CompoSecure Inc (CMPO) 2023 Q1 法說會逐字稿

Good day and thank you for standing by. Welcome to the CompoSecure Q1 earnings conference call. At this time, all participants are in a listen only mode. (Operator Instructions) Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Sean Mansouri, CompoSecure's External Director of Investor Relations. Please go ahead.

美好的一天，感謝您的支持。歡迎參加 CompoSecure 第一季度收益電話會議。此時，所有參與者都處於只聽模式。 （操作員說明）請注意，今天的電話會議正在錄音。現在我想將會議交給今天的發言人、CompoSecure 投資者關係外部總監 Sean Mansouri。請繼續。

Good evening, and thank you for joining us to review CompoSecure's first quarter 2023 financial results. With me on the call tonight is Jon Wilk, CompoSecure's Chief Executive Officer, and Tim Fitzsimmons, Chief Financial Officer. They will begin with prepared remarks and then we will open the call for Q&A.

晚上好，感謝您與我們一起回顧 CompoSecure 的 2023 年第一季度財務業績。今晚與我通話的有 CompoSecure 首席執行官喬恩·威爾克 (Jon Wilk) 和首席財務官蒂姆·菲茨西蒙斯 (Tim Fitzsimmons)。他們將從準備好的發言開始，然後我們將開始問答環節。

During the call, we will make statements related to our business that may be considered forward-looking, including statements concerning our plans to execute on our growth strategy and our ability to maintain existing and acquire new customers, as well as other statements regarding our plans and prospects. Forward-looking statements may often be identified with words such as we expect, we anticipate, or upcoming. These statements reflect our views only as of today and should not be considered our views as of any subsequent date.

在電話會議期間，我們將做出與我們的業務相關的可能被視為前瞻性的聲明，包括有關我們執行增長戰略的計劃以及我們維持現有和獲取新客戶的能力的聲明，以及有關我們計劃的其他聲明和前景。前瞻性陳述通常可以用“我們期望”、“我們預期”或“即將到來”等詞語來識別。這些陳述僅反映我們今天的觀點，不應被視為我們在任何後續日期的觀點。

We undertake no obligation to update or revise these forward-looking statements. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of material risks and other important factors that could affect our actual results, please refer to the information in our annual report on Form 10-K and other reports filed with the SEC which are available on the Investor Relations section of our website at composecure.com and on the SEC's website at SEC.gov.

我們不承擔更新或修改這些前瞻性陳述的義務。前瞻性陳述不是對未來業績的承諾或保證，並受到各種風險和不確定性的影響，可能導致實際結果與我們的預期存在重大差異。有關可能影響我們實際業績的重大風險和其他重要因素的討論，請參閱我們的 10-K 表年度報告以及向 SEC 提交的其他報告中的信息，這些信息可在我們網站的投資者關係部分獲取： composecure.com 和 SEC 網站 SEC.gov。

Please note that the discussion on today's call includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income, and adjusted EPS. The company believes these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends impacting the company's financial condition and results of operations. These non-GAAP financial measures should not be considered as an alternative to net income or any other performance measures derived in accordance with US GAAP and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation of GAAP to non-GAAP measures is available in our press release and earnings presentation available on the Investor Relations section of our website.

請注意，今天電話會議的討論包括某些非公認會計準則財務指標，包括調整後的 EBITDA、調整後的淨利潤和調整後的每股收益。該公司相信，這些非公認會計準則財務指標為管理層和投資者提供了有關影響公司財務狀況和經營業績的某些財務和業務趨勢的有用信息。這些非公認會計原則財務指標不應被視為淨利潤或根據美國公認會計原則得出的任何其他業績指標的替代品，並且可能與其他公司使用的類似標題的非公認會計原則指標有所不同。我們網站投資者關係部分的新聞稿和收益介紹中提供了 GAAP 與非 GAAP 衡量標準的對賬。

Thank you. And with that said, let me turn the call over to Jon to discuss our first quarter results.

謝謝。話雖如此，讓我把電話轉給喬恩，討論我們第一季度的業績。

Thanks, Sean. Good evening, everyone, and thank you for joining us for our first quarter conference call. 2023 is off to a solid start following a record 2022. Demand for our premium metal cards remains strong, and we continue to execute on our sales goals and objectives for both new and existing programs. Sentiment from our largest clients also remains positive as consumer and business spending has proven to be resilient despite the challenged macro environment. More to come on this later in the call.

謝謝，肖恩。大家晚上好，感謝您參加我們的第一季度電話會議。繼 2022 年創下紀錄之後，2023 年迎來了良好的開端。對我們優質金屬卡的需求依然強勁，我們將繼續執行新項目和現有項目的銷售目標和目標。儘管宏觀環境充滿挑戰，但消費者和企業支出已被證明具有彈性，因此我們最大客戶的情緒也保持積極。稍後將在電話會議中詳細介紹這一點。

Now onto our key highlights from the first quarter on slide 3, we achieved net sales of $95.3 million, which was up 13% versus last year, driven by strong sales execution and demand from traditional card issuers and fintechs for our premium payment cards. I'll expand on this in a few slides. We also reported net income of $10.7 million compared to $26.9 million in Q1 of '22. Net income in the first quarter was primarily impacted by noncash expenses, including $13.4 million related to the fair value of our warrants, earn out consideration, and derivative liabilities, and $4 million of stock-based compensation.

現在我們來看幻燈片 3 中第一季度的主要亮點，在強勁的銷售執行力以及傳統發卡機構和金融科技公司對我們的高級支付卡的需求的推動下，我們實現了 9530 萬美元的淨銷售額，比去年增長了 13%。我將在幾張幻燈片中對此進行擴展。我們還報告淨利潤為 1,070 萬美元，而 2022 年第一季度的淨利潤為 2,690 萬美元。第一季度的淨利潤主要受到非現金支出的影響，包括與我們的認股權證公允價值、盈利對價和衍生負債相關的 1340 萬美元，以及 400 萬美元的股票薪酬。

As a reminder, the fair value adjustments fluctuate quarter to quarter relative to our share price performance. When our stock price increases, our net income is inversely impacted by fair value adjustments. Year to date, our stock price was up more than 50% as of market close on May 1, 2023.

提醒一下，公允價值調整相對於我們的股價表現會逐季度波動。當我們的股價上漲時，我們的淨利潤會受到公允價值調整的反向影響。年初至今，截至 2023 年 5 月 1 日收盤，我們的股價上漲了 50% 以上。

Adjusted EBITDA came in at $35.5 million, up 6% year over year, and we generated $25 million of operating cash flow in the quarter. In March, we were thrilled to announce the extension of our American Express contract to continue manufacturing their premium metal payment cards through July 2026. Looking at card issuer trends, our largest customers continue to report strong card acquisition growth and have indicated positive outlooks for 2023, while increasing investment in programs that drive customer acquisition, retention, and spending.

調整後 EBITDA 為 3550 萬美元，同比增長 6%，本季度我們產生了 2500 萬美元的運營現金流。今年 3 月，我們很高興地宣布延長美國運通合同，以繼續製造其優質金屬支付卡至 2026 年 7 月。從發卡機構的趨勢來看，我們最大的客戶繼續報告強勁的卡採購增長，並表示 2023 年前景樂觀，同時增加對推動客戶獲取、保留和支出的計劃的投資。

Regarding Arculus, we continue to invest in our platform as well as marketing to address the growing need for better multifactor authentication as consumers, businesses, and card issuers look to reduce fraud and protect identity and assets.

關於 Arculus，我們繼續投資於我們的平台和營銷，以滿足消費者、企業和發卡機構希望減少欺詐並保護身份和資產時對更好的多因素身份驗證日益增長的需求。

As mentioned in our press release earlier today, we are reaffirming our guidance for 2023, which calls for net sales in the range of $400 million to $425 million, with adjusted EBITDA ranging between $145 million and $155 million.

正如我們今天早些時候的新聞稿中提到的，我們重申 2023 年的指導，即淨銷售額在 4 億美元至 4.25 億美元之間，調整後的 EBITDA 在 1.45 億美元至 1.55 億美元之間。

Turning to slide 4, on the left-hand side, you'll see that our largest customers reported another solid quarter of 14% purchase volume growth. Although this growth has tempered over the past several quarters, it remains in the double digits. It's worth noting that these are year-over-year comps. So hitting double digit growth against a 30% comp in Q1 of '22 remains very impressive from our standpoint.

轉向左側的幻燈片 4，您會看到我們最大的客戶報告了另一個季度採購量增長 14%。儘管這種增長在過去幾個季度有所放緩，但仍保持在兩位數。值得注意的是，這些是逐年比較。因此，從我們的角度來看，在 22 年第一季度實現兩位數增長（相對於 30% 的增長率）仍然非常令人印象深刻。

Moving to the right side of the slide, American Express recently reported strong card acquisitions with a record 3.4 million new customers added, which translates to 13% year over year growth. Amex also increased marketing and business development spend by more than 20% year over year, which we believe speaks to their confidence for future card issuance volumes. This is all publicly available information, and we update this chart every quarter to provide insight into our customers' guidance.

轉向幻燈片的右側，美國運通最近報告稱其信用卡收購量強勁，新增客戶數量達到創紀錄的 340 萬，同比增長 13%。美國運通的營銷和業務開發支出也同比增加了 20% 以上，我們認為這表明了他們對未來發卡量的信心。這些都是公開信息，我們每季度都會更新此圖表，以深入了解客戶的指導。

Moving on to slide 5, which is data that informs our metal payment card business, issuers continue to offer elevated levels of incentives and rewards to acquire and retain customers. Some card issuer programs can amount to thousands of dollars of value in rewards and incentives. Metal payment card costs only reflect the [minimus] portion associated with customer acquisition and retention costs, positioning our offering as a compelling and cost-effective part of these continued investments in marketing programs.

轉到幻燈片 5，這是為我們的金屬支付卡業務提供信息的數據，發卡機構繼續提供更高水平的激勵和獎勵來獲取和留住客戶。一些發卡機構計劃的獎勵和激勵金額可達數千美元。金屬支付卡成本僅反映與客戶獲取和保留成本相關的[最小]部分，將我們的產品定位為這些營銷計劃持續投資中引人注目且具有成本效益的部分。

On slide 6, you can see that the US consumer remains healthy and resilient. As mentioned, our partners continue to remain positive with many outlining continued marketing spend to drive resilient growth and highlighting the lack of any notable consumer and small business pullback in the first quarter, despite slower macro economic growth.

在幻燈片 6 上，您可以看到美國消費者仍然健康且富有彈性。如前所述，我們的合作夥伴繼續保持積極態度，許多合作夥伴概述了持續的營銷支出，以推動彈性增長，並強調儘管宏觀經濟增長放緩，但第一季度消費者和小企業沒有出現任何明顯的回調。

Moving on to our security and authentication solutions on slide 7, I want to spend some more time discussing the clear demand being signaled for more secure payment and authentication solutions. The amount of global debit and credit card fraud continues to set new records, and at nearly four times the cost for each dollar of fraud loss. These dynamics are spurring meaningful demand for passwordless multifactor authentication, including some combination of biometrics, PINs, and secure tokens. Industry experts anticipate this market will grow at a 17% kegger through the end of the decade.

接下來是幻燈片 7 上的安全和身份驗證解決方案，我想花更多時間討論對更安全的支付和身份驗證解決方案的明確需求。全球借記卡和信用卡欺詐金額繼續創下新紀錄，每美元欺詐損失的成本幾乎是其四倍。這些動態刺激了對無密碼多因素身份驗證的有意義的需求，包括生物識別技術、PIN 和安全令牌的某種組合。行業專家預計，到本十年末，該市場將以 17% 的速度增長。

If you flip to slide 8, you get a sense of the market opportunity for authentication and the expected market growth over the next seven years. As you can see, the market opportunity for authentication solutions is tremendous, and we believe Arculus is the right solution at the right time to help address this growing need. Let me discuss that further.

如果您翻到幻燈片 8，您就會了解身份驗證的市場機會以及未來七年的預期市場增長。正如您所看到的，身份驗證解決方案的市場機會是巨大的，我們相信 Arculus 是在正確的時間提供正確的解決方案，可以幫助滿足這一不斷增長的需求。讓我進一步討論這個問題。

On slide 9, you can see how our Arculus can deliver secure login or step-up verification, incorporating seamless multi-factor authentication to address the passwordless market I just outlined. Simply tapping your metal card to the back of your phone adds another layer of security and authentication on top of providing a PIN and or biometric. We believe this added step should lead to both better customer security and a lower cost burden for issuers.

在幻燈片 9 上，您可以看到我們的 Arculus 如何提供安全登錄或升級驗證，並結合無縫多因素身份驗證來滿足我剛才概述的無密碼市場的需求。只需將金屬卡輕觸手機背面即可在提供 PIN 和/或生物識別的基礎上增加另一層安全和身份驗證。我們相信這一增加的步驟應該會帶來更好的客戶安全並降低發行人的成本負擔。

On slide 10, we outline some of the use cases for tapping your metal card to the back of your phone, including strong customer authentication for customer service, authorizing high-dollar transactions like Wire or Zelle transactions, authenticating a new device, or turning Internet payments into card present transactions.

在幻燈片 10 中，我們概述了將金屬卡刷到手機背面的一些用例，包括用於客戶服務的強大客戶身份驗證、授權 Wire 或 Zelle 交易等高額交易、驗證新設備或接入互聯網支付到卡現交易中。

On slide 11, you can see the broader solution set for Arculus that we have shared with you historically.

在幻燈片 11 上，您可以看到我們之前與您分享的 Arculus 更廣泛的解決方案集。

Now turning to some company highlights on slide 12, we continue to execute on our sales goals with multiple new program launches for both metal premium payment cards and Arculus. On the metal payment card side, Rocket Mortgage launched a new card created to make home-buying easier and more accessible through everyday spending. H-E-B, a privately held supermarket chain in the Southwest, launched a metal card with cashback rewards. And UMB is delivering a metal card for their private bank with cash rewards and incentives toward travel, just to highlight a few examples on this page.

現在轉向幻燈片 12 上的一些公司亮點，我們繼續執行我們的銷售目標，推出了針對金屬高級支付卡和 Arculus 的多個新計劃。在金屬支付卡方面，Rocket Mortgage 推出了一款新卡，旨在通過日常消費讓購房變得更容易、更方便。西南地區一家私營連鎖超市H-E-B推出了帶有現金返還獎勵的金屬卡。 UMB 正在為其私人銀行提供一張金屬卡，提供現金獎勵和旅行獎勵，僅在此頁面上強調幾個示例。

On the Arculus front, we continue to build market awareness for our B2B secure authentication and cold storage offerings through industry tradeshows and marketing campaigns. All said, these efforts have driven a solid pipeline of opportunities. To name a few that are progressing well, let me start with NBC Banq to deliver a payment card with digital asset cold storage. Chainge Finance, which I've mentioned on previous calls, launched their self custody hardware cold storage wallet powered by Arculus. And we've also seen Inbestgo offer their cold storage wallet powered by Arculus for customers in Latin America. We've also made progress on the pilot with a major crypto exchange that I discussed on the prior call.

在 Arculus 方面，我們繼續通過行業貿易展覽和營銷活動來提高 B2B 安全身份驗證和冷存儲產品的市場知名度。總而言之，這些努力帶來了一系列堅實的機會。舉幾個進展順利的例子，首先是 NBC Banq 推出了帶有數字資產冷存儲功能的支付卡。我在之前的電話中提到的 Chainge Finance 推出了由 Arculus 提供支持的自助硬件冷存儲錢包。我們還看到 Inbestgo 為拉丁美洲的客戶提供由 Arculus 提供支持的冷錢包。我們在與我在之前的電話會議中討論過的主要加密貨幣交易所的試點方面也取得了進展。

From a B2C perspective, we commenced Arculus cold storage wallet sales in Canada, and we anticipate additional international availability, including Australia and the UK in the coming months. We continue to technically enhance the Arculus platform for both B2B and B2C. This now include being able to crypto graphically support more than 10,000 coins.

從 B2C 角度來看，我們開始在加拿大銷售 Arculus 冷錢包，我們預計未來幾個月將在包括澳大利亞和英國在內的國際市場上銷售更多產品。我們繼續從技術上增強針對 B2B 和 B2C 的 Arculus 平台。現在包括能夠以加密圖形方式支持超過 10,000 種硬幣。

With that, I'll hand it over to Tim to review our financials before returning for closing remarks.

有了這個，我將把它交給蒂姆來審查我們的財務狀況，然後再返回結束語。

Thanks, John, and good evening, everyone. I'll provide a more detailed overview of our Q1 2023 financial performance and then turn it back to Jon before we open up the call for questions. Unless stated otherwise, all of the comparative (inaudible) and variance commentary is on a year-over-year basis.

謝謝約翰，大家晚上好。我將更詳細地概述我們 2023 年第一季度的財務業績，然後在我們開始提問之前將其返回給喬恩。除非另有說明，所有比較（聽不清）和差異評論都是逐年比較的。

Net sales increased 13% to $95.3 million compared to $84.2 million. As Jon mentioned, the increase was driven by strong sales execution and demand from traditional financial institutions as well as fintechs for our premium payment cards. Gross margin for the quarter was 56% compared to 58% in prior year. While this was due to higher material costs, it is in line with our previously mentioned and long-term gross margin expectations of being in the mid 50% range.

淨銷售額從 8,420 萬美元增長 13% 至 9,530 萬美元。正如喬恩提到的，這一增長是由強勁的銷售執行力以及傳統金融機構和金融科技公司對我們的高級支付卡的需求推動的。本季度毛利率為 56%，而去年同期為 58%。雖然這是由於材料成本上升造成的，但這符合我們之前提到的 50% 左右的長期毛利率預期。

Net income was $10.7 million compared to $26.9 million. Net income in the first quarter of 2023 was impacted by noncash expenses, including $13.4 million related to the fair value of company's warrants, earnout consideration, and derivative liabilities, which was driven by the improvement in our stock price. It also was impacted by $4 million of stock-based compensation.

淨利潤為 1,070 萬美元，去年同期為 2,690 萬美元。 2023 年第一季度的淨利潤受到非現金支出的影響，其中包括與公司認股權證公允價值、盈利對價和衍生負債相關的 1,340 萬美元，這是由我們股價上漲推動的。它還受到 400 萬美元股票薪酬的影響。

Adjusted EBITDA in Q1 was $35.5 million, up 6% compared to $33.3 million last year. And adjusted EBITDA margin in Q1 was 37% compared to 40% in the first quarter of 2022. The decrease in adjusted EBITDA margin was driven by lower gross margins and our continued investment in the Arculus business and building out infrastructure. Adjusted EBITDA includes the net expense investment in Arculus of $4.5 million. However, it excludes both the non-cash revaluation adjustments, which were driven by our strong stock price, and stock compensation expense.

第一季度調整後 EBITDA 為 3550 萬美元，比去年的 3330 萬美元增長 6%。第一季度調整後 EBITDA 利潤率為 37%，而 2022 年第一季度為 40%。調整後 EBITDA 利潤率下降是由於毛利率下降以及我們對 Arculus 業務和基礎設施建設的持續投資。調整後的 EBITDA 包括 Arculus 的 450 萬美元的淨費用投資。然而，它不包括由我們強勁的股價驅動的非現金重估調整和股票補償費用。

Looking at the split between domestic and international, you can see we continue to have strong domestic sales, increasing 18% compared to the first quarter of 2022 to $74 million, again, due to the strength of our sales execution and favorable industry trends.

看看國內和國際之間的差距，您可以看到我們的國內銷售額繼續強勁，與 2022 年第一季度相比增長了 18%，達到 7,400 萬美元，這同樣是由於我們強大的銷售執行力和有利的行業趨勢。

International net sales for the first quarter of 2023 was $22 million, returning to a roughly 20% mix and in line with our long-range view of this business.

2023 年第一季度的國際淨銷售額為 2200 萬美元，恢復到約 20% 的比例，符合我們對該業務的長期看法。

Turning to our balance sheet at March 31, 2023, which you will find in the appendix, we continue to build our inventory stocks based on the strong demand we are seeing and to stay ahead of any supply chain issues. We have a track record of turning our inventory over 10 times each year while the absolute value has grown. We had cash and cash equivalents of $23 million and total debt of $363 million, which includes approximately $233 million of term loan and $130 million of exchangeable notes. This result in a total net debt of $340 million.

轉向我們截至 2023 年 3 月 31 日的資產負債表（您可以在附錄中找到），我們​​繼續根據我們看到的強勁需求建立庫存，並在任何供應鏈問題面前保持領先地位。我們的庫存每年周轉超過 10 倍，而絕對價值卻在增長。我們擁有 2,300 萬美元的現金和現金等價物，總債務為 3.63 億美元，其中包括約 2.33 億美元的定期貸款和 1.3 億美元的可交換票據。這導致淨債務總額為 3.4 億美元。

We want to provide both our overall debt leverage and our bank agreements secured debt leverage as our bank agreement is calculated with slight differences. At March 31, our overall leverage ratio improved to 2.5 times based on a net debt of $340 million and trailing 12 month adjusted EBITDA of $138 million. This compares to 3.7 times at March 31, 2022, with the improvement driven by a combination of paying down debt and growing adjusted EBITDA.

我們希望提供我們的整體債務槓桿和我們的銀行協議擔保債務槓桿，因為我們的銀行協議的計算略有差異。截至 3 月 31 日，我們的整體槓桿率提高至 2.5 倍，淨債務為 3.4 億美元，過去 12 個月調整後 EBITDA 為 1.38 億美元。相比之下，截至 2022 年 3 月 31 日，這一數字為 3.7 倍，這一改善是由償還債務和調整後 EBITDA 增長共同推動的。

At March 31, 2023, we had a bank agreement secured debt leverage ratio of 1.6 times based on a total secured debt of $233 million and trailing 12 month adjusted bank EBITDA of $146 million. This compares to 2.5 times at March 31, 2022.

截至 2023 年 3 月 31 日，我們的銀行協議擔保債務槓桿率為 1.6 倍，擔保債務總額為 2.33 億美元，過去 12 個月調整後的銀行 EBITDA 為 1.46 億美元。相比之下，2022 年 3 月 31 日這一數字為 2.5 倍。

Taking a look at our cash flow statement, as Jon mentioned, we generated operating cash flow of $25 million during the first quarter. We continue to believe our cash balances, cash flow generation, and debt facilities provide us with more than enough adequate working capital to fund our operations.

正如喬恩提到的，看看我們的現金流量表，我們在第一季度產生了 2500 萬美元的運營現金流。我們仍然相信我們的現金餘額、現金流產生和債務便利為我們提供了足夠充足的營運資金來資助我們的運營。

I want to turn now to earnings per share. As a reminder, our method under GAAP for calculating basic and diluted EPS allows us to allocate changes in adjustments of the mark-to-market instruments among the public company and the operating subsidiaries to better reflect the actual economic impact of conversion of such instruments on the net income on a per share basis. Having said that, let me run through the EPS calculations.

我現在想談談每股收益。需要提醒的是，我們根據 GAAP 計算基本每股收益和稀釋每股收益的方法使我們能夠在上市公司和運營子公司之間分配按市價工具調整的變化，以更好地反映此類工具轉換對公司的實際經濟影響。每股淨利潤。話雖如此，讓我來看看每股收益的計算。

GAAP EPS for the three months ended March 31, 2023, was $0.13 per basic share and $0.11 per diluted share. This compares to $0.23 per basic and diluted share in the year-ago period. As I mentioned earlier, the decline was primarily attributable to a change in the fair value of our warrants, earn-out consideration, and derivative liabilities, which was driven by the appreciation in our stock price. You can read the footnotes on the slide that take you through the complexities of the allocation of net income due to the Up-C structure and the shares are included in the basic and diluted calculations. Note that the fair value adjustments in the quarter have been allocated among the companies to come to pre-allocation net income.

截至 2023 年 3 月 31 日止三個月的 GAAP 每股基本每股收益為 0.13 美元，每股稀釋每股收益為 0.11 美元。相比之下，去年同期基本股和稀釋股每股 0.23 美元。正如我之前提到的，下降的主要原因是我們的認股權證、盈利對價和衍生負債的公允價值發生變化，這是由我們的股價升值推動的。您可以閱讀幻燈片上的腳註，這些腳註將帶您了解由於 Up-C 結構而導致的淨利潤分配的複雜性，並且股票包含在基本計算和稀釋計算中。請注意，本季度的公允價值調整已在各公司之間進行分配，以得出預分配淨利潤。

Now for non-GAAP earnings per share. On slide 17 and in our MD&A, we are also providing a non-GAAP adjusted net income and adjusted EPS, which excludes the impact of non-cash fair value adjustments on our warrant, earn-out revaluation, and stock comp. We believe that this provides a clearer picture of the economics of the company's operating results. Please note that these non-cash adjustments can have both a positive and a negative impact on net income. With that background, our non-GAAP EPS for Q1 2023 was $0.27 per basic share and $0.23 per diluted share. This was flat compared to $0.27 per basic share and $0.23 per diluted share in the year ago period. In the appendix, you'll find a reconciliation between the GAAP and non-GAAP net income used in these calculations.

現在是非公認會計準則每股收益。在幻燈片 17 和 MD&A 中，我們還提供了非 GAAP 調整後淨利潤和調整後每股收益，其中不包括非現金公允價值調整對我們的認股權證、盈利重估和股票比較的影響。我們相信，這可以更清晰地了解公司經營業績的經濟性。請注意，這些非現金調整可能對淨利潤產生積極和消極影響。在此背景下，我們 2023 年第一季度的非 GAAP 每股基本每股收益為 0.27 美元，稀釋每股收益為 0.23 美元。與去年同期的每股基本股 0.27 美元和稀釋後每股 0.23 美元相比，這一數字持平。在附錄中，您將找到這些計算中使用的 GAAP 和非 GAAP 淨利潤之間的調節表。

I'll now hand it back over to Jon for a final summary before we take questions.

現在，在我們回答問題之前，我將把它交還給喬恩，讓他做最後的總結。

Thanks, Tim. Now turning to slide 18, as I mentioned earlier, we expect another year of solid growth in 2023, and we are reiterating our previously issued guidance with net sales in the range of $400 million to $425 million and adjusted EBITDA between $145 million and $155 million. As a reminder, these targets reflect the expectation of continued sales execution in our metal card business, as well as a net investment in Arculus at or below our net investment in 2022. In addition, this guidance takes into consideration some of the continuing uncertainty of the macro economic environment, and we continue to monitor these dynamics and our customers closely. And we believe we are well equipped to drive shareholder value.

謝謝，蒂姆。現在轉向幻燈片 18，正如我之前提到的，我們預計 2023 年將是又一個穩健增長的一年，我們重申之前發布的指導，淨銷售額在 4 億至 4.25 億美元之間，調整後 EBITDA 在 1.45 億至 1.55 億美元之間。提醒一下，這些目標反映了我們金屬卡業務持續銷售執行的預期，以及對 Arculus 的淨投資等於或低於我們 2022 年淨投資的預期。此外，本指引還考慮了一些持續的不確定性。宏觀經濟環境，我們將繼續密切關注這些動態和我們的客戶。我們相信我們有能力推動股東價值。

On slide 19, I want to end where I began. 2023 is off to a solid start following a record 2022. Demand for our premium metal cards remain strong, and we continue to execute on our sales goals and objectives for both new and existing programs. Sentiment from our largest clients also remains positive as consumer and business spending has proven to be resilient despite more challenging macro conditions. With Arculus, we are well positioned to deliver enhanced security and cold storage solutions for businesses and millions of people around the world. The opportunity ahead is immense, and we will continue to innovate our product suite with a prudent approach to capital allocation and driving efficiencies in our business to maximize the bottom line.

在幻燈片 19 上，我想從開始的地方結束。繼 2022 年創下紀錄之後，2023 年迎來了良好的開端。對我們優質金屬卡的需求依然強勁，我們將繼續執行新項目和現有項目的銷售目標和目標。儘管宏觀環境更具挑戰性，但消費者和企業支出已被證明具有彈性，因此我們最大客戶的情緒也保持積極。借助 Arculus，我們能夠為全球企業和數百萬人提供增強的安全性和冷藏解決方案。未來的機會是巨大的，我們將繼續創新我們的產品組合，採取審慎的資本配置方法並提高業務效率，以最大限度地提高利潤。

Thank you all for your time today, and I look forward to your questions.

感謝大家今天抽出寶貴的時間，期待你們的提問。

Thank you. (Operator Instructions)

謝謝。 （操作員說明）

John Todaro, Needham and Company.

約翰·托達羅，李約瑟公司。

Great. Thanks for taking my question. I just have one here and that relates to Apple. So Apple has been pushing more into consumer finance. Just wanted to get some commentary from you guys. Is there an increasing concern, whether it's Apple Pay or some of the other products, that challenge cards offerings? Or is there actually an opportunity here to add Apple and some other similar companies as customers?

偉大的。感謝您提出我的問題。我這裡只有一個與蘋果有關的。因此，蘋果一直在加大力度進軍消費金融領域。只是想得到你們的一些評論。人們是否越來越擔心，無論是 Apple Pay 還是其他一些產品，都會對銀行卡產品帶來挑戰？或者這裡實際上有機會將蘋果和其他一些類似的公司添加為客戶嗎？

Thanks, John, for the question. I think as we think about the things that Apple is doing on the savings side, you can split that up between -- on the card side, what's been publicly disclosed is Goldman's losing a lot of money on that business at this point. Struggling to sort of find their way. I think they have had some success on the saving side. We have not seen trends on the Apple Pay side that cause us any greater concern. It's something we monitor. But as I've said on these calls prior, we think cards are going to be around a long time and that view hasn't changed.

謝謝約翰提出這個問題。我認為，當我們考慮蘋果在儲蓄方面所做的事情時，你可以將其分開——在信用卡方面，公開披露的是高盛目前在該業務上損失了大量資金。努力尋找自己的出路。我認為他們在節約方面取得了一些成功。我們還沒有看到 Apple Pay 方面的趨勢引起我們更大的擔憂。這是我們監控的東西。但正如我之前在這些電話中所說的那樣，我們認為卡片將存在很長一段時間，並且這種觀點沒有改變。

Great. Thanks for that, Jon.

偉大的。謝謝你，喬恩。

Reggie Smith, JPMorgan.

雷吉·史密斯，摩根大通。

Good evening, gentlemen. Congrats on the quarter. Two quick questions from me. First, I know you guys are stepping into some pretty difficult [growth] or [compares] next quarter. And I was hoping you could shed some light on, I guess, kind of quarterly revenue cadence and maybe what the growth rate could look like in the next few quarters? And then secondarily to that, you kind of [boast] to recognizing that the potential strength in the financial markets and banks. But I was curious how you are thinking about metal card growth longer-term. You still see as a double digit grower? And whether your view has modified or changed in light of where we are in the cycle?

晚上好，先生們。恭喜本季度。我問了兩個簡單的問題。首先，我知道你們下個季度將進入一些相當困難的[增長]或[比較]。我希望你能透露一些季度收入節奏以及未來幾個季度的增長率會是什麼樣子？其次，你有點[吹噓]認識到金融市場和銀行的潛在實力。但我很好奇您如何看待金屬卡的長期增長。您仍將其視為兩位數種植者嗎？您的觀點是否根據我們所處的周期發生了變化？

So thanks for the question, Reggie. I'm going to take those in reverse order and just talk about kind of the macro overall and then address the revenue cadence. So as we look at the macro overall, we tried in the presentation to give some perspective on what we're seeing in the market based on publicly available data to help provide some sentiment, which is -- our view is that our clients and others still see strong purchase volume growth. They're still investing in card acquisition. And they're still looking at the kind of back half of the year, fourth quarter, trying to understand what will unfold. But generally, as we looked at earnings releases, they all seemed generally positive on the growth -- it's important to us as a company.

謝謝你的提問，雷吉。我將以相反的順序討論這些內容，只討論總體宏觀情況，然後討論收入節奏。因此，當我們整體審視宏觀時，我們試圖在演示中根據公開數據對我們在市場上看到的情況給出一些看法，以幫助提供一些情緒，即我們的觀點是，我們的客戶和其他人購買量仍然強勁增長。他們仍在投資購卡。他們仍在關註今年下半年、第四季度的情況，試圖了解將會發生什麼。但總的來說，當我們查看收益發佈時，它們似乎都對增長普遍持積極態度——這對我們作為一家公司來說很重要。

As we think about the revenue cadence, we haven't broken it down by quarter for you guys, Reggie. We've stuck to the $400 million to $425 million. And you can begin to do some math based on kind of where we are coming out of this quarter and what the rest of the year could look like.

當我們考慮收​​入節奏時，我們還沒有為你們按季度細分，雷吉。我們一直堅持 4 億至 4.25 億美元。您可以開始根據本季度的情況以及今年剩餘時間的情況進行一些數學計算。

Got it. And so, I guess kind of assume similar seasonality to previous years is the takeaway there in terms of quarterly?

知道了。因此，我想有點假設與前幾年類似的季節性是季度方面的外賣？

Yes, we don't see -- I think it's less seasonal for us, Reggie, more just related to timing of orders and deliveries and shipments and other things versus necessarily expecting a specific quarter to be up or down based on time of year.

是的，我們沒有看到——雷吉，我認為這對我們來說季節性較少，更多地與訂單、交貨和裝運以及其他事情的時間有關，而不是必然預期特定季度會根據一年中的時間而上升或下降。

Understood. If I could sneak two more in, just to clarify, if I'm remembering correctly, most of your bank partners are kind of top 10 banks mode -- I know the top two, your two largest partners are pretty massive. But I guess I just wanted to frame, I guess, the potential regional bank exposure -- like I would imagine, it is a pretty small piece of your business? Is that fair?

明白了。如果我能再偷偷溜進去兩個，只是為了澄清一下，如果我沒記錯的話，你們的大多數銀行合作夥伴都屬於十大銀行模式——我知道前兩名，你們最大的兩個合作夥伴規模相當大。但我想我只是想框架潛在的區域銀行風險敞口——就像我想像的那樣，這只是您業務的一小部分？這公平嗎？

Yes, I wanted to actually address it even more directly if I could, Reggie. We have no direct exposure to kind of the banks that have been taken over, in that we have no deposit relationship, we have no lending relationship, not in our lending facility. And we have no outstanding receivables or card sales to any of those specific banks. In addition to that, your point is a fair one, which is for better or worse, our revenue is concentrated with larger players, Chase, American Express, Capital One, and others. We've talked on prior calls about opening up Wells Fargo as a new client as well. So yes, the smaller regional banks make up a very small percentage. At same time, we'd like to grow with them over time. But what's happening with those regional banks today is not impacting our business.

是的，如果可以的話，我想更直接地解決這個問題，雷吉。我們與被接管的銀行沒有直接接觸，因為我們沒有存款關係，我們沒有貸款關係，也沒有我們的貸款設施。我們對任何這些特定銀行都沒有未償還的應收賬款或卡銷售。除此之外，你的觀點是公平的，無論好壞，我們的收入都集中在較大的參與者，大通銀行、美國運通、第一資本等公司。我們在之前的電話會議中也談到了將富國銀行作為新客戶開放的問題。所以，是的，規模較小的地區性銀行只佔很小的比例。與此同時，我們希望與他們一起成長。但今天這些區域銀行發生的事情並沒有影響我們的業務。

All right. Understood. If I could get one more in and I promise to be my last question. You highlighted a payment plus authentication pilot that you're doing with the crypto partner. I was just hoping you could kind of talk about what are the steps in that pilot? Like how does that play out? When could it actually become a real account or revenue contributor? If you follow my question, so like, timeline of how to how that plays out? Thank you.

好的。明白了。如果我能再問一個問題，我保證這是我的最後一個問題。您強調了您正在與加密貨幣合作夥伴進行的支付加身份驗證試點。我只是希望你能談談該試點項目的步驟是什麼？效果如何？什麼時候才能真正成為真實賬戶或收入貢獻者？如果您遵循我的問題，那麼如何進行的時間表？謝謝。

Sure. And Reggie, thank you for the questions. We appreciate it. So I just wanted to make sure I'm highlighting what it is again, which is, if you think about the crypto space, we play a lot in self custody or cold storage. The authentication capabilities actually let an exchange lock down their hot wallet. So, a customer, instead of using a username and password to login would use our card and the combination of biometric or pin to login and secure the hot wallet. And that's the pilot that we're ramping up. And for them, it is kind of ramping up the customer pilot, being able to observe that data, and then roll it out further from there. I would suggest to you that that will ramp up in the back half of the year. And we would anticipate if that goes well that the impact of that one would more be a 24 impact.

當然。雷吉，謝謝你的提問。我們很感激。所以我只是想確保我再次強調它是什麼，也就是說，如果你考慮一下加密貨幣領域，我們在自我保管或冷藏方面發揮了很多作用。身份驗證功能實際上可以讓交易所鎖定其熱錢包。因此，客戶無需使用用戶名和密碼登錄，而是使用我們的卡以及生物識別或個人識別碼的組合來登錄並保護熱錢包。這就是我們正在加強的試點。對於他們來說，這相當於加強客戶試點，能夠觀察這些數據，然後進一步推廣。我建議您，這一數字將在今年下半年有所增加。我們預計，如果進展順利，這一影響將更多地達到 24 小時。

Got it. Thank you so much.

知道了。太感謝了。

Thank you.

謝謝。

Chase White, Compass Point Research & Trading.

Chase White，Compass Point 研究與交易。

Thanks. So a couple of questions. First of all, what drove American Express's thinking in extending the contract so early in the process? And in your experience, when would you generally expect to have something to report on the JP Morgan contract? Obviously don't know exactly when, but just trying to get a sense of when we could hear care about that.

謝謝。有幾個問題。首先，是什麼促使美國運通這麼早就延長合同的想法？根據您的經驗，您通常希望什麼時候獲得有關摩根大通合約的報告？顯然不知道確切的時間，但只是想了解一下我們什麼時候可以聽到對此的關心。

Yes. So I'm going to reiterate. We were very pleased to extend the American Express contract through the middle of '26. There are a variety of reasons why some of our issuer partners look to extend contracts. I'm not going to comment specifically on this one. I apologize, but I'm not going to get more detailed. But we're very pleased to have 3.5 years, 3.25 years remaining on that agreement. And we think it's a testament to the partnership that we have and really have had for over 20 years with American Express.

是的。所以我要重申一下。我們非常高興將美國運通合同延長至 26 年中期。我們的一些發行合作夥伴希望延長合同的原因有多種。我不會專門評論這一點。我很抱歉，但我不會說得更詳細。但我們很高興該協議還剩 3.5 年、3.25 年。我們認為這證明了我們與美國運通 20 多年來的合作關係。

With respect to the Chase agreement, I commented last time that for us, we look at that as renewing in the normal course of business and expect to have an update as we give you results perhaps next quarter.

關於大通協議，我上次評論說，對我們來說，我們認為這是正常業務過程中的更新，並期望在下個季度向您提供結果時得到更新。

Yes, that's helpful. And then, how should we think about sort of the international -- the impact of the international expansion on the Arculus business kind of in the near to intermediate term? And when should we start to think about starting to see the impact of the authentication use cases outside of crypto, cold storage, and Arculus?

是的，這很有幫助。然後，我們應該如何考慮國際擴張——國際擴張在中短期內對 Arculus 業務的影響？我們什麼時候應該開始考慮開始看到加密、冷存儲和 Arculus 之外的身份驗證用例的影響？

So, we think we're making progress on both sides in terms of some of the partnerships that we had announced in earlier quarters starting to get launched and ramp up, both on the cold storage and the authentication side. So we'd hope to start to see progress on both towards the second half of the year. And you know, we're pleased with the pipeline there in terms of the opportunities that we're discussing, and we'll continue to update you guys on progress as we make it. Consistent with my comments, the level of investment and what we're doing there we said would be at or below the levels of last year, and our view is it's trending that way as we reported first quarter numbers.

因此，我們認為，就我們在前幾個季度宣布的一些合作夥伴關係而言，雙方都在取得進展，這些合作夥伴關係開始在冷存儲和身份驗證方面啟動和擴大。因此，我們希望在今年下半年開始看到這兩方面的進展。你知道，我們對我們正在討論的機會方面的進展感到滿意，我們將繼續向大家通報我們取得的進展。與我的評論一致，我們所說的投資水平和我們正在做的事情將等於或低於去年的水平，我們的觀點是，正如我們報告的第一季度數據一樣，它的趨勢也是如此。

Yes. Thank you.

是的。謝謝。

Thank you. Appreciate the questions.

謝謝。感謝您提出的問題。

Hal Goetsch, B. Riley.

哈爾·戈奇，B.萊利。

Hey, good afternoon, guys. I wanted to ask you about Arculus and your investment. I think you mentioned it's just over $4 million in the quarter. And some new partnerships were announced. But wanted to gauge your traction in asking, what -- if business takes off, if you get more product market, and if you get more traction, will there be a lessening of those losses in investment spend? Or will investment spend have to ramp if traction improves? They're trying to figure out what is the direction of the drag if there's success? And then looking at the (inaudible) to hit a kill switch and reduce it even further?

嘿，下午好，伙計們。我想向您詢問有關 Arculus 和您的投資的情況。我想你提到過這個季度的收入剛剛超過 400 萬美元。並宣布了一些新的合作夥伴關係。但想衡量一下你的吸引力，如果業務起飛，如果你獲得更多的產品市場，如果你獲得更多的吸引力，投資支出的損失會減少嗎？或者如果牽引力改善，投資支出是否必須增加？他們試圖弄清楚如果成功的話阻力的方向是什麼？然後看著（聽不清）按下終止開關並進一步減少它？

Yes. So Hal, thank you for the question and welcome to the call. I'd say we anticipate the direction going down in terms of the number that we gave you so that I'm clear is the net impact of revenue and investment. So it's sort of the net of the two. We haven't broken out revenue, we haven't broken out expense. We're giving you the net of the two. And so, the net of the two last year being about $21 million, we said the net of those two this year will be less. And we would hope to see that trending toward a lower number and positive over time.

是的。哈爾，感謝您提出問題並歡迎致電。我想說的是，我們預計我們提供給您的數字會下降，因此我很清楚收入和投資的淨影響。所以這是兩者的結合。我們沒有列出收入，也沒有列出支出。我們給你的是兩者的淨值。因此，去年兩者的淨值約為 2100 萬美元，我們說今年這兩者的淨值會更少。我們希望看到隨著時間的推移，這一數字趨於減少並呈積極趨勢。

Okay. I wanted to ask one follow-up. You mentioned like limited regional bank exposure, but also wanted to do more business with them. And where are you in discussions with larger regional banks? And where are their heads at using metal cards to differentiate versus large national money center banks and credit card issuers like Capital One, which spend a tremendous amount of money on marketing?

好的。我想問一個後續問題。您提到區域銀行的風險敞口有限，但也希望與他們開展更多業務。您與大型區域銀行的討論進展如何？他們在使用金屬卡來區別於大型國家貨幣中心銀行和信用卡發行商（如第一資本銀行）方面的頭腦在哪裡，這些機構在營銷上花費了大量資金？

Yes. So what I've talked about domestic growth opportunities outside of Chase and Amex, I've talked about folks like Capital One, I've talked about folks like Bank of America, who is a client, but on the smaller side. We think there's still tremendous opportunity. Wells Fargo, who we've opened up as a new client. And then yes, to your point, there are a whole set of regional banks that while today aren't a huge part of our business, we think have potential over time. And when I say over time, my point there isn't we think what's going on there will impact this year's performance. As we look out -- a number of years out, we'd like to see more of those banks as clients. Today, we do business with folks like US Bank, and there are a handful of others that we would put in that list, and we'd like to see that grow over time and add that onto the international growth story, our growth story with (inaudible). And we think those come together to complement the overall growth that we've been able to deliver in the market.

是的。因此，我談到了大通和美國運通之外的國內增長機會，我談到了像第一資本這樣的人，我談到了像美國銀行這樣的人，他們是我們的客戶，但規模較小。我們認為仍然存在巨大的機會。富國銀行，我們已將其作為新客戶。然後，是的，就你的觀點而言，有一整套區域性銀行，雖然目前還不是我們業務的重要組成部分，但我們認為隨著時間的推移它們將具有潛力。當我說隨著時間的推移，我的觀點是，我們認為發生的事情不會影響今年的表現。展望未來，幾年後，我們希望看到更多這些銀行成為我們的客戶。今天，我們與像美國銀行這樣的人做生意，還有一些其他人我們會列入這個名單，我們希望看到它們隨著時間的推移而增長，並將其添加到國際增長故事中，我們的增長故事與（聽不清）。我們認為這些因素結合在一起可以補充我們在市場上實現的整體增長。

Okay. Thank you very much.

好的。非常感謝。

Thank you. Appreciate it.

謝謝。欣賞它。

Thank you for your questions. I would now like to turn it back to Jon Wilk for closing remarks.

謝謝您的提問。現在我想請喬恩·威爾克（Jon Wilk）發表結束語。

Thanks, operator. We appreciate the time this evening and hope everyone has a good night. Thank you.

謝謝，接線員。我們感謝今晚的時光，並希望每個人都有一個美好的夜晚。謝謝。