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    GPGI
    Earnings call· Mar 2026(Q1 FY26)

    GPGI Q1 FY26 earnings call GPGI

    May 7, 2026 Source

    Executive summary

    GPGI Q1 FY26 — CompoSecure Outperforms While Husky Faces Headwinds

    GPGI reported a "tale of two cities" in Q1 FY26, with CompoSecure delivering record performance driven by strong demand and Resolute Operating System (ROS) implementation, while Husky faced significant market headwinds from oil price volatility, tariffs, and geopolitical disruptions leading to customer order delays. Despite the short-term disappointment at Husky and a revised full-year outlook, management remains confident in the long-term prospects of both businesses, emphasizing continued ROS implementation and strategic investments.

    Highlights

    4

    • CompoSecure achieved record pro forma net sales of $130.4 million, up 26% year-over-year.

    • CompoSecure's pro forma adjusted EBITDA increased 37% to $47.6 million, with margins expanding 300 basis points to 36.5%.

    • GPGI's overall pipeline grew approximately 4% year-over-year in Q1 and 7% through April, indicating underlying demand.

    • GPGI generated approximately $29 million of adjusted free cash flow in Q1, similar to prior year levels.

    Concerns

    4

    • Husky's pro forma adjusted net sales decreased 5% to $290.8 million year-over-year.

    • Husky's pro forma adjusted EBITDA decreased 40% to $38.2 million, with margins eroding 770 basis points to 13.2%.

    • GPGI revised its full-year 2026 pro forma net sales guidance to $1.95 billion - $2.1 billion (from an implied higher previous range) due to Husky's challenges.

    • Husky experienced over $20 million in revenue push-outs in Q1 due to customer delays, shipment issues, and payment delays.

    Guidance & targets

    8
    CategoryTargetConfidence
    Pro forma net sales
    $425M - $475M
    high materiality
    High
    Pro forma adjusted EBITDA
    $105M - $120M
    high materiality
    High
    Pro forma adjusted EBITDA margins
    24.7% - 25.3%
    high materiality
    High
    Pro forma net sales
    $1.95B - $2.1B
    high materiality
    Medium
    Pro forma adjusted EBITDA
    $550M - $610M
    high materiality
    Medium
    Pro forma adjusted EBITDA margins
    28.2% - 29%
    high materiality
    Medium
    Pro forma adjusted free cash flow
    $275M - $325M
    high materiality
    High
    Total leverage
    ~3x
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    GPGI (Consolidated Pro Forma Adjusted)
    Consolidated results reflecting strong CompoSecure performance offset by Husky's underperformance.
    EBITDA Margin: 19.5%
    		$421.2M3%—$82.1M EBITDA
    CompoSecure
    Record sales performance driven by strategic investments, commercial excellence, and ROS implementation, leading to significant margin expansion.
    Adjusted EBITDA Margin: 36.5%Adjusted EBITDA Growth YoY: 37%Adjusted EBITDA Margin Improvement: 300 bps
    		$130.4M26%—$47.6M Adjusted EBITDA
    Husky
    Impacted by significant macroeconomic headwinds, including resin price spikes and tariffs, leading to customer order delays and revenue push-outs. Q1 is seasonally the smallest quarter.
    Adjusted EBITDA Margin: 13.2%Adjusted EBITDA Growth YoY: -40%Adjusted EBITDA Margin Erosion: 770 bps
    		$290.8M-5%—$38.2M Adjusted EBITDA

    Operational metrics

    18
    Pro forma adjusted net sales
    $421.2Mup 3% from prior year
    Q1 FY26

    Consolidated pro forma adjusted net sales.

    Pro forma adjusted EBITDA
    $82.1Mdown 16% from prior year
    Q1 FY26

    Consolidated pro forma adjusted EBITDA.

    Pro forma adjusted EBITDA margins
    19.5%down 430 basis points from prior year
    Q1 FY26

    Consolidated pro forma adjusted EBITDA margins.

    Pro forma net sales
    $130.4Mup 26% year-over-year
    Q1 FY26

    Record sales performance at CompoSecure.

    Pro forma adjusted EBITDA
    $47.6Mup 37% compared to a year ago
    Q1 FY26

    Strong EBITDA growth at CompoSecure.

    Adjusted EBITDA margin
    36.5%300 basis point improvement
    Q1 FY26

    Margin expansion driven by ROS initiatives and operational efficiencies.

    Pro forma adjusted net sales
    $290.8Mdown 5% compared to the prior year
    Q1 FY26

    Sales decline driven by lower new system sales and tooling, offset by growth in spare parts, hot runners, and controllers.

    Pro forma adjusted EBITDA
    $38.2Mdecreased 40%
    Q1 FY26

    EBITDA decline driven by lower revenue, under-absorbed labor, and continued investments in R&D and sales capabilities.

    Pro forma adjusted EBITDA margin
    13.2%770 basis point erosion
    Q1 FY26

    Margin erosion due to revenue decline and cost structure.

    Revenue push-out
    $20M
    Q1 FY26

    Revenue that got pushed out at the very end of the quarter due to various factors.

    Virgin PET prices increase
    46%
    March and April

    Sharp increase in input costs impacting customer purchasing behavior.

    Husky installed base
    13,500
    Current

    Installed base of systems primarily used to produce nondiscretionary products, driving aftermarket revenue.

    Husky revenue mix
    35%
    Current

    Portion of revenue tied to new system sales, currently impacted most significantly by demand shock.

    Husky revenue mix
    65%
    Current

    Portion of revenue tied to recurring revenue (aftermarket parts, tooling, services).

    Tariff rate on systems and tooling into US
    15%
    Current

    Tariff rate on approximately 40% of revenue related to systems and tooling shipped into the U.S.

    Tariff rate on imported aftermarket parts into US
    25%declining from 50%
    Current

    Tariff rate on imported aftermarket parts, which is declining.

    US import duty exemption
    3.1%
    Current

    Husky equipment qualifies under USMCA and remains exempt from this duty.

    US market sales exposure
    27%
    Current

    The U.S. market represents less than 27% of Husky's total sales, moderating overall tariff exposure.

    Industry KPIs

    6
    MetricValueDetails
    Capital return FCF$29MUSD
    Gross margin drivers36.5% (CompoSecure) / 13.2% (Husky)%
    Services peripheral attach65%%
    Component supply constraintsVirgin PET prices up 46%%
    Installed base refresh runway13,500 systemssystems
    Revenue mix by end market segment35% new system sales / 65% recurring revenue%

    Orderbook & backlog

    5
    Pipeline growth4%Q1 FY26

    year-over-year

    Slower conversion rates as customers defer purchase orders.

    Pipeline growth7%April FY26

    year-over-year

    Slower conversion rates as customers defer purchase orders.

    Husky orders-16%End of March FY26

    year-over-year

    Orders fell due to resin price spikes and customer delays.

    12-month pipelineupQ1 FY26

    Indicates longer-term optimism despite short-term volatility.

    3-month pipelinedownQ1 FY26

    Reflects near-term customer deferrals.

    Deals & partnerships

    1
    Kevin MoriartyAppointment as Husky's acting CFO

    Kevin Moriarty, a current GPGI Board member, has stepped in to be Husky's acting CFO, bringing extensive finance leadership experience.

    Risks & headwinds

    4
    Oil market volatility and tariffsQ1 FY26, continuing

    Virgin PET prices up approximately 46% in March and April

    Mitigation: Husky is implementing targeted furloughs, managing indirect spend, and focusing on ROS implementation. Tariffs are being passed through to customers, and USMCA exemption limits exposure.

    Customer order delays and reduced new ordersLate Q1 FY26, continuing into Q2

    Over $20 million in revenue pushed out in Q1; Husky orders fell 16% YoY to end of March

    Mitigation: Aggressive management of indirect spend, furloughs, and reinvigorating the sales force. Underlying demand drivers for nonalcoholic beverages remain resilient, supporting pipeline strength.

    Geopolitical disruptions (Middle East conflict)Mid-March FY26, continuing

    $5 million tied to shipment and logistical delays

    Mitigation: Management believes these dynamics are cyclical and expects a rebound when tensions ease and input costs stabilize. The company is focusing on productivity, sustainability, and system efficiency.

    Slower conversion rates in pipelineQ1 FY26, continuing

    Pipeline up 4% YoY in Q1 and 7% through April, but slower conversion

    Mitigation: Husky is investing in R&D and commercial excellence, and implementing ROS to improve operational efficiency and competitiveness, which should help convert pipeline into orders when macro conditions improve.

    What to watch in Q2 FY26

    5

    Husky customer order delays

    next quarter
    CurrentOver $20M revenue pushed out in Q1
    TargetReduction in customer delays and improved order conversion

    Why it matters

    Resolution of customer delays is critical for Husky's revenue and margin recovery, directly impacting GPGI's overall performance.

    So if the delays continue because the Iran conflict just keeps going, then those delays are going to 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.

    Q&A highlights

    5

    Could you clarify the full-year guidance range, specifically if the low end assumes the Iran conflict lasts all year and the high end assumes it resolves quickly?

    The guidance range reflects the impact of customer delays. The low end assumes delays continue due to the Iran conflict, while the high end suggests customers might stop delaying even if the conflict persists, driven by their need for machines and aftermarket services.

    “The way I would look at it is what we're trying to reflect is the impact of delays. So if the delays continue because the Iran conflict just keeps going, then those delays are going to cause us to come into the lower end of the range.”

    asked by Jacob Stephan · answered by David Cote

    2 min read7 chapters

    Detailed Narrative

    01

    Husky's Unexpected Market Headwinds

    Husky encountered unanticipated market headwinds🌐 in Q1 FY26, primarily due to oil market volatility🌐 and tariffs, which caused resin prices to spike by approximately 46% in March and April. This led customers to delay accepting orders and reduce new orders, impacting sales by over $20 million in push-outs. The company views these dynamics as cyclical rather than structural, expecting a rebound when geopolitical tensions ease and input costs stabilize.

    02

    CompoSecure's Strong Performance and ROS Impact

    CompoSecure delivered a record quarter, with pro forma net sales up 26% year-over-year and adjusted EBITDA up 37%. This performance is attributed to strategic investments in the sales force, enhanced commercial excellence, and the effective implementation of the Resolute Operating System (ROS). ROS initiatives have driven significant gains in manufacturing yields and operational efficiencies, leading to a 300 basis point expansion in adjusted EBITDA margins.

    03

    Resolute Operating System (ROS) Implementation

    The Resolute Operating System is being aggressively implemented across both businesses. CompoSecure is 18 months into its ROS journey, showing clear benefits in growth and profitability. Husky, about a year behind, is also focusing on ROS to drive cultural change, improve job sequencing, manufacturing output, reduce waste, and enhance supply chain procurement excellence, which is expected to drive future margin expansion and operational resilience.

    04

    Husky's Cost Actions and Commercial Excellence

    In response to market challenges🌐, Husky is implementing targeted furloughs to reduce direct labor costs and aggressively managing indirect spend. The company is also reinvigorating its sales force under new leadership to enhance commercial excellence. Despite near-term volatility, Husky continues to invest in R&D expansion to accelerate innovation and long-term organic growth, positioning the business for future rebound.

    05

    Tariff Impact and Mitigation at Husky

    The U.S. implemented modified Section 232 tariffs on April 6, 2026, adding uncertainty to customer order placement. However, GPGI does not expect a material impact on its results, as the U.S. market represents less than 27% of total sales. Husky has been successfully passing through tariff-related costs to customers since Q3 FY25 and its equipment qualifies under USMCA, further limiting exposure.

    06

    Product Line and Geographic Performance at Husky

    Husky's systems orders are being deferred due to resin price volatility and tariffs, while aftermarket tooling sales were lower in Q1 but expected to return to growth in H2. Hot runners and controllers saw strong Q1 revenue growth but face near-term order outlook ambiguity. Geographically, North America sees a pause in PET systems, Europe shows growth in aftermarket tooling, and LatAm experiences softness due to inflationary pressures and taxes on beverages.

    07

    GPGI's Overall Strategy and Confidence

    GPGI's leadership remains confident in the long-term investment thesis, despite Husky's short-term challenges. The company emphasizes that both CompoSecure and Husky hold strong positions in good industries and are becoming stronger through cultural transformations and consistent ROS deployment. The focus remains on driving best-in-class top-line growth, margin expansion, and free cash flow generation across the platform.

    AI-generated summary of the company’s earnings call. Not investment advice.