(PMTS) 2022 Q4 法說會逐字稿

Welcome to CPI Card Group's Fourth Quarter 2022 Earnings Call. My name is Glenn, and I will be your operator today.

歡迎來到 CPI Card Group 的 2022 年第四季度財報電話會議。我叫格倫，今天我將是你的接線員。

(Operator Instructions)

（操作員說明）

Now I would like to turn the call over to Mike Salop, CPI's Head of Investor Relations. Mike?

現在我想把電話轉給 CPI 的投資者關係主管 Mike Salop。麥克風？

Thanks, operator, and good morning, everyone. Welcome to the CPI Card Group Fourth Quarter 2022 Earnings Webcast and Conference Call. Today's date is March 8, 2023, 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 年第四季度收益網絡直播和電話會議。今天的日期是 2023 年 3 月 8 日，今天來自 CPI Card Group 的電話會議是總裁兼首席執行官 Scott Scheirman；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 a discussion of such risks and uncertainties, please see CPI Card Group's most recent filings with the SEC.

在開始之前，我想提醒大家，本次電話會議可能包含 1995 年《私人證券訴訟改革法案》所定義的前瞻性陳述。這些陳述存在某些風險和不確定性，可能導致實際結果有所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 最近提交給美國證券交易委員會的文件。

All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to take any statement to reflect the events that occur after this call. 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. 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.

今天所做的所有前瞻性陳述僅反映我們當前的預期，我們沒有義務發表任何聲明來反映本次電話會議後發生的事件。此外，在今天的電話會議中，公司將討論一項或多項非 GAAP 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 GAAP 財務指標與最直接可比的 GAAP 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。可在 CPI 的投資者關係網站 investor.cpicardgroup.com 上獲取今天新聞稿的副本以及本次電話會議的演示文稿。

In addition, CPI's Form 10-K for the year ended December 31, 2022, will be available on CPI's Investor Relations website. And now I'd like to turn the call over to President and Chief Executive Officer, Scott Scheirman.

此外，CPI 截至 2022 年 12 月 31 日止年度的 10-K 表格將在 CPI 的投資者關係網站上提供。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 discuss CPI's performance in 2022, provide thoughts on our initial outlook for 2023 and reiterate our long-term strategy.

謝謝，邁克，大家早上好。在今天的電話會議中，我將討論 CPI 在 2022 年的表現，對我們對 2023 年的初步展望提出想法，並重申我們的長期戰略。

Amintore will review the financial results in more detail, and then we will open up the call for questions. We will start on Slide 4. 2022 was a great year for CPI. We increased sales 27% for the full year to a record level of $476 million, and we believe we gained significant overall market share.

Amintore 將更詳細地審查財務結果，然後我們將公開提問。我們將從幻燈片 4 開始。2022 年對 CPI 來說是豐收的一年。我們全年的銷售額增長了 27%，達到創紀錄的 4.76 億美元，我們相信我們獲得了顯著的整體市場份額。

We grew adjusted EBITDA 28% to $98 million and increased the adjusted EBITDA margin slightly to 20.5% despite significant inflationary impacts on costs. We also improved our net leverage ratio in 2022, ending the year at 3x, and retired $25 million of principal on our senior secured notes during the year.

我們將調整後的 EBITDA 增長了 28% 至 9800 萬美元，並將調整後的 EBITDA 利潤率略微提高至 20.5%，儘管通貨膨脹對成本產生了重大影響。我們還在 2022 年提高了淨槓桿率，年底為 3 倍，並在年內收回了我們優先擔保票據的 2500 萬美元本金。

And we ended 2022 on a high note with fourth quarter net sales increasing 36% and adjusted EBITDA increasing 100%. As we look back on 2022, there were 4 main drivers that were critical to our success. First was our differentiated, innovative products and services and end-to-end solutions; second, our market-leading quality and customer service; third, our strong supply chain execution while the industry faced challenges; and fourth, we benefited from a strong growth year for the card markets in the U.S.

我們以高調結束了 2022 年，第四季度淨銷售額增長了 36%，調整後的 EBITDA 增長了 100%。回顧 2022 年，有 4 個對我們的成功至關重要的主要驅動因素。首先是我們差異化的創新產品和服務以及端到端的解決方案；第二，我們市場領先的質量和客戶服務；第三，在行業面臨挑戰的同時，我們強大的供應鏈執行力；第四，我們受益於美國卡片市場強勁增長的一年

Our differentiated end-to-end solution, leading quality and customer service and strong supply chain execution, each contributed meaningfully to our market share gains. One example was our innovative eco-focused cards, which posted a 70% increase in sales for the year. Led by our cards made with recovered ocean-bound plastic core, we sold more than 40 million eco-focused cards in 2022, bringing our total to more than 90 million sold since the launch in mid-2019.

我們差異化的端到端解決方案、領先的質量和客戶服務以及強大的供應鏈執行力，每一項都對我們的市場份額增長做出了有意義的貢獻。一個例子是我們創新的以生態為中心的卡片，該卡片全年銷售額增長了 70%。在我們使用回收的海洋塑料芯製成的卡片的帶動下，我們在 2022 年售出了超過 4000 萬張環保卡片，使我們自 2019 年年中推出以來的總銷量超過 9000 萬張。

Another example is our differentiated Software-as-a-Service instant issuance solution, Card@Once, which delivered another excellent year. Growth was driven by new customer installations, strong printer upgrade sales and ongoing services revenue. At the end of the year, Card@Once installations across the U.S. totaled more than 14,000 customer locations.

另一個例子是我們差異化的軟件即服務即時發行解決方案 Card@Once，它又創造了出色的一年。增長是由新客戶安裝、強勁的打印機升級銷售和持續的服務收入推動的。到年底，Card@Once 在美國的安裝總數超過 14,000 個客戶地點。

Across our portfolio, our market-leading quality and customer service helped us gain more business with existing and new customers, including in prepaid, where we added new customer types beyond the traditional retail channels. In addition, we were able to significantly expand Secure Card production capacity during the year to meet customer needs and to fulfill demand in the market.

在我們的產品組合中，我們市場領先的質量和客戶服務幫助我們獲得了更多現有客戶和新客戶的業務，包括在預付費方面，我們在傳統零售渠道之外增加了新的客戶類型。此外，我們在這一年中能夠顯著擴大 Secure Card 的產能以滿足客戶需求和市場需求。

And we believe our strong execution and supply chain, including proactive inventory management during the year while the industry was challenged, also allowed us to gain more business in 2022. As you may recall, we entered last year with strong customer demand but faced significant supply chain and labor shortage challenges and the impact of inflation on our cost was escalating.

我們相信我們強大的執行力和供應鏈，包括在行業面臨挑戰的一年中積極的庫存管理，也使我們能夠在 2022 年獲得更多業務。您可能還記得，我們進入去年時客戶需求強勁，但面臨大量供應鍊和勞動力短缺的挑戰以及通貨膨脹對我們成本的影響正在升級。

I would like to thank all of our employees for their dedication and effort to tackle those challenges and deliver a record year, successfully increasing capacity, navigating global supply chains and serving our customers.

我要感謝我們所有的員工為應對這些挑戰所做的奉獻和努力，並創造了創紀錄的一年，成功地提高了產能，駕馭了全球供應鏈並為我們的客戶提供服務。

Before I discuss our 2023 outlook, I would like to also personally thank Amintore Schenkel for his strong contributions to our success since joining CPI. Amintore has informed us he will be leaving the company this year due to family-related personal reasons, but will stay on while we search for his replacement to help transition the new CFO once named.

在討論我們的 2023 年展望之前，我還想親自感謝 Amintore Schenkel 自加入 CPI 以來為我們的成功做出的巨大貢獻。 Amintore 已告知我們，由於與家庭相關的個人原因，他將於今年離開公司，但在我們尋找他的繼任者以幫助新 CFO 任命後的過渡期間，他將繼續留任。

In addition to his role in helping us drive profitability and improve our financial position, Amintore has led us towards successful SOX compliance and further developed our financial organization, leaving us with a strong financial team. Amintore will give some remarks and a further financial review in a few minutes.

除了在幫助我們提高盈利能力和改善財務狀況方面發揮的作用外，Amintore 還帶領我們成功地實現了 SOX 合規，並進一步發展了我們的財務組織，使我們擁有了一支強大的財務團隊。 Amintore 將在幾分鐘內發表一些評論和進一步的財務審查。

But first, let's turn to our 2023 outlook on Slide 5. For 2023, we're focused on continuing to execute on our strategies, grow the business, win share in the marketplace, increase cash flow and reduce leverage. We believe we are well positioned to continue to gain overall market share in 2023, with our portfolio of differentiated solutions and market-leading quality and customer service.

但首先，讓我們看看我們在幻燈片 5 上的 2023 年展望。對於 2023 年，我們的重點是繼續執行我們的戰略、發展業務、贏得市場份額、增加現金流和降低杠桿率。我們相信，憑藉我們差異化的解決方案組合以及市場領先的質量和客戶服務，我們有能力在 2023 年繼續獲得整體市場份額。

We anticipate continued benefits from the ongoing transition to contactless cards, more progress on providing end-to-end solutions to small- and medium-sized issuers, and further instant issuance penetration. Our initial financial outlook for 2023 projects mid-single-digit growth for net sales with higher expected net sales growth in our Debit and Credit segment, which comprised 82% of net sales last year, and Prepaid Debit segment net sales similar to the 2022 levels.

我們預計持續向非接觸式卡的過渡將繼續帶來好處，在為中小型發卡機構提供端到端解決方案方面取得更多進展，以及進一步的即時發卡滲透。我們對 2023 年的初步財務展望預計淨銷售額將實現中個位數增長，我們的借記和貸記業務的淨銷售額預計將實現更高的增長，佔去年淨銷售額的 82%，而預付借記業務的淨銷售額與 2022 年的水平相似.

The net sales outlook reflects expectations for slower market growth in 2023 as last year benefited from robust customer demand. We anticipate issuers being more cautious regarding the U.S. economic environment, tightly managing spending and orders as they assess the consumer trends and their own inventory levels and potentially increasing credit underwriting standards.

淨銷售額前景反映了對 2023 年市場增長放緩的預期，因為去年受益於強勁的客戶需求。我們預計發行人對美國經濟環境更加謹慎，在評估消費趨勢和自身庫存水平時嚴格管理支出和訂單，並可能提高信貸承銷標準。

Debit cards, which today make up the majority of the market, tend to be less affected by economic conditions. And historically, around 90% of payment card issuance is for reissuance and replacements. So we still expect the market to grow overall, but not as strong as 2022.

如今佔市場大部分的借記卡往往受經濟狀況的影響較小。從歷史上看，大約 90% 的支付卡發行是為了重新發行和更換。所以我們仍然預計市場會整體增長，但不會像 2022 年那樣強勁。

Also faced challenging comparisons with our 2022 performance as the 27% net sales growth last year benefited from significant contributions by large portfolio additions with existing customers, particularly eco-focused cards, and strong Card@Once printer upgrade sales.

與我們 2022 年的業績相比也具有挑戰性，因為去年 27% 的淨銷售額增長得益於現有客戶的大量產品組合增加的重大貢獻，特別是以生態為中心的卡片，以及強勁的 Card@Once 打印機升級銷售。

As we did last year, we will remain nimble and ready to adapt as the market and economic conditions evolve and customers' plans change. On the profitability side, we expect adjusted EBITDA growth for 2023 in the mid- to high single-digit range despite continued inflationary impact on cost as we manage expenses tightly and achieve more operating leverage in our Debit and Credit segment.

正如我們去年所做的那樣，隨著市場和經濟狀況的發展以及客戶計劃的變化，我們將保持靈活並隨時準備適應。在盈利能力方面，我們預計 2023 年調整後的 EBITDA 增長將在中高個位數範圍內，儘管通脹對成本持續產生影響，因為我們嚴格管理費用並在我們的借貸部門實現更高的運營槓桿。

We're also focused on significantly increasing free cash flow and reducing our net leverage ratio, which Amintore will discuss in a few minutes. Overall, we expect continued share gains, solid growth and another strong earnings year in 2023 as we continue the momentum we have established over the past few years.

我們還專注於顯著增加自由現金流和降低我們的淨槓桿率，Amintore 將在幾分鐘後討論這些問題。總體而言，隨著我們繼續保持過去幾年建立的勢頭，我們預計 2023 年將繼續保持份額增長、穩健增長和另一個強勁的盈利年度。

Now let's turn to Slide 6 to discuss our long-term strategy. Over the past 5 years, we have consistently focused on 4 key strategic priorities: deep customer focus, market-leading quality products and customer service, continuous innovation and a market competitive business model.

現在讓我們轉到幻燈片 6 來討論我們的長期戰略。在過去的 5 年裡，我們始終專注於 4 個關鍵戰略重點：深入關注客戶、市場領先的優質產品和客戶服務、持續創新和具有市場競爭力的商業模式。

Successful execution of these strategies has allowed us to gain market share, create and expand market leadership in key categories and deliver strong financial results. Since 2017, we have achieved compounded annual growth rates of 16% in net sales and 33% in adjusted EBITDA. Over the same period, we have increased gross margins from 30% to 37% and reduced net leverage from over 12x to 3x at the end of 2022.

這些戰略的成功執行使我們獲得了市場份額，在關鍵類別中建立和擴大了市場領導地位，並取得了強勁的財務業績。自 2017 年以來，我們實現了 16% 的淨銷售額複合年增長率和 33% 的調整後 EBITDA 複合增長率。同期，到 2022 年底，我們的毛利率從 30% 提高到 37%，淨槓桿率從 12 多倍降至 3 倍。

Some examples of strategy success in 2022, as mentioned earlier, include winning new business with our innovative eco-focused cards and prepaid solutions, expanding our SaaS-based instant issuance distribution, providing personalization and print-on-demand solutions for fintechs, and enhancing our market competitive business model to improve capacity and reduce customer lead times following supply chain-driven spikes throughout the industry.

如前所述，2022 年戰略成功的一些例子包括通過我們以生態為中心的創新卡和預付解決方案贏得新業務，擴大我們基於 SaaS 的即時發行分銷，為金融科技提供個性化和按需印刷解決方案，以及增強我們的具有市場競爭力的商業模式可以在整個行業的供應鏈驅動高峰之後提高產能並縮短客戶交貨時間。

At the end of 2022, we reorganized our structure to help us better execute our strategies going forward. Specifically, we aligned Secure Cards, personalization and instant issuance under one leader, which we believe will optimize our ability to focus on providing end-to-end solutions for our customers.

2022 年底，我們重組了結構，以幫助我們更好地執行未來的戰略。具體來說，我們將安全卡、個性化和即時發行統一在一位領導者的領導下，我們相信這將優化我們專注於為客戶提供端到端解決方案的能力。

We also created a leadership position dedicated to Prepaid and a position focused on new growth opportunities, including new product and business development and digital solutions. Some new product and business examples include providing prepaid payment cards for non-retail channels, such as our health savings accounts, and to support businesses that need to provide funds to gig workers and contractors.

我們還設立了一個專門負責預付業務的領導職位，並專注於新的增長機會，包括新產品和業務開發以及數字解決方案。一些新產品和業務示例包括為非零售渠道（例如我們的健康儲蓄賬戶）提供預付支付卡，以及支持需要向零工和承包商提供資金的企業。

We're also exploring opportunities for instant issuance solutions beyond financial institution locations, such as with retailers. To summarize, execution of our strategic priorities has contributed greatly to our success over the past 5 years, driving sales growth, market share gains, product diversification and operating leverage, and we believe there are many opportunities to further expand offerings and capabilities and drive growth in the years to come.

我們還在探索金融機構以外的即時發行解決方案的機會，例如與零售商合作。總而言之，執行我們的戰略重點在過去 5 年中為我們的成功做出了巨大貢獻，推動了銷售增長、市場份額增加、產品多樣化和經營槓桿，我們相信有很多機會進一步擴大產品和能力並推動增長在未來的歲月裡。

Now I will turn the call over to Amintore Schenkel to review our fourth quarter and full year 2022 results in more detail. Amintore?

現在，我將把電話轉給 Amintore Schenkel，以更詳細地審查我們的第四季度和 2022 年全年業績。阿明托爾？

Thank you, Scott, and good morning, everyone. I will begin my overview on Slide 8. Fourth quarter net sales increased 36% to $126.4 million compared to the prior year quarter, with strong growth across our Debit and Credit portfolio and in Prepaid.

謝謝斯科特，大家早上好。我將從幻燈片 8 開始我的概述。與去年同期相比，第四季度淨銷售額增長 36% 至 1.264 億美元，我們的借貸組合和預付業務增長強勁。

The Debit and Credit segment net sales increased 35%, with strong contributions from contactless cards, personalization services, Card@Once instant issuance solutions, and various other products. Prepaid Debit segment net sales increased 39% compared with the prior year, driven by new customer additions outside the traditional retail channel and growth with existing customers.

借記卡和信用卡業務淨銷售額增長了 35%，非接觸式卡、個性化服務、Card@Once 即時發行解決方案和其他各種產品的貢獻很大。受傳統零售渠道之外的新客戶增加和現有客戶增長的推動，預付借記業務淨銷售額較上年增長 39%。

Fourth quarter gross profit of $47.5 million increased 54% from the prior year, while gross profit margin increased from 33.2% to 37.6%, driven by operating leverage from sales growth, including benefits from price increases, partially offset by the impacts of inflation on production costs, primarily on materials costs.

第四季度毛利潤為 4750 萬美元，比去年同期增長 54%，而毛利率從 33.2% 增長到 37.6%，這主要是由於銷售增長帶來的經營槓桿，包括價格上漲帶來的好處，部分被通貨膨脹對生產的影響所抵消成本，主要是材料成本。

SG&A expenses increased by approximately $3 million in the quarter compared to the prior year, primarily to support our growth and strategic execution. This includes approximately $2 million of increased compensation expenses, which reflect higher headcount and higher salaries, partially offset by a reduction in stock compensation expense of $500,000.

本季度的 SG&A 費用與去年同期相比增加了約 300 萬美元，主要是為了支持我們的增長和戰略執行。這包括約 200 萬美元增加的補償費用，這反映了更多的員工人數和更高的薪水，部分被股票補償費用減少 500,000 美元所抵消。

Our tax rate was 19.4% in the quarter, due to some favorable adjustment items related to unrecognized tax benefits and state tax settlements, which brought our full year rate to 25.7%. The fourth quarter rate was down from 62.3% in the prior year quarter, which included unfavorable adjustments related to state tax and uncertain tax position items.

我們本季度的稅率為 19.4%，這是由於一些與未確認的稅收優惠和州稅收結算相關的有利調整項目，使我們的全年稅率達到 25.7%。第四季度利率低於去年同期的 62.3%，其中包括與州稅和不確定稅收狀況項目相關的不利調整。

We project a tax rate of slightly less than 30% for 2023, excluding any adjustment items that may arise. Net income in the fourth quarter increased from $700,000 in the prior year to $12.5 million in 2022, and adjusted EBITDA increased 100% to $27.2 million. Adjusted EBITDA margin improved from 14.6% in the prior year to 21.5%, driven by operating leverage from the strong sales, including pricing benefits.

我們預計 2023 年的稅率略低於 30%，不包括可能出現的任何調整項目。第四季度的淨收入從上年的 70 萬美元增加到 2022 年的 1250 萬美元，調整後的 EBITDA 增加 100% 到 2720 萬美元。調整後的 EBITDA 利潤率從上一年的 14.6% 提高到 21.5%，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 9. Net sales for the full year reached a record level of $475.7 million, a 27% increase compared to the prior year. By segment, Debit and Credit segment sales increased 32%, and Prepaid Debit segment increased 9%.

現在轉到幻燈片 9 上我們年初至今的財務業績。全年淨銷售額達到創紀錄的 4.757 億美元，比上年增長 27%。按部門劃分，借記和貸記部門銷售額增長 32%，預付借記部門增長 9%。

Revenue credit sales growth benefited from strong sales of contactless cards, including large orders for eco-focused cards. Approximately 75% of our Secure Card volume in 2022 was from contactless cards, up from just under 70% in 2021. We estimate contactless penetration for the U.S. market ended 2022 at about 50% to 60% of cards in circulation, and continue to expect the level to grow to more than 80% by 2025.

收入信貸銷售增長得益於非接觸式卡的強勁銷售，包括生態卡的大訂單。到 2022 年，我們的安全卡數量中約有 75% 來自非接觸式卡，高於 2021 年略低於 70% 的比例。我們估計到 2022 年底美國市場的非接觸式滲透率約為流通卡的 50% 至 60%，並繼續預計到 2025 年，這一水平將增長到 80% 以上。

We also experienced strong growth in 2022 from Card@Once instant issuance solutions, which represented just under 10% of total company savings, and good growth from personalization services, contact cards and other products.

我們在 2022 年還經歷了 Card@Once 即時發行解決方案的強勁增長，占公司總儲蓄的不到 10%，以及個性化服務、名片卡和其他產品的良好增長。

In Prepaid, we expected a challenging year in 2022 as the previous year benefited from significant retail inventory restocking and the addition of a large new customer portfolio. Thanks to a very strong fourth quarter, we were able to grow the Prepaid business 9% in 2022, which is another record level, driven by growth with new and existing customers and pricing benefits.

在預付方面，我們預計 2022 年將是充滿挑戰的一年，因為前一年受益於大量零售庫存補貨和大量新客戶組合的增加。得益於非常強勁的第四季度，我們能夠在 2022 年將預付費業務增長 9%，這是另一個創紀錄的水平，這得益於新老客戶的增長以及定價優勢。

Overall, pricing amounted to a low single-digit contribution to the company's 27% growth for the year and to the growth of each segment. For Secure Cards, 80% of sales growth was due to volume, with the remainder due to mix from the conversion to contactless and pricing. Full year gross profit of $175.8 million increased 24% from the prior year, while gross profit margin decreased from 37.7% to 36.9% due to inflationary impact on production costs, primarily materials, partially offset by operating leverage, including the benefits of price increases.

總的來說，定價對公司全年 27% 的增長和每個部門的增長貢獻較低的個位數。對於 Secure Cards，80% 的銷售額增長來自銷量，其餘來自轉換為非接觸式和定價。全年毛利潤為 1.758 億美元，比上年增長 24%，而毛利率從 37.7% 下降到 36.9%，原因是通貨膨脹對生產成本（主要是材料）的影響，部分被經營槓桿所抵消，包括價格上漲的好處。

SG&A expenses increased by approximately $15 million for the full year, primarily due to approximately $8 million of increased compensation expenses and approximately $3.5 million of incremental professional services comp. The compensation expense increase reflects increased headcount and salaries as well as approximately $2 million of additional stock compensation, partially offset by approximately $1 million of lower severance expense.

全年 SG&A 費用增加了約 1500 萬美元，這主要是由於增加了約 800 萬美元的補償費用和約 350 萬美元的增量專業服務費用。補償費用的增加反映了員工人數和薪水的增加以及約 200 萬美元的額外股票補償，部分被約 100 萬美元的遣散費減少所抵消。

Full year net income increased 129% to $36.5 million, primarily due to the sales growth and the impact of debt refinancing costs incurred in the 2021 first quarter. Adjusted EBITDA increased 28% to $97.7 million, while the adjusted EBITDA margin increased from 20.4% in the prior year to 20.5% in 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.

全年淨收入增長 129% 至 3650 萬美元，這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。調整後的 EBITDA 增長 28% 至 9770 萬美元，而調整後的 EBITDA 利潤率從上一年的 20.4% 增長到 2022 年的 20.5%。調整後的 EBITDA 的增長是由銷售增長和由此產生的經營槓桿推動的，部分被產量增加和SG&A 成本。

Turning now to our segments on Slide 10. 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 68% in the quarter to $31.2 million, driven by the higher net sales and operating leverage, partially offset by higher production costs, primarily materials.

現在轉到幻燈片 10 上的細分市場。我之前提到了細分市場的銷售驅動因素。所以我將只討論這張幻燈片上的部門盈利能力。借記和貸記部門的運營收入在本季度增長了 68%，達到 3,120 萬美元，這主要是由於淨銷售額和運營槓桿的增加，部分被更高的生產成本（主要是材料）所抵消。

For the full year, Debit and Credit segment income from operations increased 38%, driven by the same factors as the fourth quarter. Prepaid Debit segment income from operations increased 35% in the fourth quarter to $5.2 million, driven by higher net sales and operating leverage. These benefits were partially offset by increased operating expenses, which also drove the Prepaid operating margin decline in the quarter.

全年，借貸部門的運營收入增長了 38%，其驅動因素與第四季度相同。第四季度預付借記業務收入增長 35% 至 520 萬美元，這主要得益於更高的淨銷售額和經營槓桿。這些收益被增加的運營費用部分抵消，這也導致本季度預付運營利潤率下降。

For the full year, Prepaid Debit segment income from operations decreased 5%, primarily due to the inflationary impact on production costs, with the majority of the impact on materials and increased operating expenses, partially offset by higher sales, including the benefit of price increases. Turning to the balance sheet, liquidity and cash flow on Slide 11.

全年，預付借記業務的運營收入下降了 5%，主要是由於生產成本受到通貨膨脹的影響，其中大部分影響是對材料和運營費用的增加，部分被更高的銷售額所抵消，包括價格上漲的好處.轉向幻燈片 11 上的資產負債表、流動性和現金流。

We continued to strengthen our financial position in 2022, ending the year with a net leverage ratio of 3x. We generated $31.3 million of cash flow from operating activities during the year and invested $17.9 million on capital expenditures, which resulted in free cash flow of $13.5 million.

我們在 2022 年繼續加強財務狀況，年底淨槓桿率為 3 倍。年內，我們從經營活動中產生了 3,130 萬美元的現金流，並投資了 1,790 萬美元用於資本支出，從而產生了 1,350 萬美元的自由現金流。

This was an increase from the $10.2 million of free cash flow generated in the prior year period despite significantly increased capital spending in 2022 and prior benefits of $9.8 million related to tax cash refunds. Accounts receivable balances increased $20 million during 2022 due to the strong sales growth in the fourth quarter.

儘管 2022 年的資本支出大幅增加，並且與稅收現金退款相關的先前收益為 980 萬美元，但與上年同期產生的 1020 萬美元自由現金流相比有所增加。由於第四季度的強勁銷售增長，2022 年應收賬款餘額增加了 2000 萬美元。

Inventories increased $10 million during the year as we managed our business to support customer demand and a challenging supply chain environment, although we reduced inventory at $4 million compared to the end of the third quarter. In the fourth quarter, we generated strong free cash flow of $16.2 million.

儘管與第三季度末相比，我們將庫存減少了 400 萬美元，但由於我們管理業務以支持客戶需求和充滿挑戰的供應鏈環境，這一年的庫存增加了 1000 萬美元。第四季度，我們產生了 1620 萬美元的強勁自由現金流。

On the balance sheet, at December 31, we had $11 million of cash and $5 million of borrowings outstanding on our $75 million ABL revolver. We had $285 million of senior secured notes outstanding at year-end as we redeemed $20 million of notes in the first quarter of 2022 and repurchased an additional $5 million in the open market in the fourth quarter.

在資產負債表上，截至 12 月 31 日，我們的 7500 萬美元 ABL 循環貸款中有 1100 萬美元現金和 500 萬美元未償還借款。由於我們在 2022 年第一季度贖回了 2000 萬美元的票據，並在第四季度在公開市場上回購了額外的 500 萬美元，因此我們在年末有 2.85 億美元的未償優先擔保票據。

Subsequent to year-end, we repurchased another $5 million of notes in the open market in the first quarter of 2023. 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.

年底之後，我們在 2023 年第一季度在公開市場上回購了另外 500 萬美元的票據。我們的資本結構和分配重點仍然側重於保持充足的流動性、投資於業務，包括可能的戰略收購、去槓桿化平衡表並可能將資金返還給股東。

Consistent with these priorities, we continue to target further lowering our net leverage ratio over time. Similar to last year, seasonal working capital needs may increase net leverage in the early part of 2023, but we do expect the ratio to improve over the course of the year and end the year between 2.5 and 3x.

與這些優先事項一致，我們的目標是隨著時間的推移進一步降低淨槓桿率。與去年類似，季節性營運資金需求可能會在 2023 年初增加淨槓桿率，但我們確實預計該比率在年內會有所改善，並在年底達到 2.5 至 3 倍。

To reiterate our outlook for 2023, we expect sales growth in the mid-single-digit range, gain share in a slower growth market. We expect adjusted EBITDA growth in the mid- to high single-digit range as we manage expenses tightly, while still investing for the future and drive more operating leverage from our Debit and Credit segment.

重申我們對 2023 年的展望，我們預計銷售額將實現中個位數增長，並在增長放緩的市場中獲得份額。我們預計調整後的 EBITDA 將在中高個位數範圍內增長，因為我們嚴格管理費用，同時仍在為未來投資並從我們的借貸部門推動更多的運營槓桿。

We expect to improve cash flow conversion and we project free cash flow to more than double from the $13.5 million generated in 2022. As always, our first priority is to serve our customers. So if business needs or the supply chain environment changes, we may prioritize additional inventory investments, but our current outlook reflects strong working capital improvement and more than doubling free cash flow.

我們希望改善現金流轉換，我們預計自由現金流將從 2022 年產生的 1350 萬美元增加一倍以上。一如既往，我們的首要任務是為客戶服務。因此，如果業務需求或供應鏈環境發生變化，我們可能會優先考慮額外的庫存投資，但我們目前的前景反映出強勁的營運資本改善和超過一倍的自由現金流。

Within free cash flow, we expect capital spending to be similar to 2022 levels, and we expect to improve our net leverage ratio to somewhere between 2.5x and 3x by year-end through EBITDA growth and net debt reduction. We delivered record results in 2022 and further strengthened our financial position, and we expect another year of progress and financial improvement in 2023 despite the more challenging environment.

在自由現金流方面，我們預計資本支出將與 2022 年的水平相似，並且我們預計通過 EBITDA 增長和淨債務減少，到年底將我們的淨槓桿率提高到 2.5 倍至 3 倍之間。我們在 2022 年取得了創紀錄的業績，並進一步加強了我們的財務狀況，儘管環境更具挑戰性，但我們預計 2023 年將取得又一年的進步和財務改善。

I'm also pleased to be able to give you an update on our SOX status. Based on the results of our most recent evaluation, it has been determined that internal control of financial reporting is effective as of year-end 2022 and the previously disclosed material weaknesses have been remediated.

我也很高興能夠向您提供我們 SOX 狀態的最新信息。根據我們最近的評估結果，已確定截至 2022 年年底，財務報告內部控制是有效的，並且先前披露的重大缺陷已得到糾正。

We have devoted significant time and resources to strengthening our processes and controls and are pleased to have completed the remediation. Finally, as Scott mentioned, I will be leaving CPI this year due to personal family reasons. I am proud of the accomplishments we have achieved and results we have delivered since I joined the company.

我們投入了大量時間和資源來加強我們的流程和控制，並很高興完成了補救工作。最後，正如 Scott 提到的，由於個人家庭原因，我今年將離開 CPI。自從我加入公司以來，我為我們取得的成就和交付的成果感到自豪。

We have a strong financial team in place, which is well prepared to continue contributing to the company's success, and I intend to stay on board to ensure there is an orderly transition to the new CFO. As we look to the future, I believe the company is well positioned to execute its strategies to drive continued growth and financial improvement. I will now pass the call back to Scott for some closing remarks on Slide 12. Scott?

我們擁有一支強大的財務團隊，已做好充分準備繼續為公司的成功做出貢獻，我打算繼續留在公司，以確保向新首席財務官的過渡有序進行。展望未來，我相信公司已準備好執行其戰略以推動持續增長和財務改善。我現在將把電話轉回給斯科特，讓他對幻燈片 12 做一些結束語。斯科特？

Thanks, Amintore. To summarize, 2022 was an outstanding year for CPI. We delivered strong sales and profit growth while countering inflation and supply chain challenges. We believe we continue to gain overall market share in a growing market.

謝謝，阿明托雷。總而言之，2022 年對 CPI 來說是出色的一年。我們在應對通貨膨脹和供應鏈挑戰的同時實現了強勁的銷售和利潤增長。我們相信我們將繼續在不斷增長的市場中獲得整體市場份額。

We continue to provide innovative solutions and product enhancements, deliver high quality and customer service and further diversify our product portfolio. We made investments and process improvements to increase our capacity, advance our capabilities, and we improved our balance sheet and financial position.

我們繼續提供創新的解決方案和產品改進，提供高質量和客戶服務，並進一步豐富我們的產品組合。我們進行了投資和流程改進，以提高我們的能力，提高我們的能力，並改善了我們的資產負債表和財務狀況。

For 2023, we're focused on continuing to execute our strategies, grow the business, win share in the marketplace, increase cash flow and reduce leverage. Thank you for joining our call today, and we will now open up the call for questions.

2023 年，我們將專注於繼續執行我們的戰略、發展業務、贏得市場份額、增加現金流並降低杠桿率。感謝您今天加入我們的電話會議，我們現在將開放問題電話會議。

(Operator Instructions) Our first question comes from Jaeson Schmidt from Lake Street Capital.

（操作員說明）我們的第一個問題來自 Lake Street Capital 的 Jaeson Schmidt。

This is Max on for Jaeson. Congrats on the really strong quarter. Just let's jump into the guidance here. So revenue outlook of mid-single digits. I was wondering -- I know you guys don't guide quarterly, but I was wondering if you could help me maybe with the linearity throughout the year. Is it second half weighted? Or is this more balanced throughout the year?

這是 Jaeson 的 Max on。恭喜這個非常強勁的季度。讓我們跳到這裡的指導。因此收入前景為中等個位數。我想知道 - 我知道你們不會每季度提供指導，但我想知道你們是否可以幫助我解決全年的線性問題。是下半場加權嗎？還是全年更平衡？

Max, this is Scott Scheirman. Thanks for joining our call today. We're confident with our guidance for a variety of reasons, don't break it into quarterly or color from that standpoint.

Max，這是 Scott Scheirman。感謝您今天加入我們的電話會議。出於各種原因，我們對我們的指導充滿信心，不要從那個角度將其分為季度或顏色。

Timing depends on customer demand and some other factors. But I would say overall, Matt, we are very pleased with 2022. We believe we're well positioned in 2023 and longer term to continue to gain share and grow and confident with the guidance and where we're heading.

時間取決於客戶需求和其他一些因素。但我要說的是，馬特，總的來說，我們對 2022 年感到非常滿意。我們相信我們在 2023 年和長期內處於有利地位，可以繼續獲得份額和增長，並對指導和我們的前進方向充滿信心。

All right. And then -- so Prepaid Debit, let's call it flat for 2023. Is this a function of slower customer additions or growth within existing customers or maybe both? Can you kind of help me out with the Prepaid Debit for 2023?

好的。然後 - 所以預付借記，讓我們稱它為 2023 年持平。這是客戶增加速度較慢或現有客戶增長或兩者兼而有之的功能嗎？你能幫我解決 2023 年的預付借記問題嗎？

Yes. We really like that business. In 2022, we had a bit of a stronger year than we anticipated. Revenues were up 9%. So -- and the fourth quarter, in particular, was strong. So just given the tough comp from 2022, we're going to call 2023 flattish, if you will.

是的。我們真的很喜歡這項業務。 2022 年，我們的表現比我們預期的要好一些。收入增長了 9%。所以——尤其是第四季度表現強勁。因此，僅考慮到 2022 年的艱難情況，如果您願意的話，我們將稱 2023 年為平穩。

But again, -- we think there's a lot of opportunity in that business to grow long term and also just some different use cases with Prepaid, whether it's for health savings accounts or supporting the gig economy. So there's other things that we're looking at just beyond the retail channels where we traditionally partake them.

但同樣， - 我們認為該業務有很多機會可以長期增長，也有一些不同的預付用例，無論是用於健康儲蓄賬戶還是支持零工經濟。因此，除了我們傳統上參與的零售渠道之外，我們還在關注其他事情。

All right. And then the last one for me, and I'll jump back in the queue. Just given the macro and supply chain, can you help me out, what's giving you guys confidence that you guys can secure supply? Maybe some puts and takes there?

好的。然後是我的最後一個，我會跳回到隊列中。就宏觀和供應鏈而言，你能幫幫我嗎，是什麼讓你們有信心確保供應？也許有些投入和採取那裡？

Yes. Again, we work closely with our suppliers. At the end of the day, we are reliant on them, but we'd like to strike close partnerships. With one of our primary chip suppliers, we've reached into a long-term -- or entered into a long-term supply agreement, which gives us more comfort that we are going to have chips as we move forward.

是的。同樣，我們與供應商密切合作。歸根結底，我們依賴他們，但我們希望建立密切的合作夥伴關係。我們與我們的主要芯片供應商之一達成了長期 - 或簽訂了長期供應協議，這讓我們更加放心，因為我們將在前進的過程中擁有芯片。

Again, they have to perform, Matt, as you could expect. But just given our strong supply chain team and working closely with our partners and vendors, we feel like we'll have the supplies we need to move forward and serve our customers well.

同樣，馬特，他們必須像你所期望的那樣表演。但是，憑藉我們強大的供應鏈團隊並與我們的合作夥伴和供應商密切合作，我們覺得我們將擁有向前推進並為我們的客戶提供良好服務所需的供應。

All right. And congrats on the strong quarter, guys.

好的。伙計們，祝賀這個強勁的季度。

Thanks, Matt. Thanks for joining the call.

謝謝，馬特。感謝您加入電話會議。

(Operator Instructions) Our next question from Parsa Kiai from Steamboat Capital.

（操作員說明）我們的下一個問題來自 Steamboat Capital 的 Parsa Kiai。

Okay. Great. Congratulations on a good quarter, guys. Scott, just a couple of questions for you. I guess I'll start with kind of the investor awareness on the company. As you know, your primary publicly traded competitor recently got picked up coverage by a firm called Compass Point. So now they're covered by JPMorgan, Compass Point, Needham and BTIG. I'm curious, how many of these analysts have you guys reached out to see if they would be interested in picking up coverage of your company?

好的。偉大的。伙計們，祝賀一個好季度。斯科特，只問你幾個問題。我想我將從投資者對公司的認識開始。如您所知，您的主要公開交易競爭對手最近得到了一家名為 Compass Point 的公司的報導。所以現在它們被摩根大通、Compass Point、Needham 和 BTIG 覆蓋。我很好奇，你們聯繫了多少分析師，看他們是否有興趣了解貴公司的報導？

Yes. I'll let -- we've been working very hard on our Investor Relations program and it's a critical priority for us. So between reaching out to potential analysts attending conferences (inaudible) really hard at that.

是的。我會讓 - 我們一直在非常努力地開展我們的投資者關係計劃，這對我們來說是一個至關重要的優先事項。因此，在接觸參加會議（聽不清）的潛在分析師之間，真的很難做到這一點。

Mike Salop has done a terrific job. And Mike, I'll let you give some color commentary of the things you've been working on, too.

Mike Salop 做得非常出色。邁克，我也會讓你對你一直在做的事情發表一些色彩評論。

Yes, Parsa. I mean as you're aware, we've talked to many firms and many analysts that we've been engaged in. So hoping to get additional coverage at some point in the future. Obviously, comparisons with other companies are challenging.

是的，帕薩。我的意思是，正如你所知，我們已經與我們參與的許多公司和許多分析師進行了交談。因此希望在未來的某個時候獲得更多的報導。顯然，與其他公司的比較具有挑戰性。

Some analysts are just in crypto, some analysts may have (inaudible) transactions with those companies, but we're talking to several analysts.

一些分析師只是在加密領域，一些分析師可能與這些公司有（聽不清）交易，但我們正在與幾位分析師交談。

I actually think comparisons with this company are rather not as difficult given that they are roughly the same size and similar margins -- excuse me, similar leverage, very similar product line and the earnings contribution are almost entirely from card manufacturing. So I think the comparison is rather apt.

實際上，我認為與這家公司進行比較並不困難，因為它們的規模和利潤率大致相同——對不起，相似的槓桿作用、非常相似的產品線和收入貢獻幾乎完全來自卡片製造。所以我覺得這個類比是很貼切的。

And I would suggest that -- you guys have done a great job getting the leverage where it needs to be providing conservative guidance hitting your numbers, but your stock is very erratic as you are obviously aware you had that period last month where think in 2 days, your stock fell maybe 26%, 27% on absolutely no news.

我建議——你們在獲得槓桿作用方面做得很好，它需要提供保守的指導來達到你們的數字，但你們的股票非常不穩定，因為你們顯然知道你們上個月有那個時期認為在 2幾天，你的股票可能下跌了 26%，27% 就完全沒有消息了。

I think it does your shareholders a disservice when your stock exists in a vacuum of this nature, whereas I think with these 4 analysts that we mentioned, in addition to Lake Street, you can have more -- you can get more attention, you can get more focus on the company, and you can allow an orderly share price so that if some investor wants to come in or to come out, they could do it at a more reasonable price.

我認為當你的股票存在於這種性質的真空中時，這會對你的股東造成傷害，而我認為除了 Lake Street 之外，我們提到的這 4 位分析師，你可以擁有更多 - 你可以獲得更多關注，你可以更多地關注公司，你可以允許一個有序的股價，這樣如果一些投資者想進場或退場，他們可以以更合理的價格進行。

All right (inaudible) repeating the same thing. We don't disagree with you. As I said, we're engaged with many analysts. There's a lot of things that go into analyst coverage, as you know. But we're attempting to get more coverage and more awareness of the stock, and we'll continue working on that.

好吧（聽不清）重複同樣的事情。我們不同意你的看法。正如我所說，我們與許多分析師進行了接觸。如您所知，分析師的報導涉及很多內容。但我們正試圖獲得更多的報導和更多的股票意識，我們將繼續努力。

Okay. Another question for Scott. Can you elaborate further what would it take for you to expand into the premium metal card? And just given the margins that your competitor in that space has, why this is not something that at least should be attempted by the company?

好的。斯科特的另一個問題。您能否進一步詳細說明您需要什麼才能擴展到高級金屬卡？鑑於您的競爭對手在該領域的利潤率，為什麼這不是公司至少應該嘗試的事情？

Yes. I would say a couple of things. First, we've been razor-focused on 4, 5 key market segments. And if you look over the last 5 years, I think we've been incredibly successful with that, with revenue growing at a 16% CAGR from '17 to '22, EBITDA growing at a 33% CAGR during that same period.

是的。我會說幾件事。首先，我們一直專注於 4、5 個關鍵細分市場。如果你回顧過去 5 年，我認為我們在這方面取得了令人難以置信的成功，從 17 年到 22 年，收入以 16% 的複合年增長率增長，同期 EBITDA 以 33% 的複合年增長率增長。

Our leverage, as you pointed to, has gone down from over 12x to 3x. So I think the areas that we really focused on -- we continue to gain share, and we've gained significant share over that period of time. With the metal card segment or heavy cards, we do partake in that. It's not a major revenue source, obviously, for us, but we continue to have some product offerings.

正如您所指出的，我們的槓桿率已經從 12 倍以上下降到 3 倍。所以我認為我們真正關注的領域——我們繼續獲得份額，並且在那段時間裡我們已經獲得了很大的份額。對於金屬卡段或重卡，我們確實參與其中。顯然，對我們來說，這不是主要的收入來源，但我們繼續提供一些產品。

We generate some revenue from that. That is a different line of investment or significant investments that would need to be made and just trying to balance investments with investing in other areas where we've been very successful and also paying down our debt. So it's just a balance that we have to move forward. And we think we've got the right strategies to move forward to continue to profitably gain share.

我們從中產生了一些收入。這是需要進行的不同投資或重大投資，只是試圖平衡投資與我們已經非常成功並償還債務的其他領域的投資。所以這只是我們必須向前邁進的平衡。而且我們認為我們已經有了正確的戰略來繼續前進以繼續盈利地獲得份額。

Okay. Okay. And then lastly, what is the incremental capital expenditures being used for? Can you give us a little color as to when you look at $17 million of CapEx, what is the breakdown above what is kind of needed to operate the business?

好的。好的。最後，增量資本支出的用途是什麼？當你看到 1700 萬美元的資本支出時，你能給我們一些顏色嗎？運營業務所需的細分是什麼？

Yes. Amintore, I'll let you go ahead and answer that.

是的。 Amintore，我會讓你繼續回答這個問題。

Yes. We don't really provide a specific breakdown as it relates to those items. But clearly, as we think about kind of the expenditures that we have for capital, it's typically always a mix of making sure that our capital stays current, our equipment stays current, but then also investing for future items as well.

是的。我們並沒有真正提供與這些項目相關的具體細目分類。但很明顯，當我們考慮我們的資本支出時，通常總是混合確保我們的資本保持最新狀態，我們的設備保持最新狀態，然後也為未來的項目進行投資。

One thing that we've noted previously is that we did increase our ability to produce by 50% during 2022, and that was definitely a reason for some of the increase in the capital spend. But -- as you might imagine, in a business like ours, there's also a renewal that has to take place as time goes on as well.

我們之前註意到的一件事是，我們確實在 2022 年將生產能力提高了 50%，這絕對是資本支出增加的部分原因。但是——正如您可能想像的那樣，在像我們這樣的企業中，隨著時間的推移，也必須進行更新。

(Operator Instructions) We have no further questions on the conference. I will now hand back to the CPI team for closing remarks.

（操作員說明）我們沒有關於會議的進一步問題。我現在將交還給 CPI 團隊作結束語。

Okay. Thanks, everyone, for joining us. I hope you have a good day, and that ends our call.

好的。謝謝大家加入我們。希望你今天過得愉快，我們的通話到此結束。

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.

謝謝。女士們，先生們，今天的電話會議到此結束。感謝您的加入。您現在可以斷開線路。