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Compass Diversified Holdings

Compass Diversified HoldingsCODIEarnings & Financial Report

NYSE · Consumer Discretionary · Household Furniture

Compass Diversified Holdings is a publicly traded holding firm that acquires and operates a diverse portfolio of middle-market businesses across sectors including consumer goods, industrial manufacturing, outdoor recreation, and food & beverage. It partners with portfolio company leadership teams to drive long-term operational growth and value creation, primarily serving North American markets.

What changed in Compass Diversified Holdings's 10-K — 2023 vs 2024

Top changes in Compass Diversified Holdings's 2024 10-K

852 paragraphs added · 942 removed · 630 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

275 edited+132 added−184 removed256 unchanged
Finally, it has been our experience, that our ability to acquire businesses without the cumbersome delays and conditions typical of third party transactional financing is appealing to sellers of businesses who are interested in confidentiality, speed and certainty to close.
Finally, it has been our experience, that our ability to acquire businesses without the cumbersome delays and conditions typical of third-party transactional financing is appealing to sellers of businesses who are interested in confidentiality, speed and certainty of close.
Products, Customers and Distribution Channels Products Permanent Magnets and Assemblies Group - Arnold’s Permanent Magnets and Assemblies Group (PMAG) is a leading global manufacturer of precision magnetic assemblies and high-performance magnets. The group’s products include tight tolerance assemblies consisting of many dozens of components and employing RECOMA ® SmCo, Neo, and AlNiCo magnets.
Products, Customers and Distribution Channels Products Permanent Magnets and Assemblies Group - Arnold’s PMAG is a leading global manufacturer of precision magnetic assemblies and high-performance magnets. The group’s products include tight tolerance assemblies consisting of many dozens of components and employing RECOMA ® SmCo, Neo, and AlNiCo magnets.
Instead, it chooses to contract with third-party suppliers for materials (fabric and trims) and manufacturers for finished goods. 5.11 partners with high-quality vendors and retains complete control of all intellectual property associated with its products. 5.11 product design, technical design and development teams work directly with its vendors to incorporate innovative materials that meet the high-quality product standards demanded by its customers. 5.11’s primary product specifications include characteristics 24 like durability, protection, functionality, and comfort. 5.11 collaborates with leading fabric suppliers to develop fabrics that it ultimately trademarks for brand recognition whenever possible.
Instead, it chooses to contract with third-party suppliers for materials (fabric and trims) and manufacturers for finished goods. 5.11 partners with high-quality vendors and retains complete control of all intellectual property associated with its products. 5.11 product design, technical design and development teams work directly with its vendors to incorporate innovative materials that meet the high-quality product standards demanded by its customers. 5.11’s primary product specifications include characteristics like durability, protection, functionality, and comfort. 5.11 collaborates with leading fabric suppliers to develop fabrics that it ultimately trademarks for brand recognition whenever possible.
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing. 5.11 products sold outside of the United States may be subject to tariffs, treaties and various trade agreements, as well as laws affecting the importation of consumer goods. 5.11 monitors changes in these laws and management believes that 5.11 is in material compliance with applicable laws.
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing. 5.11 products sold outside of the United States may be subject to tariffs, treaties, export compliance regulations and various trade agreements, as well as laws affecting the importation of consumer goods. 5.11 monitors changes in these laws and management believes that 5.11 is in material compliance with applicable laws.
Not only is this insight helpful in product design and development, but also in outbound marketing efforts, both domestically and internationally. 5.11 supports and builds its brand through a fully integrated, high-impact marketing strategy which includes innovative and exclusive content, 23 digital and social media, dedicated weekly Podcast, community-outreach, television and movie product placement and integrations, sponsorships, and local store activations and events that foster consumer engagement.
Not only is this insight helpful in product design and development, but also in outbound marketing efforts, both domestically and internationally. 5.11 supports and builds its brand through a fully integrated, high-impact marketing strategy which includes innovative and exclusive content, digital and social media, dedicated weekly Podcast, community-outreach, television and movie product placement and integrations, sponsorships, and local store activations and events that foster consumer engagement.
Product development and innovation are divided amongst (i) BOA’s internal innovation and evolution of its fit systems and platforms, refining and improving on the aesthetics, durability, user experience, and price/value, (ii) the design and engineering collaboration that BOA engages in with its brand partners for project and application-specific needs, and (iii) BOA’s 28 advanced research through its PFL, which is transforming markets through innovative performance fit solutions that are scientifically tested and validated.
Product development and innovation are divided amongst (i) BOA’s internal innovation and evolution of its fit systems and platforms, refining and improving on the aesthetics, durability, user experience, and price/value, (ii) the design and engineering collaboration that BOA engages in with its brand partners for project and application-specific needs, and (iii) BOA’s advanced research through its PFL, which is transforming markets through innovative performance fit solutions that are scientifically tested and validated.
Additionally, 5.11 store employees are critical to 5.11’s success and often represent members of its communities, with many of them retired military, law enforcement officers and first responders. 5.11 prides itself in its ability to work directly with top professionals around the world, innovating to solve their greatest needs in the most mission-critical settings. 5.11 maintains a global footprint, with employees working in thirty-three states and eighteen countries.
Additionally, 5.11 store employees are critical to 5.11’s 26 success and often represent members of its communities, with many of them retired military, law enforcement officers and first responders. 5.11 prides itself in its ability to work directly with top professionals around the world, innovating to solve their greatest needs in the most mission-critical settings. 5.11 maintains a global footprint, with employees working in thirty-three states and eighteen countries.
Competitors’ products are typically high volume or collection-based jewelry lines that are inherently less unique or exclusive – traits highly valued by Lugano’s clientele. Customers Lugano’s client base generally consists of sophisticated, high-net-worth individuals who value long-standing relationships and a personalized sales approach over one-time purchases and the high-pressure sales tactics used by other jewelry competitors.
Competitors’ products are typically high volume or collection-based jewelry lines that are inherently less unique or exclusive – traits highly valued by Lugano’s clientele. Customers Lugano’s client base generally consists of sophisticated, high-net-worth individuals who value long-standing relationships and a personalized sales approach over one-time purchases and the high-pressure sales tactics used 31 by other jewelry competitors.
Precision Strip and Foil - Precision rolled thin metal foil products are manufactured from a wide range of materials for use in applications such as transformers, motor laminations, lightweight structures, shielding, and composite structures. They have the unique processing capability to roll foils as thin as 2.5 microns while providing critical heat treatment maintaining competitive material properties.
Precision Strip and Foil - Precision rolled thin metal foil products are manufactured from a wide range of materials for use in applications such as transformers, motor laminations, lightweight structures, shielding, and composite 48 structures. They have the unique processing capability to roll foils as thin as 2.5 microns while providing critical heat treatment maintaining competitive material properties.
We believe the Everyday Consumers align with 5.11 products’ price points and superior value proposition. • Prosumers: Includes everyone from the most elite U.S. and international military and law enforcement special forces units on the planet to everyday heroes including first responders, frontline workers, and other professionals, both on duty in mission-critical situations and off-duty.
We believe the Everyday Consumers align with 5.11 products’ price points and superior value proposition. 20 • Prosumers: Includes everyone from the most elite U.S. and international military and law enforcement special forces units on the planet to everyday heroes including first responders, frontline workers, and other professionals, both on duty in mission-critical situations and off-duty.
We believe ongoing research contributes to consumer loyalty, superior quality, and well-rounded fragrance programs. The wax warmers are made up of quality materials including wood, metal, ceramic, and glass. • Essential Oils and Diffusers - The 100% Pure Essential Oil lines and brands consists of Peppermint, Lavender, Lemon, Eucalyptus, Sweet Orange, Grapefruit, Tea tree, Cinnamon, etc.
We believe ongoing research contributes to consumer loyalty, superior quality, and well-rounded fragrance programs. The wax warmers are made up of quality materials including wood, metal, ceramic, and glass. 54 • Essential Oils and Diffusers - The 100% Pure Essential Oil lines and brands consists of Peppermint, Lavender, Lemon, Eucalyptus, Sweet Orange, Grapefruit, Tea tree, Cinnamon, etc.
Tax Reporting On August 3, 2021, the shareholders of CODI approved amendments to the Second Amended and Restated Trust Agreement of the Trust and the Fifth Amended and Restated Operating Agreement of the Company to allow the Company’s Board of Directors (the “Board”) to cause the Trust to elect to be treated as a corporation for U.S. federal income tax purposes (the “tax reclassification”) and, at its discretion in the future, cause the Trust to be converted to a corporation.
Tax Reporting On August 3, 2021, the shareholders of the Trust approved amendments to the Second Amended and Restated Trust Agreement of the Trust and the Fifth Amended and Restated Operating Agreement of the Company to allow the Company’s Board of Directors (the “Board”) to cause the Trust to elect to be treated as a corporation for U.S. federal income tax purposes (the “tax reclassification”) and, at its discretion in the future, cause the Trust to be converted to a corporation.
The Professional Wholesale channel consists of Prosumer sales relationships, and is comprised of dealers and resellers of 5.11 technical apparel, footwear and gear through governmental 20 departments and agencies, including their retail front and e-commerce services that cater to Prosumers that need additional services, such as tailoring of their uniforms, in a one-stop-shop experience.
The Professional Wholesale channel consists of Prosumer sales relationships, and is comprised of dealers and resellers of 5.11 technical apparel, footwear and gear through governmental departments and agencies, including their retail front and e-commerce services that cater to Prosumers that need additional services, such as tailoring of their uniforms, in a one-stop-shop experience.
Arnold engineers solutions for and produces high performance permanent magnets (PMAG), stators, rotors and full electric motors ("Ramco"), precision foil products (Precision Thin Metals or "PTM"), and flexible magnets (Flexmag™) that are mission critical in motors, generators, 8 sensors and other systems and components. Arnold has expanded globally and built strong relationships with its customers worldwide.
Arnold engineers solutions for and produces high performance permanent magnets (PMAG), stators, rotors and full electric motors ("Ramco"), precision foil products (Precision Thin Metals or "PTM"), and flexible magnets (Flexmag™) that are mission critical in motors, generators, sensors and other systems and components. Arnold has expanded globally and built strong relationships with its customers worldwide.
Second, we identify, perform due diligence on, negotiate and consummate additional platform acquisitions of small to middle market businesses in attractive industry sectors in accordance with acquisition criteria established by the board of directors. Management Strategy Our management strategy involves the proactive financial and operational management of the subsidiaries we own in order to increase cash flows and shareholder value.
Second, we identify, perform due diligence on, negotiate and consummate additional platform acquisitions of small to middle market businesses in attractive industry sectors in accordance with acquisition criteria established by the Board. Management Strategy Our management strategy involves the proactive financial and operational management of the subsidiaries we own in order to increase cash flows and shareholder value.
This feedback helps ensure products will meet Arnold’s demanding standards of excellence as well as the constantly changing needs of end users. Arnold’s research and development activities are supported by state-of-the-art engineering software design tools, integrated manufacturing facilities and a performance testing center equipped to ensure product safety, durability and superior performance.
This feedback helps ensure products will meet Arnold’s demanding standards of excellence as well as the constantly changing needs of end users. Arnold’s research and 51 development activities are supported by state-of-the-art engineering software design tools, integrated manufacturing facilities and a performance testing center equipped to ensure product safety, durability and superior performance.
Frequently, opportunities exist to support and augment existing management at such businesses and improve the performance of these businesses upon their acquisition through active management. We are business builders rather than asset traders. In the past, our management team has acquired businesses that were owned by entrepreneurs or large corporate parents.
Frequently, opportunities exist to support and augment existing management at such businesses and improve the performance of these businesses upon their acquisition through active management. We are business builders 11 rather than asset traders. In the past, our management team has acquired businesses that were owned by entrepreneurs or large corporate parents.
To mitigate supplier concentration risk, 5.11 commercializes its top key items at multiple factories to ensure it can balance geographic risks as well as respond quickly to spikes in business. 5.11 also continuously seeks out additional suppliers and manufacturers to enable contingency plans that minimize disruptions, as well as support its future growth.
To mitigate supplier concentration risk, 5.11 commercializes its top key items at multiple factories to ensure it can balance geographic 25 risks as well as respond quickly to spikes in business. 5.11 also continuously seeks out additional suppliers and manufacturers to enable contingency plans that minimize disruptions, as well as support its future growth.
Requirements of outfitting entire agencies or departments necessitates carrying numerous, often infrequently used, sizes and colors of a given product. In addition, 5.11’s years of handling these types of customized orders has resulted in 5.11 having a dedicated team with specialized expertise, a skillset that is unique in the industry.
Requirements 21 of outfitting entire agencies or departments necessitates carrying numerous, often infrequently used, sizes and colors of a given product. In addition, 5.11’s years of handling these types of customized orders has resulted in 5.11 having a dedicated team with specialized expertise, a skillset that is unique in the industry.
(“Sterno Home”) with Rimports to leverage the capabilities of Rimports’ operations for profitability and growth. Previously, Sterno Home was a separate product division of Sterno whose product offerings include flameless candles, traditional house and garden lighting including path lights, spotlights, and security lights. History of Sterno Sterno’s history dates back to 1893 when S.
(“Sterno Home”) with Rimports to leverage the capabilities of Rimports’ operations for profitability and growth. Previously, Sterno Home was a separate product division of Sterno whose product offerings include flameless candles, traditional house and garden lighting including path lights, spotlights, and security lights. 52 History of Sterno Sterno’s history dates back to 1893 when S.
We believe strong ESG practices can be long-term performance enhancing and enable us to oversee and balance the needs of important stakeholders in doing so. We are committed to maintaining responsible business practices that position our businesses for long-term success. Our long-term responsible approach is also reflected in how we manage ourselves.
We believe strong ESG practices can be long-term performance enhancing and enable us to oversee and balance the needs of important stakeholders in doing so. We are committed to maintaining responsible business practices that position our businesses for long-term success. 14 Our long-term responsible approach is also reflected in how we manage ourselves.
The addressable market includes Snowsports (Alpine Ski, Snowboarding, and Cross-Country boots plus Helmets), Athletic (Golf, Court Sports, Running, and Training footwear), Outdoor (Trail, Hiking, Trekking, and Mountaineering boots/shoes), Cycling (Footwear and Helmets), Workwear (Footwear and Helmets), and bracing. BOA partners with the leading premier brands to integrate their system into their best gear.
The addressable market includes Snowsports (Alpine Ski, Snowboarding, and Cross-Country boots plus Helmets), Athletic (Golf, Court Sports, Running, and Training footwear), Outdoor (Trail, Hiking, Trekking, and Mountaineering boots/shoes), Cycling (Footwear and Helmets), Workwear (Footwear and Helmets), and Bracing. BOA partners with the leading premier brands to 27 integrate their system into their best gear.
For permanent magnets and assemblies our magnets are produced and fabricated utilizing personnel, skills, tools, and specific machinery to convert raw materials into finished magnet and then integration of those magnets and machines components into devices or sub-assemblies. 54 Orders are all built to specific customer needs and distributed directly from our manufacturing facilities located worldwide.
For permanent magnets and assemblies our magnets are produced and fabricated utilizing personnel, skills, tools, and specific machinery to convert raw materials into finished magnet and then integration of those magnets and machines components into devices or sub-assemblies. Orders are all built to specific customer needs and distributed directly from our manufacturing facilities located worldwide.
We have been and remain committed to being a responsible partner to our subsidiaries and are proud stewards of corporate citizenship. 14 Financing We incur third party debt financing almost entirely at the Company level, which we use, in combination with our equity capital, to provide debt financing to each of our businesses and to acquire additional businesses.
We have been and remain committed to being a responsible partner to our subsidiaries and are proud stewards of corporate citizenship. Financing We incur third-party debt financing almost entirely at the Company level, which we use, in combination with our equity capital, to provide debt financing to each of our businesses and to acquire additional businesses.
Although CenterPoint is a recent entry into the archery market, the brand has been able to outpace more established brands on the reliability, pricing, and service aspects to win market share. The Ravin product line has a higher price point and falls within the "best" segment for crossbows, competing with the higher end Tenpoint crossbows.
Although CenterPoint is a recent entry into the archery market, the brand has been able to outpace more established brands on the reliability, pricing, and service aspects to win market share. The Ravin product line has a higher price point and falls within the "best" segment for crossbows, competing with the higher end crossbows.
The 2022 Credit Facility also permits the LLC, prior to the applicable maturity date, to increase the 2022 Revolving Loan Commitment and/or obtain additional term loans in an aggregate amount of up to $250 million, subject to certain restrictions and conditions. On the closing date for the 2022 Credit Facility, the 2022 Term Loan was advanced in full.
The 2022 Credit Facility also permits the LLC, prior to the applicable maturity date, to increase the 2022 Revolving Loan Commitment and/or obtain additional term loans in an aggregate amount of up to $250 million, subject to certain customary restrictions and conditions. On the closing date for the 2022 Credit Facility, the 2022 Term Loan was advanced in full.
General Industrial - Within the industrial sector, Arnold provides electric motors, magnet assemblies as well as magnets for custom made motor systems. These include stepper motors, pick and place robotic systems, and new designs that are increasingly being required by regulation to meet energy efficiency standards.
General Industrial - Within the industrial sector, Arnold provides electric motors, magnet assemblies as well as magnets for custom made motor systems. These include stepper motors, pick and place robotic systems, and new 49 designs that are increasingly being required by regulation to meet energy efficiency standards.
A further outcome is an understanding of the types and levels of risk associated with those projections. While future performance and projections are always uncertain, we believe that with detailed due diligence, future cash flows will be better estimated and the prospects for operating the business in the future better evaluated.
A further outcome is a better understanding of the types and levels of risk associated with those projections. While future performance and projections are always uncertain, we believe that with detailed due diligence, future cash flows will be better estimated and the prospects for operating the business in the future better evaluated.
Interest on the 2032 Notes is payable in cash on July 15th and January 15th of each year. The 2032 Notes are general unsecured obligations of the Company and are not guaranteed by our subsidiaries. The proceeds from the sale of the 2032 Notes was used to repay debt outstanding under the 2021 Credit Facility.
Interest on the 2032 Notes is payable in cash on July 15th and January 15th of each year. The 2032 Notes are general unsecured obligations of 15 the Company and are not guaranteed by our subsidiaries. The proceeds from the sale of the 2032 Notes was used to repay debt outstanding under the 2021 Credit Facility.
Although our management team is at various stages of evaluating several transactions at any given time, there may be periods of time during which our management team does not recommend any new acquisitions to us. Even if an acquisition is recommended by our management team, our board of directors may not approve it.
Although our management team is at various stages of evaluating several transactions at any given time, there may be periods of time during which our management team does not recommend any new acquisitions to us. Even if an acquisition is recommended by our management team, our Board may not approve it.
Management believes that Sterno complies, in all material respects, with applicable environmental and occupational health and safety laws and regulations. Seasonality Sterno typically has higher sales in the second and fourth quarter of each year, reflecting the outdoor summer season and the holiday season.
Management believes that Sterno complies, in all material respects, with applicable environmental and occupational health and safety laws and regulations. Seasonality Sterno Products typically has higher sales in the second and fourth quarter of each year, reflecting the outdoor summer season and the holiday season.
Direct to Consumer - 5.11’s direct-to-consumer ("DTC") channel is comprised of its digital platform, 511tactical.com, its growing network of retail stores as well as its third-party marketplace partners. 5.11 has significantly expanded its DTC mix in the past five years, with DTC now co mprising 45%, 43% and 43% of net sales for the years ended December 31, 2023, 2022 and 2021, respectively. 5.11’s website has grown significantly and drives a significant portion of its online sales. 5.11 also operates company owned retail stores in 35 states, with plans to grow its footprint further.
Direct to Consumer - 5.11’s direct-to-consumer ("DTC") channel is comprised of its digital platform, 511tactical.com, its growing network of retail stores as well as its third-party marketplace partners. 5.11 has significantly expanded its DTC mix in the past five years, with DTC now co mprising 43%, 45% and 43% of net sales for the years ended December 31, 2024, 2023 and 2022, respectively. 5.11’s website has grown significantly and drives a significant portion of its online sales. 5.11 also operates company owned retail stores in 35 states, with plans to grow its footprint further.
Industry Sterno Products competes in the broadly defined U.S. foodservice industry where historically restaurant, catering and hospitality sales have accounted for a majority of the market with the remainder comprised of the travel and leisure, education and healthcare related sales.
Industry Sterno Products competes in the broadly defined U.S. foodservice industry where historically restaurant, catering and hospitality sales have accounted for a majority of the market with the remainder comprised of retail, travel and leisure, education and healthcare related sales.
They also appreciate the aesthetic and functional design of 5.11 products, which can take them from the comfort of their home to a favorite nearby hike, as well as 5.11 apparel, footwear and gear, which are as dynamic as 19 they are functional.
They also appreciate the aesthetic and functional design of 5.11 products, which can take them from the comfort of their home to a favorite nearby hike, as well as 5.11 apparel, footwear and gear, which are as dynamic as they are functional.
The canned heat product line is composed of two subcategories: wick chafing fuel and gel chafing fuel. The subcategories are distinguished based on the type of chafing fuel being used; the four primary chafing fuels are diethylene glycol (“DEG”), propylene glycol, ethanol and methanol.
The canned heat product line is composed of two subcategories: wick chafing fuel and gel chafing fuel. The subcategories are distinguished based on the type of chafing fuel being used; the four primary chafing fuels are 53 diethylene glycol (“DEG”), propylene glycol, ethanol and methanol.
These shirts can be used as uniforms and/or casual wear. 5.11's polos are also well known for their comfort, durability and utility. 5.11 offers them in a range of proprietary fabrics that are highly fade resistant, and among some of the most popular styles are Performance Polo, Professional Polo and Utility Polo, which have price ranges from $50.00 to $63.00. • Outerwear - 5.11 offers a wide range of outerwear solutions for on and off the job.
These shirts can be used as uniforms and/or casual wear. 5.11's polos are also well known for their comfort, durability and utility. 5.11 offers them in a range of proprietary fabrics that are highly fade resistant, and among some of the most popular styles are Performance Polo, Professional Polo and Utility Polo, which have price ranges from $50.00 to $65.00. • Outerwear - 5.11 offers a wide range of outerwear solutions for on and off the job.
Management believes 5.11's large and growing community of everyday consumers associate with the 5.11 brand heritage and authenticity and values 5.11's high-quality product design and functionality. 17 Headquartered in Costa Mesa, California, 5.11 operates sales offices and distribution centers globally. 5.11 products are widely distributed in uniform stores, military exchanges, outdoor retail stores, its own retail stores and through e-commerce channels, including 511tactical.com.
Management believes 5.11's large and growing community of everyday consumers associate with the 5.11 brand heritage and authenticity and values 5.11's high-quality product design and functionality. 18 Headquartered in Costa Mesa, California, 5.11 operates sales offices and distribution centers globally. 5.11 products are widely distributed in uniform stores, military exchanges, outdoor retail stores, its own retail stores and through e-commerce channels, including 511tactical.com.
The top selling pants include Taclite, which is built with a lighter and stronger fabric to outperform 5.11's original canvas pant, Stryke, which uses 5.11's patented FlexTac fabric, Apex, 18 which leverages 5.11's Flex-Tac technology, and 5.11's highly durable FastTac all with stain and water-resistant properties, and Defender-Flex, 5.11’s performance denim. • Shirts, T-shirts and Polos – 5.11 tops are feature rich just like their pants.
The top selling pants include Taclite, which is built with a lighter and stronger fabric to outperform 5.11's original canvas pant, Stryke, which uses 5.11's patented FlexTac fabric, Apex, which leverages 5.11's Flex-Tac technology, and 5.11's highly durable FastTac all with stain and water-resistant properties, and Defender-Flex, 5.11’s performance denim. 19 • Shirts, T-shirts and Polos – 5.11 tops are feature rich just like their pants.
The risk of ruining a 59 dining experience and the low proportionate cost of canned chafing fuel relative to the cost of a catered event represent significant barriers to customers switching out of Sterno’s canned chafing fuel products.
The risk of ruining a dining experience and the low proportionate cost of canned chafing fuel relative to the cost of a catered event represent significant barriers to customers switching out of Sterno’s canned chafing fuel products.
As a leading supplier of canned heat to foodservice distributors and foodservice group purchasing organizations, Sterno is always pursuing end-user solutions and innovations to strengthen its position in the marketplace. • Rimports - Rimports is a manufacturer and distributor of branded and private label wickless candle products used for home decor and fragrance systems under the ScentSationals, AmbiEscents, Oak & Rye, Fusion and Ador brands.
As a leading supplier of canned heat to foodservice distributors and foodservice group purchasing organizations, Sterno is always pursuing end-user solutions and innovations to strengthen its position in the marketplace. • Rimports - R imports is a manufacturer and distributor of branded and private label wickless candle products used for home decor and fragrance systems under the ScentSationals, AmbiEscents, Oak & Rye, Fusion and Ador brands.
This approach currently utilizes a mixture of Professional and Consumer wholesale channels, distributors, wholesale partner stores, third party e-commerce sites as well as owned e-commerce websites and retail stores.
This approach currently utilizes a mixture of Professional and Consumer wholesale channels, distributors, wholesale partner stores, 22 third-party e-commerce sites as well as owned e-commerce websites and retail stores.
The Company’s retail products appeal to a wide variety of consumers, from home entertainers to recreational campers and extreme outdoorsmen. Online retail sales are also an important channel for Sterno and Rimports. With an online dynamic, it is also much easier to showcase how Sterno’s and Rimport's products look in actual dark use conditions, directly addressing their primary merchandising challenge.
The Company’s retail products appeal to a wide variety of consumers, from home entertainers to recreational campers and extreme outdoorsmen. Online retail sales are also an important channel for Sterno and Rimports. With an online dynamic, it is also much easier to showcase how Sterno’s and Rimports' products look in actual dark use conditions, directly addressing their primary merchandising challenge.
PrimaLoft maintains highly collaborative relationships with its brand partners, visiting most several times per year to introduce new innovations, generate new product ideas, and assist with integrating the latest PrimaLoft technologies into their outerwear lineups. The process of designing a jacket usually begins about 18 months before the jacket is 37 intended to be sold at retail.
PrimaLoft maintains highly collaborative relationships with its brand partners, visiting most several times per year to introduce new innovations, generate new product ideas, and assist with integrating the latest PrimaLoft technologies into their outerwear lineups. The process of designing a jacket usually begins about 18 months before the jacket is 34 intended to be sold at retail.
The SEC maintains an Internet site 9 that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
Most brand partners do not possess the same depth of internal expertise in synthetic insulation design and view PrimaLoft as an innovation and sustainability partner that enhances the parent brand in a manner consistent with increasingly eco-focused brand missions. 36 History of PrimaLoft PrimaLoft was originally founded in 1983 after being approached by the U.S.
Most brand partners do not possess the same depth of internal expertise in synthetic insulation design and view PrimaLoft as an innovation and sustainability partner that enhances the parent brand in a manner consistent with increasingly eco-focused brand missions. 33 History of PrimaLoft PrimaLoft was originally founded in 1983 after being approached by the U.S.
Lugano’s in-house production workshop or close network of captive workshops provide increased production efficiencies, improved control over its inventory and better speed to market. 35 High-touch Retail Model Lugano’s one-of-a-kind inventory requires a unique and high-touch sales strategy which the company has cultivated over its nearly 20-year history.
Lugano’s in-house production workshop or close network of captive workshops provide increased production efficiencies, improved control over its inventory and better speed to market. 32 High-touch Retail Model Lugano’s one-of-a-kind inventory requires a unique and high-touch sales strategy which the company has cultivated over its nearly 20-year history.
Arnold continues to be an industry leader with regard to new product formulations and innovations. As evidence of this, Arnold currently relies on a deep portfolio of “trade secrets” and proprietary intellectual property. Arnold 53 continuously endeavors to introduce electromagnetic solutions that exceed the performance of current offerings and meet customer design specifications.
Arnold continues to be an industry leader with regard to new product formulations and innovations. As evidence of this, Arnold currently relies on a deep portfolio of “trade secrets” and proprietary intellectual property. Arnold 50 continuously endeavors to introduce electromagnetic solutions that exceed the performance of current offerings and meet customer design specifications.
Seasonality Due to the nature of insulated outerwear and the concentration of spending in the northern hemisphere, PrimaLoft typically sees approximately 70% of sales in the first half of the calendar year, which is when brand partners order components to be used in cold weather apparel that will be sold to end consumers in the subsequent fall/winter.
Seasonality Due to the nature of insulated outerwear and the concentration of spending in the northern hemisphere, PrimaLoft typically sees approximately 65% of sales in the first half of the calendar year, which is when brand partners order components to be used in cold weather apparel that will be sold to end consumers in the subsequent fall/winter.
Most countries outside the US are under-penetrated with limited 21 distribution and select dealers only carrying a portion of available styles.
Most countries outside the US are under-penetrated with limited distribution and select dealers only carrying a portion of available styles.
BOA leverages athlete endorsements to further establish its positioning as a performance fit leader as well as drive cross-segment brand awareness. The company's tag line and positioning “Dialed in Precision Fit" showcases pioneers performing at their peak both physically and mentally. BOA also relies on its trusted brand partners to increase BOA brand awareness.
BOA leverages athlete endorsements to further establish its positioning as a performance fit leader as well as drive cross-segment brand awareness. The company's tag line and positioning “Dialed in Precision Fit" showcases athletes performing at their peak both physically and mentally. BOA also relies on its trusted brand partners to increase BOA brand awareness.
The company’s retail experience is carefully curated, emphasizing both exclusivity and elegance, both critical to the sale of Lugano jewelry. Event-based Marketing Strategy Lugano sponsors close to three hundred events each year, enabling the company to meet prospective clients and reconnect with existing clients that have become loyal and repeat purchasers.
The company’s retail experience is carefully curated, emphasizing both exclusivity and elegance, both critical to the sale of Lugano jewelry. Event-based Marketing Strategy Lugano sponsors over three hundred events each year, enabling the company to meet prospective clients and reconnect with existing clients that have become loyal and repeat purchasers.
Management will continue to seek acquisitions of regional foam molders and other packaging suppliers where sales and operational efficiencies can be realized, and to diversify into packaging products other than molded foam. Competitive Strengths National Scale and Proximity to Customers - Altor Solutions maintains a national footprint of 15 manufacturing locations across North America.
Management will continue to seek acquisitions of regional foam molders and other packaging suppliers where sales and operational efficiencies can be realized, and to diversify into packaging products other than molded foam. Competitive Strengths National Scale and Proximity to Customers - Altor Solutions maintains a national footprint of 23 manufacturing locations across North America.
These products are sold to a wide range of industries including aerospace and defense, motorsport/ transportation, oil and gas, medical, general industrial, energy and reprographics. Arnold has established a reputation in the magnetic industry as the engineering solutions provider, assisting customers to ensure their critical assemblies meet expectations.
These products are sold to a wide range of industries including aerospace and defense, motorsport/ transportation, oil and gas, medical, general industrial, energy and semiconductors. Arnold has established a reputation in the magnetic industry as the engineering solutions provider, assisting customers to ensure their critical assemblies meet expectations.
PrimaLoft provides fiber requirements and formulations to its network of exclusive manufacturing partners, who then directly receive raw materials ordered by PrimaLoft. 38 PrimaLoft oversees the manufacturing partner insulation production process, often with visits to facilities and continuous testing to ensure all insulation produced meets the performance and sustainability standards.
PrimaLoft provides fiber requirements and formulations to its network of exclusive manufacturing partners, who then directly receive raw materials ordered by PrimaLoft. 35 PrimaLoft oversees the manufacturing partner insulation production process, often with visits to facilities and continuous testing to ensure all insulation produced meets the performance and sustainability standards.
As a leader in synthetic insulation PrimaLoft has built a patent portfolio of more than 13 issued and pending patents in the United States and more than 70 pat ents issued internationally. In addition, PrimaLoft uses a variety of trade secrets typically covering specific insulation manufacturing processes. Lastly, PrimaLoft has more than 50 registered and pending trademarks globally.
As a leader in synthetic insulation PrimaLoft has built a patent portfolio of more than 11 issued and pending patents in the United States and more than 70 pat ents issued internationally. In addition, PrimaLoft uses a variety of trade secrets typically covering specific insulation manufacturing processes. Lastly, PrimaLoft has more than 50 registered and pending trademarks globally.
Additionally, management believes that there is no other technology available today that offers the portability, reliability and low cost of the Sterno canned chafing fuel products. Rimports’ ultimate consumers seek high quality products in the Home Fragrance section. This high value strength ensures consumer loyalty and satisfaction.
Additionally, management believes that there is no other technology available today that offers the portability, reliability and low cost of the Sterno canned chafing fuel products. Rimports’ ultimate consumers seek high quality products in the Home Fragrance section. This high value proposition ensures consumer loyalty and satisfaction.
Arnold’s employees are compensated at levels commensurate with industry standards, based on their respective position and job grade. Arnold’s workforce is non-union except for approximately 66 hourly employees at its Marengo, Illinois facilities, which are represented by the International Association of Machinists (IAM).
Arnold’s employees are compensated at levels commensurate with industry standards, based on their respective position and job grade. Arnold’s workforce is non-union except for approximately 61 hourly employees at its Marengo, Illinois facilities, which are represented by the International Association of Machinists (IAM).
Our ideal acquisition candidate has the following characteristics: • is a leading branded consumer, industrial or healthcare company headquartered in North America; • maintains highly defensible position in the markets it serves and with customers; • operates in an industry with favorable long-term macroeconomic trends; • has a strong management team, either currently in place or previously identified, and meaningful incentives; • has low technological and/or product obsolescence risk; and • maintains a diversified customer and supplier base.
Our ideal acquisition candidate has the following characteristics: • is a leading branded consumer, industrial, healthcare or critical outsourced service company headquartered in North America; • maintains highly defensible position in the markets it serves and with customers; • operates in an industry with favorable long-term macroeconomic trends; • has a strong management team, either currently in place or previously identified, and meaningful incentives; • has low technological and/or product obsolescence risk; and • maintains a diversified customer and supplier base.
Sterno’s top ten customers comprised approximat ely 70%, 71%, and 71 % of gross sales in the years ended December 31, 2023, 2022 and 2021, respectively. • Foodservice - The foodservice channel consists of multiple layers of distribution comprised of broadline distributors, equipment and supply dealers and cash and carry dealers.
Sterno’s top ten customers comprised approximat ely 70%, 70%, and 71 % of gross sales in the years ended December 31, 2024, 2023 and 2022, respectively. • Foodservice - The foodservice channel consists of multiple layers of distribution comprised of broadline distributors, equipment and supply dealers and cash and carry dealers.
We currently own 98.0% of the outstanding stock of Arnold on a primary basis and 85.5% on a fully diluted basis. Sterno SternoCandleLamp Holdings, Inc. ("Sterno"), headquartered in Plano, Texas, is the parent company of Sterno Products, LLC ("Sterno Produ cts") and Rimports, LLC ("Rimports").
We currently own 98.0% of the outstanding stock of Arnold on a primary basis and 85.8% on a fully diluted basis. 8 Sterno SternoCandleLamp Holdings, Inc. ("Sterno"), headquartered in Plano, Texas, is the parent company of Sterno Products, LLC ("Sterno Produ cts") and Rimports, LLC ("Rimports").
Branded consumer businesses are those businesses that we believe capitalize on a valuable brand name in their respective market sector. We believe that our branded consumer businesses are leaders in their particular product categories. Industrial businesses are those businesses that focus on manufacturing and selling products and industrial services within a specific market sector.
Branded consumer businesses are those businesses that we believe capitalize on a valuable brand name in their respective market sector. We believe that our branded consumer businesses are leaders in their product categories. Industrial businesses are those businesses that focus on manufacturing and selling products and/or industrial services within a specific market sector.
The following table represents the percentage of net revenue and operating income each of our businesses contributed to our consolidated results since the date of acquisition for the years ended December 31, 2023, 2022 and 2021, and the total assets of each of our businesses as a percentage of the consolidated total as of December 31, 2023 and 2022.
The following table represents the percentage of net revenue and operating income each of our businesses contributed to our consolidated results since the date of acquisition for the years ended December 31, 2024, 2023 and 2022, and the total assets of each of our businesses as a percentage of the consolidated total as of December 31, 2024 and 2023.
On existing products, BOA is committed to continuous innovation, including key improvements such as lower installation costs for brand partner factories, thinner and sleeker product profiles for improved aesthetics, in field warranty rate reduction to approximately 0.5%, improved user experience, and the broadening of the platform suite to address key opportunities in alpine skiing, basketball, and outdoor.
On existing products, BOA is committed to continuous innovation, including key improvements such as lower installation costs 29 for brand partner factories, thinner and sleeker product profiles for improved aesthetics, in field warranty rate reduction to approximately 0.5%, improved user experience, and the broadening of the platform suite to address key opportunities in alpine skiing, outdoor and helmets.
Intellectual Property Arnold currently relies on a deep portfolio of “trade secrets” and proprietary intellectual property. Patents Arnold currently has 2 patents in force in the United States, 1 patent in force in Europe and 1 patent in force in Japan. Trademarks Arnold currently has 86 trademarks, 12 of which are in the U.S.
Intellectual Property Arnold currently relies on a deep portfolio of “trade secrets” and proprietary intellectual property. Arnold currently has 2 patents in force in the United States, 2 patent in force in Europe and 1 patent in force in Japan. Arnold currently has 40 trademarks, 12 of which are in the U.S.
Finished motors range from under 1kW through 1MW for aerospace and defense, industrial, energy, hybrid electric platforms and energy exploration. • Precision Thin Metals - Produces thin and ultra-thin alloys that improve the power density electrical systems such as motors, generators, and transformers along with thin foils for other applications such as electromagnetic shielding, radio frequency shielding, lightweight structures, and implantable structures.
Finished motors range from under 1kW through 1MW for aerospace and defense, industrial, energy, hybrid electric platforms and energy exploration. • Precision Thin Metals - Arnold's precision thin metals group ("Precision Thing Metals") produces thin and ultra-thin alloys that improve the power density electrical systems such as motors, generators, and transformers along with thin foils for other applications such as electromagnetic shielding, radio frequency shielding, lightweight structures, and implantable structures.
Gear - Gear re presented 19%, 20% and 21%, re spectively, of 2023, 2022 and 2021 net sales, which includes multi-use backpacks, cases, load-bearing equipment, range bags, duffels, field knives, watches and gloves. 5.11 bags, pouches, and packs provide reliable, multifunctional storage options designed to excel in a wide range of operational and recreational settings.
Gear - Gear re presented 19%, 19% and 20%, re spectively, of 2024, 2023 and 2022 net sales, which includes multi-use backpacks, cases, load-bearing equipment, range bags, duffels, field knives, watches and gloves. 5.11 bags, pouches, and packs provide reliable, multifunctional storage options designed to excel in a wide range of operational and recreational settings.
BOA maintains 187 registered and pending trademarks protecting 14 unique marks, with core marks filed in 40+ countries. Seasonality Due to the diversity of industries and geographies BOA participates in, there is no significant seasonality to the business.
BOA maintains 18 registered and pending trademarks protecting 14 unique marks, with core marks filed in 40+ countries. Seasonality Due to the diversity of industries and geographies BOA participates in, there is no significant seasonality to the business.
Lugano’s clients can range in age from 25 to over 80 and come from 34 all over the nation, with most based in California, followed by Florida, New York, Texas, and Colorado, along with international clientele, primarily in the United Kingdom.. Lugano’s retail revenue is diversified with no customer representing greater than 10% of total revenue in 2023.
Lugano’s clients can range in age from 25 to over 80 and come from all over the nation, with most based in California, followed by Florida, New York, Texas, and Colorado, along with international clientele, primarily in the United Kingdom. Lugano’s retail revenue is diversified with no customer representing greater than 10% of total revenue in 2024.
Since their launch in Steamboat Springs, CO in 2001, BOA has maintained a strong and healthy company culture that is rooted in a passion for pioneering, and for making the best gear even better. As the team has expanded over the last 23 years, BOA has placed an emphasis on attracting, developing, and retaining a diverse and talented workplace.
Since their launch in Steamboat Springs, CO in 2001, BOA has maintained a strong and healthy company culture that is rooted in a passion for pioneering, and for making the best gear even better. As the team has expanded over the last 24 years, BOA has placed an emphasis on attracting, developing, and retaining a diverse and talented team.
During the year ended December 31, 2023, approximately 41% of 5.11 products at cost were produced in Bangladesh, approximately 31% in Vietnam, and the remainder in China, Cambodia, Taiwan, Philippines, Indonesia, Africa, Central America and the United States. 5.11 does not have any long-term agreements requiring it to use any manufacturer, and no manufacturer is required to produce its products in the long term. 5.11 purchase s from suppliers on a purchase order basis informed by capacity forecasts. 5.11 measures supplier performance through various performance indicators and partner closely with them to continually improve efficiency, cost, and quality.
During the year ended December 31, 2024, approximately 39% of 5.11 products at cost were produced in Bangladesh, approximately 27% in Vietnam, and the remainder in China, Cambodia, Taiwan, Philippines, Indonesia, Africa, Central America and the United States. 5.11 does not have any long-term agreements requiring it to use any manufacturer, and no manufacturer is required to produce its products in the long term. 5.11 purchase s from suppliers on a purchase order basis informed by capacity forecasts. 5.11 measures supplier performance through various performance indicators and partner closely with them to continually improve efficiency, cost, and quality.
Specifically, while our businesses have different growth opportunities and potential rates of growth, we expect our Manager to work with the management teams of each of our businesses to increase the value of, and cash generated by, each business through various initiatives, including: • making selective capital investments to expand geographic reach, increase capacity, or reduce manufacturing costs of our businesses; • investing in product research and development for new products, processes or services for customers; • improving and expanding existing sales and marketing programs; • pursuing reductions in operating costs through improved operational efficiency or outsourcing of certain processes and products; and • consolidating or improving management of certain overhead functions.
Specifically, while our businesses have different growth opportunities and potential rates of growth, we expect our Manager to work with the management teams of each of our businesses to increase the value of, and cash generated by, each business through various initiatives, including: • making selective capital investments to expand geographic reach, increase capacity, or reduce manufacturing costs of our businesses; • investing in product research and development for new products, processes or services for customers; • improving and expanding existing sales and marketing programs; • pursuing reductions in operating costs through improved operational efficiency or outsourcing of certain processes and products; and • consolidating or improving management of certain overhead functions. 12 Our businesses typically acquire and integrate complementary businesses.
In terms of the businesses in which we have a controlling interest as of December 31, 2023, we believe that these businesses have strong management teams, operate in strong markets with defensible market niches, and maintain long-standing customer relationships. We categorize the businesses we own into two separate groups (i) branded consumer businesses and, (ii) industrial businesses.
In terms of the businesses in which we have a controlling interest as of December 31, 2024, we believe that these businesses have strong management teams, operate in strong markets with defensible market niches, and maintain long-standing customer relationships. We categorize the current businesses we own into two separate groups (i) branded consumer businesses and, (ii) industrial businesses.
On March 23, 2021, we consummated the issuance and sale of $1,000 million aggregate principal amount of our 5.250% Notes due 2029 (the "2029 Notes") offered pursuant to a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act, and to non-U.S. persons under Regulation S under the Securities Act.
On March 23, 2021, we consummated the issuance and sale of $1 billion aggregate principal amount of our 5.250% Notes due 2029 (the "2029 Notes") offered pursuant to a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act, and to non-U.S. persons under Regulation S under the Securities Act.
For sellers of businesses, our unique financial structure allows us to acquire businesses efficiently with little or no third party financing contingencies and, following acquisition, to provide our businesses with substantial access to growth capital.
For sellers of businesses, our unique financial structure allows us to purchase businesses efficiently with little or no third party financing contingencies and, following acquisition, to provide our businesses with substantial access to growth capital.
Industries served include aerospace and defense, energy exploration, industrial , motorsport and medical. 48 • Electric Motors - Low-to-mid volume AC induction, Switched Reluctance, and Brushless DC stators, rotors, and rotor shaft assemblies.
Industries served include aerospace and defense, energy exploration, industrial , motorsport and medical. 47 • Electric Motors - Low-to-mid volume AC induction, Switched Reluctance, and Brushless DC stators, rotors, and rotor shaft assemblies.
Wholesale - The Wholesale channel is comprised of Professional Wholesale, Consumer Wholesale and International business. Wholesale sales were 55%, 57% and 57% of net sales for the years ended December 31, 2023, 2022 and 2021, respectively. The Professional Wholesa le channel specializes in demand creation for formal procurement through specification of 5.11 on government contracts around the world.
Wholesale - The Wholesale channel is comprised of Professional Wholesale, Consumer Wholesale and International business. Wholesale sales were 54%, 55% and 57% of net sales for the years ended December 31, 2024, 2023 and 2022, respectively. The Professional Wholesa le channel specializes in demand creation for formal procurement through specification of 5.11 on government contracts around the world.
This makes them inherently safer than traditional candles as there is no flame or even heat 57 generated to cause any type of accidents. Although pillar type candles are the most common shape, Sterno also designs and manufactures votives, tealights, tapers as well as specialty molded candles.
This makes them inherently safer than traditional candles as there is no flame or even heat generated to cause any type of accident. Although pillar type candles are the most common shape, Sterno also designs and manufactures votives, tealights, tapers as well as specialty molded candles.
Corporation Income Tax Return on an annual basis and for all taxable periods beginning on or after the tax reclassification. In addition, distribution with respect to Trust shares (including Trust preferred shares) will now be reported on Form 1099-DIV, instead of on Schedule K-1.
Corporation Income Tax Return on an annual basis and for all taxable periods beginning on or after the tax reclassification. In addition, distribution with respect to Trust shares (including Trust preferred shares) are now reported on Form 1099-DIV, instead of on Schedule K-1.
Sterno operates via two product divisions: • Sterno Products - Sterno Products offers a broad range of wick and gel chafing fuels, liquid and traditional wax candles, butane stoves and accessories, and catering equipment and lamps for restaurants, hotel and 55 home entertainment uses, selling both Sterno brand and private label.
Sterno operates via two product divisions: • Sterno Products - S terno Products offers a broad range of wick and gel chafing fuels, liquid and traditional wax candles, butane stoves and accessories, and catering equipment and lamps for restaurants, hotel and home entertainment uses, selling both Sterno brand and private label.
Share repurchase program In January 2023, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase, through December 31, 2023, up to $50 million of its outstanding common shares. The Company repurchased 482,400 shares for approximately $9.2 million during the year ended December 31, 2023. The share repurchase program expired on December 31, 2023.
This share repurchase program expired on December 31, 2024. In January 2023, the Company's Board approved a share repurchase program authorizing the Company to repurchase, through December 31, 2023, up to $50 million of its outstanding common shares. The Company repurchased 482,400 shares for approximately $9.2 million during the year ended December 31, 2023.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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These provisions include, among others: • restrictions on the LLC’s ability to enter into certain transactions with our major shareholders, with the exception of our Manager, modeled on the limitation contained in Section 203 of the Delaware General Corporation Law, or DGCL; • allowing only the LLC’s board of directors to fill newly created directorships, for those directors who are elected by our shareholders, and allowing only our Manager, as holder of a portion of the Allocation Interests, to fill vacancies with respect to the class of directors appointed by our Manager; • requiring that directors elected by our shareholders be removed, with or without cause, only by a vote of 85% of our shareholders; • requiring advance notice for nominations of candidates for election to the Company’s board of directors or for proposing matters that can be acted upon by our shareholders at a shareholders’ meeting; 62 • having a substantial number of additional authorized but unissued shares that may be issued without shareholder action; • providing the Company’s board of directors with certain authority to amend the LLC Agreement and the Trust Agreement, subject to certain voting and consent rights of the holders of trust interests and Allocation Interests; and • limitations regarding calling special meetings and written consents of our shareholders.
These provisions include, among others: • restrictions on the LLC’s ability to enter into certain transactions with our major shareholders, with the exception of our Manager, modeled on the limitation contained in Section 203 of the Delaware General Corporation Law, or DGCL; • allowing only the LLC’s board of directors to fill newly created directorships, for those directors who are elected by our shareholders, and allowing only our Manager, as holder of a portion of the Allocation Interests, to fill vacancies with respect to the class of directors appointed by our Manager; • requiring that directors elected by our shareholders be removed, with or without cause, only by a vote of 85% of our shareholders; • requiring advance notice for nominations of candidates for election to the Company’s Board or for proposing matters that can be acted upon by our shareholders at a shareholders’ meeting; • having a substantial number of additional authorized but unissued shares that may be issued without shareholder action; 59 • providing the Company’s Board with certain authority to amend the LLC Agreement and the Trust Agreement, subject to certain voting and consent rights of the holders of trust interests and Allocation Interests; and • limitations regarding calling special meetings and written consents of our shareholders.
Registering as an investment company could, among other things, materially adversely affect our financial condition, business and results of operations, materially limit our ability to borrow funds or engage in other transactions involving leverage and require us to add directors who are independent of us or our Manager and otherwise will subject us to additional regulation that will be costly and time-consuming.
Registering as an investment company could, among other things, materially adversely affect our financial condition, business and results of operations, materially limit our ability to borrow funds or engage in other transactions involving leverage and require us to add directors who are 60 independent of us or our Manager and otherwise will subject us to additional regulation that will be costly and time-consuming.
Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our businesses may result in additional costs and time delays that could materially adversely affect our financial condition, business and results of operations. We must pay our Manager the management fee regardless of our performance.
Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our businesses may result in additional costs and time delays that could materially adversely affect our financial condition, business and results of operations. We must pay our Manager the base management fee regardless of our performance.
We will have no obligation to pay distributions for a distribution period if the board of directors of the Company does not declare such distribution before the scheduled record date for such period, whether or not distributions are declared or paid for any subsequent distribution period with respect to the Series A Preferred Shares, or any other preferred shares we may issue or our common shares.
We will have no obligation to pay distributions for a distribution period if the Board of the Company does not declare such distribution before the scheduled record date for such period, whether or not distributions are declared or paid for any subsequent distribution period with respect to the Series A Preferred Shares, or any other preferred shares we may issue or our common shares.
The Company’s board of directors has full authority and discretion to determine whether or not a distribution by the Company should be declared and paid to the Trust and in turn, subject to U.S. federal income taxes and applicable state and local taxes, to our shareholders, as well as the amount and timing of any distribution.
The Company’s Board has full authority and discretion to determine whether or not a distribution by the Company should be declared and paid to the Trust and in turn, subject to U.S. federal income taxes and applicable state and local taxes, to our shareholders, as well as the amount and timing of any distribution.
In addition, any general changes to tax laws, such as changes to limitations on the deductibility of interest, could result in the Trust or its shareholders paying tax at rates higher than anticipated. 64 Risks Related to the Preferred Shares Distributions on the Series A Preferred Shares are discretionary and non-cumulative.
In addition, any general changes to tax laws, such as changes to limitations on the deductibility of interest, could result in the Trust or its shareholders paying tax at rates higher than anticipated. Risks Related to the Preferred Shares Distributions on the Series A Preferred Shares are discretionary and non-cumulative.
Any proceeds from the sale of a business will be allocated among us and the non-controlling shareholders of the business that is sold. The Company’s board of directors has the power to change the terms of our shares in its sole discretion in ways with which you may disagree.
Any proceeds from the sale of a business will be allocated among us and the non-controlling shareholders of the business that is sold. The Company’s Board has the power to change the terms of our shares in its sole discretion in ways with which you may disagree.
Our distribution policy may be changed at any time at the discretion of the Company’s board of directors. Future changes to tax laws are uncertain and may result in the Trust paying corporate income tax at rates higher than expected or result in the Trust failing to realize the anticipated benefits of the Election.
Our distribution policy may be changed at any time at the discretion of the Company’s Board. Future changes to tax laws are uncertain and may result in the Trust paying corporate income tax at rates higher than expected or result in the Trust failing to realize the anticipated benefits of the Election.
Future changes to tax laws are uncertain, but any such changes could cause the Trust to fail to realize the anticipated benefits of the Election. If corporate income tax rates are raised, the anticipated advantages of being treated as a corporation for U.S. tax purposes would be diminished.
Future changes to tax laws are uncertain, but any such changes could cause the Trust to fail to realize the anticipated benefits of the Election. If corporate income tax rates are raised, the anticipated advantages of being 61 treated as a corporation for U.S. tax purposes would be diminished.
Instead, the Company’s board of directors can only remove our Manager in certain limited circumstances or upon a vote by the majority of the Company’s board of directors and the majority of our shareholders to terminate the Management Services Agreement. This limitation could materially adversely affect the market price of our shares.
Instead, the Company’s Board can only remove our Manager in certain limited circumstances or upon a vote by the majority of the Company’s Board and the majority of our shareholders to terminate the Management Services Agreement. This limitation could materially adversely affect the market price of our shares.
As a shareholder of the Trust, you may disagree with the terms of the Conversion that might be implemented by the Company’s board of directors in the future, and you may disagree with the board’s determination that the terms of the Conversion are not materially adverse to you as a shareholder or that they are in the best interests of the Trust and its shareholders.
As a shareholder of the Trust, you may disagree with the terms of the Conversion that might be implemented by the Company’s Board in the future, and you may disagree with the Board’s determination that the terms of the Conversion are not materially adverse to you as a shareholder or that they are in the best interests of the Trust and its shareholders.
The Company’s board of directors has full authority and discretion over the distributions of the Company, other than the profit allocation, and it may decide to reduce or eliminate distributions at any time, which may materially adversely affect the market price for our shares.
The Company’s Board has full authority and discretion over the distributions of the Company, other than the profit allocation, and it may decide to reduce or eliminate distributions at any time, which may materially adversely affect the market price for our shares.
If we were deemed to be an investment company, we would either have to register as an investment company under the Investment Company Act, obtain exemptive relief from the SEC or modify our investments or organizational structure or our contract rights to fall 63 outside the definition of an investment company.
If we were deemed to be an investment company, we would either have to register as an investment company under the Investment Company Act, obtain exemptive relief from the SEC or modify our investments or organizational structure or our contract rights to fall outside the definition of an investment company.
Consequently, if the board of directors of the Company does not authorize and declare a distribution for a distribution period, holders of the Series A Preferred Shares would not be entitled to receive any distribution for such distribution period, and such unpaid distribution will not be payable in such distribution period or in later distribution periods.
Consequently, if the Board of the Company does not authorize and declare a distribution for a distribution period, holders of the Series A Preferred Shares would not be entitled to receive any distribution for such distribution period, and such unpaid distribution will not be payable in such distribution period or in later distribution periods.
Certain risks are inherent in operating or conducting business in foreign jurisdictions, including exposure to local economic conditions; difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; longer payment cycles for foreign customers; adverse currency exchange controls; exposure to risks associated with changes in foreign exchange rates; potential adverse changes in political environments; actual or threatened 71 geopolitical conflict; withholding taxes and restrictions on the withdrawal of foreign investments and earnings; export and import restrictions; difficulties in enforcing intellectual property rights; and required compliance with a variety of foreign laws and regulations.
Certain risks are inherent in operating or conducting business in foreign jurisdictions, including exposure to local economic conditions; difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; longer payment cycles for foreign customers; adverse currency exchange controls; exposure to risks associated with changes in foreign exchange rates; potential adverse changes in political environments; actual or threatened geopolitical conflict; withholding taxes and restrictions on the withdrawal of foreign investments and earnings; export and import restrictions; difficulties in enforcing intellectual property rights; and required compliance with a variety of 68 foreign laws and regulations.
This means that the Series A, Series B and Series C Preferred Shares rank junior to all of our indebtedness and to other non-equity claims on us and our assets available to satisfy claims on us, including claims in our liquidation.
This means that the Series A, Series B and Series C Preferred Shares rank junior to all of our indebtedness and to other non-equity claims on us and our assets available to satisfy claims on us, including claims in the event of our liquidation.
Distributions on the Series A Preferred Shares are discretionary and non-cumulative. Holders of the Series A Preferred Shares will only receive distributions of the Series A Preferred Shares when, as and if declared by the board of directors of the Company.
Distributions on the Series A Preferred Shares are discretionary and non-cumulative. Holders of the Series A Preferred Shares will only receive distributions of the Series A Preferred Shares when, as and if declared by the Board of the Company.
In addition, before the tax reclassification, income from the Trust was passed through to holders of its preferred shares, which resulted in less income being passed through from the Trust to holders of its common shares and effectively reduced each common shareholder’s allocable share of the Trust’s income; however, after the tax reclassification, no income will pass through to any shareholders, but the Trust will not be able to claim a tax deduction for distributions in respect of the preferred shares.
In addition, before the Election, income from the Trust was passed through to holders of its preferred shares, which resulted in less income being passed through from the Trust to holders of its common shares and effectively reduced each common shareholder’s allocable share of the Trust’s income; however, after the Election, no income will pass through to any shareholders, but the Trust will not be able to claim a tax deduction for distributions in respect of the preferred shares.
If we fail to comply with the relevant and increasing complex laws and regulations, we could suffer financial losses, a disruption of our business, liability to investors, regulatory intervention or reputational damage. Impairment of our goodwill, indefinite-lived intangible assets or other long-lived assets could result in significant charges that would adversely impact our future operating results.
If we fail to comply with the relevant and increasingly complex laws and regulations, we could suffer financial losses, a disruption of our business, liability to investors, regulatory intervention or reputational damage. Impairment of our goodwill, indefinite-lived intangible assets or other long-lived assets could result in significant charges that would adversely impact our future operating results.
Factors that could trigger impairment include the following: • significant under performance relative to historical or projected future operating results; • significant changes in the manner of or use of the acquired assets or the strategy for our overall business; • significant negative industry or economic trends; • significant decline in our stock price for a sustained period; • changes in our organization or management reporting structure could result in additional reporting units, which may require alternative methods of estimating fair values or greater desegregation or aggregation in our analysis by reporting unit; and • a decline in our market capitalization below net book value.
Factors that could trigger impairment include the following: • significant underperformance relative to historical or projected future operating results; • significant changes in the manner of or use of the acquired assets or the strategy for our overall business; • significant negative industry or economic trends; • significant decline in our stock price for a sustained period; • changes in our organization or management reporting structure could result in additional reporting units, which may require alternative methods of estimating fair values or greater desegregation or aggregation in our analysis by reporting unit; and • a decline in our market capitalization below net book value.
The Company’s board of directors may, based on their review of our financial condition and results of operations and pending acquisitions or our tax structure, determine to reduce or eliminate distributions, which may have a material adverse effect on the market price of our shares. We rely entirely on receipts from our businesses to make distributions to our shareholders.
The Board may, based on their review of our financial condition and results of operations and pending acquisitions or our tax structure, determine to reduce or eliminate distributions, which may have a material adverse effect on the market price of our shares. We rely entirely on receipts from our businesses to make distributions to our shareholders.
Risks Related to Velocity Outdoor Velocity’s products are subject to product safety and liability lawsuits, which could materially adversely affect its financial condition, business and results of operations. As a manufacturer of recreational airguns and archery products, Velocity is involved in various litigation matters that occur in the ordinary course of business.
Risks Related to Velocity Outdoor Velocity’s products are subject to product safety and liability lawsuits, which could materially adversely affect its financial condition, business and results of operations. As a manufacturer of archery products, Velocity is involved in various litigation matters that occur in the ordinary course of business.
Furthermore, because customers may be dependent on planned deliveries from us, customers that have to reschedule their own operations due to our delivery delays may be able to pursue financial claims against us, and we may incur costs to correct such problems in addition to any liability resulting from 69 such claims.
Furthermore, because customers may be dependent on planned deliveries from us, customers that have to reschedule their own operations due to our delivery delays may be able to pursue financial claims against us, and we may incur costs to correct such problems in addition to any liability resulting from 66 such claims.
Upon a determination by the Company’s board of directors not to promptly pursue an opportunity presented to it by our Manager in whole or in part, our Manager will be unrestricted in its ability to pursue such opportunity, or any part that we do not promptly pursue, on its own or refer such opportunity to other entities, including its affiliates.
Upon a determination by the Company’s Board not to promptly pursue an opportunity presented to it by our Manager in whole or in part, our Manager will be unrestricted in its ability to pursue such opportunity, or any part that we do not promptly pursue, on its own or refer such opportunity to other entities, including its affiliates.
If our Manager determines, in its sole discretion, that an opportunity fits our criteria, our Manager will refer the opportunity to the Company’s board of directors for its authorization and approval prior to the consummation thereof; opportunities that our Manager determines do not fit our criteria do not need to be presented to the Company’s board of directors for consideration.
If our Manager determines, in its sole discretion, that an opportunity fits our criteria, our Manager will refer the opportunity to the Company’s Board for its authorization and approval prior to the consummation thereof; opportunities that our Manager determines do not fit our criteria do not need to be presented to the Company’s Board for consideration.
Cyber attacks are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise, especially given increased vulnerability of corporate information technology systems as distributed work environments have become prevalent.
Cybersecurity attacks are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise, especially given increased vulnerability of corporate information technology systems as distributed work environments have become prevalent.
The Trust Agreement authorizes the Company, acting through the board of directors and without further shareholder approval, to cause the Trust to be converted to a corporation (the “Conversion”).
The Trust Agreement authorizes the Company, acting through the Board and without further shareholder approval, to cause the Trust to be converted to a corporation (the “Conversion”).
Under the Management Services Agreement, the Company will be obligated to pay a management fee to and, subject to certain conditions, reimburse the costs and out-of-pocket expenses of our Manager incurred on behalf of the Company in connection with the provision of services to the Company.
Under the Management Services Agreement, the Company will be obligated to pay management fees to and, subject to certain conditions, reimburse the costs and out-of-pocket expenses of our Manager incurred on behalf of the Company in connection with the provision of services to the Company.
There is a risk that Velocity's product liability insurance may not be sufficient to cover all liabilities incurred in connection with such claims and the financial consequences of these claims and lawsuits will have a material adverse effect on its business, financial condition, liquidity and results of operations. 68 General Risk Factors We could be negatively impacted by cybersecurity attacks.
Velocity's product liability insurance may not be sufficient to cover all liabilities incurred in connection with such claims and the financial consequences of these claims and lawsuits will have a material adverse effect on its business, financial condition, liquidity and results of operations. 65 General Risk Factors We could be negatively impacted by cybersecurity attacks.
Your recourse, if you disagree, will be limited because our Trust Agreement gives broad authority and discretion to our board of directors.
Your recourse, if you disagree, will be limited because our Trust Agreement gives broad authority and discretion to our Board.
In addition, the running of statutes of limitations in the United States for personal injuries to minor children may be suspended during the child’s legal minority. Therefore, it is possible that accidents resulting in injuries to minors may not give rise to lawsuits until a number of years later.
In addition, the running of statutes of limitations in the U.S. for personal injuries to minor children may be suspended during the child’s legal minority. Therefore, it is possible that accidents resulting in injuries to minors may not give rise to lawsuits until a number of years later.
Your 61 recourse, if you disagree, will be limited because our Trust Agreement gives broad authority and discretion to the Company’s board of directors to implement the Conversion as long as the board determines that it will be in the best interests of the Trust and its shareholders to do so.
Your recourse, if you disagree, will be limited because our Trust Agreement gives broad authority and discretion to the Board to 58 implement the Conversion as long as the Board determines that it will be in the best interests of the Trust and its shareholders to do so.
Our ability to meet our debt service obligations may be affected by events beyond our control and will depend primarily upon cash produced by our businesses. Any failure to comply with the terms of our indebtedness could materially adversely affect us. Changes in interest rates could materially adversely affect us.
Our ability to meet our debt service obligations may be affected by events beyond our control and will depend primarily upon cash produced by our businesses. Any failure to comply with the terms of our indebtedness could materially adversely affect us.
Ryan Faulkingham, devotes substantially all of his time to our affairs. Our Chief Executive Officer, directors, Manager and members of our management team may engage in other business activities. This may result in a conflict of interest in allocating their time between our operations and our management and operations of other businesses.
Stephen Keller, devotes substantially all of his time to our affairs. Our Chief Executive Officer, directors, Manager and members of our management team may engage in other business activities. This may result in a conflict of interest in allocating their time between our operations and our management and operations of other businesses.
In addition, we and our subsidiary companies may have difficulty effectively managing or integrating acquisitions. We may experience greater than expected costs or difficulties relating to such acquisition, in which case, we might not achieve the anticipated returns from any particular acquisition, which may have a material adverse effect on our financial condition, business and results of operations.
In addition, we and our subsidiary companies may have difficulty effectively managing or integrating acquisitions. We may experience greater than expected costs or difficulties relating to such acquisition, in which case, we might not achieve the anticipated returns from any particular acquisition, our financial condition, business and results of operations.
Therefore, the amount of cash available for distributions to holders of Trust common shares could be reduced and their investment could be adversely affected. Following the tax reclassification, determinations, declarations, and payments of distributions to holders of Trust common shares will continue to be at the sole discretion of the Company’s board of directors.
Therefore, the amount of cash available for distributions to holders of Trust common shares could be reduced and their investment could be adversely affected. Following the Election, determinations, declarations, and payments of distributions to holders of Trust common shares will continue to be at the sole discretion of the Company’s Board.
Our Manager will review any acquisition or disposition opportunity presented to the Manager to determine if it satisfies the Company’s acquisition or disposition criteria, as established by the Company’s board of directors from 65 time to time.
Our Manager will review any acquisition or disposition opportunity presented to the Manager to determine if it satisfies the Company’s acquisition or disposition criteria, as established by the Company’s Board from time to time.
As an owner of our shares, you may disagree with changes made to the terms of our shares, and you may disagree with the Company’s board of directors’ decision that the changes made to the terms of the shares are not materially adverse to you as a shareholder or that they do not alter the characterization of the Trust.
As an owner of our shares, you may disagree with changes made to the terms of our shares, and you may disagree with the Board's decision that the changes made to the terms of the shares are not materially adverse to you as a shareholder or that they do not alter the characterization of the Trust.
The management fee is calculated by reference to the Company’s adjusted net assets, which will be impacted by the acquisition or disposition of businesses, which can be significantly influenced by our Manager, as well as the performance of our businesses and other businesses we may acquire in the future.
Both the base management fee and the incentive management fee are calculated by reference to the Company’s adjusted net assets, which will be impacted by the acquisition or disposition of businesses, which can be significantly influenced by our Manager, as well as the performance of our businesses and other businesses we may acquire in the future.
Under the Trust Agreement, the Company’s board of directors will have the power to cause the Trust to be converted to a corporation in the future at its sole discretion in ways with which you may disagree.
Under the Trust Agreement, the Company’s Board will have the power to cause the Trust to be converted to a corporation in the future at its sole discretion in ways with which our shareholders may disagree.
Such determination would be dependent on the potential sale proceeds received for any of our businesses and the performance of the Company and its businesses over a multi-year period of time, among other factors that cannot be predicted with certainty at this time. Such factors may have a significant impact on the amount of any profit allocation to be paid.
We cannot determine the amount of profit allocation that will be paid over time with any certainty. Such determination would be dependent on the potential sale proceeds received for any of our businesses and the performance of the Company and its businesses over a multi-year period of time, among other factors that cannot be predicted with certainty at this time.
As a result, the payment of these amounts may significantly reduce the amount of earnings and cash available for distribution to our shareholders. Our Manager’s influence on conducting our operations, including on our conducting of transactions, gives it the ability to increase its fees, which may reduce the amount of earnings and cash available for distribution to our shareholders.
Our Manager’s influence on conducting our operations, including on our conducting of transactions, gives it the ability to increase its fees, which may reduce the amount of earnings and cash available for distribution to our shareholders.
As of December 31, 2023, we had identified indefinite lived intangible assets with a carrying value in our financial statements of $57.0 million, and goodwill of $901.4 million. Our businesses are subject to unplanned business interruptions which may adversely affect our performance.
As of December 31, 2024, we had identified indefinite lived intangible assets with a carrying value in our financial statements of $30.8 million, and goodwill of $982.3 million. Our businesses are subject to unplanned business interruptions which may adversely affect our performance.
Complying with applicable environmental laws requires significant resources, and if our businesses fail to comply, they could be subject to substantial liability. 70 Some of the facilities and operations of our businesses are and may be subject to a variety of federal, state and foreign environmental laws and regulations including laws and regulations pertaining to the handling, storage and transportation of raw materials, products and wastes, which require and will continue to require significant expenditures to remain in compliance with such laws and regulations currently in place and in the future.
Some of the facilities and operations of our businesses are and may be subject to a variety of federal, state and foreign environmental laws and regulations including laws and regulations pertaining to the handling, storage and transportation of raw materials, products and wastes, which require and will continue to require significant 67 expenditures to remain in compliance with such laws and regulations currently in place and in the future.
Any amounts paid in respect of the profit allocation are unrelated to the management fee earned for performance of services under the management services agreement. 66 The fees to be paid to our Manager pursuant to the Management Services Agreement, the offsetting Management Services Agreements and integration services agreements and the profit allocation to be paid to certain persons who are employees and partners of our Manager, as holders of the Allocation Interests, pursuant to the LLC Agreement may significantly reduce the amount of earnings and cash available for distribution to our shareholders.
The fees to be paid to our Manager pursuant to the Management Services Agreement, and the offsetting management services agreements and the profit allocation to be paid to certain persons who are employees and partners of our Manager, as holders of the Allocation Interests, pursuant to the LLC Agreement may significantly reduce the amount of earnings and cash available for distribution to our shareholders.
There is no assurance that adverse financial conditions, including bankruptcies of our suppliers, reduced levels of production, natural disasters, staffing shortages, supply chain issues or other problems experienced by our suppliers will not result in shortages or delays in their supply of components to us. For example, the COVID-19 pandemic has resulted in labor shortages and supply chain disruptions.
There is no assurance that adverse financial conditions, including bankruptcies of our suppliers, reduced levels of production, natural disasters, staffing shortages, supply chain issues or other problems experienced by our suppliers will not result in shortages or delays in their supply of components to us.
Potential conflicts of interest may exist with respect to a particular acquisition, and, as a result, the terms of the acquisition of a target business may not be as advantageous to our shareholders as it would have been absent any conflicts of interest. CGI Maygar Holdings LLC may exercise significant influence over the Company.
Potential conflicts of interest may exist with respect to a particular acquisition, and, as a result, the terms of the acquisition of a target business may not be as advantageous to our shareholders as it would have been absent any conflicts of interest.
The Series A, Series B and Series C Preferred Shares are equity securities and are subordinated to our existing and future indebtedness. The Series A, Series B and Series C Preferred Shares are our equity interests and do not constitute indebtedness.
The Series A, Series B and Series C Preferred Shares are our equity interests and do not constitute indebtedness.
Our financing arrangements expose us to additional risks associated with leverage and inhibits our operating flexibility and reduces earnings and cash available for distributions to our shareholders. At December 31, 2023, we had approximately $1,685 million of consolidated debt outstanding.
Our financing arrangements expose us to additional risks associated with leverage, inhibit our operating flexibility and reduce earnings and cash available for distributions to our shareholders. As of December 31, 2024, we had approximately $1,785 million of consolidated debt outstanding.
Our Ergobaby, Velocity, Altor and Sterno businesses derive a significant amount of revenue from a concentrated number of retailers, distributors or manufacturers.
Our The Honey Pot Co., Altor and Sterno businesses derive a significant amount of revenue from a concentrated number of retailers, distributors or manufacturers.
Risks Specific to Our Subsidiaries Risks Related to Arnold Arnold's operations and the prior operations of predecessor companies expose it to the risk of material environmental liabilities, which could have a negative effect on its financial condition or results of operations.
This circumstance could materially adversely affect our liquidity and ability to make distributions to our shareholders. 64 Risks Specific to Our Subsidiaries Risks Related to Arnold Arnold's operations and the prior operations of predecessor companies expose it to the risk of material environmental liabilities, which could have a negative effect on its financial condition or results of operations.
Under the terms of the Management Services Agreement, our Manager is paid a management fee calculated as a percentage of the Company’s adjusted net assets for certain items and is unrelated to net income or any other performance base or measure.
The base management fee is calculated as a percentage (which varies based on our size) of the Company’s adjusted net assets for certain items and is unrelated to net income or any other performance base or measure.
The board of directors of the Company may, in its sole discretion, determine to suspend distributions on the Series A Preferred Shares, which may have a material adverse effect on the market price of the Series A Preferred Shares.
The Board of the Company may, in its sole discretion, determine to suspend distributions on the Series A Preferred Shares, which may have a material adverse effect on the market price of the Series A Preferred Shares. Our operations may not generate sufficient cash flows to enable us to pay distributions on the Series A Preferred Shares.
Likewise, such determination would be dependent on whether certain hurdles were surpassed giving rise to a payment of profit allocation.
Such factors may have a significant impact on the amount of any profit allocation to be paid. Likewise, such determination would be dependent on whether certain hurdles were surpassed giving rise to a payment of profit allocation.
Risks Related to Sterno Sterno's products operate at high temperatures and use flammable fuels, each of which could subject our business to product liability claims. Sterno products expose it to potential product liability claims typical of fuel based heating products. The fuels Sterno uses in its products are flammable and may be toxic if ingested.
Risks Related to Sterno Sterno's products operate at high temperatures and use flammable fuels, each of which could subject our business to product liability claims, which could adversely affect its reputation and reduce customer demand. Sterno's products expose it to potential product liability claims typical of fuel based heating products.
If we do not have sufficient liquid assets to pay the management fee and profit allocation when such payments are due, we may be required to liquidate assets or incur debt in order to make such payments. This circumstance could materially adversely affect our liquidity and ability to make distributions to our shareholders.
The obligations to pay management fees and profit allocation may cause the Company to liquidate assets or incur debt. If we do not have sufficient liquid assets to pay the management fees and profit allocation when such payments are due, we may be required to liquidate assets or incur debt in order to make such payments.
Another source of capital for us may be the sale of additional shares, subject to market conditions and investor demand for the shares at prices that we consider to be in the interests of our shareholders.
Another source of capital for us may be the sale of additional shares, subject to market conditions and investor demand for the shares at prices that we consider to be in the interests of our shareholders. These risks may materially adversely affect our ability to pursue our acquisition strategy successfully and our financial condition, business and results of operations.
Accidents involving Sterno products may have an adverse effect on its reputation and reduce demand for its products. In addition, Sterno may be held responsible for damages beyond its insurance coverage and there can be no guarantee that it will be able to procure adequate insurance coverage in the future.
The fuels Sterno uses in its products are flammable and may be toxic if ingested. Accidents involving Sterno's products may have an adverse effect on its reputation and reduce demand for its products. In addition, Sterno may be held responsible for damages beyond its insurance coverage and we may not be able to procure adequate insurance coverage in the future.
Our businesses are and may be subject to federal, state and foreign environmental laws and regulations that expose them to potential financial liability.
Our businesses are and may be subject to federal, state and foreign environmental laws and regulations that expose them to potential financial liability. Complying with applicable environmental laws requires significant resources, and if our businesses fail to comply, they could be subject to substantial liability.
If a significant number of their customers or clients elect not to use their services or purchase their products, it could materially adversely affect their financial condition, business and results of operations.
If a significant number of their customers or clients elect not to use their services or purchase their products, it could materially adversely affect their financial condition, business and results of operations. Changes to U.S. tariff and import/export regulations may have a negative effect on economic activity, financial conditions and results of our businesses.
Changes in adjusted net assets and in the resulting management fee could be significant, resulting in a material adverse effect on the Company’s results of operations. In addition, if the performance of the Company declines, assuming adjusted net assets remains the same, management fees will increase as a percentage of the Company’s net income.
Changes in adjusted net assets and in the resulting management fees could be significant, resulting in a material adverse effect on the Company’s results of operations.
In this regard, the Management Services Agreement and the obligation to provide management services will not create a mutually exclusive relationship between our Manager and its affiliates, on the one hand, and the Company, on the other.
In this regard, the Management Services Agreement and the obligation to provide management services will not create a mutually exclusive relationship between our Manager and its affiliates, on the one hand, and the Company, on the other. 62 Our Manager need not present an acquisition or disposition opportunity to us if our Manager determines on its own that such acquisition or disposition opportunity does not meet the Company’s acquisition or disposition criteria.
As a result, our Manager may be incentivized to recommend the sale of one or more of our businesses to the Company’s board of directors at a time that may not be optimal for our shareholders. 67 The obligations to pay the management fee and profit allocation may cause the Company to liquidate assets or incur debt.
In this respect, a calculation and payment of profit allocation may be triggered upon the sale of one of our businesses. As a result, our Manager may be incentivized to recommend the sale of one or more of our businesses to the Company’s Board at a time that may not be optimal for our shareholders.
Similarly, our businesses will be obligated to pay fees to and reimburse the costs and expenses of our Manager pursuant to any offsetting Management Services Agreements entered into between our Manager and one of our businesses, or any integration services agreements to which such businesses are a party.
Similarly, our businesses will be obligated to pay fees to and reimburse the costs and expenses of our Manager pursuant to any offsetting management services agreements entered into between our Manager and one of our businesses. In addition, Sostratus LLC, as holder of the Allocation Interests, will be entitled to receive profit allocations.
If, in the future, we cease to control and operate our businesses, we may be deemed to be an investment company under the Investment Company Act of 1940, as amended. Under the terms of the LLC Agreement, we have the latitude to make investments in businesses that we will not operate or control.
If, in the future, we cease to control and operate our businesses, we may be deemed to be an investment company under the Investment Company Act of 1940, as amended, which may adversely affect our business, financial conditions and otherwise.
In addition, Sostratus LLC, as holder of the Allocation Interests, will be entitled to receive profit allocations. While it is difficult to quantify with any certainty the actual amount of any such payments in the future, we do expect that such amounts could be substantial. See the section entitled Part 3, Item 13.
While it is difficult to quantify with any certainty the actual amount of any such payments in the future, we do expect that such amounts could be substantial. See the section entitled Part 3, Item 13. “ Certain Relationships and Related Transactions, and Director Independence ” for more information about these payment obligations of the Company.
“ Certain Relationships and Related Transactions, and Director Independence ” for more information about these payment obligations of the Company. The management fee and profit allocation will be payment obligations of the Company and, as a result, will be paid, along with other Company obligations, prior to the payment of distributions to shareholders.
The management fees and profit allocation will be payment obligations of the Company and, as a result, will be paid, along with other Company obligations, prior to the payment of distributions to shareholders. As a result, the payment of these amounts may significantly reduce the amount of earnings and cash available for distribution to our shareholders.
There can be no assurances that our operations will generate sufficient cash flows to enable us to pay distributions on the Series A Preferred Shares. Our financial and operating performance is subject to prevailing economic and industry conditions and to financial, business and other factors, some of which are beyond our control.
Our financial and operating performance is subject to prevailing economic and industry conditions and to financial, business and other factors, some of which are beyond our control. The Series A, Series B and Series C Preferred Shares are equity securities and are subordinated to our existing and future indebtedness.
Our 2022 Credit Facility bears interest at floating rates which will generally change as interest rates change.
Changes in interest rates could materially adversely affect our profitability, ability to service debt, and our business as a whole. Our 2022 Credit Facility bears interest at floating rates which will generally change as interest rates change.
We cannot determine the amount of profit allocation that will be paid over time with any certainty. We cannot determine the amount of profit allocation that will be paid over time with any certainty.
In addition, if the performance of the Company declines, assuming adjusted net assets remains the same, management fees will increase as a percentage of the Company’s net income. 63 We cannot determine the amount of profit allocation that will be paid over time with any certainty.
Removed
These risks may materially adversely affect our ability to pursue our acquisition strategy successfully and materially adversely affect our financial condition, business and results of operations.
Added
Under the terms of the LLC Agreement, we have the latitude to make investments in businesses that we will not operate or control.
Removed
As of December 31, 2023, CGI Maygar Holdings LLC owns approximately 8.0 million or approximatel y 11.1% of our common shares and may have significant influence over the election of directors in the future.
Added
The U.S. has recently enacted and proposed to enact significant new tariffs. Additionally further evaluation of key aspects of U.S. trade policy is occurring, along with ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs.
Removed
Our Manager need not present an acquisition or disposition opportunity to us if our Manager determines on its own that such acquisition or disposition opportunity does not meet the Company’s acquisition or disposition criteria.
Added
There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may significantly affect global trade and, in particular, trade between the impacted nations and the U.S.
Removed
The management fee paid to CGM for the year ended December 31, 2023 was $68.4 million.
Added
Any of these factors could depress economic activity and restrict our businesses' access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations.
Removed
Fees paid by the Company and our businesses pursuant to integration services agreements do not offset fees payable under the Management Services Agreement and will be in addition to the management fee payable by the Company under the Management Services Agreement.
Added
The management fee paid to CGM for the year ended December 31, 2024 was $74.8 million. Going forward, the management fee will consist of a base management fee and, if specified performance measure is met under certain circumstances, an incentive management fee.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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As part of such reviews, our board of directors and Audit Committee receive periodic reports and presentations from members of the team responsible for overseeing cybersecurity risk management. These periodic reviews address various topics including evolving regulatory standards, recent developments, vulnerability assessments, third-party reviews, and other information security topics that senior management deems necessary.
As part of such reviews, our Board and Audit Committee receive periodic reports and presentations from members of the team responsible for overseeing cybersecurity risk management. These periodic reviews address various topics including evolving regulatory standards, recent developments, vulnerability assessments, third-party reviews, and other information security topics that senior management deems necessary.
For more information on our cybersecurity related risks, see Item 1A Risk Factors of this Annual Report on Form 10-K. Cybersecurity Governance Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity risks to the Audit Committee.
For more information on our cybersecurity related risks, see Item 1A Risk Factors of this Annual Report on Form 10-K. Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity risks to the Audit Committee.
ITEM 1C. CYBERSECURITY Risk Management Cybersecurity risk management is overseen both as a critical component of our overall risk management program and as a standalone program.
ITEM 1C. CYBERSECURITY Risk Management and Strategy Cybersecurity risk management and strategy is overseen both as a critical component of our overall risk management program and as a standalone program.
The Audit Committee has oversight responsibility for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements and related effects on financial and other risks, and it reports any findings and recommendations, as appropriate, to the full board of directors for consideration.
The Audit Committee has oversight responsibility for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements and related effects on financial and other risks, and it reports any findings and recommendations, as appropriate, to the full Board for consideration.
Senior management regularly discusses cyber risks and trends and, if they should arise, will discuss any material incidents with the Audit Committee. Both the board of directors and the Audit Committee periodically review the measures we have implemented to identify and mitigate cybersecurity risks.
Senior management regularly discusses cyber risks and trends and, if they should arise, will discuss any material incidents with the Audit Committee. Both the Board and the Audit Committee periodically review the measures we have implemented to identify and mitigate cybersecurity risks.
We have also established protocols by which certain cybersecurity incidents that meet established reporting thresholds are escalated internally and, where appropriate, reported to the Audit Committee or the board of directors in a timely manner.
We have also established protocols by which certain cybersecurity incidents that meet established reporting thresholds are escalated internally and, where appropriate, reported to the Audit Committee or the Board in a timely manner.

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. PROPERTIES The following is a summary as of December 31, 2023 of the physical properties owned or leased by our businesses that we consider materially important to those businesses. 73 5.11 5.11 is headquartered in Costa Mesa, California and leases offices and warehouse space in locations worldwide. The summary below outlines 5.11's primary leased offices and warehouse space.
ITEM 2. PROPERTIES The following is a summary as of December 31, 2024 of the physical properties owned or leased by our businesses that we consider materially important to those businesses. 70 5.11 5.11 is headquartered in Costa Mesa, California and leases offices and warehouse space in locations worldwide. The summary below outlines 5.11's primary leased offices and warehouse space.
Location Square Feet Use Plano, TX 4,356 Corporate Office Memphis, TN 196,200 Manufacturing Texarkana, TX 357,700 Manufacturing La Porte, IN 20,000 Office/ Manufacturing Provo, UT 171,361 Office/Warehouse Spanish Fork, UT 585,904 Warehouse Calgary, Canada 28,748 Office/Warehouse Corporate Our corporate offices are located in Westport, Connecticut and Costa Mesa, California, where we utilize space provided by our Manager.
Location Square Feet Use Plano, TX 4,356 Corporate Office Memphis, TN 196,200 Manufacturing Texarkana, TX 337,700 Manufacturing La Porte, IN 20,000 Office/ Manufacturing Provo, UT 171,361 Office/Warehouse Spanish Fork, UT 585,904 Warehouse Bentonville, AR 3,000 Office Corporate Our corporate offices are located in Westport, Connecticut and Costa Mesa, California, where we utilize space provided by our Manager.
BOA BOA is headquartered in Denver, Colorado and leases offices and warehouse space in locations worldwide. The summary below outlines BOA's primary leased offices and warehouse space. Location Square Feet Use Denver, CO 88,000 Office Mondsee, Austria 15,714 Office Hong Kong, China 30,000 Office/Warehouse Ergobaby Ergobaby is headquartered in Torrance, California and leases office and warehouse locations worldwide.
BOA BOA is headquartered in Denver, Colorado and leases offices and warehouse space in locations worldwide. The summary below outlines BOA's primary leased offices and warehouse space. Location Square Feet Use Denver, CO 88,000 Office Mondsee, Austria 15,714 Office Hong Kong, China 10,000 Office/Warehouse Lugano Lugano is headquartered in Newport Beach, California.
Location Square Feet Use Newport Beach, CA 47,726 Corporate office and Retail salon London, UK 4,600 Office and Retail salon Palm Beach, FL 6,683 Retail salon Greenwich, CT 3,509 Retail salon Aspen, CO 1,463 Retail salon Ocala, FL 2,014 Retail salon Houston, TX 1,069 Retail salon Washington, DC 2,971 Retail salon 74 PrimaLoft PrimaLoft is headquartered in Latham, New York.
Location Square Feet Use Newport Beach, CA 46,170 Corporate office and Retail salon Chicago, IL 15,769 Retail salon London, UK 3,600 Office and Retail salon Palm Beach, FL 4,528 Retail salon Greenwich, CT 3,509 Retail salon Aspen, CO 1,463 Retail salon Ocala, FL 2,014 Retail salon Houston, TX 1,069 Retail salon Washington, DC 2,971 Retail salon PrimaLoft PrimaLoft is headquartered in Latham, New York.
Location Square Feet Use Costa Mesa, CA 39,650 Office Manteca, CA 400,000 Warehouse Bankstown, Australia 10,387 Office Malmo, Sweden 8,751 Office Kowloon Bay, Hong Kong 17,759 Office In addition, at December 31, 2023, 5.11 leased space for 123 retail store s, ranging in size fr om 3,000 square feet to 12,575 square feet, with an average square footage of 5,000 square feet.
Location Square Feet Use Costa Mesa, CA 39,650 Office Manteca, CA 400,000 Warehouse Bankstown, Australia 10,387 Office Malmo, Sweden 8,751 Office Kowloon Bay, Hong Kong, China 17,759 Office In addition, at December 31, 2024, 5.11 leased space for 122 retail stores, ranging in size from 3,250 square feet to 10,000 square feet, with an average square footage of 5,000 square feet.
Location Square Feet Use Marengo, IL 94,220 Office/Warehouse Marietta, OH 81,000 Office/Warehouse Marengo, IL 57,600 Office/Warehouse 75 Norfolk, NE 109,000 Office/Warehouse Rochester, NY 73,000 Office/Warehouse Ogallala, NE 25,000 Office/Warehouse Greenville, OH 70,908 Office/Warehouse Sheffield, England 25,000 Office/Warehouse Lupfig, Switzerland 52,937 Office/Warehouse Middleton, WI 10,616 Office/Warehouse Guangdong Province, China 113,302 Office/Warehouse Sterno Sterno is headquartered in Plano, Texas.
Location Square Feet Use Marietta, OH 81,000 Office/Warehouse Norfolk, NE 109,000 Office/Warehouse Rochester, NY 73,000 Office/Warehouse Ogallala, NE 25,000 Office/Warehouse Greenville, OH 70,908 Office/Warehouse Woodstock, IL 124,995 Office/Warehouse 72 Middleton, WI 10,616 Office/Warehouse Sheffield, England 25,000 Office/Warehouse Lupfig, Switzerland 52,937 Office/Warehouse Guangdong Province, China 113,302 Office/Warehouse ChonBuri, Thailand 37,673 Office/Warehouse Sterno Sterno is headquartered in Plano, Texas.
Altor Solutions Altor is headquartered in Scottsdale, Arizona and operat es 15 moldi ng and fabricating facilities across North America. Altor owns the New Albany, IN, Bloomsburg, PA and El Dorado Springs, MO locations. All other locations are leased. The summary below outlines Altor's primary property locations.
Its King's Camo subsidiary leases a 14,000 square foot manufacturing facility in Lindon, Utah. Altor Solutions Altor is headquartered in St. Louis, Missouri and operat es 23 moldi ng and fabricating facilities across North America. Altor owns the New Albany, IN, Bloomsburg, PA and El Dorado Springs, MO locations. All other locations are leased.
Location Square Feet Use Scottsdale, Arizona 7,000 Corporate Anderson, South Carolina 133,250 Manufacturing/Warehouse Compton, California 44,000 Manufacturing/Warehouse Erie, Pennsylvania 35,772 Manufacturing/Warehouse Fort Madison, Iowa 114,000 Manufacturing/Warehouse Jackson, Tennessee 55,000 Manufacturing/Warehouse Jefferson, Georgia 60,000 Manufacturing/Warehouse Keller, Texas 131,073 Manufacturing/Warehouse Modesto, California 79,000 Manufacturing/Warehouse El Dorado Springs, Missouri 38,000 Manufacturing/Warehouse New Albany, Indiana 65,000 Manufacturing/Warehouse Bloomsburg, Pennsylvania 54,000 Manufacturing/Warehouse Northbridge, MA 380,000 Manufacturing/Warehouse Cranston, RI 14,000 Manufacturing/Warehouse Plymouth, WI 248,000 Manufacturing/Warehouse Gnadenhutten, OH 98,200 Manufacturing/Warehouse Uxbridge, MA 117,586 Manufacturing/Warehouse Tijuana, Mexico 60,000 Manufacturing/Warehouse Rosa Jaurequi, MX 100,000 Manufacturing/Warehouse Arnold Arnold is headquartered in Rochester, New York and has eleven manufacturing facilities.
Location Square Feet Use Anderson, South Carolina 133,250 Manufacturing/Warehouse Belcamp, Maryland 337,865 Manufacturing/Warehouse Bloomsburg, Pennsylvania 54,000 Manufacturing/Warehouse Compton, California 44,000 Manufacturing/Warehouse El Dorado Springs, Missouri 38,000 Manufacturing/Warehouse Fort Madison, Iowa 114,000 Manufacturing/Warehouse Gnadenhutten, Ohio 98,200 Manufacturing/Warehouse Huntington Beach, California 11,000 Manufacturing/Warehouse Jackson, Tennessee 55,000 Manufacturing/Warehouse Jefferson, Georgia 60,000 Manufacturing/Warehouse Keller, Texas 131,073 Manufacturing/Warehouse Modesto, California 53,022 Manufacturing/Warehouse New Albany, Indiana 65,000 Manufacturing/Warehouse North Andover, Massachusetts 248,500 Manufacturing/Warehouse Northbridge, Massachusetts 380,000 Manufacturing/Warehouse Plymouth, Wisconsin 248,000 Manufacturing/Warehouse Rome, Georgia 170,884 Manufacturing/Warehouse Springfield, Tennessee 34,895 Manufacturing/Warehouse St.
The summary below outlines PrimaLoft's primary leased office space. Location Square Feet Use Latham, NY 13,321 Corporate Office Xiamen, China 5,796 Office Taufkirchen, Germany 4,330 Office Velocity Outdoor Velocity Outdoor is headquartered in Bloomfield, New York.
The summary below outlines PrimaLoft's primary leased office space. Location Square Feet Use Latham, NY 13,321 Corporate Office Xiamen, China 6,347 Office 71 The Honey Pot Co. The Honey Pot Co. is headquartered in Atlanta, Georgia and leases office space of approximately 10,000 square feet. Velocity Outdoor Velocity's Ravin subsidiary leases an 85,000 square foot manufacturing facility in Superior, Wisconsin.
Arnold owns the Ogallala, NE and the Greenville, OH locations. All other locations are leased. The summary below outlines Arnold's primary property locations.
Petersburg, Florida 79,503 Manufacturing/Warehouse Vernon, California 100,545 Manufacturing/Warehouse Waxahachie, Texas 198,450 Manufacturing/Warehouse Rosa Jaurequi, Mexico 100,000 Manufacturing/Warehouse Tijuana, Mexico 60,000 Manufacturing/Warehouse Arnold Arnold is headquartered in Rochester, New York and has eleven manufacturing facilities. Arnold owns the Ogallala, NE and the Greenville, OH locations. All other locations are leased. The summary below outlines Arnold's primary property locations.
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The summary below outlines Ergobaby's primary leased office and warehouse space. Location Square Feet Use Carson, CA 5,000 Warehouse Bialystok, Poland 9,688 Warehouse Hamburg, Germany 4,886 Office Lugano Lugano is headquartered in Newport Beach, California. The summary below outlines Lugano's primary leased office space and retail locations.
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The summary below outlines Lugano's primary leased office space and retail locations.
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Velocity owns a 225,000 square foot manufacturing facility in Bloomfield, New York that also holds their corporate offices, and leases a 144,000 square foot finished goods warehouse in Farmington, New York. Velocity's Ravin subsidiary operates an 85,000 square foot manufacturing facility in Superior, Wisconsin.
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The summary below outlines Altor's primary property locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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The Consent Order also requires the ultimate settlement of any 76 stipulated and civil penalties related to the Marengo Litigation. In May of 2021, the McHenry County State’s Attorney joined the Marengo Litigation as a plaintiff.
The Consent Order also requires the ultimate settlement of any stipulated and civil penalties related to the Marengo Litigation. In May of 2021, the McHenry County State’s Attorney joined the Marengo Litigation as a plaintiff.
Arnold Our Arnold subsidiary was named as co-defendant, together with 300 West LLC (“300 West”), in a suit filed in the Twenty-Second Judicial Circuit, McHenry County, Illinois, Chancery Division (Case No. 13CH1046) in 2013 by the State of Illinois (the “Marengo Litigation”). Arnold leases a site in Marengo, McHenry County, Illinois (the “Site”) from 300 West.
Arnold Our Arnold subsidiary was named as co-defendant, together with 300 West LLC (“300 West”), in a suit filed in the Twenty-Second Judicial Circuit, McHenry County, Illinois, Chancery Division (Case No. 13CH1046) on June 14, 2013 by the State of Illinois (the “Marengo Litigation”). Arnold leases a site in Marengo, McHenry County, Illinois (the “Site”) from 300 West.
CODI does not believe that the outcome of the Marengo Litigation will have a material adverse effect on its financial position or results of operations.
We do not believe that the outcome of the Marengo Litigation will have a material adverse effect on its financial position or results of operations.
Certain damages incurred by Arnold in connection with the Marengo Litigation are subject to indemnification pursuant to the Stock Purchase Agreement, among SPS Technologies, LLC (“SPS”), SPS Technologies Limited (“SPS Ltd.”), Precision Castparts Corp.
The Marengo lease ended on December 31, 2024. 73 Certain damages incurred by Arnold in connection with the Marengo Litigation are subject to indemnification pursuant to the Stock Purchase Agreement, among SPS Technologies, LLC (“SPS”), SPS Technologies Limited (“SPS Ltd.”), Precision Castparts Corp.
Since 2008, Arnold and 300 West have been a part of the Illinois Remediation Program with respect to the Site. In the Marengo Litigation, the State of Illinois claimed that 300 West and Arnold discharged Chlorinated VOCs into the groundwater on-Site, which has since migrated off-Site into private drinking wells. The State of Illinois sought injunctive relief and civil penalties.
Since 2008, Arnold and 300 West have been a part of the Illinois Remediation Program with respect to the Site. In the Marengo Litigation, the State of Illinois claimed that 300 West and Arnold discharged Chlorinated volatile organic compounds into the groundwater on-Site, which has since migrated off-Site into private drinking wells.
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The State of Illinois sought injunctive relief and civil penalties.
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In June 2024, Arnold issued a notice to 300 West to terminate its lease for the Marengo site and subsequently moved to a new location in Woodstock, Illinois. Arnold and 300 West are still in discussion regarding maintenance and repair to the Marengo property.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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COMPARATIVE PERFORMANCE OF SHARES OF TRUST COMMON STOCK The performance graph shown below compares the change in cumulative total shareholder return on common shares of Trust stock with the NYSE Composite Index and the NYSE Financial Sector Index for the previous five years, through the year ended December 31, 2023.
COMPARATIVE PERFORMANCE OF SHARES OF TRUST COMMON STOCK The performance graph shown below compares the change in cumulative total shareholder return on common shares of Trust stock with the NYSE Composite Index and the NYSE Financial Sector Index for the previous five years, through the year ended December 31, 2024.
The Company’s board of directors may, based on their review of our financial condition and results of operations and any future changes to our tax structure, determine to modify future distributions.
The Board may, based on their review of our financial condition and results of operations and any future changes to our tax structure, determine to modify future distributions.
The Company plans to continue to declare and pay quarterly cash distributions on all outstanding shares through fiscal 2024, however, the Company’s board of directors has full authority and discretion to determine whether or not a distribution by the Company should be declared and paid to the Trust and in turn to our shareholders, as well as the amount and timing of any distribution.
The Company plans to continue to declare and pay quarterly cash distributions on all outstanding shares through fiscal 2025, however, the Board has full authority and discretion to determine whether or not a distribution by the Company should be declared and paid to the Trust and in turn to our shareholders, as well as the amount and timing of any distribution.
The Company expects cash distributions will exceed earnings and profits in the 2023 taxable year.
The Company expects cash distributions will exceed earnings and profits in the 2024 taxable year.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common shares of Trust stock has traded on the New York Stock Exchange (the “NYSE”) under the symbol “CODI”. Common Stock Holders On December 31, 2023 there were 15 registered ho lders of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common shares of Trust stock has traded on the New York Stock Exchange (the “NYSE”) under the symbol “CODI”. Common Stock Holders On December 31, 2024 there were 15 shareholders of record of our common stock.
All common shares repurchased during the fourth quarter of 2023 were repurchased pursuant to this publicly-announced share repurchase program. (2) As of December 31, 2023, the publicly-announced share repurchase program expired. 79 ITEM 6. [Reserved] 80
All common shares repurchased during the fourth quarter of 2024 were repurchased pursuant to this publicly-announced share repurchase program. (2) As of December 31, 2024, the publicly-announced share repurchase program expired. ITEM 6. [Reserved] 76
The number of registered holders includes banks and brokers who act as nominees, each of whom may represent more than one shareholder.
The number of shareholders of record includes banks and brokers who act as nominees, each of whom may represent more than one shareholder.
Issuer Purchases of Equity Securities The following table presents the total number of shares of common stock purchased during the quarter ended December 31, 2023, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase program, if any, and the approximate dollar value of the maximum number of shares that may yet be purchased under the share repurchase program: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1 - October 31, 2023 — $ — — $ 42,600,000 November 1 - November 30, 2023 87,500 $ 19.12 87,500 $ 41,000,000 December 1 - December 31, 2023 12,500 $ 20.65 12,500 $ 40,800,000 Total 100,000 $ 19.31 100,000 $ 40,800,000 (1) In January 2023, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase, through December 31, 2023, up to $50.0 million of outstanding common shares of the Trust.
Recent Sales of Unregistered Securities None Issuer Purchases of Equity Securities The following table presents the total number of shares of common stock purchased during the quarter ended December 31, 2024, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase program, if any, and the approximate dollar value of the maximum number of shares that may yet be purchased under the share repurchase program: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1 - October 31, 2024 — N/a N/a N/a November 1 - November 30, 2024 234,290 $ 22.99 234,290 $ 94,600,000 December 1 - December 31, 2024 182,030 $ 23.45 182,030 $ 90,300,000 Total 416,320 $ 23.19 416,320 $ 90,300,000 (1) In October 2024, the Board approved a share repurchase program authorizing the Company to repurchase, through December 31, 2024, up to $100 million of outstanding common shares of the Trust.
Year ended December 31, Data 2018 2019 2020 2021 2022 2023 Compass Diversified Holdings $ 100.00 $ 217.02 $ 183.39 $ 314.75 $ 196.08 $ 253.90 NYSE Composite Index $ 100.00 $ 125.51 $ 134.28 $ 162.04 $ 146.89 $ 167.12 NYSE Financial Sector Index $ 100.00 $ 128.35 $ 125.54 $ 157.42 $ 137.40 $ 161.02 78 Distributions During the year ended December 31, 2023 and December 31, 2022, we declared and paid cash distributions of $1.00 to our common shareholders.
Year ended December 31, Data 2019 2020 2021 2022 2023 2024 Compass Diversified Holdings $ 100.00 $ 84.50 $ 145.03 $ 90.35 $ 116.99 $ 125.79 NYSE Composite Index $ 100.00 $ 106.99 $ 129.11 $ 117.04 $ 133.16 $ 154.19 NYSE Financial Sector Index $ 100.00 $ 97.82 $ 122.65 $ 107.05 $ 125.46 $ 186.97 75 Distributions During each of the years ended December 31, 2024, December 31, 2023 and December 31, 2022, we declared and paid cash distributions of $1.00 to our common shareholders.
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During the year ended December 31, 2021, we declared and paid cash distributions of $2.21 to holders of record of our common shares, including a special distribution to shareholders in August 2021.
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On August 3, 2021, in order to offset a portion of the tax liability to the shareholders as a result of the election to cause the Trust to be treated as a corporation for U.S. federal income tax purposes, the Company's board of directors declared a special cash distribution on the Trust’s common shares of $0.88 per common share.
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Following the tax reclassification, the Company’s board reduced our anticipated annual distribution from $1.44 per Trust common share per year to approximately $1.00 per common share per year.
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Recent Sales of Unregistered Securities On December 15, 2023, the Company completed the sale of 3,550,000 common shares to Allspring Special Small Cap Value Fund for consideration per share equal to $21.18 per share, or an aggregate sale price of approximately $75.2 million.
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In connection with the issuance of the Shares, CODI paid a commission equal to 1% of the aggregate sales price, or approximately $752,000.
Removed
The issuance of the common shares is private placement to an accredited investor and is exempt from registration under the Securities Act, in reliance upon Section 4(a)(2) of the Securities Act, as a transaction by an issuer not involving a public offering .
Removed
The sale of the common shares was made pursuant to a subscription agreement pursuant to which the buyer agreed not to dispose of the common shares for a period of six months following the date of the private placement.
Removed
The proceeds received in connection with the issuance of the common shares was used for general corporate purposes, including the funding of acquisitions.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. [Reserved] 80 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 81 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 127 Item 8. Financial Statements and Supplementary Data 128 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 129 Item 9A. Controls and Procedures 130
Item 6. [Reserved] 76 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 77 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 121 Item 8. Financial Statements and Supplementary Data 122 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 123 Item 9A. Controls and Procedures 124 Item 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Pursuant to the THP Purchase Agreement, subsequent to certain internal reorganizations, THP Buyer acquired all of the issued and outstanding equity of Blocker I and Blocker II and, thereafter, THP Merger Sub merged with and into THP (the “THP Merger”), with THP surviving such that the separate existence of THP Merger Sub ceased, with THP surviving the THP Merger as a wholly-owned, indirect subsidiary of the THP Topco .
Pursuant to the THP Purchase Agreement, subsequent to certain internal reorganizations, THP Buyer acquired all of the issued and outstanding equity of Blocker I and Blocker II and, thereafter, THP Merger Sub merged with and into THP (the “THP Merger”), such that the separate existence of THP Merger Sub ceased, with THP surviving the THP Merger as a wholly-owned, indirect subsidiary of THP Topco .
Adjusted EBITDA is calculated utilizing the same calculation as described in arriving at EBITDA further adjusted by: (i) non-controlling stockholder compensation, which generally consists of non-cash stock option expense; 113 (ii) successful acquisition costs, which consist of transaction costs (legal, accounting, due diligence, etc.) incurred in connection with the successful acquisition of a business expensed during the period in compliance with ASC 805; (iii) impairment charges, which reflect write downs to goodwill or other intangible assets; (iv) changes in the fair value of contingent consideration subsequent to initial purchase accounting, (v) integration service fees, which reflect fees paid by newly acquired companies to the Manager for integration services performed during the first year of ownership; and (vi) items of other income or expense that are material to a subsidiary and non-recurring in nature.
Adjusted EBITDA is calculated utilizing the same calculation as described in arriving at EBITDA further adjusted by: (i) non-controlling stockholder compensation, which generally consists of non-cash stock option expense; (ii) successful acquisition costs, which consist of transaction costs (legal, accounting, due diligence, etc.) incurred in connection with the successful acquisition of a business expensed during the period in compliance with ASC 805; (iii) impairment charges, which reflect write downs to goodwill or other intangible assets; (iv) changes in the fair value of contingent consideration subsequent to initial purchase accounting, (v) integration service fees, which reflect fees paid by newly acquired companies to the Manager for integration services performed during the first year of ownership; and (vi) items of other income or expense that are material to a subsidiary and non-recurring in nature.
Through this network, as well as our management team’s active proprietary transaction sourcing efforts, we typically have a substantial pipeline of potential acquisition targets. In consummating transactions, our management team has, in the past, been able to successfully navigate complex situations surrounding acquisitions, including corporate spin- 81 offs, transitions of family-owned businesses, management buy-outs and reorganizations.
Through this network, as well as our management team’s active proprietary transaction sourcing efforts, we typically have a substantial pipeline of potential acquisition targets. In consummating transactions, our management team has, in the past, been able to successfully navigate complex situations surrounding acquisitions, including corporate spin-offs, transitions of family-owned businesses, management buy-outs and reorganizations.
Our industrial businesses faced inflationary pressures in the current year, with both Altor and Sterno experiencing decreases in sales as a result. Refer to "Results of Operations - Our Businesses" for a more detailed analysis of net revenue by business segment. We do not generate any revenues apart from those generated by the businesses we own.
Our industrial businesses faced inflationary pressures in the current year, with both Altor and Sterno experiencing decreases in sales as a result. Refer to "Results of Operations - Our Businesses" for a more detailed analysis of net revenue by business segment. 84 We do not generate any revenues apart from those generated by the businesses we own.
The decrease was reflected across key industries including Snow Sports, Cycling, Outdoor, Athletic, Workwear and Performance Bracing. The main factor of the decrease in sales was higher than anticipated end market inventory levels due to supply chain 93 normalization and corresponding inventory ordering surge experienced in many of our industries in 2022.
The decrease was reflected across key industries including Snow Sports, Cycling, Outdoor, Athletic, Workwear and Performance Bracing. The main factor of the decrease in sales was higher than anticipated end market inventory levels due to supply chain normalization and corresponding inventory ordering surge experienced in many of our industries in 2022.
The 2021 Credit Facility provided for revolving loans, swing line loans and letters of credit up to a maximum aggregate amount of $600 million and also permitted the LLC, prior to the applicable maturity date, to increase the revolving loan commitment and/or obtain term loans in an aggregate amount of up to $250 million, subject to certain restrictions and conditions.
The 2021 Credit Facility provided for revolving loans, swing line loans and letters of credit up to a maximum aggregate amount of $600 million and also permitted the LLC, prior to the applicable maturity date, to increase the revolving loan commitment and/or obtain term loans in an aggregate amount of up to $250 million, subject to certain customary restrictions and conditions.
We have not yet acquired a business in the healthcare sector. 91 Branded Consumer Businesses 5.11 Overview 5.11 is a leading provider of purpose-built technical apparel and gear for law enforcement, firefighters, EMS, and military special operations as well as outdoor and adventure enthusiasts. 5.11 is a brand known for innovation and authenticity and works directly with end users to create purpose-built apparel, footwear and gear designed to enhance the safety, accuracy, speed and performance of tactical professionals and enthusiasts worldwide. 5.11 operates sales offices and distribution centers globally, and 5.11 products are widely distributed in uniform stores, military exchanges, outdoor retail stores, its own retail stores and on 511tactical.com.
We have not yet acquired a business in the healthcare sector. 86 Branded Consumer Businesses 5.11 Overview 5.11 is a leading provider of purpose-built technical apparel and gear for law enforcement, firefighters, EMS, and military special operations as well as outdoor and adventure enthusiasts. 5.11 is a brand known for innovation and authenticity and works directly with end users to create purpose-built apparel, footwear and gear designed to enhance the safety, accuracy, speed and performance of tactical professionals and enthusiasts worldwide. 5.11 operates sales offices and distribution centers globally, and 5.11 products are widely distributed in uniform stores, military exchanges, outdoor retail stores, its own retail stores and on 511tactical.com.
Additionally, financing activities in 2023 reflects cash paid to noncontrolling shareholders related to our recapitalization of BOA in December 2023 ($11.7 million in distributions to noncontrolling shareholders at BOA). 2022 Cash flows provided by financing activities totaled approximately $556.9 million for the year ended December 31, 2022, as compared to cash flows provided by financing activities of $273.2 million for the year ended December 31, 2021.
Additionally, financing activities in 2023 reflects cash paid to noncontrolling shareholders related to our recapitalization of BOA in December 2023 ($11.7 million in distributions to noncontrolling shareholders at BOA). 103 2022 Cash flows provided by financing activities totaled approximately $556.9 million for the year ended December 31, 2022, as compared to cash flows provided by financing activities of $273.2 million for the year ended December 31, 2021.
If qualitative factors are not sufficient to determine that the fair value of a reporting unit is more likely than not to exceed its carrying value, we will perform a quantitative test at the reporting unit whereby we estimate the fair value of the reporting unit using an income approach or market approach, or a weighting of the two methods.
If qualitative factors are not sufficient to determine that the fair value of a reporting unit is more likely 118 than not to exceed its carrying value, we will perform a quantitative test at the reporting unit whereby we estimate the fair value of the reporting unit using an income approach or market approach, or a weighting of the two methods.
In the prior year, these businesses substantially increased inventory levels to combat supply chain issues given longer lead times, resulting in higher cash outflows throughout the year. The use of cash for working capital also reflects significant inventory build at Lugano during both 2022 and 2023.
In 2022, these businesses substantially increased inventory levels to combat supply chain issues given longer lead times, resulting in higher cash outflows throughout the year. The use of cash for working capital also reflects significant inventory build at Lugano during both 2022 and 2023.
The discount rate used in the income approach was 11.3%. The results of the quantitative impairment testing indicated that the fair value of the PrimaLoft reporting unit did not exceed its carrying value, resulting in goodwill impairment expense of $57.8 million in the year ended December 31, 2023 at PrimaLoft.
The discount rate used in the income approach was 11.3%. The results of the quantitative impairment testing indicated that the fair value of the PrimaLoft reporting unit did not exceed its carrying value, resulting in goodwill impairment expense of $57.8 million in the year ended December 31, 2023 at 119 PrimaLoft.
This increase is primarily driven by a $29.8 million increase in direct-to-consumer sales largely due to strong demand in digital sales, in addition to sales from new retail store openings since December 2022 (bringing the total store count to 123 as of December 31, 2023).
This increase is primarily driven by a $29.8 million increase in direct-to-consumer sales largely due to strong demand in digital sales, in addition to sales from new retail store openings 87 since December 2022 (bringing the total store count to 123 as of December 31, 2023).
The decrease in net sales during the period was due to lower volume as compared to the prior year, primarily in construction and building products. 101 Gross profit Gross profit as a percentage of net sales was 30.9% and 22.2%, respectively, for the years ended December 31, 2023 and 2022.
The decrease in net sales during the period was due to lower volume as compared to the prior year, primarily in construction and building products. Gross profit Gross profit as a percentage of net sales was 30.9% and 22.2%, respectively, for the years ended December 31, 2023 and 2022.
Adjusted Earnings –– Adjusted earnings is calculated as net income (loss) adjusted to include the cost of the distributions to preferred shareholders, and adjusted to exclude the impact of certain costs, expenses, gains and losses and other specified items the exclusion of which management believes provides insight regarding our ongoing operating performance.
Adjusted Earnings –– Adjusted earnings is calculated as net income (loss) adjusted to include the cost of the distributions to preferred shareholders, and adjusted to exclude the impact of certain costs, expenses, gains and 108 losses and other specified items the exclusion of which management believes provides insight regarding our ongoing operating performance.
Each unique BOA configuration is designed with brand partners to deliver superior fit and performance for athletes, is engineered to perform in the toughest conditions and is backed by The BOA Lifetime Guarantee. BOA is headquartered in Denver, Colorado and has offices in Austria, Greater China, South Korea, and Japan.
Each unique BOA configuration is designed with brand partners to deliver superior fit and performance for athletes, is engineered to perform in the toughest conditions and is backed by The BOA Lifetime Guarantee. BOA is headquartered in Denver, Colorado and has offices in Austria, China, South Korea, and Japan.
Velocity - As a result of operating results that were below the forecast that we used in the quantitative impairment test of Velocity Outdoor at March 31, 2023 (see below), we determined that a triggering event had occurred at Velocity in the third quarter of 2023 and performed an interim impairment test of goodwill as of August 31, 2023.
Velocity - As a result of operating results that were below the forecast that we used in the quantitative impairment test of Velocity Outdoor at March 31, 2023 (see above), we determined that a triggering event had occurred at Velocity in the third quarter of 2023 and performed an interim impairment test of goodwill as of August 31, 2023.
The payment to the Holders for a Sale Event is based on the pre-tax gain from the sale of the business. Payments of profit allocation to the Holders are accounted for as dividends declared on Allocation Interests and recorded in stockholders' equity once they are approved by our Board of Directors.
The payment to the Holders for a Sale Event is based on the pre-tax gain from the sale of the business. Payments of profit allocation to the Holders are accounted for as dividends declared on Allocation Interests and recorded in stockholders' equity once they are approved by our Board.
We believe the flexibility, creativity, experience and expertise of our management team in structuring transactions provides us with a strategic advantage by allowing us to consider non-traditional and complex transactions tailored to fit a specific acquisition target.
We believe the flexibility, creativity, experience and expertise of our management team in structuring transactions provides us with a strategic 77 advantage by allowing us to consider non-traditional and complex transactions tailored to fit a specific acquisition target.
Lugano also opened its Washington D.C. location in March 2023, its Greenwich, Connecticut location in September 2023, and its Palm Beach, Florida flagship location in November 2023, and expects to open more retail locations in the near term to further expand sales opportunities.
Lugano also opened its Washington D.C. location in March 2023, its Greenwich, Connecticut location in September 90 2023, and its Palm Beach, Florida flagship location in November 2023, and expects to open more retail locations in the near term to further expand sales opportunities.
In the following results of operations, we provide (i) our actual Consolidated Results of Operations for the years ended December 31, 2023, 2022 and 2021, which includes the historical results of operations of each of our businesses (operating segments) from the date of acquisition in accordance with generally accepted accounting principles in the United States ("GAAP" or "US GAAP") and (ii) comparative historical components of the results of operations for each of our businesses on a stand-alone basis (“Results of Operations – Our Businesses”), for each of the years ended December 31, 2023, 2022 and 2021, where all years presented include relevant pro-forma adjustments for pre-acquisition periods and explanations where applicable.
In the following results of operations, we provide (i) our actual Consolidated Results of Operations for the years ended December 31, 2024, 2023 and 2022, which includes the historical results of operations of each of our businesses (operating segments) from the date of acquisition in accordance with generally accepted accounting principles in the United States ("GAAP" or "US GAAP") and (ii) comparative historical components of the results of operations for each of our businesses on a stand-alone basis (“Results of Operations – Our Businesses”), for each of the years ended December 31, 2024, 2023 and 2022, where all years presented include relevant pro-forma adjustments for pre-acquisition periods and explanations where applicable.
Management fees Pursuant to the Management Services Agreement, we pay CGM a quarterly management fee equal to 0.5% (2.0% annually) of our consolidated adjusted net assets. We accrue for the management fee on a quarterly basis.
Fees to manager Pursuant to the Management Services Agreement, we pay CGM a quarterly management fee equal to 0.5% (2.0% annually) of our consolidated adjusted net assets. We accrue for the management fee on a quarterly basis.
We recognized total net proceeds from the sales of our FOX shares of approximately $465.1 million, plus proceeds from the repayment of the FOX credit facility of $61.5 million upon completion of their initial public offering, and a total gain of $428.7 million. 83 We are dependent on the earnings of, and cash receipts from, the businesses that we own in order to meet our corporate overhead and management fee expenses and to pay distributions.
We recognized total net proceeds from the sales of our FOX shares of approximately $465.1 million, plus proceeds from the repayment of the FOX credit facility of $61.5 million upon completion of their initial public offering, and a total gain of $428.7 million. 79 We are dependent on the earnings of, and cash receipts from, the businesses that we own in order to meet our corporate overhead and management fee expenses and to pay distributions.
Interest on the 2029 Notes is payable in cash on April 15th and October 15th of each year. The 2029 Notes are general unsecured obligations of the Company and are not guaranteed by our subsidiaries.
Interest on the 2029 106 Notes is payable in cash on April 15th and October 15th of each year. The 2029 Notes are general unsecured obligations of the Company and are not guaranteed by our subsidiaries.
On a consolidated level, growth in net revenues at our 5.11 and Lugano businesses offset decreases in net revenues at 87 several of our businesses as compared to the prior year.
On a consolidated level, growth in net revenues at our 5.11 and Lugano businesses offset decreases in net revenues at several of our businesses as compared to the prior year.
(3) The total purchase price does not reflect add-on acquisitions made by our businesses subsequent to their purchase by CODI unless indicated. (4) FOX completed an IPO of its common stock in August 2013 in which we sold a 22% interest in FOX, reducing our ownership interest to 53.9%.
(3) The total purchase price does not reflect add-on acquisitions made by our businesses subsequent to their purchase by the Company unless indicated. (4) FOX completed an IPO of its common stock in August 2013 in which we sold a 22% interest in FOX, reducing our ownership interest to 53.9%.
Arnold Overview Arnold serves a variety of markets including aerospace and defense, general industrial, motorsport/ transportation, oil and gas, medical, energy, reprographics and advertising specialties. Over the course of more than 100 years, Arnold has successfully evolved and adapted its products, technologies, and manufacturing presence to meet the demands of current and emerging markets.
Arnold Overview Arnold serves a variety of markets including aerospace and defense, general industrial, motorsport/ transportation, oil and gas, medical, energy, semiconductor and advertising specialties. Over the course of more than 100 years, Arnold has successfully evolved and adapted its products, technologies, and manufacturing presence to meet the demands of current and emerging markets.
The 2032 Notes were issued pursuant to an indenture, dated as of November 17, 2021 (the “2032 Notes Indenture”), between the Company and U.S. Bank National Association, as trustee. The 2032 Notes bear interest at the rate of 5.000% per annum and will mature on January 15, 2032.
The 2032 Notes were issued pursuant to an indenture, dated as of November 17, 2021 (as further amended, the “2032 Notes Indenture”), between the Company and U.S. Bank National Association, as trustee. The 2032 Notes bear interest at the rate of 5.000% per annum and will mature on January 15, 2032.
The 2029 Notes were issued pursuant to an indenture, dated as of March 23, 2021 (the “2029 Notes Indenture”), between the Company and U.S. Bank National Association, as trustee. The 2029 Notes bear interest at the rate of 5.250% per annum and will mature on April 15, 2029.
The 2029 Notes were issued pursuant to an indenture, dated as of March 23, 2021 (as further amended, the “2029 Notes Indenture”), between the Company and U.S. Bank National Association, as trustee. The 2029 Notes bear interest at the rate of 5.250% per annum and will mature on April 15, 2029.
The proceeds from the sale of the 2032 Notes were used to repay debt outstanding under the 2021 Credit Facility. 2029 Notes On March 23, 2021, we consummated the issuance and sale of $1,000 million aggregate principal amount of our 5.250% Senior Notes due 2029 (the “2029 Notes”) offered pursuant to a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act, and to non-U.S. persons under Regulation S under the Securities Act.
The proceeds from the sale of the 2032 Notes were used to repay debt outstanding under the 2021 Credit Facility. 2029 Notes On March 23, 2021, we consummated the issuance and sale of $1 billion aggregate principal amount of our 5.250% Senior Notes due 2029 (the “2029 Notes”) offered pursuant to a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act, and to non-U.S. persons under Regulation S under the Securities Act.
Sterno Overview Sterno, headquartered in Plano, Texas, is the parent company of Sterno, LLC ("Sterno Products") and Rimports Inc. ("Rimports"). Sterno is a leading manufacturer and marketer of portable food warming systems, creative indoor and outdoor lighting, and home fragrance solutions for the consumer markets. Sterno also manufactures creative indoor and outdoor lighting and home fragrance solutions for consumer markets.
Sterno Overview Sterno, headquartered in Plano, Texas, is the parent company of Sterno, LLC ("Sterno Products") and Rimports Inc. ("Rimports"). Sterno is a leading manufacturer and marketer of portable food warming systems. Sterno also produces creative indoor and outdoor lighting and home fragrance solutions for consumer markets.
On January 31, 2024, the Company completed the acquisition of The Honey Pot using cash held on our balance sheet.
On January 31, 2024, the Company completed the acquisition of The Honey Pot Co. using cash held on our balance sheet.
Cost of revenues On a consolidated basis, cost of revenues decreased approximately $60.5 million during the year ended December 31, 2023, compared to the corresponding period in 2022, primarily as a result of the decrease in net revenues at certain of our subsidiaries.
Cost of revenues On a consolidated basis, cost of revenues decreased approximately $60.1 million during the year ended December 31, 2023, compared to the corresponding period in 2022, primarily as a result of the decrease in net revenues at certain of our subsidiaries.
The Company renamed its CBS Personnel business Staffmark subsequent to the acquisition. 82 (2) Velocity Outdoor (formerly "Crosman Corp.") was purchased by the Company in May 2006 and subsequently sold in January 2007. We reacquired Velocity Outdoor in June 2017.
The Company renamed its CBS Personnel business Staffmark subsequent to the acquisition. 78 (2) Velocity Outdoor (formerly "Crosman Corp.") was purchased by the Company in May 2006 and subsequently sold in January 2007. We reacquired Velocity Outdoor in June 2017.
Investing activities in 2021 reflected our acquisition of Lugano in September 2021, plus add-on acquisitions at Arnold (Ramco Electric Motors), Altor Solutions (Plymouth Foam) and Marucci (Lizard Skins) for total cash used in acquisitions of $404.3 million.
Investing activities in 2021 reflected our acquisition of Lugano in September 2021, plus add-on acquisitions at Arnold (Ramco), Altor Solutions (Plymouth Foam) and Marucci (Lizard Skins) for total cash used in acquisitions of $404.3 million.
Actual sales will depend on a variety of factors to be determined by us from time to time, including, market conditions, the trading price of Trust common shares and determinations by us regarding appropriate sources of funding.
Actual sales of both the Trust common and preferred shares will depend on a variety of factors to be determined by us from time to time, including, market conditions, the trading price of Trust common and preferred shares and determinations by us regarding appropriate sources of funding.
Subsequent to the IPO the Company’s board of directors engaged our Manager to externally manage the day-to-day operations and affairs of the Company, oversee the management and operations of the businesses and to perform those services customarily performed by executive officers of a public company.
Subsequent to the IPO the Board engaged our Manager to externally manage the day-to-day operations and affairs of the Company, oversee the management and operations of the businesses and to perform those services customarily performed by executive officers of a public company.
Gross profit as a percentage of net sales for the year ended December 31, 2023 was 62.7%, as compared to gross profit as a percentage of sales of 59.4% for the year ended December 31, 2022. In the prior year, PrimaLoft record ed $0.6 million in amortization of the inventory step-up resulting from the acquisition purchase price allocation.
Gross profit as a percentage of net sales for the year ended December 31, 2023 was 62.7%, as compared to gross profit as a percentage of sales of 59.4% for the year ended December 31, 2022. In the prior year, PrimaLoft recorded $0.6 million in amortization of the inventory step-up resulting from the acquisition purchase price allocation.
Altor operates 15 molding and fabricating facilities across North America and provides products to a variety of end-markets, including appliances and electronics, pharmaceuticals, health and wellness, automotive, building products and others.
Altor operates 23 molding and fabricating facilities across North America and provides products to a variety of end-markets, including appliances and electronics, pharmaceuticals, health and wellness, automotive, building products and others.
Business Outlook The Company anticipates that the areas of focus for 2024, which are generally applicable to each of our businesses, include: • Pursuing sales growth through a combination of new product development, increasing distribution, new customer acquisitions and international expansion; 85 • Driving free cash flow through increased net income and effective working capital management, enabling continued investment in our businesses; • Raising prices, when appropriate, on our goods due to rising input costs to preserve operating margins; • Taking market share, where possible, in each of our niche market leading companies, generally at the expense of less well capitalized competitors; • Striving for excellence in supply chain management, manufacturing and technological capabilities; • Continuing to pursue expense reduction and cost savings in lower margin business lines or in response to lower production volume; and • Continuing to grow through disciplined, strategic acquisitions and rigorous integration processes. 86 Results of Operations The following discussion reflects a comparison of the historical results of operations of our consolidated business for the years ended December 31, 2023, 2022 and 2021, and components of the results of operations as well as those components presented as a percent of net revenues, for each of our businesses on a stand-alone basis.
Business Outlook The Company anticipa tes that the areas of focus for 2025, which are generally applicable to each of our businesses, include: • Pursuing sales growth through a combination of new product development, increasing distribution, new customer acquisitions and selective international expansion; • Driving free cash flow through increased net income and effective working capital management, enabling continued investment in our businesses; • Raising prices, when appropriate, on our goods due to rising input costs to preserve operating margins; • Taking market share, where possible, in each of our niche market leading companies, generally at the expense of less focused or less well capitalized competitors; • Striving for excellence in supply chain management, manufacturing and technological capabilities; • Continuing to pursue expense reduction and cost savings in lower margin business lines or in response to lower production volume; and • Continuing to grow through disciplined, strategic acquisitions and rigorous integration processes. 81 Results of Operations The following discussion reflects a comparison of the historical results of operations of our consolidated business for the years ended December 31, 2024, 2023 and 2022, and components of the results of operations as well as those components presented as a percent of net revenues, for each of our businesses on a stand-alone basis.
The prospective financial information considers reporting unit specific facts and circumstances and is our best estimate of operational results and cash flows for the Velocity reporting unit as of the date of our impairment testing.
The prospective financial information considered reporting unit specific facts and circumstances and is our best estimate of operational results and cash flows for the Velocity reporting unit as of the date of our impairment testing.
The prospective financial information considered reporting unit specific facts and circumstances and was our best estimate of operational results and cash flows for the Arnold reporting unit as of the date of our impairment testing.
The prospective financial information considered reporting unit specific facts and circumstances and was our best estimate of operational results and cash flows for the Velocity reporting unit as of the date of our impairment testing.
Preferred shares - For the 2023 fiscal year we declared distributions to our preferred shareholders totaling $1.8125 per share on our Series A Preferred Shares and $1.96875 on our Series B Preferred Shares and $1.96875 on our Series C Preferred Shares. 2024 Outlook and Significant Trends Impacting our Subsidiary Businesses Macroeconomic Trends The macroeconomic environment remains dynamic as global macroeconomic trends, including inflationary pressures and rising interest rates, are impacting consumer spending behavior.
Preferred shares - For the 2024 fiscal year we declared distributions to our preferred shareholders totaling $1.8125 per share on our Series A Preferred Shares and $1.96875 on our Series B Preferred Shares and $1.96875 on our Series C Preferred Shares. 2025 Outlook and Significant Trends Impacting our Subsidiary Businesses Macroeconomic Trends The macroeconomic environment remains dynamic as global macroeconomic trends, including inflationary pressures and elevated interest rates, are impacting consumer spending behavior.
The cash flows used in investing activities in 2021 was offset by the proceeds received from our sale of Liberty Safe in August 2021 ($101.0 million in proceeds).
The cash flows used in investing activities in the prior year was offset by the proceeds received from our sale of Liberty Safe in August 2021 ($101.0 million in proceeds).
The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of our reporting units except Arnold exceeded their carrying value.
The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of our reporting units except Velocity exceeded their carrying value.
Segment operating loss Segment operating loss for the year ended December 31, 2023 was $57.1 million compared to segment operating loss of $1.9 million for the same period in 2022, primarily as a result of the goodwill impairment recorded in the fourth quarter of 2023.
Segment operating loss Segment operating loss for the year ended December 31, 2023 was $57.1 million compared to segment operating loss of $1.9 million for the same period in 2022, primarily as a result of the goodwill impairment recorded in the fourth quarter of 2023. The Honey Pot Co.
Cost Reimbursement and Fees We reimbursed CGM approximately $6.4 million, $6.5 million, and $5.4 million, principally for occupancy and staffing costs incurred by CGM on our behalf during the years ended December 31, 2023, 2022 and 2021, respectively.
Cost Reimbursement and Fees We reimbursed CGM approximately $8.8 million, $6.4 million, and $6.5 million, principally for occupancy and staffing costs incurred by CGM on our behalf during the years ended December 31, 2024, 2023 and 2022, respectively.
We performed the quantitative impairment test using both an income approach and a market approach. The prospective information used in the income approach considers macroeconomic data, industry and reporting unit specific facts and circumstances and is our best estimate of operational results and cash flows for the PrimaLoft reporting unit as of the date of our impairment testing.
We performed the quantitative impairment test using both an income approach and a market approach. The prospective information used in the income approach considered macroeconomic data, industry and reporting unit specific facts and circumstances and was our best estimate of operational results and cash flows for the PrimaLoft reporting unit as of the date of our impairment testing.
The decrease in net sales during the year ended December 31, 2023 is attributabl e to higher than anticipated end market inventory levels leading to lower ordering from existing customers in the first half of the year.
The decrease in net sales during the year ended December 31, 2023 is attributable to higher than anticipated end market inventory levels leading to lower ordering from existing customers in the first half of the year.
Refer to "Results of Operations - Our Businesses" for a more detailed analysis of gross profit by business segment. Selling, general and administrative expense Consolidated selling, general and administrative expense increased approximately $65.2 million during the year ended December 31, 2023, compared to the corresponding period in 2022.
Refer to "Results of Operations - Our Businesses" for a more detailed analysis of gross profit by business segment. Selling, general and administrative expense Consolidated selling, general and administrative expense increased approximately $60.4 million during the year ended December 31, 2023, compared to the corresponding period in 2022.
Results of Operations In the following results of operations, we provide comparative pro forma results of operations for PrimaLoft for the years ended December 31, 2022 and 2021 as if we had acquired the business on January 1, 202 1. The results of operations that follow include relevant pro-forma adjustments for pre-acquisition periods and explanations where applicable.
Results of Operations In the following results of operations, we provide comparative pro forma results of operations for PrimaLoft for the year ended December 31, 2022 as if we had acquired the business on January 1, 202 2. The results of operations that follow include relevant pro-forma adjustments for pre-acquisition periods and explanations where applicable.
The 2022 Term Loan requires quarterly payments ranging from $2.5 million to $7.5 million, commencing September 30, 2022, with a final payment of all remaining principal and interest due on July 12, 2027, which is the 2022 Term Loan’s maturity date. At December 31, 2023, approximately 23% of our outstanding debt was subject to interest rate changes.
The 2022 Term Loan requires quarterly payments ranging from $2.5 million to $7.5 million, commencing September 30, 2022, with a final payment of all remaining principal and interest due on July 12, 2027, which is the 2022 Term Loan’s maturity date. On December 31, 2024, approximately 27.2% of our outstanding debt was subject to interest rate changes.
Selling, general and administrative expense in the year ended December 31, 2022 included $5.8 million in transaction costs associated with the Company's acquisition of PrimaLoft. Excluding the transaction costs, selling, general and administrative expense decre ased approximately $2.4 million due to a decrease in stock compensation and a reduction in marketing costs.
Selling, general and administrative expense in the year ended December 31, 2022 included $5.8 million in transaction costs associated with the Company's acquisition of PrimaLoft. Excluding the transaction costs, selling, general and 92 administrative expense decreased approximately $2.4 million due to a decrease in stock compensation and a reduction in marketing costs.
Recent Accounting Pronouncements Refer to " Note B - Summary of Significant Accounting Policies " to our consolidated financial statements for a discussion of recent accounting pronouncements. 126
Recent Accounting Pronouncements Refer to " Note B - Summary of Significant Accounting Policies " to our consolidated financial statements for a discussion of recent accounting pronouncements. 120
Acquisition of The Honey Pot On January 31, 2024 (the "Closing Date"), the LLC, through its newly formed acquisition subsidiaries, THP Topco, Inc. , a Delaware corporation (“THP Topco”) and THP Intermediate, Inc. , a Delaware corporation (“THP Buyer”), acquired The Honey Pot Company Holdings, LLC (“THP”) and certain of its affiliated entities pursuant to a Merger and Stock Purchase Agreement (the “THP Purchase Agreement”) dated January 14, 2024 by and among THP Buyer, THP, VMG Honey Pot Blocker, Inc.
On January 31, 2024, the LLC, through its newly formed acquisition subsidiaries, THP Topco, Inc. , a Delaware corporation (“THP Topco”) and THP Intermediate, Inc. , a Delaware corporation (“THP Buyer”), acquired THP and certain of its affiliated entities pursuant to a Merger and Stock Purchase Agreement (the “THP Purchase Agreement”) dated January 14, 2024 by and among THP Buyer, THP, VMG Honey Pot Blocker, Inc.
Our spending on capital expenditures decr eased $5.2 million during the year ended December 31, 2023 as compared to the year ended December 31, 2022, with $55.8 million in capital expenditures in 2023 and $61.0 million in capital expenditures in 2022.
Our spending on capital expenditures decreased $5.2 million during the year ended December 31, 2023 as compared to the year ended December 31, 2022, with $55.8 million in capital expenditures in 2023 and $61.0 million in capital expenditures in 2022.
Dispositions Business Date of Disposition Sale Price CODI Proceeds from Disposition (1) Gain (loss) recognized (2) Crosman January 5, 2007 $ 143,000 $ 109,600 $ 35,800 Aeroglide June 24, 2008 $ 95,000 $ 78,500 $ 33,700 Silvue June 25, 2008 $ 95,000 $ 63,600 $ 39,600 Staffmark October 17, 2011 $ 295,000 $ 216,000 $ 88,500 Halo May 1, 2012 $ 76,500 $ 66,500 $ (300) CamelBak August 3, 2015 $ 412,500 $ 367,800 $ 158,300 American Furniture October 5, 2015 $ 24,100 $ 23,500 $ (14,100) Tridien September 21, 2016 $ 25,000 $ 22,700 $ 1,700 FOX * * $ 526,600 $ 428,700 Manitoba Harvest (3) February 28, 2019 $ 294,300 $ 219,700 $ 121,700 Clean Earth June 28, 2019 $ 625,000 $ 560,520 $ 217,900 Liberty August 3, 2021 $ 147,500 $ 129,600 $ 73,700 Advanced Circuits February 14, 2023 $ 220,000 $ 173,000 $ 106,900 Marucci Sports November 14, 2023 $ 572,000 $ 484,020 $ 241,400 (1) CODI portion of the net proceeds from disposition includes debt and equity proceeds and reflects the accounting for the redemption of the sold business's minority shareholders and transaction expenses.
Dispositions Business Date of Disposition Sale Price CODI Proceeds from Disposition (1) Gain (loss) recognized (2) Crosman January 5, 2007 $ 143,000 $ 109,600 $ 35,800 Aeroglide June 24, 2008 $ 95,000 $ 78,500 $ 33,700 Silvue June 25, 2008 $ 95,000 $ 63,600 $ 39,600 Staffmark October 17, 2011 $ 295,000 $ 216,000 $ 88,500 Halo May 1, 2012 $ 76,500 $ 66,500 $ (300) CamelBak August 3, 2015 $ 412,500 $ 367,800 $ 158,300 American Furniture October 5, 2015 $ 24,100 $ 23,500 $ (14,100) Tridien September 21, 2016 $ 25,000 $ 22,700 $ 1,700 FOX * * $ 526,600 $ 428,700 Manitoba Harvest (3) February 28, 2019 $ 294,300 $ 219,700 $ 121,700 Clean Earth June 28, 2019 $ 625,000 $ 560,520 $ 217,900 Liberty August 3, 2021 $ 147,500 $ 129,600 $ 73,700 Advanced Circuits February 14, 2023 $ 220,000 $ 173,000 $ 106,900 Marucci Sports November 14, 2023 $ 572,000 $ 487,320 $ 244,700 Ergobaby December 27, 2024 $ 104,000 $ 99,100 $ 6,100 (1) CODI portion of the net proceeds from disposition includes debt and equity proceeds and reflects the accounting for the redemption of the sold business's minority shareholders and transaction expenses.
The following table reflects required and actual financial ratios as of December 31, 2023 included as part of the affirmative covenants in our 2022 Credit Facility: Description of Required Covenant Ratio Covenant Ratio Requirement Actual Ratio Fixed Charge Coverage Ratio Greater than or equal to 1.50:1.00 3.17 Total Secured Debt to EBITDA Ratio Less than or equal to 3.50:1.00 0.00 Total Debt to EBITDA Ratio Less than or equal to 5.00:1.00 3.11 We intend to use the availability under our 2022 Credit Facility and cash on hand to pursue acquisitions of additional businesses, to fund distributions (if and to the extent approved by our board of directors) and to provide for other working capital needs.
The following table reflects required and actual financial ratios as of December 31, 2024 included as part of the affirmative covenants in our 2022 Credit Facility: Description of Required Covenant Ratio Covenant Ratio Requirement Actual Ratio Fixed Charge Coverage Ratio Greater than or equal to 1.50:1.00 2.43 Total Secured Debt to EBITDA Ratio Less than or equal to 3.50:1.00 0.92 Total Debt to EBITDA Ratio Less than or equal to 5.00:1.00 3.58 We intend to use the availability under our 2022 Credit Facility and cash on hand to pursue acquisitions of additional businesses, to fund distributions (if and to the extent approved by our Board) and to provide for other working capital needs.
The decrease in selling, general and administrative expense of $3.2 million in the current year was primarily due to decreased employee costs related to BOA’s bonus plan.
The decrease in selling, general and administrative expense of $3.2 million in 2023 was primarily due to decreased employee costs related to BOA’s bonus plan.
Amortization expense Amortization expense for the year ended December 31, 2023 increased $11.1 million to $95.8 million as compared to the prior year, primarily as a result of the amortization expense associated with the intangibles that were recognized in conjunction with the purchase price allocation for PrimaLoft, which was acquired in July 2022, and an add-on acquisition at Velocity in July 2022. 88 Impairment expense PrimaLoft performed an interim impairment test of their goodwill during the period ended December 31, 2023 as a result o f operating results that were below forecast amounts that were used as the basis for the purchase price allocation at acquisition.
Amortization expense Amortization expense for the year ended December 31, 2023 increased $11.2 million to $88.4 million as compared to the prior year, primarily as a result of the amortization expense associated with the intangibles that were recognized in conjunction with the purchase price allocation for PrimaLoft, which was acquired in July 2022, and an add-on acquisition at Velocity in July 2022. 85 Impairment expense PrimaLoft performed an interim impairment test of their goodwill during the period ended December 31, 2023 as a result of operating results that were below forecast amounts that were used as the basis for the purchase price allocation at acquisition.
The tables below reflect summarized information relating to our acquisitions and dispositions from the date of our IPO through December 31, 2023 (in thousands): Acquisitions Ownership Interest - December 31, 2023 Business Acquisition Date CODI Purchase Price Primary Diluted CBS Holdings (Staffmark) (1) May 16, 2006 $ 183,200 N/a N/a Crosman (2) May 16, 2006 $ 72,600 N/a N/a Advanced Circuits (3) May 16, 2006 $ 81,000 N/a N/a Silvue May 16, 2006 $ 36,000 N/a N/a Tridien (3) August 1, 2006 $ 31,000 N/a N/a Aeroglide February 28, 2007 $ 58,200 N/a N/a Halo (3) February 28, 2007 $ 62,300 N/a N/a American Furniture August 31, 2007 $ 97,000 N/a N/a FOX (4) January 4, 2008 $ 80,400 N/a N/a Liberty Safe (3) March 31, 2010 $ 70,200 N/a N/a Ergobaby (3) September 16, 2010 $ 85,200 81.6% 72.8% CamelBak August 24, 2011 $ 251,400 N/a N/a Arnold Magnetics (3) March 5, 2012 $ 128,800 98% 85.5% Clean Earth (3) August 7, 2014 $ 251,400 N/a N/a Sterno (3) (5) October 10, 2014 $ 314,400 99.4% 87.6% Manitoba Harvest (3) July 10, 2015 $ 102,700 N/a N/a 5.11 August 31, 2016 $ 408,200 97.2% 88.9% Velocity Outdoor (2) (3) June 2, 2017 $ 150,400 99.4% 87.7% Altor Solutions (3) February 15, 2018 $ 253,400 99.3% 89.8% Maruccci Sports (3) April 20, 2020 $ 201,000 N/a N/a BOA October 16, 2020 $ 456,800 91.8% 83.2% Lugano September 3, 2021 $ 265,100 59.9% 55.5% PrimaLoft July 12, 2022 $ 541,100 90.7% 83.1% (1) The total purchase price for CBS Holdings includes the acquisition of Staffmark Investment LLC in January 2008 for a purchase price of $128.6 million.
The tables below reflect summarized information relating to our acquisitions and dispositions from the date of our IPO through December 31, 2024 (in thousands): Acquisitions Ownership Interest - December 31, 2024 Business Acquisition Date CODI Purchase Price Primary Diluted CBS Holdings (Staffmark) (1) May 16, 2006 $ 183,200 N/a N/a Crosman (2) May 16, 2006 $ 72,600 N/a N/a Advanced Circuits (3) May 16, 2006 $ 81,000 N/a N/a Silvue May 16, 2006 $ 36,000 N/a N/a Tridien (3) August 1, 2006 $ 31,000 N/a N/a Aeroglide February 28, 2007 $ 58,200 N/a N/a Halo (3) February 28, 2007 $ 62,300 N/a N/a American Furniture August 31, 2007 $ 97,000 N/a N/a FOX (4) January 4, 2008 $ 80,400 N/a N/a Liberty Safe (3) March 31, 2010 $ 70,200 N/a N/a Ergobaby (3) September 16, 2010 $ 85,200 N/a N/a CamelBak August 24, 2011 $ 251,400 N/a N/a Arnold Magnetics (3) March 5, 2012 $ 128,800 98% 85.8% Clean Earth (3) August 7, 2014 $ 251,400 N/a N/a Sterno (3) (5) October 10, 2014 $ 314,400 98.5% 91.6% Manitoba Harvest (3) July 10, 2015 $ 102,700 N/a N/a 5.11 August 31, 2016 $ 408,200 97.6% 86.9% Velocity Outdoor (2) (3) June 2, 2017 $ 150,400 99.4% 93.3% Altor Solutions (3) February 15, 2018 $ 253,400 99.3% 90.2% Marucci Sports (3) April 20, 2020 $ 201,000 N/a N/a BOA October 16, 2020 $ 456,800 91.7% 83% Lugano September 3, 2021 $ 265,100 59.9% 55% PrimaLoft July 12, 2022 $ 541,100 90.7% 84.7% The Honey Pot Co.
Th e impairment test resulted in PrimaLoft recording impairment ex pense of $57.8 million. Velocity performed an interim impairment test of their goodwill during the third quarter of 2023 as a result of operating results that were below the forecast that we used in the quantitative annual impairment test of Velocity at March 31, 2023.
The impairment test resulted in PrimaLoft recording impairment expense of $57.8 million. Velocity performed an interim impairment test of their goodwill during the third quarter of 2023 as a result of operating results that were below the forecast that we used in the quantitative annual impairment test of Velocity at March 31, 2023.
All amounts outstanding under the 2022 Revolving Credit Facility will become due on July 12, 2027, which is the maturity date of loans advanced under the 2022 Revolving Credit Facility. The 2022 Credit Facility also provides for a $400 million term loan (the “2022 Term Loan”).
All amounts outstanding under the 2022 Revolving Credit Facility will become due on July 12, 2027, which is the maturity date of loans advanced under the 2022 Revolving Credit Facility. The 2022 Credit Facility also provides for the “2022 Term Loan.
Segment operating income (loss) Segment operating loss for the year ended December 31, 2023 was $32.8 million, a decrease of $51.8 million when compared to segment operating income of $19.0 million for the comparable period in 2022.
Segment operating income (loss) Segment operating loss for the year ended December 31, 2023 was $32.8 million, a decrease of $51.8 million when compared to segment operating income of $19.0 million for the comparable period in 2022. The decrease in segment operating income in the year ended December 31, 2022 reflects the factors noted above.
Our goodwill and indefinite lived intangible assets are tested for impairment on an annual basis as of March 31 st , and if 123 current events or circumstances require, on an interim basis. Goodwill is allocated to various reporting units, which are generally an operating segment or one level below the operating segment.
Our goodwill and indefinite lived intangible assets are tested for impairment on an annual basis as of March 31 st , and if current events or circumstances require, on an interim basis. Goodwill is allocated to various reporting units, which are generally an operating segment or one level below the operating segment. Each of our businesses represents a reporting unit.
Selling, genera l and administrative expense represented 11.3% of net sales for the year ended December 31, 2023 and 8.7% for the year ended December 31, 2022.
Selling, general and administrative expense represented 11.3% of net sales for the year ended December 31, 2023 and 8.7% for the year ended December 31, 2022.
CGM entered into a waiver of the MSA for a period through June 30, 2023 to receive a 1% annual management fee related to PrimaLoft, rather than the 2% called for under the MSA, which resulted in a lower management fee paid in the third and fourth quarter of 2022 than would have normally been due.
CGM entered into a waiver of the MSA for a period through June 30, 2023 to receive a 1% annual management fee related to PrimaLoft, rather than the 2% called for under the MSA, which resulted in a lower management fee paid in the second half of 2022 and the first half of 2023 than would have normally been due.
The 2022 Credit Facility is secured by all of the assets of the Company, including all of its equity interests in, and loans to, its consolidated subsidiaries. At December 31, 2023, we had letters of credit totaling $2.2 million outstanding under the 2022 Revolving Credit Facility.
The 2022 Credit Facility is secured by all of the assets of the Company, including all of its equity interests in, and loans to, its consolidated subsidiaries. At December 31, 2024, we had letters of credit totaling $3.5 million outstanding under the 2022 Revolving Credit Facility.
Our effective tax rate in the year ended December 31, 2023 was (122.6)%, compared to an effective income tax rate of 91.0% during the same period in 2022. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions.
Our effective tax rate in the year ended December 31, 2023 was (102.0)%, compared to an effective income tax rate of 71.8% during the same period in 2022. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions.
Branded consumer businesses are characterized as those businesses that we believe capitalize on a valuable brand name in their respective market sector. We believe that our branded consumer businesses are leaders in their particular category. Industrial businesses are characterized as those businesses that focus on manufacturing and selling particular products or services within a specific market sector.
We believe that our branded consumer businesses are leaders in their particular category. Industrial businesses are characterized as those businesses that focus on manufacturing and selling particular products or services within a specific market sector. We believe that our industrial businesses are leaders in their specific market sector.
During the years ended December 31, 2023, 2022 and 2021, CGM receiv ed $2.4 million, $4.1 million, and $4.9 million, respectively, in total integration service fees.
During the years ended December 31, 2024, 2023 and 2022, CGM receiv ed $2.6 million, $2.4 million, and $4.1 million, respectively, in total integration service fees.
Year Ended December 31, Quarter ended 2023 2022 2021 March 31st 23.6 % 22.8 % 21.6 % June 30th 23.6 % 24.3 % 23.6 % September 30th 25.3 % 26.5 % 25.5 % December 31st 27.5 % 26.4 % 29.3 % Earnings of certain of our operating segments are seasonal in nature due to various recurring events, holidays and seasonal weather patterns, as well as the timing of our acquisitions during a given year.
Year Ended December 31, Quarter ended 2024 2023 2022 March 31st 23.0 % 23.5 % 22.8 % June 30th 23.4 % 23.4 % 24.0 % September 30th 25.5 % 25.3 % 26.7 % December 31st 28.2 % 27.7 % 26.5 % Earnings of certain of our operating segments are seasonal in nature due to various recurring events, holidays and seasonal weather patterns, as well as the timing of our acquisitions during a given year.
Cash Flow from Investing Activities 2023 Cash flows provided by investing activities totaled approximately $570.5 million for the year ended December 31, 2023, compared to $626.7 million used in investing activities during the year ended December 31, 2022.
Cash Flow from Investing Activities 2024 Cash flows used in investing activities totaled approximately $422.5 million for the year ended December 31, 2024, compared to $570.5 million provided by investing activities during the year ended December 31, 2023.
The 2022 Credit Facility provides for revolving loans, swing line loans and letters of credit up to a maximum aggregate amount of $600 million (the "2022 Revolving Credit Facility") and also permits the LLC, prior to the applicable maturity date, to increase the revolving loan commitment and/or obtain term loans in an aggregate amount of up to $250 million, subject to certain restrictions and conditions.
The 2022 Credit Facility provides for the 2022 Revolving Credit Facility and also permits the LLC, prior to the applicable maturity date, to increase the revolving loan commitment and/or obtain term loans in an aggregate amount of up to $250 million, subject to certain customary restrictions and conditions.
Sostratus LLC owns all of our Allocation Interests. The Company is the operating entity with a board of directors and other corporate governance responsibilities, similar to that of a Delaware corporation. The Trust and the Company were formed to acquire and manage a group of small and middle-market businesses headquartered in North America.
The Company is the operating entity with a board of directors and other corporate governance responsibilities, similar to that of a Delaware corporation. The Trust and the Company were formed to acquire and manage a group of small and middle-market businesses headquartered in North America.
On March 13, 2017, FOX closed on a secondary public offering of 5,108,718 shares of FOX common stock held by CODI, which represented CODI's remaining interest in FOX.
On March 13, 2017, FOX closed on a secondary public offering of 5,108,718 shares of FOX common stock held by the Company, which represented our remaining interest in FOX.
For the year ended December 31, 2023, we incurred approximately $68.4 million in management fees as compared to $62.6 million in fees in the year ended December 31, 2022. The increase in management fees is primarily attributable to our acquisition of PrimaLoft in July 2022.
For the year ended December 31, 2023, we incurred approximately $67.9 million in management fees as compared to $62.1 million in fees in the year ended December 31, 2022. The increase in management fees is primarily attributable to our acquisition of PrimaLoft in July 2022.
Interest expense We recorded interest expense totaling $105.2 million for the year ended December 31, 2023 compared to $83.5 million for the comparable period in 2022, an increase of $21.7 million.
The impairment test resulted in Velocity recording $31.6 million impairment expense in the year ended December 31, 2023. Interest Expense We recorded interest expense totaling $105.2 million for the year ended December 31, 2023 compared to $83.5 million for the comparable period in 2022, an increase of $21.7 million.
The increase in gross profit during 2023 as compared to 2022 was p rimarily attribut able to lower freight costs and favorable material costs across the businesses and the effect of a price increase at Sterno Products.
The increase in gross profit during 2023 as compared to 2022 was primarily attributable to lower freight costs and favorable material costs across the businesses and the effect of a price increase at Sterno Products.
Gross profit as a percentage of net sales decreased from 19.2% for the year ended December 31, 2021 to 19.1% for the same period ended December 31, 2022.
Gross profit as a percentage of net sales increased from 19.1% for the year ended December 31, 2022 to 24.2% for the same period ended December 31, 2023.
Cash Flow from Financing Activities 2023 Cash flows used in financing activities totaled approximately $260.2 million for the year ended December 31, 2023, as compared to cash flows provided by financing activities of $556.9 million for the year ended December 31, 2022.
Cash Flow from Financing Activities 2024 Cash flows provided by financing activities totaled approximately $100.6 million for the year ended December 31, 2024, as compared to cash flows used in financing activities of $260.2 million for the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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ITEM 7A. – Quantitative and Qualitative Disclosures about Market Risk Interest Rate Sensitivity At December 31, 2023, our debt includes both fixed rate and variable rate instruments. We are exposed to interest rate risk primarily through borrowings under our 2022 Credit Facility because borrowings under this agreement are subject to variable interest rates based on SOFR.
ITEM 7A. – Quantitative and Qualitative Disclosures about Market Risk Interest Rate Sensitivity At December 31, 2024, our debt includes both fixed rate and variable rate instruments. We are exposed to interest rate risk primarily through borrowings under our 2022 Credit Facility because borrowings under this agreement are subject to variable interest rates based on SOFR.
Although we have a large number of customers who are dispersed across different industries and geographic areas, a prolonged economic downturn could increase our exposure to credit risk on our trade receivables. We perform ongoing credit evaluations of our customers and maintain an allowance for potential credit losses. 127
Although we have a large number of customers who are dispersed across different industries and geographic areas, a prolonged economic downturn could increase our exposure to credit risk on our trade receivables. We perform ongoing credit evaluations of our customers and maintain an allowance for potential credit losses. 121
We do not believe that our cash equivalents or investments present significant credit risks because the counterparties to the instruments consist of major financial institutions and we manage the notional amount of contracts entered into with any one counterparty.
Credit Risk We are exposed to credit risk associated with cash equivalents, investments, and trade receivables. We do not believe that our cash equivalents or investments present significant credit risks because the counterparties to the instruments consist of major financial institutions and we manage the notional amount of contracts entered into with any one counterparty.
Our cash and cash equivalents at December 31, 2023 consists principally of (i) treasury backed securities, (ii) insured prime money market funds, and (iii) cash balances in several non-interest bearing checking accounts.
Our cash and cash equivalents at December 31, 2024 consists principally of (i) treasury backed securities, (ii) insured prime money market funds, and (iii) cash balances in several non-interest bearing checking accounts. Substantially all trade receivable balances of our businesses are unsecured.
These borrowings will be subject to variable interest rates. Foreign Exchange Rate Sensitivity We are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business at certain of our subsidiaries, such as sales to third party customers, foreign plant operations, and purchases from suppliers.
Foreign Exchange Rate Sensitivity We are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business at certain of our subsidiaries, such as sales to third-party customers, foreign plant operations, and purchases from suppliers. Foreign exchange transactions do not materially affect our operations as a significant portion of our operations are domestic.
We had $385 million outstanding under the 2022 Term Loan and no amount outstanding under our 2022 Revolving Credit Facility at December 31, 2023. The one-month SOFR was approximately 534 basis points at December 31, 2023, and the three-month SOFR was approximately 536 basis points at December 31, 2023.
We had $375 million outstanding under the 2022 Term Loan and $110 million outstanding under our 2022 Revolving Credit Facility at December 31, 2024. The one-month SOFR was at an average of 453 basis points at December 31, 2024, and the three-month SOFR was at an average of 469 basis points at December 31, 2024.
We currently estimate that a 100 basis point increase in SOFR would not have a material impact on our results of operations, cash flows or financial condition. We expect to have additional borrowings under our Revolving Credit Facility in the future in order to finance our short term working capital needs and future acquisitions.
We currently estimate that a 100 basis point increase in SOFR would not have a material impact on our results of operations, cash flows or financial condition. The effect of a 100 basis point increase on the outstanding borrowings subject to variable interest rates at December 31, 2024 would be approximately $4.8 million additional annual interest expense.
Removed
Foreign exchange transactions do not materially affect our operations as a significant portion of our operations are domestic. Credit Risk We are exposed to credit risk associated with cash equivalents, investments, and trade receivables.
Added
We expect to have additional borrowings under our Credit Facility in the future in order to finance our short term working capital needs and future acquisitions. These borrowings will be subject to variable interest rates.
Removed
We held significantly more cash at December 31, 2023 than we typically do as we received proceeds related to the sale of one of our subsidiaries in November 2023.
Removed
A majority of the cash on our balance sheet at December 31, 2023 was held in short-term interest bearing savings accounts, and was used in January 2024 to fund our acquisition of The Honey Pot Co.. Substantially all trade receivable balances of our businesses are unsecured.

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