Segment Reporting

9 Months Ended

Sep. 30, 2024

Segment Reporting

Segment Reporting

14. Segment Reporting

The Company has identified reportable segments 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 September 30, 2024, the Company’s reportable segments were as follows:

●    Debit and Credit

●    Prepaid Debit

●    Other

Debit and Credit Segment

The Debit and Credit segment primarily produces Financial Payment Cards and provides integrated card services, including digital services, for card-issuing financial institutions primarily in the United States. Products produced by this segment primarily include EMV and non-EMV Financial Payment Cards, including contact and contactless cards, and 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 Card Brands. The Company provides print-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 facilities and operations are audited for compliance with the standards of the PCI Security Standards Council by multiple Payment Card Brands.

Prepaid Debit Segment

The Prepaid Debit segment primarily provides integrated prepaid card services to Prepaid Debit Card providers primarily 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 facilities and operations are audited for compliance with the standards of the PCI Security Standards Council by multiple Payment Card Brands.

Other

The Other segment includes corporate expenses.

Performance Measures of Reportable Segments

Net sales and EBITDA of the Company’s reportable segments, as well as a reconciliation of total segment EBITDA to income from operations and net income for the three and nine months ended September 30, 2024 and 2023, were as follows:

	Three Months Ended September 30, 2024
	Debit and Credit		Prepaid Debit		Other		Intersegment Eliminations		Total
Net sales	$	99,755	$	25,173	$	—	$	(177)	$	124,751
Cost of sales		63,624		16,606		—		(177)		80,053
Gross profit		36,131		8,567		—		—		44,698
Operating expenses		9,096		1,456		16,348		—		26,900
Income (loss) from operations	$	27,035	$	7,111	$	(16,348)	$	—	$	17,798
EBITDA by segment:
Income (loss) from operations	$	27,035	$	7,111	$	(16,348)	$	—	$	17,798
Depreciation and amortization		2,198		1,061		894		—		4,153
Other income (expense)		31		(1)		(3,551)		—		(3,521)
EBITDA	$	29,264	$	8,171	$	(19,005)	$	—	$	18,430

	Nine Months Ended September 30, 2024
	Debit and Credit		Prepaid Debit		Other		Intersegment Eliminations		Total
Net sales	$	283,348	$	73,186	$	—	$	(1,029)	$	355,505
Cost of sales		181,558		46,372		—		(1,029)		226,901
Gross profit		101,790		26,814		—		—		128,604
Operating expenses		26,612		4,049		51,091		—		81,752
Income (loss) from operations	$	75,178	$	22,765	$	(51,091)	$	—	$	46,852
EBITDA by segment:
Income (loss) from operations	$	75,178	$	22,765	$	(51,091)	$	—	$	46,852
Depreciation and amortization		6,585		2,827		2,806		—		12,218
Other income (expense)		(32)		(3)		(3,629)		—		(3,664)
EBITDA	$	81,731	$	25,589	$	(51,914)	$	—	$	55,406
	Three Months Ended September 30, 2023
	Debit and Credit		Prepaid Debit		Other		Intersegment Eliminations		Total
Net sales	$	83,780	$	22,335	$	—	$	(252)	$	105,863
Cost of sales		55,399		14,564		—		(252)		69,711
Gross profit		28,381		7,771		—		—		36,152
Operating expenses		7,590		1,140		14,461		—		23,191
Income (loss) from operations	$	20,791	$	6,631	$	(14,461)	$	—	$	12,961
EBITDA by segment:
Income (loss) from operations	$	20,791	$	6,631	$	(14,461)	$	—	$	12,961
Depreciation and amortization		2,322		675		1,008		—		4,005
Other income (expense)		(27)		(2)		(24)		—		(53)
EBITDA	$	23,086	$	7,304	$	(13,477)	$	—	$	16,913
	Nine Months Ended September 30, 2023
	Debit and Credit		Prepaid Debit		Other		Intersegment Eliminations		Total
Net sales	$	278,959	$	63,286	$	—	$	(570)	$	341,675
Cost of sales		179,356		42,818		—		(570)		221,604
Gross profit		99,603		20,468		—		—		120,071
Operating expenses		23,705		2,532		42,783		—		69,020
Income (loss) from operations	$	75,898	$	17,936	$	(42,783)	$	—	$	51,051
EBITDA by segment:
Income (loss) from operations	$	75,898	$	17,936	$	(42,783)	$	—	$	51,051
Depreciation and amortization		6,836		2,003		3,031		—		11,870
Other income (expense)		(1)		(1)		(243)		—		(245)
EBITDA	$	82,733	$	19,938	$	(39,995)	$	—	$	62,676

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income	$	1,293	$	3,857	$	12,749	$	21,253
Interest, net		13,458		6,714		26,413		20,235
Income tax expense		(474)		2,337		4,026		9,318
Depreciation and amortization		4,153		4,005		12,218		11,870
EBITDA	$	18,430	$	16,913	$	55,406	$	62,676