(PMTS) 2022 Q3 法說會逐字稿

Hello, and welcome to CPI Card Group's third-quarter 2022 earnings call. My name is Sam, and I'll be your operator today. (Operator Instructions)

您好，歡迎參加 CPI Card Group 的 2022 年第三季度財報電話會議。我的名字是山姆，今天我將成為你的接線員。 （操作員說明）

And now I'd like to turn the call over to Mike Salop, CPI's Head of Investor Relations, to begin. Mike, please go ahead.

現在我想把電話轉給 CPI 投資者關係主管 Mike Salop 開始。邁克，請繼續。

Thanks, operator, and good morning, everyone. Welcome to the CPI Card Group third-quarter 2022 earnings webcast and conference call. Today's date is November 3, 2022. And on the call today from CPI Card Group are Scott Scheirman, President and Chief Executive Officer; and Amintore Schenkel, Chief Financial Officer.

謝謝，接線員，大家早上好。歡迎來到 CPI Card Group 2022 年第三季度財報網絡直播和電話會議。今天的日期是 2022 年 11 月 3 日。今天來自 CPI Card Group 的電話是總裁兼首席執行官 Scott Scheirman；和首席財務官 Amintore Schenkel。

Before we begin, I'd like to remind everyone that this call may contain forward-looking statements as they are defined under the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For discussion of such risks and uncertainties, please see CPI Card Group's most recent filings with the SEC. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statement to reflect the events that occur after this call.

在我們開始之前，我想提醒大家，本次電話會議可能包含根據 1995 年《私人證券訴訟改革法案》定義的前瞻性陳述。這些陳述受到某些風險和不確定性的影響，可能導致實際結果不同實質上來自前瞻性陳述中表達的內容。有關此類風險和不確定性的討論，請參閱 CPI Card Group 向 SEC 提交的最新文件。今天做出的所有前瞻性陳述僅反映我們當前的預期，我們不承擔更新任何陳述以反映本次電話會議後發生的事件的義務。

Also, during the course of today's call, the company will be discussing one or more non-GAAP financial measures including, but not limited to, EBITDA, adjusted EBITDA, adjusted EBITDA margin, net leverage ratio and free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in the press release and slide presentation we issued this morning.

此外，在今天的電話會議中，公司將討論一項或多項非公認會計準則財務指標，包括但不限於 EBITDA、調整後的 EBITDA、調整後的 EBITDA 利潤率、淨槓桿率和自由現金流。這些非公認會計原則財務指標與最直接可比的公認會計原則指標的對賬包含在我們今天上午發布的新聞稿和幻燈片演示中。

Copies of today's press release as well as the presentation that accompanies this conference call are accessible on CPI's Investor Relations website, investor.cpicardgroup.com. In addition, CPI's Form 10-Q for the quarter ended September 30, 2022 will be available on CPI's Investor Relations website.

今天的新聞稿副本以及本次電話會議隨附的演示文稿可在 CPI 的投資者關係網站investor.cpicardgroup.com 上獲取。此外，CPI 的截至 2022 年 9 月 30 日的季度的 10-Q 表格將在 CPI 的投資者關係網站上提供。

And now I'd like to turn the call over to President and Chief Executive Officer, Scott Scheirman.

現在我想把電話轉給總裁兼首席執行官 Scott Scheirman。

Thanks, Mike, and good morning, everyone. During today's call, I will provide an overview of CPI's performance in the third quarter, update our 2022 expectations, and review our long-term strategy. Amintore will review the quarterly financial results in more detail, and then we will open up the call for questions.

謝謝，邁克，大家早上好。在今天的電話會議中，我將概述 CPI 在第三季度的表現，更新我們對 2022 年的預期，並回顧我們的長期戰略。 Amintore 將更詳細地審查季度財務業績，然後我們將開放提問。

We will start on Slide 4. We had an outstanding third quarter with strong sales growth across our portfolio which generated operating leverage and significant increases in profitability. Net sales increased 25% to $125 million, our third consecutive record quarterly sales level, led by 31% growth in our debit and credit segments and 8% growth in our prepaid debit segment.

我們將從幻燈片 4 開始。我們的第三季度表現出色，整個投資組合的銷售增長強勁，這產生了經營槓桿並顯著提高了盈利能力。淨銷售額增長 25% 至 1.25 億美元，這是我們連續第三個創紀錄的季度銷售額水平，主要得益於借記和貸記業務增長 31% 以及預付借記業務增長 8%。

Our debit and credit business was again driven by strong growth from higher-priced contactless cards, but we saw good increases across our portfolio of solutions. Card sales growth in the segment resulted primarily from unit volume increases as more than 85% of Secure Card growth was due to volume, with the remainder from higher average selling prices due to price increases and favorable mix.

我們的借記卡和信用卡業務再次受到價格較高的非接觸式卡的強勁增長的推動，但我們的解決方案組合出現了良好的增長。該部門的卡銷售增長主要來自單位數量的增長，因為超過 85% 的安全卡增長是由於數量，其餘來自由於價格上漲和有利的組合導致的平均售價較高。

We sold 7 million eco-focused cards in the quarter, increasing our total to approximately 85 million cards sold since launch in late 2019. As we mentioned last quarter, eco-focused card sales will vary by quarter based on deliveries of large customer orders. The demand for our recovered ocean-bound plastic card offering remains very strong.

我們在本季度售出了 700 萬張以生態為重點的卡片，自 2019 年底推出以來，我們的總銷量增加到約 8500 萬張。正如我們上個季度所提到的，以生態為重點的卡片銷售額將根據大客戶訂單的交付情況而有所不同。對我們回收的海運塑料卡產品的需求仍然非常強勁。

Our sales growth generated strong operating leverage with net income increasing 80% to $12 million and adjusted EBITDA increasing 32% to $28 million in the quarter, despite inflationary impacts on production costs. Given these results and ongoing strong customer demand for our portfolio of innovative solutions, we have again increased our full year financial outlook. We now expect net sales growth for the full year to be in the low 20 percentage range, up from high teens in our previous outlook, and adjusted EBITDA growth in the high teens, up from low double digits previously.

儘管通貨膨脹對生產成本產生了影響，但我們的銷售增長產生了強勁的經營槓桿，淨收入增長了 80% 至 1200 萬美元，本季度調整後的 EBITDA 增長了 32% 至 2800 萬美元。鑑於這些結果以及客戶對我們創新解決方案組合的持續強勁需求，我們再次提高了全年財務展望。我們現在預計全年的淨銷售額增長將在 20% 的低位範圍內，高於我們之前展望中的高位，調整後的 EBITDA 增長率從之前的低兩位數增長到高位。

We continue to expect our full-year adjusted EBITDA margin to be slightly below 20%. This is shaping up to be another strong year of double-digit top line and bottom line growth for CPI despite the global macro challenges.

我們繼續預計我們全年調整後的 EBITDA 利潤率將略低於 20%。儘管面臨全球宏觀挑戰，但今年仍將成為 CPI 實現兩位數頂線和底線增長的又一個強勁年份。

Turning to Slide 5. We believe the strategies we have been executing for the past several years allowed us to deliver strong results and continue to position us well for the future. Our ongoing strategic priorities include deep customer focus, market-leading quality products and customer service, continuous innovation, and a market-competitive business model.

轉到幻燈片 5。我們相信，過去幾年我們一直在執行的策略使我們能夠取得強勁的成果，並繼續為我們的未來做好準備。我們持續的戰略重點包括以客戶為中心、市場領先的優質產品和客戶服務、持續創新以及具有市場競爭力的商業模式。

Some of the successes we experienced in the third quarter resulting from our strategies including leveraging innovative packaging solutions to win more business from existing prepaid customers and meeting the needs of fintech customers for print on-demand services.

我們在第三季度取得的一些成功源於我們的戰略，包括利用創新的包裝解決方案從現有的預付費客戶那裡贏得更多業務，以及滿足金融科技客戶對按需印刷服務的需求。

We also continue to be a leader in the US eco-focused card solution, a fast-growing area that is expected to have strong adoption over the coming years and Software as a Service-based instant issuance solutions for small and medium financial institutions. Our focus on customer service has resulted in deep and long-standing relationships with financial institution issuers of all sizes, bank platforms and resellers, prepaid program managers, and fintechs.

我們還將繼續成為美國以生態為重點的卡解決方案的領導者，這是一個快速發展的領域，預計在未來幾年將得到大力採用，以及面向中小型金融機構的基於軟件即服務的即時發行解決方案。我們對客戶服務的關注導致與各種規模的金融機構發行人、銀行平台和經銷商、預付費項目經理和金融科技公司建立了深厚而長期的關係。

The strategic emphasis on operating and market-competitive business model encompasses driving efficiency and productivity throughout our business, with ongoing process improvements, operational automation, and technology and equipment advancement. This emphasis has helped contribute to our 2022 results, and we are delivering record sales levels despite supply chain challenges, a competitive labor environment, and inflationary pressures.

對運營和市場競爭商業模式的戰略重點包括在整個業務中提高效率和生產力，同時不斷改進流程、運營自動化以及技術和設備的進步。這種重視有助於促成我們 2022 年的業績，儘管存在供應鏈挑戰、競爭激烈的勞動力環境和通貨膨脹壓力，我們仍實現了創紀錄的銷售水平。

Customer demand has been very strong, but we would not have been able to deliver against it without the improvements we have made in our business. Specifically, we have invested in equipment and technology and make process changes that allowed us to increase our Secure Card capacity by nearly 50% this year. We've also worked to reduce customer lead times from the high levels prompted last year by supply chain disruptions, which have affected the entire industry.

客戶需求一直非常強勁，但如果沒有我們在業務中做出的改進，我們將無法實現這一目標。具體來說，我們在設備和技術上進行了投資，並進行了流程變更，使我們今年的安全卡容量增加了近 50%。我們還努力將客戶交貨時間從去年因供應鏈中斷而引發的高水平縮短，這影響了整個行業。

To summarize, our strategic priorities have contributed greatly to our success driving sales growth, market share gains, and operating leverage, and we will continue to focus on these areas moving forward.

總而言之，我們的戰略重點極大地促進了我們成功推動銷售增長、市場份額增加和經營槓桿，我們將繼續專注於這些領域的發展。

Now I will turn the call over to Amintore to review our third-quarter results in more detail. Amintore?

現在我將把電話轉給 Amintore，以更詳細地審查我們的第三季度業績。阿明托？

Thank you, Scott, and good morning, everyone.

謝謝你，斯科特，大家早上好。

I will begin my overview on Slide 7. Third-quarter net sales increased 25% to $124.6 million compared to the prior year quarter, led by volume growth as price increases provided a low single-digit contribution to the growth percentage. The 31% increase in our debit and credit segment was primarily due to increased sales of higher-priced contactless cards, but we saw good growth across our portfolio, including contact cards, personalization services and Card@Once instant issuance solutions.

我將從幻燈片 7 開始我的概述。與去年同期相比，第三季度淨銷售額增長了 25%，達到 1.246 億美元，這主要是由於價格上漲對增長百分比的貢獻很小，因此銷量增長。我們的借記卡和信用卡業務增長了 31%，這主要是由於價格較高的非接觸式卡的銷售額增加，但我們看到我們的產品組合實現了良好的增長，包括接觸式卡、個性化服務和 Card@Once 即時發行解決方案。

Prepaid debit segment sales increased 8% compared with the prior year, driven by growth with existing customers as well as benefits from price increases. Third-quarter gross profit of $48.4 million increased 29% from the prior year, while gross profit margin increased from 37.8% to 38.9% driven by operating leverage from sales growth including benefits and price increases, partially offset by the impact of inflation on production costs primarily on materials cost.

由於現有客戶的增長以及價格上漲帶來的好處，預付借記業務的銷售額與去年相比增長了 8%。第三季度毛利潤為 4840 萬美元，同比增長 29%，而毛利率從 37.8% 上升至 38.9%，這主要得益於銷售增長帶來的經營槓桿，包括福利和價格上漲，部分被通脹對生產成本的影響所抵消主要是材料成本。

SG&A expenses increased by $3.9 million in the quarter compared to the prior year but declined $600,000 compared to the second quarter. The year-over-year SG&A increase was primarily due to approximately $2 million of increased compensation expenses and approximately $1.5 million of incremental professional services costs, including costs related to Sarbanes-Oxley compliance. The compensation expense increase reflects higher headcount and labor rates and $800,000 of incremental stock compensation expense, partially offset by comparisons with severance expense incurred in 2021.

與去年同期相比，本季度的 SG&A 費用增加了 390 萬美元，但與第二季度相比下降了 60 萬美元。 SG&A 同比增長主要是由於增加了約 200 萬美元的補償費用和約 150 萬美元的增量專業服務成本，包括與 Sarbanes-Oxley 合規相關的成本。補償費用的增加反映了更高的員工人數和勞動力率以及 800,000 美元的增量股票補償費用，與 2021 年發生的遣散費相比部分抵消了。

Our tax rate was 25.8% in the quarter, down from 30.3% in the prior year and our year-to-date rate of 28.5% reflects the expected 2022 rate given our current financial outlook. Net income in the third quarter increased 80% to $11.9 million and adjusted EBITDA increased 32% to $28.3 million. Adjusted EBITDA margin improved from 21.6% in the prior year to 22.7% in the 2022 third quarter, driven by operating leverage from the strong sales, including pricing benefits.

本季度我們的稅率為 25.8%，低於上一年的 30.3%，而我們年初至今的 28.5% 的稅率反映了考慮到我們當前的財務前景的 2022 年預期稅率。第三季度淨收入增長 80% 至 1190 萬美元，調整後 EBITDA 增長 32% 至 2830 萬美元。調整後的 EBITDA 利潤率從上一年的 21.6% 提高到 2022 年第三季度的 22.7%，這得益於強勁銷售帶來的經營槓桿，包括定價優勢。

Turning now to our year-to-date financial results on Slide 8. Net sales for the first nine months of the year reached a record level of $349.3 million, a 24% increase compared to the prior year. By segment, debit and credit sales increased 31% and prepaid debit increased 1%. Nine-month debit and credit sales growth was primarily driven by contactless cards, including eco-focused cards and Card@Once instant issuance solutions. The segment has benefited in 2022 from large eco-focused card orders and high printer replacement sales in Card@Once, but we continue to feel positive about ongoing demand for our portfolio of differentiated solutions.

現在轉向我們在幻燈片 8 上的年初至今財務業績。今年前九個月的淨銷售額達到創紀錄的 3.493 億美元，比去年增長 24%。按部門劃分，借記卡和貸記卡銷售額增長了 31%，預付借記卡增長了 1%。九個月的借記卡和信用卡銷售增長主要由非接觸式卡推動，包括以生態為重點的卡和 Card@Once 即時發行解決方案。該部門在 2022 年受益於 Card@Once 的大量以生態為重點的卡片訂單和高打印機更換銷售，但我們繼續對我們的差異化解決方案組合的持續需求感到樂觀。

We're also pleased with the increase in prepaid debit sales given the record year in 2021, which benefited from the onboarding of new customer portfolios and retail inventory replenishment following the COVID slowdown in the prior year. Year-to-date gross profit of $128.3 million increased 16% from the prior year, while gross profit margin decreased from 39.2% to 36.7% due to inflationary impacts on production costs primarily materials, partially offset by pricing benefits.

鑑於 2021 年創紀錄的一年，我們也對預付借記銷售額的增長感到高興，這得益於前一年 COVID 放緩後新客戶組合的加入和零售庫存補充。年初至今的毛利潤為 1.283 億美元，比上年增長 16%，而由於通貨膨脹對生產成本（主要是材料）的影響，毛利率從 39.2% 下降至 36.7%，部分被定價收益所抵消。

SG&A expenses increased by $12 million in the first nine months compared to the prior year, primarily due to $6 million of increased compensation expenses including approximately $3 million of additional stock compensation and approximately $3.5 million of incremental professional services costs.

與去年同期相比，前九個月的 SG&A 費用增加了 1200 萬美元，主要是由於薪酬費用增加了 600 萬美元，其中包括約 300 萬美元的額外股票薪酬和約 350 萬美元的增量專業服務成本。

Year-to-date net income increased 58% to $24.1 million primarily due to the sales growth and the impact of debt refinancing costs incurred in the 2021 first quarter. Adjusted EBITDA increased 12% to $70.5 million while adjusted EBITDA margins declined from 22.3% in the prior year to 20.2% in the first nine months of 2022. The increase in adjusted EBITDA was driven by sales growth and the resulting operating leverage, partially offset by increased production and SG&A costs.

年初至今的淨收入增長 58% 至 2410 萬美元，主要是由於銷售增長和 2021 年第一季度產生的債務再融資成本的影響。調整後 EBITDA 增長 12% 至 7,050 萬美元，而調整後 EBITDA 利潤率從上一年的 22.3% 下降至 2022 年前九個月的 20.2%。調整後 EBITDA 的增長是由銷售增長和由此產生的經營槓桿推動的，部分抵消了增加生產和 SG&A 成本。

Turning now to our segments on Slide 9. I mentioned the segment sales drivers earlier so I will just discuss segment profitability on this slide. Income from operations for the debit and credit segment increased 44% in the quarter to $29.4 million, driven by the higher net sales and operating leverage partially offset by higher production costs, primarily material. For the first nine months, debit and credit segment income from operations increased 29%, driven by the same factors as the third quarter.

現在轉到幻燈片 9 上的細分市場。我之前提到了細分市場的銷售驅動因素，所以我將在這張幻燈片上討論細分市場的盈利能力。借方和貸方部門的運營收入在本季度增長了 44%，達到 2940 萬美元，這是由於較高的淨銷售額和運營槓桿部分被較高的生產成本（主要是材料）所抵消。前九個月，在與第三季度相同的因素推動下，來自運營的借方和信貸部門收入增長了 29%。

Prepaid debit segment income from operations increased 7% in the quarter to $9.1 million, driven by higher net sales, partially offset by increased material costs. For the first nine months, prepaid debit segment income from operations decreased 12%, primarily due to the inflationary impact on production costs, with the majority of the impact on materials.

受淨銷售額增加的推動，本季度預付借記業務收入增長 7% 至 910 萬美元，但部分被材料成本增加所抵消。前九個月，預付借記分部的運營收入下降了 12%，主要是由於通貨膨脹對生產成本的影響，其中大部分影響是對材料的影響。

Turning to the balance sheet, liquidity, and cash flow on Slide 10. Our cash balance as of September 30 was $21.5 million, and we had $25 million of borrowings outstanding on our $75 million ABL revolver with proceeds utilized to fund our notes redemption in the first quarter and working capital needs. We had $290 million of senior secured notes outstanding, and our net leverage ratio as of quarter end was 3.6 times.

轉向幻燈片 10 上的資產負債表、流動性和現金流量。截至 9 月 30 日，我們的現金餘額為 2150 萬美元，我們在 7500 萬美元的 ABL 左輪手槍上有 2500 萬美元的未償借款，所得款項用於為我們的票據贖回提供資金。第一季度和營運資金需求。我們有 2.9 億美元的高級擔保票據未償，截至季度末我們的淨槓桿率為 3.6 倍。

We generated $11.7 million of cash flow from operating activities in the first nine months of the year and utilized $14.4 million on capital expenditures, which resulted in year-to-date free cash flow being a usage of $2.7 million. In the prior year period, we had free cash flow generation of $9.7 million, which included $9.8 million of tax cash refund primarily related to the CARES Act and only $4.8 million of capital expenditures.

今年前 9 個月，我們從經營活動中產生了 1170 萬美元的現金流，並使用了 1440 萬美元的資本支出，這導致年初至今的自由現金流為 270 萬美元。在上一年期間，我們產生了 970 萬美元的自由現金流，其中包括主要與 CARES 法案相關的 980 萬美元的稅收現金返還和僅 480 萬美元的資本支出。

The free cash flow usage in the first nine months of this year was driven by increased inventory purchases of $14 million to continue to support customer demand and $15 million increase in accounts receivable, driven by the high sales levels in the third quarter. As expected, we experienced significant improvement in cash flow in the third quarter relative to earlier in the year.

今年前九個月的自由現金流使用量增加了 1400 萬美元以繼續支持客戶需求，以及由於第三季度的高銷售水平而增加了 1500 萬美元的應收賬款。正如預期的那樣，我們在第三季度的現金流相對於今年早些時候有了顯著改善。

Inventory levels decreased $3.6 million from the second quarter, and we generated $19.9 million of cash flow from operating activities and $13.6 million of positive free cash flow in the quarter. Our capital structure and allocation priorities remain focused on maintaining ample liquidity, investing in the business including possible strategic acquisitions, deleveraging the balance sheet, and potentially returning funds to stockholders.

庫存水平比第二季度減少了 360 萬美元，我們在本季度產生了 1990 萬美元的經營活動現金流和 1360 萬美元的正自由現金流。我們的資本結構和分配重點仍然集中在保持充足的流動性、投資業務，包括可能的戰略收購、資產負債表去槓桿化以及可能向股東返還資金。

Consistent with these priorities, we continue to target further lowering our net leverage ratio over time. To reiterate what Scott mentioned earlier, we have updated our full-year 2022 expectations to reflect growth in the low 20% range for net sales and high teens for adjusted EBITDA while maintaining expectations for an adjusted EBITDA margin of slightly below 20%.

與這些優先事項一致，我們將繼續致力於隨著時間的推移進一步降低我們的淨槓桿率。為了重申斯科特之前提到的內容，我們更新了我們對 2022 年全年的預期，以反映調整後 EBITDA 的淨銷售額在 20% 的低位增長和青少年的高增長，同時維持對調整後 EBITDA 利潤率略低於 20% 的預期。

I will now pass the call back to Scott for some closing remarks on Slide 11. Scott?

我現在將電話轉回給 Scott，讓我對幻燈片 11 做一些結束語。Scott？

Thanks, Amintore.

謝謝，阿明托雷。

The third quarter was the strongest quarter of what has been a very good year despite the ongoing macro challenges, and I would like to thank all of our employees for their contributions in delivering these results. We continue to experience high demand for our portfolio of innovative products and end-to-end solutions, and we generated strong sales growth across our portfolio in Q3, including contactless cards, personalization solutions, Card@Once, SaaS-based instant issuance, and our prepaid debit business.

儘管面臨持續的宏觀挑戰，但第三季度是非常好的一年中表現最強勁的一個季度，我要感謝我們所有員工為實現這些結果所做的貢獻。我們的創新產品組合和端到端解決方案的需求持續旺盛，我們在第三季度的產品組合中實現了強勁的銷售增長，包括非接觸式卡、個性化解決方案、Card@Once、基於 SaaS 的即時發行和我們的預付借記業務。

This growth translated into strong operating leverage driving healthy profitability increases. We also made improvements in our financial position in the quarter, bringing net leverage down to 3.6 times, and we'll continue to target further reductions. We are pleased once again to be able to increase our outlook for sales and adjusted EBITDA growth and continue to be confident in the long-term opportunities for our company.

這種增長轉化為強勁的經營槓桿，推動了健康的盈利能力增長。我們還在本季度改善了財務狀況，將淨槓桿率降至 3.6 倍，我們將繼續以進一步降低為目標。我們再次很高興能夠提高我們的銷售前景和調整後的 EBITDA 增長，並繼續對我們公司的長期機遇充滿信心。

Thank you for joining our call today, and we will now open the call for any questions.

感謝您今天加入我們的電話，我們現在將打開電話以解決任何問題。

(Operator Instructions) Jaeson Schmidt, Lake Street.

（操作員說明）傑森施密特，湖街。

Hey, guys, thanks for taking my questions and congrats on a really strong quarter. Just want to start with the supply chain. Just curious your confidence level in securing supply not only in Q4, but as you start to look out into next year? And I guess relatedly, are you assuming any supply chain constraints for Q4?

嘿，伙計們，感謝您提出我的問題，並祝賀一個非常強勁的季度。只想從供應鏈開始。只是好奇您對確保供應的信心水平，不僅在第四季度，而且在您開始展望明年的時候？我想相關的是，您是否假設第四季度有任何供應鏈限制？

Good morning, Jaeson. Thank you for joining the call. This is Scott. In Q4, we've got pretty good visibility as far as customer orders, what our supply chain looks like. So we're confident in our full-year outlook for sure. So we've got really good line of sight there. Longer term, as you think about, say, 2023, we feel good about our supply chain.

早安，傑森。感謝您加入通話。這是斯科特。在第四季度，我們對客戶訂單以及我們的供應鏈狀況有了很好的了解。因此，我們肯定對我們的全年前景充滿信心。所以我們那裡的視線非常好。從長遠來看，比如 2023 年，我們對我們的供應鏈感覺良好。

We are working closely with our vendor partners every week. There's no guarantees with these global supply chains and markets for sure, but we feel like we've done all the right things to secure our supply chain. At the end of the day, our vendor partners have to deliver at the right time, too. But overall, we feel good about the supply chain.

我們每週都與我們的供應商合作夥伴密切合作。這些全球供應鍊和市場肯定無法保證，但我們覺得我們已經做了所有正確的事情來保護我們的供應鏈。歸根結底，我們的供應商合作夥伴也必須在正確的時間交付。但總的來說，我們對供應鏈感覺良好。

Okay. No, that's good to hear. And then prepaid debit was extremely strong in Q3 and implied Q4 guidance says -- it seems a bit more of a pronounced sequential decline than usual. Should we infer that you saw some pull-in orders in Q3? Or could you discuss some of the other dynamics going on?

好的。不，很高興聽到。然後預付借記在第三季度非常強勁，暗示第四季度的指導表明——這似乎比平時更明顯的連續下降。我們是否應該推斷您在第三季度看到了一些拉入訂單？或者你能討論一下正在發生的其他一些動態嗎？

Yes. I would say for -- specifically for our prepaid segment, prepaid tends to be the -- historically, if you look back, Jaeson, of the four quarters in the year, the highest quarter from a revenue standpoint primarily getting cards ready for the holiday season in December in the US from that standpoint. When you look at our full-year guidance, again, at the top line, low 20s growth. So we continue to be confident in the strong customer growth, the pipeline we can see, and so forth.

是的。我會說 - 特別是對於我們的預付部分，預付往往是 - 從歷史上看，如果你回顧一下，Jaeson，在一年中的四個季度中，從收入的角度來看，最高的季度主要是為假期準備卡片從這個角度來看，美國 12 月的季節。當您再次查看我們的全年指導時，最重要的是 20 多歲的低增長。因此，我們繼續對強勁的客戶增長、我們可以看到的渠道等充滿信心。

So again, there are some timing differences among quarters for sure at probably every company around the globe, but we feel confident in '22 and the strong customer demand that we're seeing.

同樣，全球每家公司可能在季度之間肯定存在一些時間差異，但我們對 22 年以及我們所看到的強勁客戶需求充滿信心。

Yes, okay. And then the last one (inaudible)

是的，好的。然後是最後一個（聽不清）

Sorry, just to add from a prepaid perspective. We expect it to be similar for the full year to what it was last year, and nine months were up 1% on prepaid. So fourth quarter in terms of growth rates would be pretty much in line with that.

抱歉，只是從預付費的角度添加。我們預計全年的情況將與去年相似，九個月的預付費用增長了 1%。因此，第四季度的增長率將與此基本一致。

Okay. Got it. And then just the last one for me, and I'll jump back in the queue. I'm just curious if contactless card penetration is tracking relatively to your expectations? Or is it outperforming what you had expected? Any color around that would be helpful.

好的。知道了。然後是我的最後一個，我會跳回隊列中。我只是好奇非接觸式卡的滲透率是否相對於您的預期？或者它的表現是否超出了您的預期？周圍的任何顏色都會有幫助。

Yes. No, it's -- I'll give you our best estimates, Jaeson. There's no pure market statistics out there as you could imagine. But we think in the US, at the end of '21, the [DI] penetration or the contactless penetration was approximately 40%. We think, again, it's an estimate that as we end '22, that might be somewhere between 50% to 60%. We think by the end of '25, probably 80% of the cards outstanding will be contactless.

是的。不，它是——傑森，我會給你我們最好的估計。正如您所想像的那樣，沒有純粹的市場統計數據。但我們認為在美國，在 21 年底，[DI] 滲透率或非接觸式滲透率約為 40%。我們再次認為，估計到 22 年結束時，這可能在 50% 到 60% 之間。我們認為到 25 年底，可能 80% 的未發行卡片將是非接觸式的。

So I would describe it as continue to be a gradual transition to contactless over probably a span of five-, six-, seven-year period. So it's progressing at a gradual pace as we move forward from that standpoint. And again, with contactless, what we like about that is they have -- it has a higher average selling price. It has more technology behind it.

因此，我將其描述為繼續逐步過渡到非接觸式，可能需要五、六、七年的時間。因此，隨著我們從這個角度向前推進，它正在逐步推進。再說一次，對於非接觸式，我們喜歡的是他們有——它有更高的平均售價。它背後有更多的技術。

We think the large financial institutions have adopted it a bit quicker compared to the small- and medium-sized FIs. And we're well positioned with the large FIs, but very, very well positioned with the small- and medium-sized financial institutions. So we think that will be a really good opportunity for us as we look over the next few years for sure.

我們認為，與中小型金融機構相比，大型金融機構採用它的速度要快一些。我們在大型金融機構方面處於有利地位，但在中小型金融機構方面處於非常非常有利的地位。因此，我們認為這對我們來說將是一個非常好的機會，因為我們肯定會展望未來幾年。

Okay, got it. Thanks a lot, guys.

好，知道了。非常感謝，伙計們。

Thank you, Jaeson. Appreciate your time.

謝謝你，傑森。珍惜你的時間。

Ivan Strugatsky, STRAN Capital.

Ivan Strugatsky, STRAN 資本。

Hi, good morning. Congratulations on an excellent quarter, and thank you for taking my questions. I'm just curious if you could provide a little bit more granularity or a bit more color on the debit and credit card side of things. Could you maybe help me understand a bit more how much of that was due to renewal replacement of the cards with your existing -- with the customers of your existing clients versus new customers of your existing clients? And maybe if you could also help me understand a bit more how much of that was debit versus credit as we might be entering into a sort of low credit cycle, so to speak. Thank you.

早上好。祝賀您取得了出色的季度成績，感謝您提出我的問題。我只是好奇您是否可以在藉記卡和信用卡方面提供更多的粒度或更多的顏色。您能否幫助我進一步了解其中有多少是由於用您現有的卡更新更換卡 - 您現有客戶的客戶與現有客戶的新客戶？也許如果你也可以幫助我更多地了解其中有多少是藉方與貸方，因為我們可能正在進入一種低信貸週期，可以這麼說。謝謝你。

Yes. No, I appreciate your question and joining the call today. I would -- let me give you some, I would say, broad color. For competitive reasons, I won't get into real granular detail for sure. But if you look back historically, what we believe, if you go back to the 2020 timeframe and prior that, probably 90% of the cards issued in the industry were I would describe as replacement in nature. So they might be due to lost or stolen, card reissuance or portfolio churn.

是的。不，我感謝您提出問題並今天加入電話會議。我會 - 讓我給你一些，我會說，廣泛的顏色。出於競爭原因，我肯定不會詳細介紹真正的細節。但是如果你回顧歷史，我們相信，如果你回到 2020 年的時間框架，在此之前，我認為行業中發行的卡中可能有 90% 本質上是替代性的。因此，它們可能是由於丟失或被盜、卡重新發行或投資組合流失造成的。

That 90% probably is not quite as high in 2022 because new card issuance across the banks have been very strong in 2022. I would say broadly -- how we're winning in the marketplace, I would say both it's with existing customers and new customers. In our Secure Card business, we've gained share historically, and I believe we're on a good path to continue to gain share in 2022 when we finally measure it at the beginning of the year.

這 90% 可能在 2022 年不會那麼高，因為 2022 年各銀行的新卡發行量非常強勁。我會廣泛地說——我們如何在市場上獲勝，我會說既有客戶，也有新客戶顧客。在我們的安全卡業務中，我們在歷史上獲得了份額，我相信我們正走在良好的道路上，在 2022 年我們最終在年初對其進行衡量時繼續獲得份額。

And I think that's really driven by our quality products, our strong customer service, but also our differentiated products. Our retail money -- excuse me, our recovered ocean-bound plastic card, we said earlier in the year that we expect that to grow by greater than 50% in 2022, and it's going to continue to grow in excess of that 50%. So I believe we're continuing to win in the marketplace and gain share as we move forward. Again, I hope that's helpful. But as I mentioned, for competitive reasons, I don't want to get too granular on some of these items.

我認為這真的是由我們的優質產品、我們強大的客戶服務以及我們的差異化產品推動的。我們的零售資金——對不起，我們回收的海運塑料卡，我們在今年早些時候說過，我們預計到 2022 年將增長 50% 以上，並且將繼續增長超過 50%。因此，我相信我們將繼續在市場上獲勝並在我們前進的過程中獲得份額。再次，我希望這會有所幫助。但正如我所提到的，出於競爭原因，我不想對其中一些項目過於細化。

Okay, understood. Thank you so much.

好的，明白了。太感謝了。

Okay. Thank you.

好的。謝謝你。

(Operator Instructions) And there are no further questions. So this concludes today's CPI Card Group third-quarter earnings call. Thank you for joining. You may now disconnect.

（操作員說明）並且沒有其他問題。因此，今天的 CPI Card Group 第三季度財報電話會議到此結束。感謝您的加入。您現在可以斷開連接。