Slide 1: Q3 2022 Earnings Presentation
0 0 Q3 2022 EARNINGS PRESENTATION November 2, 2022
Slide 2: Disclaimers
1 1 Disclaimers Forward Looking Statements This presentation contains forward - looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although the Company believes that its plans, intentions, an
Slide 3: Key Highlights – Q3 2022
2 2 Key Highlights – Q3 2022 Net Income of $22mm, 17% higher than Q3 ‘21 and Adjusted EBITDA 1 of $33mm, 33% higher than Q3 ‘21 driven primarily by Net Sales growth, production efficiencies, and economies of scale, as well as managing investments based on Arculus ramp - up expectations and timing Ar
Slide 4: Company Highlights
3 3 Company Highlights CompoSecure is driving strong new partnership momentum across the payment card and Arculus ecosystems Gaming Payment Cards Digital Authentication Security FinTechs Marketing & Distribution FinTech & Technology Partners Mana Venmo PayPal eToro Vital Card Exchanges Mercury BHG W
Slide 5: Positive Trends & Momentum across Payment Cards
4 4 1 American Express & JP Morgan Chase Earnings Presentations 2 PYMNTS: “Mobile Wallet Adoption”, 2022 Positive Trends & Momentum across Payment Cards CompoSecure’s Largest Customers Continue to Report Over 17% Purchase Volume Growth vs. Prior Year Contactless Cards are 5x More Often Used than App
Slide 6: Positive Trends & Momentum across Payment Cards
5 5 Positive Trends & Momentum across Payment Cards ~40% ~60% ~50% Source: American Express Earnings Presentations (5 %) YoY Card Growth + 28 % + 46 % + 29 % + 63 % + 4 % + 0 % YoY Marketing & Business Development Spend Growth (35%) +43% + 59 % + 86 % + 140 % (16%) (52 %) American Express continues
Slide 7: The Arculus Platform Offers a Broad Range of Security & Authentication Solutions
6 6 The Arculus Platform Offers a Broad Range of Security & Authentication Solutions Targeting a Variety of Verticals FinTechs Financial Institutions Sports & Entertainment Gaming & Gambling Crypto Exchanges NFT Marketplaces KEY VERTICALS Telecom Healthcare B2B to Consumer Security Solutions Direct
Slide 8: Momentum Gaining to Shift Away from User Names and Passwords
7 7 Momentum Gaining to Shift Away from User Names and Passwords 90% 57% 57% 51% 33% Internet Users Worried about Getting Passwords Hacked People Already Been Scammed in Phishing Attacks Still Haven't Changed Their Passwords Internet Users Would Prefer a Passwordless Method of Protecting Their Ident
Slide 9: Arculus Authentication Provides Passwordless Login and/or Step-Up Verification
8 8 Arculus Authentication Provides Passwordless Login and/or Step - Up Verification ~60% ~50% Easy set - up process for FIDO2 compatible app Can be used for step - up authentication Simply tap Arculus Key card for secure log - in Payment Card Integration: Can combine credit/debit card wit h authent
Slide 10: Crypto Hacks and Exchange Freezes Have Continued to Challenge the Industry
9 9 1 SlowMist Hacked 2 PYMNTS: “Mobile Wallet Adoption”, 2022 Crypto Hacks and Exchange Freezes Have Continued to Challenge the Industry Hacking Losses 1 $0.1 $1.3 $2.1 $5.5 $4.2 $9.9 $3.5 - 50 100 150 200 250 300 $0 $2 $4 $6 $8 $10 $12 2016 2017 2018 2019 2020 2021 YTD Oct 2022 # of Hack Events Mo
Slide 11: Arculus Wallet Enables Safe Storage of Private Keys for Digital Assets
10 10 Arculus Wallet Enables Safe Storage of Private Keys for Digital Assets ~60% ~50% Seamlessly send, receive, and swap cryptocurrency and NFTs Easily track and record historical transactions Simply tap - to - transact with the Arculus Key card Convenience of a Hot Wallet with the Security of Cold
Slide 12: @Cmpdecure
@Cmpdecure
Slide 13: Q3 2022 Results
12 12 Q3 2022 Results Net Sales Gross Margin Adjusted EBITDA 1 Adjusted EBITDA Margin 1 Q3 ‘22 Q3 ‘21 % Change Commentary $103mm 60 % $3 3 mm 32% $66mm 55% $25mm 37 % 56% 516 bps 33% (552 bps) Demand for premium metal cards, strong sales execution, & increased international demand Economies of scale
Slide 14: Sept YTD 2022 Results
13 13 Sept YTD 2022 Results Net Sales Gross Margin Adjusted EBITDA 1 Adjusted EBITDA Margin 1 YTD Sept ‘22 YTD Sept ‘21 % Change Commentary $285mm 59% $106mm 37% $193mm 55% $81mm 42% 48% 469bps 30% (502 bps) Excludes $38mm net increase from re - valuation of earnout & warrants YTD Sept ‘22 includes
Slide 15: Net Sales Trend
14 14 Net Sales Trend In millions $52 $64 $62 $70 $84 $14 $11 $22 $27 $19 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 International Domestic $66 $ 75 $84 $ 97 International Domestic 28 % 72 % 21 % 79 % 15 % 85% 26 % 74 % Domestic and international are both contributing to CompoSecure’s growth +35% Q3 ‘22 vs. Q3 ‘
Slide 16: Earnings per Share: GAAP
15 15 15mm 5 Earnings per Share: GAAP Basic Q2 YTD ‘22 GAAP Net Income $22mm $0.18 12.9% $3mm 1 Three months ended 9/30/22 Nine months ended 9/30/22 $22mm 16.2% $4mm 2 20mm 6 $0.18 $109mm $109mm 14.1% 28.3% $15mm 3 $31mm 4 15mm 5 33mm 7 $1.02 $0.94 Source: Company Financials 1 20.6% of Operating Net
Slide 17: Adjusted Earnings per Share
16 16 76mm 3 Adjusted Earnings per Share Basic Q2 YTD ‘22 GAAP Net Income $22mm $0.26 90% $20mm 1 Three months ended 9/30/22 Nine months ended 9/30/22 $22mm 90% $20mm 1 88mm 4 $0.22 $109mm $109mm 60% 60% $65mm 2 $65mm 2 76mm 3 88mm 4 $0.86 $0.74 Source: Company Financials 1 GAAP Net Income of $22.0m
Slide 18: 2022 Guidance
17 17 2022 Guidance Net Sales Adjusted EBITDA 1 Prior 2022E 2021 $268mm $102mm $355mm - $380mm $110mm - $120mm 1 Adjusted EBITDA is a non - GAAP financial metric. For a reconciliation of Adjusted EBITDA to the most - comparable GAAP metric, plea se see the Appendix to this presentation $370mm - $ 38
Slide 19: Strategic Priorities
18 18 Strategic Priorities Leader in Metal Payment Cards, Security, Storage, and Authentication Technology Drive premium payment card sales through continued domestic growth, international expansion, and FinTechs Deliver innovative new card constructs and leverage our scale and existing relationship
Slide 20: Investor Relations Contact
19 19 Investor Relations Contact ir.composecure.com Sean Mansouri 720 - 330 - 2829 ir@composecure.com
Slide 21: @CompdSecure
@CompdSecure security § innovation durability
Slide 22: Summary Equity Capitalization Table
21 21 CompoSecure, Inc. (Nasdaq: CMPO) Summary Equity Capitalization Table (with net exercise model) As of September 30, 2022 Holders # of Shares Issued & Outstanding # of Shares Issued & Outstanding Public Shareholders (including PIPE & Sponsor): Class A 15.8mm 15.8mm Historic CompoSecure Owners :
Slide 23: Balance Sheets (Unaudited)
22 22 Balance Sheets ( Unaudited) Source: Company financials Note: Financial position has been derived from CompoSecure’s consolidated financial statements for the quarters ended Septemb er 30, 2022 and December 31, 2021 respectively. ($mm) Q3 2022A Q4 2021 Assets Current Assets Cash & cash equivale
Slide 24: Statements of Operations (Unaudited)
23 23 Statements of Operations (Unaudited) Source: Company financials Note: Operating results have been derived from CompoSecure’s consolidated financial statements for the nine month s ended September 30, 2022 and 2021 respectively ($mm) YTD Sep 2022A YTD Sep 2021A Revenue Net Sales $285 $193 Cost
Slide 25: Statements of Cash Flows (Unaudited)
24 24 Statements of Cash Flows (Unaudited) Source: Company financials Note: Cash flows have been derived from CompoSecure’s consolidated financial statements for the nine month s ended September 30, 2022 and 2021 respectively ($mm) YTD Sep 2022A YTD Sep 2021A Cash flows from operating activities Net
Slide 26: Non-GAAP Adjusted EBITDA Reconciliation (Unaudited)
25 25 $mm Q3 2022A Q3 2021A YTD Sep 2022A YTD Sep 2021A Net Income $22 $19 $109 $63 Interest Expense 6 3 16 9 Depreciation and Amortization 2 3 7 8 Taxes 0 4 Unadjusted EBITDA $30 $24 $136 $80 Non-Cash Stock Comp Expense 4 0 8 1 Mark-to-Market Adjustments -1 -38 Other 0 0 Total EBITDA Adjustments $3
Slide 27: Non-GAAP EPS Reconciliation (Unaudited)
26 26 Source: Company financials 1 Assumes treasury stock method, valuation at assumed FMV of $18.00 2 Assumes exercise net of strike price, valuation at assumed FMV of $10.00 Non - GAAP EPS Reconciliation (Unaudited) ($mm) BASIC DILUTED BASIC DILUTED GAAP Net Income $21.9 $21.9 $109.5 $109.5 Add ba