CODI - Earnings call transcript Q3 2024

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Operator

Good afternoon, and welcome to Compass Diversified's Third Quarter 2024 Conference Call. Today's call is being recorded. [Operator Instructions]

At this time, I would like to turn the conference call over to Cody Slach of Gateway Group for introductions and the reading of the safe harbor statement. Mr. Slach, you may begin the conference.

Cody Slach

you. Thank Compass XXXX to Call. Third Diversified's welcome Conference Quarter and CODI's are Keller, COO Representing management. today Sabo, of CEO; Group Maciariello, the company Pat Elias Stephen and CODI's Compass CFO;

website the like tables net financial non-GAAP sales compassdiversified.com. pro the adjusted financial at subsidiary at point would EBITDA, including for and I Investor reconciliations are on EBITDA begin, press release, available we out Before the Relations forma that adjusted QX measure adjusted XXXX the and company's to section and earnings

following The closed, of with on CODI the its adjusted financial EBITDA expected remarks without financial income references company-specific EBITDA these to efforts. information to reconciling company to of reconciliation relate financial Unless also provide website. as adjusted XXXX Form reconciled SEC the not section unreasonable loss EBITDA or filings. discussions is in earnings, year XX-Q certain not significant adjusted otherwise refer because discussed Relations to is the in subsidiary that noted, also or filed measures to of full available Please XXXX the The to and as which the its metrics third quarter available today after in company. of company's or period period-to-period -- decreases note year-over-year. Investor this the or references to net adjusted a continuing call, references Diversified refer Compass at this references Throughout increases are financial in measures from certain market operations to call does company's company and the reconciliations the includes non-GAAP EBITDA we will

statement. safe to me following allow Now the harbor read

inherent with or risks discussion in company as in well the in and generally CODI the as disasters chain, regard the subject XXXX, projects, factors operational social, a basis forward-looking required the civil the performance for and future plans. the year companies. in and due and and disruption revise plans, environment, changing These forward-looking SEC political the material no enumerated forward-looking supply on obligation particular, CODI Form such law, future actual related factor uncertainties and statements, political XX, subsidiary believes, conditions. Certain conference forward-looking CODI from as results associated timing filings. In XX-K the and otherwise. interest information, ended with statements cause of in similar SEC whether filed because these call, events factors future this on as Words to we During intended statements. projected subsidiaries, identify its or have to to forward-looking statements, rates December update divestitures differ the are new anticipates, make the of the may and could acquisitions are these global certain impact significant of expectations disruptions, to or and in and some inflation, expects, other expected those expressions should by are natural global any undertakes impact future economic labor domestic including future predicting with to our unrest statements to to risk publicly may of and all or and statements, a as results Except

would Sabo. over to Elias the I to like time, turn this At call

Elias Sabo

digits, saw versus another grew XX% over EBITDA grow for pleased thanks delivered Good afternoon, In double we Today, quarter. announce revenue everyone, third and quarter strong our and joining of adjusted combined our today. I we am to XXXX. us the QX, by

are creation full into we XXXX, $XXX to are quarterly model million representing of raising CODI we and date, for performance strategy. Based our year our is positioned our byproduct fact, new QX record adjusted a we well and and for business value of believe our In EBITDA strong XXXX. long-term guidance on

provide to provide be more on Before and consumer, I consumer, and little take our a hand opportunity full the both both to outlook, more details to our holding appears geopolitical and uncertainty, ongoing affluent and the wanted this American QX especially our North strategy to up more I performance about current well. environment. Despite it operating economic color year over Pat our to

momentum businesses, to manage a in We the order we are we of interest market recently our At underlying that the required. driven believe of reading into of last the shifts sentiment. Momentum outlook the bookings us continued for that we cuts outlook. In supports the mix and week, a call data as of rate the and Index. developed believe index over will in Middle with of inflation and XX encouraged of stable CODI the index this We a our proprietary last a We have gauge This by market Russia subsidiaries, start by saw our provides the the of X.XX. insights consistent help geopolitical are weeks QX the and had sales XXXX. we conflicts monitoring And of this index create a outlook the businesses election year, us both indicator some economic diverse quarters. into that and momentum is to as We end we identify stable from incremental and strength X.XX. uncertainties including U.S. slowing better outlook last uses several useful both economic East risk the and with recent the for of think economy. Obviously,

years, These actively -- are this high-growth active last with sustainable long-term begun competitive of positive spirit. demonstrate our the our CODI. owning our our a disruptive that managing over model disruption goal As poised we advantage the and middle to business companies are share and I quarter are mentioned, gain and that companies attractive demonstrate in market have innovative markets. of Innovation strength our and to at heart codify strategy. the of market past few results And

our strategic just and a of part strategy. innovation a value drive and through long superior is work don't right key empowering businesses talent with ensure our a on management creation provide and to support the teams to orientation. their our We with and We that growth and as realize the term. outsourced Partnering active execution We processes have long-term teams our capital. subsidiary management strategy, vision they provide focus

I teams. note Founder-Friendly were awarded Award. Inc. a with that we collaborative yesterday, our am just testament Magazine's proud to approach management our Investor working to bespoke businesses and and to

Our collaboration traditional with beyond drivers. our businesses value goes well

creates internal team work the happens value. outside spotlight, tremendous example, our the but For audit of often

we varying know, of you that companies typically controls processes and middle-market levels As financial in place. acquire have

both more our confidence. and closely systematically exceptional our for businesses value scale to with and Our This outcomes subsidiaries internal ultimately and subsidiaries' all controls, improve better to very and positions creating team review our our audit with financial works raised drives as stakeholders. Consistent $XX this cost million our we to We stock preferred we while more continue flexibility. long-term lowers strategy, the in of plan of to long-term raise of capital believe capital. financial issuance third stock than preferred our maximizing through quarter, capital the processes

on We deployment. also continue opportunities focus for capital to

Our disciplined goal own companies and as look type be to we of the for we manage. but active is want to

at remains in entrepreneurs, private to with great While somewhat us founders, to we companies order relationships to like continue cultivate muted, buy appropriate position bankers companies equity CODI and the M&A prices. market

well choice innovative value. capital the to buyer we as that and be business of and need unlock strong support have are businesses strategic models We confident for as can active that long-term

meantime, long-term we On as and This X, Altor the continue accelerates our capabilities will expect acquisition expands of completed Altor October support the solutions bring its the strategy, subsidiaries. in In explore growth. support faster invest cold customers to Altor's to creation, packaging value addition long-term stand Lifoam. to partners its we growth advanced their market. to we chain businesses drive ready to continues opportunities and with of our Each to inorganic

repurchase that our believe share intrinsic common a shares subject This and indicates and of authorizes program us in our we new price the that $XXX extension our the not Board. XX, October we to of strategic throughout repurchase continued our CODI's program XXXX the indicates reflects on to by it our prospects. plan business growth confidence and current do million of further value Lastly, announced program balance beyond, opportunistically

not vision to thank also quarter outstanding management to here our direct of to at for It work the life. want in is hard CODI accident. exceeding performance teams their execution the fostering worked an strategy. the Our I take team was our to moment of expectations. our result the I subsidiary want and innovation, bring and results to thank employees who tirelessly exceptional driving a

now I With call will turn that, to Pat. the over

Patrick Maciariello

exceed Thanks, another reiterate, To our expectations. our has quarter was to continued and Elias. business successful it

pro and for where pro set versus confidence with the year approach by right Over place by in the Branded goals period, we believe few start XX.X% increased to forma XXXX for our increased, our increased us have exceed quarters, our the we segment, will forma XXXX. I adjusted up our strong prior period. the and XX% revenues year-to-date has EBITDA last in a and Consumer companies

vertical basis We by partners. of solution some and strong continues surpass basis, Pot, will revenues respectively. customers. Lugano on of that several quarterly Honey Pot growth industry, declined distribution consumer growth will on serve in market Solutions, be stabilize X% areas as segment, continues also needs decline now X.X%, is businesses, quarter particularly to adjusted long-term the of each driven we in midterm. we to to solidify is its performance the and expectations growth posted strong Our chain in to Industrial where our the and can declined believe The exceptional to and the We very BOA company a the offering and affluent And which most was headwinds challenges we growth. Within Company the primarily in year-to-date PrimaLoft cold Altor quarters. address performed by share our well. there at the position return brand face drive believe the EBITDA to a Outdoor Honey may changing Altor a its believe that continue the at in continue lumpiness invest by and we be believe at in these at though will and

a completed facilitate finish new the we expecting the Lifoam. as approximately results $X by to will completes believe company believe performance. the in these In we're quarters the this transaction. Arnold very expect $XXX,XXX had quarter's Illinois acquisition from onetime total we this in optimistic costs synergies operations will its strategic be XXXX QX, We're Included considerable to next to X over approximately recently and integration it capital move to $X excluding as extracts opportunities costs million addition, growth. strong state-of-the-art million, X we solid as the the of better transition. presented quarter, what investments, of company about In location transitioned company were Altor's another approximately with costs

intend provide core next several perspective the Arnold, over onetime both we to business call For and of to performance. quarters costs better the specific Altor out a

quarter, the this CODI's in the close we performance financial Once our provide more and XXXX. I continue now he are will excited XXXX and year. Stephen to to so quarter consolidated very to performance about again, in over specifics grow outlook we are the and for full pleased with out can turn call

Stephen Keller

Pat. of XX.X% Thank increase of In pro quarter, you, million, in $XXX.X over the our the Normalizing consolidated we of an grew the acquisitions, for the quarter. impact delivered net X.X% forma year. representing third sales sales prior

consumer more As branded with all double-digit by as partially industrial mentioned, offset This growth growth as in Honey delivering Pot, and Crosman BOA, divestiture airgun well the the growth growth. our quarter by of Lugano, PrimaLoft businesses. Velocity's in was was driven primarily modest business businesses

million a net was period XXXX. quarter representing increase over to income $XX.X XXXX. compares $XXX recorded loss XX% the in in million, we net was QX the in EBITDA third in quarter consolidated million, Our $X.X of a same favorably of Adjusted the which

EBITDA strong from Honey was acquisition and performance While adjusted of most margins our BOA, PrimaLoft significantly benefited expanding across all primarily subsidiaries, EBITDA by of the operational the in quarter. adjusted growth our Pot, driven Lugano, our year-over-year Arnold, performance in with

CFO quarter. The $XX.X was increase onetime of increase were transition. primarily the This than represents increase associated the an our $X.X fees with management by of this million greater and sequential QX over and costs a of -- $X Corporate in costs recent million prior XXXX. increase driven year from million

costs sequentially. and down management were XX% in earnings Adjusted Excluding increase costs, million, which of QX total these fees over quarter a nonrecurring and $XX.X represents both year-over-year XXXX. corporate were the

In the used flow. Turning of million cash cash to flow from we $XX quarter, consolidated operations. third our

Lugano, in extraordinary we business. cash Lugano, support this driven Our subsidiaries around was of generated million highly million our operating by used $XX primarily than of to profitable, in the in growth usage $XX where the other quarter fast-growing cash. Outside cash greater

to period. In Increase well over relocation $XX.X consumer growth terms expenditures, which of was investments quarter, in year businesses discussed invested million of Pat the in the capital Arnold, an investments earlier. we in in related as prior capital $X.X the increase as plant million our

with strong, $XXX ended Our in revolver. our third the we and available balance sheet quarter than million cash, on is greater million and $XX.X

the million of million. We additional liquidity the modestly leverage Lifoam to important to and have that declined total well is substantial they our subsidiaries the increase as the our are Our we borrowings quarter, we believe ratio the become fund ability subsequent positioned note $XXX the to both approximately $XXX of to available. by end to quarter. growth acquisitions X.XX% cash an Overall, in on acquisition. to close maintained deployed It attractive act as we as well of

outlook. Turning our full year to

million consumer is and now now for adjusted costs expect million forma $XXX guidance. million. $XXX from between year pro our momentum come XXXX. $XXX EBITDA to our adjusted is million be million and January to now be Elias million branded inclusive see on As raising deliver mentioned subsidiary EBITDA full of $XXX million $XXX based vertical a million. adjusted and and EBITDA to of across consolidated our vertical, and be it around basis, the EBITDA Adjusted earlier, expected the which will expect expect full we our for fees businesses, strong we are Pot consolidated $XX between we full between corporate was Industrial QX our This Increase owned our X, increase in We management performance to year of between million. primarily year. On from $XXX if an Honey inclusive and $XXX guidance in our $XXX as we our

to Our and not full I between turn potential now year does adjusted over $XXX call $XXX the be include impact of earnings are or expected outlook to divestitures. With million any back Obviously, million. the will acquisitions this Elias. that,

Elias Sabo

Thank you, Stephen.

City to I'd Day more XXXX; will playbook XX, we and in over Q&A shareholder like diverse strategic will businesses call, and long-term where our portion turning our our share and returns. to on we'll that the highlight New Before hosting it driving of we be the for York Analyst positioning and Investor showcasing be our January subsidiary about

You there. With more forward details for in you and to all the the look I please weeks, operator, expect lines Q&A. coming seeing that, can open of

Operator

Securities. from from [Operator Your line comes question Instructions] first the of Solow Larry CJS

Lawrence Solow

little mostly the bit looks acquisition. up It raise and question, a tweaked on the is industrial a primarily first for Lifoam just or on just bit. guidance, piece, thoughts any branded that's guess, I narrowed well. then on I little as that? like that the the Lugano, guess on upwards And then side,

Elias Sabo

Yes, Larry, it's Elias.

deliver On the Honey say third to going strong I than anticipate the expect Lugano. guide it's includes better it broader had investing year-over-year in performing fourth substantially would than quarter, -- Pot anticipated. in We bit a consumer BOA really a quarter. still little it's marketing do side, but the growth. to

a turned little expect. doing and So is track than of is better and that we where kind on PrimaLoft expectations.

Lugano to your is due Lifoam. point on just than broader correct. That it's Industrial is So and

Lawrence Solow

of been January Has just of year? of be this some little And now. I now, number movement in that usually just downturn of momentum a last a kind little curious X guess question words, the that recent. you few the just I kind is in a and like point little was bit months trending I so somewhat Maybe kind that I bit of you've a at kind you. any which there between semantics, of have last up? quantified kind the up one of it's two couple and I there's guess, the index, those question or -- was but back weeks ask bit a it of then in of and it fun. in Got

Elias Sabo

remarkably think Larry, on held we held Yes, the especially well. up stable it's has touch consumer, relatively consumer indicates interesting we about side, throughout because affluent the the I the it's consumer which were what that year, talking it more

We a there the year, say down around Industrial. was months. of little on have general bouncing over trending first seen months X X, would X the I a the

take we has a a bit. V-shaped weakened that September, then Industrial of in back turn up. little almost back saw And business miraculously August sort the Somehow and

around. QX. And time late so over bit little we lot saw a to economic that did in ticked It it's of gyrated a readings a the It little correlate down October. bit better in has

So especially side industrial economy. it on feels maybe up that flow was of there happened, rate the like of a cuts, around maybe freed momentum order little bit some interest the that

like Now sort that back little bit. it's of in rein feels a

Lawrence Solow

Got you.

else. and someone Okay. wanted one -- I I'll to just up then just Great. And company-specific it leave question, to

of and highest luxury Just on amazing another sort of the quarter. high in the Lugano end clearly

business incredible. this been think has I

do you see Just this continuing?

guess any does getting hesitation too without that or potentially specific thoughts have guys question, my in broad it on potential on the impact question that. tax, business? And any a I a has impact your I broader other Then And of leave changes at does gains capital you guess, impact there basis? on brush been could I'll the businesses, political, just any across kind that more election,

Patrick Maciariello

we rates is just an as of opening number broad well papers on announced Coast continue be Chicago. to continues grow we'll Gold We the to to I in gains to in tax -- a Pat. capital little I handle expenditures the growth start the Lugano broad. with color it's let me, at think Elias more be just changes We or then continues as on have side transaction bit to Lugano political And It it potential excuse in and will to transactions effect. the geographically. anticipate don't The I'll that Larry, be continues several and cap geographically. and question. But increase.

excited the salon. other sort maybe new spring quarter, that well. doing London of We of first that mean, good have pretty internationally having and locations we're next and success about, will we're our locations. And year, are be after considering I the a we're great location opening there

excited Lugano to So, kind invest of you in to the well business. on the speak do and are at want continue results? everything is election we to doing really . Elias,

Elias Sabo

don't other us. could affect have say than I policies we insight any know to Yes. how different that

you product. lot know, that As consumer being of a we selling goods, -- do import

Some of is China. If going Larry. out tariffs and of XX% kind There Southeast XX% there that's level can way clearly, increases. those on product particularly company that are some Asia enacted from partners, absorb of all tariff create of comes of that some our to no trade get to disruption, that any

is So unless in through reduces pushed consumption and pricing can to is my increase gets additional this decrease marketplace some going through. that inflationary sense to that pushed be offset the likely that tax are costs in there's

companies. could that we tariffs other clearly that, about think be don't of potential impact policies I would that there's are So been lot a at. talk that our have of I operating major of think But an looking outside too on potential than a

Operator

the from Instructions] [Operator coming line Capital. Koranda next And of ROTH question the from Matt

Matt Koranda

the there. new wanted growth a of you understand there? Anything just be helping of line? And to curious get continues maybe from what the like to out off existing I the the way to parse if question wanted mean qualitatively that Lugano. could drivers get help on there? I'll any contribution? you're a of out top terms key salon Just growth kind just of with on Maybe you better the I drivers average start sense on or expectations versus have of call us defy like to margins Just salons values order in seeing to of sort But kind could that unpack to. the

Patrick Maciariello

Sure.

did growth of to increase on of area or by that salon So I'm But was. kind where all year-over-year. salons area to these the only by kind say going touch to a not salon up to or performed chunk grow I'm and average continue salons which march of continue do decent salons the driving really sort organic growth. in see well. We our transaction value of a existing is going

We also number our transactions see per of an increase in quarter.

that's of value believe it's can't that Lugano's sense. as I'm people in-depth relationships little dealing highest you're than you're them we investments each. And more we if it as of with really whether to it's store business so be little has really, a of and sorry, we're think are jewelry more So important, inventory. mean I things, And the and the demographic of makes to people at -- dealing than of our to all right? that. it's different a believe disruptive. fundamentally demographic, those wealth., whether any clearly, And we Lugano of a important it's long-term we So any model, -- consumers are combination right? we I goes But allowing offering with well. We're see each, a look that's of And you believe for competitors. a And in that creating more

in on as need part we're of we're well. of diamonds, a have order Matt. And And getting we're to diamonds You those, all really our right? combination return good that, investment. sell doing to getting very a and But what that's on it's turns of

Matt Koranda

Yes.

Okay.

to I'm anything to Now That's balanced or call can quite on Lugano on guys gets else was $X spoken a great. then in fair. EBITDA you profitability growth unique Maybe historically, out margins, Lugano. excess quarter there anything growth was sounds there understand if that's third of drove incremental And margins this the on have a incremental of we think I of the there. $X.XX-plus margin sort at just the line just basis? It so go-forward that quarter incremental you the bit about curious at the that. of like

Patrick Maciariello

well to average, going are slightly not be this we mean just as any as capabilities two, think, to take costs. scale more great number get add expect talent if straight of grow This well and one. And I'm going sure QX, margin we beyond in And is we're number we will quarter's buying been to There effectively, I we I next line quarters, we more right? think least I as if as more them management, materially, in higher higher and not at quarter. the this as over effectively, increase and sort than we'll slightly marketing but would out not more X forward. grow but not clearly quarter. want could a Yes. point events we'd have than QX, and

Matt Koranda

Got and maybe you're Okay. deal desire the given some the maybe in the And of versus terms what near thoughts something -- of Elias, landscape term do million broader the and deploy to in asked the sort flow a in kind less how $XXX of these to to the portfolio right I I balance sheet then very this the then maybe just just Lifoam seeing about shape always fashion, is days? And large Stephen, or little on buyback? acquisition noticed has call now. M&A you. balance just seemingly on question. a which on stock, maybe talk one little the of but bit maybe bit sort then add maybe, we And capacity cheap to the desire

Elias Sabo

Yes.

So your Matt, on then the And -- first talk about. remind me I'll again? question

Matt Koranda

deal M&A first just question flow. Was and landscape just was the

Elias Sabo

sheet. we'll And balance about talk the then Yes.

been So -- a that know it's flow and sound broken for records. we like has way deal couple I the muted. relatively been And now. years of

of of we said companies consistent COVID, And out coming that we're lot we are types we Those be be catalysts chasing them. PrimaLoft Matt, our you've with buy everywhere the down, not really going trading Lugano. to -- BOA, in can. us want of One we're script, businesses. We're marketplace. And innovative right, These looking the just Their our growth a like very disciplined IP much companies, rates here. we're entrepreneurs, have in protection. generally active, trying also seen to of what been with approaching but directly and which as stronger. have be to are are They

reduction and environment in the policy, obviously, had, we created flow. First, a tight deal rate which

you worry now landing. just have made And a with is markets has the the very that M&A the and really everybody soft getting ends have weak. may that that no or hitting recession up We comfortable

up, a landscape. you sort and Now on coming the completely market have that's that's presidential of the frozen election M&A

election. after that be there number transactions the of forward So we're to going hearing a are come

free I extremely hearing of pitch And of peaceful flow. outcome strong. outcome, think the lot a bank as and going long deal is regardless up been think as the has we're of power, it's that to I a activity transition

So greater to that be to I the not to that's want I much there's going want we mandate. act will very with on think the buy. We of we disciplined consistent coming to XXXX. to something opportunity reiterate, into more our just cost think types companies be strategic that But is activity

the terms we a top end bit outside We're outside our not of that. of remain is the which of In it's continue balance sheet, leverage. X.Xx, to parameter, little leverage under materially Xx of

whether Lugano. Clearly, on the growth use well. we because on half growing occurred as million of that to an the or a has denominator in GDP into we're a things continue to M&A into getting equation, capital is it's well that's the that's whether at years, $XXX that a is over of at point moved supporting opportunities, deleverager generally dozen deployment basis of we've One is last but we're and portfolio but only just grew X% X% that would the the equation. a down into XXXX at that on something kind Lugano's is better support, the QX now to from portfolio to of larger alters that than had sheet balance the business rates. And to Depending needs expect clearly, depending buyback, And in digit if growth sort single high deleveraging generating we natural of rate, of have ever north cash this now not year's where low before. can double-digit a retained I think that annual supports capital we that that

been this is, the name cash leverage best in it. position of growth, where before with comfortable all given you we're those So, dynamics, of frankly, our investment, capital in are working in, has terms which, flow company ever

market very market, where are and I'm to. are tack be available of financing partners to is is that confident loan That we available right terms relative A our all we loans, commitment, whether now. in that full a B the Term there we time, Loan the on revolver parts talk with The something In have capacity-wise of us. to capital term our available different to outstanding term

we into and what is. lot bond liquidity. capacity around move can secured We have well the can lending to revolver So our a enter relative extremely market open of up continue that trade rating we to additional we where

feel we balance the sheet of our So capacity all good and that have. very we about

Matt Koranda

leave always. Okay. there. as Thorough it I'll

Operator

of line next question from And from coming Jefferies. the Howlett Matthew

Matthew Howlett

and Great trends quarter. terms supply and the become talk of bullwhip might portfolio we've sort about unwind seen? tailwind in that And destocking on you various the chain companies? of that when Could just impact a just

Patrick Maciariello

that's draining would the of the think overbuilding. we channel. demand. if an know consumer is much you of Sure. don't you want will now and tailwind are businesses, mean, we say to you roughly are where when I that se. generally early chain of up tailwind retail we're to of sometimes think you we that We future. Portfolio-wide, Pat. within feel a have up become it don't will. we're that like I will I -- sets as in we think in because in kind or sort don't to if makes -- we're supply per This we too not Portfolio-wide, or means for feel sets supply are producing don't overstocking kind of don't like a equilibrium generally I I at from you're manner it for sense. a that whether say those We sort equal issues now

Matthew Howlett

Okay. Great. large has you're dividend about then you're about dividend just how payments out been That's you forward? margin, leverage fairly Obviously, just and thinking point? the this about at by consistent, a And earning it helpful. but going you're how talk thinking could

Elias Sabo

Yes.

the been our dividend. right now. is that in decision we've We makes public our we've considered be, the unless that is payer, As the position Board we strategic in dividend the plan, on dividend coming of paid public, not some every that current quarter and said are since company past, which is and a is change a being there publicly will we

Operator

of The Raymond question next Robert Dodd coming line the from from James.

Robert Dodd

Congrats.

your conducive to been has maybe think like the health process building, over a XX very not you for CODI you pipelines take. conducive back finding period auction kind market mean an over to et hearing question. of company going that normally is be ideal extended next going highly approach M&A right, what's next you, muted. But the say, same the -- But because care kind I into the an that you the a competitive rather the than might kind view issue. you on as the M&A going I something to what's business you deals cetera. landscape your optimism mean be market's over I'm for of are Going to of be not the level quarter, optimism mean index thing like to want? I months happen? of that's

Elias Sabo

situation move back which as M&A a planning exit We're for should why to to think lot they starting them asset be can now, so come realizations your nobody stay so there forces and to ends market one only I to a have There's fall move has of have on. subdued, occurring. first There's tax desire need been is coming a the so that -- entrepreneurs a of discovery them the price state the kind people on markets, a with forward. That bring end Everybody and been an just equity be to the for sellers can really going lives really for of years, think for said couple hesitant because there market. to that planning be wants to very flat into for face. A+ into and Rob. there's up or right up that Eventually, optimistic private do We I for long. fund

catatonic is XX seeing point I If So first and to think multiples that continuing the to helps. monetary looser to start the seller help We're rates policy basis a marketplace. come lending to kind interest it's move, created that's fed come down, assets. move coming in these now. With of back already right leverage type start the market of back going

next transact that place of the that bounce to us give optimism, Robert, able be to against So the is lot a back, year ingredients going company are we that a buy. should the be and of to pretty we good ilk want in

Robert Dodd

if mean, middle store to any out, base further, -- already quite sell more color do think I have to obviously. you're year, the nothing there's you've doing you mean but think And well, ask think I -- I right? internationally the be a has expand you second have right? So can Lugano mean been be do be footprint But sell, going open the of what's on might location you'll it requisite open do to any to the picked having how to -- I by many open question. while I mean them, got year? customer one of without next potential international? I next what even London openings you to year, then mean you preliminary Do got takes the right? seems and expansion kind next international you -- on a

Patrick Maciariello

Yes.

locations me and fire. and us plan -- several attractive mean, next So absent within haven't than the as or the and to We've right? locations year for and that point the I we're of that not. always I several something maybe international them That -- as X. And any sort is think into. any but or there And number, in had lot said, and in Board of guess. to openings we one would evaluating more markets you would good and we lately, of sort I are several at you if a reviewed have want would fit Is maybe -- Lugano, mean XXXX. time, is several to, hasn't this identified are being growth. there store model there the -- a summary. I'd roll say out a happening, Lugano envision of we we us strategic expect of we to with X one the I room are for irons that now probably. incremental the Board want not If that of you

Robert Dodd

want Sure, the always number.

Elias Sabo

Sure. Sure.

Operator

Jonathan from Cowen. question line TD of coming from next the [indiscernible] And the

Unknown Analyst

]. on for Lance Jonathan [ is This

Just one question for me.

do With what's the about at and decreasing based on going are acquisitions does time? as Or it? managing How the of thinking rates with in change balancing -- debt? it it the buybacks, your seems to you you well on the XXXX be potentially quarter in how prioritize as the Like a share market guidance. raised good

Elias Sabo

Yes. Jonathan, this is Elias.

our Clearly, to against fluids. to capital capital goal is Our within many And we a our lower billion proceed that that, it our plan to of we've the is like strategic cost to $X all continues end comes capital. our times said from And would plan. subsidiaries as quest of hit allocation we size markets diversity strategic strategic retain EBITDA. to market, of breadth and and that with think the

is as our that divestitures, internally to generated first market So through acquisitions prioritize would we well the strategic capital through in and generate our strategic we and capital as vision. our point that that goal be to raising North whatever Star align constantly with

our can against is return than the said, being deviate because stock And value or price, back we least be buyback what materially plan. those on stock floor put that use allocation immune strategic to starts shares on to in it's at to Now risk-adjusted think the us deploying the price. intrinsic basis, buy the get by in we market a cannot our opinion incumbent as better that of better capital from to then we upon a

I give exact fluid. that know doesn't So you answer. It's an

to to and share use we want being in made would is that quarter. of strategic and out at type is a the in buyback of being that's our one think level follow script used. I this discount, we also million capital raised the of price That return, third the getting be $XX that we comments in on priority capital the Our I to this we said, point preferred plan. at of step are willing support that

how We of product cost, That's fourth so window buy disclose would preferred that in the in can at to a shares, it it the used is we the raise that Lugano, right October. We be capital either us which reasonable invest continue theoretically right? as fourth back anticipate the fungible. raised we in quarter would could to form available be shut in that capital that as as following. raised also is long before used quarter. until don't much have far capital to was We to now, equity is Money

invested return is in I you, exceptional. in on wherever Lugano, gives investing are returns attractive tell that So capital right is. because opinion, the as the as really now, highest nothing can our

to That stock. just or viable source capital It new -- buy companies. deleveraging. preferred be our raising part back go view can And so the can there, a as be that buy I have of we we can acquisition general that

us And And divestiture markets some is we more our door strategic on we that that plan. we for means. would so as in capital there against side, march there through the become that acquisition active continue as to continue to are I M&A think the coming pursue say, do opportunities

Operator

at Thank to I this the over you. back Sir? questions There are no now further turn to like would Mr. Elias. time. conference call

Elias Sabo

Thank you, operator.

us everyone interest today's in CODI. support. your call for for like for and you I'd again your to always, on thank Thank continued joining As

Operator

call. conference this gentlemen, Compass and concludes Thank Diversified and Ladies you, great have a day.

Compass Diversified (CODI) 30 Oct 242024 Q3 Earnings call transcript