Summary of CODI-PA Q3 2025 Earnings Call

1Key Financial Results and Metrics

Net Sales: $472.6 million for Q3 2025, up 3.5% year-over-year.

Year-to-Date Net Sales: $1.4 billion, an increase of 8.6% over the prior year (6.1% excluding Lugano).

GAAP Net Loss: $87.2 million for Q3, with a year-to-date loss of $215 million, including a $155 million loss attributed to Lugano.

Adjusted EBITDA: Year-to-date subsidiary adjusted EBITDA was $257 million, a 5.8% increase from 2024.

Cash Position: Ended Q3 with $61.1 million in cash and cash equivalents; less than $10 million drawn on the revolver.

Leverage Ratio: Expected to be around 5.3x by year-end, with a target to reduce to mid-4s by mid-2026.

2Strategic Updates and Business Highlights

Organizational Changes: Pat Maciariello retired; Zach Sawtelle appointed COO of Compass Group Management.

Subsidiary Performance:

Consumer Vertical: Low single-digit growth; strong performance from Honey Pot and BOA.

Industrial Vertical: Mid-single-digit sales growth; Altor's acquisition of Lifoam contributed positively.

Sterno: Continued double-digit EBITDA growth.

Focus on Deleveraging: CODI aims to reduce leverage through organic growth and potential asset sales, while also considering returning capital to shareholders.

3Forward Guidance and Outlook

Adjusted EBITDA Guidance: Tightened range for 2025 to between $335 million and $355 million, excluding Lugano.

2026 Expectations: Anticipated organic deleveraging and growth in subsidiary adjusted EBITDA, with free cash flow projected between $50 million to $100 million.

Future Capital Allocation: Plans to prioritize debt reduction, growth investments, and potential shareholder returns.

4Bad News, Challenges, or Points of Concern

Lugano Impact: Continued losses from Lugano, which will be deconsolidated after November 16, 2025.

Geopolitical Risks: Ongoing tariff and supply chain disruptions, particularly affecting the rare earth magnetics market and companies like Arnold.

Consumer Market Pressures: Inflation and tariff-related challenges have led to a slowdown in consumer spending, impacting growth rates.

Management Fees: High public company costs and management fees, including onetime costs related to the Lugano investigation, remain a concern.

5Notable Q&A Insights

Honey Pot Performance: Outperforming expectations due to increased shelf space and successful product launches in new categories.

Asset Sales Strategy: CODI remains open to selling any subsidiary if the valuation is attractive, emphasizing a disciplined approach to divestitures.

Economic Outlook: Management acknowledges a slowdown in growth but expects recovery and growth in 2026, driven by improved cash flow and strategic initiatives.

Arnold's Supply Chain: Short-term disruptions are expected to normalize, with long-term growth opportunities anticipated as customers seek stable supply chains outside China. Overall, CODI is navigating a challenging environment while focusing on strategic growth, deleveraging, and returning value to shareholders in the coming years.