UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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| Item 2.02 | Results of Operations and Financial Condition |
On November 8, 2024, CompoSecure, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended September 30, 2024, and provided an investor presentation to accompany the press release. The press release and investor presentation provide business updates.
Copies of the press release and the investor presentation are furnished herewith as Exhibits 99.1 and 99.2, respectively.*
| Item 7.01 | Regulation FD Disclosure |
The information included under Item 2.02 of this Current Report on Form 8-K is incorporated into this Item 7.01 by reference.*
| Item 9.01 | Exhibits |
(d) Exhibits
| Exhibit No. | Description |
| 99.1 | Press Release of the Company, dated November 8, 2024 |
| 99.2 | Investor Presentation, dated November 8, 2024 |
| 104 | Cover Page Interactive Data File (embedded with the Inline XBRL document) |
* The information in Items 2.02 and 7.01 of this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| COMPOSECURE, INC. | ||
| Date: November 8, 2024 | By: | /s/ Timothy Fitzsimmons |
| Timothy Fitzsimmons | ||
| Chief Financial Officer | ||
Exhibit 99.1
CompoSecure Reports Strong Third Quarter 2024 Financial Results
| · | Q3 Net Sales up 11% to $107.1 million |
| · | GAAP Net Income/(Loss) of $(85.5) million due to significant stock price improvement negatively impacting the fair value of non-cash items |
| · | Q3 Adjusted Net Income up 18% to $25.6 million |
| · | Q3 Adjusted EBITDA up 13% to $40.0 million |
| · | Completed Resolute Holdings transaction; appointed new Executive Chairman and Board members |
| · | Revises 2024 outlook: Net Sales guidance to range between $418-$424 million; Adjusted EBITDA guidance to range between $148-$151 million to reflect investments for future growth |
SOMERSET, N.J., November 8, 2024 -- CompoSecure, Inc. (Nasdaq: CMPO), a leader in metal payment cards, security, and authentication solutions, today announced its operating results for the third quarter ended September 30, 2024.
Jon Wilk, President and CEO of CompoSecure, commented: “We are very pleased with our third quarter performance which included double-digit growth for both Net Sales and Adjusted EBITDA. The quarter was driven by strong international execution, continued growth of new programs, and the growing adoption of our innovative payment cards. I am also happy to announce that we signed a two-year contract extension with Capital One.”
“Although we are reporting a GAAP Net Loss for the quarter, this was entirely driven by the significant improvement in our stock price this quarter, which impacts the valuation of non-cash items. Importantly, our Adjusted Net Income was up 18% compared to the year-ago period, which we believe more accurately reflects our operating performance.”
Mr. Wilk continued: “We are also enhancing our capabilities to drive accretive M&A and remain focused on strategic investments
in our business. To support this growth, we are revising our Adjusted EBITDA guidance for the year to account for additional investments
aimed at accelerating our momentum.”
Dave Cote, CompoSecure’s Executive Chairman, added: “As we embark on this next chapter, I want to express how excited I am about our long-term opportunities as well as our challenges ahead. We were attracted to the business because it hit the six hot buttons we used to evaluate acquisitions at Honeywell: Great position, good industry, technology differentiator, organic and inorganic sales growth, and margin expansion. That being said, this is a pivotal time for the company, and we are committed to building a culture centered on high performance, improving efficiency through the CompoSecure Operating System, reinvigorating organic growth, and driving accretive M&A. That work will require investment and you will see that reflected in our full year estimate.”
Financial Highlights (Q3 2024 vs. Q3 2023 )
| · | Net Sales: Net Sales increased 11% to $107.1 million compared to $96.9 million. The increase was primarily driven by strong international demand and product innovation. |
| · | Gross Profit: Gross Profit increased to $55.4 million or 52% of Net Sales, compared to $48.9 million or 50%. The increase was driven by favorable product mix and improved production efficiencies. |
| · | Net Income/EPS: Net Income/(Loss) of $(85.5) million compared to $38.0 million. The decrease was driven by an improvement to the Company’s stock price during the quarter, which led to a change in the fair value of warrant liabilities, earnout consideration liability and derivative liability. Net Income/(Loss) per share attributable to Class A common shareholders was $(1.10) (Basic) and $(1.10) (Diluted), compared to $0.39 (Basic) and $0.34 (Diluted) in the year-ago period. |
| · | Adjusted Net Income/Adjusted EPS: Adjusted Net Income (a non-GAAP measure) increased 18% to $25.6 million compared to $21.7 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 $0.27 (Basic) and $0.24 (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 13% to $40.0 million compared to $35.5 million, with the increase driven by net sales growth and gross margin expansion. |
Liquidity and Capital Structure
Balance Sheet: At September 30, 2024, CompoSecure had $52.7 million of cash and cash equivalents and $330.0 million of total debt, which included $200.0 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 $23.8 million and total debt of $345.0 million at September 30, 2023. CompoSecure’s secured debt leverage ratio was 1.06x at September 30, 2024 compared to 1.39x at December 31, 2023 and 1.48x at September 30, 2023.
Shares Outstanding: On September 17, 2024, Resolute Holdings and its affiliated vehicles (“Resolute”) completed the acquisition of a majority interest in CompoSecure through stock purchase agreements among Resolute and certain selling shareholders. In the transaction, the selling shareholders exchanged all of their Class B units for Class A shares and Resolute acquired 49.3 million Class A shares, representing approximately 60% of CompoSecure’s outstanding shares. At September 30, 2024, CompoSecure had 82.7 million shares outstanding all of which were Class A shares, with the increase resulting from the Resolute Holdings transaction.
Exchangeable Notes
| · | Effective September 19, 2024, Resolute’s acquisition of a majority of the Company’s common stock caused a Fundamental Change, as defined in the Indenture pursuant to which $130 million of 7% Exchangeable Senior Notes, due 2026 (“Notes”) were issued by a subsidiary of the Company. This Fundamental Change provides holders of the Notes a choice to: |
| ▪ | Exchange the Notes for shares of Class A Common Stock at a temporarily increased exchange rate of 104.5199 shares per $1,000 principal amount of Notes until November 27, 2024 (with the exchange rate then reverting to the existing 91.0972 shares per $1,000 principal amount of Notes) |
| · | Have the Company repurchase for cash of all of such holder’s Notes on November 29, 2024 at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest |
| · | Continue to hold the Notes |
| · | Through November November 6, 2024, an aggregate of $51.4 million of the Notes have been surrendered and exchanged for an aggregate of 5.4 million newly-issued shares of Class A Common Stock. |
Additional Highlights
| · | Announced a two-year contract extension with Capital One |
| · | New customer programs included US Bank Smartly, Goldman Sachs Debit, IDFC India, HSBC Global Singapore, BTG Brazio, Qonto France, Military Bank Vietnam |
| · | Tom Knott, Joseph DeAngelo, Roger Fradin, Mark James, John Cote, and Dr. Krishna Mikkilineni also appointed to the Board of Directors |
| · | Achieved ISO 27001 Certification for Premium Card Manufacturing (ISO 27001 is the globally recognized information security management system (ISMS) standard) |
2024 Financial Outlook
CompoSecure is revising its full year Net Sales guidance to $418-$424 million (previously $418-$428 million) and its Adjusted EBITDA guidance to $148-$151 million (previously $150-157 million) to reflect investments for future growth.
Conference Call
CompoSecure will host a conference call and live audio webcast today at 8:30 a.m. Eastern Time to discuss its financial and operational results, followed by a question-and-answer period.
Date: Friday, November 8, 2024
Time: 8:30 a.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 ability of CompoSecure to diversify its business and customer base and to achieve enhancements in organic growth and operational efficiency, including for any future acquired companies; the ability of CompoSecure to create value for its shareholders and generate robust free cash flow; 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 Communications, CompoSecure
(917) 208-7724
apiniella@composecure.com
Investor Relations Contact
Sean Mansouri, CFA
Elevate IR
(720) 330-2829
CMPO@elevate-ir.
Condensed Consolidated Balance Sheet Data
(in thousands)
| September 30, 2024 | December 31, 2023 | |||||||
| Unaudited | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 52,674 | $ | 41,216 | ||||
| Accounts receivable, net | 43,799 | 40,488 | ||||||
| Inventories | 55,090 | 52,540 | ||||||
| Prepaid expenses and other current assets | 5,248 | 5,133 | ||||||
| Total current assets | 156,811 | 139,377 | ||||||
| Property and equipment, net | 23,062 | 25,212 | ||||||
| Right of use assets, net | 5,929 | 7,473 | ||||||
| Deferred tax asset | 245,102 | 23,697 | ||||||
| Derivative asset - interest rate swap | 2,775 | 5,258 | ||||||
| Deposits and other assets | 1,762 | 24 | ||||||
| Total assets | $ | 435,441 | $ | 201,041 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | 9,692 | 5,193 | ||||||
| Accrued expenses | 13,473 | 11,986 | ||||||
| Commission payable | 2,967 | 4,429 | ||||||
| Bonus payable | 7,732 | 5,616 | ||||||
| Current portion of long-term debt | 10,000 | 10,313 | ||||||
| Current portion of lease liabilities | 2,070 | 1,948 | ||||||
| Current portion of earnout liability | 18,527 | 60 | ||||||
| Current portion of tax receivable agreement liability | 122 | 1,425 | ||||||
| Total current liabilities | 64,583 | 40,970 | ||||||
| Long-term debt, net of deferred finance costs | 188,149 | 198,331 | ||||||
| Convertible notes | 128,220 | 127,832 | ||||||
| Derivative liability - convertible notes redemption make-whole provision | — | 425 | ||||||
| Warrant liability | 84,505 | 8,294 | ||||||
| Lease liabilities, operating | 4,490 | 6,220 | ||||||
| Tax receivable agreement liability | 234,117 | 23,949 | ||||||
| Earnout consideration liability | 16,386 | 793 | ||||||
| Total liabilities | 720,450 | 406,814 | ||||||
| Commitments and contingencies (Note 13) | ||||||||
| Redeemable non-controlling interest | — | 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, 82,677,354 and 19,415,123 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | 8 | 2 | ||||||
| Class B common stock, $0.0001 par value; 75,000,000 shares authorized, no shares and 59,958,422 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | — | 6 | ||||||
| Additional paid-in capital | 180,356 | 39,466 | ||||||
| Accumulated other comprehensive income | 2,569 | 4,991 | ||||||
| Accumulated deficit | (467,942 | ) | (846,825 | ) | ||||
| Total stockholders' deficit | (285,009 | ) | (802,360 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 435,441 | $ | 201,041 | ||||
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net sales | $ | 107,135 | $ | 96,886 | $ | 319,712 | $ | 290,729 | ||||||||
| Operating expenses: | ||||||||||||||||
| Cost of sales | 51,727 | 47,990 | 153,019 | 134,542 | ||||||||||||
| Selling, general and administrative expenses | 26,316 | 20,095 | 74,673 | 67,627 | ||||||||||||
| Total operating expenses | 78,043 | 68,085 | 227,692 | 202,169 | ||||||||||||
| Income from operations | 29,092 | 28,801 | 92,020 | 88,560 | ||||||||||||
| Total other income (expense), net | (113,937 | ) | 10,197 | (126,773 | ) | (6,408 | ) | |||||||||
| (Loss) income before income taxes | (84,845 | ) | 38,998 | (34,753 | ) | 82,152 | ||||||||||
| Income tax (expense) | (629 | ) | (949 | ) | (51 | ) | (656 | ) | ||||||||
| Net (loss) income | $ | (85,474 | ) | $ | 38,049 | $ | (34,804 | ) | $ | 81,496 | ||||||
| Net (loss) income attributable to redeemable non-controlling interests | $ | (43,414 | ) | $ | 30,574 | $ | (18,414 | ) | $ | 65,653 | ||||||
| Net (loss) income attributable to CompoSecure, Inc. | $ | (42,060 | ) | $ | 7,475 | $ | (16,390 | ) | $ | 15,843 | ||||||
| Net (loss) income per share attributable to Class A common stockholders - basic | $ | (1.10 | ) | $ | 0.39 | $ | (0.58 | ) | $ | 0.86 | ||||||
| Net (loss) income per share attributable to Class A common stockholders - diluted | $ | (1.10 | ) | $ | 0.34 | $ | (0.58 | ) | $ | 0.75 | ||||||
| Weighted average shares used to compute net (loss) income per share attributable to Class A common stockholders - basic (in thousands) | 38,212 | 19,075 | 28,110 | 18,420 | ||||||||||||
| Weighted average shares used to compute net (loss) income per share attributable to Class A common stockholders - diluted (in thousands) | 38,212 | 35,765 | 28,110 | 35,362 | ||||||||||||
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) Income | $ | (34,804 | ) | $ | 81,496 | |||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation and amortization | 6,932 | 6,249 | ||||||
| Stock-based compensation expense | 15,269 | 13,052 | ||||||
| Amortization of deferred finance costs | 958 | 1,262 | ||||||
| Loss on extinguishment of debt | 148 | — | ||||||
| Change in fair value of earnout consideration liability | 34,060 | (10,540 | ) | |||||
| Revaluation of warrant liability | 76,211 | (1,771 | ) | |||||
| Change in fair value of derivative liability | (425 | ) | 364 | |||||
| Deferred tax (benefit) | (4,813 | ) | (1,485 | ) | ||||
| Changes in assets and liabilities | ||||||||
| Accounts receivable | (3,311 | ) | (11,261 | ) | ||||
| Inventories | (2,550 | ) | (9,614 | ) | ||||
| Prepaid expenses and other assets | (115 | ) | (87 | ) | ||||
| Accounts payable | 4,499 | 6,938 | ||||||
| Accrued expenses | 1,487 | 4,065 | ||||||
| Other liabilities | 590 | (789 | ) | |||||
| Net cash provided by operating activities | 94,136 | 77,879 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (4,782 | ) | (6,669 | ) | ||||
| Capitalized software expenditures | (729 | ) | — | |||||
| Net cash used in investing activities | (5,511 | ) | (6,669 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from employee stock purchase plan, warrants and exercises of equity awards | 2,895 | 1,024 | ||||||
| Payments for taxes related to net share settlement of equity awards | (8,482 | ) | (3,126 | ) | ||||
| Payment of tax receivable agreement liability | — | (2,193 | ) | |||||
| Payment of term loan | (10,333 | ) | (18,122 | ) | ||||
| Deferred finance costs related to debt modification | (1,889 | ) | (256 | ) | ||||
| Tax distributions to non-controlling members | (34,863 | ) | (38,362 | ) | ||||
| Special distribution to non-controlling members | (15,573 | ) | — | |||||
| Dividend to Class A shareholders | (8,922 | ) | — | |||||
| Net cash used in financing activities | (77,167 | ) | (61,035 | ) | ||||
| Net increase in cash and cash equivalents | 11,458 | 10,175 | ||||||
| Cash and cash equivalents, beginning of period | 41,216 | 13,642 | ||||||
| Cash and cash equivalents, end of period | $ | 52,674 | $ | 23,817 | ||||
| Supplementary disclosure of cash flow information: | ||||||||
| Cash paid for interest expense | $ | 16,987 | $ | 18,296 | ||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Derivative asset - interest rate swap | $ | (2,422 | ) | $ | (637 | ) | ||
Non-GAAP Adjusted EBITDA Reconciliation
(in thousands)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net (loss) income | $ | (85,474 | ) | $ | 38,049 | $ | (34,804 | ) | $ | 81,496 | ||||||
| Add: | ||||||||||||||||
| Depreciation and amortization | 2,331 | 2,078 | 6,932 | 6,249 | ||||||||||||
| Interest expense, net (1) | 5,533 | 6,010 | 16,927 | 18,355 | ||||||||||||
| Income tax expense | 629 | 949 | 51 | 656 | ||||||||||||
| EBITDA | $ | (76,981 | ) | $ | 47,086 | $ | (10,894 | ) | $ | 106,756 | ||||||
| Stock-based compensation expense | 5,634 | 4,637 | 15,269 | 13,052 | ||||||||||||
| Mark-to-market adjustments, net (2) | 108,404 | (16,207 | ) | 109,846 | (11,947 | ) | ||||||||||
| Secondary offering transaction costs | — | — | 586 | — | ||||||||||||
| Debt refinance costs | 225 | — | 225 | — | ||||||||||||
| Resolute transaction costs | 2,726 | — | 2,726 | — | ||||||||||||
| Adjusted EBITDA | $ | 40,008 | $ | 35,516 | $ | 117,758 | $ | 107,861 | ||||||||
| (1) | Includes amortization of deferred financing cost for the three and nine months ended September 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 nine months ended September 30, 2024 and 2023, respectively. |
Non-GAAP Adjusted EPS Reconciliation
(in thousands)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) except per share amounts | ||||||||||||||||
| Basic and Diluted: | ||||||||||||||||
| Net (loss) income | $ | (85,474 | ) | $ | 38,049 | $ | (34,804 | ) | $ | 81,496 | ||||||
| Add: provision for income taxes | 629 | 949 | 51 | 656 | ||||||||||||
| (Loss) income before income taxes | (84,845 | ) | 38,998 | (34,753 | ) | 82,152 | ||||||||||
| Income tax expense (1) | (7,100 | ) | (5,868 | ) | (20,487 | ) | (17,639 | ) | ||||||||
| Adjusted net (loss) income before adjustments | (91,945 | ) | 33,130 | (55,240 | ) | 64,513 | ||||||||||
| (Less) add: mark-to-market adjustments (2) | 108,948 | (16,058 | ) | 110,271 | (12,311 | ) | ||||||||||
| Add: Secondary offering transaction costs | $ | — | — | 586 | — | |||||||||||
| Add: stock-based compensation | 5,634 | 4,637 | 15,269 | 13,052 | ||||||||||||
| Adjusted net income | $ | 25,588 | $ | 21,709 | $ | 73,837 | $ | 65,254 | ||||||||
| Common shares outstanding used in computing net income per share, basic: | ||||||||||||||||
| Class A and Class B common shares (3) | 82,222 | 79,033 | 81,303 | 78,378 | ||||||||||||
| 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 | 3,544 | 3,690 | 2,915 | 3,942 | ||||||||||||
| Total Shares outstanding used in computing net income per share - diluted | 93,860 | 90,817 | 92,312 | 90,414 | ||||||||||||
| Adjusted net income per share - basic | $ | 0.31 | $ | 0.27 | $ | 0.91 | $ | 0.83 | ||||||||
| Adjusted net income per share - diluted | $ | 0.27 | $ | 0.24 | $ | 0.80 | $ | 0.72 | ||||||||
| 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. |
Exhibit 99.2
Q3 2024 Earnings Presentation November 8, 2024
Disclaimers 2 Forward Looking Statements This presentation 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 reasona ble, 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 , a re 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,” “sh oul d,” “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 no t 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 the CompoSecure’s future resul ts and could cause those results or other outcomes to differ materially from those expressed or implied in these forward - looking statements: the ability of CompoSecure to diversify its business and customer base and to achieve enhancements in organic growth and operational efficiency, including for any future acquired companies; the ability of CompoSecure to create value for its shareholders and generate robust free cash flow; the ability of CompoSecure to grow and manage growth profitably, maintain relationships with customers, compete within its industry and retain its key employees; the possi bil ity 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 Commissi on. 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. Non - GAAP Financial Measures This presentation 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. The Company believes EBITDA, Adjusted EBITDA, Adjusted Net Income, Adj usted EPS, and Free Cash Flow are useful to investors in evaluating the Company’s financial performance. The Company uses these measures internally to establish forecasts, budgets and operational g oal s 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 the Company to evaluate and plan more effectively for the future. Due to the forward - looking natur e of the financial guidance included below, specific quantification of the charges excluded from the non - GAAP financial measures included in such financial guidance, including with respect to depreciatio n, 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 pro vide 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, the Company’s debt agreements contain covenants that use a variation of these measures for purposes of determining debt covenant compliance. The Co mpany 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 Ca sh 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 a re significant components in understanding and assessing the Company’s financial performance. Accordingly, these key business metrics have limitations as an analytical tool. They should not be con sid ered 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 the Company’s liqui dit y and may be different from similarly titled non - GAAP measures used by other companies. Please refer to the tables below for the reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Inc ome , Adjusted EPS, and Free Cash Flow. Industry and Market Information Statements in this presentation concerning our industry and the markets in which we operate, including our general expectatio ns and competitive position, business opportunity and market size, growth and share, are based on information from independent industry organizations and other third - party sources, data from our internal re search and management estimates. Management estimates are derived from publicly available information and the information and data referred to above and are based on assumptions and calculations m ade by us based upon our interpretation of such information and data. The information and data referred to above are imprecise and may prove to be inaccurate because the information cannot always be ver ified with complete certainty due to the limitations on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. As a res ult , please be aware that the data and statistical information in this presentation may differ from information provided by our competitors or from information found in current or future studies conducted by marke t r esearch institutes, consultancy firms or independent sources.
Executive Summary Revised guidance for f ull y ear 2024 Net Sales expected to be in the range of $ 418 mm to $ 424 mm a nd Adjusted EBITDA of $148mm to $151mm Dave Cote’s Resolute Holdings acquired majority interest; Dave appointed executive chairman and we added new board members; impact eliminated dual - class stock & simplified tax structure, improving free cash flow Net Sales: Q3 ’24 vs. Q3 ‘23 increased 11% to $107mm compared to $97mm driven by strong international demand and product innovation 1 Adjusted EBITDA is a non - GAAP financial measure. For reconciliation of Adjusted EBITDA to the most directly comparable measure prepared in accordance with GAAP, please see the Appendix Adjusted EBITDA 1 : Q3 ‘24 vs. Q3 ‘23 increased 13% to $40mm compared to $36mm driven by higher net sales and lower SG&A High - profile customer card programs launched this quarter including US Bank Smartly, Goldman Sachs Debit, BTG in Brazil, and variety of fintechs and international banks 3 Capital One contract extended for another two years
2024 Company Objectives Grow and diversify metal payment cards while delivering exceptional quality to our customers Innovate across products, processes and platforms to differentiate from competition and continue emphasis on environmental impact Drive Arculus Authenticate and Cold Storage by demonstrating to our customers the value proposition of both hardware and software solutions Maintain margins through improved quality, production efficiency, sourcing optimization, and automation Grow Metal Payment Cards Innovate Across Functions Demonstrate Arculus Success Enhance Efficiency 1 4 3 2 Continue to evolve as a world - class organization, innovator, and employer of choice to deliver unparalleled customer and shareholder value Focus On Our People 5 4
Key Highlights – New Metal Card Programs Goldman Sachs Debit - US Qonto - France Military Bank - Vietnam HSBC - Singapore US Bank Smartly - US BTG - Brazil IDFC - India 5 Several high - profile metal payment card launches across the globe including both traditional banks and fintechs
Recent Trends across Payment Cards 1 American Express & JP Morgan Chase Earnings Presentations 2 American Express Earnings Presentations Year over Year Purchase Volume Growth 1 American Express New Card Acquisitions and Investment 2 - 32% - 6% 30% 4% 51% 13% 7% -35% -15% 5% 25% 45% 65% Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 American Express JP Morgan Chase 2.5 1.0 1.4 1.7 2.1 2.4 2.6 2.7 3.0 3.2 3.3 3.0 3.4 3.0 2.9 2.9 3.4 3.3 3.3 - 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 $0.0 $1.0 $2.0 $3.0 $4.0 New Cards (MM) Marketing & Business Development Spend ($B) 6 CompoSecure’s largest customers reported purchase volume growth vs. prior year while American Express acquired 3.3mm new cards behind robust investments
Card Issuer and Payment Network Sentiment 1 Q3 ‘24 Earnings Transcripts “ And we continue to see strong demand for our products as we bring new customers into the franchise with new cards acquired of 3.3 million in the quarter. Our strong acquisition and retention levels, along with our ongoing cycle of refreshing products continue to drive sustainable growth in card fee revenue. This strong growth represents a real proof point of the success of our strategy and the continued engagement of our customers. ” – Christophe Le C aillec (CFO) 1 “ So overall, we see the spending patterns as being sort of solid and consistent with the narrative that the consumer is on solid footing and consistent with the strong labor market and the current central case of a kind of new landing scenario economically .” – Jeremy Barnum (CFO) 1 7 The payment card industry is performing well and remains optimistic about future growth “We continue to see compelling growth opportunities in our Domestic Card business. Our marketing continues to deliver strong new account growth across the Domestic Card business compared to the third quarter of 2023. Domestic Card marketing in the quarter included increased marketing to grow originations at the top of the market, higher media spend, and increased investment in differentiated customer experiences like our travel airport lounges and Capital One shopping.” – Richard Fairbank (Chairman & CEO) 1 “The macroeconomic environment remained supportive and continues to underpin the strength in consumer spending. The labor market remained strong, even if slightly below historically tight levels. And inflation has moderated, albeit at varied lev els across categories and countries. Overall, we remain positive about our growth outlook, but we will continue to monitor the environment.” – Michael Miebach (CEO) 1
Cardholders Issuers Elevated, Premium Experience • Metal cards instill feelings of quality, durability, exclusivity, and status Consumers Prefer Metal Cards Over Plastic • Superior tactile experience • Global surveys indicate consumer preference for metal Entrenched Preference for Physical Payment Cards Over Mobile • Perception of increased security with physical payment cards vs. mobile • Metal further elevates the tangible physical payment experience Environmental Sustainability • 65% post - consumer recycled stainless steel • Most new metal cards include a postage - paid envelope to return and recycle expired metal cards Highly Compelling Economics • Low, predictable cost of metal cards relative to ongoing marketing/rewards costs drives ROI for issuers Innovative Product Differentiation • Elevated user experience and branding encourages consumers to keep issuer cards top of wallet amidst highly competitive payment card market Quality Offering for Mass Affluent • Pioneering technology and manufacturing capabilities have reduced production costs, enabling issuers to target a wider variety of consumers Superior Metal Construct • Metal construction enables issuers to increase durability to support new technological capabilities Metal Payment Card’s Value Proposition 8 Metal payment cards offer an unmatched value proposition to both cardholders and issuers
Differentiated Capabilities ▪ Key manufacturing equipment heavily customized to enable proprietary processes ▪ Vast industry experience across the leadership team and entire organization to collaborate closely with clients and drive innovation ▪ Extensive trade secrets in metal card printing, proprietary coatings, and specialized etching and engraving ▪ Intense focus on intellectual property ▪ Broad protection on metal card manufacturing ▪ 60+ patents issued, 35+ pending, and with a constant focus on new technological innovations ▪ Strong operating leverage; produced 31mm+ metal cards in 2023 ▪ Available space to expand capacity within existing footprint ▪ Ability to provide volume and quality at scale larger than any competitor's existing metal card output SCALE TRADE SECRETS INTELLECTUAL PROPERTY 9 Comprehensive product portfolio, extensive business partnerships, advanced technology and innovation, and strong sustainability strategy Expertise Patents Expansive Operations
Arculus Capabilities Arculus Authenticate Arculus Cold Storage Hardware - bound PassKey authenticator • Secure login on any iPhone, Android phone, or platform enabled with FIDO2 technology • New device authentication (on - boarding new phone) • Customer support authentication to call center • Step - up authentication for high - risk transactions • Secure account and prevent hackers from gaining access to banking or social media app • White - labeled or co - branded solution sold through businesses for usage by their customer base • Generate, store, and secure keys for digital assets such as Bitcoin, Ethereum, Cardano, Solano, and many more • White - labeled or co - branded solution sold through businesses for usage by their customer base • Direct to consumer Capability Use Cases Example Distribution Channels Crypto and NFT hardware cold storage wallet • Advanced three - factor authentication (biometric, PIN, and tapping card) • Securely store, send, and receive digital assets via user - friendly mobile application • Secure element with NFC connectivity (no battery or charging required) 10 Created capability for Arculus to enable Web3 payments - using digital assets for everyday purchases at point of sale
Financial Overview 11
$49 $55 Q3 2023 Q3 2024 $13 $27 Q3 2023 Q3 2024 $84 $80 Q3 2023 Q3 2024 $97 $107 Q3 2023 Q3 2024 Q3 2024 12 Total Net Sales » Lower in quarter but expected to rebound in Q4 » Strong performance from both traditional financial institutions and fintech » Momentum from new product innovation ( Trade Republic’s new program launch with our Echo Mirror card ) Strong third quarter results driven by international sales and improved production efficiencies » Driven by net sales growth and improved production efficiencies Domestic Net Sales International Net Sales Gross Profit Gross Margin 50.5% 51.7% Q3 2023 Q3 2024 » Improved production efficiencies and favorable product mix Up ~$10mm +11% vs prior year Down ~$4mm (5%) vs prior year Up ~$14mm +115% vs prior year Up ~$6mm +13% vs prior year Up 125 bps vs prior year $ Millions
$0.24 $0.27 Q3 2023 Q3 2024 36.7% 37.3% Q3 2023 Q3 2024 $36 $40 Q3 2023 Q3 2024 $22 $26 Q3 2023 Q3 2024 Q3 2024 13 Adjusted EBITDA 1 » Improved efficiencies and spend management » Includes net impact from Arculus investment in Q3 ‘24 of ($2.4mm) vs. Q3 ‘23 of ($3.1mm) » Adjusts out $108mm of non - cash charges from stock price Operating leverage increased in the quarter as Adjusted EBITDA grew at faster rate than Net Sales » Number of diluted shares up 90.8mm to 93.9mm Adjusted EBITDA Margin 1 Adjusted Net Income 1 Adjusted Diluted EPS 1 Up ~$4mm +13% vs prior year Up 69 bps vs prior year Up ~$4mm +18% vs prior year Up ~$0.03 +13% vs prior year $ Millions 1 Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted EPS are non - GAAP financial measure. For reco nciliation of these non - GAAP measures to the most directly comparable measure prepared in accordance with GAAP, please see the A ppendix
53.7% 52.1% YTD Sept '23 YTD Sept '24 $156 $167 YTD Sept '23 YTD Sept '24 $55 $62 YTD Sept '23 YTD Sept '24 $236 $258 YTD Sept '23 YTD Sept '24 $291 $320 YTD Sept '23 YTD Sept '24 YTD Sept 2024 14 Total Net Sales » Strong performance from large traditional bank issuers » Expansion of existing client business as well as growth from new clients » Acceleration from both direct and indirect distribution channels » Driven by net sales growth Domestic Net Sales International Net Sales Gross Profit Gross Margin » Primarily due to higher headcount and wage cost, inflationary costs of materials, and product mix Up ~$29mm +10% vs prior year Up ~$22mm +9% vs prior year Up ~$7mm +13% vs prior year Up ~$11mm +7% vs prior year Down 159 bps vs prior year Strong year to date results driven by global sales growth across new and existing customers $ Millions
$0.72 $0.80 YTD Sept '23 YTD Sept '24 $65 $74 YTD Sept '23 YTD Sept '24 37.1% 36.8% YTD Sept '23 YTD Sept '24 $108 $118 YTD Sept '23 YTD Sept '24 YTD Sept 2024 15 » Impact from lower production efficiencies » Includes net impact from Arculus investment YTD Q3 ‘24 of ($6.5mm) vs. YTD Q3 ‘23 of ($11.8mm) » Benefitting from higher revenue growth Net investment from Arculus continues to trend favorably vs. prior year and remains on track to turn profitable in 2025 » Number of diluted shares up 90.4mm to 92.3mm Up ~$10mm +9% vs prior year Down 27 bps vs prior year Up ~$9mm +13% vs prior year Up ~$0.08 +11% vs prior year $ Millions 1 Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted EPS are non - GAAP financial measure. For reco nciliation of these non - GAAP measures to the most directly comparable measure prepared in accordance with GAAP, please see the A ppendix Adjusted EBITDA 1 Adjusted EBITDA Margin 1 Adjusted Net Income 1 Adjusted Diluted EPS 1
Net Sales Adjusted EBITDA 2 $98mm - $104mm $30mm - $33mm $418mm - $424mm $148mm - $151mm 2024F +$ 27 mm / +$33mm +3mm / +$6mm B/(W) vs. ‘23 B/(W) vs. ‘23 +7% / + 9 % +2% / +4% Q4F 2024 Guidance Revised full year Net Sales and Adjusted EBITDA guidance 1 1 Previous guidance was Net Sales of $418mm - $428mm and Adjusted EBITDA of $150mm - $157mm 2 Adjusted EBITDA is a non - GAAP financial metric. For a reconciliation of Adjusted EBITDA to the most - comparable GAAP metric, plea se see the Appendix to this presentation 16
Balance Sheet (Unaudited) Source: Company financials Note: Financial position has been derived from CompoSecure’s consolidated financial statements for the quarters ended Septemb er 30, 2024 and December 31, 2023 respectively Q4 2023A Q3 2024A ($mm) Assets Current Assets $41 $53 Cash & cash equivalents 40 44 Accounts receivable, net 53 55 Inventories 5 5 Prepaid expenses and other Current assets 139 157 Total Current Assets 25 23 Property and equipment, net 24 245 Deferred tax assets 12 10 Other assets $201 $435 Total assets Liabilities and Members' Equity Current Liabilities $5 $10 Accounts payable 12 13 Accrued expenses 13 31 Other current liabilities 10 10 Current portion of long - term debt 41 65 Total current liabilities 198 188 Long - term debt, net of deferred finance costs 0 0 Line of credit 128 128 Convertible Debt, net of debt discount 39 339 Other liabilities $407 $720 Total liabilities (206) (285) Members' Equity $201 $435 Total liabilities and members' equity 17 Finished the quarter with $53mm in cash, up $12mm vs. end of year 2023
Statement of Cash Flows (Unaudited) Source: Company financials Note: Cash flows have been derived from CompoSecure’s consolidated financial statements for the nine months ended September 3 0, 2024 and 2023 respectively YTD Q3 '23A YTD Q3 '24A ($mm) Cash flows from operating activities $81 ($35) Net income 6 7 Depreciation 13 15 Equity - based compensation expense 1 1 Amortization of deferred finance costs (12) 110 Change in fair value of earnout, warrant and derivative (11) (3) Accounts receivable 7 4 Accounts payable (10) (3) Inventories (1) (5) Deferred tax expense (benefit) (1) 0 Other liabilities 4 1 Accrued expenses $78 $94 Net cash provided by operating activities Cash flows rom investing activities (7) (5) Acquisition of property and equipment ($7) ($5) Net cash used in investing activities Cash flows from financing activities 1 3 Proceeds from employee stock purchase plan and exercise of equity awards 0 (9) Dividend to Class A shareholders (2) 0 Payment of Tax receivable agreement liability (3) (8) Payments for taxes related to net share settlement of equity awards (18) (10) Payment of term loan 0 (16) Distributions (0) (2) Deferred finance costs related to debt origination (38) (35) Tax Distribution to members ($61) ($77) Net cash used in financing activities 10 11 Net increase (decrease) cash, cash equivalents and restricted cash $14 $41 Cash, cash equivalents and restricted cash, beginning of year $24 $53 Cash, cash equivalents and restricted cash, end of year 18 Net cash from operating activities YTD Sept ‘24 is $94mm, up $16mm vs. prior year
Early Expectations for 2025 Stable supply chain conditions with typical variability in material pricing and continued diversification of sources Positive sentiment of payment card industry, long - term contracts with largest customers, strong backlog, and visibility into sales pipeline provide confidence into metal card organic growth Growing focus on fraud reduction provides Arculus Authenticate opportunities Generation of strong free cash flow to invest in production and process innovation and diversify the business and customer base though M&A activity 19 Improvement of operational efficiencies through the development of the CompoSecure Operating System Global political and economic uncertainty Continued competition across the metal card industry Gradual adoption of digital wallets for point - of - sale transactions Tailwinds Headwinds Strong pipeline for new product innovation and interest from new and existing customers Rising labor costs and competition for top talent Will provide specific 2025 Net Sales and Adjusted EBITDA guidance at next reporting cycle, consistent with prior years
Key Takeaways Arculus net investment trending favorably and remains on track to turn profitable in 2025 Delivered strong results on both the top and bottom line driven by international performance and consistent sales execution Customers reporting sustained growth and commitment to ongoing marketing investment reaffirming our belief in strong growing market for metal payment cards With addition of Dave Cote as Executive Chairman and new board members, we are well - equipped to continue driving organic growth, maximize operating efficiencies, and pursue growth opportunities through M&A 20
Investor Relations Contact ir.composecure.com Sean Mansouri 720 - 330 - 2829 ir@composecure.com 21
Appendix 22
CompoSecure , Inc. (Nasdaq: CMPO) Summary Equity Capitalization Table (with net exercise model) As of September 30, 2024 # of Shares Issued & Outstanding # of Shares Issued & Outstanding Holders 82.7mm 82.7mm Public Shareholders: Class A # of Shares Reserved for Immediately Exercisable In - The - Money Options (assuming net exercise) 1 # of Shares Reserved for Immediately Exercisable In - The - Money Options Holders 0.4mm 0.8mm Merger Rollover Options 83.1mm 83.5mm Subtotal # of Shares Reserved for Conversion (assuming net exercise) # of Shares Reserved for Conversion Convertible Instruments 8.1mm 22.4mm Public Warrants 2 13.6 mm 13 . 6 mm Exchangeable Notes 3 10 4.8 mm 119.5 mm Grand Total Notes: The table above excludes shares which may be issued in the future for equity incentive plan, employee stock purchase p lan , 401K plan and contingent “earnout”. Contingent “earnout” from 2021 merger gives certain equity holders the right to receive up to 7,500,000 additional shares of the Company's Class A common stock bas ed on the achievement of certain stock price thresholds. See Note 9 to the Q3 2024 financial statements for more detail. 1 Assumes exercise net of strike price, valuation at assumed FMV of $10.00 2 Assumes treasury stock method, $11.50 strike price, & valuation at assumed FMV of $18.00 3 The conversion price has been temporarily adjusted to $9.57 from September 19, 2024 to November 29, 2024 and will revert to $ 10. 98 after that period. See Note 5 to the Q3 2024 financial statements for more detail. Assumes $10.98 conversion price with redemption (at company’s discretion) on or after December 15, 2024 if s toc k price exceeds $14.27. 23
Statement of Operations (Unaudited) Source: Company financials Note: Operating results have been derived from CompoSecure’s consolidated financial statements for the three and nine months end ed September 30, 2024 and 2023 respectively Note: Totals may not sum due to rounding 1 Includes other income (expense) and income tax (expense) benefit as presented in annual and interim financial statements YTD Q3 '23A YTD Q3 '24A Q3 2023A Q3 2024A ($mm) Revenue $291 $320 $97 $107 Net Sales (135) (153) (48) (52) Cost of Sales $156 $167 $49 $55 Gross Profit Operating Expenses (68) (75) (20) (26) Selling, general and administrative $89 $92 $29 $29 Income from operations Other expense (7) (127) 9 (115) Other income (expense), net $81 ($35) $38 ($85) Net Income (Loss) 24
Non - GAAP Adjusted EBITDA Reconciliation (Unaudited) Source: Company financials Non - Cash Equity Awards : Equity based expenses related to the equity incentive plan Non - Cash Mark - to - Market Adjustments : Related to changes in fair value of liabilities for warrants, earnouts and derivatives assets 1 2 1 2 YTD Q3 '23A YTD Q3 '24A Q3 '23A Q3 '24A $mm $81 ($35) $38 ($85) Net Income 18 17 6 6 Interest Expense 6 7 2 2 Depreciation and Amortization 1 0 1 1 Taxes $107 ($11) $47 ($77) Unadjusted EBITDA 13 15 5 6 Non - Cash Stock Comp Expense - 12 110 - 16 108 Mark - to - market Adjustments 0 4 0 3 Other $1 $129 ($12) $117 Total EBITDA Adjustments $108 $118 $36 $40 Adjusted EBITDA 37.1% 36.8% 36.7% 37.3% Adjusted EBITDA % 25
Q 3 Earnings per Share: GAAP 38 . 2 mm 3 Basic Q2 YTD ‘22 GAAP Net Income (Loss) ( $ 85 . 5 mm ) ( $ 1 . 10) ( $ 42 . 1 mm ) 1 Three Months Ended Sep 30, 2024 ( $ 85 . 5 mm ) ( $ 42 . 1 mm ) 2 38 . 2 mm 4 ( $ 1 . 10) $ 38 . 1 mm $3 8 . 1 mm $ 7 . 5 mm $1 2 . 3 mm 1 9 . 1 mm 35. 8 mm $0.3 9 $0. 34 Net Income (Loss) used in EPS Total Shares used in EPS Earnings per Share Diluted Basic Diluted Source: Company Financials 1 46.47 % of N et In come (Loss) of ( $ 81 . 1 mm ) of operating entities plus 100% of C - Corp net loss of $ 4 . 4 mm. 2 46.47% of N et I ncome (Loss) of ( $ 81 . 1 mm ) of operating entities plus 100% of C - Corp net loss of $ 4 . 4 mm. 3 Weighted - average outstanding Class A Shares. 4 Weighted - average outstanding Class A Shares. 26 Three Months Ended Sep 30, 202 3
Q 3 Adjusted Earnings per Share 8 2 .2mm 3 Basic Q2 YTD ‘22 GAAP Net Income (Loss) ( $ 85 . 5 mm ) $0.31 $25. 6 mm 1 Three Months Ended Sep 30, 2024 Three Months Ended Sep 30, 2023 ( $ 85 . 5 mm ) $25. 6 mm 1 9 3 . 9 mm 4 $0.27 $3 8 . 1 mm $3 8 . 1 mm $2 1 . 7 mm 2 $2 1 . 7 mm 2 7 9 . 0 mm 3 90. 8 mm 5 $0.2 7 $0.2 4 Adjusted Net Income Total Shares used in EPS Adjusted EPS 6 Diluted Basic Diluted Source: Company Financials 1 GAAP Net Income (Loss) of ( $ 85 . 5 mm ) less Additional Tax Provision of $ 6 . 5 mm plus Fair Value/Mark to Market Changes for Warrants and Earnouts, Equity Awards Adjustment and secondary offer transaction cost of $ 1 17 . 5 mm. 2 GAAP Net Income of $3 8 . 1 mm less Additional Tax Provision of $ 4 . 9 mm less Fair Value/Mark to Market Changes for Warrants and Earnouts , Equity Awards Adjustment and secondary offer transactio n c ost of $ 11 . 4 mm. 3 Outstanding Class A plus Class B Shares. 4 Outstanding Class A plus Class B Shares plus $8.1mm Public Warrants (Converted Using Treasury Stock Method) and $ 3 .5mm Equity Awards. 5 Outstanding Class A plus Class B Shares plus $8.1mm Public Warrants (Converted Using Treasury Stock Method) and $ 3 . 7 mm Equity Awards 6 Adjusted Net Income and Adjusted EPS are non - GAAP financial measures. For reconciliation of these non - GAAP measures to the most directly comparable measures prepared in accordance with GAAP, please see the Appendix 27
YTD Earnings per Share: GAAP 28.1 mm 3 Basic Q2 YTD ‘22 GAAP Net Income (Loss) ( $ 34 . 8 mm ) ( $ 0 . 58) ( $ 16 . 4 mm ) 1 Nine M onths E nded Sep 30, 2024 Nine M onths E nded Sep 30, 2023 ( $ 34 . 8 mm ) ( $ 16 . 4 mm ) 2 28 . 1 mm 4 ( $0. 58) $ 81 . 5 mm $ 81 . 5 mm $ 15 . 8 mm $ 26 . 5 mm 18. 4 mm 35. 4 mm $0. 86 $0. 75 Net Income (Loss) used in EPS Total Shares used in EPS Earnings per Share Diluted Basic Diluted Source: Company Financials 1 34.57 % of net income of $ 28 . 1 mm of operating entities plus 100% of C - Corp net loss of $ 6 . 7 mm. 2 34.57% of net income of $ 28 . 1 mm of operating entities plus 100% of C - Corp net loss of $ 6 . 7 mm. 3 Weighted - average outstanding Class A Shares. 4 Weighted - average outstanding Class A Shares. 28
YTD Adjusted Earnings per Share 8 1 . 3 mm 3 Basic Q2 YTD ‘22 GAAP Net Income (Loss) ( $ 34 . 8 mm ) $0. 91 $ 73 . 8 mm 1 Nine M onths E nded Sep 30, 2024 Nine M onths E nded Sep 30, 2023 ( $ 34 . 8 mm ) $ 73 . 8 mm 1 9 2 . 3 mm 4 $0. 80 $ 81 . 5 mm $ 81 . 5 mm $ 65 . 3 mm 2 $ 65 . 3 mm 2 78. 4 mm 3 90. 4 mm 5 $0. 83 $0. 72 Adjusted Net Income Total Shares used in EPS Adjusted EPS 6 Diluted Basic Diluted Source: Company Financials 1 GAAP Net Income (Loss) of ( $3 4 . 8 mm ) less Additional Tax Provision of $ 20 . 4 mm plus Fair Value/Mark to Market Changes for Warrants and Earnouts, Equity Awards Adjustment and secondary offer transaction co st o $1 29 . 1 mm. 2 GAAP Net Income of $ 81 . 5 mm less Additional Tax Provision of $1 7 . 0 mm less Fair Value/Mark to Market Changes for Warrants and Earnouts and Equity Awards Adjustment of $ 0 . 7 mm. 3 Outstanding Class A plus Class B Shares. 4 Outstanding Class A plus Class B Shares plus $8.1mm Public Warrants (Converted Using Treasury Stock Method) and $2. 9 mm Equity Awards. 5 Outstanding Class A plus Class B Shares plus $8.1mm Public Warrants (Converted Using Treasury Stock Method) and $ 3 . 9 mm Equity Awards 6 Adjusted Net Income and Adjusted EPS are non - GAAP financial measures. For reconciliation of these non - GAAP measures to the most directly comparable measures prepared in accordance with GAAP, please see the Appendix 29
Q3 Non - GAAP EPS Reconciliation (Unaudited) Source: Company financials 1 Assumes treasury stock method, valuation at assumed FMV of $18.00 2 Includes options, RSUs, and ESPP shares Three months ended September 30, 2023 Three months ended September 30, 2024 DILUTED BASIC DILUTED BASIC in millions $ 38.0 $ 38.0 $ (85.5) $ (85.5) GAAP Net Income 0.9 0.9 0.6 0.6 Adjust for tax (benefit) expense (5.9) (5.9) (7.1) (7.1) Tax Provision $ 33.0 $ 33.0 $ (92.0) $ (92.0) Tax Adjusted Net Income (11.4) (11.4) 117.5 117.5 Stock Based Compensation and Fair Value Adjustment $ 21.6 $ 21.6 $ 25.5 $ 25.5 Adjusted Net Income 78.5 79.0 82.2 82.2 Class A + Class B Shares 8.1 — 8.1 — Public Warrants 1 4.0 — 3.5 — Equity Awards 2 90.6 79.0 93.8 82.2 Total Shares $ 0.24 $ 0.27 $ 0.27 $ 0.31 EPS 30
YTD Sept Non - GAAP EPS Reconciliation (Unaudited) Source: Company financials 1 Assumes treasury stock method, valuation at assumed FMV of $18.00 2 Includes options, RSUs, and ESPP shares Nine months ended September 30, 2023 Nine months ended September 30, 2024 DILUTED BASIC DILUTED BASIC in millions $ 81.5 $ 81.5 $ (34.8) $ (34.8) GAAP Net Income 0.7 0.7 0.1 0.1 Adjust for tax (benefit) expense (17.6) (17.6) (20.5) (20.5) Tax Provision $ 64.6 $ 64.6 $ (55.2) $ (55.2) Tax Adjusted Net Income 0.7 0.7 129.1 129.1 Stock Based Compensation and Fair Value Adjustment $ 65.3 $ 65.3 $ 73.9 $ 73.9 Adjusted Net Income 78.4 78.4 81.3 81.3 Class A + Class B Shares 8.1 — 8.1 Public Warrants 1 3.9 — 2.9 Equity Awards 2 90.4 78.4 92.3 81.3 Total Shares $ 0.72 $ 0.83 $ 0.80 $ 0.91 EPS 31