GPGI Q2 2026 earnings: Sales and EBITDA margin both decline

GPGI (NYSE: GPGI) reported second-quarter 2026 pro forma adjusted net sales of $473.2 million, down 4% from $493.7 million, while GAAP diluted EPS improved to $0.17 from a loss of $0.26 a year earlier. Pro forma adjusted EBITDA declined 13% to $113.9 million and its margin narrowed to 24.1%, as record performance at CompoSecure was offset by transient market headwinds at Husky.

Core earnings data

Following the February 2025 spin-off of Resolute Holdings Management, GPGI accounts for GPGI Holdings under the equity method. As a result, GAAP statements do not include consolidated revenue from CompoSecure and Husky, so adjusted consolidated and pro forma figures provide the more useful operating comparison.

On that basis, sales declined modestly but profitability fell more quickly. GAAP net income moved back into positive territory, although the comparison was heavily affected by non-operating items, including a $96.2 million gain on debt extinguishment in the current quarter.

The prior-year operating figures include Husky on a pro forma basis as if the acquisition had occurred on January 1, 2025.

Business performance

CompoSecure delivered what GPGI described as record results supported by deployment of the Resolute Operating System. Husky performed in line with management’s expectations but continued to face transient market headwinds.

GPGI did not provide separate quarterly sales or EBITDA figures for the two businesses. That prevents investors from quantifying how much CompoSecure’s growth offset Husky’s pressures, but management’s commentary indicates a clear divergence between the two operations.

Profitability, cash flow, and the balance sheet

Adjusted cost of sales increased to $308.2 million from pro forma cost of sales of $296.0 million, despite the decline in revenue. Adjusted selling, general, and administrative expenses also rose to $148.4 million from $129.6 million. Together, these movements explain why operating income declined more sharply than sales.

The difference between operating income and adjusted EBITDA was also affected by $64.3 million of depreciation and amortization and a $23.6 million fair-value inventory step-up, both of which were added back in the EBITDA reconciliation. GAAP net income additionally benefited from the $96.2 million debt-extinguishment gain, meaning the improvement in GAAP earnings did not reflect stronger underlying operating profit.

Cash-flow data were provided for the first six months rather than Q2 alone. On an adjusted consolidated basis, GPGI used $76.7 million of operating cash during the six months ended June 30, 2026. It ended the period with $114.8 million of adjusted consolidated cash and short-term investments and $2.12 billion of total debt. GAAP cash was only $7.7 million because $107.1 million held at GPGI Holdings was excluded under the equity-method presentation.

Higher adjusted net income was offset by a much larger share count

The EPS reconciliation showed adjusted net income rising to $50.8 million from $28.4 million, but adjusted diluted EPS fell to $0.17 from $0.25. Diluted shares used in the calculation increased to 292.4 million from 114.9 million, more than offsetting the increase in adjusted income on a per-share basis.

The higher share count came alongside GPGI’s Husky-related issuance of Class A common stock. This distinction is important because total adjusted earnings and earnings attributable to each diluted share moved in opposite directions.

Full-year 2026 guidance

GPGI reiterated the revised full-year outlook introduced in the prior quarter. The midpoint of the sales range implies flat year-over-year revenue, while the midpoint of adjusted EBITDA guidance implies 7% growth, requiring better profitability than the company reported in Q2.

Management said GPGI remained positioned to deliver in the second half of 2026 and accelerate in 2027. It also plans to continue organic investment while evaluating bolt-on acquisitions and additional platform transactions.

Recent insider transactions

Reported insider data show eight purchases totaling 158,036 shares and one sale totaling 13,667 shares during the latest six-month period, resulting in net purchases of 144,369 shares. These transactions are presented objectively and do not by themselves establish insiders’ views about valuation or future performance.

Risks investors should monitor

• Husky’s market headwinds: Management characterized the pressure as transient, but no segment data were provided to show its magnitude or timing. Continued weakness could constrain consolidated sales and EBITDA.
• Margin recovery: Gross margin declined by approximately 520 basis points and adjusted EBITDA margin fell by 230 basis points. Reaching the full-year EBITDA outlook will require improved profitability during the second half.
• Cash conversion and leverage: Adjusted consolidated operating cash flow was negative for the first six months, while total debt stood at $2.12 billion. Delivering the free-cash-flow target and reaching approximately 3.0x net LTM leverage depend on a meaningful second-half improvement.

Summary

GPGI’s Q2 2026 results presented a mixed operating picture: CompoSecure reached record performance, but Husky’s headwinds contributed to lower consolidated sales and narrower margins. GAAP earnings improved because of non-operating gains, while adjusted EPS declined as the diluted share count increased substantially. The central issues for the remainder of 2026 are Husky’s performance, margin recovery, cash conversion, and progress toward the reiterated leverage target.