BOA, Primaloft, parent Compass Diversified Inc sees revenue growth in the double-digits in Q2

Compass Diversified (NYSE: CODI) closed out the second quarter with a familiar split-screen result: its stable of active-lifestyle brands — BOA, PrimaLoft, 5.11 and Velocity Outdoor — kept firing on the profitability front even as the company's industrial businesses held back overall sales growth.

The holding company reported that three of its best-known consumer names turned in standout quarters. BOA, PrimaLoft and The Honey Pot each grew sales more than 25 percent year-over-year, while Arnold Magnetics — one of CODI's industrial subsidiaries — saw its adjusted earnings jump nearly 50 percent. Even 5.11, which posted a softer top line, managed to expand its margins.

"Our performance was broad-based, with Adjusted EBITDA growth across our Branded Consumer businesses and at Arnold," said Zach Sawtelle, Compass Diversified's chief operating officer, on the company's earnings call. He noted that BOA, PrimaLoft and The Honey Pot each posted year-over-year growth topping 25 percent, and called Arnold's near-50-percent EBITDA gain a standout.

Profitability Outpaces Sales

On a comparable basis — excluding the deconsolidated Lugano Diamonds business and the divested Sterno Food Service unit from both periods — net sales came in at roughly $410.6 million, essentially flat versus the second quarter of 2025. But profitability told a different story: Subsidiary Adjusted EBITDA climbed 12.6 percent to $91.5 million, reflecting the stronger margin performance across the consumer portfolio.

The bottom line looked even better on a GAAP basis, though largely because of one-time items. CODI reported net income from continuing operations of $81.9 million, a sharp reversal from an $80.8 million loss in the same period a year ago. Net income attributable to Holdings was $81.1 million, or $0.86 per share, compared with a $51.2 million loss in the second quarter of 2025. Those figures were boosted by a $182.3 million gain on the sale of Sterno's Food Service Business and a $58.0 million reduction in the fair value of a receivable tied to the collapsed Lugano subsidiary, which filed for bankruptcy last year following an accounting scandal.

Industrial Drag Persists

While the active-lifestyle brands carried the quarter, CODI's industrial businesses continued to act as a brake on overall growth — a pattern that has now stretched across multiple quarters in 2026. Altor Solutions, the company's packaging business, has faced ongoing softness tied to cold-chain competition and weaker appliance demand, a trend management flagged as early as the first quarter. That weakness offset the strength coming from Arnold's magnet business, which has benefited from new production capacity in Thailand and rising demand for non-China rare-earth magnet supply chains.

Velocity Outdoor, the smallest of CODI's active-lifestyle names and home to Ravin crossbows, CenterPoint archery products and the King's Camo apparel line, has been a wildcard for the company since it sold off its Crosman airgun business to Daisy Manufacturing in 2024 — a divestiture that continues to depress its year-over-year sales comparisons even as its remaining product lines have shown signs of stabilizing.

Balance Sheet Cleanup

Much of the quarter's news centered on debt reduction. CODI used more than $280 million in proceeds from the May sale of Sterno's Food Service Business — sold for an enterprise value of $292.5 million — to pay down debt, cutting total borrowings to $1.59 billion from $1.89 billion at the end of 2025. The company's leverage ratio fell to roughly 4.8 times, down from 5.3 times at the end of the first quarter, while senior secured net leverage dropped to 0.66 times. CODI ended the quarter with about $87.4 million in cash and nearly $97 million in revolver availability, and it subsequently amended its senior credit facility to push term-loan and revolver maturities out to January 2028.

The company also disclosed a leadership transition: CEO Elias Sabo will retire at the end of 2026, with Sawtelle set to succeed him. Separately, CODI amended its Management Services Agreement, lowering the fees paid to its external manager and tying more of that compensation to shareholder returns and operating performance.

Outlook

CODI held its full-year 2026 guidance steady, projecting Subsidiary Adjusted EBITDA of $320 million to $365 million, with expectations tilted toward stronger results from the Branded Consumer businesses offsetting a softer outlook for the Industrial group. Management has said its near-term priorities remain straightforward: grow profitably, pursue divestitures at attractive valuations, keep reducing debt and, eventually, return more capital to shareholders — an agenda the company says is aimed at closing what it views as a persistent gap between CODI's share price and the intrinsic value of its subsidiaries.