CompoSecure Earnings Call Highlights Growth And Headwinds

Composecure Inc. ((GPGI)) has held its Q4 earnings call. Read on for the main highlights of the call.

CompoSecure’s latest earnings call struck an overall upbeat tone, as management highlighted strong revenue growth, expanding margins and healthy cash generation across the platform. While Husky’s near‑term margin pressure and some regional softness weighed on headline profitability, executives framed these as transient issues, stressing confidence in their operating playbook and capital discipline.

Strong CompoSecure Top-Line Growth

CompoSecure delivered robust top‑line gains, with non‑GAAP net sales reaching $462.1 million in fiscal 2025, up about 9.9% from the prior year. Fourth‑quarter revenue was even stronger at $117.7 million, rising roughly 17% year over year and underscoring accelerating demand for the company’s metal payment cards.

CompoSecure Margin and EBITDA Expansion

Profitability at CompoSecure improved sharply, as pro forma adjusted EBITDA climbed to approximately $171 million in 2025, up about 24% and lifting margins to roughly 36.9%. Fourth‑quarter EBITDA rose around 41% to $43 million, while full‑year gross margin expanded more than 400 basis points to about 56.3%, signaling better mix, pricing and efficiency.

Recurring Revenue and Installed Base Momentum at CompoSecure

Management emphasized the durability of CompoSecure’s earnings profile, noting that around 75% of revenue comes from recurring replacement and reissue cycles. Over the past four years, the business has shipped roughly 123 million metal cards, including more than 30 million in 2025 alone, creating a sizable installed base that supports predictable future demand.

Husky Revenue Growth and Large Installed Base

Husky also posted steady growth, with fourth‑quarter net sales of $521 million, up more than 6% year over year, and full‑year 2025 sales near $1.57 billion, up about 5%. The company now counts around 13,500 systems in its installed base, and roughly 65% of revenue comes from higher‑margin recurring aftermarket parts and services, which can be worth two to three times the initial system sale.

Platform Strategy and ROS Implementation

The call underscored GPGI’s identity as a permanent‑capital platform applying the Resolute operating system, or ROS, across its holdings. Management targets mid‑ to high‑single‑digit organic growth, more than 100 basis points of annual margin expansion, double‑digit EBITDA growth and high free‑cash‑flow conversion, pointing to early success at CompoSecure and initial deployment at Husky.

2026 Pro Forma Guidance and Cash Generation

For fiscal 2026, GPGI guided to non‑GAAP net sales of $2.18 billion to $2.23 billion, pro forma adjusted EBITDA of $620 million to $650 million and free cash flow of $325 million to $375 million. At the midpoints, that implies about 8.5% revenue growth, roughly 17% EBITDA growth and an EBITDA margin near 29%, highlighting the platform’s cash‑rich profile.

Capital Allocation and Leverage Discipline

Management reaffirmed a conservative stance on leverage, stating a goal of bringing total debt below roughly three times EBITDA. The company signaled that excess cash will first be directed to paying down borrowings, with shareholder returns like buybacks taking a back seat until balance‑sheet targets are met.

Product and Technology Extensions

CompoSecure is scaling its Arculus solution, which embeds multi‑factor authentication directly into metal cards, positioning it as a growing revenue contributor in digital security. Husky is pushing digital and remote offerings such as Advantage+Elite to boost uptime, deepen service contracts and drive higher spare‑parts revenue across its installed base.

Husky Margin Compression in 2025

Despite solid sales, Husky’s margins compressed in 2025 as the business shifted toward a greater mix of new‑system sales that carry lower blended profitability. Additional pressure came from strategic investments in sales, service labor and prototyping, along with ramp‑up inefficiencies, which management framed as temporary costs to support higher future throughput.

Near-Term Husky Profitability Headwinds

Executives cautioned that Husky’s profitability will remain under pressure in early 2026, with margin declines expected in the first quarter and a tough first half overall. They anticipate relatively flat margins across H1 as operational improvements take hold, followed by a more meaningful recovery in the second half as growth and efficiencies begin to flow through.

Regional Weakness and One-Off Market Challenges

Husky’s performance also reflected uneven demand across regions, with a notable decline in China for 2025 due to tough year‑over‑year comparisons. Africa weakened in the fourth quarter, while North America and the Middle East were essentially flat, and management suggested this concentrated regional variability masked otherwise solid underlying growth.

Operational Inefficiencies While Scaling Husky Throughput

As Husky ramped to record sales throughput in the fourth quarter, it incurred variable cost inefficiencies in labor and overhead that weighed on margins. Management described these inefficiencies as growing pains linked to scaling production and expressed confidence they would fade as the operating system tools and process improvements are more fully implemented.

Potential Investor Concerns over Accounting and Structure

Analysts pressed management on the complex accounting structure created by the spin‑off and management agreements, which leave Husky consolidated via the equity method rather than in GPGI’s core results. Executives acknowledged the potential for investor confusion but rejected the idea of conflicts between Resolute and GPGI, arguing incentives are aligned around long‑term value creation.

Forward-Looking Guidance and Outlook

Looking ahead to 2026, GPGI expects mid‑single‑digit revenue growth and relatively flat margins in the first half, with Husky’s headwinds gradually easing. The second half is projected to deliver double‑digit year‑over‑year growth and faster margin expansion, supporting a path toward longer‑term goals of steady organic growth, rising margins, double‑digit EBITDA gains and high free‑cash‑flow conversion.

The call left investors with a mixed but ultimately encouraging picture, as strong execution at CompoSecure and clear operational plans at Husky underpin constructive guidance. While near‑term margin volatility and accounting complexity remain watch points, management’s focus on leverage reduction, recurring revenue and disciplined capital deployment suggests a platform positioned for durable value creation.