Segment Reporting

9 Months Ended

Sep. 30, 2021

Segment Reporting

Segment Reporting

16. Segment Reporting

The Company has identified reportable segments 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 to identify strategies to improve the allocation of resources amongst segments.

As of September 30, 2021, the Company’s reportable segments were as follows:

●    Debit and Credit;

●    Prepaid Debit; and

●    Other.

Debit and Credit Segment

The Debit and Credit segment primarily produces Financial Payment Cards and provides integrated card services, including card personalization and fulfilment services, to card-issuing banks primarily in the United States. Products manufactured by this segment primarily include EMV and non-EMV Financial Payment Cards, including contact and contactless dual-interface cards, and plastic and encased metal cards, and our eco-focused solutions including Second Wave payment cards featuring a core made with recovered ocean bound plastic and Earthwise cards made with upcycled plastic. The Company also sells Card@Once instant card issuance solutions, and private label credit cards that are not issued on the networks of the Payment Cards Brands. The Company provides CPI On-Demand

services, where images, personalized payment cards, and related collateral are produced on a one-by-one, on-demand basis for customers. The Debit and Credit segment facilities are audited for compliance with the standards of the PCI Security Standards Council by multiple Payment Card Brands.

Prepaid Debit Segment

The Prepaid Debit segment primarily provides integrated card services to Prepaid Debit Card providers in the United States, including tamper-evident security packaging. This segment also produces Financial Payment Cards issued on the networks of the Payment Card Brands that are included in the tamper-evident security packages. The Prepaid Debit segment facilities are audited for compliance with the standards of the PCI Security Standards Council by multiple Payment Card Brands.

Other

The Other segment includes corporate expenses and the loss on debt extinguishment.

Performance Measures of Reportable Segments

Net Sales and EBITDA of the Company’s reportable segments for the three and nine months ended September 30, 2021 and 2020, were as follows:

	Net Sales
	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Debit and Credit	$	76,121	$	62,710	$	218,798	$	180,855
Prepaid Debit		23,498		20,604		63,339		48,680
Intersegment eliminations		(17)		(612)		(224)		(1,486)
Total	$	99,602	$	82,702	$	281,913	$	228,049

	EBITDA
	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Debit and Credit	$	22,356	$	16,993	$	67,078	$	45,073
Prepaid Debit		9,040		8,332		24,719		16,974
Other		(11,130)		(7,836)		(34,955)		(23,757)
Total	$	20,266	$	17,489	$	56,842	$	38,290

The following table provides a reconciliation of total segment EBITDA to net income for the three and nine months ended September 30, 2021 and 2020:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Total segment EBITDA	$	20,266	$	17,489	$	56,842	$	38,290
Interest, net		(7,183)		(6,298)		(23,196)		(19,158)
Income tax (expense) benefit		(2,887)		(1,402)		(6,769)		2,178
Depreciation and amortization		(3,570)		(3,980)		(11,609)		(12,436)
Net loss from discontinued operations		—		—		—		(30)
Net income	$	6,626	$	5,809	$	15,268	$	8,844

Balance Sheet Data of Reportable Segments

Total assets of the Company’s reportable segments at September 30, 2021 and December 31, 2020, were as follows:

	September 30, 2021		December 31, 2020
Debit and Credit	$	190,534	$	215,846
Prepaid Debit		35,753		34,734
Other		25,988		15,571
Total assets	$	252,275	$	266,151

Net Sales to Geographic Locations, Property, Equipment and Leasehold Improvements and Long-Lived Assets

Each of 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.