled accounts receivable | 73,970 | 80,801 |
Less allowance | (246) | (218) |
Accounts receivable, net | $ 73,724 | $ 80,583 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Bad debts and Concentration of Credit Risk (Details) | 12 Months Ended | |
Dec. 31, 2023 item customer | Dec. 31, 2022 item customer | |
Customer Concentration Risk | Net sales | Major Customer Number One | ||
Allowance for bad debt and credit activity | ||
Number of customers | customer | 1 | 1 |
Concentration risk (as a percent) | 18% | 16% |
Supplier Concentration Risk [Member] | Cost of Goods and Service Benchmark [Member] | Four Suppliers [Member] | ||
Allowance for bad debt and credit activity | ||
Concentration risk (as a percent) | 96% | 97% |
Number of suppliers | 4 | 4 |
Supplier Concentration Risk [Member] | Cost of Goods and Service Benchmark [Member] | One Supplier [Member] | ||
Allowance for bad debt and credit activity | ||
Concentration risk (as a percent) | 72% | 68% |
Number of suppliers | 1 | 1 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Plant, Equipment and Leasehold Improvements (Details) | Dec. 31, 2023 |
Minimum | |
Plant, Equipment and Leasehold Improvements | |
Useful life (in years) | 3 years |
Maximum | |
Plant, Equipment and Leasehold Improvements | |
Useful life (in years) | 10 years |
Net Sales (Details)
Net Sales (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue | ||
Net sales | $ 444,547 | $ 475,745 |
Operating Segments | Debit and Credit | ||
Disaggregation of Revenue | ||
Net sales | 361,057 | 390,559 |
Operating Segments | Prepaid Debit | ||
Disaggregation of Revenue | ||
Net sales | 84,237 | 86,136 |
Intersegment eliminations | ||
Disaggregation of Revenue | ||
Net sales | (747) | (950) |
Products | ||
Disaggregation of Revenue | ||
Net sales | 249,354 | 281,190 |
Products | Operating Segments | Debit and Credit | ||
Disaggregation of Revenue | ||
Net sales | 250,047 | 282,081 |
Products | Intersegment eliminations | ||
Disaggregation of Revenue | ||
Net sales | (693) | (891) |
Services | ||
Disaggregation of Revenue | ||
Net sales | 195,193 | 194,555 |
Services | Operating Segments | Debit and Credit | ||
Disaggregation of Revenue | ||
Net sales | 111,010 | 108,478 |
Services | Operating Segments | Prepaid Debit | ||
Disaggregation of Revenue | ||
Net sales | 84,237 | 86,136 |
Services | Intersegment eliminations | ||
Disaggregation of Revenue | ||
Net sales | $ (54) | $ (59) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Inventories | ||
Raw materials | $ 66,210 | $ 61,434 |
Finished goods | 7,162 | 10,300 |
Inventory reserve | (2,778) | (3,335) |
Inventory | $ 70,594 | $ 68,399 |
Plant, Equipment, Leasehold I_3
Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Plant, Equipment and Leasehold Improvements | ||
Plant, equipment and leasehold improvements, gross | $ 129,489,000 | $ 119,100,000 |
Less accumulated depreciation and amortization | (66,436,000) | (61,922,000) |
Total property, equipment and leasehold improvements, net | 63,053,000 | 57,178,000 |
Impairments of the Company's plant, equipment, and leasehold improvement assets | 0 | 0 |
Machinery and equipment | ||
Plant, Equipment and Leasehold Improvements | ||
Plant, equipment and leasehold improvements, gross | 67,506,000 | 64,786,000 |
Machinery and equipment under financing leases | ||
Plant, Equipment and Leasehold Improvements | ||
Plant, equipment and leasehold improvements, gross | 23,774,000 | 15,717,000 |
Furniture, fixtures and computer equipment | ||
Plant, Equipment and Leasehold Improvements | ||
Plant, equipment and leasehold improvements, gross | 107,000 | 3,072,000 |
Leasehold improvements | ||
Plant, Equipment and Leasehold Improvements | ||
Plant, equipment and leasehold improvements, gross | 16,335,000 | 14,703,000 |
Construction in progress | ||
Plant, Equipment and Leasehold Improvements | ||
Plant, equipment and leasehold improvements, gross | 1,778,000 | 3,304,000 |
Operating lease right-of-use assets | ||
Plant, Equipment and Leasehold Improvements | ||
Plant, equipment and leasehold improvements, gross | $ 19,989,000 | $ 17,518,000 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Intangible Assets | ||
Impairment of goodwill | $ 0 | $ 0 |
Impairment of acquired finite-lived intangible assets | 0 | 0 |
Intangible amortization expense | 3,866,000 | 3,866,000 |
Intangible assets subject to amortization, Gross Book Value | 65,885,000 | 65,885,000 |
Intangible assets subject to amortization, Accumulated Amortization | (51,763,000) | (47,897,000) |
Intangible assets subject to amortization, Net Book Value | $ 14,122,000 | 17,988,000 |
Customer relationships | ||
Intangible Assets | ||
Weighted Average Life | 17 years 2 months 12 days | |
Intangible assets subject to amortization, Gross Book Value | $ 55,454,000 | 55,454,000 |
Intangible assets subject to amortization, Accumulated Amortization | (41,971,000) | (38,695,000) |
Intangible assets subject to amortization, Net Book Value | $ 13,483,000 | 16,759,000 |
Acquired Technology | ||
Intangible Assets | ||
Weighted Average Life | 10 years | |
Intangible assets subject to amortization, Gross Book Value | $ 7,101,000 | 7,101,000 |
Intangible assets subject to amortization, Accumulated Amortization | (6,967,000) | (6,767,000) |
Intangible assets subject to amortization, Net Book Value | $ 134,000 | 334,000 |
Trademarks | ||
Intangible Assets | ||
Weighted Average Life | 8 years 8 months 12 days | |
Intangible assets subject to amortization, Gross Book Value | $ 3,330,000 | 3,330,000 |
Intangible assets subject to amortization, Accumulated Amortization | (2,825,000) | (2,435,000) |
Intangible assets subject to amortization, Net Book Value | $ 505,000 | $ 895,000 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Future Aggregate Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Estimated future aggregate amortization expense | ||
2024 | $ 3,630 | |
2025 | 3,440 | |
2026 | 2,471 | |
2027 | 1,947 | |
2028 | 1,580 | |
Thereafter | 1,054 | |
Intangible assets subject to amortization, Net Book Value | $ 14,122 | $ 17,988 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Mar. 15, 2021 |
Senior Notes | |||
Liabilities: | |||
Carrying amount | $ 267,897 | $ 285,000 | $ 310,000 |
ABL Revolver. | |||
Liabilities: | |||
Carrying amount | 5,000 | ||
Level 2 | Senior Notes | |||
Liabilities: | |||
Long-term debt | 261,834 | 281,438 | |
Level 2 | ABL Revolver. | |||
Liabilities: | |||
Long-term debt | 5,000 | ||
Estimate of Fair Value | Senior Notes | |||
Liabilities: | |||
Long-term debt | $ 261,834 | 281,438 | |
Estimate of Fair Value | ABL Revolver. | |||
Liabilities: | |||
Long-term debt | $ 5,000 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Accrued Expenses. | ||
Accrued payroll and related employee expenses | $ 11,431 | $ 7,727 |
Accrued employee performance bonuses | 667 | 8,576 |
Employer payroll taxes | 298 | 1,092 |
Accrued rebates | 2,919 | 2,668 |
Estimated sales tax liability | 351 | 622 |
Accrued interest | 6,830 | 7,275 |
Current operating and financing lease liabilities | 7,318 | 5,697 |
Other | 5,989 | 6,413 |
Total accrued expenses | $ 35,803 | $ 40,070 |
Financing and Operating Lease_2
Financing and Operating Leases - Components of Operating and Finance Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Finance lease option to extend | true | |
Operating lease option to extend | true | |
Operating lease costs: | ||
Operating lease costs | $ 3,191 | $ 3,064 |
Variable lease costs | 741 | 642 |
Total expense from operating leases | 3,932 | 3,706 |
Finance lease costs: | ||
Right-of-use amortization expense | 2,314 | 1,718 |
Interest on lease liabilities | 784 | 482 |
Total financing lease cost | $ 3,098 | $ 2,200 |
Maximum | ||
Finance lease extension term | 10 years | |
Operating lease extension term | 10 years |
Financing and Operating Lease_3
Financing and Operating Leases - Operating and Financing Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Leases | ||
Operating lease right-of-use assets, net of amortization | $ 11,234 | $ 10,705 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Total property, equipment and leasehold improvements, net | Total property, equipment and leasehold improvements, net |
Current operating lease liabilities | $ 2,539 | $ 2,355 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | Accrued Liabilities, Current |
Non-current operating lease liabilities | $ 9,384 | $ 8,905 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Total operating lease liabilities | $ 11,923 | $ 11,260 |
Property, equipment and leasehold improvements | 129,489 | 119,100 |
Accumulated depreciation | (66,436) | (61,922) |
Total property, equipment and leasehold improvements, net | 63,053 | 57,178 |
Current financing lease liabilities | $ 4,779 | $ 3,342 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | Accrued Liabilities, Current |
Non-current financing lease liabilities | $ 13,327 | $ 7,355 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Total financing lease liabilities | $ 18,106 | $ 10,697 |
Financing leases | ||
Leases | ||
Property, equipment and leasehold improvements | 23,774 | 15,717 |
Accumulated depreciation | (3,335) | (3,135) |
Total property, equipment and leasehold improvements, net | $ 20,439 | $ 12,582 |
Financing and Operating Lease_4
Financing and Operating Leases - Components of Lease Expense (Details) | Dec. 31, 2023 | Dec. 31, 2022 |
Weighted Average Remaining Lease Term | ||
Weighted Average Remaining Lease Term - Operating Leases | 4 years 8 months 12 days | 5 years 21 days |
Weighted Average Remaining Lease Term - Financing Leases | 3 years 11 months 23 days | 3 years 7 months 6 days |
Weighted Average Discount Rate | ||
Weighted Average Discount Rate - Operating Leases | 7.19% | 7.93% |
Weighted Average Discount Rate - Financing Leases | 6.28% | 6.62% |
Financing and Operating Lease_5
Financing and Operating Leases - Lease Maturity (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Financing and Operating Leases | ||
Cash paid on operating lease liabilities | $ 2,400 | $ 2,400 |
Operating Leases | ||
2024 | 3,310 | |
2025 | 2,851 | |
2026 | 2,684 | |
2027 | 2,518 | |
2028 | 2,185 | |
Thereafter | 574 | |
Total operating lease payment | 14,122 | |
Less imputed interest | (2,199) | |
Total operating lease liabilities | 11,923 | 11,260 |
Financing Leases | ||
2024 | 5,777 | |
2025 | 5,472 | |
2026 | 4,111 | |
2027 | 3,180 | |
2028 | 1,919 | |
Total financing lease payment | 20,459 | |
Less imputed interest | (2,353) | |
Total financing lease liabilities | $ 18,106 | $ 10,697 |
Long-Term Debt - Long-Term Debt
Long-Term Debt - Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Mar. 15, 2021 |
Long-term Debt | |||
Unamortized deferred financing costs | $ (2,900) | $ (4,478) | |
Total long-term debt | 264,997 | 285,522 | |
Long-term debt, net of current maturities | 264,997 | 285,522 | |
Senior Notes | |||
Long-term Debt | |||
Long-term debt | 267,897 | 285,000 | $ 310,000 |
Senior Notes | |||
Long-term Debt | |||
Long-term debt | $ 267,897 | 285,000 | |
ABL Revolver. | |||
Long-term Debt | |||
Long-term debt | $ 5,000 |
Long-Term Debt - First Lien Cre
Long-Term Debt - First Lien Credit Facility (Details) | 12 Months Ended | ||||||
Apr. 01, 2023 | Mar. 31, 2023 | Mar. 03, 2022 USD ($) | Dec. 31, 2023 USD ($) item | Dec. 31, 2022 USD ($) | Mar. 15, 2022 USD ($) | Mar. 15, 2021 USD ($) | |
Senior Notes | |||||||
Long-term Debt | |||||||
Interest rate (as a percent) | 8.625% | ||||||
Repayment of debt | $ 17,100,000 | $ 25,000,000 | |||||
Long-term debt | 267,897,000 | 285,000,000 | $ 310,000,000 | ||||
Prepayment of debt | 0 | 0 | |||||
Debi issuance cost | 2,900,000 | $ 500,000 | |||||
ABL Revolver | |||||||
Long-term Debt | |||||||
Maximum borrowing capacity | $ 75,000,000 | 75,000,000 | |||||
Maximum uncommitted accordion feature amount | $ 25,000,000 | $ 15,000,000 | |||||
Debi issuance cost | 1,000,000 | ||||||
Available to borrow threshold amount | $ 7,500,000 | ||||||
Number of consecutive days at or above available to borrow threshold amount | item | 30 | ||||||
Minimum fixed coverage ratio (as a percent) | 1 | ||||||
ABL Revolver | Maximum | |||||||
Long-term Debt | |||||||
Unused commitment fee (as a percent) | 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. | |||||||
Long-term Debt | |||||||
Interest rate (as a percent) | 8.625% | ||||||
Senior Credit Facility | Minimum | |||||||
Long-term Debt | |||||||
Unused commitment fee (as a percent) | 0.375% | 1.50% | |||||
Senior Credit Facility | Maximum | |||||||
Long-term Debt | |||||||
Unused commitment fee (as a percent) | 0.50% | 1.75% |
Income Taxes - Continuing Opera
Income Taxes - Continuing Operations - Other (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Current taxes: | ||
Domestic | $ 10,126 | $ 11,047 |
Foreign | 20 | 5 |
Current income tax (benefit) expense | 10,146 | 11,052 |
Deferred taxes: | ||
Domestic | 331 | 1,554 |
Foreign | 1 | |
Deferred income tax (benefit) expense | 331 | 1,555 |
Income tax expense | 10,477 | 12,607 |
Income before income taxes | ||
Domestic income | 34,400 | 49,108 |
Foreign income | 62 | 39 |
Income before income taxes | $ 34,462 | $ 49,147 |
Effective Income Tax Rate Reconciliation, Percent | 30.40% | 25.70% |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Effective Income Tax Rate Reconciliation | ||
Tax at federal statutory rate (as a percent) | 21% | 21% |
State taxes, net (as a percent) | 4.40% | 5.40% |
Unrecognized tax benefits (as a percent) | 0.10% | (2.00%) |
Deductibility limitations on excess compensation | 3.30% | 0.40% |
Tax credits (as a percent) | (0.50%) | (0.10%) |
Permanent items (as a percent) | 2% | 1% |
Other (as a percent) | 0.10% | |
Effective income tax rate (as a percent) | 30.40% | 25.70% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Accrued expense | $ 1,928 | $ 3,830 |
Net operating loss carryforward | 130 | 257 |
Stock compensation | 1,798 | 1,303 |
Interest limitation | 1,689 | 2,474 |
Lease liability | 3,026 | 2,891 |
Capital loss carryforward | 2,110 | 2,135 |
Research and development costs | 1,350 | 1,434 |
Other | 3,244 | 3,609 |
Total gross deferred tax asset | 15,275 | 17,933 |
Valuation allowance | (2,616) | (2,791) |
Net deferred tax assets | 12,659 | 15,142 |
Deferred tax liabilities: | ||
Plant, property and leasehold improvements | (8,825) | (9,510) |
Intangible assets | (6,745) | (8,020) |
Right-to-use assets | (2,851) | (2,749) |
Other | (1,377) | (1,671) |
Total gross deferred tax liabilities | (19,798) | (21,950) |
Net deferred tax liabilities | $ (7,139) | $ (6,808) |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 23, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Unrecognized Tax Benefits | |||
Minimum compensation expense for certain covered employees | $ 1,000 | ||
Proceeds from income tax refunds | 86 | $ 451 | |
Unrecognized Tax Benefits, Beginning Balance | 1,395 | ||
Increase related to current year tax position | 42 | ||
Increase related to prior year tax position | 22 | ||
Decrease related to prior year tax position | $ (62) | ||
Decrease related to settlements with tax authorities, net of federal benefit | (80) | ||
Unrecognized Tax Benefits, Ending Balance | 1,317 | 1,395 | |
Unrecognized tax benefits expected to be recognized in next twelve months | 900 | ||
Unrecognized tax benefits, accrued interest and penalties | $ 300 | $ 300 |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 06, 2023 $ / shares shares | Dec. 31, 2023 USD ($) Vote / shares $ / shares shares | Nov. 02, 2023 USD ($) $ / shares | Dec. 31, 2022 $ / shares | |
Stockholders' Deficit | ||||
Common shares, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |
Repurchase Program | ||||
Maximum value of shares authorized for repurchase under repurchase plan | $ | $ 20 | |||
Value of shares repurchased and retired | $ | $ 0.3 | |||
Average cost of shares repurchased (in dollars per share) | $ / shares | $ 18.93 | |||
Shares repurchased and retired (in shares) | shares | 13,180 | |||
Common Stock | ||||
Class of Stock | ||||
Voting rights per share | Vote / shares | 1 | |||
Repurchase Program | ||||
Shares repurchased and retired (in shares) | shares | (13,180) | |||
Tricor Pacific Capital Partners (Fund IV) US, LP | ||||
Repurchase Program | ||||
Average cost of shares repurchased (in dollars per share) | $ / shares | $ 18.55 | |||
Shares repurchased and retired (in shares) | shares | 39,540 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Numerator: | ||
Net income | $ 23,985 | $ 36,540 |
Denominator: | ||
Basic weighted-average common shares outstanding (in shares) | 11,426,124 | 11,291,202 |
Dilutive shares | 491,432 | 457,903 |
Diluted weighted-average common shares outstanding (in shares) | 11,917,556 | 11,749,105 |
Basic earnings per share: (in dollars per share) | $ 2.10 | $ 3.24 |
Diluted earnings per share: (in dollars per share) | $ 2.01 | $ 3.11 |
Outstanding stock based awards | ||
Potential antidilutive effect of share-based compensation excluded (in shares) | 72,049 | 27,813 |
Commitments and Contingencies -
Commitments and Contingencies - Contingencies (Details) - Smart Packaging Solutions SA v. CPI Card Group, Inc. - Pending Litigation | Dec. 31, 2023 USD ($) item | Apr. 20, 2021 item |
Commitments and Contingencies | ||
The number of patents involved in lawsuit | 4 | |
The number of patents involved in lawsuit that have been invalidated | 3 | |
The number of patents involved in lawsuit that remain under review | 1 | |
Loss contingency accrual | $ | $ 0 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Employee Benefits | ||
Employee benefit plan, Company's portion vested at time of match (as a percent) | 100% | |
Employee benefit plan expense | $ 2.1 | $ 1.9 |
Participant's first 3% of deferrals | ||
Employee Benefits | ||
Employee benefit plan, Company match (as a percent) | 100% | |
Participant's second 2% of deferrals | ||
Employee Benefits | ||
Employee benefit plan, Company match (as a percent) | 50% |
StockBased Compensation - Omnib
StockBased Compensation - Omnibus Incentive Plan (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Weighted- Average Remaining Contractual Term (in Years) | ||
Balance (in years) | 4 years 21 days | 4 years 7 months 24 days |
Granted (in years) | 6 years 3 months 3 days | |
Weighted-Average Remaining Contractual Term (in Years): Options vested and exercisable | 3 years 7 months 13 days | |
Weighted-Average Remaining Contractual Term (in Years): Options vested and expected to vest | 4 years 21 days | |
Omnibus Plan | ||
Stock based compensation | ||
Number of shares authorized | 2,200,000 | |
Omnibus Plan | Stock Options | ||
Stock based compensation | ||
Number of shares available for grant | 111,737 | |
Stock options granted (in shares) | 139,648 | |
Granted (in dollars per share) | $ 22.23 | |
Total fair value of options vested | $ 1,200 | $ 1,000 |
Outstanding (in shares) | 909,438 | 780,623 |
Exercise price (in dollars per share) | $ 18.79 | $ 18.12 |
Stock option life (in years) | 7 years | |
Number of shares | ||
Balance at beginning of year (in shares) | 780,623 | |
Granted (in shares) | 139,648 | |
Exercised (in shares) | (8,295) | |
Expired (in shares) | (1,409) | |
Forfeited (in shares) | (1,129) | |
Balance at end of year (in shares) | 909,438 | 780,623 |
Options: Options vested and exercisable | 749,317 | |
Options: Options vested and expected to vest | 909,438 | |
Weighted-Average Exercise Price | ||
Balance at beginning of year (in dollars per share) | $ 18.12 | |
Granted (in dollars per share) | 22.23 | |
Exercised (in dollars per share) | 12.36 | |
Expired (in dollars per share) | 23.72 | |
Forfeited (in dollars per share) | 20.09 | |
Balance at end of year (in dollars per share) | 18.79 | $ 18.12 |
Weighted-Average Exercise Price: Options vested and exercisable | 18.26 | |
Weighted-Average Exercise Price: Options vested and expected to vest | $ 18.79 | |
Number of unvested options scheduled to vest | ||
Non-Vested Options as of beginning of period | 100,059 | |
Granted (in shares) | 139,648 | |
Vested (in shares) | (78,457) | |
Forfeited (in shares) | (1,129) | |
Non-Vested Options as of end of period | 160,121 | 100,059 |
Weighted-Average Grant Date Fair Value | ||
Non-Vested, beginning balance | $ 6.02 | |
Granted: Weighted-Average Grant Date Fair Value | 11.21 | $ 8.99 |
Vested: Weighted-Average Grant Date Fair Value | 15.19 | |
Forfeited: Weighted-Average Grant Date Fair Value | 12.09 | |
Non-Vested, ending balance | $ 10.92 | $ 6.02 |
Valuation Assumptions: | ||
Expected term in years | 2 years 10 months 24 days | 4 years 3 months |
Volatility (as a percent) | 73.16% | 77.58% |
Risk-free interest rate | 4.46% | 2.86% |
Dividend yield (as a percent) | 0% | 0% |
Granted: Weighted-Average Grant Date Fair Value | $ 11.21 | $ 8.99 |
Aggregate intrinsic value of stock option awards outstanding | $ 6,482 | $ 15,902 |
Aggregate intrinsic value of stock option awards vested and exercisable | 6,326 | |
Aggregate intrinsic value of stock option awards vested and expected to vest | $ 6,482 | |
2021 | Omnibus Plan | Stock Options | ||
Number of unvested options scheduled to vest | ||
Non-Vested Options as of end of period | 160,121 | |
Valuation Assumptions: | ||
Term of award | P7Y | |
Vesting period | 2 years |
StockBased Compensation - Restr
StockBased Compensation - Restricted Stock Units (Details) - Omnibus Plan - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Weighted Average Grant Date Fair Value | ||
Unrecognized compensation expense | $ 10.2 | |
Period over which compensation expense expected to recognize | 2 years | |
Restricted stock units | ||
Stock based compensation | ||
Granted (in units) | 699,281 | |
Granted (in dollars per unit) | $ 21.39 | $ 16.87 |
Outstanding (in units) | 713,360 | 98,664 |
Outstanding (in dollars per unit) | $ 21.25 | $ 25.23 |
Number of Restricted Stock Units | ||
Units outstanding at the beginning of the period (in shares) | 98,664 | |
Granted (in units) | 699,281 | |
Exercised (in shares) | (80,580) | |
Forfeited (in shares) | (4,005) | |
Units outstanding at the end of the period (in shares) | 713,360 | 98,664 |
Weighted Average Grant Date Fair Value | ||
Units outstanding at the beginning of the period (in dollars per shares) | $ 25.23 | |
Granted (in dollars per unit) | 21.39 | $ 16.87 |
Exercised (in dollars per share) | 27.07 | |
Forfeited (in dollars per share) | 26.85 | |
Units outstanding at the end of the period (in dollars per shares) | $ 21.25 | $ 25.23 |
Weighted-Average Remaining Amortization Period | 2 years 2 months 4 days | |
Total fair value of shares vested | $ 2.2 | $ 1.3 |
Compensation expense | $ 7.5 | $ 3.5 |
Restricted stock units | Minimum | ||
Stock based compensation | ||
Vesting period | 2 years | |
Restricted stock units | Maximum | ||
Stock based compensation | ||
Vesting period | 3 years |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional information (Details) | 12 Months Ended |
Dec. 31, 2023 | |
Stock Options | |
Stock based compensation | |
Percentage of award in a plan | 25% |
Restricted stock units | |
Stock based compensation | |
Percentage of award in a plan | 75% |
June 2023 award one | |
Stock based compensation | |
Vesting period | 3 years |
June 2023 award one | Awards vesting beginning the first anniversary of the grant date | |
Stock based compensation | |
Percentage of award granted | 33% |
June 2023 award one | Awards vesting beginning the second anniversary of the grant date | |
Stock based compensation | |
Percentage of award granted | 33% |
June 2023 award two | |
Stock based compensation | |
Vesting period | 2 years |
Segment Reporting - Revenue and
Segment Reporting - Revenue and EBITDA from Continuing Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Segment Reporting | ||
Net sales | $ 444,547 | $ 475,745 |
Cost of sales | 289,058 | 299,978 |
Gross profit | 155,489 | 175,767 |
Operating expenses | 93,899 | 96,637 |
Income from operations | 61,590 | 79,130 |
EBITDA by segment: | ||
Income (loss) from operations | 61,590 | 79,130 |
Depreciation and amortization | 15,931 | 14,886 |
Other income (expenses) | (215) | (367) |
EBITDA | 77,306 | 93,649 |
Operating Segments | Debit and Credit | ||
Segment Reporting | ||
Net sales | 361,057 | 390,559 |
Cost of sales | 234,281 | 246,345 |
Gross profit | 126,776 | 144,214 |
Operating expenses | 31,870 | 34,169 |
Income from operations | 94,906 | 110,045 |
EBITDA by segment: | ||
Income (loss) from operations | 94,906 | 110,045 |
Depreciation and amortization | 9,025 | 8,440 |
Other income (expenses) | 29 | (7) |
EBITDA | 103,960 | 118,478 |
Operating Segments | Prepaid Debit | ||
Segment Reporting | ||
Net sales | 84,237 | 86,136 |
Cost of sales | 55,524 | 54,583 |
Gross profit | 28,713 | 31,553 |
Operating expenses | 3,786 | 5,976 |
Income from operations | 24,927 | 25,577 |
EBITDA by segment: | ||
Income (loss) from operations | 24,927 | 25,577 |
Depreciation and amortization | 2,860 | 2,310 |
Other income (expenses) | (1) | (43) |
EBITDA | 27,786 | 27,844 |
Operating Segments | Other | ||
Segment Reporting | ||
Operating expenses | 58,243 | 56,492 |
Income from operations | (58,243) | (56,492) |
EBITDA by segment: | ||
Income (loss) from operations | (58,243) | (56,492) |
Depreciation and amortization | 4,046 | 4,136 |
Other income (expenses) | (243) | (317) |
EBITDA | (54,440) | (52,673) |
Intersegment eliminations | ||
Segment Reporting | ||
Net sales | (747) | (950) |
Cost of sales | $ (747) | $ (950) |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of EBITDA to net income (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
EBITDA by segment: | ||
Total segment EBITDA | $ 77,306 | $ 93,649 |
Interest, net | (26,913) | (29,616) |
Income tax expense | (10,477) | (12,607) |
Depreciation and amortization | (15,931) | (14,886) |
Net income | $ 23,985 | $ 36,540 |
Segment Reporting - Balance She
Segment Reporting - Balance Sheet Data (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Segment Reporting | ||
Total assets | $ 293,683 | $ 296,666 |
Operating Segments | ||
Segment Reporting | ||
Total assets | 293,683 | 296,666 |
Operating Segments | Debit and Credit | ||
Segment Reporting | ||
Total assets | 235,680 | 238,610 |
Operating Segments | Prepaid Debit | ||
Segment Reporting | ||
Total assets | 38,265 | 38,138 |
Operating Segments | Other | ||
Segment Reporting | ||
Total assets | $ 19,738 | $ 19,918 |
Segment Reporting - Capital Exp
Segment Reporting - Capital Expenditure (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Segment Reporting | ||
Capital Expenditures | $ 6,405 | $ 17,867 |
Debit and Credit | ||
Segment Reporting | ||
Capital Expenditures | 5,116 | 15,283 |
Prepaid Debit | ||
Segment Reporting | ||
Capital Expenditures | 963 | 2,309 |
Other | ||
Segment Reporting | ||
Capital Expenditures | $ 326 | $ 275 |
Segment Reporting - Net Sales b
Segment Reporting - Net Sales by Product and Services (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Segment Reporting | ||
Net sales | $ 444,547 | $ 475,745 |
Products | ||
Segment Reporting | ||
Net sales | 249,354 | 281,190 |
Services | ||
Segment Reporting | ||
Net sales | $ 195,193 | $ 194,555 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 23,985 | $ 36,540 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |