Hello everyone, and welcome to the CPI Card Group Second Quarter 2021 Earnings Conference Call. My name is Harry, I will be your operator today. I will now hand the call over to your host Brian [indiscernible] to begin. Brian, please go ahead.

Thank you, Harry, and good morning everyone. Welcome to the CPI Card Group second quarter and first half 2021 earnings webcast and conference call. On the call today from CPI Card Group is Scott Scheirman, President and Chief Executive Officer; and John Lowe, Chief Financial Officer. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements as they are defined under the Private Securities 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. For a discussion of such risks and uncertainties, please see CPI Card Group's most recent filings with the SEC and on SEDAR. All forward-looking statements made today reflect our current expectations only and we undertake no obligation to update any statement to reflect the events that occur after this call. 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, adjusted EBITDA, adjusted EBITDA margin, and adjusted free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in the press release in slide presentation we issued this morning. Copies of today's press release, as well as the presentation that accompanies this conference call are accessible on CPI's Investor Relations website, investor.cpicardgroup.com. In addition, CPI's Form 10-Q for the quarter and six months ended June 30, 2021 will be filed with the SEC later today, and will also be available on CPI's Investor Relations website. And now I'd like to turn the call over to Scott Scheirman, President and Chief Executive Officer of CPI.

Thank you, Brian. And good morning, everyone. Thank you for joining us today for our second quarter conference call. During today's call, I will provide an overview of CPI's financial performance, recent highlights and our company's vision and strategic priorities. John will then discuss the financial results in more detail before I conclude the call. CPI had a strong second quarter and first half of 2021, and we are proud of our team and accomplishments. Here's some highlights from the second quarter. We delivered a 31% increase in net sales over the prior year by winning new customers, growing with the existing ones and continuing to support our customers during the ongoing transition to contactless cards. Diluted earnings per share was $0.53 in the second quarter, nearly five times the $0.11 diluted earnings per share during the second quarter of last year. Net income was $6.2 million, 387% higher than last year and adjusted EBITDA increased by 91% to $19.3 million. Our second quarter and first half net sales growth was driven by earning new customers, including in the FinTech space. Additionally, the ongoing shift to contact with cards drove net sales growth and higher average selling prices in our Debit and Credit segment. We also won new business and increased volumes with existing customers in our Prepaid Debit segment. Our performance has resulted in strong cash flow, and we further executed on our capital strategy during the first half of 2021. We refinanced our debts in the first quarter and pay down the $15 million balance on our ABL Revolver to zero in the second quarter continuing to deleverage the balance sheet. We accomplished this while investing nearly $20 million in the business to meet our customer needs as a partner of choice. In addition, we are excited about…

Thank you, Scott. Good morning, everyone. I will begin my review of our results from the second quarter first half of 2021. On Slide 9, second quarter net sales increased 31% compared with the second quarter of 2020 to $93 million. Net sales growth was driven by a 25% increase from our Debit and Credit segment, and a 51% increase from our Prepaid Debit segment. Results in both segments were primarily driven by new customer growth Scott described earlier, and from the ongoing transition to contactless cards, as well as growth with existing customers. As a reminder, contactless cards have additional technology, and generally have a higher selling price than contact only cards. Our prior year net sales in the second quarter and first half were also impacted in both segments by lower customer demand than expected, which we believe was primarily attributable to the COVID-19 pandemic. Second quarter gross profit was $37 million, up 61% over the second quarter of last year. Gross margins for the second quarter increased 750 basis points year-over-year to 39.8%, primarily due to operating leverage from higher net sales. SG&A expenses increased in the second quarter compared to the prior year, mainly due to higher selling and performance incentive compensation due to strong business performance and from increased healthcare expenses. During the second quarter, we generated net income of $6.2 million or $0.53 diluted earnings per share, compared to $1.3 million of net income and $0.11 diluted earnings per share in the second quarter of 2020. Adjusted EBITDA was $19.3 million, an increase of 91% year-over-year, compared to $10.1 million in the second quarter of 2020. The increase was largely due to net sales growth and operating leverage of the business. Our adjusted EBITDA margin increased 650 basis points to 20.7%. Turning to Slide…

Thanks, John. We are pleased with our business performance in the first half of 2021, which I attribute to the hard work of our thousand plus employees that strive every day to make CPI a better company. We believe that we are well positioned to deliver on our strategies as we enter the second half of the year. We displayed solid execution throughout our business which was reflected by our strong net sales growth and margin expansion. In wrapping up, we remain committed to being the partner of choice by providing market leading quality products and customer service through a market competitive business model. Thank you for joining our call today.

This concludes today's call. Thank you for joining and you may now disconnect your lines.