(PMTS) 2023 Q1 法說會逐字稿

Welcome to the CPI Card Group's first quarter 2023 earnings call. My name is Bailey, and I will be your operator today. (Operator Instructions) And now, I will turn the call over to Mike Salop, CPI's Head of Investor Relations.

歡迎參加 CPI 卡集團 2023 年第一季度財報電話會議。我叫貝利，今天我將成為您的接線員。 （操作員說明） 現在，我將把電話轉給 CPI 投資者關係主管 Mike Salop。

Thanks, operator, and good morning, everyone. Welcome to the CPI Card Group's first quarter 2023 earnings webcast and conference call. Today's date is May 9, 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。歡迎觀看 CPI 卡集團 2023 年第一季度收益網絡廣播和電話會議。今天的日期是 2023 年 5 月 9 日。CPI 卡集團總裁兼首席執行官 Scott Scheirman 今天接聽了電話；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.

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，可能導致實際結果與實際結果有所不同。實質上來自於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 卡集團最近向 SEC 提交的文件。

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

我們今天做出的前瞻性聲明僅反映我們當前的預期，我們沒有義務更新任何聲明以反映本次電話會議後發生的事件。

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，在今天的電話會議期間，公司將討論一項或多項非公認會計原則財務指標，包括但不限於調整後的 EBITDA、EBITDA、調整後的 EBITDA 利潤率、淨槓桿率和自由現金流。我們今天上午發布的新聞稿和幻燈片演示中包含了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調節表。

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 March 31, 2023 will be available on CPI's Investor Relations website.

今天的新聞稿以及本次電話會議附帶的演示文稿的副本可在 CPI 投資者關係網站 Investor.cpicardgroup.com 上獲取。此外，CPI 截至 2023 年 3 月 31 日的季度的 10-Q 表將在 CPI 投資者關係網站上發布。

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

現在，我想將電話轉給總裁兼首席執行官斯科特·謝爾曼 (Scott Scheirman)。

Thanks, Mike, and good morning, everyone. During today's call, I will discuss CPI's first-quarter performance, reiterate our outlook for the full year, and review our long-term strategy. Amintore will review the 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，我將討論 CPI 第一季度的表現，重申我們對全年的展望，並回顧我們的長期戰略。 Amintore 將更詳細地審查財務業績，然後我們將開放提問。

We will start on slide 4. Overall, I'm very pleased with the first-quarter performance. We increased sales by 8% despite comparisons with a very strong first quarter in 2022, which benefited from large equal focus card orders and significant instant issuance printer upgrade sales.

我們將從幻燈片 4 開始。總的來說，我對第一季度的表現非常滿意。儘管與 2022 年第一季度的強勁表現相比，我們的銷售額仍增長了 8%，這得益於大量同等焦點卡訂單和大量即時發行打印機升級銷售。

Growth in this year's first quarter was led by ongoing strength in sales of contactless cards, and we also delivered good growth from other areas across our debit and credit portfolio. We grew adjusted EBITDA 11% to $25 million and increased the adjusted EBITDA margins 50 basis points to 20.7%, driven by operating leverage.

今年第一季度的增長得益於非接觸式卡銷售的持續強勁，我們的借記卡和信貸投資組合的其他領域也實現了良好的增長。在運營槓桿的推動下，我們調整後的 EBITDA 增長了 11%，達到 2500 萬美元，調整後的 EBITDA 利潤率提高了 50 個基點，達到 20.7%。

We increased net income by 81% to nearly $11 million, aided by sales growth, operating leverage, and lower tax rates, and lower interest expense, as we have utilized cash flow to reduce our average borrowings. We also improved our overall financial position in the quarter, generating nearly $4 million of positive free cash flow, retiring an additional $8 million of our senior notes, and reducing our net leverage ratio to 2.9 times at quarter end.

得益於銷售增長、運營槓桿、較低的稅率以及較低的利息支出（因為我們利用現金流來減少平均借款），我們的淨利潤增加了 81%，達到近 1100 萬美元。我們還改善了本季度的整體財務狀況，產生了近 400 萬美元的正自由現金流，另外註銷了 800 萬美元的高級票據，並將我們的淨槓桿率在季度末降低至 2.9 倍。

As we mentioned in March, this year, we are focused on continuing to execute our strategies, grow the business, win share in the marketplace, increase cash flow, and reduce leverage. We believe the first quarter demonstrated good progress against each of these goals. As we look to the rest of the year, our sales efforts will remain focused on gaining market share with our differentiated portfolio of innovative products and services and end-to-end solutions and leading quality and customer service.

正如我們在三月份提到的，今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、增加現金流並降低杠桿。我們相信第一季度在實現這些目標方面都取得了良好進展。展望今年剩餘時間，我們的銷售工作將繼續集中於通過我們差異化的創新產品和服務組合、端到端解決方案以及領先的質量和客戶服務來贏得市場份額。

Turning to our outlook on slide 5. Today we are affirming the financial outlook we provided in March. We believe continued strong performance from contactless cards, additional sales of end-to-end solutions, and further penetration of instant issuance will drive sales growth for the full year. However, there is more risk and uncertainty in the market.

轉向幻燈片 5 中的展望。今天，我們確認了 3 月份提供的財務展望。我們相信，非接觸式卡的持續強勁表現、端到端解決方案的額外銷售以及即時發卡的進一步滲透將推動全年銷售增長。但市場風險和不確定性較多。

The banking industry stress that emerged following the collapse of Silicon Valley Bank in March has contributed to more cautious spending environment among issuers. Although we do not have any significant direct exposure to the three major banks that have failed, we have recently seen softening customer demand in our debit and credit segment, and consequently, do not expect second-quarter results to be as strong as the first quarter.

三月份矽谷銀行倒閉後出現的銀行業壓力導致發行人的支出環境更加謹慎。儘管我們對倒閉的三大銀行沒有任何重大直接風險，但我們最近發現借記卡和貸記卡領域的客戶需求疲軟，因此，預計第二季度業績不會像第一季度那樣強勁。

Near term, it's difficult to project the extent of the banking industry stress or how long it will continue to impact us. However, given the uncertainty, we have implemented various new initiatives to drive sales and manage expenses more tightly in 2023. Based on what we know today and the strong first-quarter performance, we have affirmed the full-year outlook we provided in March.

短期內，很難預測銀行業壓力的程度或它將繼續影響我們多久。然而，考慮到不確定性，我們在 2023 年實施了各種新舉措，以推動銷售並更嚴格地管理費用。根據我們今天所知的情況和第一季度的強勁表現，我們確認了 3 月份提供的全年展望。

Despite the near-term challenges, we continue to believe we operate in an attractive long-term growth market. Secular card trends have remained healthy, as evidenced by the 11% compounded annual growth rate on Mastercard and Visa US cards in circulation for the three-year period ending December 31, 2022, and the ongoing movements towards eco-focused cards and contactless cards should continue to aid growth.

儘管近期面臨挑戰，我們仍然相信我們在一個具有吸引力的長期增長市場中運營。長期卡趨勢保持健康，截至 2022 年 12 月 31 日的三年內流通的萬事達卡和 Visa 美國卡的複合年增長率為 11%，並且持續向環保卡和非接觸式卡發展的趨勢應能證明這一點。繼續助力增長。

I would also remind you that the card business is reoccurring in nature with historically approximately 90% of payment cards issuance being for reissuance and replacements, so there is strong support for the market over time. We have successfully gained share and a growing market over the past five years by focusing on our key strategies, and we expect those to continue to be the foundation for our growth.

我還要提醒大家的是，卡業務本質上是重複性的，歷史上約90%的支付卡發行都是為了補發和補發，因此隨著時間的推移，市場會有強有力的支撐。通過專注於我們的關鍵戰略，我們在過去五年中成功獲得了市場份額和不斷增長的市場，我們預計這些戰略將繼續成為我們增長的基礎。

Specifically, turning to slide 6. Our key strategic priorities remain deep customer focus, market-leading quality products and customer service, continuous innovation, and a market-competitive business model. We believe the first-quarter results demonstrated further advances against these priorities.

具體來說，轉向幻燈片 6。我們的關鍵戰略重點仍然是深度關注客戶、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。我們相信第一季度的業績表明這些優先事項取得了進一步的進展。

Although eco-focused card sales were down compared to some very large orders in the prior year, we still sold nearly 7 million of our innovative cards made with recovered ocean-bound plastic core in the quarter and continue to be a leader in the US eco-focused card space. We also continue to leverage our high-quality end-to-end solutions, driving growth in contactless cards, personalization services, and our Card@Once SaaS-based instant issuance business.

儘管與去年的一些非常大的訂單相比，以生態為重點的卡片銷量有所下降，但本季度我們仍然售出了近 700 萬張由回收的海洋塑料芯製成的創新卡片，並繼續成為美國生態卡片的領導者。 - 集中的卡片空間。我們還繼續利用高質量的端到端解決方案，推動非接觸式卡、個性化服務以及基於 Card@Once SaaS 的即時發卡業務的增長。

Prepaid was down slightly in the quarter, but we did continue to have success with new customer types. And we demonstrated a competitive business model. We generated operating leverage despite ongoing inflationary impacts on key material costs and continue to balance pricing with managing long-term customer relationships.

本季度預付費業務略有下降，但我們在新客戶類型方面確實繼續取得成功。我們展示了具有競爭力的商業模式。儘管通脹對關鍵材料成本造成持續影響，我們仍產生了運營槓桿，並繼續在定價與管理長期客戶關係之間取得平衡。

These four key strategic priorities will continue to guide our actions to grow and gain market share. And we also plan to pursue additional opportunities in the markets, such as our expansion of prepaid use cases and development of complementary digital offerings. We remain confident in the long-term growth prospects for the market and in our ability to execute against our strategies to win business and grow share.

這四個關鍵戰略重點將繼續指導我們的行動，以實現增長並獲得市場份額。我們還計劃在市場上尋求更多機會，例如擴展預付費用例和開發補充數字產品。我們對市場的長期增長前景以及我們執行戰略以贏得業務和擴大份額的能力充滿信心。

Now, I will turn the call over to Amintore to review our first-quarter results and our outlook in more detail. Amintore?

現在，我將把電話轉給 Amintore，更詳細地審查我們第一季度的業績和前景。阿明托爾？

Thank you, Scott, and good morning, everyone. I will begin my overview on slide 8. First-quarter net sales increased 8% to $120.9 million compared to the prior-year quarter, led by the debit and credit segment, which increased 11%. As Scott mentioned, debit and credit sales growth was driven by strong sales of contactless cards and personalization services also contributed solid sales growth [as it] Card@Once instant issuance solutions.

謝謝你，斯科特，大家早上好。我將從幻燈片 8 開始概述。與去年同期相比，第一季度淨銷售額增長 8%，達到 1.209 億美元，其中藉記卡和貸記卡業務增長了 11%，帶動了增長。正如 Scott 提到的，借記卡和信用卡銷售增長是由非接觸式卡和個性化服務的強勁銷售推動的，Card@Once 即時發行解決方案也貢獻了穩定的銷售增長。

Prepaid debit segment net sales decreased 2% compared with the prior year, and we continue to expect full-year prepaid sales to be similar to 2022 levels.

預付借記業務淨銷售額較上年下降 2%，我們繼續預計全年預付銷售額將與 2022 年水平相似。

Overall, pricing contributed a little less than half of the sales growth in the quarter, primarily due to pricing actions implemented over the course of 2022. First-quarter gross profit of $43.1 million increased 10% from the prior year, while gross profit margin increased from 35.3% to 35.7%, driven by operating leverage from sales growth, including benefits from price increases, partially offset by the impacts of inflation on materials costs and expenses incurred related to production staffing model change in our prepaid segment.

總體而言，定價對本季度銷售增長的貢獻略低於一半，這主要是由於 2022 年期間實施的定價行動。第一季度毛利潤為 4310 萬美元，較上年增長 10%，同時毛利率有所上升從 35.3% 增至 35.7%，這是由銷售增長帶來的運營槓桿推動的，包括價格上漲帶來的好處，部分被通貨膨脹對材料成本的影響以及與預付費部門生產人員配置模式變化相關的費用所抵消。

SG&A expenses increased by approximately $1 million in the quarter compared to the prior year, primarily due to increased headcount and related compensation expenses to support our growth and strategic execution, partially offset by a reduction in professional services expenses primarily related to third-party SaaS costs incurred in the prior year.

與上年同期相比，本季度的 SG&A 費用增加了約 100 萬美元，主要是由於為支持我們的增長和戰略執行而增加的員工人數和相關薪酬費用，但部分被主要與第三方 SaaS 成本相關的專業服務費用的減少所抵消上一年發生的。

Our tax rate was 20.7% in the quarter, which compared to 38.3% in the prior-year quarter due to higher interest expense deductibility and a favorable adjustment to reflect a change in state tax law. We were projecting normalized rate, excluding any adjustment items of between 25% and 30%, but including the Q1 adjustment benefit, we currently expect the overall 2023 rate to be at the lower end of that range.

我們本季度的稅率為 20.7%，而上年同期為 38.3%，原因是利息費用扣除額提高以及反映州稅法變化的有利調整。我們預測的是標準化利率，不包括 25% 至 30% 之間的任何調整項目，但包括第一季度調整收益，我們目前預計 2023 年整體利率將處於該範圍的下限。

Net income in the first quarter increased 81% to $10.9 million and adjusted EBITDA increased 11% to $25.1 million. Adjusted EBITDA margin improved from 20.2% in the prior year to 20.7%, driven by operating leverage from sales including pricing benefits, while net income growth also benefited from the lower tax rate and lower interest expense.

第一季度淨利潤增長 81% 至 1,090 萬美元，調整後 EBITDA 增長 11% 至 2,510 萬美元。調整後的 EBITDA 利潤率從上年的 20.2% 提高至 20.7%，這得益於包括定價優勢在內的銷售運營槓桿，而淨利潤增長也受益於較低的稅率和較低的利息支出。

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.

現在轉向幻燈片 9 上的細分市場。我之前提到了細分市場的銷售驅動因素，因此我將在這張幻燈片上討論細分市場的盈利能力。

Income from operations for the debit and credit segment increased 25% in the quarter to $30 million, driven by the higher net sales and operating leverage, including the benefits of price increases. Prepaid debit segment income from operations decreased 38% in the first quarter to $3.7 million.

由於淨銷售額和運營槓桿率提高（包括價格上漲的好處），本季度借記卡和貸記卡部門的運營收入增長了 25%，達到 3,000 萬美元。第一季度預付借記業務收入下降 38%，至 370 萬美元。

Prepaid income was negatively impacted by approximately $1 million costs incurred related to the conversion from a temporary to full-time staffing model at our prepaid production facility and was also negatively impacted by the reduction in sales. We expect the prepaid margins to be stronger over the remainder of the year as we gain efficiencies from the labor conversion and benefit from more beneficial mix and operating leverage.

預付收入受到與我們的預付生產設施從臨時員工模式轉換為全職員工模式相關的約 100 萬美元成本的負面影響，並且還受到銷售額減少的負面影響。我們預計，隨著我們從勞動力轉換中提高效率，並從更有利的組合和運營槓桿中受益，預付利潤率在今年剩餘時間內將會更高。

Turning to the balance sheet, liquidity, and cash flow on slide 10. We made substantial progress with our financial position in the first quarter. We generated $8 million of cash flow from operating activities in the quarter and invested $4.1 million on capital expenditures, which resulted in free cash flow of $3.9 million. This compared to the free cash flow usage of $19.1 million in the prior-year period with a strong improvement driven by increased net income and reduced working capital usage.

轉向幻燈片 10 上的資產負債表、流動性和現金流。第一季度我們的財務狀況取得了實質性進展。本季度我們從經營活動中產生了 800 萬美元的現金流，並投資了 410 萬美元的資本支出，從而產生了 390 萬美元的自由現金流。與去年同期 1,910 萬美元的自由現金流使用量相比，淨收入增加和營運資金使用量減少推動了強勁改善。

Accounts receivable balances decreased $4 million from year end as we collected the receivables related to high sales levels in the fourth quarter, and inventories only increased $1 million or less than 2%.

應收賬款餘額比年末減少了 400 萬美元，因為我們收回了與第四季度高銷售水平相關的應收賬款，而庫存僅增加了 100 萬美元或不到 2%。

On the balance sheet at March 31, we had $14 million of cash and $13 million of borrowings outstanding on our $75 million ABL revolver. We had $277 million of senior secured notes outstanding at quarter end as we repurchased $8 million of notes in the open market in the first quarter. Subsequent to quarter end, we repurchased an additional $7 million in the second quarter.

在 3 月 31 日的資產負債表上，我們價值 7500 萬美元的 ABL 左輪手槍有 1400 萬美元現金和 1300 萬美元未償還借款。由於我們第一季度在公開市場回購了 800 萬美元的票據，因此截至季度末我們有 2.77 億美元的未償還高級擔保票據。季度末後，我們在第二季度額外回購了 700 萬美元。

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. Overall, the first quarter results were strong, and we have affirmed our 2023 full-year outlook.

我們的資本結構和分配優先事項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、去槓桿化資產負債表以及可能向股東返還資金。總體而言，第一季度業績強勁，我們確認了 2023 年全年展望。

Specifically for 2023, we continue to expect mid-single digit net sales growth with higher growth in the debit and credit segment, and prepaid sales similar to 2022 levels. Mid to high single-digit adjusted EBITDA grow free cash flow to more than double from the 2022 level as we grow earnings and optimize working capital in a more stable supply chain environment, and net leverage ratio improvement to between 2.5 and 3 times as we generate strong cash flow and continue to reduce our senior notes balance.

具體到 2023 年，我們繼續預計淨銷售額將實現中等個位數增長，借記卡和貸記業務將出現更高增長，預付銷售額將與 2022 年水平相似。隨著我們在更穩定的供應鏈環境中增加收益並優化營運資本，中高個位數的調整後 EBITDA 使自由現金流量比 2022 年水平增加一倍以上，並且隨著我們產生的淨槓桿率提高到 2.5 至 3 倍強勁的現金流並繼續減少我們的優先票據余額。

Our outlook assumes the turmoil in the banking industry affect second-quarter results, but does not worsen, and we return to a more normalized environment over the course of the year.

我們的前景假設銀行業的動盪會影響第二季度的業績，但不會惡化，並且我們將在今年恢復到更加正常化的環境。

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

我現在將把電話轉回斯科特，請他對幻燈片 11 做一些結束語。斯科特？

Thanks, Amintore. Before opening the call for questions, I would like to welcome Jeff Hochstadt to the CPI team. We announced today that Jeff will become our new Chief Financial Officer effective May 15, replacing Amintore, who had previously declared his plans to resign in 2023 due to family-related personal reasons.

謝謝，阿明托爾。在開始提問之前，我謹歡迎 Jeff Hochstadt 加入 CPI 團隊。我們今天宣布，Jeff 將於 5 月 15 日起成為我們新任首席財務官，接替 Amintore，Amintore 此前曾宣布因家庭相關個人原因計劃於 2023 年辭職。

Jeff is a proven strategic leader who brings a vast background of diverse business and financial experience to CPI. He most recently had his own company providing strategic and financial consulting services, which followed his career at Western Union from 2006 through 2021, including roles as Chief Strategy Officer and Senior Vice President and Head of Global Financial Planning.

Jeff 是一位久經考驗的戰略領導者，他為 CPI 帶來了豐富的多元化業務背景和財務經驗。他最近擁有自己的公司，提供戰略和財務諮詢服務，此前他於 2006 年至 2021 年在西聯匯款工作，包括擔任首席戰略官、高級副總裁兼全球財務規劃主管。

Jeff has also held various financial and strategic positions with First Data, Morgan Stanley, IBM, and Pricewaterhouse among others. Amintore will stay with CPI full time through the end of the second quarter and then will continue as an advisor for a period of time. I want to again thank Amintore for his many contributions to CPI and his commitment to ensure a smooth transition.

Jeff 還曾在 First Data、摩根士丹利、IBM 和普華永道等公司擔任過各種財務和戰略職位。 Amintore 將在第二季度末全職留在 CPI，然後將繼續擔任一段時間的顧問。我要再次感謝 Amintore 對 CPI 的眾多貢獻以及他對確保順利過渡的承諾。

To summarize today's call, we had a strong performance in the first quarter, increasing sales, adjusted EBITDA margins, and free cash flow, and driving further improvements in our net leverage ratio. Although we have seen some new risks arise from the banking industry turmoil of recent weeks, we're taking responsive actions and have affirmed our full-year outlook. Overall, we remain focused on continuing to execute our strategies, grow the business, win share in the marketplace, increase cash flow, and reduce net leverage in 2023.

總結今天的電話會議，我們在第一季度表現強勁，銷售額增加，調整後的 EBITDA 利潤率和自由現金流，並推動我們的淨槓桿率進一步提高。儘管我們看到最近幾周銀行業的動盪帶來了一些新的風險，但我們正在採取應對行動，並確認了全年前景。總體而言，我們仍然致力於在 2023 年繼續執行我們的戰略、發展業務、贏得市場份額、增加現金流並降低淨槓桿。

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

感謝您今天加入我們的電話會議，我們現在將開放電話會議以解答任何問題。

(Operator Instructions) Jaeson Schmidt.

（操作員說明）Jaeson Schmidt。

Hey, guys. Thanks for taking my questions and congrats on a really nice start to the year. Scott, just want to dig into your caution around Q2. Is this softening demand more related to pushouts, or are you seeing cancellations as well?

大家好。感謝您回答我的問題，並祝賀您今年有一個非常好的開始。斯科特，只是想深入了解一下您在第二季度的謹慎態度。需求疲軟是否與取消訂單更多有關，或者您是否也看到了取消訂單？

What I would describe it is as we move through the month of April, just saw a softening in customer demand or customer orders coming in. Some customers that might be not placing an order, some customers who might be pushing the order to say that for third quarter or fourth quarter. So it really seems to have tied back to the Silicon Valley Bank. And subsequent, I'm going to use the word banking turmoil, Jaeson, where customers feel uncertain about the future. We believe they're probably tightening their spending just to see how things will unroll over the weeks, maybe the months to come from that standpoint.

我想說的是，隨著我們進入四月份，剛剛看到客戶需求或客戶訂單出現疲軟。一些客戶可能沒有下訂單，一些客戶可能會推動訂單，這樣說第三季度或第四季度。所以它似乎確實與硅谷銀行有聯繫。接下來，我將使用銀行業動盪這個詞，Jaeson，表示客戶對未來感到不確定。我們認為，他們可能會收緊支出，只是為了看看未來幾週甚至幾個月內情況會如何發展。

But again, I have a lot of confidence in the long-term business. There's a lot of secular trends in place for sure. Cards continue to grow. Card payments are growing at the expense of cash. As we shared in the script, Visa, Mastercard, cards in circulation have grown at 11% CAGR over the last three years ending December 31, 2022.

但我再次對長期業務充滿信心。肯定有很多長期趨勢。卡片數量持續增長。卡支付的增長是以現金為代價的。正如我們在腳本中分享的那樣，截至 2022 年 12 月 31 日的過去三年裡，Visa、萬事達卡的流通量複合年增長率為 11%。

I believe contactless cards are still a really good opportunity for us. We think at the end of '22, the market was 50% to 60% converted to contactless. We think that will be over 80% by '25.

我相信非接觸式卡對我們來說仍然是一個很好的機會。我們認為到 22 年底，市場已有 50% 到 60% 轉向非接觸式。我們認為到 25 年這一比例將超過 80%。

And then I'd also just emphasize eco cards, right? The broadly of banks, end-user consumers, the issuers, the networks, everybody is trying to be more sustainable. And we are definitely a market leader with eco-focused cards issuing over 95 million. So I think there are some near-term challenges. But long term, I'm very positive on the business and believe there is continued opportunity to gain share and grow over the long term.

然後我也會強調生態卡，對吧？廣泛的銀行、最終用戶消費者、發行人、網絡，每個人都在努力變得更加可持續。我們絕對是市場領導者，生態卡發行量超過 9500 萬張。所以我認為近期存在一些挑戰。但從長遠來看，我對這項業務非常樂觀，並相信從長遠來看，仍有機會獲得份額並實現增長。

Okay. That makes sense and all really helpful. And I think you probably answered through what my next question was going to be on -- through the confidence that Q2 is simply this air pocket, and you would resume to a more normalized environment, is this really just due to customers noting that these launches have simply been delayed into the second half?

好的。這是有道理的，而且都非常有幫助。我認為您可能會通過我的下一個問題來回答 - 通過相信第二季度只是這個空氣袋，並且您將恢復到更加正常化的環境，這真的只是因為客戶注意到這些發布只是被推遲到下半場了嗎？

Well, there -- I would say there -- some of that, right? There's things that are happening in the market where, I would say, the regulators and the government are continuing to trying to do things to provide more confidence to end-user consumers with banks. They've done, in my view, some of the right things to get these banks recapitalize or take them over. So hopefully, this banking turmoil will subside in the coming weeks or months, if you will.

嗯，有——我會說有——其中一些，對吧？我想說，市場上正在發生一些事情，監管機構和政府正在繼續努力採取措施，為銀行的最終用戶消費者提供更多信心。在我看來，他們已經做了一些正確的事情來讓這些銀行進行資本重組或接管。因此，如果你願意的話，希望這場銀行業動盪能夠在未來幾週或幾個月內平息。

But again, as we called out in the earnings release or the script comments that we assume that the turmoil in the banking industry affects the second quarter but does not worsen. And we believe we'll return to more normalized environment over the course of the year. But we'll have to play it out from that standpoint. But so far, in the month of April, customer demand has been soft.

但正如我們在財報發布或腳本評論中所指出的那樣，我們假設銀行業的動盪會影響第二季度，但不會惡化。我們相信，我們將在一年內恢復到更加正常化的環境。但我們必須從這個角度來考慮。但到目前為止，四月份客戶需求一直疲軟。

Okay, got it. And then just last one for me and I'll jump back in the queue. Just curious if you could expand on some of these new initiatives that you've implemented to drive sales.

好，知道了。然後我就跳回隊列中，只看最後一個。只是好奇您是否可以擴展您為推動銷售而實施的一些新舉措。

Sure, sure. No, it's -- and we could probably appreciate, Jaeson for competitive reasons that I want to get into a lot of detail here. But over the last week to 10 days, the teams have been meeting, and they've come up with a number of ideas that I believe will be helpful to drive the top line and sent some demand in the marketplace.

一定一定。不，我們可能會感激 Jaeson，出於競爭原因，我想在這裡詳細介紹一下。但在過去的一周到十天裡，團隊一直在開會，他們提出了一些想法，我相信這些想法將有助於提高收入並在市場上產生一些需求。

And then also, we are just closely like probably many companies are right now, just closely managing our expenses and making some decisions on some expenses that may be -- can be pushed off to later in the year or into 2024. So it's a combination of those. But again, for competitive reasons, I don't want to get into a lot of detail on how we're driving demand.

而且，我們與許多公司現在的情況非常相似，只是密切管理我們的費用，並對某些費用做出一些決定，這些費用可能會推遲到今年晚些時候或 2024 年。所以這是一個組合那些。但同樣，出於競爭原因，我不想詳細介紹我們如何推動需求。

Okay. Totally understand. That's it for me. Thanks a lot, guys.

好的。完全明白了。對我來說就是這樣。非常感謝，伙計們。

Thanks for joining, Jaeson.

感謝您的加入，傑森。

Leanne Hayden.

莉安·海登。

Yeah, hi. This is Ed Najarian and Leanne Hayden at EF Hutton. How are you?

是的，嗨。我是 EF Hutton 的 Ed Najarian 和 Leanne Hayden。你好嗎？

Good. How are you guys doing this morning?

好的。今天早上你們好嗎？

We're doing great. Thank you.

我們做得很好。謝謝。

So two quick questions. First on the senior secured notes. Could you give us some context about just on a couple of things. Number one, how quickly you are contemplating paying that down over the next year or two. And I guess secondarily on that, what kind of purchase costs you're seeing on the senior secured notes relative to par.

那麼兩個簡單的問題。首先是高級擔保票據。您能給我們提供一些有關幾件事的背景信息嗎？第一，您考慮在未來一兩年內支付首付款的速度有多快。我想其次，您在優先擔保票據上看到的相對於面值的購買成本是多少。

And then the rain on -- it looks like the ABL revolver is replacing some of that debt to some extent. What -- are you getting some rate arbitrage there relative to the 8.6% on the secured notes? Thanks. That's the first question. Thanks.

然後下雨了——看起來 ABL 左輪手槍在某種程度上取代了部分債務。什麼——相對於擔保票據的 8.6%，你在那裡得到了一些利率套利嗎？謝謝。這是第一個問題。謝謝。

Yeah. Let me -- I'll start -- or go ahead Amintore.

是的。讓我——我來開始——或者繼續阿明托爾。

Go ahead, Scott. You may start.

來吧，斯科特。你可以開始了。

Okay. Hey, thanks for joining our call. Thank you for your question. First, I would say we've been committed to deleveraging the balance sheet, both through growing our profitability and reducing -- using our cash flow to reduce our debt outstanding.

好的。嘿，感謝您加入我們的通話。謝謝你的問題。首先，我想說，我們一直致力於去槓桿化資產負債表，既通過提高我們的盈利能力，又通過減少——利用我們的現金流來減少我們的未償債務。

As we think about '23 without getting into real specifics, so far, we've bought back $15 million of our debt. I'm going to call it, it's been a tad bit below $1 or below par, so we think it's a good value and a good thing for the shareholders to do that. Where we think the leverage will end up in 2023 as we've guided is somewhere between 2.5 and 3 times. We closed Q1 at 2.9x. So broadly, I would say we continue to be committed to deleverage the balance sheet.

當我們考慮 23 年時，沒有考慮具體細節，到目前為止，我們已經回購了 1500 萬美元的債務。我想說，它的價格略低於 1 美元或低於面值，所以我們認為這樣做對股東來說是一個很好的價值和一件好事。我們認為 2023 年槓桿率最終將達到我們所指導的 2.5 至 3 倍之間。我們第一季度的市盈率為 2.9 倍。總的來說，我想說我們將繼續致力於資產負債表去槓桿化。

And Amintore, do you want to speak about the rate between the senior notes and the revolver?

阿明托爾，您想談談高級紙幣和左輪手槍之間的匯率嗎？

Yes. There's a little bit of a differential and I'll let you guys do the math by looking at our disclosures in terms of the rate that we've got on the ABL versus the senior notes. But there is a positive rate differential between the two if we borrow on the ABL versus having those balances still remain outstanding on the senior notes.

是的。存在一點差異，我會讓你們通過查看我們披露的 ABL 與高級票據的利率來計算一下。但是，如果我們通過 ABL 借款，與這些餘額仍然在優先票據上未償還，則兩者之間存在正利率差。

And as it relates to the repurchases, we have been able to do those repurchases below par. And clearly, as we look forward at what we will do going forward here in the future, we've indicated that we do on our leverage ratio to be between 2.5 and 3 by the time we hit to the end of the year.

由於與回購有關，我們能夠以低於標準的價格進行回購。顯然，當我們展望未來將要做的事情時，我們已經表示，到今年年底，我們的槓桿率將在 2.5 到 3 之間。

And clearly, we'll look at what makes sense in terms of either repurchasing notes or utilizing cash for other activities out there. But we continue to have one of our key mantra as it relates to our capital structure strategy, deleveraging our balance sheet.

顯然，我們將研究回購票據或利用現金進行其他活動方面的意義。但我們仍然堅持我們的關鍵口號之一，因為它與我們的資本結構戰略相關，即去槓桿化我們的資產負債表。

Okay, great. Thank you.

好的，太好了。謝謝。

You're at 2.9 on the leverage ratio now. I don't want to -- I guess maybe I'm trying a little bit putting words in your mouth. Would it be reasonable to think we could get to the lower end of that 2.5 to 3 range by the end of the year?

您現在的槓桿率為 2.9。我不想——我想也許我正在嘗試把話放到你嘴裡。認為我們可以在今年年底前達到 2.5 至 3 範圍的下限是否合理？

So I will try to give you it depends answer. We gave a range just so that we've got flexibility, if you will. Again, we're committed to deleveraging the balance sheet. But as we think about the uses of our cash or capital and we want to make sure we've got ample liquidity but also invest in the business, whether that's through CapEx or working capital, there's things that will help us grow the business long term.

所以我會盡力給你這取決於答案。如果您願意的話，我們給出了一個範圍，以便我們有靈活性。我們再次致力於去槓桿化資產負債表。但是，當我們考慮現金或資本的用途時，我們希望確保擁有充足的流動性，同時也對業務進行投資，無論是通過資本支出還是營運資金，有些事情將幫助我們長期發展業務。

We're actively looking at how do we deploy that cash so it has the best return to our shareholders at the end of the day. So that's why there's a bit of a range there just so that as we move through the year, if there's opportunities, we can take a hard look at those and make the best decisions for our shareholders.

我們正在積極研究如何部署這些現金，以便最終為股東帶來最佳回報。因此，這就是為什麼會有一些範圍，以便當我們度過這一年時，如果有機會，我們可以仔細審視這些機會，並為我們的股東做出最佳決策。

Right. Okay. Understood. I appreciate that. Thank you. And then just one more quick question. I don't know if you're maybe willing to go here or not, but in terms of the -- a bit of weakness, I guess, in the second quarter relative to the whole broader situation with regional banks. Any ability to put any context or parameters around that from a revenue or a sales standpoint, or just to give us any kind of range of how to think about that magnitude?

正確的。好的。明白了。我很感激。謝謝。然後還有一個簡單的問題。我不知道你是否願意去這裡，但我想，相對於區域銀行的整體更廣泛的情況，第二季度有點疲軟。是否有能力從收入或銷售的角度提供任何背景或參數，或者只是為我們提供如何思考該規模的任何範圍？

Yeah, you're right, I don't want to go there. But what I would tell you is that we've reaffirmed the full-year outlook. Q1 results are actually down, but our color really has been around that we just expect second-quarter results to not be as strong as first quarter just due to softening demand. So again -- and part of that just depends upon how we progress through the second quarter, the timing of orders and so forth.

是的，你說得對，我不想去那裡。但我要告訴你的是，我們已經重申了全年展望。第一季度的業績實際上有所下降，但我們確實認為，由於需求疲軟，我們只是預計第二季度的業績不會像第一季度那麼強勁。再說一遍——這部分取決於我們在第二季度的進展情況、訂單的時間等等。

So again, I want to get our investors -- our potential investors to really focus on the long-term opportunities here. There's a lot of great secular trends that we spoke about with contactless cards, eco cards. Clearly, cards will continue to grow in our opinion. In our instant issuance, Card@Once business, SaaS-based business, we've got, by far, the best solution in the marketplace. So over the long term, I believe there's a lot of opportunities for us to grow and continue to gain market share -- possibly gain market share just as we have historically.

再次強調，我想讓我們的投資者——我們的潛在投資者真正關注這裡的長期機會。我們談到非接觸式卡、生態卡有很多偉大的長期趨勢。顯然，我們認為卡片將繼續增長。在我們的即時發卡、Card@Once 業務、基於 SaaS 的業務中，我們擁有迄今為止市場上最好的解決方案。因此，從長遠來看，我相信我們有很多機會成長並繼續獲得市場份額——可能會像我們歷史上那樣獲得市場份額。

Okay, great. Thank you very much for taking our questions.

好的，太好了。非常感謝您接受我們的提問。

Thank you for dialing in. Appreciate the questions.

感謝您撥入。感謝您提出的問題。

And with no further questions, that concludes today's CPI Card Group's first-quarter earnings call. Thank you for joining.

沒有更多問題，今天的 CPI 卡集團第一季度財報電話會議就到此結束。感謝您的加入。