Segment Reporting

6 Months Ended

Jun. 30, 2022

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 June 30, 2022, 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 to card-issuing banks primarily in the United States. Products produced by this segment primarily include EMV and non-EMV Financial Payment Cards, including contact and contactless cards, and Earth Elements^TM Eco-Focused Cards. 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 Card 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. This segment also provides a variety of integrated card services, including card personalization and fulfillment services and instant issuance services. The Debit and Credit segment facilities and operations are audited for compliance with the standards of the Payment Card Industry Security Standards Counsel by multiple Payment Card Brands.

Prepaid Debit Segment

The Prepaid Debit segment primarily provides integrated prepaid 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 and operations are audited for compliance with the standards of the Payment Card Industry Security Standards Counsel by multiple Payment Card Brands.

Other

The Other segment includes corporate expenses.

Performance Measures of Reportable Segments

Net Sales and EBITDA of the Company’s reportable segments for the three and six months ended June 30, 2022 and 2021, were as follows:

	Net Sales
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Debit and Credit	$	94,181	$	72,860	$	186,196	$	142,677
Prepaid Debit		19,214		20,383		38,675		39,841
Intersegment eliminations		(87)		(24)		(139)		(207)
Total	$	113,308	$	93,219	$	224,732	$	182,311

	EBITDA
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Debit and Credit	$	27,273	$	22,322	$	53,367	$	44,722
Prepaid Debit		5,899		8,106		12,463		15,679
Other		(14,562)		(10,820)		(26,025)		(23,825)
Total	$	18,610	$	19,608	$	39,805	$	36,576

The following table provides a reconciliation of total segment EBITDA to net income for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Total segment EBITDA	$	18,610	$	19,608	$	39,805	$	36,576
Interest, net		(7,146)		(7,037)		(15,011)		(16,013)
Income tax expense		(1,742)		(2,522)		(5,460)		(3,882)
Depreciation and amortization		(3,571)		(3,817)		(7,181)		(8,039)
Net income	$	6,151	$	6,232	$	12,153	$	8,642

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.