pass Diversified LLC(CODI) - 2025 Q3 - Quarterly Report

Financial Performance - Net revenues for Q3 2025 were $472.6 million, a 3% increase from $456.6 million in Q3 2024[22] - Gross profit for Q3 2025 was $207.7 million, compared to $196.6 million in Q3 2024, reflecting a gross margin improvement[22] - Operating loss for Q3 2025 was $(11.1) million, a decrease from an operating income of $8.3 million in Q3 2024[22] - Net loss for Q3 2025 was $(87.2) million, compared to a net loss of $(65.5) million in Q3 2024, indicating a worsening financial performance[22] - Basic loss per common share attributable to Holdings for Q3 2025 was $(1.21), compared to $(0.62) in Q3 2024[22] - The company reported a comprehensive loss of $(86.2) million for Q3 2025, compared to $(64.1) million in Q3 2024[25] - The company reported a net loss of $74,015,000 for the quarter ending July 1, 2025, indicating a worsening financial position compared to previous periods[29] - The net loss for the quarter ending September 30, 2024, is $36,032,000, compared to a net loss of $28,922,000 in the previous quarter, indicating an increase in losses of about 24%[29] - The company reported a net loss from continuing operations of $(73.492) million for the three months ended September 30, 2025, compared to $(35.536) million for the same period in 2024[155] Assets and Liabilities - Total current assets increased to $1,010.8 million as of September 30, 2025, up from $964.8 million at December 31, 2024[20] - Total liabilities rose to $2,928.8 million as of September 30, 2025, compared to $2,766.8 million at December 31, 2024[20] - Total stockholders' equity attributable to Holdings decreased to $519.2 million as of September 30, 2025, from $678.6 million at December 31, 2024[20] - The company has a total stockholders' equity of $318,366,000 as of September 30, 2025, which is a decrease from $519,217,000, indicating a decline of approximately 38.7%[29] - Cash and cash equivalents increased to $61.1 million as of September 30, 2025, from $59.7 million at December 31, 2024[20] - The company's property, plant, and equipment totaled $491.8 million as of September 30, 2025, down from $498.3 million at the end of 2024[76] - Inventory increased to $602.2 million as of September 30, 2025, compared to $571.2 million at the end of 2024, marking a rise of 5.4%[77] Cash Flow and Investments - Cash used in operating activities for continuing operations was $53,834 thousand for the nine months ended September 30, 2025, compared to $144,343 thousand in 2024, indicating a significant reduction in cash outflow[32] - Total cash used in investing activities for the nine months ended September 30, 2025, was $33,084 thousand, a decrease from $352,251 thousand in 2024, reflecting improved cash management[32] - The company reported a gain on the sale of discontinued operations of $2,326 thousand in 2025, compared to $3,345 thousand in 2024, reflecting ongoing divestiture activities[32] - Cash and cash equivalents at the end of the period were $61,139 thousand in 2025, a decrease from $71,879 thousand in 2024, indicating a tightening liquidity position[34] Financing Activities - Proceeds from the issuance of Trust preferred shares were $58,998 thousand in 2025, compared to $26,944 thousand in 2024, showing a substantial increase in financing through preferred shares[34] - Borrowings from the revolving credit facility amounted to $98,000 thousand in 2025, down from $349,000 thousand in 2024, indicating a reduction in reliance on short-term debt[34] - The company issued $300 million of 5.000% Senior Notes due 2032, with interest payable semi-annually[111] - The company also issued $1,000 million of 5.250% Senior Notes due 2029, with interest payable semi-annually[113] - The total outstanding long-term debt as of September 30, 2025, was $1.88 billion, with significant components including $1.02 billion in 2029 Senior Notes and $305.3 million in 2032 Senior Notes[127] Acquisitions and Divestitures - The Company acquired The Honey Pot Company on January 31, 2024, through a merger and stock purchase agreement, making it a wholly-owned subsidiary[56] - The Company completed the sale of Ergobaby during Q4 2024, with results reported as discontinued operations for the three and nine months ended September 30, 2024[48] - The Company recorded a pre-tax gain of $6.1 million from the sale of Ergobaby, with total proceeds of approximately $99.1 million received at closing[68] - The sale of Crosman Corporation resulted in a loss of $24.6 million, with net proceeds of approximately $61.9 million used to repay intercompany credit[70] Segment Information - As of September 30, 2025, Compass Diversified Holdings controls nine operating segments, including 5.11 Acquisition Corp. and The Honey Pot Co.[37] - The Company operates nine reportable operating segments, each representing a platform acquisition with distinct products and services[217] - 5.11 specializes in technical apparel and gear for law enforcement and military professionals, emphasizing innovation and user collaboration[217] - The Honey Pot Co. offers plant-derived feminine care products and is available in over 33,000 stores across the U.S.[218] Legal and Compliance - The Company is subject to ongoing investigations by the SEC and DOJ due to the withdrawal of reliance on its financial statements for 2024, 2023, and 2022[192] - The Company intends to vigorously defend itself against claims and believes it has strong defenses available[184] - The Company has identified potential defaults under the Credit Agreement due to irregularities at its subsidiary, Lugano, leading to a Forbearance Agreement with lenders[101] Management and Governance - The Company has an at-the-market equity offering program allowing for the issuance of up to $500 million in common shares, refreshed on September 5, 2024[133] - Management fees paid by the LLC to Compass Group Management LLC are limited to $10.5 million per fiscal quarter[103] - The Company suspended quarterly cash distributions to common shareholders on May 27, 2025, to preserve cash amid the Lugano Investigation[141]