Resolute Holdings Management Inc(RHLD) - 2025 Q1 - Quarterly Results

Executive Summary Resolute Holdings reported Q1 2025 financial results post-spin-off, including a net loss per share of ($0.39) and Non-GAAP Fee-Related Earnings per share of ($0.07), with management focusing on strategic growth and M&A Q1 2025 Financial Highlights (GAAP & Non-GAAP) Resolute Holdings reported a net loss attributable to common stockholders of ($0.39) per share and Non-GAAP Fee-Related Earnings per share of ($0.07) for Q1 2025, reflecting the foundational quarter post-spin-off and significant one-time costs Q1 2025 Key Financial Highlights (in thousands) | Metric | | | :------------------------------------------------- | :-------- | | Net income (loss) attributable to common stockholders per share (diluted) | ($0.39) | | Non-GAAP Fee-Related Earnings per share (diluted) | ($0.07) | | Management fees (GAAP) | $1,129 | | Income from operations (GAAP) | ($2,797) | | Net income (loss) (GAAP) | ($3,366) | | Fee-Related Earnings (Non-GAAP) | ($606) | - Resolute Holdings reported first quarter earnings per share attributable to common stockholders of ($0.39) and Non-GAAP Fee-Related Earnings per share of ($0.07)[2] - Management fees for the quarter were $1,129 thousand, resulting in an income from operations of ($2,797) thousand and a net income (loss) of ($3,366) thousand[5] Management Commentary & Strategic Outlook CEO Tom Knott highlighted the completion of the spin-off and the impact of one-time costs, projecting limited full-year profitability with $3.0 million quarterly management fee revenue. Executive Chairman Dave Cote emphasized ongoing operational improvements at CompoSecure and increased M&A evaluation - The spin-off from CompoSecure was completed in February, marking a foundational quarter for Resolute Holdings[3] - Expectation for limited profitability for the full year with approximately $3.0 million of quarterly management fee revenue, despite higher tax provision and post-spin-off professional fees[3] - Increased efforts to evaluate potential acquisitions, anticipated to remain significant through 2025 and beyond, alongside ongoing work to improve CompoSecure's operations and drive organic growth[4] Spin-Off and Business Model Context Due to the spin-off and management agreement, Resolute Holdings consolidates CompoSecure Holdings' financials under GAAP, but clarifies that its standalone business model relies on recurring management fees and fixed expenses, with Non-GAAP Fee-Related Earnings providing a clearer economic view for shareholders - Resolute Holdings is required to consolidate the financial results of CompoSecure Holdings in accordance with U.S. GAAP as a result of the spin-off and execution of the Management Agreement[4] - The underlying economics of Resolute Holdings' standalone business model consist of recurring, long-duration management fees and a relatively fixed expense base[4] - Non-GAAP Fee-Related Earnings calculation is included to provide a clear picture of the economic performance directly attributable to shareholders of RHLD[4] Company Information and Disclosures This section provides an overview of Resolute Holdings' asset management platform, outlines cautionary notes regarding forward-looking statements, and explains the use of non-GAAP financial measures for investor clarity About Resolute Holdings Management, Inc. Resolute Holdings is an alternative asset management platform led by David Cote and Tom Knott, providing operating management services, capital allocation, and M&A for CompoSecure Holdings and future managed businesses, aiming for long-term value creation through its Resolute Operating System - Resolute Holdings is an alternative asset management platform that provides operating management services, including oversight of capital allocation strategy, operational practices, and M&A sourcing and execution[9] - The company aims to create long-term value through the systematic deployment of the Resolute Operating System at both underlying managed businesses and Resolute Holdings[9] Cautionary Note Concerning Forward-Looking Statements This section serves as a standard disclaimer, stating that forward-looking statements are based on management's beliefs and are subject to inherent risks and uncertainties that could cause actual results to differ materially. It lists various potential influencing factors and clarifies that the company does not undertake to update these statements unless legally required - Forward-looking statements are inherently subject to risks, uncertainties, and assumptions, and Resolute Holdings cannot assure that its plans, intentions, or expectations will be achieved or realized[10] - Important factors that could affect future results include the timing and amount of management fees, unexpected changes in costs, market and macroeconomic developments, and the ability to grow profitably[10] - Resolute Holdings undertakes no obligations to update or revise publicly any forward-looking statements, except as required by law[10] Use of Non-GAAP Financial Measures Resolute Holdings utilizes non-GAAP financial measures, specifically Fee-Related Earnings and Fee-Related Earnings per share, to offer investors a clearer view of its financial performance and the underlying economics. The company explicitly states these measures are not GAAP-compliant, have analytical limitations, and should not replace GAAP-derived metrics - Resolute Holdings believes Fee-Related Earnings and Fee-Related Earnings per share are useful to investors in evaluating its financial performance and the underlying economics attributable to common stockholders[11] - These non-GAAP financial measures are not prepared in accordance with U.S. GAAP, have limitations as analytical tools, and should not be considered as alternatives to net income or other GAAP performance measures[11] Consolidated Financial Statements This section presents Resolute Holdings' Q1 2025 consolidated balance sheets, statements of operations, and cash flows, highlighting key financial changes and performance metrics Consolidated Balance Sheets As of March 31, 2025, Resolute Holdings' total assets increased to $214,288 thousand from $201,792 thousand at year-end 2024, while total liabilities remained stable. Total stockholders' equity (deficit) improved from ($36,630) thousand to ($24,006) thousand Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------- | :---------------- | :----- | | Total assets | $214,288 | $201,792 | +$12,496 | | Total liabilities | $238,294 | $238,422 | -$128 | | Total equity (deficit) | ($24,006) | ($36,630) | +$12,624 | | Cash and cash equivalents | $71,017 | $71,589 | -$572 | | Accounts receivable | $54,188 | $47,449 | +$6,739 | | Long-term debt, net | $180,713 | $184,389 | -$3,676 | - Total assets increased by $12,496 thousand from December 31, 2024, to March 31, 2025[14] - Total equity (deficit) improved by $12,624 thousand, from ($36,630) thousand to ($24,006) thousand[14] Consolidated Statements of Operations For Q1 2025, net sales slightly decreased to $103,889 thousand, and gross profit declined to $54,547 thousand. A significant increase in operating expenses led to a lower income from operations of $25,621 thousand. The company reported a net loss attributable to common stockholders of ($3,366) thousand, primarily due to spin-off related costs and tax provisions Consolidated Statements of Operations Highlights (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | | :------------------------------------------------- | :-------- | :-------- | :------- | | Net sales | $103,889 | $104,010 | -$121 | | Gross profit | $54,547 | $55,213 | -$666 | | Selling, general and administrative expenses | $28,926 | $22,770 | +$6,156 | | Income from operations | $25,621 | $32,443 | -$6,822 | | Net income (loss) attributable to common stockholders | ($3,366) | $0 | -$3,366 | | Net income (loss) per share attributable to common stockholders - diluted | ($0.39) | $0 | -$0.39 | - Net sales decreased slightly from $104,010 thousand in Q1 2024 to $103,889 thousand in Q1 2025[16] - Selling, general and administrative expenses increased by $6,156 thousand, contributing to a decrease in income from operations[16] - Net income (loss) attributable to common stockholders was ($3,366) thousand in Q1 2025, compared to zero in Q1 2024[16] Consolidated Statements of Cash Flows In Q1 2025, net cash from operating activities decreased substantially to $18,368 thousand. Investing activities used less cash, while financing activities also used less cash compared to the prior year. Overall, cash and cash equivalents saw a slight decrease, ending at $71,017 thousand Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | | :------------------------------------ | :-------- | :-------- | :------- | | Net cash provided by operating activities | $18,368 | $35,668 | -$17,300 | | Net cash used in investing activities | ($1,156) | ($1,613) | +$457 | | Net cash used in financing activities | ($17,784) | ($21,978) | +$4,194 | | Net increase (decrease) in cash and cash equivalents | ($572) | $12,077 | -$12,649 | | Cash and cash equivalents, end of period | $71,017 | $50,268 | +$20,749 | - Net cash provided by operating activities decreased by $17,300 thousand from $35,668 thousand in Q1 2024 to $18,368 thousand in Q1 2025[19] - Cash and cash equivalents decreased by $572 thousand during Q1 2025, ending the period at $71,017 thousand[19] Segment Financial Information This section details Resolute Holdings' Q1 2025 segment financial performance, including standalone management fees and operating losses, alongside CompoSecure Holdings' product sales and operating income, and segment balance sheet highlights Segment Statements of Operations and Non-GAAP Reconciliations For Q1 2025, Resolute Holdings' standalone segment reported $1,129 thousand in management fees and an operating loss of ($2,797) thousand, leading to a net loss attributable to common stockholders of ($3,366) thousand. The consolidated CompoSecure Holdings segment generated $103,889 thousand in product sales and $26,608 thousand in operating income. After non-GAAP adjustments, Resolute Holdings' Fee-Related Earnings were ($606) thousand Segment Statements of Operations Highlights (Q1 2025, in thousands) | Metric | Resolute Holdings | CompoSecure Holdings | Consolidated | | :------------------------------------------------- | :---------------- | :------------------- | :----------- | | Management fees | $1,129 | $0 | $0 | | Product sales | $0 | $103,889 | $103,889 | | Income from operations | ($2,797) | $26,608 | $25,621 | | Net income (loss) attributable to common stockholders | ($3,366) | $0 | ($3,366) | | Fee-Related Earnings (Non-GAAP) | ($606) | N/A | ($606) | - Resolute Holdings' segment reported management fees of $1,129 thousand and a net loss attributable to common stockholders of ($3,366) thousand[22] - CompoSecure Holdings segment generated $103,889 thousand in product sales and $26,608 thousand in income from operations[22] - Adjustments to reconcile Fee-Related Earnings include adding $1,148 thousand for equity-based compensation, $2,046 thousand for pro forma management fees, and $290 thousand for spin-off costs, offset by a net tax impact of ($724) thousand, resulting in Fee-Related Earnings of ($606) thousand[22] Segment Balance Sheets As of March 31, 2025, Resolute Holdings' standalone segment had total assets of $11,742 thousand and total liabilities of $2,873 thousand, resulting in total stockholders' equity of $8,869 thousand. The majority of consolidated assets and liabilities resided within the CompoSecure Holdings segment, which reported total assets of $203,675 thousand and total liabilities of $236,484 thousand Segment Balance Sheet Highlights (March 31, 2025, in thousands) | Metric | Resolute Holdings | CompoSecure Holdings | Consolidated | | :------------------------------------ | :---------------- | :------------------- | :----------- | | Total assets | $11,742 | $203,675 | $214,288 | | Total liabilities | $2,873 | $236,484 | $238,294 | | Total stockholders' equity (deficit) | $8,869 | N/A | $8,869 | | Non-controlling interest | $0 | ($32,809) | ($32,875) | - Resolute Holdings' segment reported total assets of $11,742 thousand and total stockholders' equity of $8,869 thousand[26] - CompoSecure Holdings' segment accounted for the majority of consolidated assets and liabilities, with total assets of $203,675 thousand and total liabilities of $236,484 thousand[26]