Corporate Structure and Spin-off - As of February 28, 2025, Resolute owned approximately 51% of the voting power of the Company's common stock, establishing the Company as a "controlled company" under Nasdaq rules[26]. - The Company completed the spin-off of Resolute Holdings Management, Inc. on February 28, 2025, distributing one share of Resolute Holdings Common Stock for every twelve shares of Class A Common Stock held[27]. - The distribution of Resolute Holdings shares will be treated as a taxable dividend for existing stockholders[27]. - The spin-off is expected to increase the aggregate value of the Company and Resolute Holdings over time, making both stocks more attractive to investors[28]. Management and Growth Strategy - The Management Agreement with Resolute Holdings stipulates a quarterly management fee of 2.5% of Holdings' last 12 months' Adjusted EBITDA[31]. - The Management Agreement has an initial term of 10 years and will automatically renew for successive ten-year terms unless terminated[33]. - The Company aims to accelerate organic growth in 2025 by winning new customers and expanding programs with existing customers[39]. - The Company plans to utilize strong free cash flow to drive growth through accretive M&A transactions, leveraging Resolute Holdings' expertise[42]. Technology and Innovation - The Company is developing the CompoSecure Operating System to improve operational efficiency across the organization[40]. - The Arculus technology is designed to transform payment cards into multifunctional devices, enhancing digital security through passwordless authentication[41]. - The market for passwordless authentication products is estimated to grow from 86.4 billion by 2033, presenting a lucrative opportunity for the company[49]. - The Arculus Cold Storage Wallet was launched in October 2021, providing a secure solution for digital asset storage and transactions[60]. - The Arculus Cold Storage Wallet utilizes a three-factor authentication system, enhancing security for users' private keys[62]. - The Arculus Authenticate solutions are FIDO2 certified, providing a passwordless and hardware-based secure authentication experience[60]. - The Company has over 65 U.S. and foreign patents issued, with more than 35 patent applications pending, indicating a strong focus on innovation[68]. - The research and development team focuses on innovations in metal form factors, secure authentication, and digital asset storage technology, with over 65 patents issued and 35 pending[95]. Market and Sales Performance - The global addressable payment card market is projected to reach 10.3 billion cards in circulation by 2024, with an estimated 5.2 billion new cards issued in that year[43]. - The company's metal payment card sales represented less than 0.6% of the estimated addressable market in 2024, indicating significant growth potential[49]. - The company's net sales from non-U.S. metal payment card programs totaled 19 million reported in 2018[52]. - The Company produced metal payment cards for 8 of the top 10 U.S. card issuers in 2024, showcasing its strong market presence[51]. - The Company has expanded its card programs from approximately 60 in 2018 to over 150 in 2024, reflecting its growth strategy[50]. - The Company has over 150 card programs for major clients like American Express and JP Morgan Chase, which represented 63.2% of net sales for the year ended December 31, 2024[75]. Security and Compliance - Identity fraud losses in the U.S. reached 34 billion in 2023, marking a 1% increase from the prior year, emphasizing the ongoing challenges in card security[49]. - The Company maintains extensive compliance with payment card industry security standards, which acts as a barrier to entry for new competitors in the payment card market[97]. - The Company’s manufacturing operations are designed to meet diverse client needs, with a focus on high security and compliance throughout the production process[88]. Sustainability and Corporate Responsibility - The Company achieved carbon neutral operations in 2023 and 2024 through production efficiencies and purchasing carbon offsets[112]. - Water usage was reduced by approximately 31.5% compared to 2022, saving about 1.5 million gallons[116]. - The Company improved energy efficiency by converting approximately 100% of lighting fixtures in its facilities to LED[116]. - The Company was awarded the EcoVadis Silver Medal for the second consecutive year, improving its score from 60 in 2023 to 67 in 2024[116]. - The Company utilizes 65% post-consumer recycled stainless steel in its metal card products, enhancing its sustainability profile compared to plastic cards[54]. Financial and Debt Management - As of December 31, 2024, the Company had 4.0 million increase or decrease in annual interest expense[376]. - The Company entered into an interest rate swap agreement on January 11, 2022, with a notional amount of 2.7 million at December 31, 2024[378]. Employment and Workforce - The Company employs approximately 1,000 full-time employees, with a gender distribution of 46% female and 54% male[118].
poSecure(CMPO) - 2024 Q4 - Annual Report