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Here are 1-3 brief analogies for Compass Diversified (CODI):

• Compass Diversified is like a publicly traded Berkshire Hathaway for middle-market consumer and industrial brands.
• Compass Diversified is like a publicly traded private equity firm that builds a permanent portfolio of diverse mid-sized companies.

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• Tactical & Outdoor Gear: Designs and distributes apparel, footwear, and equipment for tactical, outdoor, and public safety professionals.
• Luxury Consumer Goods: Offers high-end products, including custom jewelry, timepieces, and luxury yachts.
• Advanced Materials & Components: Manufactures high-performance magnets, insulation, engineered packaging, and specialized closure systems for various industries.
• Health & Wellness Products: Provides plant-derived feminine care products.

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Compass Diversified (symbol: CODI) is a holding company that acquires and operates a diverse group of businesses across various sectors. To identify its major customers, one must look at the end customers of its underlying portfolio companies, which are grouped into "Consumer" and "Industrial" segments.

Based on Compass Diversified's full-year 2023 financial performance, its Consumer segment generated $577.1 million in revenue, while its Industrial segment generated $443.4 million. This indicates that CODI's portfolio, in aggregate, primarily sells to individuals through its consumer-focused businesses.

The major categories of individual customers served by Compass Diversified's portfolio companies are:

1. Recreational & Leisure Consumers: This category includes individuals and families who purchase products for their leisure activities and outdoor enjoyment. An example is customers acquiring pontoon boats for recreational boating from portfolio companies such as Boyd Industries (which produces Avalon and Tahoe Pontoons).
2. Health & Wellness Consumers: This group comprises individuals, primarily women, who seek personal care and feminine hygiene products, often with a preference for plant-derived or natural options. The Honey Pot Company, a portfolio brand, serves this customer base with its range of feminine care products sold through retail channels.
3. Travelers & Business Professionals: This category encompasses individuals who purchase luggage, travel accessories, and business cases for their personal trips, business travel, or daily professional needs. Luggage Pros, an online retailer within CODI's portfolio, caters to these consumers.

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Elias J. Sabo Partner & Chief Executive Officer

Elias J. Sabo is a Co-Founder of Compass Diversified, joining the firm in 1998, and was appointed CEO in May 2018. He is responsible for the overall strategy and direction of the firm, and manages corporate financing activities. Prior to co-founding CODI, Mr. Sabo worked as a healthcare investment banker for CIBC World Markets from 1996 to 1998, and in the acquisition department of Colony Capital, LLC, a real estate private equity firm, from 1992 to 1996. He also served as Chairman of Fox Factory Holding Corp. (NASDAQ: FOXF), a former CODI subsidiary, from 2007 to 2017.

Stephen Keller Executive Vice President, Chief Financial Officer

Stephen Keller is the Executive Vice President and Chief Financial Officer of Compass Diversified. Prior to joining CODI, Mr. Keller was with Envista Holdings Corporation, Avery Dennison, The Freudenberg Group, and AB SKF.

Patrick A. Maciariello Partner & Chief Operating Officer

Patrick A. Maciariello is a Partner and Chief Operating Officer at Compass Diversified, which he joined in 2005. As COO, he is responsible for the financial and strategic oversight of the firm's portfolio companies and manages the investment teams. He is also a member of the firm's Investment Committee. Before joining CODI, Mr. Maciariello worked at Bain & Company and Deutsche Banc Alex Brown. He currently serves as a director and Chairman for several CODI subsidiaries, including The Sterno Group of Companies, LLC and Foam Fabricators, Inc., and is a director for 5.11, Inc., Advanced Circuits, Inc., and The Ergo Baby Carrier, Inc.

Joseph Milana Chief Administrative Officer, Executive Vice President of Finance

Joseph Milana serves as the Chief Administrative Officer and Executive Vice President of Finance at Compass Diversified. He is part of the key executive team at the company.

Carrie Ryan General Counsel, Chief Compliance Officer & Corporate Secretary

Carrie Ryan holds the titles of General Counsel, Chief Compliance Officer, and Corporate Secretary at Compass Diversified. She is a key member of the company's leadership team.

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The key risks to Compass Diversified (CODI) primarily stem from an extensive accounting scandal involving its subsidiary, Lugano Holding, Inc.

1. Accounting Irregularities and Financial Restatement: Compass Diversified has disclosed that investors should not rely on its financial statements for the fiscal years 2022, 2023, and 2024 due to widespread, intentional accounting fraud at its subsidiary, Lugano Holding, Inc. The fraud at Lugano involved inflating sales, understating costs, and falsifying inventory and receivables, which has led to a significant reduction in Lugano's inventory and revenue. This has resulted in a loss of financial visibility and the arduous process of restating three years of financials.
2. Delisting Risk and Debt Covenant Breaches: Due to the unreliable financial statements and delayed regulatory filings, CODI has received a warning from the New York Stock Exchange for non-compliance with listing requirements, facing a deadline to remedy the situation or risk delisting. Furthermore, if the restated financials reveal lower-than-estimated EBITDA for its remaining portfolio, the company's leverage could exceed debt covenants, potentially leading to a breach of its financing arrangements.
3. Loss of Investor Confidence and Legal Actions: The accounting scandal has precipitated a severe loss of investor confidence, evidenced by a significant drop in CODI's market capitalization. This has led to the initiation of multiple securities class-action lawsuits alleging material misstatements and omissions by CODI and its executives. The uncertainty surrounding the investigation and potential legal outcomes contributes to a highly volatile and uncertain investment environment for the company.

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The increasing market penetration and acceptance of lab-grown diamonds pose a clear emerging threat to Lugano Diamonds, one of Compass Diversified's portfolio companies. Lab-grown diamonds offer a visually identical product at a significantly lower price point, challenging the traditional value perception and scarcity model of natural diamonds, which is fundamental to high-end jewelers like Lugano. This trend is evidenced by the rapid growth in sales and market share of lab-grown diamonds and their increasing adoption by major retailers globally.

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Compass Diversified (CODI) is a publicly traded investment firm that acquires and manages a diverse portfolio of middle-market businesses across branded consumer and niche industrial sectors. Its main products and services are offered through its current portfolio companies.

Here are the addressable markets for Compass Diversified's main products and services:

• 5.11 Tactical (Tactical Apparel and Gear): The global tactical apparel market size was estimated at $14.1 billion in 2023. This market is projected to grow to $25.2 billion by 2032, with a compound annual growth rate (CAGR) of 6.7%. The market includes apparel, gear, and accessories for law enforcement, military personnel, and outdoor enthusiasts.
• BOA Technology (Performance Fit Systems): The BOA Fit System is integrated into products across outdoor, athletic, workwear, and medical bracing markets worldwide. While a specific market size for "performance fit systems" is not readily available, the global athletic footwear market was valued at $144.9 billion in 2023 and is expected to reach $201.2 billion by 2029 (CAGR of 5.6%). The global outdoor footwear market was valued at $15.5 billion in 2022 and is projected to reach $24.7 billion by 2032 (CAGR of 4.7%).
• Lugano Diamonds (High-End Jewelry): The global luxury jewelry market was valued at $23.6 billion in 2022 and is anticipated to reach $35.6 billion by 2028 (CAGR of 7.1%). Lugano Diamonds specializes in high-end, one-of-a-kind jewelry.
• PrimaLoft (Synthetic Insulation): The global synthetic insulation market size was valued at $1.3 billion in 2023 and is projected to grow to $2.2 billion by 2030 (CAGR of 7.9%). PrimaLoft is a leading provider of branded, high-performance synthetic insulation used primarily in consumer outerwear and accessories.
• The Honey Pot Co. (Feminine Care Products): The global feminine hygiene market size was valued at $40.5 billion in 2023 and is expected to reach $68.7 billion by 2030 (CAGR of 7.8%). The Honey Pot Co. is a "better-for-you" feminine care brand.
• Arnold Magnetic Technologies (Engineered Magnetic Solutions): The global permanent magnet market was valued at $31.9 billion in 2023 and is expected to reach $55.7 billion by 2030 (CAGR of 8.2%). Arnold Magnetic Technologies manufactures engineered electric motor and magnetic solutions and high-performance permanent magnets, with manufacturing facilities in the United States, United Kingdom, Switzerland, and China.
• Sterno Group (Portable Heating and Lighting Solutions): The global portable heaters market size was valued at $4.6 billion in 2023 and is projected to reach $6.8 billion by 2032 (CAGR of 4.4%). Sterno is a provider of portable heating and lighting solutions, including chafing fuels and flameless candles for the foodservice industry and consumer markets.
• Altor Solutions (Molded Protective Foam Solutions and OEM Components): The global protective packaging market size was valued at $32.4 billion in 2023 and is expected to grow to $53.1 billion by 2030 (CAGR of 7.2%). Altor Solutions produces molded protective foam solutions and OEM components for various markets.
• Velocity Outdoor (Airguns, Archery Products, Optics, and Accessories): The global archery equipment market size was valued at $2.6 billion in 2023 and is expected to reach $3.9 billion by 2030 (CAGR of 5.5%). The global airgun market was valued at $2.4 billion in 2022 and is projected to grow to $3.5 billion by 2032 (CAGR of 3.8%). Velocity Outdoor designs, manufactures, and markets airguns, archery products, optics, and related accessories.

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Compass Diversified (CODI) is poised for future revenue growth over the next 2-3 years, driven by several strategic initiatives and the performance of its diverse portfolio of subsidiary companies.

1. Strategic Acquisitions in Diverse Sectors: CODI's fundamental business model involves acquiring controlling interests in established, profitable middle-market companies. The company continues to pursue strategic acquisitions across various industries, including branded consumer goods, industrial technology, and healthcare, to expand its revenue base and mitigate sector-specific risks. A recent example of this strategy is the acquisition of The Honey Pot Company.
2. Organic Growth and Innovation within Branded Consumer Businesses: Several of CODI's branded consumer subsidiaries are expected to be key drivers of organic revenue growth. Businesses like BOA and PrimaLoft have demonstrated strong performance and are positioned for continued growth through innovation, superior execution, and strategic expansion. This focus on empowering strong management teams within existing subsidiaries aims to drive outsized growth.
3. Market Expansion and Product Development in Subsidiaries: CODI supports its subsidiaries in expanding their market presence both domestically and internationally. This includes entering new geographic regions, targeting new customer segments, and continuously innovating by developing new products or enhancing existing ones. Such initiatives are crucial for increasing sales and market share across the portfolio.
4. Entry into the Healthcare Market: Compass Diversified has explicitly indicated its intention to enter the healthcare market as a new avenue for growth. This strategic expansion into a new sector is expected to contribute to future revenue generation.
5. Leveraging Specialty Industrial Demand and Supply Chain Realignment: Within its industrial segment, a notable driver is the potential for increased demand and earnings for subsidiaries like Arnold Magnetic Technologies. This is particularly relevant due to an intensified focus on rare-earth supply alternatives, following shifts such as Chinese export controls, which could boost the specialty industrial sector.

It is important to note that while Lugano Holding, Inc. was a significant historical growth contributor, its future revenue contribution is uncertain due to an ongoing internal investigation and the company's non-reliance on past financial statements for this subsidiary. However, CODI has affirmed that the issues are confined to Lugano, and its other subsidiaries continue to operate robustly.

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Share Repurchases

• Compass Diversified authorized a $100 million share repurchase program on October 16, 2024, for its common shares, which was set to run through December 31, 2024, with a possibility of extension.
• The company bought back more than 400,000 shares of its common stock in the fourth quarter of 2024.

Share Issuance

• Compass Diversified raised over $115 million in preferred equity during the full year 2024.
• The weighted average number of shares outstanding for the full year 2024 was 75.45 million, an increase from 72.11 million in 2023.
• The weighted average number of shares outstanding for the first quarter of 2021 was 64.9 million, up from 59.9 million in the first quarter of 2020.

Inbound Investments

• In 2024, Compass Diversified raised more than $115 million in preferred equity, which contributed to deleveraging its balance sheet and reducing its overall weighted average cost of capital.

Outbound Investments

• In 2024, Compass Diversified completed the acquisitions of The Honey Pot Company and LifeVone.
• The company divested Ergobaby and Crosman Airgun in 2024.
• In the third quarter of 2021, CODI acquired Lugano Diamonds and Jewelry, Inc. for an enterprise value of $256 million and sold Liberty Safe for an enterprise value of $147.5 million, realizing a gain of $72.7 million on the sale.

Capital Expenditures

• Capital expenditures for the fourth quarter of 2024 were $22.9 million, an increase of $6 million compared to the prior year.
• For 2025, capital expenditures are expected to be between $80 million and $90 million, primarily focused on growth investments at Lugano and other businesses.
• Maintenance capital expenditures were approximately $2.8 million for the three months ended March 31, 2021, and $3.3 million for the three months ended March 31, 2020, excluding growth capital expenditures.