Compass Diversified (CODI) reported financial results for the second quarter ended June 30, 2025, showing gains at 5.11 helped offset declines at BOA, PrimaLoft and Velocity Outdoor in its Branded Consumer segment.
CODI suspended the reporting of its financial results starting in the first quarter of this year due to accounting irregularities and fraud discovered at its Lugano Diamonds subsidiary. On December 8, the owner of middle-market branded consumer and industrial businesses said it completed the restatement process and filed its restated financial results for fiscal years 2022, 2023 and 2024. On December 18, it filed its first-quarter report and promised to report its second- and third-quarter results in the following weeks.
CODI, in its latest media release, reiterated its expectation for full-year 2025 subsidiary adjusted EBITDA of $330 million to $360 million, excluding Lugano.
Sales for the second quarter in the three months ended June 30 reached $478.7 million against $426.7 million a year ago, a gain of 12.2 percent.
The operating loss was $27.7 million, compared with operating earnings of $7.5 million a year ago. The latest quarter includes an impairment charge of $31.5 million related to Lugano. Excluding the charge, operating income was down 42.8 percent to $4.3 million.
The net loss in the quarter was $78.0 million against a loss of $103.1 million. The year-ago quarter included a $24.6 million loss on the sale of Crosman and a $40.6 million loss in expenses tied to the Lugano reinstatements.
Adjusted EBITDA improved 4.1 percent to $92.1 million from $88.4 million.
Among its subsidiaries in the Branded Consumer segment, sales at 5.11 rose 6.7 percent to $131.4 million in the second quarter. Adjusted EBITDA declined 6.3 percent to $1.5.8 million.
CODI in its 10-Q filing attributed the sales increase at 5.11 primarily to $5.0 million increase in domestic wholesale sales, reflecting strong demand and improved inventory levels; a $3.6 million increase in direct-to-consumer sales, attributable to higher full-price sales of new products; and a $1.6 million increase in international sales, also driven by strong demand. These increases were partially offset by a decrease in direct-to-agency sales, primarily due to the timing of large contracts. The decrease in segment operating income at 5.11 reflected higher net sales and gross margin dollars that were more than offset by increased selling, general and administrative expenses, primarily driven by non-recurring payroll costs associated with restructuring, higher performance-based bonuses, and increased marketing investments to support sales growth.
Sales at BOA fell 10.7 percent to $48.4 million. Adjusted EBITDA dropped 11.4 percent to $20.5 million.
CODI attributed the decline in BOA’s sales to reduced kids-based business in China, partially offset by continued growth in performance-based business in Snow Sports, Cycling, and Workwear. The decrease in segment operating income was driven by lower sales, partially offset by improved product margins and reduced employee costs related to BOA’s bonus plan.
PrimaLoft’s sales in the second quarter slid 1.7 percent to $24.9 million. Adjusted EBITDA dipped 2.6 percent to $10.7 million from $11.1 million.
CODI blamed PrimaLoft’s sales decrease on a “pullback in orders from PrimaLoft’s brand partners as they remain cautious due to the economic uncertainties from the evolving tariff policy in the United States.” The lower earnings were attributed to an increase in selling, general and administrative expense, with increases in employee compensation, rent and marketing costs versus the comparable quarter in the prior year.
Velocity Outdoors sales fell 18.7 percent to $15.2 million, reflecting the sale of Crosman. The segment’s remaining products, which includes Ravin crossbows, CenterPoint archery products and hunting and casual apparel under the King’s Camo brand, increased compared to the same period in 2024 due to increased archery sales through big box retailers and dealer channels and improved online sales of apparel.
Adjusted EBITDA at Velocity Outdoors reached $470,000, up from $242,000 a year ago. CODI said that despite an improvement in gross margin percentage quarter over quarter a its Velocity Outdoor business attributable to the sale of the Crosman product line, the decrease in net sales led to a decrease in both gross profit and operating expense leverage, with gross profit of $5.0 million in the second quarter of 2025 as compared to $5.6 million in the second quarter of 2024, and selling, general and administrative expense as a percentage of net sales of 29.9 percent in the second quarter of 2025 as compared to 31.3 percent in the second quarter of 2024.
Lugano’s sales totaled $26.8 million against $12.0 million a year ago. Adjusted EBITDA was a negative $13.7 million against a negative $16.4 million a year ago.
The Honey Pot’s sales rose to $32.8 million, up from $24.2 million. Adjusted EBITDA amounted to $8.2 million versus $4.2 million a year ago.
In its Niche Industrial brands segment, Altor Solutions’ sales jumped to $83.3 million from $52.2 million. Adjusted EBITDA improved to $15.8 million from $9.4 million.’
Arnold Magnetics’ sales declined to $38.4 million from $43.2 million. Adjusted EBITDA fell to $4.2 million from $7.6 million.
Sterno sales improved slightly, to $77.5 million, up from $73.8 million. Adjusted EBITDA rose to $15 million from $12.7 million a year ago.
Image courtesy 5.11
