GPGI

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended March 31, 2026, for GPGI, Inc. (formerly CompoSecure, Inc.). GPGI operates as a permanent capital platform managing two primary businesses: CompoSecure (premium metal payment cards and authentication) and Husky (injection molding equipment). Following a Spin-Off of Resolute Holdings in February 2025, GPGI no longer consolidates its operating subsidiaries but accounts for them via the equity method. The quarter was defined by the completion of the Husky Transaction on January 12, 2026, combining GPGI with Husky Technologies Limited.

Key Financial Metrics

Note: Consolidated Net Sales are $0 due to the deconsolidation of operating subsidiaries. Operating results are reflected in "Earnings (losses) in equity method investment."

Material Changes vs. Prior Period

• Accounting Structure: The Company transitioned to equity method accounting for its operating subsidiaries (GPGI Holdings) following the February 2025 Spin-Off. Consequently, consolidated revenue dropped to zero, while operating results are now captured in the equity method line item.
• Husky Acquisition: The completion of the Husky Transaction on January 12, 2026, significantly increased the scale of operations. GPGI Holdings net sales rose 292% year-over-year to $407.8 million, driven by the inclusion of Husky's revenue.
• Net Loss: The Company reported a net loss of $235.0 million compared to net income of $21.5 million in the prior year. This was primarily driven by a $154.1 million loss recorded in the equity method investment, which included a $106.8 million loss on debt extinguishment and $92.9 million in transaction costs related to the Husky deal.
• Capital Structure: Total debt at GPGI Holdings increased from $186.3 million to $2,175.0 million to finance the Husky acquisition. Cash at the parent company decreased from $114.6 million to $6.5 million due to the investment in GPGI Holdings.

Guidance, Outlook, and Risks

Management Commentary: Management views the Husky Transaction as a strategic expansion into a diversified permanent capital platform. The company expects to fund future operations through cash flows from GPGI Holdings, distributions, and available debt capacity under a new $400 million revolving credit facility.

Key Risks and Contingencies:

• Integration Risk: Challenges in integrating Husky operations and realizing anticipated synergies.
• Debt Service: Significant increase in interest expense due to the $2.1 billion refinancing package (5.625% senior secured notes and term loans).
• Tax Receivable Agreement (TRA): A liability of $293.3 million exists for future payments to former shareholders based on tax benefits realized.
• Geopolitical Factors: Ongoing conflicts in the Middle East and trade policies may disrupt supply chains and increase raw material costs.
• Digital Assets: Risks associated with the commercialization of Arculus digital asset storage solutions.

Investor Verification Checklist

• Verify the sustainability of the $88.8 million Adjusted EBITDA generated by GPGI Holdings post-acquisition.
• Confirm the ability of GPGI Holdings to service the new $2.1 billion debt load, particularly given the variable rate exposure ($1,275 million).
• Monitor the cash balance at the parent company ($6.5 million) and reliance on distributions from GPGI Holdings for liquidity.
• Assess the impact of the Tax Receivable Agreement (TRA) on future cash flows and the $21.9 million loss on remeasurement recorded in Q1.
• Review the progress of the Husky integration and the achievement of the specific Adjusted EBITDA targets set for 2026-2029.