GPGI, Inc. Class A

and thank you for standing by. Welcome to the GPGI Inc. first quarter 2026 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dave Marshall, Chief Legal Counsel. Please go ahead.

Thanks, Shannon. Good morning, and welcome to GPGI's conference call, where we'll review GPGI's first quarter 2026 financial results. With me on the call today are the business leaders from GPGI, Resolute Holdings, CompoSecure, and Husky. We'll begin with prepared remarks and then open the call for Q&A. During the call, we'll make statements regarding our business that may be considered forward-looking, including statements regarding our growth strategy, customer demand, macroeconomic factors, implementation of the resolute operating system, and our guidance for 2026, as well as other statements regarding our plans and prospects. For a discussion of material risks and other important factors that could affect our actual results, please refer to the information in our 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. As a reminder regarding the company's accounting, On February 28, 2025, GPGI completed the spinoff of Resolute Holdings Management Inc. and our wholly owned subsidiary, GPGI Holdings, entered into a management agreement with Resolute Holdings. As a result, the results of operations of GPGI Holdings and the operating companies which are its subsidiaries, including Compost Secure and Husky, are not consolidated in the financial statements of GPGI and are instead accounted for under the equity method of accounting. For more information about our financial presentation, please see our SEC filings, including our quarterly report on Form 10Q, to be filed later today. 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. With that, I'll turn the call over to Executive Chairman Dave Cody.

Well, we have a tale of two cities. CompoSecure is performing better than our expectations, reflecting just excellent implementation of the Resolute Operating System for both growth and operations. Husky unfortunately has encountered unanticipated market headwinds because of oil market volatility and tariffs. This has caused customers to delay accepting orders that normally would have been expected to ship in the quarter, while also reducing new orders. Well, you'll likely ask what changed. Since I spoke to you on our March 12th fourth quarter earnings call, we saw a significant and surprising increase in customers taking a wait and see approach in response to those changing macro conditions. At the time of the call, February year to date orders were up approximately 27% versus prior year. And the pipeline was up approximately 6% year over year. The amount of book and ship required to make the quarter was not unusual given history. And in the subsequent two and a half weeks, several customers would not finalize their orders for shipment, we could not ship to a couple of countries, and customers delayed placing an official order. This trend continues today. We can't predict when it will end, so we have provided a wider revised guidance range. In anticipation of lower sales, we've taken various actions on expenses to mitigate some of the impact of those lower sales. At the same time we're seeing audit delays, we saw the pipeline grow approximately 4% over last year in the first quarter, and up 7% year over year through April. So there are reasons for optimism that this will not be a long-lived problem. Consistent with this, we're seeing the 12-month pipeline up while the three-month pipeline is down. Husky leadership is aggressively tackling ROS implementation for both growth and operations. The investment thesis is very much intact with their great position in a good industry. Now, I'm very unhappy to be sharing a different result today than I expected when I talked to you on March 12th. While certainly disappointing in the short term, I can still say with confidence that the prospects for GPGI performance are quite rewarding. Compose Secure is on a roll, and the new leadership has significantly energized that team and is improving the culture. The commercial prospects for growth are better than ever, and ROS implementation and operations is showing significant gains. The prospects for this business are terrific, and they're apparent today. Compo also benefits from being more than a year ahead of Husky in ROS implementation. Husky prospects are also excellent. It doesn't show right now because of the market headwinds, but it is real. We continue to fund R&D expansion because it will greatly benefit the business's future. Consistent with our underwriting thesis, we can already see that ROS will also have a profound impact on our Husky business. With Rob's leadership, They are aggressively implementing ROS and driving the cultural change necessary for success. We will navigate the market headwinds, implement ROS, continue increasing R&D and commercial excellence, and become a significantly stronger business as we exit the year. I'm also pleased to say that Kevin Moriarty, a current GPGI board member and deeply experienced finance leader, has stepped in to be Husky's acting CFO. This is yet another benefit of having a board of superb operators. I worked closely with Kevin in the past, and he has a tremendous reputation as an operating CFO. We are actively evaluating a long list of candidates for the full-time role. But in Kevin, we have a proven leader who brings a steady hand to Husky, and I know will benefit from his financial and operating capabilities. I wish we could have seen the Husky market issues sooner than we did, of course. I have not looked forward to today. That being said, nothing has changed concerning GPGI and the prospects for both businesses. I'm personally energized by the progress I'm seeing in both businesses. The cultural change is well on its way at Compo, and the cultural change needed at Husky is being accelerated in dealing with these unfortunate market headwinds. We can't predict today how long the headwinds will continue, so we'll be cautious in our 2026 outlook. That, though, shouldn't take away from what both businesses can accomplish, given they both have a great position in a good industry. I can promise you, GPGI has my full attention. You all know my family and I have a lot of our own money involved here, so I want to see GPGI perform extraordinarily well, as much as all of you do. We will get through this, just like we have in the past. This is an unfortunate blip, nothing more. We're excited about the path GPGI is on and what it will become. So with that, I'll now turn it over to Tom Knott, our Chief Investment Officer, to review our financial performance.