Good day everyone and welcome to the CompoSecure Second Quarter 2025 Earnings Call. At this time all participants are in a listen-only mode. After the speakers' presentation there will be a question and answer session. To participate you will need to press star one one on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star one one again. Please note this event is being recorded. Now, it's my pleasure to turn the call over to the General Counsel, Steven Feder. Good afternoon and thank you for joining us to review CompoSecure's Second Quarter 2025 Financial Results. With me on the call from CompoSecure are David Cote, Executive Chairman, Jon Wilk, Chief Executive Officer, and Timothy 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 relating to our business that may be considered forward-looking, including statements concerning our plans to execute on our growth strategy, customer demand, our ability to maintain existing and acquire new customers, implementation of the CompoSecure Operating System, and our guidance for the balance of 2025, 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 these risks and other important factors that could affect our results, please refer to the information in our 10-K, 10-Qs, and other reports filed with the SEC, 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, Inc., and as a result of the management agreement between Resolute Holdings Management, Inc. and the Company's wholly owned subsidiary CompoSecure Holdings, the results of operations of CompoSecure Holdings and the operating companies which are its subsidiaries are not consolidated in the financial statements of CompoSecure, Inc. included in our quarterly report on Form 10-Q and the accompanying earnings presentation and instead are accounted for by CompoSecure 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. 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. With that said, let me turn the call over to Executive Chairman D Cote. Our investment in CompoSecure and I want to step back and assess the opportunity. Compared to what we saw at the time of our investment, Tom and I were confident that CompoSecure had a great position in a good industry. This has proven to be true. We are far and away the leader in metal cards globally, but importantly, metal cards in total represent less than 1% penetration of the payment card market. This is the case even though the financial and brand benefits our metal cards offer to an issuer are huge and proven with the most recognizable card programs in the world. We believe the upside for us and our customers is significant and we believe the opportunity for metal to take a larger share of the total market is very real. I can confirm we are seeing early results from our focus on Compo's sales efforts and are confident in the continued investments we're making to capitalize on the very large opportunity we see. We're also very encouraged with the early results from the implementation of the Compo Operating System or COS. We believed at the time of our investment that opportunities existed for step changes in performance and we're beginning to see those come to fruition. We're making capital investments across the enterprise that we believe will drive meaningful results over time. All of this is intended to enable CompoSecure to build and sustain a culture of excellence for our customers, employees, and investors in a very real way over time. The high performance culture is the glue that allows COS to become ingrained throughout the enterprise and it is beginning to happen. This will take time. We've proven before this approach to building a business may work. As I've said, I have even greater confidence today about what is possible for CompoSecure than when we first invested and with that I'll turn the call over to Jon. Thank you, Dave. Good afternoon, everyone, and thank you for joining us for our second quarter conference call. As mentioned last quarter, our results are being reported using equity method accounting following the completed spinoff of Resolute Holdings Management earlier this year. Due to the change in accounting, on this call we will refer to non-GAAP measures for net sales, gross profit, and related operating measures. With that context, let's dive into the quarter. We delivered strong top line growth in Q2 with non-GAAP net sales increasing 10% year- over- year to $119.6 million. This was driven by robust domestic demand from traditional banks and leading fintechs. Pro forma adjusted EBITDA increased 26% to $46.3 million for the quarter, driven by organic revenue growth and the early operational efficiencies from the ongoing implementation of the CompoSecure Operating System. We also saw several high profile customer program launches during the quarter, which I. Will expand on shortly. For fiscal year 2025, we are raising our guidance and now expect non-GAAP net sales to be approximately $455 million. We also now expect pro forma adjusted EBITDA to be approximately $158 million. Both are up from prior guidance of mid single digit growth. This updated guidance reflects continued commercial and operational momentum in the second half of the year and ongoing foundational investments as well as the payment of the Resolute Holdings Management fee. You saw Slide five last quarter, but as a quick reminder, because our reporting can be a bit complex when you're trying to understand the CompoSecure business, think of it as our traditional operating results minus the management fee paid to Resolute. When it comes to Resolute, it is essentially the management fee from CompoSecure less whatever operating expenses they incur. Turning to slide six, we continue to see strong activity around premium upgrade cycles and card program refreshes. These are great examples of how issuers are enhancing the value proposition of established premium products and speaks to the ROI of metal cards. We're also seeing growth from new market entrants and fintechs who are leaning into the differentiated offerings with metal card programs. Metal cards are increasingly serving a broad range of customers with product tiers designed to meet the needs of the high net worth, mass affluent, and also includes mass market segments. On the operational side, we're making tangible progress through the CompoSecure Operating System. We've rolled out our operating system across all functional areas, establishing more structure and discipline in how we operate. We're building a high performance culture that promotes collective ownership and drives accountability across the organization. To support long term growth and sustained execution, we've prioritized investments in talent and manufacturing capabilities, efforts that will enable us to scale efficiently and deliver strong margins. Taken together, we are clearly beginning to see the benefits of the CompoSecure Operating System in our financial performance as you. can see from our improved margins this quarter. Now turning to Slide seven, we continue to build on our market leadership with strong program activity during the quarter, highlighted by the launch and expansion of several metal card programs. They include the Chase Sapphire Reserve and the Chase Sapphire Reserve Business Card, the Coinbase One Card, Gemini, Crypto.com, and the MGM Rewards Card, demonstrating the breadth of customers that value our differentiated offerings. As we step back and look at the broader picture, Slide eight underscores just how much opportunity we see ahead. While metal cards remain a small fraction of total payment cards, consumer demand continues to rise, and we've proven our ability to grow within that white space. With a market estimate of over 4 billion payment cards shipped every year and more issuers looking to differentiate through premium experiences, we believe there's a long runway for us to continue capturing share and delivering strong returns. Our combination of design leadership, operational execution, and trusted customer relationships puts us in a great position to continue to scale. On Slide nine, we continue to see strong signals from top issuers that reinforce the durability of premium metal card demand. These trends across three of the largest global issuers show just how much is being invested to attract and retain high value customers. Turning to Slide 10, we're seeing growing momentum from Arculus as a secure, multifunction platform for digital authentication and asset protection. We delivered another net positive quarter for Arculus, supported by continued operational progress and commercial momentum. The Arculus team was especially proud to partner with Coinbase and American Express on the launch of the new Coinbase One Card, the first crypto card on the American Express network, which underscores our role in enabling innovation in digital finance. As a reminder, and for those who may be new, our Arculus offering spans three core applications: Arculus Authenticate, our passkey-based authenticator; Secure Payment with Arculus Authenticate; and Arculus Cold Storage, the digital asset hardware wallet. These tools enable a range of use cases from passwordless login and account validation to step-up authentication and digital asset security. I'll now hand it over to Tim to review our financials before returning for closing remarks. Thank you, Jon, and good afternoon, everyone. Before running through our financial results, hopefully many of you caught the news last month that I will be retiring later this year after more than 13 incredible years with the company. It's been a remarkable run, and I'm grateful to have had the opportunity to work with such a talented team. I'm excited to see how the next chapter of CompoSecure unfolds and know the team will continue to raise the bar. While I participate in the company's growth as an advisor and shareholder, I want to go through the required accounting change. As a reminder from last quarter, as of February 28th, following the spinoff of Resolute Holdings and the execution of the Management Agreement, Resolute Holdings is required to consolidate the financial results of CompoSecure's operating businesses in accordance with U.S. GAAP. As a result of this change, the results of CompoSecure Holdings and its subsidiaries, which are our operating companies, are no longer consolidated in our GAAP financials. Instead, our share of earnings from CompoSecure Holdings is presented as a single line item in our income statement, and the carrying value in the assets of CompoSecure Holdings is now reflected on our balance sheet. The non-GAAP financial information we are providing is comparable to our historical financial statements, with the only change being the management fee paid to Resolute Holdings. For Resolute Holdings, the non-GAAP financials show management fee revenue from CompoSecure, less salaries and ongoing operating expenses. Now turning to the quarter, I'll walk through our Q2 2025 financial performance. Unless stated otherwise, all comparisons and variance commentary are on a year-over-year basis. In Q2, non-GAAP net sales increased 10% to $119.6 million compared to $108.6 million in the prior year period, driven by strong domestic demand and growth across both traditional financial institutions and fintech partners. Non-GAAP gross margin for the quarter was 57.5% of net sales compared to 51.6% for the same quarter of the prior year. The gross margin expansion reflects improved manufacturing efficiencies driven by the CompoSecure Operating System along with favorable product mix. Pro forma adjusted EBITDA for the quarter increased 26% to $46.3 million, up from $36.7 million in the year ago period, with the increase due to organic revenue growth and early operational efficiencies from ongoing implementation of the CompoSecure Operating System. Pro forma adjusted EBITDA includes the payment of a management fee in the amount of $3.4 million for Q2 2025 as incurred by CompoSecure Holdings in the quarter and a $3.3 million fee for Q2 2024 on a pro forma basis for comparability as if the management fee had been in effect in this quarter as well. You could find the statement of operations in the appendix of the company earnings slides for full reconciliation. We continue to generate strong cash flow, bringing in approximately $52 million in operating cash flow year to date on a non-GAAP basis. This reflects both the efficiency of our model and our continued focus on disciplined execution. At June 30, 2025, on a non-GAAP basis, CompoSecure had $96.5 million of cash and cash equivalents and $192.5 million of total debt, resulting in net debt of $96 million and a net debt leverage ratio of 0.66 x. This compares to June 30, 2024, non-GAAP cash and cash equivalents of $35.4 million and total debt of $330.9 million. That resulted in net debt of $295.5 million and a net debt leverage ratio of 2.15 x. Both periods reflect pro forma management fees to Resolute Holdings. For further details and reconciliations, please refer to the appendix on slide 14. You could see that the domestic net. Sales of CompoSecure Holdings grew 22% to $104.3 million, an increase of $19.1 million compared to the prior year period, while international net sales of CompoSecure Holdings declined 35% to $15.3 million, down $8.1 million versus the prior year period. As we've often said in the past, our international business tends to see greater fluctuations given its smaller scale relative to our domestic business. Turning to Slide 15, adjusted net income was $28.4 million compared to $24.2 million in the year ago period. Adjusted diluted EPS was $0.25 per share compared to $0.23 in the prior year period. With that, I'll hand it back to Jon. Thanks, Tim. As mentioned, we are raising our full year guidance. We now expect non-GAAP net sales to be approximately $455 million and pro forma adjusted EBITDA to be approximately $158 million, up from our previous guidance of. Mid single digit growth. Guidance for pro forma adjusted EBITDA includes the payment of the Resolute Holdings management fee in both periods for comparison. This updated guidance reflects continued commercial and operational momentum in the second half of the year and ongoing foundational investments. I'll close with reiterating what Dave highlighted in his opening remarks. Over the course of the past year we've been planting seeds of investment that are starting to pay off, which is helping us drive growth while simultaneously improving operating efficiency. We believe the addressable market opportunity is huge given the continued interest in growing demand for premium payment products, authentication and digital asset solutions, and our conviction about what's possible for CompoSecure is stronger than ever. We believe we will continue to drive both short and long term value for our shareholders. With that, I'd like to open up. The call for Q&A. Thank you. As a reminder, to ask a question, simply press star one one on your telephone and wait for your name to be announced. To remove yourself, press star one one again. Please stand by while we compile the Q& A roster. One moment for our first question. That comes from the line of Moshe Orenbuch with TD Cowen. Please proceed. Great, Jon. I guess hoping to, since you've got so many kind of new and refreshed products out there, you know, and Amex coming in the second half of the year, I didn't notice that whether you mentioned, you know, Citi Strata, that's another one that just recently launched, I think is a product of yours. Do you talk about when those players actually order those cards and when, you know, kind of when we see them in your results? Yeah, thank you for the question, Moshe. I did see your report with your detective work on the Citi Strata card. So. That is a card that we make. It depends on the issuer. Typically, I'd say one to two quarters ahead, depending on the size of the program for some of the larger programs that we would expect. Got it. Thank you. Dave, I was struck by your comment about greater confidence in the investment now. I think there's a lot of wonderful things that have been going on. I mean, there's practically a war in the high end card segment. You've had better sales, likely to see that continue. Arculus continues to improve. Could you talk about what the factors are that drove you to that statement, which are the things that are the most important that you feel have improved since you made the investment. Moshe, Dave had to drop off after his remarks. I apologize. We've had that conversation. In his remarks he tried to highlight sort of the two sides of the story. It's one on the organic growth side. When we talk about the impact of the changes that are happening, number one, we've talked about the ability to leverage Dave, the Resolute team, our board, to help drive some of that organic growth, making introductions in a pretty material way in terms of trying to help accelerate that in addition to what we've talked about more, which is the operating system work and the efficiency work. His prepared remarks were intended to convey both the market opportunity, which I think he sees even more clearly today, just how big and important it is, combined with the progress being made on the organic growth and the operations side. Thanks very much. Thank you. One moment for our next question, please. It comes from Brian Vieten with Needham. Please proceed. Great, thanks guys. Congrats on a great quarter. You called out the commercial momentum. Any particular reason the back half would look more like Q2 here? Maybe an offset to some of the recent crypto launches which seem well positioned, or was it more of just a pull forward here? Thank you for the question. We don't see it as a pull forward. We see continued momentum as we move through the year. Yes. We've given you specific point guidance for how we see the year unfolding. There's always some natural timing for how we see things play out through the year. It was certainly not a pull forward into Q2 in terms of our results. Okay, great. Just on the margin profile of some of those newer launches, are those cards coming in? Similar margin profile. Anything to call out there? Nice. Thank you. On the margin question, as both Dave and I and Tim all noted, we are beginning to see, we believe, the effects of the operating system work and it's happening throughout every function in the company, including manufacturing. It is, we think, a pretty meaningful contributor to the improvements that we saw in gross margin during the quarter. I'd say we're really pleased with the operating system work and the impacts that it's driving. All right, thanks a lot, guys. Thank you. Our next question is from Reginald Smith with JP Morgan. Mr. Smith, you're allowing. Thank you. Congrats on the quarter. I guess the first question here, obviously the gross margins were up sharply and I understand that the operating system is working, but I was hoping maybe you could talk about maybe some of the most impactful operational changes you guys have made. I'm going to ask you this, I don't know if I'll get the answer, but you know, how much more efficiency is available over the next 12, 18 months? I have some follow ups. Thank you. Thank you for the question, Reggie. I'm not going to get specific. On the specific operational improvements, which function of operations it is throughout manufacturing and in addition to. The manufacturing I've talked about. It's literally from the time we take an order till the time cash comes in the door, the intensity, the focus, the discipline that we are providing around all aspects of that are all contributing to the improvements that you're seeing in the gross margin lines. As we move through the back half of the year, some of that's impacted by product mix in a particular quarter, and you will see perhaps some variation, fluctuation in that. We believe we can maintain this. Strong margin profile and continue to drive. Additional improvements, which was the core to your question. Those improvements let us continue to reinvest in the business, right? In manufacturing, in sales, and other things that we need to ensure we continue to grow the business and continue to drive additional operating efficiencies. We have said from the beginning, Reggie, we will reinvest some of that back in seed planting for the future. We believe there's actually still a good bit of opportunity ahead of us on the operations side. Okay, that sounds good. Looking forward to seeing that unsold. I was hoping to ask Dave, and maybe you can speak to this, but I would love to hear about the M&A pipeline and maybe talk about how many deals are in serious diligence and what you expect there. If finally, and you may or may not be able to answer this, but you know, looking at the Resolute Holdings, and I know that they earn a management fee, but I'm not sure if there's anything else in there, a kicker or incentives that may explain its value. Am I missing something there on Resolute in terms of what they can earn from your success? Thank you. On the first part of the question, I would say the M&A pipeline is robust. There are a lot of opportunities out there that we are looking at and evaluating. I am not going to comment, Reggie, on how many or which ones are deep into diligence, et cetera. I'm going to come back to there are a set of core criteria that we look at for any deal that we're going to do that align well to the framework that Dave used to drive nearly 100 acquisitions during his time at Honeywell. Those same criteria or the core criteria we're going to use here, and we're. Going to be very selective. We're trying to find the next CompoSecure, a market leader, great company that is undervalued and do an accretive deal for our shareholders. To the second part of the question, I'm not going to comment deeply, as you said, when you asked the question on the valuation there. You know, the business, as I tried to explain, is pretty straightforward in terms of the management fee, the management fee paid from Compo less the expenses there. The point that we've made over time, Reggie, is that, you know, the goal is that the management fee will grow as we grow EBITDA, as we acquire new companies. The goal would be to see material growth in our EBITDA, therefore the management fee, while keeping costs relatively flattish, they're driving huge operational leverage in that business. We think that makes it quite an attractive investment opportunity. I'm not going to comment specifically on the valuation. Understood. Okay, thank you. Thank you. Our next question is from Jacob Stephan with Lake Street Capital Markets. Please proceed. Hey, great quarter guys. Just wanted to touch on a couple things. We've seen a lot of these kind of relaunch programs with the Chase Sapphire Reserve and I think Amex is recently did one last year. What does the pipeline look like for relaunches of existing metal card offerings out there, and maybe if you could help us think through what the new card program pipeline looks like. Thank you for the question. When we look forward, Jacob, we are very pleased with what we're seeing evolve in the premium card market in terms of banks across the spectrum that continue to compete for customers in this segment. We've also seen, you know, the cards. Move from high net worth to mass affluent and into mass market. That's the point that we were making around, you know, 4 billion payment cards issued. We think on an annual basis, you know, we're still less than 1% providing that opportunity that we described. Coming back to the core of. Your question, we like that competition for. This segment of customers. We think it's healthy for our business using premium cards as part of a value proposition that they're delivering for their customers. We think the market is finding it compelling. Yes, that is what we see driving the growth that we're seeing right now in the business, and we believe will drive our future years' growth. You heard me comment on that, and you heard Dave comment on that in terms of our outlook and conviction on this business, where we are, and the opportunity that we still see in front of us, which we think is quite material. Yeah, that's very helpful. Maybe if I could just kind of ask, you know, more of a crypto focused question. Obviously there's been significant kind of legislation proposed and you kind of got the rise of stable coins. Is there any other driving factors between several other of the major exchanges kind of rolling out their card offerings or upgrading existing? We think that's very exciting opportunities. To see folks like Coinbase, Robinhood, Gemini, Crypto.com making the kind of strides that they are at the intersection, in our view, of crypto and payments, we think this is a very exciting time. Overlay the recent changes with stablecoins and the work that our team has done to basically build the capabilities to help spending of stablecoins from cold storage at point of sale over traditional rails or direct wallet to wallet. We're very excited about how we're positioned for the opportunities ahead there. Great. I appreciate all the color. Thanks, guys. Appreciate the question. Thank you. Thank you. We have a follow-up from Moshe Orenbuch with Teddy Collin. Please proceed. Thank you. You did mention that Arculus contribution was positive. Just following up, what's the path there? Are you investing more and the revenue is growing? Could you, is there a way to expand on that in the context of your disclosure? I'd say generally it's being driven. Revenue growing is by far the number one driver of what's driving that positive contribution in the business. I'd say our spending or investment is fairly flat to slightly increasing on things like the sales side, go to market, Moshe. Overall, it's revenue growth that is driving the day there. Great. Okay, thanks very much. Thank you. Thank you so much. Ladies and gentlemen, this concludes our Q&A session and conference for today. Thank you all for participating. You may now disconnect.