CPI Card Group(PMTS) - 2024 Q2 - Quarterly Report

Financial Performance - Total net sales for Q2 2024 reached $118.818 million, a 3.8$114.960 million in Q2 2023[5] - Gross profit for Q2 2024 was $42.388 million, compared to$40.825 million in Q2 2023, reflecting a 3.8% increase[5] - Net income for Q2 2024 was $6.001 million, a decrease of 8.0$6.523 million in Q2 2023[5] - Basic earnings per share for Q2 2024 were $0.54, down from$0.57 in Q2 2023[5] - The company reported total net sales of $230,754 for the six months ended June 30, 2024, compared to$235,812 for the same period in 2023, reflecting a slight decrease[14] - For the six months ended June 30, 2024, net income was $11.456 million, a decrease of 34$17.396 million for the same period in 2023[34] - The company’s net income for the six months ended June 30, 2024, was $17.396 million, down from$21.475 million in the same period of 2023, indicating a decline of about 19.5%[42] Assets and Liabilities - Total assets increased to $321.446 million as of June 30, 2024, up from$293.683 million at December 31, 2023, representing a 9.4% growth[4] - Total liabilities rose to $366.003 million as of June 30, 2024, compared to$345.619 million at December 31, 2023, indicating a 5.9% increase[4] - Current liabilities increased to $68.949 million as of June 30, 2024, from$49.445 million at December 31, 2023, a 39.6% rise[4] - Long-term debt as of June 30, 2024, was $269.654 million, up from$264.997 million as of December 31, 2023, with the 2026 Senior Notes bearing an interest rate of 8.625%[24] - Total current assets increased to $179.745 million as of June 30, 2024, compared to$165.378 million at December 31, 2023[4] Cash Flow and Operating Activities - Cash and cash equivalents decreased to $7.479 million as of June 30, 2024, down from$12.413 million at December 31, 2023[4] - Cash provided by operating activities decreased to $4.1 million for the six months ended June 30, 2024, down from$10.3 million for the same period in 2023, primarily due to lower net income and changes in working capital[64] - Total cash provided by operating activities for the six months ended June 30, 2023, was $10,322, compared to$4,108 for the six months ended June 30, 2024[9] Segment Performance - The company’s reportable segments include Debit and Credit, Prepaid Debit, and Other, with a focus on integrated card services and financial payment cards[38][39] - The Debit and Credit segment generated $183,593 in total net sales for the six months ended June 30, 2024, compared to$195,179 for the same period in 2023[14] - The company’s prepaid debit segment generated $48,013,000 in net sales for the six months ended June 30, 2024, compared to$40,951,000 in the same period of 2023, marking an increase of 17%[14] Operating Expenses - Operating expenses for the three months ended June 30, 2024, totaled $27.479 million, compared to$23.333 million in the same period of 2023, marking an increase of about 17.0%[40][42] - The company’s operating expenses for the six months ended June 30, 2024, totaled $54.852 million, compared to$45.829 million in the same period of 2023, reflecting an increase of about 19.7%[41] Share Repurchase and Stock Compensation - The company repurchased 352,750 shares of common stock at an average price of $18.14 per share, totaling$6.4 million during the six months ended June 30, 2024[31] - As of June 30, 2024, the company had an authorized amount of $11.2 million remaining under the share repurchase plan[31] - Stock-based compensation expense increased to$5,154 for the six months ended June 30, 2024, from $1,831 for the same period in 2023[9] Economic and Market Conditions - CPI Card Group Inc. reported reduced demand from customers for certain products and services during 2023 through the first half of 2024, impacting financial and operating results[51] - The company has experienced concerns in the banking and financial services industry, leading to reduced overall spending on card programs[51] - Economic uncertainties, including negative liquidity events in certain banks, have led to caution in the financial services industry, affecting demand in the Debit and Credit segment[51] Tax and Compliance - The effective tax rate for the three months ended June 30, 2024, was 27.7%, a decrease from 38.9% in the same period of 2023, primarily due to changes in executive compensation deductibility[28] - The effective income tax rate for the six months ended June 30, 2024, was 28.2%, slightly lower than 28.6% for the same period in 2023[30] - The company is committed to compliance with PCI Security Standards Council requirements, ensuring the security of its products and services[48]