Jonathan L.'s questions to Compass Diversified Holdings (CODI) leadership • Q3 2024
Question
Jonathan, on behalf of Lance Vitanza at TD Cowen, asked how the company is thinking about balancing its capital allocation priorities—specifically share buybacks, potential acquisitions, and debt management—given the current market environment and decreasing interest rates.
Answer
Executive Elias Sabo described CODI's capital allocation as fluid. He stated the primary strategic goal is pursuing acquisitions to reach $1 billion of EBITDA. However, he emphasized that when the stock price is at a significant discount to intrinsic value, buybacks become a compelling use of capital. He also highlighted the ongoing issuance of preferred stock as a flexible capital source that can be used for deleveraging, funding acquisitions, or supporting high-return internal investments like Lugano's growth.