8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8‑K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 6, 2020

CPI CARD GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)	001‑37584 (Commission File Number)	26‑0344657 (I.R.S. Employer Identification No.)
	CPI Card Group Inc. 10026 West San Juan Way Littleton, CO (Address of principal executive offices)	80127 (Zip Code)

(720)  681‑6304

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐   Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)

☐   Pre-commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))

☐   Pre-commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	PMTS	OTC Markets Group Inc.

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b‑2 of the Securities Exchange Act of 1934 (§240.12b‑2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☒

Item 2.02   Results of Operations and Financial Condition.*

On May 6, 2020, CPI Card Group Inc. (the “Company”) issued a press release announcing financial results for its fiscal quarter ended March 31, 2020 (the “Earnings Release”). A copy of the Earnings Release is attached hereto as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure.*

In connection with the issuance of the Earnings Release, the Company is providing the supplemental investor commentary attached hereto as Exhibit 99.2, which will be included on the investor relations portion of the Company’s website, www.cpicardgroup.com.    

Item 9.01   Financial Statements and Exhibits.

(d) Exhibits:

Exhibit Number	Exhibit Description
99.1*	Press release issued May 6, 2020 announcing the first quarter results
99.2*	Supplemental Investor Commentary of the Company dated May 6, 2020

*The information furnished under Item 2.02 and Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CPI CARD GROUP INC.
Dated: May 6, 2020	By:	/s/ Sarah J. Kilgore
	Name:	Sarah J. Kilgore
	Title:	Chief Legal and Compliance Officer

EX-99.1

Exhibit 99.1

CPI Card Group Inc. Reports First Quarter 2020 Results

Date: May 6, 2020

Net Sales Up 11% Year Over Year

Net Income from Continuing Operations of $2.4 Million, an Improvement of 179% Year Over Year

Adjusted EBITDA of $12.4 Million Up 55% Year Over Year

Cash of $46.9 Million at Quarter End

Littleton, CO. May 6, 2020 -- CPI Card Group Inc. (OTCQX: PMTS; TSX: PMTS) (“CPI Card Group” or the “Company”) today reported financial results for the first quarter ended March  31, 2020. 

“Our hearts go out to those who have been impacted by the COVID-19 pandemic,” said Scott Scheirman, President and Chief Executive Officer of CPI.  “As this pandemic continues to evolve, the health and safety of our employees remains paramount.  We continue to follow the safety precautions and other appropriate measures recommended by the Centers for Disease Control and Prevention.  I want to thank our employees for their dedication and commitment to continuing to serve our customers through these unprecedented times. All of CPI’s operations remain open and continue to provide direct and essential support to the financial services industry, including the production, personalization and fulfillment of debit, credit, and prepaid cards such as payroll, government benefit, and health savings account cards. In addition, we have made COVID-19 support-related contributions to organizations in the communities in which we operate and source materials.”

Scheirman added, “We delivered strong results to start the year, though we did see some impact from the pandemic late in the first quarter.  During the first quarter, our differentiated products and solutions such as our dual-interface EMV® products, including our Second Wave™ card, experienced strong demand by our customers. This drove an 11% year-over-year improvement in the top-line and allowed us to further leverage our business model, yielding significant improvement in bottom-line performance in the quarter.  We remain focused on being a partner of choice through the continued execution of our strategic priorities and, like most companies, we are taking certain steps to reduce or defer spending as we navigate through this uncertainty.”

First Quarter 2020 Financial Highlights

Net sales of $74.0 million in the first quarter of 2020 represented an increase of 11% year over year.    First quarter gross profit increased 19% year over year and gross margins increased to 34.8% from 32.2% in the first quarter of 2019.  First quarter income from operations improved to $7.7 million, up from $3.6 million in the first quarter of 2019.  

First quarter 2020 net income from continuing operations was $2.4 million, or $0.22 per share, an improvement of 179% from the net loss from continuing operations of $3.1 million, or $0.28 per share loss in the first quarter of 2019. First quarter Adjusted EBITDA improved 55% year over year to $12.4 million. 

First Quarter Segment Information

Debit and Credit:

Net sales increased 22% year over year to $59.8 million in the first quarter driven by strong demand for dual interface EMV® cards, including Second Wave™, and continued strength in personalization, including CPI On-Demand™ and Card@Once®.

Prepaid Debit:

As expected, first quarter net sales declined when compared with the 2019 first quarter, which benefited from stronger sales as the Company supported customers through changing regulatory requirements in the industry.  Net sales for the first quarter of 2020 were down 13% year over year. 

Balance Sheet, Liquidity, and Cash Flow from Continuing Operations

As of March 31, 2020, cash and cash equivalents was $46.9 million.  Cash provided by operating activities was $3.2 million and cash outflows for capital expenditures was $0.9 million in the first quarter, yielding positive adjusted free cash flow of $2.3 million. This compares with the first quarter of 2019, when cash used in operating activities was $10.2 million, capital expenditures were $2.1 million and adjusted free cash flow was negative $12.3 million.  Year over year, adjusted free cash flow increased $14.6 million. 

As previously reported, during the first quarter, the Company entered into a new $30 million Senior Credit Facility and terminated its revolving credit facility, each effective on March 6, 2020. For the first quarter of 2020, cash provided by financing activities was $26 million. Total long-term debt principal outstanding, comprised of the Company’s $30 million Senior Credit Facility and its $312.5 million First Lien Term Loan, was $342.5 million at March 31, 2020.  Net of debt issuance costs and discount, total debt was $333.9 million as of March 31, 2020.  The Company’s Senior Credit Facility matures in May 2022 and the First Lien Term Loan matures in August 2022.

John Lowe, Chief Financial Officer, said, “During the first quarter, solid execution led to top-line growth, further leveraging of our business model and margin expansion, which enabled us to significantly improve our bottom line and generate positive free cash flow.  As the COVID-19 pandemic unfolds, we continue to provide essential support to our customers and execute on our strategic plan, while carefully managing our spending.”

2020 Strategy and Market Outlook

The Company’s vision is to be the partner of choice by providing market-leading quality products and customer service with a market-competitive business model.  The Company will continue to execute on its four key strategies:

· Deep customer focus,

· Market-leading quality products and customer service,

· Continuous innovation, and

· Market-competitive business model.

While our strategy remains the same, given the rapidly evolving nature of the COVID-19 pandemic and its economic impacts, it is challenging to predict the potential impact this pandemic will have and, therefore, the Company is withdrawing its market outlook issued on March 9, 2020.

Additional Investor Commentary

Beginning with the release of its first quarter 2020 results, in lieu of an earnings call, the Company has provided written commentary regarding its quarterly performance and other business matters.  Such commentary is consistent with information historically discussed on the Company’s earnings calls and has been provided concurrently with the issuance of the Company’s quarterly earnings press release.  The earnings press release and additional written commentary is available at http://investor.cpicardgroup.com. 

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

Non-GAAP Financial Measures

In addition to financial results reported in accordance with U.S. generally accepted accounting principles (GAAP), we have provided the following non-GAAP financial measures in this release, all reported on a continuing operations basis: EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow. These non-GAAP financial measures are utilized by management in comparing our operating performance on a consistent basis between fiscal periods. We believe that these financial measures are appropriate to enhance an overall understanding of our underlying operating performance trends compared to historical and prospective periods and our peers. Management also believes that these measures are useful to investors in their analysis of our results of operations and provide improved comparability between fiscal periods. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Our non-GAAP measures may be different from similarly titled measures of other companies. Investors are encouraged to review the reconciliation of these historical non-GAAP measures to their most directly comparable GAAP financial measures included in Exhibit E to this press release.

EBITDA

EBITDA represents earnings before interest, taxes, depreciation and amortization, all on a continuing operations basis. EBITDA is presented because it is an important supplemental measure of performance, and it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. EBITDA is also presented and compared by analysts and investors in evaluating our ability to meet debt service obligations. Other companies in our industry may calculate EBITDA differently. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net (loss) income or net (loss) income from continuing operations as indicators of operating performance or any other measures of performance derived in accordance with GAAP. Because EBITDA is calculated before recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a measure of discretionary cash available to invest in the growth of the business.

Adjusted EBITDA

Adjusted EBITDA is presented on a continuing operations basis and is defined as EBITDA adjusted for litigation and related charges incurred in connection with certain patent and shareholder litigation; stock-based compensation expense; restructuring and other charges; loss on Revolving Credit Facility termination; foreign currency gain or loss; and other items that are unusual in nature, infrequently occurring or not considered part of our core operations, as set forth in the reconciliation on Exhibit E. Adjusted EBITDA is also a defined computation in our First Lien Term Loan and Senior Credit Facility agreements, which generally conforms to the definition above, and impacts

certain credit measures and compliance targets including an associated required covenant of at least $25 million adjusted EBITDA for the previous four consecutive fiscal quarters in total for each quarterly period ending on or after March 31, 2020.  Adjusted EBITDA is intended to show our unleveraged, pre-tax operating results and therefore reflects our financial performance based on operational factors, excluding non-operational, non-cash or non-recurring losses or gains. Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for, analysis of our results as reported under GAAP. For example, Adjusted EBITDA does not reflect: (a) our capital expenditures, future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expenses or the cash requirements necessary to service interest or principal payments on our debt; (d) tax payments that represent a reduction in cash available to us; (e) any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; (f) the impact of earnings or charges resulting from matters that we and the lenders under our credit agreement may not consider indicative of our ongoing operations; or (g) the impact of any discontinued operations. In particular, our definition of Adjusted EBITDA allows us to add back certain non-cash, non-operating or non-recurring charges that are deducted in calculating net (loss) income, even though these are expenses that may recur, vary greatly and are difficult to predict and can represent the effect of long-term strategies as opposed to short-term results.

In addition, certain of these expenses can represent the reduction of cash that could be used for other purposes. Further, although not included in the calculation of Adjusted EBITDA, the measure may at times allow us to add estimated cost savings and operating synergies related to operational changes ranging from acquisitions to dispositions to restructurings and/or exclude one-time transition expenditures that we anticipate we will need to incur to realize cost savings before such savings have occurred. Further, management and various investors use the ratio of total debt less cash to Adjusted EBITDA, or "net debt leverage", as a measure of our financial strength and ability to incur incremental indebtedness when making key investment decisions and evaluating us against peers.   The metric “total debt less cash” includes borrowed long term debt, letters of credit, and finance lease obligations, less cash.  Adjusted EBITDA margin percentage as shown in Exhibit E is computed as Adjusted EBITDA divided by total net sales.

Free Cash Flow

We define Free Cash Flow as cash flow from continuing operations less capital expenditures from continuing operations.  We use this metric in analyzing our ability to service and repay our debt. However, this measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt, nor does it reflect the cash impacts of our discontinued operations.

About CPI Card Group Inc.

CPI Card Group® is a payment technology company and leading provider of credit, debit and prepaid solutions delivered physically, digitally and on-demand. CPI helps our customers foster connections and build their brands through innovative and reliable solutions, including financial payment cards, personalization, and Software-as-a-Service (SaaS) instant issuance. CPI has more than 20 years of experience in the payments market and is a trusted partner to financial institutions and payments services providers. Serving customers from locations throughout the United States, CPI has a large network of high security facilities, each of which is registered as PCI compliant by one or more of the payment brands: Visa, Mastercard®, American Express® and Discover®. Learn more at www.cpicardgroup.com.

Forward-Looking Statements

Certain statements and information in this earnings release (as well as information included in our accompanying written or oral statements) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “1933 Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”). The words “believe,” “estimate,” “project,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “guides,” “provides guidance,” “provides outlook,” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us, and other information currently available. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. We are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated.

 These risks and uncertainties include, but are not limited to: the potential effects of COVID-19 on our business, including our supply-chain, customer demand, operations and ability to comply with certain covenants in our credit facilities; a decline in U.S. and global market and economic conditions and resulting decreases in consumer and business spending; our substantial indebtedness, including inability to make debt service payments or refinance such indebtedness; the restrictive terms of our credit facilities and covenants of future agreements governing indebtedness and the resulting restraints on our ability to pursue our business strategies; our limited ability to raise capital in the future; system security risks, data protection breaches and cyber-attacks; failure to comply with regulations, customer contractual requirements and evolving industry standards regarding consumer privacy and data use and security, including with respect to possible exposure to litigation and/or regulatory penalties under applicable data privacy and other laws for failure to so comply; interruptions in our operations, including our IT systems, or in the operations of the third parties that operate the data centers or computing infrastructure on which we rely; disruptions in production at one or more of our facilities; our inability to adequately protect our trade secrets and intellectual property rights from misappropriation or infringement, claims that our technology is infringing on the intellectual property of others, and risks related to open source software; defects in our software; problems in production quality, materials and process; a disruption or other failure in our supply chain; our failure to retain our existing customers or identify and attract new customers; a loss of market share or a decline in profitability resulting from competition; our inability to recruit, retain and develop qualified personnel, including key personnel; our inability to sell, exit, reconfigure or consolidate businesses or facilities that no longer meet with our strategy; our inability to develop, introduce and commercialize new products; the effect of legal and regulatory proceedings; failure to meet the continued listing standards of the Toronto Stock Exchange or the rules of the OTCQX® Best Market; a continued decrease in the value of our common stock combined with our common stock no longer being traded on a United States national securities exchange, which may prevent investors from investing or achieving a meaningful degree of liquidity; developing technologies that make our existing technology solutions and products obsolete or less relevant or a failure to introduce new products and services in a timely manner; quarterly variation in our operating results; our inability to realize the full value of our long-lived assets; our failure to operate our business in accordance with the PCI Security Standards Council security standards or other industry standards; costs relating to product defects and any related product liability and/or warranty claims; maintenance and further imposition of tariffs and/or trade restrictions on, or slow-downs or interruptions in our ability to obtain, goods imported into the United

States; costs and impacts to our financial results relating to the obligatory collection of sales tax and claims for uncollected sales tax in states that impose sales tax collection requirements on out-of-state retailers, and challenges to our income tax positions; our dependence on licensing arrangements; risks associated with international operations; non-compliance with, and changes in, laws in the United States and in foreign jurisdictions in which we operate and sell our products; our ability to comply with a wide variety of environmental, health and safety laws and regulations and the exposure to liability for any failure to comply; risks associated with the controlling stockholders’ ownership of our stock; potential conflicts of interest that may arise due to our board of directors being comprised of directors who are principals of our largest stockholder; and other risks that are described in Part I, Item 1A – Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 6, 2020, and our other reports filed from time to time with the Securities and Exchange Commission (the “SEC”).

We caution and advise readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof. These statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results to differ materially from the expectations and beliefs contained herein. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

####

For more information:

CPI encourages investors to use its investor relations website as a way of easily finding information about the company. CPI promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information and press releases. CPI uses its investor relations site (http://investor.cpicardgroup.com) as a means of disclosing material information and for complying with its disclosure obligations under Regulation FD.

CPI Card Group Inc. Investor Relations:

(877) 369-9016

InvestorRelations@cpicardgroup.com

CPI Card Group Inc. Media Relations:

Media@cpicardgroup.com

CPI Card Group Inc.Earnings Release Supplemental Financial Information

Exhibit A	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - Unaudited for the three months ended March 31, 2020 and 2019
Exhibit B	Condensed Consolidated Balance Sheets – Unaudited as of March 31, 2020 and December 31, 2019
Exhibit C	Condensed Consolidated Statements of Cash Flows - Unaudited for the three months ended March 31, 2020 and 2019
Exhibit D	Segment Summary Information – Unaudited for the three months ended March 31, 2020 and 2019
Exhibit E	Supplemental GAAP to Non-GAAP Reconciliations - Unaudited for the three months ended March 31, 2020 and 2019

				EXHIBIT A
CPI Card Group Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Amounts in Thousands, Except Share and Per Share Amounts)
(Unaudited)
	Three Months Ended March 31,
	2020		2019
Net sales:
Products	$	42,501	$	32,757
Services		31,468		34,109
Total net sales		73,969		66,866
Cost of sales:
Products (exclusive of depreciation and amortization shown below)		26,379		21,489
Services (exclusive of depreciation and amortization shown below)		19,187		21,166
Depreciation and amortization		2,693		2,690
Total cost of sales		48,259		45,345
Gross profit		25,710		21,521
Operating expenses:
Selling, general and administrative (exclusive of depreciation and amortization shown below)		16,542		16,418
Depreciation and amortization		1,485		1,533
Total operating expenses		18,027		17,951
Income from operations		7,683		3,570
Other expense, net:
Interest, net		(6,088)		(6,324)
Foreign currency (loss) gain		(8)		41
Other (expense) income, net		(87)		19
Total other expense, net		(6,183)		(6,264)
Income (loss) from continuing operations before income taxes		1,500		(2,694)
Income tax benefit (expense)		943		(403)
Net income (loss) from continuing operations		2,443		(3,097)
Net (loss) income from discontinued operation, net of tax		(26)		42
Net income (loss)	$	2,417	$	(3,055)
Net income (loss) per share from continuing operations - Basic:	$	0.22	$	(0.28)
Net income (loss) per share from continuing operations - Diluted:	$	0.22	$	(0.28)
Net income (loss) per share - Basic:	$	0.22	$	(0.27)
Net income (loss) per share - Diluted:	$	0.21	$	(0.27)
Basic weighted-average shares outstanding:		11,224,500		11,160,473
Diluted weighted-average shares outstanding:		11,262,359		11,160,473
Comprehensive income (loss):
Net income (loss)	$	2,417	$	(3,055)
Currency translation adjustment		—		31
Total comprehensive income (loss)	$	2,417	$	(3,024)

			EXHIBIT B
CPI Card Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in Thousands, Except Share and Per Share Amounts)
(Unaudited)
	March 31,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	46,904	$	18,682
Accounts receivable, net of allowances of $338 and $395, respectively		43,790		42,832
Inventories		19,146		20,192
Prepaid expenses and other current assets		4,548		6,345
Income taxes receivable		5,590		4,164
Total current assets		119,978		92,215
Plant, equipment and leasehold improvements and operating lease right-of-use assets, net		39,928		42,088
Intangible assets, net		29,653		30,802
Goodwill		47,150		47,150
Other assets		681		1,232
Total assets	$	237,390	$	213,487
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable	$	13,772	$	16,482
Accrued expenses		20,973		22,820
Deferred revenue and customer deposits		645		468
Total current liabilities		35,390		39,770
Long-term debt		333,890		307,778
Deferred income taxes		7,495		6,896
Other long-term liabilities		10,598		11,478
Total liabilities		387,373		365,922
Commitments and contingencies
Series A Preferred Stock; $0.001 par value—100,000 shares authorized; 0 shares issued and outstanding at March 31, 2020 and December 31, 2019		—		—
Stockholders’ deficit:
Common stock; $0.001 par value—100,000,000 shares authorized; 11,229,819 and 11,224,191 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively		11		11
Capital deficiency		(111,953)		(111,988)
Accumulated loss		(38,041)		(40,458)
Total stockholders’ deficit		(149,983)		(152,435)
Total liabilities and stockholders’ deficit	$	237,390	$	213,487

				EXHIBIT C
CPI Card Group Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands)
(Unaudited)
	Three Months Ended March 31,
	2020		2019
Operating activities
Net income (loss)	$	2,417	$	(3,055)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Loss (income) from discontinued operation		26		(42)
Depreciation and amortization expense		4,178		4,223
Stock-based compensation expense		41		147
Amortization of debt issuance costs and debt discount		634		489
Deferred income taxes		599		250
Other, net		582		(45)
Changes in operating assets and liabilities:
Accounts receivable		(911)		(1,420)
Inventories		521		(4,382)
Prepaid expenses and other assets		1,138		309
Income taxes receivable, net		(1,384)		114
Accounts payable		(2,747)		403
Accrued expenses		(1,981)		(6,716)
Deferred revenue and customer deposits		177		(551)
Other liabilities		(86)		80
Cash provided by (used in) operating activities - continuing operations		3,204		(10,196)
Cash provided by (used in) operating activities - discontinued operation		(26)		42
Investing activities
Acquisitions of plant, equipment and leasehold improvements		(938)		(2,146)
Cash used in investing activities - continuing operations		(938)		(2,146)
Financing activities
Proceeds from Senior Credit Facility, net of discount		29,100		—
Debt issuance costs		(2,507)		—
Proceeds from Revolving Credit Facility		—		5,000
Payments on Revolving Credit Facility		—		(5,000)
Payments on finance lease obligations		(593)		(143)
Cash provided by (used in) financing activities		26,000		(143)
Effect of exchange rates on cash		(18)		34
Net increase (decrease) in cash and cash equivalents		28,222		(12,409)
Cash and cash equivalents, beginning of period		18,682		20,291
Cash and cash equivalents, end of period	$	46,904	$	7,882
Supplemental disclosures of cash flow information
Cash paid (refunded) during the period for:
Interest	$	5,538	$	5,736
Income taxes, net refunds	$	(232)	$	(41)
Right-to-use assets obtained in exchange for lease obligations:
Operating leases	$	141	$	—
Financing leases	$	251	$	—
Accounts payable, and accrued expenses for acquisitions of plant, equipment and leasehold improvements	$	345	$	1,238

							EXHIBIT D
CPI Card Group Inc. and Subsidiaries
Segment Summary Information
For the Three Months Ended March 31, 2020 and March 31, 2019
(Dollars in Thousands)
(Unaudited)
Net Sales
	Three Months Ended March 31,
	2020		2019		$ Change			% Change
Net sales by segment:
Debit and Credit	$	59,839	$	48,929	$	10,910		22.3	%
Prepaid Debit		14,540		16,744		(2,204)		(13.2)	%
Other		—		1,679		(1,679)		(100.0)	%
Eliminations		(410)		(486)		76		*	%
Total	$	73,969	$	66,866	$	7,103		10.6	%

* Calculation not meaningful

Gross Profit
	Three Months Ended March 31,
	2020		% of Net Sales		2019		% of Net Sales		$ Change		% Change
Gross profit by segment:
Debit and Credit	$	20,470	34.2	%	$	15,272	31.2	%	$	5,198	34.0	%
Prepaid Debit		5,240	36.0	%		6,346	37.9	%		(1,106)	(17.4)	%
Other		—	-	%		(97)	(5.8)	%		97	*	%
Total	$	25,710	34.8	%	$	21,521	32.2	%	$	4,189	19.5	%

* Calculation not meaningful

Income from Operations
		Three Months Ended March 31,
		2020	% of Net Sales			2019	% of Net Sales			$ Change	% Change
Income (loss) from operations by segment:
Debit and Credit	$	12,659	21.2	%	$	7,776	15.9	%	$	4,883	62.8	%
Prepaid Debit		4,116	28.3	%		5,316	31.7	%		(1,200)	(22.6)	%
Other		(9,092)	*	%		(9,522)	*	%		430	(4.5)	%
Total	$	7,683	10.4	%	$	3,570	5.3	%	$	4,113	115.2	%

* Calculation not meaningful

EBITDA	Three Months Ended March 31,
	2020		% of Net Sales		2019		% of Net Sales		$ Change		% Change
EBITDA by segment:
Debit and Credit	$	15,080	25.2	%	$	10,380	21.2	%	$	4,700	45.3	%
Prepaid Debit		4,660	32.0	%		5,779	34.5	%		(1,119)	(19.4)	%
Other		(7,974)	*	%		(8,306)	*	%		332	(4.0)	%
Total	$	11,766	15.9	%	$	7,853	11.7	%	$	3,913	49.8	%

* Calculation not meaningful

Reconciliation of Income (loss) from
Operations by Segment to EBITDA by Segment
	Three Months Ended March 31, 2020
	Debit and Credit		Prepaid Debit		Other		Total
EBITDA by segment:
Income (loss) from operations	$	12,659	$	4,116	$	(9,092)	$	7,683
Depreciation and amortization		2,431		548		1,199		4,178
Other (expenses) income		(10)		(4)		(81)		(95)
EBITDA	$	15,080	$	4,660	$	(7,974)	$	11,766
	Three Months Ended March 31, 2019
	Debit and Credit		Prepaid Debit		Other		Total
EBITDA by segment:
Income (loss) from operations	$	7,776	$	5,316	$	(9,522)	$	3,570
Depreciation and amortization		2,605		463		1,155		4,223
Other (expenses) income		(1)		—		61		60
EBITDA	$	10,380	$	5,779	$	(8,306)	$	7,853

			EXHIBIT E
CPI Card Group Inc. and Subsidiaries
Supplemental GAAP to Non-GAAP Reconciliation
(Dollars in Thousands)
(Unaudited)
	Three Months Ended March 31,
	2020			2019
EBITDA and Adjusted EBITDA:
Net income (loss) from continuing operations	$	2,443		$	(3,097)
Interest expense, net		6,088			6,324
Income tax (benefit) expense		(943)			403
Depreciation and amortization		4,178			4,223
EBITDA	$	11,766		$	7,853
Adjustments to EBITDA:
Stock-based compensation expense		41			147
Litigation and related charges (1)		—			20
Restructuring and other charges (2)		467			—
Loss on Revolving Credit Facility termination (3)		92			—
Foreign currency loss (gain)		8			(41)
Subtotal of adjustments to EBITDA		608			126
Adjusted EBITDA	$	12,374		$	7,979
Adjusted EBITDA margin (% of Net Sales)		16.7%			11.9%
Adjusted EBITDA growth (% Change 2020 vs. 2019)		55.1%
Net income from continuing operations (% Change 2020 vs. 2019)		178.9%
	Three Months Ended March 31,
	2020			2019
Reconciliation of cash provided by (used in) operating activities - continuing operations (GAAP) to free cash flow:
Cash provided by (used in) operating activities - continuing operations	$	3,204		$	(10,196)
Acquisitions of plant, equipment and leasehold improvements		(938)			(2,146)
Free cash flow - continuing operations	$	2,266		$	(12,342)

Note that tables in this exhibit are presented on a continuing operations basis.

⁽¹⁾ Represents net legal costs incurred with certain patent and shareholder litigation.

⁽²⁾ Represents restructuring severance charges in 2020. 

⁽³⁾ The Company terminated the Revolving Credit Facility during the first quarter of 2020 and expensed the remaining unamortized deferred financing costs.

EX-99.2

Exhibit 99.2

Investor Commentary First Quarter 2020 May 6, 2020

Table of Contents COVID-19 Update 2 Vision and Strategic Priorities 3 Strategic Update 4 First Quarter 2020 Financial Highlights 6 Segment Performance 8 Balance Sheet, Liquidity and Cash Flow 10 COVID-19 Business Trends and Market Outlook 12 Summary 13 Appendix Cautionary Statement on Forward-Looking Statements 14 Reconciliation of Non-GAAP Financial Measures 15 1 The commentary that follows is issued in conjunction with the earnings release dated May 6, 2020. Certain statements and information in this document (as well as information included in our accompanying written or oral statements) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “1933 Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”). Please see the Cautionary Statement on Forward Looking Statements at the end of this document.

First Quarter 2020 2 As the COVID-19 pandemic continues to evolve, our hearts go out to those who have been impacted. Before updating you on our first quarter results, we would like to share our response to the evolving situation and events. COVID-19 Update First and foremost comes the health and safety of our employees, customers, vendors and communities. We continue to follow the safety precautions and other appropriate measures recommended by the Centers for Disease Control and Prevention. This includes social distancing measures, a required work-from-home policy for office employees, visitor restrictions, staggered production shifts, enhanced sick pay, as well as appropriate hygiene measures, including heightened routine and deep cleaning and face mask protocols. We continue to monitor this changing environment to make adjustments as necessary. We want to extend our gratitude to our employees for their dedication and commitment to safety and serving our customers through these unprecedented times. As an essential service provider to the financial services industry, all of our operations remain open and continue to produce, personalize and fulfill debit, credit, and prepaid cards, which enable people to access fundamental financial services. Several of our products are vital for individuals who are unbanked, underbanked, or are receiving government disbursements. Among these are payroll cards, which enable wages to be deposited directly onto a card on pay day, general purpose reloadable cards and secure payment cards to access state and local government disbursements. We are working with our suppliers to assess potential risks and mitigate those risks through additional inventory investments and multiple supplier sources. At this time, we believe our supply chain and inventory on hand is sufficient for our current and expected demand from our customers. Lastly, we have made COVID-19 support-related contributions to organizations in the communities in which we operate and from which we source recovered ocean-bound plastic, including stay-at- home assistance and support for isolation centers to help combat the spread of the virus.

Vision and Strategic Priorities 3 Deep Customer Focus We strive to be the trusted partner in payments and exceed expectations through high quality, collaboration and innovative products. Market-Leading Quality Products and Customer Service We are committed to continually raising the bar on delivering high quality products and exceptional service while making it easy to do business with CPI. Market-Competitive Business Model We drive efficiency and productivity throughout our business with ongoing process improvements, operational automation, technology and equipment advancement. Continuous Innovation We collaborate with our customers to deliver unique and differentiated products and solutions that elevate their customers’ experience and enhance their brands. Our vision is to be the partner of choice by providing market-leading quality products and customer service with a market-competitive business model.

Strategic Update 4 We had a strong first quarter, delivering 11% year-over-year net sales growth, significantly increasing margins and bottom-line profitability as well as ending the quarter with ample liquidity. During the first quarter, we: • Grew our bottom line by 179% year-over-year, resulting in net income from continuing operations of $2.4 million. • Delivered Adjusted EBITDA1 growth of 55% year-over-year to $12.4 million. • Ended the quarter with nearly $47 million in cash. These strong results reflect the continued execution on our four key strategies: deep customer focus, market-leading quality products and customer service, continuous innovation and a market-competitive business model. We delivered solid growth across the business due to the ongoing dual interface transition in the U.S. With over 10 years of experience in dual interface card manufacturing, we are meeting our customers’ needs as they transition to dual interface and provide their customers with cards that enable a faster and more seamless contactless point-of-sale experience. 1 Adjusted EBITDA is not a measurement of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” at the end of this document for more information and reconciliations to the most directly comparable GAAP financial measures. Our Secure Card business had strong sales growth year-over-year in the first quarter due to a growing mix of higher average selling price dual interface cards. Dual interface continues to benefit our broader business, as we continue to see growth in demand within our Personalization and Card@Once® businesses. Our dual interface Second WaveTM cards, which feature a core made with recovered ocean-bound plastic, were a significant driver of Secure Card’s first quarter growth. Since introducing this product in September 2019, we have produced and delivered over ten million Second Wave cards. We continue to execute our roadmap for differentiated products by developing cards and packaging made with more sustainable materials. We provide choice, convenience and control to our Secure Card, Personalization, Card@Once and Prepaid customers through these differentiated products and solutions.

Strategic Update (continued) 5 Our market-leading Card@Once® Software-as-a-Service instant issuance solution ended the quarter with over 11,000 printers in market across approximately 1,600 financial institutions, growing net sales again year-over-year. One key accomplishment during the quarter was our recently signed agreement with FISTM to integrate Card@Once with FIS PaymentsOne® Card Services to allow CPI to acquire new customers and better serve mutual customers. This enables CPI to offer a more seamless Card@Once instant issuance experience to thousands of FISTM clients. Our innovative product capabilities in personalization, including CPI On-DemandTM, continue to support growth through new customer wins and expanded volumes with existing customers. CPI On-Demand and its buy online capabilities, including inline EMV®, support the expanding needs of our customers. Our market leading Prepaid business continues to see demand driven by our innovation, including new form factors and differentiated secure and more sustainable packaging solutions. We believe our business model enables us to drive incremental profitability and strengthen our balance sheet as the top-line grows. The first quarter of 2020 was a good example, as an 11% year-over-year increase in net sales drove a 115% year-over-year increase in income from operations. By focusing on top-line sales growth, process improvement, expense management, and disciplined capital investments to create efficiencies we improved our net income from continuing operations by 179% to $2.4 million in the first quarter of 2020, grew our Adjusted EBITDA1 by 55% year-over-year to $12.4 million and significantly improved our margins. Looking forward, like most companies, we are taking certain steps to reduce or defer spending to navigate through the uncertainty caused by COVID-19. We continue to collaborate with our customers to deliver unique, high-quality and innovative products and solutions to elevate their customers’ experience and enhance their brands. We believe we are well positioned to capitalize on market opportunities as we execute on our strategic priorities. 1 Adjusted EBITDA is not a measurement of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” at the end of this document for more information and reconciliations to the most directly comparable GAAP financial measures. FIS PaymentsOne is a registered trademark of FIS and its subsidiaries 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 .

$66.9 $74.0 Q1 2019 Q1 2020 NET SALES ($ in millions) We are pleased with our first quarter business performance and financial results. Our top-line growth in the first quarter combined with expanding margins demonstrates solid execution of our strategic plan. First Quarter 2020 Financial Highlights Net Sales up 11% year-over-year to $74 million. This growth was driven by strong demand for our dual-interface EMV® products, including our Second Wave™ payment card. Additionally, increases in card personalization, including sales from CPI On-DemandTM and our Card@Once® instant issuance solution contributed to growth. Gross profit increased 19% to $25.7 million. Gross margins expanded 260 basis points year over year to 34.8%. $21.5 $25.7 32.2% 34.8% Q1 2019 Q1 2020 GROSS PROFIT & MARGIN ($ in millions) 6

$8.0 $12.4 11.9% 16.7% Q1 2019 Q1 2020 $(3.1) $2.4 Q1 2019 Q1 2020 First Quarter 2020 Financial Highlights (continued) Net income from continuing operations was $2.4 million in the first quarter, or $0.22 per share. This compares with a net loss from continuing operations of $3.1 million, or a $0.28 loss per share, in the same quarter one year ago. 7 $3.6 $7.7 5.3% 10.4% Q1 2019 Q1 2020 NET INCOME (LOSS) FROM CONTINUING OPERATIONS ($ in millions) INCOME FROM OPERATIONS & OPERATING MARGIN ADJUSTED EBITDA1 & ADJUSTED EBITDA MARGIN1 For the first quarter, income from operations increased 115% year-over-year to $7.7 million. Operating margin expanded 510 basis points year over year to 10.4% in the first quarter. Top-line strength combined with a more favorable product mix and operating leverage drove these gains. Adjusted EBITDA1 increased 55% in the first quarter to $12.4 million. Adjusted EBITDA Margin1 for the first quarter expanded 480 basis points to 16.7%. ($ in millions) ($ in millions) 1 Adjusted EBITDA and Adjusted EBITDA Margin are not measurements of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” at the end of this document for more information and reconciliations to the most directly comparable GAAP financial measures.

Debit and Credit Segment Performance 8 Option 7.0 Year-Over-Year First quarter net sales for the Debit and Credit segment increased 22% year-over-year to $59.8 million on higher volumes of dual- interface EMV® card sales, including a significant amount of Second WaveTM cards. Dual interface EMV cards use additional technology to process contactless transactions and generally have a higher selling price than contact-only EMV cards. To a lesser extent, increases in card personalization, including sales from CPI On- DemandTM and our Card@Once® instant issuance solution contributed to growth. First quarter income from operations increased 63% to $12.7 million. Operating margins increased more than 500 basis points to 21% in the first quarter. This increase was due to favorable operating leverage from higher dual interface card manufacturing sales and card personalization sales mix. $48.9 $59.8 15.9% 21.2% Q1 2019 Q1 2020 NET SALES & OPERATING MARGIN ($ in millions)

Prepaid Debit Segment Performance Consistent with our expectations, first quarter net sales for the Prepaid Debit segment declined 13% to $14.5 million due to sales mix along with reduced volumes. Sales mix and volume comparisons were impacted as the first quarter of 2019 benefited from an increase in sales as we provided additional support to customers through changing industry regulatory requirements. Income from operations decreased 23% to $4.1 million in the first quarter and operating margins contracted to 28.3% due to unfavorable cost absorption resulting from lower sales. 9 $16.7 $14.5 31.7% 28.3% Q1 2019 Q1 2020 NET SALES & OPERATING MARGIN ($ in millions)

Balance Sheet, Liquidity and Cash Flow 10 Our cash balance at the end of the first quarter was $46.9 million. This includes $27 million in net proceeds from the new Senior Credit Facility received in the first quarter, which we previously announced on March 6, 2020. $7.9 $46.9 3/31/2019 3/31/2020 CASH BALANCE ($ in millions) Q1 2019 Q1 2020 OPERATING CASH FLOW FROM CONTINUING OPS $ (10.2) $ 3.2 CAPEX (2.1) (0.9) ADJUSTED FREE CASH FLOW $ (12.3) $ 2.3 ADJUSTED FREE CASH FLOW1 First quarter cash provided by operating activities was $3.2 million, due to improved net income and working capital benefits. Capital expenditures during the quarter were $0.9 million, bringing Adjusted Free Cash Flow1 for the quarter to a positive $2.3 million. ($ in millions) 1 Adjusted Free Cash Flow is not a measurement of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” at the end of this document for more information and reconciliations to the most directly comparable GAAP financial measures.

Balance Sheet, Liquidity and Cash Flow (continued) 11 March 31, 2020 Maturity SENIOR CREDIT FACILITY $ 30.0 May 2022 FIRST LIEN TERM LOAN 312.5 August 2022 TOTAL DEBT $ 342.5 TOTAL LONG-TERM DEBT 8.1% 7.6% Q1 2019 Q1 2020 10.9x 8.0x 7.2x 12/31/2018 12/31/2019 3/31/2020 NET LEVERAGE RATIO1 1 Net Leverage Ratio and Weighted Average Interest Rate are not measurements of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” at the end of this document for more information. As of March 31, 2020, our Net Leverage Ratio was 7.2x, an improvement from 8.0x at year- end 2019 and 10.9x at year-end 2018. WEIGHTED AVERAGE INTEREST RATE1 • Our Weighted Average Interest Rate decreased 50 basis points to 7.6% in the first quarter of 2020. Capital Structure ($ in millions)

12 COVID-19 Business Trends and Market Outlook Debit and Credit Segment Secure Card Our Secure Card business delivered strong results in the first quarter, driven by continued demand for dual interface and Second WaveTM cards. We continue to experience demand for card manufacturing services as well as a general shift in demand toward dual interface payment cards. Our card manufacturing volumes remained steady during April including increased demand for state and local government disbursement card production. Card@Once® Card@Once®, which enables financial institutions to easily and instantly issue cards to customers during in-person bank transactions, has been a compelling product for small-to-medium-sized bank customers. Card@Once performed well in the first quarter, but has experienced softening in both printer sales and processing and consumables beginning late in the first quarter and continuing through April related to impacts from bank branch closures, limited hours of operation and reduced traffic due to stay-at-home orders. Personalization Our Personalization business delivered solid net sales in the first quarter. Beginning late in the first quarter and continuing through April, our personalization and fulfillment services experienced softness as consumers are staying at home, reducing new issuance and lost and stolen activity volumes. An increase in demand for government disbursement-related work partially offset this softness. Prepaid Segment As expected, our Prepaid net sales were down year-over-year in the first quarter of 2020 due to the strong demand experienced in the first quarter of 2019 as we supported changing regulatory requirements in the industry. During April, our Prepaid business experienced softening related to reduced retail traffic and stay-at-home orders. All of CPI’s operations remain open to provide essential services to our financial services customers. Our operations provide direct and critical support to this industry, including the production, personalization and fulfillment of debit and credit, payroll, government benefit, and health savings account cards, as well as payment cards used by the underbanked or unbanked to pay for daily expenses and bills. These products enable U.S. consumers to access fundamental financial services. Market Outlook The COVID-19 pandemic and its economic impacts have affected our business as described above Given the rapidly evolving nature of this environment, it is challenging to predict the degree or duration of these impacts on the markets in which we operate. Therefore, the Company is withdrawing the market outlook we provided on March 9, 2020. As the economy begins to normalize, we believe our businesses will participate in the recovery.

13 Summary Near term, like most companies, economic contraction related to COVID-19 will impact the demand for our products and services. Long term, we believe we are well-positioned to capture market opportunities. As an essential business to the financial services industry, we aim to scale our solutions, diversify our offerings, and expand our customer base through continued execution of our key strategies. We will leverage and build upon the market-leading and innovative solutions CPI is known for including dual interface secure cards, more sustainable solutions, SaaS-based instant issuance, personalization and prepaid solutions. We continue to provide essential support to our customers through this ever- changing time. Our thanks go out to our employees for their dedication in serving our customers as we remain focused on being our customers’ partner of choice and executing on our key strategies through these challenging times.

Certain statements and information in this document (as well as information included in our accompanying written or oral statements) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “1933 Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”). The words “believe,” “estimate,” “project,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “guides,” “provides guidance,” “provides outlook,” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us, and other information currently available. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. We are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated. These risks and uncertainties include, but are not limited to: the potential effects of COVID-19 on our business, including our supply- chain, customer demand, operations and ability to comply with certain covenants in our credit facilities; a decline in U.S. and global market and economic conditions and resulting decreases in consumer and business spending; our substantial indebtedness, including inability to make debt service payments or refinance such indebtedness; the restrictive terms of our credit facilities and covenants of future agreements governing indebtedness and the resulting restraints on our ability to pursue our business strategies; our limited ability to raise capital in the future; system security risks, data protection breaches and cyber-attacks; failure to comply with regulations, customer contractual requirements and evolving industry standards regarding consumer privacy and data use and security, including with respect to possible exposure to litigation and/or regulatory penalties under applicable data privacy and other laws for failure to so comply; interruptions in our operations, including our IT systems, or in the operations of the third parties that operate the data centers or computing infrastructure on which we rely; disruptions in production at one or more of our facilities; our inability to adequately protect our trade secrets and intellectual property rights from misappropriation or infringement, claims that our technology is infringing on the intellectual property of others, and risks related to open source software; defects in our software; problems in production quality, materials and process; a disruption or other failure in our supply chain; our failure to retain our existing customers or identify and attract new customers; a loss of market share or a decline in profitability resulting from competition; our inability to recruit, retain and develop qualified personnel, including key personnel; our inability to sell, exit, reconfigure or consolidate businesses or facilities that no longer meet with our strategy; our inability to develop, introduce and commercialize new products; the effect of legal and regulatory proceedings; failure to meet the continued listing standards of the Toronto Stock Exchange or the rules of the OTCQX® Best Market; a continued decrease in the value of our common stock combined with our common stock no longer being traded on a United States national securities exchange, which may prevent investors from investing or achieving a meaningful degree of liquidity; developing technologies that make our existing technology solutions and products obsolete or less relevant or a failure to introduce new products and services in a timely manner; quarterly variation in our operating results; our inability to realize the full value of our long-lived assets; our failure to operate our business in accordance with the PCI Security Standards Council security standards or other industry standards; costs relating to product defects and any related product liability and/or warranty claims; maintenance and further imposition of tariffs and/or trade restrictions on, or slow-downs or interruptions in our ability to obtain, goods imported into the United States; costs and impacts to our financial results relating to the obligatory collection of sales tax and claims for uncollected sales tax in states that impose sales tax collection requirements on out-of-state retailers, and challenges to our income tax positions; our dependence on licensing arrangements; risks associated with international operations; non-compliance with, and changes in, laws in the United States and in foreign jurisdictions in which we operate and sell our products; our ability to comply with a wide variety of environmental, health and safety laws and regulations and the exposure to liability for any failure to comply; risks associated with the controlling stockholders’ ownership of our stock; potential conflicts of interest that may arise due to our board of directors being comprised of directors who are principals of our largest stockholder; and other risks that are described in Part I, Item 1A – Risk Factors of our Form 10-K for the year ended December 31, 2019, Part II, Item 1A – Risk Factors of our Form 10-Q for the quarter ended March 31, 2020, and our other reports filed from time to time with the Securities and Exchange Commission (the “SEC”). We caution and advise readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof. These statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results to differ materially from the expectations and beliefs contained herein. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. Cautionary Statement on Forward-Looking Statements 14 Non-GAAP Financial Measures In addition to financial results reported in accordance with U.S. generally accepted accounting principles (GAAP), we have provided the following non-GAAP financial measures in this commentary, all reported on a continuing operations basis: EBITDA, Adjusted EBITDA, LTM Adjusted EBITDA, Net Leverage Ratio and Free Cash Flow. These non-GAAP financial measures are utilized by management in comparing our operating performance on a consistent basis between fiscal periods. We believe that these financial measures are appropriate to enhance an overall understanding of our underlying operating performance trends compared to historical and prospective periods and our peers. Management also believes that these measures are useful to investors in their analysis of our results of operations and provide improved comparability between fiscal periods. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Our non-GAAP measures may be different from similarly titled measures of other companies. Investors are encouraged to review the reconciliation of these historical non-GAAP measures to their most directly comparable GAAP financial measures included herein. Additional information relating to certain financial measures, including our Non-GAAP financial measures, is available in our most recent earnings release and on our website at http://investor.cpicardgroup.com.

Reconciliations of Non-GAAP Financial Measures 15 Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is presented on a continuing operations basis and is defined as EBITDA adjusted for litigation and related charges incurred in connection with certain patent and shareholder litigation; stock-based compensation expense; restructuring and other charges; loss on Revolving Credit Facility termination; foreign currency gain or loss; litigation settlement gain; and other items that are unusual in nature, infrequently occurring or not considered part of our core operations. Adjusted EBITDA is also a defined computation in our First Lien Term Loan and Senior Credit Facility agreements, which generally conforms to the definition above, and impacts certain credit measures and compliance targets including an associated required covenant of at least $25 million adjusted EBITDA for the previous four consecutive fiscal quarters in total as measured for each quarterly period ending on or after March 31, 2020. Adjusted EBITDA is intended to show our unleveraged, pre-tax operating results and therefore reflects our financial performance based on operational factors, excluding non-operational, non-cash or non-recurring losses or gains. Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for, analysis of our results as reported under GAAP. For example, Adjusted EBITDA does not reflect: (a) our capital expenditures, future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expenses or the cash requirements necessary to service interest or principal payments on our debt; (d) tax payments that represent a reduction in cash available to us; (e) any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; (f) the impact of earnings or charges resulting from matters that we and the lenders under our credit agreement may not consider indicative of our ongoing operations; or (g) the impact of any discontinued operations. In particular, our definition of Adjusted EBITDA allows us to add back certain non-cash, non-operating or non-recurring charges that are deducted in calculating net (loss) income, even though these are expenses that may recur, vary greatly and are difficult to predict and can represent the effect of long-term strategies as opposed to short-term results. In addition, certain of these expenses can represent the reduction of cash that could be used for other purposes. Further, although not included in the calculation of Adjusted EBITDA, the measure may at times allow us to add estimated cost savings and operating synergies related to operational changes ranging from acquisitions to dispositions to restructurings and/or exclude one-time transition expenditures that we anticipate we will need to incur to realize cost savings before such savings have occurred. EBITDA EBITDA represents earnings before interest, taxes, depreciation and amortization, all on a continuing operations basis. EBITDA is presented because it is an important supplemental measure of performance, and it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. EBITDA is also presented and compared by analysts and investors in evaluating our ability to meet debt service obligations. Other companies in our industry may calculate EBITDA differently. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net (loss) income or net (loss) income from continuing operations as indicators of operating performance or any other measures of performance derived in accordance with GAAP. Because EBITDA is calculated before recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a measure of discretionary cash available to invest in the growth of the business. Reconciliation of net income (loss) from continuing operations to EBITDA and Adjusted EBITDA: Net income (loss) from continuing operations $ 2.4 $ (3.1) Interest expense, net 6.1 6.3 Income tax expense (benefit) (0.9) 0.4 Depreciation and amortization 4.2 4.2 EBITDA $ 11.8 $ 7.9 Adjustments to EBITDA: Litigation and related charges (1) — — Stock-based compensation expense — 0.2 Restructuring and other charges (2) 0.5 — Loss on Revolving Credit Facility termination (3) 0.1 — Foreign currency loss (gain) — (0.1) Subtotal of adjustments to EBITDA 0.6 0.1 Adjusted EBITDA - continuing operations $ 12.4 $ 8.0 Adjusted EBITDA margin (% of net sales) 16.7% 11.9% Adjusted EBITDA growth (% change 2020 vs 2019) 55.1% Net loss from continuing operations (% change 2020 vs 2019) 178.9% Three Months Ended March 31, 2020 2019 (in millions) (1) Represents net legal costs incurred with certain patent and shareholder litigation. Amounts do not appear in the above schedule as they are in the thousands. (2) Represents restructuring severance charges in 2020. (3) The Company terminated the Revolving Credit Facility during the first quarter of 2020 and expensed the remaining unamortized deferred financing costs.

16 Reconciliations of Non-GAAP Financial Measures LTM Adjusted EBITDA and Net Leverage Ratio We define LTM Adjusted EBITDA as Adjusted EBITDA (defined above) for the last twelve months. Management and various investors use the ratio of total debt, plus finance lease obligations, plus unreimbursed letters of credit, less cash to LTM Adjusted EBITDA, or “Net Leverage Ratio,” as a measure of our financial strength when making key investment decisions and evaluating us against peers. Net Leverage Ratio is defined in our Senior Credit Facility and First Lien Term Loan. Reconciliation of net income from continuing operations to LTM EBITDA and Adjusted EBITDA - continuing operations: Net income/(loss) from continuing operations $ 1.2 $ (4.3) $ (14.8) Interest expense, net 24.7 24.9 23.4 Income tax expense 2.3 3.7 (4.3) Depreciation and amortization 17.0 17.0 18.4 EBITDA 45.1 41.2 22.7 Adjustments to EBITDA: Stock-based compensation expense 0.1 0.3 1.0 Litigation and related charges (1) — — 1.0 Litigation settlement gain (2) (6.0) (6.0) — Restructuring and other charges (3) 1.2 0.7 2.1 Loss on Revolving Credit Facility termination (4) 0.1 — — Foreign currency loss (5) 1.4 1.3 0.3 Subtotal of adjustments to EBITDA (3.2) (3.7) 4.4 LTM Adjusted EBITDA - continuing operations $ 42.0 37.6 27.1 (in millions) Twelve Months Ended March 31, 2020 December 31, 2019 December 31, 2018 (1) Represents net legal costs incurred in connection with certain patent and shareholder litigation. Amounts do not appear in the above schedule as they are in the thousands. (2) During the second quarter of 2019, the Company recognized in operating income a $6.0 million gain related to the cash settlement of litigation. The litigation has been disclosed in the CPI’s SEC filings since CPI brought the complaint in 2017, and details of the settlement are disclosed in CPI’s 2019 Form 10-K. (3) Represents executive severance charges in 2020 and 2019. In 2018, this represents employee and lease termination costs in connection with the decision to consolidate three personalization operations in the United States to two facilities, and employee termination costs incurred in the fourth quarter of 2018 in connection with the sale of our Canadian operations.. (4) The Company terminated the Revolving Credit Facility during the first quarter of 2020 and expensed the remaining unamortized deferred financing costs. (5) Foreign currency loss includes the release of the cumulative translation adjustment from the balance sheet to the statement of operations done in connection with the disposition of CPI’s Canadian subsidiary during the second quarter of 2019. Calculation of Net Leverage Ratio:* Consolidated Net Debt: Term Loan $ 312.5 $ 312.5 $ 312.5 Senior Credit Facility 30.0 — — Unreimbursed letters of credit — 0.1 0.1 Finance lease obligations 5.7 6.1 1.6 Total Consolidated Net Debt 348.2 318.7 314.1 Less: Cash and cash equivalents (46.9) (18.7) (20.3) Total Consolidated Secured Indebtedness (a) $ 301.3 $ 300.0 $ 293.8 LTM Adjusted EBITDA (b) $ 42.0 $ 37.6 $ 27.1 Net Leverage Ratio (a)/(b) 7.2 8.0 10.9 * Net leverage ratio is defined in our First Lien Term Loan and Senior Credit Facility December 31, 2018 ($ in millions) March 31, 2020 ($ in millions) As of December 31, 2019 ($ in millions)

Reconciliations of Non-GAAP Financial Measures 17 Weighted Average Effective Interest Rate Weighted Average Effective Interest Rate is computed as interest expense for the quarter divided by average debt outstanding during the first quarter, including the $312.5 million First Lien Term Loan and $30 million Senior Credit Facility entered into on March 6, 2020, multiplied by four. Note the impact of borrowings on the Revolving Credit Facility in the first quarter of 2019 were immaterial to this rate computation. Adjusted Free Cash Flow We define Adjusted Free Cash Flow as cash flow from continuing operations less capital expenditures from continuing operations. We use this metric in analyzing our ability to service and repay our debt. However, this measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt, nor does it reflect the cash impacts of our discontinued operations. Reconciliation of cash provided by (used in) operating activities - continuing operations (GAAP) to Adjusted Free Cash Flow: Cash provided by (used in) operating activities - continuing operations $ 3.2 $ (10.2) Acquisitions of plant, equipment and leasehold improvements (0.9) (2.1) Adjusted Free Cash Flow - continuing operations $ 2.3 $ (12.3) Three Months Ended March 31, 2020 2019 (in millions) Weighted Average Interest Rate Interest Expense (a) $ 6.1 $ 6.3 Term Loan 312.5 312.5 Senior Credit Facility 30.0 — Total Debt at Quarter End 342.5 312.5 Average Debt Balance during quarter (b) 320.7 312.5 Weighted Average Interest Rate (a/ b * 4) 7.6% 8.1% ($ in millions) ($ in millions) As of March 31, 2020 March 31, 2019