Compass Diversified 2025 Q1 Earnings 61.2% EPS Improvement Narrows Losses

Compass Diversified (CODI) reported fiscal 2025 Q1 results on Dec 18, 2025, with a 10.5% revenue increase and a 61.2% reduction in per-share losses. The company maintained its full-year Adjusted EBITDA guidance and highlighted operational progress despite macroeconomic challenges. However, post-earnings stock performance remained volatile, with a 15.48% month-to-date decline.

Revenue

Total revenue rose 10.5% year-over-year to $453.77 million, driven by strong contributions across subsidiaries. 5.11 led with $129.37 million, followed by Altor ($76.26 million) and Arnold ($34.01 million). PrimaLoft and The Honey Pot Co. added $23.64 million and $36.19 million, respectively, while BOA, Velocity Outdoor, and Sterno reported $48.88 million, $13.20 million, and $65.38 million. Lugano, the underperforming segment, generated $26.84 million.

Earnings/Net Income

The company narrowed losses to $0.59 per share in 2025 Q1, a 61.2% improvement from $1.52 in 2024 Q1. Net losses decreased by 41.7% to $-49.71 million, down from $-85.27 million. The EPS improvement and significant net loss reduction highlight progress, though challenges persist.

Price Action

The stock edged up 0.40% in a day but fell 15.48% month-to-date, reflecting mixed investor sentiment.

Post-Earnings Price Action Review

The strategy of buying CODI shares after a revenue increase and holding for 30 days yielded -57.25% returns over three years, underperforming the benchmark by 137.85%. With a -24.92% CAGR and a 0.00% maximum drawdown, the strategy incurred substantial losses despite no further portfolio depletion.

CEO Commentary

CEO Elias Sabo emphasized financial flexibility and operational execution, noting strong cash flow from subsidiaries (excluding Lugano). Key priorities include inventory discipline, capital efficiency, and growth in Arnold and PrimaLoft.

Guidance

The company reiterated full-year 2025 Adjusted EBITDA guidance of $330–$360 million, excluding Lugano, while cautioning on macro risks and litigation.

Additional News

Recent developments include the acquisition of The Honey Pot Co. and an extended forbearance agreement with lenders to improve financial flexibility. Compass Diversified also disclosed non-reliance on 2022–2023 financial statements due to the Lugano fraud investigation. The company suspended common share distributions and reduced management fees to address liquidity constraints.