CPI Card (PMTS) 5 Nov 24 2024 Q3 Earnings call transcript
1min read In the latest earnings call for the third quarter of 2024, CPI Card Group showcased an impressive financial performance, delivering the second largest sales quarter in the company's history. The company reported a nearly 20% growth in both net sales and adjusted EBITDA, highlighting its strong foothold in the market and strategic initiatives.
Strategic Advancements and Growth Opportunities
CPI Card Group is not only focusing on its traditional businesses but also expanding into adjacent markets, including digital solutions. The company is actively pursuing new opportunities and has recently signed an agreement with Rippleshot to offer their fraud prevention tools to its customer base. This move is expected to strengthen CPI's position in the market and provide additional value to its financial institution clients.
Financial Highlights and Outlook
The third quarter of 2024 saw significant improvements in key financial metrics. Net sales increased by 18%, with product sales, primarily representing debit and credit cards, experiencing a 25% growth. This growth was led by strong sales of eco-focused contactless cards, reflecting the company's commitment to sustainability. The company also made strides in improving profitability, with gross margins increasing by 170 basis points and adjusted EBITDA increasing by 18%.
Looking ahead, CPI Card Group has updated its full-year outlook for 2024, increasing the net sales range to mid to high single-digit growth and adjusted EBITDA to low single-digit growth. These updates reflect the company's confidence in its strategic initiatives and market position.
Addressing Challenges and Market Trends
Despite the strong performance, CPI Card Group acknowledged the challenges faced due to elevated channel inventories. However, the company is optimistic about winning business in the market and believes it is on track to continue driving growth in its core markets. The latest U.S. cards in circulation trends indicate a healthy card market, with cards in circulation increasing at a 9% CAGR over the last 3 years.
Innovation and Sustainability
CPI Card Group is also leading the way in innovation, with the ability to produce cards featuring advanced contactless chips. This new technology, which integrates the antenna within the chip itself, offers more design flexibility and reduces the carbon footprint. The company is positioning itself as a potential early adopter of this important new technology, setting a positive trend for the industry.
Conclusion
CPI Card Group's strong performance in the third quarter of 2024 underscores its commitment to growth and innovation. With a focus on expanding into adjacent markets and enhancing its traditional businesses, the company is well-positioned to capitalize on new opportunities and drive long-term success. Investors and stakeholders should closely monitor CPI Card Group's strategic initiatives and financial performance as it continues to navigate the evolving market landscape.