GPGI Cuts 2026 Profit Outlook as Husky Costs Offset CompoSecure Growth

GPGI Inc. said third-quarter 2026 results were in line with its expectations as strong growth and margin expansion at CompoSecure offset weaker profitability at Husky. The company maintained its prior full-year sales forecast but lowered its adjusted EBITDA and free cash flow outlook, citing delayed cost actions, product mix, freight expenses and growth investments at Husky.

For 2026, GPGI now expects pro forma adjusted net sales of $2.034 billion to $2.064 billion, representing about 1% growth at the midpoint. Pro forma adjusted EBITDA is projected at $520 million to $550 million, down about 2% year over year at the midpoint, with a margin of 25% to 27%. The midpoint of the EBITDA range is approximately $45 million, or 8%, below the prior forecast.

Pro forma adjusted free cash flow is expected to be $250 million to $300 million, a midpoint reduction of about $25 million, or 8%. The measure represents operating cash flow excluding one-time Husky transaction and debt-refinancing expenses, less capital expenditures.

CompoSecure drives third-quarter growth

Third-quarter adjusted net sales rose 4.5% year over year to $509.6 million. Pro forma adjusted EBITDA increased 6.6% to $146.3 million, while the corresponding margin expanded to 28.7% from 28.1%.

CompoSecure accounted for the growth, reporting record adjusted net sales of $140.7 million, up 16.4% from a year earlier. GPGI attributed the increase to robust demand across a broader customer base and new program wins.

The metal payment-card business generated record pro forma adjusted EBITDA of $61.2 million, an increase of 22.9%. Its margin rose about 230 basis points to 43.5%, reflecting higher organic revenue, improved product mix, stronger manufacturing yields, labor optimization and operating efficiencies associated with the Resolute Operating System.

CompoSecure continued to invest in engineering, research and development, manufacturing and sales capabilities. It also opened a design center in London as part of its international expansion and secured additional premium card programs across banks, financial-technology companies and co-branded card issuers.

Husky sales return to growth, but costs weigh on earnings

Husky’s adjusted net sales increased 0.5% to $368.9 million. Growth in systems and service, including spare parts and contracts, offset difficult prior-year comparisons and customer deferrals involving aftermarket tooling and hot runners.

Pro forma adjusted EBITDA declined 0.9% to $88.8 million, while the margin slipped about 30 basis points to 24.1%. The margin nevertheless improved by approximately 500 basis points from the second quarter. GPGI said operating efficiencies and realized savings were offset by growth investments, elevated freight and duties, and an unfavorable product mix.

Demand indicators strengthened during the quarter. Husky’s pipeline increased 16% from a year earlier, total orders rose 7%, and aftermarket orders excluding systems advanced 13%. Total backlog was 5% higher year over year. Management said the near-term pipeline was strengthening, particularly for systems, although order conversion remained extended and longer system lead times can delay revenue recognition.

Husky’s updated 2026 sales forecast is broadly consistent with the company’s May plan, but its profitability forecast is lower. The midpoint of Husky’s pro forma adjusted net sales outlook increased by about $8 million, while the midpoint of its pro forma adjusted EBITDA forecast fell by approximately $31 million.

GPGI attributed the earnings shortfall primarily to costs rather than sales. Direct labor was about $11 million above plan after Husky retained staffing for a higher sales outlook, while delayed indirect-expense reductions accounted for roughly $14 million. Lower-margin machines, third-party revenue and elevated material costs, net of the benefit from incremental sales, reduced earnings by about another $6 million. The company said a more rigorous sales, inventory and operations planning process has been implemented, indirect-cost actions are planned by year-end, and procurement savings initiatives are underway.

Fourth-quarter and 2027 outlook

For the fourth quarter, GPGI expects low-single-digit organic revenue growth at the midpoint of its range. CompoSecure is expected to grow in the high teens, while Husky sales could range from a low-single-digit decline to low-single-digit growth.

Fourth-quarter pro forma adjusted net sales are forecast at $630 million to $660 million, compared with $639 million a year earlier. Pro forma adjusted EBITDA is expected to be $178 million to $208 million, with a margin of 27% to 29%. Pro forma adjusted free cash flow is projected at $77 million to $127 million.

Management expects GPGI to return to its long-term growth framework in 2027, targeting mid- to high-single-digit organic revenue growth, more than 100 basis points of margin expansion and double-digit-plus EBITDA growth. The outlook assumes continued commercial and operational gains at CompoSecure and improving demand and cost execution at Husky. Growth capital spending and higher R&D investment are planned for both businesses.

At September 30, GPGI had $176 million of cash, total debt of $2.097 billion and net debt of $1.921 billion. Net debt was 3.7 times last-12-month pro forma adjusted EBITDA, and total liquidity was $569 million. The company is targeting year-end non-GAAP net leverage of approximately 3.5 times.

Risks identified by GPGI include geopolitical and macroeconomic uncertainty, tariffs, regional instability, interest and exchange rates, changes in demand, and higher input costs such as resin, oil, freight and logistics. Management also noted that elevated interest rates could affect new card issuance, while renewed resin-price increases could lead Husky customers to defer equipment purchases.