CO-based CPI Card Group reported net sales were $107.7 million, an increase of 39.2% over the prior year period. The company attributed most of the increase to the U.S. EMV migration.
Adjusted net income was $17.3 million, or an increase of 89.9% over the prior year period
U.S. Debit and Credit:
Net sales grew 69.0% to $72.8 million from $43.1 million in the third quarter of 2014. Income from operations increased to $21.6 million from $10.4 million in the third quarter 2014, while operating margins expanded to 29.6% from 24.1% in the prior year period. The growth in the U.S. Debit and Credit segment was driven by the continued conversions of financial payment cards from magnetic stripe to EMV chip products, with the number of EMV chip cards sold increasing by 120% as compared with the third quarter of 2014. The segment’s growth in net sales and income from operations also benefited from the EFT Source business acquired in the third quarter of 2014.
U.S. Prepaid Debit:
Net sales for the third quarter remained essentially flat at $23.7 million compared to $23.8 million in 2014. Income from operations increased 10.1% to $9.5 million from $8.6 million in the third quarter 2014, while operating margins expanded to 40.0% from 36.2% in the prior year period. The relatively flat net sales during the quarter reflected the quarterly timing of product refreshes and program launches by prepaid program managers serviced by the Company. For the nine months ended September 30, 2015, the U.S. Prepaid Debit segment’s net sales are up 13.7% compared with the same prior year period. The improvement in operating margins during the quarter of 380 basis points compared with the third quarter of 2014 reflected richer mix of business produced during the quarter combined with operating efficiency gains.
On October 15, 2015, CPI Card Group completed its initial public offering , issuing 15,000,000 shares of common stock. The offering price of the shares sold in the IPO was $10.00 per share, resulting in net proceeds to the Company, after underwriters’ discounts and commissions, of approximately $142.5 million. The proceeds from the offering were used to repay debt ($112.5 million), redeem the remaining Series A Preferred Stock outstanding ($11.9 million) and repay the Company’s liability under its phantom stock plan ($13.3 million).
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