CPI Card Group Inc. reported second-quarter 2025 net sales of $129.8 million, an increase of 9% year-over-year, or 15% excluding a one-time non-cash accounting change. The Arroweye acquisition, completed in early May, contributed approximately $10 million in net sales within less than two months, exceeding initial expectations for both sales and profitability.
Despite the strong sales performance, net income for the quarter decreased 91% to $0.5 million, or $0.04 diluted earnings per share. This decline was primarily due to transaction and integration costs related to the Arroweye acquisition, restructuring charges, the accounting change, and increased interest expense.
Gross profit margin decreased to 30.9% from 35.7% in the prior-year quarter, impacted by an unfavorable sales mix and increased production costs, including over $1 million in tariffs and higher depreciation from the new Indiana facility transition. Adjusted EBITDA increased modestly by 3% to $22.5 million, as sales growth was partially offset by these lower gross margins.
The company updated its full-year 2025 net sales outlook to low double-digit to mid-teens growth, an increase from its previous guidance, primarily reflecting the addition of Arroweye. However, the Adjusted EBITDA outlook remained unchanged at mid-to-high single-digit growth, as the benefits from Arroweye are expected to be offset by approximately $5 million in increased tariffs for the year and an unfavorable sales mix.
As of June 30, 2025, the Net Leverage Ratio increased to 3.6x, up from 3.1x in the prior quarter, due to the Arroweye acquisition and higher capital spending. Post-quarter, CPI retired $20 million principal of its 10% Senior Notes. Strategic investments in Card@Once, closed-loop prepaid, and metal card capabilities continue to show progress, with initial closed-loop deliveries on track for the fourth quarter of 2025.
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