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CompoSecure Reports Record Second Quarter 2024 Financial Results; Narrows 2024 Full Year Guidance to High End of Range

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CompoSecure reported record Q2 2024 financial results, with net sales up 10% to $108.6 million and net income rising 3% to $33.6 million. Adjusted EBITDA increased 8% to $40 million. The company has narrowed its 2024 full-year guidance, now anticipating net sales between $418-$428 million and adjusted EBITDA between $150-$157 million.

The David Cote Family acquired a majority interest in CompoSecure, with David Cote becoming Executive Chairman. This move aims to simplify the corporate structure and enhance shareholder value. The company also expanded its partnership with Fiserv to market Arculus Authenticate.

Operational highlights include launching new card programs with Wells Fargo and Amex, winning three International Card Manufactures Awards, and receiving recognition from industry bodies.

CompoSecure amended its credit facility, securing lower rates and a longer term. The company had $35.4 million in cash and $330.9 million in total debt as of June 30, 2024.

CompoSecure ha riportato risultati finanziari record per il secondo trimestre del 2024, con vendite nette in aumento del 10% a 108,6 milioni di dollari e un reddito netto in crescita del 3% a 33,6 milioni di dollari. L'EBITDA rettificato è aumentato dell'8% a 40 milioni di dollari. L'azienda ha ridotto la sua guida per l'anno 2024, prevedendo ora vendite nette tra 418 e 428 milioni di dollari e un EBITDA rettificato tra 150 e 157 milioni di dollari.

La famiglia David Cote ha acquisito una quota di maggioranza in CompoSecure, con David Cote che diventa Presidente Esecutivo. Questa mossa mira a semplificare la struttura aziendale e a migliorare il valore per gli azionisti. L'azienda ha anche ampliato la sua partnership con Fiserv per commercializzare Arculus Authenticate.

I punti salienti operativi includono il lancio di nuovi programmi di carte con Wells Fargo e Amex, la vittoria di tre premi International Card Manufacturers, e il riconoscimento da parte degli organismi del settore.

CompoSecure ha emendato la sua linea di credito, assicurandosi tassi più bassi e un periodo più lungo. L'azienda disponeva di 35,4 milioni di dollari in contante e 330,9 milioni di dollari in debito totale al 30 giugno 2024.

CompoSecure reportó resultados financieros récord para el segundo trimestre de 2024, con ventas netas que aumentaron un 10% a 108.6 millones de dólares y un ingreso neto que creció un 3% a 33.6 millones de dólares. El EBITDA ajustado aumentó un 8% a 40 millones de dólares. La empresa ha ajustado su pronóstico para el año completo 2024, anticipando ahora ventas netas entre 418 y 428 millones de dólares y un EBITDA ajustado entre 150 y 157 millones de dólares.

La familia David Cote adquirió una participación mayoritaria en CompoSecure, con David Cote convirtiéndose en Presidente Ejecutivo. Este movimiento tiene como objetivo simplificar la estructura corporativa y aumentar el valor para los accionistas. La empresa también amplió su asociación con Fiserv para comercializar Arculus Authenticate.

Los aspectos destacados operativos incluyen el lanzamiento de nuevos programas de tarjetas con Wells Fargo y Amex, la obtención de tres premios de International Card Manufacturers, y el reconocimiento por parte de órganos de la industria.

CompoSecure modificó su línea de crédito, asegurando tasas más bajas y un plazo más largo. La compañía tenía 35.4 millones de dólares en efectivo y 330.9 millones de dólares en deuda total al 30 de junio de 2024.

CompoSecure는 2024년 2분기 기록적인 재무 실적을 보고했으며, 순매출이 10% 증가하여 1억 860만 달러, 순이익이 3% 증가하여 3천 360만 달러에 이르렀습니다. 조정된 EBITDA는 8% 증가하여 4천만 달러에 달했습니다. 이 회사는 2024년 전체 연도 가이던스를 조정해 순매출을 4억 1800만에서 4억 2800만 달러 사이로, 조정된 EBITDA를 1억 5000만에서 1억 5700만 달러 사이로 예상하고 있습니다.

데이비드 코트 가족이 CompoSecure의 대다수 지분을 인수했으며, 데이비드 코트가 회장직에 오르게 되었습니다. 이 조치는 기업 구조를 간소화하고 주주 가치를 향상시키기 위한 것입니다. 또한, 이 회사는 Arculus Authenticate의 마케팅을 위해 Fiserv와의 파트너십을 확대했습니다.

운영 하이라이트에는 Wells Fargo 및 Amex와의 새로운 카드 프로그램 출시, 3개의 국제 카드 제조업체 상 수상, 업계 기관으로부터의 인정이 포함됩니다.

CompoSecure는 신용 시설을 수정하여 더 낮은 금리와 긴 기간을 확보했습니다. 2024년 6월 30일 기준으로 회사는 3천 540만 달러의 현금과 3억 3천 900만 달러의 총 부채를 보유하고 있었습니다.

CompoSecure a annoncé des résultats financiers record pour le deuxième trimestre de 2024, avec des ventes nettes en augmentation de 10 % à 108,6 millions de dollars et un revenu net en hausse de 3 % à 33,6 millions de dollars. L'EBITDA ajusté a augmenté de 8 % pour atteindre 40 millions de dollars. L'entreprise a révisé ses prévisions pour l'année 2024, anticipant désormais des ventes nettes comprises entre 418 et 428 millions de dollars et un EBITDA ajusté entre 150 et 157 millions de dollars.

La famille David Cote a acquis une participation majoritaire dans CompoSecure, David Cote devenant Président Exécutif. Cette décision vise à simplifier la structure de l'entreprise et à accroître la valeur pour les actionnaires. L'entreprise a également élargi son partenariat avec Fiserv pour commercialiser Arculus Authenticate.

Les points forts opérationnels comprennent le lancement de nouveaux programmes de cartes avec Wells Fargo et Amex, la victoire de trois International Card Manufacturers Awards, et la reconnaissance des organismes de l'industrie.

CompoSecure a modifié sa ligne de crédit, garantissant des taux plus bas et une durée plus longue. Au 30 juin 2024, l'entreprise disposait de 35,4 millions de dollars en liquidités et de 330,9 millions de dollars de dettes totales.

CompoSecure hat für das zweite Quartal 2024 Rekordergebnisse gemeldet, mit einem Anstieg des Nettoumsatzes um 10% auf 108,6 Millionen Dollar und einem Anstieg des Nettogewinns um 3% auf 33,6 Millionen Dollar. Das bereinigte EBITDA stieg um 8% auf 40 Millionen Dollar. Das Unternehmen hat seine Prognose für das Gesamtjahr 2024 eingegrenzt und erwartet nun Nettoumsätze zwischen 418 und 428 Millionen Dollar sowie ein bereinigtes EBITDA zwischen 150 und 157 Millionen Dollar.

Die Familie David Cote hat eine Mehrheitsbeteiligung an CompoSecure erworben, wobei David Cote Executive Chairman wird. Dieser Schritt zielt darauf ab, die Unternehmensstruktur zu vereinfachen und den Shareholder-Wert zu steigern. Das Unternehmen hat auch seine Partnerschaft mit Fiserv erweitert, um Arculus Authenticate zu vermarkten.

Zu den betrieblichen Highlights gehören die Einführung neuer Kartenprogramme mit Wells Fargo und Amex, der Gewinn von drei International Card Manufacturers Awards und die Anerkennung durch Verbände der Branche.

CompoSecure hat seine Kreditfazilität geändert und sich günstigere Zinssätze sowie längere Laufzeiten gesichert. Am 30. Juni 2024 hatte das Unternehmen 35,4 Millionen Dollar in bar und 330,9 Millionen Dollar Gesamtschulden.

Positive
  • Net sales up 10% to $108.6 million
  • Net income up 3% to $33.6 million
  • Adjusted EBITDA up 8% to $40 million
  • Narrowed 2024 guidance with higher expected net sales and adjusted EBITDA
  • David Cote to become Executive Chairman, expected to enhance shareholder value
  • Expanded partnership with Fiserv
  • Amended credit facility with lower rates and longer term
  • Won three International Card Manufactures Awards
Negative
  • Gross profit margin decreased from 55% to 52%, due to inflationary pressure on wages and product mix

Insights

CompoSecure's Q2 2024 results demonstrate robust growth and financial health. Net sales increased by 10% to $108.6 million, while net income rose 3% to $33.6 million. The Adjusted EBITDA growth of 8% to $40.0 million is particularly impressive, indicating strong operational efficiency.

The company's narrowed guidance for fiscal 2024, now expecting net sales between $418-$428 million and Adjusted EBITDA between $150-$157 million, suggests confidence in their growth trajectory. The improved credit facility terms, including lower rates and a longer term, reflect lender confidence and provide financial flexibility for future growth.

However, investors should note the slight decrease in gross margin to 52% from 55%, attributed to product mix and inflationary pressures. This warrants monitoring in future quarters to ensure profitability remains strong.

The announcement of David Cote, former Honeywell CEO, becoming executive chairman following the Cote Family's $372 million investment is a significant development. Cote's experience with global public companies like Honeywell and Vertiv could prove invaluable for CompoSecure's growth strategy and operational excellence.

The planned removal of the dual-share structure is a positive move for corporate governance. This change should improve shareholder alignment by eliminating tax distributions related to Class B units. The simplification of the corporate structure could potentially lead to better market valuation and increased investor interest.

However, investors should closely monitor how this change in control affects the company's strategic direction and existing management team's roles. The transition period will be important to ensure continuity and successful implementation of any new initiatives.

CompoSecure's expansion into secure authentication through the Arculus Authenticate partnership with Fiserv is a strategic move. This diversification beyond metal payment cards into FIDO2 secure authentication could open up new revenue streams and market opportunities, especially given Fiserv's extensive customer base of financial institutions and fintechs.

The company's innovation in Web3 payment capabilities using digital assets for everyday purchases at point of sale demonstrates forward-thinking in emerging technologies. This positions CompoSecure well in the evolving fintech landscape.

The expectation for Arculus to turn positive in fiscal 2025 is promising, but investors should watch for concrete progress and adoption metrics. The success of this initiative could significantly impact the company's long-term growth trajectory and market positioning in the digital security space.

Q2 Net Sales up 10% to $108.6 million; Q2 Net Income up 3% to $33.6 million; Q2 Adj. EBITDA up 8% to $40.0 million

Narrows fiscal 2024 guidance; now anticipates Net Sales between $418-$428 million and Adjusted EBITDA between $150-$157 million

David Cote, former CEO of Honeywell and current executive chairman of Vertiv, to become executive chairman of CompoSecure following the acquisition of a majority interest in the Company by the David Cote Family; Expected to simplify corporate structure and unlock shareholder value

SOMERSET, N.J., Aug. 07, 2024 (GLOBE NEWSWIRE) -- CompoSecure, Inc. (Nasdaq: CMPO), a leader in metal payment cards, security, and authentication solutions, today announced its operating results for the second quarter ended June 30, 2024.

“I am pleased to report another record quarter of Net Sales and Adjusted EBITDA, driven by continued growth in our domestic business and strong international demand from the launch of new programs,” said Jon Wilk, President and CEO of CompoSecure. We continue to support our customer’s ability to offer highly attractive premium card programs such as the limited edition Amex White Gold Card and the first Wells Fargo and Expedia co-branded metal card, as well as driving growth with innovative products through our Echo Mirror Card and LED card.

“I am also excited to announce an expansion of our strategic partnership with Fiserv to include the marketing and reselling of Arculus Authenticate. Building on our already successful metal payment card collaboration, this partnership will enhance the ability to bring FIDO 2 secure authentication capabilities to Fiserv’s extensive customer base of financial institutions and fintechs.”

As just announced in a separate press release, the David Cote Family is investing $372 million through Resolute and Dave Cote will become the executive chairman of the board of directors of CompoSecure upon closing of the transaction. Resolute will become the majority shareholder of the Company and will focus on deploying operational and M&A best practices to drive long-term value creation for all shareholders. Importantly, the transaction will remove the dual-share structure, delivering higher retained annual cash flow and better alignment of all shareholders with the elimination of the tax distributions related to the Class B units.

Mr. Wilk continued, “I am thrilled to have David Cote serve as Executive Chairman of the Board of Directors. David’s career and track record is unparalleled, setting the standard for how organizations can simultaneously drive both short and long-term performance to realize their full potential. We believe his experience steering global public companies, such as Honeywell and Vertiv, will be invaluable to CompoSecure as we enter a new phase of growth and value creation for shareholders, employees, and customers.”

Wilk added, “Today, we have also amended our credit facility with lower rates, an upsized revolving line of credit, a longer term and more flexible covenants. This reflects the confidence our lenders have in our business and provides capacity for continued growth and to retire our exchangeable notes maturing in December 2026.”

Financial Highlights (Q2 2024 vs. Q2 2023)

  • Net Sales: Net Sales increased 10% to $108.6 million compared to $98.5 million. The increase was primarily driven by continued domestic growth and improved international demand.

  • Gross Profit: Gross Profit was $56.1 million or 52% of Net Sales, compared to $53.9 million or 55%. The decrease in gross margin was primarily due to product mix, as well as inflationary pressure on wages.

  • Net Income/EPS: Net Income increased 3% to $33.6 million compared to $32.7 million. Net Income per share attributable to Class A common shareholders was $0.44 (Basic) and $0.32 (Diluted), compared to $0.31 (Basic) and $0.29 (Diluted) in the year-ago period.

  • Adjusted Net Income/Adjusted EPS: Adjusted Net Income (a non-GAAP measure) increased 10% to $25.2 million compared to $22.9 million in the year-ago period. Adjusted EPS (a non-GAAP measure), which includes both Class A and Class B shares, was $0.31 (Basic) and $0.27 (Diluted) compared to $0.29 (Basic) and $0.25 (Diluted) in the year-ago period (see reconciliation of non-GAAP measures shown in table below).

  • Adjusted EBITDA: Adjusted EBITDA (a non-GAAP measure) increased 8% to $40.0 million compared to $36.9 million, with the increase driven by net sales growth.

Liquidity and Capital Structure

Balance Sheet: At June 30, 2024, CompoSecure had $35.4 million of cash and cash equivalents and $330.9 million of total debt, which included $200.9 million of term loan and $130 million of exchangeable notes. This compares to cash and cash equivalents of $41.2 million and total debt of $340.3 million at December 31, 2023, and cash and cash equivalents of $22.6 million and total debt of $358.1 million at June 30, 2023. CompoSecure’s secured debt leverage ratio was 1.29x at June 30, 2024 compared to 1.39x at December 31, 2023 and 1.60x at June 30, 2023.

Shares Outstanding: At June 30, 2024, CompoSecure had 81.7 million shares outstanding which included 29.8 million Class A shares and 51.9 million Class B shares. This includes the effect of the May 2024 underwritten secondary offering of approximately 8.1 million shares of Class A common stock, which were converted from shares of Class B common stock (for more information on shares outstanding, both Basic and Diluted, please refer to CompoSecure’s SEC filings and the earnings presentation).

Operational Highlights

  • Expanded partnership with Fiserv to market and resell Arculus Authenticate capabilities to Fiserv’s customer base
  • Customer card programs launched include Wells Fargo Expedia Onekey Card, the Amex White Gold Card, Turkish Airlines, and Atlas, a leading fintech.
  • Arculus highlights:
    • Remain on track for Arculus total net investment to be lower than 2023, with the expectation of turning positive for fiscal 2025
    • Showcased Arculus innovation around Web3 payment capabilities using digital assets for everyday purchases at point of sale
  • CompoSecure recognition:
    • Won three 2024 International Card Manufactures Awards Elan Award: Best Metal Cards, Best Environmentally-Friendly Cards, and Best Secure Payment Cards
    • Jon Wilk, CEO, Visionary CEO Award from the Banking Tech Awards USA
    • Steve Feder, General Counsel, NJBIZ Leaders in Law Awards
  • Released inaugural ESG Report

2024 Financial Outlook
The Company has narrowed its previously issued fiscal 2024 guidance and now expects Net Sales to range between $418-$428 million (previously $408-428 million) and Adjusted EBITDA to range between $150-$157 million (previously $147-$157 million).

Conference Call
CompoSecure will host a conference call and live audio webcast today at 5:00 p.m. Eastern Time to discuss its financial and operational results, followed by a question-and-answer period.

Date: Wednesday, August 7, 2024
Time: 5:00 p.m. Eastern Time
Dial-in registration link
Live webcast registration link

If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.

A live webcast and replay of the conference call will be available on the investor relations section of CompoSecure’s website at https://ir.composecure.com/news-events/events.

About CompoSecure
Founded in 2000, CompoSecure (Nasdaq: CMPO) is a technology partner to market leaders, fintech’s and consumers enabling trust for millions of people around the globe. The company combines elegance, simplicity and security to deliver exceptional experiences and peace of mind in the physical and digital world. CompoSecure’s innovative payment card technology and metal cards with Arculus security and authentication capabilities deliver unique, premium branded experiences, enable people to access and use their financial and digital assets, and ensure trust at the point of a transaction. For more information, please visit www.CompoSecure.com and www.GetArculus.com.

Forward-Looking Statements
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although CompoSecure believes that its plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, CompoSecure cannot assure you that it will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning CompoSecure’s possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. In some instances, these statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or the negatives of these terms or variations of them or similar terminology. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, among others, could affect CompoSecure’s future results and could cause those results or other outcomes to differ materially from those expressed or implied in CompoSecure’s forward-looking statements: the completion of the transactions contemplated by the proposed transactions with Resolute Partners; the ability of CompoSecure to grow and manage growth profitably; maintain relationships with customers; compete within its industry and retain its key employees; the possibility that CompoSecure may be adversely impacted by other global economic, business, competitive and/or other factors; the outcome of any legal proceedings that may be instituted against CompoSecure or others; future exchange and interest rates; and other risks and uncertainties, including those under “Risk Factors” in filings that have been made or will be made with the Securities and Exchange Commission. CompoSecure undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Use of Non-GAAP Financial Measures
This press release may include certain non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and that may be different from non-GAAP financial measures used by other companies. CompoSecure believes EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow are useful to investors in evaluating CompoSecure’s financial performance. CompoSecure uses these measures internally to establish forecasts, budgets and operational goals to manage and monitor its business, as well as evaluate its underlying historical performance and/or to measure incentive compensation, as we believe that these non-GAAP financial measures depict the true performance of the business by encompassing only relevant and controllable events, enabling CompoSecure to evaluate and plan more effectively for the future. Due to the forward-looking nature of the financial guidance included above, specific quantification of the charges excluded from the non-GAAP financial measures included in such financial guidance, including with respect to depreciation, amortization, interest, and taxes, that would be required to reconcile the non GAAP financial measures included in such financial guidance to GAAP measures are not available, so it is not feasible to provide accurate forecasted non-GAAP reconciliations without unreasonable effort. Consequently, no disclosure of estimated comparable GAAP measures is included, and no reconciliation of the forward-looking non-GAAP financial measures is included. In addition, CompoSecure’s debt agreements contain covenants that use a variation of these measures for purposes of determining debt covenant compliance. CompoSecure believes that investors should have access to the same set of tools that its management uses in analyzing operating results. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow should not be considered as measures of financial performance under U.S. GAAP, and the items excluded from EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow are significant components in understanding and assessing CompoSecure’s financial performance. Accordingly, these key business metrics have limitations as an analytical tool. They should not be considered as an alternative to net income or any other performance measures derived in accordance with U.S. GAAP or as an alternative to cash flows from operating activities as a measure of CompoSecure’s liquidity and may be different from similarly titled non-GAAP measures used by other companies. Please refer to the tables below for the reconciliation of GAAP measures to these non-GAAP measures.

Corporate Contact
Anthony Piniella
Head of Global Communications, CompoSecure
(917) 208-7724
apiniella@composecure.com

Investor Relations Contact
Sean Mansouri, CFA
Elevate IR
(720) 330-2829
CMPO@elevate-ir.com

Consolidated Balance Sheet Data
(in thousands)
 
 June 30,
2024
 December 31,
2023
 Unaudited  
ASSETS   
CURRENT ASSETS   
Cash and cash equivalents$35,391  $41,216 
Accounts receivable, net 39,648   40,488 
Inventories 57,514   52,540 
Prepaid expenses and other current assets 3,928   5,133 
Total current assets 136,481   139,377 
    
Property and equipment, net 23,739   25,212 
Right of use assets, net 6,449   7,473 
Deferred tax asset 41,082   23,697 
Derivative asset - interest rate swap 5,182   5,258 
Deposits and other assets 422   24 
Total assets$213,355  $201,041 
    
LIABILITIES AND STOCKHOLDERS' DEFICIT   
CURRENT LIABILITIES   
Accounts payable 9,431   5,193 
Accrued expenses 12,183   11,986 
Commission payable 5,010   4,429 
Bonus payable 5,473   5,616 
Current portion of long-term debt 13,437   10,313 
Current portion of lease liabilities 2,029   1,948 
Current portion of tax receivable agreement liability 1,425   1,425 
Total current liabilities 48,988   40,910 
    
Long-term debt, net of deferred finance costs 186,244   198,331 
Convertible notes 128,088   127,832 
Derivative liability - convertible notes redemption make-whole provision 544   425 
Warrant liability 10,087   8,294 
Lease liabilities, operating 5,077   6,220 
Tax receivable agreement liability 43,060   23,949 
Earnout consideration liability 383   853 
Total liabilities 422,471   406,814 
    
Commitments and contingencies (Note 13)   
    
Redeemable non-controlling interest 516,489   596,587 
    
Preferred stock, $0.0001 par value; 10,000,000 shares authorized, no shares issued and outstanding     
Class A common stock, $0.0001 par value; 250,000,000 shares authorized, 29,847,338 and 19,415,123 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively. 3   2 
Class B common stock, $0.0001 par value; 75,000,000 shares authorized, 51,908,422 and 59,958,422 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively. 5   6 
Additional paid-in capital 36,258   39,466 
Accumulated other comprehensive income 4,848   4,991 
Accumulated deficit (766,719)  (846,825)
Total stockholders' deficit (725,605)  (802,360)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT$213,355  $201,041 
        


Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
 Three months ended June 30, Six months ended June 30,
  2024   2023   2024   2023 
Net sales$108,567  $98,527  $212,577  $193,843 
Operating expenses:       
Cost of sales 52,495   44,590   101,292   86,552 
Selling, general and administrative expenses 24,279   23,588   48,357   47,532 
Total operating expenses 76,774   68,178   149,649   134,084 
        
Income from operations 31,793   30,349   62,928   59,759 
        
Total other income (expense), net 2,062   3,331   (12,836)  (16,605)
Income before income taxes 33,855   33,680   50,092   43,154 
Income tax (expense) benefit (258)  (970)  578   293 
Net income$33,597  $32,710  $50,670  $43,447 
        
Net income attributable to redeemable non-controlling interests$22,498  $26,973  $33,629  $35,347 
Net income attributable to CompoSecure, Inc.$11,099  $5,737  $17,041  $8,100 
        
Net income per share attributable to Class A common stockholders - basic$0.44  $0.31  $0.74  $0.45 
Net income per share attributable to Class A common stockholders - diluted$0.32  $0.29  $0.49  $0.41 
        
Weighted average shares used to compute net income per share attributable to Class A common stockholders - basic (in thousands) 25,438   18,537   23,003   18,087 
Weighted average shares used to compute net income per share attributable to Class A common stockholders - diluted (in thousands) 96,641   35,528   96,438   35,155 
                


Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 Six months ended June 30,
  2024   2023 
    
Cash flows from operating activities:   
Net income$50,670  $43,447 
Adjustments to reconcile net income to net cash provided by operating activities   
Depreciation and amortization 4,601   4,171 
Stock-based compensation expense 9,635   8,415 
Amortization of deferred finance costs 669   700 
Change in fair value of earnout consideration liability (470)  (4,221)
Revaluation of warrant liability 1,793   7,968 
Change in fair value of derivative liability 119   513 
Deferred tax (benefit) (2,922)  (1,770)
Changes in assets and liabilities   
Accounts receivable 840   738 
Inventories (4,974)  (6,515)
Prepaid expenses and other assets 1,205   (272)
Accounts payable 4,238   (492)
Accrued expenses 197   612 
Other liabilities 399   (313)
Net cash provided by operating activities 66,000   52,981 
    
Cash flows from investing activities:   
Purchase of property and equipment (3,129)  (5,697)
Capitalized software expenditures (398)   
Net cash used in investing activities (3,527)  (5,697)
    
Cash flows from financing activities:   
Proceeds from employee stock purchase plan and exercises of equity awards 221   389 
Payments for taxes related to net share settlement of equity awards (8,482)  (2,483)
Payment of tax receivable agreement liability    (2,193)
Payment of term loan (9,375)  (5,017)
Tax distributions to non-controlling members (26,167)  (29,008)
Special distribution to non-controlling members (15,573)   
Dividend to Class A shareholders (8,922)   
Net cash used in financing activities (68,298)  (38,312)
    
Net (decrease) increase in cash and cash equivalents (5,825)  8,972 
    
Cash and cash equivalents, beginning of period 41,216   13,642 
    
Cash and cash equivalents, end of period$35,391  $22,614 
    
Supplementary disclosure of cash flow information:   
Cash paid for interest expense$12,890  $13,626 
Supplemental disclosure of non-cash financing activities:   
Derivative asset - interest rate swap$(143) $(373)
        


Non-GAAP Adjusted EBITDA Reconciliation
(in thousands)
(unaudited)
 
 Three months ended June 30, Six months ended June 30,
  2024   2023   2024   2023 
 (in thousands)
Net income$33,597  $32,710  $50,670  $43,447 
Add:       
Depreciation and amortization 2,380   2,131   4,601   4,171 
Interest expense, net (1) 5,648   5,849   11,394   12,345 
Income tax expense (benefit) 258   970   (578)  (293)
EBITDA$41,883  $41,660  $66,087  $59,670 
Stock-based compensation expense 5,238   4,393   9,635   8,415 
Mark-to-market adjustments, net (2) (7,710)  (9,180)  1,442   4,260 
Secondary offering transaction costs 586      586    
Adjusted EBITDA$39,997  $36,873  $77,750  $72,345 
                

(1) Includes amortization of deferred financing cost for the three and six months ended June 30, 2024 and 2023, respectively.
(2) Includes the changes in fair value of warrant liability, derivative liabilities and earnout consideration liability for the three and six months ended June 30, 2024 and 2023, respectively.

Non-GAAP Adjusted EPS Reconciliation
(in thousands)
(unaudited)
 
 Three months ended June 30, Six months ended June 30,
  2024   2023   2024   2023 
 (in thousands) except per share amounts
Basic and Diluted:       
Net Income$33,597  $32,710  $50,670  $43,447 
Add (less): provision (benefit) for income taxes 258   970   (578)  (293)
Income before income taxes 33,855   33,680   50,092   43,154 
Income tax expense (1) (6,982)  (6,190)  (13,387)  (11,771)
Adjusted net income before adjustments 26,873   27,490   36,705   31,383 
(Less) add: mark-to-market adjustments (2) (7,532)  (8,985)  1,323   3,747 
Add: Secondary offering transaction costs$586      586    
Add: stock-based compensation 5,238   4,393   9,635   8,415 
Adjusted net income$25,165  $22,898  $48,249  $43,545 
Common shares outstanding used in computing net income per share, basic:       
Class A and Class B common shares (3) 81,151   78,496   80,838   78,046 
Common shares outstanding used in computing net income per share, diluted:       
Warrants (Public and Private) (4) 8,094   8,094   8,094   8,094 
Equity awards 2,490   3,991   2,600   4,068 
Total Shares outstanding used in computing net income per share - diluted 91,735   90,581   91,532   90,208 
        
Adjusted net income per share - basic$0.31  $0.29  $0.60  $0.56 
Adjusted net income per share - diluted$0.27  $0.25  $0.53  $0.48 
                

1) Calculated using the Company's blended tax rate.
2) Includes the changes in fair value of warrant liability and earnout consideration liability.
3) Assumes both Class A shares and Class B shares participate in earnings and are outstanding at the end of the period.
4) Assumes treasury stock method, valuation at assumed fair market value of $18.00.
5) The Company did not include the effect of Exchangeable Notes in its total shares outstanding used in diluted adjusted net income per share.


FAQ

What were CompoSecure's Q2 2024 financial results?

CompoSecure reported net sales of $108.6 million, up 10%, and net income of $33.6 million, up 3%. Adjusted EBITDA increased 8% to $40 million.

What is CompoSecure's updated 2024 financial guidance?

CompoSecure now anticipates net sales between $418-$428 million and adjusted EBITDA between $150-$157 million.

What impact does David Cote's new role have on CompoSecure?

David Cote's appointment as Executive Chairman aims to simplify the corporate structure and unlock shareholder value.

How has CompoSecure expanded its partnership with Fiserv?

CompoSecure will now market and resell Arculus Authenticate to Fiserv's customer base.

What awards has CompoSecure won recently?

CompoSecure won three 2024 International Card Manufactures Awards for Best Metal Cards, Best Environmentally-Friendly Cards, and Best Secure Payment Cards.

CompoSecure, Inc.

NASDAQ:CMPO

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1.15B
82.54M
16.01%
94.45%
18.1%
Metal Fabrication
Finance Services
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United States of America
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