Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2020 |
Apr. 23, 2020 |
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Document and Entity Information | ||
Entity Registrant Name | CPI Card Group Inc. | |
Entity Central Index Key | 0001641614 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Interactive Data Current | Yes | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 11,229,819 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Condensed Consolidated Balance Sheets | ||
Allowance on accounts receivable | $ 338 | $ 395 |
Preferred shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred shares, authorized shares (in shares) | 100,000 | 100,000 |
Preferred shares, issued shares (in shares) | 0 | 0 |
Preferred shares, outstanding shares (in shares) | 0 | 0 |
Common shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common shares, authorized shares (in shares) | 100,000,000 | 100,000,000 |
Common shares, issued shares (in shares) | 11,229,819 | 11,224,191 |
Common shares, outstanding shares (in shares) | 11,229,819 | 11,224,191 |
Business Overview and Summary of Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2020 | |
Business Overview and Summary of Significant Accounting Policies | |
Business Overview and Summary of Significant Accounting Policies | 1. Business Overview and Summary of Significant Accounting Policies
Business Overview
CPI Card Group Inc., (which, together with its subsidiary companies, is referred to herein as “CPI” or the “Company”) is a payment technology company and leading provider of comprehensive Financial Payment Card solutions in the United States. The Company defines “Financial Payment Cards” as credit, debit and Prepaid Debit Cards issued on the networks of the “Payment Card Brands” (Visa, Mastercard®, American Express® and Discover® in the United States) and Interac (in Canada). We define “Prepaid Debit Cards” as debit cards issued on the networks of the Payment Card Brands, but not linked to a traditional bank account. The Company also offers an instant card issuance solution, which provide card issuing bank customers the ability to issue a personalized debit or credit card within the bank branch to individual cardholders. As a producer and provider of services for Financial Payment Cards, each of the Company’s secure facilities must be compliant and registered with one or more of the Payment Card Brands and is therefore subject to specific requirements and conditions. Noncompliance with these requirements would prohibit the individual facilities of the Company from producing Financial Payment Cards for these entities’ payment card issuers. In the fourth quarter of 2018, the Company entered into a definitive agreement to sell the Company’s Canadian subsidiary to Allcard Limited, a provider of card solutions to the gift and loyalty sectors. The sale agreement did not include the portions of the business relating to Financial Payment Cards, as that business migrated to the Company’s operations in the Debit and Credit segment or to other service providers in 2019. The transaction closed on April 1, 2019, and the Company received cash proceeds of $1,451. After the payment of liabilities and transaction costs, including employee termination costs, the sale did not have a significant impact on cash, and no significant loss on sale. The Canadian subsidiary was not a significant operating segment and was part of the Other reportable segment.
COVID-19 Update
In December 2019, a novel coronavirus disease (“COVID-19”) was reported and in January 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic. Further, on March 13, 2020, the President of the United States declared the COVID-19 pandemic a national emergency, invoking powers under the Stafford Act – the legislation that directs federal emergency disaster response.
The broader and long-term implications of COVID-19 on the Company’s results of operations and overall financial performance remain uncertain. The adverse effects of the COVID-19 pandemic have become widespread, including in the locations where the Company operates and its customers and suppliers conduct business. The health and safety of CPI’s employees remains paramount, and the Company continues to follow the safety precautions and other appropriate measures recommended by the Centers for Disease Control and Prevention. All of CPI’s operations remain open and continue to provide direct and essential support to the financial services industry. However, the Company may experience constrained supply or curtailed customer demand that could materially adversely impact the business, results of operations and overall financial performance in future periods. While CPI’s net sales and net income in the first quarter of 2020 has increased over the first quarter of 2019, the effect of the COVID-19 pandemic will not be fully reflected in the Company’s results of operations and overall financial performance until future periods. See Risk Factors for further discussion of the possible impact of the COVID-19 pandemic on the business.
As the COVID-19 pandemic unfolds, the Company continues to provide essential support to its customers and execute on its strategic plan, while carefully managing spending. However, there can be no assurance that such strategies will be successful in effectively managing the Company’s resources and mitigating the negative impact of the COVID-19 on the business and operating results.
On March 27, 2020, the President of the United States signed the Coronavirus Aid Relief, and Economic Security (CARES) Act into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, changes in net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. CPI is evaluating the applicability of the CARES Act to the Company, and the potential impacts on the business. While the Company may determine to apply for, or otherwise participate in, such programs, there is no guarantee that CPI will meet any eligibility requirements to participate in certain programs or, even if the Company is able to participate, that such programs will provide meaningful benefit to the business.
Basis of Presentation
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of the results of the interim periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2019 is derived from the audited financial statements as of that date. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
Use of Estimates
Management uses estimates and assumptions relating to the reporting of assets and liabilities in its preparation of the condensed consolidated financial statements. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and intangible assets, leases, valuation allowances for inventories and deferred taxes, revenue recognized for work performed but not completed, and uncertain tax positions. Actual results could differ from those estimates.
Recent Accounting Standards
Recently Adopted Accounting Standards
In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets. ASC 842 is effective for annual and interim periods beginning after December 15, 2018 (the Company’s fiscal year 2019) with early adoption permitted. The guidance required a modified retrospective approach, with an option to apply the transition provisions of the new guidance at the adoption date without adjusting the comparative periods presented. In July 2018, the FASB issued additional accounting standard updates clarifying certain provisions, as well as providing for a second transition method allowing entities to initially apply the standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The Company adopted the new guidance on January 1, 2019 and used the adoption date as the date of initial application as allowed under ASC 842. Refer to Note 10, Financing and Operating Leases.
Recently Issued Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This ASU changes the model for the recognition of credit losses from an incurred loss model, which recognized credit losses only if it was probable that a loss had been incurred, to an expected loss model, which requires the Company to estimate the total credit losses expected on the portfolio of financial instruments. The effective date of ASU 2016-13 was amended by ASU 2019-10, Credit Losses Effective Dates. CPI is a smaller reporting company and adoption of this accounting standard is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods therein, with early adoption permitted. The Company has elected not to early adopt this accounting standard in the current fiscal year 2020. The Company is evaluating the impact of adoption of this standard, and does not anticipate the application of ASU 2016-13 will have a material impact on the Company’s consolidated financial position and results of operations. |
Net Sales |
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Net Sales | 2. Net Sales
The Company disaggregates its net sales by major source as follows:
Products Net Sales “Products” net sales are recognized when obligations under the terms of a contract with a customer are satisfied. In most instances, this occurs over time as cards are manufactured for specific customers and have no alternative use and the Company has an enforceable right to payment for work performed. For work performed but not completed and unbilled, the Company estimates revenue by taking actual costs incurred and applying historical margins for similar types of contracts. Items included in “Products” net sales are manufactured Financial Payment Cards, including contact-EMV®, Dual-Interface EMV, contactless and magnetic stripe cards, Second WaveTM, metal, private label credit cards and retail gift cards. Card@Once® printers and consumables are also included in “Products” net sales, and their associated revenues are recognized at the time of shipping. The Company includes gross shipping and handling revenue in net sales, and shipping and handling costs in cost of sales. EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC .
Services Net Sales
Net sales are recognized for “Services” as the services are performed. Items included in “Services” net sales include the personalization and fulfillment of Financial Payment Cards, providing tamper-evident secure packaging and fulfillment services to Prepaid Debit Card program managers and software as a service personalization of instant issuance debit and credit cards. The Company also generates “Services” net sales from usage-fees generated from the Company’s patented card design software, known as MYCA®, which provides customers and cardholders the ability to design cards on the internet and customize cards with individualized digital images. For work performed but not completed and unbilled, the Company estimates revenue by taking actual costs incurred and applying historical margins for similar types of contracts.
Customer Contracts The Company often enters into Master Services Agreements (“MSAs”) with its customers. Generally, enforceable rights and obligations for goods and services occur only when a customer places a purchase order or statement of work to obtain goods or services under an MSA. The contract term as defined by ASC 606, Revenue from Contracts with Customers, is the length of time it takes to deliver the goods or services promised under the purchase order or statement of work. As such, the Company's contracts are generally short term in nature. |
Discontinued Operation |
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Mar. 31, 2020 | |
Discontinued Operation | |
Discontinued Operation | 3. Discontinued Operation
On August 3, 2018, the Company completed the sale of its three facilities in the United Kingdom that produced retail cards, such as gift and loyalty cards, for customers in the United Kingdom and continental Europe, and provided personalization, packaging and fulfillment services. The facilities sold included Colchester, Liverpool and Derby locations. The Company reported the U.K. Limited reporting segment as discontinued operations and restated the comparative financial information for all periods presented in conformity with GAAP. Unless otherwise indicated, information in these notes to the unaudited condensed consolidated financial statements relate to continuing operations. The Company did not retain significant continuing involvement with the discontinued operation subsequent to the disposal. The impact of the discontinued operations was insignificant to the Company’s condensed consolidated statement of operations for the three months ended March 31, 2020 and 2019.
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Accounts Receivable |
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Accounts Receivable | 4. Accounts Receivable
Accounts receivable consisted of the following:
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Inventories |
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Inventories | 5. Inventories
Inventories consisted of the following:
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Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets |
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Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets | 6. Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets
Plant, equipment, leasehold improvements and operating lease right-of-use assets consisted of the following:
Depreciation expense of plant, equipment and leasehold improvements, including depreciation of assets under financing leases, was $3,029 and $3,059 for the three months ended March 31, 2020 and 2019, respectively.
Operating lease right-of-use assets, net of accumulated amortization, are further described in Note 10, Financing and Operating Leases. |
Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets | 7. Goodwill and Other Intangible Assets
The Company reports all of its goodwill in its Debit and Credit segment at March 31, 2020 and December 31, 2019. Goodwill is tested for impairment at least annually on October 1 or more frequently when an event occurs or circumstances change that indicates the carrying value may not be recoverable. The Company did not identify a triggering event requiring a quantitative test for impairment as of March 31, 2020. The implications of COVID-19, and a decline in the Company’s total fair value of invested capital and financial performance for reporting units with goodwill, could require the Company to perform a quantitative test for goodwill impairment in future quarters.
Intangible assets consist of customer relationships, technology and software, trademarks and non-compete agreements. Intangible amortization expense was $1,149 and $1,164 for the three months ended March 31, 2020 and 2019, respectively.
At March 31, 2020 and December 31, 2019, intangible assets, excluding goodwill, were comprised of the following:
The estimated future aggregate amortization expense for the identified amortizable intangibles noted above as of March 31, 2020 was as follows:
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Fair Value of Financial Instruments |
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Fair Value of Financial Instruments | 8. Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). In determining fair value, the Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2— Observable inputs other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the assets or liabilities.
Level 3— Valuations based on unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
The Company’s financial assets and liabilities that are not required to be re-measured at fair value in the Condensed Consolidated Balance Sheets were as follows:
The aggregate fair value of the Company’s First Lien Term Loan, as defined in Note 11, Long-Term Debt, was based on bank quotes. The fair value measurement associated with the Senior Credit Facility is based on significant unobservable Level 3 inputs, which require significant management judgment and estimation. The fair value approximates its carrying value as of March 31, 2020, given the facility ranks senior in priority to the Company’s First Lien Term Loan, and the close proximity to the date the Company entered into the Senior Credit Facility on March 6, 2020.
The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable each approximate fair value. |
Accrued Liabilities |
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Accrued Liabilities |
9. Accrued Liabilities
Accrued liabilities consisted of the following:
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Financing and Operating Leases |
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Financing and Operating Leases | 10. Financing and Operating Leases
CPI adopted ASC 842 effective January 1, 2019. The Company elected the ‘package of practical expedients’, which permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs. Right-of-use (“ROU’) represents the right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. A lease is deemed to exist when the Company has the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Company has the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets. As a result of the adoption of ASC 842 the Company recorded $8,025 of operating ROU assets, and corresponding operating lease liabilities of $8,813 on January 1, 2019, relating to existing real estate operating leases.
The components of operating and finance lease costs were as follows:
The following table reflects balances for operating and financing leases:
Finance and operating lease right-of-use assets are recorded in “Plant, equipment, leasehold improvements, and operating lease right-of-use assets, net”. Financing and operating lease liabilities are recorded in “Accrued expenses” and “Other long-term liabilities”.
Future cash payment with respect to lease obligations as of March 31, 2020 were as follows:
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Long-Term Debt |
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Long-Term Debt | 11. Long-Term Debt
At March 31, 2020 and December 31, 2019, long-term debt consisted of the following:
(1) Interest Rate on the First Lien Term Loan was 6.38%, and 6.71% as of March 31, 2020, and December 31, 2019, respectively. The interest rate on the Senior Credit Facility, which was entered into on March 6, 2020, was 9.50% as of March 31, 2020.
On August 17, 2015, the Company entered into a first lien credit facility (the “First Lien Credit Facility”) with a syndicate of lenders providing for a $435,000 first lien term loan (the “First Lien Term Loan”) and a $40,000 revolving credit facility (the “Revolving Credit Facility”). The First Lien Term Loan matures August 17, 2022 and the Revolving Credit Facility was terminated concurrently with the Company entering into a new senior credit facility on March 6, 2020.
On March 6, 2020, the Company and its wholly owned subsidiary, CPI Acquisition, Inc. (the “Borrower”), entered into a super senior credit agreement with Guggenheim Credit Services, LLC (“Guggenheim”), Vector Capital Credit Opportunity Master Fund, L.P. (“Vector”), Guggenheim, as administrative agent and collateral agent, and certain other lenders from time to time party thereto (the “Senior Credit Agreement” and together with all ancillary documents thereto, the “Senior Credit Facility”). The Senior Credit Facility matures on May 17, 2022, and provides for the extension of credit to the Borrower in the form of super senior term loans in an aggregate principal amount of $30,000, which ranks senior in priority to the Company’s First Lien Term Loan, which has $312,500 outstanding as of March 31, 2020.
The Senior Credit Facility and the First Lien Term Loan are secured by substantially all of the Company’s assets constituting equipment, inventory, receivables, cash and other tangible and intangible property.
The Senior Credit Facility and the First Lien Term Loan contain customary representations, covenants and events of default, including certain covenants that limit or restrict the Company’s and certain of its subsidiaries’ ability to incur indebtedness, grant certain types of security interests, incur certain types of liens, sell or transfer assets or enter into a merger or consolidate with another company, enter into sale and leaseback transactions, make certain types of investments, declare or make dividends or distributions, engage in certain affiliate transactions, or modify organizational documents, among other restrictions and subject to certain exceptions. In accordance with the Senior Credit Facility, the Company is also required to maintain adjusted EBITDA, as defined in the agreement, of $25,000 for the previous four consecutive fiscal quarters in total, as measured each quarterly period ending on or after March 31, 2020. As of March 31, 2020, the Company was in compliance with all covenants under the First Lien Term Loan and the Senior Credit Facility.
The Senior Credit Facility and the First Lien Term Loan also require prepayment in advance of the maturity date upon the occurrence of certain customary events, including based on an annual excess cash flow calculation, pursuant to the terms of the agreement, with any required payments to be made after the issuance of the Company’s annual financial statements. The Company was not required to make any prepayments of the First Lien Term Loan with respect to our 2019 annual financial statements.
Interest rates under the Senior Credit Facility are based, at the Company's election, on a Eurodollar rate, subject to an interest rate floor of 1.0%, plus a margin of 8.5% or a base rate plus a margin of 7.5%. The maturity date of the Senior Credit Facility is May 17, 2022, and prepayments made prior to February 15, 2022 are subject to a make-whole premium. Interest rates under the First Lien Term Loan are based, at the Company’s election, on a Eurodollar rate, subject to an interest rate floor of 1.0%, plus a margin of 4.50%, or a base rate plus a margin of 3.50%.
The term loans made under the Senior Credit Facility would be accelerated and become immediately due and payable if an event of default (as defined in the Senior Credit Agreement) were to occur. Tricor Pacific Capital Partners (Fund IV), Limited Partnership and Tricor Pacific Capital Partners (Fund IV) US, Limited Partnership (collectively, the “Tricor Funds”), own approximately 37% and 22% of the Company’s common stock, respectively, as of December 31, 2019. If the Tricor Funds were to sell or otherwise dispose of more than 25% of CPI’s outstanding common stock, or otherwise cease to own at least 30% of CPI’s outstanding common stock, other than by means of distributing CPI common stock to the participants in Tricor Funds, a “change of control” event of default would occur. Additionally, certain proposed changes to the Senior Credit Facility require the consent of lenders representing more than 50% of the outstanding term loans, and if a lender does not consent to such proposed changes, then, among other options, CPI may be required to pre-pay the non-consenting lender’s portion of the loan, including accrued interest, fees and other amounts payable, as well as a make-whole premium.
The proceeds of the Senior Credit Facility may be used by the Company to provide for the working capital and general corporate requirements of the Company and its subsidiaries, including to pay any fees and expenses in connection with the Senior Credit Facility and other related loan documents.
Deferred Financing Costs and Discount
Certain costs and discounts incurred with borrowings or the establishment or modification of credit facilities are reflected as a reduction to the long-term debt balance. These costs are amortized as an adjustment to interest expense over the life of the borrowing using the effective-interest rate method. The discount on the Senior Credit Facility was $1,400, and financing costs were $3,215, and were recorded as a reduction to the long-term debt balance in the quarter ended March 31, 2020. The net discount and debt issuance costs on the Senior Credit Facility as included within financing activities on the condensed consolidated statement of cash flows relates to cash flows during the quarter ended March 31, 2020. |
Income Taxes - Continuing Operations |
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Income Taxes - Continuing Operations | 12. Income Taxes – Continuing Operations
During the three months ended March 31, 2020, the Company recognized an income tax benefit of $943 on a pre-tax income of $1,500, compared to an income tax expense of $403 on a pre-tax loss of $2,694 for the prior year period. For the three months ended March 31, 2020 and 2019, the effective tax rate differs from the U.S. federal statutory income tax rate as follows:
In March 2020, the CARES Act was signed into law. The CARES Act allows companies with net operating losses (NOLs) originating in 2018, 2019, or 2020 to carry back those losses for five years and temporarily eliminates the tax law provision that limits the use of NOLs to 80% of taxable income. The CARES Act increases the Internal Revenue Code Section 163(j) interest deduction limit for 2019 and 2020, and allows for the acceleration of refunds of alternative minimum tax credits. For the quarter ended March 31, 2020, the Company estimated a tax benefit for certain provisions in the CARES Act including the carryback of losses and the increase to the interest deduction limitation, resulting in a tax rate benefit of 238.6%. In addition, the Company recorded a partial valuation allowance with a tax rate impact of 70.4%, due to the limitation on the deductibility of interest expense. The Company’s income tax receivable on the condensed consolidated balance sheet as of March 31, 2020, relates primarily to U.S. federal income tax receivables relating to prior tax years including NOL carrybacks. In the prior year quarter ended March 31, 2019, the effective tax rate differs from the federal U.S. statutory rate primarily due to the impact of tax expense recorded related to the partial valuation allowance due to the limitation on the deductibility of interest expense. |
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Stockholders’ Deficit |
13. Stockholders’ Deficit
Common Stock
Common Stock has a par value of $0.001 per share. Holders of common stock are entitled to receive dividends and distributions subject to the participation rights of holders of all classes of stock at the time outstanding, as such holders have prior rights as to dividends pursuant to the rights of any series of Preferred Stock. Upon any liquidation, dissolution, or winding up of the Company, after required payments are made to holders of any series of Preferred Stock, any remaining assets of the Company will be distributed ratably to the holders of Common Stock. Holders of Common Stock are entitled to one vote per share.
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Income (Loss) per Share | 14. Income (Loss) per Share
Basic and diluted income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period.
The following table sets forth the computation of basic and diluted income (loss) per share:
The Company reported a net loss for the three months ended March 31, 2019. Accordingly, the potentially dilutive effect of 893,238 stock options and 67,592 restricted stock units were excluded from the computation of diluted earnings per share as of March 31, 2019, as their inclusion would be anti-dilutive. |
Commitments and Contingencies: Litigation Settlement |
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Commitments and Contingencies: Litigation Settlement | 15. Commitments and Contingencies; Litigation Settlement
Contingencies
In accordance with applicable accounting guidance, the Company establishes an accrued liability when loss contingencies are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. As a matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. Once the loss contingency is deemed to be both probable and estimable, the Company will establish an accrued liability and record a corresponding amount of litigation-related expense. The Company expenses professional fees associated with litigation claims and assessments as incurred.
Heckermann v. Montross et al., Case No. 1:17-CV-01673 (D. Del.) (the “Derivative Suit”) On November 20, 2017, a purported CPI stockholder filed a stockholder derivative complaint in the United States District Court for the District of Delaware (the “Court”) against certain of CPI’s former officers and current and former directors, along with the sponsors of CPI’s October 2015 initial public offering (“IPO”). CPI is also named as a nominal defendant. The derivative complaint asserts claims under §§10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 and seeks, among other things, injunctive relief, damages and costs. It alleges false or misleading statements and omissions in the Registration Statement filed by CPI in connection with its IPO and subsequent public filings and statements. The derivative complaint also asserts claims for purported breaches of fiduciary duties, unjust enrichment, mismanagement and waste of corporate assets. On December 18, 2019, the parties filed a Stipulation and Agreement of Settlement to resolve and dismiss the Derivative Suit, and on April 1, 2020, the Court granted final approval of the settlement set forth therein and dismissed with prejudice all claims (the “Settlement”). Under the Settlement, (i) all claims that were or could have been asserted in the Derivative Suit were resolved and discharged, (ii) the Company agreed to implement certain corporate governance reforms, and (iii) the Company’s insurer agreed to pay fees and expenses awarded to the plaintiff’s counsel in the amount of $343 and a service award to the plaintiff of a nominal amount. No liability associated with the Settlement has been recorded by the Company as of March 31, 2020, or December 31, 2019.
In addition to the matters described above, the Company is subject to routine legal proceedings in the ordinary course of business. The Company believes that the ultimate resolution of these matters will not have a material adverse effect on its business, financial condition or results of operations.
Litigation Settlement CPI Card Group Inc. v. Multi Packaging Solutions, Inc., et al. Second Case During the summer of 2017, the Company and its subsidiary, CPI Card Group – Minnesota, Inc. (together, the “Company Plaintiffs”), commenced a lawsuit in the United States District Court for the District of Minnesota against a former employee, Multi Packaging Solutions, Inc. (“MPS”), and two MPS employees as individuals (collectively, the Defendants). On June 12, 2019, the Company Plaintiffs and the Defendants reached a settlement pursuant to which the case was resolved and dismissed by mutual agreement on terms that provided for, among other things, a cash payment to the Company. The Company received a $6,000 cash settlement payment during the second quarter of 2019, and recorded the gain within income from operations, in the Other segment. The case was dismissed in its entirety, with prejudice, by court order on July 12, 2019.
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Stock Based Compensation | 16. Stock-Based Compensation
CPI Card Group Inc. Omnibus Incentive Plan
During October 2015, the Company adopted the CPI Card Group Inc. Omnibus Incentive Plan (the “Omnibus Plan”) pursuant to which cash and equity based incentives may be granted to participating employees, advisors and directors. The Company had reserved 800,000 shares of common stock for issuance under the Omnibus Plan. Effective March 25, 2017, the Omnibus Plan was amended and restated, providing for an increase in the number of shares of common stock authorized for issuance thereunder by 400,000. The increase was made effective in the fourth quarter of 2017 by stockholder approval in accordance with applicable law, after which the Company had reserved 1,200,000 shares of common stock for issuance. As of March 31, 2020, there were 336,731 shares available for grant under the Omnibus Plan. During the three months ended March 31, 2020, and during the fiscal year ended December 31, 2019, the Company did not grant any awards of non-qualified stock options. The following is a summary of the activity in outstanding stock options under the Omnibus Plan:
The following is a summary of the activity in unvested stock options under the Omnibus Plan:
Unvested options as of March 31, 2020, will vest as follows:
The following table summarizes the changes in the number of outstanding restricted stock units:
During the three months ended March 31, 2020, and during the fiscal year ended December 31, 2019, the Company did not grant any awards of restricted stock units. Unvested restricted stock units of 928 as of March 31, 2020, will vest entirely in 2020.
During the year ended December 31, 2017, the Company granted awards of 932,837 cash performance units with a grant-date fair value of $663. These awards settled in cash in three annual payments on the first, second and third anniversaries of the date of grant. The cash performance units were based on the performance of the Company’s stock, measured based on the Company’s stock price at each of the first, second, and third anniversaries of the grant date compared to the Company’s stock price on the date of grant. The Company recognized compensation expense on a straight-line basis for each annual performance period. The cash performance units were accounted for as a liability and remeasured to fair value at the end of each reporting period. During the three months ended March 31, 2020, the third tranche of the cash performance units vested and the Company made a cash payment of $68 to the award recipients. There are no outstanding cash performance units as of March 31, 2020.
Compensation expense for the Omnibus Plan for the three months ended March 31, 2020 and 2019 was $41 and $147, respectively. As of March 31, 2020, the total unrecognized compensation expense related to unvested options, and restricted stock units is not significant, and the expense is expected to be recognized over an estimated weighted-average period of less than one year.
CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan
In 2007, the Company’s Board of Directors adopted the CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan (the “Option Plan”). Under the provisions of the Option Plan, stock options could be granted to employees, directors and consultants at an exercise price greater than or equal to (and not less than) the fair market value of a share on the date the option was granted. As a result of the Company’s adoption of its Omnibus Plan, no further awards will be made under the Option Plan. During the year ended December 31, 2019, the remaining 6,600 outstanding shares in the Option Plan were exercised. As such, there were no outstanding shares remaining as of December 31, 2019, or March 31, 2020. There was no compensation expense related to options previously granted under the Option Plan, for quarters ended March 31, 2020, and 2019. |
Segment Reporting |
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Segment Reporting | 17. Segment Reporting
The Company has identified reportable segments as those consolidated subsidiaries 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 identify strategies to improve the allocation of resources amongst segments.
As of March 31, 2020, the Company’s reportable segments were as follows:
Debit and Credit, Prepaid Debit, and Other.
The Other category includes the Company’s corporate office and a less significant operating segment that historically derived its revenue from the production of financial payment cards and retail gift cards in Canada. The Company’s Canadian subsidiary was sold on April 1, 2019. The sale agreement did not include the portions of the business relating to Financial Payment Cards, as those business customers of the Canadian subsidiary migrated to the Company’s operations in the Debit and Credit segment or to other service providers in 2019. Performance Measures of Reportable Segments
Net Sales and EBITDA of the Company’s reportable segments for the three months ended March 31, 2020, and 2019, were as follows:
The following table provides a reconciliation of total segment EBITDA from continuing operations to net income (loss) from continuing operations for the three months ended March 31, 2020, and 2019:
Balance Sheet Data of Reportable Segments
Total assets of the Company’s reportable segments at March 31, 2020, and December 31, 2019, were as follows:
Net Sales to Geographic Locations, Property, Equipment and Leasehold Improvements and Long-Lived Assets
Subsequent to the sale of the Company’s U.K. Limited segment and reclassification to discontinued operations, and the sale of the Company’s Canada operations on April 1, 2019, the Company’s Net Sales, Property, Equipment and Leasehold Improvements, and Long-Lived assets relating to geographic locations outside of the United States is insignificant. |
Business Overview and Summary of Significant Accounting Policies (Policies) |
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Basis of Presentation | Basis of Presentation
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of the results of the interim periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2019 is derived from the audited financial statements as of that date. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
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Use of Estimates | Use of Estimates
Management uses estimates and assumptions relating to the reporting of assets and liabilities in its preparation of the condensed consolidated financial statements. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and intangible assets, leases, valuation allowances for inventories and deferred taxes, revenue recognized for work performed but not completed, and uncertain tax positions. Actual results could differ from those estimates. |
Recent Accounting Standards | Recent Accounting Standards
Recently Adopted Accounting Standards
In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets. ASC 842 is effective for annual and interim periods beginning after December 15, 2018 (the Company’s fiscal year 2019) with early adoption permitted. The guidance required a modified retrospective approach, with an option to apply the transition provisions of the new guidance at the adoption date without adjusting the comparative periods presented. In July 2018, the FASB issued additional accounting standard updates clarifying certain provisions, as well as providing for a second transition method allowing entities to initially apply the standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The Company adopted the new guidance on January 1, 2019 and used the adoption date as the date of initial application as allowed under ASC 842. Refer to Note 10, Financing and Operating Leases.
Recently Issued Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This ASU changes the model for the recognition of credit losses from an incurred loss model, which recognized credit losses only if it was probable that a loss had been incurred, to an expected loss model, which requires the Company to estimate the total credit losses expected on the portfolio of financial instruments. The effective date of ASU 2016-13 was amended by ASU 2019-10, Credit Losses Effective Dates. CPI is a smaller reporting company and adoption of this accounting standard is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods therein, with early adoption permitted. The Company has elected not to early adopt this accounting standard in the current fiscal year 2020. The Company is evaluating the impact of adoption of this standard, and does not anticipate the application of ASU 2016-13 will have a material impact on the Company’s consolidated financial position and results of operations. |
Net Sales (Tables) |
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Accounts Receivable (Tables) |
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Inventories (Tables) |
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Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets (Tables) |
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Schedule of plant, equipment, leasehold improvements and operating lease right-to-use assets |
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Goodwill and Other Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets excluding goodwill |
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Schedule of future aggregate amortization expense for identified amortizable intangibles |
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Fair Value of Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial assets and liabilities subject to fair value measurements |
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Accrued Liabilities (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities |
|
Financing and Operating Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing and Operating Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of operating and finance lease costs |
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Schedule of balances for operating and financing leases |
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Schedule of future cash payments with respect to lease obligations | Future cash payment with respect to lease obligations as of March 31, 2020 were as follows:
|
Long-Term Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt |
(1) Interest Rate on the First Lien Term Loan was 6.38%, and 6.71% as of March 31, 2020, and December 31, 2019, respectively. The interest rate on the Senior Credit Facility, which was entered into on March 6, 2020, was 9.50% as of March 31, 2020.
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Income Taxes - Continuing Operations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes - Continuing Operations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of effective income tax rate reconciliation |
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Income (Loss) per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (Loss) per Share | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of basic and diluted loss per share |
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Stock Based Compensation (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of changes in outstanding restricted stock units |
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Omnibus Plan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of outstanding and exercisable stock options |
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Summary of activity in non-vested stock options |
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Schedule of vesting for unvested options | Unvested options as of March 31, 2020, will vest as follows:
|
Segment Reporting (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenue and EBITDA of the company's reportable segments |
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Schedule of reconciliation of total segment EBITDA to income before taxes |
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Schedule of total assets of the company's reportable segments |
|
Business Overview and Summary of Significant Accounting Policies - Business Overview and Basis of Presentation (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2019
USD ($)
| |
Business Overview and Summary of Significant Accounting Policies | |
Proceeds from Divestiture of Interest in Subsidiaries and Affiliates | $ 1,451 |
Discontinued Operation (Details) |
Aug. 03, 2018
facility
|
---|---|
U.K. Limited | Sold | |
Discontinued Operation and Disposition | |
Number Of Facilities Sold | 3 |
Accounts Receivable (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounts Receivable | ||
Trade accounts receivable | $ 38,525 | $ 39,004 |
Unbilled accounts receivable | 5,603 | 4,223 |
Accounts receivable, gross | 44,128 | 43,227 |
Less allowance for doubtful accounts | (338) | (395) |
Accounts receivable, net | $ 43,790 | $ 42,832 |
Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventories | ||
Raw materials | $ 16,634 | $ 16,492 |
Finished goods | 4,384 | 5,047 |
Inventory reserve | (1,872) | (1,347) |
Inventory | $ 19,146 | $ 20,192 |
Goodwill and Other Intangible Assets - Future Aggregate Amortization Expense (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Estimated future aggregate amortization expense | ||
2020 | $ 3,446 | |
2021 | 4,352 | |
2022 | 3,867 | |
2023 | 3,867 | |
2024 | 3,530 | |
Thereafter | 10,591 | |
Intangible assets subject to amortization, Net Book Value | $ 29,653 | $ 30,802 |
Fair Value of Financial Instruments (Details) - USD ($) |
Mar. 31, 2020 |
Mar. 06, 2020 |
Dec. 31, 2019 |
---|---|---|---|
First Lien Credit Facility | |||
Liabilities: | |||
Carrying amount | $ 312,500,000 | $ 312,500 | $ 312,500,000 |
First Lien Credit Facility | Term Loan | |||
Liabilities: | |||
Carrying amount | 312,500,000 | 312,500,000 | |
Long-term debt | 201,563,000 | 234,375,000 | |
First Lien Credit Facility | Level 2 | Term Loan | |||
Liabilities: | |||
Long-term debt | 201,563,000 | $ 234,375,000 | |
Senior Credit Facility | Term Loan | |||
Liabilities: | |||
Carrying amount | 30,000,000 | ||
Long-term debt | 30,000,000 | ||
Senior Credit Facility | Level 3 | Term Loan | |||
Liabilities: | |||
Long-term debt | $ 30,000,000 |
Accrued Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Accrued Liabilities | ||
Accrued payroll and related employee expenses | $ 4,743 | $ 3,954 |
Accrued employee performance bonus | 1,497 | 3,920 |
Accrued interest | 4,740 | 4,951 |
Operating and financing lease liability (current portion) | 4,675 | 4,494 |
Other | 5,318 | 5,501 |
Total accrued expenses | $ 20,973 | $ 22,820 |
Financing and Operating Leases - Components of Operating and Finance Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Operating lease cost: | ||
Total operating lease costs | $ 671 | $ 643 |
Finance lease cost: | ||
Right-of-use amortization expense | 327 | 123 |
Interest on lease liabilities | 129 | 22 |
Total financing lease cost | $ 456 | $ 145 |
Financing and Operating Leases - Lease Maturity (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Operating Leases | ||
2020 | $ 2,186 | |
2021 | 2,700 | |
2022 | 1,428 | |
2023 | 1,106 | |
2024 | 607 | |
Total operating lease payment | 8,027 | |
Less imputed interest | (1,078) | |
Total operating lease liabilities | 6,949 | $ 7,350 |
Financing Leases | ||
2020 | 2,038 | |
2021 | 2,128 | |
2022 | 1,641 | |
2023 | 693 | |
Total financing lease payment | 6,500 | |
Less imputed interest | (766) | |
Total financing lease liabilities | $ 5,734 | $ 6,097 |
Long-Term Debt - Long-Term Debt (Details) - USD ($) |
Mar. 31, 2020 |
Mar. 06, 2020 |
Dec. 31, 2019 |
---|---|---|---|
Long-term Debt | |||
Unamortized discount | $ (2,951.00) | $ (1,770.00) | |
Unamortized deferred financing costs | (5,659,000) | (2,952,000) | |
Total long-term debt | 333,890,000 | 307,778,000 | |
Long-term debt, net of current maturities | $ 333,890,000 | $ 307,778,000 | |
Senior Credit Facility | |||
Long-term Debt | |||
Interest rate (as a percent) | 9.50% | ||
Long-term debt | $ 30,000,000 | ||
First Lien Credit Facility | |||
Long-term Debt | |||
Interest rate (as a percent) | 6.38% | 6.71% | |
Long-term debt | $ 312,500,000 | $ 312,500 | $ 312,500,000 |
Income Taxes - Continuing Operations - (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Income Taxes - Continuing Operations | ||
Income tax benefit (expense) | $ 943 | $ (403) |
Income (loss) before income taxes | $ 1,500 | $ (2,694) |
Operating Loss Carryforwards, Period | 5 years |
Income Taxes – Continuing Operations - Effective Income Tax Rate Reconciliation (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Effective Income Tax Rate Reconciliation | ||
Tax at federal statutory rate (as a percent) | 21.00% | 21.00% |
State Taxes, net (as a percent) | 33.90% | (0.80%) |
Valuation allowance (as a percent) | 70.40% | (31.20%) |
Permanent items (as a percent) | 34.60% | (2.10%) |
Tax benefit CARES Act (as a percent) | (238.60%) | |
Other (as a percent) | 15.80% | (1.90%) |
Effective income tax rate (as a percent) | (62.90%) | (15.00%) |
Stockholders' Deficit (Details) |
Mar. 31, 2020
item
$ / shares
|
Dec. 31, 2019
$ / shares
|
---|---|---|
Stockholders' Deficit | ||
Common shares, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 |
Common Stock | ||
Class of Stock | ||
Voting rights per share | item | 1 |
Commitments and Contingencies: Litigation Settlement - Contingencies (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Dec. 18, 2019
USD ($)
|
Jun. 30, 2015
plaintiff
|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
|
Commitments and Contingencies | ||||
Loss contingency accrual | $ 0 | $ 0 | ||
Heckermann Montross Suit | Settled Litigation | ||||
Commitments and Contingencies | ||||
Settlement expense | $ 343 | |||
CPI Card Group Inc. v. Multi Packaging Solutions, Inc., et al. Second Case | Settled Litigation | ||||
Commitments and Contingencies | ||||
Number of purported shareholders that have filed lawsuits | plaintiff | 2 | |||
Proceeds from settlements | $ 6,000 |
Stock Based Compensation - Restricted Stock Units (Details) - Omnibus Plan - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|
Weighted Average Grant Date Fair Value | |||
Compensation expense | $ 41 | $ 147 | |
Restricted stock units | |||
Number of Restricted Stock Units | |||
Units outstanding at the beginning of the period (in shares) | 7,347 | ||
Granted (in shares) | 0 | 0 | |
Vested (in shares) | (6,216) | ||
Forfeited (in shares) | (203) | ||
Units outstanding at the end of the period (in shares) | 928 | 7,347 | |
Weighted Average Grant Date Fair Value | |||
Units outstanding at the beginning of the period (in dollars per shares) | $ 22.49 | ||
Vested (in dollars per share) | 21.75 | ||
Forfeited (in dollars per share) | 21.75 | ||
Units outstanding at the end of the period (in dollars per shares) | $ 27.60 | $ 22.49 | |
Period over which compensation expense expected to recognize | 5 months 1 day | ||
Unvested restricted stock (in units) | 928 | 7,347 |
Stock Based Compensation - Cash Performance Units (Details) - Cash Performance - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2020 |
Dec. 31, 2017 |
|
Number of Cash Performance Units | ||
Granted (in shares) | 932,837 | |
Units outstanding at the end of the period (in shares) | 0 | |
Cash payments made | $ 68 | |
Vesting period | 3 years | |
Weighted average grant date fair value | $ 663 |
Stock Based Compensation - Option Plan (Details) - Stock Options - Option Plan - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|
Stock based compensation | |||
Compensation expense | $ 0 | $ 0 | |
Number of shares | |||
Shares outstanding | 0 | 0 | |
Exercisable (in shares) | 6,600 |
Segment Reporting - Revenue and EBITDA from Continuing Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Segment Reporting | ||
Revenue | $ 73,969 | $ 66,866 |
EBITDA | 11,766 | 7,853 |
Debit and Credit | ||
Segment Reporting | ||
EBITDA | 15,080 | 10,380 |
Prepaid Debit | ||
Segment Reporting | ||
EBITDA | 4,660 | 5,779 |
Other | ||
Segment Reporting | ||
EBITDA | (7,974) | (8,306) |
Operating Segments | Debit and Credit | ||
Segment Reporting | ||
Revenue | 59,839 | 48,929 |
Operating Segments | Prepaid Debit | ||
Segment Reporting | ||
Revenue | 14,540 | 16,744 |
Operating Segments | Other | ||
Segment Reporting | ||
Revenue | 1,679 | |
Intersegment eliminations | ||
Segment Reporting | ||
Revenue | $ (410) | $ (486) |
Segment Reporting - Reconciliation of EBITDA from Continuing Operations to "Net income (loss) from continuing operations" (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Reconciliation of total segment EBITDA to income before taxes | ||
Total segment EBITDA from continuing operations | $ 11,766 | $ 7,853 |
Interest, net | (6,088) | (6,324) |
Income tax benefit (expense) | 943 | (403) |
Depreciation and amortization | (4,178) | (4,223) |
Net income (loss) from continuing operations | $ 2,443 | $ (3,097) |
Segment Reporting - Balance Sheet Data (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Segment Reporting | ||
Total assets | $ 237,390 | $ 213,487 |
Debit and Credit | ||
Segment Reporting | ||
Total assets | 200,578 | 176,496 |
Prepaid Debit | ||
Segment Reporting | ||
Total assets | 26,023 | 25,259 |
Other | ||
Segment Reporting | ||
Total assets | $ 10,789 | $ 11,732 |