CPI Card Group Inc.

If you're 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 Salib, CPI's head of investor relations.

Thanks, operator, and good morning, everyone. Welcome to the CPI Card Group third quarter 2023 earnings webcast and conference call. Today's date is November 7, 2023, and on the call today from CPI Card Group are Scott Shireman, President and Chief Executive Officer, Jeff Hochstadt, Chief Financial Officer, and John Lowe, Executive Vice President, MDN Payment Solutions. 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 a 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 statements 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, 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 ended September 30, 2023, will be available on CPI's investor relations website. On today's call, all growth rates refer to comparisons with the prior year period, unless otherwise noted. And now I'd like to turn the call over to President and Chief Executive Officer Scott Scheierman.

Scott Scheierman Thanks, Mike, and good morning, everyone. During today's call, I will give a brief business and strategic overview. John will discuss CPI's third quarter performance and our updated outlook for the full year, and then Jeff will review the financial results in more detail before we open up the call for questions. We will start on slide four. As we stated in our second quarter earnings call, we expected third quarter results to be lower than prior year as customers remained cautious in their spending and continued to work down their inventory levels after stocking up in 2022 due to the significant supply chain challenges across the industry last year. We're also facing very challenging comparisons with the prior year third quarter when net sales increased 25%. Given this backdrop, third quarter sales this year declined 15%, driven by a reduction in card volumes in our debit and credit segments and some timing impacts in prepay. As we assess the rest of the year, we believe sales and adjusted EBITDA in the fourth quarter will be at similar levels as the third quarter, as it is taking longer than expected for customer spending to rebound and for our new sales initiatives to have an impact. Consequently, we now expect net sales as well as adjusted EBITDA to decline in the mid-single digits range for the year. The market for card production has certainly turned out to be more difficult than expected in 2023, but if we step back and look at the bigger picture, we believe the overall card industry appears healthy. Most importantly, cards in circulation have continued to grow, and large issuers have continued to report strength in their card programs. which John will discuss more in a few minutes. Consequently, we remain confident in the long-term health of the market, and we believe we're well positioned for future with our innovative, high-quality products and services and strong customer focus. As one indicator of our belief in the business, this morning we announced a $20 million share repurchase program. We believe repurchasing shares is a great investment for our shareholders, and this authorization will run through the end of 2024. Before turning the collar bridge on, I would like to highlight our ongoing strategic focus on slide five. As discussed, we believe the softness we are experiencing is temporary in nature. The strategies we have successfully employed to grow sales and gain market share since 2017 continue to be our cornerstone, and we remain committed to having deep customer focus, market-leading quality products and customer service, continuous innovation, and a market-competitive business model. Over the long term, we believe our market will return to solid growth, and we believe we will gain share by focusing on these strategic priorities. I would now like to turn the call over to John Lowe to further discuss the current environment, our third quarter results, and our outlook for 2023. John?