Compass Diversified Holdings

Good afternoon and welcome to Compass Diversify's fiscal 2026 first quarter conference call. Today's call is being recorded. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1-1 again. At this time, I would like to turn the call over to Ben Tapper, Vice President, Investor Relations. Ben, please go ahead.

Thank you, and welcome to Compass Diversified's first quarter 2026 conference call. Representing the company today are Elias Sabo, Cody's Chief Executive Officer, and Stephen Keller, Cody's Chief Financial Officer. Before we begin, I'd like to remind everyone that during the course of this call, COTI will make certain forward-looking statements, including discussions of forecasts and targets, future business plans, future performance of COTI and its subsidiaries, and other forward-looking statements regarding COTI and its financial results. Words such as believes, expects, anticipates, plans, projects, should, and future, or similar expressions, are intended to identify forward-looking statements. These forward-looking statements are subject to many risks and uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements, and some of these factors are enumerated in the risk factor discussion in the company's Form 10-K as filed with the SEC on February 27, 2026, as well as in other SEC filings and press releases. Except as required by law, Cody undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise. During the call, we will refer to certain non-GAAP financial measures. The Q1 2026 press release, including the financial tables and non-GAAP financial measure reconciliations for adjusted EBITDA, subsidiary adjusted EBITDA, pro forma net sales, and financial results excluding Lugano, are available at the investor relations section on the company's website at www.compassdiversified.com. Please note that references to EBITDA in the following discussions refer to adjusted EBITDA as reconciled to net income or loss from continuing operations in COTI's press release and SEC filings. The company does not provide a reconciliation of its full year expected 2026 subsidiary adjusted EBITDA because certain significant reconciling information is not available without unreasonable efforts. Throughout this call, we will refer to Compass Diversified as CODI or the company. At this time, I would like to turn the call over to Elias Szabo. Elias?

Thank you, Ben, and good afternoon to everyone. We started 2026 committed to a clear plan, and we are delivering against it, specifically We sold Sterno's food service business at an attractive valuation, despite a muted M&A environment. We completed a sale lease back at Altour and applied the proceeds directly to debt reduction. We delivered solid subsidiary-adjusted EBITDA growth, highlighted by double-digit growth in our consumer businesses, despite uncertainty in the global economy. And collectively, our subsidiaries generated strong operating cash flow in the quarter, a hallmark of the Cody model. Incorporating our current view of the operating environment and reflecting the sale of Cerno's food service business, we are updating our full year guidance. Before Stephen walks through the financials and our updated guidance, I would like to provide additional color on both our strategic focus and operational performance. Let me start with the sale of Cerno's food service business. Throughout this process, we've been asked whether the broader environment, including geopolitical uncertainty in the Middle East, tighter private credit markets, and other macro factors, would limit our ability to monetize our businesses at attractive values. From the outset, our answer was straightforward. First, there is almost always a market for high-quality businesses. And second, we have an experienced team with a track record of maximizing value across market cycles. We believe the outcome here speaks for itself. We view this as an initial step towards the goals we've established, not the final step. Our leverage ratio remains above our target range and our shares continue to trade at what we believe is a discount to intrinsic value. Our work is not done. We will continue to pursue deleveraging and value creation both organically and inorganically with the same urgency and discipline we have demonstrated so far. And once leverage is within our target range, we will accelerate work to address the gap to intrinsic value, including through the efficient return of capital to shareholders. Alongside our deleveraging efforts, we have initiated a review of our management services agreement. We are actively evaluating our MSA for opportunities to further align incentives and drive incremental shareholder value. The process is underway, and we expect to provide further updates in the coming months. Turning to operational performance. Against the backdrop of continued macro uncertainty, our subsidiaries collectively outperformed in the first quarter. Let me walk through a few highlights. Our consumer businesses led the way with double-digit adjusted EBITDA growth driven by strength across these businesses. The honeypot continued its exceptional momentum in the first quarter with revenue growth of nearly 25%, and EBITDA growth of over 40% compared to the prior period. We continue to see the brand gain share across the feminine care category, reflecting the strength of the product portfolio, expanded distribution, and growing consumer adoption as the brand continues to extend beyond its origin into the broader period care category. The honeypot is now firmly established as a leading better-for-you brand in the feminine care, and we believe it has significant runway for continued growth. BOA delivered another strong quarter, with revenue growth of 6.5% and EBITDA growth of 11% compared to the prior year period. We believe the performance of the BOA FIT system is unmatched. And that technical edge continues to drive category-leading adoption across snow sports, cycling, workwear, and more. The company's focus on differentiated solutions and operational efficiency supports their category-leading margins. And with continued innovation and expansion into new performance applications, we see meaningful opportunity for growth ahead. 5.11 Tactical delivered solid margin performance and strong cash flow in the quarter, despite some modest top-line pressure. The business continues to generate durable cash flow from its core professional customer base, and we are encouraged by the steps the team is taking to expand 5.11's appeal to the broader adventure-oriented consumer. This includes a recent grand opening of its next generation retail format in Seattle, which significantly outperformed the chain average on opening weekend. Early customer response has been strong and we are seeing encouraging traction. While this is an early signal, it reinforces our belief that 5.11 has meaningful runway to broaden the brand's reach over time. And finally, within our consumer businesses, A new leadership team is getting up to speed at Primaloft. It's only month three, but we are pleased with management's progress, laying the groundwork to accelerate future growth while remaining a highly profitable, low working capital business. Much more to come in future quarters. Turning to our industrial businesses. Arnold delivered a standout quarter with adjusted EBITDA nearly doubling year over year. despite ongoing geopolitical dynamics around rare earth supply, including continued export restrictions out of China. While these dynamics create near-term headwinds, they also reinforce the long-term tailwinds for the business. Demand for geopolitically secure rare earth magnet supply continues to build as customers increasingly prioritize reliable non-China sources. Arnold's Thailand facility is ramping up, adding capacity and supply chain redundancy. We believe this uniquely positions Arnold to serve aerospace, defense, and industrial customers who prioritize supply chain security and performance reliability. Altor remains a work in progress. The business faced a challenging first quarter, reflecting competitive pressure in the cold chain market and continued consumer headwinds in the appliance market. The team is focused on execution. optimizing the combined platform following the Lifoam acquisition and driving commercial progress. And we remain confident in Altor's long-term positioning, even as near-term results continue to reflect current market conditions. Finally, let me turn to Rimports, which is the business we retained following the sale of the Sterno Food Service business. Rimports is a home fragrance platform, supplying scented wax, wax warmers, and essential oils, under a range of in-house and private label brands to many of the nation's largest retailers. We want to be clear about what to expect. The balance of 2026 will be a transition period. Rim Forks will absorb some stranded costs from the separation of the food service business during the year, and we are working through an updated commercial relationship with a large customer. Both of these factors will weigh on near-term results, but are expected to improve in 2027. We have confidence in the leadership team and believe the long-term opportunity remains attractive as the team focuses on the go-forward business. Before I hand the call over to Stephen, I want to underscore that the actions this corridor are part of a disciplined, sequenced plan. Our path is clear. De-leverage. Drive continued operational performance. Further align management incentives. and over time, close the gap between our share price and intrinsic value. That is the priority we are executing against. With that, I'll turn the call over to Stephen to walk through the financial results.