CPI Card Group Inc. reports 415% Net Income growth in 2020 and 12.3% Revenue growth
02/25/2021 • About CPI Card Group Inc. (
$PMTS) • By InTwits
CPI Card Group Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is expanding: 17.9% in 2020 vs. 15.2% in 2019 vs. 14.9% in 2016
- EBITDA Margin is quite volatile: 17.9% in 2020, 15.2% in 2019, 9.0% in 2018, -0.0% in 2017, 14.9% in 2016
- CPI Card Group Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's a lot of higher than industry average of 3.7%.
- CAPEX is quite volatile: $7m in 2020, $4m in 2019, $6m in 2018, $9m in 2017, $14m in 2016
- The company has highly profitable business model: ROIC is 20.5%
- It operates with high leverage: Net Debt/EBITDA is 5.2x while industry average is -0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 12.3%. Revenue growth showed acceleration in 20Q4 - it increased 15.9% YoY. Revenue decline was slowing down on average by 8.6 pp per annum in the last 5 years. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 8.9 pp from -0.50% to 8.4% in 2020. During the last 5 years EBITDA Margin bottomed in 2017 at -0.036% and was growing since that time.
Gross Margin increased on 2.6 pp from 32.8% to 35.3% in 2020. During 2016-2020 Gross Margin bottomed in 2017 at 29.4% and was growing since that time. SG&A as a % of Revenue decreased on 2.8 pp from 23.9% to 21.1% in 2020. During the last 5 years SG&A as a % of Revenue topped in 2018 at 26.6% and was declining since that time.
Net Income margin increased on 7.0 pp from -1.8% to 5.2% in 2020. During 2016-2020 Net Income margin bottomed in 2018 at -14.6% and was growing since that time.
Investments (CAPEX, working capital and M&A)
CPI Card Group Inc.'s CAPEX/Revenue was 2.3% in 2020. CPI Card Group Inc.'s CAPEX/Revenue decreased slightly on 1.2 pp from 3.4% in 2017 to 2.3% in 2020. Average CAPEX/Revenue for the last three years was 2.0%. During 2016-2020 CAPEX as a % of Revenue bottomed in 2019 at 1.5%.
Leverage (Debt)
Debt level is 5.2x Net Debt / EBITDA and 6.3x Debt / EBITDA. Net Debt / EBITDA dropped on 1.9x from 7.2x to 5.2x in 2020. Debt increased on 8.9% while cash surged on 208%.
CPI Card Group Inc. has no short term refinancing risk: cash is higher than short term debt (463.3%).
Valuation and dividends
CPI Card Group Inc.'s trades at EV/EBITDA 7.2x and P/E 6.7x.
Management team
The company's CEO is Scott T Scheirman. Scott T Scheirman has 3 years tenure with the company. CPI Card Group Inc.'s CFO John D Lowe has spent 2 years with the company.
Financial and operational results
FY ended 12/31/2020
CPI Card Group Inc. ($PMTS) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 308.7 | 254.9 | 255.8 | 278.1 | 312.2 | 12.3% |
| Gross Profit | 101.9 | 75.0 | 78.6 | 91.1 | 110.3 | 21.1% |
| SG&A | 66.7 | 67.3 | 68.0 | 66.3 | 65.8 | -0.8% |
| EBITDA | 45.9 | -0.1 | 23.0 | 42.3 | 55.8 | 32.0% |
| Net Income | 5.4 | -22.0 | -37.5 | -5.1 | 16.1 | |
Balance Sheet
|
|---|
| Cash | 37.0 | 23.2 | 20.3 | 18.7 | 57.6 | 208.3% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 4.5 | 12.4 | 176.7% |
| Long Term Debt | 301.9 | 303.9 | 305.8 | 316.7 | 337.2 | 6.5% |
Cash flow
|
|---|
| Capex | 14.3 | 8.8 | 5.6 | 4.2 | 7.1 | 69.9% |
Ratios
|
|---|
| Revenue growth | -17.5% | -17.4% | 0.4% | 8.7% | 12.3% | |
| EBITDA growth | -45.2% | -100.2% | -25,367.0% | 83.8% | 32.0% | |
|
|---|
| Gross Margin | 33.0% | 29.4% | 30.7% | 32.8% | 35.3% | 2.6% |
| EBITDA Margin | 14.9% | -0.0% | 9.0% | 15.2% | 17.9% | 2.7% |
| SG&A, % of revenue | 21.6% | 26.4% | 26.6% | 23.9% | 21.1% | -2.8% |
| Net Income Margin | 1.7% | -8.6% | -14.6% | -1.8% | 5.2% | 7.0% |
| CAPEX, % of revenue | 4.6% | 3.4% | 2.2% | 1.5% | 2.3% | 0.8% |
|
|---|
| ROIC | 12.8% | -9.3% | 2.7% | 15.4% | 20.5% | 5.1% |
| Net Debt/EBITDA | 5.8x | | 12.4x | 7.2x | 5.2x | -1.9x |
CPI Card Group Inc. ($PMTS) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 74 | 71 | 83 | 84 | | 10.6% | 6.7% | 15.4% | 15.9% |
| EBITDA | 13 | 7 | 18 | 17 | | 48.6% | -51.2% | 41.5% | 98.3% |
| Net Income | 2 | 0 | 6 | 7 | | - | -92.6% | - | - |
Balance Sheet
|
|---|
| Cash | 47 | 54 | 50 | 58 | | 495.1% | 211.4% | 252.3% | 208.3% |
| Short Term Debt | 5 | 5 | 5 | 12 | | 88.9% | 19.9% | 10.8% | 176.7% |
| Long Term Debt | 342 | 342 | 342 | 337 | | 9.0% | 8.4% | 8.1% | 6.5% |
Ratios
|
|---|
| Gross Margin | 34.8% | 32.4% | 37.0% | 36.8% | | 2.6% | -1.0% | 1.5% | 6.6% |
| EBITDA Margin | 16.9% | 10.3% | 22.1% | 20.8% | | 4.3% | -12.2% | 4.1% | 8.6% |
| Net Income Margin | 3.3% | 0.2% | 7.0% | 8.7% | | 7.8% | -2.1% | 8.0% | 12.0% |
Peers in Technology Hardware, Storage & Peripherals
Below you can find CPI Card Group Inc. benchmarking vs. other companies in Technology Hardware, Storage & Peripherals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Ionix Technology Inc ($IINX) | - | 246.0% | -5.8% | 92.3% | 66.8% |
| Veritec Inc ($VRTC) | - | -52.2% | 53.1% | -38.5% | 42.9% |
| Pure Storage, Inc. ($PSTG) | - | 67.9% | 38.6% | 32.7% | 20.9% |
| USA Technologies, Inc. ($USAT) | - | 34.5% | - | - | 12.9% |
| Apple Inc. ($AAPL) | - | 6.3% | 15.9% | -2.0% | 5.5% |
| |
|---|
| Median (20 companies) | 1.4% | 2.1% | 5.6% | -3.7% | -10.2% |
|---|
| CPI Card Group Inc. ($PMTS) | - | -17.4% | 0.4% | 8.7% | 12.3% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Immersion Corporation ($IMMR) | 99.7% | 99.4% | 99.8% | 99.5% | 99.4% |
| Datasea Inc ($DTSS) | - | 39.3% | 54.4% | - | 89.7% |
| Pure Storage, Inc. ($PSTG) | 61.9% | 65.9% | 65.5% | 66.4% | 69.0% |
| Avid Technology, Inc. ($AVID) | 65.0% | 57.8% | 57.9% | 60.5% | 63.3% |
| Socket Mobile, Inc. ($SCKT) | 50.2% | 53.5% | 51.4% | 52.5% | 53.1% |
| |
|---|
| Median (21 companies) | 39.3% | 39.6% | 38.8% | 35.1% | 38.2% |
|---|
| CPI Card Group Inc. ($PMTS) | 33.0% | 29.4% | 30.7% | 32.8% | 35.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Apple Inc. ($AAPL) | 32.7% | 31.2% | 30.8% | 29.4% | 28.7% |
| Immersion Corporation ($IMMR) | -25.1% | -127.0% | 48.6% | -50.4% | 17.4% |
| Avid Technology, Inc. ($AVID) | 17.5% | 6.6% | 8.4% | 13.5% | 13.6% |
| Western Digital Corporation ($WDC) | 12.5% | 21.4% | 27.5% | 11.5% | 11.7% |
| NCR Corporation ($NCR) | 14.4% | 16.0% | 8.1% | 15.6% | 11.4% |
| |
|---|
| Median (19 companies) | 3.8% | 4.5% | 7.9% | 7.7% | 7.6% |
|---|
| CPI Card Group Inc. ($PMTS) | 14.9% | -0.0% | 9.0% | 15.2% | 17.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Datasea Inc ($DTSS) | - | 0.0% | 0.0% | - | 20.9% |
| Hewlett Packard Enterprise Company ($HPE) | 10.8% | 10.9% | 9.6% | 9.8% | 8.8% |
| Pure Storage, Inc. ($PSTG) | 8.9% | 10.4% | 6.3% | 7.4% | 5.3% |
| Stratasys, Ltd. ($SSYS) | 6.7% | 3.3% | 3.5% | 3.5% | 5.2% |
| Western Digital Corporation ($WDC) | 4.5% | 3.0% | 4.0% | 5.3% | 3.9% |
| |
|---|
| Median (19 companies) | 1.7% | 1.8% | 2.4% | 2.3% | 1.7% |
|---|
| CPI Card Group Inc. ($PMTS) | 4.6% | 3.4% | 2.2% | 1.5% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| HP Inc. ($HPQ) | 15.8% | 60.8% | 72.9% | 116.0% | 109.2% |
| Apple Inc. ($AAPL) | 27.0% | 23.8% | 28.0% | 29.5% | 33.0% |
| Avid Technology, Inc. ($AVID) | - | - | 252.4% | 42.1% | 30.0% |
| NCR Corporation ($NCR) | 13.9% | 16.3% | 4.6% | 14.3% | 5.5% |
| Crossroads Systems Inc ($CRSS) | -175.9% | -96.3% | - | - | 3.9% |
| |
|---|
| Median (21 companies) | -2.6% | 1.6% | 3.1% | 2.9% | 2.0% |
|---|
| CPI Card Group Inc. ($PMTS) | 12.8% | -9.3% | 2.7% | 15.4% | 20.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Diebold Nixdorf Incorporated ($DBD) | - | 8.3x | - | 6.6x | 7.3x |
| Hewlett Packard Enterprise Company ($HPE) | 0.4x | 1.2x | 1.6x | 2.6x | 5.2x |
| NCR Corporation ($NCR) | 2.7x | 2.3x | 5.2x | 3.3x | 4.8x |
| Western Digital Corporation ($WDC) | 5.5x | 1.7x | 1.1x | 3.7x | 3.5x |
| Avid Technology, Inc. ($AVID) | 1.7x | 5.6x | 4.8x | 3.5x | 3.3x |
| |
|---|
| Median (11 companies) | 0.1x | 0.3x | 0.2x | 1.3x | 2.7x |
|---|
| CPI Card Group Inc. ($PMTS) | 5.8x | - | 12.4x | 7.2x | 5.2x |
