CompoSecure, Inc. (Nasdaq: CMPO), a leader in metal payment cards,
security, and authentication solutions, today announced its
operating results for the first quarter ended March 31, 2024.
“We are off to a strong start in 2024 as we generated a record
quarter of revenue, driven by continued momentum in our domestic
business,” said Jon Wilk, President and CEO of CompoSecure. “We
were excited to see several high-profile customer programs that
garnered significant attention in the marketplace including a new,
limited edition version of a payment card made from a recycled
airplane and the Robinhood Gold Card. CompoSecure continues to
generate meaningful free cash flow and ended the quarter with a
cash balance of $55 million, which has more than doubled from one
year ago.”
Mr. Wilk continued, “Given the Company’s robust cash position,
our Board of Directors has declared a special cash dividend of
$0.30 per share. This announcement reflects our commitment to
rewarding CompoSecure shareholders as well as our confidence in
continuing to generate strong free cash flow. We are pleased to
incorporate another avenue for enhancing shareholder value into our
capital allocation framework, which now encompasses organic growth
investments, debt paydowns, securities repurchases, and
consideration of additional dividends.”
Q1 2024 Financial Highlights (vs. Q1 2023)
- Net Sales: Net Sales increased 9% to $104.0
million compared to $95.3 million. The increase was primarily
driven by a record quarter for CompoSecure’s metal payment card
business.
- Gross Profit: Gross Profit increased 3% to
$55.2 million or 53.1% of Net Sales, compared to $53.4 million or
56.0% of Net Sales. The decrease in gross margin was primarily due
to inflationary pressure on wages as well as product mix.
- Net Income/EPS: Net Income increased 59% to
$17.1 million compared to $10.7 million. The increase was primarily
driven by higher net sales and changes to the fair value of warrant
liabilities, earnout consideration liability and derivative
liability. Net Income per share attributable to class A
shareholders was $0.20 (Basic) and $0.17 (Diluted), compared to
$0.13 (Basic) and $0.11 (Diluted) in the year-ago period.
- Adjusted Net Income/Adjusted EPS: Adjusted Net
Income (a non-GAAP measure) increased 12% to $23.1 million compared
to $20.6 million in the year-ago period. Adjusted EPS (a non-GAAP
measure), which includes both class A and class B shares, was $0.29
(Basic) and $0.25 (Diluted) compared to $0.27 (Basic) and $0.23
(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 6% to $37.8 million compared to $35.5 million,
with the increase driven by higher Net Sales.
Liquidity and Capital Structure
- Balance Sheet: At March 31, 2024, CompoSecure
had $55.1 million of cash and cash equivalents and $335.6 million
of total debt, which included $205.6 million of term loan, and
$130.0 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 $362.8 million at March 31, 2023.
CompoSecure’s secured debt leverage ratio was 1.34x at March 31,
2024 compared to 1.39x at December 31, 2023 and 1.60x at March 31,
2023.
- Shares Outstanding: At March 31, 2024,
CompoSecure had 80.6 million shares outstanding which included 20.6
million class A shares and 60.0 million class B shares (for more
information on shares outstanding, both Basic and Diluted, please
refer to CompoSecure’s SEC filings and the accompanying earnings
presentation).
Operational Highlights
- Strong domestic growth demonstrated by 26% increase in Net
Sales compared to Q1 2023.
- Several high-profile customer card programs launched this
quarter, including a new limited edition version of the Delta
Reserve card made from a recycled airplane, the Robinhood Gold
Card, Lloyds Bank in the UK, and Rogers Bank in Canada, among
others.
- Product highlights:
- Echo Mirror Card now available in black and gold, in addition
to silver
- Arculus Cold Storage multi-card/wallet support, allowing
customer to split assets among multiple Arculus cards
- Arculus Cold Storage support for additional blockchains
including XDC, Provenance, and Stellar as well as Ondo tokens and
Polygon NFTs
- CompoSecure Leadership recognition:
- Tim Fitzsimmons, CFO, NJBIZ Leaders in Finance Award
- Greg Maes, COO, finalist, 2024 Manufacturing Leadership
Awards
Special Cash Dividend
CompoSecure’s Board of Directors (the “Board”) has declared a
special cash dividend of $0.30 per share to Class A shareholders.
The Company has also declared a corresponding distribution of $0.30
per share to Class B unitholders of CompoSecure Holdings, L.L.C.
Both the dividend and distribution will be payable on June 11, 2024
to Class A shareholders and Class B unitholders of record as of May
20, 2024 and will be funded by cash on the Company’s balance sheet.
The total amount of cash disbursed to Class A shareholders and
Class B unitholders is expected to be approximately $24.2 million.
The Board may consider future special and recurring dividends and
distribution payments in accordance with the Company’s governance
documents and borrowing arrangements.
2024 Financial Outlook
CompoSecure is reiterating its previously issued full year 2024
guidance, which calls for Net Sales for the full year to range
between $408-$428 million and Adjusted EBITDA to range between
$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: Monday, May 6, 2024Time: 5:00 p.m. Eastern TimeDial-in
registration link: hereLive webcast registration link: here
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 timing and
amount of the special cash dividend; 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 includes 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 PiniellaHead of Communications, CompoSecure(917)
208-7724apiniella@composecure.com
Investor Relations Contact
Sean Mansouri, CFAElevate IR(720)
330-2829CMPO@elevate-ir.com
|
CompoSecure, Inc. |
Condensed Consolidated Balance Sheet Data |
(in thousands) |
|
|
|
|
|
|
|
March 31, 2024 |
|
December 31, 2023 |
|
|
(unaudited) |
|
|
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
55,146 |
|
|
$ |
41,216 |
|
Accounts receivable, net |
|
|
35,110 |
|
|
|
40,488 |
|
Inventories |
|
|
55,197 |
|
|
|
52,540 |
|
Prepaid expenses and other current assets |
|
|
5,252 |
|
|
|
5,133 |
|
Property and equipment, net |
|
|
24,604 |
|
|
|
25,212 |
|
Right of use assets, net |
|
|
6,964 |
|
|
|
7,473 |
|
Deferred tax asset |
|
|
25,529 |
|
|
|
23,697 |
|
Derivative asset – interest rate swap |
|
|
5,745 |
|
|
|
5,258 |
|
Deposits and other assets |
|
|
24 |
|
|
|
24 |
|
TOTAL ASSETS |
|
$ |
213,571 |
|
|
$ |
201,041 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Accounts payable |
|
$ |
4,747 |
|
|
$ |
5,193 |
|
Accrued expenses |
|
|
13,473 |
|
|
|
11,986 |
|
Commission payable |
|
|
5,442 |
|
|
|
4,429 |
|
Bonus payable |
|
|
3,405 |
|
|
|
5,616 |
|
Current portion of long-term debt |
|
|
11,875 |
|
|
|
10,313 |
|
Current portion of lease liabilities |
|
|
1,988 |
|
|
|
1,948 |
|
Current portion of tax receivable agreement liability |
|
|
1,425 |
|
|
|
1,425 |
|
Long-term debt, net of deferred finance costs |
|
|
192,299 |
|
|
|
198,331 |
|
Convertible notes, net of debt discount |
|
|
127,959 |
|
|
|
127,832 |
|
Derivative liability – convertible notes redemption make-whole
provision |
|
|
722 |
|
|
|
425 |
|
Warrant liability |
|
|
15,691 |
|
|
|
8,294 |
|
Earnout consideration liability |
|
|
2,312 |
|
|
|
853 |
|
Lease liabilities, operating |
|
|
5,655 |
|
|
|
6,220 |
|
Tax receivable agreement liability |
|
|
23,949 |
|
|
|
23,949 |
|
Total stockholders' (deficit) |
|
|
(197,371 |
) |
|
|
(205,773 |
) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
213,571 |
|
|
$ |
201,041 |
|
CompoSecure, Inc. |
Consolidated Statements of Operations |
(in thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Net sales |
|
$ |
104,010 |
|
|
$ |
95,316 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Cost of sales |
|
|
48,797 |
|
|
|
41,962 |
|
Selling, General and administrative |
|
|
24,077 |
|
|
|
23,944 |
|
Total operating expenses |
|
|
72,874 |
|
|
|
65,906 |
|
|
|
|
|
|
Income from operations |
|
|
31,136 |
|
|
|
29,410 |
|
|
|
|
|
|
Total other (expense), net |
|
|
(14,899 |
) |
|
|
(19,936 |
) |
Income before income taxes |
|
|
16,237 |
|
|
|
9,474 |
|
Income tax benefit |
|
|
836 |
|
|
|
1,263 |
|
Net income |
|
|
17,073 |
|
|
|
10,737 |
|
|
|
|
|
|
Net income attributable to non-controlling interests |
|
|
13,048 |
|
|
|
8,408 |
|
Net income attributable to CompoSecure, Inc |
|
|
4,025 |
|
|
|
2,329 |
|
|
|
|
|
|
Net income per share attributable to Class A common stockholders –
basic |
|
$ |
0.20 |
|
|
$ |
0.13 |
|
Net income per share attributable to Class A common
stockholders – diluted |
|
$ |
0.17 |
|
|
$ |
0.11 |
|
|
|
|
|
|
Weighted average shared used to compute net income per share
attributable to Class A common stockholders – basic (in
thousands) |
|
|
20,567 |
|
|
|
17,632 |
|
Weighted average shared used to compute net income per share
attributable to Class A common stockholders – diluted (in
thousands) |
|
|
96,235 |
|
|
|
94,736 |
|
CompoSecure, Inc. |
Consolidated Statements of Cash Flows |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
CASH FLOWS FROM OPERATING ACTIVITES: |
|
|
|
|
Net income |
|
$ |
17,073 |
|
|
$ |
10,737 |
|
Adjustments to reconcile net income to net cash provided by
operating activities |
|
|
|
|
|
|
Depreciation |
|
|
2,221 |
|
|
|
2,040 |
|
Stock-based compensation expense |
|
|
4,397 |
|
|
|
4,022 |
|
Amortization of deferred finance costs |
|
|
345 |
|
|
|
559 |
|
Change in fair value of earnout consideration liability |
|
|
1,459 |
|
|
|
1,973 |
|
Revaluation of warrant liability |
|
|
7,397 |
|
|
|
10,759 |
|
Change in fair value of derivative liability |
|
|
297 |
|
|
|
708 |
|
Deferred tax (benefit) expense |
|
|
(1,867 |
) |
|
|
(2,034 |
) |
Changes in assets and liabilities |
|
|
|
|
Accounts receivable |
|
|
5,378 |
|
|
|
(1,915 |
) |
Inventories |
|
|
(2,657 |
) |
|
|
(8,901 |
) |
Prepaid expenses and other assets |
|
|
(119 |
) |
|
|
(373 |
) |
Accounts payable |
|
|
(446 |
) |
|
|
8,367 |
|
Accrued expenses |
|
|
1,486 |
|
|
|
2,069 |
|
Other liabilities |
|
|
(1,213 |
) |
|
|
(3,114 |
) |
Net cash provided by operating activities |
|
|
33,751 |
|
|
|
24,897 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Acquisition of property and equipment |
|
|
(1,613 |
) |
|
|
(3,666 |
) |
Net cash used in investing activities |
|
|
(1,613 |
) |
|
|
(3,666 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Proceeds from employee stock purchase plan and exercise of equity
awards |
|
|
107 |
|
|
|
146 |
|
Payments for taxes related to net share settlement of equity
awards |
|
|
(3,476 |
) |
|
|
(2,409 |
) |
Payment of term loan |
|
|
(4,688 |
) |
|
|
(330 |
) |
Distributions |
|
|
(10,151 |
) |
|
|
(9,714 |
) |
Net cash used in financing activities |
|
|
(18,208 |
) |
|
|
(12,307 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
13,930 |
|
|
|
8,924 |
|
Cash and cash equivalents,
beginning of period |
|
|
41,216 |
|
|
|
13,642 |
|
Cash and cash equivalents, end of period |
|
$ |
55,146 |
|
|
$ |
22,566 |
|
|
|
|
|
|
Supplementary disclosure of cash flow information |
|
|
|
|
Cash paid for interest expense |
|
|
4,175 |
|
|
|
4,567 |
|
Supplemental disclosure of non-cash financing activity: |
|
|
|
|
Derivative asset – interest rate swap |
|
|
452 |
|
|
|
(1,649 |
) |
|
|
|
|
|
CompoSecure, Inc. |
Non-GAAP Adjusted EBITDA Reconciliation |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Net income |
|
$ |
17,073 |
|
|
$ |
10,737 |
|
Add: |
|
|
|
|
Depreciation |
|
|
2,221 |
|
|
|
2,040 |
|
Interest expense, net (1) |
|
|
5,746 |
|
|
|
6,496 |
|
Income tax benefit |
|
|
(836 |
) |
|
|
(1,263 |
) |
EBITDA |
|
$ |
24,204 |
|
|
$ |
18,010 |
|
Stock-based compensation |
|
|
4,397 |
|
|
|
4,022 |
|
Mark to market adjustments (2) |
|
|
9,153 |
|
|
|
13,440 |
|
Adjusted EBITDA |
|
$ |
37,754 |
|
|
$ |
35,472 |
|
|
|
|
|
|
(1) Includes amortization of deferred financing cost for the three
months ended March 31, 2024 and 2023, respectively. |
(2) Includes the changes in fair value of warrant liability,
derivative liabilities and earnout consideration liability for the
three months ended March 31, 2024 and 2023, respectively |
CompoSecure, Inc. |
Non-GAAP Adjusted EPS Reconciliation |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
(in thousands) except per share amounts |
Basic and Diluted: |
|
|
|
|
Net income |
|
$ |
17,073 |
|
|
$ |
10,737 |
|
Less: benefit for income taxes |
|
|
(836 |
) |
|
|
(1,263 |
) |
Income before Income taxes |
|
|
16,237 |
|
|
|
9,474 |
|
Income tax expense (1) |
|
|
(6,405 |
) |
|
|
(5,581 |
) |
Adjusted net income before adjustments |
|
|
9,832 |
|
|
|
3,893 |
|
Add: mark-to-market adjustments (2) |
|
|
8,856 |
|
|
|
12,732 |
|
Add: stock-based compensation |
|
|
4,397 |
|
|
|
4,022 |
|
Adjusted net income |
|
$ |
23,085 |
|
|
$ |
20,647 |
|
Common shares outstanding used in computing earnings per share,
basic: |
|
|
|
|
Class A and Class B common shares (3) |
|
|
80,525 |
|
|
|
77,591 |
|
Common shares outstanding used in computing earnings per share,
diluted: |
|
|
|
|
Warrants (Public and Private) (4) |
|
|
8,094 |
|
|
|
8,094 |
|
Equity awards |
|
|
2,710 |
|
|
|
4,145 |
|
Total Shares outstanding used in computing adjusted earnings per
share - diluted |
|
|
91,329 |
|
|
|
89,830 |
|
|
|
|
|
|
Adjusted net income per share – basic |
|
$ |
0.29 |
|
|
$ |
0.27 |
|
Adjusted net income per share – diluted |
|
$ |
0.25 |
|
|
$ |
0.23 |
|
|
|
|
|
|
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 to
its total shares outstanding used in diluted adjusted net income
per share. |
CompoSecure (NASDAQ:CMPO)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
CompoSecure (NASDAQ:CMPO)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024