GPGI

Good day. Thank you for standing by. Welcome to the GPGI, Inc. First Quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Marshall, Chief Legal Counsel. Please go ahead.

Thanks, Shannon. Good morning, and welcome to GPGI's conference call, where we'll review GPGI's first quarter 2026 financial results. With me on the call today are the business leaders from GPGI, Resolute Holdings, CompoSecure, and Husky. We'll begin with prepared remarks and then open the call for Q&A. During the call, we'll make statements regarding our business that may be considered forward-looking, including statements regarding our growth strategy, customer demand, macroeconomic factors, implementation of the Resolute Operating System, and our guidance for 2026, as well as other statements regarding our plans and prospects. For a discussion of material risks and other important factors that could affect our actual results, please refer to the information in our reports filed with the SEC, which are available on the investor relations section of our website and on the SEC's website at sec.gov.

As a reminder regarding the company's accounting, on February 28, 2025, GPGI completed the spin-off of Resolute Holdings Management, Inc., and our wholly owned subsidiary, GPGI Holdings, entered into a management agreement with Resolute Holdings. As a result, the results of operations of GPGI Holdings and the operating companies which are its subsidiaries, including CompoSecure and Husky, are not consolidated in the financial statements of GPGI and are instead accounted for under the equity method of accounting. For more information about our financial presentation, please see our SEC filings, including our quarterly report on Form 10-Q, to be filed later today. In the earnings release we issued earlier today and in the discussion on today's call, we also present non-GAAP financial measures to help investors better understand our operating performance.

The company believes these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends impacting the company's financial condition and results of operations. These non-GAAP financial measures should not be considered as an alternative to performance measures derived in accordance with U.S. GAAP and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation of GAAP to non-GAAP measures is available in our press release and earnings presentation available on the IR section of our website. With that, I'll turn the call over to Executive Chairman, David Cote.

We have a tale of two cities. CompoSecure is performing better than our expectations, reflecting just excellent implementation of the Resolute Operating System for both growth and operations. Husky, unfortunately, has encountered unanticipated market headwinds because of oil market volatility and tariffs. This has caused customers to delay accepting orders that normally would have been expected to ship in the quarter while also reducing new orders. You'll likely ask what changed. Since I spoke to you on our March 12th fourth quarter earnings call, we saw a significant and surprising increase in customers taking a wait and see approach in response to those changing macro conditions. At the time of the call, February year-to-date orders were up approximately 27% versus prior year, and the pipeline was up approximately 6% year-over-year.

The amount of book and ship required to make the quarter was not unusual given history. In the subsequent two and a half weeks, several customers would not finalize their orders for shipment, we could not ship to a couple of countries, and customers delayed placing an official order. This trend continues today. We can't predict when it will end. We have provided a wider revised guidance range. In anticipation of lower sales, we've taken various actions on expenses to mitigate some of the impact of those lower sales. At the same time we're seeing order delays, we saw the pipeline grow approximately 4% over last year in the first quarter and up 7% year-over-year through April. There are reasons for optimism that this will not be a long-lived problem.

Consistent with this, we're seeing the 12-month pipeline up while the 3-month pipeline is down. Husky leadership is aggressively tackling ROS implementation for both growth and operations. The investment thesis is very much intact with their great position in a good industry. Now, I'm very unhappy to be sharing a different result today than I expected when I talked to you on March 12th. While certainly disappointing in the short term, I can still say with confidence that the prospects for GPGI performance are quite rewarding. CompoSecure is on a roll, and the new leadership has significantly energized that team and is improving the culture. The commercial prospects for growth are better than ever, and ROS implementation and operations is showing significant gains. The prospects for this business are terrific, and they're apparent today. Compo also benefits from being more than 1 year ahead of Husky in ROS implementation.

Husky prospects are also excellent. It doesn't show right now because of the market headwinds, but it is real. We continue to fund R&D expansion because it will greatly benefit the business's future. Consistent with our underwriting thesis, we can already see that ROS will also have a profound impact on our Husky business. With Rob Domodossola's leadership, they are aggressively implementing ROS and driving the cultural change necessary for success. We will navigate the market headwinds, implement ROS, continue increasing R&D and commercial excellence, and become a significantly stronger business as we exit the year. I'm also pleased to say that Kevin Moriarty, a current GPGI board member and deeply experienced finance leader, has stepped in to be Husky's acting CFO. This is yet another benefit of having a board of superb operators. I worked closely with Kevin in the past, and he has a tremendous reputation as an operating CFO.

We are actively evaluating a long list of candidates for the full-time role. In Kevin, we have a proven leader who brings a steady hand to Husky, and I know will benefit from his financial and operating capabilities. I wish we could have seen the Husky market issues sooner than we did, of course. I have not looked forward to today. That being said, nothing has changed concerning GPGI and the prospects for both businesses. I'm personally energized by the progress I'm seeing in both businesses. The cultural change is well on its way at Compo, and the cultural change needed at Husky is being accelerated in dealing with these unfortunate market headwinds. We can't predict today how long the headwinds will continue, so we'll be cautious in our 2026 outlook.

That, though, shouldn't take away from what both businesses can accomplish, given they both have a great position in a good industry. I can promise you GPGI has my full attention. You all know my family and I have a lot of our own money involved here, so I want to see GPGI perform extraordinarily well as much as all of you do. We will get through this just like we have in the past. This is an unfortunate blip, nothing more. We're excited about the path GPGI is on and what it will become. With that, I'll now turn it over to Tom Knott, our Chief Investment Officer, to review our financial performance.

Thank you, David. Going to slide 4, GPGI delivered pro forma adjusted net sales of $421.2 million, up approximately 3% from the prior year. Pro forma adjusted EBITDA of $82.1 million, down approximately 16% from the prior year, and pro forma adjusted EBITDA margins of 19.5%, down approximately 430 basis points from the prior year. As David mentioned, these results reflect record sales performance at CompoSecure, offset by market-related underperformance at Husky. Given Husky's size relative to CompoSecure, this macro-driven delay in demand at Husky is more than offsetting excellent performance at CompoSecure. Starting with CompoSecure, we delivered a record quarter of strategic investments in the sales force and enhanced focus on commercial excellence are driving strong organic growth supported by ROS in the factory.

ROS initiatives have led to a step change in manufacturing yields and operational efficiencies throughout the production process, which were the primary drivers of adjusted EBITDA margins expanding approximately 300 basis points in the quarter. Graham and Mary will go into more detail, but I would just highlight that CompoSecure is now 18 months into implementing the Resolute Operating System, and we are pleased with the cultural and operational intensity taking hold at the company today. We expect CompoSecure to continue its strong trajectory of organic sales growth and improve profitability through the remainder of 2026. Turning to Husky, Rob and Kevin will discuss our performance in the quarter and our outlook. I would reiterate Dave's comments in noting that customer demand for Husky's products deteriorated rapidly at the end of March in a way that surprised us.

This change more than offset the strong pipeline and order book we saw developing through the first 2 months of the year as customers aggressively shifted to a wait-and-see posture as resin prices spiked. While we expect the business to rebound when uncertainty subsides, this change in near-term demand has led us to revise our outlook for GPGI. Turning to slide 5, you have heard us in the past discuss the complicated accounting we are required to use. Given the transaction this quarter on top of that existing accounting complexity, slide 5 shows a simplified walk to pro forma adjusted EBITDA. The full reconciliation appears in the appendix. As previously announced, we refinanced our debt concurrent with the transaction closing, extending maturities, and materially reducing our interest burden. This is the first major component. Transaction expenses were in line with expectations and were paid through closing.

These transaction expenses taken together represent over $200 million of one-time GAAP expenses, which will not recur going forward. Net interest expense for the quarter reflects stub period interest, deferred financing costs, and the interest on the new debt. Other key items include purchase price intangibles amortization, ordinary course income tax provision, non-cash TRA liability remeasurement, stock-based compensation, and foreign exchange impacts. Moving to slide 6, we're providing more detail this quarter than normal to give a full picture of what we were seeing at Husky when we last spoke to you on March 12th, and how things changed through the end of the quarter. Pipeline orders at backlog at Husky were trending favorably through February, with positive commercial activity giving us confidence in our full-year guidance for both Husky and GPGI. This momentum turned quickly late in the quarter.

Orders fell 16% year-over-year through the end of March as resin prices spiked and customers delayed accepting shipments and placing orders. Backlog followed a similar pattern in 1Q. We saw an accelerated recovery through February following a softer January, but the negative trend accelerated in the middle of March with a simultaneous decline in order activity. Despite all of this, our pipeline has remained strong, growing 4% year-over-year through the first quarter and ending April up 7% year-over-year. Even with this healthy pipeline growth, we continue to see slower conversion rates as customers defer some purchased orders in the current environment. Turning to slide 7, the underlined demand drivers for our products, namely non-alcoholic beverage demand, remains resilient. This supports the healthy and expanding pipeline we discussed even though near-term orders are volatile.

While macro conditions have introduced significant ambiguity that is influencing near-term customer purchasing behavior, the core fundamentals of the market Husky serves remain intact. Even though oil market volatility and its impact on resin prices is impacting customer behavior today, the volatility is also reinforcing areas where Husky products are well-differentiated. As resin prices rise, the value of our systems become increasingly compelling for customers because our equipment delivers industry-leading throughput, superior cycle times, higher preform consistency, greater uptime, and lower energy consumption. All of this enables us to offer customers a 15%-20% lower total cost of ownership versus competitive offerings. Additionally, as the price differential between virgin and recycled resin gets smaller, customers are increasingly evaluating rPET as a feedstock alternative to virgin resin.

Husky is the preeminent manufacturer of recycled PET systems, which will result in additional opportunities for new equipment sales and retrofit upgrades if customers shift to more sustainable feedstocks as an alternative to now expensive virgin resin. While the current uncertainty is causing some customers to delay near-term purchasing decisions, we remain confident that the underlying demand driver, particularly consumption of bottled water, remains strong and that this period will drive customers to focus more on productivity, sustainability, and system efficiency, all areas where Husky excels. I want to also take a moment to explain how we're responding to this challenging market environment at Husky. On the cost side, we are in the process of implementing targeted furloughs across jurisdictions to reduce direct labor costs without impacting our industrial base or impairing our ability to respond to the rebound in demand.

We are aggressively managing indirect spend and making necessary changes to be more efficient while also working towards a full return to office to maximize collaboration and increase cross-functional accountability across sales, finance, and operations. On the commercial side, we are reinvigorating our sales force under new leadership because commercial excellence is also a key strategic priority. Husky is a little more than a year behind CompoSecure on the implementation of ROS. While the market backdrop for our customers has changed meaningfully in a short period of time, we remain focused on doing the right things to position the business to achieve its potential. This includes making the necessary investments to accelerate innovation and long-term organic growth through aggressive expansion of the R&D organization and an unrelenting focus on ROS implementation.

These critical initiatives are not stopping despite the market volatility we are facing because they will position the business to benefit from the rebound in demand and for the future more broadly. With that, I will turn the call over to Robert Domodossola, the CEO of Husky.

Thanks, Tom. Going to slide 8, I want to begin at the most fundamental level of what we do. Husky produces systems that make the precursor to non-discretionary items, primarily water bottles. Demand for these products is durable, with long-established history of through-the-cycle growth in periods of macroeconomic volatility. The current period of volatility is no different. The demand for non-alcoholic beverages continues to expand around the world. Our customers are continuing to operate these high essential systems every day to meet this demand, and that will continue. While the current demand shock, driven by steep increases in oil and resin prices, has made customer delay normal purchasing behavior, the fundamental drivers of demand for our products remain solidly intact. Specifically, we currently have installed base of 13,500 systems that are primarily used to produce non-discretionary products.

This installed base is embedded in our customers' operations and drives a large and growing aftermarket revenue stream across parts, tooling, and services. The installed base is globally diverse across developed and emerging markets, and new systems have a higher content than legacy ones. Roughly 35% of our revenue is tied to new system sales, which is currently being impacted most significantly by the demand shock as customers pause large capital investments. While 65% of our revenue is tied to recurring revenue. Although current market dynamics are causing near-term demand deferrals, the mission-critical nature of our products and consistent underlying demand drivers in the markets we serve gives us confidence in a return to normalized order patterns.

Adding to our confidence, Husky is well-positioned because our system delivers the lowest total cost of ownership for customers through faster cycle times, higher quality, lower energy use, and maximum uptime. As higher oil and resin costs persist, our lightweight solutions, resin efficiency, and system productivity enhanced by our connected Advantage+Elite remote monitoring further differentiates the value propositions of Husky's equipment relative to competitors. Taken together, we remain very focused on delivering on what matters most to our customers: uptime, output, and durability at the lowest total cost. Turning to our results, we delivered pro forma adjusted net sales of $290.8 million and pro forma adjusted EBITDA of $38.2 million, down 5% and 40% Y-o-Y respectively.

As David Cote and Tom Knott mentioned, the Middle East conflict altered customers' purchasing behavior nearly overnight in mid-March as supply disruptions drove sharp increases in virgin PET prices, up approximately 46% in March and April. These higher input costs, combined with a tighter supply and increased financing costs, have weighed on near-term demand, as David Cote and Tom Knott described. We view these dynamics as cyclical rather than structural. In fact, elevated material and operating costs tend to reinforce demand for efficiency, lightweighting, and system-level performance, all areas where Husky is highly differentiated. We've seen this pattern before. When geopolitical tensions ease and input costs stabilize, deferred investments tend to rebound, they rebound sharply. Importantly, the end markets we serve are tied to essential customer needs, which has historically proven resilient across cycles.

Operationally, as Dave and Tom mentioned, we are in the early stages of implementing the Resolute Operating System, and our focus is now entirely on disciplined execution. ROS is fundamentally changing the way we operate, and these changes matter even more in times like these. A key initiative we are influencing includes integrated sales, inventory, and operations, or SIOP, planning to improve job sequencing, manufacturing output, and to reduce waste. We are also managing indirect spend and enhanced enterprise cost discipline across our procurement team. AI will be an accelerator for ROS as we identify bottlenecks and improve lead times. ROS is critical to our long-term success, and we are using it every day to drive measurable inputs, improvements to growth, operations, and financial performance.

While the first quarter was disappointing, we know that fundamental seed planting efforts underway to establish a high-performance culture and invest for the future are the right steps and are improving the business. Husky operates in essential needs categories. As macro pressures ease, we expect to see a rebound in deferred investment consistent with past cycles. Now turning to slide 9. Given the breadth of our business, I want to cover what we're seeing in individual product lines and key geographies. Starting with our product lines, specifically new systems, orders are being deferred due to the resin price volatility, tariff-related uncertainty, and elevated financing costs. We expect the weakness we saw in the first quarter to continue through the year if the market headwinds persist.

For aftermarket tooling, orders at the end of last year were lower due to customer uncertainty related to tariffs, which weighed on Q1 2026 sales. However, we expect the segment to return to growth in the second half as customers invest in tooling for their existing installed base while deferring the purchases of new equipment. With respect to hot runners and controllers, we saw strong revenue growth across most regions in the first quarter, but continued market ambiguity is weighing on the order outlook in the near term. Lastly, for aftermarket parts and services, market ambiguity and tariff noise impacted demand at the end of Q1, which is expected to persist in Q2, but we expect a return to growth in the second half as customers increasingly prioritize productivity.

In our key geographies, starting in North America, we see a pause in demand for PET systems, partly offset by growth in tooling, spare parts, and services. We believe North America market is close to trough levels and represents market with our boldest installed base. Shifting to Europe, we're seeing growth in aftermarket tooling, driven by lightweighting and sustainability mandates that support further shifts to rPET adoption. For the Middle East and Africa, we see strong consumption-driven growth in PET systems and growth in hot runners for medical applications, offset by near-term geopolitical disruptions. Turning to LATAM, inflationary pressures and the steep tax on sugar-sweetened bottled beverages in Mexico are driving near-term softness in PET systems, while aftermarket tooling continues to grow, given shifts towards lightweighting and package optimization.

Lastly, in Asia Pacific, we continue to see consumption-driven growth in PET systems and demand for hot runners tied to food and packaging and medical applications. I will now turn it over to our acting CFO, Kevin Moriarty, to review our financial performance in more detail.

Thanks, Rob. Let's turn to our financial performance on slide 10. Given the number of moving parts, let me level set where we landed for the quarter and our path forward. As a reminder, the 1st quarter is seasonally the smallest for Husky, with the 2nd half of the year typically much stronger than the 1st. Against this backdrop, Husky faced significant macroeconomic headwinds that weighed on both growth and profitability. We reported pro forma adjusted net sales of $290.8 million, down 5% compared to the prior year, as declines in new system sales and tooling offset strong growth in spare parts, hot runners, and controllers. Pro forma adjusted EBITDA decreased 40% to $38.2 million, driven primarily by lower revenue and resulting underabsorbed labor and continued investments in R&D and front-end sales capabilities to support future growth.

In aggregate, these factors translated to an approximately 770 basis point erosion in pro forma adjusted EBITDA margin to 13.2%. As Dave, Tom, and Rob all mentioned, we had over $20 million in revenue that got pushed out at the very end of the quarter. This included approximately $6 million tied to customer delays in taking deliveries, approximately $5 million tied to shipment and logistical delays tied to the Middle East conflict, and approximately $4 million tied to delays in customer payments. Combined with the growth investments being made, this quantum of deferred revenue exacerbated margin degradation in the seasonally smallest quarter of the year as we carried excess labor costs relative to demand.

Consistent with historical first half and second half seasonality, we expect margins to expand in the second quarter and continue improving sequentially throughout the year, driven by improved fixed cost absorption in the seasonally stronger second half, the impact of ongoing cost actions, and acceleration operational efficiencies from ROS-led initiatives. These initiatives are central to our thesis of driving sustained margin expansion and bolstering long-term profitability at Husky. On the tariff front, after the Supreme Court invalidated IEEPA tariffs in February, the U.S. implemented modified Section 232 tariffs on April 6, 2026. While continued tariff policy pivots add uncertainty to when customers place their orders, we do not expect them to have a material impact on our results. The U.S. market represents less than 27% of our total sales, which helps moderate our overall exposure.

Of this, roughly 40% of the revenue relates to systems and tooling shipped into the U.S. that is subject to a 15% tariff, a third from imported aftermarket parts that have tariffs declining from 50%-25%, and the balance is primarily hot runners, parts, and services that are locally produced or delivered and therefore not impacted. In addition, consistent with our standard terms and conditions, we have been successfully passing through tariff-related costs to customers since the third quarter of last year and will continue to do so. Our Husky equipment qualifies under USMCA and remains exempt from the 3.1% U.S. import duty, further limiting our exposure. We are not alone when it comes to tariffs. Industry demand in the U.S. has been negatively impacted for the last two years.

The U.S. is an importer of PET systems, and Husky's primary peers do not have domestic production capability. We believe our North American presence positions us favorably relative to international peers importing into the U.S. while this tariff regime remains in place, while also allowing us to capture the inevitable cyclical upturn. With that, I will turn the call over to Graham Robinson, the CEO of CompoSecure.

Thank you, Kevin, and good morning, everyone. Going to slide 11. We delivered an outstanding quarter at CompoSecure, continuing to build upon our commercial and operational momentum. We achieved record pro forma net sales of $130.4 million, up 26% year over year, underscoring both the effectiveness of our commercial execution and the robust demand for premium metal cards. We are seeing this trend translate into new program wins and accelerating issuer activity across leading fintechs and traditional financial institutions. We're also seeing growth in metal cards that have Arculus capabilities. At the same time, the Resolute Operating System continues to have a deep and profound impact across the business.

We are realizing meaningful improvements across all functional areas, from sales performance to improved operations, which helped us deliver strong pro forma adjusted EBITDA of $47.6 million, up 37% compared to a year ago. We are encouraged by our progress, we remain highly focused on investing in our future, in line with our strategic and execution framework that includes three pillars of growth. One, accelerating organic growth. Two, driving international expansion. Thirdly, increasing Arculus momentum. In the first quarter, we saw several exciting customer programs go live, including the American Express Graphite Business Card, XMoney from Elon Musk, the Robinhood Platinum Card, and Revolut's All The F1 Card, as well as Fold, Cash App, Kraken, and MetaMask, which provide crypto rewards and the optionality to pay with crypto.

These signature program wins reflect the breadth of demand for premium card solutions and our differentiated value proposition, combined with advanced design, engineering, and manufacturing capabilities to reinforce our position as the partner of choice for issuers launching high-impact card programs. Most recently, we strengthened our leadership team by appointing general managers to lead our Arculus and international businesses.

With that, I will turn it over to our CFO, Mary Holt, to review our financials in more detail.

Thank you, Graham. Let's turn to our financial performance on slide 12. In the first quarter, CompoSecure delivered strong results across all key financial metrics, driven by continued demand strength and increasing impact of the Resolute Operating System across the organization. As Graham mentioned, adjusted net sales were $130.4 million, up 25.6% year-over-year, driven by robust demand from traditional banks and leading Fintech customers. Adjusted EBITDA increased 36.8% to $47.6 million, reflecting both volume growth and meaningful operational efficiencies, which led to a 300 basis point improvement in adjusted EBITDA margin to 36.5%. Some of these productivity gains will continue to flow through to profitability, while some will be strategically reinvested to support sustained growth.

Overall, this performance highlights the operating leverage and tangible benefits we are realizing from the systematic deployment of the Resolute Operating System, including enhanced throughput and process innovation, which has led to higher and more consistent yields at the factory level. I will now hand it back to Tom to review GPGI's revised guidance.

Thanks, Mary. Turning to slide 13, we are introducing new guidance for 2Q 2026 and revising our full year 2026 outlook to reflect the macro-driven headwinds facing Husky. For 2Q 2026, we expect net sales between $425 million-$475 million, pro forma adjusted EBITDA between $105 million-$120 million, and pro forma adjusted EBITDA margins between 24.7%-25.3%. For FY 2026, we now expect pro forma net sales between $1.95 billion-$2.1 billion, pro forma adjusted EBITDA between $550 million-$610 million, and pro forma adjusted EBITDA margins between 28.2%-29%.

Consistent with the historical trends in the seasonally lowest quarter for free cash flow and despite the market-related challenges we faced at Husky, we generated approximately $29 million of adjusted free cash flow, similar to last year's level, which gives us further confidence in our revised full year estimate of between $275 million-$325 million in pro forma adjusted free cash flow. We anticipate ending the year with approximately 3 times total leverage. Our revised guidance reflects the impact of the market shock facing Husky, but we continue to view 2026 as a critical and foundational year of cultural change, ROS implementation, and strategic seed planting at both businesses that will position us to deliver best-in-class top-line growth, margin expansion, and free cash flow generation across the GPGI platform.

This remains our focus, and we are confident in the work underway at both businesses. With that, I'll hand it back to Dave for some closing remarks.

Thanks, Tom. We've got two businesses in CompoSecure and Husky that hold great positions in good industries, both of which are becoming even stronger through the cultural transformations their teams are driving and the consistent deployment of the Resolute Operating System. You can see the results clearly now at CompoSecure. The market dislocation we're experiencing in Husky is making those improvements harder to see, but they are there. The culture and the business processes are getting better. We're committed to continuing the course, investing smartly for the future, and the results of our efforts will become evident. With that, I'd like to open up the call for Q&A.

Our first question comes from the line of Jacob Stephan with Lake Street Capital Markets.

Hey, guys. Appreciate you taking the questions. I guess first, I just wanted to understand on the guidance a little bit better and make sure I have clarification on the On slide 13, you have kind of two arrows pointing to, you know, the high end and the low end. The low end represents, you know, Iran conflict being delayed with the Strait disrupted. At the high end would be if the conflict is resolved. I guess, you know, if you could give a little bit better sense on, you know, timing, does the low end of the range, I guess, assume the conflict lasts the remainder of the year? Does the high end assume that this is over tomorrow? Any kind of comments you can give there?

Yeah. The way I would look at it is, what we're trying to reflect is the impact of delays. If the delays continue because the Iran conflict keeps going, then those delays are gonna cause us to come into the lower end of the range. To the extent that our customers let go of those delays and maybe even if the conflict is continuing, but they stop delaying because they need the aftermarket or they need the machines, then we'll end up towards the higher end of the range. It's more a reflection of what do we think could happen on customer delays today driven by the Iran conflict and tariffs.

Okay. Got it. I guess, you know, just kind of continuing on the, on the guidance factor. You know, when you look at kind of the second half for adjusted EBITDA, you know, I think it implies relatively, you know, higher adjusted EBITDA in the second half. I know Q4 is a strong quarter for Husky, but, you know, we're looking at kind of $450 million-$550 million of EBITDA in the back half versus the first half. I guess any color there, especially when you kind of talk about the, you know, the margins compressing on Husky a little bit.

Sure. This is Kevin. If you look at our first half, second half, seasonally, second half represents roughly 60% of our revenue base. With the better cost absorption, variable contribution margins improving as well as the cost actions, we feel that the second half will be stronger.

Okay. Just lastly on CompoSecure's, on the core business there. Wondering if you could touch on the, I guess, new card launch pipeline. Is that strong looking at the kind of the last three quarters of the year?

Yeah. The pipeline continues to be quite strong, and we see it in a number of different dimensions. The programs that we have with our existing customers, those customers are also continuing to create and generate new programs also. Lastly, we continue to penetrate a new customer base, both internationally and domestically, and also with Fintechs and with our traditional banks. We continue to be quite optimistic about the strength of the pipeline that we have and what we're seeing going forward.

Got it. Thanks, guys.

Thank you.

Thank you.

Our next question comes from the line of Tomohiko Sano with J.P. Morgan. Your line is now open.

Good morning, everyone.

Morning.

Thank you for taking my questions. like to ask about the Husky's margin, declined by 770 basis Y-o-Y in the past quarters. looking ahead to second quarter and remainder of the year, what specific factors or initiatives do you expect will drive the margin improvement, toward your full year guidance? could you clarify the key assumptions for margin recovery in the back half, please?

Sure. As I alluded to, the first quarter is historically our lower revenue number. As we sequentially go through the year, revenue will grow, which has been our historical pattern every year weighted to the third and fourth quarters. The variable part contribution margin we're expecting on that is going to sequentially improve the margin rate. We're driving the ROS initiatives internally, which we expect to provide some lift, as well as, we've commented on cost actions that we're taking. We instituted some furloughs as well as some indirect cost actions that we're also expecting to provide some lift.

Thank you. A follow-up regarding leveraging the ROS to drive the margin improvement for Husky. Could you share some examples of the cultural changes and operational opportunities being executed to enhance resilience and profitability, please?

Sure. Maybe I'll start. It's Robert. One of the biggest things is what I mentioned, the SIOP process is really intended to level load the factories. It's hard to keep your costs under control if you have peaks and valleys, but with level loading of the factories, it's much easier to get the labor and material costs aligned with the volume that's coming out of the factory. That's one of the biggest initiatives that we have right now. With reduced lead times, that also helps to level load the factories, not just making us more competitive but more profitable as well. We have a significant focus on supply chain and procurement excellence that's helping with material cost reduction.

Finally, on the commercial excellence side, our whole go-to-market approach, we are taking steps to have some very effective value propositions globally rolled out, especially with regards to our new product launches.

Very helpful. Thank you very much.

Thank you. I'm currently showing no further questions at this time. This does conclude today's call. Thank you all for your participation. You may now disconnect.

Good day, and thank you for standing by. Welcome to the GPGI, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker host for today, Sean Mansouri, Investor Relations for GPGI. Please go ahead.

Good morning, and welcome to GPGI's conference call today. where we will review GPGI's fourth quarter 2025 financial results. With me on the call are the business leaders from GPGI, Resolute Holdings, CompoSecure and Husky. We will begin with prepared remarks and then open the call for Q&A. During the call, we will make statements related to our business that may be considered forward-looking, including statements about our growth strategy, customer demand, our ability to maintain existing and acquire new customers; implementation of the Resolute operating system and our guidance for 2026, as well as other statements regarding our plans and prospects. For a discussion of material risks and other important factors that could affect our actual results, please refer to the information in our annual report on Form 10-K and other reports filed with the SEC which are available on the Investor Relations section of our website and on the SEC's website at sec.gov. Please note that effective as of February 28, 2025, and the date of the spin-off of Resolute Holdings management and as a result of the management agreement between Resolute Holdings management and GPGI's fully owned subsidiary, GPGI Holdings LLC, the results of operations of GPGI Holdings and the operating companies, which are its subsidiaries are not consolidated in the financial statements of GPGI and instead are accounted for under the equity method ofaccounting. For more information about our financial presentation, please see our annual report on Form 10-K. In the earnings release we issued earlier today, and in the discussion on today's call. We also present non-GAAP financial measures to help investors better understand our operating performance. The company believes these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends impacting the company's financial condition and results of operations. These non-GAAP financial measures should not be considered as an alternative to performance measures derived in accordance with U.S. GAAP and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation of GAAP to non-GAAP measures is available in our press release and earnings presentation available on the IR section of our website. Thank you. And with that, let me turn the call over to Executive Chairman, Dave Cote.

Good morning, everyone. Before we get into the fourth quarter and full year results, I want to begin with a more detailed overview of what we are building at GPGI to provide more context on the platform and our objectives going forward. Now this is going to be a longer introduction than you can expect in the future as we want to clearly articulate our strategy and structure on this first earnings call as GPGI. There will also be longer presentations from each business for the same reason than you will see in the future. GPGI is a diversified multi-industry platform that was purpose-built to acquire and operate companies that hold great positions in good industries, representing the acronym behind our new name. Following the completion of our acquisition of Husky, GPGI now owns 2 high-quality, market-leading businesses with best-in-class financials and durable growth profiles. Importantly, we believe Compo and Husky have opportunities to benefit from the systematic deployment of the Resolute operating system, ROS. And that work is already underway at both businesses. Our vision for the GPGI platform is to help Compo, Husky and businesses we may acquire in the future, achieve their full potential by combining GPGI's permanent capital base with the systematic deployment of the Resolute operating system and implementation of a high-performance culture. This idea to marry permanent capital with superior operating practices began years ago when Tom and I first partnered together and ultimately acquired Vertiv. With the creation of GPGI, we are now refining this approach and believe it represents a needed innovation in the marketplace that is well positioned today and for the future. Going to Slide 5. We have our business leaders on the call today, and you will hear directly from both the Compo and Husky teams regarding their respective businesses. Before getting there, I want to highlight how we think about GPGI's long-term growth algorithm. Specifically, we're focused on delivering mid- to high single-digit annual organic growth, over 100 basis points of annual margin expansion through the deployment of ROS, double-digit plus annual EBITDA growth and 90% to 100% free cash flow conversion over time. The plan is simple. We intend to grow GPGI's earnings and cash flow faster than the market to deliver superior durable through-the-cycle returns for our investors. That is the whole point of GPGI. On Slide 6, which you have seen before, we outlined the relationship between GPGI and Resolute Holdings. They are intentionally inextricably linked. The success of Resolute Holdings is tied to the success of GPGI. We designed the structure to empower the leadership teams of each acquired business to operate with all the benefits of permanent capital but without the constraints that often come with a bureaucracy of typical public company corporate infrastructure. This allows us to help with the efficient implementation of ROS M&A strategy and capital allocation without distracting leadership teams at each business. A final point. I've mentioned on previous calls how confusing the accounting we are required to use is. To keep it simple, you should evaluate GPGI's performance by looking at the core non-GAAP operating results, which includes the deduction from the management fee paid to Resolute. GPGI is the operating company. Conversely, RHLD's results reflect that same management fee income less its own operating expenses. It is the asset management company. It really is pretty simple, entirely complexified by the accounting were required to use. Moving to Slide 7. The value creation playbook at GPGI marries disciplined underwriting from a permanent capital base with operating excellence to drive superior performance. We do this by relentlessly implementing the Resolute operating system, developing a truly high-performance culture at each business and investing with discipline in assets that meet our tried and true 6 investment criteria. We have a structural advantage for acquisitions. And on the right side, you can see it works. The Resolute operating system with a high-performance culture applied to businesses that have a great position in a good industry works quite effectively. The strategy is not new. It's one we have consistently deployed and delivered across multiple public companies over the years. Turning to Slide 8, establishing a high-performance culture is central to the value creation process. A high-performance culture does not just happen. It involves people and process. It starts with everyone focusing on what is right for the customer. Every company talks about the customer, but few focus their entire culture on it. I will not go through each item on the page. It involves starting with the customer than aggressively setting expectations making strategy and people daily instead of annual activities, regularly measuring performance and providing candid and direct feedback. These are the process pillars of how cultures begin to transform. These are the tools that help foster high-performance cultures and teams, which in turn are what ultimately deliver results. We are intentionally embedding these norms across GPGI and view a high-performance culture as foundational to maximizing the potential impact of ROS in each business. When everyone across the business buys in, that's attitude, and fully applies these ROS principles to good businesses, that's aptitude. This is how we achieve performance and deliver results and at altitude. It is not just about a great attitude. You have to have something fundamentally strong to apply it to. Hence, the need for GPGI, great positions in good industries. Moving to Slide 9. The Resolute operating system is our proprietary approach to operating businesses. It's an adaptation of the Toyota production system. It really comes down to 3 areas of focus: growing sales, controlling costs and generating the cash necessary for seat planning and delivering returns for investors. Starting with growing sales. Our approach is centered around our customers, delivering end-to-end commercial excellence and continuing to innovate on new products and services that meet and exceed customer demand. This strategy is made possible by a capital structure that allows us to prioritize investments in R&D for new products and services and provide support to the go-to-market functions to appropriately cover the markets we serve. On the cost side, we worked diligently to identify and implement robust reporting around fixed and variable costs to drive efficiencies and ensure our fixed costs stay flat or grow much slower than sales. The fall-through of the variable margin rates in our businesses is impressive. So being able to retire fixed cost growth relative to sales growth enables a huge amount of flexibility for us. Taken together, we improved cash generation with greater profitability, which allows us to invest more back into the business to drive more innovation and growth, while concurrently being able to deliver returns for investors. The flywheel begins spinning when these investments drive growth that delivers increasing profit through necessary cost controls, which in turn enables more investment growth than profits. This is the add of making the right decisions for each business today and for the long-term at the same time. Some might even call it winning now, winning later. Shifting to Slide 10. I want to spend some time on how we think about implementing ROS in our underlying businesses. ROS is the operational cornerstone of every GPGI business, and it consists of 3 phases. We start with a period of seed planting where we laid the foundation for excellence. This represents the time immediately after we acquire a business where monthly growth days and deployment of our playbook of best practices across all functions begins. The second phase is where we continue making strategic investments to catalyze growth and innovation, implement lean principles and firm up cultural change from top to bottom. The third phase is where everything comes together in a culture of continuous improvement powers the flywheel necessary for a long-term compounding. The key is that ROS is not a one-and-done activity. It is a daily mindset for sustaining performance over time, and it's in every function. We are just beginning this journey with Husky, and while we are encouraged by our early efforts, there remains significant opportunity to continue the work underway at both Compo and Husky. Starting on Slide 11 to demonstrate how an operating transformation begins. We have a case study compiled on CompoSecure's performance since we got involved. From the time we made our initial investment in the company, we deployed ROS to catalyze growth, control costs and make strategic investments in the business. Over the past 5 quarters, you can see these efforts are beginning to take hold and drive a phased inflection in financial performance. We're pleased with this early progress at Compo, but also know there is a lot more to achieve there over time. However, the inflection in performance you've been able to see, both top and bottom line performance is what cultural transformation paired with the deployment of the operating system is designed to do. This is the same approach we are taking at Husky, and we know that deploying ROS consistently across each business, while helping to cultivate a high-performance culture is a winning formula. And one we will apply to all GPGI businesses. With that, I'll turn it over to Tom Knott, our Chief Investment Officer, to review our investment philosophy.

Thanks, Dave. I want to begin this section about our investment philosophy by explaining how we think about acquisitions. Fundamentally, we view acquisitions as opportunities and are focused on using the same discipline that we have used in the past for every opportunity we evaluate in the future. Deals must make sense, both in terms of business quality and in terms of valuation. We built GPGI to encourage the discipline, specifically because we have no deployment targets or timing pressure to acquire new businesses. We are very enthusiastic about the 2 businesses we currently own and believe in the opportunity to deliver strong organic top and bottom line performance with a continued focus on ROS implementation and cultural transformations underway at each company. This is where we focus much of our day-to-day efforts and having good businesses with rich organic opportunities ahead is a great place from which to operate. While we are constantly evaluating potential investment opportunities for GPGI, we will only acquire additional platform businesses if they solidly meet our 6 investment criteria and if they can be acquired at a fair price. Today, we do believe GPGI is uniquely positioned as a structurally advantaged acquirer of the increasing number of high-quality private businesses that need to access the public markets and that can benefit from our operating system. This universe consists of family-owned businesses, noncore divisions of public companies and a significantly growing number of businesses owned by private equity firms. We are confident in our platform's ability to offer superior outcomes for each of these different types of businesses. but we see the largest opportunity today among private equity firms that need to monetize their investments to return capital to their investors. Specifically, we are confident that our platform can deliver transactions that result in a win-win for both GPGI and a selling private equity firm that is superior relative to a traditional IPO. The list of large, high-quality private equity-owned businesses that need to reach the public market is growing, and as a result, our platform is well positioned as a unique solution. This paired with the excellent organic prospects for CompoSecure and Husky allows us to be selective as we evaluate potential businesses to add to the GPGI platform in the future. Wrapping up my comments with Slide 13. I believe it is important to again review the 6 investment criteria we use to evaluate businesses. It is how we look at companies, and it's important to discuss so that investors and potential sellers know what is important to us. As we have said before, we want GPGI to be an aspirational home for market-leading businesses, which must operate in a good industry, have a great position in that industry, differentiate with technology, can grow both organically and inorganically and have the potential for significant margin expansion. This list is what we measure for each potential acquisition and it's one that we will remain consistent in applying. From Dave's time at Honeywell to my involvement with Myriam to our partnership on Vertiv, CompoSecure and now with Husky, this approach is proven and serves as a highly effective screen for selecting high-quality businesses that can generate superior investor returns. With that, I will turn the call over to Graham Robinson, the CEO of CompoSecure.

Thank you, Tom. As announced in January, I recently joined as President and Chief Executive Officer of CompoSecure. In my short time here, it has become quickly evident that this is the most dynamic and compelling business that I have been involved with. The company has already proven its strategy with a differentiated value proposition, and we are now in a position to accelerate growth with disciplined execution. I am delighted to lead our expanding teams on this journey. Turning to Slide 16. We delivered strong organic growth and profitability in the fourth quarter and for fiscal year 2025, driven by disciplined execution, operational focus, and the continued support from the Resolute team and the Board on our strategic initiatives. Mary Holt, our CFO, will go into more detail on the quarter later. But I would note Net sales increased to $462.1 million in fiscal year '25, up 9.9%. We also delivered strong operating performance as pro forma adjusted EBITDA increased to [indiscernible] million in fiscal year '25, up 23.5%. As Tom mentioned, implementation of the revenue operating system at CompoSecure [indiscernible] real inflection in financial performance. With that, let me take a step back and talk about where CompoSecure sits in the market today for those who are new to [indiscernible] [indiscernible] going to Slide 17. CompoSecure is the go premium entertainment cards with over 200 active made programs. We rent 9 of the top 10 U.S. additions, along with our growing rest of disruptive context. Our leadership position is reinforced by 1,000 design and utility patents and 25 years of technical expertise, we have built a unique, competitive mode that combines proprietary design, engineering and scaled manufacturing capabilities will enable us to deliver high-quality metal cards at scale. In 2025, we shipped more than 30 million cards to our customers. Moving to Slide 18. Our business is much, much more than making the metal card. We deliver a tire value proposition to our customers. As a pioneer of metal cards, we uniquely understand evolving customer needs. -- and use that understanding to inform our customer-centric innovation, coupled with our advanced manufacturing capabilities and integrated authentication capabilities with -- we are a trusted partner for issuers as they launch their signature core programs. Turning to Slide 19, where we speak about the industry. Our offerings are in mission-critical but low-cost component of the overall value proposition for payment card programs. Launching a metal card enhances brand loyalty and delivers accelerated returns through higher acquisition, customer acquisition, spending and retention, resulting in significant ROI for our customers. Our products elevate our customers' position and deliver measurable financial impact by enriching their programs while driving differentiation and positioning their cards at top of wallet. Importantly, metal cars remain significantly underpenetrated at less than 1% of all cards ship globally. When combined with our expectation of low double-digit growth for the premium car segment globally, this creates a long runway for growth and continued share gains versus plastic cards. On Slide 20, this brings me to the strength of our model and industry. We're seeing continued adoption of payment cards globally, increasing the total addressable base of cards in circulation. Additionally, the new users in international markets and the Fintech segment, are launching their first metal card programs and existing customers are expanding their programs through tiering to further drive improved customer acquisition spend and retention, which also needs to higher ASPs. According to industry data, credit and debit card in circulation, including plastic cards, have grown at approximately 8% over the past 5 years. And CompoSecure is well positioned to further capture field within that expanding. All of this supports a durable recurring revenue model as new cards are introduced, reissued, refreshed and upgraded over term. In addition to our core offering, CompoSecure is extending its technology leadership through its Oculus platform a multifactor authentication and digital asset storage solution that embeds secure login technology directly into metal cards. Instead of relying on passwords, which can be lost or compromised, [indiscernible] seamlessly integrates 3 secure elements. One, phone biometrics; two, a pin; and thirdly, a metal card. This makes it ideal for high-security applications like logging into financial accounts or safeguarding sensitive digital information. While the platform was originally designed to protect digital assets its broader applications now include passwordless login, identity verification and transaction approvals, especially in environments where both security and simplicity are critical. This represents a natural adjacency for CompoSecure. We are leveraging our expertise in secure physical products and trusted issuer relationships to expand into authentication use cases. In 2025, [indiscernible] continued to scale and is now a growing contributor to revenues and cash flows, reinforcing our belief that this platform can be a long-term value creator. So when you step back, we have a core metal card platform with structural growth tailwinds, and we are extending that platform into adjacent authentication opportunities through Arculus. Going to Slide 22. While we often talk about new program wins, a significant portion of our growth is supported by the installed base of metal cards already in circulation. Approximately 75% of our revenue is recurring, driven by replacement and reissuer cycles. Over the past 4 years, we have shipped approximately 123 million metal cards. That growing installed base creates a predictable stream of replacement volume over time. As metal cards in circulation continue to scale, this recurring component of our revenue base will grow alongside it. This is an important flywheel and structural [indiscernible] of our model, which provides strong visibility into our future growth. On Slide 23. In addition to that recurring foundation, organic growth is also driven by continued innovation and customer wins. There is incredible innovation and engineering complexity behind our products. Our cards integrate secure elements near field communication capabilities and layered material construction, all of which require advanced manufacturing. That technical differentiation is a key reason why we continue to secure high-profile customer wins. This includes recent wins with Wells Fargo Autograph, Bilt's re-launch of a tiered portfoliosn and Citi's American Airlines Centennial card among others, these recent wins underscore the strength of our customer relationships, the breadth of demand for differentiated premium car solution. and the value we deliver to use tissues. With that overview, let me hand the call over to our CFO, Mary Holt, to review our financial results.

Good morning, everyone. Let's turn to our financial performance. In the fourth quarter, CompoSecure delivered non-GAAP net sales of $117.7 million up approximately 17% compared to prior year, reflecting strong domestic demand and continued momentum across our core customer base. Non-GAAP gross margins in the fourth quarter reached 55.7%, up approximately 360 basis points from last year, as we continue to benefit from the implementation of the Resolute operating system which has led to increased discipline across manufacturing, sourcing and end-to-end execution. Pro forma adjusted EBITDA for the quarter increased approximately 41% to $43 million, while pro forma adjusted EBITDA margin increased approximately 640 basis points to 36.5%. This performance highlights the operating leverage in our business and the continued benefits from driving operational efficiencies. For full year 2025, CompoSecure once again delivered across the board. Non-GAAP net sales were up approximately 10% year-over-year to approximately $462 million. Non-GAAP gross margin improved approximately [ 20% ] and up 420 basis points to 56.3%, and pro forma adjusted EBITDA increased approximately 24% to $171 million, with pro forma adjusted EBITDA margins expanding more than 400 basis points to 36.9%. Let me hand it back to Graham to close out the CompoSecure section.

Thank you, Mary. Looking ahead, I am very encouraged by where CompoSecure stands. Entering 2026, we see continued strength in our core metal card business, supported by a healthy pipeline. We also expect Arculus to remain an important growth range as adoption broadens across authentication and payment adjacent use cases. Equally important, we see significant opportunities to continue improving execution and margins as the Resolute operating system becomes further embedded across the organization. Some of those gains will continue to flow through to profitability, and some will be strategically invested to support sustained growth. In closing, CompoSecure has a strong position, a compelling value proposition and a proven ability to translate growth into cash flow and earnings. I am excited to lead this business into its next phase and deliver long-term value for investors. I'll now pass the call back to Tom.

Thanks, Graham. Before we get to the Husky results, I'm excited to introduce Rob Domodossola as the new President and CEO of Husky. Rob brings a long and tremendously successful Husky career to the position and his background in technology, engineering, sales and marketing adds a lot to our increased growth focus. Rob has 30 years of dedicated service to Husky, having joined in 1996 and most recently serving as the President of Systems and Tooling. Throughout his career, Rob has demonstrated exceptional leadership across multiple divisions, including President of Rigid Packaging, President of Medical and Specialty Packaging Systems and Vice President of Engineering and Business Development. He is admired internally and externally for his relentless commitment to the customer, and we could not be more excited about working with him in this new role. Rob, over to you.

Tom, thanks for the kind words. I'm really excited and honored to serve as only the fourth CEO in Husky's 70-year history. What's company on Husky for the past 3 years is our passion for innovation with an 18- to 24-month cadence of new product launches that kept us in the lead. Our deep customer intimacy, investments in our go-to-market approach that has strengthened our customer loyalty, while helping us diversify our customer base and our desire and capability to serve our customers anywhere in the world, 24/7, and now with the capital structure that Resolute brings and the Resolute operating system, which is essentially a playbook for commercial excellence, we can leverage these core competencies and develop new capabilities for growth. I'm really excited about Husky's prospects. For those who are new to Husky, Slide from 6 captures who we are and white Husky is such an attractive addition to the GPGI platform. We certainly hold great positions in a good industry and are the global leader in highly engineered injection molding systems and related aftermarket services. Husky has a global recognized brand with a long-standing reputation for manufacturing best-in-class systems over 70 years. We primarily serve attractive food, beverage and medical packaging end markets and have a large installed base with approximately 65% of our sales coming from reoccurring high-margin aftermarket parts and services. Now if we turn to Slide 27. Husky has a leading competitive position derived from its mission-critical products and a long-standing track record that creates a durable competitive advantage. We have an installed base of approximately 13,500 total systems that drive high recurring revenues from aftermarket parts, tooling and services. Our installed base is well distributed globally, and we benefit from growth in both developed as well as emerging markets. Husky is the global leader in PT markets across both new systems as well as aftermarket [Audio Gap]

[Operator Instructions]

Okay. Sorry about that. I'll continue here. Husky maintains its market leadership position because we have the premium product offering in our markets. We deliver our customers the lowest cost of ownership enabled by the fastest cycle times, the highest quality, the lowest energy consumption and the highest output in the industry. Our customer base is large and diverse with no significant customer concentrations. And we have an excellent tension rate with customers who come back to us to purchase new systems year after year. Now to help contextualize our business, Slide 28 shows how we deliver end-to-end solutions to customers. Given our legacy of innovation and close connectivity with customers, we clearly understand emerging customer needs and use this knowledge to develop customer-centric innovations with a proven product market fit. We are a trusted partner to our customers and advise them on unpackaged design material selection, and we even designed their factories to noise throughput. Our advanced manufacturing capabilities across a global footprint gives us the ability to meet demand across markets and meet stringent customer tolerance at scale, while our 24/7 remote learning solutions help customers significantly increase their overall equipment performance to drive improved business outcomes. Taken together, our offering support customers along every step of their product ownership journey. Turning to Slide 29. We operate in a large and growing industry, characterized by a cyclical customer demand. The industry has supported strong growth for years, and we believe the fundamentals are firmly in place to continue that for a long time to come, especially when it comes to growing awareness of PET superior material properties. It has a superior carbon footprint. It has regulatory push for plastic circularity and there's growing adoption for recycled plastics and packaging. Growth in PET beverage demand is the underlying secular trend driving market for Husky's equipment. It's hard to imagine the future without a lot more PET bottles as work continues to urbanize and demand for safe, affordable, convenient packaged beverage continues to grow. Importantly, PET has demonstrated a consistent share gain over other substances. We tend -- we expect to continue. PET's peer to glass to aluminum and to paper with lower overall production costs, stronger performance characteristics and it's 100% recyclable over and over again from bottle to bottle. Husky's certain systems are capable of processing up to 100% recycled PET, positioning the business to benefit from global regulatory initiatives that increasingly favor higher recycle content. Overall, Husky is well positioned to capitalize on favorable long-term demand drivers across its key end markets. Moving to Slide 30. We A key differentiator for our business is our remote monitoring capability called [indiscernible] Elite. It's an internally developed technology that enables us to remotely monitor the health of our customers' equipment in real time, optimize system performance and proactively inform our customers of operational challenges or were in terror before any downtime happens. Husky machines sit at the core of our customers' operations and typically runs close to 24/7 and with our highest output machines producing approximately 1 billion preforms per year, meaning any downtime or performance segregation can materially impact our customers' unit economics. Advantage+Elite has -- Advantage+Elite increased uptime and overall performance of our customer systems and deliver significant value. This has resulted in increased adoption since we first launched it back in 2019. And we see tremendous white space as we look to connect the rest of our existing installed base. We expect these growth initiatives to accelerate service contract revenues, while also supporting incremental spare part sales through proactive identification of maintenance needs, which increases customers' uptime. Going to Slide 31. Our global installed base and rising content per system drive high-margin reoccurring aftermarket revenue streams that underpins our organic growth. For each new system sale, we expect to generate about 2 to 3x the initial sale value in aftermarket products and services over the life cycle of the system. While our equipment can run for over 20 years, and it does, and we generally view the economic life of a system being approximately 15 years. And with more than 50% of our installed base over 15 years old, we're excited by the favorable demand dynamics this creates for upcoming replacement cycles. Our technology focus results in constant improvements, so machine today is significantly more productive than one say from 10 years ago. Importantly, this aftermarket revenue stream has demonstrated resilience across economic cycles and carries higher margins than new system sales. As the installed base continues to expand, increase a self-reinforcing flywheel that supports durable long-term aftermarket growth. Now Slide 32 outlines our key organic growth drivers and how we plan to capture the significant white space ahead. We delineate growth opportunities by new markets and through capturing share within our existing installed base. The 4 primary pillars of our growth include: one, expanding share in our core PET markets through stronger sales execution continued technology differentiation and asset renewal to support recycled PET regulatory requirements; two, by leveraging our brand and engineering capabilities to grow our install base beyond PET with new products, particularly across packaging systems, beverage closure systems and medical end markets; three, by capturing the full aftermarket opportunity with our own installed base and finally, by becoming the digital leader in our industry through Advantage+Elite. We are already leveraging sales in Resolute tools from the Resolute operating system to execute against each 1 of these initiatives, deliver growth and drive collaboration across go-to-market, finance and operational functions. We remain excited about the opportunities ahead of us. And with that, I'll turn it over to John Linker, Husky's CFO, to wrap up the Husky section.

Thanks, Rob. Closing out with Slide 33, we cover Husky's financial performance for the fourth quarter and full year 2025, noting that the business combination closed after the quarter end in January 2026. Net sales increased to $521 million in the fourth quarter, up over 6% from prior year, primarily from volume and also a small tailwind from FX. Fourth quarter volume growth came primarily from China, India, Europe and Latin America, while North America and the Middle East were flat and Africa declined. Net sales increased to approximately $1.57 billion for full year 2025, up 5% from 2024, again, due to volume with a small tailwind from FX. Full year 2025 volume growth was driven by strength in Europe, Latin America, the Middle East and India, while China declined due to a tough year-over-year comp. However, the momentum in sales growth was offset by margin compression in both the fourth quarter and full year 2025. Margins were adversely impacted by 3 primary drivers unique to 2025 that we have confidence will not recur going forward. First, from a product mix standpoint, we delivered higher sales growth in new system sales versus aftermarket. This transient mix brought down blended margins in 2025, but it also means that we're seeing an acceleration in new systems demand, which grows the installed base and drives margin accretive aftermarket sales in future periods. Second, we made strategic investments in sales force coverage, service contract labor and new product prototyping to support long-term value growth in future periods. Lastly and most acutely in the fourth quarter, we faced variable cost inefficiencies in labor and overhead as we ramp the organization to deliver the record level of sales throughput. With respect to ongoing investments, particularly now as a GPGI company, we are focused on catalyzing sales growth, improving profitability through operational efficiencies and accelerating new product introductions. All of these initiatives are being enabled by the significantly enhanced capital structure under GPGI and operating focus and expertise from Resolute paired with the long-standing culture of innovation at Husky that is no longer capital constrained. We are firmly in the early stages of implementing the Resolute operating systems, and we are encouraged by initial progress, and we're confident in our ability to return to margin expansion in 2026. I'll now turn it back to Tom to discuss GPGI's guidance.

Thanks, John. Let's go to Slide 35, where we address our pro forma forward guidance for fiscal year '26. We are encouraged by the trends we see at both businesses and are introducing a guidance range for fiscal year '26 that represents this, while also accounting for the dynamic macroeconomic and geopolitical backdrop. We currently expect non-GAAP net sales of approximately $2.18 billion to $2.23 billion, pro forma adjusted EBITDA of approximately $620 million to $650 million and pro forma adjusted free cash flow of approximately $325 million to $375 million. The midpoint figures represent 8.5% non-GAAP net sales growth approximately 17% adjusted EBITDA growth and approximately 29% adjusted EBITDA margins. We expect continued momentum at both businesses in fiscal year '26. At CompoSecure, increasing adoption of metal payment cards and ongoing share gains are driving new program launches and expanding cards in circulation, creating meaningful opportunities with both new and existing customers. At Husky, pipeline activity is building with continued strength expected in higher growth emerging markets alongside growth in North America supported by aftermarket performance and packaging systems demand. across both businesses, new product introduction, targeted investments and improved go-to-market execution are expected to catalyze growth. On the margin side, we expect to drive margin expansion through organic sales growth cost savings through operational efficiencies and realizing fixed cost leverage. We are deploying the Resolute operating system and are investing in R&D, commercial excellence and operational improvements at both Husky and CompoSecure. In terms of cadence through the year, we anticipate GPGI revenue growth and margin expansion to accelerate in the second half versus the first half, with growth in the first half anticipated to be mid-single digits year-over-year expanding to double-digit year-over-year growth in the second half. Margins are expected to be relatively flat in the first half of the year, with margin declines at Husky in the first quarter. as key investments and in-flight operational improvement initiatives at Husky take time to be fully realized. These costs will offset anticipated margin expansion that CompoSecure early in fiscal year '26, but will contribute to margin expansion that is expected in the second half and the full year. Concluding my comments on Slide 36, we provide a summary of our pro forma financial metrics for fiscal year '26 and the supplemental bridge for pro forma adjusted free cash flow. We are enthusiastic about the opportunities ahead for CompoSecure and Husky and view 2026 as a foundational year of cultural change ROS implementation and strategic seed planting that gives us confidence in delivering best-in-class top line growth, margin expansion and free cash flow generation. With that, I'll hand the call back to Dave for some closing remarks.

Well, as I said at the beginning, the formation of GPGI establishes the foundation for a best-in-class diversified compounder that we believe can be a home for market-leading businesses and best-in-class operators. We have a proven value creation plan that implements our operating system to catalyze organic growth, improve margins. It builds a high-performance culture and brings rigorous discipline around capital allocation to pursue accretive inorganic growth. We are operating from a position of strength. The opportunity ahead is substantial, and we're focused on building upon our momentum to deliver long-term value for our investors. So with that, I'd like to open up the call for Q&A.

[Operator Instructions] Our first question coming from the line of Moshe Orenbuch with TD Cowen.

Great. I was hoping you could talk a little bit on the Campo secure side. about the factors that could drive the difference in terms of your range of expectations for revenue, what sorts of things it take to get to the higher end of that? And I've got a follow-up, if that's okay.

So as we look at the CompoSecure business, the key drivers that we look at in terms of growth are what we do in terms of our core business, our core card payment business, how we drive growth internationally and how we ramp up our Arculus business overall. Those 3 factors really drive what will influence the range in terms of our outcomes.

Okay. And maybe as part of the guidance, you talked about getting leverage down to about 3x on an adjusted basis. Could you talk about kind of how that -- how you think about that level, like what that means? Is that insufficiently improved to think about other actions? Or how do you think about that level for the -- by the end 2026?

Yes. Moshe, this is Tom. Thanks for the question. We would expect total leverage to be below 3x. We talked about it pretty consistently. I think Dave and I don't like worrying about debt or cash. And so -- you can expect us to continue moving that lower. We're certainly not afraid of leverage in the context of where it is now. We think the business is incredibly durable, both on the demand side and in the cash generation side. But you're going to see us bring that down to below 3x. I think that would be pretty comfortable and normal place for us to operate on a go-forward basis.

Our next question coming from the line of Reggie Smith with JPMorgan.

You guys typically, I guess, disclosed card shipments in the U.K. So I guess we can look for. But I was curious, I really would love to dig into the margin expansion -- gross margin expansion you've seen this year of Compo. And specifically, if you can kind of break that down or break that out between maybe increases in price per car versus reductions and COGS itself per card. And then maybe if you could highlight 2 or 3 things operationally that you did that made those gross margins so strong this year? And then I have one follow-up.

Right. Thanks for the question. So if you think about the implementation of the ROS operating system, that is really lended to lean principles being deployed throughout the organization. And as we've talked about before, having a focus on yields. So when I think about our margin expansion, there is a favorable price mix impact in the 2025 results -- but there's also a pretty healthy impact from yields. So I think if you think of those 2 things together, those are really the things that drove our gross margin expansion, again with ROS helping drive the improved yields?

Yes. Is there a way to frame that? Maybe 1/3, 2/3, like how should we think about those 2 different components.

I don't think we're going to get into that level of detail here, but just rest assured that we are going to continue to focus on our margin expansion for '26 and have a number of terrific programs lined up to ensure that we continue to drive the operational efficiencies.

And then my last question, and it really just came to me as you guys were talking, listening to your ROS system. I was curious are there any plans to possibly just license it out to other companies rather than acquire them? And then secondarily, I wanted to give you guys a chance to kind of address, I guess, the questions and concerns that may relate to potential conflict of interest between RHLD and GPGI shareholders and how you guys are managing those confidence.

Well, the first question is no. The second one, I don't see a conflict. So I mean, the 2 are inextricable. So the success of RHLD comes from the success of GPGI. So I don't see a conflict, Tom. I don't know...

No, I think maybe I can be more specific. So I guess the concern is that RHLD is compensated on EBITDA. And I guess, presumably, shareholders are driven by EPS. And so there's, I guess, a leverage in interest costs and is -- so directionally, yes...

I guess I mean you rephrase the question, but the answer is still the same is there's no conflict there. This is -- they're tied together. The success of one depends on the success of the other. And we're very focused on the success of GPGI because that's, again, as we've said many times, the foundation of everything we see as a success at RHLD, GPGI has to be the foundation for that. We've got a lot of money invested in GPGI. We want to see it grow and be successful. That's where we apply ROS. That's where we work on growing sales, EBITDA and cash flow because that's the foundation for RHL. So I'm hard for us to see any kind of conflict.

I appreciate that. I only ask because if we get the question from investors, and I wanted you to be able to address it.

Yes, it's -- we've got -- I have to say we have gotten the question before, -- it didn't make sense then, it doesn't make sense now. So I think that's [indiscernible] you have to go back to everyone is to say, okay, we'll point out what the conflict is. And sometimes they say, "Well, get paid in RHL because of the EBITDA, it's okay." But if EBITDA is going down in GPGI, that means it will be going down for RHL, so how is that a conflict or a potential problem? It's not. The 2 are tied and we get paid based upon the success of GPGI. So I would tell -- [indiscernible] an interesting question, but no, we're not relevant a year ago when it was asked and it's not relevant now.

Next question in queue coming from the line of Jacob Stephan with Lake Street Capital Markets.

Congrats on getting the deal closed in Q1 here. Maybe just to start out, obviously, margins -- gross margins have improved pretty significantly at Compo. I'm wondering what kind of opportunity you're seeing at Husky? Is it similar to the operating structure in COGS that you see at Campo and maybe how it differs from a margin improvement perspective over the next year or so.

I would say the answer is yes, and I will let Rob explain how.

The single biggest -- this is John speaking. The single biggest unlock that we have at Husky is really accelerating the organic volume growth. This is a business that has performed very well and historically in margins, but as not outgrown the market in terms of volume and with our very high variable contribution margins, given our cost structure, if we can accelerate volume growth as sort of embedded in the guidance that Tom described, that alone drops through very meaningfully to the bottom line. Aside from that, the Resolute operating system brings great discipline around the cost side of business, both on direct and indirect costs, and we've got a good pipeline of cost savings programs that are in place to drive cost out of the business, and that's well underway and good visibility there. And then I'd say the other side of things is more on the pricing and commercial excellence side. That is an area where we've already been working with the Resolute team to make sure that we're optimizing price and the right products and regions that will drive the balance between volume and pricing to drop through to margins. So I mean, those are the big buckets that I would see at Husky, but Rob,any comment.

Yes. Maybe just add some color to that too, John. One of the biggest initiatives this year for growth is in our aftermarket tooling business. We ran a pilot campaign last year to recapture share in emerging markets, and it was exceptional. So we're doubling down on that at the same time, using the Resolute operating system, we think there's tremendous opportunity to improve our cost competitiveness to make us even more competitive while maintaining and improving margins. But I think those are the biggest drivers.

I would just say generally, and we put the little bit of case study in for Compo, which you've been able to see. I think every business we look at has the same fundamentals in terms of the opportunity where we focus on sales, focus on controlling cost and focusing on reinvesting and marrying all those 3 together with an appropriate capital structure allows us to really get after that, and you're going to see the same thing at Husky. So I think just as a general view, -- that's as simple as it is, which we're focused on the top line, we're focused on getting after the cost of the fall through, as John mentioned, on variable margins, gives us the flexibility to keep investing and Husky particularly has tremendous opportunities on the R&D side, given the tech for a company that it is and the capabilities it brings to its customers. So we're quite excited about it.

Okay. Got it. Very helpful. Obviously, with the cash flow profile changing pretty significantly. I'm wondering from a capital allocation perspective, does it make sense to be repurchasing shares at this point? Or how do you kind of think through just what your priorities are?

Yes. And our first priorities, we've said several times hasn't changed, and that's to pay down debt. That's going to be our focus.

Thank you. And' there are no further questions in the queue at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.