Segment Reporting

12 Months Ended

Dec. 31, 2021

Segment Reporting

Segment Reporting

18. Segment Reporting

The Company has identified reportable segments as those consolidated subsidiaries that represent 10% or more of its net sales, EBITDA (as defined below) or total assets, or when the Company believes information about the segment would be useful to the readers of the financial statements. The Company’s chief operating decision maker is its Chief Executive Officer who is charged with management of the Company and is responsible for the evaluation of operating performance and decision making about the allocation of resources to operating segments based on measures, such as net sales and EBITDA.

EBITDA is the primary measure used by the Company’s chief operating decision maker to evaluate segment operating performance. As the Company uses the term, EBITDA is defined as income before interest expense, income taxes, depreciation and amortization. The Company’s chief operating decision maker believes EBITDA is a meaningful measure and is useful as a supplement to GAAP measures as it represents a transparent view of the Company’s operating performance that is unaffected by fluctuations in property, equipment and leasehold improvement additions. The Company’s chief operating decision maker uses EBITDA to perform periodic reviews and comparison of operating trends and to identify strategies to improve the allocation of resources amongst segments.

As of December 31, 2021, the Company’s reportable segments were as follows:

● Debit and Credit,

● Prepaid Debit, and

● Other.

Debit and Credit Segment

The Debit and Credit segment primarily produces Financial Payment Cards and provides integrated card services to card-issuing banks primarily in the United States. Products manufactured by this segment primarily include EMV and non-EMV Financial Payment Cards, including contact and contactless cards, and Earth Elements Eco-Focused Cards. The Company also sells Card@Once instant card issuance solutions, and private label credit cards that are not issued on the networks of the Payment Cards Brands. The Company provides CPI On-Demand services, where images, personalized payment cards, and related collateral are produced on a one-by-one, on demand basis for customers. This segment also provides a variety of integrated card services, including card personalization and fulfillment services and

instant issuance services. The Debit and Credit segment operations are each audited for compliance by multiple Payment Card Brands. Many of the Company’s customers require CPI to comply with the standards of the PCI Security Standards Council.

Prepaid Debit Segment

The Prepaid Debit segment primarily provides integrated prepaid card services to Prepaid Debit Card providers in the United States, including tamper-evident security packaging. This segment also produces Financial Payment Cards issued on the networks of the Payment Card Brands that are included in the tamper-evident security packages. The Prepaid Debit segment operation is audited for compliance by multiple Payment Card Brands. Many of the Company’s customers require CPI to comply with the standards of the PCI Security Standards Council.

Other

The Other segment includes corporate expenses.

Performance Measures of Reportable Segments

Net sales and EBITDA of the Company’s reportable segments for the years ended December 31, 2021 and 2020 were as follows:

	Net Sales				EBITDA
	December 31,				December 31,
	2021		2020		2021		2020
Debit and Credit	$	296,204	$	250,427	$	87,499	$	64,522
Prepaid Debit		79,213		63,596		29,156		22,156
Other		—		—		(47,127)		(31,569)
Intersegment eliminations(a)		(298)		(1,834)		—		—
Total:	$	375,119	$	312,189	$	69,528	$	55,109

(a) Amounts include the elimination of sales between segments for consolidation.

The following table provides a reconciliation of total segment EBITDA to Net Income for the years ended December 31, 2021 and 2020:

	December 31,
	2021		2020
Total segment EBITDA	$	69,528	$	55,109
Interest, net		(30,608)		(25,397)
Income tax (expense) benefit		(7,881)		3,305
Depreciation and amortization		(15,098)		(16,827)
Net loss from discontinued operations		—		(61)
Net Income	$	15,941	$	16,129

Balance Sheet Data of Reportable Segments

Total assets of the Company’s reportable segments as of December 31, 2021 and 2020 were as follows:

	December 31,
	2021		2020
Debit and Credit	$	210,492	$	215,846
Prepaid Debit		31,480		34,734
Other		26,168		15,571
Total assets	$	268,140	$	266,151

Capital Expenditures of Reportable Segments

Total capital expenditures of the Company’s reportable segments as of December 31, 2021 and 2020 were as follows:

	December 31,
	2021		2020
Debit and Credit	$	6,826	$	5,179
Prepaid Debit		2,774		1,548
Other		474		366
Total company capital expenditures	$	10,074	$	7,093

Net Sales to Geographic Location; Property, Equipment and Leasehold Improvements and Long-Lived assets by Geographic Segments

Each of the Company’s Net Sales, Property, Equipment and Leasehold Improvements, and Long-Lived assets relating to geographic locations outside of the United States is insignificant.

Net Sales by Product and Services

Net sales from products and services sold by the Company for the years ended December 31, 2021 and 2020 were as follows:

	December 31,
	2021		2020
Product net sales(a)	$	199,586	$	171,968
Services net sales(b)		175,533		140,221
Total net sales:	$	375,119	$	312,189

(a)  “Products” net sales include the design and production of Financial Payment Cards in contact-EMV, contactless EMV, metal, contactless and magnetic stripe card formats. The Company also generates “Products” revenue from the sale of Card@Once printers and consumables, private label credit cards and retail gift cards.

(b) “Services” net sales include revenue from the personalization and fulfillment of Financial Payment Cards, providing tamper-evident security packaging and fulfillment services to Prepaid Debit Card program managers and software as a service personalization of instant issuance cards.