CompoSecure, Inc. Q3 FY2025 earnings call

• Dave Cote expressed excitement about the Husky transaction, stating the combination of CompoSecure and Husky forms a platform for a best-in-class diversified compounder. CompoSecure is a global leader in metal payment cards and authentication solutions, while Husky is a global leader in injection molding equipment and aftermarket services.
• Jon Wilk highlighted CompoSecure's progress, including accelerated organic growth, strengthened operating discipline, and the impact of the CompoSecure Operating System (COS). Customer programs like Citi Strata Elite, Chime, and others were launched. He also raised 2025 and 2026 guidance.
• Tim Fitzsimmons thanked the team and wished Mary Holt well in her new role, noting CompoSecure's strong position and readiness for growth under current leadership.
• Tom Knott provided details on the Husky transaction, including the acquisition value, funding, and expected accretive nature to EPS.

In the third quarter of 2025, non-GAAP net sales increased 13% year-over-year to $120.9 million. Non-GAAP gross margin for the quarter was 59% of net sales compared to 51.7% in the prior year. Domestic net sales grew 31% to $105.1 million, while international net sales declined 42% to $15.8 million due to timing of certain customer orders. Non-GAAP pro forma adjusted EBITDA for the quarter increased 30% to $47.7 million, with a margin of 39.5%.

• For fiscal year 2025, CompoSecure raised guidance to non-GAAP net sales of approximately $463 million and pro forma adjusted EBITDA of approximately $165 million to $170 million.
• For fiscal year 2026, guidance includes non-GAAP net sales of approximately $510 million and non-GAAP pro forma adjusted EBITDA of approximately $190 million. The Husky transaction is expected to be accretive to diluted EPS in the first full year post-combination and is funded through a $2 billion private placement, rolled equity, and debt.

Material risks and other important factors that could affect actual results are detailed in the company's annual report on Form 10-K and other reports filed with the SEC, available on the Investor Relations section of the website and the SEC's website.

Q: Moshe Orenbuch asked about share count and margin improvement.

A: Tim Fitzsimmons (with Tom Knott clarifying) said pro forma share count is 291 million. Jonathan Wilk discussed that there's still enormous potential with the operating system to improve efficiency, with some margin improvement and reinvestment for future growth.

Q: Jacob Stephan asked about synergies between CompoSecure's metal card business and Husky's injection molding equipment.

A: David Cote stated they didn't count on specific synergies but emphasized the application of the management operating system, similar to how it worked at Honeywell. Thomas Knott explained Husky's business model is like a razor-razor blade with recurring aftermarket sales.

Q: Harold Goetsch asked about margin expansion and operational efficiency.

A: Jonathan Wilk said the operating system, routines, and culture change are driving margin improvements, with sustainable opportunities ahead and 100 basis points of margin expansion opportunity annually for the combined businesses.