UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-34927 Compass Diversified Holdings (Exact name of registrant as specified in its charter) Delaware 57-6218917 (State or other jurisdiction of i ...

Core Insights - Compass Diversified (CODI) reported strong financial results for 2024, achieving double-digit sales growth and over 30% growth in Adjusted EBITDA, driven by robust performance in both consumer and industrial sectors [2][5][12] Financial Performance - In Q4 2024, net sales reached $620.3 million, a 13.8% increase from $544.9 million in Q4 2023. For the full year, net sales totaled $2.2 billion, up 11.9% from $2.0 billion in 2023 [5][6] - Branded consumer net sales increased by 15.2% to $403.0 million in Q4 2024, while industrial net sales rose by 11.4% to $217.2 million [11] - Adjusted EBITDA for Q4 2024 was $118.2 million, a 29% increase compared to $91.6 million in Q4 2023. For the full year, Adjusted EBITDA was $424.8 million, up 30% from $326.5 million in 2023 [12][10] Income and Earnings - Operating income for Q4 2024 was $60.6 million, a significant recovery from an operating loss of $4.6 million in Q4 2023, primarily due to prior year impairment charges [7] - Net income for Q4 2024 was $23.8 million, down from $139.4 million in Q4 2023, largely due to significant gains from asset sales in the previous year [8] - Adjusted Earnings for the full year 2024 were $161.6 million, compared to $101.2 million in 2023 [10] Capital and Liquidity - As of December 31, 2024, CODI had approximately $59.7 million in cash and cash equivalents, with significant debt obligations including $375 million in term loans and $1 billion in senior notes [13][14] - The company raised around $90 million through preferred share issuance in Q4 2024 and repurchased over 400,000 common shares at an average price of $23.19 [11] Future Outlook - For 2025, CODI expects consolidated Subsidiary Adjusted EBITDA to be between $570 million and $610 million, with branded consumer vertical projected to contribute $440 million to $465 million [20][21] - The company anticipates Adjusted Earnings for 2025 to be between $170 million and $190 million [21]

Core Viewpoint - Compass Diversified (CODI) is set to release its financial results for Q4 and the full year of 2024 on February 27, 2025, after market close, followed by a conference call to discuss the results [1][2]. Group 1: Financial Results Announcement - CODI will announce its financial results for the fourth quarter and full year ended December 31, 2024, on February 27, 2025 [1]. - A conference call is scheduled for February 27, 2025, at 5:00 p.m. ET, featuring key executives including the CEO, CFO, and COO [2]. Group 2: Company Overview - Since its IPO in 2006, CODI has focused on owning and managing a diverse portfolio of middle-market businesses across various sectors, including industrial, branded consumer, and healthcare [3]. - The company utilizes its permanent capital base and long-term approach to maintain controlling ownership interests in its subsidiaries, enhancing cash flow generation and value creation [3]. - CODI provides both debt and equity capital to its subsidiaries, which supports their financial and operational flexibility [3].

Core Viewpoint - Compass Diversified Holdings has restructured its management fee agreement with Compass Group Management LLC, introducing a base management fee and an incentive management fee starting January 1, 2025 [1][2]. Management Fee Structure - The base management fee will be 2.0% of adjusted net assets up to $3.5 billion, with a tiered structure for higher asset levels: - 2.0% for assets ≤ $3.5 billion - 2.0% + 1.25% for assets > $3.5 billion and < $10 billion - 1.5% for assets ≥ $10 billion [1][2]. - The incentive management fee is set at 0.25% for adjusted net assets exceeding $3.5 billion, contingent on the company's annualized internal rate of return on equity exceeding 12% over the trailing three years [2]. Changes in Fee Agreement - The Amendment eliminates the integration services fee paid by subsidiaries to the Manager and excludes excess cash from the adjusted net assets calculation, with certain exceptions [3]. - Additional changes to the management services agreement are noted but not exhaustively detailed [4]. Company Overview - Since its IPO in 2006, Compass Diversified Holdings has focused on owning and managing a diverse portfolio of middle-market businesses across various sectors, including industrial, branded consumer, and healthcare [5]. - The company aims to leverage its permanent capital base and expertise to maintain controlling interests in subsidiaries, enhancing long-term cash flow and value creation [5].

Community and Membership - HDO is the largest and most exciting community of income investors and retirees with over 8000 members [1] - The company is actively seeking more members to join its lively group [1] Investment Strategy - The Income Method generates strong returns regardless of market volatility, making retirement investing less stressful, simple, and straightforward [1] - The Model Portfolio targets a yield of 9-10% [1] - The company emphasizes the Power of Dividends as a key investment strategy [1] Membership Offer - A 17% discount and 14-day free trial are being offered on the annual price of $599 99 [1] Retirement Challenges - Achieving a secure retirement may be more challenging now than at any previous time [2] - The average life expectancy for an American who reaches age 65 is roughly 85 years, but many will live far beyond that [2]

Core Viewpoint - Compass Diversified Holdings announced an amendment to its existing credit agreement, allowing for an additional term loan of $200 million and delayed draw commitments of $100 million, aimed at supporting acquisitions and general corporate purposes [1][2][3]. Group 1: Credit Agreement Amendment - The amendment modifies the Third Amended and Restated Credit Agreement dated July 12, 2022, providing for an additional advance of $200 million and delayed draw commitments of $100 million [2]. - The Incremental Term Loan will require quarterly repayments ranging from $3.75 million to $11.25 million, starting March 31, 2025, with a final payment due on July 12, 2027 [3]. - The Incremental Delayed Draw Term Loan will also require quarterly repayments of 0.625% to 1.875% of the drawn amount, commencing after the loan is fully drawn or the end of the availability period [4]. Group 2: Use of Proceeds - Proceeds from the Incremental Term Loan and Incremental Delayed Draw Term Loan will be utilized for new acquisitions, working capital, capital expenditures, and other general corporate purposes [3]. Group 3: Company Overview - Since its IPO in 2006, Compass Diversified has focused on owning and managing a diverse portfolio of middle-market businesses across various sectors, leveraging its permanent capital base and expertise to maximize long-term cash flow and value creation [5].

Core Points - Compass Diversified Holdings (CODI) announced that director Gordon M. Burns will not seek re-election at the 2025 annual shareholders meeting due to other commitments [1] - Burns has been a board member since May 2008 and has stepped down as Chair of the Nominating & Corporate Governance Committee, but will remain on the board until the 2025 meeting [1][2] - Nancy B. Mahon has been appointed as the new Chair of the Nominating Committee, effective January 3, 2025 [2][3] - Mahon has been a director since May 2023 and is currently the Chief Sustainability Officer at The Estée Lauder Companies, Inc. [3] - The board aims to strengthen and diversify its governance, with Mahon bringing over a decade of experience in corporate citizenship and sustainability practices [4] Company Overview - CODI has consistently executed its strategy of owning and managing a diverse set of middle-market businesses across industrial, branded consumer, and healthcare sectors since its IPO in 2006 [5] - The company leverages its permanent capital base and long-term disciplined approach to maintain controlling ownership interests in its subsidiaries, maximizing long-term cash flow generation and value creation [5] - CODI provides both debt and equity capital for its subsidiaries, contributing to their financial and operational flexibility [5]

Core Points - Compass Diversified (CODI) announced a quarterly cash distribution of $0.25 per share on its common shares, payable on January 23, 2025, to holders of record as of January 16, 2025 [1] - The Board declared cash distributions for its preferred shares: $0.453125 per share for Series A, $0.4921875 per share for Series B, and $0.4921875 per share for Series C, all payable on January 30, 2025, to holders of record as of January 15, 2025 [2][3][4] Financial Overview - CODI's common and preferred cash distributions are expected to generally constitute "qualified dividends" for U.S. federal income tax purposes, contingent on being paid from "earnings and profits" [5] - The company does not expect all distributions in the 2024 taxable year to be qualified dividends, as earnings and profits are anticipated to be below cash distributions [6] - CODI anticipates that all distributions in 2025 may be treated as a return of capital, with final tax status to be reported in early 2026 [7] Company Background - Since its IPO in 2006, CODI has focused on owning and managing a diverse set of middle-market businesses across industrial, branded consumer, and healthcare sectors [8] - The company leverages its permanent capital base and long-term approach to maintain controlling ownership interests in its subsidiaries, enhancing cash flow generation and value creation [8]

Group 1: Acquisition Overview - Highlander Partners has acquired Ergobaby, the global market leader in premium baby carriers, from Compass Diversified [3] - Ergobaby was founded in 2003 and is headquartered in Los Angeles, California, employing 170 people and distributing products in over 75 countries [3][4] - The acquisition aligns with Highlander's strategy of investing in category-leading branded consumer product companies, emphasizing growth through product innovation and market expansion [1][8] Group 2: Product Portfolio - Ergobaby's product line includes baby carriers, wraps, strollers, bouncers, highchairs, maternity support bands, and nursing accessories, designed to support parents and babies through pregnancy and early development [4] - The company also features two other brands: Tula, known for functional carriers, and Belly Bandit, which focuses on maternity and postpartum solutions [7] Group 3: Management Insights - Jason Frame, CEO of Ergobaby, expressed excitement about the partnership with Highlander, highlighting the management team's energy and a full pipeline of new opportunities [8] - Highlander Partners has over $3 billion in assets under management and employs a buy and build investment approach to create value through organic growth and acquisitions [8]

Core Viewpoint - Compass Diversified has completed the sale of its majority-owned subsidiary, Ergobaby, to Highlander Partners, aiming to utilize the proceeds for debt reduction and corporate purposes while continuing to acquire innovative brands [1][3]. Group 1: Company Overview - Compass Diversified (CODI) is an owner of leading middle-market businesses, focusing on industrial, branded consumer, and healthcare sectors since its IPO in 2006 [4]. - The company employs a strategy of maintaining controlling ownership interests in its subsidiaries to maximize long-term cash flow generation and value creation [4]. - CODI leverages its permanent capital base and expertise to provide both debt and equity capital for its subsidiaries, contributing to their financial flexibility [4]. Group 2: Transaction Details - The sale of Ergobaby was executed through a definitive agreement with Highlander Partners, a private investment firm based in Dallas [1]. - Proceeds from the transaction will be allocated to pay down debt and for general corporate purposes, indicating a focus on financial health and operational flexibility [3]. - The CEO of Compass Diversified expressed confidence in the future, stating the intention to use the sale proceeds to acquire and manage innovative brands, thereby driving long-term shareholder value [2]. Group 3: Leadership Comments - Elias Sabo, CEO of Compass Diversified, acknowledged Ergobaby's position as a global leader in premium juvenile products and expressed gratitude for the contributions of the Ergobaby team [2]. - Jason Frame, CEO of Ergobaby, expressed appreciation for the support from CODI and optimism for future success under Highlander Partners [4].