CPI Card Group Inc. (PMTS) Q4 2021 Earnings Report, Transcript and Summary

Welcome to the CPI Card Group’s Fourth Quarter 2021 Earnings Call. My name is Bailey, and I will be coordinator for today. The call will be open for questions after the Company’s remarks. [Operator Instructions] I would now like to turn the call over to Mike Salop, CPI’s Head of Investor Relations. Please go ahead.

Thanks, operator, and good morning, everyone. Welcome to the CPI Card Group fourth quarter 2021 earnings webcast and conference call. Today's date is March 8, 2022, and on the call today from CPI Card Group are Scott Scheirman, President and Chief Executive Officer; and Amintore Schenkel, Chief Financial Officer. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements as they are defined under the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For a discussion of such risks and uncertainties, please see CPI Card Group's most recent filings with the SEC. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statement to reflect the events that occur after this call. Also during the course of today's call, the Company will be discussing one or more non-GAAP financial measures, including but not limited to EBITDA, adjusted EBITDA, adjusted EBITDA margin, net leverage ratio and free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in the press release and slide presentation we issued this morning. Copies of today's press release as well as the presentation that accompanies this conference call are accessible on CPI's Investor Relations website, investor.cpicardgroup.com. In addition, CPI's Form 10-K for the year ended December 31, 2021, will also be available on CPI’s Investor Relations website. And now, I’d like to turn the call over to President and Chief Executive Officer, Scott Scheirman.

Thanks Mike and good morning everyone. During today's call, I will provide an overview of CPIs performance in 2021, give some thoughts on our strategy, future, and 2022 expectations. Amintore will review the quarterly and annual financial results in more detail. Then we will open up the call for questions. Overall, as we will look back at 2021, we deliver very strong performance for the year. Net sales increased 20% raising our compounded annual growth rate in sales to 14% over the last four years. The profitability has improved that even a greater rate than the top-line, moving from a net loss of $22 million in 2017 to 2021 net income of $16 million, and adjusted EBITDA exceeding $76 million, which translates to a compounded annual growth rate of 35% over the past four years. We believe our high quality and innovative products and solutions have propelled us to significant outpaced market growth over the past four years. In addition, we believe our team's ability to navigate the supply chain and labor environment has given us a competitive advantage. Some of the highlights from 2021 include strong sales from new customer additions as our comprehensive end-to-end solutions helped us gain the business from FinTechs customers as well as traditional financial services providers. We also continue to help facilitate the U.S. market's gradual transition to higher priced contactless cards. We believe approximately 40% of the estimated $2 billion financial payment cards outstanding in the U.S. at the end of 2021 were contactless with small-and mid-sized financial institutions well below that level. For CPI, almost 70% of the secure cards we sold in 2021 were the higher average selling price contactless cards, which was up more than 10 percentage points from the year and contributed to our operating margin growth. Secure cards include EMV contact and dual interface, which we refer to as contactless and account for the significant majority of our card revenue in the debit and credit segment. We expect the contactless sales percentage to grow further as our customer continue to confer to issuing these faster to use and more convenient cards. The card networks have noted that tap to pay increases card usage, which gives additional incentive to issuers to drive the transition in the U.S. We remain a leading market provider of equal focused payment card solutions in the U.S., selling more 20 million cards in 2021 to reach nearly 50 million cards sold since launch in late 2019. As these cards were predominantly contactless, they also helped drive higher average selling prices. Card@Once our market leading staff-based instant issuance solution grew faster than the Company overall in 2021, reaching nearly 10% of the Company's net sales and delivering strong profitability. Card@Once growth was aided by expanded distribution channels and success with our high-end spectrums solution and we now have nearly 13,000 installations across financial institutions in the U.S. Our personalization business brought us growth from new customers, including FinTechs, who are attracted to our end-to-end solution offerings including design production, packaging, and fulfillment capabilities. And our pre-paid business had a record year as we leveraged our innovative, tamper evident packaging solutions to enhance our leadership in the U.S. retail pre-paid card and packaging market. Net income for the year was down 1% due to prior year income tax benefits and debt refinancing costs in the first quarter of 2021 but adjusted EBITDA increased 33%, and the adjusted EBITDA margin increased 200 basis points to 20.4%. We also improved our balance sheet in 2021, reducing outstanding debt by more than $30 million during the year and driving our net leverage ratio down below 4x as of year-end. As we noted in our third quarter earnings release, we expected our fourth quarter results to be impacted by increased labor, materials, and certain other costs. Those impacts largely happened as anticipated bringing fourth quarter margins down from prior year and the first nine month levels. However, as we look forward, we believe the full year 2021 adjusted EBITDA margin of 20.4% is more indicative of the full year 2022 expected profitability level than the fourth quarter margin. This is a result of implementation of various business initiatives including price increases, operating leverage from higher expected sales, and expected reductions in the level of certain fourth quarter expense items. Turning to Slide 5, given the current market dynamics with labor and supply chain challenges and the related inflationary environments as well as from specific comparison items for our prepaid business, today, we are providing some high level expectations for 2022 performance. First, let me state that I'm very confident in our future. We continue to experience strong customer demand and we believe our innovative and differentiated payment solutions, longstanding customer relationships and participation in attractive growing market position as well for continued market share gain and long term growth. Over four years ago, we focused the Company on a vision of being the partner choice and payment solutions by providing market leading quality products and customer service, while operating a market competitive business model. We made deep customer focus and continuous innovation key strategic priorities, increasing our capabilities to offer tailor products and services and comprehensive end-to-end solutions. Since that time, we've established ourselves as a top payments card solution provider in the U.S. serving thousands of banks, credit unions and FinTechs. Today, we're leading provider of eco-focused payment card solutions in the U.S., which is a rapidly growing space. We are also a leader in personalization and software-as-a-service based instant solutions for small and medium sized U.S. financial institutions as well as for U.S. retail prepaid debit card solutions. Our markets are healthy and growing. Based on figures reported by Visa and MasterCard, U.S. credit, debit and prepaid cards and circulation have grown at a compounded annual growth rate of 8% over the three-year period ending September 30, 2021. In addition, a recent report by credit data agency TransUnion noted that a record 196 million Americans held credit cards at the end of 2021 and U.S. lenders issued more payment cards than ever last year. According to the report, an all-time high of 20 million new payment cards were issued in the third quarter of 2021, the latest period for which detailed numbers were available. As a reminder, we estimate that historically 90% of annual card issuance has been for replacement cards. So, we believe increases in new card customers will have a positive ongoing, long-term effect. We expect U.S. market revenue growth will continue to be aided by further financial payment card issuance growth, as well as a gradual transition to higher price contactless cards including eco-focused cards. We believe we have gained significant overall market share over the last four years with our high quality products and services and the end-to-end solution and see strong opportunities for additional share gains going forward. For 2022, we do have some unique dynamics. Supply chain and labor shortage challenges continue to impact the industry affecting lead times, raw materials, availability and costs. We have navigated these challenges with proactive inventory management, hiring and retention incentives at our production facilities and other operational actions and expect to continue to be able to be nimble and adapt. Our current high level financial expectations for 2022 are delivered mid single digit net sales and adjusted EBITDA growth compared to last year, with an adjusted EBITDA margin similar to last year's full year level of 20.4%. We expect our debit and credit segment, which includes our secure card personalization and instant insurance solutions and represented 79% of 2021 net sales to provide strong growth as demand remains robust and we are in a good position to serve our customers and benefit from the contact with trends including with eco-focused card solutions. Based on current orders, we expect our eco-focused card sales to increase by more than 50% in 2022. Customer demand for our debit and credit segment is generally higher than our outlook, but we have factored certain capacity and material constraints into our forecast. We will attempt to alleviate some of these constraints through operational initiatives by partnering with our suppliers where we can throughout the year. We expect debit and credit segment growth to be partially offset by decline in sales and EBITDA in our prepaid debit segment. Prepaid had a record year in 2021 growing sales 25% in what is usually a slower growth market. Last year's prepaid sales were aided by a large new portfolio additions as well as retail inventory replenishment by our customers who reduced purchases in 2020 due to COVID-related concerns. Although, we expect a decline for prepaid in 2022 due to the comparisons with a record 2021, the business remains healthy and customer relationships are strong and we would expect prepaid sales to be between the 2020 and 2021 levels. Finally, before I turn the call over to Amintore, I would like to mention our announcement today that we have notified holders that we plan to redeem 20 million of our 8.625% senior secured notes due in 2026 at a redemption price of 103. We expect this retirement to help improve our leverage ratio by year end in providing ongoing interest expense savings. As we generate more cash flow, we will continue to review capital allocation alternatives to maximize value for our stockholders. Now, I will turn the call over to Amintore to review our fourth quarter and full year financial and operating results in more detail. Amintore?

Thank you, Scott, and good morning, everyone. I will begin my overview of 2021 with the fourth quarter results on Slide 7. Fourth quarter net sales of $93.2 million represented an increase of 11% compared to the prior year quarter, driven by an 11% increase in our debit and credit segment and a 6% increase in the prepaid debit segment. The debit and credit segment increases primarily due to the ongoing transition to higher price contactless cards, including strong growth in our eco-focused cards, strong increases in Card@Once instant issuance solutions and new customer growth. Prepaid debit segment growth in the quarter was driven by higher volumes with existing customers. As we noted in our third quarter earnings release, we expect the fourth quarter sales growth and profit margins would not be as strong as the first nine months. And we expected increased labor, materials and certain other costs to be more impactful than earlier in the year. We did see those factors materialized and impact our fourth quarter results. Our fourth quarter 2021 gross profit of $30.9 million was essentially flat with prior year, while gross profit margin decreased 360 basis points to 33.2%. The decrease in margin was primarily driven by higher labor costs and to a lesser extent increased freight and material costs with declined partially offset by offering leverage from sales growth. SG&A expenses increased by $3.4 million in a quarter compared to the prior year, primarily due to $1.3 million in increased consulting and accounting cost related to Sarbanes-Oxley and increased healthcare and other employee related expenses. We are continuing to work on remediation efforts regarding identified internal control deficiencies, so we do expect incremental stock costs to continue into 2022. Our plan is to complete remediation by the end of the year. Employee healthcare expenses, which vary by quarter, depending on employee usage increase $700,000 compared to the prior year fourth quarter. And we also incur a $600,000 expense tied to a new state law regarding paid time off compensation. Net income in the quarter decreased 91% to $700,000, primarily due to increased income tax expense compared to an income tax benefit in the prior fourth quarter, an increased interest expense. The 62% income tax rate in the 2021 fourth quarter reflects the effect of some state tax and uncertain tax position adjustment items. Adjusted EBITDA decreased 23% to $13.6 million as the benefits of higher net sales were offset by increased labor costs and the SG&A items previously mentioned. Adjusted EBITDA margin declined from 20.8% in the prior year to 14.6% in the 2021 fourth quarter. As Scott mentioned, we do not expect the fourth quarter adjusted EBITDA margin to be the ongoing level. We expect improvements in 2020 from pricing and other initiatives, operating leverage from sales growth, and reductions from certain high four quarter expenses to results in the full-year 2022 adjusted EBITDA margin to be similar to the 2021 full-year level although sales growth and margins may vary by quarter. Turning to the full-year results on Slide 8. While the fourth quarter results were impacted by items discussed, overall for the year, we again delivered very strong results. Net sales increased 20% to $375.1 million driven by strong growth from both segments. Debit and credit sales increased 18% to $296.2 million and pre-paid debit sales increased 25% to $79.2 million. Sales growth was strong at 2021 across our portfolio product and services. The primary drivers of the increase in the debit credit segment included new customer growth and sales of contactless cards and related card personalization. Card@Once instant issuance and CPI and demand were also strong contributors to growth. Prepaid debit sales growth for the year was driven by higher volumes from existing customers, including the acquisition of new portfolios and replenishment of inventory by those customers. Full-year gross profit for the Company increased 28% to $141.4 million, while gross profit margin increased 240 basis points to 37.7% primarily due to operating leverage from higher net sales partially offset by increased labor costs. SG&A expenses increased $9.9 million for the year, primarily due to higher compensation related expenses including performance incentive compensation, higher professional fees, and other compliance costs which were primarily relate to Sarbanes-Oxley and increased healthcare expenses. The compensation related increase included $2.2 million of high performance incentive compensation and $1.1 million of stock compensation. Stock related consulting and accounting fees accounted for $2.1 million of the SG&A increase and employee healthcare cost increased $1.6 million for the year. Net income for the full year of $15.9 million decrease 1% due to income tax benefits in the prior year and debt refinancing costs in 2021 including $5 million of debt extinguishing cost incurred in the first quarter and $2.6 million of make-whole interest expenses. As a reminder in 2020, we recorded income tax benefits for the year as a result of discrete items, including benefits related to the CARES act. Our 2021 income tax rate of 33% with a more normalized rate than we expected 2022 rates to be slightly higher due to the impact of regulatory changes that will further limit interest expense deductions, adjusted EBITDA in 2021 increased 33% to $76.4 million primarily due to net sales growth and related operating leverage. The adjusted EBITDA margin increased 200 basis points to 20.4% for the year. Turning now to our segments on Slide 9. I mentioned the debit and credit, and prepaid debit segment sales drivers earlier. So I will just discuss segment profitability on this slide. Income from operations for the debit and credit segment increased 10% over quarter to $18.6 million, and 45% for the full year to $79.5 million. Higher net sales and offering leverage drove the increases, although these benefits were partially offset by increased labor costs. The fourth quarter income was also impacted by increased rate costs. Prepaid debit segment income from operations decreased 16% in the quarter to $3.9 million and increased 35% for the year to $26.9 million. The full year profitability increase was driven by the 25% sales growth while the fourth quarter was negatively impacted by increased labor, materials, and freight costs. Turning to the balance sheet liquidity and cash flow on Slide 10. Our cash balance as the December 31 was $20.7 million and we had no borrowings outstanding on our $50 million ABL revolver, which gave us total liquidity of more than $70 million at the end of the year. Total debt principal outstanding of $310 million was down more than 30 million from year-end 2020, and our net leverage ratio as of December 31 was less than 4x. For the year, we generated $20.2 million in cash from operating activities and utilized $10.1 million on capital expenditures. This resulted in free cash of $10.2 million. This was down from $15 million in the prior year, primarily due to increase investment in inventories, partially offset by collection of tax refunds. We invested more than $33 million in incremental inventories to support the business and help mitigate supply chain constraints during the year, and collected $9.8 million in income tax refunds related to a CARES act. Given our strength and financial position, our capital structure and allocation priorities now focus on maintaining ample liquidity, investing in the business including possible strategic acquisitions, deleveraging the balance sheet and potentially returning funds to stockholders. If we were to return funds to stockholders in the future, our priority would be to do so through share repurchases; although, we filed an S3 last September that registered shares for possible future issuance, we currently do not have any plans for the Company to sell shares to raise capital. The registration simply provided flexibility over the next three years if an opportunity were to arise, as well as registered the shares of our private equity investors for possible future sales. As Scott mentioned earlier, we are in the process of redeeming $20 million of our senior secured 8.625% note, which will reduce our long term debt levels and save us significant interest expense on an annualized basis. Finally to provide us additional liquidity and flexibility, we recently expanded our ABL revolving credit facility for $50 million to $75 million. This facility is committed through December of 2025. I will now pass the call back to Scott for the closing remarks. Scott?

Thanks, Amintore. As mentioned overall 2021 was another strong year for CPI with growth across our portfolio. I would like to thank all of our employees for working hard to deliver these results. Since implementing our vision to being the partner of choice and payment solutions by providing market leading quality products and customer service for a market competitive business model, we have now posted four consecutive years of strong sales and profitability growth and believe we have gained significant overall market share over that time. We are well positioned in attractive growing markets with strong capabilities and customer relationships. Although, the industry continues to face near-term labor and supply chain related challenges, we have various initiatives that we expect to benefit from in 2022. We are also pleased to be able to pay down $20 million of our senior notes in the first quarter of this year, and we will continue to pursue capital strategies that provide value to our stockholders. We are excited about our long-term growth opportunities and we look forward to updating you on our progress as we move forward. Thank you for joining our call today and we'll now open the call for any questions.

Thank you. [Operator Instructions] Our first question today comes from Jaeson Schmidt of Lake Street. Jaeson, please go ahead. Your line is now open.

Hey guys. Thanks for taking my questions. Scott, you mentioned factoring in capacity and material constraints into your outlook, which makes complete sense, but just curious if you could quantify the impact or the amount of demand do you think you're unable to be satisfied just given these current dynamics?

Yes, again, I won't give you specifics, Jaeson, and I appreciate you joining the call today. But if I just walk you back through our guidance to kind of give you some color on that, again for the Company we guided mid-single digit revenue growth, mid-single digit adjusted EBITDA growth, but it's the tale of two business units. And in our debit and credit segment for sure, demand is generally higher than our outlook, but to your point, we do have some constraints with supply chain and labor and working hard with our partners and our suppliers to alleviate that. But customer demand is very strong, and debit and credit segment it's robust, but we'll continue to work through that. The other business unit is, is prepaid. Prepaid has been a great business for us. We have strong customer relationships. It's a business in really good shape, but it had a record 2021 where sales were up 25% due to two primary factors. One is COVID inventory replenishment that happened in '21, and then with one of our partners, we want a large portfolio. And so, there was some initial stocking there. The good news that'll be reoccurring business as we move forward, but prepaid has a tough comparison in '22 versus '21. So, we see the sales of prepaid for '22 to be somewhere between what we did in 2020 and 2021. But again, I'd come back to customer demand is really strong. We properly gain market share over the last four years. That's our objective on a go forward basis. And we believe our high quality, our differentiated products such as eco-focused cards, our SaaS-based issuance solution, prepaid quality innovative packaging, all those things we believe will help us to continue to win share.

And then, just looking at gross margin, understand the dynamics that impacted Q4, but given sort of the supply chain and labor costs, which likely will persist at least here in the near-term. How should we think about gross margin trending here in 2022? And relatedly, are you able to pass along some of these inflationary costs?

Yes, to your second question, we are passing along the inflationary costs. And so what, I'd probably take it back to just broadly, our guidance where we guided the mid single-digit adjusted EBITDA growth, but also, we believe our 2022 margins will be similar to our 2021 margins that were 20.4%. And so, there were some things of expected in the fourth quarter with labor and inflation and so forth. But to your question on customer pricing, many of our pricing initiatives are going into effect in the first half of 2022, also we believe, the sales we generate the operating leverage will be helpful to the gross margins and also to the adjusted EBITDA. And then we're also like, we always have, is continuing to try and drive efficiencies off of operational and improvements. And so, we're quite comfortable that who you believe our 2022 adjusted EBITDA margins will be similar to 2021 full-year of 20.4%. And knowing Jaeson, that gross margins kind of a number in between sales and adjusted EBITDA right, but it's kind of all the things work together to drive strong margins as we move forward.

And just the last one from me and I'll jump back into queue. I mean, you mentioned taking share over the past few years, I assume you expect that to continue going forward. But just curious, if you've seen any change in the competitive landscape and I guess specifically sort of with the rumor surrounding IDEMIA?

Yes, I won't speak to any specific competitor, but clearly that there are some competitors out there that are struggling in the marketplace. And it's evident that over the last four years, we've gained share, we significantly outpaced the market growth. [Indiscernible] broadly, I feel there's two reasons we're gaining share, a variety of reasons for share, but [Audio Gap] strategic decisions we made to purchase inventory we spent. Our inventory increased over $33 million in 2021, as Amintore mentioned on the call. So I believe we've got very strong quality with the quality of our products, on-time delivery. We've been able to -- I believe navigate the supply chain better than some of our competitors. But the second thing that I think is critically important too is, we have really got some innovative and differentiated products that are in high demand in the market to give you a couple examples, one is our eco-focused cards. Again, financial institutions have ESG goals. All of us with consumers once, the businesses -- we do tidbit business with to be more environmentally conscious. So our eco-focused cards are clearly differentiated. We sold 50 million of both since we launched them in 2019. And more importantly in 2022, we believe sales of eco-focused cards will be up over 50%. Another key, just as an example of a differentiated product is, our SaaS based Card@Once instant issuance. It is clearly the market leader for SMEs. There was no one that is even a close second in my opinion. And with that business, it’s great business in that, it's plug and play, it's easy for the bank or the credit union to use. We get initial revenue from the sales of the machine, but it's got a great reoccurring revenue model with a click charge. Every time a card is printed, we earn a fee, there's fees for some consumables, center driven thing of that nature, so highly differentiated, but I'd also hop to our prepaid business, record sales year in 2021 with 25% growth. But again, high quality there, we've got innovative packaging that is helped to prevent fraud, drive [Indiscernible] a consumer pull that package off [Indiscernible] versus somebody else's package. So again, we do see competitors struggling. I believe our quality, our proactive strategy with inventory supply chain management, and then just our highly differentiate products are allowing us to win over of the last four years. And I'm really confident that our objective is to continue to gain market share as we move forward.

[Operator Instructions] The next question today comes from Joseph Thomas from Voya Investment. Joseph, please go ahead.

Hi. Good morning. Quick question on how you see margins progressing through the year. I mean you've noted, that pricing, higher pricing is coming into effect during the first half. Does that imply margins will be stronger than the second half versus first half? And I have a follow up?

Yes, I would -- the color I would give you is we provided full your guidance. So, any given quarter there could be some variability both in sales and margins, and it could relate to the timing of on-boarding customers. Our prepaid business has seasonality in the third quarter that's generally the highest demand going into the holiday season. Some of it can be when the pricing initiatives kick in or investments we make. So, I don't want to give you specific color quarter by quarter, but I think the important thing is that on a full year basis for 2022, we expect our adjusted EBITDA margins to be similar to 2021 adjusted EBITDA margins of 20.4%.

Perfect. Okay. And, uh, from a leverage standpoint what is your target leverage change?

If I just walk you back through our priorities for our capital; first is to have ample liquidity; second is to and this has to in the business including if there's acquisitions that would make sense for us. The third item to your question, Joseph is reducing our leverage. Our leverage at the end of the year was about 3.8 churns. Today, we announced we're paying down the senior secured notes by $20 million. So, I would describe that we would like our leverage to be less, compared to where it was at yearend, but I think the other important thing to keep in mind is that, we have a much improved financial condition compared to about a year ago, stronger balance sheet. So that really gives us, I'd say more strategic flexibility, whether that's to make more investments in the business or acquisitions, paying down the debts or returning funds to shareholders. If we were to do that that would likely be through stock buyback. So again, I'd like the leverage to be less, but I don't have a target that we want to share publicly, just so that as we move forward, we got some flexibility with investing in the business, acquisitions and including reducing the leverage and returning funds to shareholders.

Okay. And, thank that. That was helpful. And final question from me, obviously working capital was a headwind last year. If you had to stock inventory, how do you see working capital move this year?

Yes. I'll let Amintore, our Chief Financial Officer walk you through our thinking there.

Yes. Joseph, I think, one of the things that's a little difficult to predict this year is, when you think about kind of the inflation and supply chain issues that exist out there, those were obviously two key drivers that caused us to increase our inventory investment and ultimately inventory kind of caused our working capital to be a use of about $17 million. And that was a primary driver, but we're going to continue to kind of monitor supply chain situations out there. We anticipate that increases would not be as high as what we had in 2021, but that clearly will be something that we’ll continue to monitor out there. The key for us is making sure that we're managing the business well and continue to grow our sales and our profits overall. But I do think 2021 was kind of a year that was a bit unique in terms of us having to build up our inventory reserves in order to make sure that we had appropriate inventory in order to make sure we can deliver on what we’re planning to deliver here in 2022.

The next question today comes from Bill Charters from Sabal Capital. Bill, please go ahead.

If I look at guidance that kind of implies a little over $2 of earnings, maybe $2.40, if you normalize that what that comes out to is roughly a 20% free cash flow yield at this point. And I believe in your indentures, you have ability to buy 20 million of stock. I didn't know if the 20 million of buying bond reduced that amount, but I guess that's my first question. And then the follow-up to that question obviously is, with the 20% free cash flow, I would strongly encourage you to buy stock because there's a very few return out that you can get better to feed 20%.

Go ahead, Mike.

Yes, I was going to say the bond redemption does not affect the basket available for the share purchase.

And I appreciate your input on how we should utilize our capital. So, I appreciate that for sure, Bill. Thank you.

There are no further questions registered. So I'd like to hand the call back over to Mike Salop-for closing remarks.

Thank you. I'd like to thank everybody for joining our call today. Feel free to contact the Company or myself, if you have any follow-up questions. I hope everyone has a good day. Thanks.

That concludes today's CPI Card Group fourth quarter earnings call. Thank you. You may now disconnect your line.