Slides
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compassdiversified.com Investor Day January 16, 2025
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compassdiversified.com Legal Disclaimer “Compass Diversified,” as we refer to it, is comprised of three separate, business entities that work closely together: Compass Group Diversified Holdings LLC (the “Company”), sponsor of Compass Diversified Holdings (“Holdings”), and Compass Group Management LLC, the external manager of the organization, which we refer to as the “Manager.” Although the shares issued to the public are technically at the Holdings level (NYSE:CODI), Holdings and the Company file consolidated reports with the Securities Exchange Commission (the “SEC”) and are referred to collectively herein as “CODI,”, “us,” “we” or “our.” This presentation does not constitute an offer or invitation for the sale or purchase of securities and has been prepared solely for informational purposes. This presentation contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may be made a part of this presentation or by reference to other documents we file with the SEC. Some of the forward-looking statements can be identified by the use of forward-looking words. Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," “plan,” “may,” "intend," "target," "estimate," “outlook,” "continue," "prospects" or "potential," by future conditional verbs such as "will," "would," "should," "could" or "may", or by variations of such words or by similar expressions. Certain statements regarding the following particularly are forward-looking in nature: future financial performance, market forecasts or projections, projected capital expenditures and our business and acquisition strategy. All forward-looking statements are based on our management's beliefs, assumptions and expectations of our future economic performance, taking into account the information currently available to it. These statements are not statements of historical fact. Forward-looking statements are subject to a number of assumptions, risks and uncertainties, some of which are not currently known to us and may change over time, that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial position. In addition to factors previously disclosed in CODI’s reports filed with the SEC, the following factors, among others, could cause actual results to differ materially from forward-looking statements: changes in the economy, financial markets and political environment; risks associated with possible disruption in CODI’s operations or the economy generally due to terrorism, natural disasters, or social, civil and political unrest; future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); and other considerations that may be disclosed from time to time in CODI’s publicly disseminated documents and filings. Further information regarding CODI and factors which could affect the forward-looking statements contained herein can be found in CODI’s annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Our actual results may differ materially from the results discussed in forward-looking statements and you should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Except to the extent required by applicable law or regulation, we assume no duty to update forward-looking statements. In addition, our discussion may include references to Adjusted Earnings, Adjusted EBITDA, Subsidiary Adjusted EBITDA, pro forma adjusted EBITDA, retained cash, or other non-GAAP measures. These non-GAAP financial measures have limitations as analytical tools and should not be viewed as a substitute for financial results determined in accordance with GAAP , nor are they necessarily comparable to non-GAAP measures that may be presented by other companies. Non-GAAP measures are not necessarily indicative of our future results of operations or financial condition. A reconciliation of the most directly comparable GAAP financial measures to such non-GAAP financial measures is included in our annual and quarterly reports in Forms 10-K and 10-Q filed with the SEC as well as the Appendix attached to this presentation. In reliance on the unreasonable efforts exception provided under Regulation G and Item 10(e)(1)(i)(B) of Regulation S-K, we have not reconciled expected Adjusted Earnings, Adjusted EBITDA or Subsidiary Adjusted EBITDA to their comparable GAAP measures because we do not provide guidance on net income (loss) or net income (loss) from continuing operations or the applicable reconciling items as a result of the uncertainty regarding, and the potential variability of, these items. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results. References in this presentation or our discussion to employees refer to employees of our Manager, as CODI currently does not have any employees and does not expect to have any employees in the foreseeable future. References in this presentation or our discussion to the “Board of Directors” or the “Board” or any “committee” of the Board, and to our “subsidiaries” or our “businesses” refer to the Board of Directors and the subsidiaries of the Company, respectively.
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compassdiversified.com Welcome Q4 Update & Strategy Overview M&A Market & Verticals Financial Outlook Q&A – Strategy & Outlook CODI in Action – Moderated Panel Discussion ▪ 5.11 - Troy Brown ▪ PrimaLoft – Anne Cavassa ▪ Altor – Terry Moody Lunch & “CODI Corner” Today’s Agenda
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compassdiversified.com Overview & Strategy Elias Sabo Founding Partner & Chief Executive Officer
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compassdiversified.com Subsidiaries Performed Well in Q4; Expect Results to Come in at or Above the High End of Our Guidance* ▪ Continued strength in Consumer ▪ Industrial accelerating ▪ Expect to take ~$12 million write down of inventory at 5.11 related to PFAS; Write off inline with previously communicated expectations Sold Ergobaby for an Enterprise Value of $104 Million ▪ Will be reported as discontinued operations Raised $300 Million in Incremental Term Loan A ▪ Initial funding of $200 million; Additional $100 million available with six - month delayed draw ▪ Coterminous with the existing Term Loan A (matures July 2027) In Q4 2024 - Raised ~$90 Million in Preferred Shares ▪ >$115 million full Year ▪ Flexible; low cost source of capital Re-purchased >400,000 Shares of Common Shares ▪ Average price of $23.19 Q4 2024 Update *Excluding impact of Ergobaby & PFAS write-off
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SubsidiariesCODI By The Numbers* *As at 09/30/2024 (includes Ergobaby) $161M $9.3B+ $5.1B+ $505M+ $2.2B+ TTM Adjusted Earnings1 Aggregate Acquisitions 24 Platforms and 34 Add-Ons Invested Capital TTM pro forma Subsidiary Adjusted EBITDA1,2 TTM pro forma Revenue2 22.5% TTM pro forma Subsidiary Adjusted EBITDA Margin1,2 Consumer Businesses Industrial Businesses 1Subsidiry Adjusted EBITDA, Adjusted EBITDA Margins, & Adjusted Earnings are non -GAAP financial measures. Please see Appendix. 2Pro forma financial data includes comparative historical results of our platform acquisit ions as if acquired at the beginning of the period presented.
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compassdiversified.com CODI is more than a ticker symbol.
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compassdiversified.com C O D I ulture f isruption & nnovation
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compassdiversified.com Collaboration We measure success as a team CODI Values Passion We have a strong will to succeed — an intense but graceful competitiveness Integrity We will always choose the right way over the easy way Accountability We deliver against our commitments and take initiative each step of the way Humility We recognize that we don't have all the answers, so we partner with strong world-class managers through the CODI family
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compassdiversified.com We are unique. We are redefining our industry with transparency, liquidity, and accessibility.
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compassdiversified.com Purpose-driven organization defined by our values Long-term focus on acquiring and owning innovative and disruptive businesses Financed in an intelligent way to lower overall cost of capital and align stakeholder incentives Match duration of opportunity with duration of capital Public company transparency and liquidity We are NOT Private Equity
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compassdiversified.com The Evolution of CODI ▪ Inflation & Interest Rates ▪ Muted M&A Market ▪ Acquired The Honey Pot; Divested Ergobaby ▪ Codified Investment Thesis ▪ Launched Centers of Excellence 2024* >5% >23% Innovative & Disruptive Industry Leading Accelerating ▪ Tightened Aperture for Acquisitions ▪ Higher Multiples for Better Businesses ▪ Buyer of Choice ▪ Centers of Excellence ▪ Lowest Cost of Capital ▪ Closer Aligned Incentives 2025 & Beyond* >2x GDP Growth High Innovative & Disruptive Industry Leading Organic Growth (pro forma) Subsidiary Adjusted EBITDA %1 Subsidiary Characteristics Cost of Capital Progress Challenges 2018 – 2023 GDP+ Growth Medium Faster Growing & Innovative Improving Repositioning ▪ Subsidiary Transition ▪ Market disruptions (COVID; Supply Chain, etc.) ▪ Reduced Cost of Capital ▪ Greater Scale ▪ Improved Governance ▪ Simplified Tax Structure ▪ Restructured Balance Sheet *Based on management’s current estimates and assumptions. These are subject to significant uncertainties and contingencies and are based upon management’s current assumptions, which are subject to change. 2006 – 2017 GDP Growth Low Stable & Modest Growth Extremely High (Competitive Disadvantage) Foundational ▪ High Cost of Capital ▪ Model Not Understood ▪ IPO (first of its kind public company) ▪ Democratized Access to Middle Market ▪ Permanent Capital Differentiation 1Adjusted EBITDA % is a Non-GAAP Measure
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compassdiversified.com The CODI Advantage For Our Businesses
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compassdiversified.com Partner with Management Teams Alignment of values, strategic partner, active support to realize their vision The CODI Advantage For Our Businesses Growth & Innovation Mindset Driving outsized growth through innovation, superior execution and a long-term focus Permanent & Patient Capital Acquisitions financed at the parent company, duration of capital to match the duration of the opportunity, building lasting infrastructure Emerging Centers of Excellence Making expert resources and strategic advice available as required/requested
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compassdiversified.com The CODI Advantage For Our Communities
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compassdiversified.com Value-Driven fully committed ownership, with incentive to invest for the long -term The CODI Advantage For Our Communities Future-Thinking For Our People & Planet attracting and retaining top-tier talent; commitment to improving our companies and the world in which we operate Superior Governance & Transparency transparent reporting, independent board, strong financial processes and controls, ensuring our businesses thrive
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compassdiversified.com The CODI Advantage For Our Shareholders
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compassdiversified.com Unique Access to Middle Market Companies Exposure to innovative and disruptive businesses with public market transparency and liquidity The CODI Advantage For Our Shareholders Differentiated Value Creation Model Industry-leading cost of capital, patient deployment of capital, selective acquisitions, opportunistic divestitures Track Record of Strong Returns History of strong returns on invested capital, aligned interests between shareholders and management
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compassdiversified.com Key Changes – Management Services Agreement ▪ Established a Sliding Scale for Management Fees: — Management Fee of 2.0% of Adjusted Net Assets (“ANA”) up to $3.5 billion — Management Fee of 1.25% of ANA over $3.5 billion and less than $10 billion — Fixed Management Fee of 1.5% if ANA hits $10 billion ▪ Eliminated Integration Service Fees on Platform Acquisitions ▪ Adjusted Net Assets Excludes Excess Cash Held at CODI and its Subsidiaries ▪ Established Incentive Management Fee of 0.25% for ANA between $3.5 - $10 billion — Only distributable to active members of management team — Earned when the trailing 3-year annualized internal rate of return exceeds 12% — Requires approval of Board’s Compensation Committee (comprised of independent Board members) ▪ Effective – the Quarter Commencing on January 1, 2025 For Our Shareholders Revised Management Services Agreement Key Benefits ▪ Reduces shareholder costs ▪ Further aligns management compensation with shareholder interests ▪ Increases oversight of the Board's Compensation Committee ▪ Focuses rewards for active members of management team
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compassdiversified.com Adjusted Net Assets Management Fees Integration Service Fee CODI – Shareholder Savings Old Agreement New Agreement Old Agreement New Agreement $3.5 Billion $70 Million $70 Million $3.5 Million based on The Honey Pot $0 $3.5 Million $3.8 Billion $76 Million $74 Million $3.5 Million based on The Honey Pot $0 $5.5 Million $5.0 Billion $100 Million $89 Million $7.0 Million Assumes 2 new platform acquisitions per year $0 $18 Million $10.0 Billion $200 Million $150 Million $10 Million Assumes 2-3 new platform acquisitions per year $0 $60 Million For Our Shareholders Revised Management Services Agreement Illustrative – Annual Impact* *Excludes impact of any Incentive Management Fees (if earned)
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compassdiversified.com Vertical & Subsidiary Update Pat Maciariello Partner & Chief Operating Officer
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compassdiversified.com Empowering Success, Driving Growth, Exceeding Expectations Investment Thesis: At CODI, we acquire high-growth middle-market companies that we believe have a sustainable competitive advantage, poised to gain share in attractive markets. We empower strong management teams to realize their vision and drive outsized growth through innovation, superior execution, and a focus on the long-term. 2 Transaction Size Range of $100 Million to $800 Million 1 Consumer, Industrial Technology, and Healthcare & Critical Outsourced Sectors 3 EBITDA >$10 Million with Attractive Long-Term Growth Prospects Acquisition Criteria
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compassdiversified.com Consumer (as of 9/30/24 – excluding Ergobaby) 6 $1.5B 11.9% Subsidiary Companies TTM Revenue (pro forma)1 TTM Revenue Growth (pro forma)1 $373M 25.7% TTM Adj. EBITDA (pro forma) 1,2 TTM Adj. EBITDA Margin (pro forma) 1,2 Consumer Subsidiaries Long-Term Outlook HSD+ Organic Revenue Growth >25% Adjusted EBITDA Margin 2 +++ Capital Deployment Overview 1Pro forma financial data includes comparative historical results of our platform acquisitions as if acquired at the beginning of the period presented. 2Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures
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compassdiversified.com 9 Curated Salons >$450k Average Transaction Size $425M+ Revenue (TTM)* 58.9% Growth (TTM)* $166M+ Adj EBITDA (TTM)* >80% Revenue from Repeat Customers >$19k Revenue Per Sq. Foot 39% Adj EBITDA Margin (TTM)* Disruptive business model redefining the >$160 Billion Luxury Collectibles Category * As of 9/30/2024 Growth continued in 2024 and expected to contribute >$180 Million in adjusted subsidiary EBITDA Given competitive positioning, ongoing investments and geographic expansion; Lugano is expected to continue to drive outsized growth
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compassdiversified.com Lugano – Impact to CODI Leverage While Lugano requires significant investments in working capital for growth; investments in Lugano do not materially increase CODI’s leverage above target Annual Estimated EBITDA Growth $75.0 $77.5 $80.0 CODI "Leveragability" at Target (3.5x) $212.7 $221.5 $230.2 Estimated Adjusted Investment in WC1 -$297.8 -$297.8 -$297.8 Estimated Cash Created at Lugano2 $144.3 $146.8 $149.3 Less: Allocation of all CODI corporate Costs and Dividends3 -$64.9 -$64.9 -$64.9 Liquidity Contribution / Leakage From Lugano -$5.7 $5.6 $16.8 Impact on CODI Leverage +0.011x -0.010x -0.031x Illustrative 1 Assumes 1-2 salons opened per year 2 Equal to EBITDA less estimated CapEx and Taxes 3 Includes allocation of corporate costs, management fees, interest and dividends
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compassdiversified.com Consumer – Subsidiary Outlook* Subsidiary Organic Growth Outlook (2025 – 2028) Long-Term Adjusted EBITDA Margins1 Anticipated Key Drivers MSD >15% • Continued consumer penetration and improved assortment • EBITDA margin improvement driven by mix shift towards DTC & greater efficiencies DD ~40% • Continued penetration of existing markets • EBITDA growth driven primarily by topline with modest margin improvements DD >25% • Continued market share gains driven by increased demand for “better for you” personal care • EBITDA growth driven primarily by topline with modest margin improvements due to continued brand investments HSD+ ~40% • Continued market share gains driven by increased demand for sustainable solutions • EBITDA growth in line with topline growth LSD ~15% • Growth driven by innovation in core crossbow business category • EBITDA margins return to historical levels after impact of channel destocking and reduced IP litigation expense *Based on management’s current estimates and assumptions. These are subject to significant uncertainties and contingencies an d are based upon management’s current assumptions, which are subject to change. 1Adjusted EBITDA Margin is a non -GAAP financial measure
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compassdiversified.com Industrial (as of 9/30/24) 3 $700M+ -4.0% Subsidiary Companies TTM Revenue TTM Revenue Growth $122M+ 17.4% TTM Adj. EBITDA 1 TTM Adj. EBITDA Margin 1 Industrial Subsidiaries Long-Term Outlook MSD Organic Revenue Growth >18% Adjusted EBITDA Margin ++ Capital Deployment Overview 1Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures
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compassdiversified.com Industrial – Subsidiary Outlook* Subsidiary Organic Growth Outlook (2025 – 2028) Anticipated Long-Term EBITDA Margins Anticipated Key Drivers MSD ~20% • Recent acquisition of Lifoam strengthens position in faster growth cold chain market • Stable long-term margins MSD >15% • Continued strong growth in core markets (e.g. Aerospace/Defense) • Margin expansion driven by operating leverage as well as improved mix following recent investments LSD >15% • Modest volume growth driven by increases in corporate travel and further product and customer expansion • Stable long-term margins *Based on management’s current estimates and assumptions. These are subject to significant uncertainties and contingencies an d are based upon management’s current assumptions, which are subject to change. 1Adjusted EBITDA Margin is a non -GAAP financial measure
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compassdiversified.com Long-Term Financial Outlook Stephen Keller Executive Vice President & Chief Financial Officer
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compassdiversified.com 2022 2024 Trend 21 23 BB BBB N/A 26.8 N/A C- Our Businesses Our Communities Our Shareholders Our Employees $179,000 $421,000 2016 2023 2024E* Subsidiary Adjusted EBITDA1 ESG Ratings Total Return Employees believe CODI is a great place to work >90% 2.4x Russell 2000® Since IPO (5/2006 – 12/31/2024) Total Return CODI +595% Russell 2000® +288% Guided by Values, Driven By Excellence Empowering Success Driving Growth Exceeding Expectations Delivering For All Stakeholders 1Subsidiry adjusted EBITDA is a non -GAAP financial measure. Please see Appendix.
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compassdiversified.com Adjusted EBITDA1 (as reported2) Significant increase in adjusted EBITDA over 3, 5, & 10 years EBITDA growth driven by organic and inorganic investment and active subsidiary management Targeting sustained DD+ growth in adjusted EBITDA 1Adjusted EBITDA is a non -GAAP financial measure. Please see Appendix. 2As presented in the annual or quarterly report filed with the SEC in the year indicated. $167.8 $195.1 $249.5 $226.1 $249.2 $327.3 $369.8 $340.9 2016 2017 2018 2019 2020 2021 2022 2023 2024E* $Millions CAGR >12%
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compassdiversified.com Continued strong operating performance at subsidiaries is driving increased retained cash 1Retained Cash is a non -GAAP financial measure. Please see Appendix. $1.0 $57.1 $64.8 $79.5 $66.3 2020 2021 2022 2023 2024 (YTD Sept) $Millions Retained Cash1 (before Working Capital) Increased retained cash supports long-term strategic goals Organic de-levering Deploying capital for new acquisitions Investing in subsidiaries
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compassdiversified.com Strong Balance Sheet 73% of debt fixed at blended 5.20% Balance Sheet & Secured DebtUnsecured Debt Capital Structure$300M 5.0% Fixed Due 2032 $1,000M 5.25% Fixed Due 2029 Est. as of 1/10/2025 40% 57% 13% Common Equity Preferred Equity Debt Rate on debt 6.6% Rate on preferred 7.7% Cash: ~$47 Million Revolver: ~$0 Million Term Loan: ~$575 Million Availability Revolver: ~$600 Million
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compassdiversified.com History of Successfully Deleveraging CODI has a demonstrated history of paying down its debt and is committed to staying conservatively levered 3.7x 2.9x 2.5x 2.6x 2.8x 3.0x 3.5x 3.5x 3.9x 3.9x 3.6x 1.9x 1.9x 1.4x 1.75x 1.9x 1.8x 3.2x 2.9x 2.6x 2.9x 2.96x 3.04x 2.98x 3.93x 3.97x 3.87x 4.08x 4.03x 3.1x 3.8x 3.72x 3.68x Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sept-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Reported Leverage at Quarter End FOXF Secondary Sales Sale Sale Sale Series BSeries A Series C Common Shares Secondary Offering $200mm ATM Equity Proceeds $75mm Private Placement Sale Reported Leverage at quarter endother than for 12/31/24 which is management's estimate based on estimate of 2024 results and impact of the sale of Ergobaby. $100mm ATM Equity ProceedsPreferred Series Offering
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compassdiversified.com Maintain Long-Term Leverage Target of 3.0x to 3.5x Financing Strategy & Outlook Secure Access to Diverse Sources Capital Ensure Significant Liquidity to Fund Subsidiary Growth and Drive Strategic Acquisitions
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compassdiversified.com Capital Allocation Priorities 1. Continued Investment in Subsidiaries ▪ Organic investment in innovative and disruptive businesses ▪ Strategic add-ons 3. Efficient Return of Capital 2. Platform Acquisitions ▪ Active but disciplined capital allocation ▪ Target of 1-2 platform acquisitions per year
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compassdiversified.com Long-Term Outlook* HSD+ ~25% >10% Organic Sales Growth* Subsidiary Adjusted EBITDA%* Adjusted Earnings Growth* Drive Organic Growth in Sales & Margins Actively Acquire Attractive Platform Businesses Opportunistically Divest Subsidiaries *Based on management’s current estimates and assumptions. These are subject to significant uncertainties and contingencies and are based upon management’s current assumptions, which are subject to change. **Organic Sales Growth, Adjusted EBITDA % and Adjusted Earnings Growth are non-GAAP financial measures.
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compassdiversified.com Q&A
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compassdiversified.com Panel Discussion Elias Sabo, CEO of Compass Diversified in conversation with: Troy Brown Anne Cavassa Terry A. Moody
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compassdiversified.com Appendix
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compassdiversified.com Appendix: Subsidiary Snapshot (as of 9/30/2024) Subsidiaries ($ in millions) Year Acquired TTM PF Revenue 9/30/24 TTM PF Revenue Growth Rate TTM PF Sub. Adj. EBITDA 9/30/24 TTM PF Sub. Adj. EBITDA Growth Rate PF Sub. Adj. EBITDA Margin 9/30/24 TTM Capital Expenditures 9/30/24 Purchase Price + Add-ons 5.11 2015 $535 2.6% $74 2.5% 13.8% $5 $408 BOA 2020 $185 18.8% $71 26.4% 38.1% $3 $454 Ergobaby 2010 $94 1.8% $11 -18.5% 11.7% $1 $173 Lugano 2021 $426 58.9% $167 78.6% 39.1% $9(1) $263 PrimaLoft 2022 $71 -1.0% $26 -6.2% 36.8% $0 $541 The Honey Pot(3) 2024 $111 8.5% $30 23.5% 27.3% $0 $377 Velocity 2017 $123 -30.7% $6 -57.6% 4.6% $3 $268 Total Branded Consumer: $1,545 11.2% $384 27.9% 24.8% $21 $2,484 Less: Ergobaby ($94) ($11) ($1) ($173) Total Branded Consumer (ex-Ergo) $1,451 11.9% $373 30.0% 25.7% $20 $2,311 Altor 2018 $214 -12.0% $45 -8.8% 20.8% $7 $327 Arnold 2012 $175 9.8% $31 18.3% 17.6% $18 $163 Sterno 2014 $318 -4.3% $46 1.9% 14.6% $7 $344 Total Industrial $707 -3.8% $122 1.0% 17.2% $31 $834 Total – Consolidated $2,252 6.0% $505(2) 20% 22.5% $52 $3,319 Total – Consolidated (ex- Ergo) $2,158 6.2% $495 21.5% 22.9% $51 $3,145 1. Growth capex at Lugano for retail store rollout. 2. Subsidiary Adj. EBITDA does not include ~$86M of corporate expenses. 3. On February 1, 2024, the Company announced the completion of its acquisition of The Honey Pot Company, LLC. Information prior to acquisition was from Honey Pot’s management.
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compassdiversified.com Appendix: Net Income to Non-GAAP Adjusted Earnings Three Months Ended Nine Months Ended September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Net income (loss) $ 31,461 $ (3,760) $ 23,519 $ 122,964 Income from discontinued operations, net of tax — 8,950 — 21,790 Gain on sale of discontinued operations, net of tax — 1,274 3,345 103,495 Net income (loss) from continuing operations $ 31,461 $ (13,984) $ 20,174 $ (2,321) Less: income (loss) from continuing operations attributable to non-controlling interest 9,397 5,721 22,632 13,390 Net income (loss) attributable to Holdings - continuing operations $ 22,064 $ (19,705) $ (2,458) $ (15,711) Adjustments: Less: Distributions paid - Preferred Shares (6,345) (6,045) (18,491) (18,136) Add: Amortization expense – intangibles and inventory step up 26,798 23,956 84,553 73,081 Add: Impairment expense — 32,568 8,182 32,568 Less: Tax effect – impairment expense — (4,308) — (4,308) Gain loss on sale of Crosman (388) — 24,218 — Tax effect – loss on sale of Crosman — — 7,254 — Add: Stock Compensation 4,769 2,750 13,026 7,598 Add: Acquisition expenses — — 3,479 — Add: Integration Services Fee 875 — 1,750 2,375 Add (Less): Other 963 349 1,368 1,129 Adjusted Earnings $ 48,736 $ 29,565 $ 122,881 $ 78,596
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compassdiversified.com Appendix: Adjusted EBITDA | Quarter Ended September 30, 2024 In OOO’s Corporate 5.11 BOA Ergo Lugano PrimaLoft THP Velocity Altor Arnold Sterno Consolidated Net income (loss) ($8,715) $9,737 $3,902 ($3,229) $24,272 ($4,273) ($160) $1,831 $2,682 $2,260 $3,154 $31,461 Adjusted for: Provision (benefit) for income taxes $1,782 $1,451 $136 $8,342 ($2,315) ($20) ($2,223) $1,466 $1,196 $939 $10,754 Interest expense, net $27,238 ($2) ($4) — — ($10) ($3) ($1) $139 — $27,357 Intercompany interest ($41,375) $3,334 $4,925 $2,116 $15,080 $4,480 $2,907 $2,038 $1,735 $1,816 $2,944 — Loss on debt extinguishment — — — — — — — — — — — — Depreciation and amortization $118 $5,617 $5,402 $2,053 $2,699 $5,337 $4,166 $1,397 $4,080 $2,340 $4,960 $38,169 EBITDA ($22,734) $20,468 $15,676 $1,076 $50,393 $3,219 $6,890 $3,042 $9,963 $7,751 $11,997 $107,741 Other income (expense) — $13 ($110) $17 ($68) $1 $25 ($164) $58 — ($81) ($309) Non-controlling shareholder compensation — $544 $1,504 $232 $459 $828 $540 $186 $237 $4 $235 $4,769 Impairment expense — — — — — — — — — — — — Acquisition expenses — — — — — — — — — — — — Integration services fee — — — — — — $875 — — — — $875 Other — — — — — — — — — $880 $83 $963 Adjusted EBITDA ($22,734) $21,025 $17,070 $1,325 $50,784 $4,048 $8,330 $3,064 $10,258 $8,635 $12,234 $114,039
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compassdiversified.com Appendix: Adjusted EBITDA | Quarter Ended September 30, 2023 In OOO’s Corporate 5.11 BOA Ergo Lugano PrimaLoft Velocity Altor Arnold Sterno Consolidated Net income (loss) ($13,750) $5,834 $4,257 ($261) $14,584 ($4,893) ($28,881) $5,042 $2,103 $1,981 ($13,984) Adjusted for: Provision (benefit) for income taxes — $1,920 $865 ($620) $4,210 ($2,566) ($2,951) $1,460 $876 $643 $3,837 Interest expense, net $27,525 ($2) ($4) — — ($3) $38 — $6 — $27,560 Intercompany interest ($34,708) $5,477 $1,571 $2,144 $8,930 $4,635 $3,633 $2,549 $1,706 $4,063 — Loss on debt extinguishment — — — — — — — — — — — Depreciation and amortization $380 $6,573 $5,930 $2,033 $2,081 $5,361 $3,272 $4,215 $2,126 $4,984 $36,955 EBITDA ($20,553) $19,802 $12,619 $3,296 $29,805 $2,534 ($24,889) $13,266 $6,817 $11,671 $54,368 Other income (expense) — $98 ($63) — $71 ($9) ($425) ($362) $8 ($363) ($1,045) Non-controlling shareholder compensation — $258 $736 $312 $472 $262 $228 $234 $8 $240 $2,750 Impairment expense — — — — — — $32,568 — — — $32,568 Acquisition expenses — — — — — — — — — — — Integration services fee — — — — — — — — — — — Other — — — — — — — — — $349 $349 Adjusted EBITDA ($20,553) $20,158 $13,292 $3,608 $30,348 $2,787 $7,482 $13,138 $6,833 $11,897 $88,990
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compassdiversified.com Appendix: Adjusted EBITDA | Nine Months Ended September 30, 2024 In OOO’s Corporate 5.11 BOA Ergo Lugano PrimaLoft THP Velocity Altor Arnold Sterno Consolidated Net income (loss) ($21,151) $18,594 $16,248 ($6,337) $59,257 ($5,261) ($7,764) ($53,368) $6,076 $6,169 $7,711 $20,174 Adjusted for: Provision (benefit) for income taxes — $4,792 $3,920 $516 $20,010 ($1,731) ($2,589) $7,074 $3,192 $3,182 $2,594 $40,960 Interest expense, net $77,280 ($3) ($16) — $3 ($15) ($28) $53 — $220 — $77,494 Intercompany interest ($122,209) $10,114 $15,716 $6,364 $40,417 $13,526 $7,827 $7,620 $5,612 $5,313 $9,700 — Loss on debt extinguishment — — — — — — — — — — — — Depreciation and amortization $552 $17,198 $16,251 $6,427 $7,571 $15,987 $14,811 $6,679 $12,250 $6,754 $14,850 $119,330 EBITDA ($65,528) $50,695 $52,119 $6,970 $127,258 $22,506 $12,257 ($31,942) $27,130 $21,638 $34,855 $257,958 Other income (expense) $462 $86 $22 $12 ($61) $5 ($5) $25,734 $2,722 ($9) ($423) $28,545 Non-controlling shareholder compensation — $1,630 $4,352 $738 $1,662 $1,823 $1,157 $556 $741 $13 $354 $13,026 Impairment expense — — — — — — — $8,182 — — — $8,182 Acquisition expenses — — — — — — $3,479 — — — — $3,479 Integration services fee — — — — — — $1,750 — — — — $1,750 Other — — — — — — $90 — — $880 $398 $1,368 Adjusted EBITDA ($65,066) $52,411 $56,493 $7,720 $128,859 $24,334 $18,728 $2,530 $30,593 $22,522 $35,184 $314,308
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compassdiversified.com Appendix: Adjusted EBITDA | Nine Months Ended September 30, 2023 In OOO’s Corporate 5.11 BOA Ergo Lugano PrimaLoft Velocity Altor Arnold Sterno Consolidated Net income (loss) ($40,914) $11,850 $15,151 ($1,114) $31,468 ($5,500) ($36,862) $12,244 $6,911 $4,445 ($2,321) Adjusted for: Provision (benefit) for income taxes — $3,990 $2,224 ($1,272) $10,295 ($3,125) ($5,905) $4,094 $3,264 $1,512 $15,077 Interest expense, net $80,123 ($4) ($9) — $4 ($9) $232 — $16 — $80,353 Intercompany interest ($99,433) $15,698 $5,032 $6,484 $22,660 $13,343 $10,070 $8,183 $5,078 $12,885 — Loss on debt extinguishment — — — — — — — — — — — Depreciation and amortization $1,056 $19,866 $17,436 $6,112 $6,971 $16,084 $10,023 $12,558 $6,248 $15,016 $111,370 EBITDA ($59,168) $51,400 $39,834 $10,210 $71,398 $20,793 ($22,442) $37,079 $21,517 $33,858 $204,479 Other income (expense) ($128) ($103) $117 $29 ($5) $130 ($1,179) $201 ($1) ($1,161) ($2,100) Non-controlling shareholder compensation — $988 $2,069 $936 $1,312 $219 $686 $800 $26 $562 $7,598 Impairment expense — — — — — — $32,568 — — — — Acquisition expenses — — — — — — — — — — — Integration services fee — — — — — $2,375 — — — — $2,375 Other — — — — — — — — — $1,129 $1,129 Adjusted EBITDA ($59,296) $52,285 $42,020 $11,175 $72,705 $23,517 $9,633 $38,080 $21,542 $34,388 $246,049
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compassdiversified.com Appendix: Adjusted EBITDA | Full Year Ended December 31, 2023 In OOO’s Corporate 5.11 BOA Ergo Lugano PrimaLoft Velocity Altor Arnold Sterno Consolidated Net income (loss) from continuing operations ($51,761) $21,690 $16,496 ($2,601) $52,315 ($69,883) ($40,045) $16,504 $10,434 $8,115 ($38,736) Adjusted for: Provision (benefit) for income taxes $301 $4,994 $2,863 ($1,309) $14,589 ($5,672) ($5,616) $5,890 $4,185 $1,106 $21,331 Interest expense, net $104,855 ($8) ($18) — $4 ($11) $352 — $5 — $105,179 Intercompany interest ($134,835) $20,244 $7,580 $8,595 $32,837 $18,123 $13,510 $10,486 $6,806 $16,654 — Loss on debt extinguishment — — — — — — — — — — — Depreciation and amortization $1,399 $26,009 $22,932 $8,110 $9,229 $21,478 $13,282 $16,741 $8,441 $19,959 $147,580 EBITDA ($80,041) $72,929 $49,853 $12,795 $108,974 ($35,965) ($18,517) $49,621 $29,871 $45,834 $235,354 Other (income) expense ($128) ($515) $98 $36 ($80) $62 ($1,210) $1,440 ($5) ($1,441) ($1,743) Non-controlling shareholder compensation — $1,191 $3,019 $1,214 $1,474 $980 $914 $986 $27 $860 $10,665 Impairment expense — — — — — $57,810 $31,590 — — — $89,400 Acquisition expenses — — — $321 — — — — — — $321 Integration services fee — — — — — $2,375 — — — — $2,375 Other — — $3,072 — — — — — — $1,434 $4,506 Adjusted EBITDA ($80,169) $73,605 $56,042 $14,366 $110,368 $25,262 $12,777 $52,047 $29,893 $46,687 $340,878
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compassdiversified.com Appendix: Adjusted EBITDA | Full Year Ended December 31, 2022 In OOO’s Corporate 5.11 BOA Ergo Lugano PrimaLoft Velocity Altor Arnold Sterno Consolidated Net income (loss) from continuing operations ($77,990) $22,633 $42,613 ($18,669) $27,934 ($17,741) $4,127 $9,662 $7,683 $3,406 $3,658 Adjusted for: Provision (benefit) for income taxes $12,119 $7,125 $6,527 ($4,274) $11,889 ($3,878) $1,562 $3,174 $3,329 ($480) $37,093 Interest expense, net $83,243 — ($25) $10 $16 ($7) $229 — $26 — $83,492 Intercompany interest ($92,177) $13,761 $7,410 $6,026 $12,773 $7,512 $10,282 $10,742 $5,518 $18,153 — Loss on debt extinguishment $534 — — — — — — — — — $534 Depreciation and amortization $1,405 $22,972 $21,993 $8,094 $11,533 $10,465 $13,374 $16,403 $8,041 $20,293 $134,573 EBITDA ($72,866) $66,491 $78,518 ($8,813) $64,145 ($3,649) $29,574 $39,981 $24,597 $41,372 $259,350 Other (income) expense ($58) ($217) $1,043 $6 $2 $112 $2,417 $766 ($20) ($1,730) $2,321 Non-controlling shareholder compensation — $1,511 $2,511 $1,479 $1,179 $2,142 $971 $1,321 $40 $844 $11,998 Impairment expense — — — $20,552 — — — — — — $20,552 Acquisition expenses — — — — — $5,680 $222 $216 — — $6,118 Integration services fee — — — — $1,688 $2,375 — — — — $4,063 Other — — — $250 — — — — — $1,330 $1,580 Adjusted EBITDA ($72,924) $67,785 $82,072 $13,474 $67,014 $6,660 $33,184 $42,284 $24,617 $41,816 $305,982
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compassdiversified.com ($000's) 12/31/2020 12/31/2021 12/31/2022 12/31/2023 9/30/2024 Net Cash Provided by (Used in) Operating Activities $148,625 $134,051 -$28,291 $78,080 -$77,610 Changes in Operating Assets and Liabilities (working capital) (3,349) 80,990 252,377 153,310 253,902 Less: Capital Expenditures (30,764) (39,880) (64,274) (55,776) (34,507) Preferred Distributions (23,678) (24,181) (24,181) (24,181) (18,941) Common Distributions (89,856) (93,834) * (70,845) (71,967) (56,577) Retained cash before working capital changes $978 $57,146 $64,786 $79,466 $66,267 *Excludes special distribution of $57.1M Appendix: Retained Cash Calculation
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compassdiversified.com Appendix Adjusted EBITDA (Historical) As reported in the annual (10K) report filed with the SEC in the year indicated.
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compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2016 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
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compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2017 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
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compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2018 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
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compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2019 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
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compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2020 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
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compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2021 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
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compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2022 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
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compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2023 *As reported in the annual (10K) report filed with the SEC in the year indicated. Adjusted EBITDA Year ended December 31, 2023 (in thousands) Corporate 5.11 BOA Ergo Lugano PrimaLoft Velocity Outdoor Altor Solutions Arnold Sterno Consolidated Net income (loss) from continuing operations $ (51,761) $ 21,690 $ 16,496 $ (2,601) $ 52,315 $ (69,883) $ (40,045) $ 16,504 $ 10,434 $ 8,115 $ (38,736) Adjusted for: Provision (benefit) for income taxes 301 4,994 2,863 (1,309) 14,589 (5,672) (5,616) 5,890 4,185 1,106 21,331 Interest expense, net 104,855 (8) (18) — 4 (11) 352 — 5 — 105,179 Intercompany interest (134,835) 20,244 7,580 8,595 32,837 18,123 13,510 10,486 6,806 16,654 — Loss on debt extinguishment — — — — — — — — — — — Depreciation and amortization 1,399 26,009 22,932 8,110 9,229 21,478 13,282 16,741 8,441 19,959 147,580 EBITDA (80,041) 72,929 49,853 12,795 108,974 (35,965) (18,517) 49,621 29,871 45,834 235,354 Other (income) expense (128) (515) 98 36 (80) 62 (1,210) 1,440 (5) (1,441) (1,743) Non-controlling shareholder compensation — 1,191 3,019 1,214 1,474 980 914 986 27 860 10,665 Impairment expense — — — — — 57,810 31,590 — — — 89,400 Acquisition expenses — — — 321 — — — — — — 321 Integration services fee — — — — — 2,375 — — — — 2,375 Other — — 3,072 — — — — — — 1,434 4,506 Adjusted EBITDA $ (80,169) $ 73,605 $ 56,042 $ 14,366 $ 110,368 $ 25,262 $ 12,777 $ 52,047 $ 29,893 $ 46,687 $ 340,878
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compassdiversified.com Thank you. Phone: Email: +1 (949) 333–5033 IRinquiry@compassdiversified.com compassdiversified.com