GPGI lowered its full-year 2026 profit and cash flow outlook as delayed cost reductions and an unfavorable product mix at Husky offset continued growth at CompoSecure (NASDAQ:CMPO), executives said on the company’s third-quarter earnings call.
Executive Chairman Dave Cote said GPGI still expects to meet its prior revenue forecast and deliver a seasonally strong fourth quarter. He also pointed to improving orders at Husky and record quarterly results at CompoSecure as reasons for confidence heading into 2027.
GPGI reported third-quarter pro forma adjusted net sales of $509.6 million, up approximately 5% from a year earlier. Pro forma adjusted EBITDA rose approximately 7% to $146.3 million, while the adjusted EBITDA margin expanded about 60 basis points to 28.7%. Pro forma adjusted free cash flow was approximately $81 million.
Corporate Secretary David Marshall said that, following the Resolute Holdings spin-off, GPGI accounts for GPGI Holdings, which includes CompoSecure and Husky, under the equity method.
Profit Outlook Reduced as Husky Costs Linger
For 2026, GPGI now expects pro forma adjusted net sales of $2.034 billion to $2.064 billion, or approximately 1% growth at the midpoint. Chief Investment Officer Tom Knott said revenue is expected to land toward the higher end of the company’s prior range.
The company lowered its full-year outlook for adjusted EBITDA, margins and free cash flow. Its updated forecast calls for:
- Pro forma adjusted EBITDA of $520 million to $550 million, down approximately 2% year over year at the midpoint.
- Pro forma adjusted EBITDA margins of 25% to 27%, down approximately 80 basis points at the midpoint.
- Pro forma adjusted free cash flow of $250 million to $300 million.
Knott attributed the reduction primarily to Husky’s delayed cost actions, product mix, higher freight costs and continued investments intended to support future growth. Husky CEO Rob Domodossola said delays in planned cost reductions, net of EBITDA from incremental sales, represented an approximately $20 million EBITDA headwind.
Domodossola said Husky had completed two rounds of furloughs and reduced some indirect spending but had been slow to deliver the full planned savings. Indirect headcount reductions are expected to be completed by year-end, with the full benefit flowing through in 2027.
Cote said Husky had carried direct labor longer than it should have in anticipation of stronger sales. He said management’s longer-term view of the business’s margin opportunity had not changed.
CompoSecure Posts Record Sales and EBITDA
CompoSecure reported record adjusted net sales of $140.7 million, up approximately 16% from a year earlier, and record adjusted EBITDA of $61.2 million, up approximately 23%. Its adjusted EBITDA margin rose to 43.5%, an expansion of about 230 basis points year over year.
CEO Graham Robinson attributed the margin improvement to efficiency gains, partly offset by reinvestment. He said manufacturing waste had fallen approximately 30% over the past year as the company applied the Resolute Operating System, or ROS.
Robinson said the company’s third-quarter activity included a premium metal debit card for a leading wealth management bank. He identified debit cards, an introductory metal card for issuers upgrading from plastic, international expansion and additional Arculus use cases among the opportunities CompoSecure is pursuing. The company also plans a design center in London and is evaluating new verticals beyond payment cards, he said.
CompoSecure has more than 200 active programs, according to Robinson. GPGI expects the business to deliver year-over-year revenue growth in the high teens in the fourth quarter.
Husky Orders Improve Despite Margin Pressure
Husky’s third-quarter adjusted net sales rose 0.5% to $368.9 million. Pro forma adjusted EBITDA fell 0.9% to $88.8 million, and the adjusted EBITDA margin declined approximately 30 basis points to 24.1%. The margin improved approximately 500 basis points from the second quarter as sales increased, Domodossola said.
Cote said a resin price shock following the Iran war had disrupted customer purchasing earlier in the year. Although resin prices remained elevated, Husky’s total orders increased 7% year over year in the third quarter, while orders through October rose 21% from a year earlier, Domodossola said. Backlog was up 5% at quarter-end, and he said the company expects double-digit-plus backlog growth by year-end.
Knott said GPGI expects Husky’s systems revenue to decline by a high-single-digit to low-double-digit percentage in 2026 before returning to growth in 2027. The company expects full-year growth in the recurring aftermarket tooling, spare parts and service contract businesses.
Fourth-Quarter Outlook and 2027 Targets
For the fourth quarter, GPGI forecast pro forma adjusted net sales of $630 million to $660 million and adjusted EBITDA of $178 million to $208 million. At the midpoints, those ranges imply year-over-year growth of approximately 1% and 8%, respectively. The company expects adjusted free cash flow of $77 million to $127 million.
Cote said GPGI expects to return in 2027 to its long-term growth framework of mid- to high-single-digit annual organic growth, more than 100 basis points of annual margin expansion and double-digit-plus annual EBITDA growth. Asked whether Husky could grow faster than that framework next year, he said a rebound was possible but that it was too early to commit.
Cote also said GPGI expects to reduce net debt by more than $200 million through year-end and finish 2026 at approximately 3.5 times leverage.
About CompoSecure (NASDAQ:CMPO)
CompoSecure, Inc is a payments and digital security technology company that develops secure products for financial institutions, fintech companies, brands and government-related customers. The company specializes in combining advanced materials, embedded security features and digital authentication technologies to protect payment credentials and other sensitive assets.
Its offerings include premium metal payment cards, which are designed and manufactured for banks and other card issuers, as well as related personalization and security solutions.
