CPI Card Group Inc. (PMTS) has reported a 72.72 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $4.03 million, or $0.07 a share in the quarter, compared with $14.76 million, or $0.19 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $6.01 million, or $0.11 a share compared with $17.27 million or $0.42 a share, a year ago.
Revenue during the quarter dropped 24.60 percent to $81.20 million from $107.70 million in the previous year period. Gross margin for the quarter contracted 418 basis points over the previous year period to 35.79 percent. Total expenses were 85.60 percent of quarterly revenues, up from 75.51 percent for the same period last year. That has resulted in a contraction of 1009 basis points in operating margin to 14.40 percent.
Operating income for the quarter was $11.70 million, compared with $26.38 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $17.76 million compared with $32.51 million in the prior year period. At the same time, adjusted EBITDA margin contracted 832 basis points in the quarter to 21.87 percent from 30.18 percent in the last year period.
"Our third quarter results were below expectations, primarily due to continued softness in demand for EMV chip cards and unfavorable foreign currency exchange rates. Partially offsetting the lower EMV demand in the third quarter was a sequential improvement in our EMV card average selling prices resulting from customer mix," said Steve Montross, president and chief executive officer of CPI Card Group. "As we look to the fourth quarter, we do not see EMV card shipments materializing at the improved rates we assumed in our prior guidance and, as a result, we are reducing the 2016 full year guidance range, primarily to reflect this softness."
For fiscal year 2016, CPI Card Group Inc. expects revenue to be in the range of $300 million to $305 million. It forecasts net income to be in the range of $5.40 million to $6.70 million. It projects adjusted net income to be in the range of $13.50 million to $14.80 million. It projects diluted earnings per share to be in the range of $0.10 to $0.12. It projects diluted earnings per share to be in the range of $0.24 to $0.26 on adjusted basis for the same period.
Operating cash flow declines
CPI Card Group Inc. has generated cash of $39.77 million from operating activities during the nine month period, down 10.48 percent or $4.66 million, when compared with the last year period.
The company has spent $12.37 million cash to meet investing activities during the nine month period as against cash outgo of $8.87 million in the last year period.
The company has spent $19.51 million cash to carry out financing activities during the nine month period as against cash outgo of $32.47 million in the last year period.
Cash and cash equivalents stood at $21.27 million as on Sep. 30, 2016, up 34.13 percent or $5.41 million from $15.86 million on Sep. 30, 2015.
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