Consolidated Statement of Operations(in thousands, expect per share amounts)(unaudited) A photo accompanying this announcement is available at Consolidated Statements of Cash Flows(in thousands)(unaudited) Three Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITES: Net (loss) income$21,492 $17,073 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 2,273 2,221 Stock-based compensation expense 5,721 4,397 Amortization of deferred finance costs 131 345 Non-cash operating lease expense 615 584 Revaluation of earnout consideration liability (11,230) 1,459 Revaluation of warrant liability (17,921) 7,397 Change in fair value of derivative liability - 297 Deferred tax expense (1,837) (1,867)Changes in assets and liabilities Accounts receivable (6,739) 5,378 Inventories (2,668) (2,657)Prepaid expenses and other assets 21 (119)Accounts payable 3,719 (446)Accrued expenses 29,585 1,486 Lease liabilities (578) (603)Other liabilities (4,430) (1,194)Net cash provided by operating activities 18,154 33,751 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (576) (1,613)Capitalized software expenditures (580) - Net cash used in investing activities (1,156) (1,613)CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from warrants and exercise of options 5,009 107 Payments for taxes related to net share settlement of equity awards (15,284) (3,476)Payment due to Spin-Off (10,008) - Payment of term loan (2,500) (4,688)Tax distributions to non-controlling members - (10,151)Net cash used in financing activities (22,783) (18,208)Net increase (decrease) in cash and cash equivalents (5,785) 13,930 Cash and cash equivalents, beginning of period 77,461 41,216 Cash and cash equivalents, end of period$71,676 $55,146 Supplementary disclosure of cash flow information Cash paid for interest expense$3,299 $4,175 Supplemental disclosure of non-cash financing activity: Derivative asset - interest rate swap$(753)$452 Source: Company financials Note: Operating results have been derived from CompoSecure's consolidated financial statements for the three months ended March 31, 2025 and 2024, respectively. Q1 Earnings Per Share: Non-GAAP Reconciliation Basic Diluted Three Months EndedMarch 31, Three Months EndedMarch 31, 2025 2024 2025 2024 (in thousands) (in thousands) Net income$21,492 $17,073 Adjusted net income$28,412$23,317 Add(less): provision (benefit) for income taxes 27,004 (836) Add: Interest on Exchangeable Notes net of tax - 1,781 Income before Income taxes 48,496 16,237 Adjusted net income used in computing net income per share, diluted (5) 28,412 25,098 Add (Less): mark-to-market adjustments (1) (29,151) 9,153 Common shares outstanding used in computing earnings per share, diluted: 102,040 80,525 Add: stock-based compensation 5,720 4,397 Warrants (4) 9,878 8,094 Add: spin-off cost 5,019 - Exchangeable Notes (5) - 13,000 Adjusted net income before tax 30,084 29,787 Equity awards 3,533 2,710 Income tax expense (2) 1,672 6,470 Total Shares outstanding used in computing adjusted earnings per share-Diluted 115,451 104,329 Adjusted net income 28,412 23,317 Adjusted net income per share - Diluted$0.25$0.24 Common shares outstanding used in computing net income per share, basic: Class A and Class B common shares (3) 102,040 80,525 Adjusted net income per share - basic$0.28 $0.29 Source: Company Financials 1) Includes the changes in fair value of warrant liability, make-whole provision of Exchangeable Notes and earnout consideration liability. 2) Reflects current and deferred income tax expenses.
Use of Non-GAAP Financial Measures Due to the spin-off of Resolute Holdings Management, Inc.and the resulting shift to equity method accounting under GAAP beginning February 28, 2025, CompoSecure is presenting a broader set of non-GAAP measures, including an Adjusted Statement of Operations (Unaudited), an Adjusted Balance Sheet (Unaudited), Consolidated Net Sales, Consolidated Gross Profit, Consolidated Gross Margin, Consolidated Total Cash, Consolidated Net Debt and related measures, to provide investors with financial information that we believe allows for greater comparability with our historical financial presentation and better represents the underlying performance of the standalone business across reporting periods.
This press release also includes certain non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States ("GAAP”) and that may be different from non-GAAP financial measures used by other companies. CompoSecure believes EBITDA, Adjusted EBITDA, Pro Forma Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Consolidated Net Sales, Consolidated Gross Profit, Consolidated Gross Margin, Consolidated Total Cash, Consolidated Net Debt and related measures are useful to investors in evaluating CompoSecure’s financial performance. Specifically, we believe EBITDA, Adjusted EBITDA, and Pro Forma Adjusted EBITDA provide valuable insight into operational efficiency independent of capital structure and tax environment; Adjusted Net Income and Adjusted EPS offer investors a clearer view of ongoing profitability by excluding non-recurring and non-operational items; and Consolidated Net Sales, Consolidated Gross Profit, Consolidated Gross Margin, Consolidated Total Cash, Consolidated Net Debt and related measures provide greater comparability with CompoSecure’s historical results, following the change in accounting presentation required as a result of the spin-off of Resolute Holdings.
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