Compass Diversified Holdings

Note A —Organization and Business Operations

Compass Diversified Holdings, a Delaware statutory trust (“the Trust”), was formed in Delaware on November 18, 2005. Compass Group Diversified Holdings, LLC, a Delaware limited liability company (the “LLC”), was also formed on November 18, 2005. Collectively, Compass Diversified Holdings and Compass Group Diversified Holdings LLC are referred to as the "Company". The Company was formed to acquire and manage a group of small and middle-market businesses headquartered in North America. In accordance with the Third Amended and Restated Trust Agreement, dated as of August 3, 2021 (as amended and restated, the “Trust Agreement”), the Trust is sole owner of 100% of the Trust Interests (as defined in the Company’s Sixth Amended and Restated Operating Agreement, dated as of August 3, 2021 (as amended and restated, the “LLC Agreement”)) of the LLC and, pursuant to the LLC Agreement, the LLC has outstanding the identical number of Trust Interests as the number of outstanding common shares of the Trust. The LLC is the operating entity with a board of directors and other corporate governance responsibilities, similar to that of a Delaware corporation.

The LLC is a controlling owner ofeight businesses, or operating segments, at December 31, 2025. The segments are as follows: 5.11 Acquisition Corp. ("5.11"), Boa Holdings Inc. ("BOA"), Relentless Topco, Inc. ("PrimaLoft"), THP Topco, Inc. ("The Honey Pot Co." or "THP"), CBCP Products, LLC ("Velocity Outdoor" or "Velocity"), AMTAC Holdings, LLC (“Arnold”), FFI Compass, Inc. ("Altor Solutions" or "Altor")and SternoCandleLamp Holdings, Inc. (“Sterno”). The segments are referred to interchangeably as “businesses”, “operating segments” or “subsidiaries” throughout the financial statements. Refer to"Note R - Operating Segment Data" for further discussion of the operating segments. Lugano Holding, Inc. ("Lugano") was an operating segment of the Company until November 16, 2025 when Lugano was deconsolidated. Refer to "Note C - Deconsolidation" for further discussion of the accounting for Lugano. Compass Group Management LLC, a Delaware limited liability company (“CGM” or the “Manager”), manages the day to day operations of the LLC and oversees the management and operations of our businesses pursuant to a management services agreement (the "Management Services Agreement").

Note B —Summary of Significant Accounting Policies

Basis of presentation

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP" or "US GAAP"). The results of operations represent the results of operations of the Company’s acquired businesses from the date of their acquisition by the Company, and therefore may not be indicative of the results to be expected for the full year.

Restatement of Previously Issued Financial Statements

As previously disclosed, in April 2025 the Audit Committee of the Company's board of directors of the Company commenced an internal investigation into the financing, accounting, and inventory practices of Lugano based on concerns reported to Company management as to these practices. The findings of the investigation (the "Lugano Investigation") identified certain unrecorded financing arrangements and irregularities in sales, cost of sales, inventory, and accounts receivable recorded by Lugano. As a result of these findings, the Company restated its previously issued audited consolidated financial statements as of December 31, 2024, 2023 and 2022 and for the years ended December 31, 2024, 2023 and 2022 as well as the interim periods in the years ended December 31, 2024, 2023 and 2022 (collectively, the “Affected Periods”) for the correction of historical financial information related to Lugano. Management identified misstatements in each of the Affected Periods that the Company deemed to be material as a result of the Lugano Investigation.

Going Concern

In the prior year, conditions and events raised substantial doubt about the Company’s ability to continue as a going concern, primarily related to covenant noncompliance under the Company’s 2022 Credit Facility, related cross‑default provisions in its senior notes, and liquidity uncertainty arising from those matters. These conditions were disclosed in the Company’s previously issued consolidated financial statements on Form 10-K/A for the year ended December 31, 2024.

During the current period, the Company resolved the conditions that previously raised substantial doubt. Specifically, the Company entered into an amendment to its 2022 Credit Facility that waived existing covenant breaches and events of default and provided revised covenant terms. In addition, the Company regained compliance with its senior note indentures following the timely delivery of required financial statements. As a result, the lenders and senior noteholders no longer have the ability to accelerate the Company’s indebtedness based on the matters that gave rise to the prior substantial doubt assessment.

Accordingly, management has concluded that the conditions and events that previously raised substantial doubt about the Company’s ability to continue as a going concern have been resolved. As of the issuance date of these consolidated financial statements, management believes the Company has the ability to meet its obligations as they become due for at least one year thereafter. Therefore, these consolidated financial statements have been prepared without inclusion of any adjustments that might result from the outcome of uncertainty related to going concern.

Principles of consolidation

The consolidated financial statements include the accounts of the Trust and the Company, as well as the businesses acquired as of their respective acquisition date. All significant intercompany accounts and transactions have been eliminated in consolidation. Discontinued operating entities are reflected as discontinued operations in the Company’s results of operations and statements of financial position.

The acquisition of businesses that the Company owns or controls more than a 50% share of the voting interest are accounted for under the acquisition method of accounting. The amount assigned to the identifiable assets acquired and the liabilities assumed is based on the estimated fair values as of the date of acquisition, with the remainder, if any, recorded as goodwill.

Discontinued Operations

The Company completed the sale of EBP Lifestyle Brands Holdings, Inc. (“Ergobaby”) during the fourth quarter of 2024, Wheelhouse Holdings, Inc. ("Marucci") during the fourth quarter of 2023 and Compass AC Holdings, Inc. ("Advanced Circuits" or "ACI") during the first quarter of 2023. The results of operations of Ergobaby are reported as discontinued operations in the consolidated statements of operations for years ended December 31, 2024 and 2023.The results of operations of Marucci and ACI are reported as discontinued operations in the consolidated statements of operations for year ended December 31, 2023. Refer to "Note E - Dispositions" for additional information. Unless otherwise indicated, the disclosures accompanying the consolidated financial statements reflect the Company's continuing operations.

Deconsolidation

On November 16, 2025, Lugano and certain of its subsidiaries filed a voluntary Chapter 11 petition under the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Lugano Bankruptcy”). The Lugano Bankruptcy resulted in the deconsolidation of Lugano as of the date of the bankruptcy filing. The Company retained its equity ownership of Lugano subsequent to the bankruptcy but has neither controlnor significant influence over Lugano due to the bankruptcy filing. The Company elected the fair value option under Accounting Standards Codification ("ASC") 825 -Financial Instruments to account for its retained financial interest. Accordingly, the investment is measured at fair value on a recurring basis, with changes in fair value, if any, recognized in earnings each reporting period. As a result of this accounting election, the carrying value of the investment, and the related impact on the Company’s results of operations, may fluctuate from period to period due to non‑cash mark‑to‑market adjustments. These fair value adjustments do not impact the Company’s cash flows or liquidity. Refer to "Note C - Deconsolidation" for additional information.

Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the related notes to the consolidated financial statements. These estimates are based on historical factors, management’s best knowledge of current events and actions the Company may undertake in the future. It is possible that in 2026 actual conditions could be better or worse than anticipated when the Company developed the estimates and assumptions, which could materially affect the results of operations and financial position in the future. Actual results could differ from those estimates.

The Company has issued Allocation Interests governed by the LLC Agreement that entitle the holders (the "Holders") to receive distributions pursuant to a profit allocation formula upon the occurrence of certain events. The Holders are entitled to receive and as such can elect to receive, if due pursuant to the profit allocation formula, an allocation payment upon the sale of a business (a "Sale Event") and upon election of the Holders during the 30-day period following the fifth anniversary of the date upon which the Company acquired a controlling interest in a business (a "Holding Event"). The payment to the Holders for a Sale Event is based on the pre-tax gain from the sale of the business, as part of the gain is allocated to the Holders and reduced by the tax that would be due on the sale transaction by the Company. Payments of profit allocation to the Holders are accounted for as dividends declared on Allocation Interests and recorded in stockholders' equity once they are approved by the Company's Board of Directors ("Board").

Revenue recognition

The Company recognizes revenue when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services, and excludes any sales incentives or taxes collected from customers which are subsequently remitted to government authorities. Refer to "Note F - Revenue" for a detailed description of the Company's revenue recognition policies.

Cash and cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Certain cash account balances held in domestic financial institutions exceed FDIC insurance limits of $250,000 per account and, as a result, there is a concentration of credit risk related to amounts in excess of the insurance limits. We monitor the financial stability of these financial institutions and believe that we are not exposed to any significant credit risk in cash or cash equivalents. At December 31, 2025 and 2024, the amount of cash and cash equivalents held by our subsidiaries in foreign bank accounts was $26.2 million and $24.1 million, respectively.

Accounts receivable

Trade receivables are reported on the consolidated balance sheets at cost adjusted for any write-offs and net of an allowance for credit losses. The Company uses estimates to determine the amount of the allowance for credit losses in order to reduce accounts receivable to their estimated net realizable value. The Company estimates the amount of the required allowance by reviewing the status of past-due receivables and analyzing historical bad debt trends. The Company’s estimate also includes analyzing existing economic conditions. When the Company becomes aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, the Company will record an allowance against amounts due, and thereby reduce the net receivable to the amount it reasonably believes will be collectible. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Prior to deconsolidation, the Company's Lugano operating segment adopted the practical expedient available under the revenue recognition accounting standard whereby for revenue contracts that have an original duration of one year or less, Lugano did not consider the time value of money and did not recognize a financing component on trade receivables where the period between the transfer of a promised good to a customer and the customer’s payment for that good will be one year or less.

Inventories

Inventories consist of raw materials, work-in-process, manufactured goods and purchased goods acquired for resale. Inventories are stated at the lower of cost or net realizable value, with cost generally determined on the first-in, first-out method or average cost method. Prior to deconsolidation, at our Lugano business, cost was determined based on specific identification. Cost includes raw materials, direct labor, manufacturing overhead and indirect overhead. Net realizable value is based on current replacement cost for raw materials and supplies and on estimated selling costs less reasonably predictable costs of completion, and disposal for finished goods. The net realizable value of the Company’s inventory is estimated based on historical experience, current and forecasted demand and other market conditions. In addition, reserves for inventory losses are estimated based on historical experience. The Company’s inventory reserves are estimates, which could vary significantly from actual results if future economic conditions, customer demand or competition differ from expectations. The Company's historical estimates of these adjustments have not differed materially from actual results.

Property, plant and equipment

Property, plant and equipment is recorded at cost. The cost of major additions or betterments is capitalized, while maintenance and repairs that do not improve or extend the useful lives of the related assets are expensed as incurred.

Depreciation is provided principally on the straight-line method over estimated useful lives. Leasehold improvements are amortized over the life of the lease or the life of the improvement, whichever is shorter.

The ranges of useful lives are as follows:

Property, plant and equipment and other long-lived assets that have definitive lives are evaluated for impairment when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable (‘triggering event’). Upon the occurrence of a triggering event, the asset is reviewed to assess whether the estimated undiscounted cash flows expected from the use of the asset plus residual value from the ultimate disposal exceeds the carrying value of the asset. If the carrying value exceeds the estimated recoverable amounts, the asset is written down to its fair value.

Fair value of financial instruments

The Company categorizes its assets and liabilities into one of three levels based on the assumptions (inputs) used in valuing the asset or liability. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Estimates of fair value for financial assets and financial liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value, and requires certain disclosures. The framework discusses valuation techniques such as the market approach (comparable market prices), the income approach (present value of future income or cash flows), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are defined as follows:

•Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3: Unobservable inputs reflecting management's assumptions about the inputs used in pricing the asset or liability.

The carrying value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to their short term nature. The carrying value of the Company's current debt, including the subsidiary financing arrangements at Lugano, approximate their fair value due to their classification as current in the accompanying consolidated financial statements. The carrying value of the principal under the Company's outstanding 2022 Term Loan approximates fair value because it bears interest at a variable interest rate that reflects changes in interest rates and changes in the Company's net leverage ratio. The fair value of the Company's Notes are based on interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities. If measured at fair value in the financial statements, the 2022 Term Loan and the Senior Notes would be classified as Level 2 in the fair value hierarchy.

Business combinations

The Company allocates the amount it pays for each acquisition to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including identifiable intangible assets which arise from a contractual or legal right or are separable from goodwill. The Company bases the fair value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use. The Company allocates any excess purchase price that exceeds the fair value of the net tangible and identifiable intangible assets acquired to goodwill. The use of alternative valuation assumptions, including estimated growth rates, cash flows, discount rates and estimated useful lives could result in different purchase price allocations and amortization expense in current and future periods. Transaction costs associated with these acquisitions are expensed as incurred through selling, general and administrative expense on the consolidated statements of operations. In those circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the contingent payments expected to be made as of the acquisition date. The Company re-measures this liability each reporting period and records changes in the fair value through operating income within the consolidated statements of operations.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The Company is required to perform impairment reviews at each of its reporting units annually and more frequently in certain circumstances. In accordance with accounting guidelines, the Company is able to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the quantitative goodwill impairment test.

The first step of the process after the qualitative assessment fails is estimating the fair value of each of its reporting units based on a discounted cash flow model using revenue and profit forecast and a market approach which compares peer data and earnings multiples. The Company then compares those estimated fair values with the carrying values, which include allocated goodwill. If the estimated fair value is less than the carrying value, then a goodwill impairment is recorded.

The Company cannot predict the occurrence of certain future events that might adversely affect the implied value of goodwill and/or the fair value of intangible assets. Such events include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on its customer base, and material adverse effects in relationships with significant customers. The impact of over-estimating or under-estimating the implied fair value of goodwill at any of the reporting units could have a material effect on the results of operations and financial position. In addition, the value of the implied goodwill is subject to the volatility of the Company’s operations which may result in significant fluctuation in the value assigned at any point in time.

Refer to "Note H - Goodwill and Intangible Assets" for the results of the annual impairment tests.

Deferred debt issuance costs

Deferred debt issuance costs represent the costs associated with the issuance of debt instruments and are amortized over the life of the related debt instrument. Deferred debt issuance costs are presented in the consolidated balance sheets as a deduction from the carrying value of the associated debt liability.

Product Warranty Costs

The Company recognizes warranty costs based on an estimate of the amounts required to meet future warranty obligations. The Company accrues an estimated liability for exposure to warranty claims at the time of a product sale based on both current and historical claim trends and warranty costs incurred. Warranty reserves are included within "Accrued expenses" in the Company's consolidated balance sheets.

Foreign currency

Certain of the Company’s segments have operations outside the United States, and the local currency is typically the functional currency. The financial statements are translated into U.S. dollars using exchange rates in effect at year-end for assets and liabilities and average exchange rates during the year for results of operations. The resulting translation gain or loss is included in stockholders' equity as other comprehensive income or loss.

Noncontrolling interest

Noncontrolling interest represents the portion of a majority-owned subsidiary’s net income that is owned by noncontrolling shareholders. Noncontrolling interest on the balance sheet represents the portion of equity in a consolidated subsidiary owned by noncontrolling shareholders.

Income taxes

Deferred Income Taxes

Deferred income taxes are calculated under the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred income taxes are provided for the differences between the basis of assets and liabilities for financial reporting and income tax purposes at the enacted tax rates.

A valuation allowance is established when necessary to reduce deferred tax assets to the amount that is expected to more likely than not be realized. Several of the Company’s majority owned subsidiaries have deferred tax assets recorded at December 31, 2025 which in total amounted to approximately $93.9 million. This deferred tax asset is net of $202.8 million of valuation allowance primarily associated with the realization of domestic and foreign net operating losses, domestic and foreign tax credits and the limitation on the deduction of interest expense. These deferred tax assets are comprised primarily of reserves not currently deductible for tax purposes. The temporary differences that have resulted in the recording of these tax assets may be used to offset taxable income in future periods, reducing the amount of taxes required to be paid. Realization of the deferred tax assets is dependent on generating sufficient future taxable income at those subsidiaries with deferred tax assets. Based upon the expected future results of operations, the Company believes it is more likely than not that those subsidiaries with deferred tax assets will generate sufficient future taxable income to realize the benefit of existing temporary differences, although there can be no assurance of this. The impact of not realizing these deferred tax assets would result in an increase in income tax expense for such period when the determination was made that the assets are not realizable.

Uncertain Tax Positions

We record uncertain tax positions in accordance with Accounting Standards Codification ASC 740 -Income Taxes, on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Earnings per common share

Basic and fully diluted earnings per Trust common share is computed using the two-class method which requires companies to allocate participating securities that have rights to earnings that otherwise would have been available only to common shareholders as a separate class of securities in calculating earnings per share. The Company has granted Allocation Interests that contain participating rights to receive profit allocations upon the occurrence of a Holding Event or a Sale Event, and has issued Preferred Shares (as defined below) that have rights to distributions when, and if, declared by the Company's Board.

The calculation of basic and fully diluted earnings per common share is computed by dividing income available to common shareholders by the weighted average number of Trust common shares outstanding during the period. Earnings per common share reflects the effect of distributions that were declared and paid to the Holders and distributions that were paid on Preferred Shares during the period.

The Company did not have any stock option plans or any other potentially dilutive securities outstanding during the years ended December 31, 2025, 2024 and 2023.

Advertising costs

Advertising costs are expensed as incurred and included in selling, general and administrative expense in the consolidated statements of operations. Advertising costs were $37.6 million, $30.6 million and $24.6 million during the years ended December 31, 2025, 2024 and 2023, respectively.

Research and development

Research and development costs are expensed as incurred and included in selling, general and administrative expense in the consolidated statements of operations. The Company incurred research and development expense of $16.6 million, $16.9 million and $13.9 million during the years ended December 31, 2025, 2024 and 2023, respectively.

Employee retirement plans

The Company and many of its segments sponsor defined contribution retirement plans, such as 401(k) plans. Employee contributions to the plan are subject to regulatory limitations and the specific plan provisions. The Company and its segments may match these contributions up to levels specified in the plans and may make additional discretionary contributions as determined by management. The total employer contributions to these plans were $7.2 million, $5.3 million and $4.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The Company’s Arnold subsidiary maintains a defined benefit plan for certain of its employees which is more fully described in "Note J - Defined Benefit Plan". Accounting guidelines require employers to recognize the overfunded or underfunded status of defined benefit pension and postretirement plans as assets or liabilities in their consolidated balance sheets and to recognize changes in that funded status in the year in which the changes occur as a component of comprehensive income.

Earnings of certain of our operating segments are seasonal in nature due to various recurring events, holidays and seasonal weather patterns, as well as the timing of our acquisitions during a given year. Historically, the third and fourth quarter have produced the highest net sales in our fiscal year, however, due to various acquisitions in the last three years, there is generally less seasonality in our net sales on a consolidated basis than there has been historically.

Stock based compensation

The Company does not have a stock based compensation plan; however, all of the Company’s subsidiaries maintain stock based compensation plans under which some form of stock compensation, typically stock options or profit interests, is issued to employees and outside directors of each subsidiary. The fair value of the awards are estimated on the date of grant using a pricing model and assumptions specific to the subsidiary that granted the stock award. During the years ended December 31, 2025, 2024 and 2023, $16.1 million, $16.3 million, and $9.5 million of stock based compensation expense was recorded in selling, general and administrative expense in the consolidated statements of operations. As of December 31, 2025, the amount to be recorded for stock-based compensation expense in future years for unvested options is approximately $37.6 million.

Recently Adopted Accounting Pronouncements

Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This guidance requires public business entities on an annual basis to provide enhanced disclosures of specific categories of reconciling items included in the rate reconciliation, as well as enhanced disclosures for income taxes paid, which includes federal, state, and foreign taxes, as well as for individual jurisdictions over a certain quantitative threshold. The amendments in ASU 2023-09 eliminate the requirement to disclose the nature and estimate of the range of the reasonably possible change in unrecognized tax benefits for the 12 months after the balance sheet date. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and early adoption is permitted. The Company adopted ASU 2023-09 for the year ended December 31, 2025 and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. Refer to "Note L - Income Taxes" in the accompanying notes to the consolidated financial statements for further detail.

Recently Issued Accounting Pronouncements

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40). This guidance will require the disclosure of disaggregation of certain relevant expenses included in the consolidated statements of operations. The guidance will be effective for annual reporting periods beginning after December 15, 2026 and for interim reporting periods beginning December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact this standard will have on the consolidated financial statements.

Interim Reporting

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11.

Note C — Deconsolidation

Lugano

On November 16, 2025, Lugano and certain of its subsidiaries filed a voluntary Chapter 11 petition under the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. As a result of the Lugano Bankruptcy, the Company deconsolidated Lugano and recorded a loss on deconsolidation in the year ending December 31, 2025.

Retained Interests and Secured Claim

Following the deconsolidation of Lugano, the Company derecognized Lugano’s assets and liabilities and recognized any retained interest in Lugano at fair value in accordance with ASC 825 -Financial Instruments. Fair value of the retained equity interest was determined using management’s estimates of expected recoveries from the bankruptcy proceedings. The fair value measurement requires the use of significant judgment and estimates and is based primarily on expected cash flows, including assumptions regarding the timing and amount of potential recoveries in the Lugano bankruptcy proceedings and the priority of claims. At November 16, 2025 and December 31, 2025, the retained equity interest in Lugano was determined to have no value, based on the Company’s assessment of expected recoveries in the bankruptcy proceedings and the priority and amounts of claims senior to equity.

Separately, prior to the bankruptcy filing, the Company had outstanding intercompany indebtedness owed by Lugano, including amounts that were secured by certain Lugano assets. Because intercompany balances are eliminated in consolidation, the fair value of intercompany indebtedness owed by Lugano to the Company was recognized upon deconsolidation in accordance with ASC 810. Any expected recovery (or lack thereof) on the secured claim is reflected through the measurement of the receivable/ claim due from affiliate (including any impairment or allowance), rather than through the fair value of any retained equity interest.

Loss on Deconsolidation

The Company recorded a loss on the deconsolidation of Lugano of$111.9 million in our consolidated results of operations which reflects (i) the derecognition of Lugano’s assets and liabilities as of the deconsolidation date (resulting in derecognition of Lugano’s net liabilities of $127.6 million), (ii) the derecognition of nonredeemable noncontrolling interests, and (iii) the recognition at fair value of the Company’s retained secured receivable/claim against Lugano as of the deconsolidation date, calculated as follows:

(1)Represents management’s estimate of recoveries expected from the Lugano bankruptcy proceedings with respect to the Company’s senior secured receivable/claim against Lugano as of the deconsolidation date, measured using the fair value option under ASC 825. Accordingly, the receivable is measured at fair value at each reporting date, and changes in fair value are recognized in earnings in the period in which they occur. The determination of fair value requires the use of significant judgment and estimates, and may be affected by developments related to the Lugano bankruptcy proceedings. As a result, the carrying amount of the receivable, and the related impact on the Company’s results of operations, may fluctuate from period to period. At December 31, 2025, the Company recorded a receivable due from unconsolidated affiliate of $71.0 million classified as current and $26.0 million classified as noncurrent. The classification between current and noncurrent is based on management’s estimate of the timing of expected cash receipts from the Lugano bankruptcy proceedings. Refer to "Note M - Fair Value Measurements" for additional information.

The following table summarizes Lugano's results of operations that are included in the Company's consolidated for the period from January 1, 2025 through November 16, 2025, the date of deconsolidation, and for the years ended December 31, 2024 and 2023:

(1)The results of operations for the periods from January 1, 2025 through November 16, 2025 and the years ended December 31, 2024 and 2023, exclude $61.9 million, $57.2 million and $33.5 million, respectively, of intercompany interest expense which is eliminated in consolidation.

Investment in Lugano

Prior to the Lugano Bankruptcy, Lugano was a consolidated subsidiary of the Company and all significant intercompany accounts and transactions between the Company and Lugano, including the Company's investment in Lugano and all intercompany loans, were eliminated in consolidation. The Company's equity investment in Lugano is accounted for subsequent to the bankruptcy using the fair value method. Since the Lugano entity is expected to be dissolved through the bankruptcy process andthe liabilities of the secured and unsecured creditors significantly exceed the estimated recovery proceeds from the Lugano Bankruptcy, the Company has assessed the fair value of the equity investment as $0 at December 31, 2025.

Note D —Acquisition of Businesses

The acquisitions of our businesses are accounted for under the acquisition method of accounting. For each new segment-level acquisition, the Company typically structures the transaction so that a newly created holding company acquires 100% of the equity interests in the acquired business. The entirety of the purchase consideration is paid by the newly created holding company to the selling shareholders. The total purchase consideration is the amount paid to the selling shareholders and we will, from time to time, allow the selling shareholder to reinvest a portion of their proceeds alongside the Company at the same price per share, into the holding company that acquires the target business. Once the acquisition is complete, the selling shareholders no longer hold equity interests in the acquired company, but rather hold noncontrolling interest in the holding company that acquired the target business. Because the selling shareholders are investing in the transaction alongside the Company at the same price per share as the Company and are not retaining their existing equity in the acquired business, the Company includes the amount provided by noncontrolling shareholders in the total purchase consideration.

A component of our acquisition financing strategy that we utilize in acquiring the businesses we own and manage is to provide both equity capital and debt capital, raised at the parent level, typically through our existing 2022 Credit Facility. The debt capital is in the form of “intercompany loans” made by the LLC to the newly created holding company and the acquired business and are due from the newly created holding company and the acquired business, and payable to the LLC by the newly created holding company and the acquired business. The selling shareholders of the acquired businesses are not a party to the intercompany loan agreements nor do they have any obligation to repay the intercompany loans. These intercompany loans eliminate in consolidation and are not reflected on the Company's consolidated balance sheets.

Acquisition of The Honey Pot

On January 31, 2024 (the "Closing Date"), the LLC, through its newly formed acquisition subsidiaries, THP Topco, Inc., a Delaware corporation (“THP Topco”) and THP Intermediate, Inc., a Delaware corporation (“THP Buyer”), acquired The Honey Pot Company Holdings, LLC (“THP”) and certain of its affiliated entities pursuant to a Merger and Stock Purchase Agreement (the “THP Purchase Agreement”) dated January 14, 2024 by and among THP Buyer, THP, VMG Honey Pot Blocker, Inc. (“Blocker I”), NVB1, Inc. (“Blocker II”), VMG Tax-Exempt IV, L.P., New Voices Fund, LP, THP Merger Sub, LLC (“THP Merger Sub”), VMG Honey Pot Holdings, LLC, as the Sellers’ Representative, and certain remaining equity holders of THP. Pursuant to the THP Purchase Agreement, subsequent to certain internal reorganizations, THP Buyer acquired all of the issued and outstanding equity of Blocker I and Blocker II and, thereafter, THP Merger Sub merged with and into THP (the “THP Merger”), with THP surviving such that the separate existence of THP Merger Sub ceased, with THP surviving the Merger as a wholly-owned, indirect subsidiary of the THP Topco. THP is the parent company of The Honey Pot Company (DE), LLC (“The Honey Pot Co.”).

The Company acquired THP for a total purchase price, including proceeds from noncontrolling shareholders, of approximately $380 million (the “THP Purchase Price”), before working capital and certain other adjustments, at the Closing Date. The Company funded the THP Purchase Price with cash on hand. Certain equity holders of THP invested in the transaction along with the Company, representing 15% of the initial equity interest in THP Topco. The Company directly owns approximately 85% of THP Topco, which in turn indirectly owns all of the issued and outstanding equity interests of THP and The Honey Pot Co. Concurrent with the Closing Date, the Company provided a credit facility to THP Buyer, THP and The Honey Pot Co., as borrowers (the “THP Credit Agreement”), pursuant to which a secured revolving loan commitment and secured term loans were made available to Buyer, THP and The Honey Pot Co. (collectively, the “Borrowers”). The initial amount outstanding under these facilities on the Closing Date was approximately $110 million.

The Honey Pot Co. is a feminine care brand that offers an extensive range of holistic wellness products across feminine hygiene, menstrual, consumer health, and sexual wellness categories. The Honey Pot Co.’s mission is to educate, support, and provide consumers around the world with the tools and resources that promote menstrual health and vaginal wellness.

The results of operations of The Honey Pot Co. have been included in the consolidated results of operations since the date of acquisition. The Honey Pot Co.'s results of operations are reported as a separate operating segment as a branded consumer business. The table below provides the recording of the fair value of assets acquired and liabilities assumed as of the date of acquisition.

(1)The fair value of accounts receivable approximates book value acquired.

The purchase allocation presented above is based upon management's estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the identifiable acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates and estimated discount rates. Current and noncurrent assets, property, plant and equipment and current and other liabilities are estimated at their historical carrying values, which approximates fair value. Inventory is recognized at fair value, with finished goods stated at selling price less an estimated cost to sell. Property, plant and equipment will be depreciated on a straight-line basis over the remaining useful lives of the assets. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships, as well as expected future synergies. The goodwill of $107.0 million reflects the strategic fit of The Honey Pot Co. in the Company's branded consumer business and is not expected to be deductible for income tax purposes.

In the second quarter of 2024, the purchase price allocation for The Honey Pot Co. was adjusted to reflect certain measurement period adjustments due to updated intangible asset valuation and an adjustment to deferred tax liabilities. Customer relationships was increased $24.3 million, with a corresponding decrease to goodwill. Deferred income tax liability increased $2.7 million, with a corresponding decrease to goodwill. In the third quarter of 2024, the purchase price of The Honey Pot Co. was adjusted to reflect the working capital settlement, additional purchase consideration of $0.5 million, and the related tax effect. The purchase price allocation for The Honey Pot Co. was finalized during the third quarter of 2024.

The intangible assets recorded related to The Honey Pot Co. acquisition are as follows (in thousands):

The tradename was considered the primary intangible asset and was valued at $225.0 million using a multi-period excess earnings method. The customer relationships were valued at $46.3 million using a multi-period excess earnings method. The multi-period excess earnings method assumes an asset has value to the extent that it enables its owners to earn a return in excess of the other assets utilized in the business.

Unaudited pro forma information

The following unaudited pro forma data for the year ended December 31, 2024 gives effect to the acquisition of The Honey Pot Co. as described above, and the dispositions of Ergo, as if these transactions had been completed as of January 1, 2024. The pro forma data gives effect to historical operating results with adjustments to interest expense, amortization and depreciation expense, management fees and related tax effects. The information is provided for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the transaction had been consummated on the date indicated, nor is it necessarily indicative of future operating results of the consolidated companies, and should not be construed as representing results for any future period.

Other acquisitions

Lifoam - On October 1, 2024, Altor Solutions acquired 100% of the outstanding equity interests of Lifoam Industries LLC, a Delaware limited liability company (“Lifoam”) pursuant to a Purchase and Sale Agreement entered into on August 19, 2024 (the “Lifoam Acquisition”). Lifoam is a manufacturer and distributor of temperature-controlled shipping solutions. The purchase price was $139.3 million, after working capital and other adjustments to the purchase price. Altor incurred transaction costs of approximately $1.8 million, which are included in selling, general and administrative expense in the consolidated statements of operations. The acquisition and related transaction costs were funded through additional term loans of $143.7 million under the Altor intercompany credit agreement. The Company funded the additional intercompany loans used for the acquisition of Lifoam with a draw on the 2022 Revolving Credit Facility. Altor recorded a purchase price allocation of $19.4 million in goodwill, which is expected to be deductible for income tax purposes, $49.4 million in intangible assets comprised of $39.5 million in customer relationships and $9.9 million in tradenames, $24 million in capital asset step-up and $1.6 million in inventory step-up. The purchase price allocation was finalized in 2025.

Note E —Dispositions

Sale of Ergo

On December 27, 2024, the LLC, solely in its capacity as the representative of the holders of stock and options of Ergobaby, a majority owned subsidiary of the Company, entered into a definitive Agreement and Plan of Merger (the “Ergobaby Merger Agreement”) with ERGO Acquisition LLC (“Ergo Acquiror”), Aloha Merger Sub LLC ( “Aloha Merger Sub”) and Ergobaby, to sell to Ergo Acquiror all of the issued and outstanding securities of Ergobaby, the parent company of the operating entity, The ERGO Baby Carrier, Inc., through a merger of Aloha Merger Sub with and into Ergobaby, with Ergobaby surviving the merger and becoming a wholly owned subsidiary of Acquiror (the “Ergobaby Merger”). On the same day, December 27, 2024, the parties completed the Ergobaby Merger pursuant to the Ergobaby Merger Agreement.

The sale price of Ergobaby was based on an enterprise value of $104 million and will be subject to certain adjustments based on matters such as transaction expenses of Ergobaby, the net working capital and cash and debt balances of Ergobaby at the time of the closing. The LLC owned approximately 82% of the outstanding stock of Ergobaby on a fully diluted basis prior to the Merger. After the allocation of the sales price to Ergobaby non-controlling equityholders and the payment of transaction expenses, the Company received approximately $99.1 million of total proceeds at closing. This amount was in respect of its debt and equity interests in Ergobaby (which was acquired by the Company on September 16, 2010) and the payment of accrued interest. The Company recorded a pre-tax gain on the sale of Ergobaby of $6.1 million. The proceeds from the Ergo sale were used to pay down outstanding debt under the Company’s Revolving Credit facility.

Summarized results of operations of Ergo for the previous years through the date of disposition are as follows (in thousands):

(1)The results of operations for the periods from January 1, 2024 through disposition and the year ended December 31, 2023, each exclude $8.8 million and $8.7 million, respectively, of intercompany interest expense.

Sale of Marucci

On November 1, 2023, the LLC, solely in its capacity as the representative of the holders of stock and options of Wheelhouse Holdings, Inc. ("Wheelhouse"), a majority owned subsidiary of the LLC, entered into a definitive Agreement and Plan of Merger with Fox Factory, Inc. (“Marucci Purchaser”), Marucci Merger Sub, Inc. (“Marucci Merger Sub”) and Wheelhouse, pursuant to which Marucci Purchaser agreed to acquire all of the issued and outstanding securities of Wheelhouse, the parent company of the operating entity, Marucci Sports, LLC, through a merger of Marucci Merger Sub with and into Wheelhouse, with Wheelhouse surviving the merger and becoming a wholly owned subsidiary of Marucci Purchaser. On November 14, 2023, the parties completed the Merger pursuant to the Agreement. The sale price of Wheelhouse was based on an enterprise value of $572 million, subject to certain adjustments based on matters such as transaction tax benefits, transaction expenses of Wheelhouse, the net working capital and cash and debt balances of Wheelhouse at the time of the closing. After the allocation of the sales price to Wheelhouse non-controlling equityholders and the payment of transaction expenses, we received approximately$484.0 million of total proceeds at closing of which $87.3 million related to the repayment of intercompany loans with the Company. We recorded a pre-tax gain on sale of Marucci of $241.4 million in the year ended December 31, 2023. In the first quarter of 2024, the LLC received a net working capital settlement of approximately $3.3 million related to Marucci, which was recognized as an additional gain on sale of discontinued operations, net of taxes, in the accompanying consolidated statements of operations. The proceeds from the Marucci sale were used to pay down outstanding debt under the Company’s 2022 Credit Facility and to fund an acquisition by Company.

Summarized results of operations of Marucci for the period from January 1, 2023 through the date of disposition are as follows (in thousands):

(1)The results of operations for the period from January 1, 2023 through disposition excludes $8.9 million of intercompany interest expense.

Sale of Advanced Circuits

On January 10, 2023, the LLC, solely in its capacity as the representative of the holders of stock and options of Compass AC Holdings, Inc., a majority owned subsidiary of the LLC, entered into a definitive Agreement and Plan of Merger with APCT Inc. (“ACI Purchaser”), Circuit Merger Sub, Inc. (“ACI Merger Sub”) and Advanced Circuits, pursuant to which ACI Purchaser agreed to acquire all of the issued and outstanding securities of Advanced Circuits, the parent company of the operating entity, Advanced Circuits, Inc., through a merger of ACI Merger Sub with and into Advanced Circuits, with Advanced Circuits surviving the merger and becoming a wholly owned subsidiary of ACI Purchaser (the “ACI Merger”). The ACI Merger was completed on February 14, 2023. The sale price of Advanced Circuits was based on an enterprise value of $220 million, subject to certain adjustments based on matters such as the working capital and cash and debt balances of Advanced Circuits at the time of the closing. After the allocation of the sales price to Advanced Circuits non-controlling equity holders and the payment of transaction expenses, the Company received approximately $170.9 million of total proceeds at closing, of which $66.9 million related to the repayment of intercompany loans with the Company. We recorded a pre-tax gain on sale of $106.9 million on the sale of Advanced Circuitsin the year ended December 31, 2023.

Summarized results of operations of ACI for the period from January 1, 2023 through the date of disposition are as follows (in thousands):

(1)The results of operations for the period from January 1, 2023 through disposition excludes $1.4 million of intercompany interest expense.

Gain on sale of discontinued operations - income tax

Effective September 1, 2021, the Trust elected to be treated as a corporation for U.S. federal income tax purposes. Prior to the Effective Date, the Trust was treated as a partnership for U.S. federal income tax purposes and the Trust’s items of income, gain, loss and deduction flowed through from the Trust to the shareholders, and the Trust shareholders were subject to income taxes on their allocable share of the Trust’s income and gains. After the Effective Date, the Trust is taxed as a corporation and is subject to U.S. federal corporate income tax at the Trust level. The election to be treated as a corporation for U.S federal income tax purposes, resulted in an approximate $328 million gain to the Trust for U.S. federal income tax purposes. This taxable capital gain should result in a basis step-up for the Trust after the Election. This basis step-up should provide a tax benefit to the Trust, as it should increase the Trust’s basis in its subsidiaries as of September 1, 2021, which in turn should reduce future gains, if and when the Trust divests such subsidiaries. The Trust filed for a Private Letter Ruling ("PLR"), with the Internal Revenue Service ("IRS") regarding the basis step-up. While the IRS declined to rule on the private letter request, they did not indicate that the Company's proposed treatment was unreasonable and the Company intends to reflect the basis step up on future tax returns. However, since the IRS declined to rule on the private letter request, the Company has concluded that a full reserve should be recorded for the stepped-up basis benefit in accordance with ASC 740 and has recorded an unrecognized tax benefit of $7.4 million that reduced the gain on Ergobaby in 2024, and $27.9 million that reduced the gain on sale of Advanced Circuits and Marucci in 2023. The sale of Ergobaby in the year ending December 31, 2024 resulted in a tax benefit of $9.9 million that increased the gain on the sale of Ergobaby. The Advanced Circuits and Marucci sales in the year ending December 31, 2023 were subject to income tax expense. Prior to the sale of Marucci in the fourth quarter of 2023, the Trust had sufficient net operating losses to offset the gain on sale of Advanced Circuits and did not record income tax expense. The sale of Marucci and the resulting gain that was recorded, combined with the gain on Advanced Circuits, utilized all of the Trust's net operating losses and resulted in taxable income in the fourth quarter of 2023. The Trust recorded income tax expense of $37.4 million that reduced the gain on sale of discontinued operations. The pre-tax gain on sale of Advanced Circuits and Marucci totaled $348.4 million, and was reduced by the $37.4 million in income tax expense and the $27.9 million in unrecognized tax benefits, resulting in the$283.0 million recorded as gain on sale of discontinued operations in the statement of operations in the year ending December 31, 2023.

Disposition of Crosman

On April 30, 2024, Velocity Outdoor entered into a stock purchase agreement to sell Crosman Corporation ("Crosman"), its airgun product division, to Daisy Manufacturing Company, for an enterprise value of approximately$63 million. The sale was completed on the same day. The Company recorded a loss of $24.6 million on the sale of Crosman in the quarter ended June 30, 2024, and a gain of$0.4 million in the third quarter of 2024 related to the working capital settlement. Velocity received net proceeds of approximately $61.9 million related to the sale of Crosman, which was used to repay amounts outstanding under its intercompany credit agreement. The results of operation of Crosman are included in the accompanying consolidated financial statements through the date of sale.

Note F -Revenue

Performance Obligations- Revenues are recognized when control of the promised goods or service is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Each product or service represents a separate performance obligation. Once the performance obligations are identified, the Company determines the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. The Company then allocates the transaction price to each performance obligation in the contract based on a relative stand-alone selling price method. The corresponding revenues are recognized as the related performance obligations are satisfied as discussed above. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. The standalone selling price is directly observable as it is the price at which the Company sells its products separately to the customer. The Company assesses promised goods or services as performance obligations deemed immaterial at the contract level. Revenue is recognized generally upon shipment terms for products and when the service is performed for services.

Shipping and handling costs -The Company accounts for shipping and handling activities performed after control of a good has been transferred to the customer as a fulfillment cost. Therefore, both revenue and costs of shipping and handling are recorded at the same time. As a result, any consideration (including freight and landing costs) related to these activities are included as a component of the overall transaction consideration and allocated to the performance obligations of the contract. Costs associated with shipment of products to a customer are accounted for as a fulfillment cost and are typically included in selling, general and administrative expense. Shipping and handling fees billed directly to customers are included in sales.

Warranty-For product sales, the Company provides standard assurance-type warranties as the Company only warrants its products against defects in materials and workmanship (i.e., manufacturing flaws). Although the warranties are not required by law, the tasks performed over the warranty period are only to remediate instances when products do not meet the promised specifications. Customers do not have the option to purchase warranties separately. The Company’s warranty periods generally range from 90 days to three years depending on the nature of the product and are consistent with industry standards. The periods are reasonable to ensure that products conform to specifications. The Company does not have a history of performing activities outside the scope of the standard warranty.

Variable Consideration -The Company’s policy around estimating variable consideration related to sales incentives (early pay discounts, rights of return, rebates, chargebacks, and other discounts) included in certain customer contracts are recorded as a reduction in the transaction price. The Company applies the expected value method to estimate variable consideration. These estimates are based on historical experience, anticipated performance and the Company’s best judgment at the time and as a result, reflect applicable constraints. The Company includes in the transaction price an amount of variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

In certain of the Company’s arrangements related to product sales, a right of return exists, which is included in the transaction price. For these right of return arrangements, an asset (and corresponding adjustment to cost of sale) for its right to recover the products from the customers is recorded. The asset recognized is the carrying amount of the product (for example, inventory) less any expected costs to recover the products (including potential decreases in the value to the Company of the returned product). Additionally, the Company records a refund liability for the amount of consideration that it does not expect to be entitled. The amounts associated with right of return arrangements are not material to the Company's statement of position or operating results.

Sales and Other Similar Taxes -The Company notes that under its contracts with customers, the customer is responsible for all sales and other similar taxes, which the Company will invoice the customer for if they are applicable. The Company excludes sales taxes and similar taxes from the measurement of transaction price.

Cost to Obtain a Contract -The Company recognizes the incremental costs of obtaining a contract as an expense when incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less.

Disaggregated Revenue - Revenue Streams & Timing of Revenue Recognition -The Company disaggregates revenue by strategic business unit and by geography for each strategic business unit which are categories that depict how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors. The disaggregation in the tables below reflects where revenue is earned based on the shipping address of our customers unless otherwise noted. This disaggregation also represents how the Company evaluates its financial performance, as well as how the Company communicates its financial performance to the investors and other users of its financial statements. Each strategic business unit represents the Company’s reportable segments and offers different products and services. Lugano was a reportable segment of the Company until November 16, 2025 when Lugano filed for bankruptcy and was deconsolidated. The results of operations of Lugano are included in the disaggregation of revenue by reportable segment for the year ended December 31, 2025 for the period from January 1, 2025 through November 16, 2025.

The following tables provide disaggregation of revenue by reportable segment geography for the years ended December 31, 2025, 2024 and 2023 (in thousands).

(1)For BOA and PrimaLoft, revenue reflects the location of the Brand Partners of each business.

Note G -Inventory and Property, Plant, and Equipment

Depreciation expense was approximately $45.3 million, $43.9 million and $46.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Note H —Goodwill and Intangible Assets

Goodwill

As a result of acquisitions of various businesses, the Company has significant intangible assets on its balance sheet that include goodwill and indefinite-lived intangibles. The Company’s goodwill and indefinite-lived intangibles are tested and reviewed for impairment annually as of March 31st or more frequently if facts and circumstances warrant by comparing the fair value of each reporting unit to its carrying value. Each of the Company’s businesses represent a reporting unit.

A reconciliation of the change in the carrying value of goodwill by segment for the years ended December 31, 2025 and 2024 are as follows(in thousands):

(1)Acquisition of businesses during the year ended December 31, 2024 includes the acquisition of The Honey Pot Co. by the Company, and an add-on acquisition at Altor.

Approximately $202.7 million of goodwill is deductible for income tax purposes at December 31, 2025.

Annual Impairment Testing

The Company uses a qualitative approach to test goodwill and indefinite lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more-likely than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform quantitative goodwill impairment testing.

2025 Annual Impairment Testing

For the Company's annual impairment testing at March 31, 2025, the Company performed a qualitative assessment of our reporting units with goodwill balances. The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of the reporting units tested except PrimaLoft exceeded their carrying value. Based on the Company's analysis, the Company determined that the PrimaLoft operating segment required quantitative testing because we could not conclude that the fair value of this reporting unit significantly exceeded the carrying value based on qualitative factors alone. The Company performed the quantitative impairment test of PrimaLoft using both an income approach and a market approach. The prospective information used in the income approach considered macroeconomic data, industry and reporting unit specific facts and circumstances and was our best estimate of operational results and cash flows for the PrimaLoft reporting unit as of the date of our impairment testing. The results of the testing indicated that the fair value of PrimaLoft exceeded the carrying value by 11.3%.

2024 Annual Impairment Testing

For the Company's annual impairment testing at March 31, 2024, the Company performed a qualitative assessment of our reporting units. The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of our reporting units except Velocity exceeded their carrying value. Based on our analysis, the Company determined that the Velocity operating segment required quantitative testing because we could not conclude that the fair value of this reporting unit significantly exceeded the carrying value based on qualitative factors alone. The Company performed a quantitative test of Velocity and the results of the testing indicated that the fair value of Velocity did not exceed the carrying value, resulting in goodwill impairment expense of $8.2 million as of March 31, 2024.

2023 Annual Impairment Testing

The Company determined that the Velocity reporting unit required additional quantitative testing because we could not conclude that the fair value of the reporting unit exceeded its carrying value based on qualitative factors alone. For the reporting units that were tested only on a qualitative basis for the 2023 annual impairment testing, the results of the qualitative analysis indicated that it was more likely than not that the fair value exceeded the carrying value of these reporting units.

The quantitative test of Velocity was performed using an income approach to determine the fair value of the reporting unit. The discount rate used in the income approach was 15% and the results of the quantitative impairment testing indicated that the fair value of the Velocity reporting unit exceeded the carrying value by 21%.

Interim Impairment Testing

2025 Interim Impairment Testing

Arnold -The Company performed an interim impairment test of goodwill at Arnold as of October 31, 2025. During 2025, Arnold was negatively impacted by both production delays related to facility transitions, and supply chain constraints caused by export controls and disruption in the market for rare earth minerals, a key component in certain of Arnold's products. As a result, the operating results of Arnold were below our forecast and prior year results for the business. While Arnold's backlog continued to grow, the production delays and supply chain disruption caused by the export controls led us to determine that a triggering event had occurred. The Company used an income approach for the impairment test, whereby we estimated the fair value of the reporting unit based on the present value of future cash flows. Cash flow projections are based on management's estimate of revenue growth rates and operating margins, and take into consideration industry and market conditions as well as company specific economic factors. The Company used a discount rate of 14.2% in the income approach. The results of the testing indicated that the fair value of Arnold exceeded the carrying value by 77%.

2023 Interim Impairment Testing

PrimaLoft - The Company performed an interim impairment test of goodwill at PrimaLoft as of December 31, 2023. As a result ofoperating results that were below forecast amounts that were used as the basis for the purchase price allocation performed when PrimaLoft was acquired as well as the failure of certain financial covenants in the intercompany credit agreement as of December 31, 2023, the Company determined that a triggering event had occurred. The Company performed the quantitative impairment test using both an income approach and a market approach. The prospective information used in the income approach considered macroeconomic data, industry and reporting unit specific facts and circumstances and was our best estimate of operational results and cash flows for the PrimaLoft reporting unit as of the date of our impairment testing. The discount rate used in the income approach was 11.3% The results of the quantitative impairment testing indicated that the fair value of the PrimaLoft reporting unit did not exceed its carrying value, resulting in goodwill impairment expense of $57.8 million in the year ended December 31, 2023.

Velocity Outdoor - The Company performed interim quantitative impairment testing of goodwill at Velocity at August 31, 2023. As a result of operating results that were below the forecast that we used in the quantitative impairment test of Velocity Outdoor at March 31, 2023, the Company determined that a triggering event had occurred at Velocity in the third quarter of 2023 and performed an interim impairment test as of August 31, 2023. The Company used an income approach for the impairment test, whereby we estimated the fair value of the reporting unit based on the present value of future cash flows. Cash flow projections are based on management's estimate of revenue growth rates and operating margins, and take into consideration industry and market conditions as well as company specific economic factors. The Company used a weighted average cost of capital of 17% in the income approach. The discount rate used was based on the weighted average cost of capital adjusted for the relevant risk associated with business specific characteristics and Velocity's ability to execute on projected cash flows. Based on the resultsof the impairment test, the fair value of Velocity did not exceed its carrying value. The Company recorded goodwill impairment of$31.6 million during the year ended December 31, 2023.

The following is a summary of the net carrying amount of goodwill at December 31, 2025, and 2024 (in thousands):

(1) Comprised of accumulated goodwill impairment expense of $260.6 million at Lugano, $72.7 million at Velocity, $24.9 million at Arnold and $57.8 million at PrimaLoft.

Intangible Assets

Intangible assets are comprised of the following(in thousands):

(1)In-process research and development is considered indefinite lived until the underlying technology becomes viable, at which point the intangible asset will be amortized over the expected useful life.

Definite-Lived Intangible Asset Impairment Testing

2025 - Interim long-lived asset impairment testing

Lugano - 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 long-lived assets at Lugano were comprised of a tradename intangible asset, property, plant and equipment and right-of-use lease assets. The long-lived assets were assessed as definite lived assets to be held and used as of the impairment testing in the second quarter. The assessment of the recoverability of the carrying value of the Lugano assets resulted in an impairment loss of $29.5 million related to property, plant and equipment and $1.9 million related to right-of-use assets as of June 30, 2025. The impairment of the property, plant and equipment reflects the amount by which the carrying value of these assets exceed their estimated fair value, with fair value determined primarily through a market comparison method. The right-of-use asset related to a retail salon in Toronto, Canada. At the time of the triggering event, the Toronto retail salon had not yet opened and the Company's assessment determined that given the findings of the Lugano Investigation, it was unlikely that the Toronto salon would open in the near term. The impairment test for right-of-use assets involves comparing the right-of-use asset's carrying value to the undiscounted cash flows expected from its future use. Given the expectation that the Toronto retail salon would not open, no cash flows were expected from its future use and an impairment loss was recognized for the entire balance of the right-of-use asset associated with the Toronto salon lease.

2023 -Interim long-lived asset impairment testing

Lugano -The Company tested the definite lived intangible assets at Lugano as of December 31, 2023. The impairment test resulted in impairment of the customer relationship intangible of $1.2 million. The fair value of the customer relationship was determined using a variation of a multi-period excess earnings method and led to a fair value that was less than the carrying value of the asset.

The Company’s amortization expense of intangible assets for the years ended December 31, 2025, 2024 and 2023 totaled $93.2 million, $94.8 million and $83.6 million, respectively.

Estimated charges to amortization expense of intangible assets over the next five years, is as follows,(in thousands):

Note I –Debt

Financing Arrangements

2022 Credit Facility

On July 12, 2022, the LLCentered into a Third Amended and Restated Credit Agreement (as amended from time to time, the “2022 Credit Facility”) to amend and restate its prior credit facility. The 2022 Credit Facility provides for (i) revolving loans, swing line loans and letters of credit (the “2022 Revolving Credit Facility”) in an aggregate principal amount of up to $600 million and (ii) a $400 million term loan (the “2022 Term Loan”). Amounts outstanding under the 2022 Revolving Credit Facility mature on July 12, 2027. The 2022 Credit Facility also permitted the LLC, subject to customary restrictions and conditions, to increase revolving commitments and/or obtain additional term loans in an aggregate amount of up to to $250 million.

Borrowings under the 2022 Credit Facility bear interest at either a base rate or a term secured overnight financing rate (“Term SOFR”), plus an applicable margin that varies based on the Company’s Consolidated Total Leverage Ratio (as defined in the 2022 Credit Facility). As amended by the Fifth Amendment (defined below), Term SOFR loans bear interest at Term SOFR plus a margin ranging from 1.50% to 3.25%, and base rate loans bear interest at the base rate plus a margin ranging from 0.50% to 2.25%.

The 2022 Credit Facility is secured by substantially all assets of the Company, including equity interests in, and loans to, its consolidated subsidiaries.

First Amendment of 2022 Credit Facility

On January 9, 2025, the LLC entered into a First Incremental Facility Amendment (the “First Amendment”) to the 2022 Credit Facility, which provided for (i) an additional $200 million advance under the term loan (the “Incremental Term Loan”) and (ii) delayed draw term loan commitments in an aggregate amount of $100 million (the “Incremental Delayed Draw Term Loan Commitments”). The proceeds were intended to be used for acquisitions, working capital, capital expenditures and other general corporate purposes. The Incremental Term Loan, together with the existing term loan, requires quarterly principal repayments ranging from $3.75 million to $11.25 million, commencing March 31, 2025, with the remaining principal and interest due on July 12, 2027. The Incremental Delayed Draw Term Loan Commitments were terminated prior to the end of the availability period in connection with Lugano-related events of default described below.

Forbearance Agreements and Amendments During 2025

In 2025, in connection with the Lugano matters and related events of default under the 2022 Credit Facility, the LLC entered into a series of forbearance agreements and related amendments with the administrative agent and the required Lenders (collectively, the “Forbearance Agreements”). The Forbearance Agreements provided the LLC with time to complete the Lugano Investigation and restatement process and, among other things, (i) limited the availability of revolving borrowings and the purposes for which borrowings could be used, (ii) imposed weekly cash disbursement controls and a 13-week cash flow budget requirement, (iii) imposed additional reporting obligations, and (iv) limited certain restricted payments and management fee payments. Certain of the Forbearance Agreements also reduced the revolving commitments to $100.0 million. The Fifth Amendment described below formally waived all outstanding Lugano-related events of default that were outstanding prior to the Fifth Amendment.

Fifth Amendment and Transaction Letter

On December 19, 2025, the LLC entered into a Fifth Amendment to the 2022 Credit Facility (the “Fifth Amendment”) and a related transaction letter (the “Transaction Letter”) with the administrative agent and the required Lenders.

Among other things, the Fifth Amendment and Transaction Letter (i) waived certain Lugano-related events of default that were outstanding prior to the Fifth Amendment, (ii) set the aggregate revolving commitments at $100.0 million, (iii) revised pricing and certain financial and other covenant requirements, including revised financial covenant levels for periods after the quarter ended March 31, 2025, (iv) required repayment of 100% of net cash proceeds from certain dispositions and deleveraging transactions to repay indebtedness, and (v) imposed additional limitations on certain restricted payments and management fee payments, as well as enhanced reporting requirements, including periodic cash flow forecasting. The Transaction Letter also provides for milestone fees payable to the lenders if specified leverage thresholds are not achieved on certain dates.

At December 31, 2025, outstanding letters of credit under the 2022 Credit Facility totaled approximately $3.2 million, and borrowing availability under the 2022 Revolving Credit Facility, as amended, was approximately $96.8 million.

2032 Senior Notes

On November 17, 2021, the Company consummated the issuance and sale of $300 million aggregate principal amount of our 5.000% Senior Notes due 2032 (the “2032 Notes” of "2032 Senior Notes") offered pursuant to a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act, and to non-U.S. persons under Regulation S under the Securities Act. The 2032 Notes were issued pursuant to an indenture, dated as of November 17, 2021 (the “2032 Notes Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee”). The 2032 Notes bear interest at the rate of 5.000% per annum and will mature on January 15, 2032. Interest on the 2032 Notes is payable in cash on January 15 and July 15 of each year, beginning on July 15, 2022.

2029 Senior Notes

On March 23, 2021, the Company consummated the issuance and sale of $1 billion aggregate principal amount of our 5.250% Senior Notes due 2029 (the "2029 Notes" or "2029 Senior Notes" and together with the 2032 Notes, the "Notes") offered pursuant to a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act, and to non-U.S. persons under Regulation S under the Securities Act. The 2029 Notes were issued pursuant to an indenture, dated as of March 23, 2021 (the “2029 Notes Indenture” and, together with the 2032 Notes Indenture, the "Indentures"), between the Company and U.S. Bank National Association, as trustee (the "Trustee"). The 2029 Notes bear interest at the rate of 5.250% per annum and will mature on April 15, 2029. Interest on the 2029 Notes is payable in cash on April 15th and October 15th of each year. The first interest payment date on the 2029 Senior Notes was October 15, 2021.

The 2032 Notes and the 2029 Notes rank equal in right of payment with all of the Company’s existing and future senior unsecured indebtedness, and rank senior in right of payment to all of the Company’s future subordinated indebtedness, if any. The 2032 Notes and the 2029 Notes will be effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including the indebtedness under the Company’s credit facilities described below. The 2032 Notes Indenture and the 2029 Notes Indenture contains several restrictive covenants including, but not limited to, limitations on the following: (i) the incurrence of additional indebtedness, (ii) restricted payments, (iii) the purchase, redemption or retirement of capital stock or subordinated debt, (iv) dividends and other payments affecting restricted subsidiaries, (v) transactions with affiliates, (vi) asset sales and mergers and consolidations, (vii) future subsidiary guarantees and (viii) incurring liens, (ix) entering into sale-leaseback transactions and (x) making certain investments, subject in each case to certain exceptions.

Indenture Forbearance Agreement and PIK Payments

In connection with the Lugano matters and related delayed periodic reporting during 2025, on August 29, 2025, the LLC entered into a forbearance agreement with certain holders of the Notes (the “Indenture Forbearance Agreement”), pursuant to which such holders agreed to forbear from exercising rights and remedies with respect to specified defaults relating to the Company’s failure to deliver certain financial statements within the time periods required under the Indentures.

As consideration for the Indenture Forbearance Agreement, the Company agreed to pay to each holder of Notes such holder’s pro rata share of (i) 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 (ii) 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 (together, the “PIK Payments”). The PIK Payments were effected through supplemental indentures dated September 9, 2025, pursuant to which the principal amount of the Notes was increased. The Company recognized $38.2 million in paid-in-kind interest related to the upfront fee and additional interest in connection with the Indenture Forbearance Agreement.

Covenants

The Company is subject to customary affirmative and restrictive covenants under the 2022 Credit Facility, including financial maintenance covenants. The following table reflects the financial covenant requirements and actual ratios as of December 31, 2025 under the 2022 Credit Facility, as amended by the Fifth Amendment:

Long-Term Debt and Interest Rates

The following table provides the Company’s outstanding long-term debt and effective interest rates at December 31, 2025 and December 31, 2024 (in thousands):

The contractual annual maturities of the Company's debt obligations are as follows (in thousands):

Letters of credit

The 2022 Credit Facility allows for letters of credit in an aggregate face amount of up to $100 million. Letters of credit outstanding at December 31, 2025 and December 31, 2024 totaled $3.2 million and $3.5 million, respectively.

Debt Issuance Costs

Deferred debt issuance costs represent the costs incurred in connection with the Company's financing arrangements. Debt issuance costs associated with the 2022 Revolving Credit Facility are recorded in other noncurrent assets because the facility is a revolving arrangement. Debt issuance costs associated with the 2022 Term Loan and the Notes are recorded as a reduction of the related debt balances. In connection with entering into the Fifth Amendment in December 2025, the Company incurred approximately $5.0 million of deferred financing costs.

The following table summarizes debt issuance costs at December 31, 2025 and December 31, 2024, and the balance sheet classification in each of the periods presents (in thousands):

Lugano Financing Arrangements

As described in “Note B— Summary of Significant Accounting Policies” and elsewhere in these consolidated financial statements, Lugano, through its former chief executive officer, entered into various financing arrangements with third parties that were not previously recorded as debt in Lugano’s historical financial statements. Certain arrangements were structured as purported joint investments in specific jewelry items, under which third parties made upfront payments in exchange for the right to receive a return of principal plus either (i) a profit share upon sale of the jewelry or (ii) interest upon liquidation prior to sale. Lugano also entered into other arrangements that involved cash receipts and payments that were recorded as accounts receivable collections, customer deposits, inventory purchases, or purchase deposits, which were inconsistent with the substance of the arrangements.

In connection with the Lugano Investigation, the Company determined that transactions recorded in connection with these arrangements were not reflective of the underlying substance of the agreements, and the arrangements were accounted for as debt in the consolidated financial statements. Interest expense was recorded based on the underlying documentation, and where documentation was not available, interest was imputed based on relevant factors, including statutory default interest rates. For arrangements that provided for a profit share upon sale, interest expense was recorded based on cash payments when settled; the Company is unable to estimate potential profit share amounts for unsettled arrangements because the underlying sales transactions were not valid.

The following table provides the Lugano financing arrangements and effective interest rates at December 31, 2024 (in thousands):

Interest expense

The following details the components of interest expense in each of the years ended December 31, 2025, 2024 and 2023:

(1) Other interest expense includes amounts related to Lugano financing arrangements.

Note J –Defined Benefit Plan

In connection with the acquisition of Arnold, the Company has a defined benefit plan covering substantially all of Arnold’s employees at its Lupfig, Switzerland location. The benefits are based on years of service and the employees’ highest average compensation during the specific period.

The following table sets forth the plan’s funded status and amounts recognized in the Company’s consolidated balance sheets at December 31, 2025 and 2024 :

The unfunded liability of $3.3 million and $4.1 million at December 31, 2025 and 2024, respectively, is recognized in the consolidated balance sheets within other non-current liabilities. Net periodic benefit cost consists of the following:

Assumptions used to determine the benefit obligations and components of the net periodic benefit cost at December 31, 2025 and 2024:

The Company considers the historical level of long-term returns and the current level of expected long-term returns for the plan assets, as well as the current and expected allocation of assets when developing its expected long-term rate of return on assets assumption. The assumptions used for the plan are based upon customary rates and practices for the location of the Company.

Arnold expects to contribute approximately $0.7 million to the defined benefit plan in 2026.

The following presents the benefit payments which are expected to be paid for the plan in each year indicated (in thousands):

Asset management objectives include maintaining an adequate level of diversification to reduce interest rate and market risk and providing adequate liquidity to meet immediate and future benefit payment requirements.

The assets of the plan are reinsured in their entirety with Swiss Life Ltd. (“Swiss Life”) within the framework of the corresponding contracts with Swiss Life Collective BVG Foundation and Swiss Life Complementary Foundation. The assets are guaranteed by the insurance company and pooled with the assets of other participating employers.

The allocation of pension plan assets by category in Swiss Life’s group life portfolio is as follows at December 31, 2025:

The plan assets are pooled with assets of other participating employers and are not separable; therefore the fair values of the pension plan assets at December 31, 2025 and 2024 were considered Level 3.

Note K —Stockholders' Equity

Trust Common Shares

The Trust is authorized to issue 500,000,000 Trust common shares and the LLC is authorized to issue a corresponding number of LLC interests. The Company will, at all times, have the identical number of LLC interests outstanding as Trust shares. Each Trust share represents an undivided beneficial interest in the Trust, and each Trust share is entitled to one vote per share on any matter with respect to which members of the LLC are entitled to vote.

Private Placement

On December 15, 2023, the Company completed the sale of 3,550,000 common shares in a private placement to

Allspring Special Small Cap Value Fundfor consideration per share equal to $21.18 per share, or an aggregate sale price of approximately $75.2 million. In connection with the issuance of the shares, we paid a commission equal to 1% of the aggregate sales price, or approximately $0.8 million. The sale of the common shares was made pursuant to a subscription agreement pursuant to which the buyer agreed not to dispose of the common shares for a period of six months following the date of the private placement.

At-The-Market Equity Offering Program - common shares

On September 5, 2024, the Company refreshed its at-the-market program for the common shares of the Trust, which was initially established on September 7, 2021, by filing a prospectus supplement pursuant to which the Company may, but has no obligation to, issue and sell up to $500 million common shares of the Trust in amounts and at times to be determined by the Company. Actual sales will depend on a variety of factors to be determined by us from time to time, including, market conditions, the trading price of Trust common shares and determinations by us regarding appropriate sources of funding.

In connection with refreshing the program, the Company entered into an Amended and Restated At Market Issuance Sales Agreement (the “Amended Common Sales Agreement”) with B. Riley Securities, Inc. ("B. Riley Securities"), Goldman Sachs & Co. LLC ("Goldman") and TD Securities (USA) LLC (each a “Common Sales Agent” and, collectively, the “Common Sales Agents”). The Amended Common Sales Agreement provides that the Company may offer and sell Trust common shares from time to time through or to the Common Sales Agents, as sales agent or principal, up to $500 million, in amounts and at times to be determined by the Company. Pursuant to the Amended Common Sales Agreement, the shares may be offered and sold through each Common Sales Agent, acting separately, in ordinary brokers’ transactions, to or through a market maker, on or through the New York Stock Exchange ("NYSE") or any other market venue where the securities may be traded, in the over-the-counter market, in privately negotiated transactions, in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act or through a combination of any such methods of sale.

During the year ended December 31, 2025, there were no sales of Trust common shares under the Amended Common Sales Agreement.

During the year ended December 31, 2024, the Company sold 381,957 Trust common shares under the Amended Common Sales Agreement. For the same period, the Company received total net proceeds of approximately $8.4 million from these sales, and incurred approximately $0.1 million in commissions payable to the Sales Agents.

During the year ended December 31, 2023, there were no sales of Trust common shares under the Amended Common Sales Agreement as our at-the-market equity program is not operated when the Company is operating a share repurchase program.

The Company incurred approximately $59.0 thousand, $0.6 million and $0.2 million in total expenses related to its at-the-market equity offering programs during the years ended December 31, 2025, 2024 and 2023, respectively.

As a result of the commencement of the Lugano Investigation and related events, the Company determined during the quarter ended June 30, 2025 that it was unable to continue offering and selling its common shares under the Amended Common Sales Agreement.

Share Repurchase Program

On October 15, 2024, the Board approved a share repurchase program authorizing the Company to repurchase, through December 31, 2024, subject to extension by the Board, up to $100 million of its outstanding common shares. The Company repurchased 416,320 shares for approximately $9.7 million during the year ended December 31, 2024. The share repurchase program expired on December 31, 2024.

In January 2023, the Board approved a share repurchase program authorizing the Company to repurchase, through December 31, 2023, up to $50 million of its outstanding common shares. The Company repurchased 482,400 shares for approximately $9.2 million during the year ended December 31, 2023. The share repurchase program expired on December 31, 2023.

Suspension of Distribution on Common Shares

In light of the Lugano Investigation and related matters, on May 27, 2025, the Company announced that it suspended 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.

Trust Preferred Shares

The Trust is authorized to issue up to 50,000,000 Trust preferred shares and the Company is authorized to issue a corresponding number of Trust Interests.

At-the-market equity offering program - preferred shares

On September 5, 2024, the Company refreshed its at-the-market program for certain Preferred Shares of the Trust, which was initially established in the first quarter of 2024, by filing a prospectus supplement pursuant to which the Company may, but has no obligation to, issue and sell up to $200 million of the Trust’s 7.250% Series A Preferred Shares (the “Series A Preferred Shares”),7.875% Series B Preferred Shares (the “Series B Preferred Shares”), and 7.875% Series C Preferred Shares (the “Series C Preferred Shares” and together with the Series A Preferred Shares, the Series B Preferred Shares, and the Series C Preferred Shares, the “Preferred Shares”), each representing beneficial interests in the Trust. The at-the-market program for Preferred Shares of the Trust was initially established on March 20, 2024 and allowed for the issuance and sale of up to $100 million of the Trust’s Preferred Shares.

In connection with refreshing the program, the Company entered into an Amended and Restated At Market Issuance Sales Agreement (the “Amended Preferred Sales Agreement”) with B. Riley Securities, Inc. (the “Preferred Sales Agent”). The Amended Preferred Sales Agreement provides that the Company may offer and sell Trust Preferred Shares from time to time through or to the Preferred Sales Agent, as sales agent or principal, up to $200 million, in amounts and at times to be determined by the Company. Pursuant to the Amended Preferred Sales Agreement, the shares may be offered and sold through the Preferred Sales Agent in ordinary brokers’ transactions, to or through a market maker, on or through the NYSE or any other market venue where the securities may be traded, in the over-the-counter market, in privately negotiated transactions, in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act or through a combination of any such methods of sale.

The following table reflects the activity in the preferred share at-the-market equity program during the years ended December 31, 2025 and 2024(in thousands, except share data):

The Company incurred less than $0.1 million in total costs related to the preferred share at-the-market equity program during the year ended December 31, 2025, and approximately $0.3 million in total costs related to the preferred share at-the-market equity program during the year ended December 31, 2024.

As a result of the commencement of the Lugano Investigation and related events, in April 2025 the Company discontinued offerings of Trust Preferred Shares under the Amended Preferred Sales Agreement.

Series C Preferred Shares

On November 20, 2019, the Trust issued 4,000,000 Series C Preferred Shares with a liquidation preference of $25.00 per share, and on December 2, 2019, the Trust issued 600,000 of the Series C Preferred Shares which were sold pursuant to an option to purchase additional shares by the underwriters. Total proceeds from the issuance of the Series C Preferred Shares were $115.0 million, or $111.0 million net of underwriters' discount and issuance costs. Distributions on the Series C Preferred Shares will be payable quarterly in arrears, when and as declared by the Board on January 30, April 30, July 30, and October 30 of each year, beginning on January 30, 2020, at a rate per annum of 7.875%. Distributions on the Series C Preferred Shares are cumulative and at December 31, 2025, $2.6 million of Series C distributions are accumulated and unpaid. Unless full cumulative distributions on the Series C Preferred Shares have been or contemporaneously are declared and set apart for payment of the Series C Preferred Shares for all past distribution periods, no distribution may be declared or paid for payment on the Trust common shares. The Series C Preferred Shares are not convertible into Trust common shares and have no voting rights, except in limited circumstances as provided for in the share designation for the Series C Preferred Shares. The Series C Preferred Shares may be redeemed at the Company's option, in whole or in part, at any time after January 30, 2025, at a price of $25.00 per share, plus any accumulated and unpaid distributions (thereon whether authorized or declared) to, but excluding, the redemption date. Holders of Series C Preferred Shares will have no right to require the redemption of the Series C Preferred Shares and there is no maturity date.

If a certain tax redemption event occurs prior to January 30, 2025, the Series C Preferred Shares may be redeemed at the Company's option, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such tax redemption event, at a price of $25.25 per share, plus accumulated and unpaid distributions to, but excluding, the redemption date. If a certain fundamental change related to the Series C Preferred Shares or the Company occurs (whether before, on or after January 30, 2025), the Company will be required to repurchase the Series C Preferred Shares at a price of $25.25 per share, plus accumulated and unpaid distributions to, but excluding, the date of purchase. If (i) a fundamental change occurs and (ii) the Company does not give notice prior to the 31 st day following the fundamental change to repurchase all the outstanding Series C Preferred Shares, the distribution rate per annum on the Series C Preferred Shares will increase by 5.00%, beginning on the 31 st day following such fundamental change. Notwithstanding any requirement that the Company repurchase all of the outstanding Series C Preferred Shares, the increase in the distribution rate is the sole remedy to holders in the event the Company fails to do so, and following any such increase, the Company will be under no obligation to repurchase any Series C Preferred Shares.

Series B Preferred Shares

On March 13, 2018, the Trust issued 4,000,000 Series B Preferred Shares with a liquidation preference of $25.00 per share, for gross proceeds of $100.0 million, or $96.5 million net of underwriters' discount and issuance costs. Distributions on the Series B Preferred Shares are payable quarterly in arrears, when and as declared by the Board on January 30, April 30, July 30, and October 30 of each year, beginning on July 30, 2018, at a rate per annum of 7.875%. Holders of the Series B Preferred Shares are entitled to receive cumulative cash distributions (i) from and including the date of issuance to, but excluding, April 30, 2028 at a rate equal to 7.875% per annum and (ii) from and including April 30, 2028, at a floating

rate equal to the then applicable three-month LIBOR (or a successor rate) plus a spread of 4.985% per annum. Subsequent to April 30, 2028, the distribution rate will be reset quarterly. At December 31, 2025, $2.5 million of Series B distributions are accumulated and unpaid. Unless full cumulative distributions on the Series B Preferred Shares have been or contemporaneously are declared and set apart for payment of the Series B Preferred Shares for all past distribution periods, no distribution may be declared or paid for payment on the Trust common shares. The Series B Preferred Shares are not convertible into Trust common shares and have no voting rights, except in limited circumstances as provided for in the share designation for the Series B Preferred Shares. The Series B Preferred Shares may be redeemed at the Company's option, in whole or in part, at any time after April 30, 2028, at a price of $25.00 per share, plus any accumulated and unpaid distributions (thereon whether authorized or declared) to, but excluding, the redemption date. Holders of Series B Preferred Shares will have no right to require the redemption of the Series B Preferred Shares and there is no maturity date.

If a certain tax redemption event occurs prior to April 30, 2028, the Series B Preferred Shares may be redeemed at the Company's option, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such tax redemption event, at a price of $25.25 per share, plus accumulated and unpaid distributions to, but excluding, the redemption date. If a certain fundamental change related to the Series B Preferred Shares or the Company occurs (whether before, on or after April 30, 2028), the Company will be required to repurchase the Series B Preferred Shares at a price of $25.25 per share, plus accumulated and unpaid distributions to, but excluding, the date of purchase. If (i) a fundamental change occurs and (ii) the Company does not give notice prior to the 31 st day following the fundamental change to repurchase all the outstanding Series B Preferred Shares, the distribution rate per annum on the Series B Preferred Shares will increase by 5.00%, beginning on the 31 st day following such fundamental change. Notwithstanding any requirement that the Company repurchase all of the outstanding Series B Preferred Shares, the increase in the distribution rate is the sole remedy to holders in the event the Company fails to do so, and following any such increase, the Company will be under no obligation to repurchase any Series B Preferred Shares.

Series A Preferred Shares

On June 28, 2017, the Trust issued 4,000,000 Series A Preferred Shares with a liquidation preference of $25.00 per share, for gross proceeds of $100.0 million, or $96.4 million net of underwriters' discount and issuance costs. When, and if declared by the Board, distribution on the Series A Preferred Shares will be payable quarterly on January 30, April 30, July 30, and October 30 of each year, beginning on October 30, 2017, at a rate per annum of 7.250%. Distributions on the Series A Preferred Shares are discretionary and non-cumulative. The Company has no obligation to pay distributions for a quarterly distribution period if the Board does not declare the distribution before the scheduled record of date for the period, whether or not distributions are paid for any subsequent distribution periods with respect to the Series A Preferred Shares, or the Trust common shares. If the Board does not declare a distribution for the Series A Preferred Shares for a quarterly distribution period, during the remainder of that quarterly distribution period the Company cannot declare or pay distributions on the Trust common shares. The Series A Preferred Shares are not convertible into Trust common shares and have no voting rights, except in limited circumstances as provided for in the share designation for the Series A Preferred Shares.

The Series A Preferred Shares may be redeemed at the Company's option, in whole or in part, at any time after July 30, 2022, at a price of $25.00 per share, plus declared and unpaid distribution to, but excluding, the redemption date, without payment of any undeclared distributions. Holders of Series A Preferred Shares will have no right to require the redemption of the Series A Preferred Shares and there is no maturity date.

If a certain tax redemption event occurs prior to July 30, 2022, the Series A Preferred Shares may be redeemed at the Company's option, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such tax redemption event, at a price of $25.25 per share, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. If a certain fundamental change related to the Series A Preferred Shares or the Company occurs (whether before, on or after July 30, 2022), the Company will be required to repurchase the Series A Preferred Shares at a price of $25.25 per share, plus declared and unpaid distributions to, but excluding, the date of purchase, without payment of any undeclared distributions. If (i) a fundamental change occurs and (ii) the Company does not give notice prior to the 31 st day following the fundamental change to repurchase all the outstanding Series A Preferred Shares, the distribution rate per annum on the Series A Preferred Shares will increase by 5.00%, beginning on the 31st day following such fundamental change. Notwithstanding any requirement that the Company repurchase all of the outstanding Series A Preferred Shares, the increase in the distribution rate is the sole remedy to holders in the event the Company fails to do so, and following any such increase, the Company will be under no obligation to repurchase any Series A Preferred Shares.

The Holders, through Sostratus LLC, are entitled to receive distributions pursuant to a profit allocation formula upon the occurrence of certain events. The distributions of the profit allocation is paid upon the occurrence of a Sale Event or, at the option of the Holders, upon a Holding Event. The Company records distributions of the profit allocation to the Holders upon occurrence of a Sale Event or Holding Event as dividends declared on Allocation Interests to stockholders’ equity when they are approved by the Board.

The following is a summary of the profit allocation payments made to the Holders of the Allocation Interest for Sale Events and Holding Events during the years ended December 31, 2024 and 2023. There were no profit allocation payments during the year ended December 31, 2025.

Year ended December 31, 2025

•The deconsolidation of Lugano in November 2025 represented a Sale Event, however the calculation of the profit allocation payment resulted in a negative amount therefore no profit allocation payment was due to the Holders. The negative amount will offset future profit allocation payments due to the Holders.

Year ended December 31, 2024

•The sale of Ergobaby in December 2024 represented a Sale Event, however the calculation of the profit allocation payment resulted in a negative amount therefore no profit allocation payment was due to the Holders. The negative amount will offset future profit allocation payments due to the Holders.

•The sale of Marucci in November 2023 represented a Sale Event and the Board approved a distribution of $48.9 million in the first quarter of 2024 (refer to Note E - "Dispositions"). This distribution was paid to the Holders of the Allocation Interests in the first quarter of 2024.

Year ended December 31, 2023

•The sale of Advanced Circuits in February 2023 represented a Sale Event and the Board approved a distribution of $24.4 million paid to the Holders of the Allocation Interests in the second quarter of 2023 (refer to Note E - "Dispositions").

•The Board approved a distribution of $2.1 million paid to the Holders of the Allocation Interests related to various sale proceeds received related to previous Sale Events. These distributions were in the second quarter of 2023.

Reconciliation of net income (loss) available to common shares of Holdings

The following table reconciles net income from continuing operations attributable to Holdings to net income (loss) from continuing operations attributable to the common shares of Holdings:

Earnings per share

Basic and diluted earnings per share for the fiscal year ended December 31, 2025, 2024 and 2023 is calculated as follows:

Distributions

The following table summarizes information related to our quarterly cash distributions on our Trust common shares and Preferred Shares:

(1) This distribution was declared on January 5, 2026.

Note L —Income Taxes

Components of the Company's income (loss) before income taxes are as follows:

Components of the Company’s income tax provision are as follows:

The tax effects of temporary differences that have resulted in the creation of deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024 are as follows:

(1)Primarily relates to the Trust and 5.11, Arnold, Lugano (2024) and Velocity operating segments.

(2)Loss at Trust primarily relates to the effect of the deconsolidation of Lugano at the Trust level.

(3)Lugano other expense represents losses recognized at Lugano in the year ending December 31, 2024 which did not meet the requirements for deduction under ASC 740 - Income taxes. The deferred tax assets associated with Lugano were deconsolidated in November 2025.

As of December 31, 2025 and 2024, the Company had approximately $198.1 million and $211.3 million, respectively in deferred tax liabilities. A significant portion of the balance in deferred tax liabilities reflects temporary differences in the basis of property and equipment and intangible assets related to the Company’s purchase accounting adjustments in connection with the acquisition of certain of its businesses. For financial accounting purposes the Company has recognized a significant increase in the fair values of the intangible assets and property and equipment in certain of the businesses it acquired. For income tax purposes the existing, pre-acquisition tax basis of the intangible assets and property and equipment is utilized. In order to reflect the increase in the financial accounting basis over the existing tax basis, a deferred tax liability was recorded. This liability will decrease in future periods as these temporary differences reverse but may be replaced by deferred tax liabilities generated as a result of future acquisitions.

At December 31, 2025 and 2024, the Company had U.S. Federal net operating loss carryforwards of approximately $48.0 million and $121.6 million, respectively. Approximately $10.6 million of these carryforwards will expire, if not utilized, begin ning in 2036. The remaining balance of the Company's U.S. Federal net operating loss carryforwards do not expireand are subject to utilization limitations based on a percentage of taxable income in a given year. As of December 31, 2025 and 2024, the Company had net operating loss carryforwards for state income tax purposes of$75.8 million and $149.5 million, resp ectively. The Company’s state net operating loss carryforwards will expire, if not utilized, beginning in 2026. As of December 31, 2025 and 2024, the Company had foreign net operating loss carryforwards of $14.4 million and $11.0 million, respectively. The foreign net operating loss carryforwards will expire, if not utilized, beginning in 2025. As of December 31, 2025, the Company had Federal capital loss carryforwards of $42.1 million. The Federal capital loss carryforwards will expire in 2029 if not utilized. As of December 31, 2025, the Company had State capital loss carryforwards of $17.1 million. The State capital loss carryforwards will expire in 2044 if not utilized.

As of December 31, 2025 and 2024, the Company had federal research and development tax credit carryforwards of $0.1 million and $0.2 million, respectively. The research and development tax credit carryforwards will expire beginning in 2044 if not utilized. As of December 31, 2025 and 2024, the Company had foreign tax credit carryforwards of $3.7 million and $2.0 million, respectively. The foreign tax credit carryforwards will expire beginning in 2031 if not utilized. As of December 31, 2025 and 2024, the Company had state tax credit carryforwards, consisting mostly of California business tax credits of $0.2 million and $0.8 million, respectively. The California business tax credit carryforwards will expire, if not utilized, beginning in 2025.

As of December 31, 2025 and 2024, the Company had a valuation allowance related to the realization of domestic and foreign net operating losses, domestic and foreign tax credits and the limitation on the deduction of interest expense of $202.8 million, $182.0 million, respectively. A valuation allowance is provided whenever it is more likely than not that some or all of deferred assets recorded may not be realized.

A reconciliation of the provision for income taxes to the amount computed by applying the U.S. Federal Statutory Rate to income before income taxes after the adoption of ASU 2023-09 is as follows:

(1)Connecticut contributes to a majority (greater than 50%) of the tax effect in this category.

A reconciliation of the provision for income taxes to the amount computed by applying the U.S. Federal Statutory Rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:

A reconciliation of the amount of unrecognized tax benefits for 2025, 2024 and 2023 are as follows(in thousands):

The unrecognized tax benefits are recorded in the consolidated balance sheets in other noncurrent liabilities. Included in the unrecognized tax benefits at December 31, 2025 and 2024, is$1.7 million, and $1.6 million, respectively, of tax benefits that, if recognized, would affect the Company’s effective tax rate. Also included in the unrecognized tax benefits at December 31, 2025 and December 31, 2024 are$0.0 million and $7.4 million, respectively, of unrecognized tax benefits that, if recognized, would not affect the Company's effective tax rate but would result in an adjustment to discontinued operations in future periods. The $7.4 million in unrecognized tax benefits was recorded as a reduction to the gain on sale related to the sale of our Ergobaby subsidiary in the year ended December 31, 2024.

The Company accrues interest and penalties related to uncertain tax positions. The amounts accrued at December 31, 2025 and 2024 are not material to the Company. Such amounts are included in the provision (benefit) for income taxes in the accompanying consolidated statements of operations. It is expected that the amount of unrecognized tax benefits will change in the next twelve months. However, we do not expect the change to have a significant impact on the consolidated results of operations or financial position.

Each of the Company’s businesses file U.S. Federal, state and foreign income tax returns in multiple jurisdictions with varying statutes of limitations. The 2020 through 2025 tax years generally remain subject to examinations by the taxing authorities.

The amounts of cash income taxes paid by the Company in 2025 were as follows:

Note M —Fair Value Measurement

Recurring Fair Value Measurements

The following table presents, by level within the fair value hierarchy, the Company's financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2025, according to the valuation technique utilized to determine their fair values. There were no assets or liabilities measured on a recurring basis as of December 31, 2024 or December 31, 2023.

The Company had no assets or liabilities Level 3 fair value measurements during the years ended December 31, 2024. A reconciliation of the change in the carrying value of the Company's Level 3 fair value measurement during the year ended December 31, 2025 is as follows:

Valuation Techniques

Receivable Due from Unconsolidated Affiliate (Secured Claim Against Lugano)

The receivable due from an unconsolidated affiliate represents the Company’s estimate of the fair value of its secured claim related to intercompany loans to Lugano, which is currently subject to bankruptcy proceedings. The fair value measurement is classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs.

Fair value was determined using a valuation approach that reflects management’s current expectations regarding recoveries from the bankruptcy proceedings. The estimate considers factors such as the priority and amount of secured and unsecured creditor claims and the expected timing of potential distributions. The valuation incorporates assumptions that are not directly observable in the marketplace and therefore require judgment, including estimates of recoverable amounts and the resolution of claims through the bankruptcy process. These assumptions reflect information available to management as of the measurement dates. Changes in these assumptions could affect the estimated fair value.

Equity Investment in Lugano

The Company’s equity investment in Lugano is measured at fair value on a recurring basis and is classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs. As of the measurement date, which coincided with Lugano’s bankruptcy filing, and as of December 31, 2025, the fair value of the Company’s equity investment was estimated to be $0.

Fair value was determined using estimates of projected cash flows that reflect management’s estimates of expected recoveries from the bankruptcy proceedings. Significant assumptions include projected cash flows available to equity holders, the priority and magnitude of secured and unsecured creditor claims, and the timing of any potential distributions. These inputs are not observable in the marketplace and require significant judgment.

Based on the estimated claims of secured and unsecured creditors, which significantly exceed expected recovery proceeds, no residual value was attributable to the Company’s equity interest as of the measurement dates.

The Company's Senior Notes consisted of the following carrying value and estimated fair value (in thousands):

2022 Term Loan

At December 31, 2025, the carrying value of the principal under the Company's outstanding 2022 Term Loan, including the current portion, was $552.5 million, which approximates fair value because it bears interest at a variable interest rate that reflects changes in interest rates and changes in the Company's net leverage ratio. The estimated fair value of the outstanding 2022 Term Loan is classified as Level 2 in the fair value hierarchy.

Nonrecurring Fair Value Measurements

The following table provides the assets and liabilities carried at fair value measured on a non-recurring basis as of December 31, 2025, December 31, 2024 and December 31, 2023. Refer to "Note H – Goodwill and Intangible Assets", for a description of the valuation techniques used to determine fair value of the assets measured on a non-recurring basis in the tables below.

(1)Lugano recorded impairment expense in the second quarter of 2025 related to long-lived assets. As a result of the deconsolidation of Lugano on November 16, 2025, the carrying value of the related assets as of December 31, 2025 was $0.

Note N —Noncontrolling Interest

Noncontrolling interest represents the portion of a majority-owned subsidiary’s net income and equity that is owned by noncontrolling shareholders.

The following tables reflect the Company’s percentage ownership of its businesses, as of December 31, 2025, 2024 and 2023 and related noncontrolling interest balances as of December 31, 2025, 2024 and 2023:

(1)The principal difference between primary and fully diluted percentages of our operating segments is due to stock option issuances of operating segment stock to management of the respective business.

Note O —Supplemental Data

Supplemental Balance Sheet Data:

Supplemental Statements of Operations Data:

(1)Lugano expense represents losses recognized at Lugano resulting fromthe accounting for the transactions associated with the off-balance sheet arrangements.

Supplemental Cash Flow Statement Data:

The following table provides supplemental disclosure of cash flow information for the years ended December 31,2025,2024 and 2023:

(1)Represents the non-cash settlement of Lugano financing arrangements.

Investments

Arnold Joint Venture

Arnold is a 50% partner in a China rare earth mine-to-magnet joint venture. Arnold accounts for its activity in the joint venture utilizing the equity method of accounting. Gains and losses from the joint venture were not material for the years ended December 31, 2025, 2024 and 2023.

In September 2020, Altor invested $3.6 million in Rational Packaging, LLC, a designer and manufacturer of recyclable, paperboard-based structural packaging components. The investment was accounted for as an equity method investment. In 2024, Altor acquired the remaining equity interests in Rational Packaging, LLC and began accounting for Rational Packaging as a consolidated entity. Gains and losses from the investment were not material for the years ended December 31, 2024 and 2023.

Note P —Commitments and Contingencies

General Matters

The Company and its subsidiaries are subject to legal proceedings and claims that arise in the ordinary course of business. A liability for a loss contingency is accrued when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. For all other material loss contingencies, including those where the loss is reasonably possible or where the amount cannot be reasonably estimated, the Company discloses the nature of the contingency. The Lugano Investigation and the restatement of our previously issued consolidated financial statements for the periods ended at December 31, 2024, 2023 and 2022 has resulted in certain litigation and may result in additional stockholder litigation, regulatory investigations and additional liabilities in future periods.

Lugano Deconsolidation and Scope of Disclosure

As described below, Lugano and certain of its subsidiaries filed Chapter 11 petitions on November 16, 2025 (the “Deconsolidation Date”) and thereafter were deconsolidated from the Company’s consolidated financial statements. Accordingly, as of December 31, 2025, the Company’s loss contingency disclosures focus on matters for which the Company and/or its current or former directors and officers have potential exposure (including matters in which the Company is a named party or otherwise has a present obligation). Certain matters described below relate solely to Lugano and its subsidiaries and do not name the Company as a defendant; such matters are disclosed to the extent they affected amounts recognized in the Company’s consolidated results during the period Lugano was consolidated in 2025 and/or are relevant to the Company’s potential exposure, including (i) matters in which the Company and/or its current or former directors and officers are named or may have indemnification or defense-cost obligations, and (ii) potential claims or challenges that could affect recoveries on the Company’s claims in the Lugano bankruptcy proceedings.

Securities Class Actions Involving the Company

Between May 9, 2025, and June 25, 2025, three putative class actions were commenced against the Company and certain of the Company’s officers and directors, asserting claims under Sections 10(b) and 20(a) of the Securities

Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder in the U.S. District Court for the Central District of California (collectively, the “CA Securities Class Actions”). On August 22, 2025, such CA Securities Class Actions were consolidated under the caption In re: Compass Securities Litigation, and the Court appointed the Eastern Atlantic States Carpenters Benefit Funds (“EAS Carpenters”) as lead plaintiff and the law firm of Cohen Milstein Sellers & Toll PLLC (“Cohen Milstein”) as lead counsel. On December 10, 2025, with the Court’s approval, the lead plaintiff voluntarily dismissed the consolidated California action in order to pursue its claims in the District of Connecticut.

On May 12, 2025, a separate putative class action was commenced against the Company and certain of its officers and directors in the U.S. District Court for the District of Connecticut, captioned Moreno v. Compass Diversified Holdings LLC, et al. (the “Moreno Action”). The plaintiff in the Moreno Action asserted the same claims as asserted by the plaintiffs in the CA Securities Class Actions. By order dated July 21, 2025, EAS Carpenters was appointed lead plaintiff and Cohen Milstein was appointed lead counsel for the Moreno Action. On February 6, 2026, lead plaintiff filed an amended complaint. The foregoing Securities Class Actions Involving the Company are in the early stages and the Company is currently unable to determine the likelihood of an unfavorable outcome. At this time, management has determined that a loss is reasonably possible but cannot reasonably estimate a range of potential loss. The Company believes it has defenses available to it and intends to vigorously defend itself.

Derivative Actions Involving the Company

On June 5, 2025, a Company shareholder commenced a shareholder derivative action in the U.S. District Court for the Central District of California, captioned Jones v. Sabo, et al. (the “Jones Action”), purporting to assert claims on behalf of the Company against current and former Company officers and directors who were named as defendants. The plaintiff is asserting causes of action for breach of fiduciary duty and violations of Section 14(a) of the Exchange Act. On July 17, 2025, a Company shareholder commenced a shareholder derivative action in the U.S. District Court for the Central District of California, captioned Kelly v. Sabo, et al., (the “Kelly Action”). The plaintiff in the Kelly Action asserted the same causes of action, against the same defendants, as the Jones Action. On August 6, 2025, the parties to the Jones Action and the Kelly Action filed a stipulation and proposed order to consolidate the two actions and to stay the actions, pending certain future events (including resolution of any motions to dismiss in the Securities Class Actions Involving the Company. On January 21, 2026, the court entered an order consolidating and staying the aforementioned derivative cases. The cases will henceforth be known as In Re Compass Diversified Holdings Derivative. On January 28, 2026, plaintiff’s counsel in a case captioned Begich v. Sabo et al, (“Begich Action”) another derivative case that previously had not been served on the Company, requested that the court include the Begich Action in the consolidated stayed cases.

On September 12, 2025, a shareholder of CODI filed a shareholder derivative action in the U.S. District Court for the District of Connecticut, captioned Kamp v. Sabo, et al. (the “Kamp Action”). The plaintiff in the Kamp Action asserts the same causes of action as in the above derivative cases, plus a cause of action for securities fraud in violation of Section 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. On October 7, 2025, a shareholder of CODI filed a shareholder derivative action in the U.S. District Court for the District of Connecticut, captioned Sulger v. Sabo, et al. (the “Sulger Action”). The plaintiff in the Sulger Action asserts the same causes of action as in the Kamp Action. On October 9, 2025, a shareholder of CODI commenced a shareholder derivative action in the U.S. District Court for the District of Columbia, captioned Moore v. Sabo, et al. (the “Moore Action”). The plaintiff in the Moore Action asserts similar claims against the same defendants as in the Kamp Action and Sulger Action. On December 8, 2025, the Court consolidated the Kamp Action, Sulger Action and Moore Action. The cases will henceforth be known as In re Compass Diversified Holdings Derivative Litigation. On January 12, 2026, the parties filed a stipulation and proposed order to stay the consolidated action pending further developments in the Securities Class Actions Involving the Company. The court entered that order on January 13, 2026.

The foregoing Derivative Actions Involving the Company are in the early stages and the Company is currently unable to determine the likelihood of an unfavorable outcome. At this time, management has determined that a loss is reasonably possible but cannot reasonably estimate a range of potential loss. The Company believes it has defenses available to it and intends to vigorously defend itself.

External Investigations and Reviews Involving the Company and Lugano

As a result of the Company’s withdrawal of reliance on its 2024, 2023, and 2022 financial statements, its failure to timely file its financial statements for the quarters ended at March 31, 2025, June 30, 2025, and September 30, 2025, and the underlying conduct at the Company’s Lugano subsidiary, there are ongoing investigations initiated by the U.S. Securities Exchange Commission (“SEC”) and the U.S. Department of Justice (“DOJ”). The regulatory investigative process is inherently uncertain and the foregoing investigations are in the early stages. Additionally, the Financial Industry Regulatory Authority (“FINRA”) initiated a routine review of trading activity in the Company’s securities following the public announcement of the restatement. On November 17, 2025, the Company received notification from FINRA that its review had been completed and had referred the matter to the SEC for whatever actions the SEC deems appropriate, if any. The Company has cooperated and continues to cooperate fully with each ongoing investigation.

State Court Action Naming Company as a Defendant in Lugano-Related Matters

On July 24, 2025, a complaint was filed against Lugano, the Company and others in California State Court, styled Champion Force Industrial Limited v. Lugano Diamonds & Jewelry Inc., et al., asserting claims for breach of contract, goods had and received, conversion, fraud, promissory estoppel, unjust enrichment, and fraudulent conveyance. The plaintiff is a vendor of diamonds and finished jewelry to Lugano and is seeking in excess of $56.4 million in damages, principally for unpaid goods. On September 12, 2025, CODI filed a motion to quash due to lack of personal jurisdiction. As a result of the Lugano Bankruptcy, the claims against Lugano in the Champion Action are subject to the automatic stay. On January 12, 2026, the plaintiff filed a stipulation and proposed order substituting Royal T. Diamonds Group Ltd. a/k/a Royal T. Diamonds Ltd. assignee of Champion Force’s claims, as plaintiff in place of Champion Force. On February 11, 2026, Champion Force filed its opposition to CODI’s motion to quash, and CODI filed its reply on February 18, 2026. A hearing on CODI’s motion to quash is currently scheduled for February 26, 2026. The foregoing matter is in the early stages and the Company is currently unable to determine the likelihood of an unfavorable outcome as to the Company. As a result of the Lugano bankruptcy, the claims against Lugano are subject to the automatic stay. The stay generally does not extend to non-debtor parties such as the Company, although a court may stay proceedings against non-debtors in certain circumstances (including where the debtor is a necessary party).

Additionally, the Company was named as a defendant in Ken Kraus v. Lugano Diamonds & Jewelry, Inc., et al. (the “Kraus Action”), in which the plaintiff is seeking approximately $1.4 million in damages, plus interest and penalties. On January 12, 2026, the judge in the Kraus Action stayed the case with respect to all defendants.

During the year ended December 31, 2024 and the period Lugano was consolidated in 2025, the Company recorded accruals for certain Lugano-related vendor obligations in accordance with applicable accounting standards, although such obligations are subject to dispute. As of December 31, 2024 and the Deconsolidation Date, the recorded amount of such accruals was $49.8 million and $52.7 million, respectively. After the Deconsolidation Date, these amounts were deconsolidated and are no longer included in the Company’s consolidated liabilities

The Company intends to avail itself of all available defenses in these matters. Management has determined that a loss is reasonably possible, but cannot reasonably estimate the loss or range of possible loss, if any, that may result from this litigation.

Lugano-Specific Claims and Threatened Claims

Certain matters described below relate solely to Lugano and are included only for the purposes described above under the heading Lugano Deconsolidation and Scope of Disclosure. These matters are described to the extent they affected amounts recognized in the Company’s consolidated results during the period Lugano was consolidated in 2025 and/or are relevant to the Company’s potential exposure described above.

During the period from approximately May 7, 2025 to November 15, 2025, litigation was threatened and initiated by counterparties to transactions that appear to have been overseen by Lugano’s former CEO, Moti Ferder, who resigned effective May 7, 2025. The vast majority involve purported investment arrangements whereby the claimant delivered a specified dollar amount to Lugano in exchange for either (a) a profits interest in the future sale of a specified diamond(s), or (b) a guaranteed interest rate (collectively, “Diamond Financing Arrangements”).

Certain Diamond Financing Arrangements are the subject of current litigation, primarily in California State court, and the majority of the plaintiffs in these cases have presented similar fact patterns and are primarily seeking damages for alleged losses of principal amounts invested (“Diamond Financing Litigation”). The total damages being sought by all plaintiffs in Diamond Financing Litigation is approximately $32.2 million, plus interest and penalties, in most cases.

As noted below under the heading Impact of Lugano Chapter 11 Filingthe Diamond Financing Litigation is subject to an automatic stay that prohibits, among other things, the continuation of these actions against Lugano, as debtor, outside of the bankruptcy process.

During the year ended December 31, 2024 and the period Lugano was consolidated in 2025, the Company recorded accruals for the estimated principal of short-term debt and interest expense related to previously undisclosed financing arrangements at Lugano (which includes the accrual for all Diamond Financing Arrangements) in accordance with applicable accounting standards, although such obligations were and are subject to dispute. As of December 31, 2024 and the Deconsolidation Date, the recorded amount of such accruals was $169.8 million and $183.7 million, respectively. After the Deconsolidation Date, these amounts were deconsolidated and are no longer included in the Company’s consolidated liabilities

Where the Company is named as a defendant in any Lugano-related matter, the Company intends to avail itself of all available defenses. The Company cannot predict whether claims arising from these matters will be asserted against the Company or its current or former directors and officers, or the outcome of any such matters. If asserted, management believes a loss could be reasonably possible, but cannot reasonably estimate the loss or range of possible loss, if any.

Impact of Lugano Chapter 11 Filing

On November 16, 2025, Lugano Holding, Inc. and certain of its subsidiaries, including Lugano, filed voluntary Chapter 11 petitions under the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Upon the filing of a bankruptcy petition, Section 362 of the Bankruptcy Code imposes an automatic stay that prohibits, among other things, the commencement or continuation of numerous actions against the debtor entity (in this case, Lugano), which include all lawsuits and collection efforts. The stay was immediately effective upon the bankruptcy filing without any further action by the debtor entity or any other party. The automatic stay remains in place until resolution of the bankruptcy case, or until otherwise waived by the debtor. The automatic stay generally protects only the debtor and does not usually extend to non-debtor parties who may be the subject of claims or litigation, including co-defendants named in litigation where Lugano is also defendant. In certain circumstances, a court may extend the stay to non-debtors if the debtor entity is a necessary party to the action. The automatic stay prohibits further litigation against Lugano outside of the Bankruptcy Court but does not necessarily prohibit continuation of actions against non-debtor parties, including CODI, absent a court order extending the stay.

In connection with the Lugano Bankruptcy proceedings, the Company’s claims against Lugano, including its senior secured receivable/claim, may be subject to challenge by Lugano or other parties in interest, including through claims or causes of action that could seek to subordinate or recharacterize the Company’s claim or otherwise reduce recoveries. Additionally, Lugano, its estate representative, creditors, or other parties in interest may assert claims or causes of action against the Company and/or its current or former directors and officers, including claims that could seek monetary damages or other relief.

The Company cannot predict whether any such claims will be asserted or the outcome of any such matters, and the assertion or resolution of such matters could affect the timing and amount of any recoveries. If asserted, such matters could result in significant defense costs, settlement payments or judgments, and could affect the timing and amount of any recoveries on the Company’s claims in the bankruptcy proceedings.

Leases

The Company and its subsidiaries lease office and manufacturing facilities, computer equipment and software under various operating arrangements. Certain of the leases are subject to escalation clauses and renewal periods. The Company and its subsidiaries recognize lease expense, including predetermined fixed escalations, on a straight-line basis over the initial term of the lease including reasonably assured renewal periods from the time that the Company and its subsidiaries control the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Certain of our subsidiaries have leases that contain both fixed rent costs and variable rent costs based on achievement of certain operating metrics. The variable lease expense was not a material component of our total lease expense for the years ending December 31, 2025, 2024 or 2023.

The maturities of lease liabilities at December 31, 2025 having an initial or remaining non-cancelable term of one year or more are as follows (in thousands):

The Company’s rent expense for the fiscal years ended December 31, 2025, 2024 and 2023 totaled $60.5 million, $53.9 million and $50.3 million, respectively. The Company entered into a finance lease during the year ended December 31, 2024. The amortization and interest related to this lease was not material in 2024.

The calculated amount of the right-of-use assets and lease liabilities in the table above are impacted by the length of the lease term and discount rate used to present value the minimum lease payments. The Company's lease agreements often include one or more options to renew at the company's discretion. In general, it is not reasonably certain that lease renewals will be exercised at lease commencement and therefore lease renewals are not included in the lease term. As the discount rate is rarely determinable, the Company utilizes the incremental borrowing rate of the subsidiary entering into the lease arrangement, on a collateralized basis, over a similar term as adjusted for any country specific risk.

The weighted average remaining lease terms and discount rates for all of our leases were as follows:

Supplemental balance sheet information related to leases was as follows (in thousands):

Supplemental cash flow information related to leases was as follows (in thousands):

Exit Costs

Altor - Subsequent to the acquisition of Lifoam in October 2024, Altor determined that they would shut down four of their facilities that had geographic overlap with Lifoam facilities. During the year ended December 31, 2025, Altor recorded approximately $10.3 million in exit costs related to the plant closures in selling general and administrative expense. The plant closures were finalized in the fourth quarter of 2025.

Arnold - During 2024, Arnold relocated two of its facilities located in Marengo, Illinois into one combined facility in Woodstock, Illinois. Arnold recorded $9.9 million in exit costs related to the move of which $9.3 million is recorded in selling, general and administrative expense and $0.6 million is recorded in costs of revenues in the consolidated statement of operations in the year ended December 31, 2024. An additional $2.9 million in expense was incurred related to the move to the new facility that were not classified as exit costs, for total expense of approximately $13.0 million in the year ended December 31, 2024. Arnold recorded an additional $0.9 million in costs in the year ended December 31, 2025 related to the relocation of the two facilities. The exit from the Marengo facility is now substantially complete.

Note Q — Related Party Transactions

The LLC has entered into related party transactions with its Manager, CGM, and Sostratus LLC, including the following:

•Management Services Agreement

•LLC Agreement

•Integration Services Agreements

•Cost Reimbursement and Fees

Management Services Agreement

The LLC entered into a MSA with CGM effective May 16, 2006, as amended. Our Chief Executive Officer is a the managing member of CGM. The MSA, provides for, among other things, CGM to perform services for the LLC in exchange for a management fee paid quarterly. The management fee is required to be paid prior to the payment of any distributions to shareholders.

Pursuant to the MSA, CGM is entitled to enter into off-setting management service agreements with each of the operating segments. The amount of the fee is negotiated between CGM and the operating management of each segment and is based upon the value of the services to be provided. The fees paid directly to CGM by the segments offset on a dollar for dollar basis the amount due CGM by the LLC under the MSA.

On January 15, 2025, the LLC and the Manager amended the Sixth Amended and Restated Management Services Agreement dated as of September 30, 2014 and originally effective as of May 16, 2006 (the “Existing Agreement”), by entering into a Seventh Amended and Restated Management Services Agreement (the “MSA Amendment”), which restructures the management fee under the Existing Agreement to consist of a base management fee and an incentive management fee. Pursuant to the MSA Amendment, the base management fee will be (i)2% the Company’s adjusted net assets when the adjusted net assets are less than or equal to $3.5 billion (the “Initial Threshold Fee”), (ii) the Initial Threshold Fee plus 1.25% of the amount of adjusted net assets exceeding $3.5 billion when the adjusted net assets are more than $3.5 billion but less than $10 billion, or (iii)1.5% of the adjusted net assets when the adjusted net assets are $10 billion or more. The incentive management fee will be 0.25% of the amount of adjusted net assets exceeding $3.5 billion only when the adjusted net assets are more than $3.5 billion but less than $10 billion and only if the Company’s annualized internal rate of return on equity for the trailing three-years exceeds 12%. Any incentive management fee paid to the Manager may only be distributed by the Manager among the then-current Employees (as defined in the MSA) of the Manager. Such incentive management fee is subject to approval by the Compensation Committee of the Company's board of directors. The MSA Amendment also eliminates the payment of integration services fee by the Company’s subsidiaries to the Manager and excludes excess cash held by the Company and the Company’s subsidiaries, subject to certain exceptions, from the calculation of the adjusted net assets of the Company, along with certain other changes.

At December 31, 2023, CGM entered into a waiver to exclude cash balances held at the LLC from the calculation of the management fee.

Effect of Restatement on Management Fees

As a result of the restatement of the financial statements as of December 31, 2024, 2023 and 2022 and for the years ended December 31, 2024, 2023 and 2022, as well as for the period ended December 31, 2021 and revisions made in the quarter ended March 31, 2025, the management fees paid to CGM were in excess of the amounts that should have been due under the MSA. While the MSA does not contain an express mechanism that permits the Company to immediately clawback the overpayment of management fees during the aforementioned periods, the MSA provides that future payments under the MSA will be reduced, on a dollar-for-dollar basis, by the aggregate amount of all overpaid management fees. The Company calculated the total aggregate amount of excess management fees paid as a result of the restatement of the financial statements as $50.4 million. Due to the restrictions placed on payment of the management fee during under the Forbearance Agreements entered into during 2025 related to the 2022 Credit Facility, the Company paid $16.6 million less than the expense due during 2025, resulting in a total overpayment of management fees as of December 31, 2025 of $33.8 million. This amount was recorded as an asset "Due from CGM" that reduced the management fee expense for the year ended December 31, 2025. For the fourth quarter of 2025, the total management fee expense incurred totaled $14.3 million, of which $13.0 million was unpaid at December 31, 2025 and offset the amount due from CGM, resulting in a net receivable of $20.8 million at December 31, 2025. The Company intends to reduce the amount of management fees paid in future quarters until the overpayment has been fully recouped. The Board intends to direct the Company to establish a plan for recovering all such excess management fees paid to the Manager as soon as is reasonably practicable, balancing prompt recovery with the need to fund Manager’s ongoing management services to the Company. Refer to "Note T - Subsequent Events" for a description of the MSA amendment entered into between the Manager and the LLC on February 23, 2026.

For the years ended December 31, 2025, 2024 and 2023, the Company incurred the following management fees to CGM, by entity:

(1) Total expense incurred at Corporate was reduced by $50.4 million in overpaid management fees in the fourth quarter of 2025.

Approximately$13.0 million and $18.0 million of the management fees incurred were unpaid as of December 31, 2025 and 2024, respectively, and are reflected in "Due to related party" on the consolidated balance sheets.

LLC Agreement

The LLC agreement gives the Allocation Interest Holders the right to distributions pursuant to a profit allocation formula upon the occurrence of a Sale Event or a Holding Event. The Holders are entitled to receive and as such can elect to receive, if due pursuant to the profit allocation formula, an allocation payment upon a Sale Event and upon election of the Holders upon a Holding Event. Holders received $48.9 million and $26.5 million in distributions related to Sale and Holding Events that occurred during the years ended December 31, 2024 and 2023, respectively. There were no profit allocation payments during the year ended December 31, 2025. Refer to "Note K - Stockholders' Equity" for a description of the profit allocation payments.

The Lugano Bankruptcy was a Sale Event and any corresponding loss on such Sale Event will have the effect of reducing future allocation payments. The LLC Agreement also contains a mechanism to adjust future profit allocation payments by over-paid and under-paid profit distributions. The Company intends to cause future allocation payments to be adjusted, as necessary, to reflect the impact of the restatement of the Company’s financial statements as described in the 2024 Form 10-K/A.

Certain employees, including the Company’s Chief Executive Officer and Chief Financial Officer, former employees, and members of our Manager, along with the estate of former director of the Company’s Board and CGI Diversified Holdings, LP, an affiliate of CGI Magyar Holdings LLC, beneficially own the Allocation Interests through their ownership in Sostratus LLC.

Integration Services Agreements

Integration service fees are included in selling, general and administrative expense on the subsidiaries' statements of operations in the period in which they are incurred. Under the Integration Services Agreement ("ISA"), CGM provides services for new segment-level acquisitions to, amongst other things, assist the management at the acquired entities in establishing a corporate governance program, implement compliance and reporting requirements of the Sarbanes-Oxley Act of 2002, as amended, and align the acquired entity's policies and procedures with our other subsidiaries. The amendment to the Management Service Agreement entered into in January 2025 eliminated the payment of integration services for future acquisitions.

The Honey Pot Co., which was acquired in January 2024, entered into an ISA with CGM whereby The Honey Pot Co. will pay CGM a total integration services fee of $3.5 million, payable quarterly over a twelve-month period beginning June 30, 2024.

PrimaLoft, which was acquired in July 2022, entered into an ISA with CGM whereby PrimaLoft paid CGM a total integration services fee of $4.8 million, paid quarterly over a twelve-month period ended June 30, 2023.

During the years ended December 31, 2025, 2024 and 2023, CGM received $0.9 million, $2.6 million, and $2.4 million, respectively, in total integration service fees. Integration service fees are included in selling, general and administrative expense on the subsidiaries' statements of operations in the period in which they are incurred.

Cost Reimbursement and Fees

The Company reimbursed its Manager, CGM, approximately $7.0 million, $8.8 million, and $6.4 million, principally for occupancy and staffing costs incurred by CGM on the Company’s behalf during the years ended December 31, 2025, 2024 and 2023, respectively.

The Company and its businesses have the following significant related party transactions:

5.11

Related Party Vendor Purchases -5.11 purchases inventory from a vendor who is a related party to 5.11 throughone of the executive officers of 5.11 via the executive's 40% ownership interest in the vendor. During the years ended December 31, 2025, 2024 and 2023, 5.11 purchased approximately $1.0 million, $1.4 million, and $1.7 million, respectively, in inventory from the vendor.

BOA

Recapitalization -In December 2023, the Company completed a recapitalization of BOA whereby the LLC entered into an amendment to the intercompany credit agreement with BOA (the "BOA Credit Agreement"). The BOA Credit Agreement was amended to provide for additional term loan borrowings of $165.9 million to fund a distribution to shareholders. The LLC received a distribution of $131.0 million related to their ownership of the outstanding shares of BOA on the date of the distribution. Noncontrolling shareholders received a distribution of $11.7 million, and the remaining amount of the recapitalization was used to repurchase shares owned by employees after the exercise of fully vested employee stock options, and to pay a bonus to employees who held phantom stock options and were not eligible to participate in the distribution to noncontrolling shareholders. BOA recorded compensation expense of $3.1 million related to the bonus paid to employees as part of the recapitalization.

Related Party Vendor Purchases -A contract manufacturer used by BOA as the primary supplier of molded injection parts is a noncontrolling shareholder of BOA. During the years ended December 31, 2025 and 2024 and 2023, BOA purchased approximately $44.8 million, $48.1 millionand $42.1 million, respectively, from this supplier.

Lugano

Related Party Transaction -In the first quarter of 2025, the former Chief Executive Officer of Lugano represented that he had entered into an agreement with a customer of Lugano to pay, on behalf of the customer, an $8.8 million outstanding account receivable owed to Lugano since July 2024. However, the former Chief Executive Officer of Lugano misrepresented the purpose and explanation for the transaction. It was subsequently determined that neither the account receivable nor the purpose of the payment by the former Chief Executive Officer of Lugano were factually accurate, and that instead the payment was made by the former Chief Executive Officer of Lugano in furtherance of his previously described schemes.

Related Party Vendor Purchases -Lugano purchases inventory from a vendor who is a related party to Lugano through one of the executive officers of Lugano. The related party relationship commenced in the second quarter of 2024 and ended in the fourth quarter of 2025. Lugano had approximately $0.3 million and $7.0 million in net purchases during the years ended December 31, 2025 and December 31, 2024, respectively in inventory from the vendor.

Note R —Operating Segment Data

At December 31, 2025, the Company hadeight reportable operating segments. Each operating segment represents a strategic business unit that offers different products and services. While each is actively managed by the Company, they are managed separately because each business requires different technology and marketing strategies. A description of each of the reportable segments and the types of products from which each segment derives its revenues is as follows:

•5.11 is a global apparel, footwear, and gear company serving consumers who demand performance, durability, and versatility across work, training, and adventure. 5.11 is a brand known for innovation and authenticity and works directly with end users to create purpose-built apparel, footwear and gear designed to enhance the safety, accuracy, speed and performance of tactical professionals and enthusiasts worldwide. 5.11 operates sales offices and distribution centers globally, and 5.11 products are widely distributed in uniform stores, military exchanges, outdoor retail stores, its own retail stores and on 511tactical.com.

•BOA, creatorof the award-winning, patented BOA Fit System, partners with market-leading brands to make the best gear even better. Delivering fit solutions purpose-built for performance, the BOA Fit System is featured in footwear across snow sports, cycling, outdoor, athletic, workwear as well as performance headwear and bracing. The system consists of three integral parts: a micro-adjustable dial, high-tensile lightweight laces, and low friction lace guides creating a superior alternative to laces, buckles, Velcro, and other traditional closure mechanisms. Each unique BOA configuration is designed with brand partners to deliver superior fit and performance for athletes, is engineered to perform in the toughest conditions and is backed by The BOA Lifetime Guarantee. BOA is headquartered in Denver, Colorado and has operations in Austria, China, South Korea, Japan and Vietnam.

•PrimaLoft is a leading provider of branded, high-performance synthetic insulation and materials used primarily in consumer outerwear, and accessories. The portfolio of PrimaLoft synthetic insulations offers products that can both mimic natural down aesthetics and provide the freedom to design garments ranging from stylish puffers to lightweight performance apparel. PrimaLoft insulations also offer superior economics to the brand partner and enable better sustainability characteristics through the use of recycled, low-carbon inputs. PrimaLoft is headquartered in Latham, New York.

•The Honey Pot Co. is a leading “better-for-you” feminine care brand, powered by plant-derived ingredients and clinically tested formulas. Founded in 2012 by CEO Beatrice Dixon, The Honey Pot Co. is rooted in the belief that all products should be made with healthy and efficacious ingredients that are kind to and safe for skin. The company offers an extensive range of holistic wellness products across the feminine hygiene, menstrual, personal care, and sexual wellness categories. The Honey Pot Co.'s mission is to educate, support, and provide consumers around the world with tools and resources that promote menstrual health and vaginal wellness. Its products can be found in more than 33,000 stores across the U.S. through mass merchants, drug and grocery retail chains, and online. The Honey Pot Co. is headquartered in Atlanta, Georgia.

•Velocity Outdoor is a leading designer, manufacturer, and marketer of archery products, hunting apparel and related accessories. The archery product category consists of products including Ravin crossbows and CenterPoint archery products, and the apparel category offers high-performance, feature rich hunting and casual apparel under the King's Camo brand, utilizing King’s own proprietary camo patterns. Velocity Outdoor offers its products through national retail chains and dealer and distributor networks. Velocity Outdoor is headquartered in Rochester, New York. On April 30, 2024, Velocity Outdoor sold the Crosman airgun product division. The results of operation for Crosman are included in the accompanying financial statements through the date of sale.

•Altor Solutions is a designer and manufacturer of custom molded protective foam solutions and original equipment manufacturer components made from expanded polystyrene and expanded polypropylene. Altor provides products to a variety of end markets, including appliances and electronics, pharmaceuticals, health and wellness, automotive, building and other products. Altor is headquartered in St. Louis, Missouri and operates 19 molding and fabricating facilities across North America.

•Arnold is a global solutions provider and manufacturer of engineered magnetic solutions for a wide range of specialty applications and end-markets, including aerospace and defense, general industrial, motorsport/ transportation, oil and gas, medical, energy, semiconductor and advertising specialties. Arnold engineers solutions for and produces high performance permanent magnets (PMAG), stators, rotors and full electric motors (Ramco), precision foil products (Precision Thin Metals), and flexible magnets (Flexmag™) that are mission critical in motors, generators, sensors and other systems and components. Based on its long-term relationships, Arnold has built a diverse and blue-chip customer base totaling more than 2,000 customers and leading systems-integrators worldwide with a focus on North America, Europe, and Asia. Arnold has built a preferred rare earth supply chain and has leading rare earth and other permanent magnet production capabilities. Arnold is headquartered in Rochester, New York.

•Sterno is a leading manufacturer and marketer of portable food warming systems, creative indoor and outdoor lighting, and home fragrance solutions for the consumer markets. Sterno offers a broad range of wick and gel chafing systems, butane stoves and accessories, liquid and traditional wax candles, catering equipment and lamps through Sterno Products, as well as scented wax cubes, warmer products, outdoor lighting and essential oils used for home decor and fragrance systems, through Rimports. Sterno is headquartered in Texarkana, Texas.

The function of chief operating decision-maker (“CODM”) is performed collectively by our Chief Executive Officer, the Chief Operating Officer and the partners of the Company’s Manager, CGM. The CODM evaluates financial results by segment, utilizing segment operating income to assess performance and allocate resources. The allocation of resources to operating segments may include, but is not limited to, debt financing through the Company's intercompany credit agreements with its operating segments to fund working capital needs, purchases of capital equipment and add-on acquisitions. The primary resource allocation process occurs predominantly in the annual budget and forecasting process. The CODM then reviews and considers budget-to-actual variances on a monthly basis for segment operating income in order to determine whether to make any adjustments to capital allocations.

The tabular information that follows shows data for each of the operating segments reconciled to amounts reflected in the consolidated financial statements. The operations of each of the operating segments are included in consolidated operating results as of their date of acquisition. Lugano was an operating segment of the Company until November 16, 2025 when Lugano filed for bankruptcy and was deconsolidated. The results of operation of Lugano are included in the Summary of Operating Segments table and the Depreciation and Amortization table for the year ended December 31, 2025 for the period from January 1, 2025 through November 16, 2025. Segment profit is determined based on internal performance measures used by the CODM to assess the performance of each business. The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. In comparison to the Consolidated Statements of Operations, selling, general and administrative expense is exclusive of stock-based compensation and acquisition costs, which are categorized to Other. Corporate consists of corporate overhead and management fees to CGM that are not allocated the Company's reportable segments. There were no significant inter-segment transactions.

Summary of Operating Segments

(1) Other consists of segment allocated management fees, amortization expense of intangible assets, stock-based compensation and impairment expense at Lugano of $31.5 million.

(1) Other consists of segment allocated management fees, amortization expense of intangible assets, stock-based compensation, acquisition costs at THP and Altor, and goodwill impairment expense of $8.2 million for Velocity.

(1)Other consists of segment allocated management fees, amortization expense of intangible assets, stock-based compensation, impairment expense at Lugano of $1.2 million and goodwill impairment expense of $57.8 million at PrimaLoft and $31.6 million at Velocity.

(1)Does not include accounts receivable balances per schedule above or goodwill balances - refer to "Note H - Goodwill and Intangible Assets" for a schedule of goodwill by segment.

Geographic Information

Net Revenues

Revenues are attributable to countries based on the location of customers. Revenue attributable to any individual foreign country was not material in 2025, 2024 or 2023.

Identifiable Assets

Several of the Company's operating segments have subsidiaries with assets located outside of the United States. The following table presents identifiable assets by geographic area:

Note S –Unaudited Quarterly Financial Data

Unaudited Quarterly Financial Data

The following tables present the unaudited quarterly financial data. This information has been prepared on a basis consistent with that of the audited consolidated financial statements and all necessary material adjustments, consisting of normal recurring accruals and adjustments, have been included to present fairly the unaudited quarterly financial data. The quarterly results of operations for these periods are not necessarily indicative of future results of operations. Typically, the first quarter of each fiscal year has the lower results than the remainder of the year, representing the Company's weakest quarter due to seasonality at our businesses. The per share calculations for each of the quarters are based on the weighted average number of shares for each period using the two class method, which requires companies to allocate participating securities that have rights to earnings that otherwise would have been available only to common shareholders as a separate class of securities in calculating earnings per share; therefore, the sum of the quarters will not equal to the full year per share amount.

(1) The Company recorded impairment of long-lived assets of $31.5 million in the second quarter of 2025. Refer to "Note H - Goodwill and Intangible Assets" for further description.

(2)The Company recorded a loss on deconsolidation of $111.9 million due to the Lugano Bankruptcy in the fourth quarter of 2025. Refer to "Note C - Deconsolidation" for further description.

(1) The Company sold its Marucci operating segment in the fourth quarter of 2023. In the first quarter of 2024, the LLC received a net working capital settlement of approximately $3.3 million related to Marucci, which was recognized as an additional gain on sale of discontinued operations, net of taxes.

(2) The Company recorded goodwill impairment of $8.2 million in the first quarter of 2024. Refer to "Note H - Goodwill and Intangible Assets" for further description.

(3)The Company recorded a loss of $24.6 million on the sale of Crosman in the second quarter of 2024, and a gain of$0.4 million in the third quarter of 2024 related to the working capital settlement.

(4)The Company sold its Ergo operating segment in the fourth quarter of 2024, recording a pre-tax gain on sale of $6.1 million. All prior periods are presented as discontinued operations.

Note T - Subsequent Events

NYSE Notice of Failure to Satisfy a Continued Listing Rule

On January 2, 2026, the Company received a letter from the New York Stock Exchange informing CODI that it is non-compliant with the corporate governance listing standards set forth in Section 302 of the New York Stock Exchange Listed Company Manual, which requires issuers to hold an annual meeting during each fiscal year. The Company was unable to hold an annual meeting during its 2025 fiscal year due to the need to complete the restatement of its financial statements as of and for the fiscal years ended December 31, 2024, 2023 and 2022, and the resulting delay in filing its amended Annual Report on Form 10-K for the fiscal year ended December 31, 2024. CODI filed its Amended Annual Report with the Securities and Exchange Commission on December 8, 2025, and intends to hold an annual meeting as soon as practicable in order to regain compliance under the Listed Company Manual. Until CODI regains compliance, CODI will be added to NYSE’s list of non-compliant issuers and a below compliance (“.BC”) indicator will be appended to CODI’s ticker symbols.

Amendment of Management Services Agreement

On February 23, 2026, the LLC and CGM amended the MSA by entering into an Eighth Amended and Restated Management Services Agreement (the “MSA Amendment”), which provides the following, along with certain other changes:

•the Manager shall repay the over-paid management fees on the applicable management fee payment dates absent written consent of the Company otherwise;

•to ensure the Manager is sufficiently funded to continue delivering services to the Company, the Company may, in its sole discretion, elect to pay the Manager all or a portion of the management fee that would otherwise be due in respect of a fiscal quarter (“Company Paid Amounts”), notwithstanding that a balance of over-paid management fees remains outstanding, so long as any Company Paid Amounts bear interest as agreed by the parties;

•if the Company outsources services to a third-party service provider, such outsourced services shall be excluded from the services provided by the Manager and the management fees will be reduced, on a dollar-for-dollar basis, by the fees paid by the Company for certain of such outsourced services;

•any individuals seconded from the Manager to the Company shall serve on a substantially full-time basis and shall not devote material time and attention to other business activities without the approval of the Company;

•the Board may prohibit any individual or entity from providing services to the Company based on its good faith judgment in the best interest of the Company;

•no employee, delegate or appointee of the Manager shall bind, or represent to third parties that he or she has the authority to bind, the Company or any of its subsidiaries, without due authorization of the Company; and

•the Manager shall indemnify the Company to substantially the same extent as the Company indemnifies the Manager.

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

(1)Sales allowance accounts - represents opening allowance balances related to acquisitions made during the period indicated.

(2)Valuation allowance for deferred tax assets - represents valuation allowance at Lugano which was deconsolidated in the fourth quarter of 2025.