Compass Diversified Holdings — Call Transcript 2026

At this time, I would like to turn the call over to Ben Tapper, Vice President, Investor Relations. Ben, please go ahead. Thank you, and welcome to Compass Diversified's first quarter 2026 conference call. Representing the company today are Elias Sabo, CODI's Chief Executive Officer, and Stephen Keller, CODI's 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 plans, 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 the call, we will refer to certain non-GAAP financial measures. The Q1 2026 press release, including the financial tables and non-GAAP financial measure reconciliations for adjusted EBITDA, subsidiary-adjusted EBITDA, pro forma net sales, and financial results excluding Lugano, are available at the Investor Relations section on the company's website at www.compassdiversified.com. Please note that references to EBITDA in the following discussions refer to adjusted EBITDA as reconciled to net income or loss from continuing operations in CODI's press release and SEC filings. The company does not provide a reconciliation of its full-year expected 2026 subsidiary adjusted EBITDA because certain significant reconciling information is not available without unreasonable efforts. Throughout this call, we will refer to Compass Diversified as CODI or the company. At this time, I would like to turn the call over to Elias Sabo. Elias. Thank you, Ben, and good afternoon to everyone. We started 2026 committed to a clear plan, and we are delivering against it. Specifically, we sold Sterno's food service business at an attractive valuation despite a muted M&A environment. We completed a sale leaseback at Altor and applied the proceeds directly to debt reduction. We delivered solid subsidiary-adjusted EBITDA growth, highlighted by double-digit growth in our consumer businesses despite uncertainty in the global economy. Collectively, our subsidiaries generated strong operating cash flow in the quarter, a hallmark of the CODI model. Incorporating our current view of the operating environment and reflecting the sale of Sterno's food service business, we are updating our full-year guidance. Before Stephen walks through the financials and our updated guidance, I would like to provide additional color on both our strategic focus and operational performance. Let me start with the sale of Sterno's food service business. Throughout this process, we've been asked whether the broader environment, including geopolitical uncertainty in the Middle East, tighter private credit markets, and other macro factors, would limit our ability to monetize our businesses at attractive values. From the outset, our answer was straightforward. First, there was almost always a market for high-quality businesses. Second, we have an experienced team with a track record of maximizing value across market cycles. We believe the outcome here speaks for itself. We view this as an initial step towards the goals we've established, not the final step. Our leverage ratio remains above our target range, and our shares continue to trade at what we believe is a discount to intrinsic value. Our work is not done. We will continue to pursue deleveraging and value creation, both organically and inorganically, with the same urgency and discipline we have demonstrated so far. Once leverage is within our target range, we will accelerate work to address the gap to intrinsic value, including through the efficient return of capital to shareholders. Alongside our deleveraging efforts, we have initiated a review of our management services agreement. We are actively evaluating our MSA for opportunities to further align incentives and drive incremental shareholder value. The process is underway, and we expect to provide further updates in the coming months. Turning to operational performance. Against a backdrop of continued macro uncertainty, our subsidiaries collectively outperformed in the first quarter. Let me walk through a few highlights. Our consumer businesses led the way with double-digit adjusted EBITDA growth, driven by strength across these businesses. The Honey Pot continued its exceptional momentum in the first quarter, with revenue growth of nearly 25% and EBITDA growth of over 40% compared to the prior period. We continue to see the brand gain share across the feminine care category, reflecting the strength of the product portfolio, expanded distribution, and growing consumer adoption as the brand continues to extend beyond its origin into the broader period care category. The Honey Pot is now firmly established as a leading better-for-you brand in the feminine care, and we believe it has significant runway for continued growth. BOA delivered another strong quarter, with revenue growth of 6.5% and EBITDA growth of 11% compared to the prior year period. We believe the performance of the BOA Fit System is unmatched, and that technical edge continues to drive category-leading adoption across snow sports, cycling, workwear, and more. The company's focus on differentiated solutions and operational efficiency supports their category-leading margins. With continued innovation and expansion into new performance applications, we see meaningful opportunity for growth ahead. 5.11 Tactical delivered solid margin performance and strong cash flow in the quarter, despite some modest top-line pressure. The business continues to generate durable cash flow from its core professional customer base, and we are encouraged by the steps the team is taking to expand 5.11's appeal to the broader adventure-oriented consumer. This includes a recent grand opening of its next-generation retail format in Seattle, which significantly outperformed the chain average on opening weekend. Early customer response has been strong, and we are seeing encouraging traction. While this is an early signal, it reinforces our belief that 5.11 has meaningful runway to broaden the brand's reach over time. Finally, within our consumer businesses, a new leadership team is getting up to speed at PrimaLoft. It's only month three, but we are pleased with management's progress, laying the groundwork to accelerate future growth while remaining a highly profitable, low working capital business. Much more to come in future quarters. Turning to our industrial businesses, Arnold delivered a standout quarter with adjusted EBITDA nearly doubling year-over-year, despite ongoing geopolitical dynamics around rare earth supply, including continued export restrictions out of China. While these dynamics create near-term headwinds, they also reinforce the long-term tailwinds for the business. Demand for geopolitically secure rare earth magnet supply continues to build as customers increasingly prioritize reliable, non-China sources. Arnold's Thailand facility is ramping up, adding capacity and supply chain redundancy. We believe this uniquely positions Arnold to serve aerospace, defense, and industrial customers who prioritize supply chain security and performance reliability. Altor remains a work in progress. The business faced a challenging first quarter, reflecting competitive pressure in the cold chain market and continued consumer headwinds in the appliance market. The team is focused on execution, optimizing the combined platform following the Lifoam acquisition and driving commercial progress. We remain confident in Altor's long-term positioning, even as near-term results continue to reflect current market conditions. Finally, let me turn to Rimports, which is the business we retained following the sale of the Sterno food service business. Rimports is a home fragrance platform, supplying scented wax warmers, and essential oils under a range of in-house and private label brands to many of the nation's largest retailers. We want to be clear about what to expect. The balance of 2026 will be a transition period. Rimports will absorb some stranded costs from the separation of the food service business during the year, and we are working through an updated commercial relationship with a large customer. Both of these factors will weigh on near-term results, but are expected to improve in 2027. We have confidence in the leadership team and believe the long-term opportunity remains attractive as the team focuses on the go-forward business. Before I hand the call over to Stephen, I want to underscore that the actions this quarter are part of a disciplined, sequenced plan. Our path is clear. De-leverage. Drive continued operational performance. Further align management incentives. Over time, close the gap between our share price and intrinsic value. That is the priority we are executing against. With that, I'll turn the call over to Stephen to walk through the financial results. Thanks, Elias. As a reminder, our prior year GAAP results include Lugano, which has since been deconsolidated following its bankruptcy filing last November. With that context, I will discuss our GAAP results first, followed by our non-GAAP results that exclude Lugano to better facilitate year-over-year comparisons. For the first quarter, GAAP net revenues were $427 million, down 5.9% year-over-year due to the inclusion of Lugano in the prior period. GAAP net loss from continuing operations was $30.8 million, an improvement of approximately $19 million year-over-year, primarily reflecting the absence of Lugano's losses in the current period. I will now provide our first quarter non-GAAP results, which excludes Lugano from the prior year. Net sales were in line with prior year as strong double-digit growth at The Honey Pot and Arnold were offset by ongoing challenges at Altor, due largely to unfavorable macro trends. Across our businesses, our consumer net sales increased 2.3%, while industrial net sales declined 3.3% compared to the prior year period. Subsidiary adjusted EBITDA was $83.9 million, an increase of 6.3%, with consumer up 11.6% and industrial down 4.5% compared to the prior year period. While Arnold nearly doubled year-over-year, industrial growth was offset by the top-line headwinds at Altor. Corporate management fees, excluding those paid by the subsidiaries, were $14.4 million for the quarter, as reflected on the income statement. Actual cash payments for Q1 fees will be significantly less at around $7.5 million. As previously discussed, corporate cash management fees paid to the manager are expected to be between $25 million and $30 million for the full-year as our manager pays back the overpaid management fees related to Lugano restatement. Public company costs were $13 million in the quarter, which includes more than $7 million of one-time costs associated with Lugano, including the cost of ongoing litigation and investigation and corporate governance changes. While these one-time costs were significantly higher than initially anticipated, they do not include any offsets that may be realized through insurance or other proceeds as we move through 2026. It is important to note that in April, we received our first insurance reimbursement, and we expect to recover additional expenses over the balance of 2026. More importantly, we remain focused on managing and reducing our public company costs consistent with our efforts to de-lever and drive long-term value creation. Cash generation was a highlight of the quarter. We generated $23.9 million in operating cash flow, a meaningful improvement versus the prior year. Our capital expenditures of $5.1 million were less than half of the prior year period, reflecting disciplined capital allocation and a capital-efficient profile of our subsidiary businesses. Together, Q1's operational cash generation demonstrates the strength of our businesses and keeps us on track toward delivering significant free cash flow in 2026. We ended the quarter with $65 million in cash and cash equivalents and nearly full availability on our $100 million revolver. Our leverage ratio for debt covenant purposes at quarter end was approximately 5.3x, a strong improvement in the quarter. As we announced earlier this week, the sale of Sterno's food service business has now closed, and we have repaid more than $280 million of senior secured term loan debt. This reduces our total leverage to approximately 5x and brings our senior secured net leverage to below one time. Importantly, this allows us to avoid the milestone fees under our senior credit facility that would otherwise have applied beyond June 30th. Reducing leverage has been and remains our top financial priority. Our actions thus far this year put us in a meaningfully stronger position. There is more work to do, and we remain disciplined and focused on the priorities we have laid out to our shareholders. Turning briefly to Lugano, the Chapter 11 process is advancing as expected, as are our efforts to minimize our liability and maximize our ultimate recovery. We expect to have greater clarity on timing by the end of the second quarter, and we'll update investors as appropriate. Before turning to our outlook, I'd like to briefly note that while the evolving tariff environment has created significant market uncertainty, we are currently experiencing a tailwind across multiple businesses. Separately, we also expect to receive one-time tariff-related refunds during 2026, though the specific timing and magnitude are difficult to forecast at this time. We will provide more clarity as the year progresses. I'll now provide an update on our 2026 outlook. For the full-year, we expect subsidiary adjusted EBITDA of between $320 million-$365 million. This range, adjusted for the impact of the sale of Sterno's food service business, is at or above the expectation we set at the start of the year and reflects the continued strength of our diversified collection of businesses. For our consumer businesses, this equates to adjusted EBITDA between $225 million-$260 million. For our industrial businesses, we expect adjusted EBITDA of between $95 million and $105 million, which includes some stranded costs associated with the sale of our Sterno business. We expect these costs will decline in 2027. For modeling purposes, we continue to assume CapEx of between $30 million-$40 million for 2026, and we expect corporate cash management fees of between $25 million-$30 million. As has been our practice, our outlook does not include the impact of any potential acquisitions or divestitures, except as noted regarding the sale of the Sterno food service business. It also does not include any significant impact, positive or negative, to the evolving trade environment. With that, I'll hand it back to Elias for closing remarks. Thanks, Stephen. Let me be clear about where we stand. The first quarter of 2026 was a quarter of execution. Solid subsidiary performance, a meaningful divestiture at an attractive valuation and measurable progress on the priorities we laid out. A single quarter does not make a turnaround, and we've, by no means, reached the finish line. We will continue to pursue our stated objective to create long-term shareholder value and close the gap to intrinsic value. That means, in the near term, pursuing strategic divestitures at attractive valuations and returning capital to shareholders where appropriate. Trust is earned through consistent execution, and that is what shareholders should expect from us every quarter going forward. The sale of Sterno's food service business is an important signal of what is possible. We transacted at an attractive value on an accelerated timeline in an otherwise softer M&A environment. That outcome reflects both the quality of the business and the capability of our team to run disciplined processes and maximize value for shareholders. Beyond a proof point, it is an important first step. We believe in the CODI model. We take a permanent capital approach to acquire great businesses, partner with strong management teams, and actively manage growing category leaders over the long term. That model has generated value for shareholders for nearly two decades. We are confident in the model and committed to demonstrating its value through execution. Thank you as always for your support. Stephen and I will now take your questions. Operator, please open the lines. Thank you. Your first question is from Larry Solow of CJS Securities. Your line is now open. Great. Thanks. Good afternoon, guys. Can you just clarify the guidance? Your net, you're down $25 million, and obviously you're up $5 million in branded, that's separate from the sale, the divestiture of Sterno. Obviously Sterno, sounds like there's some moving parts, right? For Sterno, maybe more than we would have thought the impact on the sale. You said some kind of stranded or lagging costs there. Maybe there's still another adjustment. Are you reducing, maybe Altor Solutions a little lower too or anything else in there? No. Thanks, Larry. No, the main thing is actually just adjusting for the industrial is just adjusting for the sale of Sterno, specifically related to the lost EBITDA, the stranded cost, and then as well as what Elias mentioned in the prepared remarks, which is we do have a couple of negotiations with some large customers in that particular business that we think will be a little bit- Right. Of a headwind for the year. Gotcha. Yeah. That's it. Basically the remain cost of Sterno, which is Rimports, will be somewhat lower this year. Correct. Than last year. Yes. And you think that- I wanna be clear. Yeah. Go ahead. I want to be clear, we're selling Sterno, we're not deconsolidating it out of the business. You will have the first quarter of Sterno will be included in our full-year EBITDA. Then the next three quarters will just be Rimports. Right. Is there like, is there a short term, like your corporate costs are too much because you kind of carved out Sterno, but you still have Rimports or did you bulk up that infrastructure maybe where it actually impacts you? Yeah, go ahead. As we mentioned, I think in our original press release, we are retaining the management team in Rimports. The Sterno management team is staying with Rimports. That is something that we need to work through. We actually really think this is the right team to help accelerate Rimports growth, but it is a little. We do have to make some adjustments to overall cost levels as we go forward. Gotcha. The stranded costs, I imagine those you kind of have pretty good visibility will be not repeat next year. The customer negotiations with the one, I think I know one large customer, that we don't know the outcome yet. The stranded costs, obviously you should have pretty good confidence those won't repeat, right? I guess. Is that fair? Yeah. I mean, we have to address the stranded costs. It is Stranded costs are costs that existed last year that will continue to exist in the business. We need to work them down over time as appropriate for what is now a smaller business. Right. Okay. That's what I thought. It's a little bit you need to downsize sort of the corporate structure there. That makes sense. Just curious, so the couple quickies, in general, Elias, maybe just on the, you know, on the branded piece, it sounds like, you know, a lot of moving parts, but in general, just your consumer, you know, the confidence you have, anything really change over the last six months? Obviously, that encompasses the start of the Iran conflict or whatever you wanna call it, higher inflationary pressures back or a lot higher. Any, have you seen any impact in any of your businesses because of this or are you contemplating that in your guidance? Any thoughts there? Yeah, Larry, we, I would say, have seen our consumer businesses perform extremely well. First quarter was above what our expectations were. I would say coming into the second quarter, as a lot of these companies work on backlog, I would say they're, you know, set up to perform better in the second quarter than expectations as well. That's, you know, clearly in the face of the Iran war starting. I think where it gets a little bit harder to dissect is whether customers are accelerating some orders because of the war and worries about longer-term inflation and, you know, kind of oil going through, you know, kind of global oil supply. That's a little bit more to be determined. I would say right now, what we can analyze the business on the consumer side looks very strong and better than anticipation. Currently, and I know this sounds odd to say, unaffected by the, you know, global macro events that we see, you know, kind of around us on a daily basis. Okay. BOA really had a nice quarter. Anything, you know, outstanding there? I know you sold the footwear business, I know, so maybe you reported 11% EBITDA growth, but I imagine it was even better ex that. Any extra color there? You know, BOA is a great business. We, you know, say over and over how awesome this company is. Its competitive positioning, strategic outlook. It has one of the best management teams, if not the best management team that I've ever worked with. I think those are all the ingredients to propel the company, you know, forward in a consistent basis. As you know, Larry, it's got a great IP position. You know, it's just, it's so well-positioned, and I think we went through a lot of, you know, kind of turbulence. Obviously, it had huge growth during the supply chain shock, you know. Then we had, you know, some softness that came from that. Then more recently, we had a customer, you know, in Asia on our kids line that from price competitive reasons we walked away from. So there's been a little bit of noise. I think right now the business is in a much better spot based in where the industry is and kind of its inventory positioning and where we are in terms of the customer mix and durability and then all the growth, you know, that it has ahead of it. I would say where there's been some extraneous sort of, you know, kind of choppy things that have happened here, this business now we think is sort of in a smoother set of waters and should produce the kind of double-digit kinda growth rates that we saw in the first quarter on a continuing basis. Great. Last question, Elias. You did a nice, you know, announcement. You completed a nice divestiture, and then you said you know, look and probably do more. You know, you're pretty confident you'll complete at least one more this calendar year? I mean, that is our plan. The M&A markets I referred to are, you know, a bit choppy. They're weaker than, you know, where they've been in the past. You know, they ebb and flow, as you know. You know, we own really great quality assets, Larry, as I mentioned in my, you know, opening remarks, there's always the market to transact for a great company or great companies. You know, we do feel confident we'll be able to transact. Now, against that, there's still a war in Iran going on and $100 oil prices and lots of uncertainty. Private credit markets- Sure. Have really tightened. I think we see that kind of in the public stock prices of a lot of these private credit providers. That is clearly a headwind for, you know, being able to transact. It's where our focus is. You know, we understand we need to get our leverage down, and that is, you know, kind of the number one, two, and three goals right now, to get back into a position where we can be allocating capital again, and, you know, as we said in our opening remark, you know, looking to close the intrinsic value discount once we get there. You know, we remain confident we'll be able to execute against that. Although, I wanna caution the M&A markets continue to remain choppy. Great. I appreciate it. Thanks. Thank you, Larry. Thank you. Our next question will come from Timothy D'Agostino from B. Riley Securities. Your line is now open. Yeah, hi. Thanks for taking the questions. Regarding leverage, could you remind us again what your long-term goal is? You know, where do you want leverage to be? As well, you know, given the sale of Sterno Food Services, how does that impact kind of your timeline and your path in order getting to that leverage target? Lastly on that, you know, given where the stock is today and let's say looking into the future, getting to your leverage target, you know, when would share buybacks become part of the equation for you all? You know, at these levels, is it attractive? Understanding you still have more deleveraging to do. Thank you. Yeah. Thanks for the question. Long term, we've always said we'd like to be around 3x-3.5x leverage. That would be like our long-term goal if things were, you know, in a more, you know, in a more normal situation. I would say our current focus is now to get under 4 times levered as a key milestone for us. Once we got under 4x, we would start to think, you know, given where the stock is trading and discount to intrinsic value, we would start thinking it would make sense to look to return capital to shareholders, potentially through a share buyback. I think, again, long term, 3.5x. I think the next milestone for us is to get below 4x, which just allows us to be a little bit more, you know, think a little bit more about return capital. Okay, great. Thank you for that. Then with, I guess, you know, with the additional sale of a full subsidiary, you know, do you think you can get to that 4x by year-end, or do you think it's gonna take a little bit more work? Just understanding, you know, the impact of the next sale might have in your opinion. The way I would think about it, if you think about it organically, I think the rest of the year, you kind of get, you have another step down, probably to around four and a half somewhere, a little bit higher than that, but somewhere around there. Then you start talking about the kind of inorganic activities, which would include recovery from Lugano, which would be straight deleveraging. Then you would, and then you would have a sale of a subsidiary. That obviously just depends on which subsidiary. There's obviously a little bit of a circular reference there where you get rid of EBITDA, but you know, then you get how much, you know, you get the multiple on it. We think with the sale of another company and the organic work and the work from Lugano recoveries, I think we would essentially be below 4x. It is dependent on the specific subsidiary and the multiple that we get for it. Okay, great. That's super helpful color. If I could just sneak a final quick one in there. I may have missed it earlier, I apologize. On SG&A, lower this quarter and, you know, on my model, a lower percentage of revenue. I guess, is there anything to flag there on why SG&A was lower in the quarter? Again, might have missed it, apologies if I did. You mean collectively across the business, or are you talking about corporate costs are higher, right? As we talked about in the prepared remarks. In terms of the overall business, if you're looking at collectively the SG&A on the GAAP accounts line, I think it's nothing specific to call out. It's, you know, nothing, just normal, you know, prudent management within the teams. As I think we talked about at the last call, 5.11 has made some significant strides in using AI to reduce overhead costs in all of our businesses. As, you know, prudent managers do, they look to reduce SG&A costs, especially in a time when there's a little bit more macro uncertainty. Okay, great. Thank you for taking the questions today. Thank you, Tim. Thank you. Our next question will come from Matt Koranda from ROTH Capital. Your line is now open. Hey, guys. I guess one fundamental one on segment and then maybe a couple of housekeeping things. On Honey Pot, maybe can you just unpack a little bit more about what's driving the really substantial growth there? I guess notice north of 30% even on margins in that segment. How sustainable do you view that that level as, and how should we be thinking about sort of a normalized level going forward? Yeah, Matt, what's driving the growth is market share gains in the category. If you recall, when we acquired the company, it was principally in the hygiene side, the washes and wipes side of the business. That is a very small percentage of the overall addressable market. Only about 5% of the potential population of candidates use washes and wipes as instead of regular soap. The big opportunity with this company was, you know, one, to increase that percentage, which we've been doing and, secondly, to extend the brand into other adjacent categories. We've had really good success extending into the period care market. That is the, you know, a market that is kinda 20 times bigger than the original market that we started out with, and our brand has shown the elasticity to be able to move into that. Remember, we stand for better for you, which is something that resonates, especially with the younger consumer, and our goal is to win that younger consumer as they're coming into the category. The strategy is working extremely well. I would say growth in period care can continue to drive, you know, really dramatic growth because we are relatively small in an enormous market right now with a differentiated proposition to the customer. In terms of margin, you know, the company is in a category where it can generate higher margins. I mean, these are better for you products. The positioning, you know, and brand association is all around better for you. As a result, consumers are willing to pay up for that. Now, I will say, you know, the company also has some benefits, and we've had Stephen mention from tariff rulings here. You know, there were huge tariff costs that were incurred as part of Liberation Day last year. Now with the IEPA ruling, some of those costs have significantly come down. That is aiding margin without question. I think if your view is those tariffs creep back in some other way. There'll be some give back of margin, naturally. I think if your view is tariffs are gonna be sort of where they are right now at this temporary level, then you should view those margins as being stable. There's nothing from a pricing standpoint that we look at that says we aren't able to maintain these margins. I think if you see the growth rate of, you know, mid-20s top line growth, you know, it's indicative of a very healthy brand. That price is not the, you know, reason that people are not buying. We believe we can hold that. Okay. Appreciate that, Elias. I guess maybe this is a broader question for all the segments. On tariff recoveries, I just wanna make sure. There were none within the first quarter that benefited margins. Just clarify that for us. Also, as you get recoveries throughout the year, how will those flow through the financial statements, just so we're clear on sort of how it shows up? There was no one-time like recovery of last year's tariffs in our Q1. As Elias mentioned, we did have some benefits of having lower tariffs than we had maybe at Q4 of last year, if that makes sense. To the extent that when we do get one-time historical refunds on tariffs, that would just be a positive in the P&L, and we will be sure to call that out for everyone for modeling purposes. Any margin that you see right now is not related to one-time tariff benefits. It's more related to the current tariff environment that we're in today. Okay. Got it. Maybe just one more, if I could. You mentioned kind of a revisiting or a review of the MSA. Are you willing to share any preliminary thoughts on that front in terms of what some of the changes could be or the changes you're contemplating, maybe based around either, I guess, the asset-based management fee or allocation interest and how those are calculated? We are not in a position yet to start to discuss that. What we wanted to convey to the market is that there are discussions that are ongoing now between the manager and the compensation committee to the Board of Directors. We anticipate MSA changes to come in the, you know, next couple few months. We just were really conveying that. It would be premature, Matt, at this point to start talking about the flavor of what those changes will look like. Okay. Fair enough. Yeah, I'll leave it there. Thank you. Thank you. Thank you. We do have time for a few additional questions. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. At this time, we have our next question is from Haley Scheff of Raymond James. Your line is now open. Good afternoon. Thanks for the question, and congrats on the sale. Now that you've completed this and kind of gotten your senior leverage down below 1x, is there any urgency with other sale processes, especially with a muted M&A market? Yeah. I would say, Haley, there's urgency because leverage at 5x is too high. There's urgency because our shares trading at these prices, in our opinion, don't reflect intrinsic value. The urgency really becomes getting our leverage down and getting back into a position where we have capital allocation availability. You know, there was a direct question earlier, and we said, you know, it would include potential share buybacks as part of that capital allocation. I think, you know, that creates urgency now. It is a fair question, and we have to juxtapose, you know, kind of that urgency against the conditions that exist in the M&A markets, and they are somewhat muted. You know, we transacted in an equally difficult M&A market on Sterno, and I think there's the ability to do that, you know, with another asset here over the course of the year. We're, you know, taking it with a sense of urgency. I do wanna be clear, though, to the extent the markets would significantly undervalue an asset in an M&A market, by doing the Sterno deal, it's taken the pressure off to do something that would be a necessity. We will transact to the extent it can create additional shareholder value. If the market conditions were so weak that it didn't create additional shareholder value, we have bought time to be able to, you know, kind of have other strategic alternatives we could consider. That would be not our central case. Our central case is the markets, you know, although they're not extremely strong, they're also not extremely weak. They kinda are a bit muted. We believe the appropriate thing is continued deleveraging through divestitures. Got it. Thanks for the detail. Then if I can squeeze another quick one in here. On the tariffs, I know you mentioned that there's not much clarity right now on the timing or the magnitude of tariff refunds. What does the process look like for that, and any clarity on whether there would be an inflection point at which you would have a better idea of the magnitude or the timing? I mean, it was just a couple of weeks ago or whatever, where the government set up the website to actually start, you know, start the process. Each of our companies is going through the process. We really just do not have clarity. We will be sure as soon as it happens, we will provide clarity. Again, we will call it when the future earnings reports when we have it, we will call it out as a one-time benefit. At this point, we do not. It's just really hard to predict, and we expect, you know, I think we'd expect that it'll be a little bit choppy. We'll get some back. We'll probably have to fight some. Each company will be a little bit different. Makes sense. Thank you so much. Thank you. Thank you. Thank you. At this time, I'm showing no further questions. I would like to turn it back to Elias Sabo for closing remarks. Thank you everyone for your time today. We look forward to seeing you and talking to you on our next conference call. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker 6: At this time, I would like to turn the call over to Ben Tapper, Vice President, Investor Relations. Ben, please go ahead. At this time, I would like to turn the call over to Ben Tapper, Vice President, Investor Relations. at this time i would like to turn the call over to ben tapper vice president investor relations Ben, please go ahead. ben please go ahead

Speaker 1: Thank you, and welcome to Compass Diversified's first quarter 2026 conference call. Representing the company today are Elias Sabo, CODI's Chief Executive Officer, and Stephen Keller, CODI's 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 plans, 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. Thank you, and welcome to Compass Diversified's first quarter 2026 conference call. thank you and welcome to compass diversified's first quarter 2026 conference call Representing the company today are Elias Sabo, CODI's Chief Executive Officer, and Stephen Keller, CODI's Chief Financial Officer. representing the company today are elias sabo codi's chief executive officer and stephen keller codi's 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 plans, future performance of CODI and its subsidiaries, and other forward-looking statements regarding CODI and its financial results. 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 plans 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. 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. 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 the call, we will refer to certain non-GAAP financial measures. The Q1 2026 press release, including the financial tables and non-GAAP financial measure reconciliations for adjusted EBITDA, subsidiary-adjusted EBITDA, pro forma net sales, and financial results excluding Lugano, are available at the Investor Relations section on the company's website at www.compassdiversified.com. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements. 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. 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. 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 the call, we will refer to certain non-GAAP financial measures. during the call we will refer to certain non-gaap financial measures The Q1 2026 press release, including the financial tables and non-GAAP financial measure reconciliations for adjusted EBITDA, subsidiary-adjusted EBITDA, pro forma net sales, and financial results excluding Lugano, are available at the Investor Relations section on the company's website at www.compassdiversified.com. the q1 2026 press release including the financial tables and non-gaap financial measure reconciliations for adjusted ebitda subsidiary-adjusted ebitda pro forma net sales and financial results excluding lugano are available at the investor relations section on the company's website at www.compassdiversified.com Please note that references to EBITDA in the following discussions refer to adjusted EBITDA as reconciled to net income or loss from continuing operations in CODI's press release and SEC filings. The company does not provide a reconciliation of its full-year expected 2026 subsidiary adjusted EBITDA because certain significant reconciling information is not available without unreasonable efforts. Throughout this call, we will refer to Compass Diversified as CODI or the company. At this time, I would like to turn the call over to Elias Sabo. Elias. Please note that references to EBITDA in the following discussions refer to adjusted EBITDA as reconciled to net income or loss from continuing operations in CODI's press release and SEC filings. please note that references to ebitda in the following discussions refer to adjusted ebitda as reconciled to net income or loss from continuing operations in codi's press release and sec filings The company does not provide a reconciliation of its full-year expected 2026 subsidiary adjusted EBITDA because certain significant reconciling information is not available without unreasonable efforts. the company does not provide a reconciliation of its full-year expected 2026 subsidiary adjusted ebitda because certain significant reconciling information is not available without unreasonable efforts Throughout this call, we will refer to Compass Diversified as CODI or the company. throughout this call we will refer to compass diversified as codi or the company At this time, I would like to turn the call over to Elias Sabo. at this time i would like to turn the call over to elias sabo Elias. elias

Speaker 2: Thank you, Ben, and good afternoon to everyone. We started 2026 committed to a clear plan, and we are delivering against it. Specifically, we sold Sterno's food service business at an attractive valuation despite a muted M&A environment. We completed a sale leaseback at Altor and applied the proceeds directly to debt reduction. We delivered solid subsidiary-adjusted EBITDA growth, highlighted by double-digit growth in our consumer businesses despite uncertainty in the global economy. Collectively, our subsidiaries generated strong operating cash flow in the quarter, a hallmark of the CODI model. Incorporating our current view of the operating environment and reflecting the sale of Sterno's food service business, we are updating our full-year guidance. Before Stephen walks through the financials and our updated guidance, I would like to provide additional color on both our strategic focus and operational performance. Thank you, Ben, and good afternoon to everyone. thank you ben and good afternoon to everyone We started 2026 committed to a clear plan, and we are delivering against it. we started 2026 committed to a clear plan and we are delivering against it Specifically, we sold Sterno's food service business at an attractive valuation despite a muted M&A environment. specifically we sold sterno's food service business at an attractive valuation despite a muted m&a environment We completed a sale leaseback at Altor and applied the proceeds directly to debt reduction. we completed a sale leaseback at altor and applied the proceeds directly to debt reduction We delivered solid subsidiary-adjusted EBITDA growth, highlighted by double-digit growth in our consumer businesses despite uncertainty in the global economy. we delivered solid subsidiary-adjusted ebitda growth highlighted by double-digit growth in our consumer businesses despite uncertainty in the global economy Collectively, our subsidiaries generated strong operating cash flow in the quarter, a hallmark of the CODI model. collectively our subsidiaries generated strong operating cash flow in the quarter a hallmark of the codi model Incorporating our current view of the operating environment and reflecting the sale of Sterno's food service business, we are updating our full-year guidance. incorporating our current view of the operating environment and reflecting the sale of sterno's food service business we are updating our full-year guidance Before Stephen walks through the financials and our updated guidance, I would like to provide additional color on both our strategic focus and operational performance. before stephen walks through the financials and our updated guidance i would like to provide additional color on both our strategic focus and operational performance Let me start with the sale of Sterno's food service business. Throughout this process, we've been asked whether the broader environment, including geopolitical uncertainty in the Middle East, tighter private credit markets, and other macro factors, would limit our ability to monetize our businesses at attractive values. From the outset, our answer was straightforward. First, there was almost always a market for high-quality businesses. Second, we have an experienced team with a track record of maximizing value across market cycles. We believe the outcome here speaks for itself. We view this as an initial step towards the goals we've established, not the final step. Our leverage ratio remains above our target range, and our shares continue to trade at what we believe is a discount to intrinsic value. Our work is not done. Let me start with the sale of Sterno's food service business. let me start with the sale of sterno's food service business Throughout this process, we've been asked whether the broader environment, including geopolitical uncertainty in the Middle East, tighter private credit markets, and other macro factors, would limit our ability to monetize our businesses at attractive values. throughout this process we've been asked whether the broader environment including geopolitical uncertainty in the middle east tighter private credit markets and other macro factors would limit our ability to monetize our businesses at attractive values From the outset, our answer was straightforward. from the outset our answer was straightforward First, there was almost always a market for high-quality businesses. first there was almost always a market for high-quality businesses Second, we have an experienced team with a track record of maximizing value across market cycles. second we have an experienced team with a track record of maximizing value across market cycles We believe the outcome here speaks for itself. we believe the outcome here speaks for itself We view this as an initial step towards the goals we've established, not the final step. we view this as an initial step towards the goals we've established not the final step Our leverage ratio remains above our target range, and our shares continue to trade at what we believe is a discount to intrinsic value. our leverage ratio remains above our target range and our shares continue to trade at what we believe is a discount to intrinsic value Our work is not done. our work is not done We will continue to pursue deleveraging and value creation, both organically and inorganically, with the same urgency and discipline we have demonstrated so far. Once leverage is within our target range, we will accelerate work to address the gap to intrinsic value, including through the efficient return of capital to shareholders. Alongside our deleveraging efforts, we have initiated a review of our management services agreement. We are actively evaluating our MSA for opportunities to further align incentives and drive incremental shareholder value. The process is underway, and we expect to provide further updates in the coming months. Turning to operational performance. Against a backdrop of continued macro uncertainty, our subsidiaries collectively outperformed in the first quarter. Let me walk through a few highlights. Our consumer businesses led the way with double-digit adjusted EBITDA growth, driven by strength across these businesses. We will continue to pursue deleveraging and value creation, both organically and inorganically, with the same urgency and discipline we have demonstrated so far. we will continue to pursue deleveraging and value creation both organically and inorganically with the same urgency and discipline we have demonstrated so far Once leverage is within our target range, we will accelerate work to address the gap to intrinsic value, including through the efficient return of capital to shareholders. once leverage is within our target range we will accelerate work to address the gap to intrinsic value including through the efficient return of capital to shareholders Alongside our deleveraging efforts, we have initiated a review of our management services agreement. alongside our deleveraging efforts we have initiated a review of our management services agreement We are actively evaluating our MSA for opportunities to further align incentives and drive incremental shareholder value. we are actively evaluating our msa for opportunities to further align incentives and drive incremental shareholder value The process is underway, and we expect to provide further updates in the coming months. the process is underway and we expect to provide further updates in the coming months Turning to operational performance. turning to operational performance Against a backdrop of continued macro uncertainty, our subsidiaries collectively outperformed in the first quarter. against a backdrop of continued macro uncertainty our subsidiaries collectively outperformed in the first quarter Let me walk through a few highlights. let me walk through a few highlights Our consumer businesses led the way with double-digit adjusted EBITDA growth, driven by strength across these businesses. our consumer businesses led the way with double-digit adjusted ebitda growth driven by strength across these businesses The Honey Pot continued its exceptional momentum in the first quarter, with revenue growth of nearly 25% and EBITDA growth of over 40% compared to the prior period. We continue to see the brand gain share across the feminine care category, reflecting the strength of the product portfolio, expanded distribution, and growing consumer adoption as the brand continues to extend beyond its origin into the broader period care category. The Honey Pot is now firmly established as a leading better-for-you brand in the feminine care, and we believe it has significant runway for continued growth. BOA delivered another strong quarter, with revenue growth of 6.5% and EBITDA growth of 11% compared to the prior year period. We believe the performance of the BOA Fit System is unmatched, and that technical edge continues to drive category-leading adoption across snow sports, cycling, workwear, and more. The Honey Pot continued its exceptional momentum in the first quarter, with revenue growth of nearly 25% and EBITDA growth of over 40% compared to the prior period. We continue to see the brand gain share across the feminine care category, reflecting the strength of the product portfolio, expanded distribution, and growing consumer adoption as the brand continues to extend beyond its origin into the broader period care category. the honey pot continued its exceptional momentum in the first quarter with revenue growth of nearly 25% and ebitda growth of over 40% compared to the prior period. we continue to see the brand gain share across the feminine care category reflecting the strength of the product portfolio expanded distribution and growing consumer adoption as the brand continues to extend beyond its origin into the broader period care category The Honey Pot is now firmly established as a leading better-for-you brand in the feminine care, and we believe it has significant runway for continued growth. the honey pot is now firmly established as a leading better-for-you brand in the feminine care and we believe it has significant runway for continued growth BOA delivered another strong quarter, with revenue growth of 6.5% and EBITDA growth of 11% compared to the prior year period. boa delivered another strong quarter with revenue growth of 6.5% and ebitda growth of 11% compared to the prior year period We believe the performance of the BOA Fit System is unmatched, and that technical edge continues to drive category-leading adoption across snow sports, cycling, workwear, and more. we believe the performance of the boa fit system is unmatched and that technical edge continues to drive category-leading adoption across snow sports cycling workwear and more The company's focus on differentiated solutions and operational efficiency supports their category-leading margins. With continued innovation and expansion into new performance applications, we see meaningful opportunity for growth ahead. 5.11 Tactical delivered solid margin performance and strong cash flow in the quarter, despite some modest top-line pressure. The business continues to generate durable cash flow from its core professional customer base, and we are encouraged by the steps the team is taking to expand 5.11's appeal to the broader adventure-oriented consumer. This includes a recent grand opening of its next-generation retail format in Seattle, which significantly outperformed the chain average on opening weekend. Early customer response has been strong, and we are seeing encouraging traction. While this is an early signal, it reinforces our belief that 5.11 has meaningful runway to broaden the brand's reach over time. The company's focus on differentiated solutions and operational efficiency supports their category-leading margins. the company's focus on differentiated solutions and operational efficiency supports their category-leading margins With continued innovation and expansion into new performance applications, we see meaningful opportunity for growth ahead. 5.11 Tactical delivered solid margin performance and strong cash flow in the quarter, despite some modest top-line pressure. with continued innovation and expansion into new performance applications we see meaningful opportunity for growth ahead 5.11 tactical delivered solid margin performance and strong cash flow in the quarter despite some modest top-line pressure The business continues to generate durable cash flow from its core professional customer base, and we are encouraged by the steps the team is taking to expand 5.11's appeal to the broader adventure-oriented consumer. the business continues to generate durable cash flow from its core professional customer base and we are encouraged by the steps the team is taking to expand 5.11's appeal to the broader adventure-oriented consumer This includes a recent grand opening of its next-generation retail format in Seattle, which significantly outperformed the chain average on opening weekend. this includes a recent grand opening of its next-generation retail format in seattle which significantly outperformed the chain average on opening weekend Early customer response has been strong, and we are seeing encouraging traction. early customer response has been strong and we are seeing encouraging traction While this is an early signal, it reinforces our belief that 5.11 has meaningful runway to broaden the brand's reach over time. while this is an early signal it reinforces our belief that 5.11 has meaningful runway to broaden the brand's reach over time Finally, within our consumer businesses, a new leadership team is getting up to speed at PrimaLoft. It's only month three, but we are pleased with management's progress, laying the groundwork to accelerate future growth while remaining a highly profitable, low working capital business. Much more to come in future quarters. Turning to our industrial businesses, Arnold delivered a standout quarter with adjusted EBITDA nearly doubling year-over-year, despite ongoing geopolitical dynamics around rare earth supply, including continued export restrictions out of China. While these dynamics create near-term headwinds, they also reinforce the long-term tailwinds for the business. Demand for geopolitically secure rare earth magnet supply continues to build as customers increasingly prioritize reliable, non-China sources. Arnold's Thailand facility is ramping up, adding capacity and supply chain redundancy. We believe this uniquely positions Arnold to serve aerospace, defense, and industrial customers who prioritize supply chain security and performance reliability. Finally, within our consumer businesses, a new leadership team is getting up to speed at PrimaLoft. finally within our consumer businesses a new leadership team is getting up to speed at primaloft It's only month three, but we are pleased with management's progress, laying the groundwork to accelerate future growth while remaining a highly profitable, low working capital business. it's only month three but we are pleased with management's progress laying the groundwork to accelerate future growth while remaining a highly profitable low working capital business Much more to come in future quarters. much more to come in future quarters Turning to our industrial businesses, Arnold delivered a standout quarter with adjusted EBITDA nearly doubling year-over-year, despite ongoing geopolitical dynamics around rare earth supply, including continued export restrictions out of China. turning to our industrial businesses arnold delivered a standout quarter with adjusted ebitda nearly doubling year-over-year despite ongoing geopolitical dynamics around rare earth supply including continued export restrictions out of china While these dynamics create near-term headwinds, they also reinforce the long-term tailwinds for the business. while these dynamics create near-term headwinds they also reinforce the long-term tailwinds for the business Demand for geopolitically secure rare earth magnet supply continues to build as customers increasingly prioritize reliable, non-China sources. demand for geopolitically secure rare earth magnet supply continues to build as customers increasingly prioritize reliable non-china sources Arnold's Thailand facility is ramping up, adding capacity and supply chain redundancy. arnold's thailand facility is ramping up adding capacity and supply chain redundancy We believe this uniquely positions Arnold to serve aerospace, defense, and industrial customers who prioritize supply chain security and performance reliability. we believe this uniquely positions arnold to serve aerospace defense and industrial customers who prioritize supply chain security and performance reliability Altor remains a work in progress. The business faced a challenging first quarter, reflecting competitive pressure in the cold chain market and continued consumer headwinds in the appliance market. The team is focused on execution, optimizing the combined platform following the Lifoam acquisition and driving commercial progress. We remain confident in Altor's long-term positioning, even as near-term results continue to reflect current market conditions. Finally, let me turn to Rimports, which is the business we retained following the sale of the Sterno food service business. Rimports is a home fragrance platform, supplying scented wax warmers, and essential oils under a range of in-house and private label brands to many of the nation's largest retailers. We want to be clear about what to expect. The balance of 2026 will be a transition period. Altor remains a work in progress. altor remains a work in progress The business faced a challenging first quarter, reflecting competitive pressure in the cold chain market and continued consumer headwinds in the appliance market. the business faced a challenging first quarter reflecting competitive pressure in the cold chain market and continued consumer headwinds in the appliance market The team is focused on execution, optimizing the combined platform following the Lifoam acquisition and driving commercial progress. the team is focused on execution optimizing the combined platform following the lifoam acquisition and driving commercial progress We remain confident in Altor's long-term positioning, even as near-term results continue to reflect current market conditions. we remain confident in altor's long-term positioning even as near-term results continue to reflect current market conditions Finally, let me turn to Rimports, which is the business we retained following the sale of the Sterno food service business. finally let me turn to rimports which is the business we retained following the sale of the sterno food service business Rimports is a home fragrance platform, supplying scented wax warmers, and essential oils under a range of in-house and private label brands to many of the nation's largest retailers. rimports is a home fragrance platform supplying scented wax warmers and essential oils under a range of in-house and private label brands to many of the nation's largest retailers We want to be clear about what to expect. we want to be clear about what to expect The balance of 2026 will be a transition period. the balance of 2026 will be a transition period Rimports will absorb some stranded costs from the separation of the food service business during the year, and we are working through an updated commercial relationship with a large customer. Both of these factors will weigh on near-term results, but are expected to improve in 2027. We have confidence in the leadership team and believe the long-term opportunity remains attractive as the team focuses on the go-forward business. Before I hand the call over to Stephen, I want to underscore that the actions this quarter are part of a disciplined, sequenced plan. Our path is clear. De-leverage. Drive continued operational performance. Further align management incentives. Over time, close the gap between our share price and intrinsic value. That is the priority we are executing against. With that, I'll turn the call over to Stephen to walk through the financial results. Rimports will absorb some stranded costs from the separation of the food service business during the year, and we are working through an updated commercial relationship with a large customer. rimports will absorb some stranded costs from the separation of the food service business during the year and we are working through an updated commercial relationship with a large customer Both of these factors will weigh on near-term results, but are expected to improve in 2027. both of these factors will weigh on near-term results but are expected to improve in 2027 We have confidence in the leadership team and believe the long-term opportunity remains attractive as the team focuses on the go-forward business. we have confidence in the leadership team and believe the long-term opportunity remains attractive as the team focuses on the go-forward business Before I hand the call over to Stephen, I want to underscore that the actions this quarter are part of a disciplined, sequenced plan. before i hand the call over to stephen i want to underscore that the actions this quarter are part of a disciplined sequenced plan Our path is clear. our path is clear De-leverage. de-leverage Drive continued operational performance. drive continued operational performance Further align management incentives. further align management incentives Over time, close the gap between our share price and intrinsic value. over time close the gap between our share price and intrinsic value That is the priority we are executing against. that is the priority we are executing against With that, I'll turn the call over to Stephen to walk through the financial results. with that i'll turn the call over to stephen to walk through the financial results

Speaker 7: Thanks, Elias. As a reminder, our prior year GAAP results include Lugano, which has since been deconsolidated following its bankruptcy filing last November. With that context, I will discuss our GAAP results first, followed by our non-GAAP results that exclude Lugano to better facilitate year-over-year comparisons. For the first quarter, GAAP net revenues were $427 million, down 5.9% year-over-year due to the inclusion of Lugano in the prior period. GAAP net loss from continuing operations was $30.8 million, an improvement of approximately $19 million year-over-year, primarily reflecting the absence of Lugano's losses in the current period. I will now provide our first quarter non-GAAP results, which excludes Lugano from the prior year. Thanks, Elias. thanks elias As a reminder, our prior year GAAP results include Lugano, which has since been deconsolidated following its bankruptcy filing last November. as a reminder our prior year gaap results include lugano which has since been deconsolidated following its bankruptcy filing last november With that context, I will discuss our GAAP results first, followed by our non-GAAP results that exclude Lugano to better facilitate year-over-year comparisons. with that context i will discuss our gaap results first followed by our non-gaap results that exclude lugano to better facilitate year-over-year comparisons For the first quarter, GAAP net revenues were $427 million, down 5.9% year-over-year due to the inclusion of Lugano in the prior period. for the first quarter gaap net revenues were $427 million down 5.9% year-over-year due to the inclusion of lugano in the prior period GAAP net loss from continuing operations was $30.8 million, an improvement of approximately $19 million year-over-year, primarily reflecting the absence of Lugano's losses in the current period. I will now provide our first quarter non-GAAP results, which excludes Lugano from the prior year. gaap net loss from continuing operations was $30.8 million an improvement of approximately $19 million year-over-year primarily reflecting the absence of lugano's losses in the current period. i will now provide our first quarter non-gaap results which excludes lugano from the prior year Net sales were in line with prior year as strong double-digit growth at The Honey Pot and Arnold were offset by ongoing challenges at Altor, due largely to unfavorable macro trends. Across our businesses, our consumer net sales increased 2.3%, while industrial net sales declined 3.3% compared to the prior year period. Subsidiary adjusted EBITDA was $83.9 million, an increase of 6.3%, with consumer up 11.6% and industrial down 4.5% compared to the prior year period. While Arnold nearly doubled year-over-year, industrial growth was offset by the top-line headwinds at Altor. Corporate management fees, excluding those paid by the subsidiaries, were $14.4 million for the quarter, as reflected on the income statement. Net sales were in line with prior year as strong double-digit growth at The Honey Pot and Arnold were offset by ongoing challenges at Altor, due largely to unfavorable macro trends. net sales were in line with prior year as strong double-digit growth at the honey pot and arnold were offset by ongoing challenges at altor due largely to unfavorable macro trends Across our businesses, our consumer net sales increased 2.3%, while industrial net sales declined 3.3% compared to the prior year period. across our businesses our consumer net sales increased 2.3% while industrial net sales declined 3.3% compared to the prior year period Subsidiary adjusted EBITDA was $83.9 million, an increase of 6.3%, with consumer up 11.6% and industrial down 4.5% compared to the prior year period. subsidiary adjusted ebitda was $83.9 million an increase of 6.3% with consumer up 11.6% and industrial down 4.5% compared to the prior year period While Arnold nearly doubled year-over-year, industrial growth was offset by the top-line headwinds at Altor. while arnold nearly doubled year-over-year industrial growth was offset by the top-line headwinds at altor Corporate management fees, excluding those paid by the subsidiaries, were $14.4 million for the quarter, as reflected on the income statement. corporate management fees excluding those paid by the subsidiaries were $14.4 million for the quarter as reflected on the income statement Actual cash payments for Q1 fees will be significantly less at around $7.5 million. As previously discussed, corporate cash management fees paid to the manager are expected to be between $25 million and $30 million for the full-year as our manager pays back the overpaid management fees related to Lugano restatement. Public company costs were $13 million in the quarter, which includes more than $7 million of one-time costs associated with Lugano, including the cost of ongoing litigation and investigation and corporate governance changes. While these one-time costs were significantly higher than initially anticipated, they do not include any offsets that may be realized through insurance or other proceeds as we move through 2026. It is important to note that in April, we received our first insurance reimbursement, and we expect to recover additional expenses over the balance of 2026. Actual cash payments for Q1 fees will be significantly less at around $7.5 million. actual cash payments for q1 fees will be significantly less at around $7.5 million As previously discussed, corporate cash management fees paid to the manager are expected to be between $25 million and $30 million for the full-year as our manager pays back the overpaid management fees related to Lugano restatement. as previously discussed corporate cash management fees paid to the manager are expected to be between $25 million and $30 million for the full-year as our manager pays back the overpaid management fees related to lugano restatement Public company costs were $13 million in the quarter, which includes more than $7 million of one-time costs associated with Lugano, including the cost of ongoing litigation and investigation and corporate governance changes. public company costs were $13 million in the quarter which includes more than $7 million of one-time costs associated with lugano including the cost of ongoing litigation and investigation and corporate governance changes While these one-time costs were significantly higher than initially anticipated, they do not include any offsets that may be realized through insurance or other proceeds as we move through 2026. while these one-time costs were significantly higher than initially anticipated they do not include any offsets that may be realized through insurance or other proceeds as we move through 2026 It is important to note that in April, we received our first insurance reimbursement, and we expect to recover additional expenses over the balance of 2026. it is important to note that in april we received our first insurance reimbursement and we expect to recover additional expenses over the balance of 2026 More importantly, we remain focused on managing and reducing our public company costs consistent with our efforts to de-lever and drive long-term value creation. Cash generation was a highlight of the quarter. We generated $23.9 million in operating cash flow, a meaningful improvement versus the prior year. Our capital expenditures of $5.1 million were less than half of the prior year period, reflecting disciplined capital allocation and a capital-efficient profile of our subsidiary businesses. Together, Q1's operational cash generation demonstrates the strength of our businesses and keeps us on track toward delivering significant free cash flow in 2026. We ended the quarter with $65 million in cash and cash equivalents and nearly full availability on our $100 million revolver. Our leverage ratio for debt covenant purposes at quarter end was approximately 5.3x, a strong improvement in the quarter. More importantly, we remain focused on managing and reducing our public company costs consistent with our efforts to de-lever and drive long-term value creation. more importantly we remain focused on managing and reducing our public company costs consistent with our efforts to de-lever and drive long-term value creation Cash generation was a highlight of the quarter. cash generation was a highlight of the quarter We generated $23.9 million in operating cash flow, a meaningful improvement versus the prior year. we generated $23.9 million in operating cash flow a meaningful improvement versus the prior year Our capital expenditures of $5.1 million were less than half of the prior year period, reflecting disciplined capital allocation and a capital-efficient profile of our subsidiary businesses. our capital expenditures of $5.1 million were less than half of the prior year period reflecting disciplined capital allocation and a capital-efficient profile of our subsidiary businesses Together, Q1's operational cash generation demonstrates the strength of our businesses and keeps us on track toward delivering significant free cash flow in 2026. together q1's operational cash generation demonstrates the strength of our businesses and keeps us on track toward delivering significant free cash flow in 2026 We ended the quarter with $65 million in cash and cash equivalents and nearly full availability on our $100 million revolver. we ended the quarter with $65 million in cash and cash equivalents and nearly full availability on our $100 million revolver Our leverage ratio for debt covenant purposes at quarter end was approximately 5.3 x, a strong improvement in the quarter. our leverage ratio for debt covenant purposes at quarter end was approximately 5.3 x a strong improvement in the quarter As we announced earlier this week, the sale of Sterno's food service business has now closed, and we have repaid more than $280 million of senior secured term loan debt. This reduces our total leverage to approximately 5x and brings our senior secured net leverage to below one time. Importantly, this allows us to avoid the milestone fees under our senior credit facility that would otherwise have applied beyond June 30th. Reducing leverage has been and remains our top financial priority. Our actions thus far this year put us in a meaningfully stronger position. There is more work to do, and we remain disciplined and focused on the priorities we have laid out to our shareholders. Turning briefly to Lugano, the Chapter 11 process is advancing as expected, as are our efforts to minimize our liability and maximize our ultimate recovery. As we announced earlier this week, the sale of Sterno's food service business has now closed, and we have repaid more than $280 million of senior secured term loan debt. as we announced earlier this week the sale of sterno's food service business has now closed and we have repaid more than $280 million of senior secured term loan debt This reduces our total leverage to approximately 5 x and brings our senior secured net leverage to below one time. this reduces our total leverage to approximately 5 x and brings our senior secured net leverage to below one time Importantly, this allows us to avoid the milestone fees under our senior credit facility that would otherwise have applied beyond June 30th. importantly this allows us to avoid the milestone fees under our senior credit facility that would otherwise have applied beyond june 30th Reducing leverage has been and remains our top financial priority. reducing leverage has been and remains our top financial priority Our actions thus far this year put us in a meaningfully stronger position. our actions thus far this year put us in a meaningfully stronger position There is more work to do, and we remain disciplined and focused on the priorities we have laid out to our shareholders. there is more work to do and we remain disciplined and focused on the priorities we have laid out to our shareholders Turning briefly to Lugano, the Chapter 11 process is advancing as expected, as are our efforts to minimize our liability and maximize our ultimate recovery. turning briefly to lugano the chapter 11 process is advancing as expected as are our efforts to minimize our liability and maximize our ultimate recovery We expect to have greater clarity on timing by the end of the second quarter, and we'll update investors as appropriate. Before turning to our outlook, I'd like to briefly note that while the evolving tariff environment has created significant market uncertainty, we are currently experiencing a tailwind across multiple businesses. Separately, we also expect to receive one-time tariff-related refunds during 2026, though the specific timing and magnitude are difficult to forecast at this time. We will provide more clarity as the year progresses. I'll now provide an update on our 2026 outlook. For the full-year, we expect subsidiary adjusted EBITDA of between $320 million-$365 million. We expect to have greater clarity on timing by the end of the second quarter, and we'll update investors as appropriate. we expect to have greater clarity on timing by the end of the second quarter and we'll update investors as appropriate Before turning to our outlook, I'd like to briefly note that while the evolving tariff environment has created significant market uncertainty, we are currently experiencing a tailwind across multiple businesses. before turning to our outlook i'd like to briefly note that while the evolving tariff environment has created significant market uncertainty we are currently experiencing a tailwind across multiple businesses Separately, we also expect to receive one-time tariff-related refunds during 2026, though the specific timing and magnitude are difficult to forecast at this time. separately we also expect to receive one-time tariff-related refunds during 2026 though the specific timing and magnitude are difficult to forecast at this time We will provide more clarity as the year progresses. we will provide more clarity as the year progresses I'll now provide an update on our 2026 outlook. i'll now provide an update on our 2026 outlook For the full-year, we expect subsidiary adjusted EBITDA of between $320 million-$365 million. for the full-year we expect subsidiary adjusted ebitda of between $320 million-$365 million This range, adjusted for the impact of the sale of Sterno's food service business, is at or above the expectation we set at the start of the year and reflects the continued strength of our diversified collection of businesses. For our consumer businesses, this equates to adjusted EBITDA between $225 million-$260 million. For our industrial businesses, we expect adjusted EBITDA of between $95 million and $105 million, which includes some stranded costs associated with the sale of our Sterno business. We expect these costs will decline in 2027. For modeling purposes, we continue to assume CapEx of between $30 million-$40 million for 2026, and we expect corporate cash management fees of between $25 million-$30 million. This range, adjusted for the impact of the sale of Sterno's food service business, is at or above the expectation we set at the start of the year and reflects the continued strength of our diversified collection of businesses. this range adjusted for the impact of the sale of sterno's food service business is at or above the expectation we set at the start of the year and reflects the continued strength of our diversified collection of businesses For our consumer businesses, this equates to adjusted EBITDA between $225 million-$260 million. for our consumer businesses this equates to adjusted ebitda between $225 million-$260 million For our industrial businesses, we expect adjusted EBITDA of between $95 million and $105 million, which includes some stranded costs associated with the sale of our Sterno business. for our industrial businesses we expect adjusted ebitda of between $95 million and $105 million which includes some stranded costs associated with the sale of our sterno business We expect these costs will decline in 2027. we expect these costs will decline in 2027 For modeling purposes, we continue to assume CapEx of between $30 million-$40 million for 2026, and we expect corporate cash management fees of between $25 million-$30 million. for modeling purposes we continue to assume capex of between $30 million-$40 million for 2026 and we expect corporate cash management fees of between $25 million-$30 million As has been our practice, our outlook does not include the impact of any potential acquisitions or divestitures, except as noted regarding the sale of the Sterno food service business. It also does not include any significant impact, positive or negative, to the evolving trade environment. With that, I'll hand it back to Elias for closing remarks. As has been our practice, our outlook does not include the impact of any potential acquisitions or divestitures, except as noted regarding the sale of the Sterno food service business. as has been our practice our outlook does not include the impact of any potential acquisitions or divestitures except as noted regarding the sale of the sterno food service business It also does not include any significant impact, positive or negative, to the evolving trade environment. it also does not include any significant impact positive or negative to the evolving trade environment With that, I'll hand it back to Elias for closing remarks. with that i'll hand it back to elias for closing remarks

Speaker 2: Thanks, Stephen. Let me be clear about where we stand. The first quarter of 2026 was a quarter of execution. Solid subsidiary performance, a meaningful divestiture at an attractive valuation and measurable progress on the priorities we laid out. A single quarter does not make a turnaround, and we've, by no means, reached the finish line. We will continue to pursue our stated objective to create long-term shareholder value and close the gap to intrinsic value. That means, in the near term, pursuing strategic divestitures at attractive valuations and returning capital to shareholders where appropriate. Trust is earned through consistent execution, and that is what shareholders should expect from us every quarter going forward. The sale of Sterno's food service business is an important signal of what is possible. We transacted at an attractive value on an accelerated timeline in an otherwise softer M&A environment. Thanks, Stephen. thanks stephen Let me be clear about where we stand. let me be clear about where we stand The first quarter of 2026 was a quarter of execution. the first quarter of 2026 was a quarter of execution Solid subsidiary performance, a meaningful divestiture at an attractive valuation and measurable progress on the priorities we laid out. solid subsidiary performance a meaningful divestiture at an attractive valuation and measurable progress on the priorities we laid out A single quarter does not make a turnaround, and we've, by no means, reached the finish line. a single quarter does not make a turnaround and we've by no means reached the finish line We will continue to pursue our stated objective to create long-term shareholder value and close the gap to intrinsic value. we will continue to pursue our stated objective to create long-term shareholder value and close the gap to intrinsic value That means, in the near term, pursuing strategic divestitures at attractive valuations and returning capital to shareholders where appropriate. that means in the near term pursuing strategic divestitures at attractive valuations and returning capital to shareholders where appropriate Trust is earned through consistent execution, and that is what shareholders should expect from us every quarter going forward. trust is earned through consistent execution and that is what shareholders should expect from us every quarter going forward The sale of Sterno's food service business is an important signal of what is possible. the sale of sterno's food service business is an important signal of what is possible We transacted at an attractive value on an accelerated timeline in an otherwise softer M&A environment. we transacted at an attractive value on an accelerated timeline in an otherwise softer m&a environment That outcome reflects both the quality of the business and the capability of our team to run disciplined processes and maximize value for shareholders. Beyond a proof point, it is an important first step. We believe in the CODI model. We take a permanent capital approach to acquire great businesses, partner with strong management teams, and actively manage growing category leaders over the long term. That model has generated value for shareholders for nearly two decades. We are confident in the model and committed to demonstrating its value through execution. Thank you as always for your support. Stephen and I will now take your questions. Operator, please open the lines. That outcome reflects both the quality of the business and the capability of our team to run disciplined processes and maximize value for shareholders. that outcome reflects both the quality of the business and the capability of our team to run disciplined processes and maximize value for shareholders Beyond a proof point, it is an important first step. beyond a proof point it is an important first step We believe in the CODI model. we believe in the codi model We take a permanent capital approach to acquire great businesses, partner with strong management teams, and actively manage growing category leaders over the long term. we take a permanent capital approach to acquire great businesses partner with strong management teams and actively manage growing category leaders over the long term That model has generated value for shareholders for nearly two decades. that model has generated value for shareholders for nearly two decades We are confident in the model and committed to demonstrating its value through execution. we are confident in the model and committed to demonstrating its value through execution Thank you as always for your support. thank you as always for your support Stephen and I will now take your questions. stephen and i will now take your questions Operator, please open the lines. operator please open the lines

Speaker 6: Thank you. Your first question is from Larry Solow of CJS Securities. Your line is now open. Thank you. thank you Your first question is from Larry Solow of CJS Securities. your first question is from larry solow of cjs securities Your line is now open. your line is now open

Speaker 4: Great. Thanks. Good afternoon, guys. Can you just clarify the guidance? Your net, you're down $25 million, and obviously you're up $5 million in branded, that's separate from the sale, the divestiture of Sterno. Obviously Sterno, sounds like there's some moving parts, right? For Sterno, maybe more than we would have thought the impact on the sale. You said some kind of stranded or lagging costs there. Maybe there's still another adjustment. Are you reducing, maybe Altor Solutions a little lower too or anything else in there? Great. great Thanks. thanks Good afternoon, guys. good afternoon guys Can you just clarify the guidance? can you just clarify the guidance Your net, you're down $25 million, and obviously you're up $5 million in branded, that's separate from the sale, the divestiture of Sterno. your net you're down $25 million and obviously you're up $5 million in branded that's separate from the sale the divestiture of sterno Obviously Sterno, sounds like there's some moving parts, right? obviously sterno sounds like there's some moving parts right For Sterno, maybe more than we would have thought the impact on the sale. for sterno maybe more than we would have thought the impact on the sale You said some kind of stranded or lagging costs there. you said some kind of stranded or lagging costs there Maybe there's still another adjustment. maybe there's still another adjustment Are you reducing, maybe Altor Solutions a little lower too or anything else in there? are you reducing maybe altor solutions a little lower too or anything else in there

Speaker 7: No. Thanks, Larry. No, the main thing is actually just adjusting for the industrial is just adjusting for the sale of Sterno, specifically related to the lost EBITDA, the stranded cost, and then as well as what Elias mentioned in the prepared remarks, which is we do have a couple of negotiations with some large customers in that particular business that we think will be a little bit- No. no Thanks, Larry. thanks larry No, the main thing is actually just adjusting for the industrial is just adjusting for the sale of Sterno, specifically related to the lost EBITDA, the stranded cost, and then as well as what Elias mentioned in the prepared remarks, which is we do have a couple of negotiations with some large customers in that particular business that we think will be a little bit- no the main thing is actually just adjusting for the industrial is just adjusting for the sale of sterno specifically related to the lost ebitda the stranded cost and then as well as what elias mentioned in the prepared remarks which is we do have a couple of negotiations with some large customers in that particular business that we think will be a little bit-

Speaker 4: Right. Right. right

Speaker 7: Of a headwind for the year. Of a headwind for the year. of a headwind for the year

Speaker 4: Gotcha. Gotcha. gotcha

Speaker 7: Yeah. That's it. Yeah. yeah That's it. that's it

Speaker 4: Basically the remain cost of Sterno, which is Rimports, will be somewhat lower this year. Basically the remain cost of Sterno, which is Rimports, will be somewhat lower this year. basically the remain cost of sterno which is rimports will be somewhat lower this year

Speaker 7: Correct. Correct. correct

Speaker 4: Than last year. Than last year. than last year

Speaker 7: Yes. Yes. yes

Speaker 4: And you think that- And you think that- and you think that-

Speaker 7: I wanna be clear. I wanna be clear. i wanna be clear

Speaker 4: Yeah. Go ahead. Yeah. yeah Go ahead. go ahead

Speaker 7: I want to be clear, we're selling Sterno, we're not deconsolidating it out of the business. You will have the first quarter of Sterno will be included in our full-year EBITDA. Then the next three quarters will just be Rimports. I want to be clear, we're selling Sterno, we're not deconsolidating it out of the business. i want to be clear we're selling sterno we're not deconsolidating it out of the business You will have the first quarter of Sterno will be included in our full-year EBITDA. you will have the first quarter of sterno will be included in our full-year ebitda Then the next three quarters will just be Rimports. then the next three quarters will just be rimports

Speaker 4: Right. Is there like, is there a short term, like your corporate costs are too much because you kind of carved out Sterno, but you still have Rimports or did you bulk up that infrastructure maybe where it actually impacts you? Yeah, go ahead. Right. right Is there like, is there a short term, like your corporate costs are too much because you kind of carved out Sterno, but you still have Rimports or did you bulk up that infrastructure maybe where it actually impacts you? is there like is there a short term like your corporate costs are too much because you kind of carved out sterno but you still have rimports or did you bulk up that infrastructure maybe where it actually impacts you Yeah, go ahead. yeah go ahead

Speaker 7: As we mentioned, I think in our original press release, we are retaining the management team in Rimports. The Sterno management team is staying with Rimports. That is something that we need to work through. We actually really think this is the right team to help accelerate Rimports growth, but it is a little. We do have to make some adjustments to overall cost levels as we go forward. As we mentioned, I think in our original press release, we are retaining the management team in Rimports. as we mentioned i think in our original press release we are retaining the management team in rimports The Sterno management team is staying with Rimports. the sterno management team is staying with rimports That is something that we need to work through. that is something that we need to work through We actually really think this is the right team to help accelerate Rimports growth, but it is a little. we actually really think this is the right team to help accelerate rimports growth but it is a little We do have to make some adjustments to overall cost levels as we go forward. we do have to make some adjustments to overall cost levels as we go forward

Speaker 4: Gotcha. The stranded costs, I imagine those you kind of have pretty good visibility will be not repeat next year. The customer negotiations with the one, I think I know one large customer, that we don't know the outcome yet. The stranded costs, obviously you should have pretty good confidence those won't repeat, right? I guess. Is that fair? Gotcha. gotcha The stranded costs, I imagine those you kind of have pretty good visibility will be not repeat next year. the stranded costs i imagine those you kind of have pretty good visibility will be not repeat next year The customer negotiations with the one, I think I know one large customer, that we don't know the outcome yet. the customer negotiations with the one i think i know one large customer that we don't know the outcome yet The stranded costs, obviously you should have pretty good confidence those won't repeat, right? the stranded costs obviously you should have pretty good confidence those won't repeat right I guess. i guess Is that fair? is that fair

Speaker 7: Yeah. I mean, we have to address the stranded costs. It is Stranded costs are costs that existed last year that will continue to exist in the business. We need to work them down over time as appropriate for what is now a smaller business. Yeah. yeah I mean, we have to address the stranded costs. i mean we have to address the stranded costs It is Stranded costs are costs that existed last year that will continue to exist in the business. it is stranded costs are costs that existed last year that will continue to exist in the business We need to work them down over time as appropriate for what is now a smaller business. we need to work them down over time as appropriate for what is now a smaller business

Speaker 4: Right. Okay. That's what I thought. It's a little bit you need to downsize sort of the corporate structure there. That makes sense. Just curious, so the couple quickies, in general, Elias, maybe just on the, you know, on the branded piece, it sounds like, you know, a lot of moving parts, but in general, just your consumer, you know, the confidence you have, anything really change over the last six months? Obviously, that encompasses the start of the Iran conflict or whatever you wanna call it, higher inflationary pressures back or a lot higher. Any, have you seen any impact in any of your businesses because of this or are you contemplating that in your guidance? Any thoughts there? Right. right Okay. okay That's what I thought. that's what i thought It's a little bit you need to downsize sort of the corporate structure there. it's a little bit you need to downsize sort of the corporate structure there That makes sense. that makes sense Just curious, so the couple quickies, in general, Elias, maybe just on the, you know, on the branded piece, it sounds like, you know, a lot of moving parts, but in general, just your consumer, you know, the confidence you have, anything really change over the last six months? just curious so the couple quickies in general elias maybe just on the you know on the branded piece it sounds like you know a lot of moving parts but in general just your consumer you know the confidence you have anything really change over the last six months Obviously, that encompasses the start of the Iran conflict or whatever you wanna call it, higher inflationary pressures back or a lot higher. obviously that encompasses the start of the iran conflict or whatever you wanna call it higher inflationary pressures back or a lot higher Any, have you seen any impact in any of your businesses because of this or are you contemplating that in your guidance? any have you seen any impact in any of your businesses because of this or are you contemplating that in your guidance Any thoughts there? any thoughts there

Speaker 2: Yeah, Larry, we, I would say, have seen our consumer businesses perform extremely well. First quarter was above what our expectations were. I would say coming into the second quarter, as a lot of these companies work on backlog, I would say they're, you know, set up to perform better in the second quarter than expectations as well. That's, you know, clearly in the face of the Iran war starting. I think where it gets a little bit harder to dissect is whether customers are accelerating some orders because of the war and worries about longer-term inflation and, you know, kind of oil going through, you know, kind of global oil supply. That's a little bit more to be determined. Yeah, Larry, we, I would say, have seen our consumer businesses perform extremely well. yeah larry we i would say have seen our consumer businesses perform extremely well First quarter was above what our expectations were. first quarter was above what our expectations were I would say coming into the second quarter, as a lot of these companies work on backlog, I would say they're, you know, set up to perform better in the second quarter than expectations as well. i would say coming into the second quarter as a lot of these companies work on backlog i would say they're you know set up to perform better in the second quarter than expectations as well That's, you know, clearly in the face of the Iran war starting. that's you know clearly in the face of the iran war starting I think where it gets a little bit harder to dissect is whether customers are accelerating some orders because of the war and worries about longer-term inflation and, you know, kind of oil going through, you know, kind of global oil supply. i think where it gets a little bit harder to dissect is whether customers are accelerating some orders because of the war and worries about longer-term inflation and you know kind of oil going through you know kind of global oil supply That's a little bit more to be determined. that's a little bit more to be determined I would say right now, what we can analyze the business on the consumer side looks very strong and better than anticipation. Currently, and I know this sounds odd to say, unaffected by the, you know, global macro events that we see, you know, kind of around us on a daily basis. I would say right now, what we can analyze the business on the consumer side looks very strong and better than anticipation. i would say right now what we can analyze the business on the consumer side looks very strong and better than anticipation Currently, and I know this sounds odd to say, unaffected by the, you know, global macro events that we see, you know, kind of around us on a daily basis. currently and i know this sounds odd to say unaffected by the you know global macro events that we see you know kind of around us on a daily basis

Speaker 4: Okay. BOA really had a nice quarter. Anything, you know, outstanding there? I know you sold the footwear business, I know, so maybe you reported 11% EBITDA growth, but I imagine it was even better ex that. Any extra color there? Okay. okay BOA really had a nice quarter. boa really had a nice quarter Anything, you know, outstanding there? anything you know outstanding there I know you sold the footwear business, I know, so maybe you reported 11% EBITDA growth, but I imagine it was even better ex that. i know you sold the footwear business i know so maybe you reported 11% ebitda growth but i imagine it was even better ex that Any extra color there? any extra color there

Speaker 2: You know, BOA is a great business. We, you know, say over and over how awesome this company is. Its competitive positioning, strategic outlook. It has one of the best management teams, if not the best management team that I've ever worked with. I think those are all the ingredients to propel the company, you know, forward in a consistent basis. As you know, Larry, it's got a great IP position. You know, it's just, it's so well-positioned, and I think we went through a lot of, you know, kind of turbulence. Obviously, it had huge growth during the supply chain shock, you know. You know, BOA is a great business. you know boa is a great business We, you know, say over and over how awesome this company is. we you know say over and over how awesome this company is Its competitive positioning, strategic outlook. its competitive positioning strategic outlook It has one of the best management teams, if not the best management team that I've ever worked with. it has one of the best management teams if not the best management team that i've ever worked with I think those are all the ingredients to propel the company, you know, forward in a consistent basis. i think those are all the ingredients to propel the company you know forward in a consistent basis As you know, Larry, it's got a great IP position. as you know larry it's got a great ip position You know, it's just, it's so well-positioned, and I think we went through a lot of, you know, kind of turbulence. you know it's just it's so well-positioned and i think we went through a lot of you know kind of turbulence Obviously, it had huge growth during the supply chain shock, you know. obviously it had huge growth during the supply chain shock you know Then we had, you know, some softness that came from that. Then more recently, we had a customer, you know, in Asia on our kids line that from price competitive reasons we walked away from. So there's been a little bit of noise. I think right now the business is in a much better spot based in where the industry is and kind of its inventory positioning and where we are in terms of the customer mix and durability and then all the growth, you know, that it has ahead of it. I would say where there's been some extraneous sort of, you know, kind of choppy things that have happened here, this business now we think is sort of in a smoother set of waters and should produce the kind of double-digit kinda growth rates that we saw in the first quarter on a continuing basis. Then we had, you know, some softness that came from that. then we had you know some softness that came from that Then more recently, we had a customer, you know, in Asia on our kids line that from price competitive reasons we walked away from. then more recently we had a customer you know in asia on our kids line that from price competitive reasons we walked away from So there's been a little bit of noise. so there's been a little bit of noise I think right now the business is in a much better spot based in where the industry is and kind of its inventory positioning and where we are in terms of the customer mix and durability and then all the growth, you know, that it has ahead of it. i think right now the business is in a much better spot based in where the industry is and kind of its inventory positioning and where we are in terms of the customer mix and durability and then all the growth you know that it has ahead of it I would say where there's been some extraneous sort of, you know, kind of choppy things that have happened here, this business now we think is sort of in a smoother set of waters and should produce the kind of double-digit kinda growth rates that we saw in the first quarter on a continuing basis. i would say where there's been some extraneous sort of you know kind of choppy things that have happened here this business now we think is sort of in a smoother set of waters and should produce the kind of double-digit kinda growth rates that we saw in the first quarter on a continuing basis

Speaker 4: Great. Last question, Elias. You did a nice, you know, announcement. You completed a nice divestiture, and then you said you know, look and probably do more. You know, you're pretty confident you'll complete at least one more this calendar year? Great. great Last question, Elias. last question elias You did a nice, you know, announcement. you did a nice you know announcement You completed a nice divestiture, and then you said you know, look and probably do more. you completed a nice divestiture and then you said you know look and probably do more You know, you're pretty confident you'll complete at least one more this calendar year? you know you're pretty confident you'll complete at least one more this calendar year

Speaker 2: I mean, that is our plan. The M&A markets I referred to are, you know, a bit choppy. They're weaker than, you know, where they've been in the past. You know, they ebb and flow, as you know. You know, we own really great quality assets, Larry, as I mentioned in my, you know, opening remarks, there's always the market to transact for a great company or great companies. You know, we do feel confident we'll be able to transact. Now, against that, there's still a war in Iran going on and $100 oil prices and lots of uncertainty. Private credit markets- I mean, that is our plan. i mean that is our plan The M&A markets I referred to are, you know, a bit choppy. the m&a markets i referred to are you know a bit choppy They're weaker than, you know, where they've been in the past. they're weaker than you know where they've been in the past You know, they ebb and flow, as you know. you know they ebb and flow as you know You know, we own really great quality assets, Larry, as I mentioned in my, you know, opening remarks, there's always the market to transact for a great company or great companies. you know we own really great quality assets larry as i mentioned in my you know opening remarks there's always the market to transact for a great company or great companies You know, we do feel confident we'll be able to transact. you know we do feel confident we'll be able to transact Now, against that, there's still a war in Iran going on and $100 oil prices and lots of uncertainty. now against that there's still a war in iran going on and $100 oil prices and lots of uncertainty Private credit markets- private credit markets-

Speaker 4: Sure. Sure. sure

Speaker 2: Have really tightened. I think we see that kind of in the public stock prices of a lot of these private credit providers. That is clearly a headwind for, you know, being able to transact. It's where our focus is. You know, we understand we need to get our leverage down, and that is, you know, kind of the number one, two, and three goals right now, to get back into a position where we can be allocating capital again, and, you know, as we said in our opening remark, you know, looking to close the intrinsic value discount once we get there. You know, we remain confident we'll be able to execute against that. Although, I wanna caution the M&A markets continue to remain choppy. Have really tightened. have really tightened I think we see that kind of in the public stock prices of a lot of these private credit providers. i think we see that kind of in the public stock prices of a lot of these private credit providers That is clearly a headwind for, you know, being able to transact. that is clearly a headwind for you know being able to transact It's where our focus is. it's where our focus is You know, we understand we need to get our leverage down, and that is, you know, kind of the number one, two, and three goals right now, to get back into a position where we can be allocating capital again, and, you know, as we said in our opening remark, you know, looking to close the intrinsic value discount once we get there. you know we understand we need to get our leverage down and that is you know kind of the number one two and three goals right now to get back into a position where we can be allocating capital again and you know as we said in our opening remark you know looking to close the intrinsic value discount once we get there You know, we remain confident we'll be able to execute against that. you know we remain confident we'll be able to execute against that Although, I wanna caution the M&A markets continue to remain choppy. although i wanna caution the m&a markets continue to remain choppy

Speaker 4: Great. I appreciate it. Thanks. Great. great I appreciate it. i appreciate it Thanks. thanks

Speaker 2: Thank you, Larry. Thank you, Larry. thank you larry

Speaker 6: Thank you. Our next question will come from Timothy D'Agostino from B. Riley Securities. Your line is now open. Thank you. thank you Our next question will come from Timothy D'Agostino from B. our next question will come from timothy d'agostino from b Riley Securities. riley securities Your line is now open. your line is now open

Speaker 8: Yeah, hi. Thanks for taking the questions. Regarding leverage, could you remind us again what your long-term goal is? You know, where do you want leverage to be? As well, you know, given the sale of Sterno Food Services, how does that impact kind of your timeline and your path in order getting to that leverage target? Lastly on that, you know, given where the stock is today and let's say looking into the future, getting to your leverage target, you know, when would share buybacks become part of the equation for you all? You know, at these levels, is it attractive? Understanding you still have more deleveraging to do. Thank you. Yeah, hi. yeah hi Thanks for taking the questions. thanks for taking the questions Regarding leverage, could you remind us again what your long-term goal is? regarding leverage could you remind us again what your long-term goal is You know, where do you want leverage to be? you know where do you want leverage to be As well, you know, given the sale of Sterno Food Services, how does that impact kind of your timeline and your path in order getting to that leverage target? as well you know given the sale of sterno food services how does that impact kind of your timeline and your path in order getting to that leverage target Lastly on that, you know, given where the stock is today and let's say looking into the future, getting to your leverage target, you know, when would share buybacks become part of the equation for you all? lastly on that you know given where the stock is today and let's say looking into the future getting to your leverage target you know when would share buybacks become part of the equation for you all You know, at these levels, is it attractive? you know at these levels is it attractive Understanding you still have more deleveraging to do. understanding you still have more deleveraging to do Thank you. thank you

Speaker 7: Yeah. Thanks for the question. Long term, we've always said we'd like to be around 3x-3.5x leverage. That would be like our long-term goal if things were, you know, in a more, you know, in a more normal situation. I would say our current focus is now to get under 4 times levered as a key milestone for us. Once we got under 4x, we would start to think, you know, given where the stock is trading and discount to intrinsic value, we would start thinking it would make sense to look to return capital to shareholders, potentially through a share buyback. I think, again, long term, 3.5x. I think the next milestone for us is to get below 4x, which just allows us to be a little bit more, you know, think a little bit more about return capital. Yeah. yeah Thanks for the question. thanks for the question Long term, we've always said we'd like to be around 3x- 3.5 x leverage. long term we've always said we'd like to be around 3x- 3.5 x leverage That would be like our long-term goal if things were, you know, in a more, you know, in a more normal situation. that would be like our long-term goal if things were you know in a more you know in a more normal situation I would say our current focus is now to get under 4 times levered as a key milestone for us. i would say our current focus is now to get under 4 times levered as a key milestone for us Once we got under 4 x, we would start to think, y ou know, given where the stock is trading and discount to intrinsic value, we would start thinking it would make sense to look to return capital to shareholders, potentially through a share buyback. once we got under 4 x we would start to think, y ou know given where the stock is trading and discount to intrinsic value we would start thinking it would make sense to look to return capital to shareholders potentially through a share buyback I think, again, long term, 3.5x. i think again long term 3.5x I think the next milestone for us is to get below 4x, which just allows us to be a little bit more, you know, think a little bit more about return capital. i think the next milestone for us is to get below 4x which just allows us to be a little bit more you know think a little bit more about return capital

Speaker 8: Okay, great. Thank you for that. Then with, I guess, you know, with the additional sale of a full subsidiary, you know, do you think you can get to that 4x by year-end, or do you think it's gonna take a little bit more work? Just understanding, you know, the impact of the next sale might have in your opinion. Okay, great. okay great Thank you for that. thank you for that Then with, I guess, you know, with the additional sale of a full subsidiary, you know, do you think you can get to that 4x by year-end, or do you think it's gonna take a little bit more work? then with i guess you know with the additional sale of a full subsidiary you know do you think you can get to that 4x by year-end or do you think it's gonna take a little bit more work Just understanding, you know, the impact of the next sale might have in your opinion. just understanding you know the impact of the next sale might have in your opinion

Speaker 7: The way I would think about it, if you think about it organically, I think the rest of the year, you kind of get, you have another step down, probably to around four and a half somewhere, a little bit higher than that, but somewhere around there. Then you start talking about the kind of inorganic activities, which would include recovery from Lugano, which would be straight deleveraging. Then you would, and then you would have a sale of a subsidiary. That obviously just depends on which subsidiary. There's obviously a little bit of a circular reference there where you get rid of EBITDA, but you know, then you get how much, you know, you get the multiple on it. The way I would think about it, if you think about it organically, I think the rest of the year, you kind of get, you have another step down, probably to around four and a half somewhere, a little bit higher than that, but somewhere around there. the way i would think about it if you think about it organically i think the rest of the year you kind of get you have another step down probably to around four and a half somewhere a little bit higher than that but somewhere around there Then you start talking about the kind of inorganic activities, which would include recovery from Lugano, which would be straight deleveraging. then you start talking about the kind of inorganic activities which would include recovery from lugano which would be straight deleveraging Then you would, and then you would have a sale of a subsidiary. then you would and then you would have a sale of a subsidiary That obviously just depends on which subsidiary. that obviously just depends on which subsidiary There's obviously a little bit of a circular reference there where you get rid of EBITDA, but you know, then you get how much, you know, you get the multiple on it. there's obviously a little bit of a circular reference there where you get rid of ebitda but you know then you get how much you know you get the multiple on it We think with the sale of another company and the organic work and the work from Lugano recoveries, I think we would essentially be below 4x. It is dependent on the specific subsidiary and the multiple that we get for it. We think with the sale of another company and the organic work and the work from Lugano recoveries, I think we would essentially be below 4x . we think with the sale of another company and the organic work and the work from lugano recoveries i think we would essentially be below 4x It is dependent on the specific subsidiary and the multiple that we get for it. it is dependent on the specific subsidiary and the multiple that we get for it

Speaker 8: Okay, great. That's super helpful color. If I could just sneak a final quick one in there. I may have missed it earlier, I apologize. On SG&A, lower this quarter and, you know, on my model, a lower percentage of revenue. I guess, is there anything to flag there on why SG&A was lower in the quarter? Again, might have missed it, apologies if I did. Okay, great. okay great That's super helpful color. that's super helpful color If I could just sneak a final quick one in there. if i could just sneak a final quick one in there I may have missed it earlier, I apologize. i may have missed it earlier i apologize On SG&A, lower this quarter and, you know, on my model, a lower percentage of revenue. on sg&a lower this quarter and you know on my model a lower percentage of revenue I guess, is there anything to flag there on why SG&A was lower in the quarter? i guess is there anything to flag there on why sg&a was lower in the quarter Again, might have missed it, apologies if I did. again might have missed it apologies if i did

Speaker 7: You mean collectively across the business, or are you talking about corporate costs are higher, right? As we talked about in the prepared remarks. In terms of the overall business, if you're looking at collectively the SG&A on the GAAP accounts line, I think it's nothing specific to call out. It's, you know, nothing, just normal, you know, prudent management within the teams. As I think we talked about at the last call, 5.11 has made some significant strides in using AI to reduce overhead costs in all of our businesses. As, you know, prudent managers do, they look to reduce SG&A costs, especially in a time when there's a little bit more macro uncertainty. You mean collectively across the business, or are you talking about corporate costs are higher, right? you mean collectively across the business or are you talking about corporate costs are higher right As we talked about in the prepared remarks. as we talked about in the prepared remarks In terms of the overall business, if you're looking at collectively the SG&A on the GAAP accounts line, I think it's nothing specific to call out. in terms of the overall business if you're looking at collectively the sg&a on the gaap accounts line i think it's nothing specific to call out It's, you know, nothing, just normal, you know, prudent management within the teams. it's you know nothing just normal you know prudent management within the teams As I think we talked about at the last call, 5.11 has made some significant strides in using AI to reduce overhead costs in all of our businesses. as i think we talked about at the last call 5.11 has made some significant strides in using ai to reduce overhead costs in all of our businesses As, you know, prudent managers do, they look to reduce SG&A costs, especially in a time when there's a little bit more macro uncertainty. as you know prudent managers do they look to reduce sg&a costs especially in a time when there's a little bit more macro uncertainty

Speaker 8: Okay, great. Thank you for taking the questions today. Okay, great. okay great Thank you for taking the questions today. thank you for taking the questions today

Speaker 2: Thank you, Tim. Thank you, Tim. thank you tim

Speaker 6: Thank you. Our next question will come from Matt Koranda from ROTH Capital. Your line is now open. Thank you. thank you Our next question will come from Matt Koranda from ROTH Capital. our next question will come from matt koranda from roth capital Your line is now open. your line is now open

Speaker 5: Hey, guys. I guess one fundamental one on segment and then maybe a couple of housekeeping things. On Honey Pot, maybe can you just unpack a little bit more about what's driving the really substantial growth there? I guess notice north of 30% even on margins in that segment. How sustainable do you view that that level as, and how should we be thinking about sort of a normalized level going forward? Hey, guys. hey guys I guess one fundamental one on segment and then maybe a couple of housekeeping things. i guess one fundamental one on segment and then maybe a couple of housekeeping things On Honey Pot, maybe can you just unpack a little bit more about what's driving the really substantial growth there? on honey pot maybe can you just unpack a little bit more about what's driving the really substantial growth there I guess notice north of 30% even on margins in that segment. i guess notice north of 30% even on margins in that segment How sustainable do you view that that level as, and how should we be thinking about sort of a normalized level going forward? how sustainable do you view that that level as and how should we be thinking about sort of a normalized level going forward

Speaker 2: Yeah, Matt, what's driving the growth is market share gains in the category. If you recall, when we acquired the company, it was principally in the hygiene side, the washes and wipes side of the business. That is a very small percentage of the overall addressable market. Only about 5% of the potential population of candidates use washes and wipes as instead of regular soap. The big opportunity with this company was, you know, one, to increase that percentage, which we've been doing and, secondly, to extend the brand into other adjacent categories. We've had really good success extending into the period care market. Yeah, Matt, what's driving the growth is market share gains in the category. yeah matt what's driving the growth is market share gains in the category If you recall, when we acquired the company, it was principally in the hygiene side, the washes and wipes side of the business. if you recall when we acquired the company it was principally in the hygiene side the washes and wipes side of the business That is a very small percentage of the overall addressable market. that is a very small percentage of the overall addressable market Only about 5% of the potential population of candidates use washes and wipes as instead of regular soap. only about 5% of the potential population of candidates use washes and wipes as instead of regular soap The big opportunity with this company was, you know, one, to increase that percentage, which we've been doing and, secondly, to extend the brand into other adjacent categories. the big opportunity with this company was you know one to increase that percentage which we've been doing and secondly to extend the brand into other adjacent categories We've had really good success extending into the period care market. we've had really good success extending into the period care market That is the, you know, a market that is kinda 20 times bigger than the original market that we started out with, and our brand has shown the elasticity to be able to move into that. Remember, we stand for better for you, which is something that resonates, especially with the younger consumer, and our goal is to win that younger consumer as they're coming into the category. The strategy is working extremely well. I would say growth in period care can continue to drive, you know, really dramatic growth because we are relatively small in an enormous market right now with a differentiated proposition to the customer. In terms of margin, you know, the company is in a category where it can generate higher margins. I mean, these are better for you products. That is the, you know, a market that is kinda 20 times bigger than the original market that we started out with, and our brand has shown the elasticity to be able to move into that. that is the you know a market that is kinda 20 times bigger than the original market that we started out with and our brand has shown the elasticity to be able to move into that Remember, we stand for better for you, which is something that resonates, especially with the younger consumer, and our goal is to win that younger consumer as they're coming into the category. remember we stand for better for you which is something that resonates especially with the younger consumer and our goal is to win that younger consumer as they're coming into the category The strategy is working extremely well. the strategy is working extremely well I would say growth in period care can continue to drive, you know, really dramatic growth because we are relatively small in an enormous market right now with a differentiated proposition to the customer. i would say growth in period care can continue to drive you know really dramatic growth because we are relatively small in an enormous market right now with a differentiated proposition to the customer In terms of margin, you know, the company is in a category where it can generate higher margins. in terms of margin you know the company is in a category where it can generate higher margins I mean, these are better for you products. i mean these are better for you products The positioning, you know, and brand association is all around better for you. As a result, consumers are willing to pay up for that. Now, I will say, you know, the company also has some benefits, and we've had Stephen mention from tariff rulings here. You know, there were huge tariff costs that were incurred as part of Liberation Day last year. Now with the IEPA ruling, some of those costs have significantly come down. That is aiding margin without question. I think if your view is those tariffs creep back in some other way. The positioning, you know, and brand association is all around better for you. the positioning you know and brand association is all around better for you As a result, consumers are willing to pay up for that. as a result consumers are willing to pay up for that Now, I will say, you know, the company also has some benefits, and we've had Stephen mention from tariff rulings here. now i will say you know the company also has some benefits and we've had stephen mention from tariff rulings here You know, there were huge tariff costs that were incurred as part of Liberation Day last year. you know there were huge tariff costs that were incurred as part of liberation day last year Now with the IEPA ruling, some of those costs have significantly come down. now with the iepa ruling some of those costs have significantly come down That is aiding margin without question. that is aiding margin without question I think if your view is those tariffs creep back in some other way. i think if your view is those tariffs creep back in some other way There'll be some give back of margin, naturally. I think if your view is tariffs are gonna be sort of where they are right now at this temporary level, then you should view those margins as being stable. There's nothing from a pricing standpoint that we look at that says we aren't able to maintain these margins. I think if you see the growth rate of, you know, mid-20s top line growth, you know, it's indicative of a very healthy brand. That price is not the, you know, reason that people are not buying. We believe we can hold that. There'll be some give back of margin, naturally. there'll be some give back of margin naturally I think if your view is tariffs are gonna be sort of where they are right now at this temporary level, then you should view those margins as being stable. i think if your view is tariffs are gonna be sort of where they are right now at this temporary level then you should view those margins as being stable There's nothing from a pricing standpoint that we look at that says we aren't able to maintain these margins. there's nothing from a pricing standpoint that we look at that says we aren't able to maintain these margins I think if you see the growth rate of, you know, mid-20s top line growth, you know, it's indicative of a very healthy brand. i think if you see the growth rate of you know mid-20s top line growth you know it's indicative of a very healthy brand That price is not the, you know, reason that people are not buying. that price is not the you know reason that people are not buying We believe we can hold that. we believe we can hold that

Speaker 5: Okay. Appreciate that, Elias. I guess maybe this is a broader question for all the segments. On tariff recoveries, I just wanna make sure. There were none within the first quarter that benefited margins. Just clarify that for us. Also, as you get recoveries throughout the year, how will those flow through the financial statements, just so we're clear on sort of how it shows up? Okay. okay Appreciate that, Elias. appreciate that elias I guess maybe this is a broader question for all the segments. i guess maybe this is a broader question for all the segments On tariff recoveries, I just wanna make sure. on tariff recoveries i just wanna make sure There were none within the first quarter that benefited margins. there were none within the first quarter that benefited margins Just clarify that for us. just clarify that for us Also, as you get recoveries throughout the year, how will those flow through the financial statements, just so we're clear on sort of how it shows up? also as you get recoveries throughout the year how will those flow through the financial statements just so we're clear on sort of how it shows up

Speaker 7: There was no one-time like recovery of last year's tariffs in our Q1. As Elias mentioned, we did have some benefits of having lower tariffs than we had maybe at Q4 of last year, if that makes sense. To the extent that when we do get one-time historical refunds on tariffs, that would just be a positive in the P&L, and we will be sure to call that out for everyone for modeling purposes. Any margin that you see right now is not related to one-time tariff benefits. It's more related to the current tariff environment that we're in today. There was no one-time like recovery of last year's tariffs in our Q1. there was no one-time like recovery of last year's tariffs in our q1 As Elias mentioned, we did have some benefits of having lower tariffs than we had maybe at Q4 of last year, if that makes sense. as elias mentioned we did have some benefits of having lower tariffs than we had maybe at q4 of last year if that makes sense To the extent that when we do get one-time historical refunds on tariffs, that would just be a positive in the P&L, and we will be sure to call that out for everyone for modeling purposes. to the extent that when we do get one-time historical refunds on tariffs that would just be a positive in the p&l and we will be sure to call that out for everyone for modeling purposes Any margin that you see right now is not related to one-time tariff benefits. any margin that you see right now is not related to one-time tariff benefits It's more related to the current tariff environment that we're in today. it's more related to the current tariff environment that we're in today

Speaker 5: Okay. Got it. Maybe just one more, if I could. You mentioned kind of a revisiting or a review of the MSA. Are you willing to share any preliminary thoughts on that front in terms of what some of the changes could be or the changes you're contemplating, maybe based around either, I guess, the asset-based management fee or allocation interest and how those are calculated? Okay. okay Got it. got it Maybe just one more, if I could. maybe just one more if i could You mentioned kind of a revisiting or a review of the MSA. you mentioned kind of a revisiting or a review of the msa Are you willing to share any preliminary thoughts on that front in terms of what some of the changes could be or the changes you're contemplating, maybe based around either, I guess, the asset-based management fee or allocation interest and how those are calculated? are you willing to share any preliminary thoughts on that front in terms of what some of the changes could be or the changes you're contemplating maybe based around either i guess the asset-based management fee or allocation interest and how those are calculated

Speaker 2: We are not in a position yet to start to discuss that. What we wanted to convey to the market is that there are discussions that are ongoing now between the manager and the compensation committee to the Board of Directors. We anticipate MSA changes to come in the, you know, next couple few months. We just were really conveying that. It would be premature, Matt, at this point to start talking about the flavor of what those changes will look like. We are not in a position yet to start to discuss that. we are not in a position yet to start to discuss that What we wanted to convey to the market is that there are discussions that are ongoing now between the manager and the compensation committee to the Board of Directors. what we wanted to convey to the market is that there are discussions that are ongoing now between the manager and the compensation committee to the board of directors We anticipate MSA changes to come in the, you know, next couple few months. we anticipate msa changes to come in the you know next couple few months We just were really conveying that. we just were really conveying that It would be premature, Matt, at this point to start talking about the flavor of what those changes will look like. it would be premature matt at this point to start talking about the flavor of what those changes will look like

Speaker 5: Okay. Fair enough. Yeah, I'll leave it there. Thank you. Okay. okay Fair enough. fair enough Yeah, I'll leave it there. yeah i'll leave it there Thank you. thank you

Speaker 2: Thank you. Thank you. thank you

Speaker 6: Thank you. We do have time for a few additional questions. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. At this time, we have our next question is from Haley Scheff of Raymond James. Your line is now open. Thank you. thank you We do have time for a few additional questions. we do have time for a few additional questions As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. as a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced At this time, we have our next question is from Haley Scheff of Raymond James. at this time we have our next question is from haley scheff of raymond james Your line is now open. your line is now open

Speaker 3: Good afternoon. Thanks for the question, and congrats on the sale. Now that you've completed this and kind of gotten your senior leverage down below 1x, is there any urgency with other sale processes, especially with a muted M&A market? Good afternoon. good afternoon Thanks for the question, and congrats on the sale. thanks for the question and congrats on the sale Now that you've completed this and kind of gotten your senior leverage down below 1x, is there any urgency with other sale processes, especially with a muted M&A market? now that you've completed this and kind of gotten your senior leverage down below 1x is there any urgency with other sale processes especially with a muted m&a market

Speaker 2: Yeah. I would say, Haley, there's urgency because leverage at 5x is too high. There's urgency because our shares trading at these prices, in our opinion, don't reflect intrinsic value. The urgency really becomes getting our leverage down and getting back into a position where we have capital allocation availability. You know, there was a direct question earlier, and we said, you know, it would include potential share buybacks as part of that capital allocation. I think, you know, that creates urgency now. It is a fair question, and we have to juxtapose, you know, kind of that urgency against the conditions that exist in the M&A markets, and they are somewhat muted. Yeah. yeah I would say, Haley, there's urgency because leverage at 5 x is too high. i would say haley there's urgency because leverage at 5 x is too high There's urgency because our shares trading at these prices, in our opinion, don't reflect intrinsic value. there's urgency because our shares trading at these prices in our opinion don't reflect intrinsic value The urgency really becomes getting our leverage down and getting back into a position where we have capital allocation availability. the urgency really becomes getting our leverage down and getting back into a position where we have capital allocation availability You know, there was a direct question earlier, and we said, you know, it would include potential share buybacks as part of that capital allocation. you know there was a direct question earlier and we said you know it would include potential share buybacks as part of that capital allocation I think, you know, that creates urgency now. i think you know that creates urgency now It is a fair question, and we have to juxtapose, you know, kind of that urgency against the conditions that exist in the M&A markets, and they are somewhat muted. it is a fair question and we have to juxtapose you know kind of that urgency against the conditions that exist in the m&a markets and they are somewhat muted You know, we transacted in an equally difficult M&A market on Sterno, and I think there's the ability to do that, you know, with another asset here over the course of the year. We're, you know, taking it with a sense of urgency. I do wanna be clear, though, to the extent the markets would significantly undervalue an asset in an M&A market, by doing the Sterno deal, it's taken the pressure off to do something that would be a necessity. We will transact to the extent it can create additional shareholder value. If the market conditions were so weak that it didn't create additional shareholder value, we have bought time to be able to, you know, kind of have other strategic alternatives we could consider. That would be not our central case. You know, we transacted in an equally difficult M&A market on Sterno, and I think there's the ability to do that, you know, with another asset here over the course of the year. you know we transacted in an equally difficult m&a market on sterno and i think there's the ability to do that you know with another asset here over the course of the year We're, you know, taking it with a sense of urgency. we're you know taking it with a sense of urgency I do wanna be clear, though, to the extent the markets would significantly undervalue an asset in an M&A market, by doing the Sterno deal, it's taken the pressure off to do something that would be a necessity. i do wanna be clear though to the extent the markets would significantly undervalue an asset in an m&a market by doing the sterno deal it's taken the pressure off to do something that would be a necessity We will transact to the extent it can create additional shareholder value. we will transact to the extent it can create additional shareholder value If the market conditions were so weak that it didn't create additional shareholder value, we have bought time to be able to, you know, kind of have other strategic alternatives we could consider. if the market conditions were so weak that it didn't create additional shareholder value we have bought time to be able to you know kind of have other strategic alternatives we could consider That would be not our central case. that would be not our central case Our central case is the markets, you know, although they're not extremely strong, they're also not extremely weak. They kinda are a bit muted. We believe the appropriate thing is continued deleveraging through divestitures. Our central case is the markets, you know, although they're not extremely strong, they're also not extremely weak. our central case is the markets you know although they're not extremely strong they're also not extremely weak They kinda are a bit muted. they kinda are a bit muted We believe the appropriate thing is continued deleveraging through divestitures. we believe the appropriate thing is continued deleveraging through divestitures

Speaker 3: Got it. Thanks for the detail. Then if I can squeeze another quick one in here. On the tariffs, I know you mentioned that there's not much clarity right now on the timing or the magnitude of tariff refunds. What does the process look like for that, and any clarity on whether there would be an inflection point at which you would have a better idea of the magnitude or the timing? Got it. got it Thanks for the detail. thanks for the detail Then if I can squeeze another quick one in here. then if i can squeeze another quick one in here On the tariffs, I know you mentioned that there's not much clarity right now on the timing or the magnitude of tariff refunds. on the tariffs i know you mentioned that there's not much clarity right now on the timing or the magnitude of tariff refunds What does the process look like for that, and any clarity on whether there would be an inflection point at which you would have a better idea of the magnitude or the timing? what does the process look like for that and any clarity on whether there would be an inflection point at which you would have a better idea of the magnitude or the timing

Speaker 7: I mean, it was just a couple of weeks ago or whatever, where the government set up the website to actually start, you know, start the process. Each of our companies is going through the process. We really just do not have clarity. We will be sure as soon as it happens, we will provide clarity. Again, we will call it when the future earnings reports when we have it, we will call it out as a one-time benefit. At this point, we do not. It's just really hard to predict, and we expect, you know, I think we'd expect that it'll be a little bit choppy. We'll get some back. We'll probably have to fight some. Each company will be a little bit different. I mean, it was just a couple of weeks ago or whatever, where the government set up the website to actually start, you know, start the process. i mean it was just a couple of weeks ago or whatever where the government set up the website to actually start you know start the process Each of our companies is going through the process. each of our companies is going through the process We really just do not have clarity. we really just do not have clarity We will be sure as soon as it happens, we will provide clarity. we will be sure as soon as it happens we will provide clarity Again, we will call it when the future earnings reports when we have it, we will call it out as a one-time benefit. again we will call it when the future earnings reports when we have it we will call it out as a one-time benefit At this point, we do not. at this point we do not It's just really hard to predict, and we expect, you know, I think we'd expect that it'll be a little bit choppy. it's just really hard to predict and we expect you know i think we'd expect that it'll be a little bit choppy We'll get some back. we'll get some back We'll probably have to fight some. we'll probably have to fight some Each company will be a little bit different. each company will be a little bit different

Speaker 3: Makes sense. Thank you so much. Makes sense. makes sense Thank you so much. thank you so much

Speaker 7: Thank you. Thank you. thank you

Speaker 2: Thank you. Thank you. thank you

Speaker 6: Thank you. At this time, I'm showing no further questions. I would like to turn it back to Elias Sabo for closing remarks. Thank you. thank you At this time, I'm showing no further questions. at this time i'm showing no further questions I would like to turn it back to Elias Sabo for closing remarks. i would like to turn it back to elias sabo for closing remarks

Speaker 2: Thank you everyone for your time today. We look forward to seeing you and talking to you on our next conference call. Thank you everyone for your time today. thank you everyone for your time today We look forward to seeing you and talking to you on our next conference call. we look forward to seeing you and talking to you on our next conference call

Speaker 6: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thank you for your participation in today's conference. thank you for your participation in today's conference This does conclude the program. this does conclude the program You may now disconnect. you may now disconnect