CPI Card Group Q3 2025 Earnings Call - Navigating Margin Pressures While Pioneering Chip-Enabled Prepaid Innovation

Operator: Ladies and gentlemen, thank you for standing by. Welcome to CPI Card Group’s Third Quarter twenty twenty May Call. My name is Janine, and I will be your operator for today. Today. And now I would like to turn the call over to Mike Salip, CPI’s Head of Investor Relations.

Sir, please go ahead.

Mike Salip, Head of Investor Relations, CPI Card Group: Thanks, operator. Welcome to the CPI Card Group third quarter twenty twenty five earnings webcast and conference call. Today’s date is 11/04/2025, and on the call today from CPI Card Group are John Lowe, President and Chief Executive Officer and Jeff Hockstadt, 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, free cash flow and net sales growth, excluding the impact of the accounting change implemented in the second quarter. Reconciliations of these non GAAP 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 Q for the third quarter will be available on CPI’s Investor Relations website. For today’s call, all growth rates refer to comparisons with the prior year period unless otherwise noted. The agenda for today’s call can be found on Slide three. After our remarks, we will open the call for questions. We can start on Slide four, and I’ll turn the call over to John.

John Lowe, President and Chief Executive Officer, CPI Card Group: Thanks, Mike, and good morning, everyone. As we come closer to wrapping up the year, I’m going to spend some time updating you on our strategic initiatives, where we are making great progress growing our core businesses and diversifying, including in our digital solutions. But first, let me touch on the highlights of our third quarter performance. Overall, the third quarter results were largely in line with our expectations. Our software as a service instant issuance business once again delivered strong growth, and ArrowEye continued to perform well.

In our Debit and Credit segment, we believe we gained market share as contactless card volumes increased nicely. Card revenue, though, was impacted by a mix shift to higher volume orders and lower average selling prices. This mix, combined with tariff impacts and other in year investments, has continued to impact margins. Overall, sales increased 11% for the quarter due to the addition of AOI compared to a very strong level in the prior year, which benefited from strong growth across our portfolio. Adjusted EBITDA decreased 7% in the quarter, primarily due to the unfavorable sales mix and tariff expenses.

We continue to work on various initiatives to counter these margin pressures in 2026 and beyond, including key supplier negotiations, driving automation and operational efficiencies in production, achieving AeroWise synergies and general overhead cost management. We have already attained future savings on key components in our supply chain, and our new Indiana facility is now fully operational, with all work moved over from the previous facility, which should aid efficiencies in 2026. For 2025, we have updated our full year outlook to low double digit to low teens net sales growth and flat to low single digit adjusted EBITDA growth as we expect margin impacts in debit and credit to continue in the fourth quarter, and we anticipate certain prepaid orders may move into 2026. Our prepaid business remains a clear market leader. And as the pace of package innovation rises to combat fraud, order timing has been a bit uneven.

That said, more prepays complexity, including the potential for the use of chip technology, is a positive over the long term as this increases values and demand for our solutions. We still expect strong year on year growth in the fourth quarter for both net sales and adjusted EBITDA, but levels significantly higher than the third quarter. Jeff will give you more details on the quarter and our outlook in a few minutes. But first, I want to update you on our strategy execution. Our vision and strategy can be seen on Slide five.

With everything we do, our organization is focused on the customer, quality and efficiency, innovation and diversification and our people and culture as we strive to be the most trusted partner for innovative payment technology solutions. We have made great progress on multiple strategy initiatives in 2025, including our efforts to expand our addressable markets to enhance growth for the future, and I’ll highlight some of the most recent developments on Slide six. We are starting to provide tours to customers in our new Indiana production facility, and we believe we should be able to leverage our innovation and automation investments across our debit and credit portfolio to drive share gains and do so even more efficiently. We are continuing to expand and cross sell our AOI solutions and are very excited about the initial progress and interest from new and existing customers. We believe our software as a service instant issuance business is headed to a record year with growth in new verticals and from additional financial institution penetration.

The value proposition of our integrations into The U. S. Payments ecosystem continues to drive our share growth and is starting to show realization in our other digital solutions, too. Although revenue in our other digital solutions is small today and will still take time to build, we continue to sign more issuers and build out even more integrations to broaden our addressable market. When we provide our full year 2025 results, we look forward to sharing more on our higher margin digital solutions performance.

Healthcare payment card expansion is also progressing, with share gains of additional programs with existing customers and advances into new areas. Our value based metal card offerings are also generating good interest, with incremental sales again in the third quarter. In closed loop prepaid, we are now in production and expect shipments in the fourth quarter. We’ve also invested in go to market for the space to expand beyond existing program managers we work with for OpenLoop and are in discussions with several potential new customers. As I mentioned before, complexity continues to rise for OpenLoop packages, which not only further solidifies our position as a market leader, but also benefits our go to market plans for closed loop.

And our most recent expansion initiative builds on this growth in prepaid complexity as we have entered into a strategic relationship with Carta, an Australia based prepaid program manager and digital technology provider.

Mike Salip, Head of Investor Relations, CPI Card Group: We will

John Lowe, President and Chief Executive Officer, CPI Card Group: be Carta’s exclusive U. S. Supplier of its digital card validation solution, producing contactless prepaid cards with chip technology, embedding Carta’s safe to buy applet. Carta’s solution eliminates the need for data to be printed on cards, significantly reducing the risk of prepaid fraud. As a reminder, prevention of prepaid gift card fraud can be accomplished through more complexity in packaging or through the adoption of tip technology in prepaid gift cards.

As CPI is uniquely positioned in our markets with deep expertise in both areas, we believe this can be a great complement to our secure prepaid solutions and will provide more choice for prepaid customers in the market. We are already piloting the solution with a large national retailer in The U. S. And look forward to further developing our relationship with Carta. Many of these growth initiatives are starting to yield tangible results, and we look forward to continuing to update you on the progress as we move forward.

I will now turn the call over to Jeff to cover the third quarter results and 2025 outlook in more detail. Jeff?

Jeff Hockstadt, Chief Financial Officer, CPI Card Group: Thanks, John, and good morning, everyone. Let’s start on Slide eight with the third quarter results. Third quarter net sales increased 11%, which was primarily driven by the addition of ROI and growth in our instant issuance business, partially offset by a decline in prepaid sales. Debit and credit segment sales increased 16% as ROI contributed $15,000,000 of sales and our CardOnce instant issuance business delivered strong growth led by solution sales. Contactless card sales were flat in the quarter compared to a very strong prior level, which includes some large EcoFocus card orders.

Contactless volumes increased, but average selling prices were down due to sales mix. Personalization services were also flat in the quarter, an improvement from the first half trend. Prepaid sales declined 7%, largely due to timing and comparisons to large sales in the prior year period. Similar to the second quarter, gross profit margin in the third quarter decreased from 35.8% in the prior year to 29.7%, driven by unfavorable sales mix resulting in lower average selling prices and increased production costs. Production costs in the quarter included $1,600,000 of tariff expenses and $1,700,000 of increased depreciation, which was primarily related to the ArrowEye acquisition as well as the new Indiana production facility.

SG and A expenses in the third quarter, including depreciation and amortization, increased approximately $1,000,000 from the prior year, primarily due to acquisition and integration costs of $1,800,000 and the inclusion of ROI operating expenses, partially offset by reduced employee performance based incentive compensation and lower severance costs. Our tax rate for the quarter was 38%, which brought our year to date rate to 34%, higher than anticipated coming into the year due primarily to nondeductible expenses related to the ArrowEye acquisition. For the full year, we expect an effective rate between 3035%. Net income increased 78% in the quarter as the prior year quarter included debt retirement costs related to the full redemption of our previous senior notes and replacement of our previous ABL revolving credit facility. Third quarter adjusted EBITDA decreased 7% to $23,400,000 and margins declined from 20.1% to 17% as the impact of higher sales was offset by unfavorable sales mix and tariffs.

Year to date results and variance explanations can be found on Slide nine. Year to date variances generally reflect the same factors that impacted the third quarter with year to date reported sales also negatively impacted by the revenue recognition change implemented in the second quarter, which primarily affected the prepaid segment. Prepaid sales decreased 5% through the first nine months on a reported basis, but increased 8% excluding the accounting change. A reconciliation of the accounting change impact on sales can be found in the exhibits of our earnings press release. Turning to segment results on Slide 10.

Income from operations for the Debit and Credit segment decreased for the quarter and year to date as sales growth, including the addition of ArrowEye, was offset by lower gross margins and increased SG and A expenses, including the impact of additional headcount from the ArrowEye acquisition. Debit and credit gross margins were impacted by sales mix and higher production costs, including tariffs, which primarily impact the Debit and Credit segment and increased depreciation related to ArrowEye, the new Indiana production facility and other capital equipment purchases. Prepaid Debit segment income from operations decreased in the quarter and year to date due to decreased net sales. On a year to date basis, the decline was a direct result of the revenue recognition accounting change. Turning to the balance sheet, liquidity and cash flow on Slide 11.

Our cash flow generated from operating activities for the first nine months increased from $16,700,000 last year to $19,900,000 in the current year, driven by lower working capital usage. As we have discussed previously, 2025 has been a major investment year, including spending for our new Indiana production facility and other advanced machinery to support operating efficiency, capacity expansion and new capabilities such as closed loop prepaid. Year to date, our capital spending has increased almost $10,000,000 compared to prior year, resulting in free cash flow of $6,100,000 in the first nine months of this year, down from $12,500,000 in the prior year. Following the third quarter, as John mentioned, we finalized a strategic relationship with the Australian prepaid technology firm Carta. This relationship also included an equity investment of $10,000,000 to acquire 20% of the company, which is also backed by the Commonwealth Bank of Australia.

For the investment, we paid $2,500,000 in upfront cash, with the remaining $7,500,000 expected to be settled through performance of commercial arrangements as we work together to bring new digital technology to prepaid cards in The U. S. Market. Turning to the balance sheet. At quarter end, we had $16,000,000 of cash, dollars 47,000,000 of borrowings on our ABL revolver and $265,000,000 of senior notes outstanding.

As we mentioned last quarter, in July, we exercised an optional redemption feature on our 10% coupon senior notes and retired 20,000,000 of notes at a redemption price of 103% of par value. We have utilized our $100,000,000 ABL facility to help fund the ROI acquisition and the senior notes redemption and plan to pay down borrowings over time as we generate cash flow. Our net leverage ratio at quarter end was 3.6 times, which we also plan to work down as cash flow is generated. Before we move on to our 2025 outlook, we have provided the latest U. S.

Cards in circulation trends from Visa and Mastercard on Slide 12. For the three years ended June 30, cards in circulation in The U. S. Increased at a 7% CAGR. Large issuers have continued to report card and account growth in their latest earnings reports, which indicate card issuance remains healthy.

I will now turn to our 2025 outlook on Slide 13. We have updated our 2025 outlook to reflect sales mix in our debit and credit segment and timing of orders in our prepaid segment. Our net sales outlook is now low double digit to low teens growth, which compares to low double digit to mid teens growth in our prior outlook. Our adjusted EBITDA outlook is now flat to low single digit growth, down from our previous range of mid to high single digits due to the margin impact of sales mix trends. Our current outlook reflects existing tariff rates and does not reflect potential impacts from the proposed semiconductor chip tariffs, which have not been enacted and details on implementation timing and exemption criteria remain unclear.

I’ll now turn the call back to John for some closing remarks.

John Lowe, President and Chief Executive Officer, CPI Card Group: Thanks, Jeff. Turning to Slide 14 to summarize before we open the call for Q and A. The third quarter was largely what we expected with good sales contribution from AOI and good demand from our core solutions, while we still face margin pressures, which we are working to counter. We have updated our outlook, and we expect strong sales and adjusted EBITDA growth in the fourth quarter. We continue to execute our strategy and are pleased to have transitioned our new Indiana production facility and advanced multiple long term growth initiatives, including entry into closed loop prepaid and our agreement to bring new prepaid chip enabled technology solutions to The U.

S. Prepaid market with CarTech. We have faced many challenges this year. We are confident in our core business growth moving forward and are excited to see many of our growth initiatives begin to yield results. Operator, we will now open the call up for any questions.

Operator: Thank you. Our question comes from the line of Andrew Scott from ROTH Capital Partners. Please go ahead.

Andrew Scott, Analyst, ROTH Capital Partners: Good morning, guys, and thank you for taking my questions. First one for me is just if you could provide some more details around the impact of tariffs. I know this is kind of tough for you guys to parse out. But following your previous call, guys said you expected around $5,000,000 in charges on the year. I believe it was a $1,000,000 headwind to EBITDA in the second quarter.

So any further details around that in

Mike Salip, Head of Investor Relations, CPI Card Group: the third quarter would be great.

John Lowe, President and Chief Executive Officer, CPI Card Group: Good morning, Andrew. I’ll let Jeff cover that.

Jeff Hockstadt, Chief Financial Officer, CPI Card Group: Hey, Andrew. Yes, we said $1,000,000 you’re right, in Q2. In Q3, we mentioned about $1,600,000 of tariffs. So and we did think in Q2 it’s going to be closer to $5,000,000 China did reduce we did get a reduction in the China rate to 45% recently. And just we’re still trying to push back every single day on our suppliers to absorb some of that tariff impact.

So we’re actually thinking more in the range of 4,000,000 to $5,000,000 now. We’re hoping it’s closer to 4 But every day, we’re trying to push back on our suppliers to try to reduce the impact to us.

Andrew Scott, Analyst, ROTH Capital Partners: Perfect. Well, I appreciate the go ahead.

Jeff Hockstadt, Chief Financial Officer, CPI Card Group: And then I would just say started in April, I’m not we’re not giving color for next year, but obviously that would probably grow a little bit into 2026 just because you got a full year impact next year.

Andrew Scott, Analyst, ROTH Capital Partners: Yes, understood and appreciate the color. Second one for me and then I’ll hop back in the queue. Your prepaid segment, you guys have added a bunch of additional programs now, healthcare, some payroll cards and whatnot. So previously kind of analyzing the segment, was just gift cards. So can you kind of give us the puts and takes in prepaid among your kind of different sales verticals?

John Lowe, President and Chief Executive Officer, CPI Card Group: Yes. Let me cover the kind of overview of what we’re doing in prepaid because it has changed a little bit. And Jeff can give any color on the numbers for Q3 and the rest of the year. Our prepaid business, just as a reminder, we’re the market leader in prepaid packaging solutions in The United States. And so as fraud rises within the prepaid market, the complexity of what our customers are asking for, what we’re innovating with our customers continues to rise.

That’s actually created lumpiness in orders, I would say, for this year within our open loop packages. But that’s a good thing. It creates kind of greater value over the longer term of what we’re producing. And then we’re also investing in closed loop, which is operational. We expect to have order shipping in Q4.

And that’s again because fraud impacts are bleeding into the closed loop side of the prepaid market. But additionally, I think you saw the announcement a couple of days ago, we issued a press release. We talked about it this morning on the call. We invested in a kind of innovative technology company based in Australia. They’re a program manager.

They’re backed by the largest bank in Australia as well. That’s another one of their big investors. And they’ve got unique technology that we’re working with our program managers to actually chip enable payment cards in prepaid space. We’re already piloting that with a large national retailer in The U. S.

So you look at the prepaid space, you look at our unique position to both lead in the packaging side, lead in our unique chip capabilities. And we believe our strategic initiatives entering into closed loop as well as expanding our capabilities in the open loop side are going to benefit us over the longer term. So we’re happy about the prepaid performance, but definitely this year a little bit lumpy on the revenue side.

Jeff Hockstadt, Chief Financial Officer, CPI Card Group: Yes. And Andrew, I’ll just add a little bit color on the revenue side. Last year, there was a lot of our clients were looking to increase the security of the packaging. So we did a lot of innovation. We actually rolled out some new security measures, fraud prevention packaging last year.

And you saw a pretty really strong growth here last year, especially in the second half. So as John said, it can be a little bit lumpy, but we do have pretty strong comps to grow over this year. I mean, we still feel really good with the prepaid business that does especially in the second half have some strong comps year over year.

Andrew Scott, Analyst, ROTH Capital Partners: Great. Well, the color. Carter certainly sounds like an exciting opportunity and I’ll jump back in the queue.

Jeff Hockstadt, Chief Financial Officer, CPI Card Group: Thanks, David.

Operator: Thank you. We have a question from Jacob Stephan from Lake Street Capital Markets. Sir, please go ahead.

Jacob Stephan, Analyst, Lake Street Capital Markets: Hey, good morning, guys. Appreciate you taking the questions. First, I just wanted to ask on the Visa and MasterCard data. Obviously, the graph in your chart or in your presentation shows prepaid actually decreasing but credit being up. And most recent guidance here talks about timing of prepaid shipments.

I guess maybe kind of help

Mike Salip, Head of Investor Relations, CPI Card Group: us think

Jacob Stephan, Analyst, Lake Street Capital Markets: through what the timing in prepaid, what that portion of guidance was and maybe do you expect that in 2026 or are these pushed out indefinitely?

John Lowe, President and Chief Executive Officer, CPI Card Group: Hey, Jacob. Let me comment on that first and then I’ll let Jeff add color. The credit side actually went up quarter to quarter. The debit side, not prepaid, actually reduced a little bit. That said, it’s one quarter.

You look back over the last three years, your CAGR is still 7%. What we’re seeing within our markets, what we’re hearing from banks opening new accounts, we continue to see growth. So we’re pretty confident on card growth and what we hear from our customers, we’re still seeing growth and new programs coming on board. This year, our card volumes are actually up, so we’re winning share. So winning share in a growing market, we’re happy about it.

Jeff Hockstadt, Chief Financial Officer, CPI Card Group: Yes. And I would just say, I don’t think that the chart is correlated necessarily to delay in orders. Just as John mentioned, the prepaid ordering can be lumpy at times. And if something does get pushed off to early twenty twenty six, it would be more delayed to early twenty twenty six, not necessarily going away. So it’s really we’re just talking about the timing.

Is it going to hit really in December? Is it going to hit in January, February? That’s kind of more of what we’re talking about.

Jacob Stephan, Analyst, Lake Street Capital Markets: Okay. That’s helpful. And then also one, touch on Carta a little bit. You know, I guess my perception of them is that they’re, you know, kind of a credit card, provider. I know they have a a kind of a travel a premium travel card launch, but, you know, help us kind of think through the safe to buy technology.

Overall, I know fraud preventative packaging has been a big growth driver for you, but what is the adding the chip capability do for you and prepaid along with the fraud preventative packaging?

John Lowe, President and Chief Executive Officer, CPI Card Group: Well, let me cover the first part. I think you’re mixing them up with another company that has a similar name based in Southern Florida. That’s a different company that we’re investing in. This company is based in Australia. They’re a prepaid program manager there.

But just to touch on why the capability is unique and why it will benefit our markets as well as our company over the long term. They have the ability to essentially enable chips in a payment card and create a payment card where the pan, the 16 digit number is constantly changing. So your fraud and ability to kind of pull that 16 digit number off of the card, deal it, if you will, significantly reduced through putting their technology onto a chip into a payment card. Why that’s good for a market is because the fraud volumes, the amount of fraud has significantly increased in the prepaid market. It hurts the reputation of our customers, hurts the reputation of those retailers out there, the 100,000 plus points of distribution that have to deal with it every day.

But additionally, if you think about our debit and credit market, and you think about the transition in our debit and credit market from MagStripe to chip enabled cards and now fully to contactless, the value grows. And that’s exactly what we’re starting to see hints of in the prepaid market, and we want to be on the front end of it. So that’s why we made this investment. We have a right to buy majority share of the company if we choose to. They’re great partners of ours.

And like I said, we’re already piloting this with a large natural retailer. So to the extent that this is successful and to the extent that the market moves more towards chips and prepaid payment cards, not only does it help our customers, our market, but it also rises the value of what we’re selling into that prepaid market and benefits our prepaid business.

Jacob Stephan, Analyst, Lake Street Capital Markets: Very helpful. Maybe just kind of a quick last one. Adding the chip to prepaid, significantly does that change kind of the ASP?

John Lowe, President and Chief Executive Officer, CPI Card Group: Yes. I wouldn’t comment on the exact ASPs. But just for context, if you’re on the debit and credit side, Magistrate card versus a chip enabled card, I mean, chip enabled card generally more than two times the cost. It’s a little bit different on the prepaid side, but the price is higher. We’ll try to put more pen to paper and get more color as we give more color on how the pilot is going when we release in March.

Jeff Hockstadt, Chief Financial Officer, CPI Card Group: Okay. Appreciate all the color guys. Thank you.

Operator: Thank you. Our last question comes from the line of Peter Heckmann from D. A. Davidson. Sir, your line is open.

Peter Heckmann, Analyst, D.A. Davidson: Good morning, gentlemen. I have two follow ups. In terms of thinking about the potential for tariffs on semiconductors and thinking about your suppliers and whether or not they have manufacturing facilities in The U. S, I guess any additional thoughts and then how you’re positioned, how you might be positioning inventories ahead of this? And potentially depending upon the timing and whether it’s retroactive or a date in the future, do you think there’s a potential to pull forward some larger projects ahead of implementation?

Jeff Hockstadt, Chief Financial Officer, CPI Card Group: Pete, good. Fair question. Everything we hear today in the market about semiconductor, we thought we would hear something late summer. It hasn’t happened. The administration really hasn’t come out with anything new in the last several months that we’ve been aware of.

Our providers are pretty confident that if there was a tariff that they would be exempt just because of their like you said, their production facilities in The U. S. And their investment in The U. S. No one can be certain at this point.

We also know if semiconductor tariffs do go into effect, it’s going to affect the entire industry equally. So we’re aware of that. We’re really hoping either they’re exempt or it doesn’t impact the industry. But we’ll just see. We’re just waiting like everyone else.

So we don’t really have any more color than we did three months ago. But with that said, if you look at our balance sheet, we did have a high inventory balance. So we’ve been buying chips at a little bit higher rate than we normally would have, just knowing what could potentially happen. I mean, could help us for a little bit of time if we had a higher balance of inventory. It’s not completely sustainable, but it would help us in the short term.

So we have been purchasing chips at a higher rate so far this year. We do expect just the timing of chips that inventory balance may come down a little bit in Q4. But we do have a higher than average amount of chips on hand right now. So we’ve been kind of taking a little bit aggressive approach on keeping that balance relatively high.

Mike Salip, Head of Investor Relations, CPI Card Group: Pete, did we lose you?

Peter Heckmann, Analyst, D.A. Davidson: Sorry. Yes, was on mute. I was going to say just as regards to the instant issuance business, in terms of thinking about other use cases there outside of the financial institution channel, we talked about a public sector customer last quarter. Any additional thoughts there in terms of opportunities to roll that out? Remind us, that subset of revenue for 2025, would you expect that CardOnce grows faster than the overall company?

John Lowe, President and Chief Executive Officer, CPI Card Group: Yes. CardOnce, our instant issuance business is growing faster. Just as a reminder, Pete, it’s higher margin business than the rest of our business. It goes hand in hand with our other digital solutions. And the value proposition there is really the solution, the technology and the fact that we’re integrated to most all processors and cores that support banks across the payments ecosystem.

That’s the exact same value proposition that we’re using to win with our other digital solutions, where we’ve been finding a number of issuers and growing, again, with higher margin products. But our other digital solutions are fairly small right now. That said, our instant issuance business, we’re on track to have a record year. You’re exactly right. There’s a value proposition, not only in the FI space, but in any location where you’d want to issue a payment card on spot.

And so we are continuing to kind of push to expand that market and diversify. And we’re happy with our instant issuance business performance. They’ve done a great job this year, and we expect them to have a record year and then look forward to what they’re going to do in the coming years. And just as a reminder, we said this in the call, our instant issuance business historically has been roughly 10% of the business, that’s a little bit more now. Our digital solutions that we’re adding continue to add to kind of our broader digital solutions suite, if you will.

And so we plan to focus more on the performance, more metrics, if you will, when we release in March going into next year. So look forward to sharing more on those businesses and especially given the value they create for CPI as a company.

Peter Heckmann, Analyst, D.A. Davidson: Okay, great. That’s helpful. All right. Appreciate it.

Jeff Hockstadt, Chief Financial Officer, CPI Card Group: Have a great day. Thanks, Pete.

Operator: Thank you. As there are no further questions in the queue, I would now like to turn the call over back to John Lowe for closing remarks.

John Lowe, President and Chief Executive Officer, CPI Card Group: Thanks, operator. As we head into the holiday season, I want to thank all of our CPI employees for their contributions and dedication to the company and our customers and wish everyone a safe and happy holiday. Thank you all for joining our call this morning, and we hope you have a great day.

Operator: Thank you for joining the call today. You may now disconnect.