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CompoSecure (CMPO)

Participants
Jon Wilk Chief Executive Officer
Timothy Fitzsimmons Chief Financial Officer
Marc Griffin Investor Relations
Steve Moss B. Riley Securities
Call transcript
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Operator

Good day and thank you for standing by. Welcome to the CompoSecure Fourth-Quarter and full-year 2021 earnings call. At this time, all participant lines are in listen-only mode. After the presentation, there will be a question-and-answer session to ask a question during the session, you will need to press star, then one on your telephone keypad. Please be advised today's conference may be recorded. like Marc the go Griffin, now your over ahead. I'd today, host Investor Instructions] to conference hand to [Operator Relations, please

Marc Griffin

Q&A. CompoSecure's the and call with then this Good today is will Jon XXXX for begin you Chief afternoon call Chief With fourth-quarter Executive we'll Financial CompoSecure's review They Officer; conference. the afternoon. and year Fitzsimmons, in open prepared on joining me for remarks Wilk, up full Tim Thank to us Officer.

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

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

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

The press release company non-GAAP any of that available call and an are SEC, the to derived company. For our including earnings companies. used which and to day's certain are website. risks note defined other other me a the earnings filed other Jon public company's Relations to measures include similarly net business could EBITDA. turn for website investors impacting SEC, financial the GAAP with reconciliation on measures financial Investor during or tighter Form on as composecure.com section information reports non-GAAP please. U.S. please and may The considered our with report and conditions on from income alternative at discussion XX-K certain results, available as affect SEC's of Investor should financial on in on today's to discussion the important sec.gov. the not of call is ahead, accordance actual useful annual believes that, factors available in With our presentation call financial different the our at in operations. be financial that non-GAAP section management and performance our These Relations material over trends, be refer as of information and website non-financial, to the Please other measures by the by measures regarding GAAP measures these our adjusted let Jon, non-GAAP and to the go first a measures non-GAAP

Jon Wilk

Thank for appreciate earnings full Marc. for which interest thank joining launched We and you record good you fourth-quarter for in sales, Thanks, our and we more And product this to release. evening, newly Arculus. as support. CompoSecure, our what recognize a proud year who thank an them I'm And extremely XXX achieved public a Digital than achieved their us and company, important net It's a XXXX discuss participating. listed was became we year. called for for dedication I to best-in-class team moment a possible. me authentication three-factor and have employees take this as securing made to we everyone. Assets year tonight your exciting of

their thank at continued the for Tech with Corp and Acquisition team mentioned, XXXX, December forward completed want company partnership and during to I support. on business of listed a newly its Roman the As Roman Nasdaq. also DBDR in CompoSecure look their combination merger is public process to

that ongoing customers, employees, CompoSecure will and and being about growth and excited about are shareholders. for public how success the support We

quarter, the discuss fourth in that XXXX. EBITDA initiatives, that is we provide guidance will 'XX our In impact our demonstrated the for quarter with we in me to the quarter strong operating have half fourth which let And of the million, before quarter our it fourth Tim revenue net our begin of achieving our investment XX% with well growth. we was would and momentum includes Fitzsimmons, year-over-year line This for increased turning sales year that. for messaging some the headline very sales CFO. as strategic our context. summarize for Tim to the we our million, on full in delivered is we $XX adjusted strong The of growth and consistent results delivered growth as results Now, as which message for and the EBITDA over see start and additional year, back $XX Arculus

year, record between $XXX XXXX XX we million. XXX. of year EBITDA Guidance, being and you just with million. to remember, with for if $XXX the net For was And adjusted million, the over a finished sales $XXX guidance $XXX our million was

the top these more of pleased for at range into were even our we end with XXXX. about I'm and heading So, the opportunities results excited EBITDA.

around these context is premium me results. led strong by well being Let start as by of business further color the card execution, sales our and relationships. drivers customer our I'll deep share as saying

solicitation as pandemic. increased also the challenges cards the are for economy We card leveraging from demand the trends issuers by premium growing emerges the of of and

trends well positive XXXX. these into expect to We continue

strong confidence $XXX the our the very impacted range with combination than million performance range focused year. gives of $XXX thoughtful in reaffirming guidance we million in to for $XX for capture the $XXX and XXXX The and remain guidance million a by being opportunity we margins adjusted to that us more Arculus net This about in sales, a value. clearly second and still accelerating met is sales end simultaneously the addition, long-term on how continued million In our that, to you the trends invested half we're of adjusted see which running the critical going and And industry and we XXXX. EBITDA high investments numbers, of million EBITDA. of into our are reflected the $XXX our were while are in business can

thought our those is it'd a payment storage earnings I familiar provide overview of solutions. cryptocurrency to a brief call, this CompoSecure leading cards helpful is and less CompoSecure first security provider and As story. with financial for our of be

Our product for not XX X serves we're been main markets, growing Digital than company The market payment securing has more premium the market startup. years, the a and Assets. around for card

the we have ability with very On X, can the XX see driven innovate. largest tenure serve clients. year our and built slide strong last XXX top across by be million company XX to you including X long X margins. we continues the a As from with of our programs page issuers, cards metal globe, U.S. card and plus was We produced to

emerging We the we've of technology, embedding have forefront metal of and been factor form technology. card in growth the creation and the through at our led science and material payment expertise

to and For now authentication evolution of accelerating technology. we're the example, transact, in digital tap and assets that innovation

can business. the this competitive is portfolio, by strong you on moats around right, patent very supported a our that As lower see helps create

that and the want given business, seeing. I of that opportunity trends the Now quick overview you we're market to contextualize I've a

you'll market addressable page next the card you for the business. five, see metal at on the the total page, the side payment left TAM on when So, look of

we year, believe only worldwide issued I of billion that so X we there business. payment on for our were As cards annual approximately premium we addressable we X.X% existing the of mentioned, cards metal basis, currently issued an penetration total a last estimate XX million card have market

the addressable the In runway for the of middle, growth. plenty as total where right exponential well as number storage, highlight authentication seeing the So, on growth market users. and we we're crypto cold of and in security

a authentication tremendous, total provide in moment. for on payment and in around and see the slide. number bigger. of will is and me market Assets as better bottom our for market the be needs business trends threats some side first I addressable right But the authentication of is The the security continues meets growing the You the Arculus can need next even that to the details and hacks in also the platforms that seeing line think further market payment we for believe us card broader for on how cover total the and could we're card these let we the grow. market Digital crypto security increases addressable marketplace

continued So, expect six. that in seeing on business. Driven XXXX, the and and page six, solicitations. supported premium that as market. card by Increased consumers, card in payment on into we're robust we acquisitions page finish we growth and by elements we laid Increased you XXXX sales out strong move execution, increased can see applications three the by

levels. cards with the look and the where platform. page we cards we're relationships customer to And publicly longstanding demand the got proposition the all digital those and You the for if leading authentication digital charts an attractive going opportunity opportunity cards or three slide exceeding in we're business are pre where value the even our issuers. -pandemic fintech elements of we bringing together data. we've at metal can to and establishing clientele, X, that available world. highlighted in payment well-positioned see an returning On we're blue-chip our And clients for some road payment as is But Strong authentication. capture you were produced we market from for card have highlighted X, and map

card We've slide, is this business over usernames card market, payments Arculus a example we've the token. the or address digital login credit debit Arculus we debit that or password. product. by on in years, The of capability, cold traditional into together security authentication. our left accounts see bringing to username investment and a today plus But seen millions and last we of compromised their and card most and using intend You people the the to few with and authentication challenge got payment credit banking hundreds your passwords a turning of storage the in bring together middle, side here

capabilities their the have We existing hot our And also authentication this to to cold to on wallet. customer a security ability product. enable those storage crypto same increased would have add

keys with. half and offering payment storage. of pilot product. Arculus functionality in To functionality and plus conversations plus on authentication And are intend bring This year. some plus we further the In are in believe addition first that and that new XXXX priorities will road to give share together specifics and payment in Digital with to we their to want into finally, enhanced and also in our one to authentication control private QX cold cold platform security the map, card intend features active key be storage QX, of for available I we clients advance currently we

such, been Slide and what and incorporating and X, explosion by the Number on If informed industries. the X, ability look the focused are NFT priorities market. seen our And - rise NFTs the are in a at We've your as to community we're and NFTs we've always in company variety Arculus customer you hearing of centric seeing a the market we across Wallet. include view and whole across of

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influential and one XX,XXX our for leading our product hands is we've where the the world, of the at directly exposure co-branded This first card the for at in in the of product most completed the in the who are Bitcoin later conferences XXXX Second, shipment the of leaders this Arculus to get crypto industry, crypto we'll Conference month put Miami in forefront. some names April.

conversations And payments, designed as with As technical a in part well. partnership, include including well be making this third, integration will cold customized, the conference crypto of operate plus B-to-B that authentication. work, we'll passes X,XXX storage partners for VIP and are specially design number we advanced that as cards and card of

further our announce our also provide get that We enhanced We with and finalized, results. press broader appointments. will deals to QX with updates we release strength our update organizational we expect a as recently key discussed in leadership

me we more Amanda sales, the walk to it to efforts, Gourbault. our press the labor leadership, in senior have development. we've payments Under Chief that of talent for software has impressed global experience for and beginning and financial I've through of let XX a to our products sector. hand years highers our more competitive Officer, new market than in service business, with teams marketing leadership her With up sales scale detail. team, our generally included Joining leading and the Amanda financials Tim security, to and product release, in over attracted Revenue we're already blockchain been and that, level also marketing crypto. the we've in in

Timothy Fitzsimmons

end Thanks, the provide then questions I'll the it before overview to briefly evening, our turn of performance. we -- Jon up back good financial and take year we Jon, and And audience. XXXX an from everyone. full fourth-quarter

that to I I guidance hit we the John's with we want that comments prior in, reiterate closing opening merger. Before SPAC had you jump to shared the

I the quarter spoken year. come XX% prior from the quarters So, communications. fourth-quarter, point in right about up $XX and have prior guidance our Jon impact on million at to million the net sales we had of had $XX indicated the in we The COVID same time. in of in that that grew

experience has that was COVID. XXXX low Our the of out proven impact of the QX of point

XX% the growth at QX expecting. look up you QX, we If over our that showing were trend, trend were quarterly we

and saw growth on domestic against Importantly, demand. facets continued new growth customers, issuers Slide about about available existing X, data, is that and shows Publicly in driven expansion, fintech increased sales by experiencing are QX strategy. you growth customers. was That all executing large from international as

We are grow in our we booked saw seeing as orders this trend well as of backlog QX.

gross to margin. on Moving

margin adjusted in Our gross mix, We QX production versus of driven This margins supply fourth XXXX by savings. was XX% investment in of was up and margin slightly year by to QX XX%. quarter were had to was XX% EBITDA chain and $XX which prior impacted in in compared of EBITDA in compared resulted XXXX, our launch XXXX. in of Arculus of the an XXXX. efficiencies, million million This adjusted XX% of the QX the product of $XX

to turn results. full-year let's now the So

$XXX in For the to full-year million of grew XXXX, up from XXX XXXX. net sales X%

growth. margin Our one are stories also of

business our Our gross mix, cost chain driving the XXXX, by business. million managed the was This adjusted margins but we Arculus payment Production same XX% that the XXXX, in efficiencies, to EBITDA We the were within decrease was in million negotiate. a includes XXXX. that of And from XX% driven that in was margin improvements impact that decrease the increase XXXX partially in of product $XXX the supply $XX by million which savings was QX: factors produced card we this and offset year $XX versus investment of a for decrease make.

COVID XXXX, Looking sales, with sheet We cash let turn expecting of that that growth free operations of million at that net if this flow appendix what international increased half see million located to Arculus. of by million of sales trajectory year. includes were our $XX chart going are of which balance in flow presentation. international at X% flow operating flow, taking of now, cash in spending a And for year-over-year. $XX derive you capital from it cash in our on quarter to of shows impact we first sales or versus emergence $X was cash for investment trend by look $XX flow free the this the the domestic I'm This the million, the the you cash The XXXX. the the $X shows the and our million.

we debt and $XXX XXst, secured $XX loan made was December a of revolver. million million of had up of $XXX term million As a that

to of arose secured credit the balance a $XXX With times ratio Jon a times of revolving million and the cash can adequate debt results unsecured debt the our loan total $XX growth sheet turn debt on million a to in had the so facility comments. in had The and $XXX results anticipated company million, million, year-end. finalize facility in also drawn it net ratio up debt on merger. SPAC years. up cash provides are million at of coming We that, a back convertible and X.X to flow of forecasted which EBITDA. of to with working $XX let $XX We provide this he of adjusted me net senior the X.X out fuel This

Jon Wilk

Thanks, Tim.

want a we today. Before to what move to we close Q&A, summarizing by I bit of talked about

we our fourth quarter to increased strong million. and Page XX, We're our a a customer on in we applications, our including of EBITDA, and $XXX between trends are to on momentum sales increased the in $XXX premium number $XXX $XXX So, in new strong increased of capitalize We're guidance results. with to XXXX with million card range again revenue the for solicitation, business, acquired. customers position and execution, highlight full-year pleased in affirming that very a

markets. for As world to we technology existing and Arculus card, digital join of thank us authentication that is very look crypto other attention enable by want and With we'll updating storage taking With the with the exchanges to grow. forward partnering We transformation demand believe crypto and gaming in to to access you partners your call well-positioned year appreciate today. all progress. for throughout relationships, Arculus and to solutions, new transactions the this accelerate the that, and to our as inevitable much increases we as real for we you the security business, are with open for as physical that, working to time continues merger our as the as rapidly I well questions.

Operator

question ask this like you'd [Operator time If at to Instructions]. a

Steve B. Our Riley with Moss first comes question from Securities.

Steve Moss

Hi. Good afternoon.

Jon Wilk

Good afternoon.

Steve Moss

maybe just to that wondering: integration to Jon, going you're partners partners on technical the here. referring same as number you're and advanced I'm you with mentioned at A starting were those those partners have of client’s up advanced terms in you in that engaged or -- Are -- what clients? of size the size maybe at how pilot point, are potential on X white-label this you page point? partners your could this that are many of

Jon Wilk

Steve. Thank question. for your you

use in with will into technical highlighting, with a are the advanced we We sizing space. conversations. an you the individual you at choices give examples not not messaging or that making Those just progress are for market to When integration kinds conversations guys this that the when advanced forth, having stages advanced that us. wallet point. we number want for industries, you if in and of across a trying Steve that's I'm it's that opportunities demonstrate to we're we SDK of point. conversations having to people the ways, more conversations stages, so they back and that card this and think that we're to of context BXB at of at our design, to integrate we're get variety And to help market to are different those I'm you out look reach I'm the into

Steve Moss

seem first-quarter announcements, announcement that potential to indicate of the hear the terms come you of with did in will I your correctly? just partnerships earnings, what then And

Jon Wilk

there is get want progress are and the something or and we'll or earnings cases, me, announce able QX those announce as understand want QX at to market help If to. times Meaning, it. we'll -- it and Yes, in in Arculus. before, around announce we're will momentum excuse out we others partners you to and, where things our

Steve Moss

one year there as outlook; throughout the the X.X we Just card Okay. the to metal growth And be could at the Great. could other? it helpful. revenue metal about think versus That's look steady here, do helpful, the year of then it as card I appreciate business we be that. color or any question weighted on

Jon Wilk

Steve. Thanks,

not think as want some year for So, so we rate terms in that sequential exited in out off seasonality our growth model it of in typically you you if that the numbers there's the the look business, to about to the full of year. run

Steve Moss

Appreciate much. color. Great. Okay. all Thank you the very

Jon Wilk

Steve. Thanks,

Operator

[Operator This conclude that this will Instructions] session. Thank concludes questions for conference today's at no showing today's queue you in participating. And further call. time, question-and-answer

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