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What changed in Compass Diversified Holdings's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Compass Diversified Holdings's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+778 added−960 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-01)

Top changes in Compass Diversified Holdings's 2023 10-K

778 paragraphs added · 960 removed · 636 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

315 edited+37 added−178 removed363 unchanged
Biggest changeNet Revenue Operating Income (1) Total Assets Year ended December 31, Year ended December 31, Year ended December 31, 2022 2021 2020 2022 2021 2020 2022 2021 Branded Consumer: 5.11 21.5 % 23.0 % 27.7 % 17.5 % 17.6 % 24.7 % 15.4 % 15.9 % BOA 9.2 % 8.5 % 1.7 % 23.3 % 15.2 % (0.8) % 12.9 % 16.5 % Ergobaby 3.9 % 4.8 % 5.2 % (6.8) % 4.1 % 4.3 % 3.5 % 5.0 % Lugano 8.9 % 2.8 % n/a 21.3 % 4.4 % n/a 13.0 % 11.0 % Marucci Sports 7.3 % 6.1 % 3.0 % 8.5 % 7.3 % (3.5) % 7.6 % 8.8 % PrimaLoft 1.1 % n/a n/a (5.6) % n/a n/a 15.7 % n/a Velocity Outdoor 10.3 % 14.0 % 14.9 % 7.6 % 17.8 % 20.5 % 7.6 % 9.0 % 62.2 % 59.3 % 52.5 % 65.9 % 66.4 % 45.2 % 75.7 % 66.2 % Niche Industrial: Advanced Circuits 4.0 % 4.7 % 6.1 % 9.5 % 11.3 % 18.8 % 2.3 % 3.0 % Altor Solutions 11.5 % 9.3 % 9.0 % 9.9 % 5.4 % 1.7 % 8.6 % 10.7 % Arnold Magnetics 6.8 % 7.2 % 6.8 % 6.7 % 8.0 % 13.1 % 4.4 % 5.1 % Sterno 15.6 % 19.4 % 25.6 % 8.0 % 8.9 % 21.2 % 8.3 % 11.6 % 37.8 % 40.7 % 47.5 % 34.1 % 33.6 % 54.8 % 23.6 % 30.4 % Corporate — — — — — — 0.7 % 3.4 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % (1) Operating income (loss) reflected is as a percentage of the total contributed by the businesses and does not include expenses incurred at the corporate level. 17 Branded Consumer Businesses 5.11 Overview 5.11 is a global lifestyle brand and innovator of purpose-built technical apparel, footwear and gear for a passionate and loyal group of consumers. 5.11 is a brand of choice for those who demand uncompromising functionality, durability, style and comfort of their gear. 5.11's brand authenticity stems from decades of collaboration with elite first responders and military professionals around the world, innovating to solve their greatest needs in the most mission-critical settings, where failure is not an option.
Biggest changeNet Revenue Operating Income (loss) (1) Total Assets Year ended December 31, Year ended December 31, Year ended December 31, 2023 2022 2021 2023 2022 2021 2023 2022 Branded Consumer: 5.11 25.9 % 24.2 % 25.8 % 27.4 % 21.4 % 21.6 % 14.1 % 17.2 % BOA 7.6 % 10.4 % 9.6 % 16.0 % 28.4 % 18.7 % 13.1 % 14.3 % Ergobaby 4.6 % 4.4 % 5.4 % 2.8 % (8.3) % 5.0 % 3.3 % 3.9 % Lugano 15.0 % 10.0 % 3.1 % 58.9 % 26.0 % 5.5 % 18.9 % 14.4 % PrimaLoft 3.3 % 1.2 % n/a (33.5) % (6.8) % n/a 13.7 % 17.5 % Velocity Outdoor 8.4 % 11.6 % 15.7 % (19.3) % 9.3 % 21.8 % 6.2 % 8.5 % 64.6 % 61.8 % 59.7 % 52.4 % 70.0 % 72.6 % 69.3 % 75.8 % Industrial: Altor Solutions 11.6 % 13.0 % 10.5 % 20.3 % 12.1 % 6.6 % 8.2 % 9.7 % Arnold Magnetics 8.1 % 7.7 % 8.1 % 12.7 % 8.2 % 9.9 % 4.6 % 4.8 % Sterno 15.7 % 17.5 % 21.8 % 14.6 % 9.7 % 10.9 % 7.3 % 9.2 % 35.4 % 38.2 % 40.3 % 47.6 % 30.0 % 27.4 % 20.1 % 23.7 % Corporate (2) — — — — — — 10.6 % 0.5 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % (1) Operating income (loss) reflected is as a percentage of the total contributed by the businesses and does not include expenses incurred at the corporate level.
("Ramco"), a provider of custom electric motor solutions for general industrial, aerospace and defense and oil and gas end markets. Ramco's complementary product portfolio will allow Arnold to offer more comprehensive, turn-key solutions to their customers. In 2022, we expanded tech center operations to Europe. We purchased a majority interest in Arnold on March 5, 2012.
("Ramco"), a provider of custom electric motor solutions for general industrial, aerospace and defense and oil and gas end markets. Ramco's complementary product portfolio will allow Arnold to offer more comprehensive, turn-key solutions to their customers. In 2022, Arnold expanded tech center operations to Europe. We purchased a majority interest in Arnold on March 5, 2012.
Our Manager actively oversees and supports the management teams of each of our businesses by, among other things: 12 • recruiting and retaining talented managers to operate our businesses using structured incentive compensation programs, including non-controlling equity ownership, tailored to each business; • regularly monitoring financial and operational performance, instilling consistent financial discipline, and supporting management in the development and implementation of information systems to effectively achieve these goals; • identifying and aligning with external policy and performance tailwinds such as those influenced by growing climate, health, and social justice concerns (and similar environmental, social and governance ("ESG") drivers); • assisting management in their analysis and pursuit of prudent organic growth strategies; • identifying and working with management to execute attractive external growth and acquisition opportunities; • assisting management in controlling and right-sizing overhead costs; • nurturing an internal culture of transparency, alignment, accountability and governance, including regular reporting; • professionalizing our subsidiaries at scale; and • forming strong subsidiary level boards of directors to supplement management in their development and implementation of strategic goals and objectives.
Our Manager actively oversees and supports the management teams of each of our subsidiaries by, among other things: • recruiting and retaining talented managers to operate our businesses using structured incentive compensation programs, including non-controlling equity ownership, tailored to each business; • regularly monitoring financial and operational performance, instilling consistent financial discipline, and supporting management in the development and implementation of information systems to effectively achieve these goals; • identifying and aligning with external policy and performance tailwinds such as those influenced by growing climate, health, and social justice concerns (and similar environmental, social and governance ("ESG") drivers); • assisting management in their analysis and pursuit of prudent organic growth strategies; • identifying and working with management to execute attractive external growth and acquisition opportunities; • assisting management in controlling and right-sizing overhead costs; • nurturing an internal culture of transparency, alignment, accountability and governance, including regular reporting; • professionalizing our subsidiaries at scale; and • forming strong subsidiary level boards of directors to supplement management in their development and implementation of strategic goals and objectives.
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.
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.
Based on the cross-over appeal of its products, 5.11 consumers fall into two core groups, professional “Prosumers” and “Everyday Consumers.” The 5.11 community was initially built by Prosumers, which consists of groups such as U.S. military personnel, law enforcement, first responders, and frontline workers, who require unwavering durability and reliability, but also value the design and 19 comfort of the 5.11 products, providing the versatility to wear its products both on and off duty.
Based on the cross-over appeal of its products, 5.11 consumers fall into two core groups, professional “Prosumers” and “Everyday Consumers.” The 5.11 community was initially built by Prosumers, which consists of groups such as U.S. military personnel, law enforcement, first responders, and frontline workers, who require unwavering durability and reliability, but also value the design and comfort of the 5.11 products, providing the versatility to wear its products both on and off duty.
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.
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.
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.
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.
Management believes Prosumers internationally view U.S. first responders, military and public servants as being among the best in the world, and want the same apparel, footwear and gear that they use both on and off duty. 5.11’s international strategy parallels the success it has enjoyed in the US by seeding the market through the Prosumer channels, which creates brand awareness and Everyday Consumer demand.
Management believes Prosumers internationally view U.S. first responders, military and public servants as being among the best in the world, and want the same apparel, footwear and gear that they use both on and off duty. 5.11’s international strategy parallels the success it has enjoyed in the U.S. by seeding the market through the Prosumer channels, which creates brand awareness and Everyday Consumer demand.
Delivering fit solutions purpose-built for performance, the BOA Fit System is featured in footwear across snow sports, cycling, outdoor, athletic, workwear as well as performance headwear and medical bracing. The system consists of three integral parts: a micro-adjustable dial, high-tensile lightweight laces, and low friction lace guides creating a superior alternative to laces, buckles, Velcro, and other traditional closure mechanisms.
Delivering fit solutions purpose-built for performance, the BOA Fit System is featured in footwear across snow sports, cycling, outdoor, athletic, workwear as well as performance headwear and bracing. The system consists of three integral parts: a micro-adjustable dial, high-tensile lightweight laces, and low friction lace guides creating a superior alternative to laces, buckles, Velcro, and other traditional closure mechanisms.
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. • 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, 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.
As such, management believes there is significant opportunity for continued international expansion and plan to expand in Europe, the Middle East, Africa ("EMEA"), Mexico, Asia, Australia, and Canada, and will leverage third-party logistics facilities in Europe and China as well as 5.11’s owned warehouse in Australia to drive this. 5.11 sees additional opportunities to further expand internationally and plan to methodically continue the expansion of its business.
As such, management believes there is significant opportunity for continued international expansion and plan to expand in Europe, the Middle East, Africa ("EMEA"), Mexico, Asia, Australia, and Canada, and will leverage third-party logistics facilities in Europe and China as well as 5.11’s owned warehouse in Australia to drive this. 5.11 sees additional opportunities to further expand internationally and plans to methodically continue the expansion of its business.
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, Estate 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 - 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.
Ergobaby offers a broad range of award-winning baby 30 carriers, blankets and swaddlers, nursing pillows, strollers, bouncers and related products that fit into families’ daily lives seamlessly, comfortably and safely. Ergobaby is headquartered in Torrance, California. History of Ergobaby Ergobaby was founded in 2003 by Karin Frost, who designed her first baby carrier following the birth of her son.
Ergobaby offers a broad range of award-winning baby carriers, blankets and swaddlers, nursing pillows, strollers, bouncers and related products that fit into families’ daily lives seamlessly, comfortably and safely. Ergobaby is headquartered in Torrance, California. History of Ergobaby Ergobaby was founded in 2003 by Karin Frost, who designed her first baby carrier following the birth of her son.
The company’s corporate responsibility and diversity and inclusion efforts are employee led, driven by the belief that supporting a global society that is resilient, empathetic, anti-racist, and inclusive starts with having a community where all people can thrive, starting from within the company itself. Lugano Overview Lugano is a leading designer, manufacturer, and retailer of high-end jewelry.
The company’s corporate responsibility and diversity and inclusion efforts are employee led, driven by the belief that supporting a global society that is resilient, empathetic, anti-racist, and inclusive starts with having a community where all people can thrive, starting from within the company itself. 33 Lugano Overview Lugano is a leading designer, manufacturer, and retailer of high-end jewelry.
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 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 37 intended to be sold at retail.
Airsoft - Airsoft guns are a class of air, CO2, gas, or electric-powered guns that are typically made from high-impact plastics and are engineered with recreation in mind to fire safe, plastic BBs quickly and accurately. Airsoft products are most often used for recreational purposes by a younger demographic and a strong user base amongst military and law enforcement customers.
Airsoft - Airsoft guns are a class of air, CO2, gas, or electric-powered guns that are typically made from high-impact plastics and are engineered with recreation in mind to fire plastic BBs quickly and accurately. Airsoft products are most often used for recreational purposes by a younger demographic and a strong user base amongst military and law enforcement customers.
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. 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. • 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.
All of Sterno's products are powered by one of the following - 1) Solar - solar panel with rechargeable power source - usually a rechargeable battery; 2) Battery - battery operated; 3) Plug-in - plugs directly into a regular wall socket either with 2 or 3 prong plug and with or 67 without included and attached transformer; 4) Low Voltage - part of a set which includes a stand-alone transformer.
All of Sterno's products are powered by one of the following - 1) Solar - solar panel with rechargeable power source - usually a rechargeable battery; 2) Battery - battery operated; 3) Plug-in - plugs directly into a regular wall socket either with 2 or 3 prong plug and with or without included and attached transformer; 4) Low Voltage - part of a set which includes a stand-alone transformer.
Finally, our management team often acts as a business development arm for our businesses to pursue organic or external growth strategies that may not have been pursued by their previous owners. Our Strategy CODI’s permanent capital structure enables us to invest in people, processes, culture, and growth opportunities that drive transformational change.
Finally, our management team often acts as a business development arm for our businesses to pursue organic or external growth strategies that may not have been pursued by their previous owners. 11 Our Strategy CODI’s permanent capital structure enables us to invest in people, processes, culture, and growth opportunities that drive transformational change.
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.
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.
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 businesses 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 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.
Management has identified a pipeline of potential acquisition targets that would help Velocity strengthen and expand its product offering and address new market segments. International Growth - Velocity is exploring opportunities to grow international sales and increase market share by pursuing new international distributor relationships. Management has recently focused its efforts on key markets within Latin America.
Management has identified a pipeline of potential acquisition targets that would help Velocity strengthen and expand its product offering and address new market segments. 42 International Growth - Velocity is exploring opportunities to grow international sales and increase market share by pursuing new international distributor relationships. Management has recently focused its efforts on key markets within Latin America.
Oil and Gas - Arnold currently provides magnets and precision assemblies for use in oil and gas exploration and production, applications which typically require exceptional collaboration and co-development with its customers. Arnold supplies products used in applications such as electric submersible pumps, oil well shutoff valves, down-hole 62 logging while drilling tooling, and a down-hole magnetic transfer coupling.
Oil and Gas - Arnold currently provides magnets and precision assemblies for use in oil and gas exploration and production, applications which typically require exceptional collaboration and co-development with its customers. Arnold supplies products used in applications such as electric submersible pumps, oil well shutoff valves, down-hole logging while drilling tooling, and a down-hole magnetic transfer coupling.
We have two primary strategies that we use to support long-term value creation. First, we focus on growing the earnings and cash flow from our acquired businesses and help them professionalize at scale. We believe that the scale and scope of our businesses give us a diverse base of cash flow upon which to further build.
We have two primary strategies that we use to support long-term value creation. First, we focus on growing the earnings and cash flow from our acquired subsidiary businesses and help them professionalize at scale. We believe that the scale and scope of our businesses give us a diverse base of cash flow upon which to further build.
Management believes 5.11's loyal customers, alongside its heritage of authenticity and high-quality product performance create such a strong connection to the 5.11 brand. 23 Deep Knowledge of Consumers Drives Product Development and Marketing - Management believe much of the 5.11 brand success is accredited to the loyalty of 5.11's consumers. 5.11 continuously strives to understand their evolving needs.
Management believes 5.11's loyal customers, alongside its heritage of authenticity and high-quality product performance create such a strong connection to the 5.11 brand. Deep Knowledge of Consumers Drives Product Development and Marketing - Management believe much of the 5.11 brand success is accredited to the loyalty of 5.11's consumers. 5.11 continuously strives to understand their evolving needs.
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.
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.
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.
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.
BOA is actively working with leading brand partners to develop 28 sport-specific footwear configurations that can benefit from the advantages of the BOA Fit System. By leveraging BOA’s brand equity and proven solutions, the company believes there is significant whitespace to increase penetration in these early adoption segments.
BOA is actively working with leading brand partners to develop sport-specific footwear configurations that can benefit from the advantages of the BOA Fit System. By leveraging BOA’s brand equity and proven solutions, the company believes there is significant whitespace to increase penetration in these early adoption segments.
Continued Development of Cutting Edge Insulation Technology - Over the past four decades, PrimaLoft has continuously improved its product offering to remain a technology leader in synthetic insulation. With strong 42 continued investment in new product development, we expect PrimaLoft innovations to push the boundaries of material science and expand the value provided to end consumers.
Continued Development of Cutting Edge Insulation Technology - Over the past four decades, PrimaLoft has continuously improved its product offering to remain a technology leader in synthetic insulation. With strong continued investment in new product development, we expect PrimaLoft innovations to push the boundaries of material science and expand the value provided to end consumers.
Other applications for which Arnold is actively involved include pipeline inspection, wireless tomography tools, and chip collection. Medical - Within the medical sector, Arnold provides magnetic assemblies, magnets, flexible magnets, and ultrathin foils. Its magnet assemblies and magnets are critical parts of motor systems for dental instruments as well as saws and grinders.
Other applications for which Arnold is actively involved include pipeline inspection, wireless tomography tools, and chip collection. 52 Medical - Within the medical sector, Arnold provides magnetic assemblies, magnets, flexible magnets, and ultrathin foils. Its magnet assemblies and magnets are critical parts of motor systems for dental instruments as well as saws and grinders.
These younger consumers are representative of an expanding, technically-focused consumer base looking for performance in every aspect of their daily lives. 5.11 caters to Everyday Consumers across all regions of the U.S., though management believes Everyday Consumers are located primarily in urban and suburban locations. 21 • U.S.
These younger consumers are representative of an expanding, technically-focused consumer base looking for performance in every aspect of their daily lives. 5.11 caters to Everyday Consumers across all regions of the U.S., though management believes Everyday Consumers are located primarily in urban and suburban locations. • U.S.
The concept of baby carrying has increased in popularity in the U.S. as parents recognize the emotional and functional benefits of carrying their baby. Consumers continually cite the comfort, design, and convenient “hands free” mobility the Ergobaby carrier offers as key purchasing criteria. Ergobaby is also recognized as an industry leader in innovation.
The concept of baby carrying has increased in popularity in the U.S. as parents recognize the emotional and functional benefits of carrying their baby. Consumers continually cite the comfort, design, and convenient “hands free” mobility the Ergobaby carrier offers as key purchasing criteria. Ergobaby is also recognized as an industry 32 leader in innovation.
Management considers its patent holdings, trademarked brand names, preeminent name recognition, ability to design innovative products, and technical and marketing expertise to be its primary competitive advantages. 48 Regulatory Environment Airguns - Airguns enjoy a relatively unrestrictive federal regulatory framework, with most regulations determined at the state level.
Management considers its patent holdings, trademarked brand names, preeminent name recognition, ability to design innovative products, and technical and marketing expertise to be its primary competitive advantages. Regulatory Environment Airguns - Airguns enjoy a relatively unrestrictive federal regulatory framework, with most regulations determined at the state level.
On the basis of product type, this market is segmented into rigid protective, flexible protective, and foam protective applications. Altor primarily competes in the North American foam protective packaging market which includes expanded polyurethane foams, loose fills, foam in place polyurethane, and molded foams products. Producers of molded foam products generally fall into two categories: block molders and shape molders.
On the basis of product type, this market is segmented into rigid protective, flexible protective, and foam protective applications. Altor primarily competes in the North American foam protective packaging market which includes expanded polyurethane foams, loose fills, foam in place polyurethane, and molded foams products. Producers of molded foam products generally fall into two categories: block and shape.
This makes them inherently safer than traditional candles as there is no flame or even heat 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 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.
Flameless and reusable wax products have seen increased adoption by younger consumers who prioritize economical and environmentally friendly products. Within the home decor space, 66 Rimports competes in the U.S. candle space and the U.S. home fragrance space, and, with the integration of Sterno Home, has added the flameless candles, lanterns and outdoor lighting industry.
Flameless and reusable wax products have seen increased adoption by younger consumers who prioritize economical and environmentally friendly products. Within the home decor space, Rimports competes in the U.S. candle space and the U.S. home fragrance space, and, with the integration of Sterno Home, has added the flameless candles, lanterns and outdoor lighting industry.
The collaboration with the some of the largest retailers brings 5.11 increased opportunity from sales and revenue to increased marketing opportunities and brand awareness. Yet at the 20 same time, 5.11 is strategic about protecting its 5.11 brand and delivering a consistent consumer experience in the third-party marketplace.
The collaboration with the some of the largest retailers brings 5.11 increased opportunity from sales and revenue to increased marketing opportunities and brand awareness. Yet at the same time, 5.11 is strategic about protecting its 5.11 brand and delivering a consistent consumer experience in the third-party marketplace.
Through its deep relationships, history of mutually beneficial partnerships, community, and social events such as “ABR Academies,” as well as its recognized leadership position, management believes 5.11 has become a partner of choice for influencers worldwide, leading to a significant competitive advantage.
Through its deep relationships, history of mutually beneficial partnerships, community, and social education events such as “ABR Academies,” as well as its recognized leadership position, management believes 5.11 has become a partner of choice for influencers worldwide, leading to a significant competitive advantage.
We offer investors a unique opportunity to own a diverse group of leading middle-market businesses in the niche-industrial and branded-consumer sectors. Our disciplined approach to our target markets provides opportunities to methodically purchase attractive businesses at values that are accretive to our shareholders.
We offer investors a unique opportunity to own a diverse group of leading middle-market businesses in the branded-consumer and industrial sectors. Our disciplined approach to our target markets provides opportunities to methodically purchase attractive businesses at values that are accretive to our shareholders.
We believe that our niche industrial businesses are leaders in their specific market sectors. In 2022, we announced that we will consider potential acquisitions in a third industry category - healthcare. Healthcare has multiple attractive, high-growth sectors with strong barriers to entry and advantageous demographic trends.
We believe that our industrial businesses are leaders in their specific market sectors. In 2022, we announced that we will consider potential acquisitions in a third industry category - healthcare. Healthcare has multiple attractive, high-growth sectors with strong barriers to entry and advantageous demographic trends.
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 home entertainment uses, selling both Sterno Brand and private label.
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.
Altor operates 18 molding and fabricating facilities across North America, creating a geographic footprint of strategically located manufacturing plants to efficiently serve national customer accounts. We acquired Altor on February 15, 2018 for a purchase price of approximately $253.4 million.
Altor operates 15 molding and fabricating facilities across North America, creating a geographic footprint of strategically located manufacturing plants to efficiently serve national customer accounts. We acquired Altor on February 15, 2018 for a purchase price of approximately $253.4 million.
Following the shareholder vote, the Board resolved to cause the Trust to elect to be treated as a 9 corporation for U.S. federal income tax purposes. The Trust was taxed as a partnership for U.S. federal income tax purposes since January 1, 2007 and until the tax reclassification became effective on September 1, 2021.
Following the shareholder vote, the Board resolved to cause the Trust to elect to be treated as a corporation for U.S. federal income tax purposes. The Trust was taxed as a partnership for U.S. federal income tax purposes since January 1, 2007 and until the tax reclassification became effective on September 1, 2021.
At no time may the (i) aggregate principal amount of all amounts outstanding under the 2022 Revolving Credit Facility, plus (ii) the aggregate amount of all outstanding letters of credit and swing line loans, exceed the borrowing availability under the 2022 Credit Facility. At December 31, 2022, we had outstanding letters of credit totaling approximately $2.2 million.
At no time may the (i) aggregate principal amount of all amounts outstanding under the 2022 Revolving Credit Facility, plus (ii) the aggregate amount of all outstanding letters of credit and swing line loans, exceed the borrowing availability under the 2022 Credit Facility. At December 31, 2023, we had outstanding letters of credit totaling approximately $2.2 million.
By serving its Prosumer, 5.11 increased demand in its Everyday Consumer segment, creating a large whitespace for growth. Moving forward, 5.11 is looking to grow share of its consumers’ wardrobe with a continued focus on everyday and weekend wear.
By serving its Prosumer, 5.11 increased demand in its 22 Everyday Consumer segment, creating a large whitespace for growth. Moving forward, 5.11 is looking to grow share of its consumers’ wardrobe with a continued focus on everyday and weekend wear.
LaserMax’s commercial business provides laser sighting solutions and tactical lights to the firearm original 45 equipment manufacturers ("OEM") and retail channels. Management believes that the addition of the LaserMax products enables Velocity to reach a wider range of new customers across retail channels.
LaserMax’s commercial business provides laser sighting solutions, and tactical lights to the firearm original equipment manufacturers ("OEM") and retail channels. Management believes that the addition of the LaserMax products enables Velocity to reach a wider range of new customers across retail channels.
The five unique fragrance combinations - lavender and chamomile, eucalyptus and rosemary, orange and vanilla, lemon and grapefruit, and peppermint and geranium - are made with 100 percent pure essential oils. 68 Customers and Distribution Channels Sterno's products are sold primarily through the foodservice and consumer retail channels.
The five unique fragrance combinations - lavender and chamomile, eucalyptus and rosemary, orange and vanilla, lemon and grapefruit, and peppermint and geranium - are made with 100 percent pure essential oils. Customers and Distribution Channels Sterno's products are sold primarily through the foodservice and consumer retail channels.
In July 2020, Altor acquired the assets of Polyfoam, a Massachusetts-based manufacturer of protective and temperature-sensitive packaging solutions for the medical, pharmaceutical, grocery and food industries, among others. In October 2021, Altor acquired Plymouth Foam, a designer and manufacturer of custom protective packaging solutions and componentry.
In July 2020, Altor acquired the assets of Polyfoam, a Massachusetts-based manufacturer of protective and temperature-sensitive packaging solutions for the medical, pharmaceutical, grocery and food industries, among others. In October 2021, Altor acquired Plymouth Foam, a designer and manufacturer of fabricated foam, custom protective packaging solutions and componentry.
Within the foodservice channel, Sterno’s products are predominantly used in the restaurant, lodging/hospitality and catering markets. • Retail - The retail channel consists of club stores, mass merchants, specialty retailers, grocers and national and regional DIY stores. The Company’s retail products are used in home, camping and emergency applications.
Within the foodservice channel, Sterno’s products are predominantly used in the restaurant, lodging/hospitality and catering markets. 58 • Retail - The retail channel consists of club stores, mass merchants, specialty retailers, grocers and national and regional DIY stores. The Company’s retail products are used in home, camping and emergency applications.
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. Niche 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 particular product categories. Industrial businesses are those businesses that focus on manufacturing and selling products and industrial services within a specific market sector.
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.
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.
Since its founding in 2003, Ergobaby has successfully introduced new carrier products to maintain innovation, uniqueness, and freshness within its baby carrier and travel system product 32 lines and has become the baby carrier industry leader with the Omni 360 baby carrier.
Since its founding in 2003, Ergobaby has successfully introduced new carrier products to maintain innovation, uniqueness, and freshness within its baby carrier and travel system product lines and has become the baby carrier industry leader with the Omni 360 baby carrier.
Arnold is generally able to pass through material costs to its 64 customers and believes that in the event of significant price increases by vendors that it could pass the increases to its customers. Arnold has a wide variety of manufacturing capabilities.
Arnold is generally able to pass through material costs to its customers and believes that in the event of significant price increases by vendors that it could pass the increases to its customers. Arnold has a wide variety of manufacturing capabilities.
To increase connectivity and reach a larger quantum of consumers, 5.11 is accelerating digital 22 growth through the utilization of data analytics, targeted digital tactics and integrated marketing campaigns.
To increase connectivity and reach a larger quantum of consumers, 5.11 is accelerating digital growth through the utilization of data analytics, targeted digital tactics and integrated marketing campaigns.
Recently CenterPoint has introduced new crossbow models at 46 higher price points to segments of the market and Ravin continues to introduce models that lead the industry in innovation and performance.
Recently CenterPoint has introduced new crossbow models at higher price points to segments of the market and Ravin continues to introduce models that lead the industry in innovation and performance.
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.
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.
Its locations provide an opportunity for 5.11 to showcase its diverse product assortment. Retail also provides an opportunity to further engage with consumers through the ABR mindset, with in-person, local community events and educational opportunities that elevate the experiential retail experience. • Third-party marketplaces. 5.11’s third-party marketplace partners, such as Amazon, are invaluable tools for its omnichannel presence.
Its locations provide an opport unity for 5.11 to showcase its diverse product assortment. Retail also provides an opportunity to further engage with consumers through the ABR mindset, with in-person, local community events and educational opportunities that elevate the experiential retail experience. • Third-party marketplaces. 5.11’s third-party marketplace partners, such as Amazon, are invaluable tools for its omnichannel presence.
Competitive Strengths PrimaLoft’s competitive advantages include: (i) four decades of brand equity built on technology leadership, that allows brand partners to command premium pricing and tell their sustainability story; (ii) deep insulation-specific material science expertise ranging from polymer innovation to manufacturing innovation to design integration; (iii) protected intellectual property and a proprietary supply chain; (iv) trusted long standing brand partner relationships for a critical but relatively small cost component of the overall product; and (v) scale (demand aggregation) to command attention at both the fiber and toll manufacturing stages of the supply chain.
Competitive Strengths PrimaLoft’s competitive advantages include: (i) four decades of brand equity built on technology leadership, that allows brand partners to command premium pricing and tell their sustainability story; (ii) deep insulation-specific material science expertise ranging from polymer innovation to manufacturing innovation to design integration; (iii) protected intellectual property and a proprietary supply chain; (iv) trusted long standing brand partner relationships for a critical but relatively small cost component of the overall product; and (v) scale (demand aggregation) to gain efficiencies at both the fiber and toll manufacturing stages of the supply chain.
By approaching trade areas in this manner, 5.11 shares inventory between stores and eCommerce and optimizes speed and efficiency with logistics that meet consumers’ needs wherever they prefer to shop, rather than directing them into a particular channel. This principle of product accessibility and experiential shopping drives brand building and organic lead generation.
By approaching trade areas in this manner, 5.11 shares inventory between stores and eCommerce and optimizes speed and efficiency with logistics that meet consumers’ needs wherever they prefer to shop, rather than directing them into a particular channel. We believe this principle of product accessibility and experiential shopping drives brand building and organic lead generation.
Competition BOA’s competition can be segmented into three categories: established footwear brands that maintain their own proprietary technology for particular market segments, lower-quality subscale BOA imitators, and non-mechanical lace alternatives (bungies, buckles, plastic lace locks, Velcro, and webbing). Management estimates that BOA is 25+ times the size of its next closest direct competitor.
Competition BOA’s competition can be segmented into three categories: established footwear brands that maintain their own proprietary technology for particular market segments, lower-quality subscale BOA imitators, and non-mechanical lace alternatives (bungies, buckles, plastic lace locks, Velcro, and webbing). Management estimates that BOA is 10+ times the size of its next closest direct competitor.
Proper clothing and apparel are essential to hunting success and enjoyment. Distribution Channels Velocity's products are sold through over 900 customers across a mix of sales channels, including mass merchants, national retailers, distributors/dealers/regional chains, international distributors, and e-commerce. Over the last 5 years, management has successfully diversified both its sales channel composition and customer mix.
Proper clothing and apparel are essential to hunting success and enjoyment. Distribution Channels Velocity's products are sold through over 900 customers across a mix of sales channels, including mass merchants, national retailers, distributors/dealers/regional chains, international distributors, and e-commerce. Over the last several years, management has successfully diversified both its sales channel composition and customer mix.
As 5.11 continues to scale, its broader consumer base allows it to reinvest resources back into its technical and functional expertise, further driving continued innovation for its professional consumers. Disciplined International Expansion - International re presents 21% of net sa les in 2022 and management believes 5.11 has a large opportunity to expand this business.
As 5.11 continues to scale, its broader consumer base allows it to reinvest resources back into its technical and functional expertise, further driving continued innovation for its professional consumers. Disciplined International Expansion - International re presents 21% of net sa les in 2023 and management believes 5.11 has a large opportunity to expand this business.
Deep Collaborative Partnerships – BOA has deep partnerships with the premier brands in every segment they compete within. They collaborate throughout the entire product lifecycle process, including product strategy, design and development, factory operational/service support, retail education, consumer warranty support, and marketing/demand creation. BOA has a high partner retention rate due to the depth and value of the relationships.
Deep Collaborative Partnerships – BOA has deep partnerships with the premier brands in every industry they compete within. They collaborate throughout the entire product lifecycle process, including product strategy, design and development, factory operational/service support, retail education, consumer warranty support, and marketing/demand creation. BOA has a high partner retention rate due to the depth and value of the relationships.
In 2016, Ergobaby launched the 3-Position Adapt Baby Carrier that is geared for newborns to toddlers (7lbs-45lbs) and offers some unique parent comfort features including lumbar support and crossable shoulder straps, as well as the benefit of being an all-in-one carrier with no need for an infant insert accessory (for babies 7-12lbs.).
In 2016, Ergobaby launched the Adapt Baby Carrier that is geared for newborns to toddlers (7lbs-45lbs) and offers some unique parent comfort features including lumbar support and crossable shoulder straps, as well as the benefit of being an all-in-one carrier with no need for an infant insert accessory (for babies 7-12lbs.).
Applications include motors and generators, magnetic resonance imaging, magnetic inspection systems, sensors and loudspeakers. 60 Other Permanent Magnet Types • AlNiCo - The AlNiCo family of magnets remains a preferred material for many mission critical applications. Its favorable linear temperature characteristics, high magnetic flux density and good corrosion resistance are ideally suited for use in applications requiring magnetic stability.
Applications include motors and generators, magnetic resonance imaging, magnetic inspection systems, sensors and loudspeakers. 50 Other Permanent Magnet Types • AlNiCo - The AlNiCo family of magnets remains a preferred material for many mission critical applications. Its favorable linear temperature characteristics, high magnetic flux density and good corrosion resistance are ideally suited for use in applications requiring magnetic stability.
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.
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.
Water bead guns functional similarly to airsoft guns, but use hydrogel instead of plastic BBs. These BBs are made of super-absorbent, biodegradable polymers which are more home and environmentally friendly. • Hunting Apparel - The technical aspect of King’s apparel lends itself well to several other outdoor categories including but not limited to backpacking, camping, fishing, and hiking.
Water bead guns function similarly to airsoft guns, but use hydrogel instead of plastic BBs. These BBs are made of super-absorbent, biodegradable polymers which are more home and environmentally friendly. • Hunting Apparel - The technical aspect of King’s apparel lends itself well to several other outdoor categories including but not limited to backpacking, camping, fishing, and hiking.
Flexmag represented approximately 17% of Arnold sales on an annualized basis. It primarily sells its products to specialty advertisers and original equipment manufacturers. With highly automated manufacturing processes, Flexmag can accommodate customers required short lead times. Flexmag benefits from a loyal customer base and significant barriers to entry in the industry.
Flexmag represented approximately 12% of Arnold sales on an annualized basis. It primarily sells its products to specialty advertisers and original equipment manufacturers. With highly automated manufacturing processes, Flexmag can accommodate customers required short lead times. Flexmag benefits from a loyal customer base and significant barriers to entry in the industry.
Velocity's product strategy encompasses producing high quality, feature-rich products recognized by consumers for their craftsmanship and value, and building on a rich history to introduce innovative new products. Airguns - Airguns has historically represented Velocity's largest product category. The airgun product line consists of air rifles, air pistols and a range of accessories including targets, holsters and cases.
Velocity's product strategy encompasses producing high quality, feature-rich products recognized by consumers for their craftsmanship, value and building on a rich history to introduce innovative new products. Airguns - Airguns have historically represented Velocity's largest product category. The airgun product line consists of air rifles, air pistols and a range of accessories including targets, holsters and cases.
Furthermore, Velocity supplements its in-house team with four independent sales representative organizations, providing coverage for approximate 375 additional customers across their respective geographic territories. International sales efforts are handled by Velocity-employed account executives who work through local distributors in order to ensure that products conform to local regulatory standards.
Furthermore, Velocity supplements its in-house team with four independent sales representative organizations, providing coverage for approximately 375 additional customers across their respective geographic territories. International sales efforts are handled by Velocity-employed account executives who work through local distributors in order to ensure that products conform to local regulatory standards.
Altor operates 18 molding and fabricating facilities across North America, creating a geographic footprint of strategically located manufacturing plants to efficiently serve national customer accounts. History of Altor Solutions Altor Solutions was founded in 1957 and began its operations as a single plant in St. Louis, MO, dedicated to the manufacture of rigid foam plastics.
Altor operates 15 molding and fabricating facilities across North America, creating a geographic footprint of strategically located manufacturing plants to efficiently serve national customer accounts. History of Altor Solutions Altor Solutions was founded in 1957 and began its operations as a single plant in St. Louis, MO, dedicated to the manufacture of rigid foam plastics.
In addition to the domestic whitespace opportunity, management believes there is opportunity to expand to a large global market, as International only represente d 21% of n et sales in 2022. 5.11 products are currently distributed in 120 countries across the globe with its market entry point being the Professional Wholesale Channel.
In addition to the domestic whitespace opportunity, management believes there is opportunity to expand to a large global market, as International only represente d 21% of n et sales in 2023. 5.11 products are currently distributed in 120 countries across the globe with its market entry point being the Professional Wholesale Channel.
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 investment 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. Our long-term responsible approach is also reflected in how we manage ourselves.
Most countries outside the US are under-penetrated with limited distribution and select dealers only carrying a portion of available styles.
Most countries outside the US are under-penetrated with limited 21 distribution and select dealers only carrying a portion of available styles.
PMAG is Arnold’s largest business unit representing approximately 56% of Arnold sales on an annualized basis (including Reprographics) with a global footprint including manufacturing facilities in the U.S., U.K., Switzerland, and China. PMAG—Products and Applications: • High precision magnetic rotors for use in electric motors and generators.
PMAG is Arnold’s largest business unit representing approximately 57% of Arnold sales on an annualized basis (including Reprographics) with a global footprint including manufacturing facilities in the U.S., U.K., Switzerland, and China. PMAG—Products and Applications: • High precision magnetic rotors for use in electric motors and generators.
These product “families” typically start with a purpose-built pant and then expand into other products. • Pants - for many consumers, 5.11 technical purpose-built pants are the gateway into the 5.11 brand. 5.11 offers a wide range of pants to tackle any mission in a broad range of waist sizes and in seams for men and women.
These product “families” typically start with a purpose-built pant and then expand into other products. • Pants - for many consumers, 5.11 technical purpose-built pants are the gateway into the 5.11 brand. 5.11 offers a wide range of pants to tackle any mission in a broad range of waist sizes and inseams for men and women.
Electric Motors Arnold manufactures electric motors and related components for use in industrial, military, and aerospace applications and represents approximately 18% of Arnold sales on an annualized basis. Arnold's Electric Motor division is a trusted partner, supplying high-quality, electrical components and assemblies to many well-known brands in the industrial and aerospace industries.
Electric Motors Arnold manufactures electric motors and related components for use in industrial, military, and aerospace applications and represents approximately 23% of Arnold sales on an annualized basis. Arnold's Electric Motor division is a trusted partner, supplying high-quality, electrical components and assemblies to many well-known brands in the industrial and aerospace industries.
Environmental, Social and Governance In the last few years, companies, investors and policymakers have focused more attention on - and have made investments in - companies that are considered leaders in ESG practices. We believe that ESG engagement can help drive value creation and have incorporated ESG factors into our investment analysis and decision making.
Environmental, Social and Governance In the last few years, companies, investors and policymakers have focused more attention on - and have made investments in - companies that are considered leaders in ESG practices. We believe that ESG engagement can help drive value creation and have incorporated ESG factors into our acquisition analysis and decision making.
Ravin primarily focuses on the higher-end segment of the crossbow market and has developed significant intellectual property related to the advancement of crossbow technology . In 2022 Ravin introduced the most compact, fastest, most powerful, and most accurate crossbow ever produced, shooting arrows at speeds over 500 feet per second.
Ravin primarily focuses on the higher-end segment of the crossbow market and has developed significant intellectual property related to the advancement of crossbow technology . In 40 2022 Ravin introduced one of the most compact, fastest, most powerful, and most accurate crossbow ever produced, shooting arrows at speeds over 500 feet per second.
Precision Thin Metals Arnold’s precision thin metals group manufactures precision thin strip and foil products from an array of materials and represents approximately 9% of Arnold sales on an annualized basis. The Precision Thin Metals group serves the aerospace and defense, power transmission, alternative energy (hybrids, wind, battery, solar), medical, security, and general industrial end-markets.
Precision Thin Metals Arnold’s precision thin metals group manufactures precision thin strip and foil products from an array of materials and represents approximately 8% of Arnold sales on an annualized basis. The Precision Thin Metals group serves the aerospace and defense, power transmission, alternative energy (hybrids, wind, battery, solar), medical, security, and general industrial end-markets.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf corporate income tax rates are raised, the anticipated advantages of being treated as a corporation for U.S. tax purposes would be diminished. 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.
Biggest changeFuture 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.
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; 80 • 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 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.
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 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 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.
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; 73 • 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 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.
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. General Risk Factors We could be negatively impacted by cybersecurity attacks.
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.
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 75 distributions in respect of the preferred shares.
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.
However, 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. For example, the COVID-19 pandemic has resulted in labor shortages and supply chain disruptions.
In addition, the laws of foreign countries may not protect our businesses’ intellectual property rights effectively or to the same extent as the laws of the United States. 81 Stopping unauthorized use of their proprietary information and intellectual property, and defending claims that they have made unauthorized use of others’ proprietary information or intellectual property, may be difficult, time-consuming and costly.
In addition, the laws of foreign countries may not protect our businesses’ intellectual property rights effectively or to the same extent as the laws of the United States. Stopping unauthorized use of their proprietary information and intellectual property, and defending claims that they have made unauthorized use of others’ proprietary information or intellectual property, may be difficult, time-consuming and costly.
As a result, these types of claims could have a material adverse effect on our businesses, results of operations and financial condition. 82 Our businesses are subject to certain risks associated with their foreign operations or business they conduct in foreign jurisdictions. Some of our businesses have and may have operations or conduct business outside the United States.
As a result, these types of claims could have a material adverse effect on our businesses, results of operations and financial condition. Our businesses are subject to certain risks associated with their foreign operations or business they conduct in foreign jurisdictions. Some of our businesses have and may have operations or conduct business outside the United States.
Risks Relating to Our Manager Our Chief Executive Officer, directors, Manager and management team may allocate some of their time to other businesses, thereby causing conflicts of interest in their determination as to how much time to devote to our affairs, which may materially adversely affect our operations. 76 Only our Chief Financial Officer, Mr.
Risks Relating to Our Manager Our Chief Executive Officer, directors, Manager and management team may allocate some of their time to other businesses, thereby causing conflicts of interest in their determination as to how much time to devote to our affairs, which may materially adversely affect our operations. Only our Chief Financial Officer, Mr.
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 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 69 such claims.
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 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 of directors from 65 time to time.
The Trust Agreement authorizes the Company, acting through the its 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 of directors and without further shareholder approval, to cause the Trust to be converted to a corporation (the “Conversion”).
A component of our strategy is to continue to acquire additional platform subsidiaries, as well as add-on businesses for our existing businesses. Generally, because such acquisition targets are held privately, we may experience difficulty in evaluating potential target businesses as the information concerning these businesses is not publicly available.
A component of our strategy is to continue to acquire additional subsidiaries, as well as add-on acquisitions for our existing subsidiaries. Generally, because such acquisition targets are held privately, we may experience difficulty in evaluating potential target businesses as the information concerning these businesses is not publicly available.
Our Ergobaby, Marucci, Velocity, Altor and Sterno businesses derive a significant amount of revenue from a concentrated number of retailers, distributors or manufacturers.
Our Ergobaby, Velocity, Altor and Sterno businesses derive a significant amount of revenue from a concentrated number of retailers, distributors or manufacturers.
Your recourse, if you disagree, will be limited because our Trust Agreement gives broad authority and discretion to 72 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 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.
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 74 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 63 outside the definition of an investment company.
The loss of services of one or more members of our management team or the management team at one of our businesses could materially adversely affect our financial condition, business and results of operations. We face risks with respect to the evaluation and management of future platform or add-on acquisitions.
The loss of services of one or more members of our management team or the management team at one of our businesses could materially adversely affect our financial condition, business and results of operations. We face risks with respect to the evaluation and management of future acquisitions.
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, 2022, we had approximately $1,850 million of consolidated debt outstanding.
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.
Risks Related to the Preferred Shares Distributions on the Series A Preferred Shares are discretionary and non-cumulative. 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 directors of the Company.
As of December 31, 2022, we had identified indefinite lived intangible assets with a carrying value in our financial statements of $57.0 million, and goodwill of $1,133.4 million. Our businesses are subject to unplanned business interruptions which may adversely affect our performance.
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.
Additionally, while our branded consumer businesses devote effort and resources to protecting their intellectual property, if these efforts are not successful the value of those brands may be harmed. Any harm to the brand or reputation of our subsidiaries could have a material adverse effect on our financial condition. ITEM 1B. UNRESOLVED STAFF COMMENTS NONE
Additionally, while our branded consumer businesses devote effort and resources to protecting their intellectual property, if these efforts are not successful the value of those brands may be harmed. Any harm to the brand or reputation of our subsidiaries could have a material adverse effect on our financial condition.
Any remedial costs or other liabilities related to cybersecurity incidents may not be fully insured or indemnified by other means. In addition, cybersecurity has become a top priority for global lawmakers and regulators, and some jurisdictions have proposed or enacted laws requiring companies to notify regulators and individuals of data security breaches involving certain types of personal data.
Any remedial costs or other liabilities related to cybersecurity incidents may not be fully insured or indemnified by other means. In addition, cybersecurity has become a top priority for global lawmakers and regulators, and some jurisdictions have enacted laws requiring companies to notify regulators and individuals of security breaches.
As of December 31, 2022, CGI Maygar Holdings LLC owns approximately 7.9 million or approximatel y 11.0% of our common shares and may have significant influence over the election of directors in the future.
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.
Failure to observe proper safety practices may result in injuries that give rise to product liability and personal injury claims and lawsuits, as well as claims for breach of contract, loss of profits and consequential damages.
Not all users of its products will observe all proper safety practices. Failure to observe proper safety practices may result in injuries that give rise to product liability and personal injury claims and lawsuits, as well as claims for breach of contract, loss of profits and consequential damages.
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.
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.
We, and our businesses, use a variety of information technology systems in the ordinary course of business, which are potentially vulnerable to unauthorized access, computer viruses and cybersecurity attacks, including cybersecurity attacks to our information technology infrastructure and attempts by others to gain access to our proprietary or sensitive information, and ranging from individual attempts to advanced persistent threats.
We, and our businesses, use a variety of information technology systems in the ordinary course of business, which are potentially vulnerable to cybersecurity attacks, including cybersecurity attacks to our information technology infrastructure and attempts by others to gain access to our proprietary or sensitive information.
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.
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.
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. 78 The Management Services Agreement provides that our businesses may enter into integration services agreements with our Manager pursuant to which our businesses will pay fees to our Manager for services provided by our Manager relating to the integration of a business’s financial reporting, computer systems and decision making and management processes into our operations following an acquisition of such business.
The Management Services Agreement provides that our businesses may enter into integration services agreements with our Manager pursuant to which our businesses will pay fees to our Manager for services provided by our Manager relating to the integration of a business’s financial reporting, computer systems and decision making and management processes into our operations following an acquisition of such business.
This circumstance could materially adversely affect our liquidity and ability to make distributions to our shareholders. 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.
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.
As a result, the management fee may incentivize 77 our Manager to increase the amount of our assets. For example, the acquisition of additional assets or the incurrence of third party debt could be prioritized rather than increasing the performance of our businesses.
As a result, the management fee may incentivize our Manager to increase the amount of our assets. For example, the acquisition of additional assets or the incurrence of third party debt could be prioritized rather than increasing the performance of our businesses. We cannot determine the amount of the management fee that will be paid over time with any certainty.
Defects in the products provided by our companies could result in financial or other damages to their customers, which could result in reduced demand for our companies’ products and/or liability claims against our companies.
Significant or continuing noncompliance with these standards and laws could disrupt our business and harm our reputation. Defects in the products provided by our companies could result in financial or other damages to their customers, which could result in reduced demand for our companies’ products and/or liability claims against our companies.
In addition, Sterno may be held responsible for 79 damages beyond its insurance coverage and there can be no guarantee that it will be able to procure adequate insurance coverage in the future.
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 obligations to pay the management fee 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 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.
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.
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. Our results of operations, cash flow and financial condition could be materially adversely affected in the future by the global COVID-19 pandemic and related economic disruptions.
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.
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 of directors at a time that may not be optimal for our shareholders.
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.
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.
Our businesses are and may be subject to federal, state and foreign environmental laws and regulations that expose them to potential financial liability.
Likewise, such determination would be dependent on whether certain hurdles were surpassed giving rise to a payment of profit allocation. 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.
Likewise, such determination would be dependent on whether certain hurdles were surpassed giving rise to a payment of profit allocation.
Your recourse, if you disagree, will be limited because our Trust Agreement gives broad authority and discretion to our board of directors. In addition, we may change the nature of the shares to be issued to raise additional equity and remain a fixed-investment trust for tax purposes.
Your recourse, if you disagree, will be limited because our Trust Agreement gives broad authority and discretion to our board of directors.
We cannot determine the amount of the management fee that will be paid over time with any certainty. The management fee paid to CGM for the year ended December 31, 2022 was $63.6 million.
The management fee paid to CGM for the year ended December 31, 2023 was $68.4 million.
Removed
The COVID-19 pandemic adversely impacted global commercial activity and contributed to significant volatility in the equity and debt markets.
Added
If any of these risks actually occur, our business, financial condition, operating results and prospects could be materially and adversely affected.
Removed
The COVID-19 pandemic and restrictive measures taken during the course of the pandemic to contain or mitigate its spread caused business shutdowns, or the re-introduction of business shutdowns, cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions, labor shortages, increased inflationary pressure and overall economic and financial market instability both globally and in the United States.
Added
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.
Removed
The extent to which the COVID-19 pandemic and related economic disruptions impact our business, results of operations, cash flow and financial condition will depend on future developments, which are highly uncertain, difficult to predict and largely outside of our control, including, but not limited to, the occurrence, spread, duration and severity of any subsequent wave or waves of outbreaks, including the emergence and spread of variants of the COVID-19 virus; the impact on our customers and suppliers; the actions taken by the U.S. and foreign governments to contain the pandemic, address its impact or respond to the reduction in global and local economic activity; the occurrence, duration and severity of a global, regional or national recession, depression or other sustained adverse market event; and how quickly and to what extent normal economic and operating conditions can resume.
Added
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.
Removed
Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse effects on our results of operations and financial condition.
Added
In this respect, a calculation and payment of profit allocation may be triggered upon the sale of one of our businesses.
Removed
Historically, our distribution policy has been to make regular distributions on outstanding common shares, and we expect to continue this policy of regular distributions. However, because the Trust will incur entity level income taxes following the tax reclassification, we reduced our previous annual distribution from $1.44 per Trust common share per year to approximately $1.00 per common share per year.
Added
Cybersecurity threats continue to increase in frequency and sophistication; a successful cybersecurity attack could interrupt or disrupt our information technology systems, or those of our third-party service providers, and may cause us to incur excessive costs or suffer reputational harm.
Removed
Recent proposals for tax reform include proposals to raise corporate income tax rates and capital gains tax rates. 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.
Added
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.
Removed
Although Sterno products have comprehensive labeling and it follows government and third party based standards and protocols, it cannot guarantee there will not be accidents due to misuse or otherwise. Accidents involving Sterno products may have an adverse effect on its reputation and reduce demand for its products.
Added
In addition to unauthorized access to or acquisition of personal data, confidential information, intellectual property or other sensitive information, such attacks could include the deployment of harmful malware and ransomware, and may use a variety of methods, including denial-of-service attacks, social engineering and other means, to attain such unauthorized access or acquisition or otherwise affect service reliability and threaten the confidentiality, integrity and availability of information.
Removed
Although Velocity provides information regarding safety procedures and warnings with all of its product packaging, not all users of its products will observe all proper safety practices.
Added
Certain of our businesses are subject to increased product regulations which may cause an increase to our expenses or result in increased litigation in the event of non-compliance.
Removed
The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusions, including by computer hackers, nation-state affiliated actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
Added
Certain of our businesses are subject to increasingly stringent and complex domestic and foreign product labeling, performance, environmental and safety standards, laws and other regulations, including those pertaining to per-and polyfluoroalkyl substances ("PFAS") a group of chemicals used to make fluoropolymer coatings and products that resist heat, oil, stains, grease, and water.
Added
These requirements could result in greater expense associated with compliance efforts, and failure to comply with these regulations could result in a delay, non-delivery, recall, or destruction of inventory shipments during key seasons, a loss of advance orders from wholesale customers or in other financial penalties.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Square Feet Use Latham, NY 13,321 Corporate Office Xiamen, China 16,800 Office Taufkirchen, Germany 22,450 Office 84 Velocity Outdoor Velocity Outdoor is headquartered in Bloomfield, New York. 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.
Biggest changeVelocity 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.
ITEM 2. PROPERTIES The following is a summary as of December 31, 2022 of the physical properties owned or leased by our businesses that we consider materially important to those businesses. 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, 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.
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. 83 Location Square Feet Use Denver, CO 88,000 Office Mondsee, Austria 15,714 Office Hong Kong, China 20,000 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 30,000 Office/Warehouse Ergobaby Ergobaby is headquartered in Torrance, California and leases office and warehouse locations worldwide.
Sterno owns manufacturing and production facilities in Memphis, Tennessee and Texarkana, Texas. All other properties are leased. The summary below outlines Sterno's primary property locations.
Sterno owns manufacturing and production facilities in Memphis, Tennessee and Texarkana, Texas. All other p roperties are leased. The summary below outlines Sterno's primary property locations.
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, 2022, 5.11 leased space for 110 retail store s, ranging in size from 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 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.
The summary below outlines Ergobaby's primary leased office and warehouse space. Location Square Feet Use Torrance, CA 4,595 Corporate Carson, CA 5,000 Warehouse Bialystok, Poland 9,688 Warehouse Lugano Lugano is headquartered in Newport Beach, California. The summary below outlines Lugano's primary leased office space and retail locations.
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.
Location Square Feet Use Marengo, IL 94,220 Office/Warehouse Marietta, OH 81,000 Office/Warehouse Marengo, IL 55,200 Office/Warehouse 85 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 Guangdong Province, China 113,302 Office/Warehouse Sterno Sterno is headquartered in Corona, California.
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 Corona, CA 12,330 Corporate Office Memphis, TN 233,027 Manufacturing Texarkana, TX 369,700 Manufacturing Delta, Canada 45,000 Warehouse La Porte, IN 20,000 Office Vancouver, Canada 50,372 Office Vancouver, Canada 33,711 Warehouse Mississauga, Canada 100,000 Warehouse 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 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 Aurora, CO 114,000 Corporate Office/Manufacturing Chandler, AZ 48,000 Office/Manufacturing Maple Grove, MN 50,000 Office/Manufacturing Altor Solutions Altor is headquartered in Scottsdale, Arizona and operat es 18 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.
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.
Location Square Feet Use Newport Beach, CA 31,374 Corporate office and Retail salon Palm Beach, FL 2,155 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 Marucci Sports Marucci is headquartered in Baton Rouge, Louisiana. The summary below outlines Marucci's primary leased office and manufacturing space.
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.
Removed
Location Square Feet Use Baton Rouge, LA 131,565 Office/Distribution Center/Manufacturing Baton Rouge, LA 16,800 Retail Store King of Prussia, PA 22,450 Office/Manufacturing Punxsutawney, PA 11,480 Manufacturing Winnfield, PA 14,330 Manufacturing Lafayette, LA 12,192 Retail Store American Fort, UT 22,576 Distribution Center PrimaLoft PrimaLoft is headquartered in Latham, New York. The summary below outlines PrimaLoft's primary leased office space.
Added
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.
Removed
Velocity's Ravin subsidiary operates an 80,000 square foot manufacturing facility in Superior, Wisconsin. Advanced Circuits Advanced Circuits is headquartered in Aurora, Colorado.The summary below outlines Advanced Circuit's primary leased office and manufacturing space.
Removed
The summary below outlines Altor's primary property locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeCODI does not believe that the outcome of the Marengo Litigation will have a material adverse effect on its financial position or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 87 PART II
Biggest changeCODI does not believe that the outcome of the Marengo Litigation will have a material adverse effect on its financial position or results of operations.
The Consent Order also requires Arnold and 300 West to submit to the Illinois Environmental 86 Protection Agency (IEPA) a comprehensive plan detailing steps to be taken by 300 West and Arnold to remediate on- and off-site soil and groundwater contamination. Discussions between Arnold and 300 West and the IEPA regarding the remediation plan are ongoing.
The Consent Order also requires Arnold and 300 West to submit to the Illinois Environmental Protection Agency (IEPA) a comprehensive plan detailing steps to be taken by 300 West and Arnold to remediate on- and off-site soil and groundwater contamination. Discussions between Arnold and 300 West and the IEPA regarding the remediation plan are ongoing.
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.
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+7 added−0 removed6 unchanged
Biggest changeFor the year 2020, we declared and paid cash distributions of $1.44 per share to holders of record of our common shares. 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.
Biggest changeFollowing 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.
The Company plans to continue to declare and pay quarterly cash distributions on all outstanding shares through fiscal 2023, 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 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.
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, 2022.
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.
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, 2022 there were 13 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, 2023 there were 15 registered ho lders of our common stock.
The Company expects cash distributions will exceed earnings and profits in the 2022 taxable year.
The Company expects cash distributions will exceed earnings and profits in the 2023 taxable year.
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. Recent Sales of Unregistered Securities None. Purchases of Equity Securities by Issuer and Affiliated Purchasers None. ITEM 6. [Reserved] 89
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.
Year ended December 31, Data 2017 2018 2019 2020 2021 2022 Compass Diversified Holdings $ 100.00 $ 79.94 $ 173.49 $ 146.60 $ 251.62 $ 156.75 NYSE Composite Index $ 100.00 $ 91.05 $ 114.28 $ 122.26 $ 147.54 $ 133.75 NYSE Financial Sector Index $ 100.00 $ 86.86 $ 111.49 $ 109.05 $ 136.74 $ 119.35 88 Distributions During the year ended December 31, 2022, we declared and paid cash distributions of $1.00 to our common shareholders.
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.
Added
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.
Added
In connection with the issuance of the Shares, CODI paid a commission equal to 1% of the aggregate sales price, or approximately $752,000.
Added
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 .
Added
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.
Added
The proceeds received in connection with the issuance of the common shares was used for general corporate purposes, including the funding of acquisitions.
Added
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.
Added
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

Item 6. [Reserved]

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

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Biggest changeItem 6. [Reserved] 89 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 90 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 141 Item 8. Financial Statements and Supplementary Data 142 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 143 Item 9A. Controls and Procedures 144
Biggest changeItem 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 7. Management's Discussion & Analysis

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

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Biggest changeReconciliation of Net income (loss) from continuing operations to EBITDA and Adjusted EBITDA The following tables reconcile EBITDA and Adj u sted EBITDA to net income (loss) from continuing operations, which we consider to be the most comparable GAAP financial measure (in thousands) : 127 Adjusted EBITDA Year ended December 31, 2022 Corporate 5.11 BOA Ergobaby Lugano Marucci PrimaLoft Velocity Outdoor ACI Altor Arnold Sterno Consolidated Net income (loss) from continuing operations $ (64,084) $ 22,633 42,613 $ (18,669) 27,934 11,526 (17,741) $ 4,127 $ 12,955 $ 9,662 $ 7,683 $ 3,406 $ 42,045 Adjusted for: Provision (benefit) for income taxes 12,119 7,125 6,527 (4,274) 11,889 4,320 (3,878) 1,562 3,616 3,174 3,329 (480) 45,029 Interest expense, net 83,243 — (25) 10 16 14 (7) 229 — — 26 — 83,506 Intercompany interest (105,813) 13,761 7,410 6,026 12,773 6,977 7,512 10,282 6,659 10,742 5,518 18,153 — Loss on debt extinguishment 534 — — — — — — — — — — — 534 Depreciation and amortization 1,134 22,972 21,993 8,094 11,533 12,583 10,465 13,374 2,158 16,403 8,041 20,293 149,043 EBITDA (72,867) 66,491 78,518 (8,813) 64,145 35,420 (3,649) 29,574 25,388 39,981 24,597 41,372 320,157 Other (income) expense (57) (217) 1,043 6 2 (1,875) 112 2,417 267 766 (20) (1,730) 714 Non-controlling shareholder compensation — 1,511 2,511 1,479 1,179 1,457 2,142 971 496 1,321 40 844 13,951 Impairment expense — — — 20,552 — — — — — — — — 20,552 Acquisition expenses — — — — — — 5,680 222 — 216 — — 6,118 Integration services fee — — — — 1,688 — 2,375 — — — — — 4,063 Other — — — 250 — 1,802 — — 853 — — 1,330 4,235 Adjusted EBITDA $ (72,924) $ 67,785 $ 82,072 $ 13,474 $ 67,014 $ 36,804 $ 6,660 $ 33,184 $ 27,004 $ 42,284 $ 24,617 $ 41,816 $ 369,790 128 Adjusted EBITDA Year ended December 31, 2021 Corporate 5.11 BOA Ergobaby Lugano Marucci Sports Velocity Outdoor ACI Altor Arnold Sterno Consolidated Net income (loss) from continuing operations $ (65,287) $ 20,152 $ 21,178 $ 5,079 $ 5,239 $ 10,232 $ 23,035 $ 14,178 $ 7,871 $ 5,013 $ (316) $ 46,374 Adjusted for: Provision (benefit) for income taxes (12,119) 6,905 3,559 2,018 2,094 3,070 6,237 3,419 2,619 1,345 2,609 21,756 Interest expense, net 58,639 16 — — 9 5 165 — (1) 6 — 58,839 Intercompany interest (73,982) 11,868 8,581 1,960 2,450 3,110 7,461 7,217 7,558 5,455 18,322 — Loss on debt extinguishment 33,305 — — — — — — — — — 33,305 Depreciation and amortization 904 22,355 20,279 8,435 4,757 8,634 12,704 2,212 12,938 8,888 23,369 125,475 EBITDA (58,540) 61,296 53,597 17,492 14,549 25,051 49,602 27,026 30,985 20,707 43,984 285,749 Other (income) expense (284) 125 377 — 16 (119) 2,573 298 (323) 8 (1,189) 1,482 Non-controlling shareholder compensation — 2,428 2,194 1,693 190 1,101 1,020 496 1,035 38 1,242 11,437 Acquisition expenses 39 — — — 1,827 971 — — 444 310 — 3,591 Integration services fee — — 3,300 — 563 1,000 — — — — — 4,863 Other 1,132 273 — — — 1,000 (2,300) — — — 995 1,100 Adjusted EBITDA $ (57,653) $ 64,122 $ 59,468 $ 19,185 $ 17,145 $ 29,004 $ 50,895 $ 27,820 $ 32,141 $ 21,063 $ 45,032 $ 308,222 129 Adjusted EBITDA Year ended December 31, 2020 Corporate 5.11 BOA Ergobaby Marucci Velocity Outdoor ACI Altor Arnold Sterno Consolidated Net income (loss) from continuing operations $ (22,794) $ 12,356 $ (2,640) $ 725 $ (4,785) $ 11,161 $ 13,170 $ 6,092 $ (3,539) $ 3,820 $ 13,566 Adjusted for: Provision (benefit) for income taxes — 1,808 (535) 2,033 (1,390) 3,560 3,431 2,554 (198) 2,343 13,606 Interest expense, net 45,610 19 — — 7 131 — — — 1 45,768 Intercompany interest (66,901) 14,085 2,043 2,405 1,843 8,915 5,778 7,084 5,730 19,018 — Depreciation and amortization 481 21,483 5,589 8,199 10,203 12,781 2,773 12,722 6,805 22,510 103,546 EBITDA (43,604) 49,751 4,457 13,362 5,878 36,548 25,152 28,452 8,798 47,692 176,486 Other (income) expense — 1,420 39 — (42) 931 154 (38) 9 140 2,613 Non-controlling shareholder compensation — 2,489 469 1,156 634 1,549 495 1,028 (20) 1,166 8,966 Acquisition expenses — — 2,517 — 2,042 — — 273 — — 4,832 Integration services fee — — 1,125 — 1,000 — — — — — 2,125 Other 324 — — 598 — — — — — — 922 Adjusted EBITDA $ (43,280) $ 53,660 $ 8,607 $ 15,116 $ 9,512 $ 39,028 $ 25,801 $ 29,715 $ 8,787 $ 48,998 $ 195,944 130 Reconciliation of Net income (loss) to Adjusted Earnings and Adjusted EBITDA The following table reconciles Adjusted Earnings to Net income (loss), which we consider the most comparable GAAP financial measure, and Adjusted Earnings to Adjusted EBITDA ( in thousands ): Three months ended Year ended March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 December 31, 2022 Net income (loss) $ 29,740 $ 30,957 $ 2,585 $ (11,844) $ 51,438 Gain (loss) on sale of discontinued operations, net of tax 5,993 (579) 1,479 2,500 9,393 Net income (loss) from continuing operations 23,747 31,536 1,106 (14,344) 42,045 Less: income from continuing operations attributable to noncontrolling interest 5,978 4,590 4,359 124 15,051 Net income (loss) attributable to Holdings - continuing operations $ 17,769 $ 26,946 $ (3,253) $ (14,468) $ 26,994 Adjustments: Distributions paid: preferred shares (6,045) (6,046) (6,045) (6,045) (24,181) Amortization expense - intangible assets and inventory step-up 23,375 22,474 26,241 28,787 100,877 Impairment expense — — — 20,552 20,552 Tax effect - impairment expense — — — (3,557) (3,557) Non-controlling interest - impairment expense — — — (3,120) (3,120) Loss on debt extinguishment — — 534 — 534 Non-controlling shareholder compensation 2,805 2,804 3,242 5,100 13,951 Acquisition expenses 216 — 5,902 — 6,118 Integration services fee 563 563 1,625 1,313 4,064 Corporate tax effect — (4,338) 16,457 — 12,119 Other 1,803 1,026 1,287 119 4,235 Adjusted earnings $ 40,486 $ 43,429 $ 45,990 $ 28,681 $ 158,586 Plus (less): Depreciation expense 10,438 10,866 11,284 11,837 44,425 Income tax provision 11,083 6,955 21,163 5,828 45,029 Corporate tax effect — 4,338 (16,457) — (12,119) Interest expense 17,419 17,519 22,799 25,769 83,506 Amortization of debt issuance costs 866 865 1,004 1,005 3,740 Income from continuing operations attributable to noncontrolling interest 5,978 4,590 4,359 124 15,051 Distributions paid - preferred shares 6,045 6,046 6,045 6,045 24,181 131 Tax effect - impairment expense — — — 3,557 3,557 Non-controlling interest - impairment expense — — — 3,120 3,120 Other (1,988) (757) 2,139 1,320 714 Adjusted EBITDA $ 90,327 $ 93,851 $ 98,326 $ 87,286 $ 369,790 132 Three months ended Year ended March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021 December 31, 2021 Net income (loss) $ 21,996 $ (11,251) $ 90,156 $ 25,908 $ 126,809 Gain on sale of discontinued operations, net of tax — — 72,745 25 72,770 Income (loss) from discontinued options, net of tax 4,194 4,780 (1,309) — 7,665 Net income (loss) from continuing operations 17,802 (16,031) 18,720 25,883 46,374 Less: income from continuing operations attributable to noncontrolling interest 2,696 3,018 2,201 3,820 11,735 Net income (loss) attributable to Holdings - continuing operations $ 15,106 $ (19,049) $ 16,519 $ 22,063 $ 34,639 Adjustments: Distributions paid: preferred shares (6,045) (6,046) (6,045) (6,045) (24,181) Amortization expense - intangible assets and inventory step-up 18,599 18,847 19,056 26,606 83,108 Loss on debt extinguishment — 33,305 — — 33,305 Non-controlling shareholder compensation 2,764 2,840 2,892 2,941 11,437 Acquisition expenses 299 11 1,866 1,415 3,591 Integration services fee 1,600 1,600 1,100 563 4,863 Corporate tax effect — — — (12,119) (12,119) Other (2,101) 1,032 460 1,709 1,100 Adjusted earnings $ 30,222 $ 32,540 $ 35,848 $ 37,133 $ 135,743 Plus (less): Depreciation expense 9,064 9,460 10,372 10,493 39,389 Income tax provision 6,078 9,028 9,556 (2,906) 21,756 Corporate tax effect — — — 12,119 12,119 Interest expense 13,805 14,947 13,855 16,232 58,839 Amortization of debt issuance costs 686 722 759 812 2,979 Income from continuing operations attributable to noncontrolling interest 2,696 3,018 2,201 3,820 11,735 Distributions paid - preferred shares 6,045 6,046 6,045 6,045 24,181 Other 2,232 706 (1,032) (425) 1,481 Adjusted EBITDA $ 70,828 $ 76,467 $ 77,604 $ 83,323 $ 308,222 133 Three months ended Year ended March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 December 31, 2020 Net income (loss) $ 4,880 $ (7,366) $ 20,903 $ 8,780 $ 27,197 Gain on sale of discontinued operations, net of tax — — 100 — 100 Income from discontinued options, net of tax 2,611 2,790 4,529 3,601 13,531 Net income (loss) from continuing operations 2,269 (10,156) 16,274 5,179 13,566 Less: income from continuing operations attributable to noncontrolling interest 1,073 909 1,395 169 3.546 Net income (loss) attributable to Holdings - continuing operations $ 1,196 $ (11,065) $ 14,879 $ 5,010 $ 10,020 Adjustments: Distributions paid: preferred shares (5,542) (6,046) (6,045) (6,045) (23,678) Amortization expense - intangible assets and inventory step-up 13,505 17,779 16,602 19,912 67,798 Non-controlling shareholder compensation 2,048 1,883 2,163 2,872 8,966 Acquisition expenses — 2,042 273 2,517 4,832 Integration services fee — — 500 1,625 2,125 Other — 598 — 324 922 Adjusted earnings $ 11,207 $ 5,191 $ 28,372 $ 26,215 $ 70,985 Plus (less): Depreciation expense 7,895 8,187 8,378 8,834 33,294 Income tax provision (316) 6,040 396 7,486 13,606 Interest expense 8,597 11,174 12,351 13,646 45,768 Amortization of debt issuance costs 525 610 660 659 2,454 Income from continuing operations attributable to noncontrolling interest 1,073 909 1,395 169 3,546 Distributions paid - preferred shares 5,542 6,046 6,045 6,045 23,678 Other (657) 2,385 450 435 2,613 Adjusted EBITDA $ 33,866 $ 40,542 $ 58,047 $ 63,489 $ 195,944 134 Seasonality The following table presents the net sales by quarter as a percentage of our annual net sales.
Biggest changeReconciliation of Net income (loss) from continuing operations to Adjusted EBITDA The following tables reconcile Adj u sted EBITDA to net income (loss) from continuing operations, which we consider to be the most comparable GAAP financial measure (in thousands) : 114 Adjusted EBITDA Year ended December 31, 2023 Corporate 5.11 BOA Ergobaby Lugano PrimaLoft Velocity Outdoor Altor Arnold Sterno Consolidated Net income (loss) from continuing operations $ (51,761) $ 21,690 $ 16,496 $ (2,601) $ 52,315 $ (69,883) $ (40,045) $ 16,504 $ 10,434 $ 8,115 $ (38,736) Adjusted for: Provision (benefit) for income taxes 301 4,994 2,863 (1,309) 14,589 (5,672) (5,616) 5,890 4,185 1,106 21,331 Interest expense, net 104,855 (8) (18) — 4 (11) 352 — 5 — 105,179 Intercompany interest (134,835) 20,244 7,580 8,595 32,837 18,123 13,510 10,486 6,806 16,654 — Depreciation and amortization 1,399 26,009 22,932 8,110 9,229 21,478 13,282 16,741 8,441 19,959 147,580 EBITDA (80,041) 72,929 49,853 12,795 108,974 (35,965) (18,517) 49,621 29,871 45,834 235,354 Other (income) expense (128) (515) 98 36 (80) 62 (1,210) 1,440 (5) (1,441) (1,743) Non-controlling shareholder compensation — 1,191 3,019 1,214 1,474 980 914 986 27 860 10,665 Impairment expense — — — — — 57,810 31,590 — — — 89,400 Acquisition expenses — — — 321 — — — — — — 321 Integration services fee — — — — — 2,375 — — — — 2,375 Other — — 3,072 — — — — — — 1,434 4,506 Adjusted EBITDA $ (80,169) $ 73,605 $ 56,042 $ 14,366 $ 110,368 $ 25,262 $ 12,777 $ 52,047 $ 29,893 $ 46,687 $ 340,878 115 Adjusted EBITDA Year ended December 31, 2022 Corporate 5.11 BOA Ergobaby Lugano PrimaLoft Velocity Outdoor Altor Arnold Sterno Consolidated Net income (loss) from continuing operations $ (77,990) $ 22,633 $ 42,613 $ (18,669) $ 27,934 $ (17,741) $ 4,127 $ 9,662 $ 7,683 $ 3,406 $ 3,658 Adjusted for: Provision (benefit) for income taxes 12,119 7,125 6,527 (4,274) 11,889 (3,878) 1,562 3,174 3,329 (480) 37,093 Interest expense, net 83,243 — (25) 10 16 (7) 229 — 26 — 83,492 Intercompany interest (92,177) 13,761 7,410 6,026 12,773 7,512 10,282 10,742 5,518 18,153 — Loss on debt extinguishment 534 — — — — — — — — — 534 Depreciation and amortization 1,405 22,972 21,993 8,094 11,533 10,465 13,374 16,403 8,041 20,293 134,573 EBITDA (72,866) 66,491 78,518 (8,813) 64,145 (3,649) 29,574 39,981 24,597 41,372 259,350 Other (income) expense (58) (217) 1,043 6 2 112 2,417 766 (20) (1,730) 2,321 Non-controlling shareholder compensation — 1,511 2,511 1,479 1,179 2,142 971 1,321 40 844 11,998 Impairment expense — — — 20,552 — — — — — — 20,552 Acquisition expenses — — — — — 5,680 222 216 — — 6,118 Integration services fee — — — — 1,688 2,375 — — — — 4,063 Other — — — 250 — — — — — 1,330 1,580 Adjusted EBITDA $ (72,924) $ 67,785 $ 82,072 $ 13,474 $ 67,014 $ 6,660 $ 33,184 $ 42,284 $ 24,617 $ 41,816 $ 305,982 116 Adjusted EBITDA Year ended December 31, 2021 Corporate 5.11 BOA Ergobaby Lugano Velocity Outdoor Altor Arnold Sterno Consolidated Net income (loss) from continuing operations $ (75,855) $ 20,152 $ 21,178 $ 5,079 $ 5,239 $ 23,035 $ 7,871 $ 5,013 $ (316) $ 11,396 Adjusted for: Provision (benefit) for income taxes (12,119) 6,905 3,559 2,018 2,094 6,238 2,619 1,345 2,608 15,267 Interest expense, net 58,639 16 — — 9 165 (1) 6 — 58,834 Intercompany interest (63,655) 11,868 8,581 1,960 2,450 7,461 7,558 5,455 18,322 — Loss on debt extinguishment 33,305 — — — — — — — — 33,305 Depreciation and amortization 1,147 22,355 20,279 8,435 4,757 12,704 12,938 8,888 23,368 114,871 EBITDA (58,538) 61,296 53,597 17,492 14,549 49,603 30,985 20,707 43,982 233,673 Other (income) expense (286) 125 377 — 16 2,573 (323) 8 (1,187) 1,303 Non-controlling shareholder compensation — 2,428 2,194 1,693 190 1,020 1,035 38 1,242 9,840 Acquisition expenses 39 — — — 1,827 — 444 310 — 2,620 Integration services fee — — 3,300 — 563 — — — — 3,863 Other 1,132 273 — — — (2,300) — — 995 100 Adjusted EBITDA $ (57,653) $ 64,122 $ 59,468 $ 19,185 $ 17,145 $ 50,896 $ 32,141 $ 21,063 $ 45,032 $ 251,399 117 Reconciliation of Net income (loss) to Adjusted Earnings and Adjusted EBITDA The following table reconciles Adjusted Earnings to Net income (loss), which we consider the most comparable GAAP financial measure, and Adjusted Earnings to Adjusted EBITDA ( in thousands ): Three months ended Year ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 December 31, 2023 Net income (loss) $ 109,601 $ 17,123 $ (3,760) $ 139,441 $ 262,405 Income (loss) from discontinued options, net of tax 10,000 2,840 8,950 (3,674) 18,116 Gain on sale of discontinued operations, net of tax 97,989 4,232 1,274 179,530 283,025 Net income (loss) from continuing operations 1,612 10,051 (13,984) (36,415) (38,736) Less: income from continuing operations attributable to noncontrolling interest 4,171 3,498 5,721 2,555 15,945 Net income (loss) attributable to Holdings - continuing operations (2,559) 6,553 (19,705) (38,970) (54,681) Adjustments: Distributions paid: preferred shares (6,045) (6,046) (6,045) (6,045) (24,181) Amortization expense - intangible assets and inventory step-up 25,148 23,977 23,956 23,914 96,995 Impairment expense — — 32,568 56,832 89,400 Tax effect - impairment expense — — (4,308) 978 (3,330) Non-controlling interest - impairment expense — — — (5,382) (5,382) Non-controlling shareholder compensation 1,641 3,207 2,750 3,067 10,665 Acquisition expenses — — — 321 321 Integration services fee 1,187 1,188 — — 2,375 Other 432 348 349 3,377 4,506 Adjusted earnings $ 19,804 $ 29,227 $ 29,565 $ 38,092 $ 116,688 Plus (less): Depreciation expense 11,155 12,107 11,994 11,291 46,547 Income tax provision 6,920 4,320 3,837 6,254 21,331 Interest expense 26,180 26,613 27,560 24,826 105,179 Amortization of debt issuance costs 1,005 1,024 1,005 1,004 4,038 Income from continuing operations attributable to noncontrolling interest 4,171 3,498 5,721 2,555 15,945 Distributions paid - preferred shares 6,045 6,046 6,045 6,045 24,181 Tax effect - impairment expense — — 4,308 (978) 3,330 Non-controlling interest - impairment expense — — — 5,382 5,382 Other (1,160) 105 (1,045) 357 (1,743) Adjusted EBITDA $ 74,120 $ 82,940 $ 88,990 $ 94,828 $ 340,878 118 Three months ended Year ended March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 December 31, 2022 Net income (loss) $ 29,740 $ 30,957 $ 2,585 $ (11,844) $ 51,438 Income (loss) from discontinued options, net of tax 13,059 4,371 10,157 10,800 38,387 Gain on sale of discontinued operations, net of tax 5,993 (579) 1,479 2,500 9,393 Net income (loss) from continuing operations 10,688 27,165 (9,051) (25,144) 3,658 Less: income from continuing operations attributable to noncontrolling interest 4,388 3,813 3,297 (1,131) 10,367 Net income (loss) attributable to Holdings - continuing operations 6,300 23,352 (12,348) (24,013) (6,709) Adjustments: Distributions paid: preferred shares (6,045) (6,046) (6,045) (6,045) (24,181) Amortization expense - intangible assets and inventory step-up 19,691 20,258 24,400 26,454 90,803 Impairment expense — — — 20,552 20,552 Tax effect - impairment expense — — — (3,557) (3,557) Non-controlling interest - impairment expense — — — (3,120) (3,120) Loss on debt extinguishment — — 534 — 534 Non-controlling shareholder compensation 2,405 2,404 2,581 4,608 11,998 Acquisition expenses 216 — 5,902 — 6,118 Integration services fee 563 563 1,625 1,312 4,063 Corporate tax effect — (4,338) 16,457 — 12,119 Other — 1,027 434 119 1,580 Adjusted earnings $ 23,130 $ 37,220 $ 33,540 $ 16,310 $ 110,200 Plus (less): Depreciation expense 9,450 9,741 10,149 10,690 40,030 Income tax provision 7,970 6,926 18,884 3,313 37,093 Corporate tax effect — 4,338 (16,457) — (12,119) Tax effect - impairment expense — — — 3,557 3,557 Non-controlling interest - impairment expense — — — 3,120 3,120 Interest expense 17,419 17,509 22,796 25,768 83,492 Amortization of debt issuance costs 866 865 1,004 1,005 3,740 Income from continuing operations attributable to noncontrolling interest 4,388 3,813 3,297 (1,131) 10,367 Distributions paid - preferred shares 6,045 6,046 6,045 6,045 24,181 Other (226) (718) 1,916 1,349 2,321 Adjusted EBITDA $ 69,042 $ 85,740 $ 81,174 $ 70,026 $ 305,982 119 Three months ended Year ended March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021 December 31, 2021 Net income (loss) $ 21,996 $ (11,251) $ 90,156 $ 25,908 $ 126,809 Income from discontinued options, net of tax 17,024 10,749 7,294 7,576 42,643 Gain on discontinued options, net of tax — — 72,745 25 72,770 Net income (loss) from continuing operations 4,972 (22,000) 10,117 18,307 11,396 Less: income from continuing operations attributable to noncontrolling interest 1,313 1,989 948 2,688 6,938 Net income (loss) attributable to Holdings - continuing operations 3,659 (23,989) 9,169 15,619 $ 4,458 Adjustments: Distributions paid: preferred shares (6,045) (6,046) (6,045) (6,045) (24,181) Amortization expense - intangible assets and inventory step-up 16,887 17,251 17,373 24,926 76,437 Loss on debt extinguishment — 33,305 — — 33,305 Non-controlling shareholder compensation 2,365 2,440 2,493 2,542 9,840 Acquisition expenses 299 11 1,866 444 2,620 Integration services fee 1,100 1,100 1,100 563 3,863 Corporate tax effect — — — (12,119) (12,119) Other (2,101) 1,032 460 709 100 Adjusted earnings $ 16,164 $ 25,104 $ 26,416 $ 26,639 $ 94,323 Plus (less): Depreciation expense 8,120 8,508 9,402 9,425 35,455 Income tax provision 2,910 8,453 7,831 (3,927) 15,267 Corporate tax effect — — — 12,119 12,119 Interest expense 13,803 14,945 13,854 16,232 58,834 Amortization of debt issuance costs 686 722 759 812 2,979 Income from continuing operations attributable to noncontrolling interest 1,313 1,989 948 2,688 6,938 Distributions paid - preferred shares 6,045 6,046 6,045 6,045 24,181 Other 2,231 (253) (1,073) 398 1,303 Adjusted EBITDA $ 51,272 $ 65,514 $ 64,182 $ 70,431 $ 251,399 120 Seasonality The following table presents the net sales by quarter as a percentage of our annual net sales.
The BOA Credit Agreement was amended to (i) provide for additional term loan borrowings of $38.0 million, and (ii) consent to the repurchase of the shares from the minority shareholder.
The BOA Credit Agreement was amended to (i) provide for additional term loan borrowings of $38.0 million, and (ii) consent to the repurchase of the shares from the minority shareholder.
Corporate level general and administrative expense during 2021 included non-recurring professional fees associated with our election for the Trust to be treated as a corporation for U.S. federal income tax purposes. 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.
Corporate level general and administrative expense during 2021 included non-recurring professional fees associated with our election for the Trust to be treated as a corporation for U.S. federal income tax purposes. 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.
These increases were partially offset by a decrease in bonus related expenses, outside service expenses, variable marketplace expenses and stock-based compensation. 101 Segment operating income Segment operating income for the year ended December 31, 2022 was $43.5 million, an increase of $4.2 million when compared to the same period in 2021, based on the factors described above.
These increases were partially offset by a decrease in bonus related expenses, outside service expenses, variable marketplace expenses and stock-based compensation. Segment operating income Segment operating income for the year ended December 31, 2022 was $43.5 million, an increase of $4.2 million when compared to the same period in 2021, based on the factors described above.
Adjusted EBITDA – Adjusted EBITDA is calculated utilizing the same calculation as described above 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.
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.
In 2021 we also paid a special common share distribution of $57.1 million to our shareholders upon the reclassification of the Trust to a corporation for income tax purposes. In September 2021, we filed a prospectus supplement and entered into a Sales Agreement for an At-the-Market program pursuant to which we may sell common shares of the Trust.
In 2021 we also paid a special common share distribution of $57.1 million to our shareholders upon the reclassification of the Trust to a corporation for income tax purposes. In September 2021, we filed a prospectus supplement and entered into a Sales Agreement for an At-the-Market program pursuant to which we may sell 108 common shares of the Trust.
During 2022, CGM entered into a waiver of the MSA for the 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 at September 30, 2022 and December 31, 2022 than would normally have been due.
During 2022, CGM entered into a waiver of the MSA for the 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 at September 30, 2022, December 31, 2022, March 31, 2023 and June 30, 2023 than would normally have been due.
This increase is due primarily to direct-to-consumer growth of $19.6 million, up 10% from the prior year comparable period. Retail sales grew largely due to store count growth, as well as positive growth in same-store sales for the year ended December 31, 2022, as compared to the same period last year.
This increase is due primarily to direct-to-consumer growth of $19.6 million, 92 up 10% from the prior year comparable period. Retail sales grew largely due to store count growth, as well as positive growth in same-store sales for the year ended December 31, 2022, as compared to the same period last year.
Selling, general and 115 administrative expense represented 15.8% of net sales for the year ended December 31, 2022 as compared to 16.3% for the same period in 2021. The decrease in selling, general and administrative expense as a percentage of net sales was due to overall higher sales volume as compared to the prior year.
Selling, general and administrative expense represented 15.8% of net sales for the year ended December 31, 2022 as compared to 16.3% for the same period in 2021. The decrease in selling, general and administrative expense as a percentage of net sales was due to overall higher sales volume as compared to the prior year.
The 5.11 Loan Agreement was amended to provide for additional term loan borrowings of $55.0 million to fund a distribution to shareholders. The Company owned 97.7% of the outstanding shares of 5.11 on the date of the distribution and received $53.7 million. The remaining amount of the distribution went to minority shareholders.
The 5.11 Credit Agreement was amended to provide for additional term loan borrowings of $55.0 million to fund a distribution to shareholders. The Company owned 97.7% of the outstanding shares of 5.11 on the date of the distribution and received $53.7 million. The remaining amount of the distribution went to minority shareholders.
The 5.11 Loan Agreement was amended to provide for additional term loan borrowings of $55.0 million to fund a distribution to shareholders. The Company owned 97.7% of the outstanding shares of 5.11 on the date of the distribution and received $53.7 million. The remaining amount of the distribution went to minority shareholders.
The 5.11 Credit Agreement was amended to provide for additional term loan borrowings of $55.0 million to fund a distribution to shareholders. The Company owned 97.7% of the outstanding shares of 5.11 on the date of the distribution and received $53.7 million. The remaining amount of the distribution went to minority shareholders.
Determining the fair value of assets acquired and liabilities assumed requires management's 137 judgment and often involves the use of assumptions with respect to future cash inflows and outflows, discount rates, royalty rates, customer attrition rates, asset lives and market multiples, among other items.
Determining the fair value of assets acquired and liabilities assumed requires management's judgment and often involves the use of assumptions with respect to future cash inflows and outflows, discount rates, royalty rates, customer attrition rates, asset lives and market multiples, among other items.
The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of our reporting units exceeded their carrying value. 138 2021 Annual Impairment Testing - For our annual impairment testing at March 31, 2021, we performed a qualitative assessment of our reporting units.
The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of our reporting units exceeded their carrying value. 2021 Annual Impairment Testing - For our annual impairment testing at March 31, 2021, we performed a qualitative assessment of our reporting units.
In the first quarter of 2022, we amended the 5.11 intercompany credit agreement to increase the capital expenditures allowable under the agreement to account for additional growth capital expenditure opportunities primarily related to retail expansion, and amended the financial covenants to reflect the increased allowable expenditure.
In the first quarter of 2022, we amended the 5.11 Credit agreement to increase the capital expenditures allowable under the agreement to account for additional growth capital expenditure opportunities primarily related to retail expansion, and amended the financial covenants to reflect the increased allowable expenditure.
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 123 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 a $400 million term loan (the “2022 Term Loan”).
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, 2022, 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, 2023, we had letters of credit totaling $2.2 million outstanding under the 2022 Revolving Credit Facility.
The proceeds from the sale of the 2029 Notes was used to repay debt outstanding under the 2018 Credit Facility in connection with our entry into the 2021 Credit Facility, as described above, and to redeem our 8.000% Senior Notes due 2026 (the “2026 Notes”). 124 2026 Notes On April 18, 2018, we consummated the issuance and sale of $400 million aggregate principal amount of our 2026 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 2029 Notes was used to repay debt outstanding under the 2018 Credit Facility in connection with our entry into the 2021 Credit Facility, as described above, and to redeem our 8.000% Senior Notes due 2026 (the “2026 Notes”). 2026 Notes On April 18, 2018, we consummated the issuance and sale of $400 million aggregate principal amount of our 2026 Notes offered pursuant to a private offering to qualified institutional buyers in accordance with Rule 144A under the 111 Securities Act, and to non-U.S. persons under Regulation S under the Securities Act.
In the following results of operations, we provide (i) our actual Consolidated Results of Operations for the years ended December 31, 2022, 2021 and 2020, 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, 2022, 2021 and 2020, 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, 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.
The decrease in cash flows in 2022 is primarily attributable to an increase in cash used for working capital. Cash used in operating activities for working capital for the year ended December 31, 2022 was $252.4 million, as compared to cash used in operating activities for working capital of $83.8 million for the year ended December 31, 2021.
The decrease in cash flows in 2022 was primarily attributable to an increase in cash used for working capital. Cash used in operating activities for working capital for the year ended December 31, 2022 was $252.4 million, as compared to cash used in operating activities for working capital of $83.8 million for the year ended December 31, 2021.
We typically have a higher usage of cash for working capital in 119 the first half of the year as most of our companies will build up inventories after the fourth quarter.
We typically have a higher usage of cash for working capital in the first half of the year as most of our companies will build up inventories after the fourth quarter.
Segment operating income (loss) Segment operating loss for the year ended December 31, 2022 was $1.9 million, a decrease of $2.9 million when compared to segment operating income of $1.0 million for the same period in 2021, primarily as a result of the factors noted above. 110 Velocity Outdoor Overview Velocity Outdoor is a leading designer, manufacturer, and marketer of airguns, archery products, laser aiming devices, hunting apparel and related accessories.
Segment operating income (loss) Segment operating loss for the year ended December 31, 2022 was $1.9 million, a decrease of $2.9 million when compared to segment operating income of $1.0 million for the same period in 2021, primarily as a result of the factors noted above. 99 Velocity Outdoor Overview Velocity Outdoor is a leading designer, manufacturer, and marketer of airguns, archery products, laser aiming devices, hunting apparel and related accessories.
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- 90 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- 81 offs, transitions of family-owned businesses, management buy-outs and reorganizations.
The tables below reflect summarized information relating to our acquisitions and dispositions from the date of our IPO through December 31, 2022 (in thousands): Acquisitions Ownership Interest - December 31, 2022 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 71.8% 67.6% 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% 90.7% Manitoba Harvest (3) July 10, 2015 $ 102,700 N/a N/a 5.11 August 31, 2016 $ 408,200 97.7% 88.3% Velocity Outdoor (2) (3) June 2, 2017 $ 150,400 99.4% 87.7% Altor Solutions (3) February 15, 2018 $ 253,400 99.8% 88.2% Maruccci Sports (3) April 20, 2020 $ 201,000 91.0% 82.1% BOA October 16, 2020 $ 456,800 91.8% 83.5% Lugano September 3, 2021 $ 265,100 59.9% 55.2% PrimaLoft July 12, 2022 $ 541,100 90.7% 83.7% (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, 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.
For the 2022 acquisition of PrimaLoft, the pro forma results of operations have been prepared as if we purchased this business on January 1, 2021. For the 2021 acquisition of Lugano Diamonds, the pro forma results of operations have been prepared as if we purchased this business on January 1, 2020.
For the 2022 acquisition of PrimaLoft, the pro forma results of operations have been prepared as if we purchased this business on January 1, 2021. For the 2021 acquisition of Lugano Diamonds, the pro forma results of operations have been prepared as if we purchased this business on January 1, 2021.
Lugano Overview Lugano is a leading designer, manufacturer and marketer of high-end, one-of-a-kind jewelry sought after by some of the world’s most discerning clientele. Lugano conducts sales via its own retail salons as well as pop-up showrooms at Lugano-hosted or sponsored events in partnership with influential organizations in the equestrian, art and philanthropic community.
Lugano Overview Lugano is a leading designer, manufacturer and marketer of high-end, one-of-a-kind jewelry sought after by some of the world’s most discerning clientele. Lugano conducts sales via its own retail salons as well as pop-up showrooms at Lugano-hosted or sponsored events in partnership with influential organizations in the equestrian, art and philanthropic communities.
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, 2022, approximately 30% 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. At December 31, 2023, approximately 23% of our outstanding debt was subject to interest rate changes.
We typically have a higher usage of cash for working capital in the first half of the year as most of our companies will build up inventories after the fourth quarter; however, in the current year, several of our subsidiary businesses substantially increased inventory levels to combat supply chain issues given longer lead times, resulting in higher cash outflows throughout the year.
We typically have a higher usage of cash for working capital in the first half of the year as most of our companies will build up inventories after the fourth quarter; however, in 2022, several of our subsidiary businesses substantially increased inventory levels to combat supply chain issues given longer lead times, resulting in higher cash outflows throughout the year.
Our Lugano business contributed $72.7 million of the increase in cost of revenues for the year ended December 31, 2022 and our PrimaLoft business contributed $11.0 million of the increase in cost of revenues for 2022.
Our Lugano business contributed $72.7 million of the increase in cost of revenues for the year ended December 31, 89 2022 and our PrimaLoft business contributed $11.0 million of the increase in cost of revenues for 2022.
Velocity Outdoor offers its products under the highly recognizable Crosman, Benjamin, LaserMax, Ravin, CenterPoint and King's Camo brands that are available through national retail chains, mass merchants, dealer and distributor networks. The airgun product category consists of air rifles, air pistols and a range of accessories including targets, holsters and cases.
Velocity Outdoor offers its products under the Crosman, Benjamin, LaserMax, Ravin, CenterPoint and King's Camo brands that are available through national retail chains, mass merchants, dealer and distributor networks. The airgun product category consists of air rifles, air pistols and a range of accessories including targets, holsters and cases.
The increase in net sales is primarily a result of increased demand in several markets including industrial and transportation, driven in part by the acquisition of Ramco Electric Motors, Inc. in March 2021. International sales were $47.9 million and $43.0 million for the years ended December 31, 2022 and 2021, respectively, an increase of $4.9 million.
The increase in net sales was primarily a result of increased demand in several markets including industrial and transportation, driven in part by the acquisition of Ramco Electric Motors, Inc. in March 2021. International sales were $47.9 million and $43.0 million for the years ended December 31, 2022 and 2021, respectively, an increase of $4.9 million.
Gross profit Gross profit as a percentage of net sales was 60.7% for the year ended December 31, 2022 compared to 61.1% for the same period in 2021. The decrease in gross profit as a percentage of net sales during the current year is attributable primarily to increased depreciation expense related to investments in production tooling.
Gross profit Gross profit as a percentage of net sales was 60.7% for the year ended December 31, 2022 compared to 61.1% for the same period in 2021. The decrease in gross profit as a percentage of net sales during 2022 was attributable primarily to increased depreciation expense related to investments in production tooling.
Business Outlook The Company anticipates that the areas of focus for 2023, which are generally applicable to each of our businesses, include: • Achieving sales growth through a combination of new product development, increasing distribution, new customer acquisitions and international expansion; • 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; • Continuing to grow through disciplined, strategic acquisitions and rigorous integration processes; and • Driving free cash flow through increased net income and effective working capital management, enabling continued investment in our businesses. 95 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, 2022, 2021 and 2020, 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 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.
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. Niche industrial businesses are characterized as 100 those businesses that focus on manufacturing and selling particular products or services within a specific market sector.
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.
The Company renamed its CBS Personnel business Staffmark subsequent to the acquisition. 91 (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. 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.
During the year ended December 31, 2022 compared to 2021, we also saw significant increases in net sales at 5.11 ($41.3 million increase), BOA ($43.5 million increase), Marucci ($47.2 million increase), Arnold ($13.9 million 96 increase), and Altor Solutions ($81.1 million increase), partially offset by a decrease in net revenue at Velocity Outdoor ($38.2 million decrease) and Sterno ($23.0 million decrease).
During the year ended December 31, 2022 compared to 2021, we also saw significant increases in net sales at 5.11 ($41.3 million increase), BOA ($43.5 million increase), Arnold ($13.9 million increase), and Altor Solutions ($81.1 million increase), partially offset by a decrease in net revenue at Velocity Outdoor ($38.2 million decrease) and Sterno ($23.0 million decrease).
We also saw notable increases in cost of revenues at 5.11 ($19.5 million increase), BOA ($17.7 million increase), Marucci ($28.0 million increase), Altor ($66.9 million increase), and Arnold ($9.0 million increase) that correspond to the revenue increases noted above.
We also saw notable increases in cost of revenues at 5.11 ($19.5 million increase), BOA ($17.7 million increase), Altor ($66.9 million increase), and Arnold ($9.0 million increase) that correspond to the revenue increases noted above.
Long-term debt liquidity requirements consist of the payment in full of our Notes upon their respective maturity dates, amounts outstanding under our 2022 Revolving Credit Facility upon its maturity date, and principal payments under our 2022 Term Loan.
Long-term debt liquidity requirements consist of the payment in full of our Notes upon their respective maturity dates, amounts outstanding under our 2022 Revolving Credit Facility, if any, upon its maturity date, and principal payments under our 2022 Term Loan.
This benefit reversed in the third quarter of 2022 when Advanced Circuits no longer qualified as held-for-sale. The Company's effective tax rate fluctuates based on, among other factors, where income is earned, the level of income relative to tax attributes and the loss incurred at the Trust related to corporate overhead and management fees incurred.
This benefit reversed in the third quarter of 2022 when Advanced Circuits no longer qualified as held-for-sale. The Company's effe ctive tax rate fluctuates based on, among other factors, where income is earned, the level of income relative to tax attributes and the loss incurred at the Trust related to corporate overhead and management fees incurred.
Accordingly, we are dependent upon the earnings and cash flow of these businesses, which are available for (i) operating expen ses; (ii) payment of interest and principal on our outstanding debt; (iii) payments to CGM due or potentially due pursuant to the MSA and the LLC Agreement; (iv) cash distributio ns to our shareholders; and (v) investments in future acquisitions.
Accordingly, we are dependent upon the earnings and cash flow of these businesses, which are available for (i) operating expen ses; (ii) payment of interest and principal on our outstanding debt; (iii) payments to CGM due or potentially due pursuant to the MSA and the LLC Agreement; (iv) cash distributio ns to our shareholders; and (v) pursuing future acquisitions.
Altor Solutions Overview Founded in 1957 and headquartered in Scottsdale, Arizona, Altor Solutions is a designer and manufacturer of custom molded protective foam solutions and original equipment manufacturer (OEM) components made from expanded polystyrene (EPS) and expanded polypropylene (EPP).
Industrial Businesses Altor Solutions Overview Founded in 1957 and headquartered in Scottsdale, Arizona, Altor Solutions is a designer and manufacturer of custom molded protective foam solutions and original equipment manufacturer (OEM) components made from expanded polystyrene (EPS) and expanded polypropylene (EPP).
CGM entered into a waiver of 97 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 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 third and fourth quarter of 2022 than would have normally been due.
The 5.11 credit agreement was amended again in both the third and fourth quarters to increase the amount available under the revolving credit facility, as well as to increase the capital expenditures allowable under the credit agreement.
The 5.11 credit agreement was amended again in both the third and fourth quarters of 2022 to increase the amount available under the revolving credit facility, as well as to increase the capital expenditures allowable under the credit agreement.
Our Chief Executive Officer is a partner of CGM. The MSA provides for, among other things, CGM to perform services for us in exchange for a management fee paid quarterly and equal to 0.5% of our adjusted net assets. The management fee is required to be paid prior to the payment of any distributions to shareholders.
Our Chief Executive Officer is a managing member of CGM. The MSA provides for, among other things, CGM to perform services for us in exchange for a management fee paid quarterly and equal to 0.5% of our adjusted net assets. The management fee is required to be paid prior to the payment of any distributions to shareholders.
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 investment in FOX.
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.
Lugano, which was acquired in September 2021, entered into an ISA with CGM whereby Lugano will pay CGM a total integration services fee of $2.3 million, payable quarterly over a twelve month period beginning in the quarter ended December 31, 2021.
Lugano, which was acquired in September 2021, entered into an ISA with CGM whereby Lugano paid CGM a total integration services fee of $2.3 million, payable quarterly over a twelve month period beginning in the quarter ended December 31, 2021.
The decrease in gross profit as a percentage of net sales was primarily attributable to p roduct mix as Velocity sold more legacy products with lower margins versus new models at higher margins along with increased supply chain costs.
The decrease in gross profit as a percentage of net sales was primarily attributable to product mix as Velocity sold more legacy products with lower margins versus new models at higher margins along with increased supply chain costs.
Investing activities in the prior year 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 Electric Motors), Altor Solutions (Plymouth Foam) and Marucci (Lizard Skins) for total cash used in acquisitions of $404.3 million.
Lugano has used significant cash to build inventory to support its sales growth strategy (approximately $89.8 million in cash used for inventory purchases in 2022). 2021 Cash flows provided by operating activities totaled approximately $134.1 million for the year ended December 31, 2021, which represented a decrease of $14.6 million compared to cash flow from operating activities of $148.6 million for the year ended December 31, 2020.
Lugano has used significant cash to build inventory to support its sales growth strategy (approximately $104.5 million in cash used for inventory purchases in 2022). 2021 Cash flows provided by operating activities totaled approximately $134.1 million for the year ended December 31, 2021, which represented a decrease of $14.6 million compared to cash flow from operating activities of $148.6 million for the year ended December 31, 2020.
The decrease in selling, general and administrative expense for the year ended December 31, 2022 as compared to the year ended December 31, 2021 is due to favorable payroll expenses .
The decrease in selling, general and administrative expense for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was due to favorable payroll expenses.
PrimaLoft, which was acquired in July 2022, entered into an ISA with CGM whereby PrimaLoft will pay CGM a total integration services fee of $4.8 million, payable quarterly over a twelve-month period ended June 30, 2023.
PrimaLoft, which was acquired in July 2022, entered into an ISA with CGM whereby PrimaLoft paid CGM a total integration services fee of $4.8 million, payable quarterly over a twelve-month period ended June 30, 2023.
Domestic sales w ere $32.2 million during the year ended December 31, 2022, reflecting a decrease of $1.1 million compared to the corresponding period in 2021. The decrease in domestic sales was primarily attributable to lower Tula e-commerce sales versus the prior year.
Domestic sales were $32.2 million during the year ended December 31, 2022, reflecting a decrease of $1.1 million compared to the corresponding period in 2021. The decrease in domestic sales was primarily attributable to lower Tula e-commerce sales versus the prior year.
Cost Reimbursement and Fees We reimbursed CGM approximately $6.5 million, $5.4 million, and $5.2 million, principally for occupancy and staffing costs incurred by CGM on our behalf during the years ended December 31, 2022, 2021 and 2020, respectively.
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.
We also saw a decrease in cost of revenues at Velocity ($15.7 million decrease) and Sterno ($18.4 million decrease) that corresponded to the decrease in revenue noted above. Gross profit as a percentage of net revenues was approximately 40.1% in the year ended December 31, 2022 compared to 39.7% in the year ended December 31, 2021.
We also saw a decrease in cost of revenues at Velocity ($15.7 million decrease) and Sterno ($18.4 million decrease) that corresponded to the decrease in revenue noted above. Gross profit as a percentage of net revenues was approximately 39.0% in the year ended December 31, 2022 compared to 38.4% in 2021.
During the years ended December 31, 2022, 2021 and 2020, 5.11 purchased approximately $2.0 million, $1.1 million, and $2.7 million, respectively, in inventory from the vendor. 136 Recapitalization - In August 2021, the Company completed a recapitalization of 5.11 whereby the Company entered into an amendment to the intercompany loan agreement with 5.11 (the "5.11 Loan Agreement").
During the years ended December 31, 2023, 2022 and 2021, 5.11 purchased approximately $1.7 million, $2.0 million, and $1.1 million, respectively, in inventory from the vendor. Recapitalization - In August 2021, the Company completed a recapitalization of 5.11 whereby the Company entered into an amendment to the intercompany loan agreement with 5.11 (the "5.11 Credit Agreement").
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 $79.2 million during the year ended December 31, 2022, compared to the corresponding period in 2021.
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.
Gross profit as a percentage of net sales for the year ended December 31, 2022 was 59.4%, as compared to gross profit as a percentage of sales of 60.9% for the year ended December 31, 2021. In the current 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, 2022 was 59.4%, as compared to gross profit as a percentage of sales of 60.9% for the year ended December 31, 2021. In the year ended December 31, 2022, PrimaLoft recorded $0.6 million in amortization of the inventory step-up resulting from the acquisition purchase price allocation.
The prospective financial information that is used to determine the fair values of the reporting units requires us to make assumptions regarding future operational results including revenue growth rates and gross margins.
The prospective financial information that is used to determine the fair values of the Velocity reporting unit requires us to make assumptions regarding future operational results including revenue growth rates and gross margins.
Recent Accounting Pronouncements Refer to " Note B - Summary of Significant Accounting Policies " to our consolidated financial statements for a discussion of recent accounting pronouncements. 140
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
The following table reflects required and actual financial ratios as of December 31, 2022 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 3.09:1.00 Total Secured Debt to EBITDA Ratio Less than or equal to 3.50:1.00 1.12:1.00 Total Debt to EBITDA Ratio Less than or equal to 5.75:1.00 3.97:1.00 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, 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.
BOA Repurchase of Noncontrolling Interest - In September 2021, BOA repurchased shares of its issued and outstanding common shares from its largest minority shareholder for a total payment of $48.0 million, which BOA financed by borrowing under their intercompany credit facility with the Company (the "BOA Credit Agreement").
In September 2021, BOA repurchased shares of its issued and outstanding common shares from its largest minority shareholder for a total payment of $48.0 million, which BOA financed by borrowing under their intercompany credit facility with the Company.
In 2021, several of our businesses had higher inventory levels than normal given s ignificantly longer lead times due to supply chain issues, which led to higher levels of inventory at December 31, 2021.
In 2021, several of our businesses had higher inventory levels than normal given significantly longer lead times due to supply chain issues, which led to higher levels of inventory at December 31, 2021.
Our spending on capital expenditures incr eased $11.1 million during the year ended December 31, 2021 as compared to the year ended December 31, 2020, with $39.9 million in capital expenditures in 2021 and $28.8 million in capital expenditures in 2020.
Our spending on capital expenditures increased $11.1 million during the year ended December 31, 2021 as compared to the year ended December 31, 2020, with $39.9 million in capital expenditures in 2021 and $28.8 million in capital expenditures in 2020.
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. 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.
Selling, general and administrative expense in the current year includes $5.8 million of transaction costs related to the Company's acquisition of PrimaLoft, and $2.4 million in integration services fees.
Selling, general and administrative expense in 2022 includes $5.8 million of transaction costs related to the Company's acquisition of PrimaLoft, and $2.4 million in integration services fees.
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 (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 $ 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.
Investing activities in the current year reflect our acquisition of PrimaLoft in the third quarter of 2022, and a small add-on acquisition at our Velocity business. The total amount of cash used for acquisitions in 2022 totaled $570.5 million.
Investing activities in 2022 reflected our acquisition of PrimaLoft in the third quarter of 2022, and a small add-on acquisition at our Velocity business. The total amount of cash used for acquisitions in 2022 totaled $570.5 million.
In the fourth quarter of 2020, we amended the Arnold intercompany credit agreement to increase the revolving credit commitment available under the credit agreement, and amended the financial covenants to reflect the increased commitment. All of our subsidiaries were in compliance with the financial covenants included within their intercompany credit arrangements at December 31, 2022.
In the fourth quarter of 2020, we amended the Arnold intercompany credit agreement to increase the revolving credit commitment available under the credit agreement, and amended the financial covenants to reflect the increased commitment. All of our subsidiaries were in compliance with the financial covenants included within their intercompany credit arrangements at December 31, 2023 except Velocity and PrimaLoft.
Holders received $34.1 million and $9.1 million in distributions related to Sale and Holding Events that occurred during 2021 and 2020, respectively. No allocation interest distributions were made in 2022. Refer to " Note K - Stockholders' Equity " for a description of the profit allocation payments.
Holders received $26.5 million and $34.1 million in distributions related to Sale and Holding Events that occurred during 2023 and 2021, respectively. No allocation interest distributions were made in 2022. Refer to " Note K - Stockholders' Equity " for a description of the profit allocation payments.
Of the remaining 38.0% at December 31, 2022 and 42.2% at December 31, 2021, 5.0% is held by CGI Diversified Holdings L P, 5.0% i s held by a director on the Company’s Board of Directors, and the remaining percentage of Allocation Interests are held by the former founding partners of the Manager.
Of the remaining 37.0% at December 31, 2023 and 38.0% at December 31, 2022, 5.0% is held by CGI Diversified Holdings L P, 5.0% i s held by a former director on the Company’s Board of Directors, and the remaining percentage of Allocation Interests are held by the former founding partners of the Manager.
Each of our subsidiaries has various non-cancelable commitments in the ordinary course of business, including operating lease payments, and purchase obligations which include payments for materials and payments under employment agreements. On a consolidated basis at December 31, 2022, we had future operating lease obligations of $241.4 million and purchase obligations of $204.6 million.
Each of our subsidiaries has various non-cancelable commitments in the ordinary course of business, including operating lease payments, and purchase obligations which include payments for materials and payments under employment agreements. On a consolidated basis at December 31, 2023, we had future operating lease obligations of $271.6 million and purchase obligations of $174.4 million.
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.
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.
The increase in interest expense in the current year reflects the higher amount outstanding on our senior notes during the current year after we redeemed $600 million of 8.000% 2026 Senior Notes and issued $1000 million of 5.250% 2029 Senior Notes in March of 2021, and issued $300 million of 5.000% 2032 Senior Notes in November 2021, and higher amounts outstanding on our revolving credit facility in the current year, as well as the interest expense associated with our new $400 million 2022 Term Loan that we entered into in July 2022 in connection with our acquisition of PrimaLoft.
The increase in interest expense in 2022 reflects the higher amount outstanding on our senior notes during 2022 after we redeemed $600 million of 8.000% 2026 Senior Notes and issued $1000 million of 5.250% 2029 Senior Notes in March of 2021, and issued $300 million of 5.000% 2032 Senior Notes in November 2021, and higher amounts outstanding on our revolving credit facility in 2022, as well as the interest expense associated with our new $400 million 2022 Term Loan that we entered into in July 2022 in connection with our acquisition of PrimaLoft. 2022 interest expense also reflects the higher interest rate environment applicable to the amounts outstanding under our credit facility.
Lugano sells high-end jewelry primarily through retail salons in California, Florida, Texas and Colorado, and via pop-up showrooms at multiple equestrian, social and charitable functions each year.
Lugano sells high-end jewelry primarily through retail salons in California, Florida, Texas, Washington D.C., Colorado and Connecticut, and via pop-up showrooms at multiple equestrian, social and charitable functions each year.
Amortization expense Amortization expense for the year ended December 31, 2022 increased $14.0 million to $94.4 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 Lugano, which was acquired in September 2021, and PrimaLoft, which was acquired in July 2022.
Amortization expense Amortization expense for the year ended December 31, 2022 increased $11.0 million to $84.7 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 Lugano, which was acquired in September 2021, and PrimaLoft, which was acquired in July 2022.
Gross profit Gross profit as a percentage of net sales totaled approximately 47.0% in the year ended December 31, 2021 compared to 49.4% in the year ended December 31, 2020. Lugano has an extensive network of suppliers through which they procure high quality diamonds and gemstones, which make up a significant percentage of the cost of sales.
Gross profit Gross profit as a percentage of net sales totaled approximately 48.9% in the year ended December 31, 2022 compared to 47.0% in the year ended December 31, 2021. Lugano has an extensive network of suppliers through which they procure high quality diamonds and gemstones, which make up a significant percentage of the cost of sales.
In the prior period, Lugano recorded $2.8 million in amortization to cost of goods sold related to the amortization of inventory step-up resulting from the acquisition purchase price allocation. Excluding the effect of the inventory step-up, the gross profit as a percentage of net sales for the year ended December 31, 2021 was 49.2%.
Excluding the effect of the step-up amortization, the gross profit as a percentage of net sales for the year ended December 31, 2022 was 51.7%. In 2021, Lugano recorded $2.8 million in amortization to cost of goods sold related to the amortization of inventory step-up resulting from the acquisition purchase price allocation.
The decrease in net sales during the year ended December 31, 2022 is primarily due to inflationary pressures impacting demand for lower-priced Airgun and Archery prod ucts partially offset by the impact of the King's Camo acquisition.
The decrease in net sales during the year ended December 31, 2022 was primarily due to inflationary pressures impacting demand for lower-priced Airgun and Archery products partially offset by the impact of the King's Camo acquisition.
Lugano is headquartered in Newport Beach, California. Results of Operations In the following results of operations, we provide comparative pro forma results of operations for Lugano for the years ended December 31, 2021 and 2020 as if we had acquired the business on January 1, 202 0.
Lugano is headquartered in Newport Beach, California. Results of Operations In the following results of operations, we provide comparative pro forma results of operations for Lugano for the year ended December 31, 2021 as if we had acquired the business on January 1, 202 1.
Year ended December 31, 2022 2021 (in thousands) Pro forma Pro forma Net sales $ 79,929 100.0 % $ 65,882 100.0 % Gross profit $ 47,513 59.4 % $ 40,153 60.9 % Selling, general and administrative expense $ 27,576 34.5 % $ 17,308 26.3 % Amortization expense $ 20,814 26.0 % $ 20,814 31.6 % Segment operating income (loss) $ (1,877) (2.3) % $ 1,031 1.6 % Pro forma results of operations include the following pro form adjustments as if we had acquired PrimaLoft January 1, 2021: • Amortization expense associated with the intangible assets recorded in connection with the purchase price allocation of PrimaLoft of an additiona l $6.4 million and $11.8 million, respectiv ely, for the years ended December 31, 2022 and 2021. • Management fees of $1.0 million that would have been payable to the Manager during each period.
Year ended December 31, 2023 2022 2021 (in thousands) Pro forma Pro forma Net sales $ 67,053 100.0 % $ 79,929 100.0 % $ 65,882 100.0 % Gross profit $ 42,015 62.7 % $ 47,513 59.4 % $ 40,153 60.9 % Selling, general and administrative expense $ 19,448 29.0 % $ 27,576 34.5 % $ 17,308 26.3 % Amortization expense $ 20,814 31.0 % $ 20,814 26.0 % $ 20,814 31.6 % Impairment expense $ 57,810 86.2 % $ — — % $ — — % Segment operating income (loss) $ (57,057) (85.1) % $ (1,877) (2.3) % $ 1,031 1.6 % Pro forma results of operations include the following pro form adjustments as if we had acquired PrimaLoft January 1, 2021: • Amortization expense associated with the intangible assets recorded in connection with the purchase price allocation of PrimaLoft of an additiona l $6.4 million and $11.8 million, respectiv ely, for the years ended December 31, 2022 and 2021. • Management fees of $1.0 million that would have been payable to the Manager during each period.
From May 16, 2006 through December 31, 2022, we purchased twenty-three businesses (each of our businesses is treated as a separate operating segment) and disposed of eleven businesses.
From May 16, 2006 through December 31, 2023, we purchased twenty-three businesses (each of our businesses is treated as a separate operating segment) and disposed of thirteen businesses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe one-month SOFR was approximately 436 basis points at December 31, 2022, and the three-month SOFR was approximately 459 basis points at December 31, 2022. 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.
Biggest changeWe 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.
ITEM 7A. – Quantitative and Qualitative Disclosures about Market Risk Interest Rate Sensitivity At December 31, 2022, 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, 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.
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. 141
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
Our cash and cash equivalents at December 31, 2022 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.
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.
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. Credit Risk We are exposed to credit risk associated with cash equivalents, investments, and trade receivables.
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.
We had $395 million outstanding under the 2022 Term Loan and $155 million outstanding under our 2022 Revolving Credit Facility at December 31, 2022 for a total of $550 million in outstanding debt subject to variable interest rates at December 31, 2022.
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.
Removed
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. These borrowings will be subject to variable interest rates.
Added
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 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.
Added
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.

Other CODI 10-K year-over-year comparisons