CMPO - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the CompoSecure Q2 2024 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Sean Mansouri, Investor Relations. Please go ahead.

Sean Mansouri

Thank you. thank XXXX joining financial and CompoSecure's to everyone, quarter second results. afternoon, you us for review Good With me Officer. on Chief Executive the call is and Fitzsimmons, Jon Tim Chief Financial Officer; Wilk, CompoSecure's then They with for will open prepared and Q&A. begin the we remarks call will

call, on statements related as we maintain and ability our may growth business to our concerning existing make our including plans regarding new statements to well forward-looking, strategy other considered statements will customers and plans the our that prospects. During be to as acquiring execute our and

date. as statements expect, statements update to be Forward-looking as not of often identified these We may revise views or subsequent our our anticipate, with of statements. These undertake words upcoming. no considered such and should as be we obligation or today forward-looking only we views reflect any

Forward-looking and not and actual performance our materially guarantees are of of that from subject results could statements future risks promises variety the cause differ uncertainties a are or to to expectations.

of in discussion company the the and certain other financial with income available adjusted include that refer could our in website material these measures, SEC's and a investors to regarding at may financial EBITDA, sec.gov. Please cash SEC, Form filed Investor management and non-GAAP are useful adjusted net information and that, be the me titled by release For of EPS net to second The measures discussion call with on and U.S. including flow. derived Investor and similarly today's is of on earnings section the company's believes financial over and Relations website. Thank performance all Jon website note other on that other measures be our certain should financial and to free and call any adjusted may non-GAAP Relations quarter non-GAAP the provide GAAP please alternative to income press which financial the business the trends information XX-K measures available an our as companies. reports section actual from in let to Report measures on condition our important affect measures of operations. These non-GAAP turn our on GAAP results, our other factors Annual results. risks with and different results of accordance considered presentation non-GAAP or A discuss reconciliation the impacting to available And not you. used

Jonathan Wilk

and with exciting quarter current to holders, in shares B removing Cote X of We've shares. David XX.X thank Cote the press separate Resolute the million the at to and of presentation. Dave you, our we the close Thank by a tax Class the purchase In company investment share, value transaction, distributions Class simplifying you class be joining transaction share a second will outstanding Executive removing reporting Chairman A B our will market to our and uncertainty will that overhang B to begin out and X issued the in shares million our call. David deal you shareholder million us eliminating and by everyone, Class the become of shares, but per by $XXX closing of Partners future the XX.X on news conference CEO earnings family. to I Executive covered of upon today, dual unlocks Sean. and through former related transaction. This $X.XX converted all Class resulting family sale shares, an strategic Honeywell of majority market today discussing following announced lot in a Vertiv, afternoon, interest for and and of of want Chairman release Good of CompoSecure for after got acquisition start Slides Cote, our the in

business, see of Importantly, more providing in can to Cote free growth slide where CompoSecure his about in a Dave than additional with included cash annual you and the background. a reward an we drive cash million basis, invest positive more flow anticipate impact to on incremental and $XX shareholders. I've

has amended announce we right growth current As value which new returns the his phase to you global and of side in Tim shareholders, end organizations can of invaluable with extended of capacity CEO experience creating CompoSecure on at customers employees. Separately, walk a as at will also this call we terms, later see track expire our be on you slide, Chairman Vertiv. and [ incredible an to will have XX during for Honeywell through and as enter this credit for of a Dave our shareholders to for facility His as little the record due the delivering ] years the continue of that. in that to focus and favorable details are pleased bit XXXX. on we was Executive

We're quarterly XX% report that by million in company. performance. our net a $XXX.X sales increased let highest record reflected to the history and summarize to our Now, of pleased revenue me the

X% guidance. million this These base our to between EBITDA bring XXXX business and customer Arculus higher FIDO fintechs. net in adjusted of results have sales $XXX guidance strong and reselling extensive institutions Authenticate. authentication prior our fiscal million $XXX demand. We versus million end international with and year, given financial increased adjusted driven $XXX our X year previous million narrowed fiscal Fiserv $XXX million, ability now anticipate secure by $XXX million. domestic full between our by Fiserv's to million million This range. We in EBITDA -- our our expanded to Overall, and to previous to million $XXX addition, marketing $XXX strong our full of $XX the growth guidance the were and year $XXX of we to include and our enhances In partnership and of versus continued progress

launched. cover customers wanted exciting to Slide Turning X. to I new, of the our some programs

Express and the and to our attractive Fargo such the Wells ability support customers' White to limited-edition programs, Card offer card Expedia co-branded premium We Gold highly first metal card. continue American as

launched recently could metal In addition, card new Airlines programs. see or fintech, and Atlas, you that a Turkish announced also

Slide X for throughout Moving drove second year market growing seen the premium metal the purchase in on volumes belief issuers Card card and market. quarter. cards. acquisitions trends maintained steady strong continues This strong we has reaffirmed on insight and have customer and and the a to the some in our for payment

quarter. see will commitment customers. Slide our addition, innovations underscore you quotes attract can and premium customer our of In on second to call-outs card the marketing from that X, and retain partner and These several

X. on Slide to Arculus Turning

XXXX XXXX, with the net lower on of than momentum We XXXX. to be have turning remain our and maintained in good total for expectation fiscal track positive for investment

For year-to-date million $X.X the Arculus million compared net the in quarter, quarter million and last Arculus to $X $X.X year. was as net in million June investment same the year XXXX of $X.X investment was versus last

mentioned to experience. collaboration a improves our payment with builds joint Fiserv Fiserv agreement signed and solidifies marketing commitment Arculus our begin Authenticate. to I we recently to and already This marketing relationship As that the customer cards expand add allow to successful our on earlier, and reselling functionality

that in but applicability to more our capability payments. With it early an at point-of-sale promising assets. hardware we Tim to In payment to has exciting is using Arculus This recently for phases, secure previewed I'll over terminals that, financials WebX detail. digital capability enable review leverages in now our addition, still wallet the hand

Timothy Fitzsimmons

XX% everyone. before are detailed stated a I'll level commentary of and to financial it you, Jon for comparisons back good a provide Thank Jon, basis. In by increased and variance more Unless million, performance our million. net to on the all open XXXX and of then compared $XX.X $XXX.X otherwise, afternoon, call overview record turn QX, to we year-over-year QX, a questions. sales

million, see year-to-date the related and lines, results in our the year-to-date to second financial well to strong XX.X% of Slide QX new compared with the timing margin to some business of the million. wages. Net income in was EBITDA We growth was could which increased $XX.X for compared addition to that the again, by mentioned, results, Adjusted provided. constructions, mentioned. $XX X% quarter our driven demand bottom was the in our demand. Gross for XX.X% as million, XX%, by XX% and Jon growth on reflect increase an Jon adjusted to $XX.X to with pressures continued in prior international by our the you on the on XX, the to compared track the just As provide mainly XXXX, This increased updated due to card continued compared to product guidance year, and driven to year. you quarter quarter. On for like top inflationary puts X% always the decline of domestic the $XX.X prior in us I as million in mix and by quarter factors EBITDA margin for

between to our at Now Slide business. and closer XX, domestic international split and turning looking the

at remained X% that You can our strong $XX.X sales see domestic million, second up year-over-year. quarter net

Our international improved, to such products $XX.X strong increasing the the million, Mirror to year-ago that This card. due business included our period. is innovative demand to demand also as international compared for accelerated XX% Echo

balance the Turning to sheet.

XX, $XXX.X and and cash term we total XXXX, of June million equivalents debt of As had of This $XX.X cash $XXX million. notes. of loan exchangeable includes million $XXX.X of million, and

and a total XXXX, dividend/distribution $XXX at primarily as paying compares trailing compares leverage compared XXXX, of December June at debt were tax slight XXXX bank million, million ratio, flows by million, of per $X.XX X.Xx $XXX.X Difficulty]. of the XX, $XX.X These our ratio to leverage both debt as decrease CapEx in adjusted June and of on total secured our was to share, other had and $XX [Technical also on provide $XX.X had of the with trailing leverage approximately X.XXx trailing million equivalents $XX.X operations total $XXX.X of million, special December calculated down cash We adjusted This cash XX, financing debt agreement of agreement of overall [ improvement million. XX-month of offset The a by As well driven X.XXx December is driven and overall of XXXX, by million leverage a bank on XXXX. end we agreement debt ratio distributions ratio million XXXX. It cash balance of to differences. On debt our of of XX, $XXX.X EBITDA. At as totaling debt based with cash the secured June XX-month and EBITDA positive million. we was activities to ] increased This XX, X.XXx million. secured debt and cash XX, $X.X $XX.X XX-month $XXX.X million. and adjusted X.X our included based -- XXXX, from EBITDA debt XX, partially or members our paid bank payments year bank

of Bank which with recently Jon mentioned we flexible a facility rates, revolving lower of upsized covenants. led amended includes by Chase and an earlier, TD line more credit America Bank, As and our JPMorgan credit, longer-term now

in previous driving a growth Importantly, majority amended the participated the lenders lenders the continue our our ] XXXX. capacity notes have us the innovation with of debt of The to in reflecting retire provides confidence business. to maturing December ability the amendment, [ along our our also in and with that facility agreement exchangeable

cash to Turning on our statement flow Slide XX.

cash by that compared XX.X% in net net $XX accounts increase in and is million. capital working by to period. activities increase changes can provided favorable to $X.X You comparative million of $XX $X.X the million, primarily income million increased driven The of operating an in see

to we're non-GAAP the through basic fair of that of adjusted the net Slide give due you and was you can on GAAP now to XX, this Slide and basic $X.XX basic and results. Non-GAAP and net XX, adjusted operating during compared per company's income excludes share of non-cash economics XX, revaluation share ] months GAAP to and $XX.X $X.XX adjustments $X.XX compared EPS to months structure share share, the per provides share calculations. On months to to Slide X Slide [ per $XX.X June the for million, the our included $X.XX the XX, EPS. I'll providing back allocation read $X.XX and the ended adjusted believe diluted Jon per clearer complexities ended diluted XXXX in footnotes share share, and slide and net increased our Turning XX, take the on X the a XX, the diluted of We compensation. and year-to-date that turn June discuss XXXX, value per to X you guidance it per closing XX, per remarks. find $X.XX ended XXXX. On to to EPS, XX, year-to-date compared income basic stock for the picture earn-out which are the for warrants, share XX% FC that $X.XX impact of EPS. million months June basic EPS of by through shares June diluted XXXX. On will our $X.XX X per the adjusted ended income with the adjusted EPS diluted the also the

Jonathan Wilk

Tim. Thanks,

mentioned guidance. earlier, closing, both year between the is sales $XXX to I full We we've million. In We momentum strong. I'd As fiscal now like adjusted quarter between in $XXX and and the EBITDA and $XXX business the line, and summarize net and of million million tightened anticipate generated results a record our XXXX bottom call today. million top on our the $XXX

to Authenticate, provides I'd our and exchangeable to about benefits track be And include XXXX, global are benefits Arculus Resolute with of This in for net excited Arculus B like growth the transaction our facility with notes steering credit XXXX. We is Q&A. maturing and holdings track on finally, of unparalleled, transaction that, shareholders. for our Fiserv supports marketing stockholders. we open excited compelling am and Class our lower the total deep up partnership our expanded we leverage companies. With expectation call the the to and through family than the amended Our record CompoSecure our to continued career investment related with his Dave and public the for positive Dave's with very expertise I to enables Cote strategic December to turning in remain reselling us and XXXX. And for retire

Operator

Our question comes from Instructions] Brian with Vieten Needham. [Operator first

Brian Vieten

a on great Congrats deal here.

Robinhood presenting embedded waitlist. assumption, that for it's Just guidance? Robinhood there's the side. And like source a the upside? quick the wanted It card? a What's lot I one possible sensitivity What's on now. there. this guess, to signups ] within topical Just piece also sales Is [ around with sounds been better from the the right understand of that obviously a Robinhood of

Jonathan Wilk

Brian. Thanks,

the about excited very are Robinhood. We partnership with

there is If unique, the that our then from got customers, really mentioned, you gold of are and very solid their excitement We've parts limited-edition that we you doing. as X of high. veneer sort metal it. think the cards we're remember, core gold And around card,

volumes that to So we very not turn we with opportunity are program, comment on yes, the excited And growing about to building say, the about can think growth for and a but into going relationship. nice excited it I'm are us. specific program. suffice we

Operator

from comes Our Cassie Bank next with America. of Chan question

Jinli Chan

full I the least like than it estimates. just to ask by year wanted more our -- I relative mean, guide bit seems beta, at you guys XQ to raised the a

full seen has relative the to the outlook year underlying posture Just underlying issued, expectations X top wanted of around Just domestic a versus to number driving maybe growth, that shift? driving to of or macro? know, ago, cards or change it any know international the months from that growth clients rate? Is X what's there for shift you've wanted demand been that's in

Jonathan Wilk

Thanks, Cassie.

look a quarter As domestically had both at we we strong full and internationally. year, yes,

about bounce see programs in was back I what some slower move And internationally the that quarter, think in expecting nice volume that new year. think a first there, international we some as we we to after drove launching quarter. out the saw excitement ] some steadies So [ through we talked about

International of the started QX So you if as business. about XX% was remember, we year,

probably historically typically. basis. It track. in that said we said that, on that it on would think -- would XX% year We've business. the comes around in slow under still it on with start our of XX% the does be a about back we was We quarter where This that full get slightly comes had,

us strong answer business, international back domestic returning a there. of to sort getting pace net-net, So our nice growth with is

Jinli Chan

follow-up. ask guys out you to I how there? guess, an cash cash $XX could term return? nice a just removing if flow, mentioned have free dual-class capital the And annual I in shares And and you or target know guys hear. conversion a incremental you free guys do are million I longer flow prioritizing was which

Jonathan Wilk

cash basis. end quite additional year was full of year, you XX% it chunk at gave calculation unlocks about free a This conversion free year. the think nice we flow. sized cash flow a Last the of on So the I

to stock expect see gives depends we our terms the of really the obviously in we share invest compare on But the So in importantly, the of for pop us price back to to it the it in flow where the more from as out structure, equity. us value cash free comes and that comes business. nice elimination of class metric that dual

it think, I excited We're So shareholders. about we're for business. it about the excited for

out. a not that long-term set We for guide come where should have

Operator

Lake comes Street question Stephan Markets. Our from with Capital next Jacob

Jacob Stephan

if Congrats maybe card? a if of What the the on Fiserv partnership. partnership I kind nice could distribution, touch announcement, Maybe the Arculus do on this Certainly, here. like us color kind seems some does think of could you there? just you results give but reseller for

Jonathan Wilk

one, here credit by Number than talking validate those to we're card the think can and I momentum see that, does there feeling around debit the token. it it capability card bit. a authentication of or We've more about an do into with starting the turning conversations thesis today, been and banks a a helps

of Fiserv, amazing clients amazing up we company, So, the partner, terrific able roster is channel and extraordinary. are to an an open think is clients distribution being a opportunity. They they -- like a the have number of

building that out, we share but this So, look forward wanted announcement. to to

Jacob Stephan

help card seasonally but card the of do we in quarter understand of the here, program expect year you this last new And the half It more first the the you obviously, is strong kind kind point second -- typically of launches? quarter, kind maybe maybe us for half or help if for new seasonal like understand launches? us could seems of Robinhood had

Jonathan Wilk

Sorry, Jacob.

more we a quarter. There It and just in the doesn't follow given the number something typically as than we've QX of any in that customers please about a programs down. a have of see to see they we that that X take bit that at may of customers, you'll giving think QX, little a number up, see with we are of you do customers. internationally, good quarter, smaller it we've we seasonality. What Europe. lumpiness are examples there's fourth where times -- more volume, launch a ones this, popular in more these need So about We're of that see But got set seasonality, our net-net, quarter. and cards. We talked programs only asked is quarter, of new type do ], and exciting. we see in had where we've volume, said But of year, don't of programs deliver to it that a some select we where [ smaller launching running don't more the were based on you always don't are are of specific in with time has you sort some for time saw

Operator

Reggie [Operator Instructions] with JPMorgan. from Our question Smith next comes

Charles Pearce

I [ a on where your partners? fully for the it's where bank doubt different that side fit products acquire Charlie ] backed and you strategy versus Reggie. card M&A? different is a also on ] the acquire I how days offering on It's guess [ M&A manufacturer you company realize thinking are extension might you I early product yet. But about consolidation

Jonathan Wilk

the in love M&A at seen of opportunities. deals the in looked We we've describe opportunity, we haven't cut think place that appreciate horizontal an different fell Charlie. we We've I thanks, framework anything potential Today, types with. across you had vertical, So question. where that

deal early soon just details. into days get For signed. us, this with It's to its too

their look sharing Nott strategy look Really his to on this to partnering about line with down what forward [ and forward forward in I and Dave think experience look with the ] more space like. our partner Tom this. Cote will

Operator

questions does you. this program. I'm you participation time. your for Thank at showing the today's no conference. This Thank further in conclude

disconnect. now may You

CompoSecure (CMPO) 7 Aug 242024 Q2 Earnings call transcript