What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-07 · 99 added, 152 removed, 315 unchanged (44% of the section changed)

4 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Current assets:

19 unchanged sentences

$ 0.001 par value— 100,000 shares authorized;

0 shares issued and outstanding at September 30, 2023 and December 31, 2022

0 shares issued and outstanding at March 31, 2024 and December 31, 2023

Stockholders’ deficit:

1 unchanged sentence

$ 0.001 par value— 100,000,000 shares authorized;

11,453,549 and 11,390,355 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

11,391,476 and 11,446,155 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Capital deficiency

7 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Total net sales

27 unchanged sentences

(in thousands, except per share amounts)

June 30, 2023

Shares issued under stock-based compensation plans

Stock-based compensation

Components of comprehensive income:

September 30, 2023

December 31, 2023

1 unchanged sentence

Stock-based compensation

Components of comprehensive income:

September 30, 2023

June 30, 2022

Shares issued under stock-based compensation plans

Stock-based compensation

Repurchase and retirement of common shares

Components of comprehensive income:

September 30, 2022

earnings (loss)

March 31, 2024

December 31, 2022

2 unchanged sentences

Components of comprehensive income:

September 30, 2022

March 31, 2023

See accompanying notes to condensed consolidated financial statements

3 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities

7 unchanged sentences

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable, net

Prepaid expenses and other assets

9 unchanged sentences

Principal payments on Senior Notes

Principal payments on ABL Revolver

Proceeds from ABL Revolver

Payments on debt extinguishment and other

Proceeds from finance lease financing

Payments on finance lease obligations

Cash (used in) provided by financing activities

Common stock repurchased

Cash used in financing activities

Effect of exchange rates on cash

Net (decrease) increase in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

8 unchanged sentences

Accounts payable and accrued expenses for capital expenditures for plant, equipment and leasehold improvements

Unsettled share repurchases included in accrued expenses

See accompanying notes to condensed consolidated financial statements

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except share and per share amounts or as otherwise indicated)

Business Overview and Summary of Significant Accounting Policies

1 unchanged sentence

CPI Card Group Inc.

(which, together with its subsidiary companies, is referred to herein as “CPI” or the “Company”) is a payment technology company and leading provider of comprehensive Financial Payment Card solutions in the United States.

(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 (defined below) issued on the networks of the Payment Card Brands (Visa, Mastercard ® , American Express ® and Discover ® ).

1 unchanged sentence

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 (the “PCI Security Standards Council”) by one or more of the Payment Card Brands.

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.

1 unchanged sentence

Debit and Credit, Prepaid Debit and Other.

The Debit and Credit segment primarily produces Financial Payment Cards and provides integrated card services for card-issuing financial institutions primarily in the United States.

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.

10 unchanged sentences

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

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.

The Company is evaluating the impact of adoption of this standard and does not anticipate that the application of ASU 2023-07 will have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.

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.

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, results of operations, or cash flows.

The Company disaggregates its net sales by major source as follows:

Three Months Ended September 30, 2023

(dollars in thousands)

Debit and Credit

Prepaid Debit

Intersegment eliminations

Nine Months Ended September 30, 2023

(dollars in thousands)

Debit and Credit

Prepaid Debit

Intersegment eliminations

Three Months Ended September 30, 2022

(dollars in thousands)

Three Months Ended March 31, 2024

Debit and Credit

1 unchanged sentence

Intersegment eliminations

Nine Months Ended September 30, 2022

(dollars in thousands)

Three Months Ended March 31, 2023

Debit and Credit

4 unchanged sentences

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 unbilled work performed but not completed, the Company estimates revenue by taking actual costs incurred and applying historical margins for similar types of contracts.

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.

1 unchanged sentence

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.

3 unchanged sentences

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 software-as-a-service personalization of instant issuance debit cards.

As applicable, for unbilled work performed but not completed, the Company estimates revenue by taking actual costs incurred and applying historical margins for similar types of contracts.

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

3 unchanged sentences

As such, the Company's contracts are generally short term in nature.

Costs to Obtain a Contract with a Customer

Costs to obtain a contract (“contract costs”) include only those costs incurred to obtain a contract that the Company would not have incurred if the contract had not been obtained.

For contracts where the term is greater than one year, these costs are recorded as an asset and amortized consistent with the timing of the related revenue over the life of the contract.

The current portion of the asset is included in “prepaid expenses and other current assets” and the noncurrent portion is included in “other assets” on the Company's condensed consolidated balance sheets.

Contract costs incurred but unpaid are included in “accrued expenses” on the Company's condensed consolidated balance sheets.

Contract costs are expensed as incurred when the amortization period is one year or less.

Accounts Receivable

Accounts receivable consisted of the following:

September 30,

(dollars in thousands)

Trade accounts receivable

Unbilled accounts receivable

Less allowance

Less allowance for credit losses

Inventories consisted of the following:

September 30,

(dollars in thousands)

Raw materials

3 unchanged sentences

Plant, equipment, leasehold improvements and operating lease right-of-use assets consisted of the following:

September 30,

(dollars in thousands)

Machinery and equipment

14 unchanged sentences

Fair Value as of

Fair Value Measurement at September 30, 2023

September 30,

Fair Value Measurement at March 31, 2024

(Using Fair Value Hierarchy)

(dollars in thousands)

Fair Value as of

1 unchanged sentence

(Using Fair Value Hierarchy)

(dollars in thousands)

The aggregate fair value of the Company’s Senior Notes (as defined in Note 8, “Long-Term Debt”) was based on bank quotes.

The fair value measurement associated with the ABL Revolver (as defined in Note 8, “Long-Term Debt”) approximates its carrying value as of September 30, 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.

1 unchanged sentence

Accrued expenses consisted of the following:

September 30,

(dollars in thousands)

Accrued payroll and related employee expenses

2 unchanged sentences

Accrued rebates

Estimated sales tax liability

Capitalized contract costs payable

Accrued interest

Current operating and financing lease liabilities

Accrued share repurchases

Total accrued expenses

Other accrued expenses as of September 30, 2023, and December 31, 2022, consisted primarily of miscellaneous accruals for invoices not yet received, self-insurance claims that have yet to be reported, and accrued property taxes.

Other accrued expenses as of March 31, 2024, and December 31, 2023, consisted primarily of federal income and sales tax accruals, as well as self-insurance claims that have yet to be reported.

Long-Term Debt

As of September 30, 2023, and December 31, 2022, long-term debt consisted of the following:

September 30,

(dollars in thousands)

As of March 31, 2024, and December 31, 2023, long-term debt consisted of the following:

Senior Notes (1)

Unamortized deferred financing costs

2 unchanged sentences

Long-term debt, net of current maturities

(1) The Senior Notes bear interest at a fixed rate and the ABL Revolver bears interest at a variable rate.

On March 15, 2021, the Company completed a private 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.

(1) The Senior Notes bear interest at a fixed rate of 8.625 % .

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.

3 unchanged sentences

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 2023 based on the Company’s operating results for the year ended December 31, 2022.

During the nine months ended September 30, 2023, the Company used cash on hand and available borrowing capacity under the ABL Revolver (defined below) 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.

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 an asset-based, senior secured revolving credit facility of up to $ 50.0 million (the “ABL Revolver”).

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.

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.

2 unchanged sentences

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.

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.

9 unchanged sentences

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 $ 3.2 million and are reported as a reduction to the long-term debt balance as of September 30, 2023.

The remaining unamortized net discount and debt issuance costs on the ABL Revolver and related Amendment were $ 1.1 million and are recorded as other assets (current and long-term) on the condensed consolidated balance sheet as of September 30, 2023.

The Company’s effective tax rate on pre-tax income was 37.7 % and 25.8 % for the three months ended September 30, 2023, and 2022, respectively, and 30.5 % and 28.5 % for the nine months ended September 30, 2023, and 2022, respectively.

The increase in the effective tax rate for the three and nine months ended September 30, 2023, was due to tax deduction limitations on executive compensation.

The effective tax rate for the three months ended September 30, 2023, also increased due to the reduction of the federal valuation allowance recorded in the third quarter of 2022 as a result of increased deductibility of interest costs due to a tax election made by the Company in the third quarter of 2022.

For the nine months ended September 30, 2023, and 2022, the effective tax rate differs from the U.S.

The remaining unamortized debt issuance costs recorded on the Senior Notes were $ 2.6 million and are reported as a reduction to the long-term debt balance as of March 31, 2024.

The remaining unamortized net discount and debt issuance costs on the ABL Revolver and related Amendment were $ 0.9 million and are recorded as other assets (current and long-term) on the consolidated balance sheet as of March 31, 2024.

The Company’s effective tax rates on pre-tax income were 28.7 % and 20.7 % for the three months ended March 31, 2024 and 2023, respectively.

The increase in the effective tax rate for the three months ended March 31, 2024 compared to the corresponding period in the prior year primarily was due to the reduction of a valuation allowance in the first quarter of 2023 related to a state’s law change.

For the three months ended March 31, 2024 and 2023, the effective tax rate differs from the U.S.

federal statutory income tax rate as follows:

September 30,

Tax at federal statutory rate

4 unchanged sentences

Effective income tax rate

Stockholders’ Deficit

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 three months ended March 31, 2024, the Company repurchased 68,258 shares of its common stock at an average price of $ 18.29 per share, excluding commissions, or $ 1.2 million in aggregate, on a trade date basis.

In accordance with the Stock Repurchase Agreement entered into on December 6, 2023, the Company is obligated to purchase 244,314 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 $ 18.03 per share, as of March 31, 2024.

obligation is based on a multiple of the number of shares the Company purchased in the open market from the date of the agreement through March 31, 2024, payment for which is due in the second quarter of 2024.

As of March 31, 2024, the Company had an authorized amount of $ 14.1 million remaining under the share repurchase plan.

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.

Shares excluded from the calculation of diluted earnings per share because their inclusion would be anti-dilutive were 160,384 and 5,425 for the three months ended September 30, 2023, and 2022, respectively, and 210,457 and 12,841 for the nine months ended September 30, 2023, and 2022, respectively.

The Company's calculation of weighted-average shares outstanding has been reduced by 244,314 shares that the Company is obligated to repurchase from Parallel49 in April 2024.

Shares excluded from the calculation of diluted earnings per share because their inclusion would be anti-dilutive were 39,933 and 28,831 for the three months ended March 31, 2024 and 2023, respectively.

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

Three Months Ended March 31,

Basic weighted-average common shares outstanding

4 unchanged sentences

Commitments and Contingencies

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 2023 and 2028 and contain purchase options which the Company may exercise to keep the machinery in use.

Contingencies

15 unchanged sentences

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 and three of the patents have been invalidated in the IPR proceedings and one remains under review.

The remaining proceedings in the patent office are scheduled to run through November 2023.

Should the remaining patent survive review by the United States Patent Office, the Company intends to defend the suit

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 September 30, 2023.

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 any remaining claims in the fourth patent that are relevant to the Company have also been invalidated.

While no assurance can be given that this matter will be resolved favorably, the patent owner has dismissed its appeals related to the three previously invalidated patents and the Company expects the pending litigation will be dismissed as a result of these developments.

In addition to the matter described above, the Company may be subject to routine legal proceedings in the ordinary course of business.

9 unchanged sentences

In October 2015, the Company adopted the CPI Card Group Inc.

Omnibus Incentive Plan (the “Omnibus Plan”) pursuant to which cash and equity-based incentives may be granted to participating employees, consultants, and directors.

On May 27, 2021, the Company’s stockholders approved an amendment and restatement of the Omnibus Plan, to among other things, increase the total number of shares of the Company’s Common Stock reserved and available for issuance, resulting in a total of 2,200,000 shares of Common Stock issuable under the Omnibus Plan.

Beginning in the first quarter of 2023, the Company’s employees that participate in the Company’s long-term incentive program will receive a quarterly grant comprising one-fourth of the annual equity-based incentive component of their total compensation.

Executive awards will consist of a mix of restricted stock units and nonqualified stock options, and other employee awards will be 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 Chief Executive Officer (“CEO”), comprised of restricted stock units.

The first tranche was awarded in June 2023 and the second tranche was awarded in August 2023.

The third and final tranche will be awarded in November 2023, subject to continued employment at that date.

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 will be granted in November 2023.

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.

Effective January 30, 2024, the Company’s stockholders approved an amendment to the Omnibus Plan to increase the total number of shares of the Company’s Common Stock reserved and available for issuance thereunder by 1,000,000 shares, resulting in a total of 3,200,000 shares issuable under the Omnibus Plan.

As of March 31, 2024, there were 962,285 shares of Common Stock available for grant under the Omnibus Plan.

In June 2023, the Company announced an award comprised of 25 % nonqualified stock options and 75 % restricted stock units to its CEO at the time 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.

During 2024, executives will receive a quarterly restricted stock unit grant comprising one-fourth of the annual equity-based incentive component of their total compensation.

The number of shares awarded will be determined based on a value tied to the monthly average closing price of the Company’s common stock.

As of March 31, 2024, there were 904,438 options outstanding at a weighted average exercise price of $ 18.87 .

No options were granted during the three months ended March 31, 2024.

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.

During the three months ended March 31, 2024, the Company granted 89,452 restricted stock units at a weighted average grant date fair value of $ 18.25 , and as of March 31, 2024, there were 786,673 outstanding restricted stock units at a weighted average grant date fair value of $ 20.55 .

In January 2024, the Company granted 60,000 performance stock units (PSU) in connection with the appointment of its CEO, with a grant date fair value of $ 0.9 million using a Monte Carlo simulation model.

The PSU award will vest, subject to continuous employment, in equal one -third increments upon the attainment of the rolling weighted average closing price of the Company’s common stock equaling or exceeding each of $ 35.00 , $ 50.00 , and $ 65.00 , in each case, for at least 90 consecutive trading days during the five-year performance period commencing on the grant date.

All equity awards are contingent and issued only upon approval by the compensation committee of the Company’s board of directors, or as otherwise permitted under the Omnibus Plan.

The Company accounts for stock-based compensation pursuant to ASC 718, Share-Based Payments.

All stock-based compensation is measured at fair value and expensed on a straight-line basis over the requisite service period for each tranche of the award.

During the nine months ended September 30, 2023, the Company granted 92,655 options at a weighted average exercise price of $ 24.48 .

As of September 30, 2023, there were 865,834 options outstanding at a weighted average exercise price of $ 18.82 .

During the nine months ended September 30, 2023, the Company granted 429,655 restricted stock units at a weighted average grant date fair value of $ 23.65 , and as of September 30, 2023, there were 450,747 outstanding restricted stock units at a weighted average grant date fair value of $ 23.39 .

All stock-based compensation is required to be

measured at fair value and expensed over the requisite service period, generally defined as the applicable vesting period.

The Company accounts for forfeitures as they occur and reverses previously recognized expense for the unvested portion of the forfeited shares.

Upon the exercise of stock options, shares of common stock are issued from authorized common shares.

Segment Reporting

5 unchanged sentences

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 September 30, 2023, the Company’s reportable segments were as follows:

As of March 31, 2024, the Company’s reportable segments were as follows:

● Debit and Credit

1 unchanged sentence

Debit and Credit Segment

The Debit and Credit segment primarily produces Financial Payment Cards and provides integrated card 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 Earth Elements TM Eco-Focused Cards.

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.

3 unchanged sentences

Prepaid Debit Segment

The Prepaid Debit segment primarily provides integrated prepaid card services to Prepaid Debit Card program managers primarily in the United States, including tamper-evident security packaging.

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.

2 unchanged sentences

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 three and nine months ended September 30, 2023 and 2022, were as follows:

Three Months Ended September 30, 2023

Debit and Credit

Prepaid Debit

Intersegment Eliminations

(dollars in thousands)

Cost of sales

Operating expenses

Income (loss) from operations

EBITDA by segment:

Income (loss) from operations

Depreciation and amortization

Other expense, net

Nine Months Ended September 30, 2023

Debit and Credit

Prepaid Debit

Intersegment Eliminations

(dollars in thousands)

Cost of sales

Operating expenses

Income (loss) from operations

EBITDA by segment:

Income (loss) from operations

Depreciation and amortization

Other expense, net

Three Months Ended September 30, 2022

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 three months ended March 31, 2024 and 2023, were as follows:

Three Months Ended March 31, 2024

Debit and Credit

1 unchanged sentence

Intersegment Eliminations

(dollars in thousands)

Cost of sales

4 unchanged sentences

Depreciation and amortization

Other expense, net

Nine Months Ended September 30, 2022

Other income (expense)

Three Months Ended March 31, 2023

Debit and Credit

1 unchanged sentence

Intersegment Eliminations

(dollars in thousands)

Cost of sales

4 unchanged sentences

Depreciation and amortization

Other expense, net

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

Total segment EBITDA

Other income (expense)

Three Months Ended March 31,

Interest, net

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements