Jonathan

An analyst named Jonathan from TD Cowen asked how the company prioritizes capital allocation between share buybacks, potential acquisitions, and debt management, particularly in the current environment of strong performance and decreasing interest rates.

Answer

Executive Elias Sabo explained that capital allocation is fluid, with the primary strategic goal being acquisitions to reach $1 billion of EBITDA. However, he stressed that when the stock price is at a significant discount to intrinsic value, buybacks become a priority. He also highlighted the ongoing raising of preferred capital as a flexible funding source for investments in Lugano, buybacks, acquisitions, or general deleveraging, noting that divestitures are also a tool to fund the strategic plan.

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.