CPI Card Group Inc.

to the CPI Card Group's first quarter 2025 earnings call. My name is Karen, and I will be your conference operator today. If you are viewing on the webcast, you may advance the slides forward by pressing the arrow button. The call will be open for questions after the company's remarks. If you would like to get in the queue for questions, please press star followed by the number one on your telephone keypad. To withdraw your question, press star followed by the number one again. Now, I would like to turn the call over to Mike Salus, CPI's Head of Investor Relations.

Thanks, Aquator. Welcome to the CPI Card Group first quarter 2025 earnings webcast and conference call. Today's date is May 7th, 2025, and on the call today from CPI Card Group are John Lowe, President and Chief Executive Officer, and Jeff Hochstadt, Chief Financial Officer. 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, 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 March 31, 2025, 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. The agenda for today's call is on slide three. John will give a brief overview of business performance and our strategies. Jeff will provide more detail on the financial results and our 2025 outlook. And then we will open the call for questions. We can start on slide four, and I'll turn the call over to John.

thanks mike and good morning everyone as you've likely seen from this morning's press releases in addition to reporting our first quarter results today we are excited to announce the acquisition of aroi solutions a leading provider of digitally driven on-demand payment card solutions for the u.s market this acquisition fits in nicely with our strategies to gain share and diversify our business and i'll talk more about this in a few minutes first i'll comment on our first quarter results in 2025 outlets We are pleased with the first quarter sales performance led by our debit and credit card portfolio and continued strength from prepaid solutions. Both of our segments increased 10% in the quarter with debit and credit growth led by strong sales of contactless cards, including eco-focused cards and prepaid driven by our higher value packaging solutions and growth in healthcare payment solutions. As we mentioned last quarter, we expect adjusted EBITDA to decline in the first quarter due to anticipated mixed issues and timing of spending. We did experience these mixed impacts and some added production costs, which resulted in an 8% decline in adjusted EBITDA compared to last year's first quarter. Although there is uncertainty in the market regarding the U.S. economic outlook and there is the potential for additional tariff issues, current demand from our customers remains healthy, and we are affirming our 2025 organic outlook for mid to high single-digit growth for net sales and adjusted EBITDA. For the remainder of 2025, we are focused on driving sales growth while balancing investing for the long term with managing spending to improve margins as the year progresses. Even in this environment, we continue to invest in key strategic projects, including our new Indiana facility, opportunities within the closed-loop prepaid market, digital solutions, and now the ROI acquisition. Jeff will provide you more detail on our results and outlook in a few minutes, but first let me highlight our strategy and how ROI fits in, starting on slide five. As a reminder, our vision is to be the most trusted partner for innovative payment technology solutions. We aim to support that vision by providing market-leading, high-quality payment solutions and best-in-class customer service. One of our strategic pillars focuses on innovation and diversification to expand our adjustable markets by offering new solutions to existing customers and existing solutions to new customer verticals. Adding AeroEye to CPI's portfolio is a perfect example of this, which I will discuss on slide six. As I mentioned earlier, Airwise is the leading provider of on-demand payment card solutions, featuring a fully integrated end-to-end digital-driven process that facilitates card production, personalization, and fulfillment. Airwise's technology-driven platform eliminates the need for customers to hold inventory and allows for hyper-personalization and rapid turnaround times on new programs. We believe combining Airwise solutions with CPI's existing portfolio will allow us to offer even more differentiated and innovative solutions and gain share with both companies' customers. Arrow Eye has historically supported a segment of the market where we have limited presence, resulting in minimal customer overlap. We would expect Arrow Eye's full-year revenue to be in the mid-$50 million range, although we will only have a partial year included in our results in 2025. The business currently has low double-digit adjusted EBITDA margins, although margins may be on the lower end in 2025 as we navigate combining the companies. Over time, we believe there will be revenue, sourcing, and other cost synergies which will bring margins closer to CPI levels. We will take on ArrowEye's production facility in Las Vegas, which was completed in 2022 and provides state-of-the-art on-demand capabilities, and there are approximately 200 employees. ArrowEye is a business we have known in the market for years, and we were very familiar with their on-demand capabilities. As we engaged in the acquisition process, we were even more impressed with their position in the market, capabilities, teams, and technology-driven production process and facility. We believe this acquisition can generate a great return for CPI and our shareholders. The purchase price to acquire AeroEye is aligned with CPI's recent market multiples, and given our belief in revenue and cost synergy opportunities, we anticipate strong adjusted EBITDA contribution and earnings accretion over time. We see this as a great fit with CPI and look forward to combining these two great organizations. We will give you more color on Arrowline next quarter after we have operated the business for a few months. But now I'd like to turn the call over to Jeff to review our first quarter financial results and pool your outlook in more detail. Jeff?