Given Husky is behind CompoSecure in ROS deployment, what has been done, what remains, and are transient market headwinds impacting the pace of ROS implementation?

ROS has been hugely impactful in a short time, focusing on strategic deployment, lean daily management, and Kaizen events. These initiatives help prioritize changes, reduce waste, and drive continuous improvement. The headwinds are not impacting the pace, but rather highlighting the need for ROS. “ROS helps with strategy deployment through resource allocation through the best resources assigned to it and transparency and communication right through from top to bottom of the organization.”

Does the maintained guidance assume further macro improvement, or can targets be hit if conditions remain as is?

The guidance does not assume material macro improvement from current levels. While there's marginal improvement, the company is confident in delivering the guide based on current business visibility and internal initiatives, not external tailwinds. “the guide does not assume things materially improve.”

Can you discuss the pipeline of M&A opportunities, the ideal number of franchises, and how you prioritize ROS implementation versus new transactions?

The pipeline is large and growing, particularly for 'stuck' PE-owned businesses. There's no rush to acquire, as current businesses offer significant growth. Prioritization involves ensuring new platforms meet strict criteria and can benefit from ROS, which is a core value driver. The focus is on accretive transactions. “I believe there's a real structural problem facing large-cap private equity firms because I don't think that the regular way IPO is actually a credible path for a successful exit.”

GPGI

GPGI (GPGI) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 6, 2026

Source: earnings call transcript

Executive summary

GPGI Q2 FY26 — CompoSecure Drives Growth While Husky Navigates Headwinds

GPGI delivered Q2 results consistent with expectations, driven by strong performance at CompoSecure, which saw record sales and margin expansion due to its ROS deployment. Husky, however, continued to face macro headwinds, leading to revenue and margin declines, though initial signs of stability and ROS implementation are emerging. The company remains focused on its long-term growth algorithm, debt reduction, and disciplined M&A strategy, aiming to accelerate performance into 2027.

Highlights

CompoSecure achieved record adjusted net sales of $133.6 million, up approximately 12% year-over-year.
CompoSecure delivered record adjusted EBITDA of $55.2 million, up approximately 14% from the prior year.
GPGI generated approximately $63 million in pro forma adjusted free cash flow in Q2, significantly higher than the prior year.
CompoSecure's adjusted EBITDA margins increased 70 basis points year-over-year to 41.3%.

Concerns

Husky's adjusted net sales were $339.6 million, down approximately 9% from the prior year.
Husky's pro forma adjusted EBITDA was $64.9 million, down approximately 23% from the prior year.
Husky's pro forma adjusted EBITDA margin declined approximately 330 basis points year-over-year to 19.1% due to lower volume and FX headwinds.
The company is adjusting its full-year pro forma adjusted EBITDA margin guidance to between 27% and 29% from a previously anticipated higher range.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year pro forma net sales	$1.95 billion to $2.1 billion high materiality	FY26	High
Full-year pro forma adjusted EBITDA	$550 million to $610 million high materiality	FY26	High
Full-year pro forma adjusted free cash flow	$275 million to $325 million high materiality	FY26	High
Full-year pro forma adjusted EBITDA margin	27% to 29% high materiality	FY26	High
Long-term annual organic growth	mid- to high single-digit high materiality	Long-term	High
Long-term annual margin expansion	over 100 basis points high materiality	Long-term	High
Long-term annual EBITDA growth	double-digit plus high materiality	Long-term	High
Long-term free cash flow conversion	90% to 100% high materiality	Long-term	High
Leverage target	3x high materiality	End of 2026 · FY26	High
Long-term leverage target	2x and 2.5x high materiality	Long-term	High
Husky H2 revenue	flat to slightly up year-over-year medium materiality	H2 FY26	Medium
Husky H2 margins	improved sequentially medium materiality	H2 FY26	Medium
GPGI performance acceleration	acceleration in 2027 high materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
CompoSecure Achieved record adjusted net sales and EBITDA, driven by robust demand for premium metal cards and effective commercial execution. ROS-led initiatives contributed to significant margin expansion. Adjusted EBITDA: $55.2MAdjusted EBITDA growth YoY: 14%	$133.6M	12%	—	41.3% adjusted EBITDA margin
Husky Performance impacted by macroeconomic uncertainty, volatile resin prices, shipping disruptions, and tariff uncertainty. Saw initial signs of stability and sequential margin expansion of 590 bps QoQ. Pro forma adjusted EBITDA: $64.9MPro forma adjusted EBITDA growth YoY: -23%	$339.6M	-9%	—	19.1% pro forma adjusted EBITDA margin

Orderbook & backlog

Husky pipeline activity robust and growing Q2 FY26

Implies demand is deferred rather than canceled for aftermarket tooling.

Husky pipeline growth double digits Q2 FY26

Pipeline growth for systems and aftermarket tooling, with conversion rates remaining stable.

Product announcements

Product	Type	Timeline
New design center	expansion	—
Tokenization	update	—
New packaging machine platform	launch	—
Aftermarket tooling technology portfolio	update	—
Tiered service model	launch	—

Deals & partnerships

Mohammad Kanaan Appointment as Chief Financial Officer of Husky

Mohammad Kanaan was appointed as CFO of Husky, bringing significant global experience to accelerate cultural transformation.

Karen Stone Appointment as Chief Human Resources Officer of Husky

Karen Stone was appointed as CHRO of Husky, helping accelerate cultural transformation with focus on accountability and engagement.

Benoit Jeanjot Promotion to Senior Vice President of Operations at Husky

Benoit Jeanjot was promoted to SVP of Operations at Husky, bringing deep operational expertise to drive ROS deployment.

Risks & headwinds

Volatile resin prices Q2 FY26

impacted Husky's Q2 performance

Mitigation:Husky's customers have secured longer-range resin purchases and/or looked for alternative sources.

Shipping disruptions related to Middle East conflict Q2 FY26

impacted Husky's Q2 performance

Mitigation:Global manufacturing footprint provides flexibility to adapt.

Continued tariff uncertainty Q2 FY26

impacted Husky's Q2 performance

Mitigation:Global manufacturing footprint provides flexibility; not expected to have a direct material impact on overall financial performance.

Macroeconomic uncertainty Q2 FY26

resulted in deferral of certain capital investment projects at Husky

Mitigation:ROS implementation, discrete cost actions, and focus on long-term demand drivers.

Geopolitical tension Q2 FY26

impacted Husky's Q2 performance

Mitigation:Global manufacturing footprint provides flexibility to adapt.

What to watch in Q3 FY26

Husky pipeline conversion

next quarter

Current double-digit growth in pipeline, stable conversion rates

Target continued conversion of pipeline to orders and sales, contributing to H2 acceleration

Why it matters

Husky's recovery and H2 performance depend on the conversion of deferred demand into actual orders and revenue.

we're seeing good growth in orders. We mentioned briefly, we're actually seeing even better performance in systems than we thought last quarter.

Find out whether GPGI delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you quantify Husky's pipeline conversion from deferred orders to booked orders, and what leading indicators are you watching to confirm the deferral thesis for H2 acceleration?

Management noted double-digit pipeline growth and good order growth, with systems performing better than expected. They are not providing specific numbers but see positive trends. They are not assuming a material improvement in macro conditions for the guidance.

“pipeline growth is up double digits. We feel very good about that. I think similar, seeing good growth in orders. We mentioned briefly, we're actually seeing even better performance in systems than we thought last quarter.”

asked by Brendan Shea · answered by Thomas Knott

2 min read 6 chapters

Detailed narrative

CompoSecure's Strong Performance and ROS Impact

CompoSecure delivered an outstanding quarter with record adjusted net sales of $133.6 million, a 12% increase year-over-year, and record adjusted EBITDA of $55.2 million, up 14%. This growth was attributed to robust demand for premium metal cards and effective commercial execution.

The Resolute Operating System (ROS) has had a compounded impact, leading to manufacturing efficiencies, increased yield, and a reinvigorated go-to-market strategy, resulting in a 70 basis point year-over-year increase in adjusted EBITDA margins to 41.3%.

Husky Navigates Macro Headwinds with ROS Implementation

Husky's performance was impacted by macroeconomic uncertainty, volatile resin prices, shipping disruptions, and tariff uncertainty, leading to a 9% year-over-year decline in adjusted net sales to $339.6 million and a 23% drop in adjusted EBITDA to $64.9 million. Despite these challenges, the company observed initial signs of stability, including improved resin availability and stronger engagement in its system pipeline.

ROS implementation is accelerating at Husky, driving cultural and operational transformation to improve efficiency and prepare for market recovery.

GPGI's Long-Term Growth Algorithm and Capital Allocation

GPGI outlined a long-term growth algorithm targeting mid- to high single-digit annual organic growth, over 100 basis points of annual margin expansion through ROS, double-digit plus annual EBITDA growth, and 90% to 100% free cash flow conversion. The capital allocation strategy prioritizes organic investments and bolt-on acquisitions that generate high returns on invested capital and strengthen competitive moats.

The company emphasizes its permanent capital base and proven ROS playbook as key enablers for compounding returns.

Strategic M&A and Market Opportunity

GPGI is actively evaluating new platform acquisitions, but maintains a disciplined approach, only pursuing opportunities that meet its six criteria for durable, high-ROIC businesses that can benefit from ROS deployment and are available at a fair price. Management believes there's a growing backlog of large, private equity-owned businesses that are 'stuck' due to an ineffective traditional IPO market, creating a structural opportunity for GPGI to acquire them as a solution.

Husky's Diversified Revenue and Innovation Focus

Husky's business model is supported by a diversified revenue profile: 30-35% from new systems, 40% from aftermarket tooling, and 25-30% from service. The company's installed base of approximately 13,500 systems provides a strong foundation for recurring aftermarket revenue. Husky continues to invest in innovation, including a new packaging machine platform, advanced aftermarket tooling technology, and a tiered service model, to strengthen its competitive position and capitalize on long-term demand drivers like sustainability and lightweighting.

Second Half Outlook and 2027 Acceleration

Management expects a stronger second half for both CompoSecure and Husky, consistent with historical seasonality. Husky anticipates sequential and year-over-year margin improvement driven by improved labor and fixed cost absorption, ROS-led efficiency gains, and cost actions. GPGI is using 2026 as a critical year for cultural change, ROS implementation, and strategic seed planting to position the company for an acceleration in performance in 2027.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.