Compass Diversified Holdings

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2026

Note A -Presentation and Principles of Consolidation

Compass Diversified Holdings, a Delaware statutory trust (the "Trust") and Compass Group Diversified Holdings LLC, a Delaware limited liability company (the "LLC"), were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. Collectively, Compass Diversified Holdings and Compass Group Diversified Holdings, LLC are referred to as the "Company". In accordance with the Third Amended and Restated Trust Agreement, dated as of August 3, 2021 (as further amended and restated, the "Trust Agreement"), the Trust is sole owner of 100% of the Trust Interests (as defined in the LLC’s Sixth Amended and Restated Operating Agreement, dated as of August 3, 2021 (as further amended and restated, the "LLC Agreement")) of the LLC and, pursuant to the LLC Agreement, the LLC has, outstanding, the identical number of Trust Interests as the number of outstanding common shares of the Trust. The LLC is the operating entity with a board of directors and other corporate governance responsibilities, similar to that of a Delaware corporation. The Trust does not have operations independent of acting as the parent company of the LLC. Compass Group Management LLC, a Delaware limited liability Company ("CGM" or the "Manager"), manages the day to day operations of the LLC and oversees the management and operations of our businesses pursuant to a management services agreement (the "Management Services Agreement" or "MSA").

The LLC is a controlling owner ofeight businesses, or operating segments, at September 30, 2026. The segments are as follows: 5.11 Acquisition Corp. ("5.11"), Boa Holdings Inc. ("BOA"), Relentless Topco, Inc. ("PrimaLoft"), THP Topco, Inc. ("The Honey Pot Co." or "THP"), CBCP Products, LLC ("Velocity Outdoor" or "Velocity"), AMTAC Holdings LLC ("Arnold"), FFI Compass, Inc. ("Altor Solutions" or "Altor"), and Rimports Holdings, Inc. ("Rimports"). The segments are referred to interchangeably as “businesses”, “operating segments” or “subsidiaries” throughout the financial statements. During the second quarter of 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, Rimports is presented as the Company’s operating segment following the distribution, and the results of Sterno’s food service business through the date of sale and Rimports for all periods presented are included in continuing operations. Refer to Note B - "Dispositions" for further discussion of the sale of Sterno’s food service business and the Rimports distribution. Refer to Note O - "Operating Segment Data" for further discussion of the operating segments. Lugano Holding, Inc. ("Lugano") was an operating segment of the Company until November 16, 2025 when Lugano was deconsolidated. Refer to Note B - "Dispositions" for further discussion of the accounting for Lugano.

Basis of Presentation

The condensed consolidated financial statements for the three and nine month periods ended September 30, 2026 and September 30, 2025 are unaudited, and in the opinion of management, contain all adjustments necessary for a fair presentation of the condensed consolidated financial statements. Such adjustments consist solely of normal recurring items. Interim results are not necessarily indicative of results for a full year or any subsequent interim period. The condensed consolidated financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP" or "GAAP") and presented as permitted by Form 10-Q and do not contain certain information included in the annual consolidated financial statements and accompanying notes of the Company.

The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and satisfy its liabilities in the ordinary course of business.

Correction of Prior Period Financial Statements

During the second quarter ended June 30, 2026, the Company identified an immaterial classification misstatement related to the presentation of the gain of $10.2 million recognized in connection with Altor’s January 23, 2026 sale-leaseback transaction, which was previously presented in other income (expense), net in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 and corrected to be presented in other operating income within operating expenses in the condensed consolidated statements of operations. The correction reflects management’s determination that the gain is appropriately presented within operating results because the transaction related to Altor’s manufacturing facilities and underlying operating assets. This correction increased previously reported operating income by the amount of the sale-leaseback gain and decreased other income (expense), net by the same amount, with no effect on previously reported income from continuing operations before income taxes, net income, cash flows, or stockholders’ equity.

Consolidation

The condensed consolidated financial statements include the accounts of the Company, as well as the businesses acquired as of their respective acquisition date. All significant intercompany accounts and transactions have been eliminated in consolidation. Businesses or components that meet the criteria for discontinued operations are presented as discontinued operations for all periods presented.

Recently Adopted Accounting Pronouncements

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

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This guidance will require, among other things, the following for public business entities: (i) enhanced disclosures of specific categories of reconciling items included in the rate reconciliation, as well as additional information for any of these items meeting certain qualitative and quantitative thresholds; (ii) disclosure of the judgment used in categorizing them if not otherwise evident; and (iii) enhanced disclosures for income taxes paid, which includes federal, state, and foreign taxes, as well as for individual jurisdictions over a certain quantitative threshold. The amendments in ASU 2023-09 eliminate the requirement to disclose the nature and estimate of the range of the reasonably possible change in unrecognized tax benefits for the 12 months after the balance sheet date. The guidance is effective for annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 for the year ended December 31, 2025 and applied the new disclosure requirements prospectively to the 2025 annual period.

Recently Issued Accounting Pronouncements

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40). This guidance will require the disclosure of disaggregation of certain relevant expenses presented in the consolidated statements of operations, including inventory purchases, employee compensation, selling expense and depreciation expense. The guidance is effective for our annual period ending December 31, 2027 and interim periods thereafter. The Company is currently evaluating the impact this standard will have on the consolidated financial statements.

Note B — Dispositions

Sale of Sterno and Distribution of Rimports

On March 28, 2026, the LLC, in its capacity as representative of the holders of common stock of SternoCandleLamp Holdings, Inc. (“Sterno”), a then-majority-owned subsidiary of the LLC, and, for the limited purposes of the Rimports Distribution described below, entered into a definitive Agreement and Plan of Merger (the “Sterno Agreement”) with WCHG Buyer, Inc. (“Parent”), WCHG Heat Merger Sub, Inc. (“Merger Sub”) and Sterno. Pursuant to the Sterno Agreement, Parent agreed to acquire Sterno through the merger of Merger Sub with and into Sterno, with Sterno surviving the merger as a wholly owned subsidiary of Parent.

Immediately prior to the closing of the merger, on April 30, 2026, Sterno completed the distribution of all of the limited liability company interests of its indirect wholly owned subsidiary Rimports, LLC (“Rimports”), which operates Sterno’s home fragrance business, to Rimports Holdings, Inc., the equity of which was, in turn, distributed pro rata to the Sterno stockholders, including the LLC (the “Rimports Distribution”), with Rimports remaining a majority owned subsidiary of the LLC. On May 1, 2026, the parties completed the merger pursuant to the Sterno Agreement, resulting in the sale of Sterno’s food service business.

The purchase consideration for Sterno’s food service business was based on an enterprise value of $292.5 million and was subject to customary adjustments, including for transaction expenses, change-of-control payments, option termination payments and the net working capital, cash and debt balances of Sterno and its subsidiaries, excluding Rimports and its subsidiaries, at closing. Approximately $2.6 million of the closing proceeds were placed in escrow to satisfy post-closing purchase price true-ups, if any.

After allocation of the purchase consideration to Sterno’s noncontrolling stockholders and payment of transaction costs, CODI 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 used the proceeds received from the sale to repay outstanding borrowings under its senior credit facility.

The Rimports Distribution represented a transfer of equity interests between entities under common control because the Company controlled Sterno, inclusive of Rimports, before the distribution and continues to control Rimports after the distribution. Accordingly, the Rimports Distribution was accounted for as a transaction between entities under common control at historical carrying amounts, and no gain or loss was recognized in the Company’s condensed consolidated financial statements as a result of the distribution.

As of March 31, 2026, the Company had classified Sterno’s food service business as held for sale. Because the Company retained Rimports following the Rimports Distribution, the assets and liabilities of Rimports were excluded from the held-for-sale disposal group and continued to be presented within the Company’s condensed consolidated balance sheet. 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$182.3 million which was reduced by$4.3 million in the third quarter of 2026 primarily to correct the initial allocation of the gain between the controlling and noncontrolling stockholders to reflect the exercise of certain Sterno stock options immediately prior to the transaction, and to reflect the post-closing working capital settlement and other transaction adjustments. The Company recognized a total gain on sale of $178.0 million within income from continuing operations during the nine months ended September 30, 2026.

The sale did not represent a strategic shift that had, or will have, a major effect on the Company’s operations or financial results and therefore did not qualify for discontinued operations presentation. Accordingly, the results of operations and cash flows of Sterno’s food service business through the date of sale, and Rimports for all periods presented, are included within continuing operations in the Company’s condensed consolidated statements of operations and cash flows.

Summarized results of operations of Sterno for the nine months ended September 30, 2026 through the date of disposition and the three and nine months ended September 30, 2025 are as follows (in thousands):

(1)The results of operations for the periods from January 1, 2026 through disposition, and the three and nine months ended September 30, 2025, each exclude $1.4 million, $2.0 million and $6.5 million, respectively, of intercompany interest expense which is eliminated in consolidation.

Lugano

On November 16, 2025, Lugano and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Lugano Bankruptcy”), resulting in the deconsolidation of Lugano. Following deconsolidation, the Company retained equity interests in Lugano at zero fair value and recognized a receivable at fair value for expected recoveries on its secured creditor claim arising from former intercompany loans (the “CODI Secured Claim”). The Company elected the fair value option under Accounting Standards Codification (“ASC”) 825, Financial Instruments, for both the receivable and the retained equity interests, with subsequent changes in fair value recognized in earnings. Upon effectiveness of the Chapter 11 plan of liquidation (the “Plan”) and related settlement, the CODI Secured Claim was satisfied through cash and a special beneficial interest in the Lugano Liquidation Trust.

Upon deconsolidation, the Company recognized the receivable based on management’s estimate of expected recoveries on the CODI Secured Claim and elected the fair value option under ASC 825. The receivable was remeasured at fair value at each reporting date, with changes in fair value recognized in earnings. At December 31, 2025, the receivable had an estimated fair value of $97.0 million, of which $71.0 million was classified as current and $26.0 million was classified as noncurrent. During the three months ended June 30, 2026, management updated its estimate following the Company’s entry on June 24, 2026 into a Settlement Agreement and Mutual Release and a related Plan Support Agreement with Lugano, the official committee of unsecured creditors and the other parties thereto. The reduction in expected proceeds resulted in a $58.0 million decrease in fair value, reducing the estimated fair value of the receivable to $39.0 million at June 30, 2026, of which $19.2 million was classified as current and $19.8 million was classified as noncurrent.

On August 27, 2026, Lugano filed a preliminary Chapter 11 plan of liquidation (the “Plan”), including the settlement and the Company’s participation percentages in specified recoveries. The preliminary Plan established the Company’s right to 34.79% of specified net inventory, tax-refund and theft-policy insurance proceeds,45% of net proceeds from specified litigation against a designated third party and 25% of net proceeds from certain other litigation claims. The Bankruptcy Court confirmed the Plan on September 24, 2026, and the Plan became effective on September 30, 2026 (the “Effective Date”). On September 29, 2026, the Company received a $29.8 million Initial CODI Distribution, equal to 34.79% of Effective Date Cash and including the Company’s share of Lugano’s 2024 tax refund. The distribution was received one day before the Effective Date and reduced the receivable to $9.2 million.

On the Effective Date, the Liquidation Trust Agreement was executed, and the Company received a special beneficial interest in the Lugano Liquidation Trust (the “Special Beneficial Interest”) in satisfaction of the remaining CODI Secured Claim. The Special Beneficial Interest represents contractual rights to distributions under the Liquidation Trust Agreement rather than title to the Liquidation Trust’s assets. The Company derecognized the remaining bankruptcy receivable and recognized the Special Beneficial Interest as a new financial asset. The Plan also cancelled the Company’s zero-value Lugano equity interests, which the Company derecognized. The Company elected the fair value option under ASC 825 for the Special Beneficial Interest, with subsequent changes in fair value recognized in other income (expense), net.

At September 30, 2026, the Special Beneficial Interest had an estimated fair value of $9.5 million and was classified as a noncurrent asset in the condensed consolidated balance sheet based on management’s estimate of the timing of expected distributions. During the three months ended September 30, 2026, the Company remeasured the remaining receivable from $9.2 million to $9.5 million and recognized the $0.3 million increase in fair value in other income (expense), net. The Company then derecognized the receivable upon satisfaction of the CODI Secured Claim and recognized the Special Beneficial Interest at its $9.5 million initial fair value. The Level 3 measurement reflects the Company’s 34.79% share of estimated 2021–2023 tax refunds, net of applicable deductions and discounting. No value was ascribed to potential litigation or theft-policy insurance recoveries, the Company’s share of any released Effective Date reserves, or its right to residual proceeds after general unsecured claims are paid in full because of uncertainty regarding amounts, timing, coverage, costs and duration. The timing and amount of ultimate recoveries remain uncertain. Refer to "Note J - Fair Value Measurements" for additional information.

The following table summarizes Lugano's results of operations that are included in the Company's consolidated results of operations for the period from January 1, 2025 through September 30, 2025:

(1)The results of operations for the three and nine months ended September 30, 2025 exclude $17.1 million and $49.8 million, respectively, of intercompany interest expense which is eliminated in consolidation.

Note C — Revenue

The Company recognizes revenue when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services, and excludes any sales incentives or taxes collected from customers which are subsequently remitted to government authorities.

Disaggregated Revenue -The Company disaggregates revenue by operating segment and by geography for each strategic business unit which are categories that depict how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors. The disaggregation in the tables below reflects where revenue is earned based on the shipping address of our customers unless otherwise noted. This disaggregation also represents how the Company evaluates its financial performance, as well as how the Company communicates its financial performance to the investors and other users of its financial statements. Each strategic business unit represents one of the Company’s reportable segments and offers different products and services. During the second quarter of 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 disaggregation of revenue by reportable segment includes the results of Sterno’s food service business through the May 1, 2026 date of sale and the results of Rimports for all periods presented, including the three and nine months ended September 30, 2025 and 2026. The results of operations of Lugano are included in the Company's consolidated results of operations for the period from January 1, 2025 through November 16, 2025 and therefore in the disaggregation of revenue by reportable segment in the table below only for the three and nine months ended September 30, 2025.

The following tables provide disaggregation of revenue by reportable segment geography for the three and nine months ended September 30, 2026 and 2025 (in thousands):

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

Note D —Property, Plant and Equipment and Inventory

Property, plant and equipment

Property, plant and equipment is comprised of the following at September 30, 2026 and December 31, 2025(in thousands):

Depreciation expense was $10.3 million and $32.6 million for the three and nine months ended September 30, 2026 and $10.9 million and $34.2 million for the three and nine months ended September 30, 2025, respectively.

Inventory

Inventory is comprised of the following at September 30, 2026 and December 31, 2025(in thousands):

Note E — Goodwill and Other Intangible Assets

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

Goodwill

Annual Impairment Testing

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

2026 Annual Impairment Testing

For the Company’s annual goodwill impairment test as of March 31, 2026, the Company performed a qualitative assessment of its reporting units with goodwill balances to determine whether it was more-likely-than-not that the fair value of each reporting unit was less than its carrying amount. Based on this assessment, the Company concluded that it was more-likely-than-not that the fair value of each reporting unit exceeded its carrying amount, except the PrimaLoft reporting unit. As a result, the Company performed a quantitative goodwill impairment test for the PrimaLoft reporting unit.

The Company estimated the fair value of the PrimaLoft reporting unit using a combination of the income approach (discounted cash flow method) and the market approach (guideline company multiples). Significant assumptions used in the quantitative test included, among others, projected revenue growth, operating margins, the terminal growth rate and the discount rate, each of which reflects management’s best estimates based on historical performance, current market conditions and expectations of future operating performance. The discount rate used in the income approach was 13.4%. The quantitative test indicated that the fair value of the PrimaLoft reporting unit was less than its carrying amount; accordingly, the Company recorded a goodwill impairment charge of $20.5 million during the three months ended March 31, 2026, which is included in operating income/(loss) in the consolidated statements of operations.

2025 Annual Impairment Testing

For the Company's annual impairment testing at March 31, 2025, the Company performed a qualitative assessment of our reporting units with goodwill balances. The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of the reporting units tested except the PrimaLoft reporting unit exceeded their carrying value. Based on the Company's analysis, the Company determined that the PrimaLoft reporting unit required quantitative testing because we could not conclude that the fair value of this reporting unit significantly exceeded the carrying value based on qualitative factors alone. The Company performed a quantitative test of 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%.

2025 Interim Impairment Testing

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

The following is asummary of the net carrying amount of goodwill at September 30, 2026 and December 31, 2025,(in thousands):

(1) Comprised of accumulated goodwill impairment expense of $72.7 million at Velocity, $24.9 million at Arnold and $78.3 million at PrimaLoft.

The following is a reconciliation of the change in the carrying value of goodwill for the nine months ended September 30, 2026 by operating segment(in thousands):

(1) The Sterno food service product division was sold on May 1, 2026. The balance at September 30, 2026 represents the goodwill balance of the Rimports product division that remains after the sale of Sterno.

Long lived assets

Other intangible assets are comprised of the following at September 30, 2026 and December 31, 2025 (in thousands):

(1) Represents the indefinite-lived trade name related to the Sterno operating segment that was sold in May 2026.

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

Amortization expense related to intangible assets was $22.7 million and $68.2 million for the three and nine months ended September 30, 2026 and $23.3 million and $69.7 million for the three and nine months ended September 30, 2025, respectively.

Estimated charges to amortization expense of intangible assets for the remainder of 2026 and the next four years, are as follows(in thousands):

Interim long-lived asset impairment testing

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

Note F —Warranties

The Company’s BOA and Velocity Outdoor operating segments estimate their exposure to warranty claims based on both current and historical product sales data and warranty costs incurred. The Company assesses the adequacy of its recorded warranty liability quarterly and adjusts the amount as necessary. Warranty liability is included in accrued expenses in the accompanying consolidated balance sheets. A reconciliation of the change in the carrying value of the Company’s warranty liability for the nine months ended September 30, 2026 and the year ended December 31, 2025 is as follows (in thousands):

Note G —Debt

2022 Credit Facility

The LLC is party to a Third Amended and Restated Credit Agreement, dated July 12, 2022, as amended from time to time, which we refer to as the “2022 Credit Facility.” On August 6, 2026, the LLC entered into a Sixth Amendment to the 2022 Credit Facility (the “Sixth Amendment”) with Bank of America, N.A. (the “Administrative Agent”), in its capacity as administrative agent for the lenders, swing line lender, and L/C issuer. The Sixth Amendment, among other things, waived the milestone fees that otherwise would have been payable under the Fifth Amendment Transaction Letter, reduced the aggregate revolving commitments under the Credit Agreement from $100,000,000 to $54,000,000, and extended the maturity date to January 12, 2028. The Sixth Amendment also made several other changes to the Credit Agreement, including reducing the portion of Combined Eligible Availability that may be attributable to any individual subsidiary business from 40% to 25%, removing the Incremental Delayed Draw Term Loan facility, permitting Rimports Holdings, Inc., any other individual subsidiary business approved by the administrative agent, and their respective subsidiaries to enter into supply chain financing arrangements, and permitting the Company and its subsidiaries to pay fees under the Ninth Amended and Restated Management Services Agreement, dated July 12, 2026, between the Company and Compass Group Management LLC. In addition, the Sixth Amendment reduced the aggregate amount available under the incremental facilities from $250,000,000 to $150,000,000. Under the Sixth Amendment, the Company is required to maintain a Consolidated Total Leverage Ratio of no more than (a) 5.75 to 1.00 for the fiscal quarter ending September 30, 2026, (b) 5.25 to 1.00 for the fiscal quarters ending December 31, 2026 and March 31, 2027, (c) 5.00 to 1.00 for fiscal quarters ending June 30, 2027 and September 30, 2027 and (d) 4.50 to 1.00 for each fiscal quarter thereafter. If the Company has not repaid the term loans under the Credit Agreement on or before December 31, 2026, the Company will be required to pay a milestone fee in the amount of $4,000,000.

In October 2026, the Company used the $29.8 million distribution received in September 2026 in connection with the Lugano bankruptcy to repay a portion of the term loans under the 2022 Credit Facility.

At September 30, 2026, there were no revolving borrowings and approximately $1.0 million of outstanding letters of credit under the 2022 Credit Facility, resulting in net availability of approxima tely $53.0 million. Amounts outstanding under the 2022 Credit Facility mature on January 12, 2028.

Borrowings bear interest at either a base rate or Term SOFR, plus an applicable margin based on the Company’s Consolidated Total Leverage Ratio, which applicable margin ranges from 0.50% to 2.25% for borrowings bearing interest based on the base rate and from 1.50% to 3.25% for borrowings bearing interest based on Term SOFR. The 2022 Credit Facility is secured by substantially all assets of the Company, including equity interests in, and loans to, its consolidated subsidiaries, and contains customary affirmative and negative covenants, financial covenants, restrictions on certain restricted payments and management fee payments, enhanced reporting requirements, and requirements to use net cash proceeds from certain dispositions and deleveraging transactions to repay indebtedness.

Senior Notes

The Company has outstanding$1,029.4 million aggregate principal amount of 5.250% Senior Notes due April 15, 2029 (the “2029 Senior Notes”) and$308.8 million aggregate principal amount of 5.000% Senior Notes due January 15, 2032 (the “2032 Senior Notes”), which we refer to collectively as the “Senior Notes.” Interest on the 2029 Senior Notes is payable in cash semi-annually on April 15 and October 15 of each year, and interest on the 2032 Senior Notes is payable in cash semi-annually on January 15 and July 15 of each year. The outstanding principal amounts of the Senior Notes reflect paid-in-kind payments made in 2025 in connection with an indenture forbearance arrangement which was described in detail in the 2025 Form 10-K.

The Senior Notes rank equal in right of payment with all of the Company’s existing and future senior unsecured indebtedness and senior in right of payment to all of the Company’s future subordinated indebtedness, if any. The Senior Notes are effectively subordinated to the Company’s existing and future secured indebtedness, including indebtedness under the 2022 Credit Facility, to the extent of the value of the assets securing such indebtedness. The indentures governing the Senior Notes contain customary restrictive covenants, subject to certain exceptions, including limitations on the incurrence of additional indebtedness, restricted payments, transactions with affiliates, asset sales, mergers and consolidations, subsidiary guarantees, liens, sale-leaseback transactions and certain investments.

Lugano Financing Arrangements

Lugano entered into various financing arrangements with third parties that were not recorded in the financial statements of Lugano as debt. In connection with the Lugano Investigation, the Company determined that the inventory and sales transactions recorded in connection with these financing agreements were invalid because they were inconsistent with the underlying substance of the agreements. These financing arrangements represented debt and the financing arrangements and related interest expense were recorded in the consolidated financial statements. Interest expense was determined based on documentation related to the underlying arrangement or, when no documentation existed related to the financing arrangement, imputed based on various factors associated with the arrangement. Lugano recorded $20.8 million in interest expense in the nine months ended September 30, 2025 related to these financing arrangements which is included in interest expense in the consolidated statement of operations.

Covenants

The Company is subject to customary affirmative and restrictive covenants under the 2022 Credit Facility, including financial maintenance covenants. The following table reflects the financial covenant requirements and actual ratios as of September 30, 2026 under the 2022 Credit Facility, as amended by the Sixth Amendment:

As of September 30, 2026, the Company was in compliance with all covenants as defined by the 2022 Credit Facility, as amended.

The following table provides the Company’s outstanding long-term debt and effective interest rates at September 30, 2026 and December 31, 2025(in thousands):

The contractual annual maturities of the Company's debt obligations at September 30, 2026 are as follows (in thousands):

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

Debt Issuance Costs

Deferred debt issuance costs represent the costs incurred in connection with the Company's financing arrangements. Debt issuance costs associated with the revolving loan commitments under the 2022 Credit Facility are recorded in other non-current assets because the commitments are available under a revolving credit arrangement. Debt issuance costs associated with term loans under the 2022 Credit Facility and the Senior Notes are recorded as a reduction of the related debt balances.The Company recorded $1.7 million in deferred debt issuance costs related to the Sixth Amendment of the 2022 Credit Facility in the three months ended September 30, 2026. The Sixth Amendment to the 2022 Credit Facility 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 wrote-off a portion of the deferred financing costs associated with the 2022 Revolving Credit Facility and recognized $1.0 million in loss on debt modification in the third quarter of 2026.

The following table summarizes debt issuance costs at September 30, 2026 and December 31, 2025, and the balance sheet classification in each of the periods presented (in thousands):

Note H — Stockholders’ Equity

Trust Common Shares

The Trust is authorized to issue 500,000,000 Trust common shares and the LLC is authorized to issue a corresponding number of Trust common interests. The Company will at all times have the identical number of Trust interests outstanding as Trust shares. Each Trust share represents an undivided beneficial interest in the Trust, and each Trust share is entitled to one vote per share on any matter with respect to which members of the LLC are entitled to vote. At September 30, 2026, the Trust had 76,135,000 common shares issued and 75,236,000 common shares outstanding. The Company did not issue any common shares under its at-the-market equity programs during the three months ended September 30, 2026, and, as a result of the commencement of the Lugano Investigation and related events, the Company determined during the quarter ended June 30, 2025 that it was unable to continue offering and selling common shares under this program. The Company did not declare or pay any distributions on its common shares during the three months ended September 30, 2026, following the suspension of common share distributions in 2025.

Trust Preferred Shares

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

The Trust has outstanding 7.250% Series A Preferred Shares,7.875% Series B Preferred Shares and 7.875% Series C Preferred Shares, each representing beneficial interests in the Trust (collectively, the “Preferred Shares”). Each series of Preferred Shares has a liquidation preference of $25.00 per share. Distributions on the Series A Preferred Shares are discretionary and non-cumulative. When, and if declared by the Company's board of directors, distribution on the Series A Preferred Shares will be payable quarterly on January 30, April 30, July 30, and October 30 of each year, at a rate per annum of 7.250%. Distributions on the Series B Preferred Shares and Series C Preferred Shares are cumulative and, when and as declared by the Company’s board of directors, are also payable quarterly in arrears on January 30, April 30, July 30 and October 30 of each year. The Series B Preferred Shares bear distributions at a fixed rate of 7.875% per annum until April 30, 2028, after which the distribution rate will reset quarterly at a floating rate equal to the applicable successor to three-month LIBOR plus a spread of 4.985% per annum. Distributions on the Series C Preferred Shares are payable at a rate per annum of 7.875%.

At September 30, 2026, accumulated and unpaid distributions were approximately $2.5 million on the Series B Preferred Shares and approximately $2.6 million on the Series C Preferred Shares. The Series A Preferred Shares and Series C Preferred Shares are currently redeemable at the Company’s option, in whole or in part, and the Series B Preferred Shares are redeemable at the Company’s option, in whole or in part, on or after April 30, 2028, in each case at a redemption price of $25.00 per share plus any applicable declared or accumulated and unpaid distributions to, but excluding, the redemption date. The Preferred Shares are not convertible into Trust common shares and have no voting rights, except in limited circumstances as provided in the applicable share designations.

Unless full cumulative distributions on the Series B Preferred Shares and Series C Preferred Shares have been declared and paid or set apart for payment for all past distribution periods, the Company may not declare or pay distributions on the Trust common shares. In addition, if the Company’s board of directors does not declare a distribution on the Series A Preferred Shares for a quarterly distribution period, the Company may not declare or pay distributions on the Trust common shares during the remainder of that quarterly distribution period.

At-the-Market Equity Offering Program

In 2024, the Company established at-the-market equity offering program for the Preferred Shares. As a result of the commencement of the Lugano Investigation and related events, the Company determined during the quarter ended June 30, 2025 that it was unable to continue offering and selling its preferred shares under the Amended Preferred Sales Agreement. No preferred shares were sold during thethree and nine months ended September 30, 2026.

The following table reflects the activity in the preferred share ATM program during the nine months ended September 30, 2025(in thousands, except share data):

The Company incurred less than $0.1 million in total costs related to the preferred share ATM program during the nine months ended September 30, 2025.

Allocation Interests

The holder of the Allocation Interests ( the "Holder"), Sostratus LLC, is entitled to receive distributions pursuant to a profit allocation formula upon the occurrence of certain events. The profit allocation is payable upon the sale of a business (a "Sale Event") and, at the election of the Holder, during the 30-day period following the fifth anniversary of the date upon which the Company acquired a controlling interest in a business (a "Holding Event"). The Company records distributions of the profit allocation upon occurrence of a Sale Event or Holding Event as dividends declared on Allocation Interests within stockholders’ equity when approved by the Company’s board of directors.

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

The sale of the Sterno food service product division in the second quarter of 2026 was a Sale Event. Although the sale of Sterno resulted in the calculation of a positive profit allocation distribution, no amount will be paid to the Holder as a result of the sale of Sterno as the amount of profit allocation payment due was not sufficient to exceed the high water mark in the profit allocation formula.

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

The following table reconciles net income (loss) attributable to Holdings to net income (loss) attributable to the common shares of Holdings (in thousands):

Earnings per share

The Company calculates basic and diluted earnings per share using the two-class method which requires the Company to allocate to participating securities that have rights to earnings that otherwise would have been available only to Trust shareholders as a separate class of securities in calculating earnings per share. The Allocation Interests are considered participating securities that contain participating rights to receive profit allocations upon the occurrence of a Holding Event or Sale Event. The calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2026 and 2025 reflects the incremental increase during the period in the profit allocation distribution to Holder related to Holding Events.

Basic and diluted earnings per share for the three and nine months ended September 30, 2026 and 2025 attributable to the common shares of Holdings is calculated as follows(in thousands, except per share data):

Distributions

On May 27, 2025, the Company announced that it suspended the quarterly cash distribution historically paid to common shareholders. No common distributions were paid subsequent to April 24, 2025. The following table summarizes information related to our quarterly cash distributions on our Trust common and preferred shares (in thousands, except per share data):

(1) This distribution was declared on October 1, 2026.

Note I —Noncontrolling Interest

Noncontrolling interest represents the portion of the Company’s majority owned subsidiaries' net income (loss) and equity that is owned by noncontrolling shareholders. The following tables reflect the LLC’s ownership percentage of its majority owned operating segments and related noncontrolling interest balances as of September 30, 2026 and December 31, 2025:

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

(2) As of December 31, 2025, the Company owned approximately 98.4% of Sterno on a primary basis, inclusive of its indirect ownership interest in Rimports. In connection with the Rimports Distribution completed immediately prior to the sale of Sterno’s food service business, the Sterno stockholders, including holders of in-the-money Sterno equity awards, received their proportionate interests in Rimports. As a result, as of September 30, 2026, the Company continued to own approximately 93.3% of Rimports on a primary and fully diluted basis and consolidates Rimports in its condensed consolidated financial statements, with the remaining ownership interest reflected as noncontrolling interest. Following the May 1, 2026 sale, the Company no longer owns an equity interest in Sterno’s food service business.

(1) The noncontrolling interest balance at Rimports as of December 31, 2025 reflected the ownership interest in Sterno held by minority shareholders. In connection with the Rimports Distribution completed immediately prior to the May 1, 2026 sale of Sterno’s food service business, Sterno’s shareholders, received their proportionate interests in Rimports. Accordingly, the noncontrolling interest balance at September 30, 2026 primarily reflects the ownership interest in Rimports held by minority shareholders.

Note J —Fair Value Measurement

Recurring Fair Value Measurements

The following tables present, by level within the fair value hierarchy, the Company's financial assets and liabilities that are measured at fair value on a recurring basisas of September 30, 2026 or December 31, 2025 according to the valuation technique utilized to determine their fair values.

The Company had no assets or liabilities Level 3 fair value measurements during the nine months ended September 30, 2025. A reconciliation of the change in the carrying value of the Company's Level 3 fair value measurement during the nine months ended September 30, 2026 is as follows:

Valuation Techniques

During the quarter, the Company began applying a new valuation technique to measure the fair value of the Special Beneficial Interest recognized in connection with the Lugano liquidation. The Company did not change the valuation techniques used to measure any of its other financial assets and liabilities during the period. For details of the Company’s fair value measurement policies under the fair value hierarchy, refer to the 2025 Form 10-K.

In connection with the recognition of the Special Beneficial Interest during the period, the fair value of the Special Beneficial Interest was estimated using an expected cash flow approach based on the Company’s contractual participation percentages and management’s estimates of the timing and amount of expected net proceeds from specified tax refunds. The significant unobservable inputs include the estimated amount and timing of the tax-refund recoveries, applicable deductions and discounting. Because these inputs are not observable in the market, the Special Beneficial Interest is classified within Level 3 of the fair value hierarchy. No value was ascribed to potential litigation rights because of the expected cost and duration of pursuing them and the priority of trust expenses. No value was ascribed to theft-policy insurance recoveries because coverage is uncertain and any recovery would likely require a coverage dispute with the insurers, with cost and duration similar to the litigation rights. No value was ascribed to the Company’s share of any released Effective Date reserves or to its right to residual proceeds after general unsecured claims are paid in full because of uncertainty regarding amount and timing. Accordingly, the September 30, 2026 fair-value measurement reflects the Company’s 34.79% share of estimated 2021–2023 tax refunds, net of applicable deductions and discounting.

Nonrecurring Fair Value Measurements

The following table provides the assets and liabilities carried at fair value measured on a non-recurring basis as of September 30, 2026 and December 31, 2025. Refer to"Note E - Goodwill and Intangible Assets", for a description of the valuation techniques used to determine fair value of the assets measured on a non-recurring basis in the tables below.

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

Note K —Income taxes

The Company estimates its annual effective tax rate each fiscal quarter and applies that estimated rate to its interimpre-tax earnings. In this regard, the Company reflects the full year’s estimated tax impact of certain unusual or infrequently occurring items and the effects of changes in tax laws or rates in the interim period in which they occur. The Company's parent, the Trust, is subject to entity-level U.S. federal, state and local corporate income taxes on the Company's earnings that flow through to the Trust.

The computation of the annual estimated effective tax rate for each interim period requires certain assumptions, estimates, and significant judgment, including with respect to the projected operating income for the year, projections of income earned and taxes incurred in various jurisdictions, permanent and temporary differences and the likelihood of recovering deferred tax assets. The accounting estimates used to compute the provision for income taxes may change as new events occur, as additional information is obtained, as our tax structure changes or as the tax laws change. Certain foreign operations are subject to foreign income taxation under existing provisions of the laws of those jurisdictions.

The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. The Company accrues interest on all cumulative unrecognized tax benefits, reflecting financial exposure that spans both historical tax years and the current reporting period. During the current year, the Company identified that interest associated with certain previously recognized uncertain tax positions had not been accrued in prior reporting periods. The Company recorded approximately $6.2 million of additional accrued interest during the nine months ended September 30, 2026, substantially all of which relates to prior years. Management concluded that the adjustment was not material to any previously issued financial statements and, accordingly, recorded the adjustment as a component of income tax expense during the current year.

The reconciliation between the Federal Statutory Rate and the effective income tax rate for the nine months ended September 30, 2026 and 2025 is as follows:

Note L —Defined Benefit Plan

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

The unfunded liability of $2.7 million is recognized in the consolidated balance sheet as a component of other non-current liabilities at September 30, 2026. Net periodic benefit cost consists of the following for the three and nine months ended September 30, 2026 and 2025 (in thousands):

During the nine months ended September 30, 2026, per the terms of the pension agreement, Arnold contributed approximately $0.5 million to the plan. For the remainder of 2026, the expected contribution to theplan will be approximately $0.2 million.

The plan assets are pooled with assets of other participating employers and arenot separable; therefore, the fair values of the pension plan assets at September 30, 2026 were considered Level 3.

Note M - Commitments and Contingencies

Legal Matters

The Company and its subsidiaries are subject to legal proceedings and claims that arise in the ordinary course of business. The Company accrues a liability for a loss contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. For material loss contingencies that are reasonably possible or for which the amount of loss cannot be reasonably estimated, the Company discloses the nature of the contingency. The Lugano Investigation, the restatement of the Company’s previously issued consolidated financial statements and related matters may result in additional litigation, regulatory investigations and liabilities in future periods.

Securities Class Actions Involving the Company

Following the Company’s announcement of the Lugano Investigation and restatement, several putative securities class actions were filed against the Company and certain of its officers and directors. The previously filed California actions were consolidated and later voluntarily dismissed so that the lead plaintiff could pursue its claims in the United States District Court for the District of Connecticut. The Connecticut action, originally captioned Moreno v. Compass Diversified Holdings LLC, et al., now known as In Re Compass Diversified Holdings Securities Litigation, asserts claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5. The lead plaintiff filed an amended complaint on February 6, 2026, and the defendants filed motions to dismiss on March 23, 2026. All motions are fully briefed. The Company believes it has defenses available and intends to vigorously defend the action. Management has determined that a loss is reasonably possible but cannot reasonably estimate a range of potential loss.

Derivative Actions Involving the Company

Several shareholder derivative actions have been filed, purportedly on behalf of the Company, against certain current and former officers and directors. The derivative actions generally assert claims for breach of fiduciary duty and violations of the federal securities laws based on allegations related to Lugano and the restatement. The California derivative actions have been consolidated and stayed, and the Connecticut derivative actions have been consolidated and stayed, in each case pending further developments in the securities class action. A derivative action was also recently filed in Delaware Chancery Court. All derivative actions are in the early stages. The Company believes defenses are available and intends to vigorously defend these matters. Management has determined that a loss is reasonably possible but cannot reasonably estimate a range of potential loss.

External Investigations and Reviews

As a result of the Company’s withdrawal of reliance on its 2024, 2023 and 2022 financial statements, delayed periodic reporting and the underlying conduct at Lugano, the Company is subject to ongoing investigations by the SEC and the U.S. Department of Justice. The investigative process is inherently uncertain, and the Company cannot predict the outcome of these investigations. The Company is cooperating with the ongoing investigations.

Management has determined that a loss is reasonably possible but cannot reasonably estimate a range of potential loss.

State Court Action Naming the Company as Defendant

Certain state court actions previously filed attempting to hold the Company responsible for the alleged conduct of Lugano, including Kraus v. Lugano Diamonds & Jewelry, Inc., et al., and Royal T Diamonds Group Ltd. v. Lugano Diamonds & Jewelry Inc., et al., have been dismissed. A similar case, Coyne v. Mordechai Haim Ferder, et al., was recently filed. Plaintiff seeks damages, plus interest, against the Company as the alleged successor in interest to Lugano. The Company believes defenses are available and intends to vigorously defend this matter. Management has determined that a loss is reasonably possible but cannot reasonably estimate a range of possible loss, if any, that may result from this matter.

Lugano Chapter 11 Filing and Related Matters

On November 16, 2025, Lugano and certain of its subsidiaries filed voluntary Chapter 11 petitions under the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. As a result, Lugano was deconsolidated from the Company’s consolidated financial statements. On June 24, 2026, CODI entered into the Settlement Agreement and Plan Support Agreement described in Note B. The Bankruptcy Court confirmed the Plan of Liquidation on September 24, 2026, and the Plan became effective on September 30, 2026. The Settlement Agreement and applicable release provisions became effective in accordance with their terms. The releases are subject to the scope, conditions and exclusions set forth in the Settlement Documents, the Plan and the order confirming the Plan. The timing and amount of remaining recoveries are uncertain, and third parties not bound by the releases may assert claims against the Company. Such claims could result in significant defense costs, settlement payments or judgments.

Tariff Refunds

In February 2026, the U.S. Supreme Court issued a decision holding that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were not authorized under the statute. As a result, the legal and regulatory framework surrounding certain IEEPA tariffs continues to evolve, including the process for seeking potential refunds of previously paid tariffs. Several of the Company's subsidiaries submitted claims for refunds related to previously paid tariffs. During the three and nine months ended September 30, 2026, the Company recognized $6.9 million and $14.4 million, respectively, as a reduction of cost of goods sold in the consolidated statement of operations related to IEEPA refunds received. An additional $1.8 million in tariff refunds received reduced the balance of inventory for product that had not yet been sold. Our subsidiaries have submitted additional claims for refunds related to certain eligible tariffs paid; however, based on claims submitted and information currently available, the Company does not expect any remaining refunds to be material to its consolidated financial statements. At September 30, 2026, the Company had not recognized a receivable for these additional refund claims because recovery remained uncertain. The Company will continue to monitor developments and recognize a receivable when amounts are realized or realizable.

Leases

The Company and its subsidiaries lease office and manufacturing facilities, computer equipment and software under various arrangements. Certain of the leases are subject to escalation clauses and renewal periods. The Company and its subsidiaries recognize lease expense, including predetermined fixed escalations, on a straight-line basis over the initial term of the lease including reasonably assured renewal periods from the time that the Company and its subsidiaries control the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Certain of our subsidiaries have leases that contain both fixed rent costs and variable rent costs based on achievement of certain operating metrics. The variable lease expense was not a material component of our total lease expense for the three and nine months ended September 30, 2026 and 2025. The Company recognized $12.2 million and $36.6 million in the three and nine months ended September 30, 2026, respectively and $13.6 million and $39.9 million in the three and nine months ended September 30, 2025, respectively, in expense related to operating leases in the condensed consolidated statements of operations. The Company entered into one finance lease in the fourth quarter of 2024. In both the three and nine months ended September 30, 2026 and September 30, 2025 the Company recognized $0.2 million and $0.5 million, respectively, in interest expense related to its finance lease.

The maturities of lease liabilities at September 30, 2026 are as follows (in thousands):

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

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

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

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

Altor Sale Leaseback

On January 23, 2026, Altor completed a sale leaseback transaction for its manufacturing facilities in Bloomsburg, Pennsylvania; New Albany, Indiana; and El Dorado Springs, Missouri (the “Properties”). Under the purchase and sale agreement, Altor sold the land, buildings and certain integrated fixtures to the buyer/lessor for total consideration of $11.75 million and recognized a gain on the transaction of $10.2 million in other operating income (expense) from continuing operations in the nine months ended September 30, 2026. Concurrently with the execution of the purchase and sale agreement, Altor entered into a 20 year triple-net master lease to lease back all three Properties.

Accounting for the transaction is governed by ASC 842, Leases. Under ASC 842, a sale leaseback is accounted for as a sale and a lease only if the transfer of the Properties qualifies as a sale in accordance with ASC 606, including that control of the Properties transferred to the buyer/lessor and the leaseback does not include (among other things) a repurchase option or other provisions that would prevent the transfer from being accounted for as a sale. When a sale is achieved, the seller-lessee derecognizes the carrying amount of the Properties, recognizes any resulting gain or loss, and recognizes a right-of-use asset and lease liability for the leaseback measured in accordance with ASC 842. Altor determined that the sale leaseback transaction qualified as a sale under ASC 606 and accordingly recognized a gain and recognized a right-of-use asset and lease liability for the leaseback.

For the leaseback, Altor will recognize lease expense generally on a straight-line basis over the lease term, and the related lease payments will be presented within operating cash flows. Because the lease is a triple-net lease, Altor is generally responsible for certain costs associated with the Properties, such as real estate taxes, insurance and maintenance; amounts paid for these items are generally excluded from the measurement of the lease liability when they represent non-lease components or variable payments, and are recognized in expense as incurred.

Exit Costs

Altor

Subsequent to the acquisition of Lifoam in October 2024, Altor determined that they would shut down four of their facilities that had geographic overlap with Lifoam facilities. During the nine months ended September 30, 2025, Altor recorded approximately $4.6 million in exit costs related to the plant closures in selling general and administrative expense. The plant closures were finalized in the fourth quarter of 2025 and no additional expense was recorded subsequent to the first quarter of 2026 related to these facilities closures.

Arnold

During 2026, Arnold closed a facility in Ogallala, Nebraska. Arnold recorded $0.3 million in costs in selling, general and administrative expense during the three and nine months ended September 30, 2026 related to the closure of the facility.

During 2024, Arnold relocated two of its facilities located in Marengo, Illinois into one combined facility in Woodstock, Illinois. Arnold recorded $0.9 million in costsin selling, general and administrative expensein the three months ended March 31, 2025 related to the relocation of the two facilities. The exit from the Marengo facility was completed during 2025.

Note N —Related Party Transactions

Management Services Agreement

The LLC entered into a MSA with CGM effective May 16, 2006, as amended. CGM is managed by Wayfinder Partners LLC, of which Zachary T. Sawtelle, the Company’s Chief Operating Officer, is the managing member. Elias J. Sabo, the Company’s Chief Executive Officer, is also a member of CGM. The MSA provides for, among other things, CGM to perform services for the LLC in exchange for a management fee. The management fee is required to be paid prior to the payment of any distributions to shareholders.

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

Amendments to Management Services Agreement

On February 23, 2026, the LLC and CGM entered into an Eighth Amended and Restated Management Services Agreement (the “Eighth MSA”), which amended and restated the MSA. The Eighth MSA, among other things, (i) established a repayment protocol for previously overpaid management fees, including permitting the Company, subject to interest, to fund all or a portion of otherwise payable quarterly fees while an overpayment balance remains outstanding, (ii) provided for a dollar-for-dollar reduction of fees payable under the MSA for certain services outsourced by the Company to third-party service providers and excludes such services from the scope of services to be provided by CGM, (iii) clarified requirements and restrictions applicable to personnel seconded by CGM to the Company, and (iv) updated certain operational, governance, authority and indemnification provisions.

On July 12, 2026, the LLC and CGM entered into the Ninth Amended and Restated Management Services Agreement (the “Ninth MSA”), which became effective upon execution and amends and restates the Eighth MSA. The Ninth MSArevises the Company’s management fee and incentive compensation arrangements with CGM. Thefeeand incentive-award provisions described below become effective January 1, 2027 and thefee provisions of the Eighth MSA remain in effect through December 31, 2026.

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.

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.

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.

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.

Effect of Restatement on Management Fees

As a result of the restatement of the financial statements as of December 31, 2024, 2023 and 2022 and for the years ended December 31, 2024, 2023 and 2022, as well as for the period ended December 31, 2021 and revisions made in the quarter ended March 31, 2025, the management fees paid to CGM were in excess of the amounts that should have been due under the MSA. While the MSA did not, prior to the MSA Amendment, contain an express mechanism that permitted the Company to immediately clawback the overpayment of management fees during the aforementioned periods, 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 calculated the total aggregate amount of excess management fees paid as a result of the restatement of the financial statements as$50.4 million. In 2025, restrictions under the Company’sfinancing arrangements limited the Company’s ability to pay management fees, resulting in management fee expense being incurred but not fully paid. The Company determined that theamount ofmanagement fees that had been overpaid at December 31, 2025 was$33.8 million, which was recorded as an asset (“Due from CGM”) and reduced management fee expense for the year ended December 31, 2025. For the nine months ended September 30, 2026, the Company recorded management fee expense of $43.4 million. During the nine months ended September 30, 2026, the Company reduced the Due from CGM balance by $20.8 million for management fees applied against the prior overpayment by reducing the management fee due to CGM. As of September 30, 2026, the Due from CGM balance of$1.3 million reflects amounts due from CGM of $13.8 million including interest expense in accordance with the Eighth MSA Amendment, net of management fees accrued of $12.5 million. Subsequent to September 30, 2026, the Company elected to fund $5.2 million of the quarterly management fee that otherwise would have been payable for the third quarter of 2026.

The Company expects to continue to reduce future management fee payments until the overpayment has been fully recouped. 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.

LLC Agreement

The LLC agreement gives the Holder the right to distributions pursuant to a profit allocation formula upon the occurrence of a Sale Event or a Holding Event. The Holder is entitled to receive and as such can elect to receive, if due pursuant to the profit allocation formula, an allocation payment upon a Sale Event and upon election of the Holders upon a Holding Event. The Lugano Bankruptcy was a Sale Event and any corresponding loss on such Sale Event will have the effect of reducing future allocation payments. The LLC Agreement also contains a mechanism to adjust future profit allocation payments by over-paid and under-paid profit distributions. The Company intends to cause future allocation payments to be adjusted, as necessary, to reflect the impact of the restatement of the Company’s financial statements.

The sale of the Sterno food service product division in the second quarter of 2026 was a Sale Event. Although the sale of Sterno resulted in the calculation of a positive profit allocation distribution, no amount will paid to the Holder as a result of the sale of Sterno as the amount of profit allocation payment due was not sufficient to exceed the high water mark in the profit allocation formula.

Integration Services

During the three months ended March 31, 2025, The Honey Pot Co., paid CGM $0.9 million in integration service fees under an integration services agreement that has since been fully paid. An amendment to the Management Services Agreement entered into in January 2025 eliminated integration service fees for future acquisitions therefore no integration service fees were incurred subsequent to March 31, 2025.

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

5.11

Related Party Vendor Purchases -5.11 purchases inventory from a vendor who is a related party to 5.11 through one of the executive officers of 5.11 via the executive's 40% ownership interest in the vendor. 5.11 purchased approximately $0.3 million and $0.5 million during the three and nine months ended September 30, 2026, respectively and $0.3 million and $0.8 million during the three and nine months ended September 30, 2025, respectively in inventory from the vendor.

BOA

Related Party Vendor Purchases -A contract manufacturer used by BOA as the primary supplier of molded injection parts is a noncontrolling shareholder of BOA. BOA purchased approxim ately $13.1 million and $37.1 million from this supplier during the three and nine months ended September 30, 2026, respectively and $10.1 million and $33.2 million from this supplier during the three and nine months ended September 30, 2025, respectively.

Lugano

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

Related Party Vendor Purchases -Lugano purchased inventory from a vendor who was a related party to Lugano through one of the executive officers of Lugano. The related party relationship commenced in the second quarter of 2024 and ended in the fourth quarter of 2025. Lugano had approximately $18.0 thousand and $0.3 million in net purchases during the three and nine months ended September 30, 2025, respectively.

Note O —Operating Segment Data

At September 30, 2026, the Company hadeight reportable operating segments. Each operating segment represents a platform acquisition. The Company’s operating segments are strategic business units that offer different products and services. While each is actively managed by the Company, they are managed separately because each business requires different technology and marketing strategies. A description of each of the reportable segments and the types of products from which each segment derives its revenues is as follows:

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

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

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

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

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

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

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

•Rimports manufactures and distributes branded and private label wickless candle products used for home decor and fragrance systems under the ScentSationals and Fusion brands. Rimports offers unique lines of wickless candle products including ceramic wax warmers, scented wax cubes, fragrance oils, essential oils, and diffusers. Rimports also sells flameless candles, lanterns, and outdoor lighting. Rimports was acquired by Sterno in February 2018 and is headquartered in Provo, Utah.

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

The tabular information that follows shows data for each of the operating segments reconciled to amounts reflected in the consolidated financial statements. The operations of each of the operating segments are included in consolidated operating results as of their date of acquisition. During the second quarter of 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. The December 31, 2025 balance sheet disclosures include Sterno’s food service business prior to the sale and distribution of Rimports. The results of Sterno’s food service business through the date of sale and the results of Rimports for all periods presented are included in continuing operations and reflected in the operating segment data, as applicable. Lugano was an operating segment of the Company until November 16, 2025 when Lugano filed for bankruptcy and was deconsolidated. The results of operation of Lugano are included in the Summary of Operating Segments table and the Depreciation and Amortization table for the three and nine months ended September 30, 2025. Segment profit is determined based on internal performance measures used by the CODM to assess the performance of each business. The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. In comparison to the Consolidated Statement of Operations, selling, general and administrative expense is exclusive of stock-based compensation and acquisition costs, which are categorized to Other. Corporate consists of corporate overhead and management fees to CGM that are not allocated to the Company's reportable segments. There were no significant inter-segment transactions.

Summary of Operating Segments

(1) Other consists of segment allocated management fees, amortization expense of intangible assets and stock-based compensation expense.

(1) Other consists of segment allocated management fees, amortization expense of intangible assets, and stock-based compensation.

(1) Other consists of segment allocated management fees, amortization expense of intangible assets, stock-based compensation, other operating (income) expense and impairment expense at PrimaLoft of $20.5 million.

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

(1)Does not include accounts receivable balances per schedule above or goodwill balances - refer to Note E - "Goodwill and Other Intangible Assets".