Executive Summary

Solid start to 2024: net sales +8% YoY to $524.3M; Adjusted EBITDA +28% YoY to $94.8M driven by Lugano (+61% sales) and contribution from The Honey Pot; Industrial remained soft (-10% sales). Management raised the full‑year Adjusted Earnings outlook to $148–$163M and kept Adjusted EBITDA ranges unchanged after offsetting the Crosman divestiture .
Mix improving: Branded Consumer pro forma net sales +11% to $375.4M; Industrial sales -10% to $159.6M as inflation/macro weigh on Sterno’s consumer wax and project churn at Altor; BOA returned to growth and PrimaLoft bookings improved, supporting a 2H acceleration narrative .
Capital and liquidity: $64.7M cash; ~$552M revolver availability; total leverage 3.84x (expected to decline in Q2 after using Crosman proceeds to pay down revolver). Management reiterated capacity to upsize revolver by $250M and willingness to temporarily operate with slightly higher leverage to pursue attractive M&A .
Stock reaction catalysts: raised 2024 Adjusted Earnings guidance, strong momentum at Lugano including London salon opening, BOA reacceleration, and potential upside if inventory destocking turns to tailwind; divestiture of Crosman refocuses portfolio on higher‑growth assets .

What Went Well and What Went Wrong

What Went Well
- Lugano delivered another “remarkable” quarter: revenue +61% YoY; Adjusted EBITDA +83% YoY, with early success from the London salon opening and continued maturation of flagship salons; management sees large international opportunity ahead .
- BOA reaccelerated: revenues +13% and Adjusted EBITDA +15% YoY with bookings outpacing revenue, signaling a strong 2024 as supply chain destocking abates .
- Consolidated outperformance drove a guidance raise on Adjusted Earnings; management emphasized a higher‑growth, more “disruptive” portfolio that reduces volatility and supports sustained outperformance .
What Went Wrong
- Industrial softness: net sales -10% YoY (to $159.6M), with wax‑melt pressure at Sterno and project churn at Altor; margins held up better due to efficiency gains and mix, but revenue headwinds persisted .
- Velocity Outdoor impairment: $8.2M non‑cash goodwill impairment recorded; CODI divested Crosman (air gun division) shortly after quarter‑end to streamline the segment .
- Operating cash flow: consolidated CFO was -$13.2M in Q1 as Lugano invested ~$65M in inventory to fund growth; outside of Lugano, subsidiaries generated $52M in CFO (management disclosure) .

Financial Results

Consolidated performance and trend

Metric	Q1 2023	Q3 2023	Q4 2023	Q1 2024
Net Sales ($M)	$483.9	$569.6	$567.0	$524.3
Gross Profit ($M)	$205.1	$254.2	$246.3	$241.8
Gross Margin (%)	42.4% (205.1/483.9)	44.7% (254.2/569.6)	43.5% (246.3/567.0)	46.1% (241.8/524.3)
Adjusted EBITDA ($M)	$74.1	$103.9	$94.8	$94.8
Adjusted Earnings ($M)	$19.8	$41.0	$38.1	$34.3
Net Income ($M)	$109.6 (incl. $98.0M gain)	$(3.8)	$139.4 (incl. Marucci gain)	$5.8
Basic EPS – Continuing Ops	$(0.19)	$(0.35)	$(0.74)	$(0.89)
Basic EPS – Total	$1.29	$(0.33)	$1.70	$(0.85)

Segment mix and profitability

Segment Metric	Q1 2023	Q3 2023	Q1 2024
Branded Consumer – Pro Forma Net Sales ($M)	$339.2	$388.3	$375.4
Niche Industrial – Net Sales ($M)	$176.6	$181.2	$159.6
Branded Consumer – Adjusted EBITDA ($M)	$65.2	$92.6	$88.8
Niche Industrial – Adjusted EBITDA ($M)	$28.4	$31.9	$27.4
Corporate Expense – Adjusted EBITDA ($M)	$(19.4)	$(20.6)	$(21.4)
Total Adjusted EBITDA ($M)	$74.1	$103.9	$94.8

Subsidiary highlights (Q1 2024 pro forma unless noted)

Subsidiary	Net Sales ($M)	Adj. EBITDA ($M)
Lugano	$103.0 vs $63.9 in Q1’23	$41.9 vs $22.9 in Q1’23
BOA	$42.9 vs $38.0 in Q1’23	$16.3 vs $14.3 in Q1’23
5.11	$125.0 vs $124.5 in Q1’23	$14.5 vs $14.3 in Q1’23
PrimaLoft	$22.5 vs $24.5 in Q1’23	$9.2 vs $10.8 in Q1’23
The Honey Pot (THP)	$30.8 (pro forma)	$6.2
Velocity Outdoor	$29.9 vs $34.0 in Q1’23	$(0.8) vs $0.2 in Q1’23
Industrial – Altor	$53.4 vs $61.5 in Q1’23	$10.9 vs $11.4 in Q1’23
Industrial – Arnold	$41.3 vs $40.1 in Q1’23	$6.3 vs $7.0 in Q1’23
Industrial – Sterno	$64.9 vs $75.0 in Q1’23	$10.2 vs $10.0 in Q1’23

Balance sheet, cash flow, and other KPIs

KPI	Q3 2023	Q4 2023	Q1 2024
Cash & Equivalents ($M)	$64.7	$450.5	$64.7
Revolver Outstanding ($M)	$112.0	$2.2	$46.0
Revolver Availability ($M)	$486	$598	$551.6
Total Leverage (x)	—	3.11x	3.84x
Management Fees (Quarter, $M)	$18.6	$16.9	$18.1
Cash From Operations ($M)	—	$21.1 (Q4’23)	$(13.2)
CapEx ($M)	—	$17.2 (Q4’23)	$7.7

Note: Gross margin figures are calculated from disclosed gross profit and net sales within the cited filings.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Subsidiary Adjusted EBITDA (Total)	FY 2024	$480–$520M (pro forma THP)	$480–$520M (raised +$10M then offset by Crosman sale)	Maintained (mix adjusted)
Subsidiary Adjusted EBITDA – Branded Consumer	FY 2024	$355–$385M	$355–$385M	Maintained
Subsidiary Adjusted EBITDA – Industrial	FY 2024	$125–$135M	$125–$135M	Maintained
Adjusted EBITDA (incl. corp.)	FY 2024	$390–$430M	$390–$430M	Maintained
Adjusted Earnings	FY 2024	$145–$160M	$148–$163M	Raised
Common Dividend	Q1 2024	$0.25/sh prior cadence	Declared $0.25/sh, paid 4/25/24	Maintained

Management clarified the Crosman sale will not be recorded as discontinued operations; any P&L impact will be offset in Adjusted Earnings in Q2 and FY24 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’23, Q4’23)	Current Period (Q1’24)	Trend
Inventory destocking and bookings	BOA pressured by destocking; PrimaLoft challenged but improving into 2024	BOA grew rev +13% and EBITDA +15%; PrimaLoft bookings up double‑digits; expect PrimaLoft to grow in Q2	Improving
Lugano growth drivers	2023: +53% revenue and ~65% EBITDA; Palm Beach salon expansion; London salon planned Q2’24	Q1: +61% sales; EBITDA +83%; London salon opened; market penetration low; mix of maturation and geography expansion	Strong, sustained
Industrial trends/margins	2023 Industrial EBITDA +18%; margin tailwinds from easing inflation; caution on 2024 reverting to trend	Q1 sales -10%; margins held up better; efficiency gains at Altor; Sterno foodservice offset wax weakness	Mixed
M&A appetite and leverage	Comfortable temporarily >4x for right deal; portfolio repositioning continues	Leverage 3.84x; comfortable adding leverage for compelling M&A; can upsize revolver; divesting slower growers (e.g., Crosman)	Active, disciplined
The Honey Pot integration	Acquired Feb‑24; aligns with strategy	Integrated with new board; shelf space gains; 2024 in‑line with plan	On‑track
ESG & disclosure	First sustainability report to be released in Q2	Inaugural sustainability report released in Q2; ongoing ESG commitment	Enhanced transparency

Management Commentary

Strategy and positioning: “Owning and managing a diversified group of companies with a growing share of disruptive, high‑growth businesses is the right strategy and…positions our business for sustained outperformance.” — CEO Elias Sabo .
Inventory dynamics: “We were expecting both BOA and PrimaLoft to rebound…BOA had a great first quarter…PrimaLoft…saw bookings growth…which provides confidence they will return to growth in the second quarter.” — CEO .
Guidance philosophy: “We are raising our full year adjusted earnings outlook…We expect full year 2024 Adjusted EBITDA to be between $390 million and $430 million.” — CFO Ryan Faulkingham .
Lugano runway: “Market penetration is incredibly low…stores continue to mature…there will be geographic growth…London salon…will drive growth.” — COO Patrick Maciariello .
M&A environment: “When debt markets are weak for single asset buyouts, our competitive advantage grows…setting the stage for M&A at more attractive valuations.” — CEO .

Q&A Highlights

Leverage/M&A posture: Comfortable taking leverage “up another half a turn or 3/4 of a turn” temporarily for compelling acquisitions; deleveraging via cash flow and portfolio actions (e.g., divestitures, ATMs when appropriate) .
Industrial cadence: Revenue softness a mix of price and volume; margins supported by cost actions and mix; expect modest growth later in 2024 .
Lugano sustainability: Growth driven by low market penetration, inventory positioning, salon maturation, and new geographies; London expected to contribute immediately .
Honey Pot growth: Gaining shelf space at big‑box and expanding drug/grocery channels; new product pipeline supports 2025–2026 .
Guidance conservatism: 2024 outlook does not assume a “snapback” from destocking, implying upside if sell‑in normalizes to sell‑through .

Estimates Context

S&P Global consensus estimates for Q1 2024 could not be retrieved in this session due to data access limits; as a result, we cannot definitively score beats/misses versus Street for revenue/EPS/EBITDA at this time. Values would ordinarily be sourced from S&P Global; unavailable in this session.
Management stated Q1 Adjusted Earnings were “above our expectations” and raised FY24 Adjusted Earnings guidance to $148–$163M (from $145–$160M), which implies internal outperformance and some interest savings from revolver paydown post‑Crosman .

Key Takeaways for Investors

Mix shift continues toward higher‑growth, “disruptive” consumer assets (Lugano, BOA, Honey Pot), supporting higher quality growth and reduced volatility; Industrial should improve modestly as 2024 progresses .
FY24 outlook de‑risked: Adjusted Earnings raised; Adjusted EBITDA maintained despite Crosman sale, suggesting underlying strength in branded portfolio and cost discipline .
Upside lever: If inventory destocking turns to tailwind, BOA/PrimaLoft could drive incremental beats versus current outlook, which management characterizes as not assuming a snapback .
Capital deployment: Adequate liquidity ($552M revolver availability) and willingness to modestly increase leverage enable opportunistic M&A; expect continued portfolio pruning of slower‑growth assets .
Lugano remains a powerful growth engine; London launch and potential further international expansion support multi‑year growth, but management is mindful of concentration and potential financing options longer‑term .
Watch Q2: management expects leverage to decline with revolver paydown; PrimaLoft growth returning; continued momentum at BOA and Lugano; limited seasonality bias in 1H vs 2H .

Additional Details and Cross‑References

Q1 2024 press release and exhibits include full P&L, balance sheet, cash flow, non‑GAAP reconciliations, and subsidiary pro forma schedules .
Q4 2023 and Q3 2023 releases provide context for trend analysis and the updated 2024 guidance framework introduced at Investor Day .
Notable corporate actions around Q1: Crosman divestiture (announced 4/30/24), Honey Pot acquisition (closed 2/1/24), and Lugano leadership appointment (3/5/24) .

Compass Diversified Holdings (CODI)·Q1 2024 Earnings Summary