CompoSecure, Inc.

Good day and thank you for standing by. Welcome to Compose Secure's first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Steve Fetter, General Counsel and Corporate Secretary. Please go ahead.

Good afternoon, and thank you for joining us to review Composecure's first quarter 2024 financial results. With me on the call is John Wilk, Composecure's Chief Executive Officer, and Tim Fitzsimmons, Chief Financial Officer. They will begin with prepared remarks, and then we will open the call for Q&A. During the call, we will make statements related to our business that may be considered forward-looking, including statements concerning our plans to execute on our growth strategy and our ability to maintain existing and acquire new customers, as well as other statements regarding our plans and prospects. Forward-looking statements may often be identified with words such as we expect, we anticipate, or upcoming. These statements reflect our views only as of today and should not be considered our views as of any subsequent date. We undertake no obligation to update or revise these forward-looking statements. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of material risk and other important factors that could affect our actual results, Please refer to the information in our annual report on Form 10-K and other reports filed with the SEC, which are available in the investor relations section of our website at compasssecure.com and on the SEC's website at sec.gov. Please note that the discussion on today's call includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income, and adjusted EPS. The company believes these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends impacting the company's financial condition and results of operations. These non-GAAP financial measures should not be considered as an alternative to net income or any other performance measures derived in accordance with U.S. GAAP and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation of gap to non-gap measures is available in our press release and earnings presentation available in the investor relations section of our website. Thank you. And with that said, let me turn the call over to John to discuss our first quarter results.

Thank you, Steve. Good afternoon, and thank you for joining us for our first quarter conference call. Our momentum from the end of last year has carried into the first quarter as we generated our third consecutive quarterly net sales record. driven by sustained growth in our domestic business, which was up 26% compared to the year-ago period. During the quarter, our customers launched several new high-profile card programs that garnered significant attention in the marketplace. This includes the introduction of the Robinhood Gold Card and a new limited-edition Delta Reserve Card in white made from an airplane. I'll discuss these new programs in greater detail later in the call, but I'm proud to see the effort and execution from our team to introduce innovative new technology and card constructs that continue to drive demand for metal payment cards. Now, to summarize our financial results on slide three, net sales in the first quarter increased 9% to a record 104 million. driven primarily by continued growth in our domestic business, offset by lower international net sales. Looking at our bottom line, Q1 adjusted EBITDA grew 6% to $37.8 million, reflecting our team's continued focus on profitability while simultaneously driving investments to capture long-term opportunity and value. Our card issuers continue to express a positive outlook for the consumer and have expressed intentions to maintain or increase their payment card marketing spend compared to prior year. For Arculus, we continue to see positive momentum and remain on track for our total net investment to be lower than 2023, with the expectation of turning positive for fiscal year 2025 as mentioned in our last quarter's call. I would also like to take a moment to comment on the announcement we made today regarding our capital allocation framework. We have continued to generate meaningful free cash flow and closed out the quarter with a cash balance of $55 million, which has more than doubled from one year ago. Given our cash position, Our board has declared a special cash dividend of 30 cents per share for our Class A shareholders, along with a corresponding distribution to Class B unit holders. This reflects our confidence in the sustainability of our cash flow generation, as well as our commitment to rewarding shareholders. We are pleased to incorporate another means to enhance Composecure shareholder value, into our capital allocation framework, which includes investment in organic growth, debt paydowns, securities repurchases, and consideration of future special and recurring dividends. Finally, as mentioned in our press release earlier today, we are reiterating our full-year guidance, which calls for net sales to range between $408 and $428 million, and adjusted EBITDA ranging between 147 and 157 million. These targets reflect our expectation for continued strength in our business as we execute on our growth and profitability objectives. Moving on to slide four, we wanted to share several new metal card programs that we have launched since our last call. Robinhood launched a very exciting card program last month with the Robin Hood Gold Card, which is a gold colored metal veneer card weighing 17 grams. As part of the program, we also created a limited edition card made from 10 karat gold weighing 36 grams. AMEX and Delta announced a new limited edition Delta Reserve Card made from a recycled airplane. You may remember AMEX launched a limited edition version in black to great success in 2022. The new version, which was launched last week, is white and already generating buzz in the market. You can see several additional customer launches on this slide, including Lloyds Bank in the UK, Rogers Bank in Canada, and Bradesco in Brazil. Turning to slide five, I mentioned card issuer trends earlier, and I'd like to provide further insight. The information is based on quarterly reported public information. Our largest customers are continuing to drive strong purchase volume in 2024. Additionally, we've seen continued strong card acquisition trends, as well as sustained business development and marketing investment. Looking at the overall payment card market, we've highlighted several customer and partner quotes on slide six. Across the board, issuer sentiment remains constructive on the state of the consumer and the long-term opportunity in the payment space. Our issuers report intentions to sustain or increase program spend compared to 2023, with several citing the intention to lean into solutions to capture high-quality customer accounts. I always like to take the opportunity to outline our Arculus platform on every call. to provide clarity around our product capabilities. As mentioned earlier, we continue to see positive momentum and remain on track to achieve our net investment target. From a capabilities perspective, we recently added multi-card support for Arculus cold storage, which allows our customers to split their assets across multiple Arculus cards operating on the same device. and expanded support for different blockchains, including XTC, Providence, and Seller, in addition to adding support for Ondo tokens and Polygon NFTs. I'll now hand it over to Tim to review our financials before returning for closing remarks.