Q3 FY2026
Filed Nov 4, 2026Compass Diversified Reports Third Quarter 2026 Financial Results
Continuing-business non-GAAP revenue and Subsidiary Adjusted EBITDA increased, with strong Branded Consumer performance, while reported GAAP net sales declined and Industrial results weakened.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 net salesGAAP | $422.9M | – | down 10.5% |
| Q3 2026 net sales excluding Lugano and the divested Sterno Food Service Businessnon-GAAP | $422.9M | – | up 0.8% |
| Q3 2026 cost of salesGAAP | 224.4M | – | – |
| Q3 2026 gross profitGAAP | 198.5M | – | – |
| Q3 2026 selling, general and administrative expenseGAAP | 130.4M | – | – |
| Q3 2026 management feesGAAP | 13.65M | – | – |
| Q3 2026 amortization expenseGAAP | 22.65M | – | – |
| Q3 2026 operating income (loss)GAAP | 31.84M | – | – |
| Q3 2026 interest expense, netGAAP | −21.77M | – | – |
| Q3 2026 income (loss) from continuing operationsGAAP | 23.19M | – | – |
| Q3 2026 net income (loss)GAAP | 23.63M | – | – |
| Q3 2026 net income (loss) attributable to HoldingsGAAP | $21.54M | – | – |
| Q3 2026 basic income (loss) per common share attributable to Holdings from continuing operationsGAAP | $ 0.05 | – | – |
| Q3 2026 basic income (loss) per common share attributable to HoldingsGAAP | $ 0.06 | – | – |
| Q3 2026 Subsidiary Adjusted EBITDA excluding Lugano and the divested Sterno Food Service Businessnon-GAAP | $89.67M | – | up 12.9% |
| Q3 2026 total Subsidiary Adjusted EBITDAnon-GAAP | 89.67M | – | – |
| Q3 2026 total Adjusted EBITDAnon-GAAP | $67.74M | – | – |
| Q3 2026 net cash provided by operating activitiesGAAP | $51.55M | – | – |
| Q3 2026 purchases of property and equipmentother | −$6.63M | – | – |
| Nine months ended September 30, 2026 net salesGAAP | $1.27B | – | – |
| Nine months ended September 30, 2026 income (loss) from continuing operationsGAAP | 74.24M | – | – |
| Nine months ended September 30, 2026 net income (loss) attributable to HoldingsGAAP | $71.87M | – | – |
| Nine months ended September 30, 2026 basic income (loss) per common share attributable to HoldingsGAAP | $ 0.45 | – | – |
| Nine months ended September 30, 2026 total Adjusted EBITDAnon-GAAP | $189.8M | – | – |
| Nine months ended September 30, 2026 net cash provided by (used in) operating activitiesGAAP | $105.2M | – | – |
| Nine months ended September 30, 2026 purchases of property and equipmentother | −$17.97M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Branded ConsumerAdjusted EBITDA increased 27.5% year-over-year, led by The Honey Pot, BOA and PrimaLoft. | $275.6M | – | up 4.3% |
| IndustrialAdjusted EBITDA decreased 19.6% year-over-year. | $147.3M | – | down 5.2% |
| 5.11Not separately stated. | $133.9M | – | – |
| BOAAdjusted EBITDA grew 22% year-over-year. | $52.97M | – | – |
| PrimaLoftAdjusted EBITDA grew 28% year-over-year. | $16.31M | – | – |
| The Honey PotAdjusted EBITDA more than doubled year-over-year. | $42.77M | – | – |
| Velocity OutdoorNot separately stated. | $29.72M | – | – |
| Altor SolutionsNot separately stated. | $64.63M | – | – |
| Arnold MagneticsAdjusted EBITDA more than doubled year-over-year. | $47.65M | – | – |
| RimportsCertain shared management and other indirect costs remained with Rimports following the Food Service Business sale. | $35.01M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Fiscal 2026 outlook
- NoteSubsidiary Adjusted EBITDA: $330 million to $355 million
- NoteBranded Consumer Subsidiary Adjusted EBITDA: $250.0 million to $270.0 million
- NoteIndustrial Subsidiary Adjusted EBITDA: $80.0 million to $85.0 million
- NoteThe outlook includes approximately $9 million of Adjusted EBITDA generated by the Sterno Food Service Business through its May 1, 2026 sale date.
Capital returns
- Applied nearly $30 million in proceeds from the Lugano bankruptcy distribution to senior secured term loan debt.
- Distributions paid - preferred shares: $ (9,714) (in thousands) for the three months ended September 30, 2026, compared with $ (9,714) (in thousands) in the prior-year period.
- Distributions paid - common shares: $ — (in thousands) for the three months ended September 30, 2026, compared with $ — (in thousands) in the prior-year period.
What drove it
- Q3 continuing-business net sales excluding Lugano and the divested Sterno Food Service Business increased 0.8% to $422.9 million.
- Branded Consumer revenue excluding Lugano was $275.6 million, up 4.3%, and Branded Consumer Subsidiary Adjusted EBITDA was $69.8 million, up 27.5%.
- The Honey Pot and Arnold each more than doubled Adjusted EBITDA, while BOA and PrimaLoft grew 22% and 28%, respectively.
- Q3 operating income was 31,845 (in thousands), compared with an operating loss of (11,067) (in thousands) in the prior-year period.
- Q3 interest expense, net was (21,769) (in thousands), compared with (66,721) (in thousands) in the prior-year period.
Concerns
- Reported Q3 GAAP net sales declined 10.5% to $422.9 million; the company states year-over-year GAAP comparisons reflect the inclusion of Lugano and Sterno's Food Service Business in the 2025 periods.
- Industrial revenue excluding the divested Sterno Food Service Business was $147.3 million, down 5.2%, and Industrial Subsidiary Adjusted EBITDA was $19.8 million, down 19.6%.
- Fiscal 2026 outlook reflects lower expectations for Industrial businesses relative to prior guidance.
- The fiscal 2026 outlook includes approximately $9 million of Adjusted EBITDA generated by the Sterno Food Service Business through its May 1, 2026 sale date, which will not recur following the sale.
- Total debt was $1,571.7 million and the debt-covenant leverage ratio was approximately 4.5x as of September 30, 2026.
What to watch
- Execution against fiscal 2026 Subsidiary Adjusted EBITDA guidance of $330 million to $355 million.
- Whether higher expectations for Branded Consumer businesses offset lower expectations for Industrial businesses.
- Industrial revenue and Subsidiary Adjusted EBITDA trends following the Q3 declines.
- Further debt reduction using cash flow and any additional Lugano liquidation settlement recoveries.
- Potential divestitures and the company's evaluation of shareholder capital returns as leverage is reduced.
Balance sheet and cash flow
- Cash and cash equivalents were $ 127,167 (in thousands) as of September 30, 2026, compared with $ 68,015 (in thousands) as of December 31, 2025.
- Revolver availability was approximately $53.0 million as of September 30, 2026.
- Total debt was $1,571.7 million as of September 30, 2026, compared with $1,890.7 million as of December 31, 2025.
- CODI's leverage ratio for debt covenant purposes was approximately 4.5x as of September 30, 2026, down from 4.8x as of June 30, 2026.
- Senior secured net leverage was 0.5x as of September 30, 2026.
- Q3 2026 net cash provided by investing activities was $ 21,508 (in thousands), compared with $ (10,897) (in thousands) in the prior-year period.
- Q3 2026 net cash used in financing activities was $ (32,731) (in thousands), compared with $ (12,323) (in thousands) in the prior-year period.
Analysis
CODI reported Q3 GAAP net sales of $422.9 million, down 10.5%, while net sales excluding Lugano and the divested Sterno Food Service Business rose 0.8% to $422.9 million. The company said GAAP comparisons include Lugano and Sterno's Food Service Business in 2025 but exclude Lugano following its November 16, 2025 deconsolidation and include Sterno Food Service only through its May 1, 2026 sale date. Income from continuing operations was $23.2 million versus a loss of $86.7 million, and operating income was 31,845 (in thousands) compared with an operating loss of (11,067) (in thousands).
The operating mix favored Branded Consumer. Branded Consumer revenue was $275.6 million, up 4.3%, and Subsidiary Adjusted EBITDA was $69.8 million, up 27.5%. Management identified The Honey Pot, BOA and PrimaLoft as the leading contributors, stating that The Honey Pot and Arnold each more than doubled Adjusted EBITDA and that BOA and PrimaLoft grew 22% and 28%, respectively.
Industrial remained the principal weakness. Industrial revenue was $147.3 million, down 5.2%, while Subsidiary Adjusted EBITDA was $19.8 million, down 19.6%. The company also tightened its fiscal 2026 Subsidiary Adjusted EBITDA range to $330 million to $355 million, with higher expectations for Branded Consumer and lower expectations for Industrial relative to prior guidance.
Cash generation and debt reduction were central to the release. Q3 net cash provided by operating activities was $51.6 million versus $10.7 million, while cash and cash equivalents were approximately $127.2 million at September 30, 2026. Total debt declined to $1,571.7 million from $1,890.7 million at December 31, 2025, and the company applied nearly $30 million of Lugano bankruptcy-distribution proceeds to senior secured term loan debt. The debt-covenant leverage ratio was approximately 4.5x, down from 4.8x at June 30, 2026.
Management, verbatim
Our third-quarter results demonstrate the strength of our businesses and the durability of CODI’s diversified model.
Elias Sabo, Chief Executive Officer of Compass Diversified
Our consumer businesses delivered an outstanding third quarter, with Adjusted EBITDA increasing 28% year-over-year, led by The Honey Pot, BOA and PrimaLoft.
Zach Sawtelle, Chief Operating Officer of Compass Diversified
Our priorities remain clear: drive profitable growth, generate cash for debt reduction and pursue divestitures where we can realize attractive value.
Zach Sawtelle, Chief Operating Officer of Compass Diversified
Not in the filing
stated, not guessed- Previous outlook section with prior guidance ranges, so no reported-result-versus-prior-guidance comparisons are provided.
- Diluted earnings per share.
- Non-GAAP earnings per share.
- Gross margin.
- Free cash flow.
- Fiscal 2026 revenue guidance.
- Fiscal 2026 gross-margin guidance.
- Fiscal 2026 operating-expense guidance.
- Fiscal 2026 tax-rate guidance.
- Segment revenue growth rates for individual subsidiaries.
- Quarter-over-quarter comparisons for income-statement metrics.
- A reconciliation of fiscal 2026 Subsidiary Adjusted EBITDA guidance to the most directly comparable GAAP measure; the company cited the unreasonable efforts exception.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.