CPI Card Group Inc. Reports Fourth Quarter and Full Year 2023 Results
Fourth Quarter Sales Affected by Cautious Customer Spending as Expected; Fourth Quarter Net Sales Decreased 19%; Net Income Decreased 78%; Adjusted EBITDA Decreased 27%
Full Year Net Sales Decreased 7% to
Company Anticipates Gradual Market Recovery in 2024;
As anticipated, fourth quarter sales were similar to third quarter levels as customers generally remained cautious with spending and continued their focus on managing inventory levels. Net sales decreased 19% to
For the full year, net sales decreased 7% to
The Company anticipates cautious customer spending will continue into 2024, with the market gradually recovering over the course of the year. The Company’s initial financial outlook for 2024 projects slight increases in both net sales and Adjusted EBITDA.
“Fourth quarter business trends were largely in-line with expectations, as customers continued to prioritize managing inventory levels,” said
Lowe added, “Longer-term, we aim to supplement growth in our current portfolio by expanding into adjacent markets and offering additional products and services, including digital solutions, for our base of thousands of financial institution customers. In 2024, we are investing in these opportunities, as well as in our companywide go-to-market resources.”
Lowe was named President and CEO in January, succeeding
“I want to thank Scott for his leadership of the company over the last six years as we delivered a remarkable turnaround and are now positioned as a leader in the
The Company believes long-term growth trends for the
CPI is a top payment solutions provider in the
2023 Business Highlights
- A leading provider of eco-focused payment card solutions in the U.S. market, with more than 100 million eco-focused cards sold since launch in late 2019.
-
A leading provider of Software-as-a-Service-based instant issuance solutions in the
U.S. , with more than 15,000 Card@Once® installations across more than 2,000 financial institutions. - Strong cash flow generation, with cash provided by operating activities increasing 9% and Free Cash Flow more than doubling from the 2022 levels.
-
The Company reduced the outstanding balance on its 8.625% Senior Secured Notes by
$17.1 million during the year through open market repurchases and ended the year with a Net Leverage Ratio of 3.1x. -
The Company announced a
$20 million share repurchase authorization and initiated execution in December. ThroughFebruary 2024 , the Company had repurchased in the open market or had committed to repurchase through its stock purchase agreement with its majority stockholder more than$4 million in shares under the authorization.
Fourth Quarter 2023 Financial Highlights
Net sales decreased 19% year-over-year to
-
Debit and Credit segment net sales decreased 22% to
$82.1 million , primarily due to declines in card volumes. -
Prepaid Debit segment net sales decreased 5% to
$21.0 million .
Fourth quarter gross profit decreased 25% to
Fourth quarter income from operations decreased 53% to
Full Year 2023 Financial Highlights
Net sales decreased 7% year-over-year to
-
Debit and Credit segment net sales decreased 8% to
$361.1 million , primarily due to volume declines in eco-focused contactless cards compared to significant orders in 2022 and lower contact card sales, partially offset by increased sales of other contactless cards and services related to Card@Once® instant issuance solutions. -
Prepaid Debit segment net sales decreased 2% to
$84.2 million .
Full year gross profit decreased 12% to
Full year income from operations decreased 22% to
Balance Sheet, Liquidity and Cash Flow
The Company generated cash from operating activities of
As of
The Company retired
The Company’s capital structure and allocation priorities are to maintain ample liquidity; invest in the business, including strategic acquisitions; deleverage the balance sheet; and return funds to stockholders.
“We were able to significantly improve free cash flow generation in 2023 despite the challenging sales environment,” said
Outlook for 2024
The Company expects cautious customer spending to continue into 2024 before the market recovers over the course of the year, with first quarter sales anticipated to be similar to the 2023 fourth quarter level. The Company projects slight increases in both net sales and Adjusted EBITDA for the full year, with declines in the first half of the year offset by growth in the second half.
Free Cash Flow for 2024 is expected to be
The Company expects its year-end 2024 Net Leverage Ratio to be between 3.0x and 3.5x.
Conference Call and Webcast
International: 646-960-0677
Conference ID: 8062733
Webcast Link: CPI Q4 Webcast or at https://investor.cpicardgroup.com
Participants are advised to login for the webcast 10 minutes prior to the scheduled start time.
A replay of the conference call will be available until
International: 647-362-9199
Conference ID: 8062733
A webcast replay of the conference call will also be available on CPI Card Group Inc.’s Investor Relations web site: https://investor.cpicardgroup.com
Non-GAAP Financial Measures
In addition to financial results reported in accordance with
Adjusted EBITDA
Adjusted EBITDA is presented on a continuing operations basis and is defined as EBITDA (which represents earnings before interest, taxes, depreciation and amortization) adjusted for litigation; stock-based compensation expense; estimated sales tax expense; restructuring and other charges, including severance and executive retention; loss on debt extinguishment; foreign currency gain or loss; and other items that are unusual in nature, infrequently occurring or not considered part of our core operations, as set forth in the reconciliation in Exhibit E. Adjusted EBITDA is intended to show our unleveraged, pre-tax operating results and therefore reflects our financial performance based on operational factors, excluding non-operational, unusual or non-recurring losses or gains. Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for, analysis of our results as reported under GAAP. For example, Adjusted EBITDA does not reflect: (a) our capital expenditures, future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expenses or the cash requirements necessary to service interest or principal payments on our debt; (d) tax payments that represent a reduction in cash available to us; (e) any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; (f) the impact of earnings or charges resulting from matters that we and the lenders under our credit agreement may not consider indicative of our ongoing operations; or (g) the impact of any discontinued operations. In particular, our definition of Adjusted EBITDA allows us to add back certain non-operating, unusual or non-recurring charges that are deducted in calculating net income, even though these are expenses that may recur, vary greatly and are difficult to predict and can represent the effect of long-term strategies as opposed to short-term results. In addition, certain of these expenses represent the reduction of cash that could be used for other purposes. Adjusted EBITDA margin percentage as shown in Exhibit E is computed as Adjusted EBITDA divided by total net sales.
We define LTM Adjusted EBITDA as Adjusted EBITDA (defined previously) for the last twelve months. LTM Adjusted EBITDA is used in the computation of Net Leverage Ratio, and is reconciled in Exhibit E.
Free Cash Flow
We define Free Cash Flow as cash flow provided by (used in) operating activities less capital expenditures. We use this metric in analyzing our ability to service and repay our debt. However, this measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt. Free Cash Flow should not be considered in isolation, or as a substitute for, cash (used in) provided by operating activities or any other measures of liquidity derived in accordance with GAAP.
Financial Expectations for 2024
We have provided Adjusted EBITDA expectations for 2024 on a non-GAAP basis because certain reconciling items are dependent on future events that either cannot be controlled or cannot be reliably predicted because they are not part of the Company’s routine activities, any of which could be significant.
Net Leverage Ratio
Management and various investors use the ratio of debt principal outstanding, plus finance lease obligations, less cash, divided by LTM Adjusted EBITDA, or “Net Leverage Ratio”, as a measure of our financial strength when making key investment decisions and evaluating us against peers.
About
Forward-Looking Statements
Certain statements and information in this release (as well as information included in other written or oral statements we make from time to time) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “believe,” “estimate,” “project,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “continue,” “committed,” “attempt,” “aim,” “target,” “objective,” “guides,” “seek,” “focus,” “provides guidance,” “provides outlook” or other similar expressions are intended to identify forward-looking statements, which are not historical in nature. These forward-looking statements, including statements about our strategic initiatives and, market opportunities and goals, plans and projections regarding our financial position, including our guidance for the full-year 2024 results, are based on our current expectations and beliefs concerning future developments and their potential effect on us and other information currently available. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important risks and uncertainties that could cause actual results or other events to differ materially from those contemplated.
These risks and uncertainties include, but are not limited to: a deterioration in general economic conditions, including inflationary conditions and resulting in reduced consumer confidence and business spending, and a decline in consumer credit worthiness impacting demand for our products; the unpredictability of our operating results, including an inability to anticipate changes in customer inventory management practices and its impact on our business; a disruption or other failure in our supply chain, including as a result of foreign conflicts and with respect to single source suppliers, or the failure or inability of suppliers to comply with our code of conduct or contractual requirements, or political unrest in countries in which our suppliers operate, or inflationary pressures, resulting in increased costs and inability to pass those costs on to our customers and extended production lead times and difficulty meeting customers’ delivery expectations; our failure to retain our existing customers or identify and attract new customers; our inability to recruit, retain and develop qualified personnel, including key personnel, and implement effective succession processes; adverse conditions in the banking system and financial markets, including the failure of banks and financial institutions; system security risks, data protection breaches and cyber-attacks; interruptions in our operations, including our information technology systems, or in the operations of the third parties that operate computing infrastructure on which we rely; our inability to develop, introduce and commercialize new products and services; the usage, or lack thereof, of artificial intelligence technologies; our substantial indebtedness, including inability to make debt service payments or refinance such indebtedness; the restrictive terms of our indebtedness and covenants of future agreements governing indebtedness and the resulting restraints on our ability to pursue our business strategies; our status as an accelerated filer and complying with the Sarbanes-Oxley Act of 2002 and the costs associated with such compliance and implementation of procedures thereunder; our failure to maintain effective internal control over financial reporting; disruptions in production at one or more of our facilities; problems in production quality, materials and process and costs relating to product defects and any related product liability and/or warranty claims; environmental, social and governance (“ESG”) preferences and demands of various stakeholders and our ability to conform to such preferences and demands and to comply with any related regulatory requirements; the effects of climate change, negative perceptions of our products due to the impact of our products and production processes on the environment and other ESG-related risks; damage to our reputation or brand image; disruptions in production due to weather conditions, climate change, political instability or social unrest; our inability to adequately protect our trade secrets and intellectual property rights from misappropriation, infringement claims brought against us and risks related to open source software; defects in our software and computing systems; our limited ability to raise capital; costs and impacts to our financial results relating to the obligatory collection of sales tax and claims for uncollected sales tax in states that impose sales tax collection requirements on out-of-state businesses or unclaimed property, as well as potential new
We caution and advise readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof. These statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results or other events to differ materially from the expectations and beliefs contained herein. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
For more information:
CPI encourages investors to use its investor relations website as a way of easily finding information about the Company. CPI promptly makes available on this website the reports that the Company files or furnishes with the
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Exhibit A |
Condensed Consolidated Statements of Operations and Comprehensive Income - Unaudited for the three months and full years ended |
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Exhibit B |
Condensed Consolidated Balance Sheets – Unaudited as of |
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Exhibit C |
Condensed Consolidated Statements of Cash Flows – Unaudited for the full years ended |
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Exhibit D |
Segment Summary Information – Unaudited for the three months and full years ended |
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Exhibit E |
Supplemental GAAP to Non-GAAP Reconciliations – Unaudited for the three months and full years ended |
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EXHIBIT A |
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Condensed Consolidated Statements of Operations and Comprehensive Income |
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(in thousands, except share and per share amounts) |
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(Unaudited) |
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Three Months Ended |
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Year Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Net sales: |
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Products |
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$ |
53,929 |
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|
$ |
72,323 |
|
|
$ |
249,354 |
|
|
$ |
281,190 |
|
Services |
|
|
48,943 |
|
|
|
54,113 |
|
|
|
195,193 |
|
|
|
194,555 |
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Total net sales |
|
|
102,872 |
|
|
|
126,436 |
|
|
|
444,547 |
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|
475,745 |
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Cost of sales: |
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Products (exclusive of depreciation and amortization shown below) |
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36,546 |
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|
|
42,166 |
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|
|
161,374 |
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|
|
171,017 |
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Services (exclusive of depreciation and amortization shown below) |
|
|
28,205 |
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|
|
34,305 |
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|
|
117,397 |
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|
|
119,930 |
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Depreciation and amortization |
|
|
2,703 |
|
|
|
2,467 |
|
|
|
10,287 |
|
|
|
9,031 |
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Total cost of sales |
|
|
67,454 |
|
|
|
78,938 |
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|
|
289,058 |
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|
|
299,978 |
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Gross profit |
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|
35,418 |
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|
|
47,498 |
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|
|
155,489 |
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|
175,767 |
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Operating expenses: |
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Selling, general and administrative (exclusive of depreciation and amortization shown below) |
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23,521 |
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|
|
23,447 |
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|
|
88,255 |
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|
|
90,782 |
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Depreciation and amortization |
|
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1,358 |
|
|
|
1,401 |
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|
|
5,644 |
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|
|
5,855 |
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Total operating expenses |
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24,879 |
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|
|
24,848 |
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|
|
93,899 |
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|
96,637 |
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Income from operations |
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10,539 |
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|
22,650 |
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61,590 |
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|
79,130 |
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Other expense, net: |
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Interest, net |
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(6,678 |
) |
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(7,282 |
) |
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(26,913 |
) |
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(29,616 |
) |
Other income (expense), net |
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|
30 |
|
|
|
107 |
|
|
|
(215 |
) |
|
|
(367 |
) |
Total other expense, net |
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(6,648 |
) |
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(7,175 |
) |
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(27,128 |
) |
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(29,983 |
) |
Income before income taxes |
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3,891 |
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|
15,475 |
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34,462 |
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|
49,147 |
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Income tax expense |
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|
(1,159 |
) |
|
|
(2,998 |
) |
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(10,477 |
) |
|
|
(12,607 |
) |
Net income |
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$ |
2,732 |
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$ |
12,477 |
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$ |
23,985 |
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$ |
36,540 |
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Basic and diluted earnings per share: |
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Basic earnings per share |
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$ |
0.24 |
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$ |
1.10 |
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$ |
2.10 |
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$ |
3.24 |
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Diluted earnings per share |
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$ |
0.23 |
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$ |
1.06 |
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$ |
2.01 |
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$ |
3.11 |
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Basic weighted-average shares outstanding |
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11,449,379 |
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11,385,843 |
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11,426,124 |
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11,291,202 |
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Diluted weighted-average shares outstanding |
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11,782,476 |
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11,805,520 |
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11,917,556 |
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|
11,749,105 |
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Comprehensive income: |
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Net income |
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$ |
2,732 |
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$ |
12,477 |
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$ |
23,985 |
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$ |
36,540 |
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Total comprehensive income |
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$ |
2,732 |
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$ |
12,477 |
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$ |
23,985 |
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$ |
36,540 |
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EXHIBIT B |
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Condensed Consolidated Balance Sheets |
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(in thousands, except share and per share amounts) |
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(Unaudited) |
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2023 |
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2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
12,413 |
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$ |
11,037 |
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Accounts receivable, net |
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73,724 |
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|
80,583 |
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Inventories, net |
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70,594 |
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|
68,399 |
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Prepaid expenses and other current assets |
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8,647 |
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|
7,551 |
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Total current assets |
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165,378 |
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|
167,570 |
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Plant, equipment, leasehold improvements and operating lease right-of-use assets, net |
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63,053 |
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57,178 |
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Intangible assets, net |
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14,122 |
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|
17,988 |
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|
47,150 |
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|
47,150 |
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Other assets |
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3,980 |
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|
6,780 |
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Total assets |
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$ |
293,683 |
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$ |
296,666 |
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Liabilities and stockholders’ deficit |
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Current liabilities: |
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Accounts payable |
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$ |
12,802 |
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$ |
24,371 |
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Accrued expenses |
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35,803 |
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40,070 |
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Deferred revenue and customer deposits |
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|
840 |
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|
3,571 |
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Total current liabilities |
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49,445 |
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|
68,012 |
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Long-term debt |
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264,997 |
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|
285,522 |
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Deferred income taxes |
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|
7,139 |
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|
6,808 |
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Other long-term liabilities |
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|
24,038 |
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|
18,401 |
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Total liabilities |
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345,619 |
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|
|
378,743 |
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Commitments and contingencies |
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Series A Preferred Stock; |
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— |
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|
— |
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Stockholders’ deficit: |
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Common stock; |
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11 |
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|
|
11 |
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Capital deficiency |
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|
(102,223 |
) |
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|
(108,379 |
) |
Accumulated earnings |
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|
50,276 |
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|
26,291 |
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Total stockholders’ deficit |
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|
(51,936 |
) |
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|
(82,077 |
) |
Total liabilities and stockholders’ deficit |
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$ |
293,683 |
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$ |
296,666 |
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EXHIBIT C |
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Condensed Consolidated Statements of Cash Flows |
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(in thousands) |
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(Unaudited) |
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Year Ended |
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2023 |
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2022 |
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Operating activities |
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|
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Net income |
|
$ |
23,985 |
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|
$ |
36,540 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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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: |
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|
|
|
|
|
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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 |
|
|
|
|
|
|
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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 |
|
|
|
|
|
|
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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 |
|
Income taxes paid |
|
$ |
10,462 |
|
|
$ |
12,584 |
|
Income taxes refunded |
|
$ |
(86 |
) |
|
$ |
(451 |
) |
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
||
Operating leases |
|
$ |
3,091 |
|
|
$ |
816 |
|
Financing leases |
|
$ |
11,285 |
|
|
$ |
9,124 |
|
Accounts payable and accrued expenses for capital expenditures for plant, equipment and leasehold improvements |
|
$ |
102 |
|
|
$ |
462 |
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT D | ||||
|
|||||||||||||||
Segment Summary Information |
|||||||||||||||
For the Three Months and Year Ended |
|||||||||||||||
(dollars in thousands) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|||||||||||||
|
|
2023 |
|
2022 |
|
$ Change |
|
% Change |
|||||||
Net sales by segment: |
|
|
|
|
|
|
|
|
|
|
|
||||
Debit and Credit |
|
$ |
82,098 |
|
|
$ |
104,851 |
|
|
$ |
(22,753 |
) |
|
(21.7 |
)% |
Prepaid Debit |
|
|
20,951 |
|
|
|
22,126 |
|
|
|
(1,175 |
) |
|
(5.3 |
)% |
Eliminations |
|
|
(177 |
) |
|
|
(541 |
) |
|
|
364 |
|
|
*% |
% |
Total |
|
$ |
102,872 |
|
|
$ |
126,436 |
|
|
$ |
(23,564 |
) |
|
(18.6 |
)% |
*Calculation not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Year Ended |
|||||||||||||
|
|
2023 |
|
2022 |
|
$ Change |
|
% Change |
|||||||
Net sales by segment: |
|
|
|
|
|
|
|
|
|
|
|
||||
Debit and Credit |
|
$ |
361,057 |
|
|
$ |
390,559 |
|
|
$ |
(29,502 |
) |
|
(7.6 |
)% |
Prepaid Debit |
|
|
84,237 |
|
|
|
86,136 |
|
|
|
(1,899 |
) |
|
(2.2 |
)% |
Eliminations |
|
|
(747 |
) |
|
|
(950 |
) |
|
|
203 |
|
|
* |
% |
Total |
|
$ |
444,547 |
|
|
$ |
475,745 |
|
|
$ |
(31,198 |
) |
|
(6.6 |
)% |
Gross Profit |
|
|
||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||
|
|
2023 |
|
|
% of Net
|
|
2022 |
|
% of Net
|
|
$ Change |
|
% Change |
|||||
Gross profit by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Debit and Credit |
|
$ |
27,173 |
|
|
33.1 |
% |
$ |
39,825 |
|
38.0 |
% |
$ |
(12,652 |
) |
|
(31.8 |
)% |
Prepaid Debit |
|
|
8,245 |
|
|
39.4 |
% |
|
7,673 |
|
34.7 |
% |
|
572 |
|
|
7.5 |
% |
Total |
|
$ |
35,418 |
|
|
34.4 |
% |
$ |
47,498 |
|
37.6 |
% |
$ |
(12,080 |
) |
|
(25.4 |
)% |
|
||||||||||||||||||
|
|
Year Ended |
||||||||||||||||
|
|
2023 |
|
|
% of Net
|
|
2022 |
|
% of Net
|
|
$ Change |
|
% Change |
|||||
Gross profit by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Debit and Credit |
|
$ |
126,776 |
|
|
35.1 |
% |
$ |
144,214 |
|
36.9 |
% |
$ |
(17,438 |
) |
|
(12.1 |
)% |
Prepaid Debit |
|
|
28,713 |
|
|
34.1 |
% |
|
31,553 |
|
36.6 |
% |
|
(2,840 |
) |
|
(9.0 |
)% |
Total |
|
$ |
155,489 |
|
|
35.0 |
% |
$ |
175,767 |
|
36.9 |
% |
$ |
(20,278 |
) |
|
(11.5 |
)% |
Income from Operations |
|
|
||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||
|
|
2023 |
|
|
% of Net
|
|
2022 |
|
% of Net
|
|
|
$ Change |
|
% Change |
||||||
Income (loss) from operations by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debit and Credit |
|
$ |
19,008 |
|
|
|
23.2 |
% |
$ |
31,198 |
|
|
29.8 |
% |
$ |
(12,190 |
) |
|
(39.1 |
)% |
Prepaid Debit |
|
|
6,991 |
|
|
|
33.4 |
% |
|
5,184 |
|
|
23.4 |
% |
|
1,807 |
|
|
34.9 |
% |
Other |
|
|
(15,460 |
) |
|
|
* |
% |
|
(13,732 |
) |
|
* |
% |
|
(1,728 |
) |
|
(12.6 |
)% |
Total |
|
$ |
10,539 |
|
|
|
10.2 |
% |
$ |
22,650 |
|
|
17.9 |
% |
$ |
(12,111 |
) |
|
(53.5 |
)% |
|
|
Year Ended |
||||||||||||||||||
|
|
2023 |
|
|
% of Net
|
|
2022 |
|
% of Net
|
|
|
$ Change |
|
% Change |
||||||
Income (loss) from operations by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debit and Credit |
|
$ |
94,906 |
|
|
|
26.3 |
% |
$ |
110,045 |
|
|
28.2 |
% |
$ |
(15,139 |
) |
|
(13.8 |
)% |
Prepaid Debit |
|
|
24,927 |
|
|
|
29.6 |
% |
|
25,577 |
|
|
29.7 |
% |
|
(650 |
) |
|
(2.5 |
)% |
Other |
|
|
(58,243 |
) |
|
|
* |
% |
|
(56,492 |
) |
|
* |
% |
|
(1,751 |
) |
|
(3.1 |
)% |
Total |
|
$ |
61,590 |
|
|
|
13.9 |
% |
$ |
79,130 |
|
|
16.6 |
% |
$ |
(17,540 |
) |
|
(22.2 |
)% |
EBITDA |
|
|
||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||
|
|
2023 |
|
|
% of Net
|
|
2022 |
|
% of Net
|
|
$ Change |
|
% Change |
|||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debit and Credit |
|
$ |
21,227 |
|
|
|
25.9 |
% |
$ |
33,436 |
|
|
31.9 |
% |
$ |
(12,209 |
) |
|
(36.5 |
)% |
Prepaid Debit |
|
|
7,848 |
|
|
|
37.5 |
% |
|
5,743 |
|
|
26.0 |
% |
|
2,105 |
|
|
36.7 |
% |
Other |
|
|
(14,445 |
) |
|
|
* |
% |
|
(12,554 |
) |
|
* |
% |
|
(1,891 |
) |
|
(15.1 |
)% |
Total |
|
$ |
14,630 |
|
|
|
14.2 |
% |
$ |
26,625 |
|
|
21.1 |
% |
$ |
(11,995 |
) |
|
(45.1 |
)% |
|
|
Year Ended |
||||||||||||||||||
|
|
2023 |
|
|
% of Net
|
|
2022 |
|
% of Net
|
|
$ Change |
|
% Change |
|||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debit and Credit |
|
$ |
103,960 |
|
|
|
28.8 |
% |
$ |
118,478 |
|
|
30.3 |
% |
$ |
(14,518 |
) |
|
(12.3 |
)% |
Prepaid Debit |
|
|
27,786 |
|
|
|
33.0 |
% |
|
27,844 |
|
|
32.3 |
% |
|
(58 |
) |
|
(0.2 |
)% |
Other |
|
|
(54,440 |
) |
|
|
* |
% |
|
(52,673 |
) |
|
* |
% |
|
(1,767 |
) |
|
(3.4 |
)% |
Total |
|
$ |
77,306 |
|
|
|
17.4 |
% |
$ |
93,649 |
|
|
19.7 |
% |
$ |
(16,343 |
) |
|
(17.5 |
)% |
Reconciliation of Income (Loss) from |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operations by Segment to EBITDA by Segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
||||||||||||||
|
|
Debit and Credit |
|
Prepaid Debit |
|
Other |
|
Total |
||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations |
|
$ |
19,008 |
|
|
$ |
6,991 |
|
|
$ |
(15,460 |
) |
|
$ |
10,539 |
|
Depreciation and amortization |
|
|
2,189 |
|
|
|
857 |
|
|
|
1,015 |
|
|
|
4,061 |
|
Other income (expenses) |
|
|
30 |
|
|
|
— |
|
|
|
— |
|
|
|
30 |
|
EBITDA |
|
$ |
21,227 |
|
|
$ |
7,848 |
|
|
$ |
(14,445 |
) |
|
$ |
14,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
||||||||||||||
|
|
Debit and Credit |
|
Prepaid Debit |
|
Other |
|
Total |
||||||||
EBITDA by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations |
|
$ |
31,198 |
|
|
$ |
5,184 |
|
|
$ |
(13,732 |
) |
|
$ |
22,650 |
|
Depreciation and amortization |
|
|
2,238 |
|
|
|
599 |
|
|
|
1,031 |
|
|
|
3,868 |
|
Other income (expenses) |
|
|
— |
|
|
|
(40 |
) |
|
|
147 |
|
|
|
107 |
|
EBITDA |
|
$ |
33,436 |
|
|
$ |
5,743 |
|
|
$ |
(12,554 |
) |
|
$ |
26,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Year Ended |
||||||||||||||
|
|
Debit and Credit |
|
Prepaid Debit |
|
Other |
|
Total |
||||||||
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 |
||||||||||||||
|
|
Debit and Credit |
|
Prepaid Debit |
|
Other |
|
Total |
||||||||
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 |
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT E |
||||||
|
||||||||||||||||
Supplemental GAAP to Non-GAAP Reconciliation |
||||||||||||||||
(dollars in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
|
|
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
EBITDA and Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
2,732 |
|
|
$ |
12,477 |
|
|
$ |
23,985 |
|
|
$ |
36,540 |
|
Interest, net |
|
|
6,678 |
|
|
|
7,282 |
|
|
|
26,913 |
|
|
|
29,616 |
|
Income tax expense |
|
|
1,159 |
|
|
|
2,998 |
|
|
|
10,477 |
|
|
|
12,607 |
|
Depreciation and amortization |
|
|
4,061 |
|
|
|
3,868 |
|
|
|
15,931 |
|
|
|
14,886 |
|
EBITDA |
|
$ |
14,630 |
|
|
$ |
26,625 |
|
|
$ |
77,306 |
|
|
$ |
93,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments to EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation expense |
|
|
3,076 |
|
|
|
551 |
|
|
|
7,507 |
|
|
|
3,479 |
|
Sales tax (benefit) expense (1) |
|
|
(105 |
) |
|
|
(56 |
) |
|
|
(70 |
) |
|
|
18 |
|
Restructuring and other charges (2) |
|
|
2,302 |
|
|
|
— |
|
|
|
4,531 |
|
|
|
— |
|
Loss on debt extinguishment (3) |
|
|
— |
|
|
|
79 |
|
|
|
243 |
|
|
|
474 |
|
Foreign currency (gain) loss |
|
|
(28 |
) |
|
|
4 |
|
|
|
(26 |
) |
|
|
83 |
|
Subtotal of adjustments to EBITDA |
|
|
5,245 |
|
|
|
578 |
|
|
|
12,185 |
|
|
|
4,054 |
|
Adjusted EBITDA |
|
$ |
19,875 |
|
|
$ |
27,203 |
|
|
$ |
89,491 |
|
|
$ |
97,703 |
|
Net income margin (% of Net sales) |
|
|
2.7 |
% |
|
|
9.9 |
% |
|
|
5.4 |
% |
|
|
7.7 |
% |
Net income growth (% Change 2023 vs. 2022) |
|
|
(78.1 |
)% |
|
|
|
|
|
(34.4 |
)% |
|
|
|
||
Adjusted EBITDA margin (% of Net sales) |
|
|
19.3 |
% |
|
|
21.5 |
% |
|
|
20.1 |
% |
|
|
20.5 |
% |
Adjusted EBITDA growth (% Change 2023 vs. 2022) |
|
|
(26.9 |
)% |
|
|
|
|
|
(8.4 |
)% |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
|
|
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Free Cash Flow: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash provided by operating activities |
|
$ |
11,775 |
|
|
$ |
19,623 |
|
|
$ |
34,041 |
|
|
$ |
31,336 |
|
Capital expenditures for plant, equipment and leasehold improvements, net |
|
|
(329 |
) |
|
|
(3,427 |
) |
|
|
(6,405 |
) |
|
|
(17,867 |
) |
Free cash flow |
|
$ |
11,446 |
|
|
$ |
16,196 |
|
|
$ |
27,636 |
|
|
$ |
13,469 |
|
________________________________ | ||
(1) |
Represents estimated sales tax (benefit) expense relating to a contingent liability due to historical activity in certain states where it is probable that the Company will be subject to sales tax plus interest and penalties. |
|
(2) |
The 2023 amount represents accrued executive retention to be paid in 2024 and costs related to production facility modernization efforts. |
|
(3) |
The Company redeemed a portion of the 8.625% Senior Secured Notes in 2023 and 2022 and expensed the associated portion of the unamortized deferred financing costs. |
|
As of |
||||||
|
|
||||||
|
2023 |
|
2022 |
||||
Calculation of Net Leverage Ratio: |
|
|
|
|
|
||
Senior Notes |
$ |
267,897 |
|
|
$ |
285,000 |
|
ABL revolver |
|
— |
|
|
|
5,000 |
|
Finance lease obligations |
|
18,106 |
|
|
|
10,697 |
|
Total debt |
|
286,003 |
|
|
|
300,697 |
|
Less: Cash and cash equivalents |
|
(12,413 |
) |
|
|
(11,037 |
) |
Total net debt (a) |
$ |
273,590 |
|
|
$ |
289,660 |
|
LTM Adjusted EBITDA (b) |
$ |
89,491 |
|
|
$ |
97,703 |
|
Net Leverage Ratio (a)/(b) |
|
3.1 |
|
|
|
3.0 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240307370173/en/
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