Compass Diversified Inc. (CODI) reported sales grew 22.3 percent at BOA and 25.2 percent at PrimaLoft to lead the gains among its active lifestyle brands.

At BOA, sales reached $45.6 million against $37.3 million a year ago. Non-GAAP adjusted EBITDA for BOA reached $17.1 million against $13.2 million a year ago, representing a gain of 28.4 percent.

PrimaLoft’s sales reached $13.7 million compared with $10.9 million a year ago. Non-GAAP adjusted EBITDA for PrimaLoft slightly more than doubled to $10.9 million from $4.05 million.

Sales at 5.11, the tactical brand, in the third quarter grew 3.0 percent to $139.2 million from $135.2 million a year ago. Non-GAAP adjusted EBITDA reached $21.0 million, up slightly from $20.2 million a year ago.

Velocity Outdoor’s sales declined 47.1 percent to $28.8 million from $54.5 million, reflecting the sale of Crosman Corp., its airgun product division, to Daisy Manufacturing Company. Non-GAAP adjusted EBITDA fell 59.0 percent to $3.1 million from $7.5 million.

CODI’s net sales were up 11.8 percent in the quarter to $582.6 million and up 6.6 percent on a pro forma basis. The gains were driven by the acquisition of The Honey Pot Co. in January 2024 and continued strong sales growth at Lugano and BOA. On a pro forma basis, assuming CODI had acquired The Honey Pot Co. on January 1, 2023, net sales were up 6.6 percent.

Branded Consumer net sales rose 9.2 percent on a pro forma basis to $399.2 million. CODI’s consumer brands include 5.11, BOA, Ergobaby, Lugano, PrimaLoft, THP (The Honey Pot) and Velocity Outdoor.

Industrial net sales increased 1.2 percent to $183.4 million. Industrial brands include Altor Arnold and Sterno.

Operating income for the third quarter of 2024 was $70.3 million compared to $17.4 million in the third quarter of 2023. Operating income in the third quarter of 2024 reflected higher gross profit at the company’s Branded Consumer businesses, offset by increased SG&A and amortization expense from the acquisition of The Honey Pot Co. in the first quarter of 2024.

Income from continuing operations in the third quarter of 2024 was $31.5 million compared to a loss from continuing operations of $14.0 million in the third quarter of 2023, primarily driven by strong growth at Lugano and BOA and the company’s acquisition of The Honey Pot Co. in January 2024. In the prior year, the company recognized an impairment charge of $32.6 million at Velocity that drove the loss in the third quarter.

Net income came to $31.5 million against a net loss of $3.8 million. Adjusted Earnings, a non-GAAP financial measure, surged 65 percent to $48.7 million from $29.6 million.

Adjusted EBITDA, a non-GAAP financial measure, was up 28 percent to $114.0 million versus $89.0 million a year ago. The increase was primarily due to strong results at Lugano and BOA, and the addition of The Honey Pot Co. in the first quarter of 2024. Management fees incurred during the third quarter were $18.8 million.

“Despite a dynamic macroeconomic environment, we had another great quarter,” said Elias Sabo, CEO of Compass Diversified. “Our differentiated business model and strong operating companies position us to create long-term value for all stakeholders. In the third quarter, we saw double-digit sales growth driven by continued demand in our Branded Consumer businesses. Our Industrial businesses are stabilizing and delivered low single-digit growth in the quarter. Given our momentum, we are raising our 2024 outlook and believe we are well positioned for growth in 2025 and beyond.”

Business Highlights

  • On October 24, 2024, CODI paid a third quarter 2024 cash distribution of $0.25 per share on its common shares.
  • On October 16, 2024, CODI announced a $100 million share repurchase program through December 31, 2024, subject to extension by the company’s board.
  • On October 1, 2024, Altor Solutions, a subsidiary of CODI and a leading designer and manufacturer of custom protective and cold-chain packaging solutions for the industrial and life sciences markets, completed the acquisition of Lifoam Industries, a manufacturer and distributor of temperature-controlled shipping solutions.
  • On August 26, 2024, CODI announced the appointment of Stephen Keller as Chief Financial Officer.

Liquidity and Capital Resources

  • As of September 30, 2024, CODI had approximately $71.9 million in cash and cash equivalents, $110 million outstanding on its revolver, $377.5 million outstanding in term loans, $1 billion outstanding in 5.250 percent Senior Notes due 2029 and $300 million outstanding in 5.000 percent Senior Notes due 2032.
  • As of September 30, 2024, the company had no significant debt maturities until 2027 and had net borrowing availability of approximately $486.6 million under its revolving credit facility.

Image courtesy BOA