CompoSecure (CMPO)

Marc Griffin ICR
Jonathan Wilk President, CEO & Director
Timothy Fitzsimmons Chief Financial & Accounting Officer
John Todaro Needham & Company
Stephen Moss B. Riley Securities
Daniel Weiskopf Toroso Investments
Call transcript
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Welcome to the CompoSecure Inc.

First Quarter 2022 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Marc Griffin with ICR. ahead. go Please

Marc Griffin

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

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

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

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

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

Jonathan Wilk

thank for our appreciate tonight Good so for Marc. XXXX evening, interest, thank earnings we us participating. and you as joining discuss We everyone, Thanks, first you quarter your release.

it by highlight me let driven new sales with up was our for outstanding early sales First, to Financial by up to fourth record levels across our momentum and delivered above turning our and strides our clients, we million, XXXX. we Chief then growth existing year-over-year, XX% making execution over and growth versus initiatives the XXXX. strong quarter strategic before exceed results net of pre-COVID accentuated international and XX% the quarter, Fitzsimmons, expectations, quarter, Tim Throughout Officer. summarize continued the operating team I'll have established our are our and in $XX performance. We revenue This

well premium XX% partnership than that $XX BXB distribution growth to execution, driven co-branding year for demand distributor detail million, we in plus and XXX% direct-to-consumer storage impressive crypto delivered EBITDA touch prior selected BTC these help our lift to channels, sales and business to XX% XXXX margin and up payment at card positive greater share had growth Arculus International quarter. platforms Arculus the payment in MassPay. several several commitment few advanced adjusted Amazon, card to the a on impact which and Inc. fintech Voyager adding us cards. we cold ramp excited for improvement, which a and of were the record moments. with year-over-year, and Our our positioned call, our in our also margins digital quarter, output partners. first I'm and/or premium was partners, a Lode to with provide quarter of incremental for for sales by that the highlighted last expanded discussions and continues Digital, cryptocurrency higher quarter-over-quarter, We support by efficiency, been million authentication relentless on the quarter. $XX has up. a continuous greater profile I'll the for highlights strong Revenue And during in were

of thank We programs results want in XXXX half XXX-plus progress. the toward goal it quarter. additional seen in and contributions of their takes for I common team these working our first these I'd launch to to continue we've a start expect add CompoSecure, together second the at to strong a leadership and the of that accomplish members to On team behalf a that partnerships the to delivering to XXXX. team like here

in We million $XXX $XXX our of to range year are fiscal million reaffirming net sales. XXXX the revenue guidance of

We On for context continues EBITDA high-quality quarter's deliver of to $XXX $XXX achieve business performance, to more are premium Slide track products. The EBITDA strong our be ability bit are results. well deep X, also these want to provide million. to our backbone our to this And and relationships adjusted customer a adjusted guidance based sales on our of million performance. reaffirming we I execution, on

had partners. expansion of of America platforms traditional banks payment We success, continue cryptocurrency demonstrate card to business, Bank with the including rewards an Elite metal support momentum to some our relationship at new clients new deeper existing great we our with and fintech card. to premium look Taking a from to

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their with which did Arculus a authentication storage silver integrated customers I'll and fiat discuss cryptocurrency, a quarter with premium card Digital, have bit functionality cold capabilities. a cryptocurrency Voyager providing some to payouts to well. and Essentially, to Lode, selected support a payment expand make that cards deliver continues XXXX, storage distribute with product combines payments multifactor industry our and same authenticate conference, more Arculus we for for key last to as Lode digital to Miami MassPay, that device highlight cryptocurrency users and Voyager platform. transactions. fintechs digital mobile On authentication X, to card partnership as debit Bitcoin mass technology. and purchased traded with in platforms Bitcoin deliver publicly a something digital and has an XX,XXX Our cryptocurrency gold us Arculus attendees, to for digital cold later. security authentication platform payment selected well. also payment enables cards to high-value globally we a token, a platform, co-branded for card as to leading selected additive trends, tap physical or Slide such a their The

to growing profile the products, acquired. some such are digital expand millennials We cards. security and to current recent Gen or storage shared the millennials cryptocurrency meet partners you that their strong card call, map our improving across our continue and acquisitions. cards proprietary from and X, existing progress other Edgar, found new consumer pace in made acquisition a market adding Overall, new to fintech of the percentage our and Delta our acquisition American road institutions. good authentication preferred accounts well. strong their to coming strong accounts customers. the in we value market. recent by crypto a to for hot by fee-paying highlighted U.S. platforms, as bolstered have is of represented support Slide product Whether product financial mirrored for the position platinum Z Card to all-time of and as independent U.S. gold growing by card products were we cards, cards white customer premium for platinum continue earnings increased their far. In Express and It Express can continue needs we're labeling On consumer for younger to highlighted also year, countries. metal in And issuers it's momentum. see an trends premium digital metal all and portfolio X, business a in XX wallet across card growth regions On survey research Dunn cold Slide positive offering, a authentication so confidence industry highs continue better we've XX%. for American statistics that Airline plan This to the see on

crypto excited additional we the plus by As quarter. authentication our that been cryptocurrency several card digital and/or and partners, mentioned, has we're expect platforms and coming storage selected payment in cold fintech Arculus announcements

had a the our media the one influencers were potent standouts co-branded Arculus speaking and by a Key Chief we social with Lowe, stage and where XX XX,XXX consumer also engagement we benefits media response the experience on attendees, enthusiasts coming participation We by of Bitcoin April feedback of than Miami Based at XX,XXX chance in the encouraged highly cold wallet. in the marketing our year, Product interviews main leading of to believe conference delivering and from including business our Innovation storage Officer, presence, of nearly out XXXX Conference, crypto of this both more conference Cards, Bitcoin Arculus with are Adam publications.

regularly were During the would by how ease Key share provided Card. by of the Arculus and use X-day event, excited attendees security they me stop Wallet the better to and

product first Arculus user And established we're beginning, launching in Moving as been mid-June, user the and NFTs on happy engage receiving we plan to our viewing, and Page with more feedback. X. forms, feedback allow Since to will half DeFi for the Arculus priorities guided WalletConnect connectivity sending on to as regularly to We've and well have support announce teams both the we to by our development have broader adding community. implement coins. of that consumer community,

the We further of as digital know, Arculus for you to receive enabling private the functionality have Ethereum Arculus keys mid-June, view, NFTs been Page in and NFTs NFTs self-custody. securely market. Wallet, launch and store, X. show hold Arculus have Consumers me as, send the down expand securing in on users a asset to securely become we'll important NFT an drill on allowing capability and part asking Let NFT

can like the NFT You in Arculus see Wallet. visually screens the look what

left the you Moving or the right, coins see in left. choice NFTs from for to can far

in are you NFTs, display Wallet. includes the few. touch a X-digit biometric more And into such detail, We to NFTs, now on the Ethereum Arculus name can the of will Solana, secured drill on but NFTs future, in one. multifactor gallery. Arculus and you to launch to each expect authentication by gaining bring NFT on the scan, And all that we click of Card. a Ethereum as that our up the plan with see others you PIN and Flow, hold SmartChain information NFTs the add can that a a of your If clicking you Binance Key

WalletConnect what like. share is me Let to look also expected

or benefit can Key The where to WalletConnect is that, you Uniswap, choose platform you you're to OpenSea, et requiring that If transactions Arculus can access as Once you be be accessing multifactor with secure you the DeFi able move to the exchange Card. Slide in Rarible, X, a see any click with app. signed to you connect you'll such environment on cetera. from authentication

the interesting distribution with would thought and how DeFi what X-factor Moving a be for have do you We've familiar the buy something this coverage events XX, channels. well users, strong past in key to at brand and and as XX. our user-friendly provide transparent, on when Slide at user. I it Slide the Arculus lot larger expanded our can opens a with seen see you you ecosystem to the but accomplished our you every process for quarter to as view simple impact media to of progress authenticate a is We've social media Arculus, and authentication secure store, day

me line with the financials overall it to over detail. in strategy. let Tim more We to to in that, ramp our expect to With walk investment Arculus through hand our continue

Timothy Fitzsimmons

and quarter the of more and it briefly financial evening, for I'll performance questions. good back call we detailed first Jon, turn before then our Thanks, a provide everyone. open to up XXXX Jon overview

The from million fourth up quarter million, quarter $XX the the up quarter net trend quarterly year. XXXX demonstrated to of over of in Moreover, our strength grew same prior the the XX% quarter XXXX. of $XX first first XX% sales in

international. grow demand growth customers, mentioned, strategy domestic execution continues across new existing to customer from and that to led John base due both of As sales our our strong to and

million, XX% compared quarter in quarter first scale. net margins production in income to Moving by on gross margin XXXX. the in of of versus the first of income was first the quarter XXXX. first of were to XXXX in efficiencies $XX.X Net Gross quarter increase gross up of was driven This and XX% $XX.X the increased XX% for million margin. XXXX

associated The EBITDA quarter of and of the our $XX net quarter year-over-year note spend company being XXX% a of of spend adjusted year. in revenue quarter the was the quarterly our approximately the An by $XX Arculus impact negative in first combination first first of investment that to to million. due important as costs not factor quarter with As the XXXX. as a mentioned, well public record and Jon million is a Arculus of other throughout strategic $XX million sales $X increased provided also the quarter. robust, million Therefore, versus anticipate -- Domestic rollout. Arculus in increased sales linear execution International or remainder to quarter XXXX. we XX% in the XXXX were is increasing

sales $X $XX flow revenue you you XX, XX% As out an from capital international a up cash $XX flow of percentage quarter. trended of Slide of and can QX see this to XX% when million of We has back spend. free operating our XXXX had on million million from of cash operations as in

Turning to the sheet. balance

working million. debt ratio in debt of of resulting we net The $XXX term $XX capital X.X% anticipated bank balance based a per XX, million facility March and results of drawn total on million the on of an up $XX are million a million convertible of a forecasted debt revolver, $XXX unsecured of adequate to growth as a million, to debt the in of secured EBITDA company $XXX $XX As sheet, $XX had XX, our provide had debt of We X.X $XXX The our net secured revolving March facility XX-month XXXX. ratio loan, million trailing of and debt cash secured plans. loan fuel with provides to agreement. million

earnings per share. about speak Let's

for XX.X based overall before to a on We per calculation used $X.XX had the the $X.XX cover summary share. first million $X.X a income. questions. the Jon The to approximately $XX the I'd over back net was per of earnings company. me resulting the it structure of share. Our EPS to public outstanding ownership basic of let of With approximately total public share the final due EPS we of how XX% were basic company. the million in company hand we in of shares EPS per is for take quarter million, calculate that, XXXX like

Jonathan Wilk

take macro rising able minute in to overall We've material want outpace the through Thanks, and costs efficiency. a Tim. to been and address to economy. labor I volume trends

page. our In highlighted forward. out continually this excellence and manage on won't some challenges focus go wanted and as macro feel ESG XX, through that On us we to on addition, we this but share I positions in we recognition well operational I quickly Slide move of our detail, laid corporate to initiatives

to want continue Turning also our our our shareholders. XX, these as focus we pursue as creation to to I strategic value reshare Slide long-term for drive priorities will

I close began. by where I'll returning to Finally,

We XXXX. by relationships continue momentum. driven increased from sales we market to to both for start offerings for customers, will see existing our believe execution, are demand and off a deep and strong We new strong

open expect gain to We to features We demand excellence to business throughout also for customers. quarters functionality remain while deliver updating your as you the customer forward Arculus our will consumer us more join that, by and and much the look questions. delivering momentum relentless attention, will and we I our our all high-quality operational focus as you response that the the the believe in appreciate we time on allow meet encouraged increase we we I enhanced taking increasing to progress. to for products. With coming efforts both call and and We marketing year want today. very us continue to to will thank now


Instructions]. [Operator

Todaro Needham. John with from is question First

John Todaro

worth guys concerns highlighting that a I decent of supply quarter we if a additional points published guys. there's anything or on actively just there Congrats issues up used on, One, at anything you about and amount the be questions the touching And are beat down. for supply what commentary there's additional you this and still that of chain the details chain here. Arculus those Bitcoin for of hear do any have any any price cropping Great. conference? on And another couple if then quarter card you had and just have two, might percent there?

Jonathan Wilk

the John. I question here. appreciate Thanks,

start on the me Let side. supply chain

it continue monitor we So that to very and is something are monitoring closely.

we impacts been other and supply chain manage think, slowdowns have the well. to things, quite able We of

able results we delivery QX, themselves speak to think had for the the achieve. modest growth of we in somewhat QX we in in while very So were impacts in terms that

still beyond down we're many will that people watching public folks what throughout So done this. comments definitely many, put disclosures we as respect team excellent But manage is did saw very itself. conference And the something the cards. closely globe. that being say, our through the far, helping in With feedback our The has so communication an number many experience, there, across was work you affecting -- reiterate the XX,XXX with space. it around people the from security. very positive my of and as I to I job did we BTC. in got not in that around We Arculus user influential us

were get to few, the many side and Voyager, like conversations to other our Probably more with Lode partnership name continuing underway. importantly MassPay, name of out and there. we're So pleased the progress we on the partnership with some a making is folks with


Steve B. Riley. question Next from with Moss is

Stephen Moss

for for roadshow, Maybe the $XX during million [indiscernible] range Arculus. the a you business. provided just $XX revenues here Arculus announcements million starting XXXX of in with the the Jon, to side on -- guys of

you're curious give and you that the -- relative could there. how about Just kind these color announcements range you where thinking of any to put

Jonathan Wilk

the Steve. for Thanks Sure. question,

to up would revenue, would think revenue the We we describe I the mentioned Tim about as as the So in well. year. think comments, when to expect, Arculus the some ramping we it up think, ramp year be we through expect of I through spend his that right, would

will So in those my around and the this comments partnerships be year. QX QX were that executed of

sort Arculus through can of So revenue year the on ramping you up the side. think of

Stephen Moss

the this came revenue that of most card the the business, metal terms came most assume of metal card of in then from I from And quarter -- business. the Okay.

year are thinking quarter for to kind first you rest for that relative Just about as the curious the how business to guys revenue of level. of the

Jonathan Wilk

in in with We we the Yes, tried terms And strength discussion Steve, of a growth specific be was we're seeing in put important some messaging. to combination business. of what was that that today. a their clients small Wells like a very cards; It of launching as opening new X about. that which the was the well and client; a fintechs client; we're as success BofA, as Venture launch talking up Chase Fargo to

All for bodes think, of metal that, the us, card payment we for well business.

included issuer in where number it in release, American many, the some we're which also gold, data acquired, products, industry, and in shared of of metal. their of premium earnings fee-based cards some like that is record releases customers platinum strength the Express trends We one was of that many, are seeing many that those we and the areas

So that we well payment business. card bodes metal think the for


line of Toroso. with next Our the Dan question is Weiskopf from

Daniel Weiskopf

Guys, congratulations.

-- guys You right? you can hear me,

Jonathan Wilk

you, Thanks. We hear can Dan.

Daniel Weiskopf

Okay, cool.

because So you doing you ask be I'm Consensus? or something similar I've attending, similar little be on a to more things, detailed to going was first similar bit do And I I something up, going have do curious. then probably questions too. got so are plans at to

Jonathan Wilk

plan generate. that members The bit we're partnership with a down us. look to Consensus. lot buzz have there but different from big of lot a trying for do there a of little We team a presence to will down significant presence Yes, there a at be Yes.

Daniel Weiskopf

to example, just you it them? and purchase Voyager the see are straight-out use there economics? an there Can with of and a I'll companies -- is, other Well, through trial? Cool. relationship them Is then that it however they then. a Is cards you they what as it Is me down want the mentioned? use shared you walk

Jonathan Wilk

a is be and different Dan, each unique. going to little one

need their wallet. authentication, model. right, wallet is different wouldn't we're have whether selling plus folks It own typical our that model, our a it's digital cards that gets need payments have or Folks typical functionality, that if is already Our payments digital our little wallet.

specifically through believe of team was X of with storage cold So of part and selected we in one in to those. partners each the each are additional executing. cases, of proprietary that's on those or I bring strategy up want yes, and digital whether willing comment as that's step enable, each say, go But and to them authentication, that payments hey, we don't to cards plus the to that because trying some features security all plus CompoSecure payments the together partner Arculus

last the So talked momentum the about of think and in to that were group share with I this the understand we those point had guys we building we progress we're at updates the on call some making, wanted just to you help business. that

Daniel Weiskopf

And I requests it do follow inbound to how In asked I or expectations something would serious pull-through that people side, regards NFT for respect to disclosed you. you've be seeing that you a be have and that totally of as the would case? competitive demand reasons. result that, you're is the

Jonathan Wilk

So in feedback community. on absolutely for functionality we've that NFTs, from us June. gotten will it launch the is And

places consistent enhancing of And through important, point is listening forums. groups, reviews, taking we and NFT on view we're for the be and as things yes, of storing, in that delivering we're making the add and in in The that It's functions most for sending and from are that time. customers. continuing X sort we're user those of is, X the to And of part additional these of our will that normal course. viewing, sure through we're to we features the the actively feedback other DeFi quarter, So that this most that call all launching priorities then to with currencies. the our the our help and first are, half view, those community the receiving terms year. important make discussion time last Those excited connectivity things

Daniel Weiskopf

I my NFT putting the forward card. on a As to look user,

Jonathan Wilk

Yes, it's really terrific.

have at mind that with beta keep to addition your running authentication cryptocurrency your And give got same to the this way point. does you've X-factor peace in it We to leverage the secure just of digital in it other assets. helps NFT it you

there could are other questions if that. excited there. So if any we're you out very Operator, about see


Instructions]. [Operator

Jonathan Wilk

and is while we forward the had any update a thank strong are for to So throughout, their to -- the messages additional the group there, assembling, questions look to which we if and continuing off a to year there move to I through company that other as out some start reiterate take we the see of believe in we for quarters very I'll will we're markets here. moment interest the just

if there other know. operator, let not, me please the questions, in no are wrap If queue, we'll So up.


more in There are no queue. questions the

Jonathan Wilk

everyone, Thanks, good and have a Great. evening.

Timothy Fitzsimmons

you. Thank


conference today's you. you The Thank Thank has for now attending presentation. concluded.

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