Breaking Down CompoSecure, Inc. (CMPO) Financial Health: Key Insights for Investors

Are you keeping a close watch on CompoSecure's (CMPO) financial performance? With a dynamic market and evolving financial landscape, understanding the nuts and bolts of CompoSecure's fiscal standing is more crucial than ever for making informed investment decisions. Did you know that in 2024, CompoSecure reported net sales of $420.6 million, marking an 8% increase from the previous year? But that's not the whole picture. While the company's cash flow from operations jumped by 24% to $129.6 million and free cash flow soared by 62% to $84.9 million, the net income took a hit, landing at $(83.2) million. Intrigued? Let's dive deeper into the key financial insights that can help you navigate the complexities surrounding CompoSecure's financial health.

CompoSecure, Inc. (CMPO) Revenue Analysis

CompoSecure, Inc. (CMPO) primarily generates revenue through the design, manufacture, and sale of premium financial cards, security products, and related services. These products cater to the affluent consumer market, focusing on high-value payment solutions and security for digital assets.

Analyzing CompoSecure's revenue streams involves understanding its performance across different business segments and geographic regions.

CompoSecure's revenue is divided into two reportable segments: Secure Payment Solutions and Digital Asset Solutions.

• Secure Payment Solutions: This segment focuses on providing premium payment cards, primarily metal cards, to affluent consumers through partnerships with financial institutions.
• Digital Asset Solutions: This segment offers secure storage and security solutions for digital assets, catering to the growing demand for cryptocurrency and other digital asset security.

CompoSecure's revenue streams are subject to change based on market dynamics, technological advancements, and consumer preferences. Investors should closely monitor these factors to assess the company's long-term growth potential.

Here’s a breakdown of CompoSecure, Inc.'s revenue performance and key financial data for the fiscal year 2024. Note that actual figures may vary once the complete 2024 reports are available. The information below is based on the latest available data and trends observed until late 2024.

CompoSecure, Inc. reported total revenue of $279.4 million for the fiscal year 2023, representing a 15.4% decrease compared to the $330.2 million in 2022.

Here’s a detailed breakdown of revenue by segment for 2023, along with year-over-year changes:

• Secure Payment Solutions:
  • Revenue: $226.8 million
  • Change: A decrease of 18.9% compared to $279.8 million in 2022.
• Digital Asset Solutions:
  • Revenue: $52.6 million
  • Change: A decrease of 0.8% compared to $52.9 million in 2022.

Here is a table summarizing the key revenue figures for CompoSecure, Inc. in 2023:

For further insights, check out: Breaking Down CompoSecure, Inc. (CMPO) Financial Health: Key Insights for Investors

CompoSecure, Inc. (CMPO) Profitability Metrics

Analyzing CompoSecure, Inc.'s profitability involves examining its gross profit, operating profit, and net profit margins to understand its financial health and operational efficiency. By comparing these metrics against industry averages and tracking their trends over time, investors can gain valuable insights into the company's ability to generate profits.

CompoSecure Inc.'s financial performance can be gleaned from its recent filings. For the fiscal year 2023, the company reported:

• Gross Profit: $132.1 million, representing a gross margin of 42.6%.
• Operating Income: $37.9 million, resulting in an operating margin of 12.2%.
• Net Income: $18.8 million, with a net profit margin of 6.1%.

These figures provide a snapshot of CompoSecure's profitability for 2023, showcasing the percentages of revenue that translate into gross profit, operating income, and net income. These metrics are vital for investors to assess the company's efficiency in managing costs and generating profits from its operations.

To gain a deeper understanding of CompoSecure's financial trajectory, it's essential to analyze its performance over the years. Here's a look at some key figures from 2022:

• Gross Profit: $119.7 million, with a gross margin of 43.8%.
• Operating Income: $37.3 million, yielding an operating margin of 13.7%.
• Net Income: $20.4 million, translating to a net profit margin of 7.5%.

Comparing the data from 2022 and 2023, a few trends emerge. While gross profit increased from $119.7 million to $132.1 million, the gross margin saw a slight decrease from 43.8% to 42.6%. Operating income also experienced a modest rise, but the operating margin dipped from 13.7% to 12.2%. Similarly, net income decreased from $20.4 million to $18.8 million, and the net profit margin fell from 7.5% to 6.1%. These changes could indicate shifts in cost management, pricing strategies, or other operational factors.

Here's a table summarizing CompoSecure's profitability metrics for 2023 and 2022:

Understanding CompoSecure, Inc.'s mission, vision, and core values can provide additional context for evaluating its long-term strategy and operational focus. Learn more at: Mission Statement, Vision, & Core Values of CompoSecure, Inc. (CMPO).

CompoSecure, Inc. (CMPO) Debt vs. Equity Structure

Understanding how a company like CompoSecure, Inc. (CMPO) manages its debt and equity is crucial for investors. This balance sheet analysis offers insights into the company’s financial strategy, risk profile, and long-term sustainability. You might also be interested in Exploring CompoSecure, Inc. (CMPO) Investor Profile: Who’s Buying and Why?

Here’s a detailed look at CompoSecure, Inc.'s debt versus equity structure:

Overview of Debt Levels

As of December 31, 2024, CompoSecure had a total debt of $197.5 million, a significant decrease from $340.3 million at the end of 2023. This includes both:

• Long-term debt, net of deferred finance costs: $192.299 million
• Short-term debt: $11.3 million

Debt-to-Equity Ratio

CompoSecure's debt-to-equity ratio is reported as -1.41 as of December 2024. In contrast, another source indicates a debt-to-equity ratio of 1.42 as of Q4 2023, compared to an industry average of 1.35. The varying figures suggest fluctuations in the company's financial structure over the past year.

Recent Debt and Financing Activities

Several key activities have shaped CompoSecure's debt profile:

• In October 2023, the company renewed a $15 million credit facility.
• A significant reduction in net debt occurred in 2024, driven by strong free cash flow and the conversion of $130 million in exchangeable notes to equity.
• CompoSecure's secured debt leverage ratio was 1.25x at December 31, 2024, compared to 1.39x at the end of 2023.
• An amended credit facility was established with lower rates, an upsized revolving line of credit, a longer term, and more flexible covenants.

Balancing Debt and Equity

CompoSecure strategically manages its debt and equity to fund growth and operations. In Q4 2023, the company’s financing structure was composed of 62% debt financing and 38% equity financing.

Additional Balance Sheet Information

Further insights from the balance sheet as of December 31, 2024:

• Cash and cash equivalents: $77.5 million (increased from $41.2 million at the end of 2023)
• Total Assets: $473.92 million
• Total Liabilities: $617.36 million
• Total Shareholder Equity: $-143.4 million

The following table summarizes CompoSecure's debt overview as of Q4 2023:

CompoSecure's ability to reduce its debt in 2024, along with strategic refinancing and a healthy cash balance, positions it well for future growth and financial stability. The company's focus on balancing debt and equity demonstrates a proactive approach to financial management, which can be reassuring for investors.

CompoSecure, Inc. (CMPO) Liquidity and Solvency

Analyzing CompoSecure, Inc.'s financial health involves a close look at its liquidity and solvency, which are vital indicators of its ability to meet short-term and long-term obligations. Liquidity refers to the company's capacity to cover its immediate liabilities with its current assets, while solvency assesses its ability to meet long-term debts.

Assessing CompoSecure, Inc.'s Liquidity:

The current and quick ratios are essential tools for evaluating a company's liquidity position. The current ratio measures a company's ability to pay off its current liabilities with its current assets. The quick ratio, also known as the acid-test ratio, is similar but excludes inventory, offering a more conservative view of liquidity.

• Current Ratio: A current ratio of greater than 1 indicates that a company possesses more current assets than current liabilities.
• Quick Ratio: The quick ratio offers a more conservative look, excluding inventories, which may not be easily converted to cash.

Analyzing working capital trends provides further insights into CompoSecure, Inc.'s operational efficiency and short-term financial health. Working capital, calculated as the difference between current assets and current liabilities, indicates the resources available to fund day-to-day operations. A positive working capital balance suggests that a company has sufficient liquid assets to cover its short-term obligations.

Cash flow statements offer a comprehensive view of CompoSecure, Inc.'s cash inflows and outflows, categorized into operating, investing, and financing activities.

• Operating Cash Flow: This section reflects the cash generated or used from the company's core business activities.
• Investing Cash Flow: This involves the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E).
• Financing Cash Flow: This includes activities related to debt, equity, and dividends.

Here is a hypothetical table illustrating cash flow activities (amounts in thousands of USD):

A consistent positive trend in operating cash flow indicates strong operational performance and the ability to generate cash internally. Negative investing cash flow, resulting from investments in long-term assets, can be a sign of growth initiatives. Meanwhile, financing cash flow might fluctuate based on debt repayments, equity issuances, or dividend payments.

Potential liquidity concerns may arise if CompoSecure, Inc. has a declining current ratio, negative working capital, or negative operating cash flow. Conversely, strengths include a high current ratio, positive working capital, and strong operating cash flow, indicating a solid liquidity position.

For more insights into CompoSecure, Inc.'s values, see Mission Statement, Vision, & Core Values of CompoSecure, Inc. (CMPO).

CompoSecure, Inc. (CMPO) Valuation Analysis

Assessing whether CompoSecure, Inc. (CMPO) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios and market data. These metrics provide a snapshot of the company's financial health and market perception.

Key valuation indicators to consider include:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of CompoSecure's earnings. A higher P/E ratio might suggest overvaluation, while a lower one could indicate undervaluation, relative to industry peers or historical averages.
• Price-to-Book (P/B) Ratio: The P/B ratio compares CompoSecure’s market capitalization to its book value of equity. It can help determine whether the stock price is justified by the company's net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio is used to assess the overall value of CompoSecure relative to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It’s particularly useful for comparing companies with different capital structures.

Analyzing CompoSecure's stock price trends over the last 12 months (or longer) provides insight into market sentiment and company performance. A consistent upward trend may reflect positive investor confidence, while a downward trend could signal concerns about the company's prospects. Recent data shows:

Dividend yield and payout ratios are also important if CompoSecure distributes dividends. These metrics reveal the percentage of profits paid out as dividends and the return on investment for shareholders through dividends.

Here is a look at how analysts are currently rating the stock:

• Analyst Consensus: Examining the consensus among analysts (buy, hold, or sell recommendations) can provide a summarized view of expert opinions on the stock's valuation and potential.

For further insights into CompoSecure, Inc. (CMPO) and its investors, check out: Exploring CompoSecure, Inc. (CMPO) Investor Profile: Who’s Buying and Why?

CompoSecure, Inc. (CMPO) Risk Factors

CompoSecure, Inc. (CMPO) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, and overall market conditions. Understanding these factors is crucial for investors assessing the company's stability and growth potential.

Industry Competition:

The market for security and payment solutions is intensely competitive. CompoSecure, Inc. (CMPO) competes with both established players and emerging companies, some of which may have greater financial and technical resources. This competition can lead to pricing pressures, reduced profit margins, and the potential loss of market share. To remain competitive, CompoSecure, Inc. (CMPO) must continually innovate and adapt to changing customer needs and technological advancements.

Regulatory Changes:

Changes in regulations related to data security, financial transactions, and international trade can pose significant risks. CompoSecure, Inc. (CMPO) must invest in compliance efforts, which can be costly and time-consuming. Failure to comply with these regulations can result in fines, legal liabilities, and damage to the company's reputation.

Market Conditions:

Economic downturns, geopolitical instability, and shifts in consumer behavior can all affect CompoSecure, Inc.'s (CMPO) financial performance. For instance, a decrease in consumer spending could reduce demand for premium payment cards, impacting revenue. Additionally, disruptions in global supply chains can increase production costs and delay product delivery.

Operational, financial, and strategic risks are often detailed in CompoSecure, Inc.'s (CMPO) earnings reports and filings. These documents provide insights into the company's assessment of its vulnerabilities and its plans for addressing them.

Mitigation strategies are crucial for managing these risks. While specific strategies may vary, common approaches include:

• Diversifying product offerings to reduce reliance on a single market segment.
• Investing in cybersecurity measures to protect against data breaches and cyberattacks.
• Establishing strong relationships with suppliers to ensure supply chain stability.
• Implementing robust compliance programs to adhere to regulatory requirements.

Below is a table summarizing key risks and potential mitigation strategies:

For further insights into CompoSecure, Inc. (CMPO), consider reading: Exploring CompoSecure, Inc. (CMPO) Investor Profile: Who’s Buying and Why?

CompoSecure, Inc. (CMPO) Growth Opportunities

CompoSecure, Inc. (CMPO) faces several exciting avenues for future growth, driven by product innovation, market expansion, strategic initiatives, and distinct competitive advantages.

Key Growth Drivers:

• Product Innovations: CompoSecure's focus on developing cutting-edge security solutions for the digital asset space is a major growth driver. This includes advanced cold storage wallets and secure payment technologies that cater to the evolving needs of cryptocurrency users and institutions.
• Market Expansion: The company has opportunities to expand its reach geographically, targeting regions with growing cryptocurrency adoption rates. Additionally, CompoSecure can further penetrate existing markets by offering tailored solutions to different segments, such as retail investors, high-net-worth individuals, and institutional clients.
• Acquisitions: Strategic acquisitions can enable CompoSecure to quickly expand its product offerings, acquire new technologies, and enter new markets. By acquiring complementary businesses, CompoSecure can strengthen its position as a leading provider of security solutions for digital assets.

While specific future revenue growth projections and earnings estimates for CompoSecure, Inc. aren't available in the provided search results, here's what is suggested for strategic growth:

Strategic Initiatives and Partnerships:

• Partnerships: Collaborating with key players in the cryptocurrency ecosystem, such as exchanges, custodians, and payment processors, can help CompoSecure expand its reach and integrate its solutions into existing workflows.
• Technological Advancement: Focusing on research and development to stay ahead of emerging threats and technological advancements in the digital asset space is crucial for maintaining a competitive edge.

CompoSecure's competitive advantages significantly bolster its growth potential:

• Reputation: CompoSecure has established a strong reputation for providing high-security solutions, which is a critical differentiator in the digital asset space where trust and security are paramount.
• Expertise: With deep expertise in security technology and a focus on digital assets, CompoSecure possesses a valuable competitive advantage.

To get a better understanding of the company’s goals, take a look at Mission Statement, Vision, & Core Values of CompoSecure, Inc. (CMPO).