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Segment Reporting
 12 Months Ended
Dec. 31, 2020
Segment Reporting  
Segment Reporting

18. Segment Reporting

The Company has identified reportable segments as those consolidated subsidiaries 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 December 31, 2020, 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 manufactured by this segment primarily include EMV and non-EMV Financial Payment Cards, including contact and contactless dual-interface cards, and plastic and encased metal cards, and Second Wave payment cards featuring a core made with ROBP.  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 Cards 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 operations are each audited for compliance by multiple Payment Card Brands. Many of the Company’s customers require CPI to comply with the standards of the PCI Security Standards Council.

Prepaid Debit Segment

The Prepaid Debit segment primarily provides integrated 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 operation is audited for compliance by multiple Payment Card Brands.  Many of the Company’s customers require CPI to comply with the standards of the PCI Security Standards Council.

Other

The Other segment includes corporate expenses and a less significant operation that generated sales from the production of Financial Payment Cards and retail gift cards, and card personalization and fulfillment services in Canada, prior to its sale. The sale agreement did not include the portions of the business relating to Financial Payment Cards, as those business customers of the Canadian subsidiary migrated to the Company’s operations in the U.S. or to other service providers in 2019.

Performance Measures of Reportable Segments

Net sales and EBITDA from continuing operations of the Company’s reportable segments for the years ended December 31, 2020 and 2019 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

EBITDA

 

 

December 31,

 

December 31,

 

    

2020

    

2019

    

2020

    

2019

Debit and Credit

 

$

250,427

 

$

213,141

 

$

64,522

 

$

45,635

Prepaid Debit

 

 

63,596

 

 

64,330

 

 

22,156

 

 

22,456

Other

 

 

 —

 

 

1,679

 

 

(31,569)

 

 

(27,468)

Intersegment eliminations(a)

 

 

(1,834)

 

 

(1,077)

 

 

 —

 

 

 —

Total:

 

$

312,189

 

$

278,073

 

$

55,109

 

$

40,623

(a)

Amounts include the elimination of sales between segments for consolidation.

 

The following table provides a reconciliation of total segment EBITDA from continuing operations to “Net loss from continuing operations” for the years ended December 31, 2020 and 2019:

 

 

 

 

 

 

 

 

 

December 31,

 

    

2020

    

2019

Total segment EBITDA from continuing operations

 

$

55,109

 

$

40,623

Interest, net

 

 

(25,397)

 

 

(24,891)

Income tax benefit (expense)

 

 

3,305

 

 

(3,474)

Depreciation and amortization

 

 

(16,827)

 

 

(17,251)

Net Income (loss) from continuing operations

 

$

16,190

 

$

(4,993)

 

Balance Sheet Data of Reportable Segments

 

Total assets of the Company’s reportable segments as of December 31, 2020 and 2019 were as follows:

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

    

2020

    

2019

 

Debit and Credit

 

$

215,846

 

$

176,020

 

Prepaid Debit

 

 

34,734

 

 

25,259

 

Other

 

 

15,571

 

 

11,732

 

Total assets

 

$

266,151

 

$

213,011

 

 

Net Sales to Geographic Location; Property, Equipment and Leasehold Improvements and Long-Lived assets by Geographic Segments

 

Subsequent to the sale of the Company’s Canada operations on April 1, 2019, 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.

 

Net Sales to Major Customers

 

For the year ended December 31, 2020 the Company had two customers that represented more than 10% of the Company’s consolidated net sales.  Net sales for these customers were approximately 15% and 14% of the Company’s consolidated net sales. For the year ended December 31, 2019 one customer represented 18% of the Company’s consolidated net sales.

 

Net Sales by Product and Services

 

Net sales from products and services sold by the Company for the years ended December 31, 2020 and 2019 were as follows:

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

    

2020

    

2019

    

Product net sales(a)

 

$

171,968

 

$

143,941

 

Services net sales(b)

 

 

140,221

 

 

134,132

 

Total net sales:

 

$

312,189

 

$

278,073

 

(a)

 “Products” net sales include the design and production of Financial Payment Cards in contact-EMV, contactless dual-interface 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.

 

(b)

“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 software as a service personalization of instant issuance cards.