Compass Diversified Holdings (CODI)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Item 2 contains forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, some of which are beyond our control. Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware or which we currently deem immaterial could also cause our actual results to differ, including those discussed in the section entitled "Forward-Looking Statements" included elsewhere in this Quarterly Report on Form 10-Q as well as those risk factors discussed in the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in the section entitled "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Overview

Compass Diversified Holdings ("Holdings", or the "Trust") was formed in Delaware on November 18, 2005. Compass Group Diversified Holdings LLC (the "LLC") was also formed on November 18, 2005. Holdings and the LLC (collectively, the "Company") were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. The LLC is a controlling owner of eight businesses, or operating segments, at March 31, 2026. The segments are as follows: 5.11 Acquisition Corp. ("5.11"), Boa Holdings Inc. ("BOA"), Relentless Topco, Inc. ("PrimaLoft"), THP Topco, Inc. ("The Honey Pot Co." or "THP"), CBCP Products, LLC ("Velocity Outdoor" or "Velocity"), AMTAC Holdings LLC ("Arnold"), FFI Compass, Inc. ("Altor Solutions" or "Altor"), and SternoCandleLamp Holdings, Inc. ("Sterno"). Lugano Holding, Inc. ("Lugano") was an operating segment of the Company until November 16, 2025 when Lugano was deconsolidated. The results of operations of Lugano are included in the Company's results of operations through the date of the deconsolidation.

We acquired our existing businesses that we own at March 31, 2026 as follows:

* Lugano was deconsolidated on November 16, 2025. The Company retained its equity interest in Lugano at March 31, 2026.

We categorize our subsidiary businesses into two separate groups of businesses: (i) branded consumer businesses, and (ii) industrial businesses. Branded consumer businesses are those businesses that we believe capitalize on a valuable brand name in their respective market sectors. We believe that our branded consumer businesses are leaders in their respective particular product categories. Industrial businesses are those businesses that focus on manufacturing and selling particular products and/ or industrial services within a specific market sector. We believe that our industrial businesses are leaders in their specific market sector. We previously announced our desire to acquire businesses in the healthcare sector, with a focus on outsourced pharma, medical manufacturing services and provider services. We have not yet acquired a business in the healthcare sector.

The following is an overview of each of our operating segments:

Branded Consumer

5.11 - 5.11 is a global apparel, footwear, and gear company serving consumers who demand performance, durability, and versatility across work, training, and adventure. 5.11 is a brand known for innovation and authenticity

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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.

BOA - BOA, creator of the award-winning, patented BOA Fit System, partners with market-leading brands to make the best gear even better. 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. Each unique BOA configuration is designed with brand partners to deliver superior fit and performance for athletes, is engineered to perform in the toughest conditions and is backed by The BOA Lifetime Guarantee. BOA is headquartered in Denver, Colorado and has operations in Austria, China, South Korea, Japan and Vietnam.

PrimaLoft - PrimaLoft is a leading provider of branded, high-performance synthetic insulation and materials used primarily in consumer outerwear and accessories. The portfolio of PrimaLoft synthetic insulations offers products that can both mimic natural down aesthetics and provide the freedom to design garments ranging from stylish puffers to lightweight performance apparel. PrimaLoft insulations also offer superior economics to the brand partner and enable better sustainability characteristics through the use of recycled, low-carbon inputs. PrimaLoft is headquartered in Latham, New York.

The Honey Pot Co. - The Honey Pot Co. is a leading “better-for-you” feminine care brand, powered by plant-derived ingredients and clinically tested formulas. Founded in 2012, The Honey Pot Co. is rooted in the belief that all products should be made with healthy and efficacious ingredients that are kind to and safe for skin. The Honey Pot Co. offers an extensive range of holistic wellness products across the feminine hygiene, menstrual, personal care, and sexual wellness categories. The Honey Pot Co.'s mission is to educate, support, and provide consumers around the world with tools and resources that promote menstrual health and vaginal wellness. Its products can be found in more than 33,000 stores across the U.S. through mass merchants, drug and grocery retail chains, and online. The Honey Pot Co. is headquartered in Atlanta, Georgia.

Velocity Outdoor - Velocity Outdoor is a leading designer, manufacturer, and marketer of archery products, hunting apparel and related accessories. The archery product category consists of products including Ravin crossbows and CenterPoint archery products, and the apparel category offers high-performance, feature rich hunting and casual apparel under the King's Camo brand, utilizing King’s own proprietary camo patterns. Velocity Outdoor offers its products through national retail chains and dealer and distributor networks. Velocity Outdoor is headquartered in Rochester, New York.

Industrial

Altor Solutions - Founded in 1957 and headquartered in St. Louis, Missouri, Altor Solutions is a designer and manufacturer of custom molded cold chain and protective foam solutions including OEM components made from EPS and EPP. Altor operates molding and fabricating facilities across North America and provides products to a variety of end-markets, including appliances and electronics, pharmaceuticals, health and wellness, building products and others.

Arnold - Arnold serves a variety of markets including aerospace and defense, general industrial, motorsport/ transportation, oil and gas, medical, energy, semiconductor and advertising specialties. Over the course of more than 100 years, Arnold has successfully evolved and adapted its products, technologies, and manufacturing presence to meet the demands of current and emerging markets. Arnold engineers solutions for and produces high performance permanent magnets (PMAG), stators, rotors and full electric motors (Ramco), precision foil products (Precision Thin Metals), and flexible magnets (Flexmag™) that are mission critical in motors, generators, sensors and other systems and components. Based on its long-term relationships, Arnold has built a diverse and blue-chip customer base totaling more than 2,000 customers and leading systems-integrators worldwide with a focus on North America, Europe, and Asia. Arnold has built a preferred rare earth supply chain and has leading rare earth and other permanent magnet production capabilities.

Sterno - Sterno, headquartered in Texarkana, Texas, is the parent company of Sterno and Rimports. Sterno is a leading manufacturer and marketer of portable food warming systems. Sterno also produces creative indoor and outdoor lighting and home fragrance solutions for consumer markets. Sterno offers a broad range of wick and gel chafing systems, butane stoves and accessories, liquid and traditional wax candles, catering equipment and lamps

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through Sterno Products, as well as scented wax cubes, warmer products, outdoor lighting and essential oils used for home decor and fragrance systems, through Rimports.

2026 Outlook and Significant Trends Impacting our Subsidiary Businesses

Macroeconomic Trends

The macroeconomic environment remains choppy, as geopolitical uncertainty and evolving trade dynamics continue to impact the operating environment; however, we believe that our diversified businesses have characteristics that may help them navigate these conditions, including leading positions in a number of categories and a disciplined focus on operating execution. Macroeconomic conditions affect our subsidiaries differently given our mix of branded consumer and industrial businesses. For our branded consumer businesses, changes in consumer confidence, discretionary spending and promotional intensity can affect demand, channel inventory levels and pricing, while persistent inflation in household essentials may continue to pressure consumer budgets in certain categories. For our industrial businesses, end-market activity and customer capital spending may be influenced by interest rates and broader manufacturing and infrastructure conditions, which can impact order patterns and project timing. Across the portfolio, we continue to experience input-cost volatility (including labor, freight and certain commodities and packaging materials), and the extent to which we can offset higher costs through pricing actions depends on competitive dynamics, contractual terms and customer demand. While changes in benchmark rates and credit spreads can affect financing markets more broadly, a significant portion of our outstanding debt is fixed-rate and, as a result, our consolidated interest expense is generally less sensitive in the near term to changes in market rates and credit spreads than it would be under a predominantly variable-rate capital structure. However, higher rates and tighter credit conditions may still affect the availability and cost of incremental financing (including for refinancings), as well as consumer and business demand and our customers’ spending decisions. Finally, evolving trade and tariff policies and supply chain reconfiguration may require certain subsidiaries to adjust sourcing, manufacturing footprint and inventory positioning, which can increase working capital requirements and, in some cases, create intermittent disruptions (including those experienced by Arnold in connection with export licensing requirements in China).

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Item 7 contains forward-looking statements. Forward-looking statements in this Annual Report on Form 10-K are subject to a number of risks and uncertainties, some of which are beyond our control. Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware or which we currently deem immaterial could also cause our actual results to differ, including those discussed in the sections entitled “Forward-Looking Statements” and “Risk Factors” included elsewhere in this Annual Report.

Overview

Compass Diversified Holdings, a Delaware statutory trust, was formed in Delaware on November 18, 2005. Compass Group Diversified Holdings LLC, a Delaware limited liability company, was also formed on November 18, 2005. In accordance with the Trust Agreement, the Trust is the sole owner of 100% of the Trust Interests (as defined in the LLC Agreement of the Company). Pursuant to the LLC Agreement, the Company has outstanding an identical number of Trust Interests as the number of outstanding shares of the Trust. Sostratus LLC owns all of our Allocation Interests. The Company is the operating entity with a board of directors and corporate governance responsibilities similar to those of a Delaware corporation.

The Trust and the LLC were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. We characterize small and middle market businesses as those that generate annual cash flows of up to $100 million. We focus on companies of this size because we believe they are better able to achieve growth rates above those of their relevant industries and efforts to improve earnings and cash flow are often more effective in companies of this size. In pursuing new acquisitions, we seek businesses with the following characteristics:

•North American base of operations;

•Stable and growing earnings and cashflow;

•Significant market share in defensible industry niches (i.e., has a “reason to exist”);

•Solid and proven management team with meaningful incentives;

•Low technological and/or product obsolescence risk; and

•Diversified customer and supplier bases.

Our management team’s strategy for our subsidiaries involves:

•Utilizing structured incentive compensation programs tailored to each business to attract and retain talented managers;

•Assisting management in its analysis and pursuit of prudent organic cash flow growth strategies;

•Identifying and working with management to execute attractive external growth and acquisition opportunities; and

•Forming strong subsidiary-level boards of directors, including independent directors, to supplement management in developing and implementing strategic goals and objectives.

Our management team leverages a network of intermediaries, advisors, and other sources of opportunities who expose us to potential acquisitions. Through these relationships, we regularly evaluate a range of potential acquisition opportunities. Our management team also has experience navigating complex acquisition situations, including corporate spin-offs, family-owned business transitions, management buy-outs, and reorganizations. We believe this flexibility, creativity, experience and expertise in structuring transactions provides a strategic advantage to us in executing non-traditional and complex transactions tailored to fit a specific acquisition target.

Lugano Investigation and Restatement

As previously disclosed, following concerns reported to the Company’s management, the Company commenced the Lugano Investigation. As a result of the Lugano Investigation, the Company determined that the Company’s

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previously issued financial statements for fiscal years 2022, 2023, 2024, and the first three fiscal quarters of 2025 including other interim and full-year financial information should no longer be relied upon. The Company corrected these errors in its 2024 Form 10-K/A which was filed on December 8, 2025, and its Quarterly Reports on Form 10-Q for the first, second, and third quarters of 2025, which were filed on December 18, 2025, December 29, 2025 and January 14, 2026 respectively. The financial information discussed herein reflects the correction of these errors.

Initial public offering (subsequent acquisitions and dispositions)

On May 16, 2006, we completed our initial public offering of 13,500,000 shares of the Trust (the “IPO”). Subsequent to the IPO the Board engaged our Manager to externally manage the day-to-day operations and affairs of the Company, oversee the management and operations of the businesses and perform those services customarily performed by executive officers of a public company.

The tables below reflect summarized information relating to our acquisitions and dispositions from the date of our IPO through December 31, 2025 (in thousands):

Acquisitions

(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 Company renamed its CBS Personnel business Staffmark subsequent to the acquisition.

(2) Velocity Outdoor (formerly "Crosman Corporation") was purchased by the Company in May 2006 and subsequently sold in January 2007. We reacquired Velocity Outdoor in June 2017.

(3) The total purchase price does not reflect add-on acquisitions made by our businesses subsequent to their purchase by the Company unless indicated.

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(4) FOX completed an IPO of its common stock in August 2013 in which we sold a 22% interest in FOX, reducing our ownership interest to 53.9%. In July 2014, FOX completed a secondary offering in which we sold a 12% interest in FOX, reducing our ownership interest to 41% and resulting in the deconsolidation of FOX from our financial results. We subsequently sold our remaining shares of FOX and now hold no ownership interest in FOX. We recognized total net proceeds from the sale of our FOX shares of approximately $465.1 million.

(5) The total purchase price of Sterno includes the acquisition of Rimports in February 2018 for a purchase price of $154.4 million.

* Lugano was deconsolidated on November 16, 2025. The Company retained its equity interest in Lugano at December 31, 2025.

Dispositions

(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.

(2) Gain (loss) recognized on sale of our businesses is calculated by deducting our total invested capital from the net sale proceeds received and does not include any applicable income tax.

(3) Sale price of Manitoba Harvest was C$370 million. Translation to USD is as of the date of sale.

* We made loans to and purchased a controlling interest in FOX on January 4, 2008, for approximately $80.4 million. In August 2013, FOX completed an initial public offering of its common stock. As a result of the initial public offering, our ownership interest in FOX was reduced to approximately 53.9%. No gain was reflected as a result of the sale of our FOX shares in the initial public offering because our majority classification of FOX did not change. FOX used a portion of their net proceeds received from the sale of their shares as well as proceeds from a new external FOX credit facility to repay $61.5 million in outstanding indebtedness to us under their existing credit facility with us. In July 2014, through a secondary offering, our ownership in FOX was lowered from approximately 54% to approximately 41%, and as a result we deconsolidated FOX as of July 10, 2014. In March and August 2016, through two more secondary offerings and a share repurchase by FOX, our ownership in the outstanding common stock of FOX was further lowered to approximately 23% as of September 30, 2016. In November 2016, through another secondary offering, our ownership in the outstanding common stock of FOX was further lowered to approximately 14%. On March 13, 2017, FOX closed on a secondary public offering of 5,108,718 shares of FOX common stock held by the Company, which represented our remaining interest in FOX. We recognized total net proceeds from the sales of our FOX shares of approximately $465.1 million, plus proceeds from the repayment of the FOX credit facility of $61.5 million upon completion of their initial public offering, and a total gain of $428.7 million.

We are dependent on the earnings of, and cash receipts from, the businesses that we own in order to meet our corporate overhead and management fee expenses and to pay distributions. The earnings and cash receipts from

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our businesses are generally lowest in the first quarter, and strongest in the third and fourth quarter, of each fiscal year. These earnings and cash receipts, net of any non-controlling interest in these businesses, are available to:

•meet capital expenditure requirements, management fees and corporate overhead charges;

•support working capital needs of our businesses and corporate overhead; and

•be distributed by the Trust to shareholders.

2025 Recent Events

Lugano Bankruptcy and Deconsolidation

On November 16, 2025, Lugano and certain of its subsidiaries filed the Lugano Bankruptcy. As a result of the Lugano Bankruptcy, effective November 16, 2025, Lugano and its subsidiaries were deconsolidated from the Company’s financial statements pursuant to ASC 810 - Consolidation. Refer to "Note C - Deconsolidation" in the accompanying notes to the consolidated financial statements for additional information.

Amendments and Waivers under the 2022 Credit Facility

In 2025, in connection with the Lugano matters and related events of default, the Company entered into the Forbearance Agreements and amendments under its 2022 Credit Facility to provide the Company with time to complete the restatement process and address Lugano-related defaults. These interim arrangements were superseded by the Fifth Amendment to the Credit Agreement and related Transaction Letter described below.

On December 19, 2025, the Company entered into the Fifth Amendment and the related Transaction Letter with the Administrative Agent and the required Lenders. Among other things, the Fifth Amendment and Transaction Letter (i) waived specified Lugano-related events of default that were outstanding prior to the Fifth Amendment, (ii) set the aggregate revolving commitments at $100.0 million, (iii) revised pricing and certain financial and other covenant requirements, including revised financial covenant levels for periods after the quarter ended March 31, 2025, (iv) imposed additional reporting and budgeting requirements (including periodic cash flow forecasting) and restrictions related to Lugano bankruptcy matters, (v) required the Company to use 100% of net cash proceeds from certain dispositions and deleveraging transactions to repay indebtedness, and (vi) imposed additional limitations on certain restricted payments and management fee payments. The Transaction Letter also provides for milestone fees payable to the lenders if certain leverage thresholds are not achieved on specified dates. Please see "Note I - Debt” in the notes to the consolidated financial statements for additional information concerning the 2022 Credit Facility.

Indenture Forbearance and Related PIK Payments

On August 29, 2025, the Company entered into the Indenture Forbearance Agreement with certain holders of its senior notes to provide additional time to complete its restatement and file its delayed periodic reports, and in connection therewith the Company agreed to pay the PIK Payments, which were effected through supplemental indentures dated September 9, 2025. Please see "Note I - Debt” in the notes to the consolidated financial statements for additional information concerning the Senior Notes.

2025 Distributions

Common shares - For the 2025 fiscal year we declared distributions to our common shareholders totaling $0.50 per share. On May 27, 2025, the Company announced that it suspended the quarterly cash distribution historically paid to common shareholders. No common distributions were paid subsequent to April 24, 2025.

Preferred shares - For the 2025 fiscal year we declared distributions to our preferred shareholders totaling $1.8125 per share on our Series A Preferred Shares, $1.96875 on our Series B Preferred Shares and $1.96875 on our Series C Preferred Shares.

2026 Outlook and Significant Trends Impacting our Subsidiary Businesses

Macroeconomic Trends

The macroeconomic environment remains choppy, as geopolitical uncertainty and evolving trade dynamics continue to impact the operating environment; however, we believe that our diversified businesses have characteristics that may help them navigate these conditions, including leading positions in a number of categories and a disciplined focus on operating execution. We continue to monitor how changing market conditions and trade-related costs may impact consumer sentiment and behavior, particularly for discretionary categories purchased by low- and middle-

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income consumers. While inflation moderated domestically in 2025, price levels for certain inputs remain elevated, and labor costs continue to create margin pressure in certain parts of our business. Although the Federal Reserve reduced interest rates in 2025, the outlook for monetary policy remains uncertain and financial conditions may remain volatile in 2026. Ultimately, our focus remains on disciplined capital allocation, operating execution and balance sheet strength, supported by our permanent capital structure and the quality of our subsidiaries.

Geopolitics and Trade Policy

Geopolitical conditions were volatile throughout 2025 and we expect geopolitical uncertainty to persist in 2026. Our subsidiaries have, over time, taken actions to diversify sourcing and reduce concentrated exposure to China; however, trade-war dynamics have broadened, and the risk of new or expanded tariffs across multiple regions and product categories remains a headwind. The rare earth and strategic minerals dispute created significant disruption for one of our subsidiaries, Arnold Magnetic Technologies, including constraints on its ability to ship certain products out of China due to heightened export licensing requirements. Over the longer term, these dynamics could support higher demand for Arnold’s solutions as customers seek more resilient and predictable sourcing and supply chain alternatives; however, the timing and magnitude of any such demand shift remains uncertain. During 2025, our businesses incurred increased costs and working capital requirements due to inventory pre-buys and front-loading of goods ahead of anticipated tariff actions and supply uncertainty. The extent to which similar actions are needed in 2026 will depend on the timing and scope of trade policy changes and the level of supply chain disruption. The Company continues to monitor tariff policies and tariff announcements, including various executive orders issued subsequent to year-end and will adjust its strategies to mitigate the impact of tariffs as trade policy evolves.

Technology and AI Investment

AI-related investment has been a meaningful contributor to global economic activity, but the durability of that cycle and its broader impacts remain uncertain. The effect of AI adoption on productivity and employment trends is unclear over the short, medium, and long term. We remain focused on targeted, ROI-driven technology investments to enhance operational efficiency at the subsidiary level, while maintaining disciplined capital allocation as these technologies evolve.

Business Outlook

Our near-term focus is on strengthening the balance sheet and enhancing financial flexibility. In 2026, we expect to prioritize deleveraging through organic free cash flow generation and selective strategic actions, while continuing to execute our strategy and operating playbook across our subsidiaries.

The Company anticipates that the areas of focus for 2026, which are generally applicable to each of our businesses, include:

•Generating free cash flow through increased net income, disciplined capital investment, and effective working capital management, while maintaining flexibility amid a choppy operating environment;

•Driving profitable growth through new product development, expanded distribution, and new customer acquisition where returns are attractive;

•Managing pricing and costs by implementing pricing actions where appropriate and executing productivity and cost initiatives to protect margins in the face of inflation, tariffs, and other input cost volatility;

•Evaluating strategic alternatives and actions for certain businesses, where doing so would enhance financial flexibility and improve risk-adjusted returns;

•Pursuing opportunities to take market share where possible in our niche market-leading businesses as customers prioritize reliability, quality, and supplier resiliency;

•Continuing to strengthen our supply chain resilience through supplier diversification, improved planning and inventory management, and ongoing enhancements in manufacturing and operational capabilities;

•Leveraging technology, including targeted AI initiatives, to improve efficiency, decision-making, and service levels, while maintaining a disciplined, ROI-driven approach to investment; and

•Continuing to enhance our governance and oversight practices, and, as appropriate, financial reporting processes and internal controls.

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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, 2025, 2024 and 2023, 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 standalone basis.

Lugano Bankruptcy

In November 2025, Lugano and certain of its subsidiaries filed the Lugano Bankruptcy. As a result of the bankruptcy filing, the Company no longer maintained a controlling financial interest in Lugano and, accordingly, deconsolidated Lugano and its subsidiaries in accordance with ASC 810 - Consolidation. The results of operations of Lugano are included in the Company’s consolidated results through the date control was lost. From that date forward, Lugano is no longer included as an operating segment of the Company. Following deconsolidation, the Company’s continuing involvement with Lugano is limited to its claims in the bankruptcy proceedings, including any secured positions. Any retained interest recognized in connection with deconsolidation was measured at fair value and reflects the Company’s estimate of recoveries expected from the bankruptcy proceedings as of December 31, 2025.

Acquisition of The Honey Pot Co.

We acquired The Honey Pot Co. in January 2024. In the following results of operations, we provide (i) our actual Consolidated Results of Operations for the years ended December 31, 2025, 2024 and 2023, 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 standalone basis (“Results of Operations – Our Businesses”), for each of the years ended December 31, 2025, 2024 and 2023, where all years presented include relevant pro-forma adjustments for pre-acquisition periods and explanations where applicable. For the 2024 acquisition of The Honey Pot Co., the pro forma results of operations have been prepared as if we purchased this business on January 1, 2023. We believe this presentation enhances the discussion and provides a more meaningful comparison of operating results. The following operating results of our businesses are not necessarily indicative of the results to be expected for a full year, going forward.

All dollar amounts in the financial tables are presented in thousands. References in the financial tables to percentage changes that are not meaningful are denoted by "NM."

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Consolidated Results of Operations — Compass Diversified Holdings

Year ended December 31, 2025 compared to the Year ended December 31, 2024

Net revenues

Net revenues for the year ended December 31, 2025 increased by approximately $85.6 million or 4.8% compared to the corresponding period in 2024. During the year ended December 31, 2025, we saw notable increases in net revenue at 5.11 ($19.7 million increase), Lugano ($18.7 million increase), PrimaLoft ($2.3 million increase), The Honey Pot Co. ($35.2 million increase) and Altor ($64.0 million increase). The Honey Pot Co. was acquired on January 31, 2024 and had an incremental revenue increase of $24.4 million year over year. The increase in net revenue at Altor was attributable to the acquisition of Lifoam in October 2024. The increase in revenue at Lugano was due to an expansion of their salon footprint during the latter half of 2024 and into 2025. These increases in net revenue were offset by decreases in net revenue at Velocity ($20.0 million decrease, primarily due to the sale of Crosman, Velocity's airgun division, in April 2024), Arnold ($20.9 million decrease) and Sterno ($12.9 million decrease). Refer to "Part II, Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Results of Operations - Our Businesses" for a more detailed analysis of net revenue by operating segment.

We do not generate any revenues apart from those generated by the businesses we own. We may generate interest income on the investment of available funds but expect such earnings to be minimal. Our investment in our businesses is typically in the form of loans from the Company to such businesses, as well as equity interests in those businesses. Cash flows coming to the Trust and the Company are the result of interest payments on those loans, amortization of those loans and additional principal payments on those loans. However, on a consolidated basis these items will be eliminated.

Cost of revenues

On a consolidated basis, cost of revenues increased approximately $21.6 million during the year ended December 31, 2025, compared to the corresponding period in 2024, primarily as a result of the increase in net revenues at certain of our subsidiaries. We saw notable increases in cost of revenues at Lugano ($9.1 million increase), The Honey Pot Co. ($4.9 million increase) and Altor ($55.8 million increase) that correspond to the revenue increases noted above. We also saw a decrease in cost of revenues at Velocity ($17.1 million decrease),

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Arnold ($10.4 million decrease) and Sterno ($19.0 million decrease) that corresponded to the decrease in revenue noted above.

Gross profit as a percentage of net revenues was approximately 43.5% in the year ended December 31, 2025 compared to 42.0% in the year ended December 31, 2024. The increase in gross profit as a percentage of net revenues in the year ended December 31, 2025 as compared to the year ended December 31, 2024 is primarily attributable to the mix of products sold, with the increase in gross profit attributable to our branded consumer products. Our branded consumer businesses had gross profit as a percentage of net revenues of 55.0% in the 2025 as compared to 52.2% in 2024, while our industrial businesses had gross profit as a percentage of net revenues of 26.5% in 2025 as compared to 27.1% in 2023. Refer to Part II, Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" under the heading "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 $73.2 million during the year ended December 31, 2025, compared to the corresponding period in 2024, driven primarily by increases at Corporate ($60.0 million increase), 5.11 ($9.6 million increase) and Altor ($12.1 million increase) due to the acquisition of Lifoam in the prior year and related integration costs. The increase in selling, general and administrative expense was partially offset by a decrease in expense at Velocity after their disposition of the Crosman product line in the second quarter of 2024, and at Arnold ($6.4 million decrease) due to non-recurring costs incurred in the prior year associated with the move of two of their facilities in the United States. Refer to "Results of Operations - Business Segments" for a more detailed analysis of selling, general and administrative expense by subsidiary business segment.

At the corporate level, general and administrative expense was $79.7 million in 2025 and $19.7 million in 2024. The increase in corporate general and administrative expense in 2025 related to the ongoing costs of an investigation at our Lugano subsidiary. The Company incurred $60.8 million in the year ended December 31, 2025 related to the investigation at Lugano, which began in April 2025. The Company also saw increased legal and professional fees incurred during 2025, offset by decreases in salary and bonus expense.

Fees to Manager

Under the MSA, we pay CGM (i) a base management fee equal to (a) 2% of the Company’s adjusted net assets when the adjusted net assets are less than or equal to $3.5 billion (the “Initial Threshold Fee”), (b) the Initial Threshold Fee plus 1.25% of the amount of adjusted net assets exceeding $3.5 billion when the adjusted net assets are more than $3.5 billion but less than $10 billion, or (c) 1.5% of the adjusted net assets when the adjusted net assets are $10 billion or more, and (ii) an incentive management fee equal to 0.25% of the amount of adjusted net assets exceeding $3.5 billion only when the adjusted net assets are more than $3.5 billion but less than $10 billion and only if the Company’s annualized internal rate of return on equity for the trailing three-years exceeds 12%. Any incentive management fee paid to the Manager may only be distributed by the Manager among the then-current Employees (as defined in the MSA) of the Manager. Such incentive management fee is subject to approval by the Compensation Committee of the Company’s Board.

As a result of the restatement of the financial statements as of December 31, 2024, 2023 and 2022 and for the years ended December 31, 2024, 2023 and 2022, as well as for the period ended December 31, 2021 and revisions made in the quarter ended March 31, 2025, the management fees paid to CGM were in excess of the amounts that should have been due under the MSA. While the MSA does not contain an express mechanism that permits the Company to immediately clawback the overpayment of management fees during the aforementioned periods, the MSA provides that future payments under the MSA will be reduced, on a dollar-for-dollar basis, by the aggregate amount of all overpaid management fees. The Company calculated the aggregate amount of excess management fees paid as of December 31, 2025 as $33.8 million and recorded an asset that reduced the management fee expense for the year ended December 31, 2025. For the year ended December 31, 2025, we incurred management fee expense of approximately $17.9 million as compared to $74.8 million in fees in the year ended December 31, 2024, with the reduction in the 2025 management fee expense reflecting the adjustment for excess management fees recorded.

Amortization expense

Amortization expense for the year ended December 31, 2025 decreased $1.7 million to $93.2 million as compared to the prior year, due to the reduction in expense associated with the sale of Crosman in the second quarter of 2024

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and certain intangibles at Sterno that were fully amortized in 2024, partially offset by the amortization expense associated with the intangibles that were recognized in conjunction with the purchase price allocation for Lifoam, the add-on acquisition that Altor completed in the fourth quarter of 2024.

Impairment expense

As a result of the preliminary findings of the Lugano Investigation, the Company determined that a triggering event had occurred in the second quarter of 2025 and tested the long-lived assets of Lugano for impairment. The impairment testing indicated that the fair value of the assets was less than the carrying value and the Company recorded impairment expense to write the long-lived assets down to fair value. The write down of the long-lived assets resulted in the Company recording impairment expense of $29.5 million related to property, plant and equipment and $1.9 million related to right-of-use assets in the quarter ended June 30, 2025. The right-of-use asset related to a retail salon in Toronto, Canada which had not yet opened.

In connection with our annual goodwill impairment test in 2024, we tested the goodwill at the Velocity reporting unit quantitatively. The impairment test resulted in Velocity recording impairment expense of $8.2 million in the year ended December 31, 2024.

Interest expense

We recorded interest expense totaling $175.3 million for the year ended December 31, 2025 compared to $122.8 million for the comparable period in 2024, an increase of $52.5 million. As consideration for entering into the Indenture Forbearance Agreement, the LLC agreed to pay to each holder of Notes such holder’s pro rata share of (a) an upfront fee, paid in kind by increasing the principal amount of the applicable series of Notes, equal to 1.75% of the aggregate principal amount of Notes outstanding, and (b) additional interest, paid in kind by increasing the principal amount of the applicable series of Notes, equal to the equivalent of a 5.00% per annum increase in the interest rate for the applicable series of Notes for the period between August 1, 2025 and October 24, 2025. The Company recorded $38.2 million in paid-in-kind interest expense in the third and fourth quarter of 2025 related to the upfront fee required by the Indenture Forbearance Agreement. The Company also incurred an increase in interest expense in the current year of $5.3 million as a result of the increase in the 2022 Term Loan that occurred in January 2025, and elevated interest rates as a result of the Forbearance Agreements and amendments related to the 2022 Credit Facility, offset by lower amounts outstanding on the 2022 Revolving Credit Facility in 2025 as compared to 2024.

The interest expense also reflects an increase of $23.3 million in interest expense related to financing arrangements at our Lugano business incurred prior to the deconsolidation.

Loss on debt modification

During the second quarter of 2025, the Company entered into a forbearance agreement which reduced the aggregate borrowing amount available for revolving commitments to $100 million from $600 million. As a result of the reduction in available revolving commitments, the Company recognized $2.8 million in loss on debt modification in the second quarter of 2025.

Loss on Deconsolidation

The Company recorded a Loss on deconsolidation of $111.9 million related to the deconsolidation of Lugano in the fourth quarter of 2025 as a result of the Lugano Bankruptcy. Refer to "Note – C Deconsolidation" in the Consolidated Financial Statements for additional information.

Provision for income taxes

We had income tax benefit of $0.9 million during the year ended December 31, 2025 compared to income tax expense of $18.6 million in 2024, a decrease of $19.6 million. Our effective tax rate in the year ended December 31, 2025 was 0.3%, compared to an effective income tax rate of (6.0)% during the same period in 2024. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. In addition to state income taxes, the items with the most significant impact on the difference between our statutory U.S. federal income tax rate of 21% and our effective income tax rate in 2025 was the limitations on the net operating loss carryforwards and the deconsolidation of Lugano, while in 2024 the most significant impact was the limitations on net operating loss carryforwards, utilization of tax credits at our subsidiaries, and the loss on the sale of Crosman in the second quarter of 2024.

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Year ended December 31, 2024 as compared to the Year ended December 31, 2023

Net revenues

Net revenues for the year ended December 31, 2024 increased by approximately $98.1 million or 5.8% compared to the corresponding period in 2023. During the year ended December 31, 2024, we saw notable increases in net revenue at BOA ($35.0 million increase), Lugano ($27.2 million increase), PrimaLoft ($7.2 million increase) and Arnold ($5.2 million increase), offset by decreases in net revenue at Velocity ($75.8 million decrease, primarily due to the sale of Crosman, Velocity's airgun division, in April 2024) and Sterno ($5.4 million decrease). The Honey Pot Co., which we acquired on January 31, 2024, contributed $104.6 million in net revenues in 2024 post-acquisition. Refer to "Part II, Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Results of Operations - Our Businesses" for a more detailed analysis of net revenue by operating segment.

We do not generate any revenues apart from those generated by the businesses we own. We may generate interest income on the investment of available funds but expect such earnings to be minimal. Our investment in our businesses is typically in the form of loans from the Company to such businesses, as well as equity interests in those businesses. Cash flows coming to the Trust and the Company are the result of interest payments on those loans, amortization of those loans and additional principal payments on those loans. However, on a consolidated basis these items will be eliminated.

Cost of revenues

On a consolidated basis, cost of revenues increased approximately $22.4 million during the year ended December 31, 2024, compared to the corresponding period in 2023, primarily as a result of the increase in net revenues at certain of our subsidiaries. We saw notable increases in cost of revenues at BOA ($8.8 million increase), Lugano ($6.2 million increase) and Arnold ($8.9 million increase) that correspond to the revenue increases noted above. We also saw a decrease in cost of revenues at Velocity ($57.0 million decrease) and Sterno ($12.1 million decrease) that corresponded to the decrease in revenue noted above. The Honey Pot Co. had cost of revenues of $53.3 million in 2024 post-acquisition. Gross profit as a percentage of net revenues was approximately 42.0% in the year ended December 31, 2024 compared to 39.9% in the year ended December 31, 2023. The increase in gross profit as a percentage of net revenues in the year ended December 31, 2024 as compared to the year ended December 31, 2023 is primarily attributable to the mix of products sold, with increases in net revenue at our higher margin businesses. Our branded consumer businesses had gross profit as a percentage of net revenues of 52.2% in the 2024 as compared to 49.2% in 2023, while our industrial businesses had gross profit as a percentage of net revenues of 27.1% in 2024 as compared to 27.7% in 2023. Refer to Part II, Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" under the heading "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 $85.5 million during the year ended December 31, 2024, compared to the corresponding period in 2023. We saw increases in selling, general and administrative expenses at several of our consumer brands due to increased investment in marketing and headcount, and increases in employee compensation, particularly Lugano ($29.6 million of the increase) with spending associated with the opening of new salons in the latter part of 2023 and 2024. The Honey Pot Co. had selling, general and administrative expense of $37.7 million in the 2024 post-acquisition period, of which $3.5 million was transaction costs and $2.6 million was integration service fees associated with the acquisition. Our Arnold operating segment also saw a notable increase in selling, general and administrative costs in 2024 ($10.3 million increase) as compared to the prior year due to non-recurring costs incurred associated with the move of two of their facilities in the United States. Refer to "Results of Operations - Business Segments" for a more detailed analysis of selling, general and administrative expense by subsidiary business segment. At the corporate level, general and administrative expense was $19.7 million in 2024 and $18.2 million in 2023, an increase of $1.5 million. The increase in corporate general and administrative expense in 2024 related to severance paid to our former chief financial officer, who departed during the third quarter, and professional fees associated with the recruitment of our new chief financial officer.

Fees to Manager

During the year ended December 31, 2024 and 2023, we paid CGM a quarterly management fee equal to 0.5% (2.0% annually) of our consolidated adjusted net assets. We accrue for the management fee on a quarterly basis.

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For the year ended December 31, 2024, we incurred approximately $74.8 million in management fees as compared to $67.9 million in fees in the year ended December 31, 2023. The increase in management fees is primarily attributable to our acquisition of The Honey Pot Co. in 2024, and increases in net asset balances at certain of our businesses in 2024. CGM entered into a waiver of the MSA for a period through June 30, 2023 to receive a 1% annual management fee related to PrimaLoft, rather than the 2% called for under the MSA, which resulted in a lower management fee paid in the second half of 2022 and the first half of 2023 than would have normally been due. Additionally, CGM had entered into a waiver of the MSA at December 31, 2023 to exclude the cash balances held at the LLC from the calculation of the management fee.

Amortization expense

Amortization expense for the year ended December 31, 2024 increased $11.2 million to $94.8 million as compared to the prior year, primarily as a result of the amortization expense associated with the intangibles that were recognized in conjunction with the purchase price allocation for The Honey Pot Co., which was acquired in January 2024, partially offset by the reduction in amortization expense at Velocity related to the intangible assets that were included in the sale of Crosman.

Impairment expense

In connection with our annual goodwill impairment test in 2024, we tested the goodwill at the Velocity reporting unit quantitatively. The impairment test resulted in Velocity recording impairment expense of $8.2 million in the year ended December 31, 2024.

PrimaLoft performed an interim impairment test of their goodwill during the period ended December 31, 2023 as a result of operating results that were below forecast amounts that were used as the basis for the purchase price allocation at acquisition. The impairment test resulted in PrimaLoft recording impairment expense of $57.8 million.

Velocity performed an interim impairment test of their goodwill during the third quarter of 2023 as a result of operating results that were below the forecast that we used in the quantitative annual impairment test of Velocity at March 31, 2023. The impairment test resulted in Velocity recording $31.6 million impairment expense in the year ended December 31, 2023.

Lugano performed an interim impairment test of their long-lived assets at December 31, 2023 that resulted in a $1.2 million impairment charge related to the customer relationship intangible.

Interest Expense

We recorded interest expense totaling $122.8 million for the year ended December 31, 2024 compared to $109.9 million for the comparable period in 2023, an increase of $12.9 million. The increase in interest expense in 2024 reflects higher average amounts outstanding on our revolving credit facility in 2024, and an increase of $11.4 million in interest expense related to financing arrangements at our Lugano business.

Loss on Sale of Crosman

On April 30, 2024, Velocity Outdoor sold Crosman, its airgun product division. Velocity recorded a loss on the sale of Crosman $24.2 million in the year ended December 31, 2024.

Provision for income Taxes

We had income tax expense of $18.6 million during the year ended December 31, 2024 compared to income tax expense of $8.2 million in 2023, an increase of $10.4 million in 2024 as compared to 2023. Our effective tax rate in the year ended December 31, 2024 was (6.0)%, compared to an effective income tax rate of (3.1)% during the same period in 2023. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. In addition to state income taxes, the items with the most significant impact on the difference between our statutory U.S. federal income tax rate of 21% and our effective income tax rate in 2024 was the limitations on the net operating loss carryforwards and utilization of tax credits at our subsidiaries, and the loss on the sale of Crosman in the second quarter of 2024.

Results of Operations — Our Businesses

We categorize the businesses we own into two separate groups of businesses (i) branded consumer businesses, and (ii) industrial businesses. Branded consumer businesses are characterized as those businesses that we believe

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capitalize on a valuable brand name in their respective market sector. We believe that our branded consumer businesses have leading positions in their particular category. Industrial businesses are characterized as those businesses that focus on manufacturing and selling particular products or services within a specific market sector. We believe that our industrial businesses have leading positions in their specific market sector. We previously announced our desire to acquire businesses in the healthcare sector, with a focus on outsourced pharma, medical manufacturing services and provider services. We have not yet acquired a business in the healthcare sector.

Branded Consumer Businesses

5.11

Overview

5.11 is a global apparel, footwear, and gear company serving consumers who demand performance, durability, and versatility across work, training, and adventure. 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.

Results of Operations

Year ended December 31, 2025 compared to the Year ended December 31, 2024

Net sales

Net sales for the year ended December 31, 2025 were $551.8 million, an increase of $19.7 million, or 3.7%, compared to the same period in 2024. The increase was driven primarily by a $19.5 million increase in domestic wholesale sales, reflecting strong demand and the fulfillment of large contracts; a $2.1 million increase in direct-to-consumer sales, resulting from higher full-price sales of new products; and a $2.8 million increase in international sales, supported by continued demand across key markets. These increases were partially offset by a $3.4 million decline in direct-to-agency sales, which are typically non-recurring.

Gross profit

Gross profit as a percentage of net sales was 53.5% in the year ended December 31, 2025 as compared to 51.3% in the year ended December 31, 2024. Gross profit as a percentage of net sales was unfavorably impacted in the prior year by a non-recurring increase in specific inventory reserves for finished goods that include PFAS.

Selling, general and administrative expense

Selling, general and administrative expenses for the year ended December 31, 2025 increased to $234.2 million or 42.4% of net sales compared to $224.7 million or 42.2% of net sales for the year ended December 31, 2024. The increase in selling, general and administrative expense was primarily driven by non-recurring payroll costs associated with restructuring, higher performance-based bonuses, and increased marketing investments to support sales growth.

Segment operating income

Segment operating income for the year ended December 31, 2025 was $51.4 million, an increase of $12.6 million when compared to the same period in 2024, based on the factors described above.

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Year ended December 31, 2024 compared to the Year ended December 31, 2023

Net sales

Net sales for the year ended December 31, 2024 were $532.2 million, a decrease of $0.9 million, or 0.2%, compared to the same period in 2023. This decrease was driven by a $10.4 million decrease in direct-to-consumer sales due to less promotional sales and lower off-price selling, as well as a $0.5 million decrease in domestic wholesale sales due to inventory availability. These increases were offset by a $9.0 million increase in international sales from strong demand and a $1.5 million increase in direct-to-agency sales due to the fulfillment of large contracts.

Gross profit

Gross profit as a percentage of net sales was 51.3% in the year ended December 31, 2024 as compared to 52.0% in the year ended December 31, 2023. Gross profit as a percentage of net sales was unfavorably impacted by a non-recurring increase in specific inventory reserves for finished goods that include PFAS, which was offset slightly by favorability due to less promotional sales and lower off price selling in the current year versus the prior year.

Selling, general and administrative expense

Selling, general and administrative expenses for the year ended December 31, 2024 increased to $224.7 million or 42.2% of net sales compared to $220.9 million or 41.4% of net sales for the year ended December 31, 2023. The increase in selling, general and administrative expense was due to an increase in payroll costs associated with retail stores, as well as an increase in sales, marketing, travel, bad debt, stock compensation expense and other expenses. These increases were partially offset by decreases in bonus related expenses.

Segment operating income

Segment operating income for the year ended December 31, 2024 was $38.8 million, a decrease of $7.9 million when compared to the same period in 2023, based on the factors described above.

BOA

Overview

BOA, creator of the award-winning, patented BOA Fit System, partners with market-leading brands to make the best gear even better. 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. Each unique BOA configuration is designed with brand partners to deliver superior fit and performance for athletes, is engineered to perform in the toughest conditions and is backed by The BOA Lifetime Guarantee. BOA is headquartered in Denver, Colorado and has operations in Austria, China, South Korea, Japan and Vietnam.

Results of Operations

Year ended December 31, 2025 compared to the Year ended December 31, 2024

Net sales

Net sales for the year ended December 31, 2025 were $190.5 million, a decrease of $0.3 million or 0.2% when compared to net sales of $190.8 million for the year ended December 31, 2024. BOA adult premium performance sales increased across key industries including Workwear, Cycling, Snow Sports, Outdoor, Helmets, and Performance Bracing, primarily as a result of market share gains, offset by reduced kids-based business in China.

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Gross profit

Gross profit was $122.4 million for the year ended December 31, 2025 as compared to $119.2 million for the year ended December 31, 2024. Gross profit as a percentage of net sales was 64.2% for the year ended December 31, 2025 compared to 62.5% for the same period in 2024. The increase in gross profit as a percentage of net sales was driven by manufacturing efficiencies and product mix .

Selling, general and administrative expense

Selling, general and administrative expense for both the year ended December 31, 2025 and December 31, 2024 was $55.3 million, or 29.0% of net sales.

Segment operating income

Segment operating income was $50.0 million for the year ended December 31, 2025 as compared to $47.2 million in segment operating income in the year ended December 31, 2024, an increase of $2.9 million based on the factors noted above.

Year ended December 31, 2024 compared to the Year ended December 31, 2023

Net sales

Net sales for the year ended December 31, 2024 were $190.8 million, an increase of $35.0 million or 22.5% when compared to net sales of $155.8 million for the year ended December 31, 2023. The increase was reflected across key industries including Cycling, Athletic, Workwear, Outdoor and Snow Sports. The increase in sales was a result of the improvement of end market inventory levels, coupled with market share gains in many of our key industries.

Gross profit

Gross profit was $119.2 million for the year ended December 31, 2024 as compared to $93.0 million for the year ended December 31, 2023. Gross profit as a percentage of net sales was 62.5% for the year ended December 31, 2024 compared to 59.7% for the same period in 2023. The increase in gross profit as a percentage of net sales was driven by manufacturing overhead leverage as well as product mix.

Selling, general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2024 was $55.3 million, or 29.0% of net sales, compared to $49.0 million, or 31.5% of net sales for the year ended December 31, 2023. The increase in selling, general and administrative expense of $6.3 million in the current year was primarily due to increased employee costs related to BOA’s bonus plan as well as strategic investments in talent across the organization.

Segment operating income

Segment operating income was $47.2 million for the year ended December 31, 2024 as compared to $27.3 million in segment operating income in the year ended December 31, 2023, an increase of $19.9 million based on the factors noted above.

PrimaLoft

Overview

PrimaLoft Technologies is a leading provider of branded, high-performance synthetic insulation and materials used primarily in consumer outerwear and accessories. The portfolio of PrimaLoft synthetic insulations offers products that can both mimic natural down aesthetics and provide the freedom to design garments ranging from stylish puffers to lightweight performance apparel. PrimaLoft insulations also offer superior economics to the brand partner and enable better sustainability characteristics through the use of recycled, low-carbon inputs. PrimaLoft is headquartered in Latham, New York.

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Results of Operations

Year ended December 31, 2025 compared to the Year ended December 31, 2024

Net sales

Net sales for the year ended December 31, 2025 were $76.5 million, an increase of $2.3 million as compared to net sales of $74.2 million for the year ended December 31, 2024. The increase in net sales during the year ended December 31, 2025 is attributable to new programs with European and Asia brand partners resulting in an increase in sales in the current year as compared to the year ended December 31, 2024, offset by a pullback in orders from PrimaLoft's brand partners as they remain cautious due to the economic uncertainties from the evolving tariff policy in the United States.

Gross profit

Gross profit for the year ended December 31, 2025 increased $2.3 million as compared to the year ended December 31, 2024, primarily due to the increase in net sales noted above. Gross profit as a percentage of net sales for the year ended December 31, 2025 was 63.8% as compared to 62.7% for the year ended December 31, 2024. The increase in gross profit as a percentage of net sales net sales was due to a decrease in sales of lower margin products in 2025 compared to the prior year and a reduction in manufacturing costs that was negotiated with third party contractors earlier in the year.

Selling general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2025 was $23.1 million, or 30.2% of net sales compared to $20.7 million, or 27.9% of net sales for the year ended December 31, 2024. Selling, general and administrative expense increased as a percentage of net sales due to added headcount in 2025, an increase in marketing expenses and a one-time charge of $1.7 million to restructure contract agreements with a key third party supplier. This was offset by a reduction in severance payments and board of director fees of $0.9 million in 2025.

Segment operating income

Segment operating income for the year ended December 31, 2025 was $3.9 million compared to segment operating of $4.0 million for the same period in 2024.

Year ended December 31, 2024 compared to the Pro forma Year ended December 31, 2023

Net sales

Net sales for the year ended December 31, 2024 were $74.2 million, an increase of $7.2 million as compared to net sales of $67.1 million for the year ended December 31, 2023. The increase in net sales during the year ended December 31, 2024 is attributable to inventory levels in the retail market normalizing, which has resulted in an increase in orders from retailers with brand partners.

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Gross profit

Gross profit for the year ended December 31, 2024 increased $4.6 million as compared to the year ended December 31, 2023, primarily due to the increase in net sales noted above. Gross profit as a percentage of net sales for both the year ended December 31, 2024 and December 31, 2023 was 62.7%.

Selling general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2024 was $20.7 million, or 27.9% of net sales compared to $19.4 million, or 29.0% of net sales for the year ended December 31, 2023. Selling, general and administrative expense in the prior period included $2.4 million in integration services fees associated with the Company's acquisition of PrimaLoft. Excluding the integration service fee, selling, general and administrative expense increased approximately $3.7 million due to an increase in stock compensation expense, bonus compensation and reorganization costs incurred as PrimaLoft continues to focus on future growth.

Impairment expense

PrimaLoft performed an interim impairment test of their goodwill as of December 31, 2023 as a result of operating results that were below forecast amounts that were used as the basis for the purchase price allocation at acquisition. The impairment test resulted in PrimaLoft recording impairment expense of $57.8 million in the year ended December 31, 2023.

Segment operating income (loss)

Segment operating income for the year ended December 31, 2024 was $4.0 million compared to segment operating loss of $57.1 million for the same period in 2023, primarily as a result of the goodwill impairment recorded in the fourth quarter of 2023.

The Honey Pot Co.

Overview

The Honey Pot Co. is a leading “better-for-you” feminine care brand, powered by plant-derived ingredients and clinically tested formulas. Founded in 2012, The Honey Pot Co. is rooted in the belief that all products should be made with healthy and efficacious ingredients that are kind to and safe for skin. The Honey Pot Co. offers an extensive range of holistic wellness products across the feminine hygiene, menstrual, personal care, and sexual wellness categories. The Honey Pot Co.'s mission is to educate, support, and provide consumers around the world with tools and resources that promote menstrual health and vaginal wellness. Its products can be found in more than 33,000 stores across the U.S. through mass merchants, drug and grocery retail chains, and online. The Honey Pot Co. is headquartered in Atlanta, Georgia.

Results of Operations

In the following results of operations, we provide comparative pro forma results of operations for The Honey Pot for the years ended December 31, 2024 and December 31, 2023 as if we had acquired the business on January 1, 2023. The results of operations that follow include relevant pro-forma adjustments for pre-acquisition periods and explanations where applicable. The operating results for The Honey Pot Co. have been included in the consolidated results of operation from the date of acquisition in January 2024.

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Pro forma results of operations include the following pro forma adjustments as if we had acquired The Honey Pot Co. on January 1, 2023:

•Incremental stock compensation expense of $0.3 million for the year ended December 31, 2024 and $0.8 million for the year ended December 31, 2023. This amount is included in SG&A above and reduces segment operating income.

•Amortization expense associated with the intangible assets recorded in connection with the purchase price allocation for The Honey Pot Co. of $1.3 million for the year ended December 31, 2024 and $16.1 million for the year ended December 31, 2023. This amount reduces segment operating income.

•Management fees that would have been payable to the Manager during each period. The Honey Pot Co. pays a management fee of $1.0 million per year ($0.25 million per quarter) to CGM. This amount reduces segment operating income.

Year ended December 31, 2025 compared to the Pro Forma Year ended December 31, 2024

Net sales

Net sales for the year ended December 31, 2025 were $139.7 million, an increase of $24.4 million or 21.2% from net sales of $115.3 million for the year ended December 31, 2024. The increase in net sales is primarily due to strong volume growth due to market share gain in the Period Care product line, particularly in mass retail, drugstores and online. Overall, volume and share growth continues to be fueled by compelling innovation, targeted investments in demand generation, and disciplined investments in capabilities to accelerate growth.

Gross profit

Gross profit for the year ended December 31, 2025 increased $19.6 million as compared to the year ended December 31, 2024. Gross profit as a percentage of net sales for the year ended December 31, 2025 was 55.2%, as compared to gross profit as a percentage of sales of 50.0% for the year ended December 31, 2024. Cost of sales in the year ended December 31, 2024 includes $3.8 million in amortization of the inventory step-up resulting from the acquisition purchase allocation. Excluding the effect of the step-up amortization, gross profit as a percentage of net sales for the year ended December 31, 2024 was 53.2%. The increase in gross profit as a percentage of net sales in the year December 31, 2025 as compared to the year ended December 31, 2024 is attributable primarily to channel mix shift.

Selling general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2025 was $44.8 million, or 32.0% of net sales compared to $40.5 million, or 35.1% of net sales for the year ended December 31, 2024. The increase in selling, general and administrative expense in the year ended December 31, 2025 as compared to the year ended December 31, 2024 was due to increased investment in marketing, increased headcount to support the growth in sales, and increases in bonus and compensation plans. Selling, general and administrative expense for the year ended December 31, 2024 included $3.5 million in transaction costs associated with the Company's acquisition of The Honey Pot Co. and $2.6 million in integration services fees paid to CGM during the year.

Segment operating income

Segment operating income for the year ended December 31, 2025 was $15.3 million, an increase of $15.3 million when compared to segment operating income of $0.1 million for the same period in 2024, as a result of the factors noted above.

Pro forma Year ended December 31, 2024 compared to the Pro Forma Year ended December 31, 2023

Net sales

Net sales for the year ended December 31, 2024 were $115.3 million, an increase of $7.9 million or 7.4% from net sales of $107.3 million for the year ended December 31, 2023. The increase in net sales is primarily due to strong volume growth related to market share gains in our Period Care product category.

Gross profit

Gross profit for the year ended December 31, 2024 decreased $2.3 million as compared to the year ended December 31, 2023. Gross profit as a percentage of net sales for the year ended December 31, 2024 was 50.0%,

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as compared to gross profit as a percentage of sales of 55.8% for the year ended December 31, 2023. Cost of sales in the year ended December 31, 2024 includes $3.8 million in amortization of the inventory step-up resulting from the acquisition purchase allocation. Excluding the effect of the step-up amortization, gross profit as a percentage of net sales for the year ended December 31, 2024 was 53.2%. The decline in gross profit as a percentage of net sales in the year December 31, 2024 as compared to the year ended December 31, 2023 is attributable to channel mix shift and higher fixed costs due to the replacement of regional third-party distribution facilities with a larger dedicated distribution center to support future growth and that will benefit from scale efficiencies over time.

Selling general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2024 was $40.5 million, or 35.1% of net sales compared to $38.9 million, or 36.3% of net sales for the year ended December 31, 2023. Selling, general and administrative expense for the year ended December 31, 2024 includes $3.5 million in transaction costs associated with the Company's acquisition of The Honey Pot Co. and $2.6 million in integration services fees paid to CGM during the year. Excluding the integration services fee, selling, general and administrative expense decreased $4.3 million versus the comparable period in the prior year. The decrease in selling, general and administrative expense in the year ended December 31, 2024 as compared to the year ended December 31, 2023 was due to changes in bonus and compensation plans, and travel expenses.

Segment operating income

Segment operating income for the year ended December 31, 2024 was $0.1 million, a decrease of $3.8 million when compared to segment operating income of $3.9 million for the same period in 2023, as a result of the factors noted above.

Velocity Outdoor

Overview

Velocity Outdoor is a leading designer, manufacturer, and marketer of archery products, hunting apparel and related accessories. The archery product category consists of products including Ravin crossbows and CenterPoint archery products, and the apparel category offers high-performance, feature rich hunting and casual apparel under the King's Camo brand, utilizing King’s own proprietary camo patterns. Velocity Outdoor offers its products through national retail chains and dealer and distributor networks. Velocity Outdoor is headquartered in Rochester, New York. On April 30, 2024, Velocity Outdoor sold the Crosman airgun product division. The results of operation for Crosman are included in the accompanying financial statements through the date of sale.

Results of Operations

Year ended December 31, 2025 compared to the Year ended December 31, 2024

Net sales

Net sales for the year ended December 31, 2025 were $76.4 million compared to net sales of $96.4 million for the year ended December 31, 2024, a decrease of $20.0 million or 20.8%. The decrease in net sales during the year ended December 31, 2025 as compared to the prior year is driven by the divestiture of Crosman, which was sold on April 30, 2024. The remaining product categories, which consist of the archery and hunting apparel product categories, increased 9.8% compared to the same period in 2024 due to increased archery sales across all channels.

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Gross profit

Gross profit as a percentage of net sales was 30.7% for the year ended December 31, 2025 as compared to 27.3% in the year December 31, 2024. The increase in gross profit as a percentage of net sales was primarily attributable to customer and product mix, as the Crosman product line had lower gross margins compared to the remaining archery and hunting apparel product categories post divestiture of the airgun product category.

Selling general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2025 was $19.5 million, or 25.6% of net sales compared to $25.5 million, or 26.4% of net sales, for the year ended December 31, 2024. The decrease in selling, general and administrative expense was primarily due to the divestiture of Crosman, as the decrease in net sales led to a decrease in operating expense leverage, with selling, general and administrative expense as a percentage of net sales decreasing year over year.

Impairment expense

The Velocity reporting unit was tested quantitatively in connection with the Company's annual goodwill impairment testing in March 2024. The impairment test resulted in Velocity recording impairment expense of $8.2 million in the year ended December 31, 2024 after the fair value of the reporting unit did not exceed the carrying value.

Segment operating loss

Segment operating loss for the year ended December 31, 2025 was $1.4 million, a decreased loss of $12.8 million when compared to segment operating loss of $14.2 million for the comparable period in 2024. The change in segment operating loss in the year ended December 31, 2024 reflects the factors noted above.

Year ended December 31, 2024 compared to the Year ended December 31, 2023

Net sales

Net sales for the year ended December 31, 2024 were $96.4 million compared to net sales of $172.2 million for the year ended December 31, 2023, a decrease of $75.8 million or 44.0%. The decrease in net sales during the year ended December 31, 2024 is driven by the divestiture of Crosman, which was sold on April 30, 2024. The remaining product categories, which consist of the archery and hunting apparel product categories decreased approximately $3.5 million compared to the same period in 2023 due to softness in the overall Hunting and Fishing market as well as retailers reducing levels of inventory on hand.

Gross profit

Gross profit as a percentage of net sales was 27.3% for the year ended December 31, 2024 as compared to 26.2% in the year December 31, 2023. The increase in gross profit as a percentage of net sales was primarily attributable to customer and product mix, as the Crosman product line had lower gross margins compared to the remaining archery and hunting apparel product categories post divestiture of the airgun product category.

Selling general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2024 was $25.5 million, or 26.4% of net sales compared to $36.3 million, or 21.1% of net sales, for the year ended December 31, 2023. The decrease in selling, general and administrative expense was primarily due to the divestiture of Crosman, while the increase as a percentage of net sales as compared to the prior year was due to the decrease in revenue noted above.

Impairment expense

The Velocity reporting unit was tested quantitatively in connection with the Company's annual goodwill impairment testing in March 2024. The impairment test resulted in Velocity recording impairment expense of $8.2 million in the year ended December 31, 2024 after the fair value of the reporting unit did not exceed the carrying value. In the prior year, Velocity performed an interim impairment test of their goodwill during the quarter ended September 30, 2023 as a result of operating results that were below forecast amounts that were used in quantitative impairment testing performed in March 2023. The impairment test resulted in Velocity recording impairment expense of $31.6 million in the year ended December 31, 2023.

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Segment operating loss

Segment operating loss for the year ended December 31, 2024 was $14.2 million, a decreased loss of $18.7 million when compared to segment operating loss of $32.8 million for the comparable period in 2023. The change in segment operating loss in the year ended December 31, 2024 reflects the factors noted above.

Industrial Businesses

Altor Solutions

Overview

Founded in 1957 and headquartered in St. Louis, Missouri, Altor Solutions is a designer and manufacturer of custom molded cold chain and protective foam solutions including OEM components made from EPS and EPP. Altor operates molding and fabricating facilities across North America and provides products to a variety of end-markets, including appliances and electronics, pharmaceuticals, health and wellness, building products and others.

Results of Operations

Year ended December 31, 2025 compared to the Year ended December 31, 2024

Net sales

Net sales for the year ended December 31, 2025 were $303.0 million, an increase of $64.0 million, or 26.8%, compared to the year ended December 31, 2024. The increase in net sales during the period was due primarily to the acquisition of Lifoam in October 2024. Lifoam had incremental net revenue of $109.6 million in the year ended December 31, 2025 as compared to the year ended December 31, 2024. The increase in net sales attributable to Lifoam was offset by lower sales due to reduced demand in the industrial white goods market, shifting market conditions in the perishable and cold chain markets, and supplier diversification initiatives undertaken by several of Altor's customers.

Gross profit

Gross profit as a percentage of net sales was 24.6% and 27.7%, respectively, for the years ended December 31, 2025 and 2024. The decrease in gross profit as a percentage of net sales was driven by a reduction in fixed cost of goods sold coverage due to the non-Lifoam portion of the business and the impact of including the full year results of the Lifoam acquisition, which had a lower gross margin at the time of acquisition.

Selling, general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2025 was $45.2 million as compared to $33.1 million for the year ended December 31, 2024, an increase of $12.1 million. The increase in selling, general and administrative expense for the year ended December 31, 2024 is primarily attributable to integration and restructuring activities due to the Lifoam acquisition as subsequent to the acquisition of Lifoam in October 2024, Altor determined that they would shut down four of their facilities that had geographic overlap with Lifoam facilities. During the year ended December 31, 2025, Altor recorded approximately $10.3 million related to the plant closures and other Lifoam integration costs in selling general and administrative expense.

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Segment operating income

Segment operating income was $14.6 million for the year ended December 31, 2025 as compared to $21.7 million for the year ended December 31, 2024, a decrease of $7.1 million based on the factors noted above and an increase in amortization expense due to the Lifoam acquisition.

Year ended December 31, 2024 compared to the Year ended December 31, 2023

Net sales

Net sales for the year ended December 31, 2024 were $239.1 million, an increase of $1.0 million, or 0.4%, compared to the year ended December 31, 2023. The increase in net sales during the period was due primarily to the acquisition of Lifoam in October 2024. Lifoam had net revenue of $35.1 million in the post acquisition period through December 31, 2024. Excluding Lifoam, net sales at the legacy Altor business decreased in the year ended December 31, 2024 when compared to the year ended December 31, 2023 due to shifting market conditions of the food delivery and other cold chain markets, which represent one of Altor's largest customer segments, and supplier diversification initiatives undertaken by several of our customers. Altor is strategically repositioning itself to adapt to these changes, including with the acquisition of Lifoam in October 2024.

Gross profit

Gross profit as a percentage of net sales was 27.7% and 30.9%, respectively, for the years ended December 31, 2024 and 2023. The decrease in gross profit as a percentage of net sales in the year ended December 31, 2024 was primarily due to the combination of customer sales mix and fixed cost absorption on the lower level of revenue noted above. Altor recognized $1.6 million in amortization of inventory step-up in the fourth quarter of 2024 related to the purchase price allocation of Lifoam, which further decreased gross profit.

Selling, general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2024 was $33.1 million as compared to $28.7 million for the year ended December 31, 2023, an increase of $4.4 million. The increase in selling, general and administrative expense for the year ended December 31, 2024 is primarily attributable to the acquisition of Lifoam, including transaction costs of $1.8 million that were incurred related to the acquisition.

Segment operating income

Segment operating income was $21.7 million for the year ended December 31, 2024 as compared to $34.6 million for the year ended December 31, 2023, a decrease of $12.8 million based on the factors noted above.

Arnold

Overview

Arnold serves a variety of markets including aerospace and defense, general industrial, motorsport/ transportation, oil and gas, medical, energy, semiconductor and advertising specialties. Over the course of more than 100 years, Arnold has successfully evolved and adapted its products, technologies, and manufacturing presence to meet the demands of current and emerging markets. Arnold engineers solutions for and produces high performance permanent magnets (PMAG), stators, rotors and full electric motors (Ramco), precision foil products (Precision Thin Metals), and flexible magnets (Flexmag™) that are mission critical in motors, generators, sensors and other systems and components. Based on its long-term relationships, Arnold has built a diverse and blue-chip customer base totaling more than 2,000 customers and leading systems-integrators worldwide with a focus on North America, Europe, and Asia. Arnold has built a preferred rare earth supply chain and has leading rare earth and other permanent magnet production capabilities. Arnold is the largest and, we believe, the most technically advanced U.S. solutions provider and manufacturer of engineered magnetic systems.

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Results of Operations

Year ended December 31, 2025 compared to the Year ended December 31, 2024

Net sales

Net sales for the year ended December 31, 2025 were approximately $151.0 million, a decrease of $20.9 million compared to the same period in 2024. The decrease in net sales is primarily a result of lower demand in various markets, material restraints related to export controls in place during the current year and production constraints.

Gross profit

Gross profit was $35.7 million for the year ended December 31, 2025 as compared to $46.1 million for the same period in 2024. Gross profit as a percentage of net sales decreased to 23.6% in 2025 from 26.8% in 2024, principally due to product mix, inefficiencies, and increased raw material costs driven in part by tariffs.

Selling, general and administrative expense

Selling, general and administrative expense in the year ended December 31, 2025 was $29.1 million as compared to approximately $35.6 million for the year ended December 31, 2024. In the prior year, Arnold incurred non-recurring move related expenses related to the relocation of two of Arnold's facilities in the United States.

Selling, general and administrative expense represented 19.3% of net sales for the year ended December 31, 2025 as compared to 20.7% for the same period in 2024. The decrease in selling, general and administrative expense as a percentage of net sales was due to lower operating expenses, absence of non-recurring expenses related to the relocation noted above which were partially offset by executive transition costs incurred during 2025.

Segment operating income

Arnold had segment operating income of approximately $3.5 million for the year ended December 31, 2025, as compared to segment operating income of $7.5 million for the year ended December 31, 2024, a decrease of $4.0 million year over year based on the factors stated above.

Year ended December 31, 2024 compared to the Year ended December 31, 2023

Net sales

Net sales for the year ended December 31, 2024 were approximately $171.8 million, an increase of $5.2 million compared to the same period in 2023. The increase in net sales is primarily a result of increased demand in several markets including aerospace and defense and oil and gas, partially offset by lower demand in the industrial and transportation markets. International sales were $52.8 million and $51.1 million for the years ended December 31, 2024 and 2023, respectively, an increase of $1.8 million.

Gross profit

Gross profit was $46.1 million for the year ended December 31, 2024 as compared to $49.8 million for the same period in 2023. Gross profit as a percentage of net sales decreased to 26.8% in 2024 from 29.9% in 2023, principally due to higher staffing related costs and non-recurring move related costs of two of our facilities in the United States.

Selling, general and administrative expense

Selling, general and administrative expense in the year ended December 31, 2024 was $35.6 million as compared to approximately $25.2 million for the year ended December 31, 2023. The increase in selling general and

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administrative expense was related to non-recurring move related expenses, increased information technology costs and outside service costs.

Selling, general and administrative expense represented 20.7% of net sales for the year ended December 31, 2024 as compared to 15.1% for the same period in 2023. The increase in selling, general and administrative expense as a percentage of net sales was due to non-recurring move related expense. The incurrence of the move related expenses was substantially complete in 2024.

Segment operating income

Arnold had segment operating income of approximately $7.5 million for the year ended December 31, 2024, as compared to segment operating income of $21.6 million for the year ended December 31, 2023, a decrease of $14.0 million year over year based on the factors stated above.

Sterno

Overview

Sterno, headquartered in Texarkana, Texas, is the parent company of Sterno and Rimports. Sterno is a leading manufacturer and marketer of portable food warming systems. Sterno also produces creative indoor and outdoor lighting and home fragrance solutions for consumer markets. Sterno offers a broad range of wick and gel chafing systems, butane stoves and accessories, liquid and traditional wax candles, catering equipment and lamps through Sterno Products, as well as scented wax cubes, warmer products, outdoor lighting and essential oils used for home decor and fragrance systems, through Rimports.

Results of Operations

Year ended December 31, 2025 compared to the Year ended December 31, 2024

Net sales

Net sales for the year ended December 31, 2025 were approximately $305.5 million, a decrease of $12.9 million or 4.1% compared to net sales for the year ended December 31, 2024. The net sales variance reflects a decrease in sales volume attributed to non-recurring customer promotional activity in the prior year as well as the impact of consumer discretionary spend on the home fragrance product line while these declines were partially offset by an increase in the Sterno product lines.

Gross profit

Gross profit was $91.3 million for the year ended December 31, 2025 as compared to $85.2 million for the same period in 2024. Gross profit as a percentage of net sales increased from 26.7% for the year ended December 31, 2024 to 29.9% for the year ended December 31, 2025. The increase in gross profit as a percentage of net revenue during 2025 as compared to 2024 was primarily attributable to operating efficiency improvements, reduced inbound container costs and favorable product mix.

Selling, general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2025 was approximately $37.8 million as compared to $38.1 million in the year ended December 31, 2024, a decrease of $0.3 million or 0.9%, reflecting a decrease in overhead costs within the current year. Selling, general and administrative expense represented 12.4% of net sales for the year ended December 31, 2025 and 12.0% for the year ended December 31, 2024.

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Segment operating income

Segment operating income for the year ended December 31, 2025 was approximately $42.6 million, an increase of $11.2 million when compared to the same period in 2024, based on the factors noted above.

Year ended December 31, 2024 compared to the Year ended December 31, 2023

Net sales

Net sales for the year ended December 31, 2024 were approximately $318.4 million, a decrease of $5.4 million or 1.7% compared to net sales for the year ended December 31, 2023. The net sales variance reflects lower sales due to increased competition in the market as well as changes in consumer discretionary buying behaviors at Rimports as a result of inflationary pressures.

Gross profit

Gross profit was $85.2 million for the year ended December 31, 2024 as compared to $78.5 million for the same period in 2023. Gross profit as a percentage of net sales increased from 24.2% for the year ended December 31, 2023 to 26.7% for the year ended December 31, 2024. The increase in gross profit as a percentage of net revenue during 2024 as compared to 2023 was primarily attributable to favorable direct materials, labor and freight costs across both divisions of Sterno.

Selling, general and administrative expense

Selling, general and administrative expense for the year ended December 31, 2024 was approximately $38.1 million as compared to $36.7 million in the year ended December 31, 2023, an increase of $1.4 million or 3.8%, reflecting an increase in sales and marketing related salaries and promotional activity for both divisions of Sterno in the current year. Selling, general and administrative expense represented 12.0% of net sales for the year ended December 31, 2024 and 11.3% for the year ended December 31, 2023.

Segment operating income

Segment operating income for the year ended December 31, 2024 was approximately $31.4 million, an increase of $6.6 million when compared to the same period in 2023, based on the factors noted above.

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Liquidity and Capital Resources

We generate cash primarily from the operations of our subsidiaries, and we have the ability to borrow under our 2022 Credit Facility to fund our operating, investing and financing activities. Our principal uses of cash are operating expenses, payment of management fees, capital expenditures, working capital needs, debt service, dividends on the common and preferred shares of the Trust, and strategic growth initiatives, including acquisitions. In connection with the Lugano Investigation, we have incurred unanticipated accounting, financing, and legal costs related to the restatement of our financial statements, including costs arising from related litigation and our entry into the Forbearance Agreements under our Credit Agreement and senior note indentures due to potential defaults or events of default. We expect to continue to incur additional costs associated with our financing arrangements, ongoing securities litigation, governmental investigations, derivative and fiduciary claims, and efforts to remediate and strengthen internal controls resulting from the Lugano Investigation and the restatement of our previously issued financial statements.

On January 9, 2025, the LLC entered into a First Incremental Facility Amendment to its existing Credit Agreement. The Amendment modified the LLC’s Credit Agreement, to provide for (a) an additional advance of the 2022 Term Loan in the aggregate amount of $200 million on the date of the Amendment, and (b) delayed draw term loan commitments in the aggregate amount of $100 million which was able to be reduced or terminated by the LLC upon five business days’ notice and pursuant to which the Company may make no more than two draws by July 9, 2025. The proceeds from the Incremental Term Loan and the Incremental Delayed Draw Term Loan Commitments were to be used for new acquisitions, working capital, capital expenditures and other general corporate purposes. The Company did not utilize the delayed draw feature and it was terminated on May 22, 2025.

The LLC entered into several forbearance agreements and amendments to its existing Credit Agreement between May 22, 2025 and November 7, 2025.

On December 19, 2025, the LLC entered into the Fifth Amendment and the Transaction Letter, each with the Administrative Agent and the required Lenders. Pursuant to the Fifth Amendment, among other things, (i) the Lenders waived certain events of default that had occurred and were continuing prior to the Fifth Amendment, which included the Lugano-related events, (ii) the aggregate revolving commitments under the Credit Agreement returned to $100,000,000, (iii) SOFR loans will bear interest at a rate per annum equal to the Term SOFR, plus a margin ranging from 1.50% to 3.25% based on the Consolidated Total Leverage Ratio (as defined in the Credit Agreement), and base rate loans will bear interest at a rate per annum equal to the base rate, plus a margin ranging from 0.50% to 2.25% based on the Consolidated Total Leverage Ratio, (iv) the Company is required to repay 100% of the net cash proceeds received in respect of any Disposition (as defined in the Credit Agreement) or Deleveraging Transaction (as defined in the Transaction Letter), and (v) the Company is restricted from paying its Manager management fees exceeding $15,000,000 in any fiscal quarter.

Pursuant to the Transaction Letter, among other things, if the Consolidated Total Leverage Ratio of the Company is not less than 4.50:1.00 as of the last day of the fiscal quarters ending June 30, 2026, September 30, 2026, December 31, 2026 and March 31, 2027, respectively, the Company is required to pay to the Administrative Agent, for the ratable benefit of the Lenders, the milestone fees in the amount of $5,000,000, $6,500,000, $8,000,000 and $9,500,000, respectively, subject to certain conditions.

As of December 31, 2025, we had $1,029 million of indebtedness associated with our 5.250% 2029 Notes, $309 million of indebtedness associated with our 5.000% 2032 Notes, $553 million outstanding on our 2022 Term Loan, and no amount outstanding on our 2022 Revolving Credit Facility. Only our 2022 Term Loan has required principal payments. 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. On December 31, 2025, approximately 29.2% of our outstanding debt was subject to interest rate changes.

We had total available cash and cash equivalents of $68.0 million and $59.7 million as of December 31, 2025 and 2024, respectively. The majority of our cash is in non-interest bearing checking accounts or invested in short-term money market accounts and is maintained in accordance with the Company’s investment policy, which identifies allowable investments and specifies credit quality standards. Net availability under the 2022 Revolving Credit Facility after giving effect to the Fifth Amendment at December 31, 2025 was $96.8 million.

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The following table summarizes our cash activity for the years presented:

Cash Flow from Operating Activities

2025

Cash flows used in operating activities totaled approximately $6.8 million for the year ended December 31, 2025, which represents an increase in the use of cash in operating activities of $144.3 million compared to cash flow used in operating activities of $151.1 million for the year ended December 31, 2024. Cash used in operating activities related to working capital for the year ended December 31, 2025 was $54.1 million compared to cash used in operating activities for working capital of $7.6 million in 2024. The increase in working capital cash usage in 2025 was primarily attributable to the impact of the Lugano Investigation.

2024

Cash flows used in operating activities totaled approximately $151.1 million for the year ended December 31, 2024, which represents an increase in cash use of $167.7 million compared to cash flow used in operating activities of $16.6 million for the year ended December 31, 2023. Cash used in operating activities related to working capital was $7.6 million in 2024, as compared to cash provided by operating activities for working capital of $5.0 million for the year ended December 31, 2023. The increase in the cash used in operating activities in 2024 was primarily attributable to the losses sustained at our Lugano subsidiary.

2023

Cash flows provided by operating activities totaled approximately $16.6 million for the year ended December 31, 2023. Cash provided by operating activities for working capital for the year ended December 31, 2023 was $5.0 million. Cash provided by working capital in 2023 primarily reflects inventory management strategies as several of our businesses worked through higher inventory levels than normal during 2023.

Cash Flow from Investing Activities

2025

Cash flows used in investing activities totaled approximately $42.6 million for the year ended December 31, 2025, compared to $422.5 million provided by investing activities during the year ended December 31, 2024. Investing activities in 2024 reflected our acquisition of The Honey Pot Co. in January 2024, and an add-on acquisition at our Altor business (total cash use of $517.9 million), offset by proceeds received from the sale of the Crosman division of Velocity Outdoor and our equity in Ergobaby (total proceeds of $74.7 million), while investing activities in the current year are primarily capital expenditures.

Our spending on capital expenditures decreased $12.4 million during the year ended December 31, 2025 as compared to the year ended December 31, 2024, with $44.3 million in capital expenditures in 2025 and $56.7 million in capital expenditures in 2024. Capital expenditures in 2024 included significant investment at our Arnold business related to a facility move, and the opening of additional retail salons by our Lugano business. We expect capital expenditures for fiscal year 2026 to be approximately $30 million to $40 million.

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2024

Cash flows used in investing activities totaled approximately $422.5 million for the year ended December 31, 2024, compared to $570.5 million provided by investing activities during the year ended December 31, 2023. Investing activities in 2024 reflects our acquisition of The Honey Pot Co. in January 2024, and an add-on acquisition at our Altor business (total cash use of $517.9 million, offset by proceeds received from the sale of the Crosman division of Velocity Outdoor and our equity in Ergobaby (total proceeds of $74.7 million)). Investing activities in the year ended December 31, 2023 reflect the proceeds received from our sale of Advanced Circuits in February 2023 and Marucci in November 2023 (total proceeds of $500.3 million).

Our spending on capital expenditures increased $1.7 million during the year ended December 31, 2024 as compared to the year ended December 31, 2023, with $56.7 million in capital expenditures in 2024 and $55.0 million in capital expenditures in 2023. Capital expenditures in 2024 included significant investment at our Arnold business related to a facility move, and the opening of additional retail salons by our Lugano business.

2023

Cash flows provided by investing activities totaled approximately $570.5 million for the year ended December 31, 2023. Investing activities in the year ended December 31, 2023 reflect the proceeds received from our sale of Advanced Circuits in February 2023 and Marucci in November 2023 (total proceeds of $500.3 million).

Our spending on capital expenditures during the year ended December 31, 2023 was $55.0 million.

Cash Flow from Financing Activities

2025

Cash flows provided by financing activities totaled approximately $55.1 million for the year ended December 31, 2025, as compared to cash flows provided by financing activities of $184.1 million for the year ended December 31, 2024. Financing activities in 2025 reflect $58.9 million in cash proceeds from Trust Preferred Shares issued under our at-the-market share equity programs while financing activities in the prior year reflects $114.9 million in proceeds from Trust Preferred Shares issued under our at-the-market share equity programs. In the current year, we added an additional $200 million in outstanding term loan, a portion of which was used to repay amounts outstanding under our 2022 Revolving Credit Facility. The total net borrowings under the 2022 Credit Facility in the year ended December 31, 2025 were $67.5 million, including the $200 million term loan draw. In the prior year comparable period, we had net borrowings under the 2022 Credit Facility of $100 million. The prior year cash provided by financing activities also reflects the amount of equity investment made by noncontrolling shareholders related to the acquisition of The Honey Pot Co. ($41.7 million). Financing activities in both periods reflect the payment of our Preferred Share distributions, and prior period financing cash flows include the payment of the profit allocation from the sale of Marucci to the Allocation Interest Holders of $48.9 million. Financing Activities also reflect payment of the Company's common share distribution of $37.6 million in the year ended December 31, 2025 and $56.6 million in the year ended December 31, 2024. In the current year, the Company suspended common share distributions in May, therefore no common distribution was made subsequent to May 2025.

Our Lugano business entered into various financing arrangements with third parties that resulted in debt being recorded. In 2025, the cash flows provided by these financing arrangements totaled $18.6 million.

2024

Cash flows provided by financing activities totaled approximately $184.1 million for the year ended December 31, 2024 as compared to cash used in financing activities of $198.7 million for the year ended December 31, 2023. Financing activities in 2024 reflects $122.6 million in proceeds from the Trust common and preferred shares issued under our at-the-market share equity programs, and net borrowings on our 2022 Credit Facility of $100 million. Financing activities in 2024 reflect the payment of our common and Preferred Share distributions, and a distribution to our Allocation Interest Holders of $48.9 million related to the November 2023 sale of Marucci. Financing activities in 2024 also reflected $9.6 million in purchases under our share repurchase program. Financing activities in 2023 reflects $9.3 million in purchases under our share repurchase program, and $74.3 million in proceeds from a private placement completed in the fourth quarter. Additionally, financing activities in 2023 reflects cash paid to noncontrolling shareholders related to our recapitalization of BOA in December 2023 ($11.7 million in distributions to noncontrolling shareholders at BOA).

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Our Lugano business entered into various financing arrangements with third parties that resulted in debt being recorded. In 2024, the cash flows provided by these financing arrangements totaled $83.5 million.

2023

Cash flows used in financing activities totaled approximately $198.7 million for the year ended December 31, 2023. In 2023, we used the proceeds from the sale of our Marucci business to repay the amount outstanding on our 2022 Revolving Credit Facility ($155 million in net outflows). Financing activities in 2023 reflects $9.3 million in purchases under our share repurchase program, and $74.3 million in proceeds from a private placement completed in the fourth quarter. Financing activities in 2023 also reflect the payment of our common and Preferred Share distributions, and a distribution to our Allocation Interest Holders of $26.5 million related to our sale of ACI. Additionally, financing activities in 2023 reflects cash paid to noncontrolling shareholders related to our recapitalization of BOA in December 2023 ($11.7 million in distributions to noncontrolling shareholders at BOA).

Our Lugano business entered into various financing arrangements with third parties that resulted in debt being recorded. In 2023, the cash flows provided by these financing arrangements totaled $61.4 million.

Total Liabilities and Intercompany loans to our businesses

The following table summarizes the total liabilities and intercompany debt of our business as of December 31, 2025:

Each loan has a scheduled maturity and each business is entitled to repay all or a portion of the principal amount of the outstanding loans, without penalty, prior to maturity. A component of our acquisition financing strategy that we utilize in acquiring the businesses we own and manage is to provide both equity capital and debt capital, raised at the parent level through our existing credit facility. Our strategy of providing intercompany debt financing within the capital structure of the businesses that we acquire and manage allows us the ability to distribute cash to the parent company through monthly interest payments and amortization of the principle on these intercompany loans. Certain of our businesses have paid down their respective intercompany debt balances through the cash flow generated by these businesses and we have recapitalized, and expect to continue to recapitalize, these businesses in the normal course of our business. The recapitalization process involves funding the intercompany debt using either cash on hand at the parent or our revolving credit facility, and serves the purpose of optimizing the capital structure at our subsidiaries and providing the noncontrolling shareholders with a distribution on their ownership interest in a cash flow positive business.

We will from time to time, amend the intercompany credit agreements to reflect changes in the business or funding needs of our businesses. The following amendments have been made in the time period indicated:

At September 30, 2025, Arnold was not in compliance with the fixed charge coverage ratio and leverage ratio covenants contained within its intercompany credit agreement. In the fourth quarter of 2025, we amended the Arnold credit agreement to increase the amount of availability under the revolving credit facility and to waive the covenant violations that existed as of September 30, 2025. Arnold was not in compliance with the fixed charge coverage ratio and leverage ratio covenants contained within its intercompany credit agreement at December 31, 2025 and was granted a waiver for the covenant violation.

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In the first quarter of 2025, we amended the Velocity intercompany credit agreement to amend the applicable fixed charge coverage ratio covenant and the applicable Total Debt to EBITDA ratio covenant. Velocity was not in compliance with the fixed charge coverage ratio or leverage ratio in their intercompany credit agreement at September 30, 2025 or December 31, 2025 and was granted a waiver for the covenant violations in each period.

In the first quarter of 2024, we amended the PrimaLoft intercompany credit agreement to amend the fixed charge ratio and leverage ratio covenants contained within its intercompany credit agreement.

In the second quarter of 2024, we amended the Velocity intercompany credit agreement to reflect the sale of the Crosman division. The amendment revises the principal payments due under the credit facility and waives the fixed charge coverage covenant for the quarters ended June 30, 2024 and September 30, 2024.

In the third quarter of 2024, we amended the Arnold intercompany credit agreement to increase the amount of the term loan outstanding under the credit agreement. Arnold was in the process of relocating two of their product divisions to a new facility at the time of the amendment. Arnold incurred total expense of approximately $13.0 million in the year ended December 31, 2024, and an additional $0.9 million in costs in the first quarter of 2025 related to the relocation of the two facilities. Arnold exceeded the capital expenditure spend that was permitted under the amendment and was granted a waiver at December 31, 2024, March 31, 2025 and June 30, 2025.

In the fourth quarter of 2024, we amended the Altor intercompany credit agreement to increase the amount of the term loan to finance the acquisition of Lifoam on October 1, 2024, and extended the term of the intercompany credit agreement by an additional three years.

In the second quarter of 2023, we amended the Velocity intercompany credit agreement to extend the term of the facility and to increase the borrowing availability under the facility.

In December 2023, we completed a recapitalization at BOA whereby the LLC entered into an amendment to the intercompany loan agreement with BOA (the "BOA Credit Agreement"). The BOA Credit Agreement was amended to provide for additional term loan borrowings of $165.9 million to fund a distribution to shareholders. The LLC received a distribution of $131.0 million related to their ownership of the outstanding shares of BOA on the date of the distribution. Noncontrolling shareholders received a distribution of $11.7 million, and the remaining amount of the recapitalization was used to repurchase employee stock options and to pay a bonus to employees who held phantom stock options and were not eligible to participate in the distribution to noncontrolling shareholders. BOA recorded compensation expense of $3.1 million related to the bonus paid to employees as part of the recapitalization.

We had made several amendments to the Lugano intercompany credit agreement prior to May 2025 to allow Lugano to continue to expand its operations and build inventory to support its salon expansion. Amendments were made to the Lugano intercompany credit agreement in the first quarter of 2025, the first, second, third and fourth quarter of 2024 and the second, third and fourth quarter of 2023. At the time of its bankruptcy filing in November 2025, the total amount of outstanding intercompany debt at Lugano was $680.6 million.

All of our subsidiaries were in compliance with the financial covenants included within their intercompany credit arrangements at December 31, 2025 except Velocity and Arnold. Velocity was issued a waiver for the fourth quarter of 2025 related to the fixed charge coverage ratio and leverage ratio in their intercompany credit agreement. Arnold received a waiver for the fourth quarter of 2025 related to the fixed charge ratio and leverage ratio in their intercompany credit agreement.

Our primary source of cash is from the receipt of interest and principal on our outstanding loans to our businesses. Accordingly, we are dependent upon the earnings and cash flow of these businesses, which are available for (i) operating expenses; (ii) payment of interest and principal on our outstanding debt; (iii) payments to CGM and Sostratus due or potentially due pursuant to the MSA and the LLC Agreement; (iv) cash distributions to our shareholders; and (v) pursuing future acquisitions. Payments made under (i) through (iii) above are required to be paid before distributions to shareholders and may be significant and exceed the funds held by us, which may require us to dispose of assets or incur debt to fund such expenditures. 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, 2025, we had future lease obligations of $217.7 million and purchase obligations of $74.9 million.

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We believe that we currently have sufficient liquidity and capital resources to meet our existing obligations, over the next twelve months and thereafter.

Financing Arrangements

Debt and Capital Structure

Our capital structure includes (i) the 2022 Credit Facility, which includes the 2022 Revolving Credit Facility and the 2022 Term Loan maturing in 2027, and (ii) the 2029 Notes and 2032 Notes. In 2025, in connection with the Lugano matters and related events of default, we entered into a series of Forbearance Agreements and amendments under the 2022 Credit Facility, which were superseded by the Fifth Amendment and related transaction letter dated December 19, 2025, which among other things set the revolving commitments at $100.0 million, revised certain covenant and reporting requirements, and imposed other limitations and requirements intended to preserve liquidity. We also entered into the Indenture Forbearance Agreement with certain holders of the Notes and effected PIK Payments through supplemental indentures, and we recognized $38.2 million of paid-in-kind interest related to these arrangements. See “Note I — Debt” included in the "Notes to the Consolidated Financial Statements" in this Form 10-K for additional detail regarding our debt instruments, including borrowing terms, amendments and waivers, covenant requirements and interest expense.

We expect to use available liquidity, including cash on hand and borrowing capacity under the 2022 Revolving Credit Facility (subject to covenant compliance and other restrictions), to support working capital needs and other general corporate purposes, and to pursue strategic initiatives as appropriate.

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, 2025, we had letters of credit totaling $3.2 million outstanding under the 2022 Revolving Credit Facility. We had approximately $96.8 million in borrowing base availability under this facility at December 31, 2025.

Interest Expense

We incurred interest expense totaling $175.3 million in the year ended December 31, 2025, as compared to $122.8 million in the year ended December 31, 2024 and $109.9 million for the year ended December 31, 2023.

The components of interest expense on our outstanding debt are as follows (in thousands):

(1) Other interest expense represents interest incurred by our subsidiaries. Other interest expense in each of the years ended December 31, 2025, 2024 and 2023 primarily reflects interest associated with third-party financing arrangements at our Lugano subsidiary.

Income Taxes

Each of the Company’s majority owned subsidiaries are subject to Federal, state and in some cases, foreign income taxes. We recorded an income tax benefit of $0.9 million with an annual effective rate of 0.3% during the year ended December 31, 2025, an income tax provision of $18.6 million with an annual effective tax rate of 6.0% during the year ended December 31, 2024, and an income tax provision of $8.2 million with an effective tax rate of 3.1% during the year ended December 31, 2023.

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The components of our income tax (benefit) expense as a percentage of income from continuing operations before income taxes for the years ended December 31, 2025, 2024 and 2023 are as follows:

Reconciliation of Non-GAAP Financial Measures

GAAP or U.S. GAAP refer to generally accepted accounting principles in the United States. From time to time we may publicly disclose certain “non-GAAP” financial measures in the course of our investor presentations, earnings releases, earnings conference calls or other venues. A non-GAAP financial measure is a numerical measure of historical or future performance, financial position or cash flow that excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with GAAP in our financial statements, and vice versa for measures that include amounts, or are subject to adjustments that effectively include amounts, that are excluded from the most directly comparable measure as calculated and presented.

Non-GAAP financial measures are provided as additional information to investors in order to provide them with an alternative method for assessing our financial condition and operating results. These measures are not intended to replace the presentation of financial results in accordance with U.S. GAAP, and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies. The presentation of these non-GAAP financial measures supplements other metrics we use to internally evaluate our subsidiary businesses and facilitate the comparison of past and present operations.

The tables below reconcile the most directly comparable GAAP financial measures to Adjusted earnings before Interest, Income Taxes, Depreciation and Amortization ("Adjusted EBITDA") and Adjusted Earnings.

Adjusted EBITDA – EBITDA is calculated as net income (loss) from continuing operations before interest expense, income tax expense (benefit), loss on debt extinguishment, depreciation expense and amortization expense. Amortization expenses consist of amortization of intangibles and debt charges, including debt issuance costs. Adjusted EBITDA is calculated utilizing the same calculation as described in arriving at EBITDA further adjusted by: (i) non-controlling stockholder compensation, which generally consists of non-cash stock option expense; (ii) successful acquisition costs, which consist of transaction costs (legal, accounting, due diligence, etc.) incurred in connection with the successful acquisition of a business expensed during the period in compliance with ASC 805 - Business Combinations; (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 historically 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 Earnings –– Adjusted earnings is calculated as net income (loss) adjusted to include the cost of the distributions to preferred shareholders, and adjusted to exclude the impact of certain costs, expenses, gains and

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losses and other specified items the exclusion of which management believes provides insight regarding our ongoing operating performance. Depending on the period presented, these adjusted measures exclude the impact of certain of the following items: gains (losses) and income (loss) from discontinued operations, income (loss) from noncontrolling interest, amortization expense, subsidiary stock compensation expense, acquisition-related expenses and items of other income or expense that may be material to a subsidiary and non-recurring in nature.

Adjusted EBITDA and Adjusted Earnings are non-GAAP measures used by the Company to assess its performance. We believe that Adjusted EBITDA and Adjusted Earnings provide useful information to investors and reflect important financial measures that are used by management in the monthly analysis of our operating results and in preparation of our annual budgets. We believe that investors’ understanding of our performance is enhanced by disclosing these performance measures as this presentation allows investors to view the performance of our businesses in a manner similar to the methods used by us and the management of our subsidiary businesses, provides additional insight into our operating results and provides a measure for evaluating targeted businesses for acquisition.

Adjusted EBITDA and Adjusted Earnings exclude the effects of items which reflect the impact of long-term investment decisions, rather than the performance of near-term operations. When compared to net income (loss) and net income (loss) from continuing operations, Adjusted Earnings and Adjusted EBITDA, respectively, are each limited in that they do not reflect the periodic costs of certain capital assets used in generating revenues of our subsidiary businesses or the non-cash charges associated with impairments, as well as certain cash charges. The presentation of Adjusted Earnings provides insight into our operating results. Adjusted EBITDA and Adjusted Earnings are not meant to be a substitute for GAAP, and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies.

Reconciliation of Net income (loss) from continuing operations to Adjusted EBITDA

The following tables reconcile Adjusted EBITDA to net income (loss) from continuing operations, which we consider to be the most comparable GAAP financial measure (in thousands):

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(1) Other represents non-recurring operating expenses that are included by management in the calculation of Adjusted EBITDA when analyzing monthly operating results of our subsidiaries. In the current year, the calculation of Adjusted EBITDA for Arnold includes the add-back of certain expenses that have been incurred related to the relocation of two of Arnold's facilities in the United States and costs related to the retirement of the chief executive officer at Arnold. For Altor, other includes the add-back of certain expenses incurred related to restructuring of their facilities after the acquisition of Lifoam.

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(1) Other represents non-recurring operating expenses that are included by management in the calculation of Adjusted EBITDA when analyzing monthly operating results of our subsidiaries. In 2024, the calculation of Adjusted EBITDA for Arnold includes the add-back of certain expenses that have been incurred related to the relocation of two of Arnold's facilities in the United States.

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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):

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