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That pop was probably nothing more than market makers manipulating the stock.
I'm looking to load the boat when it tanks back to .75-.80 again
Absolutely! If he just did the split to make himself look good well it still doesn't.
I'm watching for news.
Not disagreeing, but he has to share the plan with me and you if I am going to buy his shares.
Otherwise, I am on the sidelines.
It's just imo but I don't think he would have done it this early with-out a plan in place.
Volume has been pretty good of late and imo again, he has some friends.
I will be watching, but if they don't announce a plan, I won't be investing.
I will watch vicariously.
I saw that today FUN. The .86 starter I bought went off at $1.00 last week. I'm surprised that he did it this soon. Perhaps he'll be talking about his new plans soon.
Keeping it on watch as there will only be approx 11.1 mil float.
CPI Card Group Announces Reverse Stock Split
Thanks for the heads up T695
CPI Card Group Inc. (Nasdaq:PMTS) (TSX:PMTS) (“CPI Card Group” or the “Company”) a global leader in financial and EMV® chip card production and related services, today announced that it will effect a 1-for-5 reverse stock split. The reverse stock split will be effective at 12:01 a.m. EDT, on December 20, 2017. The Company’s common stock will begin trading on a split-adjusted basis on the Nasdaq Global Select Market and on the Toronto Stock Exchange under the Company’s existing symbol “PMTS” on December 20, 2017.
The reverse stock split is primarily intended to bring the Company into compliance with the minimum bid price requirement for maintaining its listing on the Nasdaq Global Select Market. The new CUSIP number for the common stock following the reverse split will be 12634H 200.
When the reverse stock split becomes effective, every five (5) shares of common stock will automatically convert into one (1) share of common stock, with no change in par value per share. No fractional shares will be issued. In lieu of any fractional shares, any holder of less than one share of common stock will be entitled to receive cash for such holder’s fractional share.
The reverse stock split will reduce the number of shares of the Company’s common stock currently outstanding from approximately 55.7 million shares to 11.1 million shares. The number of authorized shares of common stock will remain unchanged. Proportional adjustments will be made to the Company’s outstanding stock options and equity compensation plans.
Because all of the Company’s stockholders hold their shares in book-entry form, they need not take any action in connection with the reverse stock split.
Sorry for your bad luck.
The R/S is always a bad sign.
That's why I bailed before. They announced the possibility of the R/S a week after I bought.
Now I will be patient and wait out hearing what their turnaround plan will be.
I too think the PPS will be under heavy pressure.
I wonder why the PPS popped the other day?
I want to know if they will be doing a capital raise on top of the R/S.
Buyin and the next day it reverse splits. Im outta here. Figured the price was good since the opening ipo at 12 or whatever and it got me! BS!
this will probably go right back to .75 after RS
The reverse stock split will reduce the number of shares of the Company’s common stock currently outstanding from approximately 55.7 million shares to 11.1 million shares. The number of authorized shares of common stock will remain unchanged.
CPI Card Group? - Fear of credit card fraud tops terrorism in the US. What are YOUR customers most afraid of? http://owl.li/Rpel30hb9am
#ICYMI: Fear of credit card fraud tops terrorism in the US. What are YOUR customers most afraid of? https://t.co/Qn79VUC3cy pic.twitter.com/QYk9aGF9Bj
— CPI Card Group (@CPICardGroup) December 15, 2017
Clutch, Welcome to the PMTS board.
It certainly may be oversold, and a turnaround plan is in the works.
This thing is due to pop. Its declined for 3 years and now there making progress
CPI Card Group? - For banks and #creditunions, delivering the “magic” of instant issuance to customers requires a number of considerations. Here's what they are: http://owl.li/oKr230h6D5m
For banks and #creditunions, delivering the “magic” of instant issuance to customers requires a number of considerations. Here's what they are: https://t.co/bAw7e9RkRt pic.twitter.com/5Vi4J2uaEh
— CPI Card Group (@CPICardGroup) December 11, 2017
Still waiting and watching.,,,,
https://finance.yahoo.com/news/opportunity-cpi-card-group-inc-224113762.html
That certainly appears to be ramping up of sorts to me anyhow.
I bought back in my first small amount at .86 Friday.
Job searches...Soldier, I don't know if you have noticed all of the PMTS production jobs they are trying to fill in 4 cities around the country.
The 20 production job searches they are conducting to hire people is not the sign of a failing company looking to cut costs as if demand is way down. They seem to be gearing up.
Machine Operator (Sunday-Thursday, 10PM-6:30AM)
CPI Card Group
Littleton, Colorado 80161
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2nd shift Machine Operator (2:30PM - 11PM)
CPI Card Group
Nashville, Tennessee 37201
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Finishing Operator
CPI Card Group
Fort Wayne, Indiana 46804
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Imaging Machine Assistant (Fri, Sat, and Sun 1st Shift)
CPI Card Group
Saint Paul, Minnesota 55113
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Imaging Machine Assistant (Fri, Sat, and Sun 1st Shift)
CPI Card Group
Saint Paul, Minnesota 55113
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Team Lead 2nd Shift
CPI Card Group
Nashville, Tennessee 37201
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1st shift Material Handler
CPI Card Group
Nashville, Tennessee 37201
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Machine Operator (Sunday - Thursday, 10PM-6:30AM)
CPI Card Group
Littleton, Colorado 80161
Updated this week Save job
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Finishing Operator
CPI Card Group
Fort Wayne, Indiana 46804
Updated yesterday Save job
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2nd Shift Machine Operator 3P-11:30P M-F
CPI Card Group
Nashville, Tennessee 37201
Updated yesterday Save job
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Card Services Inventory Clerk
CPI Card Group
Littleton, Colorado 80161
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3rd shift Machine Operator 10 PM - 6 AM
CPI Card Group
Nashville, Tennessee 37201
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Machine Operator (Monday-Friday 6AM-2:30PM)
CPI Card Group
Littleton, Colorado 80161
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Inventory Control Specialist AMW
CPI Card Group
Saint Paul, Minnesota 55113
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Driver
CPI Card Group
Saint Paul, Minnesota 55113
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Jobs 1 to 15 of 20
Special Handling - Part Time/1st Shift
CPI Card Group
Nashville, Tennessee 37201
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Embossing Operator
CPI Card Group
Nashville, Tennessee 37201
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Fedex/Ups Rep. 1st shift
CPI Card Group
Nashville, Tennessee 37201
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Burkle Machine Assistant (Fri, Sat, and Sun 1st Shift)
CPI Card Group
Saint Paul, Minnesota 55113
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Imaging Machine Assistant (Fri, Sat, and Sun 1st Shift)
CPI Card Group
Saint Paul, Minnesota 55113
Urgently Hiring
Updated in the last 2 weeks
Scott Scheirman, CEO of PMTS, will lay out his turnaround strategy within 90 days. It won't take him longer than until the next Q's conference call.
The GRPN turnaround strategy has been tweaked numerous time. I expect PMTS turnaround plan will be tweaked over time too.
But they won't try to conclude the next investor conference call without revealing their intentions. Otherwise if all they present is more of the same, I think The Street will kill them.
I agree that the period of time to delisting may easily be much longer than PMTS needs. That is the point of the initial and extension time periods.
PMTS might also preemptively do the R/S.
Regardless of whether they do the R/S or not, the most important thing is to identify the turnaround plan, and to see how fast they can start acting on it to effect the current Q.
It would be nice if the new CEO does lay out his plan/strategy to turn the company around.
As for maintaining compliance, they have 6 months from the time the company began trading at a pps lower than a $1.00 minimum bid for 10 consecutive trading days. Then an additional 6 month extension can be applied for and received from the SEC. I've never seen one turned down.
The new price target is more believable, I agree.
Agreed. However, even though I know the math is the same, if they do an R/S just to maintain compliance, I won't touch PMTS unless Scott Scheirman, CEO of PMTS, lays out the turnaround plan/strategy.
I want to base the investment decision on something tangible. I want to read it, just as I was able to with GRPN and LOGI when they were down at $6.
BTW, in my opinion, I am happy to see the revised price target. It's believable.
New CEO may have some good plans for PMTS.
Long as I can buy in the .80s and .90s I don't mind a price target of $1.30.
CPI Card Plans for the Future with Oracle BI Cloud Service
1:46
Hear how CPI Card Group is putting data ownership back into the hands of their executives with Oracle BI Cloud Service. A scalable solution, intuitive interface, and a great mobile experience gives CPI Card Group a solid path for the future.
https://video.oracle.com/detail/videos/most-recent/video/4868392771001/cpi-card-plans-for-the-future-with-oracle-bi-cloud-service?autoStart=true&page=104
PMTS Price Target Cut to $1.30 by Analysts at BMO Capital Markets
Posted by Jennifer Salazar on Nov 18th, 2017
CPI Card Group Inc. (NASDAQ:PMTS) (TSE:PNT) had its price objective trimmed by BMO Capital Markets from $2.20 to $1.30 in a research note published on Thursday, November 9th. The firm currently has a market perform rating on the credit services provider’s stock.
FY2017 Earnings Estimate for CPI Card Group Inc. (PMTS) Issued By Barrington Research
Posted by Stefani Robinson on Nov 17th, 2017
CPI Card Group Inc. (NASDAQ:PMTS) (TSE:PNT) – Investment analysts at Barrington Research lowered their FY2017 earnings estimates for shares of CPI Card Group in a note issued to investors on Tuesday. Barrington Research analyst G. Prestopino now forecasts that the credit services provider will post earnings per share of ($0.07) for the year, down from their previous estimate of ($0.05). Barrington Research currently has a “Underperform” rating on the stock. Barrington Research also issued estimates for CPI Card Group’s Q4 2017 earnings at ($0.03) EPS.
PMTS will have at least 6 months grace. Maybe 12.
I can see them reverse splitting for compliance but not to dilute at these levels. If they go 10:1 and are not at $1.50 or $2 at least, they would give away way too much equity for almost nothing. Can't imagine tutes would like that. just my opinion...
CPI Card Group Inc. (PMTS) Receives $2.85 Consensus Price Target from Brokerages
Posted by Joyce Ramirez on
Nov 10th, 2017
Shares of CPI Card Group Inc. (NASDAQ:PMTS) (TSE:PNT) have received a consensus rating of “Hold” from the eight analysts that are presently covering the stock, MarketBeat Ratings reports. Four equities research analysts have rated the stock with a sell rating and four have issued a hold rating on the company. The average 1 year target price among brokerages that have issued a report on the stock in the last year is $2.40.
CPI Card Group? - Instant Issuance: What You Need to Know About Software for Purchase and Software as a Service Solutions http://owl.li/u08D30grUyT #banking
Instant Issuance: What You Need to Know About Software for Purchase and Software as a Service Solutions https://t.co/HdOjQAmmHu #banking
— CPI Card Group (@CPICardGroup) November 8, 2017
T6, I think you are right. I like PMTS but want to play it right.
I'm holding off before jumping back in, I think we'll see a new 52week low and a RS before it moved up
PMTS Earnings Call Transcript
CPI Card Group's (PMTS) CEO Scott Scheirman on Q3 2017 Results - Earnings Call Transcript
Nov. 7, 2017 7:49 PM ET
CPI Card Group, Inc. (NASDAQ:PMTS)
Q3 2017 Earnings Conference Call
November 7, 2017 05:00 PM ET
Executives
Scott Scheirman - President and CEO
Lillian Etzkorn - CFO
Will Maina - SVP, ICR
Analysts
Paulo Ribeiro - BMO Capital Markets
David Koning - Robert W. Baird
Operator
Good day ladies and gentlemen, and welcome to the Q3 2017 CPI Card Group Inc. Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded.
I would now like to introduce your host for today's conference, Will Maina. You may begin.
Will Maina
Thank you and good afternoon everyone. Welcome to the CPI Card Group third quarter 2017 earnings conference call. Participating on today's call from CPI Card Group are Scott Scheirman, President and Chief Executive Officer; and Lillian Etzkorn, Chief Financial Officer.
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. Please refer to the disclosures at the end of the company's earnings press release for information about forward-looking statements, that may be made or discussed on this call. The earnings press release is posted on CPI's web site.
Please note there is also a presentation that accompanies this conference call and is also available on the IR section of our web site. Please refer to the information along with our filings with the SEC and on SEDAR for a disclosure of the factors that may impact subjects discussed on this call. 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.
Also during the course of today's call, the company will be discussing one or more non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted diluted earnings per share, free cash flow and currency. Please see the earnings press release on CPI's web site for all disclosures required by the SEC, including reconciliations to the most comparable GAAP measures.
And now I'd like to turn over the call to Scott Scheirman, President and Chief Executive Officer.
Scott Scheirman
Thanks Will and good afternoon everyone. Thank you for joining us on our third quarter 2017 conference call. Beginning on slide 4, I'd like to start the call by sharing with you how excited I am to be CPI's President and Chief Executive Officer. I am impressed by CPI's position in the market as one of the leading providers of financial payment card products, and value-added solutions. The CPI team is both talented and energetic, and since joining the company, I have seen a culture of collaboration and steadfast focus on delivering superior solutions and customer service.
We remain confident in the long term opportunities ahead of us. CPI is a leader in a large addressable market, with solid long term secular tailwinds. Our market position, diverse suite of products and differentiated solutions, passionate employees and a commitment to providing the highest levels of customer service position us well, to capitalize on this opportunity. And while we are confident we can achieve long term success, we believe that our areas where we need to improve, in order to realize our full potential.
Similar to other market leading organizations, we need to be working towards continuous improvement. For example, we believe we have opportunities to improve our business, to ensure that our level of execution, quality, product delivery and cost structure are optimized. We also believe that we need to sharpen our focus on changing market trends, to more quickly maneuver and capitalize on new opportunities and provide our customers with new and innovative solutions.
As a result, we recently commenced a comprehensive review of our business to assess our strategies and market opportunities, both from a short term perspective, as we continue to navigate a challenging U.S. card market, and from a longer term perspective. The objective of this review, is to enhance our strategies, and execute key initiatives to further capitalize on our addressable market, better serve the needs of our customers, and deliver shareholder value.
We are in the early stages of this review. Consequently, we believe that it is prudent to discontinue our current guidance practices, while we take the time to enhance our strategies, and execute the appropriate actions to achieve our objectives.
To be clear, this decision in no way reflects lack of confidence in CPI's long term opportunities. We do believe, that it is appropriate to take the time to review and assess the current situation. We plan to provide you with an update on our strategies, initiatives and guidance policies on our fourth quarter 2017 earnings call.
Now turning to slide 5; I will provide a brief overview of our third quarter results. We reported total net sales of $68 million, adjusted diluted EPS of $0.02, adjusted EBITDA of $9.6 million, and positive operating cash flow of $1.3 million. Lillian will take you through our third quarter results in more detail in a few moments.
Turning to slide 6; as discussed on our last call, the market for U.S. debit and credit card manufacturing remains challenging in 2017. More specifically, we continue to see the impacts of the pull forward by large banks in the prior year's of card reissuance, than normally would have occurred this year. The extension of card expiration dates for a portion of the market, as well as the negative impact on average selling prices driven by the competitive environment.
While these factors are impacting the market currently, and also may have a longer term influence on the frequency of reissuance, annual card demand and average selling prices, we also continue to see several positive long term drivers to the U.S. card manufacturing market, that we believe will benefit us in the years ahead.
First, the number of payment cards in circulation is expected to grow in the U.S. Given the replacement nature of cards through factors such as expiration, portfolio churn and lost cards or fraudulent activity, we believe the long term outlook for future reissuance demand remains positive. Second, the U.S. card market continues its migration to EMD cards. We anticipate much of the migration of activity going forward will come from small and medium sized banks, where we have a solid market position. Third, the premium portion of the card market, including metal cards, continues to grow. I will expand upon this in just a moment.
And finally, while it's still a longer term opportunity, we will continue to view the potential migration of the U.S. market to dual interface cards as an attractive, long term opportunity.
Moving to slide 7; equally as important as these products, and where I am very excited for CPI's prospects, is a level of demand and building momentum in our newer products and solution areas. Our Card@Once instant issuance solutions continues to show solid traction in the market, as we ended the third quarter with approximately 6,700 installations, up from approximately 6,400 installations at the end of the second quarter. Our long term outlook for Card@Once growth is positive, as small and medium sized banks continue to look for innovative services to differentiate themselves from the market, and newer technology in this area is closing the gap between the look and feel of an instant issuance card, compared to a card printed at a central facility.
With approximately 6,700 Card@Once installations and other potential markets available beyond the traditional financial services space, we believe there is room for growth.
For CPI metal, we continue to see high levels of interest across the market for this premium product. We believe most large issuers today are exploring moving some portion of their card portfolio to metal, as we are also seeing traction in small and medium sized issuer segment. We began shipping our first metal cards in October, including our patented tungsten card. Opportunities in our metal card pipeline continue to build, and while it's early days, we are encouraged by the level of activity we are seeing, as we approach the end of 2017. We believe we are in a good position to capture share in this market, where average prices per card are materially higher than EMV cards.
For our CPI on-demand solutions or what we previously referred to as print-on-demand, we are also seeing good customer demand and a solid pipeline of business opportunities. In the third quarter, we continue to onboard new customers, revenue growth in our CPI on-demand business is progressing, and we are encouraged by the momentum we are building with this solution.
And finally, we believe that expanding our payment solutions through digital services, represents a long term opportunity for CPI. At Money20/20 this year, we showcased our new suite of next generation digital solutions, including CPI Digital Express a customizable, white label solution that provides online ordering of digital and physical cards; and our CPI Digital Card, a solution that enables quick and secured delivery of prepaid cards through multiple channels. We will continue to work closely with our customers to support their demand for digital services.
Turning to our other major business line, U.S. prepaid, we continue to see long term potential in the retail prepaid and the enterprise B2B and B2C verticals of prepaid. We believe we are well positioned in prepaid segment and expect the market to grow in the high single digits long term.
So as I hope you can see, I am excited about the opportunities CPI has in the future, and I am encouraged about the forward progress we are making in many areas. However, as I mentioned earlier, I also believe that we need to take the appropriate time to review our strategies and market opportunities to better serve our customers, and sharpen our execution, in order to build a stronger foundation and deliver shareholder value.
Turning to slide 8, in closing, I would like to reiterate how excited and honored I am to be CPI's CEO. I am committed to working with the CPI team, our customers and our partners to build on our strengths and our market position to maximize our potential on this compelling space. I believe that CPI has many long term opportunities. We remain completely focused on capitalizing on our large market opportunity, with the goal to derive growth by improving and leveraging on an entire suite of products and solutions, provide exceptional customer service, and focus on seamless execution.
I would also like to mention some of the key focus areas for me as a CEO, as I work with this talented team of CPI employees towards achieving our goals.
First and foremost, a customer-first mentality in everything that we do at CPI, our customers are a top priority and I am committed to actively working with them and providing them with the highest quality products, solutions and service.
Second, I want to make sure that we have a clear strategy and an action plan in place, and that we are executing against this plan.
Third, ensuring that we continue to provide innovative products and solutions in the market, so that we are helping our customers to succeed, enabling CPI to grow.
Fourth, focusing on increasing efficiencies and improving the cost structure of the business.
Fifth, is empowering and developing CPI's employees and as needed, hiring the most talented people. Our people are our most valuable asset, and I want to foster a culture of innovation and excellence. And finally, our guiding principles as an organization are integrity, accountability, teamwork and setting a high bar of excellence. I look forward to sharing our progress and the next steps in our strategy with you in early 2018.
I will now turn the call over to Lillian, to review our detailed financial and operating results for the third quarter.
Lillian Etzkorn
Thanks Scott and good afternoon everyone. Turning to slide 10; you will see an overview of our third quarter results. As Scott referenced earlier, we continue to operate in a challenging U.S. card manufacturing market, which is impacting our performance, as well as the entire domestic card manufacturing industry. Third quarter net sales were $68 million, down 16.2% from $81.2 million in the third quarter of 2016. Product net sales decreased by $6.1 million or 16.2% from the prior year, primarily driven by a 13.6% year-over-year decrease in the number of U.S. debit and credit EMV chip cards sold, and lower EMV card average selling prices.
Services net sales decreased approximately $7.1 million or 16.2% year-over-year to $36.6 million, primarily driven by a decrease in card personalization and fulfillment sales and lower U.S. Prepaid Debit segment revenue. Gross profit for the third quarter was $21 million, representing a gross margin of 30.8%, down from 35.8% in the third quarter of 2016, and up sequentially from 29.3% in the second quarter of 2017.
Income from operations in the third quarter of 2017 was $3.5 million, compared with operating income of $11.7 million from the prior year period. The year-over-year change in gross profit and income from operations, primarily reflects the decline in our revenue, partially offset by our previously announced cost reduction actions and efficiency initiatives.
We reported a net loss of $700,000 or a $0.01 loss per diluted share in the third quarter of 2017. This compared with the net income of $4 million or $0.07 per diluted share in the prior year period.
Now turning to our non-GAAP metrics; adjusted EBITDA for the third quarter of 2017 was $9.6 million, compared with $17.8 million for the third quarter of 2016. Adjusted EBITDA margin was 14.1%, up from 13.2% in the second quarter of 2017, but down from 21.9% in the prior year period. The year-over-year changes in our adjusted EBITDA and EBITDA margin, primarily reflect lower net sales, with the margin reflecting some corresponding negative impact of absorption of overhead costs from lower volume, partially offset by cost efficiencies.
Adjusted net income was $1.1 million in the third quarter or $0.02 per diluted share, compared with $6 million or $0.11 per diluted share in the third quarter of 2016.
Now turning to a review of our segments, which you will find on slide 11; U.S. Debit and Credit segment net sales was $39.3 million for the third quarter, a 20% decrease from the prior year period. The corresponding segment EBITDA was $6.5 million, down from $12.9 million in the prior year period. The year-over-year decline in our U.S. debit and credit segment results, was predominantly driven by a decrease in EMV cards sold, as well as lower average selling prices.
19.5 million EMV cards were sold in the third quarter of 2017, down from $22.6 million cards in the third quarter of 2016, but up from $18.8 million in the second quarter of this year. On a weighted average basis, average selling prices were $0.86 in the quarter, down from $0.96 in the third quarter of 2016, and flat sequentially, with $0.86 in the second quarter of 2017.
As was the case in the prior quarter this year, the annual decrease in average selling prices in the third quarter was primarily due to lower prices experienced in a large issuer market.
In our U.S. card personalization and fulfillment business, net sales decreased $3.6 million versus the third quarter of 2016. This is predominantly due to the reduced EMV card production.
U.S. Prepaid Debit segment net sale were $19.9 million in the third quarter, down $3.2 million year-over-year. The decrease in revenue was primarily driven by lower volume, partially offset by higher net sales related to our new CPI on-demand solution. U.S. prepaid debit segment EBITDA was $7.6 million, down from $8.6 million in the prior year. Our prepaid EBITDA margin of 38.2% is improved by approximately 100 basis points over the third quarter of 2016. This is primarily due to product mix and cost efficiency.
Finally, our U.K. Limited segment net sales were $7 million in the third quarter, representing a decrease of 8.2% from the prior year period. The lower net sales in our U.K. Limited segment, resulted from a prior year loyalty card project, which did not reoccur during the third quarter of 2017, and this is partially offset by higher retail gift card net sales. U.K. Limited segment EBITDA was about $400,000, down from about $900,000 in the prior year period.
Turning to our cash flow overview on slide 12; cash flow from operations for the third quarter was $1.3 million, down from $6.6 million in the prior year period, but up sequentially from a negative $3.3 million in the second quarter of 2017, and into positive territory, which is in line with our expectations. Capital expenditures in the third quarter of 2017 were $2 million, down from $5.4 million in the prior year period. We expect positive operating cash flow for the balance of 2017.
Moving to slide 13; our ending cash balance as of September 30, was $14.8 million. We ended the quarter with a total debt principal outstanding of $312.5 million and a net debt balance of $297.7 million. Netting the deferred financing costs and discounts, our recorded total debt balance was $303.4 million.
At September 30, 2017, our net debt leverage ratio was at 9.7 times. As of September 30, 2017, we had an undrawn $40 million revolving credit facility, of which $20 million was available for borrowing. Our term loan has no financial leverage covenants and does not mature until 2022.
Total available liquidity for the company is $34.8 million as of September 30 this year. In conclusion, I am pleased with the improvement in an operating cash flow trend in the third quarter. Our ongoing cost reduction and efficiency actions are on-track to achieve greater than $10 million in savings this year. I look forward to working with Scott and the rest of the management team, as we implement our initiatives aimed at sharpening our execution and driving shareholder value. Our priorities continue to include, making the investments necessary, to position CPI for growth, while also seeking additional cost efficiencies in the business, returning to consistent positive cash flow generation, and improving our overall liquidity position.
With that, JJ, please open the call for questions.
Question-and-Answer Session
Operator
[Operator Instructions]. And our first question is from [indiscernible] from BMO Capital Markets. Your line is now open.
Paulo Ribeiro
Hi. This is Paulo Ribeiro from BMO.
Lillian Etzkorn
Hi Paulo.
Paulo Ribeiro
Hey, how are you? Well so much to say, Scott, welcome. I mean, you have a challenge ahead of you. So let me ask right off the bat, do you think if this is a turnaround situation? Do you think it's -- CPI has -- I don't know. I used to think that, with the market problem, challenging position in the market, I am sure to think it's a CPI specific problem. Are you guys -- again, in a turnaround situation, are you guys losing market share? Is your product not up to par? Anything you can comment? Sorry to put you on the spot, but just very frustrating.
Scott Scheirman
No, no. Thank you for your question. I am sure, your question is on the mind of others too. So Paulo, thank you for the question. First, I am very excited to be here. Are there things that we need to turn around? Absolutely. But what I will say -- what I have been very impressed with is, we have a strong foundation for growth. We are an industry later, in a large addressable market that have growth opportunities, and we have breadths and depths of our products and solutions. The management team here is very strong. We have very engaged employees and so forth. To your point Paulo, the U.S. card manufacturing environment has been challenging, not only for us, but for our competitors too from that standpoint.
But with that said, I do believe there is things we need to get better at, like most companies. We need to continuously improve around our execution and our quality and our product delivery. We need to take a hard look at our process and our business to optimize, to get to a lower cost structure. And then just continue to sharpen our focus on changing market trends, just to ensure that we quickly capitalize on new opportunities and provide customers with new solutions and innovative products from that standpoint.
But with that said, Paulo, I really see a lot of opportunity here. The EMV transition will continue. Later in the prepaid space, I visited the Minneapolis, Minnesota facility, a couple of weeks ago. I was very impressed, what I saw there with the team and the talent. Dual interface, maybe not a near term opportunity in 2018, but longer term opportunity. And then, as I mentioned on the call, Card@Once, we've got 6,700 installations. I believe we have got a lot of room to grow there. Metal cards, we are positioned well. I don't think that's a matter of if, but when. We know our customers have long marketing cycles or lead time, but we shipped our first cards and we are doing some things in the digital area.
So all-in-all, I am optimistic about our future. I believe we have got a number of long term growth opportunities here. Are there some near term bumps we have got to work through? Absolutely. But I feel like we have got a really good foundation for growth, a great management team, and I believe ultimately, we are going to win in the marketplace long term.
Paulo Ribeiro
So let me follow-up, [indiscernible]. Have you had a chance to talk to some of your large clients? And did they express [indiscernible] comment, any -- they complain about your product or your process or some things, one. As you review the business, are you also reviewing personnel and might be able to make some change to implement your vision? And third, just getting more granular here on this quarter, prepaid, I thought 3Q is seasonally stronger, and there was a point made here in prepaid, based on top of [indiscernible] areas that we should be worried about [indiscernible]?
Scott Scheirman
It's okay, that's okay. Let me first start with card customers, Paulo. One of my first goals as the CEO is and continues to be is, to go listen to the voice of the employee and the voice of the customer. And I have had a number of meetings, face-to-face and over the phone with customers, and I have received a warm reception. They very much value the partnership or the relationship with CPI, and many of these have been longstanding relationships, and I believe they will continue to be longstanding relationships on a go forward basis, and they see the value we bring.
We have had some good candid discussions around where are opportunities to improve, and at some points, I touched upon in my prepared remarks. But opportunities around this continues to improve with our level of execution, our quality and our product delivery, but our customers, have been very warm and welcoming and in spirit of partnership, want to continue to work with CPI.
On your second question, as far as personnel and so forth, again, I would say that we are in the early days of reviewing our strategies, our business plan. We want to do a comprehensive and robust review, and I look forward to sharing that with everybody in early 2018. I feel like overall, we have got a really strong management team. We have got passionate employees. But I'd say like, every company, you are always looking to add talent, as you can find talent, because at the end of the day, what makes almost every company work, is having the best and the brightest employees and that will be our focus. But overall, I am pleased with the talent, that there is always opportunities to improve all facets of your business.
Lillian Etzkorn
And I guess -- Paulo, this is Lillian. So in terms of your question around the prepaid performance. You are very right in pointing out, that that has lagged on a year-over-year basis when we compare to last year, and Q3 is typically the highest quarter, which it has been thus far this year. But really, the overhang that we have been dealing with, in terms of the prepaid, has been in overhang for most of the year, and it has really been around -- the indecision around the CFPP regulations and coming out with kind of firm guidelines. That what we have been experiencing with our clients is, that they have been pushing out some of the orders that we might typically have seen this year, as they have been waiting for some of those decisions.
So as we are looking forward into the coming months and into 2018, we are expecting more certainty on that front. We are starting to see more encouragement, I guess you say, from the clients to progress, as they feel that there is more conclusions there. At least, in stuff that would impact their form. So the outside security packaging for these secured prepaid cards. And the other thing that we are finding as well, quite happily, is that we are gaining new business in this area, and we are offering some very innovative solutions for our clients, and we are winning new business that we don't presently have on the books and are excited to be onboarding, as we move into 2018.
Paulo Ribeiro
Thank you. I will get back in the queue. Thanks.
Lillian Etzkorn
Thanks Paulo.
Scott Scheirman
Thanks Paulo.
Operator
Thank you. Our next question is from James Schneider from Goldman Sachs. Your line is now open.
Unidentified Analyst
Hi, this is Julie on for Jim Schneider.
Scott Scheirman
Hi Julie.
Unidentified Analyst
So we are wondering, are you going to incur any additional cost, as a part of your strategic review?
Scott Scheirman
It's really too early to determine that. We are literally just, Julie, weeks into that process, and we are looking at a broad range of strategies, and really have not concluded on anything at this point in time. But the goal of the review is to enhance our strategies, our business plan, develop key initiatives and action plans, all with an aim to improve the business performance in simple terms. So we will have more to share with you on that in early 2018. But hope we can appreciate, we are just in the early days of that review and need to continue through that process. But we will come back to you in early 2018 to give you our thoughts in where we are heading and what we are doing.
Unidentified Analyst
Okay, great. Thanks.
Scott Scheirman
Thanks Julie.
Operator
Thank you. [Operator Instructions]. And our next question is from Dave Koning from Baird. Your line is now open.
David Koning
Oh yeah. Hey guys, thank you.
Lillian Etzkorn
Hey Dave.
David Koning
And I guess, first of all, it seems like in the core U.S. debit and credit business, you have kind of been hovering right around $40 million of revenue. Some of your competitors have actually been calling out the -- really the toughest comps are hitting this quarter, and that it's just a tough environment. Actually, you are kind of holding pretty steady in that. Is this kind of normalized, or does it start to feel like a pretty normal cadence of business to kind of hold around $40 million, or is it too premature to kind of say, that we couldn't get some pretty extreme lumpiness in the future? So --
Lillian Etzkorn
Thanks for the question, Dave. I think, it's a little bit hard to tell quite candidly. I mean, the market is definitely soft. We are hearing that from others in the industry, and I think, we still feel that we are experiencing that. That said, I think you are pointing out something very fair that, it seems to have kind of tapered off through some consistency in terms of the EMV cards that we are producing. We are not seeing continued sequential declines, which I think was the concern that the marketplace had for some time.
So is this where we are going to hover? I am not sure. I mean, we definitely feel soft at this stage, and I think there is still a lot of opportunity, as Scott referenced in some of his comments during the earlier part of the call that, as the industry goes into, what I'd characterize as a more normalized reissuance cadence, once we start approaching expiration dates, which I think is longer term, we should see some recoveries and some improvements overall broadly for the marketplace.
I think it's more of the timing that the industry is still grappling with.
David Koning
Got you. Okay. And then I guess, just the second thing, just on operating expenses; they have been very steady now, right around $17 million, $17.5 million, $18 million, very steady for a while. Is this sort of a bare bones operating expense? Like is their limited like ability to cut more from here, and you are kind of operating really lean or can that flex either way still?
Scott Scheirman
I would say, everything is in scope as part of our -- reviewing our strategies and our business plan and those initiatives to enhance our business performance. So I am not taking anything for granted, so to speak. One of our key goals, is really to be a high quality provider, but to also be a low cost structure, if you will. So as we go through this business review, that's something we are going to take a hard look at, and make sure that we have the right resources to serve our customers well. So really more to come on that.
David Koning
Okay, got you. And just yeah, appreciate how transparent you are being with the tough trends and everything. But I guess the one thing like -- how does the bank? I know you said that you have committed financing through 2022. But yeah, how does the bank deal with such high leverage? I mean, is it just committed, that you guys have that money for now, and there is not really too strict of covenants? How do they deal with that?
Lillian Etzkorn
Yeah. Well I think that, first to start off, I think nobody wants to see the company operating at these higher net leverage levels, and really, as we look towards the long term for the company, our intention is to get back into, what I'd characterize as more normalized leverage. I think in the past, we have talked about our objective of getting back to three turns net leverage.
That being said, the way the term debt has been structured, there are not restrictions in terms of the financial covenants that will trigger any types of repayments. So that debt really is on the books until 2022.
In terms of our revolving credit facility, that is where we do have a restriction, and it's a restriction in access. So the facility is approved and stands at $40 million, but to the extent that our net leverage is at 7 turns or greater, what's available to us, is only $20 million. But I should also point out, that once the leverage returns back below 7 turns, the full $40 million is available to the company again. So it's a limited restriction, is how I would characterize it.
David Koning
Got you. Great. Well thank you guys.
Lillian Etzkorn
Thank you, Dave.
Scott Scheirman
Thank you.
Operator
Thank you. We have a follow-up question from Paulo from BMO Capital Markets. Your line is now open.
Paulo Ribeiro
Thank you. Could you comment on the smaller financial institutions into the demand? You mentioned in your prepared remarks about the pull forward from the renewals and so forth from the larger financial institutions, and you talked about their impact on pricing. Where are the [indiscernible] in terms of the issuance of EMV, and more broadly if you could talk how you think -- give us an update on the status of EMV migration broadly? Thanks.
Lillian Etzkorn
Sure Paulo. Thanks for the question. So as you know, the small and medium sized institutions definitely lagged in the migration in comparison to the large financial institution. And I guess, how I would characterize them at this stage is that, they are steadily progressing their conversion. We are not seeing the type of lumpiness, I think that we experienced with the large institutions early in the cycle. So it's steady progression. I think the market is still overall, trending, and our expectation is that market in total is trending to about 100% conversion by the end of 2018, which will be good. We don't have a specific number in terms of measuring the third quarter levels, but things are progressing as we would expect.
Scott Scheirman
Yeah. I don't think I would add -- Paulo, the midyear numbers we had, is we think that the markets and round numbers about 70% converted as of the end of the second quarter. So still a fair amount to go in the next 12, 18, 24 months from that standpoint. And with the small and mid-sized issue, as you are probably well aware, that's one place that we are well positioned and we have really good relationships there.
Paulo Ribeiro
And if you -- do you have a sense of your market share? And in your prepared remarks, you kept pointing you guys are a leader and one of the things that you guys probably still have, is you have more production capacity than anyone else. You have four facilities, right, I think the closest competitor has a couple or something. Can you give a sense of where that was like -- where is the path of [indiscernible] versus the competition? If it is true, do you still have more? And in terms of market share, if -- in last quarter's call, Steve talked about, finally I guess, that you guys lost some market share, where [indiscernible] the overall market was down. Do you think -- any comments on that?
Lillian Etzkorn
Sure Paulo, it's Lillian. Why don't I start off, and then I think, Scott will chime in as well. So in terms of -- just talking maybe a little bit about our production facilities, because I think, sometimes there can be some confusion in terms of what we actually have in our footprint here in the U.S.; because what we have is very unique compared to others that participate in the card manufacturing space. And what I mean by that is, we have two facilities that I would characterize as dedicated to card manufacturing. We have a facility here in Colorado, which really focuses more so on the large production runs. Supports more of your large financial institutions, is how I would characterize it. Then we have a sister facility, for a lack of a better way to refer to it, in Indiana, which really specializes in the small and mid-size issuers. Provide some very customizable support, and great customer service for the small and mid-size issuers.
Our other two facilities that we have in the U.S., one is in Minnesota, that really is fully geared toward supporting our prepaid market and our CPI on-demand business. And then we have our facility in Tennessee, which focuses on the personalization.
That said, I think we recognize and that's part of what Scott was discussing in his remarks, is that we do need to look at the business, and that's part of the business review that we are looking at, to make sure that we are operating as efficiently as we can as an organization. But I think it's important to clarify that, while we do have more facilities than many of our peers, our business footprint and the type of business that we support out of those facilities are very unique.
In terms of the market share, quite candidly, that's a really hard number to get at in our industry, just given the lack of what I'd call your system-wide, industry-wide sharing of data, in terms of actual production volume. So while we did discuss in the last call, where we did have a couple of large financial institutions, that were in our portfolio in 2016 that are with us now, it's hard to assess what is the absolute share level, as we look at the business. We have not lost other clients, as we move through 2017, I think that's an important datapoint. But the absolute share metric is real difficult to assess.
Scott Scheirman
But one thing I would add, and not maybe direct with your question. But I think, that's one thing that I like about our business model, and that we are diverse, just beyond -- call it the traditional card manufacturing, but we are in the prepaid space. Dual interface, we think is a long term opportunity. Card@Once, 6,700 installations, more room there. Metal cards, we have got capacity to produce metal cards, and then CPI on-demand and digital solutions. So there is a number of other products and solutions that have allowed us to become, let's say, somewhat more diverse and broaden our product portfolio from that standpoint.
But also on a go forward basis, as we think about market share, our goal is to profitably gain market share, because you can't put a card in the bank, you can't put revenue in the bank, but you can put profits in the bank, so to speak, as a proxy for cash flow. So we will be very focused on profitably gaining share, as we move forward, as an objective.
Paulo Ribeiro
Great. Thank you.
Lillian Etzkorn
Thanks Paulo.
Operator
Thank you. At this time, I am showing no further questions. I would now turn the call back over to Scott Scheirman, CEO, for closing remarks.
Scott Scheirman
Thank you for participating in our earnings call today, and I look forward to speaking with you and meeting with many of you in the months to come, and I look forward to speaking with all of you again during our fourth quarter earnings call, in early 2018. Operator, you may end the call. Thanks everyone for joining us.
Operator
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect.
Looks like going green today... Q was better than the 1$ it is trading at now.
PMTS Reports Third Quarter 2017 Results
Tue November 7, 2017 4:10 PM
EPS of $0.02 misses by $-0.03 Revenue of $68.04M (- 16.2% Y/Y) misses by $-6.69M
Third Quarter Net Sales of $68.0 million
GAAP loss per diluted share of $(0.01); Adjusted diluted EPS of $0.02
Adjusted EBITDA of $9.6 million
Third Quarter Cash Provided by Operating Activities of $1.3 million
Cash of $14.8 million, Undrawn Revolver of $20.0 million, Available Liquidity of $34.8 million
New Leadership Initiated Robust Review of Business Strategies and Market Opportunities; Discontinued Providing Guidance as Review Underway and Initiatives are Executed to Drive Shareholder Value
Confident in Long-Term Opportunities and will Provide an Update on Plans and Initiatives during Fourth Quarter 2017 Earnings Call
Call scheduled for Tuesday, November 7, 2017 at 5:00 p.m. Eastern Time
LITTLETON, Colo.--(BUSINESS WIRE)-- CPI Card Group Inc. (Nasdaq: PMTS; TSX: PMTS) (“CPI Card Group” or the “Company”) today reported financial results for the third quarter ended September 30, 2017.
Scott Scheirman, President and Chief Executive Officer of CPI Card Group (PMTS), stated, “We believe CPI has strong long-term opportunities. We expect cards in circulation will continue to grow in the U.S. over the long-term, which bodes well for card replacement driven demand, and the migration to EMV continues to progress. Furthermore, we are excited about the momentum that is building in our newer products and solutions including Card@Once, CPI on Demand (formerly “Print on Demand”) and premium metal cards. In addition, we continue to view the potential migration of the U.S. market to dual-interface cards as an attractive long-term opportunity. We believe our dedicated and passionate employees, strong market position and diverse suite of products and differentiated solutions position us very well. However, we also need to enhance our strategies and sharpen our execution to better serve our customers and drive growth in order to deliver shareholder value. I’m personally looking forward to working with our employees, customers and partners to achieve these objectives.”
Business Review & 2017 Financial Outlook
CPI believes that it has the products and innovative solutions in place to navigate the challenging U.S. card manufacturing market and capitalize on the significant long-term growth opportunities within the broader payments space. With this solid foundation established, CPI believes that customers and stockholders will benefit from the Company conducting a thorough review of its business strategies and market opportunities. As a result, CPI has initiated a review of its business with an objective to better serve the needs of customers and deliver shareholder value. The Company has discontinued providing guidance so that it can enhance its strategies and execute initiatives to achieve these objectives. CPI plans to provide an update with key indicators of performance during the fourth quarter earnings call.
Mr. Scheirman stated, “While we remain confident in our long-term success, we believe that it is prudent to take the time to review and assess the business, enhance our strategies and execute our key initiatives. We plan to provide an update on our plans, initiatives, and guidance policies when we report fourth quarter 2017 results.”
Third Quarter 2017 Segment Information
U.S. Debit and Credit:
Net sales were $39.3 million in the third quarter of 2017, representing a decrease of 20.0% from the third quarter of 2016. The decrease in U.S. Debit and Credit segment net sales was driven predominantly by a decline in the number of EMV® chip cards sold in the third quarter compared with the third quarter of 2016 and lower EMV® card average selling prices, as well as a $3.6 million decrease in card personalization and fulfillment services revenue.
U.S. Prepaid Debit:
Net sales were $19.9 million in the third quarter of 2017, representing a decrease of 13.7% from the third quarter of 2016. The year-over-year decline in U.S. Prepaid Debit segment net sales was driven primarily by lower volumes, partially offset by higher net sales related to CPI on Demand (formerly “Print on Demand”) services.
U.K. Limited:
Net sales were $7.0 million in the third quarter of 2017, representing a decrease of 8.2% from the third quarter of 2016. The lower net sales resulted from a prior year loyalty card project which did not recur during the third quarter of 2017, partially offset by higher retail gift card net sales.
Balance Sheet, Cash Flow, Liquidity & Other Select Financial Information
At September 30, 2017, the Company had $14.8 million of cash and cash equivalents and an undrawn $40.0 million revolving credit facility, of which $20.0 million was available for borrowing.
Total debt principal outstanding, comprised of the Company’s First Lien Term Loan, was $312.5 million at September 30, 2017, unchanged from December 31, 2016. Net of debt issuance costs and discount, recorded debt was $303.4 million as of September 30, 2017. The Company’s First Lien Term Loan matures on August 17, 2022 and includes no financial leverage covenants.
Cash provided by operating activities for the three months ended September 30, 2017 was $1.3 million, a decrease from $6.6 million in the prior year period, but an increase of $4.6 million from a use of $(3.3) million in the second quarter of 2017. Capital expenditures totaled $2.0 million for the three months ended September 30, 2017 compared with $5.4 million in the prior year period. Free cash flow for the three months ended September 30, 2017 was $(0.7) million, compared with $1.2 million in the prior year period.
Interest expense, net, was $5.3 million in the third quarter of 2017, up modestly from $5.0 million in the third quarter of 2016 due primarily to higher average interest rates on the Company’s outstanding debt balance.
Lillian Etzkorn, Chief Financial Officer, stated, “I am pleased with the improvement in our operating cash flow trend in the third quarter, and we remain intensely focused on returning to consistent positive cash flow generation. We expect positive cash flow from operations for the balance of 2017. Our primary objective is to deliver long-term shareholder value by making the investments necessary to better position CPI to capitalize on the growth opportunities in our industry, and we plan to aggressively improve our cost structure and operating efficiencies, while also improving our net leverage position.”
Cashflow positive. Great cc. Expecting uptrend? 2$ soon? Only positive news on CC? Great!
Look at the buyvon the ask side. 3times the bid... strangevthis us down. Someone buyingca lot of shares at 1,02$. What will ER bring AH.
I was wondering that too. Could very well be.
I'm wondering if they are a new customer resulting from the Money 20/20 show?
That's good news.
Altamaha Bank instantly issues cards with a local flair with Card@Once
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