Compass Diversified, Inc. saw revnue growth in the double-digits in the second quarter across its active-lifestyle businesses, including BOA, Primaloft, 5.11, and Velocity Outdoor. Overall profitability also saw a strong uptick, although overall sales fell due to weakness in its industrial businesses.

“In the second quarter, our subsidiaries delivered strong operating performance and cash flow,” said Elias Sabo, CEO, Compass Diversified. “We took concrete actions to strengthen our balance sheet, including selling Sterno’s Food Service Business at an attractive valuation and applying more than $280 million of proceeds to debt reduction. We also amended our Management Services Agreement to lower expected fees and increase alignment with shareholders by tying more of the Manager’s compensation to shareholder returns and operating performance.”

“Our performance was broad-based, with Adjusted EBITDA growth across our Branded Consumer businesses and at Arnold,” added Zach Sawtelle, chief operating officer, Compass Diversified. “BOA, PrimaLoft and The Honey Pot were each up more than 25 percent year-over-year, and Arnold was a standout, up nearly 50 percent. 5.11 expanded margins despite a softer top line.”

Sawtelle continued, “Our work is not done. Our shares trade at what we believe is a meaningful discount to intrinsic value, and we remain focused on closing that gap. Our near-term priorities are straightforward: drive profitable growth, pursue divestitures where we can realize attractive value, further reduce debt and, when appropriate, efficiently return capital to shareholders. We are moving with urgency and discipline to realize value for shareholders.”

Financial Summary – GAAP Results
Year-over-year GAAP comparisons reflect the operating results of Lugano and a full quarter of Sterno’s Food Service Business in the 2025 period, versus the 2026 period, which excludes Lugano’s operating results (following its deconsolidation in connection with its bankruptcy proceedings) and includes the Food Service Business through its May 1 sale date.

Q2 2026 vs Q2 2025 (GAAP)

  • Net revenues were $424.0 million, down 11.4 percent vs Q2 2025
  • Net income from continuing operations: $81.9 million vs net loss from continuing operations of $80.8 million in Q2 2025
  • Net income attributable to Holdings: $81.1 million, or $0.86 per common share, vs. a net loss of $51.2 million, or $(0.88) per common share
  • Cash provided by operating activities: $29.7 million, vs. cash used of $35.2 million
  • Q2 2026 results included a $182.3 million gain on the sale of Sterno’s Food Service Business and a $58.0 million reduction in the fair value of CODI’s receivable from Lugano.

Subsidiary Performance Q2 2026 vs Q2 2025 (Non-GAAP)

Subsidiary Net Sales were $410.6 million, approximately flat vs. Q2 2025. Among Active Lifestyle brands, sales at 5.11 declined 3.8 percent to $126.5 million, BOA grew 22.1 percent to $59.1 million, Primaloft gained 19.7 percent to $29.7 million and Velocity Outdoor increased 12.4 percent to $17.1 million. Velocity Outdoor includes Ravin Crossbows, Crosman, Benjamin, CenterPoint Archery and Optics, LaserMax, and Game Face Airsoft.

Branded Consumer: $270.8 million, up 7.2 percent

Subsidiary Adjusted EBITDA was $91.5 million, up 12.6 percent vs. Q2 2025. Branded Consumer: $69.3 million, up 24.2 percent.

Key Business Updates
During and subsequent to the quarter, CODI:

  • Completed the sale of Sterno’s Food Service Business and applied more than $280 million of the proceeds to senior secured term loan debt.
  • Amended its Management Services Agreement to reduce expected management fees beginning in 2027 and further strengthen shareholder alignment.
  • Amended its senior credit facility to extend the maturity of its term loan and revolving commitments, providing financial flexibility.
  • Announced a settlement to facilitate the orderly liquidation of Lugano’s assets.
  • Announced that Elias Sabo will retire as Chief Executive Officer on December 31, 2026, and appointed Zach Sawtelle Chief Operating Officer and named him CEO successor.

Liquidity and Capital Resources
As of June 30, 2026, CODI had approximately $87.4 million in cash and cash equivalents and approximately $97 million in revolver availability. Total debt was $1,592.3 million, compared with $1,890.7 million as of December 31, 2025.

CODI’s leverage ratio for debt covenant purposes was approximately 4.8x as of June 30, 2026, down from 5.3x as of March 31, 2026, and senior secured net leverage was 0.66x as of June 30.

Subsequent to quarter-end, CODI amended its senior credit facility to extend all outstanding term loan borrowings and its revolving commitments to January 12, 2028, and to reduce aggregate revolving commitments from $100.0 million to $54.0 million.

2026 Outlook
CODI is maintaining its fiscal 2026 total Subsidiary Adjusted EBITDA outlook of $320 million to $365 million.

The outlook includes approximately $9 million of Adjusted EBITDA generated by the Sterno Food Service Business through its May 1, 2026 sale date. That contribution will be reflected in CODI’s reported full-year results but will not recur following the sale.

CODI’s outlook reflects higher expectations for the Branded Consumer businesses and lower expectations for the Industrial businesses relative to prior guidance.

Image courtesy Scarpa / BOA