PMTS 8-K

CPI Card Group Inc. (PMTS)

8-K 2021-02-25 For: 2021-02-24

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Added on April 10, 2026


Exhibit Number	Exhibit Description
99.1*	Press release issued February 25, 2021 announcing the fourth quarter and full year results
99.2*	Supplemental Investor Commentary of the Company dated February 25, 2021


	CPI CARD GROUP INC.


Dated: February 25, 2021	By:	/s/ Sarah J. Kilgore
	Name:	Sarah J. Kilgore
	Title:	Chief Legal and Compliance Officer


Exhibit A	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - Unaudited for the three months and full years ended December 31, 2020 and 2019

Exhibit B	Condensed Consolidated Balance Sheets – Unaudited as of December 31, 2020 and December 31, 2019

Exhibit C	Condensed Consolidated Statements of Cash Flows - Unaudited for the years ended December 31, 2020 and 2019

Exhibit D	Segment Summary Information – Unaudited for the three months and full years ended December 31, 2020 and 2019

Exhibit E	Supplemental GAAP to Non-GAAP Reconciliations - Unaudited for the three months and full years ended December 31, 2020 and 2019


							EXHIBIT A
CPI Card Group Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

	Three Months Ended December 31,				Year Ended December 31,
	2020		2019		2020			2019
Net sales:
Products	$	46,928	$	44,096	$	171,968		$	143,941
Services		37,212		28,529		140,221			134,132
Total net sales		84,140		72,625		312,189			278,073
Cost of sales:
Products (exclusive of depreciation and amortization shown below)		27,862		29,120		107,642			94,889
Services (exclusive of depreciation and amortization shown below)		22,552		18,752		83,538			80,894
Depreciation and amortization		2,763		2,817		10,701			11,220
Total cost of sales		53,177		50,689		201,881			187,003
Gross profit		30,963		21,936		110,308			91,070
Operating expenses:
Selling, general and administrative (exclusive of depreciation and amortization shown below)		16,898		16,787		65,791			66,328
Depreciation and amortization		1,628		1,492		6,126			6,031
Litigation settlement gain		—		—		—			(6,000)
Total operating expenses, net		18,526		18,279		71,917			66,359
Income from operations		12,437		3,657		38,391			24,711
Other expense, net:
Interest, net		(6,239)		(6,044)		(25,397)			(24,891)
Foreign currency gain (loss)		3		(15)		(7)			(1,335)
Other income (expense), net		(12)		(29)		(102)			(4)
Total other expense, net		(6,248)		(6,088)		(25,506)			(26,230)

Income (loss) before income taxes		6,189		(2,431)		12,885			(1,519)
Income tax benefit (expense)		1,127		144		3,305			(3,474)
Net income (loss) from continuing operations		7,316		(2,287)		16,190			(4,993)
Discontinued operations:
Net loss from discontinued operation, net of tax		(31)		(108)		(61)			(124)
Net income (loss)	$	7,285	$	(2,395)	$	16,129		$	(5,117)

Basic net income (loss) per share from continuing operations:	$	0.65	$	(0.20)	$	1.44		$	(0.45)
Basic net income (loss) per share:	$	0.65	$	(0.21)	$	1.44		$	(0.46)

Diluted net income (loss) per share from continuing operations:	$	0.65	$	(0.20)	$	1.44		$	(0.45)
Diluted net income (loss) per share:	$	0.64	$	(0.21)	$	1.44		$	(0.46)

Basic weighted-average shares outstanding:		11,230,482		11,224,191		11,228,707			11,196,710
Diluted weighted-average shares outstanding:		11,326,078		11,224,191		11,232,004			11,196,710

Comprehensive income (loss)
Net income (loss)	$	7,285	$	(2,395)	$	16,129		$	(5,117)
Reclassification adjustment to foreign currency loss		—		—		—			1,329
Currency translation adjustment		—		—		—			31
Total comprehensive income (loss)	$	7,285	$	(2,395)	$	16,129		$	(3,757)


			EXHIBIT B
CPI Card Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in Thousands, Except Share and Per Share Amounts)
(Unaudited)


	December 31,		December 31,
	2020		2019

Assets
Current assets:
Cash and cash equivalents	$	57,603	$	18,682
Accounts receivable, net of allowances of $289 and $395, respectively		54,592		42,832
Inventories		24,796		20,192
Prepaid expenses and other current assets		5,032		6,345
Income taxes receivable		10,511		4,164
Total current assets		152,534		92,215
Plant, equipment, leasehold improvements and operating leases right-of-use assets, net		39,403		41,612
Intangible assets, net		26,207		30,802
Goodwill		47,150		47,150
Other assets		857		1,232
Total assets	$	266,151	$	213,011

Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable	$	18,883	$	16,482
Accrued expenses		28,149		24,735
Current portion of Long-term debt		8,027		—
Deferred revenue and customer deposits		1,868		468
Total current liabilities		56,927		41,685
Long-term debt		328,681		307,778
Deferred income taxes		7,409		6,366
Other long-term liabilities		11,171		11,478
Total liabilities		404,188		367,307

Commitments and contingencies
Series A Preferred Stock; $0.001 par value—100,000 shares authorized; 0 shares issued and outstanding		—		—
Stockholders’ deficit:
Common Stock; $0.001 par value—100,000,000 shares authorized; 11,230,482 and 11,224,191 shares issued and outstanding at December 31, 2020 and 2019, respectively		11		11
Capital deficiency		(111,858)		(111,988)
Accumulated loss		(26,190)		(42,319)
Total stockholders’ deficit		(138,037)		(154,296)
Total liabilities and stockholders' deficit	$	266,151	$	213,011


				EXHIBIT C
CPI Card Group Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)

	Year Ended December 31,
	2020		2019
Operating activities
Net income (loss)	$	16,129	$	(5,117)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss from discontinued operations		61		124
Depreciation and amortization expense		16,827		17,251
Stock-based compensation expense		136		250
Amortization of debt issuance costs and debt discount		3,453		1,960
Deferred income taxes		1,043		969
Reclassification adjustment to foreign currency loss		—		1,329
Other, net		1,834		153
Changes in operating assets and liabilities:
Accounts receivable		(11,662)		(688)
Inventories		(6,105)		(10,410)
Prepaid expenses and other assets		494		(1,328)
Income taxes		(6,346)		1,369
Accounts payable		1,657		1,127
Accrued expenses		2,958		(3,810)
Deferred revenue and customer deposits		1,404		(446)
Other liabilities		192		232
Cash provided by operating activities - continuing operations		22,075		2,965
Cash used in operating activities - discontinued operations		(61)		(124)
Investing activities
Capital expenditures for plant, equipment and leasehold improvements		(7,093)		(4,175)
Cash received from sale of Canadian subsidiary		—		1,451
Other		—		150
Cash used in investing activities		(7,093)		(2,574)
Financing activities
Proceeds from Senior Credit Facility, net of discount		29,100		—
Debt issuance costs		(2,507)		—
Proceeds from revolving credit facility		—		11,500
Principal payment on revolving credit facility		—		(11,500)
Payments on financing leases		(2,616)		(1,926)
Cash provided by (used in) financing activities		23,977		(1,926)
Effect of exchange rates on cash		23		50
Net increase (decrease) in cash and cash equivalents		38,921		(1,609)
Cash and cash equivalents, beginning of period		18,682		20,291
Cash and cash equivalents, end of period	$	57,603	$	18,682
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	22,750	$	23,036
Income tax payments, net	$	1,043	$	780
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	3,260	$	8,533
Financing leases	$	1,718	$	6,438
Accounts payable and accrued expenses for capital expenditures for plant, equipment and leasehold improvements	$	1,052	$	308


							EXHIBIT D
CPI Card Group Inc. and Subsidiaries
Segment Summary Information
For the Three Months and Year Ended December 31, 2020 and 2019
(Dollars in Thousands)
(Unaudited)



Net Sales
	Three Months Ended December 31,
	2020		2019		$ Change			% Change
Net sales by segment:
Debit and Credit	$	69,572	$	61,624	$	7,948		12.9	%
Prepaid Debit		14,916		11,168		3,748		33.6	%
Eliminations		(348)		(167)		(181)		*	%
Total	$	84,140	$	72,625	$	11,515		15.9	%


Gross Profit
	Three Months Ended December 31,
	2020		% of Net Sales		2019		% of Net Sales		$ Change		% Change
Gross profit by segment:
Debit and Credit	$	25,152	36.2	%	$	18,893	30.7	%	$	6,259	33.1	%
Prepaid Debit		5,811	39.0	%		3,043	27.2	%		2,768	91.0	%
Total	$	30,963	36.8	%	$	21,936	30.2	%	$	9,027	41.2	%


Income from Operations
	Three Months Ended December 31,
	2020		% of Net Sales		2019		% of Net Sales			$ Change	% Change
Income (loss) from Operations by segment:
Debit and Credit	$	16,934	24.3	%	$	11,112	18.0	%	$	5,822	52.4	%
Prepaid Debit		4,563	30.6	%		1,878	16.8	%		2,685	143.0	%
Other		(9,060)	*	%		(9,333)	*	%		273	2.9	%
Total	$	12,437	14.8	%	$	3,657	5.0	%	$	8,780	240.1	%


EBITDA
	Three Months Ended December 31,
	2020		% of Net Sales		2019		% of Net Sales		$ Change		% Change
EBITDA by segment
Debit and Credit	$	19,449	28.0	%	$	13,643	22.1	%	$	5,806	42.6	%
Prepaid Debit		5,182	34.7	%		2,455	22.0	%		2,727	111.1	%
Other		(7,812)	*	%		(8,176)	*	%		364	4.5	%
Total	$	16,819	20.0	%	$	7,922	10.9	%	$	8,897	112.3	%
* Calculation not meaningful


Reconciliation of Income (loss) from
Operations by Segment to EBITDA by Segment
	Three Months Ended December 31, 2020
	Debit and Credit		Prepaid Debit		Other		Total
EBITDA by segment:
Income (loss) from operations	$	16,934	$	4,563	$	(9,060)	$	12,437
Depreciation and amortization		2,522		617		1,252		4,391
Other (expenses) income		(7)		2		(4)		(9)
EBITDA	$	19,449	$	5,182	$	(7,812)	$	16,819

	Three Months Ended December 31, 2019
	Debit and Credit		Prepaid Debit		Other		Total
EBITDA by segment:
Income (loss) from operations	$	11,112	$	1,878	$	(9,333)	$	3,657
Depreciation and amortization		2,554		579		1,176		4,309
Other (expenses) income		(23)		(2)		(19)		(44)
EBITDA	$	13,643	$	2,455	$	(8,176)	$	7,922

	Year Ended December 31, 2020
	Debit and Credit		Prepaid Debit		Other		Total
EBITDA by segment:
Income (loss) from operations	$	54,848		19,942		(36,399)		38,391
Depreciation and amortization		9,729		2,216		4,882		16,827
Other (expenses) income		(55)		(2)		(52)		(109)
EBITDA	$	64,522	$	22,156	$	(31,569)	$	55,109

	Year Ended December 31, 2019
	Debit and Credit		Prepaid Debit		Other		Total
EBITDA by segment:
Income (loss) from operations	$	35,149		20,383		(30,821)		24,711
Depreciation and amortization		10,520		2,094		4,637		17,251
Other (expenses) income		(34)		(21)		(1,284)		(1,339)
EBITDA	$	45,635	$	22,456	$	(27,468)	$	40,623


							EXHIBIT E
CPI Card Group Inc. and Subsidiaries
Supplemental GAAP to Non-GAAP Reconciliation
(Dollars in Thousands)
(Unaudited)


	Three Months Ended December 31,				Year Ended December 31,
	2020		2019		2020			2019
Reconciliation of net income (loss) from continuing operations (GAAP) to EBITDA and Adjusted EBITDA
Net income (loss) from continuing operations	$	7,316	$	(2,287)	$	16,190		$	(4,993)
Interest expense, net		6,239		6,044		25,397			24,891
Income tax (benefit) expense		(1,127)		(144)		(3,305)			3,474
Depreciation and amortization		4,391		4,309		16,827			17,251
EBITDA	$	16,819	$	7,922	$	55,109		$	40,623

Adjustments to EBITDA
Litigation and related charges ⁽¹⁾		—		18		—			46
Sales tax expense⁽²⁾		633		189		926			584
Stock-based compensation expense		52		(66)		136			250
Restructuring and other charges⁽³⁾		40		720		1,269			720
Loss on Revolving Credit Facility termination⁽⁴⁾		—		—		92			—
Litigation settlement gain⁽⁵⁾		—		—		—			(6,000)
Foreign currency (gain) loss ⁽⁶⁾		(3)		15		7			1,335
Subtotal of adjustments to EBITDA		722		876		2,430			(3,065)
Adjusted EBITDA	$	17,541	$	8,798	$	57,539		$	37,558
Net income (% change 2020 vs. 2019)		404.2%				415.2%
Adjusted EBITDA Margin (% of Net Sales)		20.8%		12.1%		18.4%			13.5%
Adjusted EBITDA growth (% change 2020 vs. 2019)		99.4%				53.2%


	Three Months Ended December 31,				Year Ended December 31,
	2020		2019		2020			2019
Reconciliation of cash provided by operating activities - continuing operations (GAAP) to adjusted free cash flow:
Cash provided by operating activities - continuing operations	$	11,867	$	5,964	$	22,075		$	2,965
Capital expenditures for plant, equipment and leasehold improvements		(3,773)		(877)		(7,093)			(4,175)
Cash received from litigation settlement ⁽⁵⁾		—		—		—			(6,000)
Adjusted free cash flow - continuing operations	$	8,094	$	5,087	$	14,982		$	(7,210)


Item 7.01 Regulation FD Disclosure.*