Compass Diversified Holdings

This Quarterly Report on Form 10-Q (this “Form 10-Q”), contains both historical and forward-looking statements. We may, in some cases, use words such as "project," "predict," "believe," "anticipate," "plan," "expect," "estimate," "intend," "should," "would," "could," "potentially," "may," or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. All statements other than statements of historical or current fact are “forward-looking statements” for purposes of federal and state securities laws. Forward-looking statements include, among other things, (i) statements as to our future performance or liquidity, such as expectations for our results of operation, net income, Adjusted EBITDA, and Adjusted Earnings and ability to make quarterly distributions, (ii) our plans, strategies and objectives for future operations, including our business outlook and planned capital expenditures and (iii) our plans to regain covenant compliance under our 2022 credit facility. Forward-looking statements in this Form 10-Q are subject to a number of risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the SEC, including, but not limited to, those described under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in both this Form 10-Q and our Amendment No. 1 to the Annual Report on Form 10-K/A for the year ended December 31, 2024 filed with the United States Securities and Exchange Commission (“SEC”) on December 8, 2025 as such factors may be updated from time to time in our filings with the SEC. Many of these risks and uncertainties are beyond our control. Important factors that could cause our actual results, performance and achievements to differ materially from those estimates or projections contained in our forward-looking statements include, among other things:

•litigation relating to our representations regarding our financial statements and litigation, enforcement actions or investigations relating to our internal controls, restatement reviews, matters related to the Lugano Investigation (as defined herein) and additional liabilities we are currently unaware of;

•the likelihood that the control deficiencies identified or that may be identified in the future will result in additional material weaknesses in our internal control over financial reporting;

•our lenders’ ability to accelerate our outstanding indebtedness and the uncertainty of our ability to secure amendments, waivers, or forbearance, which could jeopardize our ability to continue as a going concern;

•the possibility that our intercompany loan to Lugano (as defined herein) may be subject to loss;

•our and our Manager’s ability to retain or replace qualified employees of our subsidiaries and Manager;

•difficulties and delays in identifying, integrating, and managing acquisitions or an inability to fully realize cost savings and other benefits related thereto;

•our ability to finance future acquisitions on acceptable terms;

•our Board’s ability to cause, in its sole discretion, the Trust to be converted into a corporation;

•our Board’s ability to reduce or eliminate distributions to our shareholders;

•our reliance on receipts from our subsidiaries to make distributions to our shareholders;

•our Board’s ability to change the terms of the Company’s shares in its sole discretion;

•provisions in our governing documents and the governing documents of the Trust which may limit a third party’s ability to acquire control of the Company and Trust;

•the potential for conflicts of interest to arise between the Company and the boards of directors of its respective businesses;

•our ability to service our debt obligations;

•our indebtedness may limit our ability to obtain financing in the future, increase the cost of future borrowings, limit our ability to use operating cash, and increase our vulnerability to adverse economic conditions;

•interest rate fluctuations;

•the potential for conflicts of interest in acquisition opportunities;

•the possibility that we may be deemed to be an investment company under the Investment Company Act of 1940, as amended, if we cease to control and operate our businesses in the future;

•the dependence of some of our businesses on a limited number of customers for a significant percentage of revenue;

•the lack of long-term customer contracts;

•changes to tariffs and import/export regulations;

•the impact of the Trust’s tax reclassification;

•future changes to tax laws and the potential for the Trust to be taxed at rates higher than expected or for the Trust to fail to realize the anticipated benefits of its tax election;

•the discretionary and non-cumulative nature of distributions on Series A Preferred Shares;

•the subordination of our Series A, Series B, and Series C Preferred Shares to our existing and future indebtedness;

•the potential for members of management to allocate their time to the operations of other businesses;

•the potential for our Manager, its affiliates, and members of the Company’s management team to engage in activities that compete with us or our businesses;

•the wide latitude that the Manager possesses in determining whether an acquisition or disposition opportunity does or does not meet the Company’s criteria;

•the difficulty in removing our Manager for poor performance;

•the ability of our Manager to resign on 180 days’ notice and the possibility that we may be unable to find a suitable replacement in a timely fashion;

•our requirement to pay our Manager the base management fee regardless of our performance;

•uncertainty with respect to determining the amount of the management fee that will be paid over time;

•uncertainty with respect to determining the amount of profit allocation that will be paid over time;

•payment of the management fee, fees under offsetting management services agreements, and profit allocation may significantly reduce the amount of earnings and cash available for shareholder distributions;

•the Manager’s influence and ability to increase its fees;

•the possibility that our management fees or profit allocation may induce our Manager to make suboptimal operations decisions;

•the obligation to pay management fees and profit allocation may cause the Company to liquidate assets or incur debt;

•potential material environmental liabilities arising from a subsidiary’s operations and the prior operations of predecessor companies;

•the potential for products liability and products safety claims against some of our businesses;

•cybersecurity-related risks, including system failures, data breaches, and the unauthorized access to and use of our and our customers’ confidential information;

•goodwill impairment;

•disruptions to our business, operations, and supply chains, including as a result of natural disasters, inclement weather, accidents, transportation delays, and other events;

•fluctuations in the cost and availability, and the possibility of shortages, of raw materials, components, or whole goods;

•our ability to protect and enforce our intellectual property rights;

•the legal and regulatory environment in which we and our subsidiaries operate, particularly with respect to environmental regulations, products safety regulations, and products liability;

•risks inherent in operating a global business, including political and economic volatility, differing or conflicting cross-jurisdictional requirements, and import/export restrictions; and

•the importance of maintaining the value and reputation of our branded consumer businesses.

Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. A description of the risks that could cause our actual results to differ appears under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in both this Form 10-Q and our 2024 Form 10-K/A.

In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this Form 10-Q may not occur. These forward-looking statements are made as of the date of this Form 10-Q. We undertake no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, whether as a result of new information, future events or otherwise, except as required by law.

EXPLANATORY NOTE

As previously reported, we were unable to timely file our Quarterly Report on Form 10-Q for the three months ended March 31, 2025 as a result of an investigation commenced in April 2025 by the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) into the financial, accounting, and inventory practices of our Lugano Holding Inc. ("Lugano") subsidiary (the investigation, the “Lugano Investigation”), as described in the Explanatory Note in Amendment No. 1 to our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2024 filed with the SEC on December 8, 2025 (the “2024 Form 10-K/A”). The Company delayed the filing of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (this “Form 10-Q”) until the completion of the Lugano Investigation and the restatement of the Company’s prior financial information as set forth in the 2024 Form 10-K/A.

Please refer to the 2024 Form 10-K/A and subsequent filings with the SEC for more information concerning the Lugano Investigation and its findings (see the “Explanatory Note” in the 2024 Form 10-K/A), certain events subsequent to the period ended March 31, 2025 relating to or resulting from the Lugano Investigation, our restatement of financial information as of December 31, 2024, 2023 and 2022 and for the fiscal years ended December 31, 2024, 2023, and 2022 as well as the interim periods in the fiscal years ended December 31, 2024, 2023, and 2022 (see Notes C and S to the consolidated financial statements of the Company included in Part II, Item 8. of the 2024 Form 10-K/A), and remediation actions taken and contemplated following the Lugano Investigation (see Part II, Item 9A of the 2024 Form 10-K/A).