CPI Card Group Inc.
For the period ended Sep 30, 2026. Filed Nov 4, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 4, 2026
PMTS$24.36-1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001641614-26-000120
Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-04.
0001641614-26-000146
Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 85 previous paragraphs and 87 current paragraphs.
47 unchanged; 28 reworded; 11 added; 10 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Selling, general and administrative expenses increased for the three and nine months ended September 30, 2026, primarily driven by business investments and non-recurring acquisition and integration costs. Business investments included additional personnel and higher technology expenditures. Headcount and related business expenses increased primarily to support the development of our Integrated Paytech segment for the three-month period and Arroweye for the nine-month period. Higher technology expenditures primarily supported the development of our Integrated Paytech segment and Arroweye during both periods.
Current report
Interest expense decreased for the three and nine months ended September 30, 2026, primarily due to impacts of lower average borrowings on the Senior Notes and ABL Revolver (as defined below), partially offset by payment in the current period of a $0.8 million early redemption premium related to the redemption of $26.5 million of the Senior Notes, as compared to payment in the prior year period of a $0.6 million premium related to the redemption of$20.0 million of the Senior Notes.
Current report
Other Expense, net:
Current report
Other expense, net, increased for the three and nine months ended September 30, 2026, primarily due to expenses incurred related to a secondary offering of our common shares. See Note 1, “Business Overview and Summary of Significant Accounting Policies” of the condensed consolidated financial statements for further information.
Current report
Our effective tax rates on pre-tax income were 20.5% and 38.3% for the three months ended September 30, 2026 and 2025, respectively, and 32.5% and 34.0% for the nine months ended September 30, 2026 and 2025, respectively. The decrease in our effective tax rate for the three and nine months ended September 30, 2026, was primarily due to increased deductibility of stock-based compensation and limitations on deductibility of executive compensation in the prior year.
Current report
Gross profit and gross profit margin for Secure Card Solutions increased for the three months ended September 30, 2026, primarily due to factors discussed in revenue.
Current report
Revenue for Prepaid Solutions increased for the three months ended September 30, 2026, primarily due to increased sales of closed loop prepaid payment solutions and higher-value open loop packages.
Current report
Gross profit and gross profit margin for Prepaid Solutions increased for the three months ended September 30, 2026, primarily due to increased revenue and favorable sales mix.
Current report
Revenue for Integrated Paytech increased for the three and nine months ended September 30, 2026, primarily due to contributions from the acquisition of an on-premise instant issuance solution effective June 23, 2026, as well as growth in our existing Integrated Paytech solutions.
Current report
Gross profit for Integrated Paytech increased for the three and nine months ended September 30, 2026, primarily due to the increase in revenue discussed above.
Current report
On July 15, 2026, we redeemed $26.5 million of the outstanding $265.0 million aggregate principal amount of Senior Notes. The redemption was made pursuant to the terms of the indenture governing the Senior Notes, at a redemption price of 103.000% of par plus accrued and unpaid interest to the date of redemption. The early redemption premium paid is recorded in “Interest, net” on the consolidated statement of operations and comprehensive income for the three and nine months ended September 30, 2026.
Removed paragraphs (10)
Previous report
On June 23, 2026, we entered into an asset purchase agreement to acquire an on-premise instant issuance solution, which includes the development, marketing, sale, licensing, and servicing of on-premise instant payment card issuance software solutions. The financial results of the acquired business are included in our Integrated Paytech segment.
Previous report
Gross profit margin decreased for the six months ended June 30, 2026, primarily due to unfavorable changes in sales mix between segments and increased depreciation expenses, partially offset by increased revenue and tariff refunds.
Previous report
Selling, general and administrative expenses increased for the three and six months ended June 30, 2026, primarily due to higher compensation and related expenses, non-recurring acquisition and integration costs, and increased investments in technology. The increase in compensation and related expenses was primarily attributable to employee-related costs associated with the Arroweye acquisition and the development of our Integrated Paytech segment. The increase in Arroweye costs reflects the addition of personnel to our workforce and is expected to continue as part of ongoing operations. Investments in technology increased primarily due to the development of our Integrated Paytech segment and our acquisition of Arroweye.
Previous report
Interest expense was relatively consistent for the three and six months ended June 30, 2026.
Previous report
Other Income, net:
Previous report
Other income, net, was relatively consistent for the three and six months ended June 30, 2026.
Previous report
Our effective tax rates on pre-tax income were 48.3% and 61.4% for the three months ended June 30, 2026 and 2025, respectively, and 42.3% and 32.0% for the six months ended June 30, 2026 and 2025, respectively. The decrease in our effective tax rate for the three months ended June 30, 2026, compared to the prior year was primarily due to deferred state tax expense recognized as part of the Arroweye Solutions, Inc. acquisition in the prior-year period. The increase in our effective tax rate for the six months ended June 30, 2026, compared to the prior year was primarily attributable to the write off of a deferred tax asset associated with vested stock options that expired unexercised, as well as an increase in the valuation allowance related to a certain state decoupling from various favorable federal tax provisions.
Previous report
Revenue for Prepaid Solutions decreased for the six months ended June 30, 2026, primarily due to comparisons with strong sales of higher-value packaging solutions in the prior year period, partially offset by the change in accounting that was implementedin the second quarter of 2025 resulting in reduced revenue recognition for work-in-process orders. Excluding the change in accounting, the decrease in revenue would have been $6.6 million, or 12.9%.
Previous report
Gross profit for Prepaid Solutions increased for the three months ended June 30, 2026, primarily due to increased revenue, including the change in accounting that was implemented in the second quarter of 2025 resulting in reduced revenue recognition for work-in-process orders; partially offset by unfavorable sales mix.
Previous report
Gross profit and gross profit margin for Integrated Paytech were relatively consistent for the three and six months ended June 30, 2026.
Reworded paragraphs (28)
Previous wording
Certain statements and information in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (as well as information included in other written or oral statements we make from time to time) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “believe,” “estimate,” “project,” “expect,” “anticipate,” “affirm,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “continue,” “committed,” “attempt,” “aim,” “target,” “objective,” “guides,” “seek,” “focus,” “provides guidance,” “provides outlook” or other similar expressions are intended to identify forward-looking statements, which are not historical in nature. These forward-looking statements, including statements about our strategic initiatives and market opportunities, are based on our current expectations and beliefs concerning future developments and their potential effect on us and other information currently available. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important risks and uncertainties that could cause actual results or other events to differ materially from those contemplated.
Current wording
Certain statements and information in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 (as well as information included in other written or oral statements we make from time to time) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “believe,” “estimate,” “project,” “expect,” “anticipate,” “affirm,” “plan,” “intend,” “foresee,” “will,” “should,” “would,” “could,” “continue,” “committed,” “attempt,” “aim,” “target,” “objective,” “guides,” “seek,” “focus,” “provides guidance,” “provides outlook” or other similar expressions are intended to identify forward-looking statements, which are not historical in nature. These forward-looking statements, including statements about our strategic initiatives and market opportunities, are based on our expectations and beliefs concerning future developments and their potential effect on us and other information available at the time such statements are made. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important risks and uncertainties that could cause actual results or other events to differ materially from those contemplated.
Previous wording
These risks and uncertainties include, but are not limited to: (i) risks relating to our business and industry, such as a deterioration in general economic conditions, including due to inflationary conditions, resulting in reduced consumer confidence and business spending, and a decline in consumer credit worthiness impacting demand for our products; the unpredictability of our operating results, including an inability to anticipate changes in customer inventory management practices and its impact on our business; our failure to retain our existing key customers or identify and attract new customers; the highly competitive, saturated and consolidated nature of our marketplace; our inability to develop, introduce and commercialize new products and related services, including due to our inability to undertake research and development activities; new and developing technologies that make our existing technology solutions and products obsolete or less relevant or our failure to introduce new products and related services in a timely manner or at all; system security risks, data protection breaches and cyber-attacks; the usage, or lack thereof, of artificial intelligence technologies; disruptions, delays or other failures in our supply chain, including as a result of inflationary pressures, single-source suppliers, failure or inability of suppliers to comply with our code of conduct or contractual requirements, trade restrictions, tariffs, foreign conflicts or political unrest in countries in which our suppliers operate, and our inability to pass related costs on to our customers or difficulty meeting customers’ delivery expectations due to extended lead times; changes in U.S. and global trade policy and the impact of tariffs on our business and results of operations; interruptions in our operations, including our information technology systems, or in the operations of the third parties that operate computing infrastructure on which we rely; defects in our software and computing systems; disruptions in production at one or more of our facilities due to weather conditions, climate change, political instability, or social unrest; problems in production quality, materials and process and costs relating to product defects and any related product liability and/or warranty claims and damage to our reputation; our inability to recruit, retain and develop qualified personnel, including key personnel, and implement effective succession processes; our substantial indebtedness, including the restrictive terms of our indebtedness and covenants of future agreements governing indebtedness and the resulting restraints on our ability to pursue our business strategies; our inability to make debt service payments or refinance such indebtedness; our inability to successfully execute on, integrate, or achieve the anticipated benefits of acquisitions, including the acquisition of Arroweye Solutions, Inc. (“Arroweye”), or execute on divestitures, strategic relationships, o…
Excerpt shortened here; the source contains the full paragraph.
Current wording
These risks and uncertainties include, but are not limited to: (i) risks relating to our business and industry, such as a deterioration in general economic conditions, including due to inflationary conditions, resulting in reduced consumer confidence and business spending, and a decline in consumer credit worthiness impacting demand for our products; the unpredictability of our operating results, including an inability to anticipate changes in customer inventory management practices and its impact on our business; our failure to retain our existing key customers or identify and attract new customers; the highly competitive, saturated and consolidated nature of our marketplace; our inability to develop, introduce and commercialize new products and related services, including due to our inability to undertake research and development activities; new and developing technologies that make our existing technology solutions and products obsolete or less relevant or our failure to introduce new products and related services in a timely manner or at all; system security risks, data protection breaches and cyber-attacks; the usage, or lack thereof, of artificial intelligence technologies; disruptions, delays or other failures in our supply chain, including as a result of inflationary pressures, single-source suppliers, failure or inability of suppliers to comply with our code of conduct or contractual requirements, trade restrictions, tariffs, foreign conflicts or political unrest in countries in which our suppliers operate, and our inability to pass related costs on to our customers or difficulty meeting customers’ delivery expectations due to extended lead times; changes in U.S. and global trade policy and the impact of tariffs on our business and results of operations; interruptions in our operations, including our information technology systems, or in the operations of the third parties that operate computing infrastructure on which we rely; defects in our software and computing systems; disruptions in production at one or more of our facilities due to weather conditions, climate change, political instability, or social unrest; problems in production quality, materials and process and costs relating to product defects and any related product liability and/or warranty claims and damage to our reputation; our inability to recruit, retain and develop qualified personnel, including key personnel, and implement effective succession processes; our substantial indebtedness, including the restrictive terms of our indebtedness and covenants of future agreements governing indebtedness and the resulting restraints on our ability to pursue our business strategies; our inability to make debt service payments or refinance such indebtedness; our inability to successfully execute on, integrate, or achieve the anticipated benefits of acquisitions, including the acquisition of Arroweye Solutions, Inc. (“Arroweye”) and our acquisition of an on-premise instant issuance s…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
We caution and advise readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof. These statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results or other events to differ materially from the expectations and beliefs contained herein. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Current wording
We caution and advise readers not to place undue reliance on forward-looking statements, which speak only as of the date such statements are made. These statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results or other events to differ materially from the expectations and beliefs contained herein and therein. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Previous wording
In connection with our increased strategic focus on expanding and developing additional proprietary integrated technological solutions for our customer base and to reflect the manner in which the Company’s Chief Operating Decision Maker (“CODM”), the Chief Executive Officer (“CEO”), manages our business, we implemented a revised segment structure to assess performance and allocate resources, beginning in the first quarter of 2026. The changes in our segment structure primarily relate to the separation of the results of our proprietary integrated technological related operations into a separate segment from the former Debit and Credit segment. Our business consists of the following reportable segments:
Current wording
In connection with our increased strategic focus on expanding and developing additional proprietary integrated technological solutions for our customer base and to reflect the manner in which the Company’s Chief Operating Decision Maker (“CODM”), the Chief Executive Officer (“CEO”), manages our business, we implemented a revised segment structure to assess performance and allocate resources, beginning in the first quarter of 2026. The changes in our segment structure primarily relate to the separation of the results of our proprietary integrated technologically related operations into a separate segment from the former Debit and Credit segment. Our business consists of the following reportable segments:
Previous wording
•Integrated Paytech: primarily provides cloud-based and on-premise solutions, which give customers the ability to issue an instant personalized debit or credit card within a customer location; and other digital payment solutions such as push provisioning for mobile wallets.
Current wording
•Integrated Paytech: primarily provides cloud-based and on-premise solutions that enable customers to issue instantly personalized debit and credit cards at customer locations, as well as other digital payment solutions, including push provisioning for mobile wallets.
Previous wording
(1)For the three months ended June 30, 2026 and 2025, revenue and cost of goods sold each include $4.5 million and $3.5 million of intersegment eliminations, respectively. For the six months ended June 30, 2026 and 2025, revenue and cost of goods sold each include $8.6 million and $8.3 million of intersegment eliminations, respectively.
Current wording
(1)For the three months ended September 30, 2026 and 2025, revenue and cost of goods sold each include $3.9 million and $4.0 million of intersegment eliminations, respectively. For the nine months ended September 30, 2026 and 2025, revenue and cost of goods sold each include $12.5 million and $12.3 million of intersegment eliminations, respectively.
Previous wording
The following discussion of our condensed consolidated results of operations and segment results refers to the three and six months ended June 30, 2026, compared to the corresponding prior year period. The results of operations should be read in conjunction with the discussion of our segment results of operations, which provide more detailed discussions concerning certain components of the condensed consolidated statements of operations and comprehensive income.
Current wording
The following discussion of our condensed consolidated results of operations and segment results refers to the three and nine months ended September 30, 2026, compared to the corresponding prior year period. The results of operations should be read in conjunction with the discussion of our segment results of operations, which provide more detailed discussions concerning certain components of the condensed consolidated statements of operations and comprehensive income.
Previous wording
Revenue increased for the six months ended June 30, 2026, primarily due to increased revenue in our Secure Card Solutions segment excluding contributions from Arroweye, driven by increased volumes of contactless cards and higher personalization services. Additionally, revenue partially increased in our Secure Card Solutions segment due to contributions from the acquisition of Arroweye.
Current wording
Revenue increased for the three months ended September 30, 2026, primarily due to increased revenue in our Secure Card Solutions segment driven by increased volumes of contactless cards; as well as higher revenue in our Integrated Paytech segment and our Prepaid Solutions segment.
Previous wording
Revenue increased for the three months ended June 30, 2026, primarily due to increased revenue in our Secure Card Solutions segment excluding contributions from Arroweye, driven by increased volumes of contactless cards and higher personalization services; as well as higher revenue in our Prepaid Solutions segment. Additionally, revenue partially increased in our Secure Card Solutions segment due to contributions from the acquisition of Arroweye.
Current wording
Revenue increased for the nine months ended September 30, 2026, primarily due to increased revenue in our Secure Card Solutions segment excluding contributions from Arroweye, driven by increased volumes of contactless cards and higher personalization services; as well as higher revenue in our Integrated Paytech segment and our Prepaid Solutions segment. Additionally, revenue partially increased in our Secure Card Solutions segment due to contributions from the acquisition of Arroweye.
Previous wording
Gross profit margin increased for the three months ended June 30, 2026, primarily due to increased revenue and tariff refunds, partially offset by unfavorable changes in sales mix between segments and increased depreciation expenses.
Current wording
Gross profit and gross profit margin increased for the three months ended September 30, 2026, primarily due to the factors discussed above, as well as favorable changes in sales mix across segments.
Previous wording
Gross profit increased for the three and six months ended June 30, 2026, primarily due to the factors discussed above and net tariff refunds totaling approximately $3.5 million and $2.5 million, respectively, partially offset by unfavorable changes in sales mix between segments and increased depreciation expenses. Additional changes in tariff rates could further impact our results of operations during 2026.
Current wording
Gross profit increased for the nine months ended September 30, 2026, primarily due to the factors discussed above and net tariff refunds totaling approximately $3.0 million, partially offset by unfavorable changes in sales mix across segments and increased depreciation expenses. The tariff refunds of approximately $4.0 million in our Secure Card Solutions segment were partially offset by tariff expenses of approximately $1.0 million in our other reportable segments.
Previous wording
Gross profit margin was relatively consistent for Prepaid Solutions for thethree months ended June 30, 2026.
Current wording
Gross profit margin was relatively consistent for the nine months ended September 30, 2026.
Previous wording
Revenue for Secure Card Solutions increased for the three and six months ended June 30, 2026, primarily due to contributions from the acquisition of Arroweye as described above, increased volumes of contactless cards and higher personalization services.
Current wording
Revenue for Secure Card Solutions increased for the three and nine months ended September 30, 2026, primarily due to increased volumes of contactless cards. The increase for the nine months ended September 30, 2026, was also due to contributions from the acquisition of Arroweye as described above.
Previous wording
Gross profit and gross profit margin for Secure Card Solutions increased for the three and six months ended June 30, 2026, primarily due to increased revenue and tariff refunds, partially offset by increased depreciation expenses.
Current wording
Gross profit and gross profit margin for Secure Card Solutions increased for the nine months ended September 30, 2026, primarily due to increased revenue and tariff refunds of approximately $4.0 million, partially offset by increased depreciation expenses.
Previous wording
Income from operations for Secure Card Solutions increased for the three and six months ended June 30, 2026, primarily due to increased gross profit, partially offset by increased selling, general and administrative expenses driven by higher compensation and related expenses and investments in technology primarily due to the acquisition of Arroweye.
Current wording
Income from operations for Secure Card Solutions increased for the nine months ended September 30, 2026, primarily due to increased gross profit, partially offset by increased selling, general and administrative expenses driven by higher compensation and related expenses and investments in technology primarily due to the acquisition of Arroweye.
Previous wording
Revenue for Prepaid Solutions increased for the three months ended June 30, 2026, primarily due to the change in accounting that was implementedin the second quarter of 2025 resulting in reduced revenue recognition for work-in-process orders, partially offset by comparisons with strong sales of higher-value packaging solutions in the prior year period. Excluding the change in accounting, revenue would have decreased $1.6 million, or 6.7%.
Current wording
Revenue for Prepaid Solutions increased for the nine months ended September 30, 2026, primarily due to increased sales ofclosed loop prepaid payment solutions, as well as the change in accounting that was implementedin the second quarter of 2025 resulting in reduced revenue recognition for work-in-process orders, partially offset by comparisons with strong sales of higher-value packages in the prior year period. Excluding the change in accounting, revenuefor the nine months ended September 30, 2026 would have decreased $3.1 million, or 4.1%.
Previous wording
Gross profit and gross profit margin for Prepaid Solutions decreased for the six months ended June 30, 2026, primarily due to decreased revenue and unfavorable sales mix, partially offset by the change in accounting that was implementedin the second quarter of 2025 resulting in reduced revenue recognition for work-in-process orders.
Current wording
Gross profit and gross profit margin for Prepaid Solutions decreased for the nine months ended September 30, 2026, primarily due to decreased revenue, excluding the change in accounting that was implementedin the second quarter of 2025 resulting in reduced revenue recognition for work-in-process orders.
Previous wording
Income from operations for Prepaid Solutions increased for the three months ended June 30, 2026 and decreased for the six months ended June 30, 2026, primarily due to the factors discussed in “Gross Profit and Gross Profit Margin” above.
Current wording
Income from operations for Prepaid Solutions increased for the three months ended September 30, 2026 and decreased for the nine months ended September 30, 2026, primarily due to the factors discussed in “Gross Profit and Gross Profit Margin” above.
Previous wording
Revenue for Integrated Paytech was relatively consistent for the three and six months ended June 30, 2026.
Current wording
Gross profit margin for Integrated Paytech was relatively consistent for the three and nine months ended September 30, 2026.
Previous wording
Income from operations for Integrated Paytech decreased for the three and six months ended June 30, 2026, primarily due to increased selling, general and administrative expenses driven by increased compensation-related expenses and technology costs.
Current wording
Income from operations for Integrated Paytech decreased for the three and nine months ended September 30, 2026, primarily due to increased selling, general and administrative expenses driven by investments in additional personnel and technology, including expenses related to the acquisition discussed in revenue above.
Previous wording
At June 30, 2026, we had $21.4 million of cash and cash equivalents. Our primary source of liquidity has been cash generated from our operating activities, which has been driven by net income and fluctuations in working capital. Our working capital fluctuates primarily due to timing and size of tax payments, collections from customers, inventory purchases, payments of employee incentive programs, and interest payments on our outstanding Senior Notes, with the interest payments being due in the first and third quarters of the year.
Current wording
At September 30, 2026, we had $15.2 million of cash and cash equivalents. Our primary source of liquidity has been cash generated from our operating activities, which has been driven by net income and fluctuations in working capital. Our working capital fluctuates primarily due to timing and size of tax payments, collections from customers, inventory purchases, payments of employee incentive programs, and interest payments on our outstanding Senior Notes, with the interest payments being due in the first and third quarters of the year.
Previous wording
Our ability to make investments in and grow our business, service our debt, and improve our debt leverage ratios, while maintaining strong liquidity, depends on our ability to generate excess operating cash flows. Although we can provide no assurances, we believe that our cash flows from operations, combined with our current cash levels and our senior secured revolving credit facility (the “ABL Revolver”) with available borrowing capacity of $92.3 million as of June 30, 2026, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, lease obligations and working capital needs. Our future cash flows could be impacted by a variety of factors, some of which are beyond our control. Factors include, but are not limited to, demand from some of our customers for certain products and related services; changes in economic conditions, especially those impacting our customers; the pricing, terms and availability of goods and services that we purchase; and financings that we enter into.
Current wording
Our ability to make investments in and grow our business, service our debt, and improve our debt leverage ratios, while maintaining strong liquidity, depends on our ability to generate excess operating cash flows. Although we can provide no assurances, we believe that our cash flows from operations, combined with our current cash levels and our senior secured revolving credit facility with available borrowing capacity of $74.5 million as of September 30, 2026, and access to capital markets as necessary, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, lease obligations and working capital needs. Our future cash flows could be impacted by a variety of factors, some of which are beyond our control. Factors include, but are not limited to, demand from some of our customers for certain products and related services; changes in economic conditions, especially those impacting our customers; the pricing, terms and availability of goods and services that we purchase; and financings that we enter into.
Previous wording
Cash provided by operating activities for the six months ended June 30, 2026, increased to $42.1 million from $9.9 million for the six months ended June 30, 2025, primarily due to reduced working capital usage. Working capital benefited from decreased incentive payments related to a customer contract originally entered into in the first quarter of 2024, lower inventory purchases, decreased employee performance-based incentive compensation and severance payments, and decreased tax payments. These benefits were partially offset by timing of payments on accounts payable and prepaid expense balances.
Current wording
Cash provided by operating activities for the nine months ended September 30, 2026, increased to $57.3 million from $19.9 million for the nine months ended September 30, 2025, primarily due to reduced working capital usage. Working capital benefited from lower inventory purchases, decreased incentive payments related to a customer contract originally entered into in the first quarter of 2024, decreased employee performance-based incentive compensation and severance payments, and decreased tax payments. These benefits were partially offset by timing of payments on accounts payable and other accrued expenses.
Previous wording
During the six months ended June 30, 2026, capital expenditures, including investments to support the business, such as machinery and information technology equipment, totaled $6.1 million.
Current wording
During the nine months ended September 30, 2026, capital expenditures, including investments to support the business, such as machinery and information technology equipment, totaled $11.1 million.
Previous wording
On the Closing Date, the Company and the Borrower entered into a credit agreement with JPMorgan, (the “ABL Revolver”) providing for up to$75.0 million. The ABL Revolver matures on the earliest to occur of July 11, 2029, and the date that is 91 days prior to the maturity of the Senior Notes. We primarily utilize our ABL Revolver to provide general liquidity and to support shorter term financing requirements.
Current wording
On the Closing Date, the Company, the Borrower and JPMorgan Chase Bank, N.A. (“JPMorgan”) entered into a credit agreement (the “ABL Revolver”) providing for up to$75.0 million. The ABL Revolver matures on the earliest to occur of July 11, 2029, and the date that is 91 days prior to the maturity of the Senior Notes. We primarily utilize our ABL Revolver to provide general liquidity and to support shorter term financing requirements.
Previous wording
During the six months ended June 30, 2026, we made principal payments of$25.0 million on the ABL Revolver. On July 15, 2026, we borrowed $30.0 million under the ABL Revolver and redeemed $26.5 million of the outstanding $265.0 million aggregate principal amount Senior Notes.
Current wording
During the nine months ended September 30, 2026, we made principal payments of $40.0 million and borrowed $30.0 million under the ABL Revolver.
Previous wording
As of June 30, 2026, the total projected principal and interest payments on our borrowings are $355.3 million, primarily related to the Senior Notes, of which $26.1 million of interest is expected to be paid in the next 12 months.
Current wording
As of September 30, 2026, the total projected principal and interest payments on our borrowings are $327.0 million, primarily related to the Senior Notes, of which $24.8 million of interest is expected to be paid in the next 12 months.
Previous wording
The remaining interest payments are expected to be paid over the remaining term of the Senior Notes, which mature in 2029, and the principal is due upon maturity. We have estimated our future interest payments including an additional $30.0 million of borrowings under the ABL Revolver and early redemptions of principal of $26.5 million on the Senior Notes, both of which occurred on July 15, 2026. This also assumes no debt issuances or renewals upon the maturity dates of our notes. However, we may borrow additional amounts under the ABL Revolver, redeem principal on the Senior Notes early, or refinance all or a portion of our borrowings in future periods.
Current wording
The remaining interest payments are expected to be paid over the remaining term of the Senior Notes, which mature in 2029, and the principal is due upon maturity. We have estimated our future interest payments assuming no additional borrowings under the ABL Revolver, no early redemptions of principal on the Senior Notes, and no debt issuances or renewals upon the maturity dates of our notes. However, we may borrow additional amounts under the ABL Revolver, redeem principal on the Senior Notes early, or refinance all or a portion of our borrowings in future periods.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Income from operations for Secure Card Solutions increased for the three months ended September 30, 2026, primarily due to increased gross profit.