EX-99.1 2 tm2214755d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

CompoSecure, Inc. Announces First Quarter 2022 Financial Results

 

· First quarter Net Sales of $84.2 million, up 32.1% year-over-year
· First quarter Net Income of $26.9 million, up 16% year-over-year
· First quarter Adjusted EBITDA of $33.3 million, up 14% year-over-year
· Payment card plus ArculusTM digital authentication and/or crypto cold storage selected by several cryptocurrency platforms and fintech partners.

 

Somerset, NJ – May 9, 2022 – CompoSecure, Inc. (Nasdaq: CMPO), a leading provider of premium financial payment cards and cryptocurrency storage and security solutions, today announced financial results for the first quarter ended March 31, 2022.

 

“We achieved record first quarter net sales and profitability driven by the strength of our premium payment card business and international growth. We are off to a strong start for 2022 and believe we will continue to see increased demand among new and existing customers, bolstered by solid sales execution and deep relationships,” said CEO Jon Wilk. “In addition, our relentless focus on operational excellence supports our ability to meet growing demand and deliver premium-quality products to our customers while enhancing our overall profitability.”

 

Wilk added, “It’s exciting to have been selected by several cryptocurrency platforms and fintech partners to launch programs combining our payment card technology plus our Arculus solution. We were also encouraged by the positive consumer response to Arculus at the Bitcoin 2022 conference held in Miami in April, where more than 25,000 digital asset enthusiasts had a chance to experience our best-in-class cold storage wallet. We expect to continue to increase Arculus investment throughout the year to drive further adoption, deliver product enhancements, and support brand momentum, in line with our previously shared marketing strategy.”

 

First Quarter 2022 Financial Highlights

 

·Net Sales: Net sales for the first quarter of 2022 were $84.2 million, up 32.1% compared to $63.7 million in the first quarter of 2021, and grew 11.8% sequentially from the fourth quarter in 2021.

·Gross Profit/Margin: Gross Profit for the first quarter of 2022 was $49 million, compared to $34 million for the first quarter of 2021. Gross margin for the first quarter of 2022 was 57.9%, compared to 53.9% for the first quarter of 2021.

·Net Income: Net Income for the first quarter of 2022 was $26.9 million compared to a net income of $23.2 million in the first quarter of 2021.

·Adjusted EBITDA: Adjusted EBITDA for the quarter was $33.3 million, compared to $29.3 million for the first quarter of 2021.

 

 

 

 

First Quarter 2022 Highlights

 

·Strong international growth with quarterly international net sales of $21.8 million, driven by sales execution and growing demand for premium payment cards in international markets.

·Focus on operational excellence drove improved productivity and efficiency, continued high-quality product delivery, and enhanced profitability.

·Payment card plus Arculus digital authentication and/or crypto cold storage has been selected by several cryptocurrency platforms and fintech partners—Voyager Digital Ltd., Lode and MassPay.

·Strong, positive response from consumers at Bitcoin 2022; more than 25,000 attendees were exposed to the Arculus cold storage wallet.

·On track for anticipated mid-June Arculus WalletTM update delivering access to the Defi ecosystem through WalletConnect and the ability to visualize NFTs, as well as ongoing expansion of supported cryptocurrencies.

 

Financial Outlook

 

·Full Year 2022 Guidance: The Company reaffirmed its guidance for expected full year 2022 operating results with net sales expected to be in the range of $336 million to $376 million and adjusted EBITDA expected to be in the range of $100 million to $110 million.

 

Conference Call and Webcast

 

CompoSecure will host a conference call today at 5:00 p.m. Eastern Time to review the Company’s financial results for the first quarter ended March 31, 2022. To access this call, dial (877) 270-2148 for the U.S. or Canada, or (412) 902-6510 for international callers. A live webcast of the conference call will be accessible from the Investors section of our website at https://ir.composecure.com/news-events/events.

 

About CompoSecure

 

Founded in 2000, CompoSecure is a pioneer and leading provider of premium payment cards and cryptocurrency and digital asset storage and security solutions. The company focuses on serving the affluent customers of payment card issuers worldwide using proprietary production methods that meet the highest standards of quality and security. The company offers secure, innovative, and durable proprietary products that implement leading-edge engineering capabilities and security. CompoSecure’s mission is to increase clients’ brand equity in the marketplace by offering products and solutions which differentiate the brands they represent, thus elevating cardholder experience. For more information, please visit www.composecure.com. CompoSecure created ArculusTM with the mission to promote cryptocurrency adoption by making it safe, simple and secure for the average person to buy, swap and store cryptocurrency. With a strong background in security hardware and financial payments, the ArculusTM solution was developed to allow people to use a familiar payment card form factor to manage their cryptocurrency. For more information, please visit 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 the Company believes that its plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company 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 the Company’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 the Company’s future results and could cause those results or other outcomes to differ materially from those expressed or implied in the Company’s forward-looking statements: the outcome of any legal proceedings that may be instituted against the Company or others; the impacts of the ongoing COVID-19 pandemic; the ability of the Company to grow and manage growth profitably, maintain relationships with customers, compete within its industry and retain its key employees; the possibility that the Company may be adversely impacted by other economic conditions (including the rapidly evolving conflict between Russian and the Ukraine), business, and/or competitive factors; future exchange and interest rates; and other risks and uncertainties included under “Risk Factors” in other Company filings that have been made or will be made with the Securities and Exchange Commission. The Company 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. The Company believes EBITDA and Adjusted EBITDA are useful to investors in evaluating the Company’s financial performance. The Company 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 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. In addition, the Company’s debt agreements contain covenants that use a variation of these measures for purposes of determining debt covenant compliance. The Company believes that investors should have access to the same set of tools that its management uses in analyzing operating results. EBITDA and Adjusted EBITDA should not be considered as measures of financial performance under U.S. GAAP, and the items excluded from EBITDA and Adjusted EBITDA are 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 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 the Company’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 net income to EBITDA and Adjusted EBITDA for the quarters ended March 31, 2022 and March 31, 2021.

 

 

 

 

Contacts:

CompoSecure Investor:
Marc Griffin
ICR for CompoSecure
646-277-1290
CompoSecure-IR@icrinc.com

 

CompoSecure Media:
Wes Robinson
626-201-2928
wrobinson@olmsteadwilliams.com

 

###

 

 

 

 

CompoSecure, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

 

   Three Months Ended March 31, 
   2022   2021 
Net sales  $84,183   $63,722 
           
Operating expenses:          
Cost of sales   35,424    29,406 
Selling, General and administrative   18,777    8,057 
Total operating expenses   54,201    37,463 
           
Income from operations   29,982    26,259 
           
Total other income (expense), net   (2,531)   (3,037)
Income before income taxes   27,451    23,222 
Income tax provision   (543)   - 
Net income   26,908    23,222 
           
Net income attributable to non-controlling interests   22,167    - 
Net income attributable to CompoSecure, Inc  $4,741   $23,222 
           
Net loss per share attributable to Class A common stockholders - basic  $0.32    n/a 
Net loss per share attributable to Class A common stockholders - diluted  $0.16    n/a 
           
Weighted average shared used to compute net loss per share attributable to Class A common stockholders - basic   14,934    n/a 
Weighted average shared used to compute net loss per share attributable to Class A common stockholders - diluted   32,265    n/a 

 

 

 

 

CompoSecure, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 

   Three Months Ended March 31, 
   2022   2021 
CASH FLOWS FROM OPERATING ACTIVITES:          
Net income  $26,908   $23,222 
Adjustments to reconcile net income to net cash provided by operating activities          
Depreciation   2,349    2,585 
Equity-based compensation expense   1,006    441 
Inventory reserve   620    - 
Amortization of deferred finance costs   (4,107)   385 
Revaluation of warrant liability   1,424    - 
Change in fair value of earnout consideration liability   248    - 
Deferred tax benefit   543    - 
Changes in assets and liabilities          
Accounts receivable   (10,659)   (16,677)
Inventories   (1,392)   (859)
Prepaid expenses and other assets   (4,423)   (377)
Accounts payable   (2,248)   2,483 
Deposits and other assets   -    (896)
Accrued expenses   3,422    (4,381)
Other liabilities   (1,782)   179 
Net cash provided by operating activities   11,909    6,105 
CASH FLOWS FROM INVESTING ACTIVITIES:          
Acquisition of property and equipment   (1,417)   (275)
Net cash used in investing activities   (1,417)   (275)
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from line of credit   10,000    - 
Payment of line of credit   -    (5,000)
Payment of term loan   (3,125)   (6,000)
Distributions to Holdings' members.   -    (3,276)
Issuance cost related to Business Combination   (23,833)   - 
Net cash used in financing activities   (16,958)   (14,276)
Net (decrease) increase in cash and cash equivalents   (6,466)   (8,446)
Cash and cash equivalents, beginning of period   21,944    13,422 
Cash and cash equivalents, end of period  $15,478   $4,976 
           
Supplementary disclosure of cash flow information          
Cash paid for interest expense  $4,734   $2,643 
Supplemental disclosure of non-cash financing activities:          
Derivative asset - interest rate swap  $4,036   $- 

 

 

 

 

CompoSecure, Inc.
Condensed Consolidated Balance Sheet Data
 (in thousands)

 

   March 31, 2022   December 31, 2021 
   (unaudited)     
ASSETS          
Cash and cash equivalents  $15,478   $21,944 
Accounts Receivable, net   38,584    27,925 
Inventories   27,198    25,806 
Prepaid expenses and other current assets   7,019    2,596 
Property and equipment, net   21,246    22,177 
Right of use asset, net   4,979    5,246 
Deferred tax asset   24,941    25,650 
Derivative asset - interest rate swap   4,036    - 
Deposits and other assets   10    10 
TOTAL ASSETS  $143,491   $131,354 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current portion of long-term debt  $14,063    12,500 
Current portion of lease liabilities   1,134    1,119 
Accounts payable   4,810    7,058 
Accrued expenses   16,642    13,220 
Deferred issuance costs   -    23,107 
Bonus payable   1,737    3,512 
Long-term debt, net of deferred finance costs   228,954    233,132 
Convertible notes, net of debt discount   127,008    126,897 
Derivative liability - convertible notes   800    552 
Warrant liability   36,695    35,271 
Line of credit   25,000    15,000 
Earnout liability   34,320    38,427 
Lease liabilities   4,421    4,709 
Tax receivable agreement liability   24,500    24,500 
Total stockholders' equity (deficit)   (376,593)   (407,650)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $143,491   $131,354 

 

 

 

 

CompoSecure, Inc.
Non-GAAP Adjusted EBITDA Reconciliation
(in thousands)
(unaudited)

 

   Three Months Ended March 31, 
   2022   2021 
Net income  $26,908   $23,222 
Add:          
Depreciation   2,349    2,585 
Interest expense, net   4,966    3,037 
Taxes   543    - 
EBITDA  $34,766   $28,844 
Equity compensation expense   1,006    441 
Mark to market adjustments (1)   (2,435)   - 
Adjusted EBITDA  $33,337   $29,285 

 

(1) Includes the changes in fair value of warrant liability, derivative liability and earnout consideration liability  for the quarter ended March 31, 2022.