Compass Diversified

What they do

The company, through its operating LLC, controls eight businesses at June 30, 2026, including 5.11 (apparel/footwear/gear), BOA (fit systems), PrimaLoft (synthetic insulation), The Honey Pot Co. (personal care), Velocity Outdoor, Arnold (magnets), Altor Solutions (industrial packaging), and Rimports (home fragrance). It categorizes these into branded consumer and industrial groups. It provides strategic and financial support, including growth capital and add-on acquisitions, to its subsidiaries.

Revenue drivers

• Branded Consumer segment — Includes 5.11, BOA, PrimaLoft, The Honey Pot Co., and Rimports; Q2 2026 net revenues were $270.8M, up 7.2% year-over-year, with Adjusted EBITDA up 24.2%.
• Industrial segment — Includes Arnold and Altor Solutions; Q2 2026 net revenues were $139.8M, down 11.5% year-over-year, with Adjusted EBITDA down 12.8%.
• 5.11 (largest brand) — Global apparel, footwear, and gear company; in Q2 2026, it expanded margins despite a softer top line, contributing to the Branded Consumer segment's growth.
• BOA and PrimaLoft growth — Both were up more than 25% year-over-year in Q2 2026, driving strong performance in the Branded Consumer segment.

Recent performance

In Q2 2026, GAAP net revenues were $424.0M, down 11.4% year-over-year, but net income attributable to Holdings was $81.1M ($0.86 per share) vs. a net loss of $51.2M ($0.88 per share) in Q2 2025. Results included a $182.3M gain on the sale of Sterno's Food Service Business and a $58.0M fair value reduction on the Lugano receivable. Non-GAAP subsidiary Adjusted EBITDA was $91.5M, up 12.6% year-over-year. For fiscal 2025, annual revenue was $1.87B with a net loss of $226.4M.

Strategy

Management's strategy is to acquire and actively manage small to middle-market businesses with stable cash flows and defensible market positions. Recent actions include selling Sterno's Food Service Business and using over $280M of proceeds to reduce term loan debt. The company amended its Management Services Agreement to lower expected fees and tie more manager compensation to shareholder returns and operating performance. It also amended its senior credit facility to extend maturities. Near-term priorities are driving profitable growth, pursuing further divestitures, reducing debt, and returning capital to shareholders when appropriate.

Risks

• Lugano bankruptcy and receivable risk — Lugano was deconsolidated in November 2025, and a $58.0M fair value reduction on the receivable was taken in Q2 2026; a settlement to facilitate orderly liquidation was announced.
• High leverage — Total debt was $1,592.3M as of June 30, 2026, and the company continues to focus on debt reduction.
• Industrial segment decline — Industrial net revenues were down 11.5% year-over-year in Q2 2026, indicating softness in that segment.
• Restatement history — The company restated previously issued financial statements for fiscal years 2022-2024 and first three quarters of 2025 due to the Lugano investigation.

Outlook

Management expects to continue driving profitable growth, with strong performance from BOA, PrimaLoft, and The Honey Pot Co. (each up more than 25% year-over-year) and Arnold (up nearly 50%). They plan to pursue divestitures where attractive value can be realized and further reduce debt. The CEO will retire on December 31, 2026, with Zach Sawtelle named as successor.