codi-20240630

美国证券交易委员会

华盛顿特区 20549

表格 10-Q


☒			根据1934年证券交易法第13或15(d)条，进行季度报告。

截至2024年6月30日季度结束 2024年6月30日

或者


☐			根据1934年证券交易法第13条或第15(d)条规定的过渡报告。

到天从发票日期计算，被视为商业合理。

罗盘多元化控股

（依凭章程所载的完整登记名称）

特拉华州

001-34927

57-6218917

(依据所在地或其他管辖区)
的注册地或组织地点)

(委员会
档案编号)

(I.R.S. 雇主识别号码)
1000 Skokie Blvd., Suite 350

COMPASS GROUP DIVERSIFIED HOLDINGS LLC

（依凭章程所载的完整登记名称）

特拉华州

001-34926

20-3812051

(依据所在地或其他管辖区)
的注册地或组织地点)

(委员会
档案编号)

(I.R.S. 雇主识别号码)
1000 Skokie Blvd., Suite 350

301 Riverside Avenue, 二楼, Westport, 康涅狄格州 06880

(203) 221-1703

(注册人的主要执行办公室地址，包括邮政编码和电话号码，包括区域代码)

根据法案第12(b)条规定注册的证券：

每个班级的标题

交易标的（s）

注册的每个交易所的名称

代表对罗盘多元化控股的有益利益的股份

CODI

纽约证券交易所

代表对罗盘多元化控股的有益利益的A级优先股

CODI PR A

纽约证券交易所

代表对compass diversified控股有益权益的B系列优先股份

CODI PR B

纽约证券交易所

代表对compass diversified控股有益权益的C系列优先股份

CODI PR C

纽约证券交易所

请勾选表示该登记者（1）已在过去12个月（或该登记者需要提交此类报告的较短期间）内提交了证券交易所法案第13或15（d）节要求提交的所有报告，且（2）在过去90天内一直受到此类提交要求的影响。是 ý 没有 ¨

请在勾选符号上注明，是否在过去的12个月内（或更短的时间内，如果注册人需提交此类文件），根据Regulation S-t第405条规定向本章第232.405条提交所需提交的每个交互式资料档案。是 ý 没有 ¨

请标记√查询公司是否属于大型高速申报机构、高速申报机构、非高速申报机构、较小的申报公司或新兴成长公司。请参见《交易所法》第120亿2条中《大型高速申报机构》、《高速申报机构》、《较小的申报公司》和《新兴成长公司》的定义。

大型加速归档人

加速归档人

非加速归档人

小型报告公司

☐

新兴成长型企业

☐

如果该企业为新兴成长型企业，请在是否选择不使用证交法第13(a)条所提供之符合任何新的或修订财务会计标准的延长过渡期的方格中打勾。 ¨

请勾选表示，登记人是否为空壳公司（根据交易所法规第120亿2条定义）。是 ☐ 没有 ý

截至2024年7月26日，这里是 75,652,286 Trust common shares of compass diversified holdings外套。

罗盘多元化控股

第10-Q表格季度报告

截至2024年6月30日的期间

页面
数字

前瞻性声明

第一部分财务资料

项目一。

第二项。

第三项

第四项

第二部分其他资讯

项目一。

第一项。

第六项。

注意读者

阅读本季度十卷表10-Q报告时，提及：

•「信托」和「控股」指的是 compass diversified 控股；

•「LLC」指的是Compass Group Diversified Holdings LLC；

•“公司”指的是 compass diversified holdings 及 compass group diversified holdings llc 两者合称；

•「业务」、「营运部门」、「子公司」和「报告单位」都指代公司所控制的业务。

•“经理”指的是Compass Group Management LLC（“CGM”）；

•「信托协议」是指自2021年8月3日起生效的信托的第三份修订和重订信托协议，并经进一步修订；

•「2022信贷设施」是指2022年7月12日由有限责任公司、不时作为贷款方的贷方、美国银行NA作为管理代理人、弹性信贷贷款人和信用状发行人（代理人）订立之第三次修订和重订信贷协议。

•「2022年循环信贷设施」是指2022年信贷设施提供的60000万美元循环贷款、摆动线贷款和信用状，并将于2027年到期；

•“2022年度贷款”指的是2022年信贷资金提供的40000万美元贷款；

•「LLC协议」指的是截至2021年8月3日的公司第六次修订及重签营运协议，以进一步修订。

•"我们"、"我们"和"我们"指的是信托、公司和企业一起。

前瞻性陈述

本季度报告表格10-Q中包含历史记录和前瞻性声明。在某些情况下，我们可能使用"项目"，"预测"，"相信"，"预期"，"计划"，"期望"，"估计"，"打算"，"应该"，"将"，"可"，"可能"或其他表达对未来事件或结果的不确定性的字词来识别这些前瞻性声明。除了历史事实或当前事实之外的一切陈述均为“前瞻性声明”，为了联邦和州证券法而言。. 前瞻性声明包括，但不限于，(i) 有关我们未来业绩或流动性的陈述，例如对我们的营运结果、净收入、调整后EBITDA、调整后收益以及进行季度分配的能力的期望，以及 (ii) 我们未来营运的计划、策略和目标，包括我们的业务展望和计划的资本支出。本季度报告表格10-Q中的前瞻性声明受到各种风险和不确定性的影响，例如本公司向SEC提交的或引用的文件中所披露的风险和不确定性，包括但不限于我们于2023年12月31日结束的年度报告表格10-k中标题为“风险因素”的部分所描述的风险，在2024年2月28日提交给美国证券交易委员会的中，随著时间的推移，我们的文件中的这些因素可能被更新。许多这些风险和不确定性超出我们的控制。. 导致我们的实际结果、表现和成就与我们前瞻性声明中包含的估计或预测有重大差异的重要因素包括，但不限于：

•一般经济、政治或业务条件的变化，或美国及其他我们存在的国家的经济、政治或人口趋势的变化，包括利率期货和通货膨胀的变化；

•全球货币供应链混乱，劳工短缺和高劳工成本；

•整合困难和延迟，或者收购后业务中断，或无法充分实现相关成本节省和其他好处；

•我们成功运营附属企业并在整体基础上有效整合和提升未来收购的能力；

•我们有能力保持我们的信贷额度，或者根据我们认为有利的条款进行更多借款；

•我们有能力移除CGM和CGM的辞职权；

•我们的组织架构可能限制我们达到股息和分配政策的能力；

•我们履行并遵守债务条款的能力；

•我们未来向股东进行分配的能力；

•我们有能力按时支付管理费和盈利分配。

•我们能够进行并资助未来收购的能力;

•我们实施收购和管理策略的能力；

•我们子公司运营的法律和监管环境;

•我们子公司所属行业的趋势;

•未来法律或法规的变化（包括监管机构对这些法律和法规的解释）；

•由于恐怖主义、自然灾害、社会、民事或政治动乱可能导致业务或整体经济遭受风险；

•环保母基风险会影响我们子公司的业务或运营；

•我们和CGM的能力，能保留或替换我们子公司和CGM的合格员工。

•信托税收重新分类的影响；

•法律和行政程序、和解、调查和索赔的费用和影响；以及

•影响我们子公司业务或运营的非凡或不可抗力事件。

我们的实际结果、表现、前景或机会可能与前瞻性陈述中表达或暗示的不同。我们目前尚不知道的其他风险，或我们目前认为不重要的风险，也可能导致我们的实际结果有所不同。

鉴于这些风险、不确定性和假设，您不应过度依赖任何前瞻性陈述。本季度报告表格10-Q中讨论的前瞻性事件可能不会发生。这些前瞻性陈述截至本季度报告表格10-Q的日期而作。我们不承诺公开更新或修订任何前瞻性陈述以反映随后事件或情况，无论基于新资讯、未来事件或其他原因，除非法律另有要求。

第I部分

财务信息

项目1. 基本报表

罗盘多元化控股

缩表合并资产负债表


	6月30日， 2024		12月31日， 2023
（以千为单位）	(未经查核)
资产
流动资产:
现金及现金等价物	$	68,370	$	450,477
应收帐款净额	358,530		318,241
存货净值	843,634		740,387
预付费用及其他流动资产	126,027		94,715
全部流动资产	1,396,561		1,603,820
不动产、厂房及设备净值	180,928		192,562
商誉	1,003,685		901,428
无形资产，扣除累计摊销	1,088,647		923,905
其他非流动资产	188,373		195,266
资产总额	$	3,858,194	$	3,816,981
负债及股东权益
流动负债：
应付账款	$	94,837	$	93,412
应计费用	174,037		157,456
由于相关方（请参阅附注P）	17,928		16,025
流动部分、长期债务	10,000		10,000
其他流动负债	37,486		35,465
流动负债合计	334,288		312,358
推延所得税	138,218		120,131
长期负债	1,712,084		1,661,879
其他非流动负债	204,852		203,232
总负债	2,389,442		2,297,600
承诺和条款（详见O项注记）
股东权益
信托喜好股票， 50,000 已授权； 13,011 2024年6月30日已发行和流通中的股份为 12,600 于2023年12月31日发行及流通的股份数。
A系列优先股，无面额为0.0001； 4,045 2024年6月30日已发行和流通中的股份为 4,000 于2023年12月31日发行及流通的股份数。	97,453		96,417
B系列优先股，无面额为0.0001； 4,128 于2024年6月30日发行并流通的股份数为万股 4,000 于2023年12月31日发行并流通的股份数为万股	99,558		96,504
C系列优先股，无面额为0.0001； 4,838 2024年6月30日已发行和流通中的股份为 4,600 2023年12月31日已发行和流通的股份数量	116,710		110,997
trust普通股，无每股面额为 500,000 已授权； 75,958 股份发行和 75,476 2024年6月30日和流通的股份数量并 75,753 已发行且 75,270 截至2023年12月31日的优秀资产	1,285,796		1,281,303
库藏股，以成本衡量	(9,339)		(9,339)
其他综合损益（损失）累积额	(4,503)		111
累积亏损	(369,171)		(249,243)
归属于控股公司的股东权益总额	1,216,504		1,326,750
非控制权益	252,248		192,631
股东权益总额	1,468,752		1,519,381
负债和股东权益总额	$	3,858,194	$	3,816,981

See notes to condensed consolidated financial statements.

COMPASS DIVERSIFIED HOLDINGS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
(in thousands, except per share data)	2024		2023		2024		2023
Net revenues	$	542,595	$	486,889	$	1,066,885	$	970,822
Cost of revenues	283,481		270,248		565,944		549,117
Gross profit	259,114		216,641		500,941		421,705
Operating expenses:
Selling, general and administrative expense	151,446		133,755		302,160		264,019
Management fees	18,864		16,795		36,931		33,065
Amortization expense	27,461		23,978		53,749		47,951
Impairment expense	—		—		8,182		—
Operating income	61,343		42,113		99,919		76,670
Other income (expense):
Interest expense, net	(26,561)		(26,613)		(50,136)		(52,793)
Amortization of debt issuance costs	(1,004)		(1,024)		(2,009)		(2,029)
Loss on sale of Crosman (refer to Note C)	(24,606)		—		(24,606)		—
Other income (expense), net	(1,375)		(105)		(4,249)		1,055
Income from continuing operations before income taxes	7,797		14,371		18,919		22,903
Provision for income taxes	21,520		4,320		30,206		11,240
Income (loss) from continuing operations	(13,723)		10,051		(11,287)		11,663
Income from discontinued operations, net of income taxes	—		2,840		—		12,840
Gain on sale of discontinued operations, net of income taxes	—		4,232		3,345		102,221
Net income (loss)	(13,723)		17,123		(7,942)		126,724
Less: Net income from continuing operations attributable to noncontrolling interest	5,806		3,498		13,235		7,669
Less: Net income from discontinued operations attributable to noncontrolling interest	—		19		—		52
Net income (loss) attributable to Holdings	$	(19,529)	$	13,606	$	(21,177)	$	119,003

Amounts attributable to Holdings
Income (loss) from continuing operations	$	(19,529)	$	6,553	$	(24,522)	$	3,994
Income from discontinued operations, net of income tax	—		2,821		—		12,788
Gain on sale of discontinued operations, net of income tax	—		4,232		3,345		102,221
Net income (loss) attributable to Holdings	$	(19,529)	$	13,606	$	(21,177)	$	119,003

Basic income (loss) per common share attributable to Holdings (refer to Note J)
Continuing operations	$	(0.45)	$	(0.45)	$	(1.30)	$	(0.59)
Discontinued operations	—		0.10		0.04		1.57
Basic income (loss) per common share attributable to Holdings (refer to Note J)	$	(0.45)	$	(0.35)	$	(1.26)	$	0.98

Basic weighted average number of shares of common shares outstanding	75,389		71,932		75,332		72,055

Cash distributions declared per Trust common share (refer to Note J)	$	0.25	$	0.25	$	0.50	$	0.50

See notes to condensed consolidated financial statements.

COMPASS DIVERSIFIED HOLDINGS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
(in thousands)	2024		2023		2024		2023

Net income (loss)	$	(13,723)	$	17,123	$	(7,942)	$	126,724
Other comprehensive income (loss)
Foreign currency translation adjustments	(1,309)		610		(2,548)		1,856
Pension benefit liability, net	(1,233)		86		(2,066)		(438)
Other comprehensive income (loss)	(2,542)		696		(4,614)		1,418
Total comprehensive income (loss), net of tax	$	(16,265)	$	17,819	(12,556)		128,142
Less: Net income attributable to noncontrolling interests	5,806		3,517		13,235		7,721
Less: Other comprehensive income (loss) attributable to noncontrolling interests	(42)		16		(98)		36
Total comprehensive income (loss) attributable to Holdings, net of tax	$	(22,029)	$	14,286	$	(25,693)	$	120,385

See notes to condensed consolidated financial statements.

COMPASS DIVERSIFIED HOLDINGS

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


(in thousands)	Trust Preferred Shares						Trust Common Shares				Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity Attributable to Holdings		Non- Controlling Interest		Non- Controlling Interest Attributable to Disc. Ops.		Total Stockholders’ Equity
	Series A		Series B		Series C				Treasury Shares
Balance — April 1, 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
Net income	—		—		—		—		—		13,606		—		$	13,606	3,498		19		17,123
Total other comprehensive income, net	—		—		—		—		—		—		696		$	696	—		—		696
Issuance of Trust common shares	—		—		—		(43)		—		—		—		$	(43)	—		—		(43)
Purchase of Trust common shares for treasury	—		—		—		—		(1,902)		—		—		$	(1,902)	—		—		(1,902)
Option activity attributable to noncontrolling shareholders	—		—		—		—		—		—		—		$	—	3,207		459		3,666
Effect of subsidiary stock option exercise	—		—		—		—		—		—		—		$	—	52		—		52
Purchase of noncontrolling interest	—		—		—		—		—		—		—		$	—	(267)		—		(267)
Acquisition of noncontrolling interest	—		—		—		—		—		—		—		$	—	—		4,155		4,155
Distributions paid - Allocation Interests (refer to Note J)	—		—		—		—		—		(26,475)		—		$	(26,475)	—		—		(26,475)
Distributions paid - Trust Common Shares	—		—		—		—		—		(17,987)		—		$	(17,987)	—		—		(17,987)
Distributions paid - Trust Preferred Shares	—		—		—		—		—		(6,046)		—		$	(6,046)	—		—		(6,046)
Balance — June 30, 2023	$	96,417	$	96,504	$	110,997	$	1,206,953	$	(5,856)	$	(328,507)	$	282	$	1,176,790	$	214,923	$	25,892	$	1,417,605

Balance — April 1, 2024	$	96,600	$	96,593	$	111,552	$	1,282,521	$	(9,339)	$	(324,695)	$	(1,961)	$	1,251,271	$	242,940	$	—	$	1,494,211
Net income (loss)	—		—		—		—		—		(19,529)		—		(19,529)		5,806		—		(13,723)
Total other comprehensive loss, net	—		—		—		—		—		—		(2,542)		(2,542)		—		—		(2,542)
Issuance of Trust common shares	—		—		—		3,275		—		—		—		3,275		—		—		3,275
Issuance of Trust preferred shares	853		2,965		5,158		—		—		—		—		8,976		—		—		8,976

Option activity attributable to noncontrolling shareholders	—		—		—		—		—		—		—		—		3,927		—		3,927
Effect of subsidiary stock option exercise	—		—		—		—		—		—		—		—		6		—		6
Purchase of noncontrolling interest	—		—		—		—		—		—		—		—		(349)		—		(349)
Reclassification of noncontrolling shareholder interest to liability	—		—		—		—		—		—		—		—		(82)		—		(82)


Distributions paid - Trust Common Shares	—		—		—		—		—		(18,846)		—		(18,846)		—		—		(18,846)
Distributions paid - Trust Preferred Shares	—		—		—		—		—		(6,101)		—		(6,101)		—		—		(6,101)
Balance — June 30, 2024	$	97,453	$	99,558	$	116,710	$	1,285,796	$	(9,339)	$	(369,171)	$	(4,503)	$	1,216,504	$	252,248	$	—	$	1,468,752


(in thousands)	Trust Preferred Shares						Trust Common Shares				Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity Attributable to Holdings		Non- Controlling Interest		Non- Controlling Interest Attributable to Disc. Ops.		Total Stockholders’ Equity
	Series A		Series B		Series C				Treasury 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	—		—		—		—		—		119,003		—		119,003		7,669		52		126,724
Total other comprehensive income, net	—		—		—		—		—		—		1,418		1,418		—		—		1,418
Issuance of Trust common shares	—		—		—		(91)		—		—		—		(91)		—		—		(91)
Purchase of Trust common shares for treasury	—		—		—		—		(5,856)		—		—		(5,856)		—		—		(5,856)
Option activity attributable to noncontrolling shareholders	—		—		—		—		—		—		—		—		4,848		1,836		6,684
Effect of subsidiary stock option exercise	—		—		—		—		—		—		—		—		57		—		57
Purchase of noncontrolling interest	—		—		—		—		—		—		—		—		(1,115)		—		(1,115)
Disposition of ACI	—		—		—		—		—		—		—		—		—		(1,729)		(1,729)
Acquisition of noncontrolling interest	—		—		—		—		—		—		—		—		—		4,155		4,155
Distributions paid - Allocation Interests (refer to Note J)	—		—		—		—		—		(26,475)		—		(26,475)		—		—		(26,475)
Distributions paid - Trust Common Shares	—		—		—		—		—		(36,038)		—		(36,038)		—		—		(36,038)
Distributions paid - Trust Preferred Shares	—		—		—		—		—		(12,091)		—		(12,091)		—		—		(12,091)
Balance — June 30, 2023	$	96,417	$	96,504	$	110,997	$	1,206,953	$	(5,856)	$	(328,507)	$	282	$	1,176,790	$	214,923	$	25,892	$	1,417,605

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)	—		—				—		—		(21,177)		—		(21,177)		13,235		—		(7,942)
Total other comprehensive loss, net	—		—				—		—		—		(4,614)		(4,614)		—		—		(4,614)
Issuance of Trust common shares	—		—		—		4,493		—		—		—		4,493		—		—		4,493
Issuance of Trust preferred shares	1,036		3,054		5,713		—		—		—		—		9,803		—		—		9,803
Option activity attributable to noncontrolling shareholders	—		—		—		—		—		—		—		—		8,257		—		8,257
Effect of subsidiary stock option exercise	—		—		—		—		—		—		—		—		6		—		6
Purchase of noncontrolling interest	—		—		—		—		—		—		—		—		(2,859)		—		(2,859)
Reclassification of noncontrolling shareholder interest to liability	—		—		—		—		—		—		—		—		(696)		—		(696)
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	—		—		—		—		—		(37,664)		—		(37,664)		—		—		(37,664)
Distributions paid - Trust Preferred Shares	—		—		—		—		—		(12,146)		—		(12,146)		—		—		(12,146)
Balance — June 30, 2024	$	97,453	$	99,558	$	116,710	$	1,285,796	$	(9,339)	$	(369,171)	$	(4,503)	$	1,216,504	$	252,248	$	—	$	1,468,752


COMPASS DIVERSIFIED HOLDINGS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six months ended June 30,
(in thousands)	2024		2023
Cash flows from operating activities:
Net income (loss)	$	(7,942)	$	126,724
Income from discontinued operations	—		12,840
Gain on sale of discontinued operations	3,345		102,221
Income (loss) from continuing operations	(11,287)		11,663
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense	21,397		23,262
Amortization expense - intangibles	53,749		47,951
Amortization expense - inventory step-up	4,006		1,174
Amortization of debt issuance costs	2,009		2,029
Impairment expense	8,182		—
Loss on sale of Crosman	24,606		—
Noncontrolling stockholder stock based compensation	8,257		4,848
Provision for receivable and inventory reserves	(5,268)		(2,002)
Deferred taxes	(407)		(7,899)
Other	497		1,047
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(37,520)		14,385
Inventories	(109,277)		(69,021)
Other current and non-current assets	1,370		(1,251)
Accounts payable and accrued expenses	(8,697)		(36,227)
Cash used in operating activities - continuing operations	(48,383)		(10,041)
Cash provided by operating activities - discontinued operations	—		47,280
Cash provided by (used in) provided by operating activities	(48,383)		37,239
Cash flows from investing activities:
Acquisitions, net of cash acquired	(379,524)		—
Purchases of property and equipment	(18,919)		(28,604)
Proceeds from sale of businesses	64,828		105,123
Other investing activities	(2,458)		(911)
Cash provided by (used in) investing activities - continuing operations	(336,073)		75,608
Cash provided by investing activities - discontinued operations	—		42,221
Cash provided by (used in) investing activities	(336,073)		117,829


COMPASS DIVERSIFIED HOLDINGS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six months ended June 30,
(in thousands)	2024		2023
Cash flows from financing activities:
Proceeds and expenses from issuance of Trust common shares, net	4,493		(91)
Proceeds and expenses from issuance of Trust preferred shares, net	9,803		—
Purchase of treasury shares, net	—		(5,856)
Borrowings under credit facility	237,000		217,000
Repayments under credit facility	(183,000)		(280,000)

Principal payments - term loan	(5,000)		(5,000)
Distributions paid - common shares	(37,664)		(36,038)
Distributions paid - preferred shares	(12,146)		(12,091)
Distributions paid - allocation interests	(48,941)		(26,475)

Net proceeds provided by noncontrolling shareholders	6		57
Net proceeds provided by noncontrolling shareholders - acquisitions	41,674		—
Purchase of noncontrolling interest	(2,859)		(1,115)

Other	—		(10)
Net cash provided by (used in) financing activities	3,366		(149,619)
Foreign currency impact on cash	(1,017)		634
Net increase (decrease) in cash and cash equivalents	(382,107)		6,083
Cash and cash equivalents — beginning of period (1)	450,477		61,271
Cash and cash equivalents — end of period (2)	$	68,370	$	67,354

(1) Includes cash from discontinued operations of $4.7 million at January 1, 2023.

(2) Includes cash from discontinued operations of $3.1 million at June 30, 2023.

See notes to condensed consolidated financial statements.

COMPASS DIVERSIFIED HOLDINGS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 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 June 30, 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 and six month periods ended June 30, 2024 and June 30, 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 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 ACI are reported as discontinued operations in the condensed consolidated statements of operations for the six months ended June 30, 2023, and the results of operations of Marucci are reported as discontinued operations in the three and six months ended June 30, 2023. Refer to Note C - "Dispositions" for additional information. Unless otherwise indicated, the disclosures accompanying the condensed consolidated financial statements reflect the Company's continuing operations.

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.

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 acquired THP for a total purchase price, including proceeds from noncontrolling shareholders, 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 equity holders of THP invested in the transaction along with the Company, representing 15% of the initial equity interest 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.


(in thousands)	Preliminary Purchase Price Allocation		Measurement Period Adjustments		Preliminary Purchase Price Allocation
Purchase Consideration	$	380,121	$	(3,320)	$	376,801

Fair value of identifiable assets acquired:
Cash	$	4,076	$	(3,320)	$	756
Accounts receivable (1)	16,361		—		16,361
Inventory	18,986		—		18,986
Property, plant and equipment	1,888		—		1,888
Intangible assets	247,000		24,300		271,300
Other current and noncurrent assets	3,958		—		3,958
Total identifiable assets	292,269		20,980		313,249

Fair value of liabilities assumed:
Current liabilities	10,957		—		10,957
Other liabilities	1,480		—		1,480
Deferred tax liabilities	27,846		2,805		30,651
Total liabilities	40,283		2,805		43,088

Net identifiable assets acquired	251,986		18,175		270,161

Goodwill	$	128,135	$	(21,495)	$	106,640


Acquisition consideration
Purchase price	$	380,000	$	—	$	380,000
Estimated cash acquired	4,375		(3,320)		1,055
Net working capital adjustment	(3,126)		—		(3,126)
Other adjustments	(1,128)		—		(1,128)
Total purchase consideration	$	380,121	$	(3,320)	$	376,801

(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 $106.6 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.

In the second quarter of 2024, the purchase price allocation for The Honey Pot Co. was adjusted to reflect certain measurement period adjustments due to updated intangible asset valuation and an adjustment to deferred tax liabilities. Customer relationships was increased $24.3 million, with a corresponding decrease to goodwill. Deferred income tax liability increased $2.8 million, with a corresponding decrease to goodwill. The purchase price allocation for The Honey Pot Co. as of June 30, 2024 is not yet final as the working capital settlement has not been finalized. The purchase price of The Honey Pot Co. is expected to be finalized in the third quarter of 2024.

The intangible assets recorded related to The Honey Pot Co. acquisition are as follows (in thousands):


Intangible Assets	Fair Value		Estimated Useful Lives

Tradename	$	225,000	18 years
Customer relationships	46,300		13 years
	$	271,300

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 $46.3 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 proforma information

The following unaudited proforma data for the six months ended June 30, 2024 and the three and six months ended June 30, 2023 gives effect to the acquisition of The Honey Pot Co., as described above, and the dispositions of ACI and Marucci, as if these transactions had been completed as of January 1, 2023. The proforma 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.


	三个月结束		六个月结束时
（以千美元为单位，除每股数据外）	2023年6月30日		2024年6月30日		2023年6月30日
净销售额	$	511,898	$	1,077,566	$	1,027,709
毛利润	$	231,389	$	507,275	$	455,402
营收	$	40,616	$	100,228	$	79,598
持续营运活动净利（损）	$	8,519	$	(11,459)	$	13,058
归属于控股公司的持续营运的净利润（损失）	$	5,010	$	(24,915)	$	4,686
归属于控股公司的每股基本和完全稀释净损失	$	(0.42)	$	(1.31)	$	(0.58)

Note C — 摆脱

Marucci的出售

于2023年11月1日，有限责任公司，仅代表Marucci的股票和期权持有人，进入与fox factory, Inc.（“Marucci 购买方”）、Marucci Merger 子公司，以及Wheelhouse 签订的最终并购协议和计划，Marucci 购买方同意收购Wheelhouse发行和流通中的所有证券，Marucci Sports, LLC的母公司，通过Marucci Merger子公司与Wheelhouse的并购，选择以Wheelhouse作为并购存续并成为Marucci 购买方的全资子公司。于2023年11月14日，各方完成了并购。 Wheelhouse的售价基于企业价值＄572 百万，根据诸如交易税收益、Wheelhouse的交易费用、交易结束时Wheelhouse的净营运资本、现金和债务余额等事项进行了一定的调整。在将销售价格分配给Wheelhouse的非控制权股东并支付交易费用之后，CODI在交易结束时获得约＄484.0 百万的总收入，其中＄87.3 百万与公司之间的公司间贷款偿还相关。公司在2023年12月31日结束的一年中，记录了Marucci售出的预税利润＄241.4 百万。在2024年第一季度，有限责任公司就Marucci获得了约＄3.3 百万的纯工作资本清算，被认定为附带的综合简明综合损益表中已售业务的额外损益，扣除税金。Marucci的出售收益被用来偿还公司2022年信贷，以及用来资助公司的后续收购。Marucci的出售已在附属财务报表中被列为已停业运作。

Marucci在2023年6月30日结束的三个月和六个月的营运摘要结果如下（单位：千元）： 2023年6月30日结束的三个月和六个月的Marucci营运摘要结果如下（单位：千元）：


	2023年6月30日结束的三个月。		2023年6月30日止六个月
净销售额	$	37,270	$	95,565
毛利润	$	20,249	$	53,016
营业利益	$	2,962	$	17,302
继续营运前所得税利益 (1)	$	2,964	$	17,271
所得税费用	$	124	$	3,040
已中止营运的收入 (1)	$	2,840	$	14,231

(1) 截至2023年6月30日的三个和六个月的营运结果不包括分别为$300万的关联公司利息支出2.4百万和$4.8的计算。

出售爱文思控股

于2023年1月10日，LLC仅作为指南针AC控股有限公司的股票和期权持有人代表，与APCt Inc.（“ACI购买方”）、Circuit并购公司Inc.（“ACI并购公司”）和爱文思控股订定了《合并协议和计划》，根据该协议，ACI购买方同意收购Advanced Circuits的所有已发行和流通证券，该公司是Advanced Circuits, Inc.的母公司，通过ACI并购公司和Advanced Circuits的合并实现，Advanced Circuits作为合并后的幸存公司，成为ACI购买方的全资子公司（“ACI并购”）。ACI并购完成于2023年2月14日。Advanced Circuits的售价基于一个企业价值$220百万，受特定调整事项的影响，如Advanced Circuits在结束时的流动资本，现金和负债余额等。在将销售价格分配给Advanced Circuits的非控制权益持有人并支付交易费用后，公司在结束时总计收到了约$170.9百万的总收益，其中$66.9百万是与公司之间的内部贷款还款相关的。公司在2023年12月31日结束的一年中，对售出Advanced Circuits的售出录得了一笔售出前税后 $106.9百万盈利。Advanced Circuits的售出在附带的基本报表中已作为一笔停业控制项进行核算。

ACI在2023年1月1日至处分日期的营运摘要如下（以千为单位）：


	截至2023年1月1日至处分日期为止
净销售额	$	8,829
毛利润	$	3,663
营业利益	$	1,058
继续营运的收入（损失）和税前收入 (1)	$	(2,464)
所得税费用（效益）	$	(1,073)
停业营运的收入（损失） (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.

Disposition of Crosman

On April 30, 2024, Velocity Outdoor entered into a stock purchase agreement to sell Crosman Corporation ("Crosman"), its airgun product division, to Daisy Manufacturing Company, for an enterprise value of approximately $63 million. The sale was completed on the same day. The Company recorded a loss of $24.6 million on the sale of Crosman in the quarter ended June 30, 2024. Velocity received net proceeds of approximately $58.5 million related to the sale of Crosman, which was used to repay amounts outstanding under its intercompany credit agreement. The results of operation of Crosman are included in the accompanying financial statements through the date of sale.

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 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 and six months ended June 30, 2024 and 2023 (in thousands):


Three months ended June 30, 2024
	United States		Mexico		Europe		Asia Pacific		Other International		Total
5.11	$	97,482	$	7,662	$	8,470	$	4,179	$	5,408	$	123,201
BOA (1)	13,305		13		22,966		17,777		99		54,160
Ergobaby	10,498		4		7,931		7,614		2,510		28,557
Lugano	98,374		—		49		—		935		99,358
PrimaLoft (1)	162		—		1,352		23,655		122		25,291
The Honey Pot Co.	24,178		—		—		—		4		24,182
Velocity Outdoor	16,889		80		515		141		1,086		18,711
Altor	45,650		6,563		—		—		—		52,213
Arnold	29,979		151		10,261		1,835		929		43,155
Sterno	71,225		—		479		—		2,063		73,767
	$	407,742	$	14,473	$	52,023	$	55,201	$	13,156	$	542,595


Three months ended June 30, 2023
	United States		Mexico		Europe		Asia Pacific		Other International		Total
5.11	$	100,627	$	5,435	$	9,365	$	3,815	$	6,788	$	126,030
BOA (1)	10,378		9		14,801		12,867		68		38,123
Ergobaby	10,014		49		6,129		8,650		1,307		26,149
Lugano	60,949		—		—		—		—		60,949
PrimaLoft (1)	141		28		886		20,922		183		22,160

Velocity Outdoor	34,253		154		1,033		132		2,267		37,839
Altor	52,870		8,016		—		—		—		60,886
Arnold	27,906		124		9,106		1,433		1,569		40,138
Sterno	72,385		—		576		—		1,654		74,615
	$	369,523	$	13,815	$	41,896	$	47,819	$	13,836	$	486,889


Six months ended June 30, 2024
	United States		Mexico		Europe		Asia Pacific		Other International		Total
5.11	$	193,652	$	15,161	$	16,562	$	8,243	$	14,557	$	248,175
BOA (1)	25,866		22		40,016		30,946		213		97,063
Ergobaby	19,632		15		13,846		11,656		4,626		49,775
Lugano	200,763		158		49		492		935		202,397
PrimaLoft (1)	263		—		2,548		44,773		248		47,832
The Honey Pot Co.	44,256		—		—		—		91		44,347
Velocity Outdoor	43,074		461		1,042		310		3,723		48,610
Altor	92,194		13,423		—		—		—		105,617
Arnold	57,912		242		21,265		3,266		1,757		84,442
Sterno	133,711		—		1,063		1		3,852		138,627
	$	811,323	$	29,482	$	96,391	$	99,687	$	30,002	$	1,066,885


Six months ended June 30, 2023
	United States		Mexico		Europe		Asia Pacific		Other International		Total
5.11	$	199,154	$	11,475	$	15,972	$	7,998	$	15,883	$	250,482
BOA (1)	21,677		15		29,453		24,563		401		76,109
Ergobaby	18,843		49		12,994		13,184		3,497		48,567
Lugano	124,836		—		—		—		—		124,836
PrimaLoft (1)	313		67		1,919		44,032		358		46,689

Velocity Outdoor	64,145		437		2,373		261		4,663		71,879
Altor	106,332		16,066		—		—		—		122,398
Arnold	54,555		246		20,089		2,844		2,494		80,228
Sterno	143,973		—		1,822		—		3,839		149,634
	$	733,828	$	28,355	$	84,622	$	92,882	$	31,135	$	970,822

(1)For BOA and PrimaLoft, revenue reflects the location of the Brand Partners of each business.

Note E — Operating Segment Data

At June 30, 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.

•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. Its 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 archery products, hunting apparel and related accessories. The archery product category consists of products including Ravin crossbows and CenterPoint archery products, and the apparel category offers high-performance, feature rich hunting and casual apparel under the King's Camo brand, utilizing King’s own proprietary camo patterns. Velocity Outdoor offers its products through national retail chains and dealer and distributor networks. Velocity Outdoor is headquartered in Rochester, New York. On April 30, 2024, Velocity Outdoor sold the Crosman airgun product division. The results of operation for Crosman are included in the accompanying financial statements through the date of sale.

•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 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 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 respective dates 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 Revenues	Three months ended June 30,				Six months ended June 30,
(in thousands)	2024		2023		2024		2023

5.11	$	123,201	$	126,030	$	248,175	$	250,482
BOA	54,160		38,123		97,063		76,109
Ergobaby	28,557		26,149		49,775		48,567
Lugano	99,358		60,949		202,397		124,836
PrimaLoft	25,291		22,160		47,832		46,689
The Honey Pot Co.	24,182		—		44,347		—
Velocity Outdoor	18,711		37,839		48,610		71,879
Altor Solutions	52,213		60,886		105,617		122,398
Arnold	43,155		40,138		84,442		80,228
Sterno	73,767		74,615		138,627		149,634
Total segment revenue	542,595		486,889		1,066,885		970,822
Corporate	—		—		—		—
Total consolidated revenues	$	542,595	$	486,889	$	1,066,885	$	970,822


Segment Profit (Loss)	Three months ended June 30,				Six months ended June 30,
(in thousands)	2024		2023		2024		2023

5.11	$	10,699	$	10,582	$	18,866	$	18,252
BOA	16,470		8,050		26,126		16,001
Ergobaby	2,562		2,526		1,564		2,914
Lugano	33,198		17,133		72,515		36,909
PrimaLoft	5,499		2,817		8,799		7,838
The Honey Pot Co.	(2,530)		—		(5,180)		—
Velocity Outdoor	(1,935)		(1,610)		(14,359)		(4,886)
Altor Solutions	5,156		9,223		11,784		16,157
Arnold	5,308		5,613		9,480		10,651
Sterno	7,870		7,088		12,655		11,581
Total segment operating income	82,297		61,422		142,250		115,417
Corporate (1)	(20,954)		(19,309)		(42,331)		(38,747)
Total consolidated operating income	61,343		42,113		99,919		76,670
Reconciliation of segment operating income (loss) to consolidated income from continuing operations before income taxes:
Interest expense, net	(26,561)		(26,613)		(50,136)		(52,793)
Amortization of debt issuance costs	(1,004)		(1,024)		(2,009)		(2,029)
Loss on sale of Crosman	(24,606)		—		(24,606)		—
Other income (expense), net	(1,375)		(105)		(4,249)		1,055
Total consolidated income from continuing operations before income taxes	$	7,797	$	14,371	$	18,919	$	22,903

(1) Corporate operating loss is comprised of management fees paid to CGM and corporate overhead expenses.


Depreciation and Amortization Expense	Three months ended June 30,				Six months ended June 30,
(in thousands)	2024		2023		2024		2023

5.11	$	5,635	$	6,774	$	11,434	$	13,151
BOA	5,211		5,756		10,448		11,392
Ergobaby	2,165		2,015		4,325		4,029
Lugano	2,241		1,891		4,356		4,609
PrimaLoft	5,245		5,282		10,493		10,560
The Honey Pot Co.	5,431		—		10,518		—
Velocity Outdoor	2,002		3,295		5,273		6,579
Altor Solutions	4,024		4,116		8,047		8,220
Arnold	2,252		2,063		4,397		4,041
Sterno	4,940		4,892		9,861		9,806
Total	39,146		36,084		79,152		72,387
Reconciliation of segment to consolidated total:
Amortization of debt issuance costs	1,004		1,024		2,009		2,029
Consolidated total	$	40,150	$	37,108	$	81,161	$	74,416


	Accounts Receivable				Identifiable Assets
	June 30,		December 31,		June 30,		December 31,
(in thousands)	2024		2023		2024 (1)		2023 (1)
5.11	$	52,511	$	50,452	$	394,506	$	398,050
BOA	4,155		1,368		235,891		243,243
Ergobaby	15,975		12,018		70,505		73,660
Lugano	157,621		124,776		656,916		510,484
PrimaLoft	2,020		1,381		280,818		288,212
The Honey Pot Co.	14,745		—		294,118		—
Velocity Outdoor	13,757		24,458		108,711		207,609
Altor Solutions	35,317		35,232		169,107		186,683
Arnold	28,563		25,977		118,747		110,883
Sterno	41,976		51,740		161,503		174,166
Sales allowance accounts	(8,110)		(9,161)		—		—
Total	358,530		318,241		2,490,822		2,192,990
Reconciliation of segment to consolidated totals:
Corporate and other identifiable assets	—		—		5,157		404,322

Total	$	358,530	$	318,241	$	2,495,979	$	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 — Property, Plant and Equipment and Inventory

Property, plant and equipment

Property, plant and equipment is comprised of the following at June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024		December 31, 2023
Machinery and equipment	$	230,420	$	238,168
Furniture, fixtures and other	70,085		67,652
Leasehold improvements	97,973		95,530
Buildings and land	10,969		12,816
Construction in process	12,605		15,197
	422,052		429,363
Less: accumulated depreciation	(241,124)		(236,801)
Total	$	180,928	$	192,562

Depreciation expense was $10.5 million and $21.4 million for the three and six months ended June 30, 2024, respectively and $12.1 million and $23.3 million for the three and six months ended June 30, 2023, respectively.

Inventory

Inventory is comprised of the following at June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024		December 31, 2023
Raw materials	$	80,763	$	97,209
Work-in-process	25,652		25,516
Finished goods	761,145		646,406
Less: obsolescence reserve	(23,926)		(28,744)
Total	$	843,634	$	740,387

Note G — Goodwill and Other Intangible Assets

As a result of acquisitions of various businesses, the Company has significant intangible assets on its balance sheet that include goodwill and indefinite-lived intangibles. The Company’s goodwill and indefinite-lived intangibles are tested and reviewed for impairment annually as of March 31st or more frequently if facts and circumstances warrant by comparing the fair value of each reporting unit to its carrying value. Each of the Company’s businesses represent a reporting unit.

Goodwill

年度减损测试

公司采用定性方法来检测商誉和无限存续无形资产是否存在减损，首先评估定性因素，以判断报告单元的公平价值是否有可能低于其携带金额，作为确定是否需要进行定量商誉减损测试的基础。

2024年度减损测试

在2024年3月31日的年度减值测试中，我们对我们的报告单位进行了定性评估。定性分析的结果显示，除了Velocity以外，我们的每个报告单位的公平价值均可能高于其帐面价值。根据我们的分析，我们确定Velocity营运部门需要进行定量测试，因为仅基于定性因素无法得出这一报告单位的公平价值明显高于帐面价值的结论。我们对Velocity进行了定量测试，测试结果显示，Velocity的公平价值未超过帐面价值，导致截至2024年3月31日的商誉减损费用为$8.2百万。

2023年度资产减损测试

公司确定Velocity报告单位需要进行额外的定量测试，因为我们无法仅基于定性因素得出报告单位的公允价值是否超过其携带价值的结论。对于仅根据定性基础进行2023年年度减损测试的报告单位，定性分析的结果表明，很可能报告单位的公允价值超过这些报告单位的携带价值。

利用收入法进行速度的量化测试，以判断报告单位的公平价值。收入方法中使用的折现率是%，量化减值测试的结果显示，速度报告单位的公平价值超过携带价值 15 21%.

中期减损测试

2023年度中期减损测试

PrimaLoft - 公司于2023年12月31日对PrimaLoft进行了商誉中期减损测试。由于营运业绩低于PrimaLoft收购时用作购买价格分配基础的预测金额，以及截至2023年12月31日发生了特定财务契约失败的重大事件，公司确定发生了触发事件。公司使用收入方法和市场方法进行量化减损测试。在收入方法中使用的前瞻性信息考虑了宏观经济数据、行业和报告单位特定的事实和情况，这是我们对营运结果和现金流的最佳估计。

PrimaLoft报告单位截至我们进行减值测试的日期。收入法中使用的折现率为 11.3%. 量化减值测试的结果显示，PrimaLoft报告单位的公平价值未超出其帐面价值，导致2023年12月31日年结的商誉减损费用达 $57.8百万。

Velocity Outdoor - 公司于2023年8月31日对Velocity的商誉进行中期量化减损测试。由于营运结果低于我们在2023年3月31日对Velocity Outdoor进行的量化减损测试中所使用的预测值，公司确定2023年第三季度Velocity发生了触发事件，并于2023年8月31日进行中期减损测试。公司在进行减损测试时使用了收入法，我们根据未来现金流的现值来估计汇报单位的公平价值。现金流预测基于管理层对营收增长率和经营利润率的估计，并考虑到行业和市场条件以及公司特定的经济因素。公司在收入法中使用了一个加权平均成本的资本，为%。使用的折现率是基于调整了与业务特定特征相关的风险以及Velocity执行预测现金流的能力的加权平均成本。根据减损测试的结果，Velocity的公平价值未超过其摊销值。公司在截至2023年12月31日的年度中记录了$百万的商誉减损。 17平均成本in the income approach。使用的折现率基于调整了与业务特定特征相关的风险以及Velocity执行预测现金流的能力。31.6在2023年12月31日结束的一年内，公司录得了$百万的商誉减损。

以下为2024年6月30日和2023年12月31日商誉净额摘要以下为2024年6月30日和2023年12月31日商誉净额摘要（以千为单位）:


	2024年6月30日		2023年12月31日











商誉 - 总帐余额	$	1,179,564	$	1,069,125
累积减损损失 (1)	(175,879)		(167,697)
商誉 - 净帐面金额	$	1,003,685	$	901,428

(1) 包括在Ergobaby记录的总商誉减值费用$20.6百万，在Velocity为$72.7百万，Arnold为$24.9百万，PrimaLoft为$57.8百万。在2024年3月31日结束的三个月内，公司在Velocity记录了$8.2百万的商誉减值费用。在2023年12月31日结束的一年内，公司在Velocity记录了$31.6百万和PrimaLoft记录了$57.8百万的商誉减值费用。

以下是截至2024年6月30日止六个月，按营运部门归属的商誉带来价值变动的调解。（以千为单位）:


	2024 年 1 月 1 日结存		并购/衡量期调整		商誉减值		2024年6月30日余额

5.11	$	92,966	$	—	$	—	$	92,966
BOA	254,153		—		—		254,153
Ergobaby	41,521		177		—		41,698
卢加诺	86,337		—		—		86,337
PrimaLoft	232,536		—		—		232,536
蜜罐公司。	—		106,640		—		106,640
Velocity Outdoor	8,182		—		(8,182)		—
阿尔托尔	91,130		3,622		—		94,752
阿诺尔	39,267		—		—		39,267
Sterno	55,336		—		—		55,336
总计	$	901,428	$	110,439	$	(8,182)	$	1,003,685

长期资产

年度无限存续减损测试

The Company used a qualitative approach to test indefinite lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more-likely-than-not that the fair value of an indefinite lived intangible asset is impaired as a basis for determining whether it is necessary to perform quantitative impairment testing. The Company evaluated the qualitative factors of each indefinite lived intangible asset in connection with the annual impairment testing for 2024 and 2023. Results of the qualitative analysis indicate that it is more likely than not that the fair value of the reporting units that maintain indefinite lived intangible assets exceeded the carrying value.

Other intangible assets are comprised of the following at June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024						December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	790,211	$	(311,140)	$	479,071	$	772,423	$	(294,628)	$	477,795
Technology and patents	199,378		(71,986)		127,392		202,898		(66,035)		136,863
Trade names, subject to amortization	546,264		(122,243)		424,021		375,507		(124,648)		250,859
Non-compete agreements	4,638		(4,207)		431		4,638		(4,082)		556
Other contractual intangible assets	1,960		(1,693)		267		1,960		(1,593)		367
Total	1,542,451		(511,269)		1,031,182		1,357,426		(490,986)		866,440
Trade names, not subject to amortization	56,965		—		56,965		56,965		—		56,965
In-process research and development (1)	500		—		500		500		—		500
Total intangibles, net	$	1,599,916	$	(511,269)	$	1,088,647	$	1,414,891	$	(490,986)	$	923,905

(1) In-process research and development is considered indefinite lived until the underlying technology becomes viable, at which point the intangible asset will be amortized over the expected useful life.

Amortization expense related to intangible assets was $27.5 million and $53.7 million for the three and six months ended June 30, 2024, respectively and $24.0 million and $48.0 million for the three and six months ended June 30, 2023, respectively.

Estimated charges to amortization expense of intangible assets for the remainder of 2024 and the next four years, is as follows (in thousands):


2024		2025		2026		2027		2028

$	52,776	$	100,358	$	94,060	$	83,326	$	81,194

Note H — Warranties

The Company’s Ergobaby, BOA and Velocity Outdoor operating segments estimate their exposure to warranty claims based on both current and historical product sales data and warranty costs incurred. The Company assesses the adequacy of its recorded warranty liability quarterly and adjusts the amount as necessary. Warranty liability is included in accrued expenses in the accompanying consolidated balance sheets. A reconciliation of the change in the carrying value of the Company’s warranty liability for the six months ended June 30, 2024 and the year ended December 31, 2023 is as follows (in thousands):


Warranty liability	Six months ended June 30, 2024		Year ended December 31, 2023

Beginning balance	$	1,375	$	1,530
Provision for warranties issued during the period	1,599		3,489
Fulfillment of warranty obligations	(1,041)		(3,644)
Other (1)	(199)		—
Ending balance	$	1,734	$	1,375

(1) Represents warranty liability of disposed businesses.

Note I — Debt

2022 Credit Facility

On July 12, 2022, the LLC entered into the Third Amended and Restated Credit Agreement (the "2022 Credit Facility") to amend and restate the Second Amended and Restated Credit Agreement (the "2021 Credit Facility"). The 2022 Credit Facility provides for revolving loans, swing line loans and letters of credit ("the 2022 Revolving Line of Credit") up to a maximum aggregate amount of $600 million ("the 2022 Revolving Loan Commitment") and a $400 million term loan (the “2022 Term Loan”). The 2022 Term Loan requires quarterly payments ranging from $2.5 million to $7.5 million, commencing September 30, 2022, with a final payment of all remaining principal and interest due on July 12, 2027, which is the 2022 Term Loan’s maturity date. All amounts outstanding under the 2022 Revolving Line of Credit will become due on July 12, 2027, which is the termination date of the 2022 Revolving Loan Commitment. The 2022 Credit Facility also permits the LLC, prior to the applicable maturity date, to increase the Revolving Loan Commitment and/or obtain additional term loans in an aggregate amount of up to $250 million, subject to certain restrictions and conditions. On the closing date for the 2022 Credit Facility, the 2022 Term Loan was advanced in full and the initial borrowings outstanding under the 2022 Revolving Line of Credit were $115 million. We used the initial proceeds from the 2022 Credit Facility to pay all amounts outstanding under the 2021 Credit Facility, pay fees and expenses incurred in connection with the 2022 Credit Facility and fund the acquisition of PrimaLoft.

The LLC may borrow, prepay and reborrow principal under the 2022 Revolving Credit Facility from time to time during its term. Advances under the 2022 Revolving Line of Credit can be either term Secured Overnight Financing Rate ("SOFR") loans or base rate loans. Term SOFR revolving loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum based on the applicable SOFR as administered by the Federal Reserve Bank of New York (or a successor administrator), as adjusted, plus a margin ranging from 1.50% to 2.50%, based on the ratio of consolidated net indebtedness to adjusted consolidated earnings before interest expense, tax expense, and depreciation and amortization expenses for such period (the “Consolidated Total Leverage Ratio”). Base rate revolving loans bear interest on the outstanding principal amount thereof at a rate per annum equal to the highest of (i) Federal Funds rate plus 0.50%, (ii) the “prime rate”, and (iii) the applicable SOFR plus 1.0% (the “Base Rate”), plus a margin ranging from 0.50% to 1.50%, based on the Company's Consolidated Total Leverage Ratio.

Advances under the 2022 Term Loan can be either term SOFR loans or base rate loans. The 2022 Term Loan was advanced in full on the closing date for the 2022 Credit Facility as a Term SOFR loan with an interest period of one month. On the last day of an interest period, Term SOFR loans may be converted to Term SOFR loans of a different interest period or to Base Rate loans. Term SOFR term loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum based on the Term SOFR for such interest period plus a margin ranging from 1.50% to 2.50%, based on the Consolidated Total Leverage Ratio. Base rate term loans bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus a margin ranging from 0.50% to 1.50%, based on the Consolidated Total Leverage Ratio.

Under the 2022 Revolving Credit Facility, an aggregate amount of up to $100 million in letters of credit may be issued, as well as swing line loans of up to $25 million outstanding at one time. The issuance of such letters of credit and the making of any swing line loan would reduce the amount available under the 2022 Revolving Credit Facility.

Net availability under the 2022 Revolving Credit Facility was approximately $543.6 million at June 30, 2024. Letters of credit outstanding at June 30, 2024 totaled approximately $2.5 million. At June 30, 2024, the Company was in compliance with all covenants as defined in the 2022 Credit Facility.

The 2022 Revolving Credit Facility is secured by all of the assets of the Company, including all of its equity interests in, and loans to, its subsidiaries.

Senior Notes

2032 Senior Notes

On November 17, 2021, we consummated the issuance and sale of $300 million aggregate principal amount of our 5.000% Senior Notes due 2032 (the “2032 Notes” or "2032 Senior Notes") offered pursuant to a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933 (the "Securities Act"), and to non-U.S. persons under Regulation S under the Securities Act. The 2032 Notes were issued pursuant to an indenture, dated as of November 17, 2021 (the “2032 Notes Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee”). The 2032 Notes bear interest at the rate of 5.000% per annum and will mature on January 15, 2032. Interest on the 2032 Notes is payable in cash on January 15 and July 15 of each year, beginning on July 15, 2022.

The proceeds from the sale of the 2032 Notes was used to repay a portion of our debt outstanding under the 2021 Revolving Credit Facility.

2029 Senior Notes

2021 年 3 月 23 日，我们完成了 $ 的发行和销售1,000我们的总本金数百万 5.250根据《证券法》第 144A 条的私人发售，并根据《证券法》第 S 规则向非美国人士提供的 2029 年到期高级债券百分比（「2029 年债券」或「2029 高级债券」）。2029 年债券是根据本公司与美国银行国家协会之间作为受托人（「受托人」）之间于 2021 年 3 月 23 日签约（「2029 年债券契约」）发行。二零二零九年债券的利率计算 5.250每年百分比，将于二零二零二年四月十五日届满。2029 年债券的利息将于每年四月十五日及十月十五日以现金支付。二零二零九年级债券的首次利息支付日期为二零二一年十月十五日。2029 债券是本公司的一般无抵押义务，并不由我们的附属公司保证。

T以下表格显示公司截至2024年6月30日和2023年12月31日的优质长期债务和有效利率期货。（以千为单位）:


	2024年6月30日				2023年12月31日
	有效利率		金额		有效利率		金额
2029年优先票据	5.25	%	$	1,000,000	5.25	%	$	1,000,000
2032年债券	5.00	%	300,000		5.00	%	300,000
2022年度定期贷款	7.58	%	380,000		7.50	%	385,000
2022年度循环信贷设备	7.95	%	54,000		—	%	—
扣除：未摊提的债务发行成本			(11,916)				(13,121)
总负债			$	1,722,084			$	1,671,879
扣除：目前部分，定期贷款设施			(10,000)				(10,000)
长期负债			$	1,712,084			$	1,661,879

公司债务到期的年度分布如下（以千元为单位）：


2024年剩余部分	$	5,000
2025	15,000
2026	25,000
2027	389,000
2028	—
2029年及之后	1,300,000
	$	1,734,000

Senior Notes由以下携带价值和估计公允价值（以千为单位）组成：


				Value	2024年6月30日
	到期日	利率			携带价值		公平价值
2032年优先票据	2032年1月15日	5.000	%	2	$	300,000	$	268,500
2029年优先票据	2029年4月15日	5.250	%	2	$	1,000,000	$	940,000

债务发行成本

递延债务发行成本代表与公司的融资安排发行有关的成本。由于公司可以在 2022 年循环信贷安排下借款、还款和重借本金，因此与 2022 年循环信贷安排相关的债务发行成本已被归类为附表所示的其他非流动资产。与 2022 年定期贷款和债券相关的债务发行成本被归类为附表所示的长期负债减项。

下表概要罗列了2024年6月30日和2023年12月31日的债务发行费用，以及每个期间所呈现的资产负债表分类。（以千为单位）):


	2024年6月30日		2023年12月31日
递延发债成本	$	32,526	$	32,526
累积摊销	(15,788)		(13,779)
递延发债成本，净额	$	16,738	$	18,747

资产负债表分类：
其他非流动资产	$	4,822	$	5,626
长期负债	11,916		13,121
	$	16,738	$	18,747

附注J — 股东权益

信托普通股

信托有权发行 500,000,000 信托普通股股份，而有限责任公司可发行相应数量的公司所有权利益。公司将始终拥有与信托股份相同数量的公司所有权利益。每个信托股份代表对信托的不可分割有益利益，每个信托股份有权在任何有限责任公司成员有权投票的事项上每股一票。

定向增发

在2023年12月15日，公司完成了向Allspring Special Small Cap Value 基金的定向增发，每股价格为$，总售价约为$。 3,550,000 私募方式向Allspring Special Small Cap Value 基金售出普通股份，每股售价为$，总售价约$。21.18 总售价约$百万。75.2有关股份发行，我们支付了相当于总销售价格的%作为佣金，约为$百万。 1佣金为总销售价格的%，约为$百万。0.8普通股份的出售是根据一份认购协议进行的，根据该协议，买方同意在私募日期后的六个月内不处置该普通股。

At-the-market equity offering program - common shares

On September 7, 2021, the Company filed a prospectus supplement pursuant to which the Company may, but has no obligation to, issue and sell up to $500 million common shares of the Trust in amounts and at times to be determined by the Company. Actual sales will depend on a variety of factors to be determined by us from time to time, including, market conditions, the trading price of Trust common shares and determinations by us regarding appropriate sources of funding.

In connection with this offering, the Company entered into an At Market Issuance Sales Agreement (the “Common Sales Agreement”) with B. Riley Securities, Inc. and Goldman Sachs & Co. LLC (each a “Sales Agent” and, collectively, the “Sales Agents”). The Common Sales Agreement provides that the Company may offer and sell Trust common shares from time to time through the Sales Agents up to $500 million, in amounts and at times to be determined by the Company. Pursuant to the Common Sales Agreement, the shares may be offered and sold through each Sales Agent, acting separately, in ordinary brokers’ transactions, to or through a market maker, on or through the New York Stock Exchange or any other market venue where the securities may be traded, in the over-the-counter market, in privately negotiated transactions, in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act or through a combination of any such methods of sale.

During the three and six months ended June 30, 2024, the Company sold 151,648 and 205,580 Trust common shares under the Common Sales Agreement, respectively. During the same periods, the Company received total net proceeds of approximately $3.4 million and $4.7 million, respectively, from these sales. The Company incurred approximately $0.1 million in commissions paid to the Sales Agents during both the three and six months ended June 30, 2024.

During the three and six months ended June 30, 2023, there were no sales of Trust common shares under the Common Sales Agreement as the at-the-market program is not active when the share repurchase program is active.

The Company incurred approximately $0.1 million and $0.2 million in total costs related to the ATM programs during the three and six months ended June 30, 2024, respectively. The Company incurred approximately $0.1 million in total costs related to the ATM program during both the three and six months ended June 30, 2023.

Share repurchase program

In January 2023, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase, through December 31, 2023, up to $50 million of its outstanding common shares.

The Company repurchased 96,800 shares for approximately $1.9 million and 306,800 shares for approximately $5.9 million during the three and six months ended June 30, 2023, respectively. The share repurchase program expired on December 31, 2023.

Trust Preferred Shares

The Trust is authorized to issue up to 50,000,000 Trust preferred shares and the Company is authorized to issue a corresponding number of Trust interests.

At-the-market equity offering program - preferred shares

On March 20, 2024, the Company filed a prospectus supplement pursuant to which the Company may, but has no obligation to, issue and sell up to $100 million of the Trust’s 7.250% Series A Preferred Shares (the “Series A Preferred Shares”), 7.875% Series B Preferred Shares (the “Series B Preferred Shares”), and 7.875% Series C Preferred Shares (the “Series C Preferred Shares” and together with the Series A Preferred Shares, the Series B Preferred Shares, and the Series C Preferred Shares, the “Preferred Shares”), each representing beneficial interests in the Trust.

In connection with this offering, the Company entered into an At Market Issuance Sales Agreement (the “Preferred Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley”), pursuant to which CODI may sell from time to time, through B. Riley acting as sales agent and/or principal (the “Sales Agent”). The Preferred Sales Agreement provides that the Company may offer and sell Trust preferred shares from time to time through the Sales Agent up to $100 million, in amounts and at times to be determined by the Company.

The following table reflects the activity in the preferred share ATM program during the three and six months ended June 30, 2024 (in thousands, except share data):


	Three Months Ended June 30, 2024					Six Months ended June 30, 2024
	Number of Shares Sold	Net Proceeds		Commissions Paid		Number of Shares Sold	Net Proceeds		Commissions Paid
Series A Preferred Shares	37,801	$	916	$	18	45,358	$	1,102	$	22
Series B Preferred Shares	124,407	3,028		62		128,067	3,120		64
Series C Preferred Shares	215,273	5,223		105		237,904	5,781		116
Total	377,481	$	9,167	$	185	411,329	$	10,003	$	202

The Company incurred approximately $0.2 million in total costs related to the preferred share ATM program during the three and six months ended June 30, 2024, respectively.

Series C Preferred Shares

On November 20, 2019, the Trust issued 4,000,000 7.875% Series C Preferred Shares (the "Series C Preferred Shares") with a liquidation preference of $25.00 per share, and on December 2, 2019, the Trust issued 600,000 of the Series C Preferred Shares which were sold pursuant to an option to purchase additional shares by the underwriters. Total proceeds from the issuance of the Series C Preferred Shares were $115.0 million, or $111.0 million net of underwriters' discount and issuance costs. Distributions on the Series C Preferred Shares will be payable quarterly in arrears, when and as declared by the Company's board of directors on January 30, April 30, July 30, and October 30 of each year, beginning on January 30, 2020, at a rate per annum of 7.875%. Distributions on the Series C Preferred Shares are cumulative and at June 30, 2024, $1.5 million of Series C distributions are accumulated and unpaid. Unless full cumulative distributions on the Series C Preferred Shares have been or contemporaneously are declared and set apart for payment of the Series C Preferred Shares for all past distribution periods, no distribution may be declared or paid for payment on the Trust common shares. The Series C Preferred Shares are not convertible into Trust common shares and have no voting rights, except in limited circumstances as provided for in the share designation for the Series C Preferred Shares. The Series C Preferred Shares may be

redeemed at the Company's option, in whole or in part, at any time after January 30, 2025, at a price of $25.00 per share, plus any accumulated and unpaid distributions (thereon whether authorized or declared) to, but excluding, the redemption date. Holders of Series C Preferred Shares will have no right to require the redemption of the Series C Preferred Shares and there is no maturity date.

Series B Preferred Shares

On March 13, 2018, the Trust issued 4,000,000 7.875% Series B Preferred Shares (the "Series B Preferred Shares") with a liquidation preference of $25.00 per share, for gross proceeds of $100.0 million, or $96.5 million net of underwriters' discount and issuance costs. Distributions on the Series B Preferred Shares are payable quarterly in arrears, when and as declared by the Company's board of directors on January 30, April 30, July 30, and October 30 of each year, beginning on July 30, 2018, at a rate per annum of 7.875%. Holders of the Series B Preferred Shares are entitled to receive cumulative cash distributions (i) from and including the date of issuance to, but excluding, April 30, 2028 a rate equal to7.875% per annum and (ii) from and including April 30, 2028, at a floating rate equal to the applicable successor to three-month LIBOR (as determined by a calculation agent) plus a spread of 4.985% per annum. Subsequent to April 30, 2028, the distribution rate will be reset quarterly. At June 30, 2024, $1.3 million of Series B distributions are accumulated and unpaid. Unless full cumulative distributions on the Series B Preferred Shares have been or contemporaneously are declared and set apart for payment of the Series B Preferred Shares for all past distribution periods, no distribution may be declared or paid for payment on the Trust common shares. The Series B Preferred Shares are not convertible into Trust common shares and have no voting rights, except in limited circumstances as provided for in the share designation for the Series B Preferred Shares. The Series B Preferred Shares may be redeemed at the Company's option, in whole or in part, at any time after April 30, 2028, at a price of $25.00 per share, plus any accumulated and unpaid distributions (thereon whether authorized or declared) to, but excluding, the redemption date. Holders of Series B Preferred Shares will have no right to require the redemption of the Series B Preferred Shares and there is no maturity date.

Series A Preferred Shares

On June 28, 2017, the Trust issued 4,000,000 7.250% Series A Preferred Shares (the "Series A Preferred Shares") with a liquidation preference of $25.00 per share, for gross proceeds of $100.0 million, or $96.4 million net of underwriters' discount and issuance costs. When, and if declared by the Company's board of directors, distribution on the Series A Preferred Shares will be payable quarterly on January 30, April 30, July 30, and October 30 of each year, beginning on October 30, 2017, at a rate per annum of 7.250%. Distributions on the Series A Preferred Shares are discretionary and non-cumulative. The Company has no obligation to pay distributions for a quarterly distribution period if the board of directors does not declare the distribution before the scheduled record of date for the period, whether or not distributions are paid for any subsequent distribution periods with respect to the Series A Preferred Shares, or the Trust common shares. If the Company's board of directors does not declare a distribution for the Series A Preferred Shares for a quarterly distribution period, during the remainder of that quarterly distribution period the Company cannot declare or pay distributions on the Trust common shares. The Series A Preferred Shares are not convertible into Trust common shares and have no voting rights, except in limited circumstances as provided for in the share designation for the Series A Preferred Shares.

Allocation Interests

The Allocation Interests represent the original equity interest in the Company. The holders of the Allocation Interests ("Holders"), through Sostratus LLC, are entitled to receive distributions pursuant to a profit allocation formula upon the occurrence of certain events. The distributions of the profit allocation is paid upon the occurrence of the sale of a material amount of capital stock or assets of one of the Company’s businesses ("Sale Event") or, at the option of the Holders, at each five-year anniversary date of the acquisition of one of the Company’s businesses ("Holding Event"). The Company records distributions of the profit allocation to the Holders upon occurrence of a Sale Event or Holding Event as dividends declared on Allocation Interests to stockholders’ equity when they are approved by the Company’s board of directors.

Sale Event

The sale of Marucci in November 2023 represented a Sale Event and the Company's board of director's approved a distribution of $48.9 million in the first quarter of 2024. This distribution was paid to the Holders of the Allocation

Interests in February 2024.

The sale of Advanced Circuits in February 2023 represented a Sale Event and the Company's board of director's approved a distribution of $24.4 million in the second quarter of 2023. In addition, the Company's board of directors approved a distribution of $2.1 million related to various sale proceeds received related to previous Sale Events. These distributions were paid to the Holders of the Allocation Interests in April 2023.

Reconciliation of net income (loss) available to common shares of Holdings

The following table reconciles net income (loss) attributable to Holdings to net income (loss) attributable to the common shares of Holdings (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Net income (loss) from continuing operations attributable to Holdings	$	(19,529)	$	6,553	$	(24,522)	$	3,994
Less: Distributions paid - Allocation Interests	—		26,475		48,941		26,475
Less: Distributions paid - Preferred Shares	6,101		6,046		12,146		12,091
Less: Accrued distributions - Preferred Shares	2,991		2,869		2,991		2,869
Net loss from continuing operations attributable to common shares of Holdings	$	(28,621)	$	(28,837)	$	(88,600)	$	(37,441)

Earnings per share

The Company calculates basic and diluted earnings per share using the two-class method which requires the Company to allocate to participating securities that have rights to earnings that otherwise would have been available only to Trust shareholders as a separate class of securities in calculating earnings per share. The Allocation Interests are considered participating securities that contain participating rights to receive profit allocations upon the occurrence of a Holding Event or Sale Event. The calculation of basic and diluted earnings per share for the three and six months ended June 30, 2024 and 2023 reflects the incremental increase during the period in the profit allocation distribution to Holders related to Holding Events.

Basic and diluted earnings per share for the three and six months ended June 30, 2024 and 2023 attributable to the common shares of Holdings is calculated as follows (in thousands, except per share data):


	截至三个月结束净利润（损失）分配给Aimco参与证券				截至六个月结束净利润（损失）分配给Aimco参与证券
	2024		2023		2024		2023
控股公司继续营运部门的普通股损失	$	(28,621)	$	(28,837)	$	(88,600)	$	(37,441)
减：基于投资收益的利润影响 - 控股事件	5,559		3,206		9,502		5,398
控股公司继续营运部门的普通股损失	$	(34,180)	$	(32,043)	$	(98,102)	$	(42,839)

停止营运产生的收入归属于控股公司	$	—	$	7,053	$	3,345	$	115,009
扣除：基于贡献利润的影响 - 持有活动	—		—		—		1,210
停业经营所得归属于持股普通股	$	—	$	7,053	$	3,345	$	113,799

基本和稀释加权平均普通股持有量	75,389		71,932		75,332		72,055

基本和全面稀释之持股普通股归属的每股收益（亏损）
继续营业	$	(0.45)	$	(0.45)	$	(1.30)	$	(0.59)
已中止之营运	—		0.10		0.04		1.57
	$	(0.45)	$	(0.35)	$	(1.26)	$	0.98

分发分布

以下表格总结了关于我们信托共同和优先股季度现金分配的相关信息（单位：千元，每股数据除外):


周期	每股现金分派		总现金分配		记录日期	付款日期

信托普通股份：
2024年4月1日至2024年6月30日 (1)	$	0.25	$	18,913	之前的30个交易日内纳斯达克的收盘平均价。其中11,000股期权，相当于赋予每位外部董事50％的期权份额，将在授权日期生效，而剩余的11,000股期权，	2024年7月25日
2024年1月1日至2024年3月31日	$	0.25	$	18,846	2024年4月18日	2024年4月25日
2023年10月1日至2023年12月31日	$	0.25	$	18,818	2024年1月18日	2024年1月25日
2023年7月1日至2023年9月30日	$	0.25	$	17,955	October 19, 2023	2023年10月26日
2023年4月1日至6月30日	$	0.25	$	17,974	2023年7月20日	2023年7月27日
2023年1月1日至3月31日	$	0.25	$	17,987	2023年4月20日	2023年4月27日

A股优先股：
2024年4月30日至2024年7月29日 (1)	$	0.453125	$	1,852	2024年7月15日	2024年7月30日
2024年1月30日至2024年4月29日	$	0.453125	$	1,822	2024年4月15日	2024年4月30日
2023年10月30日至2024年1月29日	$	0.453125	$	1,813	2024年1月15日	2024年1月30日
2023年7月30日 - 2023年10月29日	$	0.453125	$	1,813	2023年10月15日	2023年10月30日
2023年4月30日 - 2023年7月29日	$	0.453125	$	1,813	2023年7月15日	2023年7月30日
2023年1月30日至2023年4月29日	$	0.453125	$	1,813	2023年4月15日	2023年4月30日
2022年10月30日至2023年1月29日	$	0.453125	$	1,813	2023年1月15日	2023年1月30日

B轮优先股：
2024年4月30日至2024年7月29日 (1)	$	0.4921875	$	2,064	2024年7月15日	2024年7月30日
2024年1月30日至2024年4月29日	$	0.4921875	$	1,983	2024年4月15日	2024年4月30日
2023年10月30日至2024年1月29日	$	0.4921875	$	1,969	2024年1月15日	2024年1月30日
2023年7月30日至2023年10月29日	$	0.4921875	$	1,969	2023年10月15日	2023年10月30日
2023年4月30日至2023年7月29日	$	0.4921875	$	1,969	2023年7月15日	2023年7月30日
2023年1月30日至2023年4月29日	$	0.4921875	$	1,969	2023年4月15日	2023年4月30日
2022年10月30日至2023年1月29日	$	0.4921875	$	1,969	2023年1月15日	2023年1月30日

C轮优先股：
2024年4月30日至2024年7月29日 (1)	$	0.4921875	$	2,430	2024年7月15日	2024年7月30日
2024年1月30日至2024年4月29日	$	0.4921875	$	2,295	2024年4月15日	2024年4月30日
2023年10月30日至2024年1月29日	$	0.4921875	$	2,264	2024年1月15日	2024年1月30日
2023年7月30日至2023年10月29日	$	0.4921875	$	2,264	2023年10月15日	2023年10月30日
2023年4月30日 - 2023年7月29日	$	0.4921875	$	2,264	2023年7月15日	2023年7月30日
2023年1月30日 - 2023年4月29日	$	0.4921875	$	2,264	2023年4月15日	2023年4月30日
2022年10月30日 - 2023年1月29日	$	0.4921875	$	2,264	2023年1月15日	2023年1月30日

(1) 这次分配是在2024年7月2日宣布的。于2024年7月2日宣布。

注 k — 非控制权益

非控股利益代表公司控股子公司的净利润（亏损）和权益中非控股股东所持有的部分。下表反映了有限责任公司对其控股营运部门及相关非控股利益余额的持有百分比，截至2024年6月30日和2023年12月31日：


	拥有权百分比 (1) 二零二四年六月三十日		拥有权百分比 (1) 二零三年十二月三十一日
	小学	完全稀释	小学	完全稀释
5.11	97.7	87.0	97.2	88.9
波亚	91.8	83.0	91.8	83.2
埃尔戈巴比	81.6	72.8	81.6	72.8
卢加诺	59.9	55.0	59.9	55.5
普里马乐福特	90.7	84.1	90.7	83.1
蜂窝股份有限公司	84.8	76.6	—	—
速度户外	99.4	87.7	99.4	87.7
阿尔托尔	99.3	89.6	99.3	89.8
阿诺德	98.0	85.8	98.0	85.5
斯特尔诺	98.1	90.8	99.4	87.6

(1) 主要差异在于我们营运部门的主要百分比和稀释后百分比，主要原因是营运部门股票向各自业务的管理层发行股票期权。主要差异在于我们营运部门的主要百分比和稀释后百分比，主要原因是营运部门股票向各自业务的管理层发行股票期权。


	非控制权益余额
（以千为单位）	2024年6月30日		2023年12月31日
5.11	$	13,802	$	15,350
BOA	11,490		8,316
Ergobaby	16,691		16,756
卢加诺	120,660		105,425
PrimaLoft	31,639		30,736
蜜罐公司。	41,139		—
Velocity Outdoor	6,788		6,770
阿尔托尔	5,880		5,354
阿诺尔	1,793		1,707
Sterno	2,266		2,117
Allocation Interests	100		100
	$	252,248	$	192,631

备注大单 — 公允价值衡量

截至2024年6月30日或2023年12月31日，没有根据重复性计算方法评估的资产或负债。

2023年1月1日至2024年6月30日，层级3公平值测量带来的变化与携带价值的调解如下：（以千为单位）):


	等级 3
2023 年 1 月 1 日结存	$	(1,442)
终止非控股股东看跌权-5.11 (1)	142
King's Camo的条件性考虑调整 (2)	25
King's Camo条件性考虑的支付 (2)	1,275
2023年12月31日余额	$	—

2024年6月30日余额	$	—

(1)代表在5.11收购相关事项中发行给非控股股东的看跌期权。该看跌期权在截至2023年3月31日的期间内终止。

(2)Velocity于2022年7月收购King's Camo时，订立了一项关于条件支付的协议。King's Camo的收购价格中包括潜在的规定，如果King's Camo达到特定的财务指标，将发生条件支付。该条件支付于2023年4月发生。

估值技术

公司在评估其所有其他金融资产和负债的公平价值时，并未在此期间更改其估值技术。有关公司根据公平价值层次所采用的公平价值衡量政策的详细资料，请参阅截至2023年12月31日公司的年度10-k表格中的年度报告。

非经常性公平价值测量

以下表格显示截至2024年6月30日和2023年12月31日的判断为非经常性基础计量的资产和负债。请参阅 “附注G-商誉和无形资产”，以了解用于决定表格中判断为非经常性基础计量的资产的公平价值的估值技术描述。


							费用
	2024年6月30日的公平价值衡量						六个月结束时
（以千为单位）	携带价值		一级	二级	等级 3		2024年6月30日
良好意愿 - 速度	$	—	—	—	$	—	$	8,182


							费用
	2023年12月31日的公平值衡量						截至年终
（以千为单位）	携带价值		一级	二级	等级 3		2023年12月31日
Goodwill - 速度	$	8,182	—	—	$	8,182	$	31,590
Goodwill - PrimaLoft	$	232,536	—	—	$	232,536	$	57,810

Note M — Income taxes

The Company estimates its annual effective tax rate each fiscal quarter and applies that estimated rate to its interim pre-tax earnings. In this regard, the Company reflects the full year’s estimated tax impact of certain unusual or infrequently occurring items and the effects of changes in tax laws or rates in the interim period in which they occur. The Company's parent, the Trust, is subject to entity-level U.S. federal, state and local corporate income taxes on the Company's earnings that flow through to the Trust.

The computation of the annual estimated effective tax rate for each interim period requires certain assumptions, estimates, and significant judgment, including with respect to the projected operating income for the year, projections of income earned and taxes incurred in various jurisdictions, permanent and temporary differences and the likelihood of recovering deferred tax assets. The accounting estimates used to compute the provision for income taxes may change as new events occur, as additional information is obtained, as our tax structure changes or as the tax laws change. Certain foreign operations are subject to foreign income taxation under existing provisions of the laws of those jurisdictions.

The reconciliation between the Federal Statutory Rate and the effective income tax rate for the six months ended June 30, 2024 and 2023 is as follows:


	Six months ended June 30,
	2024		2023
United States Federal Statutory Rate	21.0	%	21.0	%
State income taxes (net of Federal benefits)	14.8		1.3
Foreign income taxes	14.1		8.2
Impact of subsidiary employee stock options	0.8		(3.1)
Non-deductible acquisition costs	3.7		—
Utilization of tax credits	(8.9)		(5.2)
Non-recognition of various carryforwards at subsidiaries	143.1		23.0
United States tax on foreign income	(7.8)		2.5
Impairment expense	8.6		—
Tax effect - loss on sale of Crosman	(31.9)		—
Other	2.2		1.4
Effective income tax rate	159.7	%	49.1	%

Note N — Defined Benefit Plan

In connection with the acquisition of Arnold, the company has a defined benefit plan covering substantially all of Arnold’s employees at its Lupfig, Switzerland location. The benefits are based on years of service and the employees’ highest average compensation during the specific period.

The unfunded liability of $4.8 million is recognized in the consolidated balance sheet as a component of other non-current liabilities at June 30, 2024. Net periodic benefit cost consists of the following for the three and six months ended June 30, 2024 and 2023 (in thousands):


	截至六月三十日止三个月				截至六月三十日止六个月
	2024		2023		2024		2023
劳务成本	$	132	$	91	$	264	$	181
利息费用	60		62		120		122
计划资产预期回报	(49)		(55)		(98)		(109)
未认列损失摊提	(11)		(9)		(22)		(18)
减少效应	—		—		—		(13)
净周期性福利费用	$	132	$	89	$	264	$	163

截至2024年6月30日止的六个月间, 根据养老金协议的条款，阿诺德向计划捐款$0.3 计划剩余部分的2024年预期捐款将约为$ 计划在2024年的余下时间预计捐款约为$0.3 百万美元之间。

计划资产与其他参与雇主的资产合并，因此在2024年6月30日，退休金计划资产的公平价值被视为第3级。不可分割；因此，2024年6月30日的退休金计划资产的公平价值被视为第3级。

N充分说明 O - 业务承诺和事后条款

公司及其附属公司在正常业务过程中涉及各种索赔和法律诉讼。尽管这些事项的最终解决方案尚未确定，但公司认为任何不利结果对公司的合并财务状况或营运成果都不会造成重大不利影响。

租赁

本公司及其子公司根据不同安排租用办公室和制造设施、计算机设备和软体。某些租赁合同设有上涨条款和续租期。本公司及其子公司从控制所租赁物业的时间开始，按照直线进行租赁费用认列，其中包括合同初始期限以及具有合理保证的续租期。租期不超过12个月的租赁未记录在资产负债表上；对于这些租赁，我们按照直线基础在租赁期内认列租赁费用。我们的某些子公司设有合同中包含根据实现某些运营指标的固定租金和变量租金成本的租赁。变量租赁费用并未成为截至2024年6月30日和2023年6月30日为止的三个和六个月的总租赁费用的重要组成部分。本公司在截至2024年6月30日的三个和六个月，以及截至2023年6月30日的三个和六个月的营运租赁相关费用分别为$15.2 百万美元和26.6 2024年6月30日结束的三个和六个月中，本公司在综合营业概况中认列了$百万元，2013年6月30日结束的三个和六个月中，相应认列了$百万的营运租赁相关费用。13.2百万和$25.12024年6月30日结束的三个和六个月中，本公司在综合营业概况中认列了$百万元，2013年6月30日结束的三个和六个月中，相应认列了$百万的营运租赁相关费用。

2024年6月30日的租赁负债到期分别是（（以千为单位）):


2024年（不包括截至2024年6月30日的六个月）	$	23,297
2025	45,017
2026	43,748
2027	38,577
2028	30,470
此后	77,163
未折现租赁总支付款项	$	258,272
减：利息	55,429
租赁负债现值	$	202,843

租赁资产和租赁负债的计算金额受租赁期间和折现率的影响，用于现值化最低租金支付的折现率。公司的租赁协议通常包括一个或多个选择权，由公司自行决定是否续租。一般情况下，在租赁开始时无法合理确定是否会行使续租权，因此未将续租列入租赁期间。由于折现率很少可以确定，公司利用进入租赁安排的子公司的增量借款利率，在抵押基础上，在相似期限内进行调整，考虑任何特定国家的风险。

所有板块营运租赁的加权平均剩余租期和折扣率如下：


租赁期限和折扣率	2024年6月30日		2023年6月30日
加权平均剩余租赁期限（年）	6.36		6.38
加权平均折现利率	8.68	%	7.93	%

与租赁相关的补充资产负债表资讯如下（（以千为单位）):


	公司综合资产负债表中的项目	2024年6月30日		2023年12月31日

营运租赁权使用资产	其他非流动资产	$	176,829	$	177,581
目前部分，营运租赁负债	其他流动负债	$	30,969	$	29,228
营业租赁负债	其他非流动负债	$	171,874	$	173,586

有关租约的补充现金流资讯如下（（以千为单位）):


	2024年6月30日结束的六个月。		2023年6月30日止六个月
计入租赁负债衡量的金额所支付的现金：
营运租赁带来的营运现金流量	$	22,268	$	20,549
作为租赁义务换取而得的使用权资产:
营运租赁	$	7,563	$	22,994

注 P — 关系人交易

管理服务协议

有限责任公司在2006年5月16日与CGm订立了《管理服务协议》（"MSA"），并经修订。我们的首席执行官是CGm的合伙人。协议规定，CGm除了其他事项外，要为有限责任公司提供服务，作为管理费用而每季支付相等于其净资产经调整后净资产百分比的酬金。 0.5根据《管理服务协议》所定义，该协议规定，CGm须提供其他服务予有限责任公司，作为管理费用之每季支付金额，相等于有限责任公司净资产的调整后净资产百分比的

2022年间，CGm进入了关于MSA的豁免协议，以便在2023年6月30日前收取与PrimaLoft相关的年管理费用，而不是MSA条款规定的百分之 1的年管理费用，这导致了在豁免期间到2023年6月30日之前的管理费用比通常应收的要低。 2的年管理费用，这导致了在豁免期间到2023年6月30日之前的管理费用比通常应收的要低。到期日。

整合服务协议

整合服务费用包含在子公司损益表的销售、一般及行政费用中，计入产生费用的期间。根据《整合服务协议》（"ISA"），CGm为新平台收购提供服务，包括协助已收购实体管理层建立企业治理计划，实施萨班斯-豪利法案（2002年修订）的合规和报告要求，并使已收购实体的政策和程序与我们的其他子公司保持一致。

The Honey Pot Co.于2024年1月被收购后，与CGm签订了ISA协议，根据协议，The Honey Pot Co.将支付给CGm总计$3.5　百万美元的整合服务费，并将于2024年6月30日开始的十二个月期间，每季支付一次。THP在截至2024年6月30日的季度向CGm支付了$0.9　百万美元的整合服务费。

PrimaLoft在2022年7月被收购后，与CGm签订了ISA，根据协议PrimaLoft每季支付CGm整合服务费4.81000万美元，在截至2023年6月30日的十二个月期间内。

该公司及其业务具有以下重要关联方交易

5.11

相关方供应商购买 - 5.11从一位担任5.11执行官的关联方供应商购买库存。 40百分之5.11通过一位执行官对该供应商的所持有权益购买。5.11在2024年6月30日止的三个和六个月分别购买了约$0.2 百万美元和0.6 百万的库存。在2023年6月30日止的三个和六个月分别购买了$0.4百万和$1.0百万的库存。

BOA

资本重组 - 在2023年12月，公司完成了对BOA的资本重组，LLC与BOA签署了一份修订BOA公司间信贷协议的协议（"BOA信贷协议"）。BOA信贷协议已经修订，以提供额外的长期借款，金额为$165.9 百万用于向股东发放分红。LLC根据分配日期持有的BOA优先股份，收到了$131.0 百万分配给非控股股东，而资本重组的剩余部分用于回购员工持有的完全授权的员工股票期权以及向持有幻影股票期权的员工支付奖金，这些员工无资格参与非控股股东的分红。 BOA因资本重组支付给员工的奖金记录为$11.7 百万。3.1 百万作为资本重组中支付给员工的奖金，BO作为众股东分红并未获得分红资格。

相关方供应商购买 - BOA使用的合约制造商是BOA的非控制股东，提供成型射出件作为主要供应商。BOA分别于2024年6月30日结束的三个月和六个月内从该供应商购买了约大约支付了626,000美元的法律费用13.6百万和$24.2百万。相对而言，在2024年6月30日结束的三个月和六个月内。 $10.7百万和$20.4的三个月在2023年6月30日结束的三个和六个月内分别。

项目2. 管理层讨论和分析财务状况和营运结果

本条款2包含前瞻性陈述。本季度报告表格10-Q中的前瞻性陈述受到多项风险和不确定性的影响，其中一些超出我们的控制范围。我们的实际结果、表现、前景或机会可能与前瞻性陈述中所表达或暗示的有实质差异。我们目前不知道的额外风险，或者目前认为不重要的风险，也可能导致我们的实际结果出现差异，包括本季度报告表格10-Q其他部分中所包含的题为「前瞻性陈述」的部分中讨论的那些，以及在我们截至2023年12月31日的年度报告10-k中所讨论的那些风险因素，以及本季度报告表格10-Q第二部分第1A条的「风险因素」部分中讨论的那些风险因素。

概观

compass diversified控股（以下简称 "控股" 或 "信托" ）于2005年11月18日在特拉华州成立。Compass Group Diversified Holdings LLC（以下简称 "LLC" ）也于2005年11月18日成立。控股和LLC（统称为 "公司" ）成立的目的是收购和管理总部位于北美的一群中小型市场企业。截至2024年6月30日，LLC控制拥有十家企业或事业部门。这些部门包括：5.11 Acquisition Corp.（ "5.11" ），Boa Holdings Inc.（ "BOA" ），The Ergo Baby Carrier, Inc.（ "Ergobaby" ），Lugano Holdings, Inc.（ "Lugano Diamonds" 或 "Lugano" ），Relentless Topco, Inc.（ "PrimaLoft" ），THP Topco, Inc.（ "The Honey Pot Co." 或 "THP" ），CBCP Products, LLC（ "Velocity Outdoor" 或 "Velocity" ），AMTAC Holdings LLC（ "Arnold" ），FFI Compass, Inc.（ "Altor Solutions" 或 "Altor" ），以及SternoCandleLamp Holdings, Inc.（ "Sterno" ）。

我们在2024年6月30日购入我们现有的业务（部门），具体情况如下：


		所有权利益 - 2024年6月30日
业务	收购日期	主要	稀释
Ergobaby	2010年9月16日	81.6%	72.8%
阿诺尔	2012年3月5日	98.0%	85.8%
Sterno	2014年10月10日	98.1%	90.8%
5.11	2016年8月31日	97.7%	87.0%
Velocity Outdoor	2017年6月2日	99.4%	87.7%
Altor解决方案	2018年2月15日	99.3%	89.6%
BOA	2020年10月16日	91.8%	83.0%
卢加诺	2021年9月3日	59.9%	55.0%
PrimaLoft	2022年7月12日	90.7%	84.1%
蜜罐公司。	2024年1月31日	84.8%	76.6%

我们将我们的子公司业务分为两组不同的业务：（i）品牌消费业务，以及（ii）工业业务。品牌消费业务的特点是我们认为这些业务在其各自的市场板块中利用了有价值的品牌名称。我们认为我们的品牌消费业务在各自的特定产品类别中是领导者。工业业务的特点是专注于制造和销售特定产品和工业服务在各自特定的市场板块。我们认为我们的工业业务在其特定市场板块中是领导者。我们最近宣布将我们的医疗保健业务作为我们的第三组公司。我们认为医疗保健有多个具吸引力且高增长的分部，带有强劲的行业风向，是一个我们预计将为当前公司组合带来多样化和稳定性的非周期性垂直，并与公司现有子公司的优先事项具有强烈的一致性。

以下是我们各附属企业的概述:

品牌消费者

5.11 5.11是一家领先的专门提供给执法人员、消防员、急救员、军工特种部队以及户外和冒险爱好者的专用技术服装和装备供应商。5.11品牌以创新和真实性闻名，直接与用户合作，设计专用的服装和装备，旨在提升全球战术专业人员和爱好者的安全性、精确性、速度和表现。总部位于加利福尼亚州的Costa Mesa，在全球运营销售办事处和配送中心，5.11产品广泛分销于制服店、军事交换所、户外零售店、自家店铺以及511tactical.com。

BOA - 这个革命性、屡获殊荣、拥有专利的BOA Fit System的创造者，与市场领先品牌合作，让最佳装备变得更好。 BOA Fit System提供针对性能量身打造的合适解决方案，特色板块鞋类的运动鞋、自行车、户外用品、体育用品、职业服装以及功能头戴物和支撑装置中均有应用。这个系统由三个主要部分组成：微调式转盘、高强度的轻量化鞋带和低摩擦力鞋带导引器，形成比鞋带、扣环、魔鬼毡和其他传统闭合机制更卓越的替代方案。每个独特的BOA配置都是与品牌合作伙伴一起设计，旨在为运动员提供卓越的合适性和性能，并且经过工程设计以在最严苛的条件下运作，并受到BOA终身保证的支持。 BOA总部设在科罗拉多州的丹佛市，并在奥地利、大中华、韩国和日本设有办事处。

Ergobaby - Ergobaby总部设在加利福尼亚州托兰斯，是一家设计师，行销商和分销商，专门生产穿戴式婴儿背带和配件，毛毯和包巾，哺乳枕，婴儿推车，摇床和相关产品。 Ergobaby主要通过实体零售商，全国连锁店，线上零售商，自家网站和分销商销售其Ergobaby和Baby Tula品牌产品，并有超过50％的销售来自美国以外的地区。

卢加诺 - Lugano 是一家领先的高端珠宝设计师、制造商和行销商，在一些世界上最有品味的客户中广受追捧。Lugano 通过自己的零售沙龙以及与驰名的马术、艺术和慈善社区的具影响力组织合作，在Lugano主办或赞助的活动中设立临时展厅来进行销售。Lugano 的总部位于加州新港海滩。

PrimaLoft - PrimaLoft是一家领先的品牌，提供高性能合成保温材料，主要用于消费者外套和配饰。PrimaLoft的合成保温产品系列既可模仿天然羽绒的外观，又能设计出从时尚的鹅绒外套到轻量化运动服的衣物。PrimaLoft保温材料还为品牌合作伙伴带来优越的经济效益，并透过使用再生、低碳输入实现更好的可持续特性。PrimaLoft总部位于纽约州拉瑟姆。

蜂蜜罐公司.- 蜂蜜罐公司是一个领先的「对你更好」的女性护理品牌，以植物衍生成分和临床测试过的配方为动力。由首席执行官Beatrice Dixon于2012年创立，蜂蜜罐公司立足于所有产品应该采用对皮肤温和又安全的健康而有效成分的信念。该公司提供一系列全面的健康和个人护理产品，跨越女性卫生、月经、个人护理和性健康等范畴。蜂蜜罐公司的使命是教育、支援并为全球消费者提供促进月经健康和阴道健康的工具和资源。其产品可以在美国的过万家商店找到，包括大型零售商、药品和杂货连锁店以及线上商店。蜂蜜罐公司总部位于佐治亚州的亚特兰大。

Velocity Outdoor - 是一家领先的弓箭产品、狩猎服饰及相关配件的设计、制造和行销商。弓箭产品包括Ravin十字弩和CenterPoint弓箭产品等，而服饰类别则提供King's Camo品牌的高性能、功能丰富的狩猎和休闲服饰，采用King自家专有的迷彩纹样。Velocity Outdoor通过全国零售连锁店以及经销商和分销商网络销售其产品。Velocity Outdoor总部设在纽约罗彻斯特。

工业

Altor解决方案 - Altor Solutions是一家设计和制造定制保护泡沫解决方案和由扩展聚苯乙烯和扩展聚丙烯制成的原始设备制造商元件的公司。Altor向各种终端市场提供产品，包括家电和电子产品、制药、健康与健康、汽车、建筑和其他产品。Altor总部设在亚利桑那州斯科茨代尔，并在北美运营15家成型和加工设施。

阿诺德 -Arnold 是一家全球解决方案供应商和制造商，适用于广泛的专业应用和终端市场，包括航空航天和国防、通用工业、赛车/运输、石油和天然气、医疗、能源、再生和广告专业。Arnold 设计并生产高性能永磁 (PMAG)、定子、转子和全电动机（「Ramco」）、精密箔产品（精密薄金属或「PTM」）以及柔性磁铁（Flexmag™），这些产品在马达、发电机、感测器和其他系统和元件中至关重要的任务。Arnold 凭借其长期的关系，建立了一个多元化的蓝筹客户群，拥有超过 2,000 名客户和全球领先的系统整合商，专注于北美、欧洲和亚洲。Arnold 建立了首选稀土供应链，并拥有领先的稀土和其他永磁生产能力。阿诺德总部位于纽约罗切斯特。

Sterno Sterno是一家领先的便携式食物加热系统、创意室内外照明和家用香氛解决方案的制造商和行销商。Sterno通过Sterno产品提供各种灯芯和明胶加热系统、丁烷炉具和配件、液体和传统蜡烛、餐饮设备和灯具，同时也通过Rimports提供香蕉蜡块、加热产品、室外照明和用于家居装饰和香氛系统的精油。Sterno总部位于德克萨斯州普莱诺。

尽管我们的子公司业务拥有不同的增长机会和潜在增长率，但我们积极管理每个子公司业务，通过各种措施增加每家业务的价值和现金收入，包括以选择性资本投资扩展地理覆盖范围、增加产能或降低子公司业务的制造成本；改进和扩大现有的销售和营销计划；协助收购和整合相关业务。

对我们子公司业务产生重大影响的趋势

宏观经济趋势

全球宏观经济环境依旧动荡，包括通胀压力和较高利率期货等全球宏观经济趋势，正影响消费者的消费行为。我们预期市场条件的变化和通胀压力将继续影响消费支出。特别是对低收入和中等收入消费者购买的杂项商品，即使在其他收入支架的整体消费者信心出现改善的情况下，消费者支出可能会受到影响。尽管全球通胀在2024年上半年在国内以较慢的速度增长，但与COVID-19疫情前的环境相比，价格仍然显著上升，通胀率仍高于中央银行的目标水平。我们继续在原材料方面经历适度的通胀成本增加，以及劳动力成本的上升，特别是在我们的企业中，时薪员工占工作人员的比例较大。我们预计，低失业率和不断增长的工资和福利成本将对我们的企业2024年的利润产生影响。我们的企业运作的一些地方在过去两年中也大幅提高了最低工资标准，未来几年将有更多的涨幅，这增加了我们支付这些地区时薪工人的工资压力。

我们的库存交货时间已稳定，我们预计将在 2024 年进行更准确的预测。我们的几家消费品牌业务在 2023 年经历了净收入下降，这是由于由于供应链正常化和 2022 年相应的库存订单激增，因此高于预期的最终市场库存水平。运输成本也从高峰期下降，但 2023 年下半年出现的全球地缘政治威胁继续对燃料和运输成本造成压力。我们的业务已开始看到货运成本上升，尤其是海运，我们预计在 2024 年下半年将影响我们。因此，我们的流动性和财务业绩可能会以我们今天无法预测的方式受到影响。

尽管上述所指出的负面趋势，我们业务的多元化、在美国市场的集中以及我们过去几年采取的措施，以改善我们子公司的整体组成和降低资金成本，我们认为已将我们定位在一个强劲地位，使我们有信心在2024年继续从强势立场执行我们的策略。

业务前景

公司预计2024年的重点领域，通常适用于我们每个业务，包括:

•通过新产品开发、扩大分销、新客户获取和国际扩张来追求销售增长；

•透过增加净利润和有效的工作资本管理，推动自由现金流，从而持续投资于我们的业务；

•在必要时，为了保持运营利润，我们将提高商品价格以应对上升的投入成本；

•在各个领先的细分市场领先公司中，我们将尽可能地取得市场份额，通常是以资金较少的竞争对手为代价；

•致力于供应链管理、制造业和技术能力的卓越。

•持续追求在低利润业务线或为应对较低生产成交量而进行的开支削减和成本节省；以及

•持续透过谨慎、战略性并购和严格的整合流程来成长。

最近事件

处置Crosman

2024年4月30日，Velocity Outdoor订立了一份股份购买协议，将其气枪产品部门Crosman公司（「Crosman」）卖给Daisy Manufacturing公司，交易价值约为6300万美元。该交易于当天完成。公司在2024年6月30日结束的季度，于Crosman出售中记录了2460万美元的亏损。Velocity收到了约5850万美元的Crosman出售净收益，用以偿还其公司间信贷协议的未偿金额。Crosman的营运成果已包含在附带的基本报表中，至出售日期止。

The Honey Pot Co. 被收购

截至2024年1月31日（“结束日期”），有限责任公司通过其新成立的收购子公司， THP Topco, Inc.，一家特拉华州的公司（“THP Topco”）和 THP Intermediate, Inc.，一家特拉华州的公司（“THP Buyer”），收购 The Honey Pot Company Holdings, LLC（“THP”）及其部分附属公司根据2024年1月14日签订的并购和股票购买协议（“THP购买协议”）而完成了收购，该协议由THP买家、 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 作为卖方代表，及THP的某些剩余股东共同签署。根据THP购买协议，在某些内部重组之后，THP Buyer收购了Blocker I和Blocker II的全部已发行及流通股份，随后，THP Merger Sub与THP进行了合并（“THP合并”）， THP并购子公司的独立存在终止，THP作为THP顶层公司的全资间接附属公司幸存下来THP是The Honey Pot Company（DE）有限责任公司（“The Honey Pot Co.”）的母公司。

The Company purchased The Honey Pot for a total enterprise value of $380 million, before working capital and certain other adjustments (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 “THP Rollover Equity”) to THP Topco in exchange for THP Topco common stock. THP Topco contributed the THP 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.

Non-GAAP Financial Measures

"U.S. GAAP" or "GAAP" refer to generally accepted accounting principles in the United States. A non-GAAP financial measure is a numerical measure of historical or future performance, financial position or cash flow that excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with GAAP in our financial statements, and vice

versa for measures that include amounts, or are subject to adjustments that effectively include amounts, that are excluded from the most directly comparable measure as calculated and presented.

See “Reconciliation of Non-GAAP Financial Measures” for further discussion of our non-GAAP financial measures and related reconciliations.

Results of Operations

The following discussion reflects a comparison of the historical results of operations of our consolidated business for the three and six months ended June 30, 2024 and June 30, 2023, and components of the results of operations as well as those components presented as a percent of net revenues, for each of our subsidiary businesses on a stand-alone basis.

In the following results of operations, we provide (i) our actual Consolidated Results of Operations for the three and six months ended June 30, 2024 and 2023, which includes the historical results of operations of each of our businesses (operating segments) from the date of acquisition in accordance with generally accepted accounting principles in the United States ("GAAP" or "US GAAP), and (ii) comparative historical components of the results of operations for each of our businesses on a stand-alone basis for the three and six months ended June 30, 2024 and 2023, where all periods presented include relevant pro forma adjustments for pre-acquisition periods and explanations where applicable. For the acquisition of The Honey Pot Co. in January 2024, the pro forma results of operations for The Honey Pot Co. business segment has been prepared as if we purchased this business on January 1, 2023. We believe this is the most meaningful comparison for the operating results of acquired business segments. The following results of operations at each of our businesses are not necessarily indicative of the results to be expected for a full year.

All dollar amounts in the financial tables are presented in thousands. References in the financial tables to percentage changes that are not meaningful are denoted by "NM."

Results of Operations - Consolidated

The following table sets forth our unaudited results of operations for the three and six months ended June 30, 2024 and 2023:


	Three months ended				Six months ended
(in thousands)	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Net revenues	$	542,595	$	486,889	$	1,066,885	$	970,822
Cost of revenues	283,481		270,248		565,944		549,117
Gross profit	259,114		216,641		500,941		421,705
Selling, general and administrative expense	151,446		133,755		302,160		264,019
Fees to manager	18,864		16,795		36,931		33,065
Amortization of intangibles	27,461		23,978		53,749		47,951
Impairment expense	—		—		8,182		—
Operating income	61,343		42,113		99,919		76,670
Interest expense	(26,561)		(26,613)		(50,136)		(52,793)
Amortization of debt issuance costs	(1,004)		(1,024)		(2,009)		(2,029)
Loss on sale of Crosman	(24,606)		—		(24,606)		—
Other income (expense)	(1,375)		(105)		(4,249)		1,055
Income from continuing operations before income taxes	7,797		14,371		18,919		22,903
Provision for income taxes	21,520		4,320		30,206		11,240
Net income (loss) from continuing operations	$	(13,723)	$	10,051	$	(11,287)	$	11,663

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net revenues

Consolidated net revenues for the three months ended June 30, 2024 increased by approximately $55.7 million, or 11.4%, compared to the corresponding period in 2023. During the three months ended June 30, 2024 compared to

2023, we saw notable increases in net revenues at BOA ($16.0 million increase) and Lugano ($38.4 million increase), offset by decreases in net revenue at Velocity ($19.1 million decrease, primarily as a result of the sale of Crosman) and Altor Solutions ($8.7 million decrease). The Honey Pot Co., which we acquired on January 31, 2024, contributed $24.2 million in net revenues in the second quarter of 2024. Refer to "Results of Operations - Business Segments" for a more detailed analysis of net revenues by subsidiary business segment.

We do not generate any revenues apart from those generated by our subsidiaries. We may generate interest income on the investment of available funds, but expect such earnings to be minimal. We make loans from the Company to our subsidiary businesses and also hold equity interests in those businesses. Cash flows coming to the Trust and the LLC are the result of interest payments on those loans, amortization of those loans and additional principal payments on those loans. However, on a consolidated basis, these items will be eliminated.

Cost of revenues

On a consolidated basis, cost of revenues increased approximately $13.2 million during the three months ended June 30, 2024 compared to the corresponding period in 2023. We saw notable increases in cost of revenues at BOA ($4.8 million increase) and Lugano ($13.4 million increase) that correlates with the increase in net revenue in the second quarter of 2024. We saw notable decreases in cost of revenues at Velocity ($14.8 million decrease, primarily as a result of the sale of Crosman) and Altor ($4.1 million decrease) that corresponded to the decrease in net revenue noted above. The Honey Pot Co. had cost of sales of $12.9 million in the second quarter of 2024. Gross profit as a percentage of net revenues was approximately 47.8% in the three months ended June 30, 2024 compared to 44.5% in the three months ended June 30, 2023. The increase in gross profit as a percentage of net sales in the quarter ended June 30, 2024 as compared to the quarter ended June 30, 2023 is driven by the mix of products sold, with increases in net revenue at our higher margin businesses, particularly Lugano. Our branded consumer businesses had gross profit as a percentage of net revenues of 56.7% in the second quarter of 2024 as compared to 53.1% in the second quarter of 2023, while our industrial businesses had gross profit as a percentage of net revenues of 28.1% in the second quarter of 2024 as compared to 29.3% in the second quarter of 2023. Refer to "Results of Operations - Business Segments" for a more detailed analysis of gross profit by subsidiary business segment.

Selling, general and administrative expense

Consolidated selling, general and administrative expense increased approximately $17.7 million during the three months ended June 30, 2024, compared to the corresponding period in 2023. We saw increases in selling, general and administrative expenses at several of our consumer brands due to increased investment in marketing and headcount, increases in employee compensation and increases in fulfillment costs. We saw notable increase in selling, general and administrative expenses at BOA ($2.8 million of the increase), Ergobaby ($1.6 million of the increase) and Lugano ($9.0 million of the increase). The Honey Pot Co. had selling, general and administrative expense of $9.3 million in the second quarter of 2024, of which $0.9 million was integration service fees associated with the Company's acquisition. Refer to "Results of Operations - Business Segments" for a more detailed analysis of selling, general and administrative expense by subsidiary business segment. At the corporate level, general and administrative expense was $4.0 million in the second quarter of 2024 and $4.1 million in the second quarter of 2023.

Fees to manager

Pursuant to the Management Services Agreement ("MSA"), we pay CGM a quarterly management fee equal to 0.5% (2.0% annually) of our consolidated adjusted net assets. We accrue for the management fee on a quarterly basis. For the three months ended June 30, 2024, we incurred approximately $18.9 million in management fees as compared to $16.8 million in fees in the three months ended June 30, 2023. The increase in management fees is primarily attributable to our acquisition of The Honey Pot Co. in January 2024.

CGM entered into a waiver of the MSA for a period through June 30, 2023 to receive a 1% annual management fee related to PrimaLoft, rather than the 2% called for under the MSA, which resulted in a lower management fee paid in the second quarter of 2023 than would have normally been due. PrimaLoft was acquired in July 2022.

Amortization expense

Amortization expense for the three months ended June 30, 2024 increased $3.5 million as compared to the three months ended June 30, 2023 as a result of the amortization expense associated with the intangibles that were recognized in conjunction with the purchase price allocation for The Honey Pot Co., which was acquired in January 2024.

Interest expense

We recorded interest expense totaling $26.6 million for the three months ended June 30, 2024 compared to $26.6 million for the comparable period in 2023. There was an average of $90 million outstanding on the revolving credit facility in the second quarter of 2024 and $104 million outstanding in the second quarter of 2023. The amount outstanding on the revolving credit facility in the last year was impacted by the timing of our dispositions and acquisitions, with the proceeds from the sale of Advanced Circuits in February 2023 used to pay down outstanding balances on the facility, and the proceeds from the sale of Marucci in November 2023 used to pay for the acquisition of The Honey Pot Co. rather than using the availability under the facility.

Loss on sale of Crosman

On April 30, 2024, Velocity Outdoor sold Crosman Corporation ("Crosman"), its airgun product division. Velocity received net proceeds of approximately $58.5 million related to the sale of Crosman, which was used to repay amounts outstanding under its intercompany credit agreement. The Company recorded a loss on the sale of Crosman in the quarter ending June 30, 2024 of $24.6 million.

Other income (expense)

For the quarter ended June 30, 2024, we recorded $1.4 million in other expense as compared to $0.1 million in other expense in the quarter ended June 30, 2023, an increase in expense of $1.3 million. Other income (expense) typically reflects the movement in foreign currency at our subsidiary businesses with international operations, gains or (losses) realized on the sale of property, plant and equipment, and expenses incurred or income earned that are not considered a part of our operations. In the quarter ended June 30, 2024, other expense reflects the accrual of a legal settlement at the corporate level.

Income taxes

We had an income tax provision of $21.5 million during the three months ended June 30, 2024 compared to an income tax provision of $4.3 million during the same period in 2023, an increase of $17.2 million. Our effective tax rate in the quarter ended June 30, 2024 was 276.0%, compared to an effective income tax rate of 30.1% during the same period in 2023. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. In addition to state income taxes, the items with the most significant impact on the difference between our statutory U.S. federal income tax rate of 21% percent and our effective income tax rate in the second quarter was the limitations on the net operating loss carryforwards and utilization of tax credits at our subsidiaries and the loss on the sale of Crosman recognized at Velocity in the second quarter of 2024.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Net revenues

Consolidated net revenues for the six months ended June 30, 2024 increased by approximately $96.1 million, or 9.9%, compared to the corresponding period in 2023. During the six months ended June 30, 2024 compared to 2023, we saw notable increases in net revenues at BOA ($21.0 million increase) and Lugano ($77.6 million increase), offset by decreases in net revenue at Velocity ($23.3 million decrease), Altor Solutions ($16.8 million decrease) and Sterno ($11.0 million decrease). The Honey Pot Co., which we acquired on January 31, 2024, contributed $44.3 million in net revenues in 2024 post-acquisition in January 2024. Refer to "Results of Operations - Business Segments" for a more detailed analysis of net revenues by subsidiary business segment.

Cost of revenues

On a consolidated basis, cost of revenues increased approximately $16.8 million during the six months ended June 30, 2024 compared to the corresponding period in 2023. We saw notable increases in cost of revenues at BOA ($6.3 million increase) and Lugano ($25.9 million increase) that correlates with the increase in net revenue in the first half of 2024. We saw notable decreases in cost of revenues at Velocity ($17.4 million decrease), Altor ($11.7 million decrease), and Sterno ($12.7 million decrease) that corresponded to the decrease in net revenue

noted above. The Honey Pot Co. had cost of sales of $24.4 million in 2024 post-acquisition. Gross profit as a percentage of net revenues was approximately 47.0% in the six months ended June 30, 2024 compared to 43.4% in the six months ended June 30, 2023. The increase in gross profit as a percentage of net sales in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 is driven by the mix of products sold, with increases in net revenue at our higher margin businesses, particularly Lugano. Our branded consumer businesses had gross profit as a percentage of net revenues of 55.2% in the first half of 2024 as compared to 52.5% in the first half of 2023, while our industrial businesses had gross profit as a percentage of net revenues of 28.3% in the first half of 2024 as compared to 27.5% in the first half of 2023. Refer to "Results of Operations - Business Segments" for a more detailed analysis of gross profit by subsidiary business segment.

Selling, general and administrative expense

Consolidated selling, general and administrative expense increased approximately $38.1 million during the six months ended June 30, 2024, compared to the corresponding period in 2023. We saw increases in selling, general and administrative expenses at several of our consumer brands due to increased investment in marketing and headcount, increases in employee compensation and increases in fulfillment costs. We saw notable increase in selling, general and administrative expenses at BOA ($4.6 million of the increase), Ergobaby ($2.8 million of the increase) and Lugano ($16.0 million of the increase). The Honey Pot Co. had selling, general and administrative expense of $18.1 million in the first half of 2024 post-acquisition, of which $3.5 million was transaction costs and $0.9 million was integration service fees associated with the acquisition. Refer to "Results of Operations - Business Segments" for a more detailed analysis of selling, general and administrative expense by subsidiary business segment. At the corporate level, general and administrative expense was $8.9 million in both the first half of 2024 and the first half of 2023.

Fees to manager

Pursuant to the Management Services Agreement ("MSA"), we pay CGM a quarterly management fee equal to 0.5% (2.0% annually) of our consolidated adjusted net assets. We accrue for the management fee on a quarterly basis. For the six months ended June 30, 2024, we incurred approximately $36.9 million in management fees as compared to $33.1 million in fees in the six months ended June 30, 2023. The increase in management fees is primarily attributable to our acquisition of The Honey Pot Co. in January 2024.

CGM entered into a waiver of the MSA for a period through June 30, 2023 to receive a 1% annual management fee related to PrimaLoft, rather than the 2% called for under the MSA, which resulted in a lower management fee paid in the first six months of 2023 than would have normally been due. PrimaLoft was acquired in July 2022.

Amortization expense

Amortization expense for the six months ended June 30, 2024 increased $5.8 million as compared to the six months ended June 30, 2023 as a result of the amortization expense associated with the intangibles that were recognized in conjunction with the purchase price allocation for The Honey Pot Co., which was acquired in January 2024.

Impairment expense

In connection with our annual goodwill impairment test, we tested the goodwill at the Velocity reporting unit quantitatively. The impairment test resulted in Velocity recording impairment expense of $8.2 million in the six months ended June 30, 2024.

Interest expense

We recorded interest expense totaling $50.1 million for the six months ended June 30, 2024 compared to $52.8 million for the comparable period in 2023, a decrease in expense of $2.7 million. We received $1.8 million in interest income on our cash balances at the LLC during the six months ended June 30, 2024 related to the proceeds from our sale of Marucci, prior to using these funds for our acquisition of The Honey Pot in January 2024. The remaining decrease in interest expense in the current period reflects the lower average amount outstanding under our revolving credit facility in the first half of 2024 as compared to the first half of 2023. There was an average of $59 million outstanding on the revolving credit facility in the first half of 2024 and $105 million outstanding in the first half of 2023. The amount outstanding on the revolving credit facility in the last year was impacted by the timing of our dispositions and acquisitions in the past year, with the proceeds from the sale of Advanced Circuits in February 2023 used to pay down outstanding balances on the facility, and the proceeds from the sale of Marucci in November 2023 used to pay for the acquisition of The Honey Pot Co. rather than using the availability under the facility.

Loss on sale of Crosman

Other income (expense)

For the six months ended June 30, 2024, we recorded $4.2 million in other expense as compared to $1.1 million in other income in the six months ended June 30, 2023, an increase in expense of $5.3 million. Other income (expense) typically reflects the movement in foreign currency at our subsidiary businesses with international operations, gains or (losses) realized on the sale of property, plant and equipment, and expenses incurred or income earned that are not considered a part of our operations. In the six months ended June 30, 2024, the other expense reflects a loss on an equity method investment at Altor Solutions and the accrual of a legal settlement at the corporate level

Income taxes

We had an income tax provision of $30.2 million during the six months ended June 30, 2024 compared to an income tax provision of $11.2 million during the same period in 2023, an increase of $19.0 million. Our effective tax rate in the six months ended June 30, 2024 was 159.7%, compared to an effective income tax rate of 49.1% during the same period in 2023. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. In addition to state income taxes, the items with the most significant impact on the difference between our statutory U.S. federal income tax rate of 21% percent and our effective income tax rate in 2024 was the limitations on the net operating loss carryforwards and utilization of tax credits at our subsidiaries, the impairment expense recognized at Velocity in the first quarter of 2024 and the loss on the sale of Crosman in the second quarter of 2024.

Results of Operations - Business Segments

Branded Consumer Businesses

5.11


	Three months ended								Six months ended
	June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
Net sales	$	123,201	100.0	%	$	126,030	100.0	%	$	248,175	100.0	%	$	250,482	100.0	%
Gross profit	$	67,485	54.8	%	$	67,893	53.9	%	$	133,412	53.8	%	$	132,836	53.0	%
SG&A	$	54,365	44.1	%	$	54,870	43.5	%	$	109,704	44.2	%	$	109,701	43.8	%
Segment operating income	$	10,699	8.7	%	$	10,582	8.4	%	$	18,866	7.6	%	$	18,252	7.3	%

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net sales

Net sales for the three months ended June 30, 2024 were $123.2 million as compared to net sales of $126.0 million for the three months ended June 30, 2023, a decrease of $2.8 million, or 2.2%. This decrease was driven by a $3.8 million decrease in direct-to-consumer sales due to lower off price selling and a $0.2 million decrease in domestic wholesale sales due to decreased inventory availability, which were offset by a $0.5 million increase in international sales growth from strong demand.

Gross profit

Gross profit was $67.5 million in the three months ended June 30, 2024 as compared to $67.9 million in the three months ended June 30, 2023, a decrease of $0.4 million. Gross profit as a percentage of net sales was 54.8% in the second quarter of 2024 as compared to 53.9% in the second quarter of 2023. Gross profit as a percentage of net sales was favorably impacted by lower off price selling.

Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2024 was $54.4 million, or 44.1% of net sales as compared to $54.9 million, or 43.5% of net sales for the comparable period in 2023. The decrease in selling, general and administrative expense was largely driven by a decrease in depreciation, bonus related expenses, outside service and bad debt expenses, offset by slight increases in the costs associated with additional retail stores and increased headcount from June 30, 2023.

Segment operating income

Segment operating income for the three months ended June 30, 2024 was $10.7 million, an increase of $0.1 million when compared to segment operating income of $10.6 million for the same period in 2023, based on the factors described above.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Net sales

Net sales for the six months ended June 30, 2024 were $248.2 million as compared to net sales of $250.5 million for the six months ended June 30, 2023, a decrease of $2.3 million, or 0.9%. This decrease was driven by a $4.9 million decrease in direct-to-consumer sales due to lower off price selling and a $0.9 million decrease in domestic wholesale sales due to decreased inventory availability, both of which were partially offset by a $3.2 million increase in international sales growth from strong demand.

Gross profit

Gross profit was $133.4 million in the six months ended June 30, 2024 as compared to $132.8 million in the six months ended June 30, 2023, an increase of $0.6 million. Gross profit as a percentage of net sales was 53.8% in the first half of 2024 as compared to 53.0% in the first half of 2023. Gross profit as a percentage of net sales was favorably impacted by decreased lower off price selling.

Selling, general and administrative expense

Selling, general and administrative expense for both the six months ended June 30, 2024 and June 30, 2023 was $109.7 million, representing 44.2% of net sales in the six months ended June 30, 2024 and 43.8% of net sales for the comparable period in 2023.

Segment operating income

Segment operating income for the six months ended June 30, 2024 was $18.9 million, an increase of $0.6 million when compared to segment operating income of $18.3 million for the same period in 2023, based on the factors described above.

BOA


	Three months ended						Six months ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
Net sales	$	54,160	100.0%	$	38,123	100.0%	$	97,063	100.0%	$	76,109	100.0%
Gross profit	$	34,070	62.9%	$	22,807	59.8%	$	60,285	62.1%	$	45,598	59.9%
SG&A	$	13,403	24.7%	$	10,573	27.7%	$	25,784	26.6%	$	21,233	27.9%

Segment operating income	$	16,470	30.4%	$	8,050	21.1%	$	26,126	26.9%	$	16,001	21.0%

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net sales

Net sales for the three months ended June 30, 2024 were $54.2 million as compared to net sales of $38.1 million for the three months ended June 30, 2023, an increase of $16.0 million, or 42.1%. The increase was reflected across key industries including Cycling, Athletic, Workwear and Snow Sports. The increase in sales was a result of the improvement of end market inventory levels, coupled with market share gains in many of our key industries.

Gross profit

Gross profit was $34.1 million for the three months ended June 30, 2024 as compared to $22.8 million for the three months ended June 30, 2023, an increase of $11.3 million. Gross Profit as a percentage of net sales was 62.9% for the three months ended June 30, 2024 as compared to 59.8% for the three months ended June 30, 2023. The increase in gross profit as a percentage of net sales was driven by manufacturing overhead leverage as well as product mix.

Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2024 was $13.4 million, or 24.7% of net sales compared to $10.6 million, or 27.7% of net sales for the comparable period in 2023. The increase in selling, general, and administrative expense is primarily due to increased employee costs related to BOA’s bonus plan and equity program.

Segment operating income

Segment operating income for the three months ended June 30, 2024 was $16.5 million, an increase of $8.4 million when compared to segment operating income of $8.1 million for the same period in 2023, based on the factors described above.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Net sales

Net sales for the six months ended June 30, 2024 were $97.1 million as compared to net sales of $76.1 million for the six months ended June 30, 2023, an increase of $21.0 million, or 27.5%. The increase was reflected across key industries including Cycling, Athletic, Workwear and Snow Sports. The increase in sales was a result of the improvement of end market inventory levels, coupled with market share gains in many of our key industries.

Gross profit

Gross profit was $60.3 million for the six months ended June 30, 2024 as compared to $45.6 million for the six months ended June 30, 2023, an increase of $14.7 million. Gross Profit as a percentage of net sales was 62.1% for the six months ended June 30, 2024 as compared to 59.9% for the six months ended June 30, 2023. The increase in gross profit as a percentage of net sales was driven by manufacturing overhead leverage as well as product mix.

Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2024 was $25.8 million, or 26.6% of net sales compared to $21.2 million, or 27.9% of net sales for the comparable period in 2023. The increase in selling, general, and administrative expense is primarily due to increased employee costs related to BOA’s bonus plan and equity program.

Segment operating income

Segment operating income for the six months ended June 30, 2024 was $26.1 million, an increase of $10.1 million when compared to segment operating income of $16.0 million for the same period in 2023, based on the factors described above.

Ergobaby


	Three months ended								Six months ended
	June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
Net sales	$	28,557	100.0	%	$	26,149	100.0	%	$	49,775	100.0	%	$	48,567	100.0	%
Gross profit	$	18,393	64.4	%	$	16,804	64.3	%	$	32,351	65.0	%	$	30,919	63.7	%
SG&A	$	13,865	48.6	%	$	12,286	47.0	%	$	26,856	54.0	%	$	24,023	49.5	%
Segment operating income	$	2,562	9.0	%	$	2,526	9.7	%	$	1,564	3.1	%	$	2,914	6.0	%

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net sales

Net sales for the three months ended June 30, 2024 were $28.6 million, an increase of $2.4 million, or 9.2%, compared to the same period in 2023. During the three months ended June 30, 2024, international sales were approximately $18.1 million, representing an increase of $1.9 million over the corresponding period in 2023, primarily as a result of timing of distributor sales and a strong quarter from key international accounts. Domestic sales were $10.5 million in the second quarter of 2024, reflecting an increase of $0.5 million compared to the corresponding period in 2023. The increase in domestic sales was primarily due to increases from online channels.

Gross profit

Gross profit as a percentage of net sales was 64.4% for the three months ended June 30, 2024, as compared to 64.3% for the three months ended June 30, 2023. The increase in gross profit as a percentage of sales was due to shifts in channel mix.

Selling, general and administrative expense

Selling, general and administrative expense increased $1.6 million quarter over quarter, with expense of $13.9 million, or 48.6% of net sales for the three months ended June 30, 2024 as compared to $12.3 million or 47.0% of net sales for the same period of 2023. The increase in selling, general and administrative expense in the three months ended June 30, 2024 as compared to the comparable period in the prior year is due to increased outbound freight, warehousing and marketing expenses, as well as increased legal fees.

Segment operating income

Ergobaby had segment operating income of approximately $2.6 million for both the three months ended June 30, 2024, and June 30, 2023, based on the factors noted above.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Net sales

Net sales for the six months ended June 30, 2024 were $49.8 million, an increase of $1.2 million, or 2.5%, compared to the same period in 2023. During the six months ended June 30, 2024, international sales were approximately $30.1 million, representing an increase of $0.4 million over the corresponding period in 2023, primarily as a result of strong sales in key international accounts. Domestic sales were $19.6 million in the first half of 2024, reflecting an increase of $0.8 million compared to the corresponding period in 2023. The increase in domestic sales was primarily due to increases from online channels.

Gross profit

Gross profit as a percentage of net sales was 65.0% for the six months ended June 30, 2024, as compared to 63.7% for the six months ended June 30, 2023. The increase in gross profit as a percentage of sales was due to shifts in channel mix and reduced costs.

Selling, general and administrative expense

Selling, general and administrative expense increased $2.8 million year over year, with expense of $26.9 million, or 54.0% of net sales for the six months ended June 30, 2024 as compared to $24.0 million or 49.5% of net sales for the same period of 2023. The increase in selling, general and administrative expense in the six months ended June 30, 2024 as compared to the comparable period in the prior year is due to increased outbound freight, warehousing and marketing expenses, as well as increased legal fees.

Segment operating income

Ergobaby had segment operating income of $1.6 million for the six months ended June 30, 2024, a decrease of $1.4 million compared to the same period in 2023, based on the factors noted above.

Lugano


	Three months ended								Six months ended
	June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
Net sales	$	99,358	100.0	%	$	60,949	100.0	%	$	202,397	100.0	%	$	124,836	100.0	%
Gross profit	$	58,722	59.1	%	$	33,698	55.3	%	$	119,626	59.1	%	$	67,975	54.5	%
SG&A	$	24,098	24.3	%	$	15,138	24.8	%	$	44,257	21.9	%	$	28,211	22.6	%
Segment operating income	$	33,198	33.4	%	$	17,133	28.1	%	$	72,515	35.8	%	$	36,909	29.6	%

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net sales

Net sales for the quarter ended June 30, 2024 increased approximately $38.4 million, or 63.0%, to $99.4 million, compared to the corresponding quarter ended June 30, 2023. Lugano sells high-end jewelry primarily through retail salons in California, Florida, Texas, Washington D.C., Colorado, Connecticut, and London, England, as well as via pop-up showrooms at multiple equestrian, social and charitable functions each year. In the current year period, Lugano has experienced strong same store sales growth as it has invested in building out its inventory as well as its sales, marketing and event staff, while increasing the number of social and charitable functions it has attended. Lugano opened its Greenwich, Connecticut location in September 2023, and its London, England salon in the second quarter of 2024, and expects to open more retail locations in the near term to further expand sales opportunities.

Gross profit

Gross profit as a percentage of net sales totaled approximately 59.1% and 55.3% for the quarters ended June 30, 2024 and June 30, 2023, respectively. Lugano has an extensive network of suppliers through which it procures diamonds and gemstones, which make up a significant percentage of the cost of sales. The increase in margins is attributable to pricing and product mix, especially in its higher priced jewelry pieces.

Selling, general and administrative expense

Selling, general and administrative expense was $24.1 million for the three months ended June 30, 2024 as compared to $15.1 million in selling, general and administrative expense in the three months ended June 30, 2023. Selling, general and administrative expense represented 24.3% of net sales in the three months ended June 30, 2024 and 24.8% of net sales for the same period of 2023. The increase in selling, general and administrative expense is primarily due to overhead expenses from newly opened locations, increased marketing spend and personnel costs, and variable costs that correlate to the increase in revenue. Lugano continues to increase its head count as it invests in additional professionals to support its growth and geographic expansion.

Segment operating income

Segment operating income increased during the three months ended June 30, 2024 to $33.2 million, as compared to $17.1 million in the corresponding period in 2023. This increase was a result of the factors noted above.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Net sales

Net sales for the six months ended June 30, 2024 increased approximately $77.6 million, or 62.1%, to $202.4 million, compared to the corresponding six months ended June 30, 2023. Lugano sells high-end jewelry primarily through retail salons in California, Florida, Texas, Washington D.C., Colorado, Connecticut, and London, England, as well as via pop-up showrooms at multiple equestrian, social and charitable functions each year. In the current year period, Lugano has experienced strong same store sales growth as it has invested in building out its inventory as well as its sales, marketing and event staff, while increasing the number of social and charitable functions it has attended. Lugano opened its Greenwich, Connecticut location in September 2023, and its London, England salon in the second quarter of 2024, and expects to open more retail locations in the near term to further expand sales opportunities.

Gross profit

Gross profit as a percentage of net sales totaled approximately 59.1% and 54.5% for the six months ended June 30, 2024 and June 30, 2023, respectively. Lugano has an extensive network of suppliers through which they procure high quality diamonds and gemstones, which make up a significant percentage of the cost of sales. The increase in margins is attributable to pricing and product mix, especially in its higher priced jewelry pieces.

Selling, general and administrative expense

Selling, general and administrative expense was $44.3 million for the six months ended June 30, 2024 as compared to $28.2 million in selling, general and administrative expense in the six months ended June 30, 2023. Selling, general and administrative expense represented 21.9% of net sales in the six months ended June 30, 2024 and 22.6% of net sales for the same period of 2023. The increase in selling, general and administrative expense is primarily due to overhead expenses from newly opened locations, increased marketing spend and personnel costs, and variable costs that correlate to the increase in revenue. Lugano continues to increase its head count as it invests in additional professionals to support its growth and geographic expansion.

Segment operating income

Segment operating income increased during the six months ended June 30, 2024 to $72.5 million, as compared to $36.9 million in the corresponding period in 2023. This increase was a result of the factors noted above.

PrimaLoft


	Three months ended								Six months ended
	June 30, 2024				June 30, 2023				June 30, 2024			June 30, 2023
Net sales	$	25,291	100.0	%	$	22,160	100.0	%	$47,832	100.0	%	$	46,689	100.0	%
Gross profit	$	16,042	63.4	%	$	13,977	63.1	%	$30,092	62.9	%	$	29,557	63.3	%
SG&A	$	5,089	20.1	%	$	5,706	25.7	%	$10,386	21.7	%	$	10,812	23.2	%
Segment operating income	$	5,499	21.7	%	$	2,817	12.7	%	$8,799	18.4	%	$	7,838	16.8	%

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net sales

Net sales for the three months ended June 30, 2024 were $25.3 million, an increase of $3.1 million as compared to net sales of $22.2 million for the three months ended June 30, 2023. The increase in net sales in the current quarter versus the quarter ended June 30, 2023 is attributable to the shift by brand partners shipping product later in the production cycle in 2024 compared to the prior year. The excess inventory in the retail market became apparent in second quarter of 2023, which impacted orders during the same period last year.

Gross profit

Gross profit for the quarter ended June 30, 2024 increased $2.1 million as compared to the three months ended June 30, 2023. Gross profit as a percentage of net sales for the three months ended June 30, 2024 was 63.4%, as compared to gross profit as a percentage of sales of 63.1% for the three months ended June 30, 2023. The increase in gross profit as a percentage of net sales in the quarter ended June 30, 2024 as compared to the quarter ended June 30, 2023 is due to product mix shift.

Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2024 was $5.1 million, or 20.1% of net sales compared to $5.7 million, or 25.7% of net sales for the three months ended June 30, 2023. Selling, general and administrative expense in the prior year quarter included $1.2 million in integration services fees associated with the Company's acquisition of PrimaLoft. Excluding the integration service fee, selling, general and administrative expense increased approximately $1.2 million due to the increase in headcount as PrimaLoft continues to focus on future growth.

Segment operating income

Segment operating income for the three months ended June 30, 2024 was $5.5 million, an increase of $2.7 million when compared to segment operating income of $2.8 million for the same period in 2023, as a result of the factors

noted above.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Net sales

Net sales for the six months ended June 30, 2024 were $47.8 million, an increase of $1.1 million as compared to net sales of $46.7 million for the six months ended June 30, 2023. The increase in net sales in the current period versus the six months ended June 30, 2023 is attributable to inventory levels in the retail market normalizing, which has resulted in an increase in orders from retailers with brand partners.

Gross profit

Gross profit for the six months ended June 30, 2024 increased $0.5 million as compared to the six months ended June 30, 2023. Gross profit as a percentage of net sales for the six months ended June 30, 2024 was 62.9%, as compared to gross profit as a percentage of sales of 63.3% for the six months ended June 30, 2023. The decrease in gross profit as a percentage of net sales in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 is due to product mix shift.

Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2024 was $10.4 million, or 21.7% of net sales compared to $10.8 million, or 23.2% of net sales for the six months ended June 30, 2023. Selling, general and administrative expense in the prior period included $2.4 million in integration services fees associated with the Company's acquisition of PrimaLoft. Excluding the integration service fee, selling, general and administrative expense increased approximately $2.4 million due to the increase in headcount as PrimaLoft continues to focus on future growth.

Segment operating income

Segment operating income for the six months ended June 30, 2024 was $8.8 million, an increase of $1.0 million when compared to segment operating income of $7.8 million for the same period in 2023, as a result of the factors noted above.

The Honey Pot Co.

In the following results of operations, we provide comparative proforma results of operations for The Honey Pot Co. for the three and six months ended June 30, 2024 and June 30, 2023 as if we had acquired the business on January 1, 2023. The results of operations that follow include relevant proforma adjustments for pre-acquisition periods and explanations where applicable. The operating results for The Honey Pot Co. have been included in the consolidated results of operation from the date of acquisition in January 2024.


	Three months ended								Six months ended
	June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
					Proforma				Proforma				Proforma
Net sales	$	24,182	100.0	%	$	25,009	100.0	%	$	55,018	100.0	%	$	56,887	100.0	%
Gross profit	$	11,323	46.8	%	$	14,748	59.0	%	$	26,242	47.7	%	$	33,697	59.2	%
SG&A	$	9,276	38.4	%	$	10,330	41.3	%	$	20,932	38.0	%	$	18,938	33.3	%
Segment operating (loss) income	$	(2,530)	(10.5)	%	$	153	0.6	%	$	(3,220)	(5.9)	%	$	6,228	10.9	%

Proforma results of operations include the following proforma adjustments as if we had acquired The Honey Pot Co. on January 1, 2023:

•Incremental stock compensation expense of $0.3 million for the six months ended June 30, 2024 and $0.3 million and $0.6 million, respectively, for the three and six months ended June 30, 2023. This amount is included in SG&A above and reduces segment operating income.

•Amortization expense associated with the intangible assets recorded in connection with the purchase price allocation for THP of $1.3 million for the six months ended June 30, 2024 and $4.0 and $8.0, respectively, for the three and six months ended June 30, 2023. This amount reduces segment operating income.

•Management fees that would have been payable to the Manager during each period. THP will pay a management fee of $1.0 million per year ($0.25 million per quarter) to CGM. This amount reduces segment operating income.

Three months ended June 30, 2024 compared to proforma three months ended June 30, 2023

Net sales

Net sales for the three months ended June 30, 2024 were $24.2 million, a decrease of $0.8 million or 3.3% from net sales of $25.0 million for the three months ended June 30, 2023. The decrease in net sales is primarily due to larger pipe fill orders from new customers and higher promotional activity in the second quarter of 2023.

Gross profit

Gross profit for the quarter ended June 30, 2024 decreased $3.4 million as compared to the three months ended June 30, 2023. Gross profit as a percentage of net sales for the three months ended June 30, 2024 was 46.8%, as compared to gross profit as a percentage of sales of 59.0% for the three months ended June 30, 2023. Cost of sales in the quarter ended June 30, 2024 includes $1.0 million in amortization of the inventory step-up resulting from the acquisition purchase allocation. Excluding the effect of the step-up amortization, gross profit as a percentage of net sales for the first quarter of 2024 was 51.1%. The decline in gross profit as a percentage of net sales in the quarter ended June 30, 2024 as compared to the quarter ended June 30, 2023 is attributable to channel mix shift and higher fixed costs due to the replacement of regional third-party distribution facilities with a larger dedicated distribution center to support future growth and that will benefit from scale efficiencies over time.

Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2024 was $9.3 million, or 38.4% of net sales compared to $10.3 million, or 41.3% of net sales for the three months ended June 30, 2023. The decrease in selling, general and administrative expense in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was due to changes in bonus and compensation plans.

Segment operating income (loss)

Segment operating loss for the three months ended June 30, 2024 was $2.5 million, a decrease of $2.7 million when compared to segment operating income of $0.2 million for the same period in 2023, as a result of the factors noted above.

Proforma six months ended June 30, 2024 compared to proforma six months ended June 30, 2023

Net sales

Net sales for the six months ended June 30, 2024 were $55.0 million, a decrease of $1.9 million or 3.3% from net sales of $56.9 million for the six months ended June 30, 2023. The decrease in net sales is primarily due to normalized replenishment levels in the current period as compared to larger, pipe fill orders from new customers and doors added in the drug and grocery channels in the first six months of 2023 as well as lower promotional activity in the current year.

Gross profit

Gross profit for the six months ended June 30, 2024 decreased $7.5 million as compared to the six months ended June 30, 2023. Gross profit as a percentage of net sales for the six months ended June 30, 2024 was 47.7%, as compared to gross profit as a percentage of sales of 59.2% for the six months ended June 30, 2023. Cost of sales in the six months ended June 30, 2024 includes $3.8 million in amortization of the inventory step-up resulting from the acquisition purchase allocation. Excluding the effect of the step-up amortization, gross profit as a percentage of net sales for the six months ended 2024 was 54.4%. The decline in gross profit as a percentage of net sales in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 is attributable to channel mix shift and higher fixed costs due to the replacement of 3PL distribution with a larger dedicated distribution center to support future growth and that will benefit from scale efficiencies over time.

Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2024 was $20.9 million, or 38.0% of net sales compared to $18.9 million, or 33.3% of net sales for the six months ended June 30, 2023. Selling, general and administrative expense in the current period includes $3.5 million in transaction costs associated with the

Company's acquisition of The Honey Pot Co.

Segment operating income (loss)

Segment operating loss for the six months ended June 30, 2024 was $3.2 million, a decrease of $9.4 million when compared to segment operating income of $6.2 million for the same period in 2023, as a result of the factors noted above.

Velocity Outdoor

On April 30, 2024, Velocity Outdoor sold its Crosman airgun product division. The results of operations for the three and six months ended June 30, 2024 and 2023 presented below include the results from the Crosman airgun product division through the date of sale.


	Three months ended								Six months ended
	June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
Net sales	$	18,711	100.0	%	$	37,839	100.0	%	$	48,610	100.0	%	$	71,879	100.0	%
Gross profit	$	5,627	30.1	%	$	10,001	26.4	%	$	12,125	24.9	%	$	18,016	25.1	%
SG&A	$	5,848	31.3	%	$	9,090	24.0	%	$	14,067	28.9	%	$	17,860	24.8	%
Impairment expense	$	—	—	%	$	—	—	%	$	8,182	16.8	%	$	—	—	%
Segment operating loss	$	(1,935)	(10.3)	%	$	(1,610)	(4.3)	%	$	(14,359)	(29.5)	%	$	(4,886)	(6.8)	%

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net sales

Net sales for the three months ended June 30, 2024 were $18.7 million, a decrease of $19.1 million or 50.6%, compared to the same period in 2023. The decrease in net sales for the three months ended June 30, 2024 is driven by the divestiture of Crosman. The remaining product categories, which consist of the archery and hunting apparel product categories decreased 5% compared to the same period in 2023 due to softness in the overall Hunting and Fishing market.

Gross profit

Gross profit for the quarter ended June 30, 2024 decreased $4.4 million as compared to the quarter ended June 30, 2023. Gross profit as a percentage of net sales increased to 30.1% for the three months ended June 30, 2024 as compared to 26.4% in the three months ended June 30, 2023 due to the divestiture of Crosman. The archery and hunting apparel product categories have higher margins than the airgun product category due to differences in the sales channels and the premium nature of the products sold in these categories. In the quarter ended June 30, 2024, the gross profit for the remaining Velocity business decreased 1.5% compared to the prior year comparable quarter.

Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2024 was $5.8 million, or 31.3% of net sales compared to $9.1 million, or 24.0% of net sales for the three months ended June 30, 2023. Selling, general and administrative expense decreased $3.2 million in the quarter ended June 30, 2024 as compared to the prior period but increased as a percentage of net sales due to the decrease in revenue noted above.

Segment operating loss

Segment operating loss for the three months ended June 30, 2024 was $1.9 million, an increased loss of $0.3 million when compared to segment operating loss of $1.6 million for the same period in 2023 based on the factors noted above.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Net sales

Net sales for the six months ended June 30, 2024 were $48.6 million, a decrease of $23.3 million or 32.4%, compared to the same period in 2023. The decrease in net sales for the six months ended June 30, 2024 is driven by the divestiture of Crosman. The remaining product categories, which consist of the archery and hunting apparel product categories decreased approximately $2.0 million compared to the same period in 2023 due to softness in the overall Hunting and Fishing market.

Gross profit

Gross profit for the six months ended June 30, 2024 decreased $5.9 million as compared to the six months ended June 30, 2023. Gross profit as a percentage of net sales decreased to 24.9% for the six months ended June 30, 2024 as compared to 25.1% in the six months ended June 30, 2023 due to product mix and the absorption of overhead expense on reduced sales.

Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2024 was $14.1 million, or 28.9% of net sales compared to $17.9 million, or 24.8% of net sales for the six months ended June 30, 2023. Selling, general and administrative expense decreased $3.8 million in the six months ended June 30, 2024 as compared to the prior period but increased as a percentage of net sales due to the decrease in revenue noted above.

Impairment expense

The Velocity reporting unit was tested quantitatively in connection with the company's annual goodwill impairment testing, The impairment test resulted in Velocity recording impairment expense of $8.2 million in the six months ended June 30, 2024 after the fair value of the reporting unit did not exceed the carrying value.

Segment operating loss

Segment operating loss for the six months ended June 30, 2024 was $14.4 million, an increased loss of $9.5 million when compared to segment operating loss of $4.9 million for the same period in 2023 based on the factors noted above.

Industrial Businesses

Altor Solutions


	Three months ended								Six months ended
	June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
Net sales	$	52,213	100.0	%	$	60,886	100.0	%	$	105,617	100.0	%	$	122,398	100.0	%
Gross profit	$	15,029	28.8	%	$	19,558	32.1	%	$	31,202	29.5	%	$	36,271	29.6	%
SG&A	$	7,280	13.9	%	$	7,740	12.7	%	$	14,230	13.5	%	$	14,922	12.2	%
Segment operating income	$	5,156	9.9	%	$	9,223	15.1	%	$	11,784	11.2	%	$	16,157	13.2	%

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net sales

Net sales for the quarter ended June 30, 2024 were $52.2 million, a decrease of $8.7 million, or 14.2%, compared to the quarter ended June 30, 2023. The decrease in net sales during the quarter was due to shifting market conditions of the food delivery and other cold chain markets, which represent one of Altor's largest customer segments. Altor is strategically repositioning itself to adapt to these changes, but anticipates continued sales pressure for the remainder of 2024.

Gross profit

Gross profit as a percentage of net sales was 28.8% and 32.1% for the three months ended June 30, 2024 and 2023, respectively. The decrease in gross profit as a percentage of net sales in the quarter ended June 30, 2024, was primarily due to fixed cost absorption on a lower sales base due to the decrease in net sales.

Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2024 was $7.3 million as compared to $7.7 million for the three months ended June 30, 2023, a decrease of $0.5 million. The decrease in selling, general and administrative expense in the second quarter of 2024 was due to lower incentive compensation as a result of the decrease in revenue.

Segment operating income

Segment operating income was $5.2 million in the three months ended June 30, 2024, a decrease of $4.1 million as compared to the three months ended June 30, 2023, based on the factors noted above.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Net sales

Net sales for the six months ended June 30, 2024 were $105.6 million, a decrease of $16.8 million, or 13.7%, compared to the six months ended June 30, 2023. The decrease in net sales during the period was due to shifting market conditions of the food delivery and other cold chain markets, which represent one of Altor's largest customer segments, and supplier diversification initiatives. Altor is strategically repositioning itself to adapt to these changes, but anticipates continued sales pressure for the remainder of 2024.

Gross profit

Gross profit as a percentage of net sales was consistent period over period, at 29.5% and 29.6% for the six months ended June 30, 2024 and 2023, respectively.

Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2024 was $14.2 million as compared to $14.9 million for the six months ended June 30, 2023, a decrease of $0.7 million. The decrease in selling, general and administrative expense in the first half of 2024 was due to lower incentive compensation as a result of the decrease in revenue.

Segment operating income

Segment operating income was $11.8 million in the six months ended June 30, 2024, a decrease of $4.4 million as compared to the six months ended June 30, 2023, based on the factors noted above.

Arnold


	Three months ended								Six months ended
	June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
Net sales	$	43,155	100.0	%	$	40,138	100.0	%	$	84,442	100.0	%	$	80,228	100.0	%
Gross profit	$	12,446	28.8	%	$	12,453	31.0	%	$	24,251	28.7	%	$	24,494	30.5	%
SG&A	$	6,388	14.8	%	$	6,090	15.2	%	$	13,271	15.7	%	$	12,342	15.4	%
Segment operating income	$	5,308	12.3	%	$	5,613	14.0	%	$	9,480	11.2	%	$	10,651	13.3	%

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net sales

Net sales for the three months ended June 30, 2024 were approximately $43.2 million, an increase of $3.0 million compared to the same period in 2023. International sales were $13.2 million in the three months ended June 30, 2024 and $12.2 million in the three months ended June 30, 2023, an increase of 7.7%. The increase in net sales is primarily a result of increased demand in several markets including aerospace and defense, and oil and gas, partially offset by lower demand in the motor sports and reprographic markets.

Gross profit

Gross profit for the three months ended June 30, 2024 was approximately $12.4 million compared to approximately $12.5 million in the same period of 2023. Gross profit as a percentage of net sales decreased to 28.8% for the quarter ended June 30, 2024 from 31.0% in the quarter ended June 30, 2023 principally due to product mix and higher staffing related costs.

Selling, general and administrative expense

Selling, general and administrative expense in the three months ended June 30, 2024 was $6.4 million, an increase in expense of approximately $0.3 million compared to $6.1 million for the three months ended June 30, 2023 due to increases in information technology expenses and consulting fees partially offset by lower staffing related costs. Selling, general and administrative expense was 14.8% of net sales in the three months ended June 30, 2024 and 15.2% in the three months ended June 30, 2023.

Segment operating income

Segment operating income for the three months ended June 30, 2024 was approximately $5.3 million, a decrease of $0.3 million when compared to the same period in 2023, as a result of the factors noted above.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Net sales

Net sales for the six months ended June 30, 2024 were approximately $84.4 million, an increase of $4.2 million compared to the same period in 2023. International sales were $26.5 million in the six months ended June 30, 2024 and $25.7 million the six months ended June 30, 2023, an increase of 3.3%. The increase in net sales is primarily a result of increased demand in several markets including aerospace and defense, and oil and gas, partially offset by lower demand in the industrial and transportation markets.

Gross profit

Gross profit for the six months ended June 30, 2024 was approximately $24.3 million compared to approximately $24.5 million in the same period of 2023. Gross profit as a percentage of net sales decreased to 28.7% for the six months ended June 30, 2024 from 30.5% in the six months ended June 30, 2023 principally due to product mix and higher staffing related costs.

Selling, general and administrative expense

Selling, general and administrative expense in the six months ended June 30, 2024 was $13.3 million, an increase in expense of approximately $0.9 million compared to $12.3 million for the six months ended June 30, 2023 due to increases in information technology and legal expenses, and consulting fees during the current period. Selling, general and administrative expense was 15.7% of net sales in the six months ended June 30, 2024 and 15.4% in the six months ended June 30, 2023.

Segment operating income

Segment operating income for the six months ended June 30, 2024 was approximately $9.5 million, a decrease of $1.2 million when compared to the same period in 2023, as a result of the factors noted above.

Sterno


	Three months ended								Six months ended
	June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
Net sales	$	73,767	100.0	%	$	74,615	100.0	%	$	138,627	100.0	%	$	149,634	100.0	%
Gross profit	$	19,976	27.1	%	$	19,479	26.1	%	$	37,689	27.2	%	$	36,039	24.1	%
SG&A	$	7,869	10.7	%	$	8,154	10.9	%	$	16,560	11.9	%	$	15,984	10.7	%
Segment operating income	$	7,870	10.7	%	$	7,088	9.5	%	$	12,655	9.1	%	$	11,581	7.7	%

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net sales

Net sales for the three months ended June 30, 2024 were approximately $73.8 million, a decrease of $0.8 million, or 1.1%, compared to the same period in 2023. The net sales variance reflects lower sales volume at Sterno in the retail and food service sales channels.

Gross profit

Gross profit as a percentage of net sales increased from 26.1% for the three months ended June 30, 2023 to 27.1% for the three months ended June 30, 2024. The increase in gross profit percentage in the second quarter of 2024 as compared to the second quarter of 2023 was primarily attributable to favorable direct materials, labor and freight costs across both divisions of the company.

Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2024 was approximately $7.9 million as compared to $8.2 million for the three months ended June 30, 2023, a decrease of $0.3 million reflecting lower occupancy expenses and management incentives. Selling, general and administrative expense represented 10.7% of net sales for the three months ended June 30, 2024 and 10.9% for the three months ended June 30, 2023.

Segment operating income

Segment operating income for the three months ended June 30, 2024 was approximately $7.9 million, an increase of $0.8 million compared to the three months ended June 30, 2023 based on the factors noted above.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Net sales

Net sales for the six months ended June 30, 2024 were approximately $138.6 million, a decrease of $11.0 million, or 7.4%, compared to the same period in 2023. The net sales variance reflects lower sales due to changes in consumer discretionary buying behaviors as a result of inflationary pressures.

Gross profit

Gross profit as a percentage of net sales increased from 24.1% for the six months ended June 30, 2023 to 27.2% for the six months ended June 30, 2024. The increase in gross profit percentage in the first half of 2024 as compared to the first half of 2023 was primarily attributable to favorable direct materials, labor and freight costs across both divisions of the company.

Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2024 was approximately $16.6 million as compared to $16.0 million for the six months ended June 30, 2023, an increase of $0.6 million reflecting an increase in sales and marketing related salaries and promotional activity for both divisions of the company in the current period. Selling, general and administrative expense represented 11.9% of net sales for the six months ended June 30, 2024 and 10.7% for the six months ended June 30, 2023.

Segment operating income

Segment operating income for the six months ended June 30, 2024 was approximately $12.7 million, an increase of $1.1 million compared to the six months ended June 30, 2023 based on the factors noted above.

Liquidity and Capital Resources

We generate cash primarily from the operations of our subsidiaries, and we have the ability to borrow under our 2022 Credit Facility to fund our operating, investing and financing activities. In 2021, we filed a prospectus supplement pursuant to which we may, but we have no obligation to, issue and sell up to $500 million of the common shares of the Trust in amounts and at times to be determined by us. In the first quarter of 2024, we filed a prospectus supplement pursuant to which we may, but we have no obligation to, issue and sell up to $100 million of the Series A, Series B and Series C preferred shares of the Trust in amounts and at times to be determined by us. Actual sales will depend on a variety of factors to be determined by us from time to time, including, market conditions, the trading price of Trust common and preferred shares and determinations by us regarding appropriate sources of funding.

Our liquidity requirements primarily relate to our debt service requirements, payments of our common and preferred share distributions, management fees paid to our Manager, working capital needs and purchase commitments at our subsidiaries. As of June 30, 2024, we had $1,000.0 million of indebtedness associated with our 5.250% 2029 Notes, $300.0 million of indebtedness associated with our 5.000% 2032 Notes, $380.0 million outstanding on our 2022 Term Loan, and $54.0 million outstanding on our 2022 Revolving Credit Facility. Only our 2022 Term Loan has required principal payments. Long-term debt liquidity requirements consist of the payment in full of our Notes upon their respective maturity dates, amounts outstanding under our 2022 Revolving Credit Facility upon its maturity date, and principal payments under our 2022 Term Loan. The 2022 Term Loan requires quarterly payments ranging from $2.5 million to $7.5 million, commencing September 30, 2022, with a final payment of all remaining principal and interest due on July 12, 2027, which is the 2022 Term Loan’s maturity date. At June 30, 2024, approximately 25% of our outstanding debt was subject to interest rate changes.

At June 30, 2024, we had approximately $68.4 million of cash and cash equivalents on hand, a decrease of $382.1 million as compared to the year ended December 31, 2023. In November 2023, we sold our Marucci subsidiary, receiving approximately $484.0 million of total proceeds at closing. A portion of the proceeds from the Marucci sale were used to pay down outstanding debt under the Company’s 2022 Revolving Credit Facility and the remaining amount was held in short term investment and savings accounts at December 31, 2023. On January 31, 2024, the Company completed the acquisition of The Honey Pot Co. using cash held on our balance sheet. The majority of our cash is in non-interest bearing checking accounts or invested in short-term money market accounts and is maintained in accordance with the Company’s investment policy, which identifies allowable investments and specifies credit quality standards. Our availability under our 2022 Revolving Credit Facility at June 30, 2024 was $543.6 million. The change in cash and cash equivalents for the six months ended June 30, 2024 and 2023 is as follows:

Operating Activities:


	Six months ended
(in thousands)	June 30, 2024		June 30, 2023
Cash provided by (used in) operating activities	$	(48,383)	$	37,239

For the six months ended June 30, 2024, cash flows used in operating activities totaled approximately $48.4 million, which represents a $85.6 million increase in cash use compared to cash provided by operating activities of $37.2 million during the six-month period ended June 30, 2023. Cash used in operating activities for working capital for the six months ended June 30, 2024 was $154.1 million, as compared to cash used in operating activities for working capital of $92.1 million for the six months ended June 30, 2023. We typically have a higher usage of cash for working capital in the first half of the year as most of our subsidiaries will build up inventories after the fourth quarter of the prior year. In the prior year, several of our businesses were working through higher levels of inventory that that were increased to combat supply chain issues during 2022 given longer lead times, resulting in lower cash outflows in the first half of 2023.

Lugano has used significant cash to build inventory to support its sales growth strategy, with net inventory build of $138.9 million in the first half of 2024 and $81.6 million in the first half of 2023. We expect Lugano to continue to use working capital to support its growth, particularly as Lugano opens new salons, each of which requires a minimum level of new inventory prior to opening.

Investing Activities:


	Six months ended
(in thousands)	June 30, 2024		June 30, 2023
Cash provided by (used in) investing activities	$	(336,073)	$	117,829

Cash flows used in investing activities for the six months ended June 30, 2024 totaled $336.1 million, compared to cash provided by investing activities of $117.8 million in the same period of 2023. In the current year, cash used in investing activities reflects our acquisition of The Honey Pot Co. in January 2024, and the proceeds of $58.5 million from the sale of the Crosman division of Velocity Outdoor, while in the prior year, investing activities reflects the sale of Advanced Circuits and the proceeds received related to the sale. Capital expenditures spend decreased $9.7 million during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, with $18.9 million in capital expenditures in 2024 and $28.6 million in capital expenditures in 2023. The decrease in capital expenditures is primarily due to a lower investment at 5.11 as they reduced the number of retail stores they plan to open in the current year as compared to the prior year. We expect capital expenditures for the full year of 2024 to be between approximately $55 million to $65 million.

Financing Activities:


	Six months ended
(in thousands)	June 30, 2024		June 30, 2023
Cash provided by (used in) financing activities	$	3,366	$	(149,619)

Cash flows provided by financing activities totaled approximately $3.4 million during the six months ended June 30, 2024 compared to cash flows used in financing activities of $149.6 million during the six months ended June 30, 2023. Financing activities in the current year reflects $14.3 million in Trust common and preferred shares issued under our at-the-market share offering program while financing activities in the first six months of 2023 reflects $5.9 million of purchases under our share repurchase program. In the current year, we borrowed $54 million, net, against our 2022 Revolving Credit Facility, while in the prior year, we used the proceeds from our sale of Advanced Circuits to repay amounts outstanding under our revolving credit facility, resulting in net repayments in the first half of 2023 of $63 million under our 2022 Revolving Credit Facility. The current year cash provided by financing activities also reflects the amount of equity investment made by noncontrolling shareholders related to the acquisition of The Honey Pot Co. ($41.7 million). Financing activities in both periods reflect the payment of our common and preferred share distributions, and current period financing cash flows includes the payment of the profit allocation from the sale of Marucci to the Allocation Interest Holders of $48.9 million.

Intercompany Debt

A component of our acquisition financing strategy that we utilize in acquiring the subsidiary businesses we own and manage is to provide both equity capital and debt capital, raised at the parent level through our existing credit facility. Our strategy of providing intercompany debt financing within the capital structure of our subsidiaries allows us the ability to distribute cash to the parent company through monthly interest payments and amortization of the principal on these intercompany loans. Each loan to our subsidiary businesses has a scheduled maturity and each subsidiary business is entitled to repay all or a portion of the principal amount of the outstanding loans, without penalty, prior to maturity. Certain of our subsidiaries have paid down their respective intercompany debt balances through the cash flow generated by these subsidiaries and we have recapitalized, and expect to continue to recapitalize, these subsidiaries in the normal course of our business. The recapitalization process involves funding the intercompany debt using either cash on hand at the parent or our applicable credit facility, and serves the purpose of optimizing the capital structure at our subsidiaries and providing the noncontrolling shareholders with a distribution on their ownership interest in a cash flow positive business.

We will from time to time, amend the intercompany credit agreements to reflect changes in the business or funding needs of our businesses. The following amendments have been made in the time period indicated:

We have made several amendments to the Lugano intercompany credit agreement to allow Lugano to continue to expand its operations and build inventory to support its salon expansion. Amendments were made to the Lugano intercompany credit agreement in the first and second quarter of 2024, and the second, third and fourth quarter of 2023. We expect to continue to fund Lugano to support its sales growth in the upcoming year.

In the first quarter of 2024, we amended the PrimaLoft intercompany credit agreement to amend the fixed charge ratio and leverage ratio covenants contained within its intercompany credit agreement.

In the second quarter of 2024, we amended the Velocity intercompany credit agreement to reflect the sale of the Crosman division. The amendment revises the principal payments due under the credit facility and waives the fixed charge coverage covenant for the quarters ended June 30, 2024 and September 30, 2024.

In the second quarter of 2023, we amended the Velocity intercompany credit agreement to extend the term of the facility and to increase the borrowing availability under the facility.

In the fourth quarter of 2023, we amended the Ergo Credit Agreement to permit the fixed charge coverage ratio to remain at the September 30, 2023 level through the period ending December 31, 2024.

In December 2023, we completed a recapitalization at BOA whereby the LLC entered into an amendment to the intercompany loan agreement with BOA (the "BOA Credit Agreement"). The BOA Credit Agreement was amended to provide for additional term loan borrowings of $165.9 million to fund a distribution to shareholders. The LLC received a distribution of $131.0 million related to its ownership of the outstanding shares of BOA on the date of the distribution. Noncontrolling shareholders received a distribution of $11.7 million, and the remaining amount of the recapitalization was used to repurchase employee stock options and to pay a bonus to employees who held phantom stock options and were not eligible to participate in the distribution to noncontrolling shareholders.

All of our subsidiaries were in compliance with the financial covenants included within their intercompany credit arrangements at June 30, 2024.

All intercompany loans eliminate in consolidation and are not reflected in the consolidated balance sheet. As of June 30, 2024, we had the following outstanding loans due from each of our subsidiary businesses (in thousands):


Subsidiary	Intercompany loan
5.11	$	121,751
BOA	189,141
Ergobaby	82,475
Lugano	524,927
PrimaLoft	153,400
The Honey Pot Co.	105,500
Velocity Outdoor	69,899
Altor	64,884
Arnold	68,947
Sterno	98,856
Total intercompany debt	$	1,479,780
Corporate and eliminations	(1,479,780)
Total	$	—

Our primary source of cash is from the receipt of interest and principal on the outstanding loans to our subsidiaries. Accordingly, we are dependent upon the earnings of and cash flow from these businesses, which are available for (i) operating expenses; (ii) payment of principal and interest under our applicable credit facility and interest on our Senior Notes; (iii) payments to CGM due pursuant to the MSA and the LLC Agreement; (iv) cash distributions to our shareholders; and (v) investments in future acquisitions. Payments made under (iii) above are required to be paid before distributions to shareholders and may be significant and exceed the funds held by us, which may require us to dispose of assets or incur debt to fund such expenditures.

Financing Arrangements

2022 Credit Facility

On July 12, 2022, we entered into the Third Amended and Restated Credit Agreement (the "2022 Credit Facility"). The 2022 Credit Facility provides for revolving loans, swing line loans and letters of credit up to a maximum aggregate amount of $600 million (the "2022 Revolving Credit Facility") and also permits the LLC, prior to the applicable maturity date, to increase the revolving loan commitment and/or obtain term loans in an aggregate amount of up to $250 million, subject to certain restrictions and conditions. All amounts outstanding under the 2022 Revolving Credit Facility will become due on July 12, 2027, which is the maturity date of loans advanced under the 2022 Revolving Credit Facility. The 2022 Credit Facility also provides for a $400 million term loan (the “2022 Term Loan”). The 2022 Term Loan requires quarterly payments ranging from $2.5 million to $7.5 million, commencing September 30, 2022, with a final payment of all remaining principal and interest due on July 12, 2027, which is the 2022 Term Loan’s maturity date.

We had $543.6 million in net availability under the 2022 Revolving Credit Facility at June 30, 2024. The outstanding borrowings under the 2022 Revolving Credit Facility include $2.5 million of outstanding letters of credit at June 30, 2024, which are not reflected on our balance sheet.

Senior Notes

2032 Notes

On November 17, 2021, we consummated the issuance and sale of $300 million aggregate principal amount of our 5.000% Senior Notes due 2032 (the "2032 Notes") offered pursuant to a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933 (the "Securities Act"), and to non-U.S. persons under Regulation S under the Securities Act. The 2032 Notes were issued pursuant to an indenture, dated as of November 17, 2021 (the “2032 Notes Indenture”), between the LLC and U.S. Bank National Association, as trustee. The 2032 Notes bear interest at the rate of 5.000% per annum and will mature on January 15, 2032.

Interest on the 2032 Notes is payable in cash on July 15th and January 15th of each year. The 2032 Notes are general unsecured obligations of the LLC and are not guaranteed by our subsidiaries.

2029 Notes

On March 23, 2021, we consummated the issuance and sale of $1,000 million aggregate principal amount of our 5.250% Senior Notes due 2029 (the “2029 Notes”) offered pursuant to a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act, and to non-U.S. persons under Regulation S under the Securities Act. The 2029 Notes were issued pursuant to an indenture, dated as of March 23, 2021 (the “2029 Notes Indenture”), between the LLC and U.S. Bank National Association, as trustee. The 2029 Notes bear interest at the rate of 5.250% per annum and will mature on April 15, 2029. Interest on the 2029 Notes is payable in cash on April 15th and October 15th of each year. The 2029 Notes are general unsecured obligations of the LLC and are not guaranteed by our subsidiaries.

The following table reflects required and actual financial ratios as of June 30, 2024 included as part of the affirmative covenants in our 2022 Credit Facility.

Description of Required Covenant Ratio

Covenant Ratio Requirement

Actual Ratio

Consolidated Fixed Charge Coverage Ratio

Greater than or equal to 1.50:1.0

3.00:1.0

Consolidated Senior Secured Leverage Ratio

Less than or equal to 3.50:1.0

0.88:1.0

Consolidated Total Leverage Ratio

Less than or equal to 5.00:1.0

3.72:1.0

Interest Expense

The components of interest expense and periodic interest charges on outstanding debt are as follows (in thousands):


	Six months ended June 30,
	2024		2023
Interest on credit facilities	$	17,094	$	17,854
Interest on Senior Notes	33,750		33,750
Unused fee on Revolving Credit Facility	1,034		990

Other interest expense	136		214
Interest income	(1,878)		(15)
Interest expense, net	$	50,136	$	52,793

The following table provides the effective interest rate of the Company’s outstanding debt at June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024			December 31, 2023
	Effective Interest Rate	Amount		Effective Interest Rate	Amount
2029 Senior Notes	5.25%	$	1,000,000	5.25%	$	1,000,000
2032 Senior Notes	5.00%	300,000		5.00%	300,000
2022 Term Loan	7.58%	380,000		7.50%	385,000
2022 Revolving Credit Facility	7.95%	54,000		—%	—
Unamortized debt issuance costs		(11,916)			(13,121)
Total debt outstanding		$	1,722,084		$	1,671,879

Reconciliation of Non-GAAP Financial Measures

GAAP or U.S. GAAP refer to generally accepted accounting principles in the United States. From time to time we may publicly disclose certain “non-GAAP” financial measures in the course of our investor presentations, earnings releases, earnings conference calls or other venues. A non-GAAP financial measure is a numerical measure of historical or future performance, financial position or cash flow that excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with GAAP in our financial statements, and vice versa for measures that include amounts, or are subject to adjustments that effectively include amounts, that are excluded from the most directly comparable measure as calculated and presented.

Non-GAAP financial measures are provided as additional information to investors in order to provide them with an alternative method for assessing our financial condition and operating results. These measures are not intended to replace the presentation of financial results in accordance with U.S. GAAP, and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies. The presentation of these non-GAAP financial measures supplements other metrics we use to internally evaluate our subsidiary businesses and facilitate the comparison of past and present operations.

The tables below reconcile the most directly comparable GAAP financial measures to Adjusted earnings before Interest, Income Taxes, Depreciation and Amortization ("Adjusted EBITDA") and Adjusted Earnings.

Adjusted EBITDA – EBITDA is calculated as net income (loss) from continuing operations before interest expense, income tax expense (benefit), depreciation expense and amortization expense. Amortization expenses consist of amortization of intangibles, amortization of inventory step-up associated with purchase price allocations of our acquisitions, and debt charges, including debt issuance costs. Adjusted EBITDA is calculated utilizing the same calculation as described in arriving at EBITDA further adjusted by: (i) non-controlling stockholder compensation, which generally consists of non-cash stock option expense; (ii) successful acquisition costs, which consist of transaction costs (legal, accounting, due diligence, etc.) incurred in connection with the successful acquisition of a business expensed during the period in compliance with ASC 805; (iii) impairment charges, which reflect write downs to goodwill or other intangible assets; (iv) changes in the fair value of contingent consideration subsequent to initial purchase accounting, (v) integration service fees, which reflect fees paid by newly acquired companies to the Manager for integration services performed during the first year of ownership; and (vi) items of other income or expense that are material to a subsidiary and non-recurring in nature.

Adjusted Earnings –– Adjusted earnings is calculated as net income (loss) adjusted to include the cost of the distributions to preferred shareholders, and adjusted to exclude the impact of certain costs, expenses, gains and losses and other specified items the exclusion of which management believes provides insight regarding our ongoing operating performance. Depending on the period presented, these adjusted measures exclude the impact of certain of the following items: gains (losses) and income (loss) from discontinued operations, income (loss) from noncontrolling interest, amortization expense, subsidiary stock compensation expense, acquisition-related expenses and items of other income or expense that may be material to a subsidiary and non-recurring in nature.

Adjusted EBITDA and Adjusted Earnings are non-GAAP measures used by the Company to assess its performance. We believe that Adjusted EBITDA and Adjusted Earnings provide useful information to investors and reflect important financial measures that are used by management in the monthly analysis of our operating results and in preparation of our annual budgets. We believe that investors’ understanding of our performance is enhanced by disclosing these performance measures as this presentation allows investors to view the performance of our businesses in a manner similar to the methods used by us and the management of our subsidiary businesses, provides additional insight into our operating results and provides a measure for evaluating targeted businesses for acquisition.

Adjusted EBITDA and Adjusted Earnings exclude the effects of items which reflect the impact of long-term investment decisions, rather than the performance of near-term operations. When compared to net income (loss) and net income (loss) from continuing operations, Adjusted Earnings and Adjusted EBITDA, respectively, are each limited in that they do not reflect the periodic costs of certain capital assets used in generating revenues of our subsidiary businesses or the non-cash charges associated with impairments, as well as certain cash charges. The presentation of Adjusted Earnings provides insight into our operating results. Adjusted EBITDA and Adjusted Earnings are not meant to be a substitute for GAAP, and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies.

Reconciliation of Net income (loss) from continuing operations to Adjusted EBITDA

The following tables reconcile Adjusted EBITDA to net income (loss) from continuing operations, which we consider to be the most comparable GAAP financial measure (in thousands):


Adjusted EBITDA
Six months ended June 30, 2024
	Corporate		5.11		BOA		Ergobaby		Lugano		PrimaLoft		THP		Velocity Outdoor		Altor		Arnold		Sterno		Consolidated
Net income (loss) from continuing operations	$	(12,436)	$	8,857	12,346		$	(3,108)	$	34,985	$	(988)	$	(7,604)	$	(55,199)	$	3,394	$	3,909	$	4,557	$	(11,287)
Adjusted for:
Provision (benefit) for income taxes	—		3,010		2,469		380		11,668		584		(2,569)		9,297		1,726		1,986		1,655		30,206
Interest expense, net	50,041		(1)		(12)		—		3		(5)		(25)		54		—		81		—		50,136
Intercompany interest	(80,834)		6,780		10,791		4,248		25,337		9,046		4,920		5,582		3,877		3,497		6,756		—

Depreciation and amortization	434		11,581		10,849		4,374		4,872		10,650		10,645		5,282		8,170		4,414		9,890		81,161
EBITDA	(42,795)		30,227		36,443		5,894		76,865		19,287		5,367		(34,984)		17,167		13,887		22,858		150,216
Other (income) expense	463		73		132		(5)		7		3		(30)		25,898		2,664		(9)		(341)		28,855
Noncontrolling shareholder compensation	—		1,086		2,848		506		1,203		995		617		370		504		9		119		8,257
Impairment expense	—		—		—		—		—		—		—		8,182		—		—		—		8,182
Acquisition expenses	—		—		—		—		—		—		3,479		—		—		—		—		3,479
Integration services fee	—		—		—		—		—		—		875		—		—		—		—		875
Other	—		—		—		—		—		—		90		—		—		—		314		404
Adjusted EBITDA	$	(42,332)	$	31,386	$	39,423	$	6,395	$	78,075	$	20,285	$	10,398	$	(534)	$	20,335	$	13,887	$	22,950	$	200,268


Adjusted EBITDA
Six months ended June 30, 2023
	Corporate		5.11		BOA		Ergobaby		Lugano		PrimaLoft		Velocity Outdoor		Altor		Arnold		Sterno		Consolidated
Net income (loss) from continuing operations	$	(27,164)	$	6,016	$	10,894	$	(853)	$	16,884	$	(607)	$	(7,981)	$	7,202	$	4,808	$	2,464	$	11,663
Adjusted for:
Provision (benefit) for income taxes	—		2,070		1,359		(652)		6,085		(559)		(2,954)		2,634		2,388		869		11,240
Interest expense, net	52,598		(2)		(5)		—		4		(6)		194		—		10		—		52,793
Intercompany interest	(64,725)		10,221		3,461		4,340		13,730		8,708		6,437		5,634		3,372		8,822		—

Depreciation and amortization	677		13,293		11,506		4,079		4,890		10,723		6,751		8,343		4,122		10,032		74,416
EBITDA	(38,614)		31,598		27,215		6,914		41,593		18,259		2,447		23,813		14,700		22,187		150,112
Other (income) expense	(128)		(201)		180		29		(76)		139		(754)		563		(9)		(798)		(1,055)
Noncontrolling shareholder compensation	—		730		1,333		624		840		(43)		458		566		18		322		4,848

Integration services fee	—		—		—		—		—		2,375		—		—		—		—		2,375
Other	—		—		—		—		—		—		—		—		—		780		780
Adjusted EBITDA (1)	$	(38,742)	$	32,127	$	28,728	$	7,567	$	42,357	$	20,730	$	2,151	$	24,942	$	14,709	$	22,491	$	157,060

(1) As a result of the sale of Marucci in November 2023, Adjusted EBITDA does not include $24.9 million that was previously included in the six months ended June 30, 2023.

Reconciliation of Net income (loss) to Adjusted Earnings and Adjusted EBITDA

The following table reconciles Adjusted Earnings to Net income (loss), which we consider the most comparable GAAP financial measure, and Adjusted Earnings to Adjusted EBITDA (in thousands):


	Six months ended June 30,
		2024		2023
Net income (loss)		$	(7,942)	$	126,724
Income from discontinued operations, net of tax		—		12,840
Gain on sale of discontinued operations, net of tax		3,345		102,221
Net income (loss) from continuing operations		$	(11,287)	$	11,663
Less: income from continuing operations attributable to noncontrolling interest		13,235		7,669
Net income (loss) attributable to Holdings - continuing operations		$	(24,522)	$	3,994
Adjustments:
Distributions paid - preferred shares		(12,146)		(12,091)
Amortization expense - intangibles and inventory step-up		57,755		49,125
Impairment expense		8,182		—
Loss on sale of Crosman		24,606		—
Tax effect - loss on sale of Crosman		7,254		—
Stock compensation		8,257		4,848
Acquisition expenses		3,479		—
Integration Services Fee		875		2,375
Other		405		780
Adjusted Earnings		$	74,145	$	49,031
Plus (less):
Depreciation expense		21,396		23,262
Income tax provision		30,206		11,240
Interest expense		50,136		52,793
Amortization of debt issuance costs		2,009		2,029
Tax effect - loss on sale of Crosman		(7,254)		—
Income from continuing operations attributable to noncontrolling interest		13,235		7,669
Distributions paid - preferred shares		12,146		12,091
Other (income) expense		4,249		(1,055)
Adjusted EBITDA		$	200,268	$	157,060

Seasonality

Related Party Transactions

Management Services Agreement

We entered into the MSA with CGM effective May 16, 2006. The MSA provides for, among other things, CGM to perform services for the LLC in exchange for a management fee paid quarterly and equal to 0.5% of the Company's adjusted net assets, as defined in the MSA. Our Chief Executive Officer is a partner of CGM.

During 2022, CGM entered into a waiver of the MSA for the period through June 30, 2023 to receive a 1% annual management fee related to PrimaLoft, rather than the 2% called for under the MSA, which resulted in a lower management fee at March 31, and June 30, 2023 than would normally have been due.

For the three and six months ended June 30, 2024 and 2023, the Company incurred the following management fees to CGM, by entity:


	Three months ended June 30,				Six Months ended June 30,
(in thousands)	2024		2023		2024		2023
5.11	$	250	$	250	$	500	$	500
BOA	250		250		500		500
Ergobaby	125		125		250		250
Lugano	188		188		375		375
PrimaLoft	250		250		500		500
The Honey Pot Co.	250		—		250		—
Velocity	125		125		250		250
Altor	188		188		375		375
Arnold Magnetics	125		125		250		250
Sterno	125		125		250		250
Corporate	16,988		15,169		33,431		29,815
	$	18,864	$	16,795	$	36,931	$	33,065

Integration Services Agreements

Integration services represent fees paid by newly acquired companies to the Manager for integration services performed during the first year of ownership. Under the Integration Services Agreement ("ISA"), CGM provides services for new platform acquisitions to, amongst other things, assist the management at the acquired entities in establishing a corporate governance program, implement compliance and reporting requirements of the Sarbanes-Oxley Act of 2002, as amended, and align the acquired entity's policies and procedures with our other subsidiaries. Integration services fees are recorded as selling, general and administrative expense in the consolidated statement of operations.

The Honey Pot Co., which was acquired in January 2024, entered into an ISA with CGM whereby The Honey Pot Co. will pay CGM a total integration services fee of $3.5 million, payable quarterly over a twelve-month period beginning June 30, 2024. THP paid CGM $0.9 million in integration service fees in the quarter ended June 30, 2024.

PrimaLoft, which was acquired in July 2022, entered into an ISA with CGM whereby PrimaLoft paid CGM a total integration services fee of $4.8 million, payable quarterly over a twelve-month period ended June 30, 2023.

Allocation Interests

The Allocation Interests represent the original equity interest in the Company. The holders of the Allocation Interests (“Holders”), through Sostratus LLC, are entitled to receive distributions pursuant to a profit allocation formula upon

the occurrence of certain events. The distributions of the profit allocation are paid upon the occurrence of the sale of a material amount of capital stock or assets of one of the Company’s businesses (“Sale Event”) or, at the option of the Holders, at each five year anniversary date of the acquisition of one of the Company’s businesses (“Holding Event”). The Company records distributions of the profit allocation to the Holders upon occurrence of a Sale Event or Holding Event as dividends declared on Allocation Interests to stockholders’ equity when they are approved by the Company’s board of directors.

The sale of Advanced Circuits in February 2023 represented a Sale Event and the Company's board of director's approved a distribution of $24.4 million in April 2023, subsequent to the end of the first quarter. In addition, the Company's board of directors approved a distribution of $2.1 million related to various sale proceeds received related to previous Sale Events. These distributions were paid to the Holders of the Allocation Interests in April 2023.

5.11

Related Party Vendor Purchases - 5.11 purchases inventory from a vendor who is a related party to 5.11 through one of the executive officers of 5.11 via the executive's 40% ownership interest in the vendor. 5.11 purchased approximately $0.2 million and $0.6 million during the three and six months ended June 30, 2024 respectively and $0.4 million and $1.0 million during the three and six months ended June 30, 2023, respectively in inventory from the vendor.

BOA

Recapitalization - In December 2023, the Company completed a recapitalization of BOA whereby the LLC entered into an amendment to the intercompany credit agreement with BOA (the "BOA Credit Agreement"). The BOA Credit Agreement was amended to provide for additional term loan borrowings of $165.9 million to fund a distribution to shareholders. The LLC received a distribution of $131.0 million related to its ownership of the outstanding shares of BOA on the date of the distribution. Noncontrolling shareholders received a distribution of $11.7 million, and the remaining amount of the recapitalization was used to repurchase shares owned by employees after the exercise of fully vested employee stock options, and to pay a bonus to employees who held phantom stock options and were not eligible to participate in the distribution to noncontrolling shareholders. BOA recorded compensation expense of $3.1 million related to the bonus paid to employees as part of the recapitalization.

Related Party Vendor Purchases - A contract manufacturer used by BOA as the primary supplier of molded injection parts is a noncontrolling shareholder of BOA. BOA purchased approximately $13.6 million and $24.2 million from this supplier during the three and six months ended June 30, 2024, respectively and $10.7 million and $20.4 million during the three and six months ended June 30, 2023, respectively.

Off-Balance Sheet Arrangements

We have no special purpose entities or off-balance sheet arrangements.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates under different assumptions and judgments and uncertainties, and potentially could result in materially different results under different conditions. These critical accounting policies and estimates are reviewed periodically by our independent auditors and the audit committee of our board of directors.

Except as set forth below, our critical accounting estimates have not changed materially from those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, for the year ended December 31, 2023, as filed with the SEC on February 28, 2024.

Goodwill and Indefinite-lived Intangible Asset Impairment Testing

Goodwill represents the excess amount of the purchase price over the fair value of the assets acquired. Our goodwill and indefinite lived intangible assets are tested for impairment on an annual basis as of March 31st, and if current events or circumstances require, on an interim basis. Goodwill is allocated to various reporting units, which are generally an operating segment. Each of our subsidiary businesses represents a reporting unit.

We use a qualitative approach to test goodwill for impairment by first assessing qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is greater than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment testing. The qualitative factors we consider include, in part, the general macroeconomic environment, industry and market specific conditions for each reporting unit, financial performance including actual versus planned results and results of relevant prior periods, operating costs and cost impacts, as well as issues or events specific to the reporting unit. If qualitative factors are not sufficient to determine that the fair value of a reporting unit is more likely than not to exceed its carrying value, we will perform a quantitative test of the reporting unit whereby we estimate the fair value of the reporting unit using an income approach or market approach, or a weighting of the two methods. Under the income approach, we estimate the fair value of our reporting unit based on the present value of future cash flows. Cash flow projections are based on management's estimate of revenue growth rates and operating margins and take into consideration industry and market conditions as well as company specific economic factors. The discount rate used is based on the weighted average cost of capital adjusted for the relevant risk associated with the business and the uncertainty associated with the reporting unit's ability to execute on the projected cash flows. Under the market approach, we estimate fair value based on market multiples of revenue and earnings derived from comparable public companies with operating characteristics that are similar to the reporting unit. When market comparables are not meaningful or available, we estimate the fair value of the reporting unit using only the income approach. The valuation approaches are subject to key judgments and assumptions that are sensitive to change such as judgments and assumptions about appropriate sales growth rates, operating margins, weighted average cost of capital, and comparable company market multiples. When developing these key judgments and assumptions, we consider economic, operational and market conditions that could impact the fair value of the reporting unit. Estimates are inherently uncertain and represent only management’s reasonable expectations regarding future developments. These estimates and the judgments and assumptions upon which the estimates are based will most likely differ from actual future results.

Annual Impairment Testing

2024 Annual Impairment Testing

For our annual impairment testing at March 31, 2024, we performed a qualitative assessment of our reporting units. The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of our reporting units except Velocity exceeded their carrying value. Based on our analysis, we determined that the Velocity operating segment required quantitative testing because we could not conclude that the fair value of this reporting unit significantly exceeded the carrying value based on qualitative factors alone. We performed a quantitative test of Velocity and the results of the testing indicated that the fair value of Velocity did not exceed the carrying value, resulting in goodwill impairment expense of $8.2 million as of March 31, 2024, which represented the remaining balance of goodwill at Velocity.

2023 Annual Impairment Testing

For our annual impairment testing at March 31, 2023, we performed a qualitative assessment of our reporting units. The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of our reporting units except Velocity exceeded their carrying value. Based on our analysis, we determined that the Velocity operating segment required quantitative testing because we could not conclude that the fair value of this reporting unit significantly exceeded the carrying value based on qualitative factors alone. We performed the quantitative test of Velocity using an income approach to determine the fair value of the reporting unit. In developing the prospective financial information used in the income approach, we considered recent market conditions, taking into consideration the uncertainty associated with the current economic environment. The prospective financial information considers reporting unit specific facts and circumstances and is our best estimate of operational results and cash flows for the Velocity reporting unit as of the date of our impairment testing. The discount rate used in the income approach was 15.0%, and the results of the quantitative impairment testing indicated that the fair value of the Velocity reporting unit exceeded the carrying value by approximately 21%. The prospective financial information that is used to determine the fair values of the Velocity reporting unit requires us to make assumptions regarding future operational results including revenue growth rates and gross margins. If we do not achieve the forecasted

revenue growth rates and gross margins, the results of the quantitative testing could change, potentially leading to additional testing and impairment at the reporting unit that was tested quantitatively.

Interim Impairment Testing

2023 Interim goodwill impairment testing

PrimaLoft - The Company performed an interim impairment test of goodwill at PrimaLoft as of December 31, 2023. As a result of operating results that were below forecast amounts that were used as the basis for the purchase price allocation performed when PrimaLoft was acquired as well as the failure of certain financial covenants in the intercompany credit agreement as of December 31, 2023, the Company determined that a triggering event had occurred. The Company performed the quantitative impairment test using both an income approach and a market approach. The prospective information used in the income approach considers macroeconomic data, industry and reporting unit specific facts and circumstances and is our best estimate of operational results and cash flows for the PrimaLoft reporting unit as of the date of our impairment testing. The discount rate used in the income approach was 11.3%. The results of the quantitative impairment testing indicated that the fair value of the PrimaLoft reporting unit did not exceed its carrying value, resulting in goodwill impairment expense of $57.8 million in the year ended December 31, 2023.

Velocity Outdoor - The Company performed interim quantitative impairment testing of goodwill at Velocity at August 31, 2023. As a result of operating results that were below the forecast that we used in the quantitative impairment test of Velocity Outdoor at March 31, 2023, the Company determined that a triggering event had occurred at Velocity in the third quarter of 2023 and performed an interim impairment test as of August 31, 2023. The Company used an income approach for the impairment test, whereby we estimate the fair value of the reporting unit based on the present value of future cash flows. Cash flow projections are based on management's estimate of revenue growth rates and operating margins, and take into consideration industry and market conditions as well as company specific economic factors. The Company used a weighted average cost of capital of 17% in the income approach. The discount rate used was based on the weighted average cost of capital adjusted for the relevant risk associated with business specific characteristics and Velocity's ability to execute on projected cash flows. Based on the results of the impairment test, the fair value of Velocity did not exceed its carrying value. The Company recorded goodwill impairment of $31.6 million during the year ended December 31, 2023.

Indefinite-lived intangible assets

We use a qualitative approach to test indefinite lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform quantitative impairment testing. Our indefinite-lived intangible assets consist of trade names with a carrying value of approximately $57.0 million. The results of the qualitative analysis of our reporting unit's indefinite-lived intangible assets, which we completed as of March 31, 2024, indicated that the fair value of the indefinite lived intangible assets exceeded their carrying value.

Recent Accounting Pronouncements

Refer to Note A - "Presentation and Principles of Consolidation" of the condensed consolidated financial statements for a discussion of recent accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our market risk since December 31, 2023. For a further discussion of our exposure to market risk, refer to the section entitled "Quantitative and Qualitative Disclosures about Market Risk" that was disclosed in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 28, 2024.

ITEM 4. CONTROLS AND PROCEDURES

As required by Securities Exchange Act of 1934, as amended (the "Exchange Act") Rule 13a-15(b), the Trust's Regular Trustees and the LLC’s management, including the Chief Executive Officer and Chief Financial Officer of the LLC, conducted an evaluation of the effectiveness of the Trust's and the LLC’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), as of June 30, 2024. Based on that

evaluation, the Trust's Regular Trustees and the Chief Executive Officer and Chief Financial Officer of the LLC concluded that the Trust's and the LLC’s disclosure controls and procedures were effective as of June 30, 2024.

There have been no material changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during our most recently completed fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material changes to those legal proceedings associated with the Company’s business together with legal proceedings for the businesses discussed in the section entitled "Legal Proceedings" that was disclosed in Part I, Item 3 of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 28, 2024.

ITEM 1A. RISK FACTORS

The risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 should be considered together with information included in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 and should not be considered the only risks to which we are exposed. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, including our results of operations, liquidity and financial condition. We believe there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.


ITEM 6. EXHIBITS

Exhibit Number						Description

3.1						Third Amended and Restated Trust Agreement of the Trust (incorporated by reference to Exhibit 3.1 of the Form 8-K filed on August 4, 2021 (File No. 001-34927)).

3.2						Sixth Amended and Restated Operating Agreement of the Company (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on August 4, 2021 (File No. 001-34927)).

3.3						First Amendment to the Sixth Amended and Restated Operating Agreement of the Company (incorporated by reference to Exhibit 3.1 of the Form 8-K filed on February 14, 2022 (File No. 001-34927)).

3.4						Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series A Preferred Shares (incorporated by reference to Exhibit 3.3 of the Form 8-K filed on August 4, 2021 (File No. 001-34927))

3.5						Compass Group Diversified Holdings LLC Trust Interest Designation of Series A Trust Preferred Interests (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on June 28, 2017 (File No. 001-34927)).

3.6						Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series B Preferred Shares (incorporated by reference to Exhibit 3.4 of the Form 8-K filed on August 4, 2021 (File No. 001-34927)).

3.7						Trust Interest Designation of Compass Group Diversified Holdings LLC with respect to Series B Trust Preferred Interests (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on March 13, 2018 (File No. 001-34927)),

3.8						Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series C Preferred Shares (incorporated by reference to Exhibit 3.5 of the Form 8-K filed on August 4, 2021 (File No. 001-34927)).

3.9						Trust Interest Designation of Compass Group Diversified Holdings LLC with respect to Series C Trust Preferred Interests (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on November 20, 2019 (File No. 001-34927)).

3.10						First Amendment to Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series A Preferred Shares (incorporated by reference to Exhibit 3.1 of the Form 8-K filed on March 20, 2024 (File No. 001-34926)).

3.11						First Amendment to Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series B Preferred Shares (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on March 20, 2024 (File No. 001-34926)).

3.12						First Amendment to Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series C Preferred Shares (incorporated by reference to Exhibit 3.3 of the Form 8-K filed on March 20, 2024(File No. 001-34926)).

3.13						First Amendment to Trust Interest Designation of Compass Group Diversified Holdings LLC with respect to Series A Trust Preferred Interests (incorporated by reference to Exhibit 3.4 of the Form 8-K filed on March 20, 2024 (File No. 001-34926)).

3.14						First Amendment to Trust Interest Designation of Compass Group Diversified Holdings LLC with respect to Series B Trust Preferred Interests (incorporated by reference to Exhibit 3.5 of the Form 8-K filed on March 20, 2024 (File No. 001-34926)).

3.15						First Amendment to Trust Interest Designation of Compass Group Diversified Holdings LLC with respect to Series C Trust Preferred Interests (incorporated by reference to Exhibit 3.6 of the Form 8-K filed on March 20, 2024 (File No. 001-34926)).

31.1*						Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Registrant

31.2*						Rule 13a-14(a)/15d-14(a) Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Registrant



32.1*+						Certification of Chief Executive Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*+						Certification of Chief Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*						Inline XBRL Taxonomy Extension Schema Document

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover page formatted as Inline XBRL and contained in Exhibit 101


*			Filed herewith.

+			In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: July 31, 2024	COMPASS DIVERSIFIED HOLDINGS

	By:	/s/ Ryan J. Faulkingham
		Ryan J. Faulkingham
		Regular Trustee

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: July 31, 2024	COMPASS GROUP DIVERSIFIED HOLDINGS LLC

	By:	/s/ Ryan J. Faulkingham
		Ryan J. Faulkingham
		Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT INDEX


Exhibit Number						Description

3.1						Third Amended and Restated Trust Agreement of the Trust (incorporated by reference to Exhibit 3.1 of the Form 8-K filed on August 4, 2021 (File No. 001-34927)).

3.2						Sixth Amended and Restated Operating Agreement of the Company (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on August 4, 2021 (File No. 001-34927)).

3.3						First Amendment to the Sixth Amended and Restated Operating Agreement of the Company (incorporated by reference to Exhibit 3.1 of the Form 8-K filed on February 14, 2022 (File No. 001-34927)).

3.4						Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series A Preferred Shares (incorporated by reference to Exhibit 3.3 of the Form 8-K filed on August 4, 2021 (File No. 001-34927))

3.5						Compass Group Diversified Holdings LLC Trust Interest Designation of Series A Trust Preferred Interests (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on June 28, 2017 (File No. 001-34927)).

3.6						Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series B Preferred Shares (incorporated by reference to Exhibit 3.4 of the Form 8-K filed on August 4, 2021 (File No. 001-34927)).

3.7						Trust Interest Designation of Compass Group Diversified Holdings LLC with respect to Series B Trust Preferred Interests (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on March 13, 2018 (File No. 001-34927)),

3.8						Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series C Preferred Shares (incorporated by reference to Exhibit 3.5 of the Form 8-K filed on August 4, 2021 (File No. 001-34927)).

3.9						Trust Interest Designation of Compass Group Diversified Holdings LLC with respect to Series C Trust Preferred Interests (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on November 20, 2019 (File No. 001-34927)).

3.10						First Amendment to Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series A Preferred Shares (incorporated by reference to Exhibit 3.1 of the Form 8-K filed on March 20, 2024 (File No. 001-34926)).

3.11						First Amendment to Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series B Preferred Shares (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on March 20, 2024 (File No. 001-34926)).

3.12						First Amendment to Amended and Restated Share Designation of Compass Diversified Holdings with respect to Series C Preferred Shares (incorporated by reference to Exhibit 3.3 of the Form 8-K filed on March 20, 2024(File No. 001-34926)).

3.13						First Amendment to Trust Interest Designation of Compass Group Diversified Holdings LLC with respect to Series A Trust Preferred Interests (incorporated by reference to Exhibit 3.4 of the Form 8-K filed on March 20, 2024 (File No. 001-34926)).

3.14						First Amendment to Trust Interest Designation of Compass Group Diversified Holdings LLC with respect to Series B Trust Preferred Interests (incorporated by reference to Exhibit 3.5 of the Form 8-K filed on March 20, 2024 (File No. 001-34926)).

3.15						First Amendment to Trust Interest Designation of Compass Group Diversified Holdings LLC with respect to Series C Trust Preferred Interests (incorporated by reference to Exhibit 3.6 of the Form 8-K filed on March 20, 2024 (File No. 001-34926)).

31.1*						Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Registrant

31.2*						Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Registrant

32.1*+						Certification of Chief Executive Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


32.2*+						Certification of Chief Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*						Inline XBRL Taxonomy Extension Schema Document

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover page formatted as Inline XBRL and contained in Exhibit 101


*			Filed herewith.

+			In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.