Segment Reporting

12 Months Ended

Dec. 31, 2023

Segment Reporting

Segment Reporting

17. 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 CEO, 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 December 31, 2023, the Company’s reportable segments were as follows:

● Debit and Credit;

● Prepaid Debit;

● Other.

Debit and Credit Segment

The Debit and Credit segment primarily produces Financial Payment Cards and provides integrated card services, including digital services, for card-issuing financial institutions 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 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 print-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 PCI Security Standards Council by multiple Payment Card Brands.

Prepaid Debit Segment

The Prepaid Debit segment primarily provides integrated prepaid card services to Prepaid Debit Card providers primarily 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 PCI Security Standards Council 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, as well as a reconciliation of total segment EBITDA to income from operations and net income for the year ended December 31, 2023 and 2022, were as follows:

	Year Ended December 31, 2023
	Debit and Credit		Prepaid Debit		Other		Intersegment Eliminations		Total
Net sales	$	361,057	$	84,237	$	—	$	(747)	$	444,547
Cost of sales		234,281		55,524		—		(747)		289,058
Gross profit		126,776		28,713		—		—		155,489
Operating expenses		31,870		3,786		58,243		—		93,899
Income (loss) from operations	$	94,906	$	24,927	$	(58,243)	$	—	$	61,590
EBITDA by segment:
Income (loss) from operations	$	94,906	$	24,927	$	(58,243)	$	—	$	61,590
Depreciation and amortization		9,025		2,860		4,046		—		15,931
Other income (expenses)		29		(1)		(243)		—		(215)
EBITDA	$	103,960	$	27,786	$	(54,440)	$	—	$	77,306

	Year Ended December 31, 2022
	Debit and Credit		Prepaid Debit		Other		Intersegment Eliminations		Total
Net sales	$	390,559	$	86,136	$	—	$	(950)	$	475,745
Cost of sales		246,345		54,583		—		(950)		299,978
Gross profit		144,214		31,553		—		—		175,767
Operating expenses		34,169		5,976		56,492		—		96,637
Income (loss) from operations	$	110,045	$	25,577	$	(56,492)	$	—	$	79,130
EBITDA by segment:
Income (loss) from operations	$	110,045	$	25,577	$	(56,492)	$	—	$	79,130
Depreciation and amortization		8,440		2,310		4,136		—		14,886
Other income (expenses)		(7)		(43)		(317)		—		(367)
EBITDA	$	118,478	$	27,844	$	(52,673)	$	—	$	93,649

	December 31,
	2023		2022
Net income	$	23,985	$	36,540
Interest, net		26,913		29,616
Income tax expense		10,477		12,607
Depreciation and amortization		15,931		14,886
EBITDA	$	77,306	$	93,649

Balance Sheet Data of Reportable Segments

Total assets of the Company’s reportable segments as of December 31, 2023 and 2022 were as follows:

	December 31,
	2023		2022
Debit and Credit	$	235,680	$	238,610
Prepaid Debit		38,265		38,138
Other		19,738		19,918
Total assets	$	293,683	$	296,666

Capital Expenditures of Reportable Segments

Total capital expenditures of the Company’s reportable segments as of December 31, 2023 and 2022 were as follows:

	December 31,
	2023		2022
Debit and Credit	$	5,116	$	15,283
Prepaid Debit		963		2,309
Other		326		275
Total company capital expenditures	$	6,405	$	17,867

Net Sales by Product and Services

Net sales from products and services sold by the Company for the years ended December 31, 2023 and 2022 were as follows:

	December 31,
	2023		2022
Product net sales(1)	$	249,354	$	281,190
Services net sales(2)		195,193		194,555
Total net sales	$	444,547	$	475,745

(1) “Products” net sales include the design and production of Financial Payment Cards in contact-EMV, contactless EMV, metal, contactless and magnetic stripe card formats. The Company also generates “Products” revenue from the sale of Card@Once printers and consumables, private label credit cards and retail gift cards.

(2) “Services” net sales include revenue from the personalization and fulfillment of Financial Payment Cards, providing tamper-evident security packaging and fulfillment services to Prepaid Debit Card program managers and SaaS personalization of instant issuance cards.