Good afternoon, welcome to Compass Diversified's Fiscal 2025 Fourth Quarter Conference Call. Today's call is being recorded. All participants are in a listening mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. At this time, I would like to turn the call over to Ben Tapper, Vice President of Investor Relations. Ben, please go ahead. Thank you. Welcome to Compass Diversified's Fourth Quarter 2025 Conference Call. Representing the company today are Elias Sabo, CODI's Chief Executive Officer, and Stephen Keller, CODI's Chief Financial Officer. Before we begin, I'd like to remind everyone that during the course of this call, CODI will make certain forward-looking statements, including discussions of forecasts and targets, future business plans, future performance of CODI and its subsidiaries, and other forward-looking statements regarding CODI and its financial results. Words such as believes, expects, anticipates, plans, projects, should, and future or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to many risks and uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements. Some of these factors are enumerated in the risk factor discussion in the Form 10-K as filed with the SEC as well as in other SEC filings and press releases. Except as required by law, CODI undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise. During the call, we will refer to certain non-GAAP financial measures. The Q4 and full year 2025 press release, including the financial tables and non-GAAP financial measure reconciliations for the adjusted EBITDA and subsidiary adjusted EBITDA are available at the investor relations section on the company's website at www.compassdiversified.com. Please note that references to EBITDA in the following discussion refer to adjusted EBITDA as reconciled to net income or loss from continuing operations in CODI's press release and SEC filings. The company does not provide a reconciliation of its full year expected 2026 subsidiary adjusted EBITDA because certain significant reconciling information is not available without unreasonable efforts. Throughout this call, we will refer to Compass Diversified as CODI or the company. At this time, I would like to turn the call over to Elias Sabo. Elias. Thank you, Ben. Good afternoon to everyone. 2025 was painful. It was humbling. It also proved that CODI is resilient. Our subsidiaries are strong, our people deliver, and the core of this model works. That's the foundation we're building from. We've discussed last year's events in detail on prior calls. As we highlighted in our third quarter update, conditions are improving and operations are normalizing. Against that backdrop, today's call will center on the performance of the businesses we currently control and our outlook for 2026. Excluding Lugano, 2025 saw us generate mid-single-digit revenue growth with operating leverage that further accelerated subsidiary adjusted EBITDA growth to high single digits. Each of our consumer businesses grew adjusted EBITDA despite a consumer environment that presented real headwinds throughout the year. On the industrial side, in 2025, we saw modest growth in adjusted EBITDA. Acquisition-driven performance at Altor was offset by short-term challenges at Arnold as they navigated sustained periods of near complete rare earth export restrictions out of China. Our outlook for 2026 is solid as we expect to generate subsidiary adjusted EBITDA growth in the mid-single digits. This reflects our belief that our diversified collection of businesses are positioned to grow across a variety of economic conditions. In 2026, we are focused on executing against our strategic plan and working to regain market confidence. Our path forward is clear. Our first priority is reducing our leverage ratio. We're addressing this on two fronts: drive organic growth with strong cash conversion and executing attractive divestitures where proceeds and timing support de-leveraging and shareholder value creation. Medium-term, we're focused on closing what we believe is a meaningful gap between our share price and our intrinsic value. That view will guide us as we deploy capital to the highest risk-adjusted returns. If the current environment and conditions continue, that could include share repurchases. Longer term, when capital markets allow, we're committed to reigniting the CODI model. That means combining selective acquisitions with strong operations to generate durable shareholder value. Everything starts with subsidiary performance. While the macroeconomic environment remains uncertain, our subsidiary teams are focused on what they can control, and they are delivering. Let me walk you through a few examples. For anyone who watched the 2026 Winter Games, athletes equipped with the BOA Fit Systems tallied more than 100 medals in Nordic skiing, snowboarding, and freestyle skiing. That's up from 10 podium winners just four years ago, and we're confident BOA's presence will be even greater four years from now. The Honey Pot had a great year establishing a leading position in better for you feminine care. Our consumer metrics like Net Promoter Score, The Honey Pot is outpacing both conventional and better for you competition, with significant additional runway to grow in brand awareness. The Honey Pot's strong product portfolio is driving increased consumer adoption and distribution across many key retailers. The team has successfully taken the brand beyond its origins in washes and wipes into the much larger period care category, with a significant opportunity to grow market share over time. Finally, Arnold ended the year with a backlog more than 40% higher than the prior year-end, and is well-positioned to capitalize on favorable trends across aerospace and defense, among other end markets. Companies are desperate to find reliable, geopolitically secure sources of rare earth magnets, and Arnold is exactly that. Quoting activity is at an all-time high. It's also important to note that China has recently reinstated export restrictions ahead of bilateral talks with the U.S. While this may create some near-term disruption, it only further demonstrates Arnold's long-term value as a reliable, geopolitically secure supplier. Arnold continues to make progress ramping its Thailand facility, with initial production already underway, bringing online valuable additional capacity and redundancy. As we have discussed, although our business model is to acquire and grow, given our current leverage position, we believe divesting one or more of our subsidiary businesses at attractive valuations is the most efficient path to meaningfully de-leveraging and restoring financial flexibility. We believe this positions us to drive long-term value creation and ultimately help close our discount to intrinsic value. There are four things I hope you take away from our remarks today. First, we have initiated multiple sale processes and are actively engaged with qualified counterparties and advisors to drive this forward. Second, on timing, processes for mid-market businesses typically take about six months end to end. This does not necessarily mean six months from today. While no transaction is ever certain, we're already well into multiple processes. Third, our priority is to drive shareholder value by both de-leveraging and maintaining a sharp operating focus across our businesses. Fourth, we are moving with urgency to maximize value and keep these processes moving fast, focused, and disciplined. These goals are not in conflict. It is our job to balance them. The bottom line is simple: we are moving decisively. We are running disciplined processes, optimizing for the right outcome, and will provide updates to you when we have something definitive to report. For the past three months or more, we have candidly shared our plans to reduce our leverage. However, the ultimate objective has always been to maximize long-term shareholder value. Our belief is that our shares are trading at a significant and elevated discount to intrinsic value, and we are committed to closing the gap. We believe deleveraging and, when appropriate, returning capital to shareholders through share buybacks can help close the gap. However, if it does not, we will continue to evaluate additional value-maximizing alternatives for our shareholders, strengthening our balance sheet, improving performance, and making the hard choices required to put CODI in the strongest position going forward. It won't happen overnight, but we are operating with urgency and discipline because that's what our situation demands. Our incentives are aligned with shareholders. Everything we do is guided by one objective: maximizing long-term shareholder value. With that, I'll turn the call over to Stephen to walk through the financial results. Thanks, Elias. Before I begin, I would like to remind everyone that our reported GAAP results include Lugano through November 16, 2025, the date that Lugano entered Chapter 11 bankruptcy. With that context, I'll first provide an overview of GAAP results and then focus on non-GAAP results excluding Lugano, as we believe this is a more accurate reflection of our business going forward. For the fourth quarter, GAAP net revenue was $468.6 million, down 5.1% year-over-year. This decrease was primarily due to the impact of Lugano and the deconsolidation. GAAP net loss for the quarter was $78.8 million, including more than $25 million in one-time Lugano investigation restatement costs. For the full year, net revenues were $1.9 billion, up 4.8%. GAAP net loss for the year was $293.7 million, which includes approximately $60 million in investigation and restatement-related expenses. I'll now provide our full-year non-GAAP results excluding Lugano. Net sales were $1.8 billion, up 3.9%. Our branded consumer net sales increased 3.7%, while industrial net sales increased 4.1% as acquisition-related growth at Altor was offset by global trade disruption at Arnold. Excluding Lugano, subsidiary adjusted EBITDA was $345.8 million, an increase of 8.8%, with consumer up 13.8% and industrial up 1.1%. The slower growth in Adjusted EBITDA in industrial was primarily due to Arnold and the geopolitical headwinds Elias described previously. Public company costs and corporate management fees for the year were $91.1 million, which reflects two non-recurring items. The investment and restatement costs as well as a $36.2 million credit in the fourth quarter related to excess management fees previously paid to CGM in connection with Lugano. Going forward, we are maintaining a rigorous focus on public company costs and cash fees consistent with our focus on deleveraging and long-term value creation. In 2025, we invested $44.3 million in capital expenditures, which reflects a $12 million re-reduction from the prior year. We continue to invest in our current subsidiaries to support their growth with the re-reduction in CapEx driven primarily by the absence of Lugano-related investments. We ended the year with $68 million in cash and cash equivalents and approximately $96 million available on our revolver. Our leverage for debt covenant purposes at year-end was slightly higher than anticipated at approximately 5.47 times. Reducing leverage remains our top financial priority, and we believe the actions already underway position us to make meaningful progress as we move through 2026. In January, we announced a sale-leaseback for some of our Altor facilities, freeing up more than $11 million in cash that we were able to immediately use to pay down senior debt. Before turning to our outlook, I want to reiterate our commitment to strong governance and oversight. The challenges of 2025 have only reinforced that commitment, and we have and will continue to take concrete steps to further enhance internal controls and transparency across the organization. I'll now provide an update on our 2026 outlook. For the full year, we expect subsidiary adjusted EBITDA of $345 million-$395 million. This includes consumer Adjusted EBITDA of between $220 million to $260 million and industrial adjusted EBITDA of $125 million to $135 million. You'll notice this is a wider range than in pre-prior years, which reflects the inherent uncertainty in the macro environment. At the midpoint, we expect solid growth in Adjusted EBITDA across both sectors. For modeling purposes, our 2026 outlook assumes CapEx of between $30 million- $40 million. CODI expects to pay cash management fees of between $25 million- $30 million in 2026. As has been our practice, our outlook does not include the impact of any potential acquisitions or divestitures. It also does not include any significant impact, positive or negative, to the evolving trade environment. With that, I'll hand it back to Elias for closing remarks. Thanks, Stephen. I want to be clear about where we stand. 2025 was the hardest year in CODI's history. It was disappointing and painful for all of our stakeholders. It is important to recognize that our remaining subsidiaries delivered in an uncertain environment. They stayed focused, they executed, and they proved this model works. As we move into 2026, that is what we are building on. Our path is clear. Operational execution with strong cash conversion, leverage reduction organically and inorganically, and value-maximizing capital allocation. We believe we have a proven business model and well-positioned subsidiaries on which to apply it. We operate with a permanent capital mindset to acquire great businesses, partner with management, invest to grow category leaders over the long term. For shareholders, that means diversified exposure to high-quality middle-market companies supported by engaged ownership and strategic capabilities. With 2025 behind us, we are focused on delivering on the potential across our collection of subsidiaries. As always, we appreciate your support. Stephen and I will now take your questions. Operator, please open the lines. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Larry Solow with CJS Securities. Your line is now open. Great. Thanks. Good afternoon, everybody. Elias, I usually ask you the question on just operations and whatnot, but it feels like there's not much change. You know, you kind of gave a preliminary outlook for 2026 on your last call, which was only a few weeks ago. I'm gonna just switch gears and just ask just on the, on the sale processes that are ongoing. It sounds like maybe we're within, you know, 90 days of hearing something at least or somewhere around there, you know, maybe less than the six months. Just curious, you know, are a lot of your, you know, the processes themselves, how would you characterize the interest? Is it different, you know, across your assets? Just kind of, you know, how you feel so far it's progressing. Yeah. Good afternoon, Larry, and thank you for the question. Look, you know, we don't give a lot of detail about any processes, and we historically have not, as you know. It is. You know, these processes are inherently uncertain, just by their very nature. We try to, you know, be very, I would say, reserved in terms of what we talk about with, you know, any of these processes. We've been saying for a while that, you know, it is our intent to divest, you know, at least a subsidiary, maybe more, and that deleveraging is the most important thing that we have on our agenda right now, and we are very much focused on that. I just wanna make one point very clear. We were not restated until early January, and we were not... You know, it was not advisable for us to have information on our companies in the market prior to having our earnings restated. As a result of that, one has to, you know, just understand that although we could do a lot of pre-work prior to getting our numbers restated, the work really kind of initiates upon the restatement. You know, I think we're working, as we said in our script, as diligently as possible. We understand expediency is important, but we will not do so at the expense of deterioration in value in our assets. Now, with respect to interest in companies that we are, you know, currently engaging, I would say, you know, it's really strong. We own great companies, and these companies are highly marketable. When they come to market, there are multiple bidders. Typically, you know, you get both a combination of financial and strategic buyers that look at these assets. We are, you know, finding that to be the case with the assets that we currently are, you know, considering for divestiture. Fair enough. I appreciate that. Just as a couple on the outlook, and then I'll move on. Just, looks like most of the growth is on the branded side, consumer side. I know industrial is usually a slower group of businesses. I guess this year, Arnold, you mentioned there'll still be some geopolitical risks, so we'll probably get some rebound from last year, but maybe not a full recovery. Maybe you could talk a little bit more about the outlook there. Then just on Altor, I know the quarter was a little bit weak. It's, and I know that, you know, the vaccine sales have been down a lot, with somewhat of a little bit of a change, you know, on the government recommendations and all. If you could maybe just walk us through, you know, just a little bit more on the industrial businesses. Thanks. Yeah. I would say, Larry, you know, we did encounter weakness. With respect to Arnold, it has been very difficult to manage. I'm gonna say, step back and say, broadly, it's very difficult to manage businesses today with the tariff and geopolitical uncertainty that has come from all of this tariff chaos. I think that's probably the only word that you can use. You know, we have tariffs, then tariffs, you know, are suspended by or go away by the Supreme Court, the new tariffs come back. It creates a lot of, you know, distortions in numbers when you're managing against that backdrop. With respect to Arnold in particular, you know, the actions of China against these tariffs have been to, you know, create, in some cases, complete export controls, which is what we suffered most of 2025. At the end of the year, we started to see that relieve. Now, as we said in our script, we've seen that emerge back again, where a majority of our export licenses have been canceled, as China gets ready for bilateral, you know, discussions with the U.S. Clearly, this is a leverage point, and Arnold unfortunately gets, you know, kind of It's the football that gets thrown around back and forth. The good news about that is we are about to lap, you know, in a few months, where export controls were put in place. The pain that is, you know, suffered from these export controls will principally be early in the year, then we lap that is no longer going to create a headwind. As Stephen and I, you know, both commented in our script in different sections, Arnold's quoting activity is at an all-time high. Their backlog is up 40% from where it was a year ago. Our Thailand facility, which is gonna add capacity that we were currently producing in China, is starting to produce, and we think that is going to materially enhance our supply capabilities and our supply chain. You know, yes, there is a couple of months more potentially of noise that is coming out, and it will make Arnold maybe not look quite as strong in growth in 2026 over 2025. As we emerge through the year, I think the kind of growth rate Arnold is capable of demonstrating will start to become in sight when we get into the back half of the year. You know, frankly, from the level of quoting activity and the level of orders that we're getting, to the extent we have supply, we feel that, you know, 2026 could be a very good year and could develop out really strong. I'll let Stephen comment on Altor. Yeah. Altor is actually. We're a little bit more cautious in our outlook for Altor. We still think it's long-term position very well for in the cold chain. Obviously, some of the. Current administration's kind of war on vaccines has not necessarily been supportive of that business in the fourth quarter. We're still working through that as we go into next year. We're a little bit more cautious on Altor for 2026. In addition to the cold chain and the vaccines, we also have the tariffs have caused a slow down in kind of appliance purchases. Again, we think the business will is well-positioned for the long term until there's a little bit more stability in the economic outlook, specifically around tariffs and then also on vaccines. I think that's really. We're gonna have to get through that to really see significant growth. We will see it stabilize in 2026. Overall, I think the industrial businesses collectively, when you expect Sterno and Altor to be relatively modest, and then there is significant upside opportunity in Arnold, it could be a really good year. We do have to work through the trade situation. Gotcha. Stephen, has your free cash flow assumption for this year changed at all? I know you kind of gave a preliminary number last quarter, but... No. You still look- Not at all. We're very, we're still saying that between $1,500 million of free cash flow makes sense. I would say Gotcha. Probably, you know, there's always a little bit of upside potential related to timing of recoveries related to Lugano, or both directly related to Lugano or related to, you know, D&O insurance claims, et cetera. Operating, no changes, potential upside from the Lugano situation. Great. Thanks. Thanks for all the color, guys. I appreciate it. Thank you, Larry. Our next question comes from the line of Cris Kennedy with William Blair. Your line is now open. Yeah, good afternoon. Thanks for taking the question. Just wanted to talk a little bit about the branded consumer business this year, given the wider than normal range. Like what, I don't know. Talk a little bit about that wider range. Is it mostly tariff related or just the general economy? Just a little bit more color would be helpful. Chris, I think it's honestly, it's both and they're related. The tariff uncertainty is just creating, I guess uncertainty would be the proper word. It is highly fluid right now, as you know, and because of that, you know, we just are anticipating slightly greater volatility. If there is better clarity on where tariffs are and the state of the economy, then I think as we progress through the year, we'll be able to narrow that down quite a bit. Given, you know, the real chaos that is kind of being created out of the tariffs in the last week and a half has been very chaotic with what has happened. We just felt it was better to widen our range right now given that. I will make one comment also, which is the tariffs have had a negative impact on consumer spending. We've seen that. We saw that in the retail sales data that came out flat during the holiday season. Obviously, units were down within that and pricing was up. I think we're seeing the impact of tariffs and the tax that they create on consumption for consumer goods having an impact. We want to be, you know, responsible as we guide for next year and have an understanding that, you know, these tariffs could have big upside if they get pulled off completely and, you know, 150 days from now, we go back to zero. It could have, you know, kind of issues that we've already been seeing, which is reduced consumer activity. We saw that in the fourth quarter. That is supporting a wider range right now. You know, we don't know things like, are there going to be refunds for the tariffs that the Supreme Court struck down? There's just a lot of uncertainties that are out there. No refunds have been built into the guidance, by the way. Got it. Understood. Thanks for that. Then just, we noticed that leadership change at PrimaLoft. If you could just kinda give a state of the union on that subsidiary would be great. Yeah, you know, we acquired PrimaLoft a couple of years ago. You know, it's been kind of flattish along from when we acquired it. There was a lot of inventory that had to work through the channel. The company is, you know, well-positioned right now. We had a opportunity to bring in a incredibly strong leader who had previously worked at one of our other subsidiaries at BOA in a very, very senior capacity. At the same time, BOA's CEO, Shawn Neville, is a board member at PrimaLoft, and Shawn is a very skilled executive and one of the best executives actually that I've ever worked with. Having his, you know, talents at PrimaLoft from a board level is very helpful in that business. The ability to bring in Eric Weis, who is a true, you know, superstar, we think is, you know, creates an opportunity for PrimaLoft to really accelerate its growth and market penetration. There was nothing, you know, kind of wrong with PrimaLoft or with the leadership, but we felt this was an opportunity to bring in somebody who we had worked with before, who we know is an extraordinary talent. When you get those kind of opportunities, we think it's value-creating within our entire firm. Great. Thanks for taking the questions. Our next question comes from the line of Timothy D'Agostino with equity research analyst. Your line is now open. Tim. Yeah. Hi. Thank you. Good afternoon. I guess, you know, a lot of subsidiaries have been touched on. I guess, could you kind of just give a little bit of a pulse check over at 5.11? You might have spoken to it a little bit earlier. You know, it seems that the business just kind of keeps performing. It'd be great to kind of just hear a little more color on what's going over there. Thank you. I mean, 5.11, you know, there's two pieces of the business. One is the professional side. That side of the business is a good, steady growth business, you know, mostly driven by government and municipality spend in the U.S. and then internationally by governments. That is a very good solid core of the business, which is very consistent and kinda grows year in and year out. The other side is the consumer business, which has been a big emphasis of growth under CODI's ownership, which is now coming up on a decade. You know, we started with very little in consumer. I think there were four stores when we acquired the company back in 2016, and now there's well over 100. That has been a huge focus for us. I would say on the consumer side, you know, one of the things that has occurred here, this consumer for 5.11 is very price sensitive. Inflation has been very, you know, kinda difficult for that, you know, kind of mid to mid, you know, middle upper consumer, which is where 5.11 generally sits. As we know, we had a bout of inflation in 2022 and 2023 and 2024 that caused real wages to go down for that cohort of buyer. Although 5.11 performed well through that, pushed through prices, we really found that we had gotten to sort of the top of the price level that our customers could afford. Unfortunately, when tariffs came in, apparel has been one of the areas that has been hit the hardest. 5.11 experienced that as well. We found that elasticity of demand was quite high as we tried to push through pricing. Some of that we had to roll back. That is gross margin dilutive, clearly, to be able to do that. Generally, the apparel category is having a lot of difficulty as this inflation on consumers' goods has caused consumers to have to make more choices today. Apparel has been one of the choices that just broadly, they have not made or they've made in reduced, you know, consumption. 5.11 is experiencing that. The professional side is doing well. The consumer side has some headwinds given the prices that have been happening. Now, on the flip side, 5.11 has probably been the most advanced company in implementing AI initiatives and getting productivity. We've been able to generate positive operating earnings growth in this company because we've offset some of that gross margin degradation through SG&A cuts enabled by AI productivity, and we would anticipate continuing to be able to do that to drive the business until we get to a better and more healthy consumer. Okay. Great. Thank you so much for taking the question. Thank you. As a reminder, to ask a question at this time, please press star one one on your touchtone telephone. Our next question comes from the line of Robert Dodd with Raymond James. Your line is now open. Good afternoon. Thanks for the question. As you take steps towards deleveraging, do you have any sort of leverage target that you're looking to achieve shorter term by the end of 2026 versus longer term? What's the probability of achieving those leverage targets organically rather than from asset sales? Yeah. Thanks for your question. Really appreciate it. First of all, I want to be clear, long term, we're targeting 3 to 3.5 times. That's the right area that we would like to be at. Probably the way we kind of think of it through the end of 2026 is that we would be around four times. To get to four times, we would definitely need to have some sort of deleveraging event through a sale transaction. Outside of that, organically, we should be down, you know, well, you know, around four. We would be probably around 4.5 is probably where you would be without a transaction. Also always somewhat dependent on the timing of recoveries from Lugano. Key things here. The sale-leaseback allowed us to pay back $11 million of debt. We're gonna generate, you know, somewhere between $50 million-$100 million of free cash flow that we'll use to pay down debt. We will also have, you know, you know, as we said, mid-single digit growth in EBITDA. All those organically get you down. You have the recoveries from Lugano, and then you have deleveraging events. All that together, again, puts us around that 4 times leverage. Got it. Thanks for the clarity. A quick follow-up. As you begin these sale processes, what sort of M&A market are you seeing and anything to flag there? Yeah. You know, I'd say the M&A market. It's not, you know, hot by any means, but it's also not dead. There's been, you know, little activity in the M&A markets over the last couple of years, and there's a lot of capital that remains available to acquire good assets. I would say it is a, you know, maybe lukewarm kind of market. It really depends on the type of asset that you have. Good assets always find, you know, good opportunities to be sold, and they create, you know, enough interest, from multiple bidding parties to, you know, keep the integrity in the process and the price, you know, at a reasonable value. I would say what is supportive to asset valuations today are rates are coming down, and, you know, capital typically starts flowing, you know, as rates start coming down from lending end parties, and that is very supportive, whether it's to financial buyers or just generally to strategics or anybody else that's in the market. On the sort of flip side to that, some of the policy uncertainty that we're seeing with around tariffs, some of the geopolitical risks that are occurring are causing buyers to be more concerned with the economy and what the future of the economy looks like, especially when you're outside of, like, AI and things that are growing that. As you know, we're in consumer and industrial, you know, those are tied to economic activity. I think it's a little bit of countervailing forces, where there's some worry about economic weakness, but you're getting a little bit of strength in, you know, kind of reduced rates and, you know, more debt capacity, and it kind of creates a, you know, I would call it moderate conditions for the M&A markets. Got it. Thanks so much. Thank you. I'm currently showing no further questions at this time. I'd now like to turn the call back over to Elias Sabo for closing remarks. Thank you all for your time today, and we look forward to talking to you on our first quarter conference call. This concludes today's conference. Thank you for your participation. You may now disconnect.