Compass Diversified Holdings
For the period ended Sep 30, 2026. Filed Nov 4, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 4, 2026
CODI$11.31-1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001345126-26-000061
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-04.
0001345126-26-000071
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 259 previous paragraphs and 261 current paragraphs.
139 unchanged; 81 reworded; 36 added; 34 removed; 5 previous and 5 current paragraphs rearranged.
Tables are not compared: 61 previous and 60 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (36)
Current report
The U.S. economy continued to expand through the third quarter of 2026, supported by resilient consumer spending and business investment, while inflation remained elevated and interest rates increased. These conditions have affected our subsidiaries differently based on their end markets, customer mix, sourcing profiles and ability to implement pricing and productivity actions. Within our Branded Consumer businesses, demand has remained strongest at BOA, PrimaLoft and The Honey Pot, supported by customer wins, expanded distribution and demand from Asian brand partners. At 5.11, disciplined promotional activity, tariff recoveries and cost management have supported margins despite softer revenue. Consumer demand nevertheless remains uneven, and changes in discretionary spending, promotional intensity, channel inventories and retailer ordering patterns could affect sales and margins. Within our Industrial businesses, Arnold has benefited from demand for rare-earth magnets sourced outside China, while Altor has experienced softer demand in certain white-goods and cold-chain applications, higher input costs, and increased competitive pressure. Rimports also faces lower anticipated volume from a significant customer. We expect labor, freight, energy, packaging, commodities and other raw-material costs to remain variable. In particular, volatility in diesel, gasoline and other fuel prices has affected and will continue to affect inbound and outbound freight costs through changes in carrier rates and fuel surcharges, which have pressured and may continue to pressure gross margins and working capital to the extent such costs cannot be offset fully or promptly through pricing, sourcing, logistics optimization or customer negotiations. Our subsidiaries continue to use pricing, productivity, sourcing, freight-management and working-capital initiatives to mitigate these pressures. Higher benchmark rates and tighter financing conditions may also affect consumer and customer spending and the cost and availability of incremental financing. Although a significant portion of our outstanding debt is fixed-rate, sustained higher rates may increase refinancing costs and reinforce our focus on free cash flow generation and debt reduction.
Current report
Geopolitical and trade-policy conditions remained fluid during 2026 and continue to affect sourcing decisions, landed product costs, supply availability, pricing and customer demand across our portfolio. The U.S. Supreme Court ruled in February 2026 that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. Other tariff authorities, including Sections 232 and 301, remain available, and the scope, timing and administration of replacement or additional measures continue to evolve. The ruling also created uncertainty regarding the timing, amount and accounting treatment of refunds for tariffs previously paid. Certain subsidiaries have received or expect recoveries related to previously paid tariffs, but the amount and timing of additional recoveries cannot be predicted with certainty. Our subsidiaries continue to diversify suppliers, reduce concentrated sourcing exposure to China, negotiate with customers and vendors, adjust pricing and inventory levels, and pursue product and manufacturing alternatives. These actions are particularly relevant to Arnold, where export-licensing requirements in China may constrain access to certain rare-earth materials and components while also increasing demand for non-China-sourced products. Tariffs and trade restrictions may increase working-capital requirements, cause order timing changes, disrupt supply or compress margins when higher costs cannot be offset fully or promptly. We will continue to monitor developments and adapt sourcing, pricing and inventory strategies as conditions evolve.
Current report
Our near-term priorities are to generate free cash flow, reduce leverage, maintain adequate liquidity and improve the operating performance of our subsidiaries. During 2026, we completed the sale of Sterno’s Food Service business and applied more than $280 million of proceeds to senior secured debt. We intend to continue evaluating targeted divestitures where we believe a transaction can realize attractive value and accelerate deleveraging. We also amended our management services agreement to reduce expected management costs beginning in 2027 and to tie a greater portion of the Manager’s compensation to shareholder returns and operating performance.
Current report
At our Branded Consumer businesses, we are focused on sustaining momentum at BOA, PrimaLoft and The Honey Pot through product innovation, distribution expansion and customer wins, while maintaining pricing and promotional discipline at 5.11. At our Industrial businesses, priorities include supporting Arnold’s opportunities in non-China-sourced rare-earth magnets, improving commercial execution and aligning costs with demand at Altor, and managing customer concentration and volume pressure at Rimports. Across the portfolio, we continue to emphasize disciplined capital spending, working-capital management, sourcing flexibility, productivity, margin protection and strengthened governance and financial-reporting processes. Our outlook remains subject to changes in inflation, interest rates, consumer and industrial demand, tariffs and trade restrictions, geopolitical developments, customer order timing and the availability and cost of financing.
Current report
At the corporate level, general and administrative expense decreased by $22.8 million, to $9.8 million for the three months ended September 30, 2026, from $32.6 million for the corresponding period in 2025. The decrease primarily reflected higher costs incurred in the prior-year period in connection with the Company’s Lugano subsidiary and the related restatement of the Company’s financial statements. The Company continued to incur elevated expenses during the current-year period associated with ongoing litigation, corporate governance changes, and internal control remediation activities.
Current report
Interest expense decreased by $45.0 million, to $21.8 million for the three months ended September 30, 2026, from $66.7 million for the corresponding period in 2025. The decrease reflected lower interest expense on the 2022 Term Loan as a result of $319 million of principal repayments made during 2026. Interest expense associated with the 2022 Term Loan decreased to approximately $4.4 million for the three months ended September 30, 2026, from $10.0 million for the corresponding period in 2025. The prior-year period also included $5.2 million of interest expense related to financing arrangements at Lugano, which was deconsolidated in November 2025. In addition, in connection with the Indenture Forbearance Agreement entered into during the third quarter of 2025, the LLC agreed to pay each holder of the Notes its pro rata share of (i) an upfront fee equal to 1.75% of the aggregate principal amount of Notes outstanding and (ii) additional interest equivalent to a 5.00% per annum increase in the interest rate on the applicable series of Notes for the period from August 1, 2025 through October 24, 2025. Both amounts were paid in kind through increases in the principal amount of the applicable series of Notes. Accordingly, the Company recognized $22.8 million of paid-in-kind interest expense in the third quarter of 2025 related to the upfront fee and accrued approximately $11.5 million related to the increased interest rate. These decreases were partially offset by higher interest expense on the Company’s Senior Notes in the third quarter of 2026 due to the higher principal balance resulting from the 2025 paid-in-kind payments made in connection with the Indenture Forbearance Agreement, as described in the Company’s 2025 Form 10-K.
Current report
Receivable due from unconsolidated affiliate
Current report
The Company recognized a $0.3 million increase in the fair value of the receivable due from an unconsolidated affiliate during the three months ended September 30, 2026. The increase resulted from the remeasurement of the remaining receivable from $9.2 million to $9.5 million based on updated estimates of expected recoveries on the CODI Secured Claim. During the quarter, the Company also received a $29.8 million initial distribution, which reduced the receivable to $9.2 million. Upon the September 30, 2026 effective date of Lugano’s Chapter 11 plan, the remaining receivable was satisfied and replaced by a Special Beneficial Interest in the Lugano Liquidation Trust with an initial fair value of $9.5 million.
Current report
Provision (benefit) for income taxes
Current report
We had an income tax benefit of $20.1 million during the three months ended September 30, 2026 compared to an income tax provision of $5.8 million during the same period in 2025, a decrease of $25.9 million. The change primarily reflected a discrete tax benefit recognized in the current-year quarter following approval of the settlement of the Lugano bankruptcy, which permitted the Company to recognize for income tax purposes the loss on its intercompany loans with Lugano. The resulting tax loss was used to offset the taxable gain recognized on the sale of Sterno in the second quarter of 2026. The Company’s effective tax rate may also vary from period to period based on recurring factors, including applicable tax rates in foreign jurisdictions and the relative amount of income earned in those jurisdictions, as well as discrete items that are not consistent between periods.
Current report
Net sales for the three months ended September 30, 2026 were $16.3 million, an increase of $3.0 million as compared to net sales of $13.3 million for the three months ended September 30, 2025. The increase in net sales in the current quarter versus the quarter ended September 30, 2025 isprimarily attributable tocontinued strong consumer demand in China for outdoor products and a shift in consumer preferences in that market away from down jackets toward high-performance synthetic jackets.
Current report
Segment operating loss for the three months ended September 30, 2026 was $0.9 million, an improvement of $0.9 million when compared to segment operating loss of $1.9 million for the same period in 2025, driven by higher net salesin the current quarter. Segment operating margin was (5.7)% in the third quarter of 2026 as compared to (14.0)% in the third quarter of 2025.
Current report
Rimports
Current report
Segment operating income for the three months ended September 30, 2026 was approximately $0.8 million, a decrease of $9.0 million compared to the three months ended September 30, 2025. The decrease was primarily attributable to the sale of Sterno Products’ food service business in May 2026. In the third quarter of 2025, the Sterno Products' food service division had operating income of $5.8 million. Segment operating margin was 2.2% in the third quarter of 2026 as compared to 13.4% in the third quarter of 2025. The Rimports variance was primarily driven by the reduction in revenue, inflationary costs and fixed cost deleveraging due to reduced distribution in the period.
Current report
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
Current report
Consolidated net revenues for the nine months ended September 30, 2026 decreased by approximately $131.2 million, or 9.3%, compared with the corresponding period in 2025. The decrease primarily reflected lower net revenues at Rimports ($71.9 million decrease) and Altor ($44.5 million decrease), as well as $71.0 million of net revenues recognized by Lugano in the prior-year period that did not recur following Lugano’s bankruptcy in
Current report
Consolidated gross profit for thenine months ended September 30, 2026 decreased by approximately$24.5 million compared with the corresponding period in 2025. The decrease primarily reflected lower gross profit at Altor ($25.5 million decrease) and Rimports ($19.2 million decrease), as well as$39.9 million of gross profit recognized by Lugano during the nine months ended September 30, 2025 that did not recur following Lugano’s bankruptcy. The decrease at Rimports was primarily attributable to the May 2026 sale of the Sterno food services product division and was consistent with the related decline in net revenues. These decreases were partially offset by higher gross profit at The Honey Pot Co. ($22.5 million increase), BOA ($17.8 million increase), and Arnold ($11.3 million increase).
Current report
Consolidated gross margin increased to 46.1% for the nine months ended September 30, 2026, from 43.6% for the corresponding period in 2025. Gross margin for the branded consumer businesses increased to 58.7% from 55.1%, reflecting improvement across each branded consumer business. Gross margin for the industrial businesses decreased to 24.7% from 26.4%, primarily due to higher fixed overhead costs absorbed over a lower revenue base and higher material and freight costs at Altor, partially offset by improved gross margins at Arnold and Rimports. Consolidated gross margin also benefited from $14.4 million of company-wide reductions related to refunds received year to date of duties previously paid under IEEPA tariffs, which were recognized as credits to cost of goods sold upon receipt of cash, consistent with the accounting for gain contingencies.
Current report
At the corporate level, general and administrative expense was $39.1 million in the nine months ended September 30, 2026 and $50.4 million in the nine months ended September 30, 2025, a decrease of $11.3 million. The decrease primarily reflected higher costs incurred in the prior-year period in connection with the Company’s Lugano subsidiary and the related restatement of the Company’s financial statements. The Company continued to incur elevated expenses during the current-year period due to costs associated with the Lugano investigation, litigation, governmental-investigation, governance and internal-control remediation.
Current report
Other operating (income)
Current report
Receivable due from unconsolidated affiliate
Current report
The Company recognized a net $57.7 million decrease in the fair value of the receivable due from an unconsolidated affiliate during the nine months ended September 30, 2026. The decrease primarily reflected a $58.0 million reduction recognized in the second quarter of 2026 following the Company’s entry into a settlement agreement and related plan support agreement on June 24, 2026, which reduced the estimated amount and changed the timing of expected recoveries on the CODI Secured Claim. This decrease was partially offset by a $0.3 million increase recognized in the third quarter of 2026 upon remeasurement of the remaining receivable from $9.2 million to $9.5 million. During the third quarter, the Company also received a $29.8 million initial distribution. Upon the September 30, 2026 effective date of Lugano’s Chapter 11 plan, the remaining receivable was satisfied and replaced by a Special Beneficial Interest in the Lugano Liquidation Trust with an initial fair value of $9.5 million.
Current report
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
Current report
Net cash provided by operating activities was $105.2 million for the nine months ended September 30, 2026, compared with net cash used in operating activities of $53.8 million for the nine-months ended September 30, 2025, an improvement of $159.0 million. The year-over-year improvement primarily reflected a $291.5 million increase in net income (loss) from continuing operations, and a $45.8 million favorable change in working capital. Working capital provided $33.2 million of cash in the nine months ended September 30, 2026 compared with cash use of $12.5 million in the nine months ended September 30, 2025, reflecting a shift from inventory investment in 2025 to inventory-related cash generation in 2026. The prior-year working capital use included accelerated inventory receipts ahead of anticipated tariff implementations. The comparison was also affected by changes in the composition of our operating segments. The 2025 period included $65.7 million of negative operating cash flow from Lugano, while the 2026 period included the Sterno food product division only through its sale in May 2026. As a result, the year-over-year improvement in consolidated operating cash flow may not be indicative of future periods.
Current report
The 2025 financing cash flows also included $18.7 million of net proceeds from third-party financing arrangements entered into by Lugano and accounted for as debt in our consolidated financial statements. No comparable Lugano financing proceeds were reflected in the 2026 period following Lugano’s November 2025 bankruptcy filing.
Current report
In this Form 10-Q, we present Adjusted EBITDA, which is a financial measure not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"). Beginning with the quarter ended September 30, 2026, we no longer present Adjusted Earnings because management no longer uses the measure internally to evaluate the Company’s operating performance and believes Adjusted EBITDA provides a more relevant measure for that purpose. We present Adjusted EBITDA in addition to, and not as a substitute for, net income (loss) from continuing operations and other financial measures prepared in accordance with GAAP. The reconciliation below begins with the most directly comparable GAAP financial measure and identifies each adjustment used to calculate Adjusted EBITDA.
Current report
Management uses Adjusted EBITDA to evaluate period-to-period operating performance, review the performance of our subsidiary businesses, prepare annual budgets and forecasts, and assess potential acquisitions. We believe Adjusted EBITDA is useful to investors because it facilitates comparison of operating performance across periods by separately identifying the effects of the adjustments described below. Investors should review Adjusted EBITDA together with the corresponding GAAP results and the reconciliation presented below.
Current report
Adjusted EBITDA is a non-GAAP measure used by the Company to assess its performance. Adjusted EBITDA has limitations as an analytical tool. It excludes expenses that require or may require cash payments, including interest, taxes, acquisition-related costs and integration costs. It also does not reflect working-capital requirements, capital expenditures, debt-service obligations or other cash requirements and should not be viewed as a measure of liquidity or cash available for discretionary use. In addition, Adjusted EBITDA may not be comparable with similarly titled measures reported by other companies because other companies may calculate it differently.
Current report
Amendments to Management Services Agreement
Current report
Beginning in 2027, the annual base management fee will equal 1.25% of the first $3.0 billion of Adjusted Net Assets, 1.125% of Adjusted Net Assets between $3.0 billion and $5.0 billion and 1.0% of Adjusted Net Assets above $5.0 billion, with Adjusted Net Assets as defined in the Ninth MSA. The 2027 base management fee will be capped at $30.0 million. In addition, aggregate fees and awards attributable to 2027 will be subject to a cap equal to 1.75% of 2026 Average Adjusted Net Assets, with reductions applied in the order specified in the Ninth MSA.
Current report
The Ninth MSA also replaces the existing incentive management fee structure with an annual Share Alignment Award and an annual Performance-Based Award. The Share Alignment Award will equal 0.125% of the Company’s Average Adjusted Net Assets for the preceding fiscal year, and the Performance-Based Award will have a target opportunity equal to the same amount. For 2027, the Share Alignment Award will be paid in cash, and the Performance-Based Award will be denominated by reference to notional CODI common shares and settled solely in cash following certification of performance by the Compensation Committee.
Current report
The Performance-Based Award will be based 70% on CODI’s total shareholder return relative to the S&P SmallCap 600 Index, with target performance at the 60th percentile, and 30% on Company-level adjusted EBITDA objectives established by the Compensation Committee. The relative total shareholder return component will be subject to a requirement that CODI’s absolute total shareholder return for the applicable performance period not be negative and, for 2027, a $17.25 dividend-adjusted stock-price threshold. The awards are subject to the terms, certification, forfeiture, acceleration and clawback provisions set forth in the Ninth MSA.
Current report
For fiscal years after 2027, the parties intend to seek shareholder approval of an equity-based structure for the Share Alignment Award and the Performance-Based Award. If no equity-based or other permanent structure is operative for a later year, the cash-based award structure applicable to 2027 generally will continue, subject to the terms of the Ninth MSA; however, the 2027 Aggregate Fee Cap and the $17.25 threshold are specific to 2027. For any later year in which the awards remain cash-based, aggregate Management Fees may not exceed the amount that would have been payable under the Eighth MSA for that year. Any amount excluded by this limitation will be carried forward solely for purposes of calculating Management Fees in subsequent years and will not otherwise be payable for the year in which it is excluded. The Ninth MSA also requires the Manager to maintain share ownership guidelines for senior Manager personnel who provide material services to the Company and confirms that amounts paid or payable under the Ninth MSA are subject to the Company’s Dodd-Frank clawback policy if and to the extent applicable.Refer to Note N - "Related Party Transactions.”
Current report
Critical Accounting Estimates
Current report
Goodwill impairment is a critical accounting estimate because determining the fair value of a reporting unit requires significant judgment. We test goodwill for impairment annually as of March 31 and more frequently when events or changes in circumstances indicate that it is more-likely-than-not that a reporting unit’s fair value is less than its carrying amount. Goodwill is allocated to our reporting units, which generally correspond to our operating segments, with each subsidiary business representing a reporting unit. This reporting-unit structure determines the level at which we estimate fair value when quantitative testing is required, using the valuation methods and significant assumptions described below.
Current report
At March 31, 2025, the Company performed a quantitative goodwill impairment test for PrimaLoft because the qualitative assessment did not support a conclusion that the reporting unit’s fair value significantly exceeded its carrying amount. Using the income and market approaches and an 11.3% discount rate, the Company estimated that PrimaLoft’s fair value exceeded its carrying amount by 12.1%. By March 31, 2026, the discount rate had increased to 13.4% and the estimated fair value had fallen below carrying amount, resulting in the $20.5 million impairment charge described above.
Removed paragraphs (34)
Previous report
We expect macroeconomic conditions to remain dynamic for the remainder of 2026, as geopolitical uncertainty, evolving trade dynamics, cost inflation and uneven consumer demand continue to shape the operating environment. We believe our diversified portfolio, leading positions in a number of categories and disciplined focus on operating execution position our subsidiaries to respond effectively to these conditions, although the magnitude and timing of impacts may vary across our branded consumer and industrial businesses. For our branded consumer businesses, future changes in consumer confidence, discretionary spending, promotional intensity and channel inventory levels may affect demand, pricing and gross margin performance; however, certain subsidiaries have demonstrated encouraging momentum through improved distribution, strong bookings, disciplined pricing and tariff-related recoveries. We expect these businesses to continue pursuing initiatives intended to strengthen customer relationships, enhance channel execution, improve product availability and protect margins where market conditions allow. For our industrial businesses, end-market activity and customer capital spending may continue to be influenced by interest rates, customer capital allocation decisions, broader manufacturing and infrastructure conditions, and the availability and cost of raw materials. These businesses are expected to continue focusing on operational efficiency, sourcing flexibility and pricing discipline to help mitigate input-cost volatility, including labor, freight, energy, packaging materials, commodities and raw materials. While a significant portion of our outstanding debt is fixed-rate and, as a result, our consolidated interest expense is generally less sensitive in the near term to changes in market rates and credit spreads than it would be under a predominantly variable-rate capital structure, higher rates and tighter credit conditions may still affect the availability and cost of incremental financing, the timing of refinancings, consumer and business demand, and our customers’ spending decisions. In addition, certain subsidiaries are expected to continue advancing supply chain reconfiguration, sourcing diversification and inventory management initiatives in response to evolving trade and tariff policies, including constraints experienced by Arnold in connection with export licensing requirements in China. We believe these actions, together with our subsidiaries’ ongoing operating initiatives, should enhance flexibility and resiliency over time, although intermittent disruptions, higher working capital requirements or timing differences in revenue and margin realization may occur in future periods.
Previous report
Geopolitical and trade policy conditions are expected to remain fluid and may continue to affect energy costs, sourcing decisions, tariff exposure, pricing strategies and customer demand patterns. While we do not currently expect the ongoing conflict in the Middle East to have a material direct impact on our businesses, broader geopolitical and trade uncertainty may influence input costs, customer purchasing behavior and the timing of capital allocation decisions across certain end markets. Tariffs and related policy changes can operate economically as an increase in landed product cost, which may compress margins if not offset through pricing, sourcing changes, productivity initiatives or customer negotiations, and may also affect demand where higher costs are passed through to customers. Our subsidiaries are continuing to diversify sourcing, reduce concentrated exposure to China and implement pricing, inventory and customer negotiation strategies intended to mitigate the potential impact of new, expanded or reinterpreted tariffs while balancing working capital efficiency and product availability. The recent U.S. Supreme Court ruling related to certain tariff authorities may continue to create uncertainty regarding the interpretation and administration of certain tariffs, including the timing, amount and accounting for refunds of previously paid tariffs. We continue to monitor geopolitical developments, tariff policies and related government actions and will adjust our strategies to mitigate impacts as conditions evolve.
Previous report
Our near-term focus remains on strengthening the balance sheet, maintaining liquidity, and executing our day-to-day operating plan across our subsidiaries. Reducing leverage is our top financial priority, which we are pursuing through organic free cash flow generation and targeted divestitures, including the sale of Sterno's food service business, which closed in the second quarter of 2026, the net proceeds of which we applied to repayment of senior secured debt.
Previous report
Our operating priorities for 2026 include: (i) generating free cash flow through improved operating performance, disciplined capital spending, and focused working capital management; (ii) driving profitable growth through product innovation, distribution expansion, and customer wins where returns are attractive; (iii) protecting margins through pricing actions, productivity initiatives, and active management of input-cost volatility; and (iv) enhancing resilience and oversight through supply chain diversification, selective technology investments, and continued improvement of governance and financial reporting processes.
Previous report
On June 24, 2026, CODI entered into the Settlement Agreement and Plan Support Agreement described in Note B. The Settlement Documents provide for specified percentages of net inventory, tax-refund, insurance and litigation recoveries, subject to creditor approval, bankruptcy court confirmation and effectiveness of the proposed Plan of Liquidation. The settlement terms and related changes in the estimated amount and timing of recoveries resulted in a $58.0 million non-cash decrease in the fair value of the Company’s Lugano receivable during the quarter. The amount and timing of any recoveries remain uncertain and depend on, among other things, confirmation and effectiveness of the proposed Plan of Liquidation and the proceeds ultimately realized from the applicable assets and claims.
Previous report
Sterno Sale
Previous report
At the corporate level, general and administrative expense was $16.3 million in the second quarter of 2026 and $13.2 million in the second quarter of 2025, an increase of $3.1 million. The increase in general and administrative expense in the second quarter of 2026 relates to costs associated with our Lugano subsidiary and the ongoing lawsuits, as well as corporate governance changes and internal control remediation that we are implementing.
Previous report
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. On June 24, 2026, the Company entered into a settlement agreement and a plan support agreement relating to the proposed resolution of claims alleged against the Company and its related parties by or on behalf of Lugano or its bankruptcy estate. The terms of those agreements changed the estimated amount and timing of the Company’s expected recoveries on its secured claim, resulting in a $58 million decrease in the fair value of the receivable at June 30, 2026.
Previous report
Provision for income taxes
Previous report
Net sales for the three months ended June 30, 2026 were $29.7 million, an increase of $4.9 million as compared to net sales of $24.9 million for the three months ended June 30, 2025. The increase in net sales in the current quarter versus the quarter ended June 30, 2025 isprimarily attributable to higher sales to Asia-based brand partners, reflecting continued strong demand for outdoor products in the region, as well as the Company's ongoing success in establishing new brand partnerships that have expanded its customer base.
Previous report
Segment operating income for the three months ended June 30, 2026 was $7.7 million, an increase of $2.8 million when compared to segment operating income of $4.9 million for the same period in 2025, driven by higher net sales andimproved gross margins in the current quarter. Segment operating margin was 26.0% in the second quarter of 2026 as compared to 19.7% in the second quarter of 2025.
Previous report
Segment operating income for the three months ended June 30, 2026 was approximately $7.4 million, a decrease of $3.7 million compared to the three months ended June 30, 2025, The decrease was primarily attributable to the sale of Sterno Products’ food service business in May 2026. Segment operating margin was 16.7% in the second quarter of 2026 as compared to 14.3% in the second quarter of 2025. Excluding Sterno, Rimports-only operating income for the quarter-to-date period ended June 30, 2026 was $3.7 million, a decrease of $0.2 million, or 6.0%, compared to $3.9 million in the same period in 2025. The Rimports variance was primarily driven by the reduction in revenue partially offset by IEEPA tariff refunds received within the quarter, which were recognized as a credit to cost of goods sold upon receipt of cash.
Previous report
Six months ended June 30, 2026 compared to six months ended June 30, 2025
Previous report
On a consolidated basis, gross profit decreased approximately $15.3 million during the six months ended June 30, 2026 compared to the corresponding period in 2025. We saw notable increases in gross profit at BOA ($11.3 million increase), The Honey Pot Co. ($12.1 million increase) and Arnold($5.7 million increase) during the six month period. We saw decreases in gross profit at Altor ($16.6 million decrease) and Rimports ($5.1 million due to the sale of Sterno in May 2026) which correspond to the decrease in net revenue in the first six months of 2026. Lugano recognized $26.6 million in gross profit during the six months ended June 30, 2025 that was nonrecurring due to the Lugano bankruptcy.
Previous report
Gross margin was 45.8% in the six months ended June 30, 2026 and 43.4% the six months ended June 30, 2025. Our branded consumer businesses had gross margin of 58.3% in the six months ended June 30, 2026 as compared to 55.0% in the six months ended June 30, 2025, with increases at each of our branded consumer business during the six months ended June 30, 2026. Gross margin at several of our businesses benefited from refunds of duties previously paid under IEEPA tariffs, which were recognized as a credit to cost of goods sold upon receipt of cash, consistent with the accounting for gain contingencies. Our industrial businesses had gross margin of 25.3% in the six months ended June 30, 2026 as compared to 26.1% in the six months ended June 30, 2025. The decrease in gross margin at our indus trial businesses was attributable to higher fixed overhead costs absorbed on a lower revenue base at Altor, offset by improved gross margins at Arnold and Rimports during the six months ended June 30, 2026.
Previous report
At the corporate level, general and administrative expense was $29.3 million in the six months ended June 30, 2026 and $17.8 million in the six months ended June 30, 2025. The increase was primarily attributable to costs associated with Lugano and the ongoing lawsuits and corporate governance changes that we are making. Because the Lugano investigation commenced in April 2025, the prior-year expense included lower related costs. We continue to incur significant investigation-related and other associated costs, which may pressure corporate expenses in subsequent periods.
Previous report
Other operating (income) expense
Previous report
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. On June 24, 2026, the Company entered into a settlement agreement and a plan support agreement relating to the proposed resolution of claims alleged against the Company and its related parties by or on behalf of Lugano or its bankruptcy estate. The terms of those agreements changed the estimated amount and timing of the Company’s expected recoveries on its secured claim, resulting in a $58 million decrease in the fair value of the receivable at June 30, 2026.
Previous report
Six months ended June 30, 2026 compared to six months ended June 30, 2025
Previous report
Segment operating loss for the six months ended June 30, 2026 was$2.0 million compared to segment operating loss of$3.7 million for the same period in 2025. Segment operating margin was (6.5)% in the six months ended
Previous report
For the six months ended June 30, 2026, net cash provided by operating activities totaled approximately $53.6 million, which represents a $118.1 million decrease in cash use compared to cash used in operating activities of $64.5 million during the six-month period ended June 30, 2025. This change reflects improvements in operating results and other operating cash flow drivers, including working capital activity. Cash provided by working capital for the six months ended June 30, 2026 was $40.9 million, as compared to cash used for working capital of $50.8 million for the six months ended June 30, 2025. We typically use more cash for working capital in the first half of the year as we build inventories following the fourth quarter of the prior year. The prior year period included accelerated certain inventory receipts ahead of anticipated tariff implementations, which increased inventory levels and contributed to higher working capital cash outflows, and Lugano operating activity (cash from operating activities of $13.1 million), while the current-year period was affected by the May 2026 sale ofthe Sterno food service product division.
Previous report
Our Lugano business entered into various financing arrangements with third parties that were accounted for as debt in the consolidated financial statements. In the six months ended June 30, 2025, the net cash flows provided by these financing arrangements totaled $18.7 million.
Previous report
The tables below reconcile the most directly comparable GAAP financial measures to Adjusted earnings before Interest, Income Taxes, Depreciation and Amortization ("Adjusted EBITDA") and Adjusted Earnings.
Previous report
Adjusted Earnings –– Adjusted Earnings is calculated as net income (loss) adjusted to include the cost of the distributions to preferred shareholders, and adjusted to exclude the impact of certain costs, expenses, gains and losses and other specified items the exclusion of which management believes provides insight regarding our ongoing operating performance. Depending on the period presented, these adjusted measures exclude the impact of certain of the following items: gains (losses) and income (loss) from discontinued operations, income (loss) from noncontrolling interest, amortization expense, subsidiary stock compensation expense, acquisition-related expenses and items of other income or expense that may be material to a subsidiary and non-recurring in nature.
Previous report
Adjusted EBITDA and Adjusted Earnings are non-GAAP measures used by the Company to assess its performance. We believe that Adjusted EBITDA and Adjusted Earnings provide useful information to investors and reflect important financial measures that are used by management in the monthly analysis of our operating results and in preparation of our annual budgets. We believe that investors’ understanding of our performance is enhanced by disclosing these performance measures as this presentation allows investors to view the performance of our businesses in a manner similar to the methods used by us and the management of our subsidiary businesses, provides additional insight into our operating results and provides a measure for evaluating targeted businesses for acquisition.
Previous report
Adjusted EBITDA and Adjusted Earnings exclude the effects of items which reflect the impact of long-term investment decisions, rather than the performance of near-term operations. When compared to net income (loss) and net income (loss) from continuing operations, Adjusted Earnings and Adjusted EBITDA, respectively, are each limited in that they do not reflect the periodic costs of certain capital assets used in generating revenues of our subsidiary businesses or the non-cash charges associated with impairments, as well as certain cash charges. The presentation of Adjusted Earnings provides insight into our operating results. Adjusted EBITDA and Adjusted Earnings are not meant to be a substitute for GAAP, and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies.
Previous report
Reconciliation of Net income (loss) to both Adjusted Earnings and Adjusted EBITDA
Previous report
The following table reconciles Net income (loss), which we consider the most comparable GAAP financial measure, to both Adjusted Earnings and Adjusted EBITDA (in thousands):
Previous report
Amendment to Management Services Agreement
Previous report
Critical Accounting Policies and Estimates
Previous report
Goodwill represents the excess amount of the purchase price over the fair value of the assets acquired. Our goodwill and indefinite lived intangible assets are tested for impairment on an annual basis as of March 31 st, and if current events or circumstances require, on an interim basis. Goodwill is allocated to various reporting units, which are generally an operating segment. Each of our subsidiary businesses represents a reporting unit.
Previous report
For our annual impairment testing at March 31, 2025, we 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 our reporting units except PrimaLoft exceeded their carrying value. Based on our analysis, we determined that the PrimaLoft operating segment required quantitative testing because we could not conclude that the fair value of the reporting unit significantly exceeded the carrying value based on qualitative factors alone. We performed a quantitative test of PrimaLoft using an income approach and a market approach to determine the fair value of the PrimaLoft reporting unit. The discount rate used in the income approach was 11.3%. The results of the testing indicated that the fair value of PrimaLoft exceeded the carrying value by 12.1%.
Previous report
2025 Interim Impairment Testing
Previous report
Arnold -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 occurred in the fourth quarter of 2025 and we performed an interim impairment test of goodwill as of October 31, 2025. We performed the impairment test using an income approach. The prospective financial information used in the income approach considered macroeconomic and geopolitical factors, industry and reporting unit specific data, and our best estimate of operational results and cash flows for the Arnold reporting unit as of the date of the impairment testing. The discount rate used in the income approach was 14.2%. The results of the testing indicated that the fair value of Arnold exceeded the carrying value by 77%.
Reworded paragraphs (81)
Previous wording
Compass Diversified Holdings ("Holdings", or the "Trust") was formed in Delaware on November 18, 2005. Compass Group Diversified Holdings LLC (the "LLC") was also formed on November 18, 2005. Holdings and the LLC (collectively, the "Company") were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. The LLC is a controlling owner of eight businesses, or operating segments, at June 30, 2026: 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 Rimports Holdings, Inc. ("Rimports"). On May 1, 2026, the Company completed the sale of Sterno’s food service business. Prior to the sale, Sterno distributed Rimports, its home fragrance business, to its stockholders, and Rimports remained a majority owned subsidiary of the LLC. Accordingly, the Rimports operating segment reflects the home fragrance business retained by the Company following the sale of Sterno’s food service business. Lugano Holding, Inc. ("Lugano") was an operating segment of the Company until November 16, 2025 when Lugano was deconsolidated. The results of operations of Lugano are included in the Company's results of operations through the date of the deconsolidation.
Current wording
Compass Diversified Holdings ("Holdings", or the "Trust") was formed in Delaware on November 18, 2005. Compass Group Diversified Holdings LLC (the "LLC") was also formed on November 18, 2005. Holdings and the LLC (collectively, the "Company") were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. The LLC is a controlling owner of eight businesses, or operating segments, at September 30, 2026: 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 Rimports Holdings, Inc. ("Rimports"). On May 1, 2026, the Company completed the sale of Sterno’s food service business. Prior to the sale, Sterno distributed Rimports, its home fragrance business, to its stockholders, and Rimports remained a majority owned subsidiary of the LLC. Accordingly, the Rimports operating segment reflects the home fragrance business retained by the Company following the sale of Sterno’s food service business. Lugano Holding, Inc. ("Lugano") was an operating segment of the Company until November 16, 2025 when Lugano was deconsolidated. The Company retained its equity interest in Lugano until September 30, 2026, when the Company's equity interests in Lugano were cancelled when the Lugano Chapter 11 plan of Liquidation became effective. Refer to "Note B - Dispositions" in the condensed consolidated financial statements for details of the Lugano disposition. The results of operations of Lugano are included in the Company's results of operations through the date of the deconsolidation.
Previous wording
Decrease in fair value of receivable due from unconsolidated affiliate
Current wording
At June 30, 2026, the estimated fair value of the Company’s receivable associated with the CODI Secured Claim against Lugano was $39.0 million after a $58.0 million decrease in fair value recognized during the second quarter of 2026. On August 27, 2026, Lugano filed its Chapter 11 plan of liquidation, incorporating the settlement among the Company, Lugano, the official committee of unsecured creditors and other parties in interest. The Bankruptcy Court confirmed the Plan on September 24, 2026, and the Plan became effective on September 30, 2026. On September 29, 2026, the Company received a $29.8 million Initial CODI Distribution, equal to 34.79% of Effective Date Cash and including its share of Lugano’s 2024 tax refund. The distribution was received one day before the Plan’s effective date due to wire timing and reduced the receivable to $9.2 million. On September 30, 2026, the Company remeasured the remaining receivable to $9.5 million and recognized a $0.3 million fair-value increase in other income (expense), net. Upon execution of the Lugano Liquidation Trust Agreement, the Company exchanged the receivable for a special beneficial interest in the Lugano Liquidation Trust (the “Special Beneficial Interest”) with an initial fair value of $9.5 million. The Special Beneficial Interest represents contractual rights to future distributions from specified tax-refund, insurance, litigation and other recoveries. Its September 30, 2026 fair value reflects the Company’s share of estimated 2021–2023 tax refunds, net of applicable deductions and discounting; no value was ascribed to litigation or theft-policy insurance recoveries because of uncertainty regarding amounts, timing, coverage, costs and duration. The amount and timing of ultimate recoveries remain uncertain. In October 2026, we used the $29.8 million distribution to repay a portion of the 2022 Term Loan.
Previous wording
Upon completion of the sale on May 1, 2026, the Company deconsolidated Sterno’s food service business and recognized a gain on the sale of approximately $182 million within income from continuing operations during the three and six months ended June 30, 2026.
Current wording
Upon completion of the sale on May 1, 2026, the Company deconsolidated Sterno’s food service business and recognized a gain on the sale of Sterno of $182.3 million, which was reduced by $4.3 million in the third quarter of 2026 to reflect the working capital settlement and other transaction adjustments.
Previous wording
The following discussion reflects a comparison of the historical results of operations of our consolidated business for the three and six months ended June 30, 2026 and June 30, 2025, and components of the results of operations for each of our operating segments on a stand-alone basis.
Current wording
The following discussion reflects a comparison of the historical results of operations of our consolidated business for the three and nine months ended September 30, 2026 and September 30, 2025, and components of the results of operations for each of our operating segments on a stand-alone basis.
Previous wording
Lugano Bankruptcy -In November 2025, Lugano and certain of its subsidiaries filed the Lugano Bankruptcy. As a result of the bankruptcy filing, the Company no longer maintained a controlling financial interest in Lugano and, accordingly, deconsolidated Lugano and its subsidiaries in accordance with ASC 810 -Consolidation. The results of operations of Lugano are included in the Company’s consolidated results through the date control was lost. From that date forward, Lugano is no longer included as an operating segment of the Company. Following deconsolidation, the Company’s continuing involvement with Lugano is limited to its claims in the bankruptcy proceedings, including any secured positions.
Current wording
Lugano Bankruptcy -In November 2025, Lugano and certain of its subsidiaries filed the Lugano Bankruptcy. As a result of the bankruptcy filing, the Company no longer maintained a controlling financial interest in Lugano and, accordingly, deconsolidated Lugano and its subsidiaries in accordance with ASC 810 -Consolidation. The results of operations of Lugano are included in the Company’s consolidated results through the date control was lost. From that date forward, Lugano is no longer included as an operating segment of the Company.
Previous wording
In the following results of operations, we provide (i) our actual Consolidated Results of Operations for the three and six months ended June 30, 2026 and 2025, which includes the historical results of operations of each of our businesses (operating segments) from the date of acquisition in accordance with US GAAP, and (ii) comparative historical components of the results of operations for each of our businesses on a stand-alone basis for the three and six months ended June 30, 2026 and 2025. The following results of operations at each of our businesses are not necessarily indicative of the results to be expected for a full year.
Current wording
In the following results of operations, we provide (i) our actual Consolidated Results of Operations for the three and nine months ended September 30, 2026 and 2025, which includes the historical results of operations of each of our businesses (operating segments) from the date of acquisition in accordance with US GAAP, and (ii) comparative historical components of the results of operations for each of our businesses on a stand-alone basis for the three and nine months ended September 30, 2026 and 2025. The following results of operations at each of our businesses are not necessarily indicative of the results to be expected for a full year.
Previous wording
Consolidated net revenues for the three months ended June 30, 2026 decreased by approximately $54.6 million, or 11.4%, compared to the corresponding period in 2025. During the three months ended June 30, 2026 compared to 2025, we saw notable increases in net revenues at BOA ($10.7 million increase), PrimaLoft ($4.9 million increase), The Honey Pot Co. ($5.6 million increase), and Arnold ($4.8 million increase). These increases in net revenue were offset by decreases in net revenue at 5.11 ($4.9 million decrease), Altor ($17.6 million decrease), and Rimports ($33.2 million decrease). The decrease in net revenues at Rimports is attributable to the sale of the Sterno food service division on May 1, 2026. The net revenues of the Sterno product division are included in the historical results of operations of Rimports through the date of sale. Lugano recognized $26.8 million in revenue in the quarter ended June 30, 2025 which was nonrecurring due to the Lugano bankruptcy in November 2025. Refer to "Results of Operations - Operating Segments - Quarter-to-Date" for a more detailed analysis of net revenues by operating segment.
Current wording
Consolidated net revenues for the three months ended September 30, 2026 decreased by approximately $49.6 million, or 10.5%, compared to the corresponding period in 2025. The decrease primarily reflected lower net revenues at Rimports ($38.5 million decrease), Altor ($15.2 million decrease), and 5.11 ($9.4 million decrease), partially offset by higher net revenues at Arnold ($10.0 million), BOA ($9.0 million), The Honey Pot Co. ($8.0 million), and PrimaLoft ($3.0 million). The decrease at Rimports was primarily attributable to the May 1, 2026 sale of the Sterno food service division. Accordingly, Rimports’ historical results include the Sterno division through the date of sale, while the Sterno division’s $35.7 million of net revenue recognized in the third quarter of 2025 did not recur in the third quarter of 2026. In addition, Lugano recognized $17.4 million of revenue in the third quarter of 2025 that did not recur in the third quarter of 2026 as a result of Lugano’s bankruptcy in November 2025. Refer to "Results of Operations - Operating Segments - Quarter-to-Date" for a more detailed analysis of net revenues by operating segment.
Previous wording
On a consolidated basis, gross profit decreased approximately $8.6 million during the three months ended June 30, 2026 compared to the corresponding period in 2025. We saw notable increases in gross profit at 5.11 ($2.5 million increase), BOA ($8.4 million increase), PrimaLoft ($3.4 million increase), The Honey Pot Co. ($5.3 million increase), and Arnold ($2.2 million increase). We saw decreases in gross profit at Altor ($10.7 million decrease) and Rimports ($6.2 million decrease) that corresponded to the decrease in net revenue noted above. The decrease in net revenues and gross profit at Rimports is attributable to the sale of the Sterno food service division on May 1, 2026. Lugano recognized $13.4 million in gross profit in the quarter ended June 30, 2025 which was nonrecurring due to the Lugano bankruptcy in November 2025.
Current wording
On a consolidated basis, gross profit decreased approximately $9.2 million during the three months ended September 30, 2026 compared to the corresponding period in 2025. We saw notable decreases in gross profit at Altor ($8.9 million decrease) and Rimports ($14.1 million decrease) that corresponded to the decrease in net revenue noted above. We saw increases in gross profit at BOA ($6.5 million increase), PrimaLoft ($1.8 million increase), The Honey Pot Co. ($10.4 million increase), and Arnold ($5.6 million increase). The decrease in net revenues and gross profit at Rimports is attributable to the sale of the Sterno food service division on May 1, 2026. Rimports’ historical results include the Sterno division through the date of sale, with the Sterno division’s $11.8 million of gross profit recognized in the third quarter of 2025 not recurring in the third quarter of 2026. In addition, Lugano recognized $13.3 million in gross profit in the quarter ended September 30, 2025 which was nonrecurring due to the Lugano bankruptcy in November 2025.
Previous wording
Gross margin was approximately 47.2% in the three months ended June 30, 2026 compared to 43.6% in the three months ended June 30, 2025. The increase in gross margin in the quarter ended June 30, 2026 as compared to the quarter ended June 30, 2025 is driven by the increase in gross margin at our consumer businesses during the quarter. Our branded consumer businesses had gross margin of 59.2% in the second quarter of 2026 as compared to 55.2% in the second quarter of 2025, while our industrial businesses had gross margin of 25.8% in the second quarter of 2026 as compared to 27.3% in the second quarter of 2025. Gross margin at several of our businesses benefited from refunds of duties previously paid under IEEPA tariffs, which were recognized as a credit to cost of goods sold upon receipt of cash, consistent with the accounting for gain contingencies. The remainder of the increase in gross margin at the branded consumer businesses was primarily attributable to product mix, particularly at BOA and PrimaLoft. The decrease in gross margin at our indus trial businesses was attributable to higher fixed overhead costs absorbed on a lower revenue base and higher raw material costs at Altor during the quarter.
Current wording
Gross margin was approximately 46.9% in the three months ended September 30, 2026 compared to 44.0% in the three months ended September 30, 2025. The increase in gross margin in the quarter ended September 30, 2026 as compared to the quarter ended September 30, 2025 is driven by the increase in gross margin at our consumer businesses during the quarter. Our branded consumer businesses had gross margin of 59.5% in the third quarter of 2026 as compared to 55.3% in the third quarter of 2025, while our industrial businesses had gross margin of 23.5% in the third quarter of 2026 as compared to 27.2% in the third quarter of 2025. Gross margin at several of our businesses benefited from refunds of duties previously paid under IEEPA tariffs of approximately $6.9 million in total during the quarter, which were recognized as a credit to cost of goods sold upon receipt of cash, consistent with the accounting for gain contingencies. The remainder of the increase in gross margin at the branded consumer businesses was primarily attributable to product mix, particularly at BOA. The decrease in gross margin at our indus trial businesses was attributable to higher fixed overhead costs absorbed on a lower revenue base and higher raw material costs at Altor during the quarter.
Previous wording
Consolidated selling, general and administrative expense decreased approximately $27.8 million during the three months ended June 30, 2026, compared to the corresponding period in 2025, driven primarily by expense incurred by Lugano ($28.6 million) in the prior year quarter which was nonrecurring due to the Lugano bankruptcy in November 2025, the sale of Sterno on May 1, 2026 and non-recurring exit costs and the impact of a workforce reduction at Altor ($4.5 million decrease in expense quarter over quarter). These decreases were offset by increases in selling, general and administrative expense at the corporate level ($3.1 million increase), and at The Honey Pot Co. ($2.7 million increase) due to increased product innovation and marketing investment.
Current wording
Consolidated selling, general and administrative expense decreased approximately $49.0 million during the three months ended September 30, 2026, compared to the corresponding period in 2025, driven primarily by expense incurred by Lugano ($24.1 million) in the prior year quarter which was nonrecurring due to the Lugano bankruptcy in November 2025, the sale of the Sterno food service division on May 1, 2026, the impact of a workforce reduction at Altor in the first half of 2026 ($3.9 million decrease in expense quarter over quarter), and the reduction in selling, general and administrative expense incurred at the corporate level ($22.8 million decrease) in the current quarter versus the comparable quarter in 2025 . These decreases were offset by increases in expense at BOA ($2.4 million increase) due to higher costs related to BOA's bonus plan and at The Honey Pot Co. ($1.4 million increase) due to increased product innovation and marketing investment.
Previous wording
Under the Management Services Agreement ("MSA"), we pay CGM (i) a base management fee equal to (a) 2% of the Company’s adjusted net assets when the adjusted net assets are less than or equal to $3.5 billion (the “Initial Threshold Fee”), and (b) an incentive fee if the adjusted net assets are greater than $3.5 billion. Such incentive management fee is subject to approval by the Compensation Committee of the Company’s board of directors. For the three months ended June 30, 2026, we incurred approximately $13.8 million in management fees as compared to $19.0 million in fees in the three months ended June 30, 2025. The decrease in the management fee in 2026 is primarily due to the deconsolidation of Lugano in November 2025 and the sale of Sterno in May 2026, which reduced the net assets used in the calculation of the management fee. The Management fee incurred in the three months ended June 30, 2025 reflects the amount incurred prior to the restatement of the Company's financial statements as the Company is not permitted under the MSA to adjust the amount owed to the Manager until the time when the restated financial information was available, which occurred upon the filing of the Company's 10-K/A on December 8, 2025. Therefore the expense recorded in the quarter ended June 30, 2025 reflects the amount that would have been due to the Manager at the time calculated, prior to the restatement of the Company's financial statements. While the MSA did not contain an express mechanism that permitted the Company to immediately clawback the overpayment of management fees, the MSA provided that future payments under the MSA would be reduced, on a dollar-for-dollar basis, by the aggregate amount of all overpaid management fees. The Company will reduce future management fee payments until the overpayment has been fully recouped. The total cash paid for Management fees in the quarter ended June 30, 2026 was $8.8 million as compared to total cash paid for Management fees for the quarter ended June 30, 2025 of $18.6 million.
Current wording
Under the Management Services Agreement ("MSA"), we pay CGM (i) a base management fee equal to (a) 2% of the Company’s adjusted net assets when the adjusted net assets are less than or equal to $3.5 billion (the “Initial Threshold Fee”), and (b) an incentive fee if the adjusted net assets are greater than $3.5 billion. Such incentive management fee is subject to approval by the Compensation Committee of the Company’s board of directors. For the three months ended September 30, 2026, we incurred approximately $13.7 million in management fees as compared to $16.2 million in fees in the three months ended September 30, 2025. The decrease in the management fee in 2026 is primarily due to the deconsolidation of Lugano in November 2025 and the sale of Sterno in May 2026, which reduced the net assets used in the calculation of the management fee. The Management fee incurred in the three months ended September 30, 2025 reflects the amount incurred prior to the restatement of the Company's financial statements as the Company is not permitted under the MSA to adjust the amount owed to the Manager until the time when the restated financial information was available, which occurred upon the filing of the Company's 10-K/A on December 8, 2025. Therefore the expense recorded in the quarter ended September 30, 2025 reflects the amount that would have been due to the Manager at the time calculated, prior to the restatement of the Company's financial statements. While the MSA did not contain an express mechanism that permitted the Company to immediately clawback the overpayment of management fees, the MSA provided that future payments under the MSA would be reduced, on a dollar-for-dollar basis, by the aggregate amount of all overpaid management fees. The Company will reduce future management fee payments until the overpayment has been fully recouped. The total cash paid for Management fees in the quarter ended September 30, 2026 was $7.9 million as compared to total cash paid for Management fees in the quarter ended September 30, 2025 of $12.1 million.
Previous wording
Amortization expense for the three months ended June 30, 2026 decreased $0.4 million as compared to the three months ended June 30, 2025 due to the effect of the sale of Sterno on May 1, 2026.
Current wording
Amortization expense for the three months ended September 30, 2026 decreased $0.6 million as compared to the three months ended September 30, 2025 due to the effect of the sale of Sterno on May 1, 2026.
Previous wording
During the second quarter of 2025, the Company entered into a forbearance agreement which reduced the aggregate borrowing amount available for revolving commitments to $100 million from $600 million. As a result of the reduction in available revolving commitments, the Company recognized $2.8 million in loss on debt modification in the second quarter of 2025.
Current wording
During the third quarter of 2026, the Company entered into an amendment to the 2022 Credit Agreement which reduced the aggregate borrowing amount available for revolving commitments to $54 million from $100 million. As a result of the reduction in available revolving commitments, the Company recognized $1.0 million in loss on debt modification in the third quarter of 2026.
Previous wording
Gain on sale of product division
Current wording
Loss on sale of product division
Previous wording
On May 1, 2026, the Company sold the Sterno food service product division. The Company received approximately $282 million of total proceeds at closing, representing amounts received with respect to the Company’s outstanding loans to Sterno, including accrued interest, and its equity interests in Sterno. The Company recorded a gain on the sale of Sterno in the quarter ending June 30, 2026 of $182.3 million.
Current wording
On May 1, 2026, the Company sold the Sterno food service product division. The Company received approximately $282 million of total proceeds at closing, representing amounts received with respect to the Company’s outstanding loans to Sterno, including accrued interest, and its equity interests in Sterno. The Company recorded a reduction in the gain on the sale of Sterno in the quarter ending September 30, 2026 of $4.3 million reflecting the final working capital settlement and other transaction adjustments.
Previous wording
For the quarter ended June 30, 2026, we recorded $0.1 million in other expense as compared to $1.7 million in other income in the quarter ended June 30, 2025, an increase in expense of $1.8 million. Other income (expense) typically reflects the movement in foreign currency at our subsidiary businesses with international operations, gains or (losses) realized on the sale of property, plant and equipment, and expenses incurred or income earned that are not considered a part of our operations. In both the current quarter and prior year comparable quarter, the expense primary relates to foreign currency gains and losses.
Current wording
For the quarter ended September 30, 2026, we recorded $0.2 million in other expense as compared to $2.3 million in other expense in the quarter ended September 30, 2025, a decrease in expense of $2.1 million. Other income (expense) typically reflects the movement in foreign currency at our subsidiary businesses with international operations, gains or (losses) realized on the sale of property, plant and equipment, and expenses incurred or income earned that are not considered a part of our operations. In both the current quarter and prior year comparable quarter, the amounts relate primarily to foreign currency gains and losses.
Previous wording
Net sales for the three months ended June 30, 2026 were $126.5 million as compared to net sales of $131.4 million for the three months ended June 30, 2025, a decrease of $4.9 million, or 3.8%. The decrease was primarily attributable to a decrease in direct-to-consumer sales of approximately $4.0 million, reflecting an intentional reduction in promotional activity compared to the prior year period, and a decrease in domestic wholesale sales of approximately $3.7 million, due to customer inventory reductions. These decreases were partially offset by an increase in international sales of approximately $2.4 million, driven by growth in EMEA, Australia, and Canada.
Current wording
Net sales for the three months ended September 30, 2026 were $133.9 million as compared to net sales of $143.2 million for the three months ended September 30, 2025, a decrease of $9.4 million, or 6.5%. The decrease was primarily attributable to a decrease in direct-to-consumer sales of approximately $2.9 million, reflecting an intentional reduction in promotional activity compared to the prior year period, a decrease in domestic wholesale sales of approximately $4.8 million, due to customer inventory reductions, and a decrease in international sales of approximately $2.6 million, reflecting the timing of demand for large government business in Latin America and the impact of geopolitical tensions in the Middle East.
Previous wording
Segment operating income for the three months ended June 30, 2026 was $12.2 million, an increase of $2.5 million when compared to segment operating income of $9.8 million for the same period in 2025. The increase was primarily attributable to improved gross margin and disciplined operating expense management, which more than offset the impact of lower net sales. Gross margin benefited from a higher mix of full-price sales and from refunds of duties previously paid under IEEPA tariffs, which were recognized as a credit to cost of goods sold upon receipt of cash, consistent with the accounting for gain contingencies. Selling, general and administrative expenses were essentially flat compared to the prior year period, as lower payroll expense was offset by higher performance-based bonus accruals and increased investment in brand marketing.Segment operating margin was 9.7% in the second quarter of 2026 and 7.4% in the second quarter of 2025.
Current wording
Segment operating income for the three months ended September 30, 2026 was $16.5 million, an increase of $0.2 million when compared to segment operating income of $16.3 million for the same period in 2025. The increase was primarily attributable to improved gross margin and disciplined operating expense management, which more than offset the impact of lower net sales. Gross margin benefited from a higher mix of full-price sales and from refunds of duties previously paid under IEEPA tariffs of $2.3 million, which were recognized as a credit to cost of goods sold upon receipt of cash, consistent with the accounting for gain contingencies. Selling, general and administrative expenses were essentially flat compared to the prior year period, as lower payroll expense was offset by higher performance-based bonus accruals, higher variable selling costs associated with growth in marketplace sales, and increased occupancy costs associated with new store openings. Segment operating margin was 12.3% in the third quarter of 2026 and 11.4% in the third quarter of 2025.
Previous wording
Net sales for the three months ended June 30, 2026 were $59.1 million as compared to net sales of $48.4 million for the three months ended June 30, 2025, an increase of $10.7 million, or 22.1%. BOA adult premium performance sales increased across key industries including Athletic, Workwear, Cycling, Snowsports, Outdoor, Helmets, and Performance Bracing, partially offset by reduced kids-based business in China.
Current wording
Net sales for the three months ended September 30, 2026 were $53.0 million as compared to net sales of $43.9 million for the three months ended September 30, 2025, an increase of $9.0 million, or 20.5%. BOA adult premium performance sales increased across key industries including Athletic, Workwear, Cycling, Snowsports, Outdoor, Helmets, and Performance Bracing, partially offset by reduced kids-based business in China.
Previous wording
Segment operating income for the three months ended June 30, 2026 was $20.1 million, an increase of $6.0 million when compared to segment operating income of $14.0 million for the same period in 2025. The increase in segment operating income was driven by higher net sales, improved product margins, partially offset by an increase in selling, general, and administrative expense related to BOA's bonus plan. Segment operating margin increased to 33.9% in the second quarter of 2026 from 29.0% in the second quarter of 2025, primarily driven by improved gross margins.
Current wording
Segment operating income for the three months ended September 30, 2026 was $14.9 million, an increase of $4.1 million when compared to segment operating income of $10.8 million for the same period in 2025. The increase in segment operating income was driven by higher net sales, improved product margins, partially offset by an increase in selling, general, and administrative expense related to BOA's bonus plan. Segment operating margin increased to 28.1% in the third quarter of 2026 from 24.6% in the third quarter of 2025, primarily driven by improved gross margins.
Previous wording
Net sales for the three months ended June 30, 2026 were $38.4 million, an increase of $5.6 million or 17.0% from net sales of $32.8 million for the three months ended June 30, 2025. The increase in net sales was primarily due to strong volume growth and market share gains in the Period Care product line, particularly in mass retail, drugstores and online channels, and the net pricing benefit related to Period Care pack price optimization implemented in late 2025. Overall, volume and share growth continued to be supported by compelling innovation, targeted investments in demand generation, and disciplined investments in capabilities to accelerate growth.
Current wording
Net sales for the three months ended September 30, 2026 were $42.8 million, an increase of $8.0 million or 23.2% from net sales of $34.7 million for the three months ended September 30, 2025. The increase in net sales was primarily due to strong volume growth and market share gains in the Period Care product line, particularly in mass retail, drugstores and online channels, and the net pricing benefit related to Period Care pack price optimization implemented in late 2025. Overall, volume and share growth continued to be supported by compelling innovation, targeted investments in demand generation, and disciplined investments in capabilities to accelerate growth.
Previous wording
Segment operating income for the three months ended June 30, 2026 was $6.4 million, an increase of $2.7 million when compared to segment operating income of $3.7 million for the same period in 2025. The increase was primarily driven by higher net sales and improved operating leverage, partially offset by increased investments in marketing and human capital. Selling, general and administrative expense as a percentage of net sales was 34.2% in the second quarter of 2026 and 31.9% in the second quarter of 2025. Segment operating margin in the second quarter of 2026 was 16.6% as compared to 11.3% in the second quarter of 2025.
Current wording
Segment operating income for the three months ended September 30, 2026 was $11.6 million, an increase of $8.9 million when compared to segment operating income of $2.7 million for the same period in 2025. Operating income for the three months ended September 30, 2026 includes a one-time benefit of $3.7 million related to IEEPA tariff refunds. Underlying organic growth of $5.2 million was primarily driven by higher net sales and improved operating leverage, partially offset by increased investments in marketing and human capital. Selling, general and administrative expense as a percentage of net sales was 32.1% in the third quarter of 2026 and 35.4% in the third quarter of 2025. Segment operating margin in the third quarter of 2026 was 27.1% as compared to 7.6% in the third quarter of 2025.
Previous wording
Net sales for the three months ended June 30, 2026 were $17.1 million, an increase of $1.9 million or 12.5%, compared to net sales of $15.2 million inthe same period in 2025. The increase in net sales for the three months ended June 30, 2026 was primarily driven by increased archery and apparel sales through national retailer channels.
Current wording
Net sales for the three months ended September 30, 2026 were $29.7 million, an increase of $0.7 million or 2.3%, compared to net sales of $29.0 million inthe same period in 2025. The increase in net sales for the three months ended September 30, 2026 was primarily driven byincreased apparel sales through national retailer and direct to consumer channels.
Previous wording
Segment operating loss for the three months ended June 30, 2026 was flat compared to the same period in 2025, reflecting an improvement of 3.7%. The modest improvement was driven by higher net sales combined with flat operating expenses. Segment operating margin was (5.1)% in the second quarter of 2026 as compared to (6.0)% in the second quarter of 2025.
Current wording
Segment operating income for the three months ended September 30, 2026 was$4.4 million compared to$2.9 million inthe same period in 2025, reflecting an improvement of$1.5 million or 50.2%. This improvement was driven by higher net sales combined with favorable product margins. Segment operating margin was 14.7% in the third quarter of 2026 as compared to 10.0% in the third quarter of 2025.
Previous wording
Net sales for the quarter ended June 30, 2026 were $65.7 million, a decrease of $17.6 million, or 21.2%, compared to net sales of $83.3 million in the quarter ended June 30, 2025. The decrease in net sales during the second quarter was primarily attributable to lower sales volumes resulting from reduced demand in the industrial white goods market and shifting market conditions in the perishable and cold chain markets.
Current wording
Net sales for the quarter ended September 30, 2026 were $64.6 million, a decrease of $15.2 million, or 19.0%, compared to net sales of $79.8 million in the quarter ended September 30, 2025. The decrease in net sales during the third quarter was primarily attributable to lower sales volumes resulting from reduced demand in the industrial white goods market and shifting market conditions in the perishable and cold chain markets.
Previous wording
Segment operating income was $1.0 million in the three months ended June 30, 2026, a decrease of $6.2 million as compared to the three months ended June 30, 2025. Segment operating margin was 1.6% in the second quarter of 2026 as compared to 8.7% in the second quarter of 2025, with the decrease driven by lower sales volumes, the deleveraging effect of fixed costs, as well as a 21% increase in the index driving the main raw materials purchase price and freight inflation driven by rising oil costs. Gross margin was 18.3% in the three months ended June 30, 2026 and 27.3% in the three months ended June 30, 2025.
Current wording
Segment operating income was $0.3 million in the three months ended September 30, 2026, a decrease of $4.9 million as compared to the three months ended September 30, 2025. Segment operating margin was 0.4% in the third quarter of 2026 as compared to 6.5% in the third quarter of 2025, with the decrease driven by lower sales volumes, the deleveraging effect of fixed costs, as well as an increase in the index driving the main raw materials purchase price and freight inflation driven by rising oil costs. Gross margin was 17.5% in the three months ended September 30, 2026 and 25.3% in the three months ended September 30, 2025.
Previous wording
Net sales for the three months ended June 30, 2026 were approximately $43.2 million, an increase of $4.8 million compared to net sales of $38.4 million in the same period in 2025. The increase in net sales was primarily attributable to growing demand for non-China sourced permanent magnets, partially offset by material and production constraints.
Current wording
Net sales for the three months ended September 30, 2026 were approximately $47.7 million, an increase of $10.0 million compared to net sales of $37.7 million in the same period in 2025. The increase in net sales was primarily attributable to growing demand for non-China sourced permanent magnets, partially offset by material and production constraints.
Previous wording
Segment operating income for the three months ended June 30, 2026 was approximately $3.6 million, an increase of $3.4 million when compared to the same period in 2025. The increase in segment operating income was driven by higher revenue and the resulting operating leverage, and non-recurring costs incurred in the first half of 2025. Segment operating margin was 8.3% in thesecond quarter of 2026 as compared to 0.5% in thesecond quarter of 2025.
Current wording
Segment operating income for the three months ended September 30, 2026 was approximately $6.3 million, an increase of $5.1 million when compared to the same period in 2025. The increase in segment operating income was driven by higher revenue and the resulting operating leverage. Segment operating margin was 13.3% in thethird quarter of 2026 as compared to 3.3% in thethird quarter of 2025.
Previous wording
Net sales for the three months ended June 30, 2026 were approximately $44.3 million, a decrease of $33.2 million, or 42.8%, compared to net sales of $77.5 million in the same period in 2025. The decrease was primarily attributable to the sale of Sterno Products’ food service business in May 2026. Excluding Sterno, Rimports-only net sales for the quarter-to-date period ended June 30, 2026 were $30.9 million, a decrease of $5.4 million, or 14.8%, compared to $36.3 million in the same period in 2025. The Rimports variance was primarily driven by a reduction in key distribution within the private label business.
Current wording
Net sales for the three months ended September 30, 2026 were approximately $35.0 million, a decrease of $38.5 million, or 52.3%, compared to net sales of $73.5 million in the same period in 2025. The decrease was primarily attributable to the sale of Sterno Products’ food service business in May 2026. In the third quarter of 2025, the Sterno Products' food service division had net sales of $35.7 million. The Rimports variance was driven by a reduction in key distribution within the private label business.
Previous wording
Consolidated net revenues for the six months ended June 30, 2026 decreased by approximately $81.6 million, or 8.7%, compared to the corresponding period in 2025. During the six months ended June 30, 2026 compared to 2025, we saw notable increases in net revenues at BOA ($13.9 million increase), The Honey Pot Co. ($14.6 million increase), and Arnold ($11.0 million increase). These increases in net revenue were offset by decreases in net revenue at 5.11 ($10.3 million decrease) and Altor ($29.3 million decrease). Lugano recognized $53.6 million in revenue in the six months ended June 30, 2025 which was nonrecurring due to the Lugano bankruptcy in November 2025. Rimports revenue decreased $33.5 million due to the sale of the Sterno product division on May 1, 2026. Refer to "Results of Operations - Operating Segments - Year-to-Date" for a more detailed analysis of net revenues by operating segment.
Current wording
November 2025. The decrease at Rimports was primarily attributable to the May 1, 2026 sale of the Sterno product division. Net revenues also decreased at 5.11 by $19.7 million. These decreases were partially offset by higher net revenues at BOA ($23.0 million increase), The Honey Pot Co. ($22.6 million increase), and Arnold ($20.9 million increase). Refer to "Results of Operations - Operating Segments - Year-to-Date" for a more detailed analysis of net revenues by operating segment.
Previous wording
Consolidated selling, general and administrative expense decreased approximately $46.1 million during the six months ended June 30, 2026, compared to the corresponding period in 2025, driven primarily by the impact of Lugano's bankruptcy. Lugano had selling, general and administrative expense of $55.2 million in the six months ended June 30, 2025 that was nonrecurring due to the November 2025 bankruptcy of Lugano. This decrease was offset by an increase in corporate expenses of $11.5 million in 2026 versus the same period in 2025 due to costs associated with the Lugano investigation, litigation, governmental-investigation, governance and internal-control remediation.
Current wording
Consolidated selling, general and administrative expense decreased approximately $95.1 million during the nine months ended September 30, 2026, compared to the corresponding period in 2025, driven primarily by the impact of Lugano's bankruptcy, a reduction in the one-time costs at Corporate related to Lugano and the resulting restatement of our financial statements, and the sale of the Sterno food service division in the second quarter of 2026. Lugano had selling, general and administrative expense of $79.3 million in the nine months ended September 30, 2025 that was nonrecurring due to the November 2025 bankruptcy of Lugano.
Previous wording
For the six months ended June 30, 2026, we incurred $29.8 million in management fees as compared to $37.9 million in fees in the six months ended June 30, 2025. The decrease in the management fee in 2026 is primarily due to the deconsolidation of Lugano in November 2025 and the sale of Sterno in May 2026, which reduced the net assets used in the calculation of the management fee. The Management fee incurred in the six months ended June 30, 2025 reflects the amount incurred prior to the restatement of the Company's financial statements as the Company is not permitted under the MSA to adjust the amount owed to the Manager until the time when the restated financial information was available, which occurred upon the filing of the Company's 10-K/A on December 8, 2025. Therefore the expense recorded in the six months ended June 30, 2025 reflects the amount that would have been due to the Manager at the time calculated, prior to the restatement of the Company's financial statements. While the MSA did not contain an express mechanism that permitted the Company to immediately clawback the overpayment of management fees, the MSA provided that future payments under the MSA would be reduced, on a dollar-for-dollar basis, by the aggregate amount of all overpaid management fees. The Company will reduce future management fee payments until the overpayment has been fully recouped. The total cash paid for Management fees in the six months ended ended June 30, 2026 was $15.4 million as compared to total cash paid for Management fees for the six months ended June 30, 2025 of $37.7 million.
Current wording
For the nine months ended September 30, 2026, we incurred $43.4 million in management fees as compared to $54.1 million in fees in the nine months ended September 30, 2025. The decrease in the management fee expense in 2026 is primarily due to the deconsolidation of Lugano in November 2025 and the sale of Sterno in May 2026, which reduced the net assets used in the calculation of the management fee. The management fee incurred in the nine months ended September 30, 2025 reflects the amount incurred prior to the restatement of the Company's financial statements as the Company is not permitted under the MSA to adjust the amount owed to the Manager until the time when the restated financial information was available, which occurred upon the filing of the Company's 10-K/A on December 8, 2025. Therefore the expense recorded in the nine months ended September 30, 2025 reflects the amount that would have been due to the Manager at the time calculated, prior to the restatement of the Company's financial statements. While the MSA did not contain an express mechanism that permitted the Company to immediately clawback the overpayment of management fees, the MSA provided that future payments under the MSA would be reduced, on a dollar-for-dollar basis, by the aggregate amount of all overpaid management fees. The Company will reduce future management fee payments until the overpayment has been fully recouped. The total cash paid for Management fees in the nine months ended September 30, 2026 was $23.3 million as compared to total cash paid for Management fees for the nine months ended September 30, 2025 of $49.8 million.
Previous wording
Amortization expense for the six months ended June 30, 2026 decreased $0.9 million as compared to the six months ended June 30, 2025 due to the effect of the sale of Sterno on May 1, 2026.
Current wording
Amortization expense for the nine months ended September 30, 2026 decreased $1.5 million as compared to the nine months ended September 30, 2025 due to the effect of the sale of Sterno on May 1, 2026.
Previous wording
Other operating income represents the gain on the sale leaseback completed at Altor in the six months ended June 30, 2026.
Current wording
Other operating income represents the gain on the sale leaseback completed at Altor in the nine months ended September 30, 2026.
Previous wording
We recorded interest expense totaling $51.4 million for the six months ended June 30, 2026 compared to $69.9 million for the comparable period in 2025, a decrease of $18.6 million. Interest expense in the six months ended June 30, 2025 includes $15.8 million related to financing arrangements at Lugano, which was deconsolidated in November 2025. Excluding the impact of the Lugano financing arrangement in the prior-year period, interest expense decreased $2.8 million, primarily due to pay down of the Company's 2022 Credit Facility during 2026, offset by higher interest expense on the Company’s Senior Notes resulting from the increased principal amount of the Senior Notes following the paid-in-kind payments made in 2025 in connection with the indenture forbearance agreement described in the 2025 Form 10-K.
Current wording
We recorded interest expense totaling $73.2 million for the nine months ended September 30, 2026 compared to $136.7 million for the comparable period in 2025, a decrease of $63.5 million. Interest expense in the nine months ended September 30, 2025 includes $20.8 million related to financing arrangements at Lugano, which was deconsolidated in November 2025. Excluding the impact of the Lugano financing arrangement in the prior-year period, interest expense decreased $42.7 million, primarily due to pay down of the Company's 2022 Credit Facility during 2026, offset by higher interest expense on the Company’s Senior Notes resulting from the increased principal amount of the Senior Notes following the paid-in-kind payments made in 2025 in connection with the indenture forbearance agreement described in the 2025 Form 10-K.
Previous wording
During the second quarter of 2025, the Company entered into a forbearance agreement which reduced the aggregate borrowing amount available for revolving commitments to $100 million from $600 million. As a result of the reduction in available revolving commitments, the Company recognized $2.8 million in loss on debt modification in the second quarter of 2025.
Current wording
During the third quarter of 2026, the Company entered into an amendment to the 2022 Credit Agreement which reduced the aggregate borrowing amount available for revolving commitments to $54 million from $100 million. As a result of the reduction in available revolving commitments, the Company recognized $1.0 million in loss on debt modification in the third quarter of 2026. During the second quarter of 2025, the Company entered into a forbearance agreement which reduced the aggregate borrowing amount available for revolving commitments to $100 million from $600 million. As a result of the reduction in available revolving commitments, the Company recognized $2.8 million in loss on debt modification in the second quarter of 2025.
Previous wording
On May 1, 2026, the Company sold the Sterno food service product division. The Company received approximately $282 million of total proceeds at closing, representing amounts received with respect to the Company’s outstanding loans to Sterno, including accrued interest, and its equity interests in Sterno. The Company recorded a gain on the sale of Sterno in the quarter ending June 30, 2026 of $182.3 million.
Current wording
On May 1, 2026, the Company sold the Sterno food service product division. The Company received approximately $282 million of total proceeds at closing, representing amounts received with respect to the Company’s outstanding loans to Sterno, including accrued interest, and its equity interests in Sterno. The Company recorded a gain on the sale of Sterno in the quarter ending June 30, 2026 of $182.3 million, which was reduced by $4.3 million in the current quarter to reflect the working capital settlement and other transaction adjustments.
Previous wording
For the six months ended June 30, 2026, other expense, net was $2.8 million, compared to $12.0 million in other expense in the six months ended June 30, 2025. Other income (expense) generally reflects foreign currency movements at our subsidiary businesses with international operations, gains or (losses) realized on the sale of property, plant and equipment, and expenses incurred a finance charge at the corporate entity related to Lugano. The other expense in the three months ended June 30, 2025 primarily represents expense recognized at Lugano related to losses resulting fromthe accounting for the transactions associated with the off-balance sheet arrangements ($11.7 million in expense in the six months ended June 30, 2025). The $10.2 million Altor sale-leaseback gain is presented separately in other operating (income) expense and is not included in this caption.
Current wording
For the nine months ended September 30, 2026, other expense was $3.0 million, compared to $14.3 million in other expense in the nine months ended September 30, 2025. Other income (expense) generally reflects foreign currency movements at our subsidiary businesses with international operations, gains or (losses) realized on the sale of property, plant and equipment, and expenses incurred a finance charge at the corporate entity related to Lugano. The other expense in the nine months ended September 30, 2025 primarily represents expense recognized at Lugano related to losses resulting fromthe accounting for the transactions associated with the off-balance sheet arrangements ($13.0 million in expense in the nine months ended September 30, 2025).
Previous wording
We had an income tax provision of $52.4 million during the six months ended June 30, 2026 compared to an income tax provision of $19.9 million during the same period in 2025, an increase of $32.5 million due to the reduction in the loss from continuing operation before income taxes and driven by the tax effect at the Trust of the sale of the Sterno product division. Our effective tax rate in the six months ended June 30, 2026 was 50.7%, compared to an effective income tax rate of 18.0% during the same period in 2025. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. In the current year, the effe ctive tax rate was impacted by the sale of the Sterno product division, the goodwill impairment at PrimaLoft, the effect of state taxes and changes in valuation allowances. In connection with the sale of Sterno, we recorded a liability for unrecognized tax benefits of $21.3 million in the six months ended June 30, 2026, and approximately $5.5 million ininterest associated with certain previously recognized uncertain tax positions that had not been accrued in prior reporting periods, substantially all of which relates to prior years.
Current wording
We had an income tax provision of $32.3 million during the nine months ended September 30, 2026 compared to an income tax provision of $25.7 million during the same period in 2025, an increase of $6.6 million. Our effective tax rate in the nine months ended September 30, 2026 was 30.3%, compared to an effective income tax rate of 13.4% during the same period in 2025. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. The current year includes a discrete tax benefit recognized in the third quarter following approval of the settlement of the Lugano bankruptcy, which permitted the Company to recognize for income tax purposes the loss on its intercompany loans with Lugano. The resulting tax loss was used to offset the taxable gain recognized on the sale of Sterno in the second quarter of 2026. In the current year, the effe ctive tax rate was also impacted by the goodwill impairment at PrimaLoft, the effect of state taxes and changes in valuation allowances. The Company also recognized approximately $6.2 million ininterest associated with certain previously recognized uncertain tax positions that had not been accrued in prior reporting periods, substantially all of which relates to prior years.
Previous wording
Net sales for thesix months ended June 30, 2026 were $250.5 million as compared to net sales of $260.8 million for thesix months ended June 30, 2025, a decrease of $10.3 million, or 4.0%. The declinewas primarily attributable to a decrease in direct-to-consumer sales of approximately $7.9 million, reflecting an intentional reduction in promotional activity compared to the prior year period, and a decrease in domestic wholesale sales of approximately $3.4 million, due to customer inventory reductions. These decreases were partially offset by increases in international sales of approximately $0.6 million, driven by growth in Australia and Canada.
Current wording
Net sales for thenine months ended September 30, 2026 were $384.3 million as compared to net sales of $404.1 million for thenine months ended September 30, 2025, a decrease of $19.7 million, or 4.9%. The decrease was primarily attributable to a decrease in direct-to-consumer sales of approximately $10.8 million, reflecting an intentional reduction in promotional activity compared to the prior year period, a decrease in domestic wholesale sales of approximately $8.2 million, due to customer inventory reductions and large prior year orders that did not repeat in the current year period, and a decrease in international sales of approximately $2.0 million, reflecting the timing of demand for large government business in Latin America, as well as the impact of geopolitical tensions in the Middle East, partially offset by growth in Asia Pacific.
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Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Sale of Sterno Food Service Division
Current report — wording carried from elsewhere
In the third quarter of 2026, we amended the Altor intercompany credit agreement to amend the applicable senior debt to EBITDA ratio covenant as Altor was not expected to be in compliance with the ratio through the remainder of 2026 based on their forecast for the remainder of 2026.
Current report — wording carried from elsewhere
The tables below reconcile net income (loss) from continuing operations to Adjusted EBITDA.
Current report — wording carried from elsewhere
On July 12, 2026, the LLC and CGM entered into the Ninth MSA, which became effective upon execution and amends and restates the Eighth MSA. The Ninth MSArevises the LLC’s management fee and incentive compensation arrangements with CGM. The fee and incentive-award provisions of the Ninth MSA described below become effective January 1, 2027, and the fee provisions of the Eighth MSA remain applicable through December 31, 2026.
Current report — wording carried from elsewhere
Accordingly, the Company no longer had an indefinite lived tradename at September 30, 2026. Refer to "Note B - Dispositions" of the condensed consolidated financial statements.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
** Lugano was deconsolidated on November 16, 2025. The Company retained its equity interest in Lugano at June 30, 2026.
Previous report — wording carried elsewhere
We recorded interest expense totaling $23.9 million for the three months ended June 30, 2026 compared to $34.1 million for the comparable period in 2025, a decrease of $10.2 million. During 2026, the Company has paid down approximately $300 million of principal on the 2022 Term Loan, reducing the total interest expense incurred. In the three months ended June 30, 2026, interest expense associated with the 2022 Term Loan was approximately $6.3 million as compared to $9.8 million in the three months ended June 30, 2025. Interest expense in the three months ended June 30, 2025 also included $6.9 million related to financing arrangements at Lugano, which was deconsolidated in November 2025. The decrease in interest expense was partially offset by higher interest expense on the Company’s Senior Notes resulting from the increased principal amount of the Senior Notes following the paid-in-kind payments made in 2025 in connection with the indenture forbearance agreement described in the 2025 Form 10-K.
Previous report — wording carried elsewhere
We had an income tax provision of $45.4 million during the three months ended June 30, 2026 compared to an income tax provision of $17.4 million during the same period in 2025, an increase of $28.0 million. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. In the current year, the effe ctive tax rate was impacted by the sale of Sterno and the tax effect at the Trust, the effect of foreign taxes and changes in valuation allowances, while in the prior year, the primary item affecting the effective tax rate was changes in valuation allowance. In connection with the sale of Sterno, we recorded a liability for unrecognized tax benefits of $21.3 million in the quarter ended June 30, 2026, and approximately $5.5 million ininterest associated with certain previously recognized uncertain tax positions that had not been accrued in prior reporting periods, substantially all of which relates to prior years.
Previous report — wording carried elsewhere
Decrease in fair value of receivable due from unconsolidated affiliate
Previous report — wording carried elsewhere
Rimports (including Sterno's food service business through May 1, 2026)