CPI Card Group Inc.

Hello, everyone, and welcome to the CPI Card Group Third Quarter 2021 Earnings Conference Call. My name is Juan, and I will be coordinating your call today. I will now hand over to your host, Mike Salop, Head of Investor Relations to Pekin. Please, Mike, go ahead.

Thanks, and good morning, everyone. Welcome to the CPI Card Group Third Quarter 2021 Earnings Webcast and Conference Call. Today's date is November 5th, 2021, and on the call today from CPI Card Group are Scott Shireman, President and Chief Executive Officer, and Amator Shankle, 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. 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 discussion of such risks and uncertainties, please see CPI Card Group's 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. 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, EBITDA, adjusted EBITDA, adjusted EBITDA margin, net leverage ratio, and free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in the press release and slide presentation we issued this morning. Copies of today's press release, as well as the presentation that accompanies this conference call, are accessible on CPI's investor relations website, investor.cpicardgroup.com. In addition, CPI's Form 10-Q for the quarter and nine months ended September 30th, 2021, will also be available on CPI's investor relations website. And now I'd like to turn the call over to President and Chief Executive Officer Scott Shireman.

Scott Shireman Thanks, Mike. And good morning, everyone. Thank you for joining us today for our third quarter conference call. During today's call, I will provide an overview of CPI's performance and review our vision and strategic priorities. Amator will then discuss the financial results in more detail, and then we will conclude the call. Before I discuss our performance, I would like to welcome Amator to the CPI team. Amator joined us as CFO in October and brings a wealth of experience and knowledge to the company. Prior to leading his own consulting firm, He served as chief accounting officer and controller of Western Union from 2006 to 2020. He also previously held a variety of financial roles at First Data Corporation and spent 12 years with Ernst & Young. Our previous CFO, John Lowe, has been promoted to become general manager of our Secure Card business. John has been a key contributor to our business success and financial improvement since joining the company in 2018. In combination with the rest of our management team, I am pleased with the strong group we have assembled to lead our business and serve our customers moving forward. Turning to our third quarter results, we continued our strong performance as we remain focused on providing high quality products and services that meet the needs of our diverse and growing customer base. We delivered a 20% increase in net sales in the quarter. with growth across our portfolio, including contributions from the ongoing conversion to contact with cards and related card personalization, our card-at-once instant issuance, and CPI and demand solutions, and our prepaid business. From a profit standpoint, net income of $6.6 million in the quarter increased 14% from last year and adjusted EBITDA increased 23% to $21.5 million, while diluted earnings per share of 56 cents compared to 52 cents in the third quarter of 2020. Strong year-to-date cash flow also helped us further strengthen our balance sheet and financial position as we ended the quarter with approximately $21 million of cash and no borrowings under our revolving credit facility. Turning to slide five, the strong business and financial performance since 2018 through the first nine months of 2021 reflects continued execution of our vision and strategic priorities, which we established nearly four years ago. At that time, we implemented a vision of being the partner of choice in payment solutions by providing market leading quality products and customer service while operating a market competitive business model. We made deep customer focus and continuous innovation key strategic priorities. increasing our capabilities to offer tailored products and services and comprehensive end-to-end solutions. Implementation of our strategies has helped establish our position as a top secure card provider for small and medium-sized financial institutions and large issuers in the U.S., a market which we estimate had approximately 2 billion active credit and debit cards at the end of 2020. We have become a leader in card personalization services for small and medium-sized and produced innovative solutions such as CPI in Demand and Card at Once, which is the leading software-as-a-service instant issuance solution for small and medium financial institutions in the U.S. Our end-to-end solutions have also helped us acquire new customers, including the emerging FinTech space. We responded to increasing focus on the environment by consumers, issuers, and the payment network brands by producing innovative eco-focused solutions And we're now offering three different cards designed to reduce first-use plastic. We have achieved leadership in this fast-growing portion of the U.S. market with over 40 million EcoFocus cards sold since launch in 2019. We also continue to lead in the U.S. prepaid debit open-loop market by providing high-quality, tamper-evident packaging with innovative, robust designs. We believe CPI gained overall market share each year from 2018 through 2020, and we increased company net sales at a compounded annual growth rate of more than 10% over that time. We achieved this growth while implementing a market competitive business model. We have streamlined our business, including selling foreign operations and consolidating U.S. facilities, and we remain focused on driving increased productivity and efficiencies. Since 2018, we have significantly increased profitability and cash flow. We have improved our net leverage ratio, driving it down from nearly 11 times at the end of 2018 to under four times as of September 30th of this year. Our 2021 results reflect continued progress. We have achieved strong net sales growth across our portfolio, including secure card, personalization, instant issuance, and prepaid. We have posted year-on-year increases in profitability, margins, and operating cash flow. In addition, in March, we refinanced our debts, and in August, we were relisted on NASDAQ. Like other companies, we are facing increasing costs and challenges from global supply chain constraints and labor shortages, as well as from changes in our operations to help ensure a safe work environment for our employees in the face of COVID-19. Our business, though, has proved resilient throughout the pandemic, and our teams have demonstrated an ability to quickly adjust and respond to the changing conditions. We're also making investments to further optimize our operations. Our objective is to continue to properly gain overall market share over the long term, and we believe we remain well positioned to capitalize on market opportunities in our growing industry. Overall, I am very pleased with our 2021 performance, And we'll now turn the call over to Amitur to review our third quarter and nine-month financial and operating results in more detail. Amitur?