CPI Card Group Inc.

Welcome to CPI Card Group's second quarter 2023 earnings call. My name is Chris and I'll be your operator today. If you are viewing on the webcast, you may advance the slides forward by pressing the arrow buttons. The call will be open for questions after the company's remarks. If you'd like to get in the queue for questions, please press star then one on your telephone keypad. Now I'd like to turn the call over to Mike Salop, CPI's head of investor relations.

Thanks, Operator, and good morning, everyone. Welcome to the CPI Card Group's second quarter 2023 earnings webcast and conference call. Today's date is August 8th, 2023, and on the call today from CPI Card Group are Scott Scheiderman, President and Chief Executive Officer, Jeff Hochsteth, Chief Financial Officer, and John Lowe, Executive Vice President in the End Payment Solutions. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements, as they are defined in 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 that we issued this morning. Copies of today's press release, as well as a 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 ended June 30th, 2023 will be available on CPI's Investor Relations website. On today's call, all growth rates refer to comparisons with a prior year period unless otherwise noted. And now I'd like to turn the call over to President and Chief Executive Officer, Scott Shireman.

Thanks, Mike, and good morning, everyone. During today's call, I will give a brief overview and highlight our ongoing strategy. John will discuss CPI second quarter performance and our updated outlook for the full year, and then Jeff will review the financial results in more detail before we open the call for questions. We will start on slide 4. As you know, in early June, I announced my plans to retire in early 2024. This was a difficult decision for me as I have enjoyed leading CPI since becoming CEO in late 2017, but I need to give priority to my family. Given the company has a strong foundation with an excellent leadership team that has been executing our strategy successfully, I feel comfortable that the time is right for me to retire. Our board is currently undergoing a search for the next CEO, evaluating both internal and external candidates, and expects to name a new CEO in late 2023 or early 2024. I want to assure you that the company remains committed to the key strategic priorities that have guided our success, specifically deep customer focus, market-leading quality products and customer service, continuous innovation, and a market-competitive business model. Although we have adjusted our outlook for the year to reflect some near-term challenges in the industry, I remain confident in the long-term secular growth for the market and in CPI's competitive position. As you can see on slide five, payment cards issued to consumers continue to grow. The latest figures from Visa and MasterCard show cards in circulation in the U.S. increased at a 10% CAGR for the three years ending March 31st and were up 9% compared to the prior year period. Trends toward adoption of higher-priced contactless and eco-focused cards also support long-term market growth expectations. And as we have discussed in the past, the card business is reoccurring in nature, and our research shows that on average about 90% of U.S. payment card annual issuance is driven by replacement of existing cards. In short, banks and financial institutions need and want to issue cards. As the market grows over time, we are well positioned to continue to win share based on our differentiated products and end-to-end solutions portfolio, our strong customer service, and our team's track record of gaining share through execution of our focused strategies. We are currently being affected by softness in customer demand, which has caused us to adjust our sales outlook range for the year, but we believe the softness is temporary in nature, as eventually cards will still need to be purchased and issued. Overall, given the market conditions, I am pleased with the results we posted in the second quarter and for the first half of the year, including solid profitability growth. I would now like to turn the call over to John Lowe to further discuss the current environment, our second quarter results, and our outlook for 2023. For those of you who don't know John, he leads all of our debit and credit segments, which represents approximately 80% of the company's net sales, and previously served as the company's CFO. He has done a great job of bringing our end-to-end payment solutions businesses together and driving our business forward. John?