D/b/a Compass Diversified Holdings Shares Of Beneficial Interest · NYSE:CODI
D/b/a Compass Diversified Holdings Shares Of Beneficial Interest — Compass Diversified Holdings — Investor Day (January 2025)
59 slides from D/b/a Compass Diversified Holdings Shares Of Beneficial Interest's investor day presentation, Jan 16, 2025
Slide 1: Investor Day January 16, 2025
compassdiversified.com Investor Day January 16, 2025
Slide 2: Legal Disclaimer
compassdiversified.com Legal Disclaimer “Compass Diversified,” as we refer to it, is comprised of three separate, business entities that work closely together: Compass Group Diversified Holdings LLC (the “Company”), sponsor of Compass Diversified Holdings (“Holdings”), and Compass Group Management L
Slide 3: Today's Agenda
compassdiversified.com Welcome Q4 Update & Strategy Overview M&A Market & Verticals Financial Outlook Q&A – Strategy & Outlook CODI in Action – Moderated Panel Discussion 5.11 - Troy Brown PrimaLoft – Anne Cavassa Altor – Terry Moody Lunch & “CODI Corner” Today’s Agenda
Slide 4: Overview & Strategy
compassdiversified.com Overview & Strategy Elias Sabo Founding Partner & Chief Executive Officer
Slide 5: Q4 2024 Update
compassdiversified.com Subsidiaries Performed Well in Q4; Expect Results to Come in at or Above the High End of Our Guidance* Continued strength in Consumer Industrial accelerating Expect to take ~$12 million write down of inventory at 5.11 related to PFAS; Write off inline with previously com
Slide 6: CODI By The Numbers
SubsidiariesCODI By The Numbers* *As at 09/30/2024 (includes Ergobaby) $161M $9.3B+ $5.1B+ $505M+ $2.2B+ TTM Adjusted Earnings1 Aggregate Acquisitions 24 Platforms and 34 Add-Ons Invested Capital TTM pro forma Subsidiary Adjusted EBITDA1,2 TTM pro forma Revenue2 22.5% TTM pro forma Subsidiary Adjust
Slide 7: CODI is more than a ticker symbol.
compassdiversified.com CODI is more than a ticker symbol.
Slide 8: CODI: Culture of Disruption & Innovation
compassdiversified.com C O D I ulture f isruption & nnovation
Slide 9: CODI Values
compassdiversified.com Collaboration We measure success as a team CODI Values Passion We have a strong will to succeed— an intense but graceful competitiveness Integrity We will always choose the right way over the easy way Accountability We deliver against our commitments and take initiative each s
Slide 10: We are unique. We are redefining our industry
compassdiversified.com We are unique. We are redefining our industry with transparency, liquidity, and accessibility.
Slide 11: We are NOT Private Equity
compassdiversified.com Purpose-driven organization defined by our values Long-term focus on acquiring and owning innovative and disruptive businesses Financed in an intelligent way to lower overall cost of capital and align stakeholder incentives Match duration of opportunity with duration of capita
Slide 12: The Evolution of CODI
compassdiversified.com The Evolution of CODI Inflation & Interest Rates Muted M&A Market Acquired The Honey Pot; Divested Ergobaby Codified Investment Thesis Launched Centers of Excellence 2024* >5% >23% Innovative & Disruptive Industry Leading Accelerating Tightened Aperture for Acquisi
Slide 13: The CODI Advantage For Our Businesses
compassdiversified.com The CODI Advantage For Our Businesses
Slide 14: The CODI Advantage For Our Businesses
compassdiversified.com Partner with Management Teams Alignment of values, strategic partner, active support to realize their vision The CODI Advantage For Our Businesses Growth & Innovation Mindset Driving outsized growth through innovation, superior execution and a long-term focus Permanent & Patie
Slide 15: The CODI Advantage For Our Communities
compassdiversified.com The CODI Advantage For Our Communities
Slide 16: The CODI Advantage For Our Communities
compassdiversified.com Value-Driven fully committed ownership, with incentive to invest for the long-term The CODI Advantage For Our Communities Future-Thinking For Our People & Planet attracting and retaining top-tier talent; commitment to improving our companies and the world in which we operate S
Slide 17: The CODI Advantage For Our Shareholders
compassdiversified.com The CODI Advantage For Our Shareholders
Slide 18: The CODI Advantage For Our Shareholders
compassdiversified.com Unique Access to Middle Market Companies Exposure to innovative and disruptive businesses with public market transparency and liquidity The CODI Advantage For Our Shareholders Differentiated Value Creation Model Industry-leading cost of capital, patient deployment of capital,
Slide 19: Key Changes – Management Services Agreement
compassdiversified.com Key Changes – Management Services Agreement Established a Sliding Scale for Management Fees: — Management Fee of 2.0% of Adjusted Net Assets (“ANA”) up to $3.5 billion — Management Fee of 1.25% of ANA over $3.5 billion and less than $10 billion — Fixed Management Fee of 1.5%
Slide 20: CODI – Shareholder Savings
compassdiversified.com CODI – Shareholder Savings Integration Service FeeManagement Fees Adjusted Net Assets New Agreement Old AgreementNew Agreement Old Agreement $3.5 Million $0 $3.5 Million based on The Honey Pot $70 Million$70 Million$3.5 Billion $5.5 Million$0 $3.5 Million based on The Honey Po
Slide 21: Vertical & Subsidiary Update
compassdiversified.com Vertical & Subsidiary Update Pat Maciariello Partner & Chief Operating Officer
Slide 22: Investment Thesis and Acquisition Criteria
compassdiversified.com Empowering Success, Driving Growth, Exceeding Expectations Investment Thesis: At CODI, we acquire high-growth middle-market companies that we believe have a sustainable competitive advantage, poised to gain share in attractive markets. We empower strong management teams to rea
Slide 23: Consumer Subsidiaries Overview
compassdiversified.com Consumer (as of 9/30/24 – excluding Ergobaby) 6 $1.5B 11.9% Subsidiary Companies TTM Revenue (pro forma)1 TTM Revenue Growth (pro forma)1 $373M 25.7% TTM Adj. EBITDA (pro forma) 1,2 TTM Adj. EBITDA Margin (pro forma) 1,2 Consumer Subsidiaries Long-Term Outlook HSD+ Organic Rev
Slide 24: Lugano
compassdiversified.com 9 Curated Salons >$450k Average Transaction Size $425M+ Revenue (TTM)* 58.9% Growth (TTM)* $166M+ Adj EBITDA (TTM)* >80% Revenue from Repeat Customers >$19k Revenue Per Sq. Foot 39% Adj EBITDA Margin (TTM)* Disruptive business model redefining the >$160 Billion Luxury Collecti
Slide 25: Lugano – Impact to CODI Leverage
compassdiversified.com Lugano – Impact to CODI Leverage While Lugano requires significant investments in working capital for growth; investments in Lugano do not materially increase CODI’s leverage above target $80.0$77.5$75.0Annual Estimated EBITDA Growth $230.2$221.5$212.7CODI "Leveragability" at
Slide 26: Consumer – Subsidiary Outlook
compassdiversified.com Consumer – Subsidiary Outlook* Anticipated Key Drivers Long-Term Adjusted EBITDA Margins1 Organic Growth Outlook (2025 – 2028)Subsidiary • Continued consumer penetration and improved assortment • EBITDA margin improvement driven by mix shift towards DTC & greater efficiencies
Slide 27: Industrial Subsidiaries Overview
compassdiversified.com Industrial (as of 9/30/24) 3 $700M+ -4.0% Subsidiary Companies TTM Revenue TTM Revenue Growth $122M+ 17.4% TTM Adj. EBITDA1 TTM Adj. EBITDA Margin1 Industrial Subsidiaries Long-Term Outlook MSD Organic Revenue Growth >18% Adjusted EBITDA Margin ++ Capital Deployment Overview 1
Slide 28: Industrial – Subsidiary Outlook
compassdiversified.com Industrial – Subsidiary Outlook* Anticipated Key Drivers Anticipated Long-Term EBITDA Margins Organic Growth Outlook (2025 – 2028)Subsidiary • Recent acquisition of Lifoam strengthens position in faster growth cold chain market • Stable long-term margins ~20%MSD • Continued st
Slide 29: Long-Term Financial Outlook
compassdiversified.com Long-Term Financial Outlook Stephen Keller Executive Vice President & Chief Financial Officer
Slide 30: Guided by Values, Driven By Excellence
compassdiversified.com Trend20242022 2321 BBBBB 26.8N/A C-N/A Our Businesses Our Communities Our Shareholders Our Employees $179,000 $421,000 2016 2023 2024E* Subsidiary Adjusted EBITDA1 ESG Ratings Total Return Employees believe CODI is a great place to work >90%2.4x Russell 2000® Total ReturnSince
Slide 31: Adjusted EBITDA
compassdiversified.com Adjusted EBITDA1 (as reported2) Significant increase in adjusted EBITDA over 3, 5, & 10 years EBITDA growth driven by organic and inorganic investment and active subsidiary management Targeting sustained DD+ growth in adjusted EBITDA 1Adjusted EBITDA is a non-GAAP financial me
Slide 32: Increased retained cash
compassdiversified.com Continued strong operating performance at subsidiaries is driving increased retained cash 1Retained Cash is a non-GAAP financial measure. Please see Appendix. $1.0 $57.1 $64.8 $79.5 $66.3 2020 2021 2022 2023 2024 (YTD Sept) $Millions Retained Cash1 (before Working Capital) Inc
Slide 33: Strong Balance Sheet
compassdiversified.com Strong Balance Sheet 73% of debt fixed at blended 5.20% Ba la nc e Sh ee t & S ec ur ed D eb t U ns ec ur ed D eb t Ca pi ta l S tr uc tu re $300M 5.0% Fixed Due 2032 $1,000M 5.25% Fixed Due 2029 Est. as of 1/10/2025 40% 57% 13% Common Equity Preferred Equity Debt 6.6%Rate on
Slide 34: History of Successfully Deleveraging
compassdiversified.com History of Successfully Deleveraging CODI has a demonstrated history of paying down its debt and is committed to staying conservatively levered 3.7x 2.9x 2.5x 2.6x 2.8x 3.0x 3.5x 3.5x 3.9x 3.9x 3.6x 1.9x 1.9x 1.4x 1.75x 1.9x 1.8x 3.2x 2.9x 2.6x 2.9x 2.96x 3.04x 2.98x 3.93x 3.9
Slide 35: Financing Strategy & Outlook
compassdiversified.com Maintain Long-Term Leverage Target of 3.0x to 3.5x Financing Strategy & Outlook Secure Access to Diverse Sources Capital Ensure Significant Liquidity to Fund Subsidiary Growth and Drive Strategic Acquisitions
Slide 36: Capital Allocation Priorities
compassdiversified.com Capital Allocation Priorities 1. Continued Investment in Subsidiaries Organic investment in innovative and disruptive businesses Strategic add-ons 3. Efficient Return of Capital 2. Platform Acquisitions Active but disciplined capital allocation Target of 1-2 platform a
Slide 37: Long-Term Outlook
compassdiversified.com Long-Term Outlook* HSD+ ~25% >10% Organic Sales Growth* Subsidiary Adjusted EBITDA%* Adjusted Earnings Growth* Drive Organic Growth in Sales & Margins Actively Acquire Attractive Platform Businesses Opportunistically Divest Subsidiaries *Based on management’s current estimates
Slide 38: Q&A
compassdiversified.com Q&A
Slide 39: Panel Discussion
compassdiversified.com Panel Discussion Elias Sabo, CEO of Compass Diversified in conversation with: Troy Brown Anne Cavassa Terry A. Moody
Slide 40: Appendix
compassdiversified.com Appendix
Slide 41: Appendix: Subsidiary Snapshot
compassdiversified.com Appendix: Subsidiary Snapshot (as of 9/30/2024) Purchase Price + Add-ons TTM Capital Expenditures 9/30/24 PF Sub. Adj. EBITDA Margin 9/30/24 TTM PF Sub. Adj. EBITDA Growth Rate TTM PF Sub. Adj. EBITDA 9/30/24 TTM PF Revenue Growth Rate TTM PF Revenue 9/30/24 Year Acquired Subs
Slide 42: Net Income to Non-GAAP Adjusted Earnings
compassdiversified.com Appendix: Net Income to Non-GAAP Adjusted Earnings Nine Months EndedThree Months Ended September 30, 2023September 30, 2024September 30, 2023September 30, 2024 $ 122,964 $ 23,519 $ (3,760)$ 31,461Net income (loss) 21,790—8,950—Income from discontinued operations, net of tax 10
Slide 43: Adjusted EBITDA | Quarter Ended September 30, 2024
compassdiversified.com Appendix: Adjusted EBITDA | Quarter Ended September 30, 2024 ConsolidatedSternoArnoldAltorVelocityTHPPrimaLoftLuganoErgoBOA5.11CorporateIn OOO’s $31,461 $3,154 $2,260 $2,682 $1,831 ($160)($4,273)$24,272 ($3,229)$3,902 $9,737 ($8,715)Net income (loss) Adjusted for: $10,754 $939
Slide 44: Adjusted EBITDA | Quarter Ended September 30, 2023
compassdiversified.com Appendix: Adjusted EBITDA | Quarter Ended September 30, 2023 ConsolidatedSternoArnoldAltorVelocityPrimaLoftLuganoErgoBOA5.11CorporateIn OOO’s ($13,984)$1,981 $2,103 $5,042 ($28,881)($4,893)$14,584 ($261)$4,257 $5,834 ($13,750)Net income (loss) Adjusted for: $3,837 $643 $876 $1
Slide 45: Adjusted EBITDA | Nine Months Ended September 2024
compassdiversified.com Appendix: Adjusted EBITDA | Nine Months Ended September 30, 2024 ConsolidatedSternoArnoldAltorVelocityTHPPrimaLoftLuganoErgoBOA5.11CorporateIn OOO’s $20,174 $7,711 $6,169 $6,076 ($53,368)($7,764)($5,261)$59,257 ($6,337)$16,248 $18,594 ($21,151) Net income (loss) Adjusted for:
Slide 46: Adjusted EBITDA | Nine Months Ended September 2023
compassdiversified.com Appendix: Adjusted EBITDA | Nine Months Ended September 30, 2023 ConsolidatedSternoArnoldAltorVelocityPrimaLoftLuganoErgoBOA5.11CorporateIn OOO’s ($2,321)$4,445 $6,911 $12,244 ($36,862)($5,500)$31,468 ($1,114)$15,151 $11,850 ($40,914)Net income (loss) Adjusted for: $15,077 $1,
Slide 47: Adjusted EBITDA | Full Year Ended December 31, 2023
compassdiversified.com Appendix: Adjusted EBITDA | Full Year Ended December 31, 2023 ConsolidatedSternoArnoldAltorVelocityPrimaLoftLuganoErgoBOA5.11CorporateIn OOO’s ($38,736)$8,115 $10,434 $16,504 ($40,045)($69,883)$52,315 ($2,601)$16,496 $21,690 ($51,761)Net income (loss) from continuing operation
Slide 48: Adjusted EBITDA | Full Year Ended December 31, 2022
compassdiversified.com Appendix: Adjusted EBITDA | Full Year Ended December 31, 2022 ConsolidatedSternoArnoldAltorVelocity PrimaLoftLuganoErgoBOA5.11CorporateIn OOO’s $3,658 $3,406 $7,683 $9,662 $4,127 ($17,741)$27,934 ($18,669)$42,613 $22,633 ($77,990)Net income (loss) from continuing operations Ad
Slide 49: Appendix: Retained Cash Calculation
compassdiversified.com 9/30/202412/31/202312/31/202212/31/202112/31/2020($000's) -$77,610$78,080-$28,291$134,051$148,625Net Cash Provided by (Used in) Operating Activities 253,902 153,310 252,377 80,990 (3,349)Changes in Operating Assets and Liabilities (working capital) Less: (34,507)(55,776)(64,27
Slide 50: Appendix Adjusted EBITDA (Historical)
compassdiversified.com Appendix Adjusted EBITDA (Historical) As reported in the annual (10K) report filed with the SEC in the year indicated.
Slide 51: Adjusted EBITDA (as Reported) | Full Year 2016
compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2016 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
Slide 52: Adjusted EBITDA (as Reported) | Full Year 2017
compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2017 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
Slide 53: Adjusted EBITDA (as Reported) | Full Year 2018
compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2018 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
Slide 54: Adjusted EBITDA (as Reported) | Full Year 2019
compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2019 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
Slide 55: Adjusted EBITDA (as Reported) | Full Year 2020
compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2020 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
Slide 56: Adjusted EBITDA (as Reported) | Full Year 2021
compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2021 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
Slide 57: Adjusted EBITDA (as Reported) | Full Year 2022
compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2022 *As reported in the annual (10K) report filed with the SEC in the year indicated. Amount In $000s
Slide 58: Adjusted EBITDA (as Reported) | Full Year 2023
compassdiversified.com Appendix: Adjusted EBITDA (as Reported*) | Full Year 2023 *As reported in the annual (10K) report filed with the SEC in the year indicated. Adjusted EBITDA Year ended December 31, 2023 (in thousands) Corporate 5.11 BOA Ergo Lugano PrimaLoft Velocity Outdoor Altor Solutions Arn
Slide 59: Thank you.
compassdiversified.com Thank you. compassdiversifi . Phone: +1 (949) 333-5033 Email: IRinquiry@compassdiversified.com
Compass Diversified Holdings — Investor Day (January 2025) on 6ix