CompoSecure, Inc.

Good day and thank you for standing by. Welcome to the Compose Secure Q1 2025 earnings call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. I would now like to hand the conference over to your speaker today, Sean Mansouri, Investor Relations for Compose Secure.

Good afternoon, and thank you for joining us to review Compose Secure's first quarter 2025 financial results. With me on the call is Dave Cody, Executive Chairman of Compose Secure, John Wilk, 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 actual results to differ materially from our expectations. For a discussion of material risks and other important factors that could affect our results, please refer to the information in our annual report on Form 10-K and other reports filed with the SEC, which are available on the Investor Relations section of our website and on the SEC's website at sec.gov. Please note that effective as of February 28, 2025, the date of the spinoff of Resolute Holdings Management and as a result of the management agreement between Resolute Holdings Management and the company's wholly owned subsidiary, Compostecure Holdings, the results of operations of Compostecure Holdings and the operating companies which are its subsidiaries are not consolidated in the financial statements included in this report and instead are accounted for under the equity method of accounting. In the earnings release we issued earlier today and in the discussion on today's call, we also present non-GAAP results to help investors reconcile and better understand our operating performance. In addition, our discussion will include non-GAAP financial measures including EBITDA, adjusted EBITDA, pro forma adjusted EBITDA, consolidated net sales, consolidated gross profit, consolidated gross margin, consolidated total cash, adjusted EPS, and consolidated net debt. 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 GAAP to non-GAAP measures is available in our press release and earnings presentation available on the IR section of our website. Thank you, and with that, let me turn the call over to Executive Chairman Dave Cote.

Afternoon, everyone. Since we last spoke to you in March, we've continued to spend a considerable amount of time working with John and his team to strengthen CompoSecure's operating capabilities with the Compo operating system, driving organic growth, and building a high-performance culture that has the intensity and sense of urgency to deliver now and into the future. I'm pleased with the team's engagement. We're beginning to see early results from their efforts, and while implementation of COS and development of that critical institutional intensity will take time, I'm encouraged by the progress we're making. I'm also pleased with the first quarter's results and believe Compost Secure is well-positioned to deliver through 2025 and beyond. As I have said since first investing in Compost Secure, we are far and away the leader in metal cards, but still have less than 1% penetration of the current credit card market. Even though the financial and brand benefits our metal cards offer to an issuer are huge. We believe the upside for us and our customers is significant. To execute against this big opportunity, we believe our focus on this Compro operating system and the related investments we're making will drive meaningful results over time. enhancing Compose Secure's ability to continue building a culture of excellence that delivers for our customers, employees, and investors. As we've proven before, it really does work. Before turning the call over to John, I want to take a moment to address the accounting change we've had to make this quarter. Tim will discuss this in more detail later in the call, but we're now required to report Compose Secure's results using the equity method of accounting following the spinoff of Resolute Holdings. and Resolute Holdings is required to consolidate the financial results of Compose Secure's wholly owned operating subsidiary in accordance with US GAAP. This consolidation accounting is quite technical in nature and does not reflect the underlying economics of Compose Secure or Resolute Holdings. To help investors better understand each business's financial performance, we have provided non-GAAP financials that do reflect the economics of each business and allow for direct comparisons to past periods of Compose Secure. We have also included a summary chart on page four of the earnings presentation to simply summarize how I think about the financials of both Compose Secure and Resolute Holdings. The non-GAAP Compose Secure financials are the same as they have been historically, with the only change being a deduction of the management fee that is paid to Resolute Holdings. For Resolute Holdings, The non-GAAP financials show management fee revenue from Compose Secure, less salaries and ongoing operating expenses. Both are that simple and are how we look at both businesses. So you may find yourself saying, gee, Dave, if it does not make sense for how investors should look at the results economically for both companies, why are you doing the accounting this way? The best answer, I think, comes from paraphrasing Warren Buffett, who once said about Berkshire Hathaway accounting that, quote, the gap earnings are 100% misleading and they serve to misinform investors. So to restate how best for investors to understand the economics of both companies, one, look at compo historical reporting and deduct the management fee, and two, look at RHLD as management fee revenue minus cost of the investment team. So with that, I'll turn the call over to John.