CompoSecure , Inc. (NASDAQ:CMPO) Q2 2023 Earnings Conference Call August 14, 2023 5:00 PM ET Company Participants Sean Mansouri - Investor Relations Jon Wilk - Chief Executive Officer Timothy Fitzsimmons - Chief Financial Officer Conference Call Participants Reggie Smith - JPMorgan Hal Goetsch - B. Riley Securities Chase White - Compass Point Research and Trading Operator Thank you for standing by and welcome to CompoSecure Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-on ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 309 Pierce St. Somerset, NJ 08873 (908) 518-0500 (Address, including zip code, and telephone number, includi ...

© Compo Secure This presentation contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and ass Although the Company believes that its plans, intentions, and expectations reflected in or suggested by chese forward-looking statements are reasonable, the Company cannot achieve or realize these plans, intentions. or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. ...

CompoSecure , Inc. (NASDAQ:CMPO) Q1 2023 Earnings Conference Call May 3, 2023 5:00 PM ET Company Participants Sean Mansouri - Investor Relations Jonathan Wilk - Chief Executive Officer Timothy Fitzsimmons - Chief Financial Officer Conference Call Participants John Todaro - Needham & Company Reggie Smith - JPMorgan Chase White - Compass Point Research & Trading Hal Goetsch - B. Riley Operator Good day, and thank you for standing by. Welcome to the CompoSecure Q1 Earnings Conference Call. At this time, all pa ...

Impact of COVID-19 Pandemic Key Components of Results of Operations Cost of Sales Operating Expenses We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges. Please see the factors discussed in this Quarterly Report on Form 10-Q, including those discussed in the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" for additional information. | --- | --- | --- | --- ...

Competitive factors in selling metal payment cards include primarily product quality, the ability to manufacture high volumes of cards, the ability to deliver finished cards on fixed schedules enabling card issuers (and their personalization partners) to meet consumer demand for metal payment cards, the range of products offered, innovation in metal form factor design and construction and technological innovation to enhance the cardholder experience, product features and price. The Company competes favorabl ...

CompoSecure, Inc. (NASDAQ:CMPO) Q4 2022 Earnings Conference Call March 1, 2023 5:00 PM ET Company Participants Steve Feder – General Counsel and Corporate Secretary Jon Wilk – Chief Executive Officer and President Tim Fitzsimmons – Chief Financial Officer Conference Call Participants Dan Lehmann – Needham & Company Reggie Smith – JPMorgan Operator Good day and thank you for standing by. Welcome to the CompoSecure Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions] I would li ...

CompoSecure, Inc. (NASDAQ:CMPO) Q3 2022 Earnings Conference Call November 4, 2022 5:00 PM ET Company Participants Sean Mansouri – Investor Relations Jon Wilk – Chief Executive Officer Tim Fitzsimmons – Chief Financial Officer Conference Call Participants John Todaro – Needham Reggie Smith – JPM Operator Good day and thank you for standing by. Welcome to the CompoSecure Q3 2022 Earnings Call. At this time all participants are in a listen-only mode. After the speaker's presentation, there will be a question-a ...

Financial Performance - Net sales for the quarter ended September 30, 2022, increased by $37.1 million, or 56%, to $103.3 million compared to $66.2 million for the same quarter in 2021 [168]. - Domestic net sales rose by $32.1 million, or 62%, to $83.8 million, while international net sales increased by $5.0 million, or 35%, to $19.5 million [170]. - Gross profit for the quarter ended September 30, 2022, increased by $25.6 million, or 71%, to $61.8 million, with a gross margin improvement from 55% to 60% [173]. - Net income for the quarter was $21.9 million, an increase from $18.7 million in the same quarter of 2021, primarily due to higher sales volume and a favorable change in the fair value of earnout consideration liabilities [177]. - Net sales for the nine months ended September 30, 2022, increased by $92.0 million, or 48%, to $284.7 million compared to $192.6 million for the same period in 2021 [182]. - Gross profit for the nine months ended September 30, 2022, increased by $63.8 million, or 60%, to $169.4 million, with a gross margin improvement from 55% to 59% [185]. - Net income for the nine months ended September 30, 2022, was $109.5 million, a 73% increase from $63.4 million in the same period in 2021 [189]. - Adjusted EBITDA for the nine months ended September 30, 2022, was $105.6 million, compared to $81.2 million for the same period in 2021 [192]. Operating Expenses - Operating expenses for the quarter increased by $21.6 million, driven by salaries and employee-related benefits, which accounted for $16.2 million of the increase [174]. - Operating expenses increased by $46 million, primarily due to higher salaries, marketing expenses, and stock-based compensation [186]. - The Company expects operating expenses to rise as a result of compliance with SEC regulations and other public company obligations [162]. Income and Margins - Income from operations for the quarter was $25.6 million, compared to $21.6 million for the same quarter in 2021, with operating margins decreasing to 25% from 33% [175]. - Income from operations was $90.0 million, with an operating margin of 32%, down from 37% in the previous year [187]. Interest Expense and Debt - Interest expense for the quarter increased by $2.9 million, or 102%, to $5.8 million, primarily due to the issuance of Exchangeable Notes in December 2021 [176]. - Interest expense increased by $7.5 million, or 85%, to $16.4 million, primarily due to the issuance of Exchangeable Notes [188]. - The effective interest rate on the Company's 2021 Credit Facility was 5.15% as of September 30, 2022 [208]. - The Company has $243.1 million in variable rate debt under the 2021 Credit Facility and $130.0 million in long-term debt from Exchangeable Notes as of September 30, 2022 [216]. - An increase or decrease of 100 basis points in the applicable interest rate would cause an increase or decrease in interest expense of approximately $4.0 million on an annual basis [217]. - The Company entered into interest rate swap agreements to hedge forecasted interest rate payments on its variable rate debt, with a notional amount of $125,000 at fixed rates of 1.06% and 1.90% [218]. Cash Flow and Liquidity - Cash provided by operating activities for the nine months ended September 30, 2022 was $90.9 million, an increase of $42.8 million compared to $48.0 million for the same period in 2021, primarily due to an increase in net income of $46.1 million [210]. - Cash used in investing activities for the nine months ended September 30, 2022 was $7.2 million, up from $3.9 million for the same period in 2021, primarily related to capital expenditures [211]. - Cash used in financing activities for the nine months ended September 30, 2022 was $90.1 million, compared to $45.3 million for the same period in 2021, mainly due to payment of issuance costs related to the Business Combination of $23.8 million [212]. - The Company anticipates that cash flows from operations and available cash will be sufficient to meet liquidity needs for at least the next 12 months, but additional liquidity may be required for significant acquisitions [205]. Business Development - The Company launched its Arculus platform in Q3 2021, which includes the Arculus Key card and Arculus Wallet mobile application, targeting the digital asset market [152]. - The Company is taking a measured approach to investments in the Arculus business due to uncertainties in the digital asset market and the impact of recent events on partners [157]. - The company experienced a significant increase in international sales driven by demand in the FinTech market and sales through international distributor channels [182]. Cash and Debt Position - As of September 30, 2022, the Company had cash and cash equivalents of $15.4 million and total debt principal outstanding of $373.1 million, compared to cash and cash equivalents of $21.9 million and total debt of $395.0 million as of December 31, 2021 [204]. - The 2021 Credit Facility includes a term loan of $250.0 million and a $60.0 million revolving loan facility, with $50.0 million available for borrowing as of September 30, 2022 [206].

Financial Performance - Net sales for the quarter ended June 30, 2022, increased by $34.5 million, or 55%, to $97.2 million compared to $62.7 million for the same period in 2021[163]. - Domestic net sales rose by $23.3 million, or 50%, to $70.1 million, while international net sales increased by $11.2 million, or 71%, to $27.1 million[163][165]. - Gross profit for the quarter ended June 30, 2022, increased by $23.7 million, or 68%, to $58.9 million, with a gross margin improvement from 56% to 61%[167]. - Income from operations for the quarter ended June 30, 2022, was $34.4 million, compared to $24.4 million for the same period in 2021, with operating margins decreasing to 35% from 39%[169]. - Net income for the quarter ended June 30, 2022, was $60.7 million, a significant increase from $21.5 million in the same quarter of 2021[171]. - Net sales for the six months ended June 30, 2022, increased by $54.9 million, or 43%, to $181.4 million compared to $126.5 million for the same period in 2021[174]. - Gross profit for the six months ended June 30, 2022, increased by $38.2 million, or 55%, to $107.6 million, with a gross margin improvement from 55% to 59%[177]. - Net income for the six months ended June 30, 2022, was $87.6 million, a 96% increase from $44.7 million in the same period in 2021, driven by higher sales volume and favorable changes in fair value of liabilities[181]. - Adjusted EBITDA for the six months ended June 30, 2022, was $72.99 million, compared to $56.59 million for the same period in 2021[184]. Operating Expenses - Operating expenses for the quarter ended June 30, 2022, increased by $13.7 million, primarily due to higher salaries, marketing, and professional fees[168]. - Operating expenses increased by $24.4 million, primarily due to higher salaries, marketing, and professional fees, resulting in an operating margin decrease from 40% to 36%[178][179]. - The increase in operating expenses was also due to a $5.0 million rise in salaries and employee-related benefits, and an $8.4 million increase in marketing and professional fees[178]. Debt and Interest - Interest expense for the quarter ended June 30, 2022, increased by $2.7 million, or 92%, to $5.6 million due to the issuance of convertible debt[170]. - Interest expense increased by $4.6 million, or 77%, to $10.5 million due to the issuance of convertible debt, but was offset by a favorable change in fair value of warrant liabilities[180]. - The Company had total debt outstanding of $388.1 million under its existing credit facilities, which included a term loan of $250.0 million and a $60.0 million revolving loan facility[200]. - The effective interest rate on the Company's 2021 Credit Facility was 3.65% as of June 30, 2022[201]. - The Company performed a sensitivity analysis indicating that a 100 basis point change in interest rates would result in an approximate $4.0 million increase or decrease in annual interest expense[212]. Cash Flow and Liquidity - Cash provided by operating activities for the six months ended June 30, 2022, was $51.4 million, an increase of $24.2 million compared to $27.2 million for the same period in 2021, primarily due to a net income increase of $42.9 million[205]. - Cash used in financing activities for the six months ended June 30, 2022, was $56.4 million, compared to $31.6 million for the same period in 2021, mainly due to payment of issuance costs related to the Business Combination of $23.8 million[207]. - The Company anticipates that cash flows from operations and available cash will be sufficient to meet liquidity needs for at least the next 12 months[199]. Business Development - The company launched its Arculus platform in Q3 2021, which includes the Arculus Key card and Arculus Wallet mobile application, targeting the digital asset market[147]. - The company is taking a measured approach to investments in the Arculus business due to market uncertainties and the impact of recent events in the digital asset space[152]. - The company continues to focus on expanding its international distributor channels and capitalizing on the growing FinTech market[174]. Inventory and Commitments - The Company had inventory-related purchase commitments totaling approximately $60.3 million as of June 30, 2022[208]. - The 2021 Credit Facility will mature on December 16, 2025[200]. - The Company issued Exchangeable Notes in an aggregate principal amount of up to $130.0 million, which are exchangeable into shares of Class A common stock at a conversion price of $11.50 per share[204].