CPI Card Group Inc (PMTS) 2024 Q3 法說會逐字稿

Welcome to CPI Card Group's third quarter, 2024 earnings call.

歡迎參加 CPI 卡集團 2024 年第三季財報電話會議。

My name is Rob and I will be your operator today.

我叫羅布，今天我將成為您的接線生。

The call will be open for questions after the company's remarks.

該公司發表講話後，電話會議將開放供提問。

(Operator Instructions).

（操作員說明）。

Now, I would like to turn the call over to Mike Salop.

現在，我想將電話轉給麥克·薩洛普。

CPIS, Head of Investor Relations.

CPIS，投資者關係主管。

Thanks operator.

感謝運營商。

Welcome to the CPI Card Group third quarter, 2024 earnings webcast and conference call.

歡迎觀看 CPI 卡集團 2024 年第三季收益網路廣播和電話會議。

Today's date is November 5, 2024.

今天的日期是 2024 年 11 月 5 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 和財務長 Jeff Hochstadt 參加了電話會議。

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 1,995.

在開始之前，我想提醒大家，本次電話會議可能包含前瞻性陳述，這些陳述是根據 1,995 年《私人證券訴訟改革法案》定義的。

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.

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討論此類風險和不確定性的前瞻性陳述中表達的結果有重大差異。

Please see CPI card groups.

請參閱 CPI 卡組。

Most recent filings with the SEC all forward-looking statements made today reflect our current expectations only and we undertake no obligation to update any statement to reflect the events that occur after this call.

最近向美國證券交易委員會提交的所有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 EBITA adjusted EBITA adjusted EBITA margin, net leverage ratio and free cash flow reconciliations of these non-GAAP financial measures.

此外，在今天的電話會議期間，該公司還將討論一項或多項非公認會計準則財務指標，包括但不限於這些非公認會計準則財務指標的調整後息稅折舊攤銷前利潤、淨槓桿率和自由現金流調節表。

The most directly comparable GAAP measures are included in the press release and flight presentation we issued this morning copies of today's press release as well as the presentation that accompanies this conference call are accessible on CPIS investor relations website, Investor.CPIcardgroup.com.

最直接可比較的GAAP 指標包含在我們今天上午發布的新聞稿和航班演示文稿中。 。

In addition CPIS form 10-Q for the quarter ended, September 30, 2024 will be available on CPIS investor relations website on today's call, all growth rates refer to comparisons with the prior year period unless otherwise noted the agenda for today's call is on slide 3.

此外，截至2024 年9 月30 日的季度CPIS 10-Q 表格將於今天的電話會議上在CPIS 投資者關係網站上提供，所有增長率均指與上一年同期的比較，除非另有說明，今天電話會議的議程正在幻燈片中3.

John will give a brief overview of the third quarter and our strategies and Jeff will provide more detail on the results and our financial outlook and then we'll open the call for questions and now we can move to slide 4 and I'll turn the call over to John.

約翰將簡要概述第三季度和我們的策略，傑夫將提供有關結果和我們的財務前景的更多詳細信息，然後我們將開始提問，現在我們可以轉到幻燈片 4，我將轉向打電話給約翰。

Thanks Mike and good morning everyone.

謝謝麥克，大家早安。

We're excited to share a strong third quarter results and increased outlook.

我們很高興與大家分享強勁的第三季業績和成長的前景。

This morning, we delivered the second largest sales quarter in the company's history and generated nearly 20% growth in both net sales and adjusted EBITA.

今天早上，我們實現了公司歷史上第二大的季度銷售業績，淨銷售額和調整後息稅折舊攤銷前利潤 (EBITA) 均實現了近 20% 的增長。

We also continue to make advances with our adjacent market strategies and are seeing growing interest in our expanding set of digital solutions.

我們也持續推進相關市場策略，並發現人們對我們不斷擴大的數位解決方案越來越感興趣。

As we highlighted at the beginning of the year, we expected the first half to be challenging as channel inventories continue to be worked down and expected to see good growth in the second half.

正如我們年初所強調的那樣，我們預計上半年將充滿挑戰，因為通路庫存繼續減少，預計下半年將出現良好成長。

And the third quarter reflects that net sales increased 18% in the quarter.

第三季反映該季淨銷售額成長了 18%。

With product sales which primarily represent debit credit cards growing 25% led by strong sales of eco focus contactless cards.

在 Eco Focus 非接觸式卡強勁銷售的帶動下，主要代表借記信用卡的產品銷售額成長了 25%。

While channel inventory levels are still elevated, they are improving and we believe we are winning business in the market.

雖然渠道庫存水準仍然較高，但正在改善，我們相信我們正在贏得市場業務。

In addition to our card performance, we continue to grow our card at once.

除了我們的卡片性能之外，我們還繼續立即發展我們的卡。

Instant issuance solutions and our personalization businesses and our prepaid business remains strong delivering 13% growth in the quarter.

即時發行解決方案以及我們的個人化業務和預付費業務仍然強勁，本季實現 13% 的成長。

We also made great progress, improving our profitability with gross margins increasing 170 basis points compared to prior year and adjusted EBITA increasing 18%.

我們也取得了巨大進步，獲利能力提高，毛利率比上年增長了 170 個基點，調整後 EBITA 成長了 18%。

And we completed some significant financing and capital strategy items issuing new senior notes extending maturities out to 2029 and supporting a secondary offering by our majority stockholder group which is a trading liquidity for our stock over time based on our results.

我們完成了一些重要的融資和資本戰略項目，發行新的高級票據，期限延長至2029 年，並支持我們的多數股東集團進行二次發行，這是根據我們的業績隨著時間的推移為我們的股票提供交易流動性。

And current expectations for the fourth quarter.

以及目前對第四季的預期。

We have updated our full year outlook for 2024 increasing our net sales range due to strength across our portfolio and also increasing our adjusted EBITA and cash flow expectations.

由於我們的投資組合實力雄厚，我們更新了 2024 年全年展望，提高了我們的淨銷售額範圍，並提高了調整後的 EBITA 和現金流預期。

Jeff will provide you more detail on our results and outlook in a few minutes, but I will first review our strategic progress on slide Five.

傑夫將在幾分鐘內向您提供有關我們的結果和前景的更多詳細信息，但我將首先在幻燈片 5 上回顧我們的策略進展。

Our strategies remain focused on the customer innovation and high quality to grow and gain share in our traditional businesses while enhancing growth by expanding into adjacent markets including digital solutions over the long term one innovation example is our recently announced ability to produce cards with a new advanced contactless chip that integrates the antenna within the chip itself.

我們的策略仍然專注於客戶創新和高品質，以實現傳統業務的成長和獲得份額，同時透過擴展到鄰近市場（包括長期的數位解決方案）來促進成長。採用新的先進技術的卡片。

This feature allows for more flexibility on card design and reduces carbon footprint as it eliminates the need for separate layers within the card for the antenna.

此功能使卡片設計更加靈活，並減少了碳足跡，因為它​​消除了卡內用於天線的單獨層的需要。

Although they are generally long adoption cycles for changes in chip technology, we are now ready to initiate pilots with customers positioning CPI as a potential early adopter of an important new technology.

儘管晶片技術變革的採用週期通常較長，但我們現在已準備好與客戶啟動試點，將 CPI 定位為重要新技術的潛在早期採用者。

In addition to driving growth in our traditional core businesses, we're advancing our efforts to capitalize on new opportunities by Jason Markets including offering more products and digital solutions to existing customers and expanding to new customer verticals.

除了推動傳統核心業務的成長外，我們還在努力利用 Jason Markets 帶來的新機遇，包括向現有客戶提供更多產品和數位解決方案以及擴展到新的垂直客戶領域。

During the quarter, we announced another digital solution offering when we signed an agreement with Ripple shop to offer their fraud prevention tools to our customer base.

在本季度，我們與 Ripple 商店簽署了一項協議，向我們的客戶群提供他們的詐欺預防工具，並宣布了另一種數位解決方案產品。

Ripple shots tools generate predictive analytics, leveraging data from thousands of financial institutions, generating millions of transactions each day.

Ripple shot 工具利用數千家金融機構的資料產生預測分析，每天產生數百萬筆交易。

We believe these tools will help our small and medium sized financial institution customers reduce losses by identifying fraud patterns to block attacks before they strike, detecting compromised merchants and high risk cars.

我們相信這些工具將幫助我們的中小型金融機構客戶透過識別詐欺模式以在攻擊發生前阻止攻擊、檢測受感染的商家和高風險汽車來減少損失。

In addition to this offering, we also continue to see growing interest in our broader digital solutions including push provisioning.

除了此產品之外，我們還繼續看到人們對我們更廣泛的數位解決方案（包括推送配置）越來越感興趣。

These are just a few examples of our progress and we believe these opportunities will supplement our growth over the coming years.

這些只是我們進步的幾個例子，我們相信這些機會將補充我們未來幾年的成長。

Turning to slide 6, we continue to expect our core markets to provide solid long-term growth.

轉向幻燈片 6，我們繼續預計我們的核心市場將提供穩健的長期成長。

On this slide.

在這張投影片上。

You can see the latest US cards in circulation trends from Visa and Mastercard for the 3 years ending June 30, cards in circulation in the US increased at a 9% and reports from large issuers also indicate a healthy card market as an example.

您可以從 Visa 和 Mastercard 看到截至 6 月 30 日的 3 年中最新的美國卡流通趨勢，美國的卡流通量增長了 9%，大型發卡機構的報告也顯示了健康的卡市場。

JP Morgan Chase reported an 11% year over year increase in cards outstanding and Bank of America noted the addition of $1 million credit card accounts.

摩根大通 (JP Morgan Chase) 報告未償信用卡餘額年增 11%，美國銀行 (Bank of America) 則增加了 100 萬美元的信用卡帳戶。

So issuant trends are strong channel inventory is being worked down and we believe we can continue to win in the marketplace with both our traditional businesses and as we expand into adjacent markets including digital solutions.

因此，發行的趨勢是強大的通路庫存正在減少，我們相信我們可以透過傳統業務以及擴展到包括數位解決方案在內的鄰近市場來繼續贏得市場。

I would like to now turn the call over to Jeff to discuss our third quarter financial results in 2024 outlook in more detail, Jeff.

我現在想將電話轉給 Jeff，更詳細地討論我們 2024 年第三季財務業績的展望，Jeff。

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。

As John mentioned, we delivered very strong sales growth in the quarter with increases across our portfolio.

正如約翰所提到的，隨著我們產品組合的增加，我們在本季實現了非常強勁的銷售成長。

The sales growth drove gross margin expansion and we also delivered a strong increase in the justice EBITA despite increased performance based employee incentive compensation expenses, net income declined in the quarter due to the impact of debt refinancing costs.

銷售成長推動了毛利率的擴張，儘管基於績效的員工激勵補償費用增加，但由於債務再融資成本的影響，本季度淨利潤有所下降，但我們的正義息稅折舊攤銷前利潤也出現了強勁增長。

As we completed the retirement of our previous senior notes and the issuance of new notes due in 2029 free cash flow generation was healthy.

隨著我們完成了先前優先票據的退役以及 2029 年到期的新票據的發行，自由現金流的產生保持健康。

And our net leverage ratio of 3.2 times at quarter end improved slightly compared to the second quarter despite the cash outflows associated with debt refinancing costs.

儘管債務再融資成本導致現金流出，但季末淨槓桿率為 3.2 倍，較第二季略有改善。

Turning to the detailed third quarter results on slide 9, the overall 18% sales increase reflected a 19% increase in our debit and credit segment and a 13% increase in our prepaid segment.

轉向投影片 9 中詳細的第三季業績，整體銷售額成長 18%，反映出我們的金融卡和貸記業務部門成長 19%，以及預付費業務部門成長 13%。

Debit and Credit segment growth was led by unit volume increases from our card business driven by eco focused contactless cards and continued growth from card at one instant issuance solutions and other card personalization services.

金融卡和信用卡業務的成長主要得益於以生態為重點的非接觸式卡片推動的卡片業務單位數量的成長，以及卡片一次性發行解決方案和其他卡片個人化服務的持續成長。

Prepaid segment growth continues to reflect demand for higher price fraud focus packaging solutions.

預付費市場的成長繼續反映了對價格更高的詐欺焦點包裝解決方案的需求。

As we discussed last quarter, gross profit increased 24% in the quarter as gross margins increased from 34.1% in the prior year quarter to 35.8%.

正如我們上季度討論的那樣，本季毛利成長了 24%，毛利率從去年同期的 34.1% 增至 35.8%。

Driven by operating leverage SG&A including depreciation and amortization increased $3.7 million from the prior year.

在營運槓桿的推動下，SG&A（包括折舊和攤提）比前一年增加了 370 萬美元。

Primarily due to increased performance-based employee incentive compensation expense.

主要是由於績效為基礎的員工激勵薪酬費用增加。

As accruals in the third quarter of last year were minimal interest expense increased $6.7 million in the quarter.

由於去年第三季的應計費用最低，本季利息支出增加了 670 萬美元。

Primarily due to payment of a 2.156% call premium or $5.8 million to redeem the $268 million outstanding of our senior notes due 2026.

主要是由於支付了 2.156% 的贖回溢價或 580 萬美元，以贖回我們 2026 年到期的 2.68 億美元未償還優先票據。

We also recorded a $3 million loss on debt extinguishment and other expense which reflects the write down of unamortized deferred financing costs on our retired debt and credit facilities.

我們還記錄了 300 萬美元的債務清償損失和其他費用，這反映了我們已償還債務和信貸額度的未攤提遞延融資成本的減記。

We recorded an income tax benefit in the quarter which brought our year-to-date tax rate to 24%.

我們在本季度獲得了所得稅優惠，使我們的年初至今稅率達到 24%。

The benefit reflects increased deductibility of stock compensation primarily related to certain option exercises which triggered recognition of updated values of the option expense for tax purposes.

這項好處反映了主要與某些選擇權行使相關的股票報酬可扣除性的增加，這觸發了出於稅務目的確認選擇權費用的更新值。

Net income in the third quarter decreased 66% or $2.6 million due to the $8.8 million of pre-tax debt refinancing costs adjusted EBITA increased 18% to $25.1 million and adjusted EBITA margins were consistent with prior year at 20.1% as the improvement in gross margin was offset by the increased incentive compensation expenses.

第三季淨利下降66%，即260 萬美元，原因是880 萬美元的稅前債務再融資成本調整後EBITA 增長18%，達到2,510 萬美元，並且隨著毛利率的改善，調整後EBITA 利潤率與上年同期一致，為20.1%被增加的激勵補償費用所抵銷。

And SG&A turning now to our year-to-date results on slide 10 for the first 9 months of the year, net sales increased 4% with the debit and credit segment increasing 2% and prepaid increasing 16% within debit and credit.

SG&A 現在轉向幻燈片10 上今年前9 個月的年初至今業績，淨銷售額增長了4%，借記卡和貸記業務增長了2%，借記卡和貸記業務的預付款增長了16 %。

The year-to-date sales increase can be attributed to growth and contactless card sales led by eco focus cards and consistent growth from instant issuance and other card personalization services partially offset by declines in contact card sales.

今年迄今的銷售成長可歸因於生態焦點卡帶動的非接觸式卡銷售的成長，以及即時發卡和其他卡片個人化服務的持續成長，但接觸式卡銷售的下降部分抵消了這一成長。

Year-to-date gross profit increased 7% as gross margin increased from 35.1% to 36.2%.

年初至今，毛利成長 7%，毛利率從 35.1% 增至 36.2%。

SG&A increased $12.7 million from the prior year period.

SG&A 較上年同期增加 1,270 萬美元。

Driven primarily by an increase in CEO transition related costs and increased performance based employee incentive compensation compared to 2023.

與 2023 年相比，主要是由於執行長過渡相關成本的增加以及基於績效的員工激勵薪酬的增加。

The CEO transition related costs increased approximately $4 million from prior year due to increased stock compensation expense from special key employee grants issued in the second half of last year.

由於去年下半年發放的特別關鍵員工補助金增加了股票補償費用，執行長過渡相關成本比前一年增加了約 400 萬美元。

And executive severance expenses partially offset by reduced impact from the CEO retention award which was completed in the first quarter.

第一季完成的執行長保留獎的影響減少，部分抵消了高階主管遣散費。

The year-to-date tax rate of 24% declined versus last years of 30.5%.

今年迄今的稅率為 24%，較去年的 30.5% 下降。

As this year's rate reflects increased stock compensation deductibility and last year's rate reflected limitations on deductibility of executive compensation expense.

由於今年的費率反映了股票薪酬扣除額的增加，而去年的費率反映了高階主管薪酬費用扣除額的限制。

Net income in the first 9 months decreased 40% to $12.7 million affected by the debt refinancing costs.

受債務再融資成本影響，前 9 個月淨利下降 40% 至 1,270 萬美元。

And CEO transition related costs in adjusted EBITA Increased 1% to $70 million adjusted EBITA margin of 19.7% was down from 20.4% in the prior year.

調整後 EBITA 中與執行長轉型相關的成本增加了 1%，達到 7,000 萬美元，調整後 EBITA 利潤率為 19.7%，低於前一年的 20.4%。

Primarily due to the increase in performance-based incentive compensation expense, partially offset by improved gross margins.

主要是由於績效為基礎的激勵薪酬費用的增加，但部分被毛利率的提高所抵銷。

Turning now to our segments on slide 11, I discussed the segment sales drivers earlier.

現在轉向幻燈片 11 上的細分市場，我之前討論了細分市場的銷售驅動因素。

So I will highlight segment profitability on this slide.

因此，我將在這張投影片上強調細分市場的獲利能力。

Income from operations for the debit and credit segment increased 30% to $27 million in the third quarter.

第三季簽帳卡和貸記卡部門的營運收入成長了 30%，達到 2,700 萬美元。

Driven by the sales increase and strong gross margin expansion and declined 1% year-to-date due to the impact of increased compensation related expenses.

受銷售額成長和毛利率強勁擴張的推動，由於薪資相關費用增加的影響，今年迄今毛利率下降了 1%。

Prepaid debit segment income from operations increased 7% to $7.1 million in the third quarter and 27% year-to-date driven by sales growth with the year-to-date increase also driven by strong gross margin improvement.

在銷售成長的推動下，第三季預付借記業務業務收入成長了 7%，達到 710 萬美元，年初至今成長了 27%，而年初至今的成長也得益於毛利率的強勁改善。

Turning to the balance sheet, liquidity and cash flow on slide12.

轉向投影片 12 上的資產負債表、流動性和現金流。

For the first 9 months of the year, we generated $16.7 million of cash from operating activities and invested $4.2 million in capital expenditures which resulted in free cash flow of $12.5 million.

今年前 9 個月，我們從營運活動中產生了 1,670 萬美元的現金，並投資了 420 萬美元的資本支出，產生了 1,250 萬美元的自由現金流。

This compared to operating cash flow of $22.3 million and free cash flow of $16.2 million in the prior year.

相比之下，上一年的營運現金流為 2,230 萬美元，自由現金流為 1,620 萬美元。

The lower generation in this year's period was primarily driven by increased working capital usage, partially offset by lower capital spending, working capital usage reflects an increase in inventory driven by purchase commitments for contactless chips.

今年期間發電量下降主要是由於營運資金使用量增加造成的，部分被資本支出減少所抵消，營運資金使用量反映了非接觸式晶片採購承諾推動的庫存增加。

As mentioned previously, we are carrying more contactless chip inventory than normal this year due to our agreement with our main supplier.

如前所述，由於我們與主要供應商達成協議，今年我們的非接觸式晶片庫存比平常更多。

But we expect to be able to use these chips going forward free cash flow through the first 9 months of 2024 was also affected by incentives related to the customer contract signed in the first quarter.

但我們預計能夠在 2024 年前 9 個月使用這些晶片，自由現金流也受到第一季簽署的客戶合約相關激勵措施的影響。

And the payment of the former CEO's retention award partially offset by lower short term employee incentive payments.

前執行長保留獎的支付被較低的短期員工激勵支付部分抵消。

Based on 2023 performance capital spending is down just under $2 million from our prior year.

根據 2023 年的業績，資本支出比前一年減少了近 200 萬美元。

But we expect spending to increase in the fourth quarter as we advance the build out of our new secure card production facility in Indiana.

但隨著我們推進印第安納州新的安全卡生產設施的建設，我們預計第四季度的支出將會增加。

On the balance sheet at quarter end, we had $14.7 million of cash, no borrowings on our ABL revolver and $285 million of senior secured notes outstanding at quarter end, our net leverage ratio was 3.2 times down slightly from the second quarter.

在季度末的資產負債表上，我們有1470 萬美元的現金，我們的ABL 左輪手槍沒有借款，季度末未償還的高級擔保票據為2.85 億美元，我們的淨槓桿率比第二季度小幅下降3.2倍。

Despite payment of the $5.8 million call premium on our retired senior notes and approximately $6.5 million of other cash outflows related to our debt refinancing our capital structure and allocation priorities remain focused on investing in the business including possible strategic acquisitions, deleveraging the balance sheet and returning funds to stockholders.

儘管支付了已退休高級票據的580 萬美元贖回溢價以及與債務再融資相關的約650 萬美元其他現金流出，但我們的資本結構和分配優先事項仍然側重於投資業務，包括可能的戰略收購、資產負債表去槓桿化和回報資金給股東。

As mentioned last quarter.

正如上個季度所提到的。

In July, we completed the refinancing of our debt issuing $285 million at 10% coupon senior secured notes due in 2029 and entering into a new $75 million ABL revolving facility while retiring our senior notes that were due in 2026.

7 月，我們完成了2.85 億美元債務的再融資，發行了2029 年到期、利率10% 的優先擔保票據，並簽訂了新的7,500 萬美元ABL 循環融資，同時註銷了2026 年到期的高級票據。

With our share repurchase program.

透過我們的股票回購計劃。

We have bought back approximately $9 million since inception in the fourth quarter of last year.

自去年第四季成立以來，我們已回購了約 900 萬美元。

In the third quarter, we completed the purchase of 121,000 shares for $2.2 million from our majority stockholder group funds affiliated with parallel 49 equity.

第三季度，我們以 220 萬美元的價格從附屬於平行 49 股本的多數股東集團基金中完成了 121,000 股股票的購買。

Pursuant to the stock purchase agreement announced in March.

根據三月宣布的股票購買協議。

Under that agreement, we continue to repurchase shares from parallel 49 at a ratio of 3 to 1.

根據該協議，我們繼續以 3 比 1 的比例回購平行 49 的股份。

So the number of shares we repurchase in the open market from April to June at a price of 98% of the average open market repurchase price over that period, we did not execute any open market repurchases in the third quarter.

所以我們從4月到6月在公開市場回購的股票數量，價格是同期公開市場回購平均價格的98%，第三季我們沒有執行任何公開市場回購。

Also on September 30, we announced a secondary offering of shares of common stock from funds affiliated with the majority stockholder group on October 2, the offering closed and $1.38 million shares were sold in a public offering.

同樣在 9 月 30 日，我們宣布對大股東集團附屬基金進行普通股二次發行，並於 10 月 2 日結束發行，並在公開發行中出售了 138 萬美元的股票。

CPI did not sell any shares or receive any proceeds from the offering.

CPI 沒有出售任何股票，也沒有從此次發行中獲得任何收益。

We believe this offering will be beneficial for shareholders as more shares were moved to the public float and majority ownership was decreased as the transaction resulted in the majority stockholder group ownership decreasing from 56% of shares outstanding to 43%.

我們相信，此次發行將對股東有利，因為更多股份將轉移至公眾持股量，多數股權將減少，因為交易導致多數股東集團所有權從已發行股份的 56% 減少至 43%。

This transaction was structured and executed by parallel 49 equity and it will be their decision.

該交易由平行 49 股權組織和執行，這將由他們決定。

If they pursue additional offerings in the future, we cannot speak on their behalf, but we will say they are very constructive and long term focused.

如果他們將來尋求更多產品，我們無法代表他們發言，但我們會說他們非常有建設性並且注重長期發展。

They have been in this investment for many years and believe that increasing the public float could be beneficial for both the company and the economics of potential future offerings.

他們多年來一直從事這項投資，並相信增加公眾持股可能對公司和未來潛在發行的經濟效益都有好處。

We also note that a controlling person of our majority stockholder group purchased 250,000 shares in the offering through his family office which indicates strong belief in the company's future.

我們還注意到，我們的大股東集團的控股人透過其家族辦公室購買了此次發行的 250,000 股，這表明對該公司未來的堅定信心。

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 have updated our financial outlook for 2024.

正如約翰所提到的，我們更新了 2024 年的財務展望。

We have increased our net sales range to mid to high single digit growth up from mid-single digit previously due to strength across our portfolio and we have increased our adjusted EBITA outlook to low single digit growth up from slight growth in our previous outlook.

由於我們的投資組合實力雄厚，我們將淨銷售額範圍從之前的中個位數增長提高到了中個位數增長，並且我們將調整後的EBITA 預期從之前的小幅增長提高到了低個位數增長。

We've also increased our full year free cash flow outlook to be slightly below the 2023 level compared to approximately half the prior year level in our previous outlook, primarily reflecting working capital improvements, lower expected capital spending and a lower tax rate.

我們也將全年自由現金流展望上調至略低於 2023 年水平，而先前展望中的水平約為去年水準的一半，主要反映了營運資本的改善、預期資本支出的降低和稅率的降低。

We now expect our year end net leverage ratio to be similar to the 2023 year end level compared to our previous outlook of between 3.0 times and 3.5 times net leverage was 3.1 times at year end 2023.

我們現在預計我們的年底淨槓桿率將與 2023 年底水準相似，而我們先前的預期為 3.0 倍至 3.5 倍，2023 年年底淨槓桿率為 3.1 倍。

Improvement.

改進。

This year was negatively impacted by the cash outflows associated with the debt refinancing.

今年受到債務再融資相關現金流出的負面影響。

But our goal is to continue to work it down over time.

但我們的目標是隨著時間的推移繼續解決這個問題。

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

我現在將把電話轉給約翰，請他對第 14 幻燈片做一些總結發言，約翰。

Thanks Jeff to summarize.

感謝傑夫的總結。

We are very pleased with the third quarter performance.

我們對第三季的業績非常滿意。

Our Debit and Credit card business provided strong growth while we continue to also drive growth in prepaid instant issuance and our other card personalization services based on the strength of our portfolio.

我們的金融卡和信用卡業務實現了強勁成長，同時我們也根據我們的投資組合實力繼續推動預付費即時發卡和其他卡片個人化服務的成長。

We updated our full year expectations, increasing our net sales adjusted EBITA and free cash flow outlooks.

我們更新了全年預期，提高了淨銷售額調整後的 EBITA 和自由現金流前景。

We continue to advance our strategies to gain share by leading in customer service quality and innovation and increasing our adjustable market through expansion into adjacencies including digital solutions.

我們繼續推進我們的策略，透過領先的客戶服務品質和創新來贏得市場份額，並透過擴展到數位解決方案等鄰近領域來擴大我們的可調整市場。

Over time.

隨著時間的推移。

We're pleased with our positioning and progress and look forward to continuing to drive performance for our shareholders operator.

我們對我們的定位和進展感到滿意，並期待繼續為我們的股東營運商提高業績。

We will now open the call up for any questions.

我們現在將開放電話詢問任何問題。

We will now open the call for your questions,

我們現在將開始電話詢問您的問題，

(Operator Instructions).

（操作員說明）。

Jason Schmidt, Lake Street Capital Markets.

賈森·施密特，湖街資本市場。

Hey guys, thanks for taking my questions and grab some nice results.

嘿夥計們，感謝您提出我的問題並獲得一些不錯的結果。

Just want to start with sort of that revenue momentum.

只是想從這種收入動力開始。

I know the excess inventory was creating some headwinds earlier this year.

我知道庫存過剩在今年早些時候造成了一些阻力。

But is it fair to say that that is completely behind you now,

但可以公平地說，現在你已經完全擺脫了這種情況嗎？

Jason, good morning.

傑森，早上好。

And so I would say not necessarily behind us, I mean, things are improving, not over, but the market is strong.

所以我想說不一定是在我們身後，我的意思是，事情正在改善，而不是結束，但市場很強勁。

Cards in circulation are still growing at a 9% CAGR over the last three years.

過去三年，信用卡流通量仍以 9% 的複合年增長率成長。

And, and if you go back in time to the beginning of this year, we did expect growth in the second half.

而且，如果你回到今年年初，我們確實預計下半年會成長。

You know, after kind of a down little bit of down side in the first half and the third quarter reflects that we have a strong third quarter with, you know, performance across the car side including eco focused prepaid had a good quarter.

你知道，在上半年和第三季度出現一些下滑之後，我們第三季度表現強勁，包括以生態為重點的預付費業務在內的整個汽車領域的表現都表現出色。

And our software as a service digital solution cart once had a great quarter and our personalization business has had a great quarter.

我們的軟體即服務數位解決方案購物車曾經有一個偉大的季度，我們的個人化業務也有一個偉大的季度。

So overall market momentum is still there, but channel inventories are still working themselves down, but we do believe we're a winning business in the market.

因此，整體市場動力仍然存在，但通路庫存仍在自行下降，但我們確實相信我們是市場上的贏家。

Got you that's helpful.

對你有幫助。

And then just as a follow up, your comments are that news on the integration of the chip and antenna design, maybe it's a bit too early.

然後作為後續，您的評論是關於晶片和天線設計整合的新聞，也許有點太早了。

But can you help us think about how the that will impact either ASPS or gross margins longer term?

但您能否幫助我們考慮一下這將如何影響長期的 ASPS 或毛利率？

Yeah, I mean, look, we're excited about the, what we call all in one chip.

是的，我的意思是，看，我們對所謂的「一體化晶片」感到興奮。

It's you know, creates a chip where the antenna is essentially put within the chip itself versus adding card layers within the card.

您知道，創建一個晶片，其中天線本質上放置在晶片本身內，而不是在卡內添加卡層。

So helps our customers expand their design options, reduces carbon footprint, but we're in early stages, right?

因此，可以幫助我們的客戶擴大他們的設計選擇，減少碳足跡，但我們還處於早期階段，對嗎？

It'll take years to really ramp up.

真正提升需要數年時間。

So we don't necessarily know the pace.

所以我們不一定知道速度。

So I wouldn't want to speak to the financial impact quite yet.

所以我還不想談財務影響。

But we're excited to be an early adopter and you know, hopefully, we'll see adoption faster than slower.

但我們很高興成為早期採用者，並希望我們能看到採用速度更快而不是更慢。

All right, thanks a lot guys.

好的，非常感謝大家。

Thanks Jason.

謝謝傑森。

Andrew Scott, Roth Capital Partners.

安德魯·斯科特，羅斯資本合夥人。

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

嘿，大家早安，謝謝你們回答我的問題。

First one for me.

對我來說第一個。

You have kind of spoken to strengthen some of the ancillary businesses.

您曾說過要加強一些輔助業務。

Play card at once and, and push provisioning.

立即打卡，並推送配置。

Can your kind of as far as push provisioning goes?

您能做到推送配置嗎？

You, you've been a couple of months into the me a partnership.

你，你和我建立夥伴關係已經幾個月了。

Can you kind of talk about momentum that you're that you're seeing there?

您能談談您在那裡看到的勢頭嗎？

Yeah, I mean, momentum is strong, let's say, it's still very minor impact to our financials at this point in time.

是的，我的意思是，勢頭強勁，可以說，目前對我們的財務影響仍然很小。

But just answer to your question me a is a reminder, they, they probably have 300 FIS they work with, we're now able to work with their FIS providing them push, provisioning.

但請回答你的問題，我提醒一下，他們可能有 300 個與之合作的 FIS，我們現在能夠與他們的 FIS 合作，為他們提供推送和配置。

There is a pipeline that we're kind of working with and push has been successful so far, but it's, it's kind of slowly ramping, right?

我們正在合作建立一條管道，到目前為止，推動已經取得了成功，但它正在緩慢推進，對嗎？

Banks are always slow to adopt and ramp things up, but there's definitely a strong interest, which is great.

銀行的採用和推廣速度總是很慢，但肯定有強烈的興趣，這很好。

And if you think about our, our car of one solution, right, our software as a service solution, we've been in that business for more than 10 years.

如果你想想我們的汽車一體化解決方案，對吧，我們的軟體即服務解決方案，我們從事這項業務已有 10 多年了。

That's a business where we're in more than 16,000 branches across the United States and, and that's been a strong growth business for us.

我們在美國擁有 16,000 多個分支機構，這對我們來說是一項強勁成長的業務。

It's a high margin business similar to what our, our broader digital solutions are as well.

這是一項高利潤業務，類似於我們更廣泛的數位解決方案。

So, we'll share more on push prospectively from a metric perspective.

因此，我們將從指標的角度前瞻性地分享更多關於推播的內容。

But what I can say is there's a strong momentum but it's still early days.

但我可以說的是，勢頭強勁，但現在還處於早期階段。

Awesome.

驚人的。

No, great to hear.

不，很高興聽到。

And second one for me kind of spoke on the revenue momentum in the Debit and Credit.

對我來說，第二個問題談到了借記卡和貸記卡的收入動能。

We also saw a nice bump up in prepaid in the quarter.

我們也看到本季預付費的大幅成長。

You just kind of speak to what you saw on in that business over the last few months.

您只是講述了過去幾個月您在該行業所看到的情況。

Yeah, I mean, prepaid is having a great year.

是的，我的意思是，預付費度過了美好的一年。

I've got to thank the team up in Minnesota because they're, they're just doing a great job.

我必須感謝明尼蘇達州的團隊，因為他們做得非常出色。

You know, 13% year, over year growth, is a, is a really strong quarter for the prepaid side and it's really driven by two sides.

你知道，年成長 13%，對於預付費方面來說是一個非常強勁的季度，而且它確實是由兩個方面推動的。

It's a one side is, the kind of increase in fraud protection demand by our customers.

一方面是我們的客戶對詐欺保護需求的增加。

We're constantly innovating with our partners in terms of putting more fraud protections into the package, that creates a higher value package, which is great for us but also protects our customers if you will.

我們不斷與合作夥伴一起創新，將更多的詐欺保護納入套餐中，從而創造出更高價值的套餐，這對我們來說非常有利，但如果您願意的話，也可以保護我們的客戶。

And then the other side is, there's a number of prepaid areas we're moving into from an adjacency perspective into the health care side and that's benefiting our prepaid business.

另一方面，我們正在從鄰近的角度進入許多預付費領域，進入醫療保健領域，這有利於我們的預付費業務。

So, strong quarter for the prepaid team and we're hoping for a strong growth for the remainder of the year.

因此，預付費團隊的季度表現強勁，我們希望今年剩餘時間能夠強勁成長。

Great.

偉大的。

Well, congrats on the continued momentum and I'll hop back in the queue.

好吧，恭喜你繼續保持勢頭，我會重新加入隊列。

All right, thanks, Andrew.

好的，謝謝，安德魯。

Pierre Heckman from D A Davidson.

D A Davidson 的 Pierre Heckman。

Hey, good morning, everyone.

嘿，大家早安。

Thanks for taking the question.

感謝您提出問題。

I'm calling on that.

我正在呼籲這一點。

That last question you, you, you, you raising your full year guidance does imply another strong quarter for the fourth and just trying to think about it in terms of thinking about seasonality and Debit and Credit versus prepaid Debit.

最後一個問題，你，你，你，你提高全年指導確實意味著第四季度又一個強勁的季度，只是試著從季節性、借記卡和貸記卡與預付借記卡的角度來思考這個問題。

I guess could you give a little bit of thoughts in terms of the relative strength of those two?

我想你能就這兩者的相對強度給出一些想法嗎？

It certainly looks like prepaid is on track to have a really great year and, Debit and Credit a good year.

看起來預付卡無疑將迎來一個非常美好的一年，而藉記卡和信用卡也將迎來美好的一年。

But I guess that that's dependent upon, you know, my forecast.

但我想這取決於我的預測。

So in terms of how you think about the fourth quarter, would you expect it to, in terms of the relative growth rates of the two segments?

那麼，就您如何看待第四季而言，您對這兩個細分市場的相對成長率有何預期？

Would you expect to be about the same or would you expect that to be a significant variance?

您期望大致相同還是期望有顯著差異？

Yeah.

是的。

Hey, Pierre.

嘿，皮埃爾。

A actually, I mean, good question, you know, we really over the years, you know, we haven't been as fluctuating as seasonally as we had in the past.

實際上，我的意思是，好問題，你知道，多年來我們確實沒有像過去那樣季節性波動。

So, you know, we, we feel like both, both businesses will have, you know, a good continuation in Q4.

所以，我們覺得，兩家企業在第四季都會有好的延續。

I don't think there's really a significant seasonality, in either of these businesses at this point.

我認為目前這兩項業務都不存在明顯的季節性。

Okay.

好的。

And then just in terms of your new production facility in Indiana, can you talk a little bit about how that process is coming.

然後就您在印第安納州的新生產設施而言，您能否談談該流程的進展。

And when you would expect to go live and, and then if you could, I don't think you've done this in the past, but, but if it's possible if you could maybe quantify a little bit about that additional volume commitment, you received from that customer and what we might see that start to hit in results.

當你期望上線時，如果可以的話，我認為你過去沒有這樣做過，但是，如果可能的話，如果你可以量化一下額外的數量承諾，您從該客戶那裡收到的信息以及我們可能會看到的內容開始產生效果。

Well, hey, good to talk to you.

嗯，嘿，很高興和你說話。

I'll let Jeff talk about kind of Indiana and capacity and on the customer contract side, the one we locked into in Q1, just as a reminder that a 6-year deal, commitments that really ramp in 25 in the outer years.

我會讓傑夫談談印第安納州的類型和產能以及客戶合約方面，我們在第一季度鎖定的合同，只是為了提醒大家，一份為期6 年的協議，承諾在接下來的幾年裡確實會在25 年內增加。

This year was kind of the start to it.

今年是它的開始。

So we continue to strengthen our relationship with that customer and it's a good way for us to win share and we're excited about it.

因此，我們繼續加強與該客戶的關係，這是我們贏得份額的好方法，我們對此感到興奮。

But I don't really want to comment on the performance quite yet given.

但我真的不想對目前的表現發表評論。

It's a 6-year deal that said, Indiana, we're excited about it.

這是一份為期六年的合同，印第安納州，我們對此感到興奮。

I think as I understand it, we've got walls up and a roof on.

我認為，據我了解，我們已經築起了圍牆，蓋好了屋頂。

So we're slowly getting it up and running.

所以我們正在慢慢地啟動並運行它。

I think it's mid next year before it's starting to be operational.

我認為它要到明年年中才能開始運作。

But Jeff, if you want to call.

但是傑夫，如果你想打電話的話。

Yeah.

是的。

It will be like John said, we broke around and, and we're, we walls are up.

就像約翰說的那樣，我們打破了界限，而且我們的牆已經豎起來了。

We should be in by the end of 2025.

我們應該會在 2025 年底前實現。

We did say previously, it, and we did say previously that the, the cost of the, the whole cost of the facility will be about $20 million.

我們之前確實說過，我們之前也說過，該設施的總成本約為 2000 萬美元。

We think that will be a cash flow impact for the first 2 years of about $12million to $13 million.

我們認為這將對前兩年的現金流產生約 1,200 萬至 1,300 萬美元的影響。

So, so that has increased our, our CapEx this year.

因此，這增加了我們今年的資本支出。

We, we are increasing our footprint in Indiana.

我們，我們正在擴大我們在印第安納州的足跡。

We're doubling our footprint in Indiana and that overall is about a 10% increase in our overall footprint company wide.

我們正在將印第安納州的足跡擴大一倍，整個公司的足跡總體增加了約 10%。

So it does, it will increase capacity over time.

確實如此，隨著時間的推移，容量會增加。

And in another note is we're buying new equipment, we're investing in automation.

另一方面，我們正在購買新設備，我們正在投資自動化。

So not only do we have more capacity, but our throughput should be more efficient with new equipment and, and automation.

因此，我們不僅擁有更多的產能，而且透過新設備和自動化，我們的吞吐量也應該更有效率。

So we're really excited to get that up and running.

因此，我們非常高興能夠啟動並運行它。

Next year.

明年。

Hal Ghosh, B Riley Securities.

哈爾‧戈什 (Hal Ghosh)，B 萊利證券。

Hey, thank you on the sales growth.

嘿，謝謝你的銷售成長。

You know, you, you were lapping at 25% growth in in product sales, lapping a minus 22.

你知道，你的產品銷售額成長了 25%，增幅為負 22。

So really just kind of getting back to where you were, maybe it's 2022 levels.

所以真的只是回到原來的水平，也許是 2022 年的水平。

Could you give us a little colour on how much of that's just normalization of existing customers and how much of that is potentially, you know, new programs?

您能否向我們介紹一下，其中有多少只是現有客戶的正常化，以及有多少是潛在的新計畫？

Kind of what's the composition of the growth kind of year over year?

同比成長的組成是什麼？

Yeah, I'll give you a high-level Hal and good to talk to you then pass off to Jeff.

是的，我會給你一個高級別的哈爾，很高興與你交談，然後轉給傑夫。

But if you go back to 2022.

但如果你回到2022年。

I mean, that was a record year that was predominantly driven by payment card sales, right?

我的意思是，那是創紀錄的一年，主要是由支付卡銷售推動的，對嗎？

I mean, that was when the, the market had extremely high demand and drove our secure card business to have significant growth.

我的意思是，當時市場的需求非常高，推動了我們的安全卡業務的顯著成長。

And ultimately, we had a nearly 30% year over year growth in that year.

最終，那一年我們實現了近 30% 的年成長。

If you look at this year, while a year of year and Q3 card sales were strong, right?

如果你看看今年，去年和第三季的卡片銷售都很強勁，對吧？

And, our volumes have been increasing progressively through the year.

而且，我們的銷量在這一年中一直在逐步增加。

We're still not necessarily at the levels that we were at 22 and still have enough ways to go if you will from an inventory rebalancing perspective.

我們仍然不一定處於 22 時的水平，如果從庫存再平衡的角度來看，我們還有足夠的路要走。

So I think the other areas of our business, you know, think of our instant influence business.

所以我認為我們業務的其他領域，你知道，想想我們的即時影響力業務。

It's grown since 22 personalization businesses are performing strong.

由於 22 家個人化企業表現強勁，該業務不斷成長。

And if you think about our, our prepaid business that's performing really well in 2024 about that as well.

如果你想想我們的預付費業務，它在 2024 年的表現也非常好。

But Jeff, you went.

但是傑夫，你走了。

Yeah, I think you're right in the sense that it's coming back.

是的，我認為你是對的，因為它會回來。

But also, you know, we've seen some really strong sequential growth from Q1 to Q2 to Q3.

而且，您知道，從第一季到第二季再到第三季度，我們看到了一些非常強勁的連續成長。

So, you know, and as John mentioned at the after the call, our second highest quarter ever.

所以，你知道，正如約翰在電話會議後提到的那樣，這是我們有史以來第二高的季度。

So, you know like John mentioned earlier, you know, the rebalancing is still going through the system, but we feel like the other parts of our portfolio are also performing at high levels.

所以，就像約翰之前提到的那樣，再平衡仍在透過系統進行，但我們覺得我們投資組合的其他部分也表現在高水準。

So, but we feel some good mobile numbers.

所以，但我們感覺有一些不錯的手機號碼。

Okay.

好的。

So, what to say would you say it's mostly existing customers or some new, a mix of both?

那麼，您認為主要是現有客戶還是一些新客戶，兩者兼具呢？

Oh, that's a great question.

哦，這是一個很好的問題。

No, we are winning new customers in the market process, hopefully.

不，我們希望在市場過程中贏得新客戶。

Okay, great.

好的，太好了。

Thank you.

謝謝。

As there are no further questions in queue.

因為隊列中沒有其他問題了。

I would now like to turn the call back over to John Lowe for closing remarks.

我現在想將電話轉回給約翰·洛（John Lowe），他將發表結束語。

Okay.

好的。

Well, thanks operator, thanks everybody for joining the call.

好的，謝謝接線員，謝謝大家加入通話。

Want to again acknowledge and thank all of our CPI employees for everything they do for our company and our customers as they execute on our vision values and strategies every day and continue to drive our business forward.

我想再次感謝所有 CPI 員工為我們公司和客戶所做的一切，他們每天都在執行我們的願景價值觀和策略，並繼續推動我們的業務向前發展。

Thank you all for joining our call this morning and we hope you have a great day.

感謝大家今天早上參加我們的電話會議，希望您有個愉快的一天。

This concludes today's conference call.

今天的電話會議到此結束。

Thank you for your participation.

感謝您的參與。

You may now disconnect.

您現在可以斷開連線。