Compass Diversified 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Compass Diversified reported fiscal 2026 second quarter GAAP net sales of $424 million, down from $479 million in the prior year period.
- Income from continuing operations was $82 million, compared with a loss of $81 million last year.
- Basic earnings per share were $0.86, compared with a loss of $0.88 in the prior year period.
- The quarter included a $182 million gain on the sale of Sterno food service business and a $58 million reduction in the fair value of receivable from Lugano.
- Continuing subsidiaries' net sales were approximately $411 million, roughly flat year over year.
- Subsidiary adjusted EBITDA was approximately $92 million, up 12.6% year over year.
- Branded consumer adjusted EBITDA increased 24.2%, while industrial adjusted EBITDA declined 12.8%.
- Strong performance was noted at Boa, Honeypot, Primaloft, 5.11, Arnold, and Reinforce, while Altor's adjusted EBITDA declined roughly 50% due to tariff disruptions, softer vaccine demand, higher input costs, and competition.
- Corporate expenses were approximately $29 million, including $16 million of public company costs with over $12 million related to Lugano.
- Operating cash flow improved to approximately $30 million in the quarter and over $50 million year to date, compared with an outflow of $65 million in the first half of 2025.
- Capital expenditures were $6 million in the quarter and $11 million year to date, about half the prior year level.
- Total debt was $1.6 billion, down nearly $300 million from year end, primarily due to application of Sterno sale proceeds to debt reduction.
- Covenant leverage ratio improved to 4.8 times from 5.3 times at the end of the first quarter.
- Senior secured net leverage was 0.66 times.
- A settlement with the Lugano Unsecured Creditors Committee is expected to yield nearly $20 million recovery by early fall, with additional recoveries anticipated over time.
STOCKNOW INSIGHTS
Continue with outlook and guidance.
Log in to unlock executive comments and Q&A highlights.
Log in for the full summaryStockNow uses AI to translate and summarize earnings calls. Accuracy and completeness are not guaranteed.
Transcript
Preview the first five paragraphs, organized by speaker.
At this time, I would like to turn the call over to Ben Avenia-Tapper, Vice President, Investor Relations.
Ben, please go ahead. Thank you, and welcome to Compass Diversified's second quarter 2026 conference call.
Representing the company today are Elias Sabo, Chief Executive Officer, Zach Sawtelle, Chief Operating Officer, and Stephen Keller, Chief Financial Officer. Before we begin, I'd like to remind everyone that during the course of this call, CODI will make certain forward-looking statements, including discussions of forecasts and targets, future business and divestiture plans, future liquidity and leverage positions, plans to return capital to shareholders, future performance of CODI and its subsidiaries, and other forward-looking statements regarding CODI and its financial results. Words such as believes, expects, anticipates, plans, projects, should, and future, or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to many risks and uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements.
Some of these factors are enumerated in the risk factor discussion in the company's Form 10-K, as filed with the SEC on February 27, 2026, as well as in other SEC filings and press releases. Except as required by law, CODI undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise. During today's call, we will refer to certain non-GAAP financial measures. Definitions of these measures, reconciliations to the most directly comparable GAAP measures, and additional information regarding their use are included in today's earnings release, which is available in the investor relations section of the company's website at www.compassdiversified.com.
Please note that references to EBITDA in our prepared remarks refer to adjusted EBITDA, unless otherwise indicated, year-over-year comparisons of net sales and subsidiary adjusted EBITDA exclude Lugano from the prior year period and exclude the divested Sterno food service business from both the current and prior year periods. Our full year 2026 outlook is presented on a different basis and includes the adjusted EBITDA generated by the Sterno food service business prior to its sale. CODI has not reconciled its full-year 2026 subsidiary adjusted EBITDA outlook to the most directly comparable GAAP measure because CODI does not provide guidance for income or loss from continuing operations and management cannot predict with sufficient certainty all of the inputs necessary to provide such a reconciliation without unreasonable effort. Additional information regarding this limitation is included in today's earnings release.
FULL TRANSCRIPT
Continue the full translated transcript in StockNow.
Log in to unlock every statement, the English original, and speaker-by-speaker history.
Log in for the full transcriptCall participants
10 people spoke on this call — only 1 are shown here.
PARTICIPANT LIST
View participant details in StockNow.
Log in to see executives and analysts, their roles, and complete speaking history.
Log in to view all participantsKeep exploring