Compass Diversified Holdings
For the period ended Jun 30, 2025. Filed Dec 29, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Dec 29, 2025
CODI$11.31-1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-12-18.
0001345126-25-000085
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-12-29.
0001345126-25-000092
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 210 previous paragraphs and 296 current paragraphs.
114 unchanged; 70 reworded; 97 added; 21 removed; 5 previous and 15 current paragraphs rearranged.
Tables are not compared: 39 previous and 67 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (97)
Current report
First Forbearance Agreement with Respect to Credit Agreement
Current report
On May 7, 2025 the LLC indicated that itthat it intended to delay the filing of its Quarterly Report on Form 10-Q for the first quarter of 2025 as a result of concerns about financing, accounting, and inventory practices at one of its subsidiaries, Lugano Holding, Inc. (“Lugano”), and irregularities identified in sales, cost of sales, inventory, and accounts receivable recorded by Lugano. The LLC also provided notice to the Administrative Agent advising of the existence of potential defaults and/or events of default in connection therewith (collectively, the “Lugano Events of Default”).
Current report
The Second Amendment provided that the Administrative Agent and the Lenders will refrain from exercising rights and remedies available to them with respect to the Lugano Events of Default until the earliest of: (a) 11:59 p.m. (Eastern Time) on July 25, 2025; (b) the occurrence of any event of default other than a Lugano Event of Default; (c) the breach by the LLC of any covenant or provision of the Second Amendment; (d) a declaration by any holders of the LLC’s 2029 Senior Unsecured Notes of any default or event of default under the Indenture dated as of March
Current report
23, 2021 between the LLC and U.S. Bank National Association, as Trustee; and (e) the declaration by the Trustee or any holder of the 2032 Senior Unsecured Notes of any default or event of default under the Indenture dated as of November 27, 2021 between the Borrower and U.S. Bank National Association, as Trustee (the “First Forbearance Period”).
Current report
During the First Forbearance Period, the Lenders under the Credit Agreement agreed to honor requests for credit extensions from the LLC for revolving loans composed of term SOFR loans with an applicable rate of 2.50% per annum and an interest period of one month; provided, however, that such credit extensions were not to cause the Lenders’ revolving credit exposures (inclusive of letters of credit obligations) to exceed $40 million. Lenders representing at least 50% of the total credit exposure of all Lenders under the Credit Agreement were able, in their discretion, to approve additional revolving borrowings by the LLC in an amount not to exceed an aggregate of $10 million. The funds provided were able to be used by the LLC for working capital, capital expenditures, general corporate purposes, and any other purpose of the LLC not otherwise prohibited under the Credit Agreement.
Current report
In addition to the forbearance of the lenders described above, the First Forbearance Agreement also amended the Credit Agreement to, among other modifications: (i) reduce the aggregate borrowing amount available for revolving commitments to $100 million; (ii) limit the management fees that may be paid by the LLC to Compass Group Management LLC (the "Manager") to no more than $10.5 million per fiscal quarter (with the amount of such management fees that cannot be paid due to this limitation being available to offset any potential future reduction in management fees as a result of any adjustments for deemed overpayments); (iii) limit the management fees that may be paid by the LLC’s subsidiaries to the Manager to no more than $2.0 million per fiscal quarter; (iv) restrict investments by the LLC into Lugano to no more than $5 million in the aggregate; (v) impose additional reporting requirements on the LLC; (vi) prohibit certain acquisitions and dispositions; and (vii) require that cash-on hand in excess of $10 million as of the last business day of any week be paid by the LLC to the Administrative Agent, for the account of the lenders, which payments would be applied to the outstanding revolving loans owing by the LLC and (ix) terminate the commitment of the Lenders to advance Incremental Delayed Draw Term Loans. On May 22, 2025, the Manager delivered to the Company a waiver agreeing to the management fee limitations described above.
Current report
NYSE Notice of Failure to Satisfy a Continued Listing Rule
Current report
On May 20, 2025, the Company received a notice from the NYSE indicating that the Company was no longer in compliance with the timely filing criteria outlined in Section 802.01E of the NYSE-Listed Company Manual due to the Company’s failure to timely file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025. Under NYSE rules, the Company was provided with six months to cure its filing delinquencies by filing its delinquent filings with the SEC. Prior to the expiration of the six month cure period, the Company requested that NYSE exercise its discretionary authority to grant the Company additional time to file its delinquent filings. On November 18, 2025, NYSE extended the Company’s compliance period until January 20, 2026.
Current report
Suspension of Distribution on Common Shares
Current report
In light of the Lugano Investigation and related matters, on May 27, 2025, the Company announced that it would suspend the quarterly cash distribution historically paid to common shareholders in order to preserve cash and protect long-term value until such time as the Company’s board of directors deems it appropriate to resume such distributions.
Current report
Suspension of At-the-Market Offering Programs
Current report
As a result of the commencement of the Lugano Investigation and related events, during the fiscal quarter ending June 30, 2025 the Company determined it was unable to continue offering and selling shares under its common and preferred at-the-market equity offering programs.
Current report
Consolidated Results of Operations - Quarter-to-Date
Current report
Net revenues
Current report
Gross Profit
Current report
Under the Management Services Agreement ("MSA"), we pay CGM (i) a base management fee equal to (a) 2% of the Company’s adjusted net assets when the adjusted net assets are less than or equal to $3.5 billion (the “Initial Threshold Fee”), (b) the Initial Threshold Fee plus 1.25% of the amount of adjusted net assets exceeding $3.5 billion when the adjusted net assets are more than $3.5 billion but less than $10 billion, or (c) 1.5% of the adjusted net assets when the adjusted net assets are $10 billion or more and (ii) an incentive management fee equal to 0.25% of the amount of adjusted net assets exceeding $3.5 billion only when the adjusted net assets are more than $3.5 billion but less than $10 billion and only if the Company’s annualized internal rate of return on equity for the trailing three-years exceeds 12%. Any incentive management fee paid to the Manager may only be distributed by the Manager among the then-current Employees (as defined in the MSA) of the Manager. Such incentive management fee is subject to approval by the Compensation Committee of the Company’s board of directors. For the three months ended June 30, 2025, we incurred approximately $19.0 million in management fees as compared to $18.7 million in fees in the three months ended June 30, 2024.
Current report
In connection with the entry into the Forbearance Agreement and Second Amendment to Credit Agreement (the “First Forbearance Agreement”) on May 22, 2025, the Credit Agreement was modified to (i) limit the management fees that may be paid by the LLC to Compass Group Management LLC (the "Manager") to no more than $10.5 million per fiscal quarter (with the amount of such management fees that cannot be paid due to this limitation being available to offset any potential future reduction in management fees as a result of any adjustments for deemed overpayments) and (ii) limit the management fees that may be paid by the LLC’s subsidiaries to the Manager to no more than $2.0 million per fiscal quarter. For the quarter ended June 30, 2025, the total management fee incurred was $19.0 million, however, due to the restrictions imposed by the First Forbearance Agreement, the total amount paid to the Manager was $12.2 million.
Current report
Refer to "Note O - Related Party Transactions" in the "Notes to the Condensed Consolidated Financial Statements" for a description of the effect of the restatement on the Management Fees.
Current report
Amortization expense
Current report
As a result of the preliminary findings of the Lugano Investigation, the Company determined that a triggering event had occurred in the second quarter of 2025 and tested the long-lived assets of Lugano for impairment. The impairment testing indicated that the fair value of the assets was less than the carrying value and the Company recorded impairment expense to write the long-lived assets down to fair value. The write down of the long-lived assets resulted in the Company recording impairment expense of $29.5 million related to property, plant and equipment and $1.9 million related to right-of-use assets in the quarter ended June 30, 2025. The right-of-use asset related to a retail salon in Toronto, Canada which had not yet opened.
Current report
Interest expense, net
Current report
We recorded interest expense totaling $34.1 million for the three months ended June 30, 2025 compared to $29.6 million for the comparable period in 2024, an increase of $4.5 million. In January 2025, we amended our credit facility to provide for an additional advance of the term loan in the aggregate amount of $200 million on the date of the amendment. The proceeds from the $200 million term loan advance were used to repay amounts outstanding under our revolving credit facility, and the excess amount after repaying the revolver was used for working capital needs at our subsidiaries and general corporate purposes. The increase in the term loan led to a slight increase in the amount of average debt outstanding during the second quarter of 2025 versus the comparable quarter in 2024, however, the effective interest rate decreased in 2025 as compared to 2024 resulting in a decrease in the interest expense paid for corporate debt quarter over quarter. The interest expense also reflects an increase of $6.9 million in interest expense related to financing arrangements at our Lugano business.
Current report
Loss on debt modification
Current report
During the second quarter of 2025, the Company entered into a Forbearance Agreement and Second Amendment to the Credit Agreement. The amendment to the 2022 Credit Agreement reduced the aggregate borrowing amount available for revolving commitments to $100 million from $600 million. As a result of the reduction in available revolving commitments, the Company recognized $2.8 million in loss on debt modification in the second quarter of 2025.
Current report
Loss on sale of Crosman
Current report
On April 30,2024, Velocity Outdoor sold Crosman Corporation ("Crosman"), its airgun product division. Velocity received net proceeds of approximately $58.5 million related to the sale of Crosman, which was used to repay amounts outstanding under the intercompany credit agreement. The Company recorded a loss on the sale of Crosman in the quarter ending June 30, 2024 of $24.6 million.
Current report
Other income (expense)
Current report
Provision for income taxes
Current report
Results of Operations - Operating Segments - Quarter-to-Date
Current report
Net sales for the three months ended June 30, 2025 were $131.4 million as compared to net sales of $123.2 million for the three months ended June 30, 2024, an increase of $8.2 million, or 6.7%. The increase was primarily driven by a $5.0 million increase in domestic wholesale sales, reflecting strong demand and improved inventory levels; a $3.6 million increase in direct-to-consumer sales, attributable to higher full-price sales of new products; and a $1.6 million increase in international sales, also driven by strong demand. These increases were partially offset by a decrease in direct-to-agency sales, primarily due to the timing of large contracts.
Current report
Segment operating income for the three months ended June 30, 2025 was $9.8 million, a decrease of $0.9 million when compared to segment operating income of $10.7 million for the same period in 2024. The decrease in segment operating income reflects higher net sales and gross margin dollars that were more than offset by increased selling, general and administrative expenses, primarily driven by non-recurring payroll costs associated with restructuring, higher performance-based bonuses, and increased marketing investments to support sales growth. Segment operating margin was 7.4% in the second quarter of 2025 and 8.7% in the second quarter of 2024.
Current report
Net sales for the three months ended June 30, 2025 were $48.4 million as compared to net sales of $54.2 million for the three months ended June 30, 2024, a decrease of $5.8 million, or 10.7%. The decrease was a result of reduced kids-based business in China, partially offset by continued growth in performance-based business in Snow Sports, Cycling, and Workwear.
Current report
Segment operating income for the three months ended June 30, 2025 was $14.0 million, a decrease of $2.4 million when compared to segment operating income of $16.5 million for the same period in 2024. The decrease in segment operating income was driven by lower sales, partially offset by improved product margins and reduced employee costs related to BOA’s bonus plan. Segment operating margin was 29.0% in the second quarter of 2025 and 30.4% in the second quarter of 2024. The decrease in operating margin in the current quarter was driven by fixed operating costs partially offset by improved gross profit margin.
Current report
Segment operating loss for the three months ended June 30, 2025 was $46.8 million, as compared to $18.1 million in the corresponding period in 2024. In the current quarter, Lugano recorded $31.5 million in impairment expense related to long-lived assets and a right-of-use asset, resulting in the higher segment operating loss in the current quarter.
Current report
Segment operating margin was (174.7)% in thesecond quarter of 2025 as compared to (150.5)% in thesecond quarter of 2024.
Current report
Net sales for the three months ended June 30, 2025 were $24.9 million, a decrease of $0.4 million as compared to net sales of $25.3 million for the three months ended June 30, 2024. The decrease in net sales in the current quarter versus the quarter ended June 30, 2024 is attributable to a pullback in orders from PrimaLoft's brand partners as they remain cautious due to the economic uncertainties from the evolving tariff policy in the United States.
Current report
Segment operating income for the three months ended June 30, 2025 was $4.9 million, a decrease of $0.6 million when compared to segment operating income of $5.5 million for the same period in 2024, driven by an increase in selling, general and administrative expense during the second quarter of 2025, with increases in employee compensation, rent and marketing costs versus the comparable quarter in the prior year. Selling, general and administrative expense as a percentage of net sales was 22.3% in the quarter ended June 30, 2025 as compared to 20.1% in the quarter ended June 30, 2024. Segment operating margin was 19.7% in the second quarter of 2025 as compared to 21.7% in the second quarter of 2024.
Current report
Segment operating income for the three months ended June 30, 2025 was $3.7 million, an increase of $6.2 million when compared to segment operating loss of $2.5 million for the same period in 2024. Segment operating income in the second quarter of 2024 included certain non-recurring expenses related to the acquisition of The Honey Pot Co. in January 2024, including $1.0 million of inventory step-up amortization expense and $0.9 million in integration service fess. The remainder of the increase in segment operating income is attributable to the increase in net sales, partially offset by higher investments in marketing and employee expense. Operating margin in thesecond quarter of 2025 was 11.3% as compared to (10.5)% in thesecond quarter of 2024.
Current report
Segment operating loss for the three months ended June 30, 2025 was $0.9 million compared to segment operating loss of $1.9 million for the same period in 2024. Segment operating margin was (6.0)% in the second quarter of 2025 as compared to (10.3)% in the second quarter 2024. Despite an improvement in gross margin percentage quarter over quarter attributable to the sale of the Crosman product line, the decrease in net sales led to a decrease in both gross profit and operating expense leverage, with gross profit of $5.0 million in the second quarter of 2025 as compared to $5.6 million in the second quarter of 2024, and selling, general and administrative expense as a percentage of net sales of 29.9% in the second quarter of 2025 as compared to 31.3% in the second quarter of 2024.
Current report
Segment operating income for the three months ended June 30, 2025 was approximately $0.2 million, a decrease of $5.1 million when compared to the same period in 2024. The decrease in segment operating income was driven by the sales shortfall, unfavorable product mix and executive transition costs. Segment operating margin was 0.5% in thesecond quarter of 2025 as compared to 12.3% in thesecond quarter of 2024.
Showing the first 40 of 97 passages. Open the source sections for the rest.
Removed paragraphs (21)
Previous report
Amendment of Credit Agreement
Previous report
The Incremental Term Loan, along with the existing term loan under the Credit Agreement, will require quarterly repayments of principal amounts ranging from $3.75 million to $11.25 million, commencing March 31, 2025, with a final payment of principal and interest due on July 12, 2027.
Previous report
Amendment of Management Services Agreement
Previous report
Consolidated Results of Operations (As Restated):
Previous report
Net revenues (as Restated)
Previous report
Gross Profit (as restated)
Previous report
Pursuant to the Management Services Agreement ("MSA"), we pay CGM a quarterly management fee equal to 0.5% (2.0% annually) of our consolidated adjusted net assets. We accrue for the management fee on a quarterly basis. Effective January 15, 2025, the LLC and CGM entered into the MSA amendment to, beginning with the first fiscal quarter for 2025, restructure the management fee under the MSA to consist of a base management fee and an incentive management fee. Pursuant to the MSA Amendment, the base management fee will be (i) 2% of the
Previous report
Company’s adjusted net assets when the adjusted net assets are less than or equal to $3.5 billion (the “Initial Threshold Fee”), (ii) the Initial Threshold Fee plus 1.25% of the amount of adjusted net assets exceeding $3.5 billion when the adjusted net assets are more than $3.5 billion but less than $10 billion, or (iii) 1.5% of the adjusted net assets when the adjusted net assets are $10 billion or more. The incentive management fee will be 0.25% of the amount of adjusted net assets exceeding $3.5 billion only when the adjusted net assets are more than $3.5 billion but less than $10 billion and only if the Company’s annualized internal rate of return on equity for the trailing three-years exceeds 12%. The MSA Amendment also eliminates the payment of integration services fee to the Manager for future acquisitions and excludes excess cash held by the Company and the Company’s subsidiaries, subject to certain exceptions, from the calculation of the adjusted net assets of the Company, along with certain other changes. For the three months ended March 31, 2025, we incurred approximately $18.9 million in management fees as compared to $17.9 million in fees in the three months ended March 31, 2024. The increase in management fees is primarily attributable to the increase in adjusted net assets during the prior year, which was partially offset by the effect of the amendments made to the MSA.
Previous report
Amortization expense (as restated)
Previous report
Interest expense (as restated)
Previous report
Other income (expense) (as restated)
Previous report
Income taxes (as restated)
Previous report
Results of Operations - Operating Segments
Previous report
Segment operating income for the three months ended March 31, 2025 was $13.7 million, an increase of $4.0 million when compared to segment operating income of $9.7 million for the same period in 2024. The increase in segment operating income was driven by higher sales, improved product margins and fixed manufacturing overhead leverage. This was partially offset by an increase in employee related costs. Segment operating margin was 27.9% in the first quarter of 2025 and 22.5% in the first quarter of 2024. The increase in operating margin in the current quarter was driven by both improved gross profit margin as well as operating expense leverage.
Previous report
Segment operating loss increased during the three months ended March 31, 2025 to $13.7 million, as compared to $12.4 million in the corresponding period in 2024. This increase was a result of higher selling general and administrative expense driven by increased headcount and employee related costs. Segment operating margin was (50.9)% in the first quarter of 2025 as compared to (114.6)% in the first quarter of 2024 due to the lower revenue base after the restatement that did not correlate to the higher selling, general and administrative spend.
Previous report
Altor Solutions
Previous report
Net sales for the three months ended March 31, 2025 were approximately $65.4 million, an increase of $0.5 million,or 0.8%, compared to net sales of $64.9 million inthe same period in 2024. The net sales variance reflects a slight increase in sales volume for wax, fragrance oil, and multi-use oils.
Previous report
As of the date of filing this Form 10-Q, the Company is not in compliance with certain financial and other covenants under its 2022 Credit Facility. These instances of noncompliance include (i) breaches of financial covenants under the 2022 Credit Facility in historical periods (including December 31, 2024), resulting from required retesting of such covenants in connection with the restatement of our consolidated financial statements for the fiscal years as of and ended December 31, 2022, 2023, and 2024 and the interim periods therein, (ii) and prior defaults and events of default resulting from the circumstances related to Lugano.
Previous report
The Company is currently operating under a forbearance agreement with its lenders under the 2022 Credit Facility as described in “Note Q – Subsequent Events” in the “Notes to Consolidated Financial Statements” in this Form 10-Q, while the Company negotiates an amendment to the 2022 Credit Facility to account for the deconsolidation of Lugano from the Company’s financial statements and Lugano’s entry into Chapter 11 proceedings (also as discussed in more detail in “Note Q – Subsequent Events” in the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q). The forbearance agreement is scheduled to expire on December 19, 2025. If an amendment to the 2022 Credit Facility is not executed on or before December 19, 2025, then beginning December 20, 2025 the lenders under the 2022 Credit Facility may elect to exercise the remedies available to them, including but not limited to declaring borrowings due and payable, discontinuing further lending commitments, imposing cash-management controls, and instructing customers to remit payments directly to the administrative agent.
Previous report
The following table reflects required and actual financial ratios as of March 31, 2025 included as part of the affirmative covenants in our 2022 Credit Facility.
Previous report
Integration Services Agreements
Reworded paragraphs (70)
Previous wording
This Item 2 contains forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, some of which are beyond our control. Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware or which we currently deem immaterial could also cause our actual results to differ, including those discussed in the section entitled "Forward-Looking Statements" included elsewhere in this Quarterly Report on Form 10-Q as well as those risk factors discussed in the section entitled "Risk Factors" in our Amendment No. 1 to the Company's Annual Report on Form 10-K (“Form 10-K/A”) for the fiscal year ended December 31, 2024 and in the section entitled "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q.
Current wording
This Item 2 contains forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, some of which are beyond our control. Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware or which we currently deem immaterial could also cause our actual results to differ, including those discussed in the section entitled "Forward-Looking Statements" included elsewhere in this Quarterly Report on Form 10-Q as well as those risk factors discussed in the section entitled "Risk Factors" Amendment No. 1 to the Company's Annual Report on Form 10-K (“Form 10-K/A”) for the fiscal year ended December 31, 2024 and in the section entitled "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q.
Previous wording
As described in Part 1, Item 1., Note A to the Condensed Consolidated Financial Statements, the Company has restated its Condensed Consolidated Financial Statements as of March 31, 2024 and for the three months ended March 31, 2024. As a result, the previously reported financial information as of March 31, 2024 and for the three months ended March 31, 2024 in this Management's Discussion and Analysis ("MD&A") have been updated to reflect the restatements. See Item 1. Note A - Presentation and principles of consolidation in the Consolidated Financial Statements for additional information related to these restatements, including descriptions of the adjustments and the impacts on the Consolidated Financial Statements.
Current wording
As described in Part 1, Item 1., Note A to the Condensed Consolidated Financial Statements, the Company has restated its Condensed Consolidated Financial Statements as of June 30, 2024 and for the three and six months ended June 30, 2024. As a result, the previously reported financial information as of June 30, 2024 and for the three and six months ended June 30, 2024 in this Management's Discussion and Analysis ("MD&A") have been updated to reflect the restatements. See Item 1. Note A - Presentation and principles of consolidation in the Consolidated Financial Statements for additional information related to these restatements, including descriptions of the adjustments and the impacts on the Consolidated Financial Statements.
Previous wording
As of the date of the filing of this Form 10-Q, the Company is not in compliance with certain covenants under its 2022 Credit Facility. While the Company is currently operating under a forbearance agreement with its lenders under the 2022 Credit Facility while it negotiates an amendment to the 2022 Credit Facility, that agreement is scheduled to expire on December 19, 2025, unless terminated earlier in accordance with its terms. Accordingly, management has determined, applying the going-concern guidance under U.S. GAAP, that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements set forth in this Form 10-Q are issued. For more information concerning this emphasis of matter paragraph and the Company’s ability to continue as a going concern, please see the section titled “Going Concern” under the heading “Liquidity and Capital Resources” in this MD&A.
Current wording
Please see the section titled “Going Concern” under the heading “Liquidity and Capital Resources” in this MD&A for information concerning management’s determination that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements set forth in this Form 10-Q are issued.
Previous wording
Compass Diversified Holdings ("Holdings", or the "Trust") was incorporated in Delaware on November 18, 2005. Compass Group Diversified Holdings LLC (the "LLC") was also formed on November 18, 2005. Holdings and the LLC (collectively, the "Company") were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. The LLC is a controlling owner of nine businesses, or operating segments, at March 31, 2025. The segments are as follows: 5.11 Acquisition Corp. ("5.11"), Boa Holdings Inc. ("BOA"), Lugano Holdings, Inc. ("Lugano Diamonds" or "Lugano"), Relentless Topco, Inc. ("PrimaLoft"), THP Topco, Inc. ("The Honey Pot Co." or "THP"), CBCP Products, LLC ("Velocity Outdoor" or "Velocity"), AMTAC Holdings LLC ("Arnold"), FFI Compass, Inc. ("Altor Solutions" or "Altor"), and SternoCandleLamp Holdings, Inc. ("Sterno").
Current wording
Compass Diversified Holdings ("Holdings", or the "Trust") was incorporated in Delaware on November 18, 2005. Compass Group Diversified Holdings LLC (the "LLC") was also formed on November 18, 2005. Holdings and the LLC (collectively, the "Company") were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. The LLC is a controlling owner of nine businesses, or operating segments, at June 30, 2025. The segments are as follows: 5.11 Acquisition Corp. ("5.11"), Boa Holdings Inc. ("BOA"), Lugano Holding, Inc. ("Lugano Diamonds" or "Lugano"), Relentless Topco, Inc. ("PrimaLoft"), THP Topco, Inc. ("The Honey Pot Co." or "THP"), CBCP Products, LLC ("Velocity Outdoor" or "Velocity"), AMTAC Holdings LLC ("Arnold"), FFI Compass, Inc. ("Altor Solutions" or "Altor"), and SternoCandleLamp Holdings, Inc. ("Sterno").
Previous wording
Lugano- Luganois a designer, manufacturer, and retailer of high-end jewelry. Lugano conducts sales via its own retail salons as well as pop-up showrooms at Lugano-hosted or sponsored events in partnership with organizations in the equestrian, art, and philanthropic communities. Lugano is headquartered in Newport Beach, California.
Current wording
Lugano- Lugano is a designer, manufacturer, and retailer of high-end jewelry. Lugano conducts sales via its own retail salons as well as pop-up showrooms at Lugano-hosted or sponsored events in partnership with organizations in the equestrian, art, and philanthropic communities. Lugano is headquartered in Newport Beach, California.
Previous wording
The Honey Pot Co.- The Honey Pot Co. is a leading “better-for-you” feminine care brand, powered by plant-derived ingredients and clinically tested formulas. The Honey Pot Co. is rooted in the belief that all products should be made with healthy and efficacious ingredients that are kind to and safe for skin. The company offers an extensive range of holistic wellness products across the feminine hygiene, menstrual, personal care, and sexual wellness categories.
Current wording
The Honey Pot Co.- The Honey Pot Co. is a leading “better-for-you” feminine care brand, powered by plant-derived ingredients and clinically tested formulas. The Honey Pot Co. is rooted in the belief that all products should be made with healthy and efficacious ingredients that are kind to and safe for skin. The company offers an extensive range of holistic wellness products across the feminine hygiene, menstrual, personal care, and sexual wellness categories. The Honey Pot Co.'s mission is to educate, support, and provide consumers around the world with tools and resources that promote menstrual health and vaginal wellness. Its products can be found in stores across the U.S. through mass merchants, drug and grocery retail chains, and online.
Previous wording
On January 9, 2025, the LLC entered into a First Incremental Facility Amendment (the “Amendment”) to its existing Credit Agreement (as defined below). The Amendment was by and among the LLC, the lenders party thereto (the “Lenders”), and Bank of America, N.A., as administrative agent for the Lenders (the “Administrative Agent”).
Current wording
On May 22, 2025, the LLC entered into a Forbearance Agreement and Second Amendment to Credit Agreement (the “Second Amendment”) to its Credit Agreement. The Second Amendment was by and among the LLC, the lenders party thereto, and the Administrative Agent.
Previous wording
Please see "Note Q – Subsequent Events” for additional information concerning the Credit Agreement included in the "Notes to the to the Consolidated Financial Statements" included in this Form 10-Q.
Current wording
Please see "Note Q – Subsequent Events” for additional information concerning the Credit Agreement included in the "Notes to the to the Condensed Consolidated Financial Statements" included in this Form 10-Q.
Previous wording
The following discussion reflects a comparison of the historical results of operations of our consolidated business for the three months ended March 31, 2025 and March 31, 2024, and components of the results of operations for each of our operating segments on a stand-alone basis. The Company has restated its Condensed Consolidated Financial Statements as of March 31, 2024 and for the three months ended March 31, 2024. As a result, the previously reported financial information as of March 31, 2024 and for the three months ended March 31, 2024 in this Management's Discussion and Analysis ("MD&A") have been updated to reflect the restatements.
Current wording
The following discussion reflects a comparison of the historical results of operations of our consolidated business for the three and six months ended June 30, 2025 and June 30, 2024, and components of the results of operations for each of our operating segments on a stand-alone basis.
Previous wording
In the following results of operations, we provide (i) our actual Consolidated Results of Operations for the three months ended March 31, 2025 and 2024, which includes the historical results of operations of each of our businesses (operating segments) from the date of acquisition in accordance with US GAAP, and (ii) comparative historical components of the results of operations for each of our businesses on a stand-alone basis for the three months ended March 31, 2025 and 2024, where all periods presented include relevant pro forma adjustments for pre-acquisition periods and explanations where applicable. For the acquisition of The Honey Pot Co. in January 2024, the pro forma results of operations for The Honey Pot Co. business segment has been prepared as if we purchased this business on January 1, 2024. We believe this is the most meaningful comparison for the operating results of acquired business segments. The following results of operations at each of our businesses are not necessarily indicative of the results to be expected for a full year.
Current wording
In the following results of operations, we provide (i) our actual Consolidated Results of Operations for the three and six months ended June 30, 2025 and 2024, which includes the historical results of operations of each of our businesses (operating segments) from the date of acquisition in accordance with US GAAP, and (ii) comparative historical components of the results of operations for each of our businesses on a stand-alone basis for the three and six months ended June 30, 2025 and 2024, where all periods presented include relevant pro forma adjustments for pre-acquisition periods and explanations where applicable. For the acquisition of The Honey Pot Co. in January 2024, the pro forma results of operations for The Honey Pot Co. business segment has been prepared as if we purchased this business on January 1, 2024. We believe this is the most meaningful comparison for the operating results of acquired business segments. The following results of operations at each of our businesses are not necessarily indicative of the results to be expected for a full year.
Previous wording
On a consolidated basis, gross profit increased approximately $21.1 million during the three months ended March 31, 2025 compared to the corresponding period in 2024. We saw notable increases in gross profit at 5.11 ($3.8 million increase), BOA ($5.0 million increase) and Lugano ($5.2 million increase), that correlates with the increase in net revenue in the first quarter of 2025. We also saw increases in gross profit at The Honey Pot Co. and Altor attributable to the timing of acquisitions with The Honey Pot Co. acquired by the Company on January 31, 2024 and therefore only two months of activity are included in the three months ended March 31, 2024, and Altor acquiring Lifoam on October 1, 2024. We saw notable decreases in gross profit at Velocity ($3.1 million decrease, primarily as a result of the sale of Crosman) and Arnold ($4.8 million decrease) that corresponded to the decrease in net revenue noted above. Gross profit as a percentage of net revenues was approximately 43.2% in the three months ended March 31, 2025 compared to 42.6% in the three months ended March 31, 2024. The increase in gross profit as a percentage of net revenue in the quarter ended March 31, 2025 as compared to the quarter ended March 31, 2024 is driven by the mix of products sold, with increases in net revenue at our higher margin businesses, particularly Lugano. Our branded consumer businesses had gross profit as a percentage of net revenues of 54.9% in the first quarter of 2025 as compared to 51.4% in the first quarter of 2024, while our industrial businesses had gross profit as a percentage of net revenues of 24.7% in the first quarter of 2025 as compared to 28.6% in the first quarter of 2024. The decrease in gross profit as a percentage of net revenues at our indus trial businesses was attributable to higher fixed overhead costs absorbed on a lower revenue base due to the decrease in sales.
Current wording
On a consolidated basis, gross profit increased approximately $20.4 million during the three months ended June 30, 2025 compared to the corresponding period in 2024. We saw increases in gross profit at 5.11 ($3.0 million increase), Lugano ($7.3 million increase), The Honey Pot Co. ($7.1 million increase) and Sterno ($2.5 million increase). We also saw an increase in gross profit at Altor attributable to the timing of acquisitions with Altor acquiring Lifoam on October 1, 2024. We saw decreases in gross profit at BOA ($3.1 million decrease) and Arnold ($3.3 million decrease) that corresponded to the decrease in net revenue noted above. Gross profit as a percentage of net revenues was approximately 43.6% in the three months ended June 30, 2025 compared to 44.1% in the three months ended June 30, 2024. The decrease in gross profit as a percentage of net revenue in the quarter ended June 30, 2025 as compared to the quarter ended June 30, 2024 is driven by the decreases in gross margin at our industrial businesses during the quarter. Our branded consumer businesses had gross profit as a percentage of net revenues of 55.2% in the second quarter of 2025 as compared to 54.6% in the second quarter of 2024, while our industrial businesses had gross profit as a percentage of net revenues of 27.3% in the second quarter of 2025 as compared to 28.1% in the second quarter of 2024. The decrease in gross profit as a percentage of net revenues at our indus trial businesses was attributable to higher fixed overhead costs absorbed on a lower revenue base at the legacy Altor business (exclusive of Lifoam) and Arnold.
Previous wording
Consolidated selling, general and administrative expense increased approximately $12.7 million during the three months ended March 31, 2025, compared to the corresponding period in 2024, driven primarily by increases at Lugano ($6.4 million) due to increased investment in salons and headcount, 5.11 ($3.4 million increase) due to increases in headcount and employee compensation, and Altor ($3.5 million increase) due to the acquisition of Lifoam in the fourth quarter of 2024. The Honey Pot Co. was acquired by the Company on January 31, 2024 and had incremental selling, general and administrative expense of $2.1 million during the three months ended March 31, 2025. The increase in selling, general and administrative expense was partially offset by a decrease in expense at Velocity after their disposition of the Crosman product line in the second quarter of 2024.
Current wording
Consolidated selling, general and administrative expense increased approximately $24.5 million during the three months ended June 30, 2025, compared to the corresponding period in 2024, driven primarily by increases at the corporate level ($9.2 million increase), 5.11 ($3.9 million increase) due to increases in sales and marketing investments and an increase in the bonus pool versus the prior year, and Altor ($4.5 million increase) due to the acquisition of Lifoam in the fourth quarter of 2024. The increase in selling, general and administrative expense was partially offset by a decrease in expense at Velocity after their disposition of the Crosman product line in the second quarter of 2024.
Previous wording
At the corporate level, general and administrative expense was $4.6 million in the first quarter of 2025 and $4.9 million in the first quarter of 2024. The decrease in general and administrative expense in the first quarter of 2025 related to the timing of certain expenses versus the prior year and non-recurring professional fees incurred in the first quarter of 2024.
Current wording
At the corporate level, general and administrative expense was $13.2 million in the second quarter of 2025 and $4.0 million in the second quarter of 2024. The increase in general and administrative expense in the second quarter of 2025 was primarily due to $8.4 million of costs incurred in the second quarter of 2025 relating to the Lugano Investigation. The remainder of the increase related to increased professional fees incurred during the quarter. The Company will continue to incur significant costs related to the Lugano investigation during the remainder of 2025.
Previous wording
Amortization expense for the three months ended March 31, 2025 increased $0.1 million as compared to the three months ended March 31, 2024 as a result of the amortization expense associated with the intangibles that were recognized in conjunction with the purchase price allocation for Lifoam, the add-on acquisition that Altor completed in the fourth quarter of 2024, partially offset by the reduction in expense associated with the sale of Crosman in the second quarter of 2024.
Current wording
Amortization expense for the three months ended June 30, 2025 decreased $1.3 million as compared to the three months ended June 30, 2024 due to the reduction in expense associated with the sale of Crosman in the second quarter of 2024, the reduction in intangible assets at Lugano resulting from the restatement and certain intangibles at Sterno that were fully amortized in 2024. These decreases were partially offset by the amortization expense associated with the intangibles that were recognized in conjunction with the purchase price allocation for Lifoam, the add-on acquisition that Altor completed in the fourth quarter of 2024.
Previous wording
We had an income tax provision of $2.5 million during the three months ended March 31, 2025 compared to an income tax provision of $3.1 million during the same period in 2024, a decrease of $0.6 million due to the increase in income from continuing operation before income taxes. Our effective tax rate in the quarter ended March 31, 2025 was (5.4)%, compared to an effective income tax rate of (3.6)% during the same period in 2024. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. In addition to state income taxes, the items with the most significant impact on the difference between our statutory U.S. federal income tax rate of 21% and our effective income tax rate for the three months ended March 31, 2025 and 2024 was the limitations on the net operating loss carryforwards and utilization of tax credits at our subsidiaries.
Current wording
We had an income tax provision of $17.4 million during the three months ended June 30, 2025 compared to an income tax provision of $15.6 million during the same period in 2024, an increase of $1.8 million. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. In addition to state income taxes, the items with the most significant impact on the difference between our statutory U.S. federal income tax rate of 21% and our effective income tax rate was the loss on the sale of Crosman at Velocity in the second quarter of 2024 and the limitations on the net operating loss carryforwards and utilization of tax credits at our subsidiaries and at the Trust.
Previous wording
Net sales for the three months ended March 31, 2025 were $26.8 million an increase of approximately $16.1 million, or 148.7%, compared to net sales of $10.8 million in the corresponding quarter ended March 31, 2024. In the current year quarter, Lugano had stronger same store sales growth. Lugano opened its London, England salon in the second quarter of 2024.
Current wording
Net sales for the three months ended June 30, 2025 were $26.8 million an increase of approximately $14.7 million, or 122.6%, compared to net sales of $12.0 million in the corresponding quarter ended June 30, 2024. In the current year quarter, Lugano had stronger same store sales growth, and opened a flagship retail salon in Chicago in June 2025.
Previous wording
Net sales for the three months ended March 31, 2025 were $36.2 million, an increase of $5.4 million or 17.4% from net sales of $30.8 million for the three months ended March 31, 2024. The increase in net sales is primarily due to strong volume growth due to market share gain in our Period Care product line, particularly in mass retail, drugstores and online. Overall, volume and share growth continues to be fueled by compelling innovation, targeted investments in demand generation, and disciplined investments in capabilities to accelerate growth.
Current wording
Net sales for the three months ended June 30, 2025 were $32.8 million, an increase of $8.6 million or 35.6% from net sales of $24.2 million for the three months ended June 30, 2024. The increase in net sales is primarily due to strong volume growth due to market share gain in our Period Care product line, particularly in mass retail, drugstores and online. Overall, volume and share growth continues to be fueled by compelling innovation, targeted investments in demand generation, and disciplined investments in capabilities to accelerate growth.
Previous wording
On April 30, 2024, Velocity Outdoor sold its Crosman airgun product division. The results of operations for the three months ended March 31, 2024 presented below include the results from the Crosman airgun product division.
Current wording
On April 30, 2024, Velocity Outdoor sold its Crosman airgun product division. The results of operations for the three months ended June 30, 2024 presented below include the results from the Crosman airgun product division through the date of sale.
Previous wording
Net sales for the three months ended March 31, 2025 were $13.2 million, a decrease of $16.7 million or 55.8%, compared to net sales of $29.9 million inthe same period in 2024. The decrease in net sales for the three months ended March 31, 2025 was driven by the divestiture of Crosman. The remaining product categories, which consist of the archery and hunting apparel product categories, increased 37.6% compared to the same period in 2024 due to increased archery sales through the dealer and distributor channels and improved online sales of apparel.
Current wording
Net sales for the three months ended June 30, 2025 were $15.2 million, a decrease of $3.5 million or 18.7%, compared to net sales of $18.7 million inthe same period in 2024. The decrease in net sales for the three months ended June 30, 2025 was driven by the divestiture of Crosman. The remaining product categories, which consist of the archery and hunting apparel product categories, increased compared to the same period in 2024 due to increased archery sales through Big Box retailers and dealer channels and improved online sales of apparel.
Previous wording
Net sales for the quarter ended March 31, 2025 were $76.3 million, an increase of $22.9 million, or 42.8%, compared to net sales of $53.4 million in the quarter ended March 31, 2024. The increase in net sales during the quarter was driven by the acquisition of Lifoam in October 2024. Lifoam contributed $32.6 million in net sales in the first quarter of 2025. The increase in net sales attributable to Lifoam was offset by lower quarterly sales due to shifting market conditions of perishable and cold chain markets and supplier diversification initiatives on behalf of several of Altor's customers.
Current wording
Net sales for the quarter ended June 30, 2025 were $83.3 million, an increase of $31.1 million, or 59.5%, compared to net sales of $52.2 million in the quarter ended June 30, 2024. The increase in net sales during the quarter was driven by the acquisition of Lifoam in October 2024. Lifoam contributed $39.7 million in net sales in thesecond quarter of 2025. The increase in net sales attributable to Lifoam was offset by lower quarterly sales due to shifting market conditions of perishable and cold chain markets and supplier diversification initiatives on behalf of several of Altor's customers.
Previous wording
Segment operating income was $5.0 million in the three months ended March 31, 2025, a decrease of $1.6 million as compared to the three months ended March 31, 2024. Segment operating margin was 6.5% in the first quarter of 2025 as compared to 12.4% in the first quarter of 2024, with the decrease driven by a reduction in fixed cost of goods sold coverage due to lower sales levels on the non-Lifoam portion of the business and increases in selling, general and administrative costs related to the acquisition and integration activities.
Current wording
Segment operating income was $7.3 million in the three months ended June 30, 2025, an increase of $2.1 million as compared to the three months ended June 30, 2024. Segment operating margin was 8.7% in thesecond quarter of 2025 as compared to 9.9% in thesecond quarter of 2024, with the decrease driven by a reduction in fixed cost of goods sold coverage due to lower sales levels on the non-Lifoam portion of the business and increases in selling, general and administrative costs related to the acquisition and integration activities.
Previous wording
Net sales for the three months ended March 31, 2025 were approximately $34.0 million, a decrease of $7.3 million compared to net sales of $41.3 million in the same period in 2024. The decrease in net sales is primarily a result of lower demand in various markets and delays in production startup at new facilities.
Current wording
Net sales for the three months ended June 30, 2025 were approximately $38.4 million, a decrease of $4.7 million compared to net sales of $43.2 million in the same period in 2024. The decrease in net sales is primarily a result of lower demand in various markets and delays in production startup at new facilities.
Previous wording
Segment operating income for the three months ended March 31, 2025 was approximately $6.4 million, an increase of $1.6 million compared to the three months ended March 31, 2024, driven by reduced amortization expense for intangibles that have been fully amortized (amortization expense decreased $1.5 million quarter over quarter). Segment operating margin was 9.7% in the first quarter of 2025 as compared to 7.4% in the first quarter of 2024.
Current wording
Segment operating income for the three months ended June 30, 2025 was approximately $11.1 million, an increase of $3.2 million compared to the three months ended June 30, 2024, driven by the increase in net sales and reduced amortization expense for intangibles that have been fully amortized (amortization expense decreased $1.5 million quarter over quarter). Segment operating margin was 14.3% in thesecond quarter of 2025 as compared to 10.7% in the second quarter of 2024.
Previous wording
Consolidated net revenues for the three months ended March 31, 2025 increased by approximately $42.9 million, or 10.5%, compared to the corresponding period in 2024. During the three months ended March 31, 2025 compared to 2024, we saw notable increases in net revenues at 5.11 ($4.4 million increase), BOA ($6.0 million increase), Lugano ($16.1 million increase), The Honey Pot Co. ($16.0 million increase ) and Altor ($22.9 million increase). The Honey Pot Co. was acquired on January 31, 2024 and had an incremental revenue increase of $5.4 million quarter over quarter on a pro forma basis. The increase in net revenue at Altor was attributable to the acquisition of Lifoam in October 2024. These increases in net revenue was offset by notable decreases in net revenue at Velocity ($16.7 million decrease, primarily as a result of the sale of Crosman) and Arnold ($7.3 million decrease). Refer to "Results of Operations - Operating Segments" for a more detailed analysis of net revenues by operating segment.
Current wording
Consolidated net revenues for the six months ended June 30, 2025 increased by approximately $94.9 million, or 11.3%, compared to the corresponding period in 2024. During the six months ended June 30, 2025 compared to 2024, we saw notable increases in net revenues at 5.11 ($12.6 million increase), Lugano ($30.8 million increase) The Honey Pot Co. ($24.6 million increase), Altor ($53.9 million increase) and Sterno ($4.3 million increase). The Honey Pot Co. was acquired on January 31, 2024 and had an incremental revenue increase of $14.0 million year over year on a pro forma basis. The increase in net revenue at Altor was attributable to the acquisition of Lifoam in October 2024. These increases in net revenue was offset by decreases in net revenue at Velocity ($20.2 million decrease, primarily as a result of the sale of Crosman) and Arnold ($12.0 million decrease). Refer to "Results of Operations - Operating Segments - Year-to-Date" for a more detailed analysis of net revenues by operating segment.
Previous wording
In the prior year, Velocity performed an impairment test of their goodwill as part of the annual impairment test at March 31, 2024. The impairment test resulted in Velocity recording impairment expense of$8.2 million in the quarter ended March 31, 2024.
Current wording
As a result of the preliminary findings of the Lugano Investigation, the Company determined that a triggering event had occurred in the second quarter of 2025 and tested the long-lived assets of Lugano for impairment. The impairment testing indicated that the fair value of the assets was less than the carrying value and the Company recorded impairment expense to write the long-lived assets down to fair value. The write down of the long-lived assets resulted in the Company recording impairment expense of $29.5 million related to property, plant and equipment and $1.9 million related to right-of-use assets in the quarter ended June 30, 2025. The right-of-use asset related to a retail salon in Toronto, Canada which had not yet opened. In the prior year, Velocity performed an impairment test of their goodwill as part of the annual impairment test at March 31, 2024. The impairment test resulted in Velocity recording impairment expense of$8.2 million in the quarter ended March 31, 2024.
Previous wording
We recorded interest expense totaling $35.9 million for the three months ended March 31, 2025 compared to $25.3 million for the comparable period in 2024, an increase of $10.6 million. In January 2025, we amended our credit facility to provide for an additional advance of the term loan in the aggregate amount of $200 million on the date of the amendment, and a delayed draw term loan commitment in the aggregate amount of $100 million. The proceeds from the initial $200 million were used to repay amounts outstanding under our revolving credit facility, and the excess amount was held as cash on the balance sheet during the first quarter. In the prior year, the cash proceeds from our sale of Marucci in November 2023 earned interest income during January 2024 before being used to pay for the acquisition of The Honey Pot Co. in January 2024. The result of these transactions was a higher amount outstanding under the credit facility in the first quarter of 2025 compared to the first quarter of 2024, although at lower effective interest rates quarter over quarter, and a higher amount of interest income earned in the first quarter of 2024 as compared to the first quarter of 2025. The interest expense also reflects an increase of $7.2 million in interest expense related to financing arrangements at our Lugano business.
Current wording
We recorded interest expense totaling $69.9 million for the six months ended June 30, 2025 compared to $54.9 million for the comparable period in 2024, an increase of $15.1 million. In January 2025, we amended our credit facility to provide for an additional advance of the term loan in the aggregate amount of $200 million on the date of the amendment. The proceeds from the $200 million term loan advance were used to repay amounts outstanding under our revolving credit facility, and the excess amount after repaying the revolver was used for working capital needs at our subsidiaries and general corporate purposes. In the prior year, the cash proceeds from our sale of Marucci in November 2023 earned interest income during January 2024 before being used to pay for the acquisition of The Honey Pot Co. in January 2024. The result of these transactions was a higher amount outstanding under the credit facility in the first half of 2025 compared to the first half of 2024, although at lower effective interest rates year over year, and a higher amount of interest income earned in the first half of 2024 as compared to the first half of 2025. The interest expense also reflects an increase of $15.8 million in interest expense related to financing arrangements at our Lugano business.
Previous wording
For the quarter ended March 31, 2025, we recorded $13.7 million in other expense as compared to $47.4 million in other expense in the quarter ended March 31, 2024, a decrease in expense of $33.8 million. In both periods, the other expense primarily represents expense recognized at Lugano related to losses resulting fromthe accounting for the transactions associated with the off-balance sheet arrangements ($13.8 million in expense in the three months ended March 31, 2025 and $44.6 million in the three months ended March 31, 2024). A significant portion of the expense associated with the Lugano financing arrangements was recognized in the historical restatement period (the years ending December 31, 2024, 2023 and 2022) which resulted in lower expense in the current year. Other income (expense) typically reflects the movement in foreign currency at our subsidiary businesses with international operations, gains or (losses) realized on the sale of property, plant and equipment, and expenses incurred or income earned that are not considered a part of our operations. In the quarter ended March 31, 2024, the expense also reflected a non-recurring loss on an equity method investment at Altor Solutions.
Current wording
For the six months ended June 30, 2025, we recorded $12.0 million in other expense as compared to $88.1 million in other expense in the six months ended June 30, 2024, a decrease in expense of $76.1 million. Other income (expense) typically reflects the movement in foreign currency at our subsidiary businesses with international operations, gains or (losses) realized on the sale of property, plant and equipment, and expenses incurred or income earned that are not considered a part of our operations. The other expense in the six months ended June 30, 2024 primarily represents expense recognized at Lugano related to losses resulting fromthe accounting for the transactions associated with the off-balance sheet arrangements ($83.8 million in expense in the six months ended June 30, 2024). A significant portion of the expense associated with the Lugano financing arrangements was recognized in the historical restatement period (the years ending December 31, 2024, 2023 and 2022) which resulted in limited impact in the current year. In the six months ended June 30, 2024, the expense reflected a non-recurring loss on an equity method investment at Altor Solutions.
Previous wording
Net sales for the three months ended March 31, 2025 were $129.4 million as compared to net sales of $125.0 million for the three months ended March 31, 2024, an increase of $4.4 million, or 3.5%. This increase was driven bya $5.5 million increase in domestic wholesale sales from strong demand and the fulfillment of large contracts, as well as a $3.2 million increase in direct-to-consumer sales due to an increase in full-price sales for new products. These increases were offset by a $2.9 million decrease in international sales and a $1.4 million decrease in direct-to-agency sales due to the timing of large contracts.
Current wording
Net sales for thesix months ended June 30, 2025 were $260.8 million as compared to net sales of $248.2 million for thesix months ended June 30, 2024, an increase of $12.6 million, or 5.1%. The increase was primarily attributable to a $10.4 million increase in domestic wholesale sales, reflecting strong demand and the fulfillment of large contracts, and a $6.9 million increase in direct-to-consumer sales, driven by higher full-price sales of new products. These increases were partially offset by a $1.3 million decrease in international sales and a $2.1 million decrease in direct-to-agency sales, both primarily due to the timing of large contracts.
Previous wording
Segment operating income for the three months ended March 31, 2025 was $8.6 million, an increase of $0.4 million when compared to segment operating income of $8.2 million for the same period in 2024. The increase in segment operating income was driven by the higher net sales as well as favorable gross margin performance, supported by a higher mix of full-price sales. The increase was offset by an increase in selling, general and administrative expenses primarily attributable to higher payroll expense and marketing spending to drive sales growth. Segment operating margin was consistent quarter over quarter, at 6.6% in the first quarter of 2025 and 6.5% in the first quarter of 2024.
Current wording
Segment operating income for the six months ended June 30, 2025 was $18.3 million, a decrease of $0.5 million when compared to segment operating income of $18.9 million for the same period in 2024. The decrease in segment operating income was driven by higher net sales and comparable gross margin performance, offset by increased selling, general and administrative expenses, primarily driven by non-recurring payroll costs associated with restructuring, higher performance-based bonuses, and increased marketing investments to support sales growth. Segment operating margin was 7.0% in the six months ended June 30, 2025 and 7.6% in the six months ended June 30, 2024.
Previous wording
Net sales for the three months ended March 31, 2025 were $48.9 million as compared to net sales of $42.9 million for the three months ended March 31, 2024, an increase of $6.0 million, or 13.9%. The increase was reflected across key industries including Cycling, Workwear, Outdoor, Helmets and Snow Sports. The increase in sales was a result of the improvement of end market inventory levels, coupled with market share gains in many of our key industries.
Current wording
Net sales for the six months ended June 30, 2025 were $97.2 million as compared to net sales of $97.1 million for the six months ended June 30, 2024, an increase of $0.2 million, or 0.2%. Sales increased across key industries including Cycling, Workwear, Helmets and Snow Sports, offset by reduced kids-based business in China. This continued momentum was primarily a result of market share gains in many of our key industries.
Previous wording
Net sales for the three months ended March 31, 2025 were $23.6 million, an increase of $1.1 million as compared to net sales of $22.5 million for the three months ended March 31, 2024. The increase in net sales in the current quarter versus the quarter ended March 31, 2024 is attributable to new programs with European and Asia brand partners resulting in an increase in sales for the first quarter of 2025 compared to the first quarter of 2024, as well as an increase in shipments earlier in the period due to the timing of the Chinese New Year in 2025 compared to 2024.
Current wording
Net sales for thesix months ended June 30, 2025 were $48.5 million, an increase of $0.7 million as compared to net sales of $47.8 million for thesix months ended June 30, 2024. The increase in net sales in the current period versus the six months ended June 30, 2024 is attributable to new programs with European and Asia brand partners resulting in an increase in sales for the first half of 2025 compared to the first half of 2024, offset by a pullback in orders from PrimaLoft's brand partners as they remain cautious due to the economic uncertainties from the evolving tariff policy in the United States.
Previous wording
Segment operating income for the three months ended March 31, 2025 was $4.2 million, an increase of $0.9 million when compared to segment operating income of $3.3 million for the same period in 2024, driven by the increase in net sales. Segment operating margin was 17.6% in the first quarter of 2025 as compared to 14.6% in the first quarter of 2024.
Current wording
Segment operating income for the six months ended June 30, 2025 was $9.0 million, an increase of $0.2 million when compared to segment operating income of $8.8 million for the same period in 2024, driven by the increase in net sales. Segment operating margin was 18.7% in the first six months of 2025 as compared to 18.4% in the first six months of 2024.
Previous wording
In the following results of operations, we provide comparative proforma results of operations for The Honey Pot Co. for the three and three months ended March 31, 2025 and March 31, 2024 as if we had acquired the business on January 1, 2024. The results of operations that follow include relevant proforma adjustments for the pre-acquisition period and explanations where applicable. The operating results for The Honey Pot Co. have been included in the consolidated results of operation from the date of acquisition on January 31, 2024.
Current wording
In the following results of operations, we provide comparative proforma results of operations for The Honey Pot Co. for the six months ended June 30, 2025 and June 30, 2024 as if we had acquired the business on January 1, 2024. The results of operations that follow include relevant proforma adjustments for the pre-acquisition period and explanations where applicable. The operating results for The Honey Pot Co. have been included in the consolidated results of operation from the date of acquisition on January 31, 2024.
Previous wording
•Incremental stock compensation expense of $0.3 million for the three months ended March 31, 2024. This amount is included in SG&A and reduces segment operating income.
Current wording
•Incremental stock compensation expense of $0.3 million for the six months ended June 30, 2024. This amount is included in SG&A and reduces segment operating income.
Previous wording
•Amortization expense associated with the intangible assets recorded in connection with the purchase price allocation for THP of $1.3 million for the three months ended March 31, 2024. This amount reduces segment operating income.
Current wording
•Amortization expense associated with the intangible assets recorded in connection with the purchase price allocation for THP of $1.3 million for the six months ended June 30, 2024. This amount reduces segment operating income.
Previous wording
•Management fees that would have been payable to the Manager during each period. THP will pay a management fee of $1.0 million per year ($0.25 million per quarter) to CGM. This amount reduces segment operating income.
Current wording
•Management fees that would have been payable to the Manager in the first quarter of 2024. THP pays a management fee of $1.0 million per year ($0.25 million per quarter). This amount reduces segment operating income.
Previous wording
Segment operating income for the three months ended March 31, 2025 was $4.8 million, an increase of $5.5 million when compared to segment operating loss of $0.7 million for the same period in 2024. Segment operating income in the first quarter of 2024 included certain non-recurring expenses related to the acquisition of The Honey Pot Co. in January 2024, including $2.7 million of inventory step-up amortization expense and $3.5 million in acquisition costs. Operating margin in the first quarter of 2025 was 13.4% as compared to (2.2)% in the first quarter of 2024, with the increase attributable to the non-recurring expenses incurred in the prior year.
Current wording
Segment operating income for the six months ended June 30, 2025 was$8.5 million, an increase of$11.8 million when compared to segment operating loss of$3.2 million for the same period in 2024. Segment operating income in the first six months of 2024 included certainnon-recurring expenses related to the acquisition of The Honey Pot Co. in January 2024, incl uding $3.8 million of inventory step-up amortization expense and $3.5 million in acquisition costs. Operating margin in the first six months of 2025 was 12.4% as compared to (5.9)% in the first six months of 2024, with the increase attributable to the increase in net sales and the non-recurring expenses incurred in the prior year.
Previous wording
Segment operating loss for the three months ended March 31, 2025 was $2.8 million compared to segment operating loss of $12.4 million for the same period in 2024. The loss in the prior year was driven primarily by the goodwill impairment expense of $8.2 million recognized in the first quarter of 2024. Segment operating margin was (21.4)% in the first quarter of 2025 as compared to (41.6)% in the first quarter 2024. Despite an improvement in gross margin quarter over quarter attributable to the sale of the Crosman product line, the decrease in net sales led to a decrease in operating expense leverage, with selling, general and administrative expense as a percentage of net sales of 37.0% in the quarter ended March 31, 2025 as compared to 27.5% in the quarter ended March 31, 2024.
Current wording
Segment operating loss for the six months ended June 30, 2025 was$3.7 million compared to segment operating loss of$14.4 million for the same period in 2024. The loss in the prior year was driven primarily by the goodwill impairment expense of $8.2 million recognized in the first quarter of 2024. Segment operating margin was (13.1)% in the first half of 2025 as compared to (29.5)% in the first half of 2024. Despite an improvement in gross margin in the first six months of 2025 as compared to the comparable period in 2024 attributable to the sale of the Crosman product line, the decrease in net sales led to a decrease in operating expense leverage, with selling, general and administrative expense as a percentage of net sales of 33.2% in the six months ended June 30, 2025 as compared to 28.9% in the six months ended June 30, 2024.
Previous wording
Segment operating loss for the three months ended March 31, 2025 was approximately $0.9 million, a decrease of $5.1 million when compared to the same period in 2024. The decrease in segment operating income (loss) was driven by the sales shortfall, unfavorable product mix and non-recurring move related expenses. Segment operating margin was (2.7)% in the first quarter of 2025 as compared to 10.1% in the first quarter of 2024.
Current wording
Segment operating loss for thesix months ended June 30, 2025 was approximately $0.7 million, a decrease of $10.2 million when compared to the same period in 2024. The decrease in segment operating income (loss) was driven by the sales shortfall, unfavorable product mix, executive transition costs and non-recurring move related expenses. Segment operating margin was(1.0)% in the firstsix months of 2025 as compared to 11.2% in the firstsix monthsof 2024.
Previous wording
As of March 31, 2025, we had $1,000.0 million of indebtedness associated with our 5.250% Senior Notes due 2029 (the "2029 Notes" or "2029 Senior Notes"), $300.0 million of indebtedness associated with our 5.000% Senior Notes (the "2032 Notes" or "2032 Senior Notes") and $571.3 million outstanding on our 2022 Term Loan. Only our 2022 Term Loan has required principal payments. Long-term debt liquidity requirements consist of the payment in full of our Notes upon their respective maturity dates, amounts outstanding under our 2022 Revolving Credit Facility upon its maturity date, and principal payments under our 2022 Term Loan. The 2022 Term Loan requires quarterly payments commencing September 30, 2022, with a final payment of all remaining principal and interest due on July 12, 2027, which is the 2022 Term Loan’s maturity date. At March 31, 2025, approxim ately 31% of our outstanding debt was subject to interest rate changes.
Current wording
As of June 30, 2025, we had $1,000.0 million of indebtedness associated with our 5.250% 2029 Notes, $300.0 million of indebtedness associated with our 5.000% 2032 Notes and $567.5 million outstanding on our 2022 Term Loan. Only our 2022 Term Loan has required principal payments. Long-term debt liquidity requirements consist of the payment in full of our Notes upon their respective maturity dates, amounts outstanding under our 2022 Revolving Credit Facility upon its maturity date, and principal payments under our 2022 Term Loan. The 2022 Term
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Rearranged current paragraphs (15)
Current report — wording carried from elsewhere
Consolidated net revenues for the three months ended June 30, 2025 increased by approximately $52.0 million, or 12.2%, compared to the corresponding period in 2024. During the three months ended June 30, 2025 compared to 2024, we saw notable increases in net revenues at 5.11 ($8.2 million increase), Lugano ($14.7 million increase), The Honey Pot Co. ($8.6 million increase), Altor ($31.1 million increase) and Sterno ($3.7 million increase). The increase in net revenue at Altor was attributable to the acquisition of Lifoam in October 2024. These increases in net revenue was offset by decreases in net revenue at BOA ($5.8 million decrease), Velocity ($3.5 million decrease, primarily as a result of the sale of Crosman) and Arnold ($4.7 million decrease). Refer to "Results of Operations - Operating Segments - Quarter-to-Date" for a more detailed analysis of net revenues by operating segment.
Current report — wording carried from elsewhere
For the quarter ended June 30, 2025, we recorded $1.7 million in other income as compared to $40.6 million in other expense in the quarter ended June 30, 2024, a decrease in expense of $42.4 million. The other expense in the quarter ended June 30, 2024 primarily represents expense recognized at Lugano related to losses resulting fromthe accounting for the transactions associated with the off-balance sheet arrangements ($39.3 million in expense in the three months ended June 30, 2024). A significant portion of the expense associated with the Lugano financing arrangements was recognized in the historical restatement period (the years ending December 31, 2024, 2023 and 2022) which resulted in limited impact in the current year. Other income (expense) typically reflects the movement in foreign currency at our subsidiary businesses with international operations, gains or (losses) realized on the sale of property, plant and equipment, and expenses incurred or income earned that are not considered a part of our operations.
Current report — wording carried from elsewhere
The following table sets forth our unaudited results of operations for the periods indicated, in dollars and as a percentage of net revenues:
Current report — wording carried from elsewhere
We do not generate any revenues apart from those generated by our subsidiaries. We may generate interest income on the investment of available funds, but expect such earnings to be minimal. We make loans from the Company to our subsidiary businesses and also hold equity interests in those businesses. Cash flows coming to the Trust and the LLC are the result of interest payments on those loans, amortization of those loans and additional principal payments on those loans. However, on a consolidated basis, these items will be eliminated.
Current report — wording carried from elsewhere
Amortization expense for the six months ended June 30, 2025 decreased $1.1 million as compared to the six months ended June 30, 2024 due to the reduction in expense associated with the sale of Crosman in the second quarter of 2024, the reduction in intangible assets at Lugano resulting from the restatement and certain intangibles at Sterno that were fully amortized in 2024, partially offset by the amortization expense associated with the intangibles that were recognized in conjunction with the purchase price allocation for Lifoam, the add-on acquisition that Altor completed in the fourth quarter of 2024.
Current report — wording carried from elsewhere
We had an income tax provision of $19.9 million during the six months ended June 30, 2025 compared to an income tax provision of $18.7 million during the same period in 2024, an increase of $1.2 million due to the increase in income from continuing operation before income taxes. Our effective tax rate in the six months ended June 30, 2025 was (18.0)%, compared to an effective income tax rate of (10.7)% during the same period in 2024. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. In addition to state income taxes, the items with the most significant impact on the difference between our statutory U.S. federal income tax rate of 21% and our effective income tax rate in the six months ended June 30, 2025 was state income taxes and the limitations on the net operating loss carryforwards and utilization of tax credits at our subsidiaries, while in the prior year, the most significant impact on the effective tax rate was the impairment expense recognized at Velocity in the first quarter of 2024, the loss on the sale of Crosman in the second quarter of 2024 and the limitations on the net operating loss carryforwards and utilization of tax credits at our subsidiaries.
Current report — wording carried from elsewhere
Net sales for thesix months ended June 30, 2025 were $69.0 million, an increase of $14.0 million or 25.4% from net sales of $55.0 million for thesix months ended June 30, 2024. The increase in net sales is primarily due to strong volume growth due to market share gain in our Period Care product line, particularly in mass retail, drugstores and online. Overall, volume and share growth continues to be fueled by compelling innovation, targeted investments in demand generation, and disciplined investments in capabilities to accelerate growth.
Current report — wording carried from elsewhere
On April 30, 2024, Velocity Outdoor sold its Crosman airgun product division. The results of operations for the six months ended June 30, 2024 presented below include the results from the Crosman airgun product division through the date of sale.
Current report — wording carried from elsewhere
Net sales for thesix months ended June 30, 2025 were $28.4 million, a decrease of $20.2 million or(41.5)%, compared to net sales of $48.6 million inthe same period in 2024. The decrease in net sales for thesix months ended June 30, 2025 was driven by the divestiture of Crosman. The remaining product categories, which consist of the archery and hunting apparel product categories, increased 30.6% compared to the same period in 2024 due to increased archery sales through the Big Box retailers and dealer channels and improved retail and online sales of apparel.
Current report — wording carried from elsewhere
Net sales for thesix months ended June 30, 2025 were $159.6 million, an increase of $53.9 million, or 51.1%, compared to net sales of $105.6 million in thesix months ended June 30, 2024. The increase in net sales during the period was driven by the acquisition of Lifoam in October 2024. Lifoam contributed $72.3 million in net sales in the firstsix months of 2025. The increase in net sales attributable to Lifoam was offset by lower quarterly sales due to shifting market conditions of perishable and cold chain markets and supplier diversification initiatives on behalf of several of Altor's customers.
Current report — wording carried from elsewhere
Net sales for the six months ended June 30, 2025 were approximately$72.4 million, a decrease of$12.0 million compared to net sales of$84.4 million in the same period in 2024. The decrease in net sales is primarily a result of lower demand in various markets and delays in production startup at new facilities.
Current report — wording carried from elsewhere
Loan requires quarterly payments commencing September 30, 2022, with a final payment of all remaining principal and interest due on July 12, 2027, which is the 2022 Term Loan’s maturity date. At June 30, 2025, approximately 30% of our outstanding debt was subject to interest rate changes.
Current report — wording carried from elsewhere
April 15th and October 15th of each year. The 2029 Notes are general unsecured obligations of the LLC and are not guaranteed by our subsidiaries.
Current report — wording carried from elsewhere
Borrowings under our 2022 Credit Facility are subject to certain conditions and customary events of default, including, without limitation, failure to make payments, cross-default to certain other debt, breaches of covenants, breaches of representations and warranties, a change in control, certain monetary judgments, and bankruptcy and ERISA events. Upon any such event of default, the principal amount of any unpaid loans and all other obligations under the 2022 Credit Facility may be declared immediately due and payable and any letters of credit then outstanding may be required to be cash collateralized, and the Agent and the Lenders may exercise any rights or remedies available to them under the 2022 Credit Facility.
Current report — wording carried from elsewhere
Refer to "Note O - Related Parties" included in the "Notes to the Condensed Consolidated Financial Statements" in this Form 10-Q, for additional information.
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Previous report — wording carried elsewhere
The Honey Pot Co.'s mission is to educate, support, and provide consumers around the world with tools and resources that promote menstrual health and vaginal wellness. Its products can be found in stores across the U.S. through mass merchants, drug and grocery retail chains, and online.
Previous report — wording carried elsewhere
The Amendment modifies the LLC’s Third Amended and Restated Credit Agreement, dated as of July 12, 2022, as amended, among the LLC, the Lenders, the Administrative Agent and the other financial institutions party thereto (the “Credit Agreement”), to provide for (a) an additional advance of the term loan in the aggregate amount of $200 million (the “Incremental Term Loan”) on the date of the Amendment, and (b) delayed draw term loan commitments in the aggregate amount of $100 million (the “Incremental Delayed Draw Term Loan Commitments,” and the loan drawn thereunder is referred to herein as the “Incremental Delayed Draw Term Loan”), which may be reduced or terminated by the LLC upon five business days’ notice and pursuant to which the Company may make no more than two draws by July 9, 2025. The proceeds from the Incremental Term Loan and the Incremental Delayed Draw Term Loan will be used for new acquisitions, working capital, capital expenditures and other general corporate purposes.
Previous report — wording carried elsewhere
On January 15, 2025, the LLC and the Manager amended the Sixth Amended and Restated Management Services Agreement dated as of September 30, 2014 and originally effective as of May 16, 2006 (the “Existing Agreement”), by entering into a Seventh Amended and Restated Management Services Agreement (the “MSA Amendment”), which restructures the management fee under the Existing Agreement to consist of a base management fee and an incentive management fee. Pursuant to the MSA Amendment, the base management fee will be (i) 2% of the Company’s adjusted net assets when the adjusted net assets are less than or equal to $3.5 billion (the “Initial Threshold Fee”), (ii) the Initial Threshold Fee plus 1.25% of the amount of adjusted net assets exceeding $3.5 billion when the adjusted net assets are more than $3.5 billion but less than $10 billion, or (iii) 1.5% of the adjusted net assets when the adjusted net assets are $10 billion or more. The incentive management fee will be 0.25% of the amount of adjusted net assets exceeding $3.5 billion only when the adjusted net assets are more than $3.5 billion but less than $10 billion and only if the Company’s annualized internal rate of return on equity for the trailing three-years exceeds 12%. Any incentive management fee paid to the Manager may only be distributed by the Manager among the then-current Employees (as defined in the MSA) of the Manager. Such incentive management fee is subject to approval by the Compensation Committee of the Board. The MSA Amendment also eliminates the payment of integration services fee by the Company’s subsidiaries to the Manager and excludes excess cash held by the Company and the Company’s subsidiaries, subject to certain exceptions, from the calculation of the adjusted net assets of the Company, along with certain other changes.
Previous report — wording carried elsewhere
As a result of the restatement of the financial statements as of December 31, 2024, 2023 and 2022 and for the years ended December 31, 2024, 2023 and 2022, as well as for the period ended December 31, 2021 and revisions made in the quarter ended March 31, 2025, the management fees paid to CGM were in excess of the amounts that should have been due under the MSA. While the MSA does not contain an express mechanism that permits the Company to immediately clawback the overpayment of management fees during the aforementioned periods, the MSA provides that future payments under the MSA will be reduced, on a dollar-for-dollar basis, by the aggregate amount of all overpaid management fees. The Company currently estimates the aggregate amount of overpaid management fees as of March 31, 2025 at approximately$43.1 million, which amount will reduce future payments on a dollar-for-dollar basis.
Previous report — wording carried elsewhere
Oxley Act of 2002, as amended, and align the acquired entity's policies and procedures with our other subsidiaries. Integration services fees are recorded as selling, general and administrative expense in the consolidated statement of operations. The amendment to the Management Service Agreement entered into in January 2025 eliminated the payment of integration services for future acquisitions.