Q1 2025 CPI Card Group Inc Earnings Call
Speaker Change: Michael Salop, John Lowe, John Lowe, John Lowe,
[inaudible]
Speaker Change: Michael Salop, Mike Salop, John Lowe,
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Karin: Welcome to the CPI Card Group's first quarter 2025 earnings call. My name is Karen and I will be your conference operator today. If you are viewing on the webcast, you may advance the slides forward by pressing the arrow buttons.
Karin: If you would like to get in the queue for questions, please press tar followed by the number one on your telephone keyboard. Do it or your question, press tar followed by the number one again. Now, I would like to turn the call over to Mike Salop, CPI's head of investor relations.
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Thanks, equator. Welcome to the CPI Card Group, first quarter, 2025 earnings webcast and conference call. Today's date is May 7th, 2025. Now the call today from CPI Card Group are John Lowe, President and Chief Executive Officer, and Jeff Fox Depp, Chief Financial Officer.
Speaker Change: Before we begin, I'd like to remind everyone that this call may contain forward-looking statements that they are defined in the Private Security's 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.
Speaker Change: For a discussion of such risks and uncertainties, please see CPI Card Group's most recent filings with the SEC. I'll forward looking statements made today reflect our current expectations only, and we undertake no obligation to have any statement to reflect the events that occur after this call.
Speaker Change: 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, Jaeson EBITDA, Jaeson EBITDA margin, net leverage ratio and pre-cash flow.
Speaker Change: Reconcelations of these non-GAAP financial measures, the most directly comparable GAAP measures are included in the press release and slide presentation for the issue this morning.
Speaker Change: copies of today's press release as well as a presentation that a company's is conference call accessible on CPI's investor relations website investor.cpicardgroup.com In addition CPI's form 10Q for the quarter ended March 31st, 2025 will be available on CPI's investor relations website.
Speaker Change: On today's call, I'll growth rates refer to comparisons with the prior year period unless otherwise noted.
Speaker Change: The agenda for today's call is on slide three. John will give a brief overview of business performance when our strategies, Jeff will provide more detail on the financial results in our 2025 outlook, and then we will open the call for questions.
Speaker Change: We can start on slide 4 and I'll turn the call over to John [inaudible]
Thanks, Mike, and good morning, everyone.
Speaker Change: As you have likely seen from this morning's press releases, in addition to reporting our first quarter results today, we are excited to announce the acquisition of ROI solutions, a leading provider of digitally driven on-demand payment card solutions for the US market.
Speaker Change: This acquisition fits in nicely with our strategies to gain chair and diversifier business and I'll talk more about this in a few minutes [inaudible]
Speaker Change: First, I'll comment on our first quarter results in 2025 Outlook. We are pleased with the first quarter sales performance, led by our Devonate Credit Card portfolio, and continued strength from prepaid solutions.
Speaker Change: Both of our segments increased 10% in the quarter, with debiting credit growth led by strong sales of contactless cards, including eco-focused cards, and prepaid driven by our higher value packaging solutions and growth and healthcare payment solutions.
Speaker Change: As we mentioned last quarter, we expected just EBITAS to decline in the first quarter due to anticipated mixed issues and timing of spending [inaudible]
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: We did experience these mixed impacts and some added production costs, which resulted in an 8% decline and adjusted EBITDA compared to last year's first quarter.
Speaker Change: Although there is uncertainty in the market regarding US economic outlook and there is the potential for additional tariff issues, current demand from our customers remains healthy and we are affirming our 2025 organic outlook for mid to high single digit growth for net sales and adjusted EBITDA.
Speaker Change: For the remainder of 2025, we are focused on driving sales growth while balancing investing for the long term with managing spending to improve margins as the year progresses.
Speaker Change: Even in this environment, we continue to invest in key strategic projects, including our new Indiana facility, opportunities within the closed-loop prepaid market, digital solutions, and now the AERILI acquisition.
Speaker Change: Depp will provide you more detail on our results now looking a few minutes. The first, let me highlight our strategy and how ROI fits in starting on slide five.
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: As a reminder, our vision is to be the most trusted partner for innovative payment technology solutions. We aim to support that vision by providing market leading, high quality payment solutions, the best in-class customer service.
Speaker Change: One of our strategic pillars focuses on innovation and diversification to expand our adjustable markets by offering new solutions to existing customers and existing solutions, new customer verticals.
Speaker Change: Adding AeroLight as CPI's portfolio is a perfect example of this, which I will discuss on slide 6.
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: As I mentioned earlier, ARY is a leading provider of on-demand payment card solutions featuring a fully integrated into end digital driven process that facilitates car production, personalization, and fulfillment.
Speaker Change: We believe combining aeroized solutions with CPI's existing portfolio will allow us to offer even more differentiated and innovative solutions and gain share with both companies' customers.
Speaker Change: Aeroi has historically supported a segment of the market where we have limited presence resulting in minimal customer overlap
Speaker Change: We would expect to paralyze four-year revenue to be in the mid-50 million dollar range, although we will only have a partial year included in our results in 2025.
Speaker Change: The business currently has low double digits adjusted even at margins, although margins may be on the lower end in 2025 as we navigate combining the companies
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Over time, we believe there will be revenue, sourcing and other cost energies which will bring margins closer to CPI levels.
Speaker Change: We will take on aeroized production facility in Las Vegas, which was completed in 2022 and provides state-of-the-art on-demand capabilities in their approximately 200 employees.
Speaker Change: Aeroize the business we have known in the market for years, and we were very familiar with our onto main capabilities. As we engaged in the acquisition process, we were even more impressed with their position in the market, capabilities, teams, and technology driven production process and facility.
Speaker Change: We believe this acquisition can generate a great return for CPI and our shareholders. The purchase price to acquire Aeroize aligned with CPI's recent market multiples.
Speaker Change: and given our belief in revenue and cost-energy opportunities, we anticipate strong adjusted the diva.com contribution and earnings accretion over time.
Speaker Change: We see this as a great fit with CPI and look forward to combining these two great organizations.
Speaker Change: We will give you more color on airline next quarter after we have operated the business for a few months But now I'd like to turn the caller to Jeff to review our first quarter financial results and pull your outlook and more detail Jeff
Jeff Hochstadt: Thanks, John , and good morning everyone. I will begin my overview on Friday with the first quarter highlight.
Jeff Hochstadt: Michael Salop, John Lowe, John Lowe, John Lowe
Jeff Hochstadt: Net sales increased 10% in the first quarter by strong performance from debit and credit cards and continued growth in prepaid. The first quarter gross margin was impacted by negative sales mix and increased production cost.
Jeff Hochstadt: which resulted in adjusted EBITDA declining 8% in the quarter. We expect similar margin pressures in the second quarter before seeing improvement in the second half of the year despite tariff impact due to operating leverage and better mix, especially in the fourth quarter.
Jeff Hochstadt: pre-cashola with slightly positive in the first quarter, as cashola generated from operations was primarily utilized for capital spending, including our new Indiana production facility.
Jeff Hochstadt: Turning to the detailed first quarter results on slide 9, the overall 10% sales increase reflected a 10% increase in both our tabudant credit and prepaid segments.
Jeff Hochstadt: Debate and Credit Growth was led by contactless cards with strong growth from eco-focused cards personally offset by a decline in personalization services.
Jeff Hochstadt: Prepaid growth was driven by continued strong demands for higher price, broad prevention and packaging solutions and our health care payment solution.
Jeff Hochstadt: The gross profit margin decreased from 37.1% in the prior year quarter to 33.2% as operating leverage from sales growth was offset by negative sales mix and increased production cost.
Jeff Hochstadt: Increased production costs reflect some operational inefficiencies which we expected diminished over the course of the year as well as incremental costs as we operate two production facilities in Indiana during our transition to the new site.
Jeff Hochstadt: SGNA, including depreciation and amortization, decreased almost $1 million from the prior year. As the 2024 first quarter includes the final cost related to the prior CEO retention agreement and other executive summits.
Jeff Hochstadt: Net income decreased 12%, primarily due to lower gross profit and higher interest expense, partially offset by lower operating expenses.
Jeff Hochstadt: and Judgedy Vita decreased 8% to $21.2 million while at Judgedy Vita margin declined from 20.5% to 17.2% driven by the lower gross margin.
Jeff Hochstadt: Turning now to our segments on slide 10. I discussed the segment sales drivers earlier, so I will highlight segment profitability on this slide.
Jeff Hochstadt: Income from operations for the debit and credit segment decreased 5% in the first quarter as sale of growth was offset by lower growth margins and increased operating expenses.
Jeff Hochstadt: Devin and credit gross margins increased compared to the fourth quarter, but were impacted by sales mix and increased production costs compared to the prior year first quarter.
Jeff Hochstadt: Pre pay debit segment income from operations decreased 9% in the quarter as benefits from sales growth were offset by lower gross margins which were impacted by sales mix including comparisons with a very strong margin in the first quarter of last year.
Jeff Hochstadt: Turning towards the balance sheet, liquidity and cash flow on slide 11.
Jeff Hochstadt: We generated $5.6 million of cash from operating activities in the first quarter and invested $5.3 million in capital expenditures, which resulted in free cash flow of $0.3 million.
Jeff Hochstadt: This compared to operating cash flow of $8.9 million and free cash flow of $7.4 million in the prior year.
Jeff Hochstadt: The decreased generation compared to the prior year was primarily due to an approximately $4 million increase in capital spending, which is supporting the build-out of our new Indiana secure car production facility.
Jeff Hochstadt: Cashflow was also impacted by lower net income, excluding non-cash items, and slightly higher working capital usage, including the impact of higher interest expense payments related to our senior note.
Jeff Hochstadt: On the balance sheet, at quarter end, we had $31.5 million of cash, no borrowings on our ABL revolver, and $285 million of senior notes outstanding.
Jeff Hochstadt: Our net leverage ratio at quarter-end was 3.1 times, up slightly from the 2024 year-end levels of three times [inaudible]
Jeff Hochstadt: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Jeff Hochstadt: Our capital structure and allocation priorities remain focused on investing in the business, including acquisitions such as ROI, leveraging the balance sheet and returning funds to stockholders.
Jeff Hochstadt: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Jeff Hochstadt: Before we move on to our 2025 Outlook, we have provided the latest U.S. cards and circulation trends from Visa and MasterCard outside 12. For the three years ending December 31st, cards and circulation in the U.S. increased at 9% cater. We have provided the latest U.S. cards and circulation in the U.S. increased at 9% cater.
Jeff Hochstadt: Despite market uncertainties on the economic outlook and tariffs, the latest earnings reports from large bank issuers have continued to indicate strong account growth for card businesses, which is consistent with the customer demand we are seeing in the market.
Jeff Hochstadt: A change in the economic environment towards recessionary conditions could affect issuances and customer purchases that at this point customer demand remains healthy.
Turning now to our 2025 Outlook on 513
Jeff Hochstadt: We have affirmed our organic net sales and adjusted EBITDA outlets as we continue to expect mid-to-high single-digit growth for both. The outlet does not include any contribution from the ROI acquisition and does not reflect any significant change in economic conditions.
Jeff Hochstadt: It does include the impact of tariffs that have been put in place as well as cost saving activities we have recently undertaken to counter the pressures from first half mix issues and projected impacts from tariffs.
John Lowe: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Jeff Hochstadt: Although our supply chain does not have material exposure to current tariff policies, would you procure some materials from China and Europe and currently project incremental cost of approximately $2 million which is included in our outlook?
John Lowe: We are making changes in our sourcing where possible to mitigate these terrorist impacts.
John Lowe: Let me conduct your chips. Our largest component in terms of value are currently exempt from tariff. Any change to remove the exemption or create a specific tariff for chips to likely impact our outlook.
John Lowe: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
John Lowe: Aeroi will add to our expected sales and adjusted eva doth for the remainder of the year and we will get more color on these expectations next quarter.
John Lowe: Due to expected integration costs and some potential incremental catbacks to accelerate key
John Lowe: We are not providing a free cash flow outlet this quarter. We do expect free cash flow to be lower than previously forecast due to these ROI items as well as timing of inventory purchases and tariff impacts on capital expenditures on the CPI business.
John Lowe: Similarly, our net leverage ratio will be impacted by the ROI acquisition
John Lowe: Excluding ROI, we would still project the ratio to be below three times at your end, but financing the acquisition with cash and borrowing should temporarily move it above three times this year. We planned to work the ratio of back down in 2026.
John Lowe: Expect the impact to earnings per share from ROI to be diluted in 2025 and slightly diluted in 2026 through the integration of financing costs before turning a creative in 2027.
John Lowe: As noted in our press release, the purchase price for ROI was $45.55 million, which we funded using cash on the balance sheet and borrowings from our $75 million ABL revolving credit
John Lowe: We also anticipate being able to utilize around $5 million of ROI net offering lost tax benefits in the coming years.
John Lowe: We will provide more insight on ROI's expected impact in future quarters, but I will now pass the call back to John for some closing remarks on slide 14 John .
John Lowe: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
John Lowe: Thanks, Jeff. To summarize, we delivered good sales growth in the first quarter and are affirming our full-year net sales and just-a-dividile outlooks, despite some cost-crushers from salesmix and tariffs.
John Lowe: customer demand remains healthy although there's uncertainty in the market and we are managing spending in response. We are excited about the ROI acquisition and adding their zero inventory on demand solutions to the CPI portfolio boosting our strategies to diversify the business and drive long-term growth.
Operator, we will now open the call-up for questions
Speaker Change: Michael Salop, John Lowe, John Lowe, John Lowe, John Lowe
John Lowe: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: We will know open the call for your questions. If you would like to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster.
The first question comes from Peter Heckmann from DA Davidson.
Your line is open [inaudible]
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Thank you. Good morning, everyone. Congratulations on the arrow ideal. I want to know if you could give us a little bit more color on exactly where they play. Are they a customer of another card production firmer? Are they doing all of their own card production and?
Speaker Change: And how would you characterize their customers? I think you said no customer overlap, but would it be the same type of customers, both large issuers, small issuers through third parties or would it be different?
You have to eat good morning. So it's just a start.
You know, paralyze an entity that we had...
Speaker Change: You know, seen in the markets over a number of years, if you think about
Speaker Change: Who we compete against in the market, broadly. There's larger players, there's smaller players. They service what I would say is a...
Speaker Change: Smaller, more nimble card programs, so think of FinTechs who might want to test out different types of card programs.
and do it on the fly.
Speaker Change: Those are the types of unique solutions that we at CPI don't necessarily have the larger players on that system they really have. So in many cases,
Speaker Change: There are customers that we have where they're small overlap where they might want to do a really small
Speaker Change: You know, nimble program and they'll go to air light to do that. So...
Speaker Change: In cases where we're scaling with the customer, that customer may be coming with us, but in the cases where the customer wants to do something really nimble that we might not be able to do, they're going to airline.
Speaker Change: And then there's a large portion of the market that wants those small, nimble programs. Let's think of...
Speaker Change: You know, the fintechs that act as program managers, if you will, that service a number of different types of programs.
Speaker Change: and think of their programs as almost like marketing tools for a number of different unique institutions. And so that's where an arrow eye comes into play.
Speaker Change: and they have technology that we don't have and ultimately we believe they can penetrate the market in ways that we cannot.
Speaker Change: And to a certain extent, we can offer their solutions to our customers and ways that we cannot. So it's a good complimentary solution and we believe it will generate a strong return for not only CPI but our shareholders as well.
Speaker Change: Okay, that's great to hear. And then in terms of the EVIT DOM margins at Aeroide, I didn't hear, did you give a maybe a time horizon for your expectation of margins moving towards the CPI average?
Mike Salop: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: You know, I think the way we describe it is, you know, they have kind of low double digit adjusted you bit on margins right now [inaudible]
Speaker Change: Obviously, in 2025 there's a bit of integration that we need to do, so margins may be impacted this year from that.
Speaker Change: That said, we do believe we can bring their margins closer to CPI margins. We didn't give it a time frame.
Speaker Change: But Jeff, you want to comment on the accretion? Yeah, no, it's going to take a little bit of time. I mean...
Mike Salop: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Okay, great, that's helpful. I'll get back in the queue
Thanks, Pete.
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: The next question comes from Jacob Stephan, from Lake Street Capital Market.
Your line is open
Speaker Change: Michael Salop, John Lowe, John Lowe, John Lowe
Speaker Change: Hey guys, good morning, congrats on the acquisition as well. Maybe just to start off, I'll skip an item, you could help us understand kind of the balance sheet moves here with the acquisition, you know, what would you draw on the revolver versus cash on the balance sheet?
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Yeah, we ended the quarter with a little over 30 million of cash. We drew about 35 million from our revolver. So, after this acquisition, we'll still have some cash on hand for sure, but that's really how we finance it.
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Okay, perfect.
Speaker Change: And then maybe you could just help me understand the broader portfolio application here. It sounds like this is more on the pre-paid debit.
Speaker Change: Slide. Do you see an opportunity with kind of retailers here with AROI and talking about those smaller run programs?
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Yeah, I mean, I think that's a good point. I mean, whether in the pre-paid debit space, whether a retailer wanted to try out different types of branding for your customers.
Speaker Change: whether you're a FinTech working with a number of programs that you want to test out with maybe a younger generation. There's a number of applications that, that ROI fits into. Thank you.
So again, I'd say their solution is
Speaker Change: The way I describe it is just unique to what we have and much more nimble, you know, they refer to it as hyper personalization So they can move on the fly and it definitely opens up an area of the market that we don't necessarily service today
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Okay, got it. That's helpful. I'll hop back in the queue.
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Thanks, Jacob.
Speaker Change: Michael Salop, Mike Salop, John Lowe, John Lowe
Speaker Change: Again, she did have a question. Kindly press star followed by the number one.
Speaker Change: The next question comes from Craig Irwin from Ross Capital Partners. Your line is open.
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Good morning and thanks You
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Number your shareholders are paying us this morning, asking about pricing.
Speaker Change: Is there anything you can share with us about the pricing environment right now?
Speaker Change: and is there anything competitive going on or do you maybe have mixed issues also impacting English margins?
Speaker Change: You know, I know there's been some success with with large issues in the last couple quarters. Did notice the the hiring in Colorado. You know, can you maybe just unpack this for us as far as the pricing environment and what we should should think about going forward? [inaudible]
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Good morning, Craig. Well, let me comment on them that I'll skip to as well [inaudible]
Speaker Change: You know, the market in general, it's always a competitive market but I would say pricing is always based upon the value proposition of what you're selling into that market.
Speaker Change: The overall, think of the inventory rebalancing that had been going on.
Speaker Change: That we're probably in the tail of, so I'd say we're back more in the normal course somewhat.
Speaker Change: and just from a volume perspective, we've grown multiple quarters and erupts. We're seeing positive events in the market that I would say.
Speaker Change: creating more rational pricing environment. The Jeff, you want to get the quarter and how it sits? Yeah, I can give you a little bit more color on the gross margin. Yeah, I can, um...
Speaker Change: You're right, you mentioned sales mix that from time to time we see different products going through and some of them have higher margins, some of them have lower margins. This was a quarter with a lower margin for the sales mix. Also we had a little bit higher production cost.
Speaker Change: in the quarter that we normally see. So we're working on efficiency programs there that will get those production costs down over the rest of the year. Also, we have a little
Speaker Change: incremental cost just as we're getting our new facility in Indiana after running so that also happened a little bit in Q1 we'll see that a little bit more in the next couple quarters as a new facility comes online. Bye.
Speaker Change: So, when we look at the rest of the year in terms of our gross margin, we do think...
Speaker Change: You know, the Q2, I think the gross margin is going to be pretty similar, but in the second half of the year we do see a little bit bare sales mix coming. Like we said, I think the production costs will be driving some efficiencies there, so I think that will improve.
Speaker Change: That will be offset a little bit by, you know, continues Indiana costs with the new facility, and also we mentioned the Terrace Impact of a couple million dollars. Here's the first one.
Speaker Change: So ultimately on the gross margin line we see it improving from where it was in Q2 but probably lower than what we saw last year in 2024. And that's one of the reasons why we we are doing this.
Speaker Change: We did some cost actions on the SGNA line to kind of offset that a little bit We talked about reducing headcounts
Speaker Change: So we did that recently, that will bring our cost structure down. We're tightening the valve a little bit on our discretionary spend. We're still trying to invest in the areas that we want to invest in, but trying to limit hiring in certain places and discretionary spend where we can. Yeah.
Speaker Change: So kind of trying to offset some of the margins, gross margin decline that we see this year, year-over-year, with some SG&A improvements.
Speaker Change: Excellent. That actually dovetails nicely to my second question, which is startup cost for Indiana. So it did appear like you were hiring quite significantly for the facility or at least that, you know.
bringing people online and training them.
Speaker Change: for a rapid start as you look to serve new customers.
Speaker Change: You know employee costs or other frictional costs for the startup of this facility and and how these are likely to taper and can you also just confirm that you know just a couple weeks away we were talking about you again
Speaker Change: That's really less than a month from now. So the benefit should start to kick in fairly soon. Thank you.
Thank you.
Hey, Greg.
Speaker Change: So you're right and Jeff mentioned it a little bit as we transition.
from one location to another.
Speaker Change: There is overlap and cost. There's overlap in hiring, if you will. We are hiring more people to service in a sense the transition.
Speaker Change: and you see that in Q1. You'll continue to see that.
throughout the year.
Speaker Change: Jeff can probably speak to more of the quantitative side of it.
Speaker Change: But it's definitely something that we knew would impact us this year as part of the reason.
Speaker Change: When we gave our original guidance, which we affirmed today, you know, revenue growth and adjusted even a growth are roughly the same. Some of the investments that were making this mean one of them.
Speaker Change: You know, kind of eat into our spending, but ultimately when you go to 2026 and beyond, we believe these will be creative and strong returning investments that we're making.
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Yeah, yeah, Craig. We didn't give exact numbers for the transition for Indiana. But as John said, we'll be running both facilities for a period of time.
Speaker Change: Just so we don't, we don't lose a step with our customers.
Speaker Change: So, that will go through the end of the year. Once the new facility goes online, we'll still be running both facilities for a period of time probably through the end of the year. Um, but
Speaker Change: Nothing specific on those costs, but like I said, we're taking some cost actions in other parts of the business and you know, we still feel good with our outlook of mid to high single digits for both Revenue and the Justice, but done.
Speaker Change: Michael Salop, John Lowe, John Lowe, John Lowe, John Lowe, John Lowe, John Lowe
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: As there are no further questions in the queue, I would now like to turn the callback over to John Lowe for closing remarks.
Speaker Change: Mike Salop, Jeffrey Hochstadt, John Lowe, Mike Salop, Jeffrey Hochstadt, John Lowe,
Speaker Change: Thanks operator. Well, I want to again acknowledge and thank all of our CPI employees for everything they do for our company and our customers as they execute on our vision values and strategies every day and continue to drive our business forward. Also, I'd like to welcome the ROI team to the CPI family. We're excited to have you all on board. Thank you all for joining and we hope you have a great day. Thank you all for joining us and we hope you have a great day.
Speaker Change: Ladies and gentlemen, dot concludes today's call. Thank you all for joining and you may now discuss now.