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Compass Diversified posts profit gains, but industrial arm weakens
In the same quarter, the company cut total debt nearly $300 million to about $1.6 billion after its May 2026 Sterno's Food Service sale.
Compass Diversified reported second-quarter results that highlighted a split performance across its portfolio, with branded consumer businesses growing profits while an industrial unit dragged on earnings and the stock remains undervalued in management's view, according to Yahoo Finance.
Across the consumer brands, BOA posted adjusted EBITDA growth of 27% with margin expansion, The Honey Pot grew adjusted EBITDA 32% as it expanded deeper into grocery, drug, and mass retail channels, PrimaLoft returned to growth with adjusted EBITDA up 28%, and 5.11 increased adjusted EBITDA 14% while widening gross margins by more than 200 basis points through tighter promotional discipline and tariff refunds.
The company also said its balance sheet improved alongside operations. Yahoo Finance reported that the May 2026 sale of the Sterno's Food Service business put more than $280 million toward debt paydown, bringing total debt down nearly $300 million since year-end to about $1.6 billion, while covenant leverage fell to 4.8x from 5.3x and operating cash flow exceeded $50 million in the first half of 2026 after an operating cash outflow of roughly $65 million over the first half of 2025.
Still, not all segments performed the same. Arnold in the industrial segment saw adjusted EBITDA rise nearly 50% on demand for rare earth magnets sourced outside China, while Altor's adjusted EBITDA fell by roughly half, driven by tariff-related disruption in white goods, softer demand for cold chain vaccine storage products, higher input costs, and tougher comparisons; management also noted a new pay deal taking effect Jan. 1, 2027 expected to cut manager fees by about $20 million next year, even after performance-linked awards are fully paid.