CPI Card Group Inc (PMTS) 2023 Q4 法說會逐字稿

Welcome to CPI Card Group's third-quarter (sic - fourth-quarter) 2023 earnings call.

歡迎參加 CPI 卡集團 2023 年第三季（原文為第四季）財報電話會議。

My name is Audra, and I will be your operator today.

我叫奧德拉，今天我將成為您的接線生。

(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.

現在，我想將電話轉給 CPI 投資者關係主管 Mike Salop。

Please go ahead.

請繼續。

Thanks, operator, and good morning, everyone.

謝謝接線員，大家早安。

Welcome to the CPI Card Group fourth-quarter 2023 earnings webcast and conference call.

歡迎參加 CPI 卡集團 2023 年第四季財報網路廣播和電話會議。

Today's date is March 7, 2024.

今天的日期是 2024 年 3 月 7 日。

And on the call today from CPI Card Group are John Lowe, President and Chief Executive Officer; and Jeff Hochstadt, Chief Financial Officer.

今天，CPI 卡集團總裁兼執行長 John Lowe 出席了電話會議。和財務長 Jeff Hochstadt。

Before we begin, I'd like to remind everyone that this call may contain forward-looking statements as they are defined in the Private Securities Litigation Reform Act of 1995.

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》中定義的前瞻性陳述。

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.

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前瞻性陳述中表達的結果有重大差異。

For a discussion of such risks and uncertainties, please see CPI Card Group's most recent filings with the SEC.

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。

All 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.

今天所做的所有前瞻性陳述僅反映我們目前的預期，我們沒有義務更新任何陳述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.

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準則財務指標，包括但不限於 EBITDA、調整後 EBITDA、調整後 EBITDA 利潤率、淨槓桿率和自由現金流。

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.

我們今天早上發布的新聞稿和幻燈片簡報中包含了這些非公認會計原則財務指標與最直接可比較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-K for the year ended December 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簡報的副本可在 CPI 的投資者關係網站 Investor.cpicardgroup.com 上取得。此外，CPI 截至 2023 年 12 月 31 日的年度 10-K 表格將在 CPI 投資者關係網站上發布。

On today's call, all growth rates refer to comparisons with the prior year period, unless otherwise noted.

在今天的電話會議上，除非另有說明，所有成長率均指與去年同期的比較。

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

現在，我想將電話轉給總裁兼執行長約翰·洛 (John Lowe)。

Thanks, Mike, and good morning, everyone.

謝謝麥克，大家早安。

For today's call, I will give an overview and discuss our strategic priorities.

在今天的電話會議中，我將概述並討論我們的策略重點。

Jeff will go into more detail on our 2023 results and 2024 financial outlook, and then we will open the call for questions.

Jeff 將更詳細地介紹我們 2023 年的業績和 2024 年的財務前景，然後我們將開始提問。

Let's start on slide 4.

讓我們從幻燈片 4 開始。

As most of you are aware, I was named President and CEO of CPI Card Group in January, taking over from Scott Scheirman, who announced his plans to retire mid-last year.

正如你們大多數人所知，我於 1 月被任命為 CPI 卡集團總裁兼首席執行官，接替斯科特·謝爾曼 (Scott Scheirman)，後者於去年年中宣布了退休計劃。

I would like to take a moment to thank Scott.

我想花點時間感謝斯科特。

Under his leadership, our team delivered a remarkable turnaround over the last six years and established a strong foundation that we can build from as we begin the next phase of the company's growth.

在他的領導下，我們的團隊在過去六年中實現了顯著的轉變，並為我們開始公司下一階段的發展奠定了堅實的基礎。

CPI has a strong culture and values that have helped establish us as a trusted leader in the US payment space, and we have a great leadership team in place today.

CPI 擁有強大的文化和價值觀，幫助我們成為美國支付領域值得信賴的領導者，並且我們今天擁有一支出色的領導團隊。

This team combines both experienced CPI leaders that have helped drive our success over the last several years, as well as some relatively newer hires to bring in additional outside expertise.

團隊既有經驗豐富的 CPI 領導者，他們在過去幾年中幫助推動了我們的成功，也有一些相對較新的員工，以引進更多的外部專業知識。

Among the experienced leaders, we have promoted Peggy O'Leary to Senior Vice President, Prepaid Solutions and Chief Development and Digital Officer.

在經驗豐富的領導者中，我們已將 Peggy O'Leary 提升為預付費解決方案高級副總裁兼首席開發和數位長。

Peggy has been leading our prepaid business since 2022 and has been instrumental in driving our growth strategy in various areas of the business since joining CPI in 2015.

Peggy 自 2022 年以來一直領導我們的預付費業務，並自 2015 年加入 CPI 以來，在推動我們各個業務領域的成長策略方面發揮了重要作用。

Peggy will be supported in business development by Rob Dixon, who is our Vice President of Business Development and Digital Solutions.

Peggy 將得到我們業務開發和數位解決方案副總裁 Rob Dixon 的業務開發支援。

Rob has been leading our product, growth, and innovation strategy for instant issuance, personalization, and digital solutions.

Rob 一直領導我們的即時發行、個人化和數位解決方案的產品、成長和創新策略。

And he and his team have been integral in expanding our product and solution sets, including our digital connections and solutions.

他和他的團隊在擴展我們的產品和解決方案集（包括我們的數位連接和解決方案）方面發揮了不可或缺的作用。

Last year, we also brought on two executive leaders from outside the company in newly created senior roles that report directly to me to further enhance our sales and operations activities.

去年，我們還從公司外部聘請了兩名新設立的高階職位，直接向我匯報，以進一步加強我們的銷售和營運活動。

Toni Thompson joined us from RR Donnelley and is now our Senior Vice President of Debit and Credit Operations.

Toni Thompson 從 RR Donnelley 加入我們，現任借記卡和信貸業務高級副總裁。

Toni leads the teams responsible for ensuring the best quality for our customers for secure card, personalization, instant issuance, and print-on-demand.

Toni 領導的團隊負責確保為客戶提供安全卡、個人化、即時發行和按需列印的最佳品質。

JD Porter, who came to us from Fiserv, is now our Chief Commercial Officer.

JD Porter 從 Fiserv 來到我們，現在是我們的商務長。

JD is responsible for all customer-facing activities for our debit and credit segment and is tasked with driving market share gains and providing the best customer service for our thousands of customers.

京東負責我們的金融卡和貸記卡業務中所有面向客戶的活動，並負責推動市場份額的成長並為我們成千上萬的客戶提供最好的客戶服務。

CPI's newly structured leadership team aligns with our strategy of building from our current foundation while expanding long-term opportunities and diversifying the business, which I will talk more about in a few minutes.

CPI 新組建的領導團隊符合我們的策略，即在現有基礎上進行建設，同時擴大長期機會和實現業務多元化，我將在幾分鐘後詳細討論這一點。

First, though, I would like to address our financial results and initial outlook for 2024.

不過，首先我想先談談我們的財務表現和 2024 年的初步展望。

Certainly, 2023 was a challenging year.

當然，2023 年是充滿挑戰的一年。

As we've discussed the last few quarters, in general, our customers were very cautious with their spending last year.

正如我們在過去幾個季度所討論的那樣，總的來說，我們的客戶對去年的支出非常謹慎。

Economic uncertainties, banking industry turmoil, and inventory rationalization after our customers purchased large quantities emitted supply chain concerns in 2022 all contributed to the cautionary spending in 2023.

經濟不確定性、銀行業動盪以及客戶在 2022 年大量採購後的庫存合理化引發了供應鏈擔憂，這些都導致​​了 2023 年的謹慎支出。

If you recall, 2022 sales were at a record level for CPI and reflected a 27% increase from prior year and a 32% increase in the debit and credit business.

如果你還記得的話，2022 年的 CPI 銷售額將創下歷史新高，比上年增長 27%，借記卡和貸記業務增長 32%。

We anticipate the customer inventory rebalancing will continue into 2024 but believe the market will gradually improve over the course of the year.

我們預計客戶庫存重新平衡將持續到 2024 年，但相信市場將在這一年中逐步改善。

For the full year, we expect to return to positive sales growth in 2024, with our initial outlook projecting slight increases for both net sales and adjusted EBITDA.

就全年而言，我們預計 2024 年銷售將恢復正成長，我們最初的展望是淨銷售額和調整後 EBITDA 均略有成長。

We expect sales to be down for the first half of the year, with growth anticipated in the second half.

我們預計上半年銷售額將下降，預計下半年將成長。

Our sales outlook is based on discussions with customers, opportunities we are seeing in the marketplace, industry projections and analysis, and anticipated benefits from sales initiatives that we initiated in 2023.

我們的銷售前景是基於與客戶的討論、我們在市場上看到的機會、產業預測和分析，以及我們在 2023 年啟動的銷售計畫的預期收益。

We are also encouraged by the outlooks of many of the large banks who generally are predicting a soft landing for the US economy.

許多大型銀行的前景也令我們感到鼓舞，他們普遍預測美國經濟將軟著陸。

We expect 2024 adjusted EBITDA to slightly increase.

我們預計 2024 年調整後 EBITDA 將小幅成長。

Growth will be impacted by investments to support our long-term strategy of growing and diversifying the business and comparisons with lower short-term employee incentive compensation in 2023.

成長將受到支持我們業務成長和多元化長期策略的投資以及與 2023 年較低的短期員工激勵薪酬的比較的影響。

Longer term, we believe we can drive further operating leverage from sales growth and operating efficiencies.

從長遠來看，我們相信我們可以透過銷售成長和營運效率進一步推動營運槓桿。

Looking back at 2023, although our sales results were disappointing, we did take important strides that will help lay the groundwork for the future.

回顧 2023 年，儘管我們的銷售業績令人失望，但我們確實取得了重要進展，這將為未來奠定基礎。

We won additional business with both new and existing customers, we expanded our health savings account business and opportunity, we developed and introduced new metal card offerings, we introduced eco-focused solutions in the prepaid space, we expanded our Card@Once instant issuance installations to more than 15,000 locations, and we accelerated plans to diversify the business by launching digital push provisioning capabilities and exploring expansion of our instant issuance solution beyond financial institutions.

我們贏得了新舊客戶的額外業務，我們擴大了健康儲蓄帳戶業務和機會，我們開發並推出了新的金屬卡產品，我們在預付領域推出了注重生態的解決方案，我們擴大了Card@Once 即時發行裝置涵蓋超過 15,000 個地點，我們透過推出數位推送配置功能並探索將我們的即時發行解決方案擴展到金融機構之外，加快了業務多元化的計劃。

In addition, despite the sales and net income decline in 2023, we were able to more than double our free cash flow to nearly $28 million, thanks to improvements in working capital and tight management of capital spending.

此外，儘管 2023 年銷售額和淨利潤有所下降，但由於營運資本的改善和資本支出的嚴格管理，我們的自由現金流仍能增加一倍多，達到近 2,800 萬美元。

We also initiated our share repurchase program in the fourth quarter and made good progress executing against the $20 million authorization in the first couple of months of 2024.

我們還在第四季度啟動了股票回購計劃，並在 2024 年前幾個月的 2,000 萬美元授權執行方面取得了良好進展。

We'll go into more detail on 2023 results and our 2024 outlook in a few minutes, but first, let's turn to our strategy review on slide 5.

我們將在幾分鐘內詳細介紹 2023 年業績和 2024 年展望，但首先，讓我們轉向幻燈片 5 上的策略回顧。

My goal is to carry forward and enhance the strategies that have made us successful with our current portfolio, while also expanding our addressable market over the long term by adding adjacent product and service offerings, including more digital solutions for our extensive customer base of thousands of financial institutions.

我的目標是發揚和加強使我們當前產品組合成功的策略，同時透過添加相鄰的產品和服務產品（包括為我們數千名廣泛的客戶群提供更多數位解決方案）來長期擴大我們的目標市場。金融機構。

My leadership team and I want to continue with key strategic priorities that have successfully driven growth and market share gains in our portfolio of secure cards, card personalization services, instant issuance solutions, print-on-demand, and prepaid solutions.

我和我的領導團隊希望繼續實施關鍵策略重點，這些策略重點已成功推動我們的安全卡、卡片個人化服務、即時發卡解決方案、按需列印和預付費解決方案組合的成長和市場份額的成長。

Specifically, we will continue to differentiate ourselves in the market by prioritizing a deep customer focus, market-leading quality payment solutions and customer service, continuous innovation, and a market-competitive business model.

具體來說，我們將繼續以深度客戶為中心、市場領先的優質支付解決方案和客戶服務、持續創新以及具有市場競爭力的商業模式來在市場中脫穎而出。

These priorities have helped us become a leader in areas such as eco-focused payment cards, our software-as-a-service-based instant issuance solutions, and tamper-evident prepaid packaging solutions.

這些優先事項幫助我們成為生態支付卡、基於軟體即服務的即時發行解決方案和防篡改預付費包裝解決方案等領域的領導者。

Our focus on customer service, quality, and innovation gives us a strong value proposition in the market, and we have consequently established strong, long-lasting customer relationships.

我們對客戶服務、品質和創新的關注使我們在市場上擁有強大的價值主張，因此我們建立了牢固、持久的客戶關係。

We remain committed to winning business and gaining market share with our existing portfolio, but we also believe there are opportunities to expand into new adjacent areas.

我們仍然致力於利用現有產品組合贏得業務並獲得市場份額，但我們也相信有機會擴展到新的相鄰領域。

Scott and I, along with our teams, spent years building the foundation we have today, and CPI is now well positioned to invest in additional growth opportunities, which will also provide further diversification to our portfolio.

我和 Scott 以及我們的團隊花費數年時間打造了我們今天所擁有的基礎，而 CPI 現在已做好了投資額外成長機會的準備，這也將為我們的投資組合提供進一步的多元化。

We serve a customer base of thousands of financial institutions, most of which are small to medium issuers who rely on third parties for many of their payment services.

我們為數千家金融機構的客戶群提供服務，其中大多數是中小型發行人，他們的許多支付服務依賴第三方。

We believe we can provide added value to these customers through additional solutions and service offerings to help their customers with their payment needs.

我們相信，我們可以透過額外的解決方案和服務產品為這些客戶提供附加價值，幫助他們的客戶滿足支付需求。

We are uniquely positioned for this, primarily due to our technology connections with the bank platform providers, also known as cores, and processors that support the backbone of most banks in the US payment system.

我們在這方面擁有獨特的優勢，主要是因為我們與銀行平台提供者（也稱為核心）和處理器的技術聯繫，支持美國支付系統中大多數銀行的骨幹。

We realized years ago, when we were trying to penetrate the market with our instant issuance solution, that we needed to make this solution easily adoptable, plug-and-play if you will, for our customers.

幾年前，當我們試圖透過即時發行解決方案打入市場時，我們意識到，我們需要使該解決方案易於為我們的客戶採用，即插即用（如果您願意的話）。

This prompted us to begin deeper technology integrations with the bank platforms and processors that we and our customers connect with every day.

這促使我們開始與我們和我們的客戶每天連接的銀行平台和處理器進行更深入的技術整合。

As we have grown our share in the US market, we have spent many years developing and investing in these technology integrations, which have allowed us to expand our reach in offering personalization services and our Card@Once software-as-a-service-based instant issuance digital solution to small- and medium-sized financial institutions across the country.

隨著我們在美國市場份額的不斷增長，我們花費了多年的時間來開發和投資這些技術集成，這使我們能夠擴大我們在提供個性化服務和基於Card@Once 軟體即服務的服務方面的影響力。為全國中小型金融機構提供即時發行數位化解決方案。

Our Card@Once solution, for example, operates on a proprietary platform that allows us to provide a plug-and-play instant card issuance solution through these integrations.

例如，我們的 Card@Once 解決方案在專有平台上運行，使我們能夠透過這些整合提供即插即用的即時發卡解決方案。

The value proposition to our customers has propelled the growth of this solution to more than 15,000 branches across more than 2,000 financial institutions today.

我們為客戶提供的價值主張已推動該解決方案發展到如今 2,000 多家金融機構的 15,000 多個分支機構。

We are now investing in and leveraging these integrations we have built to offer digital push provisioning, a service that complements the physical card personalization and solutions we provide the customers.

我們現在正在投資並利用我們建立的這些整合來提供數位推播配置，這是一種補充我們為客戶提供的實體卡個人化和解決方案的服務。

With push provisioning, we can additionally offer our customers the ability to let their customers seamlessly push their card credentials onto a digital wallet simply by pressing a button on their mobile banking app.

透過推送配置，我們還可以為客戶提供只需按下行動銀行應用程式上的按鈕即可將其卡片憑證無縫推送到數位錢包的功能。

Our vision is to provide push provisioning services as a digital complement to each physical card we help our customers issue, which assists them in moving their cards to top-of-wallet status, both physically and digitally.

我們的願景是提供推播配置服務，作為我們幫助客戶發行的每張實體卡的數位補充，幫助他們將實體卡和數位卡轉移到錢包頂部狀態。

This is just one example of value-added services that will benefit our small- and medium-sized customers.

這只是讓我們的中小型客戶受益的加值服務的一個例子。

Similar to previous initiatives, such as eco-focused card rollouts, we expect adoption among our customers to ramp slowly but grow into a meaningful business over time.

與先前的舉措類似，例如推出以生態為重點的卡，我們預計客戶的採用率會緩慢上升，但隨著時間的推移會成長為一項有意義的業務。

We believe our widespread technology integrations, along with the relationships and trust we have established with providers, both of which took years to build, are meaningful point of differentiation that allows us to expand beyond our traditional offerings and offer additional, easily adaptable solutions for our customers.

我們相信，我們廣泛的技術集成，以及我們與供應商建立的關係和信任（兩者都花費了數年時間建立），是有意義的差異化點，使我們能夠超越我們的傳統產品，並為我們的客戶提供額外的、易於適應的解決方案。顧客。

We also have opportunities to continue taking existing products and solutions to new types of customers, such as our expansion into health savings account payment cards and potentially selling instant issuance to customers outside of the traditional bank branch and credit union space.

我們還有機會繼續將現有產品和解決方案提供給新類型的客戶，例如我們擴展到健康儲蓄帳戶支付卡，並有可能向傳統銀行分行和信用社領域以外的客戶銷售即時發行服務。

This could include any business that may have a need to issue payment cards to consumers at their locations.

這可能包括任何需要在其所在地向消費者發行支付卡的企業。

As we refine our plans and strategies and roll out new solution offerings, we will give you more details, but I want to emphasize we remain very confident in the long-term growth of the markets where we currently participate and will continue to invest in advancing these long-term growth areas.

隨著我們完善計劃和策略並推出新的解決方案，我們將向您提供更多詳細信息，但我想強調的是，我們對我們目前參與的市場的長期增長仍然充滿信心，並將繼續投資推進這些長期成長領域。

A big driver of our market growth is cards in circulation.

我們市場成長的一大推動力是卡片的流通。

If I take you to slide 6, these are updated three-year charts on the growth of US payment cards.

如果我帶您看投影片 6，這些是有關美國支付卡成長的三年更新圖表。

The latest figures from Visa and Mastercard for cards in circulation in the US increased at a 10% CAGR for the three years ending September 30 and were up 8% compared to the prior year quarter.

Visa 和 Mastercard 的最新數據顯示，截至 9 月 30 日的三年間，美國流通卡的複合年增長率為 10%，與去年同期相比成長 8%。

Additionally, the trends towards eco-focused and higher-price contactless cards remain strong.

此外，注重環保和價格更高的非接觸式卡的趨勢仍然強勁。

In 2024, one of our priorities will be to increase penetration of eco-focused cards to our thousands of small to medium customers.

2024 年，我們的首要任務之一是提高生態卡對數千名中小型客戶的滲透率。

These cards have been primarily purchased by large issuers to date, which is similar to what we have experienced with the contactless transition.

到目前為止，這些卡主要由大型發卡機構購買，這與我們在非接觸式過渡中所經歷的情況類似。

Mandates from card networks and initiatives from large banks to move to eco-focused cards over the next few years should further aid the rate of penetrations.

未來幾年，卡片網路的強制要求和大型銀行轉向以生態為重點的卡片的舉措應該會進一步提高滲透率。

Contactless adoption also continues to advance, and Visa noted in its latest earnings call that it estimates tap-to-pay usage in the US reached 45% for in-person transactions last year.

非接觸式採用也不斷推進，Visa 在最新的財報電話會議中指出，預計去年美國面對面交易的觸碰支付使用率達到 45%。

We estimate the contactless penetration of cards in circulation in the US was between 60% and 70% at year-end, up from 50% to 60% at the end of 2022.

我們估計，截至年底，美國流通卡的非接觸式普及率在 60% 至 70% 之間，高於 2022 年底的 50% 至 60%。

In short, we believe the US payment card market is very healthy, with positive secular trends still intact.

簡而言之，我們認為美國支付卡市場非常健康，積極的長期趨勢仍然完好無損。

The market also remains recurring in nature, with a significant majority of payment card issuance relating to existing card replacement.

該市場本質上仍然是週期性的，絕大多數支付卡發行都與現有卡的更換有關。

Although customers increased inventory levels in 2022 and subsequently have been working them down, resulting in a sales decline in 2023, our sales still increased at a 9% compound annual growth rate over the past two years, with our debit and credit segment sales posting a 10% compound growth rate.

儘管客戶在2022 年增加了庫存水平，隨後一直在降低庫存水平，導致2023 年銷售額下降，但我們的銷售額在過去兩年中仍以9% 的複合年增長率增長，我們的借記卡和貸記分部銷售額均實現了複合成長率10%。

Once we get through the remaining stages of the inventory rebalancing, we believe the market will return to more normalized patterns.

一旦我們度過了庫存再平衡的剩餘階段，我們相信市場將恢復到更正常化的模式。

In addition to sales opportunities, another emphasis for us in our long-term strategy is to invest in technology and processes to further enhance and improve the customer journey and experience, drive growth, and increase operating efficiencies.

除了銷售機會之外，我們長期策略的另一個重點是投資技術和流程，以進一步增強和改善客戶旅程和體驗，推動成長並提高營運效率。

This includes investment in a new state-of-the-art secure card production facility in Indiana.

這包括在印第安納州投資一座新的最先進的安全卡生產設施。

Lease on our current space in Indiana expires in 2026, and we are beginning a multi-year buildout and transition to a new facility which will provide more capabilities, capacity, and efficiencies.

我們位於印第安納州的現有空間的租約將於 2026 年到期，我們正在開始為期多年的擴建並過渡到新設施，這將提供更多的能力、產能和效率。

In summary, our team is excited about the opportunities to grow in the future, both from winning business with our existing portfolio and what we believe will be a growing market and by adding new addressable markets by expanding into adjacent offerings.

總而言之，我們的團隊對未來的成長機會感到興奮，無論是利用我們現有的產品組合贏得業務，還是透過我們相信將不斷增長的市場來贏得業務，以及透過擴展到相鄰產品來增加新的潛在市場。

But for now, I'd like to turn the call over to Jeff to go through our 2023 financial results and 2024 outlook in more detail.

但現在，我想將電話轉給 Jeff，以更詳細地介紹我們 2023 年的財務表現和 2024 年的前景。

Jeff?

傑夫？

Thanks, John, and good morning, everyone.

謝謝約翰，大家早安。

I will begin my overview on slide 8.

我將從幻燈片 8 開始概述。

The fourth-quarter environment was generally what we expected, as customers remained cautious with spending and continued to work down their inventory levels.

第四季的環境總體符合我們的預期，因為客戶對支出保持謹慎，並繼續降低庫存水準。

The sales decline had a negative effect on margins as we lost operating leverage, although we continued to manage discretionary spending tightly.

儘管我們繼續嚴格管理可自由支配支出，但由於我們失去了營運槓桿，銷售下降對利潤率產生了負面影響。

Overall, fourth-quarter net sales declined 19%, net income decreased 78%, and adjusted EBITDA declined 27% compared to the prior year period.

整體而言，與去年同期相比，第四季淨銷售額下降 19%，淨利潤下降 78%，調整後 EBITDA 下降 27%。

For the full year, net sales decreased 7%, net income declined 34%, and adjusted EBITDA fell 8%, as reductions in operating expenses helped offset the impact of the sales and gross margin decline.

全年淨銷售額下降 7%，淨利潤下降 34%，調整後 EBITDA 下降 8%，營運費用的減少幫助抵消了銷售額和毛利率下降的影響。

Net income for both the quarter and the year was negatively impacted by accruals for the previously announced executive retention award, as well as higher tax rates.

本季和當年的淨利潤均受到先前宣布的高階主管保留獎的應計費用以及較高的稅率的負面影響。

Despite the reduction in net income, we were able to significantly increase our free cash flow for the year, more than doubling last year's level, due to improvements in working capital and tight management of capital spending.

儘管淨收入減少，但由於營運資本的改善和資本支出的嚴格管理，我們今年的自由現金流量大幅增加，是去年水準的兩倍多。

We were also able to maintain a relatively consistent net leverage ratio, ending the year at 3.1 times.

我們也能夠維持相對穩定的淨槓桿率，年底為 3.1 倍。

Turning to the detailed fourth-quarter results on slide 9.

轉向幻燈片 9 上詳細的第四季業績。

The 19% sales decline was comprised of a 22% decrease in our debit and credit segment and a 5% decline in prepaid.

銷售額下降 19%，其中藉記卡和信貸業務下降 ​​22%，預付業務下降 ​​5%。

Within debit and credit, the primary driver of the decline was reduced card sales.

在藉記卡和信用卡中，下降的主要驅動因素是卡片銷量的減少。

We saw this decline across contactless, contact, and non-EMV cards.

我們看到非接觸式、接觸式和非 EMV 卡出現了這種下降。

Sales of eco-focused cards declined compared to some very large orders in the prior year period but did increase relative to the third quarter as we filled some good-sized orders in the fourth quarter.

與去年同期的一些非常大的訂單相比，以生態為重點的卡的銷量有所下降，但由於我們在第四季度完成了一些大訂單，因此相對於第三季度確實有所增加。

Card@Once instant issuance sales increased in the fourth quarter compared to prior year, driven by growth in both solution sales and transaction processing fees, while other personalization services declined.

受解決方案銷售和交易處理費用成長的推動，第四季 Card@Once 即時發行銷售額與去年同期相比有所成長，而其他個人化服務則有所下降。

The sales declines for both debit and credit and prepaid segments also reflect very challenging comparisons with the 2022 fourth quarter, when debit and credit sales increased 35% and prepaid grew 39%.

借記卡、貸記卡和預付費業務的銷售額均出現下降，這也反映出與2022 年第四季相比非常具有挑戰性，當時借記卡和貸記卡銷售額增長了35%，預付費業務成長了39%。

Gross profit in the 2023 fourth quarter declined 25% from prior year, and the gross profit margin decreased from 37.6% to 34.4%, although it did increase slightly from the third-quarter level.

2023年第四季毛利較上年同期下降25%，毛利率從37.6%下降至34.4%，儘管較第三季水準略有成長。

Compared to the prior year period, the lower sales levels negatively affected gross margin due to the impact on fixed costs within cost of sales, and margin was also impacted by higher material costs, primarily chips, partially offset by labor efficiencies in our prepaid segment.

與去年同期相比，較低的銷售水準對毛利率產生了負面影響，因為銷售成本中的固定成本受到影響，而利潤率也受到材料成本（主要是晶片）上漲的影響，部分被我們預付費部門的勞動效率所抵銷。

SG&A expenses, including depreciation and amortization, were consistent with the prior year period, as lower selling expenses and professional services costs were partially offset by higher compensation expenses.

SG&A 費用（包括折舊和攤提）與去年同期一致，因為較低的銷售費用和專業服務成本被較高的補償費用部分抵銷。

The increase in compensation expenses was driven by approximately $3 million of accruals related to the previously announced chief executive retention award, including a stock compensation component, the higher headcount and salaries, partially offset by lower short-term incentive compensation expenses.

薪酬費用的增加是由於與先前宣布的執行長保留獎勵相關的約300 萬美元的應計費用所致，其中包括股票薪酬部分、員工人數和工資的增加，但部分被短期激勵薪酬費用的減少所抵消。

Our tax rate in the fourth quarter increased to 29.8% compared to 19.4% in the prior year quarter, which brought our full-year rate to 30.4%.

我們第四季的稅率從去年同期的 19.4% 增加到 29.8%，這使得我們的全年稅率達到 30.4%。

The increased full-year tax rate for 2023 primarily reflects limitations on deductibility of executive compensation related to the executive retention package and favorable adjusted items in the prior year.

2023年全年稅率上調主要反映了與上一年高階主管保留方案和優惠調整項目相關的高階主管薪酬扣除限制。

We currently expect the 2024 rate to be fairly similar to the 2023 level.

我們目前預計 2024 年的成長率將與 2023 年的水準相當相似。

Net income in the fourth quarter decreased 78% to $2.7 million, and adjusted EBITDA decreased 27% to $19.9 million.

第四季淨利潤下降 78% 至 270 萬美元，調整後 EBITDA 下降 27% 至 1,990 萬美元。

Adjusted EBITDA margin declined from 21.5% in the prior year to 19.3% as a result of the reduced sales levels and related lower gross margins.

由於銷售水準下降以及相關的毛利率下降，調整後 EBITDA 利潤率從上一年的 21.5% 下降至 19.3%。

As mentioned, the net income decline also reflects the impacts of the executive retention award accrual which is not included in adjusted EBITDA and a higher tax rate, partially offset by lower interest expense.

如前所述，淨利潤下降也反映了應計高階主管保留獎勵的影響（不包括在調整後的 EBITDA 中）和較高的稅率（部分被較低的利息費用所抵消）。

Turning now to our full-year results on slide 10.

現在轉向幻燈片 10 上的全年業績。

For the full year, net sales decreased 7%, with the debit and credit segment down 8% and prepaid debit down 2%.

全年淨銷售額下降 7%，其中藉記和貸記業務下降 ​​8%，預付借記業務下降 ​​2%。

Debit and credit sales declines primarily reflect lower eco-focused card sales compared to very large orders in 2022 and declines in contact cards, partially offset by increases in volumes of other contactless cards.

金融卡和信用卡銷售額的下降主要反映了與2022 年的大量訂單相比，以生態為重點的卡片銷售額下降以及接觸式卡的下降，但部分被其他非接觸式卡銷量的增長所抵消。

For the year, contactless cards, including eco-focused cards, represented just over 80% of the volume of secure cards results from just over 75% in 2022.

今年，包括環保卡在內的非接觸式卡僅佔安全卡銷量的 80% 以上，而 2022 年這一比例將略高於 75%。

Card@Once instant issuance sales increased for the year, driven primarily by transaction processing fees.

今年 Card@Once 即時發行銷售額有所成長，這主要是由交易處理費用推動的。

Pricing contributed approximately 2 percentage points of growth in 2023, primarily related to actions taken in 2022.

定價在 2023 年貢獻了約 2 個百分點的成長，主要與 2022 年採取的行動有關。

Full-year gross profit decreased 12% from the prior year, with gross profit margin decreasing from 36.9% to 35.0%, driven by lower sales levels and increased material costs, partially offset by pricing benefits and lower freight costs.

全年毛利較前一年下降 12%，毛利率從 36.9% 下降至 35.0%，這是由於銷售水準下降和材料成本增加所致，但部分被定價優勢和運費下降所抵銷。

Total SG&A expenses decreased by $2.7 million, as reduced professional services expense more than offset an increase in total compensation expense.

SG&A 總費用減少了 270 萬美元，因為專業服務費用的減少足以抵銷總薪資費用的增加。

The total compensation expense increase was primarily driven by accruals of $7 million related to the CEO executive retention award and higher salaries and headcount, partially offset by lower short-term incentive compensation expense.

總薪酬支出的成長主要是由於與執行長高階主管留任獎相關的 700 萬美元的應計費用以及更高的薪資和員工人數所致，但部分被短期激勵薪酬支出的減少所抵消。

The final $2 million accrual for the executive retention award will be incurred in the first quarter of 2024.

高階主管保留獎勵的最終 200 萬美元應計金額將於 2024 年第一季支付。

Full-year net income decreased 34% to $24 million, and adjusted EBITDA decreased 8% to $89.5 million.

全年淨利潤下降 34% 至 2,400 萬美元，調整後 EBITDA 下降 8% 至 8,950 萬美元。

Adjusted EBITDA margin decreased from 20.5% in the prior year to 20.1%, driven by the reduced sales levels, partially offset by lower operating expenses.

由於銷售水準下降，調整後 EBITDA 利潤率從上一年的 20.5% 下降至 20.1%，但部分被營運費用下降所抵銷。

The net income decline also reflects the executive retention award and a higher tax rate, partially offset by lower interest expense.

淨利潤下降也反映出高階主管保留獎勵和較高的稅率，但利息支出的下降部分抵消了這種影響。

Turning now to our segments on slide 11.

現在轉向幻燈片 11 上的部分。

I discussed the segment sales drivers earlier, so I will just discuss segment profitability on this slide.

我之前討論了細分市場的銷售驅動因素，因此我將在這張投影片上討論細分市場的獲利能力。

Income from operations for the debit and credit segment decreased 39% in the fourth quarter and declined 14% for the full year.

第四季金融卡和貸記卡業務收入下降 39%，全年下降 14%。

Income declines in both periods were driven by decreased sales and higher material costs, partially offset by lower operating expenses.

這兩個時期的收入下降都是由於銷售額下降和材料成本上升造成的，但部分被營運費用下降所抵消。

Prepaid debit segment income from operations increased 35% in the fourth quarter to $7 million, with growth driven by comparisons with some large expenses incurred in the fourth quarter of 2022 and by labor efficiencies.

第四季預付借記業務收入成長了 35%，達到 700 萬美元，成長的推動因素是與 2022 年第四季發生的一些大額費用的比較以及勞動力效率的提高。

Full-year income from operations for prepaid decreased 3% due to lower sales.

由於銷售額下降，全年預付費業務收入下降了 3%。

Turning to the balance sheet, liquidity, and cash flow on slide 12.

轉向投影片 12 上的資產負債表、流動性和現金流。

For the full year, we generated $34 million of cash from operating activities and invested $6.4 million in net capital expenditures, which resulted in free cash flow of $27.6 million.

全年，我們從營運活動中產生了 3,400 萬美元的現金，並投資了 640 萬美元的淨資本支出，產生了 2,760 萬美元的自由現金流。

This compared to the free cash flow of $13.5 million in 2022.

相較之下，2022 年的自由現金流為 1,350 萬美元。

We were able to double free cash flow despite the net income decline due to strong improvement in working capital and reduced net capital expenditures as we tightly managed all spending in the challenging sales environment.

儘管淨收入下降，但由於我們在充滿挑戰的銷售環境中嚴格管理所有支出，營運資本大幅改善和淨資本支出減少，我們仍能夠將自由現金流增加一倍。

On the balance sheet at year-end, we had a $12.4 million of cash and no borrowings outstanding on our $75 million ABL revolver.

在年底的資產負債表上，我們價值 7500 萬美元的 ABL 左輪手槍有 1240 萬美元現金，並且沒有未償還借款。

We had $268 million of senior notes outstanding at year-end, a reduction from $285 million at the end of 2022, as we repurchased $17 million of notes in the open market during the course of the year.

截至年底，我們未償還的優先票據為 2.68 億美元，較 2022 年底的 2.85 億美元有所減少，因為我們在這一年中在公開市場回購了 1,700 萬美元的票據。

Our net leverage ratio of 3.1 times at the end of the year was relatively consistent with the 2022 level at 3 times despite lower adjusted EBITDA as we reduced our net debt.

儘管我們減少了淨債務，調整後的 EBITDA 有所下降，但我們年底的淨槓桿率為 3.1 倍，與 2022 年 3 倍的水平相對一致。

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 returning funds to stockholders.

我們的資本結構和配置重點仍集中在維持充足的流動性、投資業務（包括可能的策略性收購）、去槓桿化資產負債表以及將資金返還給股東。

As you recall, in the fourth quarter of last year, we announced a $20 million share repurchase program with the authorization expiring at the end of 2024.

大家還記得，去年第四季度，我們宣布了一項 2000 萬美元的股票回購計劃，授權將於 2024 年底到期。

Later in the quarter, we announced an agreement with our majority stockholder to purchase shares from them based on a multiple of our open market repurchases through March 31, 2024.

在本季度晚些時候，我們宣布與大股東達成協議，根據截至 2024 年 3 月 31 日的多次公開市場回購，向他們購買股票。

In the fourth quarter, we initiated the open market program, buying back $250,000 worth of shares.

第四季度，我們啟動了公開市場計劃，回購了價值 25 萬美元的股票。

Including what we have repurchased in the first two months of 2024, we have bought back more than $1 million in shares since beginning the program.

包括我們在 2024 年前兩個月回購的股票，自該計劃啟動以來，我們已經回購了超過 100 萬美元的股票。

Based on our agreement with our majority stockholder, we will repurchase from them in April an amount equal to three times the repurchases we made in the open market from December through March, with settlement at 98% of the average price of our open market repurchases.

根據我們與大股東的協議，我們將在4月進行回購，金額相當於12月至3月份公開市場回購的三倍，並依照公開市場回購均價的98%進行結算。

In total, including that agreement through February, we have repurchased or committed to repurchase more than $4 million out of the $20 million authorization.

總的來說，包括截至 2 月的協議，我們已回購或承諾回購 2,000 萬美元授權中的超過 400 萬美元。

Turning to our 2024 financial outlook on slide 13.

轉向幻燈片 13 上的 2024 年財務展望。

As John mentioned, we expect the customer inventory rebalancing to continue into 2024.

正如 John 所提到的，我們預期客戶庫存重新平衡將持續到 2024 年。

Consequently, we expect first-quarter sales to be similar to the fourth quarter of 2023 level.

因此，我們預計第一季的銷售額將與 2023 年第四季的水平相似。

Over the course of the year, we believe the market will gradually return to growth and we currently expect sales declines in the first half of the year to be offset by growth in the second half.

在這一年中，我們相信市場將逐漸恢復成長，目前我們預計上半年的銷售下降將被下半年的成長所抵消。

For the full year, we are projecting slight increases in both net sales and adjusted EBITDA.

對於全年，我們預計淨銷售額和調整後 EBITDA 均略有成長。

We are not projecting positive operating leverage in 2024 due to the relatively low sales growth expectations, and we are expecting cost savings initiatives to generally offset the impact of investments to support future growth and employee incentive compensation returning to more normalized levels.

由於銷售成長預期相對較低，我們預期 2024 年的營運槓桿不會為正，我們預期成本節約措施將普遍抵銷投資的影響，以支持未來成長和員工激勵薪資恢復到更正常的水平。

In the first quarter, we expect adjusted EBITDA margin to be lower than the fourth quarter of 2023 due to having minimal employee incentive compensation accruals in last year's fourth quarter.

由於去年第四季應計員工激勵薪資極少，我們預期第一季調整後 EBITDA 利潤率將低於 2023 年第四季。

Free cash flow for 2024 is expected to be $5 million to $10 million lower than the $27.6 million we generated in 2023 due to increased capital spending to invest for future growth.

由於投資未來成長的資本支出增加，預計 2024 年的自由現金流將比 2023 年的 2,760 萬美元減少 500 萬至 1,000 萬美元。

The CapEx increases include approximately $5 million of expected investment in the new production facility in Indiana.

資本支出增加包括對印第安納州新生產設施的約 500 萬美元的預期投資。

Including incremental operating expenses and capital spending, we expect to spend about $20 million for this project, of which approximately $13 million will impact our cash flow over 2024 and 2025.

包括增量營運費用和資本支出，我們預計該項目將花費約 2,000 萬美元，其中約 1,300 萬美元將影響我們 2024 年和 2025 年的現金流。

Once complete, this will double our size in Indiana and result in about a 10% increase in our overall real estate operating footprint.

完成後，我們在印第安納州的規模將增加一倍，並導致我們的整體房地產營運足跡增加約 10%。

We expect free cash flow generation in 2024 to occur mainly in the fourth quarter, primarily due to the back half weighted sales growth, as well as the impact of inventory build during the first three quarters due to purchase commitments we had in place for contactless chips.

我們預計 2024 年自由現金流的產生將主要發生在第四季度，這主要是由於下半年加權銷售成長，以及由於我們對非接觸式晶片的採購承諾而導致前三個季度庫存增加的影響。

First-quarter cash flow will also be impacted by the $5 million executive retention award payments.

第一季現金流也將受到 500 萬美元高階主管保留獎勵付款的影響。

We currently expect the year-end 2024 net leverage ratio to be between 3 and 3.5 times depending on cash flow generation and share repurchase execution among other factors.

我們目前預計 2024 年底淨槓桿率將在 3 至 3.5 倍之間，具體取決於現金流量產生和股票回購執行等因素。

Overall, we expect 2024 to be a rebound year for the business once we clear the channel inventory book rebalancing and expect to see more normalized trends in the back half of the year.

總體而言，一旦我們清除了通路庫存帳面再平衡，我們預計 2024 年將是業務反彈的一年，並預計下半年將出現更正常化的趨勢。

I will now pass the call back to John for some closing remarks on slide 14, John?

我現在將把電話轉回約翰，讓他對幻燈片 14 做一些結束語，約翰？

Thanks, Jeff.

謝謝，傑夫。

To summarize, 2023 was a challenging year for the market.

總而言之，2023 年對市場來說是充滿挑戰的一年。

And we believe the first half of 2024 will continue to be affected by cautious customer spending, but we expect growth to gradually return over the course of the year.

我們認為 2024 年上半年將繼續受到謹慎的客戶支出的影響，但我們預計成長將在一年內逐漸恢復。

We are focused on continuing to win business and gain share with our existing portfolio, while also expanding our addressable market over the long term through the introduction of adjacent product and service solutions.

我們專注於繼續贏得業務並利用我們現有的產品組合來獲得份額，同時透過引入相鄰的產品和服務解決方案來長期擴大我們的目標市場。

We generated strong free cash flow in 2023 despite the decline in net income, and our outlook projects a return to slight sales growth in 2024, with declines in the first half of the year offset by growth in the second half.

儘管淨利潤下降，我們在 2023 年仍產生了強勁的自由現金流，我們的前景預計 2024 年銷售將恢復小幅增長，上半年的下降被下半年的增長所抵消。

Our leadership team is very excited about the future and proud of the strong team of employees we have in place.

我們的領導團隊對未來感到非常興奮，並對我們擁有的強大員工團隊感到自豪。

And I want to take a moment to thank all of our employees for their continued dedication and commitment to serving our customers well.

我想花一點時間感謝我們所有的員工為我們的客戶提供良好服務的持續奉獻和承諾。

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會議，我們現在將開始電話會議以解答任何問題。

(Operator Instructions) Jaeson Schmidt, Lake Street Capital Markets.

（操作員指令）Jaeson Schmidt，湖街資本市場。

Hey, guys.

大家好。

Thanks for taking my questions.

感謝您回答我的問題。

Just curious if you're seeing any cancellations or some of these headwinds are just due to pushouts and delays in new programs.

只是好奇您是否看到任何取消或其中一些阻力只是由於新計劃的推出和延遲而造成的。

Hey.

嘿。

Morning, Jaeson.

早上好，傑森。

Good to talk to you again.

很高興再次與你交談。

No, I wouldn't say anything is related to cancellations.

不，我不會說任何與取消有關的事情。

I would say, more related to just cautious spending that remains in the market, continuous inventory rebalancing if you will.

我想說，這更多是與市場上仍然存在的謹慎支出、持續的庫存再平衡（如果你願意的話）有關。

But as we said on the call, we expect the first half to continue to be a little choppy, rebalancing to continue, but we expect in the second half to return to growth.

但正如我們在電話會議上所說，我們預計上半年將繼續有點波動，再平衡將繼續，但我們預計下半年將恢復成長。

But we're not necessarily seeing any cancellations or reductions of orders, if you will.

但如果您願意的話，我們不一定會看到任何訂單取消或減少。

It's more just overall slowness in the market.

更重要的是市場整體放緩。

Got you.

明白你了。

And then you noted expanding into some adjacent areas.

然後您注意到擴展到一些鄰近區域。

Do you expect to see sort of meaningful inroads this year?

您預計今年會看到一些有意義的進展嗎？

Or is this year more about learning about the market and some of the opportunities there?

或者今年更多的是了解市場和那裡的一些機會？

No, great question.

不，很好的問題。

We've been working on adjacencies for a number of years.

我們多年來一直致力於鄰接問題。

As an example, I think you've probably heard us in prior quarters talk about growth in the health account space.

舉個例子，我想您可能在前幾個季度聽過我們談論健康帳戶領域的成長。

That's HSA cards, flexible spending account cards.

那就是HSA卡，彈性支出帳戶卡。

But the big areas that we're trying to grow into prospectively are push provisioning, essentially where we're pushing a digital credential to a customer's wallet.

但我們未來試圖發展的主要領域是推送配置，本質上是我們將數位憑證推送到客戶的錢包。

That's an area where we feel like we have differentiation in the market because we're essentially agnostic to a core processor that the small to medium bank issuers we work with use.

在這個領域，我們覺得我們在市場上具有差異化，因為我們基本上不知道與我們合作的中小型銀行發行人使用的核心處理器。

So I wouldn't say it'll be meaningful this year to the financials, but we definitely feel like, over the longer term, it will be meaningful to the business.

因此，我不會說這對今年的財務有意義，但我們絕對認為，從長遠來看，這對業務有意義。

So kicking it off and growing but not substantial this year.

因此，今年開始並成長，但幅度不大。

Okay, that's helpful.

好的，這很有幫助。

And then just the last one for me and I'll jump back in the queue.

然後我就跳回隊列中的最後一個。

And sort of a good segue to it was on that push provisioning.

一個很好的延續就是推送配置。

Do you guys expect to receive an incremental fee for this?

你們希望為此收取增量費用嗎？

Or is this just more an added service to increase the value proposition?

或者這只是一項增加價值主張的附加服務？

Yeah.

是的。

So the economics of it are similar to unit cost for card sales.

因此，它的經濟效益與卡片銷售的單位成本類似。

You're essentially adding on an additional service.

您實際上是在新增一項附加服務。

So every time someone pushes that digital credential to their wallet, we are earning a fee off of that, a processing fee, if you will, similar to what we do within our Card@Once instant issuance solution.

因此，每次有人將該數位憑證推送到他們的錢包時，我們都會從中賺取一定的費用，如果您願意的話，也可以稱之為處理費，類似於我們在Card@Once 即時發行解決方案中所做的事情。

So think of our Card@Once instant issuance solution, how we have transaction processing fees that occur every day across our 15,000 branches, push provisioning is a similar kind of economic animal, if you will.

因此，想想我們的 Card@Once 即時發行解決方案，我們的 15,000 個分支機構每天都會產生交易處理費用，如果您願意的話，推送配置是一種類似的經濟動物。

So every time someone pushes to their wallet, we get a fee.

因此，每次有人向他們的錢包付款時，我們都會收取費用。

Okay, perfect.

好的，完美。

Appreciate the color, guys.

欣賞一下這個顏色，夥計們。

Thanks a lot.

多謝。

Andrew Scutt, Roth MKM.

安德魯·斯卡特，羅斯·MKM。

Hey, good morning, and thank you for taking my questions.

嘿，早上好，謝謝你回答我的問題。

First one for me, I was wondering if you could provide a bit more details around the new Indiana facility and if you could help us quantify the potential capacity expansion.

對於我來說，第一個問題是，我想知道您是否可以提供有關印第安納州新工廠的更多詳細信息，以及是否可以幫助我們量化潛在的產能擴張。

Sounds like the building is double the size of the existing facility.

聽起來這棟建築的規模是現有設施的兩倍。

Any additional details around the buildout timeline may be helpful as well.

有關擴建時間表的任何其他詳細資訊也可能會有所幫助。

Good morning.

早安.

Well, I'll give an overview and then hand it off to Jeff.

好吧，我將提供一個概述，然後將其交給傑夫。

Our Indiana facility, we've been in for a number of years.

我們的印第安納工廠已經運作多年。

We love Fort Wayne, Indiana.

我們喜歡印第安納州韋恩堡。

They do a great job for us.

他們為我們做得很好。

That's a facility where the lease is expiring in 2026.

該設施的租約將於 2026 年到期。

It gives us an opportunity to really move that facility but, in doing so, build out what I would call a state-of-the-art facility -- that's efficiencies, it's both digital and physical enablement, if you will, that tie everything together at the plant -- and ultimately will double our capacity in Indiana.

它給了我們一個真正移動該設施的機會，但在這樣做的過程中，建立了我所說的最先進的設施——這就是效率，它是數位和實體支持，如果你願意的話，它將一切聯繫在一起我們將在工廠共同努力，最終將使我們在印第安納州的產能增加一倍。

But keep in mind, the expansion that we're doing in Indiana is roughly 10% of our overall footprint.

但請記住，我們在印第安納州的擴張大約占我們整體足跡的 10%。

So it's definitely a growth in capacity, but it's not significant to the overall business.

所以這肯定是產能的成長，但對整體業務來說並不重要。

But it will be a good growth to support our secure card business over the longer term.

但從長遠來看，這將是一個很好的成長，可以支援我們的安全卡業務。

Yeah.

是的。

Hi, Andrew.

嗨，安德魯。

This is Jeff.

這是傑夫。

We are really excited about Indiana and the expansion opportunities there.

我們對印第安納州及其擴張機會感到非常興奮。

So as we stated, it will probably be about $20 million investment over the next several years, about $13 million cash flow impact over the next two years.

因此，正如我們所說，未來幾年的投資可能約為 2000 萬美元，未來兩年的現金流影響約為 1300 萬美元。

And we'll probably be in that facility at the end of 2025, so a couple of years, and that's really the timeline.

我們可能會在 2025 年底進入該設施，所以需要幾年時間，這確實是時間表。

We're starting to build it out now, but that's probably when it will be ready.

我們現在就開始建造它，但那時它可能就準備好了。

Great.

偉大的。

Thank you for the color.

謝謝你的顏色。

And then second one for me, can you speak to the long-term potential eco-friendly cards?

我的第二個問題是，您能談談環保卡的長期潛力嗎？

You guys have seen a really good momentum with the large issuers.

你們已經看到了大型發行人的良好勢頭。

But I'm curious as to how discussions with the smaller issuers have gone to date, and just as adoption of the eco-friendly cards increased, how this may impact company margins and profitability.

但我很好奇迄今為止與小型發行人的討論進展如何，以及隨著環保卡的採用增加，這可能會如何影響公司的利潤和盈利能力。

Yeah.

是的。

So eco is a great space for us.

所以生態對我們來說是一個很好的空間。

I mean, we started selling eco into the market in 2019.

我的意思是，我們從 2019 年開始向市場銷售 Eco。

We did that -- one of the largest issuers in the US.

我們做到了——美國最大的發行人之一。

We are, we believe, a leader in the eco-focused space in the US, selling more than 100 million cards.

我們相信，我們是美國生態環保領域的領導者，銷售了超過 1 億張卡片。

We don't want to update the stats every single quarter, but into the US, over time, if you think of the large issuer base, similar to what's happened in the contactless transition, the largest issuers move quickly.

我們不想每季更新統計數據，但在美國，隨著時間的推移，如果你考慮到龐大的發行人基礎，類似於非接觸式過渡中發生的情況，最大的發行人會迅速採取行動。

We've seen a great success in that space.

我們在這個領域看到了巨大的成功。

And now, what we're doing, one of our big goals in '24, is to push and penetrate within our small to medium issuer base.

現在，我們正在做的，24 年的大目標之一，就是推動和滲透到我們的中小型發行人群體中。

And just keep in mind, if you look at our debit and credit segment broadly, the majority of our revenue actually comes from those small to medium issuers.

請記住，如果你廣泛地觀察我們的金融卡和信貸部門，我們的大部分收入實際上來自那些中小型發行人。

So we expect the transition to take a number of years and occur over time similar to the contactless transition.

因此，我們預期這種轉變需要數年時間，並且會隨著時間的推移而發生，類似於非接觸式轉變。

But we do have a significant number of what I would call small to medium issuers who are interested in the product and want to buy the product.

但我們確實有大量我稱之為中小型發行人的人對該產品感興趣並想要購買該產品。

We have been selling it on a smaller scale, if you will, but it will be a benefit to our overall, we believe, our market share, our way to differentiate in the market.

如果你願意的話，我們一直在以較小的規模銷售它，但這將有利於我們的整體，我們相信，我們的市場份額，我們在市場上差異化的方式。

But also, all of our eco-focused products, for the most part, are contactless and premium products, if you will.

而且，如果您願意的話，我們所有以生態為重點的產品在很大程度上都是非接觸式優質產品。

So you can also, generally speaking, charge either the same amount for a contactless card or sometimes anymore.

因此，一般來說，您也可以對非接觸式卡收取相同金額或有時更高的費用。

Great.

偉大的。

Well, thanks for the color, and I'll hop back in the queue.

好吧，謝謝你的顏色，我會跳回隊列。

And that concludes today's CPI Card Group fourth-quarter earnings call.

今天的 CPI 卡集團第四季財報電話會議到此結束。

Thank you for joining, and have a good day.

感謝您的加入，祝您有美好的一天。