CPI Card Group Inc. · NASDAQ:PMTS
CPI Card — FY2017 Earnings Presentation
19 slides from CPI Card's earnings presentation, Mar 12, 2018
Slide 1: Fourth Quarter & FY 2017 Earnings Conference Call
Fourth Quarter & FY 2017 Earnings Conference Call March 12, 2018 Copyright 2018 CPI Card Group
Slide 2: Safe Harbor
Safe Harbor Forward-Looking Statements • Statements in this presentation that are not statements of historical fact are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements may be identified by terms such as stateme
Slide 3: Business Summary
Business Summary Scott Scheirman President and CEO Copyright 2018 CPI Card Group
Slide 4: Results Summary
Results Summary Q4 2017 FY 2017 • Total net sales of $65.0 million • Total net sales of $254.9 million • GAAP net loss of $14.6 million, Adjusted • GAAP net loss of $22.0 million, Adjusted net loss* of $400 thousand net loss* of $2.2 million • Adjusted EBITDA* of $3.4 million • Adjusted EBITDA* of $
Slide 5: Business Review
Business Review Overview • CPI has developed a strategy & plan that will enable it to better serve the needs of our customers, further capitalize on our addressable market, and deliver shareholder value • Goal is to be the partner of choice by providing market- leading quality products and service w
Slide 6: Business Review: U.S. Organizational Re-alignment
Business Review New business units are: U.S. Organizational Re-alignment • Secure Card Solutions, which • CPI has re-aligned its U.S. business by product to includes CPI Metals best address its strategy • Personalization Solutions, including CPI On-Demand • Organizational re-alignment is focused on
Slide 7: Four Key Strategic Priorities
Business Review Four Key Strategic Priorities to Enable CPI to Reach its Objectives Deep customer focus Improving productivity and reducing costs Ensure the customer is at the center of all that we do While ensuring the highest quality and market-competitiveness Executing on: • Process improvements
Slide 8: The Market
The Market U.S. Market Conditions • The market for U.S. Debit and Credit card manufacturing remains challenging • Expect U.S. industry card manufacturing volume will be about flat in 2018 versus 2017 levels • Expect average selling prices will continue to decline during the course of this year, simi
Slide 9: Business Highlights
Business Highlights Emerging Products & Solution Areas Card @Once® CPI Metals™ CPI On-Demand™ Dual Interface EMV • Ended Q4 with ~7,400 • Began shipping first metal • Revenue growth continues • In active conversations with installations, up from ~6,700 cards in October to progress and encouraged cus
Slide 10: Summary
Summary • 2017 was a challenging year • Believe there is significant long-term opportunity for CPI • Have put a strategy and plan in place that will get CPI “fit for growth” • Look forward to sharing our progress with customers, analysts, and investors Copyright 2018 CPI Card Group 10
Slide 11: Financial Summary
Financial Summary Lillian Etzkorn Chief Financial Officer Copyright 2018 CPI Card Group
Slide 12: Financial Results
Financial Results Fourth Quarter and FY 2017 ($ in millions, except EPS and ASP) Fourth Quarter Year Ended December 31, 2017 2016 Change 2017 2016 Change Net sales: Products $ 30.3 $ 36.0 $ (5.7) $ 125.3 $ 168.5 $ (43.2) Services 34.7 31.4 3.3 129.6 140.2 (10.6) Total net sales $ 65.0 $ 67.4 $ (2.4)
Slide 13: Fourth Quarter 2017 Segment Review
Financial Results Fourth Quarter 2017 Segment Review Net Sales EBITDA* ($ in millions) $37.9 $43.7 $8.8 U.S. Debit and Credit $6.3 ** Q4 2017 Q4 2016 Q4 2017 Q4 2016 Margin 16.5% 20.2% $19.0 $12.6 $6.5 U.S. Prepaid Debit $3.2 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Margin 34.5% 25.5% $7.5 $7.8 $1.0 U.K. Lim
Slide 14: Operating and Free Cash Flow
Financial Results Operating and Free Cash Flow • Positive Operating Cash Flow in Q4 and FY 2017 • Positive Free Cash Flow in Q4 2017 ($ in millions) Three Months Ended December 31, Twelve Months Ended December 31, 2017 2016 Change 2017 2016 Change Net income $ (14.6) $ (4.0) $ (10.6) $ (22.0) $ 5.4
Slide 15: Debt and Liquidity
Financial Results Debt and Liquidity • Term Loan Has No Financial Leverage Covenants • Borrowing Under Revolver limited to $20 million above 7.0x Net Debt / LTM Adj. EBITDA ($ in millions) Year End 2017 2016 CPI Debt Maturities Term $(Millions) Loan Cash $23.2 $37.0 $313 Debt $312.5 $312.5 Net Debt
Slide 16: Appendix
Appendix Copyright 2018 CPI Card Group
Slide 17: Non-GAAP Measures
Non-GAAP Measures Non-GAAP Financial Information In addition to financial results reported in accordance with U.S. generally accepted accounting principles (GAAP), we have provided the following non-GAAP financial measures in this presentation: Adjusted Net (Loss) Income, Adjusted Diluted (Loss) Ear
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended December 31, Twelve Months Ended December 31, 2017 2016 2017 2016 (in millions) (in millions) EBITDA and Adjusted EBITDA: Net (loss) income $ (14.6) $ (4.0) $ (22.0) $ 5.4 Interest expense, net 5.3 4.9 20.8 20.0 Income tax (benefit) expense (12.5) (2.1) (16
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended December 31, Twelve Months Ended December 31, 2017 2016 2017 2016 (Loss) Income from operations, excluding non-cash impairments (Loss) Income from operations $ (21.8) $ (0.9) $ (18.1) $ 29.0 Impairments 19.1 — 19.1 - (Loss) Income from operations, excluding