GPGI, Inc. Class A

Good day and thank you for standing by. Welcome to the GPEGI-Inc. Fourth Quarter 2025 Earnings Conference 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 this session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker host for today, Sean Mansour, Investillations for GPGI. Please go ahead.

Good morning and welcome to GPGI's conference call today, where we will review GPGI's fourth quarter 2025 financial results. With me on the call are the business leaders from GPGI, Resolute Holdings, Compose Secure, and Husky. We will begin with prepared remarks and then 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 about our growth strategy, customer demand, our ability to maintain existing and acquire new customers, implementation of the resolute operating system, and our guidance for 2026, as well as other statements regarding our plans and prospects. For discussion of material risks 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 on the investor relations section of our website and on the SEC's website at sec.gov. Please note that effective as of February 28th, 2025, the date of the spinoff of Resolute Holdings Management, and as a result of the management agreement between Resolute Holdings Management and GPGI's wholly owned subsidiary, GPGI Holdings LLC, the results of operations of GPGI Holdings and the operating companies which are its subsidiaries are not consolidated in the financial statements of GPGI and, instead, are accounted for under the equity method of accounting. For more information about our financial presentation, please see our annual report on 10-K. In the earnings release we issued earlier today and in the discussion on today's call, we also present non-GAAP financial measures to help investors better understand our operating performance. 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 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 Cody.

Good morning, everyone. Before we get into the fourth quarter and full year results, I want to begin with a more detailed overview of what we're building at GPGI to provide more context on the platform and our objectives going forward. Now, this is going to be a longer introduction than you can expect in the future, as we want to clearly articulate our strategy and structure on this first earnings call as GPGI. There will also be longer presentations from each business for the same reason than you will see in the future. GPGI is a diversified multi-industry platform that was purpose-built to acquire and operate companies that hold great positions in good industries, representing the acronym behind our new name. Following the completion of our acquisition of Husky, GPGI now owns two high-quality market-leading businesses with best-in-class financials and durable growth profiles. Importantly, we believe Compo and Husky have opportunities to benefit from the systematic deployment of the Resolute Operating System, ROS, and that work is already underway at both businesses. Our vision for the GPGI platform is to help Compo, Husky, and businesses we may acquire in the future achieve their full potential by combining GPGI's permanent capital base and with the systematic deployment of the resolute operating system and implementation of a high performance culture. This idea to marry permanent capital with superior operating practices began years ago when Tom and I first partnered together and ultimately acquired Vertiv. With the creation of GPGI, we are now refining this approach and believe it represents a needed innovation in the marketplace that is well positioned today and for the future. Going to slide five, we have our business leaders on the call today, and you will hear directly from both the Compo and Husky teams regarding their respective businesses. Before getting there, I want to highlight how we think about GPGI's long-term growth algorithm. Specifically, we're focused on delivering mid to high single-digit annual organic growth, over 100 basis points of annual margin expansion through the deployment of ROSs, double-digit plus annual EBITDA growth, and 90% to 100% free cash flow conversion over time. The plan is simple. We intend to grow GPGI's earnings and cash flow faster than the market to deliver superior durable through-the-cycle returns for our investors. That is the whole point of GPGI. On slide six, which you have seen before, we outline the relationship between GPGI and Resolute Holdings. They are intentionally, inextricably linked. The success of Resolute Holdings is tied to the success of GPGI. We designed the structure to empower the leadership teams of each acquired business to operate with all the benefits of permanent capital, but without the constraints that often come with the bureaucracy of typical public company corporate infrastructure. This allows us to help with the efficient implementation of ROS, M&A strategy, and capital allocation without distracting leadership teams at each business. A final point. I've mentioned on previous calls how confusing the accounting we are required to use is. To keep it simple, you should evaluate GPGI's performance by looking at the core non-GAAP operating results, which includes the deduction for the management fee paid to Resolute. GPGI is the operating company. Conversely, RHLD's results reflect that same management fee income less its own operating expenses. It is the asset management company. It really is pretty simple, entirely complexified by the accounting we're required to use. Moving to slide seven. The value creation playbook at GPGI marries disciplined underwriting from a permanent capital base with operating excellence to drive superior performance. We do this by relentlessly implementing the resolute operating system, developing a truly high performance culture at each business, and investing with discipline in assets that meet our tried and true six investment criteria. We have a structural advantage for acquisitions. And on the right side, you can see it works. The resolute operating system with a high performance culture applied to businesses that have a great position in a good industry works quite effectively. The strategy is not new. It's one we have consistently deployed and delivered across multiple public companies over the years. Turning to slide eight, establishing a high performance culture is central to the value creation process. A high-performance culture does not just happen. It involves people and process. It starts with everyone focusing on what is right for the customer. Every company talks about the customer, but few focus their entire culture on it. I will not go through each item on the page. It involves starting with the customer, then aggressively setting expectations, making strategy and people daily instead of annual activities. regularly measuring performance and providing candid and direct feedback. These are the process pillars of how cultures begin to transform. These are the tools that help foster high performance cultures and teams, which in turn are what ultimately deliver results. We are intentionally embedding these norms across GPGI and view a high performance culture as foundational to maximizing the potential impact of ROS in each business. When everyone across the business buys in, that's attitude, and fully applies these ROS principles to good businesses, that's aptitude. This is how we achieve performance and deliver results, and that's altitude. It is not just about a great attitude. You have to have something fundamentally strong to apply it to. Hence, the need for GPGI, great positions in good industries. moving to slide nine the resolute operating system is our proprietary approach to operating businesses it's an adaptation of the toyota production system it really comes down to three areas of focus growing sales controlling costs and generating the cash necessary for seed planning and delivering returns for investors starting with growing sales our approach is centered around our customers delivering end-to-end commercial excellence and continuing to innovate on new products and services that meet and exceed customer demand. This strategy is made possible by a capital structure that allows us to prioritize investments in R&D for new products and services and provide support to the go-to-market functions to appropriately cover the markets we serve. On the cost side, we work diligently to identify and implement robust reporting around fixed and variable costs, to drive efficiencies and ensure our fixed costs stay flat or grow much slower than sales. The fall through of the variable margin rates in our businesses is impressive. So being able to retire fixed cost growth relative to sales growth enables a huge amount of flexibility for us. Taken together, we improve cash generation with greater profitability, which allows us to invest more back into the business to drive more innovation and growth. while concurrently being able to deliver returns for investors. The flywheel begins spinning when these investments drive growth that delivers increasing profit through necessary cost controls, which in turn enables more investment growth and profits. This is the art of making the right decisions for each business today and for the long term at the same time. Some might even call it Winning now, winning later. Shifting to slide 10. I want to spend some time on how we think about implementing ROS at our underlying businesses. ROS is the operational cornerstone of every GPGI business, and it consists of three phases. We start with a period of seed planting where we lay the foundation for excellence. This represents the time immediately after we acquire a business where monthly growth days and deployment of our playbook of best practices across all functions begins. The second phase is where we continue making strategic investments to catalyze growth and innovation, implement lean principles, and firm up cultural change from top to bottom. The third phase is where everything comes together and a culture of continuous improvement powers the flywheel necessary for long-term compounding. The key is that ROS is not a one and done activity. It is a daily mindset for sustaining performance over time, and it's in every function. We are just beginning this journey with Husky. And while we are encouraged by our early efforts, there remains significant opportunity to continue the work underway at both Compo and Husky. Starting at slide 11 to demonstrate how an operating transformation begins, we have a case study compiled on CompoSecure's performance since we got involved. From the time we made our initial investment in the company, we deployed ROS to catalyze growth, control costs, and make strategic investments in the business. Over the past five quarters, you can see these efforts are beginning to take hold and drive a phased inflection in financial performance. We're pleased with this early progress at Compo, but also know there is a lot more to achieve there over time. However, the inflection in performance you've been able to see, both top and bottom line performance, is what cultural transformation paired with the deployment of the operating system is designed to do. This is the same approach we are taking at Husky, and we know that deploying ROS consistently across each business while helping to cultivate a high-performance culture is a winning formula and one we will apply to all GPGI businesses. For that, I'll turn it over to Tom Nutt, our Chief Investment Officer, to review our investment philosophy.