pass Diversified LLC(US:CODI)2025-02-27 21:16Distributions and Shareholder Returns - The Trust declared distributions totaling $1.00 per common share for the 2024 fiscal year[41] - Preferred shareholders received distributions of $1.8125 per share on Series A, $1.96875 on Series B, and $1.96875 on Series C for the 2024 fiscal year[41] Acquisitions and Investments - The Trust acquired a controlling interest in 5.11 for approximately $408.2 million, owning 97.6% of the outstanding stock[29] - The Trust acquired a controlling interest in BOA for approximately $456.8 million, owning 91.7% of the outstanding stock[30] - The Trust acquired a controlling interest in Lugano for approximately $265.1 million, owning 59.9% of the outstanding stock[31] - The Trust acquired a controlling interest in PrimaLoft for approximately $541.1 million, owning 90.7% of the outstanding stock[33] - The Trust acquired a controlling interest in The Honey Pot Co. for approximately $380 million, owning 84.8% of the outstanding stock[34] - The Trust acquired a controlling interest in Velocity Outdoor for approximately $150.4 million, owning 99.4% of the outstanding stock[35] - The Trust acquired a controlling interest in Altor Solutions for approximately $253.4 million, owning 99.3% of the outstanding stock[37] - The Trust acquired a controlling interest in Sterno for approximately $160.0 million, owning 98.5% of the outstanding stock[39] Management and Strategy - The management fee structure was restructured to include a base management fee of 2% on adjusted net assets up to $3.5 billion, increasing to 1.5% for assets over $10 billion[50] - The company targets small to middle market businesses generating annual cash flows of up to $100 million, indicating a fragmented acquisition market[51] - The management team has a network of approximately 2,000 deal intermediaries to source potential acquisitions[62] - The company expects to minimize delays in acquisitions by utilizing its 2022 Revolving Credit Facility[63] - The management strategy includes recruiting talented managers and implementing structured incentive compensation programs[55] - The company aims to enhance cash flows and shareholder value through proactive financial and operational management of subsidiaries[54] - The acquisition strategy focuses on companies with sustainable competitive advantages and favorable long-term macroeconomic trends[56] - The management team performs rigorous due diligence and financial evaluations for potential acquisitions[64] - The company emphasizes the importance of assessing the existing management team's capability during the acquisition process[65] Financial Facilities and Borrowing - The 2022 Credit Facility includes a $600 million revolving credit facility and a $400 million term loan, with quarterly payments ranging from $2.5 million to $7.5 million starting September 30, 2022[69] - As of December 31, 2024, the borrowing availability under the 2022 Revolving Credit Facility was approximately $486.6 million, with outstanding letters of credit totaling approximately $3.5 million[70] - The Company entered into a First Incremental Facility Amendment on January 9, 2025, providing for an additional $200 million term loan and $100 million delayed draw term loan commitments[72] Share Repurchase and Issuance - The Company repurchased 416,320 shares for approximately $9.7 million during the year ended December 31, 2024, under a share repurchase program[77] - The Trust is authorized to issue 500 million Trust common shares, with approximately 75.2 million shares outstanding as of December 31, 2024[76] - During the year ended December 31, 2024, the Company sold 381,957 Trust common shares under the at-the-market program, receiving total net proceeds of approximately $8.4 million[81] - The Company issued $300 million aggregate principal amount of 5.000% Notes due 2032, with interest payable semi-annually[73] - The Company sold 4,897,084 preferred shares during the year ended December 31, 2024, generating net proceeds of approximately $115.1 million[87] Business Segmentation and Performance - The Company categorizes its businesses into branded consumer businesses and industrial businesses, both considered leaders in their respective sectors[89] - Branded Consumer segment net revenue for 2024 was 66.8%, up from 62.9% in 2023 and 60.1% in 2022[91] - Operating income for the Branded Consumer segment was 80.9% in 2024, compared to 51.0% in 2023 and 72.3% in 2022[91] - Apparel accounted for 71% of net sales in 2024, 70% in 2023, and 69% in 2022, indicating a stable demand for this product category[99] - Gear represented 19% of net sales for 2024, 2023, and 2022, maintaining consistent performance in this category[100] - Footwear consistently accounted for 10% of net sales across the years 2024, 2023, and 2022, reflecting steady consumer interest[101] Market Potential and Growth - The global addressable soft goods market is estimated at approximately $79 billion, highlighting significant growth potential for 5.11[97] - 5.11's community includes both professional "Prosumers" and "Everyday Consumers," expanding its market reach and brand loyalty[102] - The company acquired a majority interest in 5.11 on August 31, 2016, enhancing its portfolio in the tactical gear and apparel market[96] - The firm backlog was approximately $23.9 million as of December 31, 2024, down from $34.6 million in 2023, suggesting a decrease in future revenue visibility[107] - International sales accounted for only 22% of net sales in 2024, indicating substantial room for growth in global markets[109] Supply Chain and Production - Approximately 39% of 5.11 products at cost were produced in Bangladesh, 27% in Vietnam, with the remainder sourced from various countries including China and Cambodia[128] - 5.11 collaborates with over 80 vendors, with 18 vendors producing about 80% of its products in 2023 and 2024[128] - 5.11's supply chain is optimized for efficiency, with a focus on mitigating supplier concentration risk by commercializing key items across multiple factories[131] Product Innovation and Marketing - The company emphasizes product innovation, leveraging feedback from professionals to enhance its offerings across apparel, footwear, and gear categories[98] - 5.11's product innovation strategy focuses on developing purpose-built technical apparel and gear, aiming to capture a larger share of consumers' wardrobes[115] - The company aims to increase brand awareness through dynamic marketing strategies, targeting both existing and new consumers domestically and internationally[112] Workforce and Culture - 5.11's workforce includes 1,073 full-time and 260 part-time employees as of December 31, 2024, emphasizing its commitment to a diverse and inclusive culture[138] BOA Fit System and Market Position - The BOA Fit System, launched in 2001, has surpassed 31 million users worldwide by 2024, indicating significant market penetration[143] - BOA currently holds approximately 4% share within its addressable market of over 800 million units sold annually[145] - BOA achieved approximately 15% model count growth, aligning with its long-term expectations for market share expansion[153] - The company estimates that 10% of BOA products are consumed in North America, 30% in Europe, and 60% in Asia, highlighting its geographical revenue distribution[151] - BOA has a diverse patent portfolio with 293 issued and pending utility patents and 168 issued and pending design patents, reinforcing its position as a technology leader[165] Lugano's Market and Growth - The average retail transaction price for Lugano's jewelry was approximately $450,000 in 2024, indicating a high-value product offering[176] - Lugano's retail revenue is diversified, with no single customer representing greater than 10% of total revenue in 2024, showcasing strong customer retention[179] - Lugano's addressable client base has increased to an estimated 290,000 individuals worldwide, reflecting growth in the high-net-worth segment[181] - The company has expanded its retail footprint with new salons in Houston, Greenwich, and Washington, DC, and plans to open its first international salon in London[174] - Lugano's repeat customers contribute an increasing percentage of revenue year-over-year, indicating strong customer loyalty and satisfaction[179] The Honey Pot Co. Overview - The Honey Pot Co. products are available in more than 33,000 retail stores across the U.S. and Canada, as well as online[209] - The Honey Pot Co. was founded in 2012 and has built a passionate customer base by "normalizing the normal" through its authentic brand voice[209] - The Honey Pot Co. secured full distribution with a leading mass retailer by 2020, expanding into grocery and drug channels[209] - The Honey Pot Co. was acquired on January 31, 2024, enhancing the company's portfolio in the wellness sector[210] - The Honey Pot Co. operates in the feminine care market, valued at approximately $9 billion in the U.S., with a mid-single digits compound annual growth rate over the past 5 years[211] - The menstrual product category accounted for 56% of gross sales in 2024, up from 49% in 2023, highlighting strong growth in this segment[214] - Personal care products represented 36% of gross sales in 2024, a slight decrease from 39% in 2023, indicating a shift in consumer preferences[215] - The company launched its hydrating body washes in 2024, expanding into the multi-billion-dollar body care segment[211] - Consumer health and sexual wellness products made up 8% of gross sales in 2024, down from 12% in 2023, suggesting a need for strategic focus in this area[216] - The Honey Pot Co. targets a predominantly younger, ethnically diverse, and highly educated consumer base, which is increasingly seeking natural and clean-label products[217] - The company's innovative "herbal" pads, infused with essential oils, are a key differentiator in the menstrual product category[214] - The Honey Pot Co. emphasizes education and awareness regarding menstrual health, appealing to Millennial and Gen Z consumers[212] - The company has a strong distribution footprint, which positions it well to benefit from the growing demand for "better-for-you" feminine care products[212] - The Honey Pot Co. is focused on building a loyal consumer base through community engagement and trust-building initiatives[217]