John Lowe: I’ll take that one. I think if you go back to 2021, 2022, and there were a ton of industries that were impacted by this, right? The supply chain was tight. Our lead times are really long. The visibility in our business has come down as lead times have come down but what I would say is we’re getting back to more historical times. Our lead times are a little bit tighter than history. But we don’t necessarily see whether it’s the large banks, the small to medium banks, changing their broader historical patterns. I think what we see is they built up inventory over the last 1.5 years, and they’re starting to normalize that optimize that back down to what I would say normal course patterns. But what we don’t see is banks in general, taking on more risk where they’re only going to hold a really, really small amount of inventory and risk not issuing a card to one of their consumers.
Their goal at the end of the day is to be top of wallet and everything they do and so they will hold the right amount of cards to make sure they always meet their customers’ needs.
Jaeson Schmidt: Okay. Appreciate that color. I’ll jump back in the queue. Thanks guys.
John Lowe: Thanks Jaeson.
Operator: [Operator Instructions]. The next question is from Hal Goetsch with B. Riley Securities. Your line is open.
Hal Goetsch: Hi. Good morning. I’ll stay on this topic. 2022 was a very, very big growth year. I mean it was up 27%. And if you look at maybe your guidance for the full year now, it looks like over a 2-year basis, the revenues are going to be up about 20%. And if the card market is growing roughly what you said kind of at least high single-digit. My question is like how much inventory in the channel was there that needs to be drawn down? Is it — can you help us figure out how long this is going to take? Because it would seem that if the — looking on a two year basis now you’re — you exit the year kind of where we think you’re going to exit that. It would seem like the consumption over maybe a 2-year period was pretty much in line and like inventories may be get rightsized by Q1. But like I wanted to get your thoughts on that. And also I wanted to get your thoughts on like, how can we anticipate not getting that kind of channel fill pretty strong again? Thank you.
John Lowe: Yes. Hal, John again. You’re right. If you look at the two year period, right, the growth of ’22 and then take that over ’22, ’23, compare that to the overall market, things are more in line. From a standpoint of when inventory will fully normalize. Right now, based upon what we’re seeing lead times still continue to be low. Our customers, I think, are continuing to optimize. That said, I think we’re going to give a lot more guidance in early next year. I don’t think we could sit here today and tell you exactly when it will fully normalize and the production market matches up to the card issuance market. But we still feel strong about where we are and your analysis is spot on. That’s exactly the way we’ve thought about it, except for exactly when it will come back.
I will say that banks in general, if you go back to where we’re in August, they are carrying less months of supply than we expected, but that can’t go to zero, right? You think of the 1 billion cards in circulation, the 600 million to 700 million that are produced every year, cards are turning over in every one’s wallets roughly every three years, regardless of what the expiration date is. So we feel — it’s going to — the market overall will gradually improve over the course of ’24 but we’ll give more guidance in early next year.
Hal Goetsch: All right. Great. Thank you.
Operator: There are no further questions at this time. And this will conclude today’s CPI Card Group third quarter 2023 earnings call. Thank you for joining. And have a good day.
