Compass Diversified (CODI) Investor Day 2025 summary

Strategic evolution and business model

• Transitioned to a portfolio of high-growth, innovative, and disruptive companies, now representing over 90% of holdings, with a focus on consumer, industrial technology, and healthcare sectors.

• Permanent capital structure enables long-term investments in innovation, marketing, and market share growth, differentiating from traditional private equity's short-term focus.

• Centers of excellence established for ESG, business automation, and AI to support subsidiaries in compliance, sustainability, and technology.

• Emphasis on values-driven, purpose-led culture to attract top talent and align with founders of acquired companies, fostering collaboration, passion, integrity, accountability, and humility.

• Full transparency and accountability to stakeholders, with a unique model that avoids the pitfalls of traditional private equity and offers public market liquidity.

Financial performance and guidance

• Achieved mid-teens organic EBITDA growth in 2024, with expectations for continued double-digit growth in adjusted EBITDA over the next three to five years and a CAGR over 12% since 2016.

• Q4 2024 results expected at or above the high end of guidance, with continued strength in consumer and accelerating industrial segments.

• Sold Ergobaby for $104M, raised $300M in incremental Term Loan A, and ~$90M in preferred shares in Q4 2024.

• TTM pro forma revenue of $2.2B+ and TTM pro forma subsidiary adjusted EBITDA of $505M+ as of 9/30/2024, with a 22.5% margin.

• Management fee structure amended, reducing fees by 75 basis points above $3.5B in assets and expected to save shareholders up to $60M annually at $10B in adjusted net assets.

Portfolio and segment outlook

• Portfolio consists of nine subsidiaries: six consumer, three industrial tech, with consumer segment contributing over 70% of EBITDA and growing faster than industrial.

• Consumer segment: $1.5B TTM revenue, 11.9% TTM revenue growth, and 25.7% TTM adjusted EBITDA margin; Lugano drives outsized growth with 58.9% TTM revenue growth and 39% margin.

• Industrial segment: $700M+ TTM revenue, -4% TTM revenue growth, and 17.4% TTM adjusted EBITDA margin; Altor, Arnold, and Sterno expected to maintain or improve margins through 2028.

• Continued investment in innovative brands like 5.11, BOA, Honey Pot, PrimaLoft, and Velocity, each with specific growth drivers such as new product launches, market expansion, and sustainability initiatives.

• Long-term outlook targets high single-digit organic sales growth, 25%+ subsidiary adjusted EBITDA margin, and 10% adjusted earnings growth.