CODI - Earnings call transcript Q4 2024

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Operator

Good afternoon, and welcome to Compass Diversified's Fourth Quarter and Full Year 2024 Conference Call. Today's call is being recorded. [Operator Instructions]. At this time, I would now like to turn the conference over to Cody Slach of Gateway Group for introductions and the reading of the safe harbor statement. Mr. begin now may you the conference. Slach,

Cody Slach

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

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

discussed The at website. the company which certain section includes Investor XX-K with filed measures and Form of Relations company's market this also is the on SEC the of call available closed, its today the reconciliations after financial also non-GAAP

remarks continuing reconciled financial expected provide EBITDA references of year income XXXX or Please to refer note its adjusted a in adjusted from adjusted in discussions that the does EBITDA to full not net The Unless subsidiary following company operations to the as reconciliation is EBITDA earnings, not effort. loss are filings. to references reconciling company's decreases adjusted financial significant references or related in otherwise the financial specific information metrics noted, year-over-year. of EBITDA in unreasonable stock or XX and metrics available because these to accompany quarter certain fourth period-to-period increases

will refer we call, Diversified CODI the this Compass Throughout as or to company.

following read to the me safe harbor allow statement. Now

and of and divestitures and the future -- with future and certain its statements, CODI statements to the we and operational regarding expectations make may During of impact acquisitions related plans. expected subsidiaries, the call, forward-looking this conference timing performance including

material in identify on of to discussion these enumerated plans, projects, forward-looking uncertainties statements, ended Words such for filed basis some risk or a SEC to in factor future to the Certain year from in similar actual factors in XX-K SEC and XXXX, forward-looking as and are should, expressions as results results factors the differ the statements. cause could filings. believes, the XX, the conditions. These December these statements Form those inherent intended subject predicting as and well are expects, projected other are in forward-looking future as anticipates, with

and particular, global as In civil the in on inflation, the disasters changes labor our political export disruption may the the difficulties natural have unrest due generally all and rates tariffs and a import domestic with chain, businesses and and global or integrating significant environment, acquired political as supply in subsidiary economic to risks U.S. social associated company regulations, changing impact companies. well interest and CODI disruptions,

CODI by information, because statements events this the over undertakes otherwise. Except to call Elias new law, I At time, any publicly or or of no update revise whether forward-looking obligation like as required to would future turn Sabo. to

Elias Sabo

I strong Good Thank you, welcome we financial to Call. and that, report results. Cody. again, once Diversified's Quarter very am Earnings pleased Fourth delivered Compass to afternoon,

EBITDA adjusted we and quarter XX%. both full EBITDA sales the revenue adjusted more for by growth Growth year. for our fourth exceeding and full the our the the in and year XXXX, both double-digit increased in quarter, For expectations achieved than accelerated

color this full on in the the made we on to our to details over in Before little I and more take performance our and strategy to quarter our want hand and opportunity also fourth year, it Pat provide reflect current I both to long-term Stephen provide the operating more on a and XXXX for environment. progress

a XXXX, that and for we value our focused focus feminine drive stakeholders. Pot, concrete grow all hygiene took on long-term care chain purpose-driven chain to more year creation was disruptive leading businesses the packaging transformational a Honey and subsidiary a steps with disrupting XXXX additional business for can of solutions. In feminine shift accounts. innovative blue-chip acquired We faster plant-derived acquired CODI. the the our diversify products our temperature-controlled cold Altor educating sector market and base better-for-you Lifoam, in providing our manufacturer cold presence Further, customer by that and consumers will to expand

these strategically well subsidiary, at of Crosman divested development streamlined for We Airgun business under also were their positioned aimed Both premium while next a ownership. our Velocity global divesting optimizing and in long-term leader focus products the business. Outdoor our transactions further businesses Ergobaby ensuring are juvenile new phase our by

structure. continue capital of improving focus to we on strategic Outside M&A our our activity,

full $XXX capital non-dilutive average the our preferred equity. weighted reduces balance overall cost our strategy. of we than Adding year our raised supporting more and helps us deleverage flexible, in long-term capital, million For XXXX, this sheet

As fourth bought of we Investor last Day month, at common shares in more the quarter. we back XXX,XXX stock our discussed also CODI than

to between believe preference return we our the price of our the our shares us our discount encouraged While value remains what to to plan, to and use shareholders. to our large capital long-term intrinsic be share capital strategic fund

to to forward, businesses reinvest As drive accelerate to shareholders. growth earnings for to will value efficient and ways our we continue look in also while ways we capital for return to shareholder to move looking expect

management year, goal our value, our with shareholder driving this we agreement. of services revised Consistent earlier

here during a detail have Investor While will reiterate to Day, on believe impact want it meaningful we this we our discussed as our this I in shareholders.

our changes fees, performance eliminating management interest, incentive The and active Committee integration the acquisitions base management changes management include for costs of members team. will on fee sliding introducing our excess and oversight management any Compensation cash Board's shareholder management rewards Collectively, significantly with for focus compensation reduce on key scale excluding align fee, the from calculation. a an fees services increase of implementing long-term these further shareholders,

are about tackle on and independently. These or areas of automation. individual emerging centers as areas, focus AI centers will bandwidth our our sustainability, may and Organizationally, the to that we financial have also such excellence. internal of resources are business subsidiaries excited excellence critical These audit controls, not

bolster improving of frameworks develop to shifts, industry helping we ensure identify enable By stay our our best whether to corporate citizenship, practices, businesses compliance, improve to subsidiaries. foundational both opportunity strengthening centers to value our major operations, financial excellence ahead further our CODI to drive a and represent businesses principles opportunities differentiate it's or and AI that and leveraging sustainability and of

our ahead, based about Looking Momentum activities gauge currently CODI's CODI of and optimistic our sales cautiously on X.XX. economic for remain we proprietary XXXX. The from prospects read activity Index, subsidiaries booking

decline While year-end consistent remains a levels, this is with slight outlook. stable it from a

in resilience a a with activity spending economic Although economy in modest recent continue and weeks, XXXX. Consumer steady the consumers throughout standing driver. key we growth observed out in we higher-income remains slowdown to have expect as

ultimately portfolio is businesses cater differentiated more we our solutions, believe our of to the many and innovative well Given which affluent are market. positioned to consumers, focused on broader outperform

the incremental for be by to limit right We the war than Obviously, risk. have believe successfully and supply that taken that diversify chain tariff to our landscape. better our as for but we create risk the potential our we tariffs a our -- We steps are monitoring the expect and positioned subsidiaries and trade evolving to driven subsidiaries well competition, navigate able are geopolitical or uncertainty XXXX. situation closely, believe

managing on Our companies acquiring success. and long-term focus for high-quality remains

to value build innovative We sustainable and all businesses lasting and by are to we owning stakeholders. buy, seek philosophy, business identifying, actively our models. grow create committed and supporting with for Guided strong

appropriate While at M&A to subdued. cultivate valuations. acquire we to companies with has and great and recently, private Nevertheless, overall firms increased remains entrepreneurs, activity the identify continue market bankers relationships equity

long-term goal capital, Our of support the for is that to to guidance from strategic and hands-on businesses be potential. unlock exceptional their benefit buyer our choice can

Despite business well and capital beyond. macroeconomic for and diverse continued position growth us approach, values-driven allocation geopolitical XXXX of our subsidiaries, and believe uncertainties, unique disciplined we in model group

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

Patrick Maciariello

our subsidiaries Elias. well to strategy We confident believe XXXX, Thanks, a positioned our XXXX. well in exceeded are for our and In we remain expectations. perform continue successful and

pro despite For by impact the EBITDA approximately pro full versus and to write-down XXXX, forma million PFAS an related digits, onetime X.XX XX% prior than regulations. our year. of vertical inventory double revenues the grow saw at forma is This of adjusted year increased greater $XX consumer

on Excluding a EBITDA than segment improvement adjusted than representing more over margin consumer greater was this XX%, EBITDA our XXXX. and over point XX% basis impact, our adjusted XXX pro the grew forma

Lugano continues XX%. to post exceptional results than with annual sales of growth more

than Lugano adjusted of performance $XXX is model, the year collectibles delivered business an XX.X% $XXX versus of EBITDA redefining XXXX, disruptive For of year. greater the prior luxury market. billion million, the result company's increase a full This the direct

XXXX. and capital As significant growth. salon of consume the Lugano new we've amounts the they X plants in X as in continues discussed, opened in half year of of long-term to their half more second the first Lugano working invest

continued will the at the continue. about excited are We potential believe and Lugano momentum growth

well. in adjusted revenue BOA growth Lugano, growth Outside more than EBITDA the full and of exceptionally year. perform for XX% delivering continues XX% greater to than in

continued believe Honey positioned new on XXXX, introductions From for addition, segment. with to due well well regulations. growth Pot a the perspective, penetration both and us, challenges long-term believe adjusted now improved In from it are focus company and performed growth. an is challenging the an behind year we is product XXXX we for -- well had and and in X.XX direct-to-consumer PFAS positioned a in EBITDA These

long focused Lifoam. EBITDA modest businesses. in Performance term. of to sales we QX benefit significantly and we industrial Turning the a our on our as XXXX adjusted flat saw acquisition for repositioning Altor's saw from decline immediate businesses in improved as

in excited as it due progressing this The Altor's drive market operations over drugs it and positions development. is believe of drug emerging about integration the We're synergies and for next and quarters. temperature-controlled anticipate meaningful bolsters the significantly strategically we well, faster-growing segments packaging we very grows the several will it to demand acquisition, as

subsidiaries challenges, improve we performance will move there segment industrial progress. make XXXX. as have to our Overall, in been And we while this through continue believe

moment up, wrapping address tariff the to to a take landscape. evolving want I Before

we the are challenges While believe that we any well remains potential arise. situation positioned to may fluid, navigate

taken few supply sourcing strengthening past our Over operations, global the proactively geographically steps diversify to our we've years, chains.

better we a being as chain And tariff the earlier, adapt good believe noted our a as environment. supply are or we not to Elias of changing As at result, anticipate we those competitors. our disadvantage than do capability competitive

economies. A broader recognize Canada. and on the the lies U.S. impact few potential subsidiaries exposure of and do the we risk global in trade Mexico of to escalating our tensions economic have both said, That

mitigate building inventory have instances and with our we strategically closely sourcing strategies. been alternative disruptions, certain identifying in suppliers However, working to stockpiles potential

we measures these continuing able manage drive place, long-term in With expect while headwinds through to to potential tariff-related be value. to

turn outlook XXXX. on to performance QX in provide for the now who'll the will consolidated Stephen, call more CODI's details over I and

Lawrence Solow

Pat. you, Thank

million. $XXX like I remind of would as have in late you The reclassified for we of results and subsidiary included that begin, Ergobaby Ergobaby results been operations enterprise today. we the will an discontinued our are we Before to therefore not sold in XXXX discuss value

consolidated increase X.X% in quarter. the sales impact pro fourth million, net $XXX.X grew of over forma XX.X% In acquisition, the of the Normalizing of representing Pot we sales for an prior delivered Honey year. our the the quarter,

As Lifoam further accelerated Lugano, mentioned, businesses quarter was delivering by consumer Pot, Honey PrimaLoft The the all our growth. growth BOA, driven in of double-digit primarily growth. and with the acquisition

the in Crosman by quarter previously Velocity's completed offset growth divestiture was business. Airgun Reported the of partially

XX% $XXX Our recorded our period was gain down versus of net Marucci when million, quarter million, over is EBITDA fourth representing was of income consolidated business. we on sale XXXX. the XXXX Adjusted in which in the a the $XX.X the same large in quarter increase a QX

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

of important due $XX.X X.XX to charge not a million onetime a This cost the to is write-down is to inventory the PFAS adjusted EBITDA regulations. repeat. will that It onetime includes that related note at of

which in and QX quarter costs XX% management in is XXXX. are fees versus $XX.X were earnings adjusted quarter, million, Public the company of up the corporate $XX.X million

quarter, of fourth consolidated the Turning $X cash generated cash flow to our In from operations. million we flow.

be Lugano of we continues user to growth. long-term a as As fund Pat mentioned, cash

of Excluding our quarter. the other $XX than Lugano, generated businesses greater million impact in the

$XX.X was capital increase invested relocation related quarter, Arnold. we at expenditures, of increase capital investments plant The million of terms over the year. the an $X in primarily to in prior million a In

and is $XX Our approximately sheet fourth ended million on quarter our the and with available in strong, cash balance we revolver. million $XXX

to have our immediately Investor Day million a us and incremental million $XXX discussed As via further an draw. term January, raised facility this early in at A. loan million a of We $XXX in we available additional funded $XXX X-month

the that move at ratio PFAS associated of includes It's the leverage calculation ratio Arnold. write-off total X.Xx to than of greater at our Our declined million and important leverage X.XX with onetime end $XX costs of the note quarter. the to the facility

Excluding remain our attractive focused would have these onetime that our subsidiaries leverage below on act We and on to costs, our been well X.Xx. available. the believe become target, as we both are actually positioned of nonrecurring to acquisitions X.Xx ratio as growth significantly as closer they well fund deleveraging

to outlook our Turning XXXX. for

Elias earlier, our consolidated between EBITDA and positive million. we $XXX we follows: expect $XXX As full businesses million see as our and mentioned subsidiary establishing year across our guide to momentum adjusted are be

$XXX is and expected between million $XXX $XXX the branded be We million Adjusted and full for $XXX vertical our year. EBITDA for between expect our consumer adjusted million industrial to million. deliver to vertical EBITDA

On and million, inclusive costs and our be corporate a expect adjusted we $XXX $XXX basis, fees. management EBITDA to consolidated of million between

to $XXX million adjusted year between earnings full Our are million. be expected $XXX and

Our be between Lugano driven expected is by in as at million, CapEx $XX well XXXX as to businesses. investments other to million growth $XX

impact at productivity-related call now tariffs include investments Obviously, With that, outlook not over and divestitures assumes potential the the acquisitions We no significant will or I our any Altor. on war. Elias. back of also made impact some trade to turn and/or does

Elias Sabo

Stephen. you, Thank

we strengthened for CODI. and have well to well-capitalized As deliver stakeholders. we was we a all continue great XXXX of With discussed, to clear positioned sheet year businesses, strategic a vision, for believe a a balance portfolio are

not are beginning values. Q&A focused to purpose. our value to what of short-termism unwavering where CODI are financial is I at long-term by the quickly competitors, the some what our engineering think on core call, drive our of and sets Before the This decisions, rhetoric. want I and reiterate of portion creation apart, is we often commitment guided Unlike

orientation values drive Our make. we and decision long-term every

empowering across organization and is be do our are ethos succeed. and are our CODI, to committed We to push and cultivating a our to conventions challenge of culture At innovation better. businesses to boundaries

Our long-term quo the values. superior that challenge that our our generates and without actively We and and deliver outsized focus disruptive believe enables us acquire status innovative growth. support approach businesses to returns compromising

We are businesses constrained fund allowing our limited by the not or us time term. to horizon,; for life manage long

that innovation, from responsible in value capital permanent and accelerate are the status businesses and long-term is to deliver base transparent We different and quo. here utilize market-leading drive shareholder our a fundamentally way

for With please that, operator, open the lines Q&A.

Operator

[Operator Instructions].

Solow comes Securities. question first CJS Our from from the line of Larry

Lawrence Solow

what Analyst Good to guess, question, hear we a the guess I from, lot heard on at the Day. of guidance. consistency first I just

very the we you to know but still Analyst between like have at what So holding, a I know breaking little take Lugano, you us guide XX%, Day, but -- maybe rapidly. like to going like and sounds a just just it grow give Industrial, branded you said that's you like don't by if than I growing there. XX%, it from around less looks XX% out branded, Can bit

majority really in of driving Or at you how 'XX? the that as look kind look that? growth is branded of we at So should that

Elias Sabo

that. say Larry, last we I growth years, and sort we Good Yes, it's Lugano to welcome. but the as afternoon. expect over we don't that with forecast are experienced funding said, and the couple Elias Lugano grow Lugano, we've rates consistent of of with would

Lugano raise much of a the hopefully that beat meet we to have couple growth then We rates with for exceeds more are able of forecast. growth guidance. modest kind we're consistent that years, And expectation and past as and

some other well. is Lugano, say coming from of the portion companies a from of as growth would I but So growth coming is good

Lawrence Solow

fair. That's

if least put But to not to range, or what even kind your does higher, high So it to like every you're XX% on probably at continues basis, Lugano I to in at branded if words if year. assuming other. does XX%, be of but do mouth, to probably your not it side, the hard going grow the it's EBITDA the is grow, going of think forecast sounds end thing on XX% that -- that

Elias Sabo

assumption. that's think a I fair

Lawrence Solow

just specifically, that add the I back if been we this to that X.XX, have on guess, on would charge, we then PFAS, I charge, couple actually guess million you're want in $XX $XX the things. ask And that a showing the quarter, EBITDA million I $XX of you're charge, right? actually million Okay.

Elias Sabo

That's correct. That's correct. $XX That's correct. million. Closer to

Lawrence Solow

$XX to million. Closer Right, right.

fun. -- So add-back, X.XX, that a and with it was year, pretty actually, in even challenging

the how better a going bit more in it 'XX, you think side. little actually bit Troy's in a by little conditions But think giving consumer just beyond us I without on challenges, side, things sort have 'XX doing driven have be look, we're even should us for the and leadership -- look but grew on give what to what but in PFAS been numbers on professional you what the X.XX? the been we improving new of

Patrick Maciariello

Sure.

So I and marketing Larry, of this of But things. Pat. would the sort is kind reinvigorating of focus one execution. X sort through We're effective more is think DTC on I

will We excited will this sales. point we're have at brand and really some we year think a that about, drive refresh further

And come in product some what our further then believe sort refresh we really have DTC new strategy. also QX, is and that I of will we'll out some, exciting

and I of I'm prongs X or So there's year for X that about would this of excited them. things at kind look each X.XX,

Operator

Cowen. of Our line question Vitanza from next the TD Lance comes from

Lance Vitanza

questions, quarter. Great could. a of couple if I have I

ongoing? more anything, done you And versus remains a of prepared The could appreciate in a if talk little date I first remarks. the remains perhaps work what, is progress tariffs. bit kind you've about work going still to back to But the that or what

of tough how companies you of competitors those the of I your do about, in kind the about know to feel how tariffs platforms. then portfolio but main And versus are sort exposed to talk this is

Patrick Maciariello

Sure.

I'll say, this at aware as made as So that a these is a it and far preparing possibilities. would can then Trump we a of year several were in. it's I of There really Pat. take were sort process Elias shot was companies. sort been one, jump and our

time, same cetera. the with there were At also et tensions China,

I Not So or sort geographically, subsidiaries, our our supply all of we of say, kind chain all. last most of say not dependent exposed say of should X and it's it's those years, mitigated or single things right? to we it's say, not chain I we're at geographic would supply diversified X to kind of, geography the over several perfect,

are. we course, Of

So a at that's our that number It's makes been one. businesses, if of process long-term many sense. subsidiary

that As far benefits. think And in everybody sort by benefits. how by shared so produce And We CEOs import of each costs as costs, instances, company, there understanding say when of strategically There I we'll handle. we some company several spent And our may there went wouldn't some as some the working a long as benefits are be right? at in with we will have we tariff that there's ours impact many those but we are time domestically industry. are competitors business.

well like So pretty positioned. we we're feel

Lance Vitanza

you be And helpful. specific in of about companies -- buying then are coming dynamics XX also the the factors companies you're macro the these to environment on months the thinking where maybe about months. of and one do kind for talk over sure, maybe days? talk here, more but the bit active or you platform And and less expect hand, I'm That's XX prior XXXX? a could about And could little I'll ask, you selling versus

Elias Sabo

Sure.

a quality and disruptive for buy. bit, 'XX years, up meeting little in of been where that X a So to couple better into a the than Lance, macro in I looking the was have little were over muted 'XX, and last 'XX years picked year of a and 'XX is that basis, of did we unfortunately would starting terms of some really years. on banner relatively businesses not was the now, have nature we 'XX market the want then it say innovative

on into being as on that we closed and at in Now Pot, Honey the acquisition Altor. said, successful also were an of beginning Lifoam year, we the closing

it, So think were pretty kind I able good. of we call expectation around a capital, which $X.X us. We of for to felt billion reasonable deploy, is

is we think better years market the that. Some back, can the recovering than would can I be significantly we hopefully comes If market say I that. But slightly. be better than

just the that and up tariffs, now, pick impact quell Now of the which federal and effect has what are activity asked, read policies in there's the generally question having XXXX some you uncertainty, I that is can of the a other economy, activity. think, kind initial bit. just right of into coming M&A creating should the little But that is

have In terms portfolio of specific the we feel now. our to companies, about right good we that really

much markets our able innovation outgrow have and to more the in. participate and vision significantly and our become portfolio reoriented strategic in We being aligned the which with disruption of companies underlying

come So great we that. great down. about feel about our how feel We has leverage

is costs actual that, we which obvious onetime X.XXx bit some At the I of number. there. have because misleading A is in that think, little are

our that's So at leverage. kind of we X.Xx our within think because back progress leverage of the I'm with number We feel I think about we us. it now it or and good Xx about going mean, ago, our parameters. kind about similarly we're on were really year how a quote of lenders to

positioned the is So well. portfolio -- our company

ability Our have grow barring our competitors like type some vis-a-vis that's themselves they to of kind companies within feel now, and positioned the pretty positioning good portfolio, of even well balance about their is feel economic right strong. sheet their unanticipated given slowdown we and that

we a good to us things last really anticipate becoming couple all hunt. the or of deals were up than with would for over more bit the So where we X. pace from the they And over of to coalesced acquisition on the years, picking were be environment little those last year create a

Operator

[Operator Instructions].

line the Capital Matt ROTH of Koranda from comes question Partners. from next Our

Unknown Analyst

bit in for EBITDA the Matt. wanted XQ, about Lugano to than higher a on is Joseph through for It's quite greater on talk We that second. on I flow XX% just it's a than see the Is so any spoken there you is why like calls. this the on for update in longer-term guys call incremental revenues? to XX% strong? any outs your goals on flow-through and past And XX%

Patrick Maciariello

strength see guide, don't of acceptance company. again, we company was is what would and the market say continued disruptive average we side, as strong continued year almost see purchases, So by metric. this unique you as by as a model believe . driven far And purchase that just I The as you the you a really business on that its by every it consumers. far repeat see

don't so mention say of And we couple again, we likely large guide, year. and of that X that been on the again, in I'll salon a for opening as while QX specifically in the do year. that's by later works did in in publicized other company, we have least at And Chicago, this well we have

we're have good at growth here we'll again So Lugano. a once confident that

Unknown Analyst

on And you any could, could a now? what's details strategy year provide it. you if that Got growth the on Troy then under now just had that? X.XX, If helm, store the

Patrick Maciariello

a little getting a bit towards the this about up to learn. of profile end We're different sort things sort of with and a of couple likely now, a -- and not sort launch we're that we're to going potentially change and we'll going right test into of at specifics but few the year, likely profile stores

in . So retail XXXX. test and our strategy I would is say, learn

Operator

from comes B. of the question Our next Riley Randy Securities. Binner from line

Randolph Binner

a been of I kind They've addressed different couple. ways. had and

that than quarter. would directly. bit And it quite more a Lugano, least better that So was we thought with a in the I little be might margin the EBITDA at is fourth ask just it

so an the the something And kind comments there, that EBITDA at wouldn't necessarily good anything was rate aside be of model? that unusually revenue Lugano margin run setting from there in this perspective quarter

Elias Sabo

you of do to benefit clearly of leverage when No. kind I accelerates, as accretion result revenue the operating the margin expect would some a you would growth and that. just -- say get have of

And usually there. before. bit do quarter the had That is a much than we've little have revenue of other was component fourth in the we smaller what in wholesale

some accretion. creates that margin So

generate, an stronger buying directly the bit kind say, and it's would and a is sourcing gross that able exceptional efforts to and over level buying, quite team buying, that on attributable just to at XXXX that the lastly, flow is on our I through to And margin is margin. executing they're of course became of which

I was that would say unusual. nothing and at there's So look

being That said, salons along salons scale, and XXXX to that significant there's going -- be comes before are those of from and that. going to come come new that And in that. fully we with have cost are some opening kind up X to we dilution increases margin

slightly It a little when keep I margins salon, X rate a in openings but X have will year, EBITDA down bit, accelerate that come on So will would be margin even to and gross dollar to profit X we accretive, can especially that dilutive from mind. more historical an effect of this gross percentage.

are happen. continues some just I such an that things of to these level, the say business extraordinary at the would But execute

are when margin upside well. find You executing gross and profit companies this

Randolph Binner

cities? if being And That's X All covered I right. are Investor what new opened apologize, salons fair. you Day, the at I don't then recall this in

Patrick Maciariello

let At company Chicago, we've We're X. announced. other the announce the going to

Randolph Binner

Okay.

through changing so -- far that just your the I -- early done consumer, has tell? high-end has it the kind know noise this is economic comment too areas that the Or is of like -- of well. it There's So is to any of maybe that country regionality of that is of year? with more -- thinking kind we the is health Texas on of that? really is And the it's yes, -- word, -- was but that's it not

Elias Sabo

mean, respect Lugano, Yes. -- customer this I with to yes. Yes.

affluent a customer. this highly, approaches Remember, highly our So in that million. $X.X understand ticket context, customer average have you is to price

of kind at broad economy customer different macro the level, So set you're a touches. that than dealing when you're with

a with other is economy customer and not But of of I this the the does that is more is this In well, through do asensitive very to customer buys general, well by very just in buy. they well, really economy it economically, seeing based terms say, buy, who anything affluent I they doesn't region. respect we're I If lot on someone kind companies insulated. region if would our Lugano, the mean think base.

to approach anticipate seeing customer we're I region, that base region there. but from would So nothing we that versus with U.S., the international

Operator

this At turn closing over you. Elias time, to back Thank I remarks. Sabo like would now the to for conference

Elias Sabo

Thank you, operator.

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

Operator

This concludes call. conference day. Compass a and you, great Thank have Diversified

Compass Diversified (CODI) 27 Feb 252024 Q4 Earnings call transcript