As the payments industry reeled Monday morning during yet another wild session on Wall Street, card manufacturer CPI Card Group Inc. provided a glimmer of hopeful news when it reported improving financials thanks in part to growing sales of dual-interface cards.
Littleton, Colo. based CPI said fourth-quarter sales in its U.S. credit and debit segment grew 24% year-over-year to $61.6 million. For all of 2019, segment sales grew 19% to $213.1 million.
The company says client financial institutions are buying more dual-interface cards that support both contact and contactless EMV chip card transactions. That is helping to increase CPI’s market share, according to president and chief executive Scott Scheirman, though he didn’t give any numbers during a conference call to review the latest results.
“During 2019 we executed well on this market demand, which we believe contributed to our market-share gains,” Scheirman said.
Dual-interface cards also have higher margins than conventional cards, chief financial officer John Lowe noted. Also contributing to the credit-debit segment’s growth were more sales of the Card@Once instant-issuance product, which now has 11,000 printers deployed through 1,600 financial institutions.
CPI Card Group’s U.S. prepaid card segment, in contrast, saw net sales tumble 35% in the fourth quarter to $11.2 million, and for all of 2019 sales slipped 7% to $64.3 million. The segment had strong sales in 2018 as well as some new customer wins that weren’t repeated in 2019. Lowe said he expects the U.S. open-loop prepaid card market “to be directionally flat in 2020.”
Heavily indebted CPI Card Group has trimmed its sails over the past two years to strengthen its balance sheet. It sold its United Kingdom business in 2018 and its Canadian subsidiary last April, though it still serves the Canadian general-purpose card market through its U.S. operations. The company also closed a U.S. facility.
Combined with the higher sales of general-purpose cards, those efforts affected the bottom line, though the company still posted losses. For the fourth quarter, CPI Card Group reported a $2.24 million loss compared with a $7.35 million loss a year earlier on net sales of $72.6 million, up 6% from $68.5 million in 2018’s fourth quarter. For all of 2019, CPI tallied a net loss of $4.45 million versus a loss of $37.5 million in 2018 on net sales of $278.1 million, a 9% increase from 2018’s $255.8 million.
Following their usual practice, Scheirman and Lowe did not take questions from analysts following their prepared remarks.