Compass Diversified Holdings
For the period ended Sep 30, 2025. Filed Jan 14, 2026.
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.
Sep 30, 2025 · Filed Jan 14, 2026
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 2025-06-30; filed 2025-12-29.
0001345126-25-000092
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-09-30; filed 2026-01-14.
0001345126-26-000011
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 296 previous paragraphs and 304 current paragraphs.
170 unchanged; 89 reworded; 43 added; 24 removed; 13 previous and 2 current paragraphs rearranged.
Tables are not compared: 67 previous and 66 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 (43)
Current report
On July 25, 2025, the LLC entered into a Second Forbearance Agreement and Third Amendment to Credit Agreement (the “Third Amendment”) to its Credit Agreement. The Third Amendment was by and among the LLC, the lenders party thereto, and the Administrative Agent.
Current report
The Third Amendment provided that the Administrative Agent and the Lenders would 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 October 24, 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 Third Amendment; (d) a declaration by the trustee or any holders of the LLC’s 2029 Senior Unsecured Notes of any default or event of default under the Indenture dated as of March 23, 2021 between the LLC and U.S. Bank National Association, as trustee, for which a forbearance agreement was not executed with the LLC within five business days after the date of such declaration; 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 LLC and U.S. Bank National Association, as trustee, for which a forbearance agreement was not executed with the LLC within five business days after the date of such declaration (the period from July 25, 2025 through the earliest of events (a) through (e) above, the “Second Forbearance Period”).
Current report
In addition to the forbearance of the Lenders described above, the Third Amendment also amended the Credit Agreement to (i) limit the management fees that were able to be paid by the LLC to CGM to no more than $5 million per fiscal quarter (with the amount of such management fees that could not 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 could be paid by the LLC’s subsidiaries to the Manager to no more than $2.0 million per fiscal quarter. The Third Amendment contained customary representations and warranties.
Current report
During the Indenture Forbearance Period, the Supporting Holders also agreed (1) in the event that the Trustee or any holder or group of holders of the Notes declares the 2029 Notes and/or the 2032 Notes to be due and payable immediately solely as a result of any Specified Default (an “Acceleration”), the Supporting Holders would (a) deliver written notice and direction to the Trustee to rescind and not seek any remedy under the Indenture in connection with such Acceleration in accordance with the terms of the Indentures and (b) take all other action in the Supporting Holders’ power to cause such Acceleration to be rescinded and cancelled, to the extent permitted by the Indentures, and (2) not to transfer any right, title or interest in their respective Notes, unless (x) such transferee was a party to the Indenture Forbearance Agreement or (y) the transferee executed a joinder agreeing to be bound by the terms of the Indenture Forbearance Agreement if such transferee was not already a party to the Indenture Forbearance Agreement.
Current report
As consideration for entering into Indenture Forbearance Agreement, the LLC agreed to pay to each holder of Notes such holder’s pro rata share of (a) an upfront fee, paid in kind by increasing the principal amount of the applicable series of Notes, equal to 1.75% of the aggregate principal amount of Notes outstanding, and (b) additional interest, paid in kind by increasing the principal amount of the applicable series of Notes, equal to the equivalent of a 5.00% per annum increase in the interest rate for the applicable series of Notes for the period between August 1, 2025 and October 24, 2025.
Current report
On September 9, 2025, the LLC entered into (a) a second supplemental indenture by and between the LLC and the Trustee amending and supplementing the 2029 Notes Indenture (the “2029 Second Supplemental Indenture”); and (b) a second supplemental indenture (the “2032 Second Supplemental Indenture” and, together with the 2029 Second Supplemental Indenture, the “Supplemental Indentures”) by and between the LLC and the Trustee, amending and supplementing the 2032 Notes Indenture.
Current report
The Supplemental Indentures: (a) amended and restated Section 2.01(a) of each of the Indentures to (i) require all Notes to be in minimum denominations of $1.00 and integral multiples of $1.00 in excess thereof and (ii) authorize the payment of the PIK Payments (defined below), payable in kind as an increase in the principal amount of the Global Notes (as defined in the Indentures) held by Cede & Co., as nominee for the Depositary (as defined in the Indentures); and (b) added a new Section 4.19 to each of the Indentures (i) requiring the LLC to make (A) a special one-time payment in kind (the “Fixed PIK Payment”) on September 17, 2025 (the “Fixed PIK Payment Date”) in an amount equal to $17.50 per $1,000 of the principal amount of the Notes outstanding to the holders of such Notes as of September 16, 2025; and (B) an additional interest payment on the Notes (the “Interest PIK Payment” and, together with the Fixed PIK Payment, the “PIK Payments”) at a rate of 5.00% per annum for each day during the period beginning on, and including, August 1, 2025 and ending on the earlier of (X) October 24, 2025 and (Y) the date of delivery to the Trustee of restated audited annual financials for fiscal years 2022, 2023, and 2024 and unaudited financials for the first quarter of fiscal year 2025.
Current report
Pursuant to Section 4.19(c), PIK Payments on the Notes were payable by increasing the principal amount of the outstanding Global Notes by an amount equal to the amount of the applicable PIK Payment (rounded down to the nearest whole dollar) as directed by the LLC. Such increased principal amount is fungible with the Notes issued prior to the applicable date of such PIK Payment and will bear interest from the most recent interest payment date on the Notes prior to the applicable date of such PIK Payment. The principal of all Notes resulting from a PIK Payment will mature on the maturity dates of the Notes.
Current report
On October 27, 2025, the Trustee delivered a notice of default under the Indentures related to the Company’s failure to deliver to the Trustee the Company’s consolidated financial statements for the fiscal quarter ending March 31, 2025 within the time period required under the Indenture Forbearance Agreement. The Company completed the delivery of its consolidated financial statements for the fiscal quarter ending March 31, 2025 on December 19, 2025, within a sixty (60) day cure period provided under the Indentures to remedy such defaults.
Current report
We recorded interest expense totaling $66.7 million for the three months ended September 30, 2025 compared to $31.6 million for the comparable period in 2024, an increase of $35.1 million. As consideration for entering into Indenture Forbearance Agreement, the LLC agreed to pay to each holder of Notes such holder’s pro rata share of (a) an upfront fee, paid in kind by increasing the principal amount of the applicable series of Notes, equal to 1.75% of the aggregate principal amount of Notes outstanding, and (b) additional interest, paid in kind by increasing the principal amount of the applicable series of Notes, equal to the equivalent of a 5.00% per annum increase in the interest rate for the applicable series of Notes for the period between August 1, 2025 and October 24, 2025. The Company recorded $22.8 million in paid-in-kind interest expense in the third quarter of 2025 related to the upfront fee required by the Indenture Forbearance Agreement, and accrued approximately $11.5 million related to the increase in interest rate during the third quarter of 2025.
Current report
Segment operating loss for the three months ended September 30, 2025 was $10.8 million, as compared to $14.9 million in the corresponding period in 2024.
Current report
Segment operating margin was (62.2)% in thethird quarter of 2025 as compared to (104.5)% in thethird quarter of 2024.
Current report
Segment operating loss for the three months ended September 30, 2025 was $1.9 million, a decrease of $0.2 million when compared to segment operating income of $2.0 million for the same period in 2024, driven by a decrease in selling, general and administrative expense during the third quarter of 2025. Selling, general and administrative expense as a percentage of net sales was 36.5% in the quarter ended September 30, 2025 as compared to 38.2% in the quarter ended September 30, 2024. Segment operating margin was (14.0)% in the third quarter of 2025 as compared to (14.9)% in the third quarter of 2024.
Current report
Segment operating income for the three months ended September 30, 2025 was $2.7 million, a decrease of $0.2 million when compared to segment operating income of $2.8 million for the same period in 2024. Compared to the third quarter of 2024, segment operating income in the third quarter of 2025 included increased investment in marketing and research and development and higher incentive compensation expense. Selling, general and administrative expense as a percentage of net sales was 35.4% in the third quarter of 2025 and 31.1% in the third quarter of 2024. Segment operating margin in the third quarter of 2025 was 7.6% as compared to 8.9% in the third quarter of 2024.
Current report
Net sales for the three months ended September 30, 2025 were $29.0 million, an increase of $0.2 million or 0.8%, compared to net sales of $28.8 million inthe same period in 2024. The increase in net sales for the three months ended September 30, 2025 was primarily driven by increased archery sales through dealer and distributor channels.
Current report
Segment operating income for the three months ended September 30, 2025 was $2.9 million compared to segment operating income of $1.5 million for the same period in 2024. Segment operating margin was 10.0% in the third quarter of 2025 as compared to 5.2% in the third quarter 2024. Gross profit increased quarter over quarter with gross profit of $9.3 million in the third quarter of 2025 as compared to $8.9 million in the third quarter of 2024, and selling, general and administrative expense as a percentage of net sales decreased to 17.5% in the third quarter of 2025 as compared to 21.0% in the third quarter of 2024. The decrease in selling, general and administrative expense as a percentage of net sales was due to a decrease in discretionary spending in general and administrative expense.
Current report
Net sales for the three months ended September 30, 2025 were approximately $73.5 million, a decrease of $11.7 million, or 13.8%, compared to net sales of $85.2 million inthe same period in 2024. The net sales variance reflects a decrease in sales volume attributed to non-recurring customer promotional activity as compared to the prior year and category softness in the home fragrance product line.
Current report
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024 (as restated)
Current report
In connection with the entry into the Third Amendment on July 5, 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 $5.0 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 could be paid by the LLC’s subsidiaries to the Manager to no more than $2.0 million per fiscal quarter. The amount of management fees paid during the second quarter of 2025 was also limited by the First Forbearance Agreement to no more than $10.5 million by the LLC and no more than $2.0 million by the LLC's subsidiaries.
Current report
Interest expense, net
Current report
We recorded interest expense totaling $136.7 million for the nine months ended September 30, 2025 compared to $86.5 million for the comparable period in 2024, an increase of $50.2 million. As consideration for entering into Indenture Forbearance Agreement, the LLC agreed to pay to each holder of Notes such holder’s pro rata share of (a) an upfront fee, paid in kind by increasing the principal amount of the applicable series of Notes, equal to 1.75% of the aggregate principal amount of Notes outstanding, and (b) additional interest, paid in kind by increasing the principal amount of the applicable series of Notes, equal to the equivalent of a 5.00% per annum increase in the interest rate for the applicable series of Notes for the period between August 1, 2025 and October 24, 2025. The Company recorded $22.8 million in paid-in-kind interest expense in the third quarter of 2025 related to the upfront fee required by the Indenture Forbearance Agreement, and accrued approximately $11.5 million related to the increase in interest rate during the third quarter of 2025.
Current report
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024
Current report
Net sales for thenine months ended September 30, 2025 were approximately$216.3 million, a decrease of$7.5 million, or 3.3%, compared to net sales of$223.8 million inthe same period in 2024. The net sales variance reflects a decrease in sales volume attributed to non-recurring customer promotional activity as compared to the prior year and category softness in both the food service and home fragrance product line resulting from the impact of tariffs on pricing.
Current report
On July 25, 2025, the LLC entered into a Second Forbearance Agreement and Third Amendment to Credit Agreement (the “Third Amendment”). Under the Third Amendment, the Lenders would 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 would not cause the Lenders’ revolving credit exposures (inclusive of letters of credit obligations) to exceed $60 million. During the
Current report
Second Forbearance Period, the LLC could make Restricted Payments (as defined in the Credit Agreement), including any dividend or other distribution with respect to equity interests, if, after giving effect to any indebtedness incurred in connection with such payment (a) all cash of the LLC on deposit with the Administrative Agent or subject to a qualifying control account, plus (b) unused borrowing availability, is not less than $10 million; provided, however, that the forgoing is not the exclusive method by which the LLC was able to make Restricted Payments.
Current report
In addition to the forbearance of the Lenders described above, the Third Amendment also amended the Credit Agreement to (i) limit the management fees that were able to be paid by the LLC to the Manager to no more than $5 million per fiscal quarter (with the amount of such management fees that could not 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 could be paid by the LLC’s subsidiaries to the Manager to no more than $2.0 million per fiscal quarter.
Current report
On August 29, 2025, the LLC entered into a Forbearance Agreement (the “Indenture Forbearance Agreement”) with certain holders of the Notes (collectively, the “Supporting Holders”) and, for certain limited purposes described therein, the Trustee, pursuant to which, during the Indenture Forbearance Period (as defined above), the Supporting Holders agreed to forbear, and to direct the Trustee to forbear, from exercising rights and remedies available to them with respect to (i) actual or potential defaults or events of default under the Indentures resulting from any breach of the Indentures’ requirement to provide certain financials within specified time periods, and (ii) any other default or event of default mutually agreed upon between the Supporting Holders and the LLC in writing and delivered to the Trustee (events (i) and (ii), collectively, the “Specified Defaults”). As consideration for entering into Indenture Forbearance Agreement, the LLC agreed to pay to each holder of Notes such holder’s pro rata share of (a) an upfront fee, paid in kind by increasing the principal amount of the applicable series of Notes, equal to 1.75% of the aggregate principal amount of Notes outstanding, and (b) additional interest, paid in kind by increasing the principal amount of the applicable series of Notes, equal to the equivalent of a 5.00% per annum increase in the interest rate for the applicable series of Notes for the period between August 1, 2025 and October 24, 2025.
Current report
The 2022 Credit Facility provides that the financial covenants thereunder will not be tested again until the Company’s prepares and files its consolidated financial statements for the fiscal year ended December 31, 2025, which the Company expects to occur on or before March 31, 2026. In evaluating the Company’s ability to continue as a going concern under Accounting Standard Codification Topic (ASC) 205, Presentation of Financial Statements - Going Concern (ASC 205-40) (which requires consideration of conditions and events within one year after the date these consolidated financial statements are issued), management considered, among other matters, the Company’s recent covenant noncompliance, the timing of the next financial-covenant test, and the Company’s projected operating results and leverage for the evaluation period. These projections are subject to significant uncertainty and are sensitive to, among other factors, operating performance, working capital requirements, and the Company’s ability to achieve planned initiatives. Additionally, even if the Company is in compliance with the reset financial covenants under the Fifth Amendment, pursuant to a letter agreement entered into in connection with the Fifth Amendment, if the Company does not maintain a Consolidated Total Leverage Ratio (as defined in the Credit Facility) of less than 4.50:1.00 as of specified quarter-end dates beginning with the fiscal quarter ending June 30, 2026, the Company will be required to pay milestone fees to the administrative agent for the ratable benefit of the lenders in amounts that increase over time, subject to certain conditions.
Current report
On July 25, 2025, the LLC entered into a Second Forbearance Agreement and Third Amendment to Credit Agreement (the “Third Amendment”) to its Credit Agreement. The Third Amendment was by and among the LLC, the lenders party thereto, and the Administrative Agent.
Current report
The Third Amendment provided that the Administrative Agent and the Lenders would 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 October 24, 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 Third Amendment; (d) a declaration by the trustee or any holders of the LLC’s 2029 Senior Unsecured Notes of any default or event of default under the Indenture dated as of March 23, 2021 between the LLC and U.S. Bank National Association, as trustee, for which a forbearance agreement was not executed with the LLC within five business days after the date of such declaration; 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 LLC and U.S. Bank National Association, as trustee, for which a forbearance agreement was not executed with the LLC within five business days after the date of such declaration (the period from July 25, 2025 through the earliest of events (a) through (e) above, the “Second Forbearance Period”).
Current report
Administrative Agent or subject to a qualifying control account, plus (b) unused borrowing availability, was not less than $10 million; provided, however, that the forgoing was not the exclusive method by which the LLC was able to make Restricted Payments.
Current report
In addition to the forbearance of the Lenders described above, the Third Amendment also amended the Credit Agreement to (i) limit the management fees that were able to be paid by the LLC to CGM to no more than $5 million per fiscal quarter (with the amount of such management fees that could not 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 could be paid by the LLC’s subsidiaries to the Manager to no more than $2.0 million per fiscal quarter. The Third Amendment contains customary representations and warranties.
Current report
In connection with the Lugano matters, the LLC maintained regular communication with holders of the LLC’s Notes concerning the existence of the potential for default under the terms of the Indentures in respect of the Lugano matters. To provide the Company with adequate time to complete the restatement of its 2022, 2023, and 2024 financial statements and to file its quarterly reports for the first and second quarters of 2025, on August 29, 2025, the LLC entered into a Forbearance Agreement (the “Indenture Forbearance Agreement”) with certain holders of the Notes (collectively, the “Supporting Holders”) and, for certain limited purposes described therein, the Trustee, pursuant to which, during the Indenture Forbearance Period (as defined below), the Supporting Holders agreed to forbear, and to direct the Trustee to forbear, from exercising rights and remedies available to them with respect to (i) actual or potential defaults or events of default under the Indentures resulting from any breach of the Indentures’ requirement to provide certain financial within specified time periods, and (ii) any other default or event of default mutually agreed upon between the Supporting Holders and the LLC in writing and delivered to the Trustee (events (i) and (ii), collectively, the “Specified Defaults”) until the earliest of: (a) the occurrence or existence of any event of default under the Indentures, other than the Specified Defaults, that is not cured or waived within any applicable grace or cure period under the Indentures; (b) the failure of the LLC to timely comply with any term, condition, or covenant of the Indenture Forbearance Agreement; (c) the termination of the forbearance period provided under the
Current report
Second Forbearance Agreement with respect to the Credit Agreement, such forbearance period having not been extended or replaced by another forbearance or similar agreement among the parties thereto within three (3) business days of such termination; (d) the cure of any Specified Default related to any breach of the requirement to provide certain financial information within specified time periods pursuant to Section 4.03 of the Indentures; (e) the LLC’s failure to cause the execution and the delivery of supplemental indentures in respect of each series of Notes substantially in the form provided in the Indenture Forbearance Agreement providing for the payment to the holders of the Notes of the fees specified in the Indenture Forbearance Agreement (or another form reasonably acceptable to the Supporting Holders providing for the payment of the same fees) (the “Supplemental Indentures”), or alternatively the LLC failed to make certain cash fee payment within fifteen business days of August 29, 2025, and (f) 11:59 p.m. ET on October 24, 2025 (the period from August 29, 2025 through the earliest of events (a) through (f) above, the “Indenture Forbearance Period”).
Current report
During the Indenture Forbearance Period, the Supporting Holders also agreed (1) in the event that the Trustee or any holder or group of holders of the Notes declared the 2029 Notes and/or the 2032 Notes to be due and payable immediately solely as a result of any Specified Default (an “Acceleration”), the Supporting Holders would (a) deliver written notice and direction to the Trustee to rescind and not seek any remedy under the Indenture in connection with such Acceleration in accordance with the terms of the Indentures and (b) take all other action in the Supporting Holders’ power to cause such Acceleration to be rescinded and cancelled, to the extent permitted by the Indentures, and (2) not to transfer any right, title or interest in their respective Notes, unless (x) such transferee was a party to the Indenture Forbearance Agreement or (y) the transferee executed a joinder agreeing to be bound by the terms of the Indenture Forbearance Agreement if such transferee was not already a party to the Indenture Forbearance Agreement.
Current report
As consideration for entering into Indenture Forbearance Agreement, the LLC agreed to pay to each holder of Notes such holder’s pro rata share of (a) an upfront fee, paid in kind by increasing the principal amount of the applicable series of Notes, equal to 1.75% of the aggregate principal amount of Notes outstanding, and (b) additional interest, paid in kind by increasing the principal amount of the applicable series of Notes, equal to the equivalent of a 5.00% per annum increase in the interest rate for the applicable series of Notes for the period between August 1, 2025 and October 24, 2025.
Current report
On September 9, 2025, the LLC entered into (a) a second supplemental indenture by and between the LLC and the Trustee amending and supplementing the 2029 Notes Indenture (the “2029 Second Supplemental Indenture”); and (b) a second supplemental indenture (the “2032 Second Supplemental Indenture” and, together with the 2029 Second Supplemental Indenture, the “Supplemental Indentures”) by and between the LLC and the Trustee, amending and supplementing the 2032 Notes Indenture.
Current report
The Supplemental Indentures: (a) amended and restated Section 2.01(a) of each of the Indentures to (i) require all Notes to be in minimum denominations of $1.00 and integral multiples of $1.00 in excess thereof and (ii) authorize the payment of the PIK Payments (defined below), payable in kind as an increase in the principal amount of the Global Notes (as defined in the Indentures) held by Cede & Co., as nominee for the Depositary (as defined in the Indentures); and (b) added a new Section 4.19 to each of the Indentures (i) requiring the LLC to make (A) a special one-time payment in kind (the “Fixed PIK Payment”) on September 17, 2025 (the “Fixed PIK Payment Date”) in an amount equal to $17.50 per $1,000 of the principal amount of the Notes outstanding to the holders of such Notes as of September 16, 2025; and (B) an additional interest payment on the Notes (the “Interest PIK Payment” and, together with the Fixed PIK Payment, the “PIK Payments”) at a rate of 5.00% per annum for each day during the period beginning on, and including, August 1, 2025 and ending on the earlier of (X) October 24, 2025 and (Y) the date of delivery to the Trustee of restated audited annual financials for fiscal years 2022, 2023, and 2024 and unaudited financials for the first quarter of fiscal year 2025.
Current report
Pursuant to Section 4.19(c), PIK Payments on the Notes were payable by increasing the principal amount of the outstanding Global Notes by an amount equal to the amount of the applicable PIK Payment (rounded down to the nearest whole dollar) as directed by the LLC. Such increased principal amount is fungible with the Notes issued prior to the applicable date of such PIK Payment and will bear interest from the most recent interest payment date on the Notes prior to the applicable date of such PIK Payment. The principal of all Notes resulting from a PIK Payment will mature on the maturity dates of the Notes.
Current report
On October 27, 2025, the Trustee delivered a notice of default under the Indentures related to the Company’s failure to deliver to the Trustee the Company’s consolidated financial statements for the fiscal quarter ending March 31, 2025 within the time period required under the Indenture Forbearance Agreement. The Company completed the delivery of its consolidated financial statements for the fiscal quarter ending March 31, 2025 on December 19, 2025, within a sixty (60) day cure period provided under the Indentures to remedy such defaults.
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Removed paragraphs (24)
Previous report
NYSE Notice of Failure to Satisfy a Continued Listing Rule
Previous 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.
Previous report
Suspension of Distribution on Common Shares
Previous 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.
Previous report
Suspension of At-the-Market Offering Programs
Previous 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.
Previous report
Segment operating margin was (174.7)% in thesecond quarter of 2025 as compared to (150.5)% in thesecond quarter of 2024.
Previous 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.
Previous 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.
Previous 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.
Previous report
Net sales for the three months ended June 30, 2025 were approximately $77.5 million, an increase of $3.7 million, or 5.1%, compared to net sales of $73.8 million inthe same period in 2024. The net sales variance reflects higher sales volume as well as price increases in certain product categories.
Previous report
Six months ended June 30, 2025 compared to six months ended June 30, 2024 (as restated)
Previous 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.
Previous report
Impairment expense
Previous report
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 report
Loss on debt modification
Previous report
Loss on sale of Crosman
Previous report
Six months ended June 30, 2025 compared to six months ended June 30, 2024
Previous report
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.
Previous report
Net sales for thesix months ended June 30, 2025 were approximately$142.9 million, an increase of$4.3 million, or 3.1%, compared to net sales of$138.6 million inthe same period in 2024. The net sales variance reflects increases in sales volume as well as price increases in certain product categories.
Previous report
The 2022 Credit Facility provides that the financial covenants thereunder will not be tested again until the Company’s preparation and filing of its consolidated financial statements for the fiscal year ended December 31, 2025, which the Company expects to occur on or before March 31, 2026. Because this Form 10-Q has been filed shortly after execution of the Fifth Amendment, management has had limited ability to forecast its expectations for compliance with the amended covenants over the twelve-month look-forward period specified in ASC 205-40 - Presentation of Financial Statements, Going Concern, and such forecasts are subject to uncertainty.
Previous report
Interest Expense
Previous report
Manager to no more than $2.0 million per fiscal quarter. On May 22, 2025, the Manager delivered to the Company a waiver agreeing to the management fee limitations described above and waiving any management fees in excess of such limitations. 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.
Previous report
Refer to "Note O - Related Parties" included in the "Notes to the Condensed Consolidated Financial Statements" in this Form 10-Q, for additional information.
Reworded paragraphs (89)
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 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.
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 September 30, 2024 and for the three and nine months ended September 30, 2024. As a result, the previously reported financial information as of September 30, 2024 and for the three and nine months ended September 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
The Company'sareas of focus for 2025, which are generally applicable to each of our businesses, include:
Current wording
The Company'sareas of focus for 2025, which were generally applicable to each of our businesses, included:
Previous wording
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
Current wording
During the Second Forbearance Period, the Lenders under the Credit Agreement would 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 shall not cause the Lenders’ revolving credit exposures (inclusive of letters of credit obligations) to exceed $60 million. Lenders representing at least 50% of the total credit exposure of all Lenders under the Credit Agreement were able to, in their discretion, approve additional revolving borrowings by the LLC in an amount not to exceed an aggregate of $10 million. During the Second Forbearance Period, the LLC was able to make Restricted Payments (as defined in the Credit Agreement), including any dividend or other distribution with respect to equity interests, if, after giving effect to any indebtedness incurred in connection with such payment (a) all cash of the LLC on deposit with the Administrative Agent or subject to a qualifying control account, plus (b) unused borrowing availability, was not less than $10 million; provided, however, that the forgoing was not the exclusive method by which the LLC was able to make Restricted Payments.
Previous wording
First Forbearance Agreement with Respect to Credit Agreement
Current wording
In connection with the Lugano matters, the LLC has maintained regular communication with holders of the LLC’s Notes concerning the existence of the potential for default under the terms of the Indentures in respect of the Lugano matters. To provide the Company with adequate time to complete the restatement of its 2022, 2023, and 2024 financial statements and to file its quarterly reports for the first and second quarters of 2025, on August 29, 2025, the LLC entered into a Forbearance Agreement (the “Indenture Forbearance Agreement”) with certain holders of the Notes (collectively, the “Supporting Holders”) and, for certain limited purposes described therein, the Trustee, pursuant to which, during the Indenture Forbearance Period (as defined below), the Supporting Holders agreed to forbear, and to direct the Trustee to forbear, from exercising rights and remedies available to them with respect to (i) actual or potential defaults or events of default under the Indentures resulting from any breach of the Indentures’ requirement to provide certain financial within specified time periods, and (ii) any other default or event of default mutually agreed upon between the Supporting Holders and the LLC in writing and delivered to the Trustee (events (i) and (ii), collectively, the “Specified Defaults”) until the earliest of: (a) the occurrence or existence of any event of default under the Indentures, other than the Specified Defaults, that is not cured or waived within any applicable grace or cure period under the Indentures; (b) the failure of the LLC to timely comply with any term, condition, or covenant of the Indenture Forbearance Agreement; (c) the termination of the forbearance period provided under the Second Forbearance Agreement with respect to the Credit Agreement, such forbearance period having not been extended or replaced by another forbearance or similar agreement among the parties thereto within three (3) business days of such termination; (d) the cure of any Specified Default related to any breach of the requirement to provide certain financial information within specified time periods pursuant to Section 4.03 of the Indentures; (e) the LLC’s failure to cause the execution and the delivery of supplemental indentures in respect of each series of Notes substantially in the form provided in the Indenture Forbearance Agreement providing for the payment to the holders of the Notes of the fees specified in the Indenture Forbearance Agreement (or another form reasonably acceptable to the Supporting Holders providing for the payment of the same fees) (the “Supplemental Indentures”), or alternatively the LLC failed to make certain cash fee payment within fifteen business days of August 29, 2025, and (f) 11:59 p.m. ET on October 24, 2025 (the period from August 29, 2025 through the earliest of events (a) through (f) above, the “Indenture Forbearance Period”).
Previous 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.
Current wording
The following discussion reflects a comparison of the historical results of operations of our consolidated business for the three and nine months ended September 30, 2025 and September 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 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.
Current wording
In the following results of operations, we provide (i) our actual Consolidated Results of Operations for the three and nine months ended September 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 nine months ended September 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
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 wording
Consolidated net revenues for the three months ended September 30, 2025 increased by approximately $16.0 million, or 3.5%, compared to the corresponding period in 2024. During the three months ended September 30, 2025 compared to 2024, we saw notable increases in net revenues at 5.11 ($4.0 million increase), Lugano ($3.1 million increase), The Honey Pot Co. ($3.2 million increase), and Altor ($27.7 million increase). The increase in net revenue at Altor was attributable to the acquisition of Lifoam in October 2024. These increases in net revenue were offset by decreases in net revenue at BOA ($1.7 million decrease), Arnold ($8.4 million decrease), and Sterno ($11.7 million decrease). Refer to "Results of Operations - Operating Segments - Quarter-to-Date" for a more detailed analysis of net revenues by operating segment.
Previous 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.
Current wording
On a consolidated basis, gross profit increased approximately $11.1 million during the three months ended September 30, 2025 compared to the corresponding period in 2024. We saw increases in gross profit at 5.11 ($2.5 million increase), Lugano ($5.4 million increase), The Honey Pot Co. ($2.3 million increase), Altor ($4.1 million increase due to the timing of the Lifoam acquisition) and Sterno ($1.2 million increase). We saw decreases in gross profit at BOA ($0.4 million decrease) and Arnold ($4.3 million decrease) that corresponded to the decrease in net revenue noted above. Gross profit as a percentage of net revenues was approximately 44.0% in the three months ended September 30, 2025 compared to 43.1% in the three months ended September 30, 2024. The increase in gross profit as a percentage of net revenue in the quarter ended September 30, 2025 as compared to the quarter ended September 30, 2024 is driven by the increase in gross margin at our consumer businesses during the quarter. Our branded consumer businesses had gross profit as a percentage of net revenues of 55.3% in the third quarter of 2025 as compared to 53.4% in the third quarter of 2024, while our industrial businesses had gross profit as a percentage of net revenues of 27.2% in the third quarter of 2025 as compared to 27.8% in the third 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 at Arnold.
Previous 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.
Current wording
Consolidated selling, general and administrative expense increased approximately $33.4 million during the three months ended September 30, 2025, compared to the corresponding period in 2024, driven primarily by increases at the corporate level ($26.8 million increase), 5.11 ($1.2 million increase) due to increases in sales and marketing investments and an increase in the bonus pool versus the prior year, Lugano ($1.5 million increase) and Altor ($3.9 million increase) due to the acquisition of Lifoam in the fourth quarter of 2024.
Previous 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.
Current wording
At the corporate level, general and administrative expense was $32.6 million in the third quarter of 2025 and $5.9 million in the third quarter of 2024, an increase of $26.8 million. The increase in general and administrative expense in the third quarter of 2025 was primarily due to $27.7 million of costs incurred in the third 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
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 six months ended June 30, 2025, we incurred approximately $37.9 million in management fees as compared to $36.7 million in fees in the six months ended June 30, 2024.
Current wording
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 September 30, 2025, we incurred approximately $16.2 million in management fees as compared to $18.6 million in fees in the three months ended September 30, 2024. The Management fee incurred in the three months ended September 30, 2025 and 2024 reflects the amount incurred prior to the restatement of the Company's financial statements as the Company is not permitted under the MSA to adjust the amount owed to the Manager until the time when the restated financial information was available, which occurred upon the filing of the Company's 10-K/A on December 8, 2025. Therefore the expense recorded in the quarter ended September 30, 2025 and 2024 reflects the amount that would have been due to the Manager at the time calculated, prior to the restatement of the Company's financial statements. The calculation of the adjusted management fee incurred as of September 30, 2025 resulted in a total amount of $13.8 million that should have been due to the Manager.
Previous wording
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 wording
In connection with the entry into the Third Amendment on July 5, 2025, the Credit Agreement was modified to (i) limit the management fees that were able to be paid by the LLC to the "Manager to no more than $5.0 million per fiscal quarter (with the amount of such management fees that could not 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 could be paid by the LLC’s subsidiaries to the Manager to no more than $2.0 million per fiscal quarter. For the quarter ended September 30, 2025, the total management fee incurred was $16.2 million, however, due to the restrictions imposed by the Third Amendment, the total amount paid to the Manager was $6.6 million.
Previous 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.
Current wording
Amortization expense for the three months ended September 30, 2025 decreased $0.5 million as compared to the three months ended September 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 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 wording
The interest expense also reflects an increase of $0.8 million in interest expense related to financing arrangements at our Lugano business.
Previous wording
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 wording
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 gain on the sale of Crosman in the quarter ending September 30, 2024 of $0.4 million
Previous wording
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 wording
For the quarter ended September 30, 2025, we recorded $2.3 million in other expense as compared to $37.8 million in other expense in the quarter ended September 30, 2024, a decrease in expense of $35.4 million. The other expense in the quarter ended September 30, 2024 primarily represents expense recognized at Lugano related to losses resulting fromthe accounting for the transactions associated with the off-balance sheet arrangements ($37.7 million in expense in the three months ended September 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.
Previous 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.
Current wording
We had an income tax provision of $5.8 million during the three months ended September 30, 2025 compared to an income tax provision of $2.8 million during the same period in 2024, an increase of $3.0 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 the current quarter, the Trust recognized approximately $9.9 million related to income from the tax effect of the Indenture Forbearance Agreement. In addition to state income taxes, the item 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 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 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 wording
Net sales for the three months ended September 30, 2025 were $143.2 million as compared to net sales of $139.2 million for the three months ended September 30, 2024, an increase of $4.0 million, or 2.9%. The increase was driven primarily by a $3.7 million rise in domestic wholesale sales, reflecting strong demand and improved inventory availability; a $1.0 million increase in direct-to-consumer sales, attributable to heightened promotional activity; and a $1.8 million increase in international sales, supported by continued demand across key markets. These gains were partially offset by a $2.1 million decline in direct-to-agency sales, primarily due to the timing of large contracts.
Previous wording
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 wording
Segment operating income for the three months ended September 30, 2025 was $16.3 million, a decrease of $1.3 million when compared to segment operating income of $14.9 million for the same period in 2024. The increase in segment operating income reflects higher net sales and gross margin dollars that were partially offset by increased selling, general and administrative expenses, primarily driven by increased marketing investments to support sales growth. Segment operating margin was 11.4% in the third quarter of 2025 and 10.7% in the third quarter of 2024.
Previous wording
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 wording
Net sales for the three months ended September 30, 2025 were $43.9 million as compared to net sales of $45.6 million for the three months ended September 30, 2024, a decrease of $1.7 million, or 3.7%. 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 Outdoor.
Previous wording
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 wording
Segment operating income for the three months ended September 30, 2025 was $10.8 million, an increase of $0.4 million when compared to segment operating income of $10.4 million for the same period in 2024. The increase in segment operating income was driven by improved product margins and reduced employee costs related to BOA’s bonus plan. Segment operating margin was 24.6% in the third quarter of 2025 and 22.7% in the third quarter of 2024. The increase in segment operating margin in the current quarter was primarily driven by improved gross margins.
Previous 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.
Current wording
Net sales for the three months ended September 30, 2025 were $17.4 million an increase of approximately $3.1 million, or 21.6%, compared to net sales of $14.3 million in the corresponding quarter ended September 30, 2024.
Previous wording
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 wording
Net sales for the three months ended September 30, 2025 were $13.3 million, a decrease of $0.4 million as compared to net sales of $13.7 million for the three months ended September 30, 2024. The decrease in net sales in the current quarter versus the quarter ended September 30, 2024 is attributable to a reduction in late season purchases from PrimaLoft's North American brand partners due to recent increases in tariffs in the United States.
Previous 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.
Current wording
Net sales for the three months ended September 30, 2025 were $34.7 million, an increase of $3.2 million or 10.1% from net sales of $31.5 million for the three months ended September 30, 2024. The increase in net sales is primarily due to strong volume growth due to market share gain in the 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
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.
Current wording
Net sales for the quarter ended September 30, 2025 were $79.8 million, an increase of $27.7 million, or 53.1%, compared to net sales of $52.1 million in the quarter ended September 30, 2024. The increase in net sales during the quarter was driven by the acquisition of Lifoam in October 2024. Lifoam contributed $38.9 million in net sales in the third quarter of 2025. The increase in net sales attributable to Lifoam was offset by lower sales due to reduced demand in the industrial white goods market and shifting market conditions in the perishable and cold chain markets.
Previous 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.
Current wording
Segment operating income was $5.2 million in the three months ended September 30, 2025, a decrease of $0.8 million as compared to the three months ended September 30, 2024. Segment operating margin was 6.5% in thethird quarter of 2025 as compared to 11.5% in thethird 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 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 wording
Net sales for the three months ended September 30, 2025 were approximately $37.7 million, a decrease of $8.4 million compared to net sales of $46.1 million in the same period in 2024. The decrease in net sales is primarily a result of lower demand in various markets and material and production restraints.
Previous wording
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.
Current wording
Segment operating income for the three months ended September 30, 2025 was approximately $1.2 million, a decrease of $4.2 million when compared to the same period in 2024. The decrease in segment operating income was driven by the decrease in revenue, unfavorable product mix and executive transition costs. Segment operating margin was 3.3% in thethird quarter of 2025 as compared to 11.8% in thethird quarter of 2024.
Previous 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.
Current wording
Segment operating income for the three months ended September 30, 2025 was approximately $9.8 million, an increase of $2.8 million compared to the three months ended September 30, 2024, driven by an increase in gross margin and reduced amortization expense for intangibles that have been fully amortized (amortization expense decreased $1.5 million quarter over quarter). Gross profit as a percentage of net sales was 30.4% in the third quarter of 2025 as compared to 24.8% in the third quarter of 2024, driven by lower material costs and overhead. Segment operating margin was 13.4% in thethird quarter of 2025 as compared to 8.2% in the third quarter of 2024.
Previous 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.
Current wording
Consolidated net revenues for the nine months ended September 30, 2025 increased by approximately $110.9 million, or 8.6%, compared to the corresponding period in 2024. During the nine months ended September 30, 2025 compared to 2024, we saw notable increases in net revenues at 5.11 ($16.7 million increase), Lugano ($33.9 million increase), The Honey Pot Co. ($27.8 million increase), and Altor ($81.6 million increase). The Honey Pot Co. was acquired on January 31, 2024 and had an incremental revenue increase of $17.2 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 were offset by decreases in net revenue at Velocity ($20.0 million decrease, primarily as a result of the sale of Crosman), Arnold ($20.4 million decrease), and Sterno ($7.5 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
On a consolidated basis, gross profit increased approximately $41.4 million during the six months ended June 30, 2025 compared to the corresponding period in 2024. We saw notable increases in gross profit at 5.11 ($6.8 million increase) and Lugano ($7.3 million increase)that correlates with the increase in net revenue in the first six months of 2025. The Honey Pot Co. had an $18.6 million increase in gross profit that was partially attributable to the timing of its acquisition on January 31, 2024 and therefore only five months of activity are included in the six months ended June 30, 2024, and partially attributable to the increase in net revenues during the period. Altor had a $10.5 million increase in gross profit that is attributable to the timing of its acquisition of Lifoam on October 1, 2024. We saw decreases in gross profit at Velocity ($3.8 million decrease, primarily as a result of the sale of Crosman) and Arnold ($8.0 million decrease) that corresponded to the decrease in net revenue noted above. Gross profit as a percentage of net revenues was approximately 43.4% in both the six months ended June 30, 2025 and the six months ended June 30, 2024. Our branded consumer businesses had gross profit as a percentage of net revenues of 55.0% in the six months ended June 30, 2025 as compared to 53.1% in the six months ended June 30, 2024, while our industrial businesses had gross profit as a percentage of net revenues of 26.1% in the six months ended June 30, 2025 as compared to 28.3% in the six months ended June 30, 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 $52.5 million during the nine months ended September 30, 2025 compared to the corresponding period in 2024. We saw notable increases in gross profit at 5.11 ($9.3 million increase) and Lugano ($17.8 million increase)that correlates with the increase in net revenue in the first nine months of 2025. The Honey Pot Co. had an $20.9 million increase in gross profit that was partially attributable to the timing of its acquisition on January 31, 2024 and therefore only eight months of activity are included in the nine months ended September 30, 2024, and partially attributable to the increase in net revenues during the period. Altor had a $14.6 million increase in gross profit that is attributable to the timing of its acquisition of Lifoam on October 1, 2024. We saw decreases in gross profit at Velocity ($3.4 million decrease, primarily as a result of the sale of Crosman) and Arnold ($12.3 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 nine months ended September 30, 2025 and 43.3% the nine months ended September 30, 2024. Our branded consumer businesses had gross profit as a percentage of net revenues of 55.1% in the nine months ended September 30, 2025 as compared to 53.2% in the nine months ended September 30, 2024, while our industrial businesses had gross profit as a percentage of net revenues of 26.4% in the nine months ended September 30, 2025 as compared to 28.1% in the nine months ended September 30, 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.
Previous wording
Consolidated selling, general and administrative expense increased approximately $37.2 million during the six months ended June 30, 2025, compared to the corresponding period in 2024, driven primarily by increases at Corporate ($8.9 million increase), 5.11 ($7.3 million increase) due to by non-recurring payroll costs associated with restructuring, higher performance-based bonuses, and increased marketing investments to support sales growth, Lugano ($10.7 million increase) due to increases in marketing expenses as well as personnel costs and rent expense associated with the opening of its Chicago salon in the second quarter of 2025, The Honey Pot Co. ($3.2 million increase) due to increased marketing investments, and Altor ($8.0 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.
Current wording
Consolidated selling, general and administrative expense increased approximately $70.5 million during the nine months ended September 30, 2025, compared to the corresponding period in 2024, driven primarily by increases at Corporate ($36.0 million increase), 5.11 ($8.5 million increase) due to by non-recurring payroll costs associated with restructuring, higher performance-based bonuses, and increased marketing investments to support sales growth, Lugano ($12.5 million increase) due to increases in marketing expenses as well as personnel costs and rent expense associated with the opening of its Chicago salon in the second quarter of 2025, The Honey Pot Co. ($5.7 million increase) due to increased marketing investments, and Altor ($11.9 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 $17.8 million in the six months ended June 30, 2025 and $8.9 million in the six months ended June 30, 2024. The increase in corporate general and administrative expense in the first half of 2025 related to the ongoing costs of an investigation at our Lugano subsidiary. The Company incurred $8.4 million in the second quarter of 2025 related to the investigation at Lugano, which began in April 2025. The remainder of the increase in selling, general and administrative expense was due to increased legal and professional fees incurred during the first half of 2025. The Company will continue to incur significant costs related to the Lugano investigation during the remainder of 2025.
Current wording
At the corporate level, general and administrative expense was $50.4 million in the nine months ended September 30, 2025 and $14.4 million in the nine months ended September 30, 2024. The increase in corporate general and administrative expense in the first nine months of 2025 related to the ongoing costs of an investigation at our Lugano subsidiary. The Company incurred $36.7 million in the nine months ended September 30, 2025 related to the investigation at Lugano, which began in April 2025. The Company also saw increased legal and professional fees incurred during the first nine months of 2025, offset by decreases in salary and bonus expense. The Company will continue to incur significant costs related to the Lugano investigation during the remainder of 2025.
Previous wording
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 wording
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 nine months ended September 30, 2025, we incurred approximately $54.1 million in management fees as compared to $55.3 million in fees in the nine months ended September 30, 2024. The Management fee incurred in the nine months ended September 30, 2025 and 2024 reflects the amount incurred prior to the restatement of the Company's financial statements as the Company is not permitted under the MSA to adjust the amount owed to the Manager until the time when the restated financial information was available, which occurred upon the filing of the Company's 10-K/A on December 8, 2025. Therefore the expense recorded in the nine months ended September 30, 2025 and 2024 reflects the amount that would have been due to the Manager at the time calculated, prior to the restatement of the Company's financial statements.
Previous wording
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 wording
Amortization expense for the nine months ended September 30, 2025 decreased $1.6 million as compared to the nine months ended September 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.
Previous 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.
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 its 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
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 wording
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 totaling $24.2 million in 2024.
Previous 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.
Current wording
For the nine months ended September 30, 2025, we recorded $14.3 million in other expense as compared to $125.9 million in other expense in the nine months ended September 30, 2024, a decrease in expense of $111.5 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 nine months ended September 30, 2024 primarily represents expense recognized at Lugano related to losses resulting fromthe accounting for the transactions associated with the off-balance sheet arrangements ($121.5 million in expense in the nine months ended September 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, primarily in the first quarter of 2025. In the nine months ended September 30, 2024, the expense reflected a non-recurring loss on an equity method investment at Altor Solutions.
Previous wording
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 wording
We had an income tax provision of $25.7 million during the nine months ended September 30, 2025 compared to an income tax provision of $21.5 million during the same period in 2024, an increase of $4.2 million due to the increase in income from continuing operation before income taxes. Our effective tax rate in the nine months ended September 30, 2025 was (13.4)%, compared to an effective income tax rate of (9.1)% 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 the current year, the Trust recognized approximately $9.9 million related to income from the tax effect of the Indenture Forbearance Agreement. 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 nine months ended September 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.
Previous 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.
Current wording
Net sales for thenine months ended September 30, 2025 were $404.1 million as compared to net sales of $387.4 million for thenine months ended September 30, 2024, an increase of $16.7 million, or 4.3%. The increase was driven primarily by a $14.1 million increase in domestic wholesale sales, reflecting strong demand and the fulfillment of large contracts; a $7.8 million increase in direct-to-consumer sales, resulting from higher full-price sales of new products; and a $0.5 million increase in international sales, supported by continued demand across key markets. These increases were partially offset by a $4.2 million decline in direct-to-agency sales, due to the timing of large contracts.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Gain (loss) on sale of Crosman
Current report — wording carried from elsewhere
The interest expense also reflects an increase of $11.9 million in interest expense related to financing arrangements at our Lugano business.
Rearranged previous paragraphs (13)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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
Previous report — wording carried elsewhere
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”).
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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.
Previous report — wording carried 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.
Previous report — wording carried 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.
Previous report — wording carried elsewhere
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”).
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
Please see "Note Q – Subsequent Events” in the "Notes to the Condensed Consolidated Financial Statements" in this Form 10-Q for additional information concerning the 2032 Senior Notes.
Previous report — wording carried 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.
Previous report — wording carried elsewhere
Please see "Note Q – Subsequent Events” in the "Notes to the Condensed Consolidated Financial Statements" in this Form 10-Q for additional information concerning the 2029 Senior Notes.