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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
COMPASS DIVERSIFIED HOLDINGS
(Exact name of registrant as specified in its charter)
Delaware001-3492757-6218917
(State or other jurisdiction of
incorporation or organization)
(Commission
file number)
(I.R.S. employer
identification number)
COMPASS GROUP DIVERSIFIED HOLDINGS LLC
(Exact name of registrant as specified in its charter)
Delaware001-3492620-3812051
(State or other jurisdiction of
incorporation or organization)
(Commission
file number)
(I.R.S. employer
identification number)
301 Riverside Avenue, Second Floor, Westport, CT 06880
(203) 221-1703
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Shares representing beneficial interests in Compass Diversified HoldingsCODINew York Stock Exchange
Series A Preferred Shares representing beneficial interests in Compass Diversified HoldingsCODI PR ANew York Stock Exchange
Series B Preferred Shares representing beneficial interests in Compass Diversified HoldingsCODI PR BNew York Stock Exchange
Series C Preferred Shares representing beneficial interests in Compass Diversified HoldingsCODI PR CNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer¨Non-accelerated filer¨
Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ý

As of April 26, 2024, there were 75,384,052 Trust common shares of Compass Diversified Holdings outstanding.



COMPASS DIVERSIFIED HOLDINGS
QUARTERLY REPORT ON FORM 10-Q
For the period ended March 31, 2024
TABLE OF CONTENTS

2


NOTE TO READER
In reading this Quarterly Report on Form 10-Q, references to:
the “Trust” and “Holdings” refer to Compass Diversified Holdings;
the “LLC” refer to Compass Group Diversified Holdings LLC;
the "Company" refer to Compass Diversified Holdings and Compass Group Diversified Holdings LLC, collectively;
“businesses”, “operating segments”, “subsidiaries” and “reporting units” all refer to, collectively, the businesses controlled by the Company;
the “Manager” refer to Compass Group Management LLC (“CGM”);
the "Trust Agreement" refer to the Third Amended and Restated Trust Agreement of the Trust dated as of August 3, 2021;
the "2022 Credit Facility" refer to the third amended and restated credit agreement entered into on July 12, 2022 among the LLC, the lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and letter of credit issuer (the "agent")
the "2022 Revolving Credit Facility" refers to the $600 million in revolving loans, swing line loans and letters of credit provided by the 2022 Credit Facility that matures in 2027;
the "2022 Term Loan" refer to the $400 million term loan provided by the 2022 Credit Facility;
the "LLC Agreement" refer to the Sixth Amended and Restated Operating Agreement of the Company dated as of August 3, 2021, as further amended; and
"we," "us" and "our" refer to the Trust, the Company and the businesses together.

3


FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, contains both historical and forward-looking statements. We may, in some cases, use words such as "project," "predict," "believe," "anticipate," "plan," "expect," "estimate," "intend," "should," "would," "could," "potentially," "may," or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. All statements other than statements of historical or current fact are “forward-looking statements” for purposes of federal and state securities laws. Forward looking statements include, among other things, (i) statements as to our future performance or liquidity, such as expectations for our results of operation, net income, adjusted EBITDA, adjusted earnings, and ability to make quarterly distributions and (ii) our plans, strategies and objectives for future operations, including our business outlook and planned capital expenditures. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the SEC, including, but not limited to, those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the United States Securities and Exchange Commission (“SEC”) on February 28, 2024, as such factors may be updated from time to time in our filings with the SEC. Many of these risks and uncertainties are beyond our control. Important factors that could cause our actual results, performance and achievements to differ materially from those estimates or projections contained in our forward-looking statements include, among other things:
changes in general economic, political or business conditions or economic, political or demographic trends in the United States and other countries in which we have a presence, including changes in interest rates and inflation;
disruption in the global supply chain, labor shortages and high labor costs;
difficulties and delays in integrating, or business disruptions following, acquisitions or an inability to fully realize cost savings and other benefit related thereto;
our ability to successfully operate our subsidiary businesses on a combined basis, and to effectively integrate and improve future acquisitions;
our ability to maintain our credit facilities or incur additional borrowings on terms we deem attractive;
our ability to remove CGM and CGM’s right to resign;
our organizational structure, which may limit our ability to meet our dividend and distribution policy;
our ability to service and comply with the terms of our indebtedness;
our ability to make distributions in the future to our shareholders;
our ability to pay the management fee and profit allocation if and when due;
our ability to make and finance future acquisitions;
our ability to implement our acquisition and management strategies;
the legal and regulatory environment in which our subsidiaries operate;
trends in the industries in which our subsidiaries operate;
future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities);
risks associated with possible disruption in operations or the economy generally due to terrorism or natural disaster or social, civil or political unrest;
environmental risks affecting the business or operations of our subsidiaries;
our and CGM’s ability to retain or replace qualified employees of our subsidiaries and CGM;
the impact of the tax reclassifications of the Trust;
costs and effects of legal and administrative proceedings, settlements, investigations and claims; and
extraordinary or force majeure events affecting the business or operations of our subsidiary businesses.
Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware or which we currently deem immaterial could also cause our actual results to differ.
In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this Quarterly Report on Form 10-Q may not occur. These forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances, whether as a result of new information, future events or otherwise, except as required by law.

4


PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COMPASS DIVERSIFIED HOLDINGS
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31,
2024
December 31,
2023
(in thousands)(Unaudited)
Assets
Current assets:
Cash and cash equivalents$64,715 $450,477 
Accounts receivable, net338,310 318,241 
Inventories, net788,809 740,387 
Prepaid expenses and other current assets126,764 94,715 
Total current assets1,318,598 1,603,820 
Property, plant and equipment, net191,869 192,562 
Goodwill1,023,024 901,428 
Intangible assets, net1,145,439 923,905 
Other non-current assets186,099 195,266 
Total assets$3,865,029 $3,816,981 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$82,371 $93,412 
Accrued expenses175,702 157,456 
Due to related parties (refer to Note P)17,202 16,025 
Current portion, long-term debt 10,000 10,000 
Other current liabilities37,681 35,465 
Total current liabilities322,956 312,358 
Deferred income taxes139,861 120,131 
Long-term debt1,705,982 1,661,879 
Other non-current liabilities202,019 203,232 
Total liabilities2,370,818 2,297,600 
Commitments and contingencies (refer to Note O)
Stockholders’ equity
Trust preferred shares, 50,000 authorized; 12,634 shares issued and outstanding at March 31, 2024 and 12,600 shares issued and outstanding at December 31, 2023
Series A preferred shares, no par value; 4,008 shares issued and outstanding at March 31, 2024 and 4,000 shares issued and outstanding at December 31, 2023
96,600 96,417 
Series B preferred shares, no par value; 4,004 shares issued and outstanding at March 31, 2024 and and 4,000 shares issued and outstanding at December 31, 2023
96,593 96,504 
Series C preferred shares, no par value; 4,623 shares issued and outstanding at March 31, 2024 and 4,600 shares issued and outstanding at December 31, 2023
111,552 110,997 
Trust common shares, no par value, 500,000 authorized; 75,807 shares issued and 75,324 shares outstanding at March 31, 2024 and 75,753 issued and 75,270 outstanding at December 31, 2023
1,282,521 1,281,303 
Treasury shares, at cost(9,339)(9,339)
Accumulated other comprehensive income (loss)(1,961)111 
Accumulated deficit(324,695)(249,243)
Total stockholders’ equity attributable to Holdings1,251,271 1,326,750 
Noncontrolling interest242,940 192,631 
Total stockholders’ equity1,494,211 1,519,381 
Total liabilities and stockholders’ equity$3,865,029 $3,816,981 
See notes to condensed consolidated financial statements.
5



COMPASS DIVERSIFIED HOLDINGS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended 
 March 31,
(in thousands, except per share data)20242023
Net revenues $524,290 $483,933 
Cost of revenues282,463 278,869 
Gross profit241,827 205,064 
Operating expenses:
Selling, general and administrative expense150,714 130,264 
Management fees18,067 16,270 
Amortization expense26,288 23,973 
Impairment expense8,182  
Operating income 38,576 34,557 
Other income (expense):
Interest expense, net(23,575)(26,180)
Amortization of debt issuance costs(1,005)(1,005)
Other income (expense), net(2,874)1,160 
Income from continuing operations before income taxes11,122 8,532 
Provision for income taxes8,686 6,920 
Income from continuing operations2,436 1,612 
Income from discontinued operations, net of income taxes 10,000 
Gain on sale of discontinued operations, net of income taxes3,345 97,989 
Net income 5,781 109,601 
Less: Net income from continuing operations attributable to noncontrolling interest7,429 4,171 
Less: Net income from discontinued operations attributable to noncontrolling interest 33 
Net income (loss) attributable to Holdings$(1,648)$105,397 
Amounts attributable to Holdings
Loss from continuing operations$(4,993)$(2,559)
Income from discontinued operations, net of income tax 9,967 
Gain on sale of discontinued operations, net of income tax3,345 97,989 
Net income (loss) attributable to Holdings$(1,648)$105,397 
Basic income (loss) per common share attributable to Holdings (refer to Note J)
Continuing operations$(0.89)$(0.19)
Discontinued operations0.04 1.48 
Basic income (loss) per common share attributable to Holdings (refer to Note J)$(0.85)$1.29 
Basic weighted average number of shares of common shares outstanding75,274 72,178 
Cash distributions declared per Trust common share (refer to Note J)$0.25 $0.25 




See notes to condensed consolidated financial statements.
6



COMPASS DIVERSIFIED HOLDINGS
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

Three months ended 
 March 31,
(in thousands)20242023
Net income $5,781 $109,601 
Other comprehensive income (loss)
Foreign currency translation adjustments(1,239)1,246 
Pension benefit liability, net(833)(524)
Other comprehensive income (loss)(2,072)722 
Total comprehensive income, net of tax$3,709 $110,323 
Less: Net income attributable to noncontrolling interests7,429 4,204 
Less: Other comprehensive income (loss) attributable to noncontrolling interests(56)20 
Total comprehensive income (loss) attributable to Holdings, net of tax $(3,664)$106,099 

See notes to condensed consolidated financial statements.

7




COMPASS DIVERSIFIED HOLDINGS
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

(in thousands)Trust Preferred SharesTrust Common SharesAccumulated DeficitAccumulated Other
Comprehensive
Income (Loss)
Stockholders' Equity Attributable
to Holdings
Non-
Controlling
Interest
Non-
Controlling
Interest Attributable to Disc. Ops.
Total
Stockholders’
Equity
Series ASeries BSeries CTreasury Shares
Balance — January 1, 2023$96,417 $96,504 $110,997 $1,207,044 $ $(372,906)$(1,136)$1,136,920 $203,464 $21,578 $1,361,962 
Net income — — — — — 105,397 — 105,397 4,171 33 109,601 
Total comprehensive income, net— — — — — — 722 722 — — 722 
Issuance of Trust common shares— — — (48)— — — (48)— — (48)
Purchase of Trust common shares for treasury— — — — (3,954)— — (3,954)— — (3,954)
Option activity attributable to noncontrolling shareholders— — — — — — — — 1,641 1,377 3,018 
Effect of subsidiary stock option exercise— — — — — — — — 5 — 5 
Purchase of noncontrolling interest— — — — — — — — (848)— (848)
Disposition of ACI— — — — — — — — — (1,729)(1,729)
Distributions paid - Trust Common Shares— — — — — (18,051)— (18,051)— — (18,051)
Distributions paid - Trust Preferred Shares— — — — — (6,045)— (6,045)— — (6,045)
Balance — March 31, 2023$96,417 $96,504 $110,997 $1,206,996 $(3,954)$(291,605)$(414)$1,214,941 $208,433 $21,259 $1,444,633 
Balance — January 1, 2024$96,417 $96,504 $110,997 $1,281,303 $(9,339)$(249,243)$111 $1,326,750 $192,631 $ $1,519,381 
Net income (loss)— — — — — (1,648)— (1,648)7,429 — 5,781 
Total comprehensive loss, net— — — — — — (2,072)(2,072)— — (2,072)
Issuance of Trust common shares— — — 1,218 — — — 1,218 — — 1,218 
Issuance of Trust preferred shares183 89 555 — — — — 827 — — 827 
Option activity attributable to noncontrolling shareholders— — — — — — — — 4,330 — 4,330 
Purchase of noncontrolling interest— — — — — — — — (2,510)— (2,510)
Reclassification of noncontrolling shareholder interest to liability— — — — — — — — (614)— (614)
Acquisition of THP— — — — — — — — 41,674 — 41,674 
Distributions paid - Allocation Interests (refer to Note J)— — — — — (48,941)— (48,941)— — (48,941)
Distributions paid - Trust Common Shares— — — — — (18,818)— (18,818)— — (18,818)
Distributions paid - Trust Preferred Shares— — — — — (6,045)— (6,045)— — (6,045)
Balance — March 31, 2024$96,600 $96,593 $111,552 $1,282,521 $(9,339)$(324,695)$(1,961)$1,251,271 $242,940 $ $1,494,211 
8


COMPASS DIVERSIFIED HOLDINGS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three months ended March 31,
(in thousands)20242023
Cash flows from operating activities:
Net income $5,781 $109,601 
Income from discontinued operations 10,000 
Gain on sale of discontinued operations3,345 97,989 
Income from continuing operations2,436 1,612 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation expense10,892 11,155 
Amortization expense - intangibles26,288 23,973 
Amortization expense - inventory step-up2,826 1,175 
Amortization of debt issuance costs 1,005 1,005 
Impairment expense8,182  
Noncontrolling stockholder stock based compensation4,330 1,641 
Provision for receivable and inventory reserves(812)(1,224)
Deferred taxes(7,921)(6,351)
Other427 390 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable(4,427)5,623 
Inventories(30,606)(46,799)
Other current and non-current assets2,622 3,024 
Accounts payable and accrued expenses(28,443)1,260 
Cash used in operating activities - continuing operations(13,201)(3,516)
Cash provided by operating activities - discontinued operations 19,061 
Cash provided by (used in) provided by operating activities(13,201)15,545 
Cash flows from investing activities:
Acquisitions, net of cash acquired(379,524) 
Purchases of property and equipment(7,747)(14,897)
Proceeds from sale of businesses3,345 103,042 
Other investing activities1,448 (303)
Cash provided by (used in) investing activities - continuing operations(382,478)87,842 
Cash provided by investing activities - discontinued operations 66,882 
Cash provided by (used in) investing activities(382,478)154,724 
9


COMPASS DIVERSIFIED HOLDINGS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three months ended March 31,
(in thousands)20242023
Cash flows from financing activities:
Proceeds and expenses from issuance of Trust common shares, net1,218 (48)
Proceeds and expenses from issuance of Trust preferred shares, net827  
Purchase of treasury shares, net (3,954)
Borrowings under credit facility100,000 76,000 
Repayments under credit facility(54,000)(223,000)
Principal payments - term loan(2,500)(2,500)
Distributions paid - common shares(18,818)(18,051)
Distributions paid - preferred shares(6,045)(6,045)
Distributions paid - allocation interests(48,941) 
Net proceeds provided by noncontrolling shareholders 5 
Net proceeds provided by noncontrolling shareholders - acquisitions41,674  
Purchase of noncontrolling interest(2,510)(848)
Other (5)
Net cash provided by (used in) financing activities10,905 (178,446)
Foreign currency impact on cash(989)562 
Net decrease in cash and cash equivalents(385,763)(7,615)
Cash and cash equivalents — beginning of period (1)
450,478 61,271 
Cash and cash equivalents — end of period (2)
$64,715 $53,656 
(1) Includes cash from discontinued operations of $4.7 million at January 1, 2023.
(2) Includes cash from discontinued operations of $3.8 million at March 31, 2023.









See notes to condensed consolidated financial statements.
10


COMPASS DIVERSIFIED HOLDINGS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024

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 amended and restated, the "Trust Agreement"), the Trust is sole owner of 100% of the Trust Interests (as defined in the Company’s Sixth Amended and Restated Operating Agreement, dated as of August 3, 2021 (as 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 LLC is a controlling owner of ten businesses, or operating segments, at March 31, 2024. The segments are as follows: 5.11 Acquisition Corp. ("5.11"), Boa Holdings Inc. ("BOA"), The Ergo Baby Carrier, Inc. ("Ergobaby"), Lugano Holdings, Inc. ("Lugano Diamonds" or "Lugano"), 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 SternoCandleLamp Holdings, Inc. ("Sterno"). The segments are referred to interchangeably as “businesses”, “operating segments” or “subsidiaries” throughout the financial statements. Refer to Note E - "Operating Segment Data" for further discussion of the operating segments. 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").
Basis of Presentation
The condensed consolidated financial statements for the three month periods ended March 31, 2024 and March 31, 2023 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. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Consolidation
The condensed consolidated financial statements include the accounts of the Trust and 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. Discontinued operating entities are reflected as discontinued operations in the Company's results of operations and statements of financial position.
Discontinued Operations
The Company completed the sale of Wheelhouse Holdings, Inc. ("Marucci") during the fourth quarter of 2023 and Compass AC Holdings, Inc. ("Advanced Circuits or "ACI") during the first quarter of 2023. The results of operations of Marucci and ACI are reported as discontinued operations in the condensed consolidated statements of operations for the three months ended March 31, 2023. Refer to Note C - "Discontinued Operations" for additional information. Unless otherwise indicated, the disclosures accompanying the condensed consolidated financial statements reflect the Company's continuing operations.
11


Seasonality
Earnings of certain of our operating segments are seasonal in nature due to various recurring events, holidays and seasonal weather patterns, as well as the timing of our acquisitions during a given year. Historically, the third and fourth quarter have produced the highest net sales in our fiscal year, however, due to various acquisitions in the last three years, there is generally less seasonality in our net sales on a consolidated basis than there has been historically.
Recently Issued Accounting Pronouncements
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This guidance will require, among other things, the following: (i) enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included in a segment's reported measure of profit or loss; (ii) disclosure of the amount and description of the composition of other segment items, as defined in ASU 2023-07, by reportable segment; and (iii) reporting the disclosures about each reportable segment's profit or loss and assets on an annual and interim basis. The guidance will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and early adoption is permitted. The Company is currently evaluating the impact that this ASU will have when adopted and anticipates the ASU will likely result in additional disclosures in our condensed consolidated financial statements.
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 will be effective for annual periods beginning after December 15, 2024 and early adoption is permitted. The Company is currently evaluating the impact that this ASU will have when adopted and anticipates the ASU will likely result in additional disclosures in our condensed consolidated financial statements.
Note B — Acquisitions
The acquisitions of our businesses are accounted for under the acquisition method of accounting. For each platform acquisition, the Company typically structures the transaction so that a newly created holding company acquires 100% of the equity interests in the acquired business. The entirety of the purchase consideration is paid by the newly created holding company to the selling shareholders. The total purchase consideration is the amount paid to the selling shareholders and we will, from time to time, allow the selling shareholder to reinvest a portion of their proceeds alongside the Company at the same price per share, into the holding company that acquires the target business. Once the acquisition is complete, the selling shareholders no longer hold equity interests in the acquired company, but rather hold noncontrolling interest in the holding company that acquired the target business. Because the selling shareholders are investing in the transaction alongside the Company at the same price per share as the Company and are not retaining their existing equity in the acquired business, the Company includes the amount provided by noncontrolling shareholders in the total purchase consideration.
A component of our acquisition financing strategy that we utilize in acquiring the businesses we own and manage is to provide both equity capital and debt capital, raised at the parent level, typically through our existing credit facility. The debt capital is in the form of “intercompany loans” made by the LLC to the newly created holding company and the acquired business and are due from the newly created holding company and the acquired business, and payable to the LLC by the newly created holding company and the acquired business. The selling shareholders of the acquired businesses are not a party to the intercompany loan agreements nor do they have any obligation to repay the intercompany loans. These intercompany loans eliminate in consolidation and are not reflected on the Company's consolidated balance sheets.
12


Acquisition of The Honey Pot Co.
On January 31, 2024 (the "Closing Date"), the LLC, through its newly formed acquisition subsidiaries, THP Topco, Inc., a Delaware corporation (“THP Topco”) and THP Intermediate, Inc., a Delaware corporation (“THP Buyer”), acquired The Honey Pot Company Holdings, LLC (“THP”) and certain of its affiliated entities pursuant to a Merger and Stock Purchase Agreement (the “THP Purchase Agreement”) dated January 14, 2024 by and among THP Buyer, THP, VMG Honey Pot Blocker, Inc. (“Blocker I”), NVB1, Inc. (“Blocker II”), VMG Tax-Exempt IV, L.P., New Voices Fund, LP, THP Merger Sub, LLC (“THP Merger Sub”), VMG Honey Pot Holdings, LLC, as the Sellers’ Representative, and certain remaining equity holders of THP. Pursuant to the THP Purchase Agreement, subsequent to certain internal reorganizations, THP Buyer acquired all of the issued and outstanding equity of Blocker I and Blocker II and, thereafter, THP Merger Sub merged with and into THP (the “THP Merger”), with THP surviving such that the separate existence of THP Merger Sub ceased, with THP surviving the Merger as a wholly-owned, indirect subsidiary of the THP Topco. THP is the parent company of The Honey Pot Company (DE), LLC (“The Honey Pot Co.”).
The Company paid a purchase price of approximately $380 million, before working capital and certain other adjustments, at the Closing (the “THP Purchase Price”). The Company funded the THP Purchase Price with cash on hand. Certain minority equity holders of THP executed agreements pursuant to which they contributed a portion of their THP equity (the “Rollover Equity”) to THP Topco in exchange for THP Topco common stock. THP Topco contributed the Rollover Equity to THP Buyer. Certain other members of The Honey Pot Co. management team also contributed cash in exchange for equity in THP Topco. The Company directly owns approximately 85% of THP Topco, which in turn indirectly owns all of the issued and outstanding equity interests of THP and The Honey Pot Co. Concurrent with the Closing, the Company provided a credit facility to THP Buyer, THP and The Honey Pot Co., as borrowers (the “THP Credit Agreement”), pursuant to which a secured revolving loan commitment and secured term loans were made available to Buyer, THP and The Honey Pot Co. (collectively, the “Borrowers”). The initial amount outstanding under these facilities on the Closing Date was approximately $110 million.
The Honey Pot Co. is a feminine care brand that offers an extensive range of holistic wellness products across feminine hygiene, menstrual, consumer health, and sexual wellness categories. The Honey Pot Co.’s mission is to educate, support, and provide consumers around the world with the tools and resources that promote menstrual health and vaginal wellness.
The results of operations of The Honey Pot Co. have been included in the consolidated results of operations since the date of acquisition. The Honey Pot Co.'s results of operations are reported as a separate operating segment as a branded consumer business. The table below provides the recording of the fair value of assets acquired and liabilities assumed as of the date of acquisition.
13


(in thousands)Preliminary Purchase Price Allocation
Purchase Consideration$380,121 
Fair value of identifiable assets acquired:
Cash$4,076 
Accounts receivable (1)
16,361 
Inventory 18,986 
Property, plant and equipment
1,888 
Intangible assets247,000 
Other current and noncurrent assets3,958 
Total identifiable assets292,269 
Fair value of liabilities assumed:
Current liabilities10,957 
Other liabilities 1,480 
Deferred tax liabilities27,846 
Total liabilities 40,283 
Net identifiable assets acquired251,986 
Goodwill$128,135 
Acquisition consideration
Purchase price$380,000 
Estimated cash acquired 4,375 
Net working capital adjustment(3,126)
Other adjustments(1,128)
Total purchase consideration$380,121 
(1) The fair value of accounts receivable approximates book value acquired.
The preliminary allocation presented above is based upon management's estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the identifiable acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates and estimated discount rates. Current and noncurrent assets, property, plant and equipment and current and other liabilities are estimated at their historical carrying values, which approximates fair value. Inventory is recognized at fair value, with finished goods stated at selling price less an estimated cost to sell. Property, plant and equipment will be depreciated on a straight-line basis over the remaining useful lives of the assets. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships, as well as expected future synergies. The goodwill of $128.1 million reflects the strategic fit of The Honey Pot Co. in the Company's branded consumer business and is not expected to be deductible for income tax purposes. The purchase price of The Honey Pot Co. is expected to be finalized in the second quarter of 2024.
14


The intangible assets recorded related to The Honey Pot Co. acquisition are as follows (in thousands):
Intangible AssetsFair ValueEstimated Useful Lives
Tradename$225,000 18 years
Customer relationships22,000 13 years
$247,000 
The tradename was considered the primary intangible asset and was valued at $225.0 million using a multi-period excess earnings method. The customer relationships were valued at $22.0 million using a multi period excess earnings method. The multi period excess earnings method assumes an asset has value to the extent that it enables its owners to earn a return in excess of the other assets utilized in the business.
Unaudited pro forma information
The following unaudited pro forma data for the three months ended March 31, 2024 and March 31, 2023 gives effect to the acquisition of The Honey Pot Co., as described above, and the dispositions of ACI and Marucci, as if these transaction had been completed as of January 1, 2023. The pro forma data gives effect to historical operating results with adjustments to interest expense, amortization expense, management fees and related tax effects. The information is provided for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the transaction had been consummated on the date indicated, nor is it necessarily indicative of future operating results of the consolidated companies, and should not be construed as representing results for any future period.
Three months endedThree months ended
(in thousands, except per share data)March 31, 2024March 31, 2023
Net sales$534,961 $515,811 
Gross profit$248,161 $224,014 
Operating income$39,816 $39,450 
Net income from continuing operations$3,156 $4,890 
Net loss from continuing operations attributable to Holdings $(4,512)$(25)
Basic and fully diluted net loss per share attributable to Holdings$(0.87)$(0.15)
Note C — Discontinued Operations
Sale of Marucci
On November 1, 2023, the LLC, solely in its capacity as the representative of the holders of stock and options of Marucci, a majority owned subsidiary of the LLC, entered into a definitive Agreement and Plan of Merger with Fox Factory, Inc. (“Marucci Purchaser”), Marucci Merger Sub, Inc. (“Marucci Merger Sub”) and Wheelhouse, pursuant to which Marucci Purchaser agreed to acquire all of the issued and outstanding securities of Wheelhouse, the parent company of the operating entity, Marucci Sports, LLC, through a merger of Marucci Merger Sub with and into Wheelhouse, with Wheelhouse surviving the merger and becoming a wholly owned subsidiary of Marucci Purchaser. On November 14, 2023, the parties completed the Merger. The sale price of Wheelhouse was based on an enterprise value of $572 million, subject to certain adjustments based on matters such as transaction tax benefits, transaction expenses of Wheelhouse, the net working capital and cash and debt balances of Wheelhouse at the time of the closing. After the allocation of the sales price to Wheelhouse non-controlling equity holders and the payment of transaction expenses, CODI received approximately $484.0 million of total proceeds at closing of which $87.3 million related to the repayment of intercompany loans with the Company. The Company recorded a pre-tax gain on sale of Marucci of $241.4 million in the year ended December 31, 2023. In the first quarter of 2024, the LLC received a net working capital settlement of approximately $3.3 million related to Marucci, which was recognized as an additional gain on sale of discontinued operations, net of taxes, in the accompanying condensed consolidated statement of operations. The proceeds from the Marucci sale were used to pay down outstanding debt under the Company’s 2022 Credit Facility, as well as, to fund a subsequent acquisition by Company.
15


Summarized results of operations of Marucci for the three months ended March 31, 2023 are as follows (in thousands):
Three months ended March 31, 2023
Net sales$58,295 
Gross profit$32,767 
Operating income $14,340 
Income from continuing operations before income taxes (1)
$14,307 
Provision for income taxes$2,916 
Income from discontinued operations (1)
$11,391 
(1) The results of operations for the three months ended March 31, 2023 excludes $2.4 million of intercompany interest expense.
Sale of Advanced Circuits
On January 10, 2023, the LLC, solely in its capacity as the representative of the holders of stock and options of Compass AC Holdings, Inc., a majority owned subsidiary of the LLC, entered into a definitive Agreement and Plan of Merger with APCT Inc. (“ACI Purchaser”), Circuit Merger Sub, Inc. (“ACI Merger Sub”) and Advanced Circuits, pursuant to which ACI Purchaser agreed to acquire all of the issued and outstanding securities of Advanced Circuits, the parent company of the operating entity, Advanced Circuits, Inc., through a merger of ACI Merger Sub with and into Advanced Circuits, with Advanced Circuits surviving the merger and becoming a wholly owned subsidiary of ACI Purchaser (the “ACI Merger”). The ACI Merger was completed on February 14, 2023. The sale price of Advanced Circuits was based on an enterprise value of $220 million, subject to certain adjustments based on matters such as the working capital and cash and debt balances of Advanced Circuits at the time of the closing. After the allocation of the sales price to Advanced Circuits non-controlling equity holders and the payment of transaction expenses, the Company received approximately $170.9 million of total proceeds at closing, of which $66.9 million related to the repayment of intercompany loans with the Company. The Company recorded a pre-tax gain on sale of $106.9 million on the sale of Advanced Circuits in the year ended December 31, 2023.
Summarized results of operations of ACI for the period of January 1, 2023 through the date of disposition are as follows (in thousands):
For the period January 1, 2023 through disposition
Net sales$8,829 
Gross profit$3,663 
Operating income $1,058 
Income (loss) from continuing operations before income taxes (1)
$(2,464)
Provision (benefit) for income taxes$(1,073)
Income (loss) from discontinued operations (1)
$(1,391)
(1) The results of operations for the period from January 1, 2023 through disposition excludes $1.4 million of intercompany interest expense.
Note D — 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 strategic business unit 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
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financial performance to the investors and other users of its financial statements. Each strategic business unit represents the Company’s reportable segments and offers different products and services.
The following tables provide disaggregation of revenue by reportable segment geography for the three months ended March 31, 2024 and 2023 (in thousands):
Three months ended March 31, 2024
United StatesMexicoEuropeAsia PacificOther InternationalTotal
5.11$96,170 $7,499 $8,092 $4,064 $9,149 $124,974 
BOA (1)
12,561 9 17,050 13,169 114 42,903 
Ergobaby9,134 11 5,915 4,042 2,116 21,218 
Lugano102,389 158  492  103,039 
PrimaLoft (1)
101  1,196 21,118 126 22,541 
The Honey Pot Co.20,078    87 20,165 
Velocity Outdoor26,185 381 527 169 2,637 29,899 
Altor46,544 6,860    53,404 
Arnold27,933 91 11,004 1,431 828 41,287 
Sterno62,486  584 1 1,789 64,860 
$403,581 $15,009 $44,368 $44,486 $16,846 $524,290 
Three months ended March 31, 2023
United StatesMexicoEuropeAsia PacificOther InternationalTotal
5.11$98,527 $6,040 $6,607 $4,183 $9,095 $124,452 
BOA (1)
11,299 6 14,652 11,696 333 37,986 
Ergobaby8,829  6,865 4,534 2,190 22,418 
Lugano63,887     63,887 
PrimaLoft (1)
172 39 1,033 23,110 175 24,529 
Velocity Outdoor29,892 284 1,340 129 2,395 34,040 
Altor53,462 8,050    61,512 
Arnold26,649 122 10,983 1,411 925 40,090 
Sterno71,588  1,247  2,184 75,019 
$364,305 $14,541 $42,727 $45,063 $17,297 $483,933 
(1)For BOA and PrimaLoft, revenue reflects the location of the Brand Partners of each business.
Note E — Operating Segment Data
At March 31, 2024, the Company had ten 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 leading provider of purpose-built technical apparel and gear for law enforcement, firefighters, EMS, and military special operations as well as outdoor and adventure enthusiasts. 5.11 is a brand known for innovation and authenticity, and works directly with end users to create purpose-built apparel and gear designed to enhance the safety, accuracy, speed and performance of tactical professionals and enthusiasts worldwide. Headquartered in Costa Mesa, California, 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.
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BOA, creator of the revolutionary, award-winning, 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 offices in Austria, Greater China, South Korea, and Japan.
Ergobaby, headquartered in Torrance, California, is a designer, marketer and distributor of wearable baby carriers and accessories, blankets and swaddlers, nursing pillows, strollers, bouncers and related products.  Ergobaby primarily sells its Ergobaby and Baby Tula branded products through brick-and-mortar retailers, national chain stores, online retailers, its own websites and distributors and derives more than 50% of its sales from outside of the United States.
Lugano Diamonds is a leading designer, manufacturer and marketer of high-end, one-of-a-kind jewelry sought after by some of the world’s most discerning clientele. Lugano conducts sales via its own retail salons as well as pop-up showrooms at Lugano-hosted or sponsored events in partnership with influential organizations in the equestrian, art and philanthropic community. Lugano is headquartered in Newport Beach, California.
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. Their 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 airguns, archery products, laser aiming devices, hunting apparel and related accessories. Velocity Outdoor offers its products under the Crosman, Benjamin, LaserMax, Ravin, CenterPoint and King's Camo brands that are available through national retail chains, mass merchants, dealer and distributor networks. The airgun product category consists of air rifles, air pistols and a range of accessories including targets, holsters and cases. Velocity Outdoor's other primary product categories are archery, with products including CenterPoint and Ravin crossbows, consumables, which includes steel and plastic BBs, lead pellets and CO2 cartridges, lasers for firearms, and airsoft products. The apparel category offers high-performance, feature rich hunting and casual apparel of uncompromised quality utilizing King’s own proprietary camo patterns. Velocity Outdoor is headquartered in Bloomfield, New York.
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 Scottsdale, Arizona and operates 15 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, reprographics 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 or "PTM"), 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
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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.
Sterno is a leading manufacturer and marketer of portable food warming systems, creative indoor and outdoor lighting, and home fragrance solutions for the consumer markets. Sterno also manufactures creative indoor and outdoor lighting and home fragrance solutions for consumer markets. Sterno offers a broad range of wick and gel chafing systems, butane stoves and accessories, liquid and traditional wax candles, catering equipment and lamps through Sterno Products, as well as scented wax cubes, warmer products, outdoor lighting and essential oils used for home decor and fragrance systems through Rimports. Sterno is headquartered in Plano, Texas.
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. Segment profit is determined based on internal performance measures used by the Manager to assess the performance of each business. Corporate consists of corporate overhead and management fees that are not allocated to any of the Company's reportable segments. There were no significant inter-segment transactions.
Summary of Operating Segments
Net RevenuesThree months ended March 31,
(in thousands)20242023
5.11 $124,974 $124,452 
BOA42,903 37,986 
Ergobaby21,218 22,418 
Lugano103,039 63,887 
PrimaLoft22,541 24,529 
The Honey Pot Co.20,165  
Velocity Outdoor29,899 34,040 
Altor Solutions53,404 61,512 
Arnold41,287 40,090 
Sterno64,860 75,019 
Total segment revenue524,290 483,933 
Corporate   
Total consolidated revenues$524,290 $483,933 


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Segment Profit (Loss) Three months ended March 31,
(in thousands)20242023
5.11 $8,167 $7,670 
BOA9,656 7,951 
Ergobaby(998)388 
Lugano39,317 19,776 
PrimaLoft3,300 5,021 
The Honey Pot Co.(2,650) 
Velocity Outdoor(12,424)(3,276)
Altor Solutions6,628 6,934 
Arnold4,172 5,038 
Sterno 4,785 4,493 
Total segment operating income59,953 53,995 
Corporate (1)
(21,377)(19,438)
Total consolidated operating income38,576 34,557 
Reconciliation of segment operating income (loss) to consolidated income from continuing operations before income taxes:
Interest expense, net(23,575)(26,180)
Amortization of debt issuance costs(1,005)(1,005)
Other income (expense), net(2,874)1,160 
Total consolidated income from continuing operations before income taxes$11,122 $8,532 
(1) Corporate operating loss is comprised of management fees paid to CGM and corporate overhead expenses.
Depreciation and Amortization ExpenseThree months ended March 31,
(in thousands)20242023
5.11 $5,799 $6,377 
BOA5,237 5,636 
Ergobaby2,160 2,014 
Lugano2,115 2,718 
PrimaLoft5,248 5,278 
The Honey Pot Co.5,087  
Velocity Outdoor3,271 3,284 
Altor Solutions4,023 4,104 
Arnold 2,145 1,978 
Sterno4,921 4,914 
Total40,006 36,303 
Reconciliation of segment to consolidated total:
Amortization of debt issuance costs 1,005 1,005 
Consolidated total$41,011 $37,308 


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Accounts ReceivableIdentifiable Assets
March 31,December 31,March 31,December 31,
(in thousands)20242023
2024 (1)
2023 (1)
5.11 $51,512 $50,452 $377,402 $398,050 
BOA3,153 1,368 241,695 243,243 
Ergobaby11,832 12,018 73,031 73,660 
Lugano136,345 124,776 591,460 510,484 
PrimaLoft1,876 1,381 282,067 288,212 
The Honey Pot Co.18,010  273,419  
Velocity Outdoor20,904 24,458 202,480 207,609 
Altor Solutions35,914 35,232 176,065 186,683 
Arnold 28,298 25,977 108,968 110,883 
Sterno 40,882 51,740 168,938 174,166 
Sales allowance accounts(10,416)(9,161)— — 
Total338,310 318,241 2,495,525 2,192,990 
Reconciliation of segment to consolidated totals:
Corporate and other identifiable assets
— — 8,170 404,322 
Total$338,310 $318,241 $2,503,695 $2,597,312 

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