poSecure(US:CMPO)2022-08-08 16:00Financial 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].