CompoSecure, Inc. reported significant financial developments in its 10-Q filing for the three and nine months ended September 30, 2024. The company experienced a notable increase in net sales, which reached $107.1 million for the third quarter, up 11% from $96.9 million in the same period of 2023. For the nine months, net sales totaled $319.7 million, a 10% increase from $290.7 million year-over-year. The gross profit for the third quarter was $55.4 million, reflecting a 13% increase from $48.9 million in Q3 2023, while the gross margin improved to 52% from 50%.

Despite these revenue gains, CompoSecure reported a net loss of $85.5 million for the third quarter, a stark contrast to a net income of $38.0 million in Q3 2023. The nine-month results also showed a net loss of $34.8 million compared to a net income of $81.5 million in the prior year. The losses were attributed to significant increases in other expenses, primarily due to changes in the fair value of earnout consideration and warrant liabilities, which totaled $113.9 million for the third quarter.

Operating expenses rose sharply, with selling, general, and administrative expenses increasing by 31% to $26.3 million in Q3 2024, driven by higher professional fees, salaries, and stock-based compensation. The income from operations for the third quarter was $29.1 million, a slight increase from $28.8 million in the previous year.

Strategically, CompoSecure underwent a major transaction on September 17, 2024, when Resolute Compo Holdings, LLC acquired 49.3 million Class A shares for approximately $372.1 million, resulting in a 60% voting interest. This acquisition led to the elimination of the Class B share structure and non-controlling interests, simplifying the company's equity structure. Additionally, the company entered into a Fourth Amended and Restated Credit Agreement on August 7, 2024, increasing its borrowing capacity to $330 million.

As of September 30, 2024, CompoSecure reported total assets of $435.4 million and total liabilities of $720.5 million, resulting in a stockholders' deficit of $285.0 million. The company had cash and cash equivalents of $52.7 million, up from $41.2 million at the end of 2023. The net cash provided by operating activities for the nine months was $94.1 million, an increase from $77.9 million in the same period of 2023.

Overall, while CompoSecure demonstrated growth in sales and gross profit, the substantial net losses and increased operating expenses highlight challenges that the company faces in the current economic environment.