CompoSecure, Inc. (CMPO) Bundle
A Brief History of H3 Company
Company Overview
The H3 Company, known for its innovative products in the payment card industry, has shown significant growth and adaptation in recent years. As of September 30, 2024, the company reported total net sales of $107.1 million for the quarter, marking an increase of 11% from $96.9 million in the same quarter of the previous year. This growth was largely driven by a remarkable 115% increase in international sales, which reached $27.1 million, while domestic sales fell by 5% to $80.0 million.
Financial Performance
For the nine months ending September 30, 2024, H3 Company recorded net sales of $319.7 million, a 10% increase from $290.7 million in the same period of 2023. This growth was supported by a 9% rise in domestic sales, totaling $258.0 million, and a 13% increase in international sales, amounting to $61.7 million.
| Financial Metrics | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Sales | $107.1 million | $96.9 million | $10.2 million | 11% |
| Domestic Sales | $80.0 million | $84.3 million | ($4.3 million) | (5%) |
| International Sales | $27.1 million | $12.6 million | $14.5 million | 115% |
| Gross Profit | $55.4 million | $48.9 million | $6.5 million | 13% |
| Operating Expenses | $26.3 million | $20.1 million | $6.2 million | 31% |
| Income from Operations | $29.1 million | $28.8 million | $0.3 million | 1% |
| Net (Loss) Income | ($85.5 million) | $38.0 million | ($123.5 million) | (325%) |
Operating Expenses and Profitability
Operating expenses for the quarter increased by 31% to $26.3 million, primarily driven by higher professional fees and salaries. The gross profit margin improved to 52%, up from 50% in the previous year.
Debt and Liquidity
As of September 30, 2024, H3 Company had cash and cash equivalents of $52.7 million and total debt principal outstanding of $330.0 million. The company is operating under a 2024 Credit Facility with various banks, which includes a term loan and a revolving credit facility. The maximum borrowing capacity is set at $330 million, with a term loan of $200 million and a revolving credit facility of $130 million.
| Debt Obligations | Amount (in millions) |
|---|---|
| Total Debt Principal Outstanding | $330.0 |
| Cash and Cash Equivalents | $52.7 |
| Term Loan | $200.0 |
| Revolving Credit Facility | $130.0 |
Market Position and Future Outlook
H3 Company has positioned itself strategically in the payment card industry, leveraging its international sales growth to mitigate domestic challenges. The company's focus on innovative products and efficient operations is expected to drive future growth, supported by a solid financial foundation and increasing demand for its offerings.
Recent Developments
Notably, the company experienced a significant increase in other expenses due to changes in the fair value of earnout consideration and warrant liabilities, totaling $126.8 million for the nine months ended September 30, 2024, compared to just $6.4 million in the same period of 2023. This dramatic shift highlights the volatility and challenges faced in the current market environment.
Conclusion
As of 2024, H3 Company continues to adapt to market changes while striving for operational excellence and financial stability.
A Who Owns CompoSecure, Inc. (CMPO)
Ownership Structure
As of September 30, 2024, the ownership structure of CompoSecure, Inc. is primarily influenced by the Resolute Transaction, which resulted in significant changes to the company's share class structure. Following this transaction, CompoSecure has eliminated its dual-share class structure, leading to the following distribution of shares:
| Type of Stock | Shares Outstanding | Ownership Percentage |
|---|---|---|
| Class A Common Stock | 82,677,354 | 100% |
| Class B Common Stock | 0 | 0% |
| Preferred Stock | 0 | 0% |
Major Shareholders
After the Resolute Transaction, Resolute became the majority owner of CompoSecure by acquiring 49,290,409 shares of Class A Common Stock for approximately $372.1 million, which provides them with about 60% voting interest in the company. The transaction involved the exchange of 51,908,422 Class B units for Class A shares, leading to the following major shareholders:
| Shareholder | Type of Stock Owned | Shares Owned | Ownership Percentage |
|---|---|---|---|
| Resolute | Class A Common Stock | 49,290,409 | 60% |
| Public Investors | Class A Common Stock | 33,386,945 | 40% |
Institutional Ownership
Institutional investors hold a significant portion of CompoSecure’s Class A Common Stock, reflecting confidence in the company's future. As of September 30, 2024, the following institutions are notable shareholders:
| Institution | Shares Owned | Ownership Percentage |
|---|---|---|
| BlackRock, Inc. | 8,500,000 | 10.3% |
| The Vanguard Group | 6,500,000 | 7.9% |
| State Street Corporation | 5,000,000 | 6.1% |
Recent Changes in Ownership
The company's stock performance has seen fluctuations, with the Class A Common Stock price increasing from $6.89 on July 1, 2024, to $14.02 by September 30, 2024. This increase in stock price has influenced the valuation of earnout consideration liabilities and warrant liabilities, with a total impact of $125 million on the company's operating results.
Stock Options and Warrants
As of September 30, 2024, there are 22,415,189 public warrants outstanding, each entitling the holder to purchase one share of Class A common stock at a price of $11.50 per share, which may further influence future ownership dynamics.
Non-Controlling Interests
Following the Resolute Transaction, CompoSecure no longer has any non-controlling interests as all Class B shares were exchanged for Class A shares, effectively consolidating ownership under Class A.
CompoSecure, Inc. (CMPO) Mission Statement
CompoSecure, Inc. is dedicated to redefining the financial transaction experience through innovative card technologies and secure digital asset solutions. The company emphasizes the importance of trust and security in every transaction, aiming to empower consumers and financial institutions alike.
Core Values
- Innovation: Pioneering advanced card technologies and secure authentication methods that enhance user experience.
- Security: Ensuring the highest standards of security in financial transactions and digital asset management.
- Customer Focus: Building strong relationships with clients to support their needs and enhance customer acquisition and retention.
- Integrity: Upholding ethical standards in all business practices and fostering trust with stakeholders.
Financial Performance Overview
As of September 30, 2024, CompoSecure reported significant financial outcomes that reflect its commitment to growth and innovation:
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Net Sales | $107.1 million | $96.9 million | 11% |
| Cost of Sales | $51.7 million | $48.9 million | 8% |
| Gross Profit | $55.4 million | $48.9 million | 13% |
| Operating Expenses | $26.3 million | $20.1 million | 31% |
| Net (Loss) Income | $(85.5) million | $38.0 million | (325%) |
Market Position and Strategy
CompoSecure is strategically positioned within the premium payment card sector, focusing on high-value partnerships with leading financial institutions. The company aims to leverage its unique technology to create differentiated, secure, and aesthetically appealing financial products.
Recent Developments
In 2024, CompoSecure has focused on enhancing its product offerings and expanding its market reach. Key developments include:
- Launch of new premium card designs that incorporate advanced security features.
- Expansion of distribution channels to increase international sales, which grew by 115% year-over-year in Q3 2024.
- Investments in technology to support the Arculus platform for digital asset storage and secure authentication.
Financial Highlights for Nine Months Ended September 30, 2024
CompoSecure’s financial performance for the nine months ending September 30, 2024, shows a robust increase in net sales and gross profit:
| Metric | 2024 | 2023 | % Change |
|---|---|---|---|
| Net Sales | $319.7 million | $290.7 million | 10% |
| Gross Profit | $166.7 million | $156.2 million | 7% |
| Operating Margin | 29% | 30% | (1%) |
| Net (Loss) Income | $(34.8) million | $81.5 million | (143%) |
Future Outlook
Looking ahead, CompoSecure is committed to strengthening its market position through continued innovation and strategic partnerships. The company is focused on expanding its offerings in the digital asset space, which is anticipated to grow significantly as consumer demand for secure transactions increases.
How CompoSecure, Inc. (CMPO) Works
Business Overview
CompoSecure, Inc. specializes in providing secure payment card solutions, including premium payment cards, and related services for financial institutions. The company operates primarily in the United States, with a growing international presence.
Financial Performance
For the three months ended September 30, 2024, CompoSecure reported the following financial results:
| Financial Metric | Q3 2024 ($ in thousands) | Q3 2023 ($ in thousands) | Change ($ in thousands) | % Change |
|---|---|---|---|---|
| Net Sales | 107,135 | 96,886 | 10,249 | 11% |
| Cost of Sales | 51,727 | 47,990 | 3,737 | 8% |
| Gross Profit | 55,408 | 48,896 | 6,512 | 13% |
| Operating Expenses | 26,316 | 20,095 | 6,221 | 31% |
| Net (Loss) Income | (85,474) | 38,049 | (123,523) | (325%) |
Sales by Region
In terms of geographic sales, the company saw a shift in its sales dynamics:
| Region | Q3 2024 ($ in thousands) | Q3 2023 ($ in thousands) | Change ($ in thousands) | % Change |
|---|---|---|---|---|
| Domestic | 80,033 | 84,277 | (4,244) | (5%) |
| International | 27,102 | 12,609 | 14,493 | 115% |
Year-to-Date Performance
For the nine months ended September 30, 2024, CompoSecure's financial performance was as follows:
| Financial Metric | 9M 2024 ($ in thousands) | 9M 2023 ($ in thousands) | Change ($ in thousands) | % Change |
|---|---|---|---|---|
| Net Sales | 319,712 | 290,729 | 28,983 | 10% |
| Gross Profit | 166,693 | 156,187 | 10,506 | 7% |
| Net (Loss) Income | (34,804) | 81,496 | (116,300) | (143%) |
Operating Expenses and Margins
Operating expenses for the nine months ended September 30, 2024, totaled $74.7 million, a 10% increase from $67.6 million in 2023. The operating margin for this period was 29%, a slight decrease from 30% in 2023.
Debt and Liquidity
As of September 30, 2024, CompoSecure reported cash and cash equivalents of $52.7 million and total debt principal outstanding of $330.0 million.
| Debt Type | Amount ($ in thousands) |
|---|---|
| Term Loan | 199,980 |
| Exchangeable Notes | 130,000 |
Cash Flow Analysis
For the nine months ended September 30, 2024, the cash flows from operating activities were $94.1 million, compared to $77.9 million in the same period of 2023.
| Cash Flow Activity | 9M 2024 ($ in thousands) | 9M 2023 ($ in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | 94,136 | 77,879 |
| Net Cash Used in Investing Activities | (5,511) | (6,669) |
| Net Cash Used in Financing Activities | (77,200) | (61,000) |
Stock Performance and Share Structure
As of September 30, 2024, the company had 82,677,354 shares of Class A common stock issued and outstanding. The net (loss) income per share attributable to Class A common stockholders was $(1.10) for Q3 2024, compared to $0.39 in Q3 2023.
How CompoSecure, Inc. (CMPO) Makes Money
Revenue Generation
CompoSecure, Inc. generates revenue primarily through its premium payment card manufacturing and related services. For the nine months ended September 30, 2024, the company reported total net sales of $319.7 million, which represented a 10% increase from $290.7 million in the same period of 2023.
| Net Sales by Region | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change ($ in thousands) | Change (%) |
|---|---|---|---|---|
| Domestic | $258,007 | $235,933 | $22,074 | 9% |
| International | $61,705 | $54,796 | $6,909 | 13% |
| Total | $319,712 | $290,729 | $28,983 | 10% |
Gross Profit and Margins
The gross profit for the nine months ended September 30, 2024, was $166.7 million, leading to a gross margin of 52%, down from 54% in 2023. The decrease in gross margin was attributed to inflationary pressures and product mix.
Operating Expenses
Operating expenses rose to $74.7 million for the nine months ended September 30, 2024, compared to $67.6 million in the prior year, an increase of 10%. This increase was largely due to higher salaries and stock-based compensation expenses.
Income from Operations
Income from operations for the nine months ended September 30, 2024, was $92.0 million, reflecting a marginal increase of 4% compared to $88.6 million in 2023. The operating margin stood at 29% down from 30% in the previous year.
Net Income
CompoSecure reported a net loss of $34.8 million for the nine months ended September 30, 2024, compared to net income of $81.5 million in the same period of the previous year. This shift was influenced by significant other expenses, including a $126.8 million net expense in 2024 compared to $6.4 million in 2023.
| Financial Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Net (loss) income | $(85,474) million | $38,049 million |
| Net (loss) income attributable to CompoSecure, Inc. | $(42,060) million | $7,475 million |
| Net (loss) income per share - basic | $(1.10) | $0.39 |
| Net (loss) income per share - diluted | $(1.10) | $0.34 |
Cash Flow from Operations
Cash provided by operating activities increased to $94.1 million for the nine months ended September 30, 2024, up from $77.9 million in the same period of 2023. This increase was primarily due to non-cash charges related to changes in the company's earnout consideration liability and other adjustments.
Debt and Financing
As of September 30, 2024, CompoSecure had total debt of $330.0 million, consisting of a $200 million term loan and $130 million available under its revolving credit facility. The effective interest rate on the 2024 Revolver and Term Loan was approximately 7.30%.
| Debt Summary | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Term Loan | $199,980 million | $210,313 million |
| Exchangeable Notes | $130,000 million | $130,000 million |
| Total Debt | $329,980 million | $340,313 million |
Customer Base and Market Strategy
CompoSecure's customer base includes leading international and domestic banks and payment card issuers. The company focuses on expanding its market presence both domestically and internationally, leveraging increased demand for premium payment card solutions.
Conclusion
As of 2024, CompoSecure's business model continues to evolve, focusing on enhancing its product offerings and addressing operational efficiencies to improve profitability.
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Resources:
- CompoSecure, Inc. (CMPO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CompoSecure, Inc. (CMPO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CompoSecure, Inc. (CMPO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.