•the "2014 Credit Facility" refer to the credit agreement, as amended, entered into on June 14, 2014 with a group of lenders led by Bank of America N.A. as administrative agent, as amended from time to time, which provides for a Revolving Credit Facility and a Term Loan;

•the "2018 Credit Facility" refer to the amended and restated credit agreement entered into on April 18, 2018 among the Company, the Lenders from time to time party thereto (the "Lenders"), Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (the "agent") and other agents party ~~thereto.~~thereto, as further amended.

•the "2018 Revolving Credit Facility" refers to the $600 million in revolving loans, swing line loans and letters of credit provided by the 2018 Credit Facility that matures in 2023;

•the "2018 Term Loan" refer to the $500 million term loan provided by the 2018 Credit ~~Facility that matures in April 2025;~~Facility;

•the "LLC Agreement" refer to the fifth amended and restated operating agreement of the Company dated as of December 6, 2016; and

•"we," "us" and "our" refer to the Trust, the Company and the businesses together.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, contains both historical and forward-looking statements. We may, in some cases, use words such as "project," "predict," "believe," "anticipate," "plan," "expect," "estimate," "intend," "should," "would," "could," "potentially," "may," or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. All statements other than statements of historical or current fact are “forward-looking statements” for purposes of federal and state securities laws. Forward looking statements include, among other things, (i) statements as to our future performance or liquidity, such as expectations for our results of operation, net income, adjusted EBITDA, and ability to make quarterly distributions and (ii) our plans, strategies and objectives for future operations, including our planned capital expenditures. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, ~~some~~such as those disclosed or incorporated by reference in our filings with the SEC, many of which are beyond our control ~~including,~~. Important factors that could cause our actual results, performance and achievements to differ materially from those estimates or projections contained in our forward-looking statements include, among other things:

•the adverse impact on the U.S. and global economy, including the markets in which we operate, of the novel coronavirus, which causes the Coronavirus disease 2019 (COVID-19) global pandemic, and the impact in the near, medium and long-term on our business, results of operations, financial position, liquidity or cash flows;

•difficulties and delays in integrating, or business disruptions following, acquisitions or an inability to fully realize cost savings and other benefit related thereto;

•our ability to successfully operate our businesses on a combined basis, and to effectively integrate and improve future acquisitions;

•our ability to remove CGM and CGM’s right to resign;

•our organizational structure, which may limit our ability to meet our dividend and distribution policy;

•our ability to service and comply with the terms of our indebtedness;

•our cash flow available for distribution and reinvestment and our ability to make distributions in the future to our shareholders;

•our ability to pay the management fee and profit allocation if and when due;

•our ability to make and finance future acquisitions;

•our ability to implement our acquisition and management strategies;

•the legal and regulatory environment in which our businesses operate;

•trends in the industries in which our businesses operate;

•changes in general economic, political or business conditions or economic, political or demographic trends in the United States and other countries in which we have a presence, including changes in interest rates and inflation;

•risks associated with possible disruption in operations or the economy generally due to terrorism or natural disaster or social, civil or political unrest;

•environmental risks affecting the business or operations of our businesses;

•our and CGM’s ability to retain or replace qualified employees of our businesses and CGM;

•costs and effects of legal and administrative proceedings, settlements, investigations and claims; and

•extraordinary or force majeure events affecting the business or operations of our businesses.

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.

In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this Quarterly Report on Form 10-Q may not occur. These forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances, whether as a result of new information, future events or otherwise, except as required by law.

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

COMPASS DIVERSIFIED HOLDINGS

CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30, 2019			December 31, 2018				September 30, 2020		December 31, 2019
(in thousands)	(Unaudited)						(in thousands)	(Unaudited)
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	285,838		$	48,771		Cash and cash equivalents	$	176,819	$	100,314
Accounts receivable, net	221,423			205,545			Accounts receivable, net	242,947		191,405
Inventories	332,221			307,437			Inventories	344,036		317,306
Prepaid expenses and other current assets	41,975			29,670			Prepaid expenses and other current assets	36,873		35,247
Current assets of discontinued operations	—			89,762
Total current assets	881,457			681,185			Total current assets	800,675		644,272
Property, plant and equipment, net	142,291			146,601			Property, plant and equipment, net	155,601		146,428
Goodwill	438,019			471,115			Goodwill	508,464		438,519
Intangible assets, net	575,354			615,592			Intangible assets, net	619,925		561,946
Other non-current assets	97,099			8,378			Other non-current assets	107,319		100,727
Non-current assets of discontinued operations	—			449,464
Total assets	$	2,134,220		$	2,372,335		Total assets	$	2,191,984	$	1,891,892

Liabilities and stockholders’ equity							Liabilities and stockholders’ equity
Current liabilities:							Current liabilities:
Accounts payable	$	87,753		$	77,169		Accounts payable	$	98,192	$	70,089
Accrued expenses	123,207			106,612			Accrued expenses	151,279		108,768
Due to related party	8,142			11,093			Due to related party	9,283		8,049
Current portion, long-term debt	5,000			5,000
Other current liabilities	30,648			6,912			Other current liabilities	25,022		22,573
Current liabilities of discontinued operations	—			52,494
Total current liabilities	254,750			259,280			Total current liabilities	283,776		209,479
Deferred income taxes	31,275			33,984			Deferred income taxes	30,854		33,039
Long-term debt	680,513			1,098,871			Long-term debt	592,107		394,445
Other non-current liabilities	87,427			12,615			Other non-current liabilities	94,554		89,054
Non-current liabilities of discontinued operations	—			48,243
Total liabilities	1,053,965			1,452,993			Total liabilities	1,001,291		726,017

Commitments and contingencies							Commitments and contingencies

Stockholders’ equity							Stockholders’ equity
Trust preferred shares, 50,000 authorized; 8,000 shares issued and outstanding at September 30, 2019 and December 31, 2018
Series A preferred shares, no par value; 4,000 shares issued and outstanding at September 30, 2019 and December 31, 2018	96,417			96,417
Series B preferred shares, no par value; 4,000 shares issued and outstanding at September 30, 2019 and December 31, 2018	96,504			96,504
Trust common shares, no par value, 500,000 authorized; 59,900 shares issued and outstanding at September 30, 2019 and December 31, 2018	924,680			924,680
Trust preferred shares, 50,000 authorized; 12,600 shares issued and outstanding at September 30, 2020 and December 31, 2019							Trust preferred shares, 50,000 authorized; 12,600 shares issued and outstanding at September 30, 2020 and December 31, 2019
Series A preferred shares, no par value; 4,000 shares issued and outstanding at September 30, 2020 and December 31, 2019							Series A preferred shares, no par value; 4,000 shares issued and outstanding at September 30, 2020 and December 31, 2019	96,417		96,417
Series B preferred shares, no par value; 4,000 shares issued and outstanding at September 30, 2020 and December 31, 2019							Series B preferred shares, no par value; 4,000 shares issued and outstanding at September 30, 2020 and December 31, 2019	96,504		96,504
Series C preferred shares, no par value; 4,600 shares issued and outstanding at September 30, 2020 and December 31, 2019							Series C preferred shares, no par value; 4,600 shares issued and outstanding at September 30, 2020 and December 31, 2019	110,997		110,997
Trust common shares, no par value, 500,000 authorized; 64,900 shares issued and outstanding at September 30, 2020 and 59,900 shares issued and outstanding at December 31, 2019							Trust common shares, no par value, 500,000 authorized; 64,900 shares issued and outstanding at September 30, 2020 and 59,900 shares issued and outstanding at December 31, 2019	1,008,564		924,680
Accumulated other comprehensive loss	(6,063		)	(8,776		)	Accumulated other comprehensive loss	(4,447)		(3,933)
Accumulated deficit	(78,728		)	(249,453		)	Accumulated deficit	(188,136)		(109,338)
Total stockholders’ equity attributable to Holdings	1,032,810			859,372			Total stockholders’ equity attributable to Holdings	1,119,899		1,115,327
Noncontrolling interest	47,445			39,922			Noncontrolling interest	70,794		50,548
Noncontrolling interest of discontinued operations	—			20,048
Total stockholders’ equity	1,080,255			919,342			Total stockholders’ equity	1,190,693		1,165,875
Total liabilities and stockholders’ equity	$	2,134,220		$	2,372,335		Total liabilities and stockholders’ equity	$	2,191,984	$	1,891,892

Note C — Discontinued Operations

Sale of Clean Earth

On May 8, 2019, the Company, as majority stockholder of CEHI Acquisition Corporation ~~(“CEHI”~~("Clean Earth" or “CEHI”) and as Sellers’ Representative, entered into a definitive Stock Purchase Agreement (the “Purchase Agreement”) with Calrissian Holdings, LLC (“Buyer”), CEHI, the other holders of stock and options of CEHI and, as Buyer’s guarantor, Harsco Corporation, pursuant to which Buyer would acquire all of the issued and outstanding securities of CEHI, the parent company of the operating entity, Clean Earth, Inc.

On June 28, 2019, Buyer completed the acquisition of all of the issued and outstanding securities of CEHI pursuant to the Purchase Agreement. The sale price for ~~CEHI~~Clean Earth was based on an aggregate total enterprise value of $625 million, ~~and is~~ subject to customary working capital adjustments. After the allocation of the sale proceeds to ~~CEHI~~Clean Earth non-controlling equity holders, the repayment of intercompany loans to the Company (including accrued interest) of $224.6 million, and the payment of transaction expenses of approximately $10.7 million, the Company received approximately $327.3 million of total proceeds at closing related to our equity interests in ~~CEHI.~~Clean Earth. The Company recognized a gain on

the sale of CEHI of $206.3 million in the second quarter of 2019. During the third quarter of 2019, the Company received the working capital settlement from the Buyer and recorded an additional $2.2 million gain related to the sale of Clean ~~Earth.~~Earth of $209.3 million during the year ended December 31, 2019.

Summarized results of operations of Clean Earth for the ~~nine months ended September 30,~~period January 1, 2019 ~~and the three and nine months ended September 30, 2018~~ through the date of disposition are as follows (in thousands):

Three months ended
September 30, 2018 For the period January 1, 2019 through disposition Nine months ended
September 30, 2018
Net sales $ 71,116
$ 132,737
$ 199,579
Gross profit 18,610
39,678
56,589
Operating income 4,278
6,232
12,495
Income from continuing operations before income taxes 4,202
5,880
12,215
Benefit for income taxes (2,627 ) (11,607 ) (2,247 )
Income from discontinued operations ⁽¹⁾
$ 6,829
$ 17,487
$ 14,462


	For the period January 1, 2019 through disposition
Net sales	$	132,737
Gross profit	$	39,678
Operating income	$	6,232
Income from continuing operations before income taxes	$	5,880
Benefit for income taxes	$	(11,607)
Income from discontinued operations (1)	$	17,487

⁽¹⁾The results of operations for the ~~periods~~period from January 1, 2019 through the date of disposition ~~and the three and nine months ended September 30, 2018, each exclude~~excludes $10.2 million ~~and $4.5 million and $12.2 million, respectively,~~ of intercompany interest expense.

Sale of Manitoba Harvest

On February 19, 2019, the Company ~~as majority shareholder of Manitoba Harvest and as Shareholder Representative,~~ entered into a definitive agreement ~~(the “Arrangement Agreement”)~~ with Tilray, Inc. ("Tilray")~~, the other shareholders of Manitoba Harvest~~ and a wholly-owned subsidiary of Tilray, 1197879 B.C. Ltd. (“Tilray Subco”), to sell to Tilray, through Tilray Subco, all of the issued and outstanding securities of our majority owned subsidiary, Manitoba ~~Harvest.~~

~~On February 28, 2019, Tilray Subco completed~~Harvest, for total consideration of up to C$419 million. The completion of the ~~acquisition of all the issued and outstanding securities~~sale of Manitoba Harvest ~~pursuant~~was subject to approval by the ~~Arrangement Agreement.~~British Columbia Supreme Court, which occurred on February 21, 2019. The sale closed on February 28, 2019. Subject to certain customary adjustments, the shareholders of Manitoba Harvest, including the Company, received ~~or will receive~~ the following from Tilray as consideration for their shares of Manitoba Harvest: (i) C$150 million in cash to the holders of preferred shares of Manitoba Harvest and the holders of common shares of Manitoba Harvest (“Common Holders”) and C$127.5 million in shares of class 2 Common Stock of Tilray (“Tilray Common Stock”) to the Common Holders on the closing date of the sale (the “Closing Date Consideration”), and (ii) C$50 million in cash and C$42.5 million in Tilray Common Stock to the Common Holders on the date that iswas six months after the closing date of the arrangement (the “Deferred Consideration”). The sale consideration also ~~includes~~included a potential earnout of up to C$49 million in Tilray Common Stock to the Common Holders, if Manitoba Harvest ~~achieves~~achieved certain levels of U.S. branded gross sales of edible or topical products containing broad spectrum hemp extracts or cannabidiols prior to December 31, 2019. The threshold for the earnout was not achieved and no additional amount was recorded related to sale of Manitoba Harvest at December 31, 2019.

The cash portion of the Closing Date Consideration was reduced by the amount of the net indebtedness (including accrued interest) of Manitoba Harvest on the closing date of C$71.3 million ($53.7 million) and transaction expenses of approximately C$5.0 million. The Company's share of the net proceeds after accounting for the redemption of the noncontrolling shareholders and the payment of net indebtedness of Manitoba Harvest and transaction expenses was approximately $124.2 million in cash proceeds and in Tilray Common Stock. ~~We recorded a receivable of $48.2 million as of March 31, 2019 related to the Deferred Consideration portion of the proceeds.~~ The Company

recognized a gain on the sale of Manitoba Harvest of $121.7 million in the ~~three months ended March 31,~~first quarter of 2019. In August 2019, the Company received the Deferred Consideration related to the sale. The Company's portion of the Deferred Consideration totaled $28.4 million in cash proceeds and $19.6 million in Tilray Common Stock. ~~No amount has been recorded related to the potential earnout as of September 30, 2019 based on an assessment of probability at the end of the quarter.~~

The Tilray Common Stock consideration was issued in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") and pursuant to exemptions from applicable securities laws of any state of the United States, such that any shares of Tilray Common Stock received by the Common Holders were freely tradeable. The Company sold the Tilray Common Stock received as part of the Closing ~~Date~~ Consideration during March 2019, recognizing a net loss of $5.3 million in Other income/ (expense) during the quarter ended March 31,

2019. In August 2019, the Company sold the Tilray Common Stock received as part of the Deferred Consideration, recognizing a loss of $4.9 million in Other income/ (expense) during the quarter ended September 30, 2019.

Summarized results of operations of Manitoba Harvest for the ~~nine months ended September 30,~~period from January 1, 2019 ~~and the three and nine months ended September 30, 2018~~ through the date of disposition are as follows (in thousands):

Three months ended
September 30, 2018 For the period January 1, 2019 through disposition Nine months ended
September 30, 2018
Net revenues $ 17,300
$ 10,024
$ 53,169
Gross profit 7,097
4,874
23,545
Operating loss (886 ) (1,118 ) (670 )
Loss before income taxes (896 ) (1,127 ) (694 )
Benefit for income taxes (490 ) (541 ) (1,163 )
Income (loss) from discontinued operations ⁽¹⁾
$ (406 ) $ (586 ) $ 469


	For the period January 1, 2019 through disposition
Net revenues	$	10,024
Gross profit	$	4,874
Operating loss	$	(1,118)
Loss before income taxes	$	(1,127)
Benefit for income taxes	$	(541)
Income (loss) from discontinued operations (1)	$	(586)

⁽¹⁾ The results of operations for the ~~periods~~period from January 1, 2019 through the date of disposition ~~and the three and nine months ended September 30, 2018 exclude~~excludes $1.0 million, ~~$1.3 million and $3.8 million, respectively,~~ of intercompany interest expense.

~~The following table presents summary balance sheet information of the Clean Earth and Manitoba Harvest businesses that is presented as discontinued operations as of December 31, 2018 (in thousands~~):

December 31, 2018
Manitoba Harvest Clean Earth Total
Assets:
   Cash and cash equivalents $ 2,577
$ 1,978
$ 4,555
   Accounts receivable, net 7,169
59,689
66,858
   Inventories 11,436
—
11,436
   Prepaid expenses and other current assets 773
6,140
6,913
   Current assets of discontinued operations $ 21,955
$ 67,807
$ 89,762
   Property, plant and equipment, net 18,157
62,060
80,217
   Goodwill 37,777
144,778
182,555
   Intangible assets, net 53,533
129,530
183,063
   Other non-current assets —
3,629
3,629
   Non-current assets of discontinued operations $ 109,467
$ 339,997
$ 449,464
Liabilities:
   Accounts payable 4,259
26,135
30,394
   Accrued expenses 4,313
16,063
20,376
   Due to related party 350
—
350
   Other current liabilities 507
867
1,374
   Current liabilities of discontinued operations $ 9,429
$ 43,065
$ 52,494
   Deferred income taxes 12,675
28,300
40,975
   Other non-current liabilities 2,093
5,175
7,268
   Non-current liabilities of discontinued operations $ 14,768
$ 33,475
$ 48,243
Noncontrolling interest of discontinued operations $ 11,160
$ 8,888
$ 20,048

Note D — Revenue

~~Effective January 1, 2018, the~~The Company ~~adopted~~recognizes revenue in accordance with the provisions of Revenue from Contracts with Customers, or ASC 606. The adoption of the new revenue guidance represents a change in accounting principle that will more closely align revenue recognition with the transfer of control of the Company's goods and services and will provide financial

~~statement readers with enhanced disclosures. In accordance with the new revenue guidance, revenue~~Revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services, and excludes any sales incentives or taxes collected from customers which are subsequently remitted to government authorities.

Disaggregated Revenue ~~- Revenue Streams and Timing of Revenue Recognition~~ - The Company disaggregates revenue by strategic business unit and by geography for each strategic business unit which are categories that depict how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors. This disaggregation also represents how the Company evaluates its financial performance, as well as how the Company communicates its financial performance to the investors and other users of its financial statements. Each strategic business unit represents the Company’s reportable segments and offers different products and services.

The following tables provide disaggregation of revenue by reportable segment geography for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 (in thousands):


	Three months ended September 30, 2020
	5.11		Ergo		Liberty		Marucci		Velocity		ACI		Arnold		Foam		Sterno		Total
United States	$	80,100	$	6,378	$	30,648	$	19,340	$	64,012	$	22,771	$	13,933	$	31,084	$	92,254	$	360,520
Canada	1,340		750		538		55		3,143		0		0		0		5,158		10,984
Europe	6,860		7,354		0		16		2,482		0		6,926		0		272		23,910
Asia Pacific	3,550		4,874		0		130		245		0		745		0		53		9,597
Other international	6,556		122		0		10		747		0		1,015		5,442		0		13,892
	$	98,406	$	19,478	$	31,186	$	19,551	$	70,629	$	22,771	$	22,619	$	36,526	$	97,737	$	418,903


	Three months ended September 30, 2019																			Three months ended September 30, 2019
	5.11		Ergo		Liberty		Velocity		ACI		Arnold		Foam		Sterno		Total			5.11		Ergo		Liberty		Velocity		ACI		Arnold		Foam		Sterno		Total
United States	$	77,783	$	6,505	$	24,061	$	42,126	$	21,897	$	18,227	$	25,833	$	105,260	$	321,692	United States	$	77,783	$	6,505	$	24,061	$	42,126	$	21,897	$	18,227	$	25,833	$	105,260	$	321,692
Canada	1,897		906		668		1,981		—		153		—		4,145		9,750		Canada	1,897		906		668		1,981		0		153		0		4,145		9,750
Europe	7,504		6,951		—		1,420		—		9,758		—		447		26,080		Europe	7,504		6,951		0		1,420		0		9,758		0		447		26,080
Asia Pacific	2,429		8,820		—		239		—		1,678		—		1,565		14,731		Asia Pacific	2,429		8,820		0		239		0		1,678		0		1,565		14,731
Other international	8,440		136		—		881		—		1,079		5,471		53		16,060		Other international	8,440		136		0		881		0		1,079		5,471		53		16,060
	$	98,053	$	23,318	$	24,729	$	46,647	$	21,897	$	30,895	$	31,304	$	111,470	$	388,313		$	98,053	$	23,318	$	24,729	$	46,647	$	21,897	$	30,895	$	31,304	$	111,470	$	388,313

•

~~Sterno~~ is a manufacturer and marketer of portable food warming fuel and creative table lighting solutions for the food service industry and flameless candles, outdoor lighting products, scented wax cubes and warmer products for consumers. Sterno's products include wick and gel chafing fuels, butane stoves and accessories, liquid and traditional wax candles, scented wax cubes and warmer products used for home decor and fragrance systems, catering equipment and outdoor lighting

•Liberty Safe is a designer, manufacturer and marketer of premium home, gun and office safes in North America. From its over 300,000 square foot manufacturing facility, Liberty produces a wide range of home and gun safe models in a broad assortment of sizes, features and styles. Liberty is headquartered in Payson, Utah.

•Marucci Sports is a leading designer, manufacturer, and marketer of premium wood and metal baseball bats, fielding gloves, batting gloves, bags, protective gear, sunglasses, on and off-field apparel, and other baseball and softball equipment used by professional and amateur athletes. Marucci also develops and licenses franchises for sports training facilities. Marucci is headquartered in Baton Rouge, Louisiana.

•Velocity Outdoor is a leading designer, manufacturer, and marketer of airguns, archery products, laser aiming devices and related accessories. Velocity Outdoor offers its products under the highly recognizable Crosman, Benjamin, Ravin, LaserMax and CenterPoint brands that are available through national retail chains, mass merchants, dealer and distributor networks. Velocity Outdoor is headquartered in Bloomfield, New York.

•Advanced Circuits is an electronic components manufacturing company that provides small-run, quick-turn and volume production rigid printed circuit boards. ACI manufactures and delivers custom printed circuit boards to customers primarily in North America. ACI is headquartered in Aurora, Colorado.

•Arnold is a global manufacturer of engineered magnetic solutions for a wide range of specialty applications and end-markets, including aerospace and defense, general industrial, motorsport/automotive, oil and gas, medical, energy, reprographics and advertising specialties. Arnold produces high performance permanent magnets (PMAG), precision foil products (Precision Thin Metals or "PTM"), 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 clients worldwide. Arnold is headquartered in Rochester, New York.

•Foam Fabricators is a designer and manufacturer of custom molded protective foam solutions and original equipment manufacturer components made from expanded polystyrene and expanded polypropylene. Foam Fabricators provides products to a variety of end markets, including appliances and electronics, pharmaceuticals, health and wellness, automotive, building and other products. In July 2020, Foam Fabricators acquired the assets of Polyfoam, a Massachusetts-based manufacturer of protective and temperature-sensitive packaging solutions for the medical, pharmaceutical, grocery and food industries, among others. Foam Fabricators is headquartered in Scottsdale, Arizona and operates 14 molding and fabricating facilities across North America subsequent to the acquisition of Polyfoam.

•Sterno is a manufacturer and marketer of portable food warming systems, creative indoor and outdoor lighting, and home fragrance solutions for the foodservice industry and 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, flameless candles and outdoor lighting products through Sterno Home, and scented wax cubes and warmer products used for home decor and fragrance systems through Rimports. Sterno is headquartered in Corona, California.

The tabular information that follows shows data for each of the operating segments reconciled to amounts reflected in the consolidated financial statements. The results of operations of each of the operating segments are included in consolidated operating results as of their date of acquisition. There were no significant inter-segment transactions.

Summary of Operating Segments


Net Revenues	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2020		2019		2020		2019

5.11	$	98,406	$	98,053	$	281,822	$	278,978
Ergobaby	19,478		23,318		59,171		68,741
Liberty	31,186		24,729		80,599		67,566
Marucci	19,551		0		24,807		0
Velocity Outdoor	70,629		46,647		148,240		107,395
ACI	22,771		21,897		67,423		67,405
Arnold	22,619		30,895		76,447		90,404
Foam Fabricators	36,526		31,304		89,338		93,634
Sterno	97,737		111,470		258,132		289,131
Total segment revenue	418,903		388,313		1,085,979		1,063,254
Corporate and other	0		0		0		0
Total consolidated revenues	$	418,903	$	388,313	$	1,085,979	$	1,063,254

Net Revenues Three months ended September 30, Nine months ended September 30,
(in thousands) 2019 2018 2019 2018

5.11 Tactical $ 98,053
$ 83,342
$ 278,978
$ 252,022
Ergobaby 23,318
24,260
68,741
70,376
Liberty 24,729
17,872
67,566
61,741
Velocity Outdoor 46,647
34,289
107,395
94,266
ACI 21,897
23,424
67,405
68,454
Arnold 30,895
29,891
90,404
90,486
Foam Fabricators 31,304
33,337
93,634
81,988
Sterno 111,470
113,868
289,131
267,069
Total segment revenue 388,313
360,283
1,063,254
986,402
Corporate and other —
—
—
—
Total consolidated revenues $ 388,313
$ 360,283
$ 1,063,254
$ 986,402

Three months ended
September 30, Nine months ended
September 30,
2019 2018 2019 2018
Loss from continuing operations attributable to common shares of Holdings $ (78,252 ) $ (7,737 ) $ (113,287 ) $ (23,910 )
Less: Effect of contribution based profit - Holding Event 1,709
2,004
3,562
3,510
Loss from continuing operations attributable to common shares of Holdings $ (79,961 ) $ (9,741 ) $ (116,849 ) $ (27,420 )

Income from discontinued operations attributable to Holdings $ 2,039
$ 6,071
$ 347,370
$ 15,370
Less: Effect of contribution based profit - Holding Event —
400
—
209
Income from discontinued operations attributable to common shares of Holdings $ 2,039
$ 5,671
$ 347,370
$ 15,161

Basic and diluted weighted average common shares outstanding 59,900
59,900
59,900
59,900

Basic and fully diluted income (loss) per common share attributable to Holdings
Continuing operations $ (1.33 ) $ (0.16 ) $ (1.95 ) $ (0.45 )
Discontinued operations 0.03
0.09
5.80
0.25
$ (1.30 ) $ (0.07 ) $ 3.85
$ (0.20 )

Distributions

The following table summarizes information related to our quarterly cash distributions on our Trust common and preferred shares (in thousands, except per share data):


Period	Cash Distribution per Share		Total Cash Distributions		Record Date	Payment Date	Period	Cash Distribution per Share		Total Cash Distributions		Record Date	Payment Date

Trust Common Shares:							Trust Common Shares:
July 1, 2019 - September 30, 2019 ⁽¹⁾	$	0.36	$	21,564	October 17, 2019	October 24, 2019
July 1, 2020 - September 30, 2020 (1)							July 1, 2020 - September 30, 2020 (1)	$	0.36	$	23,364	October 15, 2020	October 22, 2020
April 1, 2020 - June 30, 2020							April 1, 2020 - June 30, 2020	$	0.36	$	23,364	July 16, 2020	July 23, 2020
January 1, 2020 - March 31, 2020							January 1, 2020 - March 31, 2020	$	0.36	$	21,564	April 16, 2020	April 23, 2020
October 1, 2019 - December 31, 2019							October 1, 2019 - December 31, 2019	$	0.36	$	21,564	January 16, 2020	January 23, 2020
July 1, 2019 - September 30, 2019							July 1, 2019 - September 30, 2019	$	0.36	$	21,564	October 17, 2019	October 24, 2019
April 1, 2019 - June 30, 2019	$	0.36	$	21,564	July 18, 2019	July 25, 2019	April 1, 2019 - June 30, 2019	$	0.36	$	21,564	July 18, 2019	July 25, 2019
January 1, 2019 - March 31, 2019	$	0.36	$	21,564	April 18, 2019	April 25, 2019	January 1, 2019 - March 31, 2019	$	0.36	$	21,564	April 18, 2019	April 25, 2019
October 1, 2018 - December 31, 2018	$	0.36	$	21,564	January 17, 2019	January 24, 2019	October 1, 2018 - December 31, 2018	$	0.36	$	21,564	January 17, 2019	January 24, 2019
July 1, 2018 - September 30, 2018	$	0.36	$	21,564	October 18, 2018	October 25, 2018
April 1, 2018 - June 30, 2018	$	0.36	$	21,564	July 19, 2018	July 26, 2018
January 1, 2018 - March 31, 2018	$	0.36	$	21,564	April 19, 2018	April 26, 2018
October 1, 2017 - December 31, 2017	$	0.36	$	21,564	January 19, 2018	January 25, 2018

Series A Preferred Shares:							Series A Preferred Shares:
July 30, 2019 - October 29, 2019 ⁽¹⁾	$	0.453125	$	1,813	October 15, 2019	October 30, 2019
July 30, 2020 - September 29, 2020 (1)							July 30, 2020 - September 29, 2020 (1)	$	0.453125	$	1,813	October 15, 2020	October 30, 2020
April 30, 2020 - July 29, 2020							April 30, 2020 - July 29, 2020	$	0.453125	$	1,813	July 15, 2020	July 30, 2020
January 30, 2020 - April 29, 2020							January 30, 2020 - April 29, 2020	$	0.453125	$	1,813	April 15, 2020	April 30, 2020
October 30, 2019 - January 29, 2020							October 30, 2019 - January 29, 2020	$	0.453125	$	1,813	January 15, 2020	January 30, 2020
July 30, 2019 - October 29, 2019							July 30, 2019 - October 29, 2019	$	0.453125	$	1,813	October 15, 2019	October 30, 2019
April 30, 2019 - July 29, 2019	$	0.453125	$	1,813	July 15, 2019	July 30, 2019	April 30, 2019 - July 29, 2019	$	0.453125	$	1,813	July 15, 2019	July 30, 2019
January 30, 2019 - April 29, 2019	$	0.453125	$	1,813	April 15, 2019	April 30, 2019	January 30, 2019 - April 29, 2019	$	0.453125	$	1,813	April 15, 2019	April 30, 2019
October 30, 2018 - January 29, 2019	$	0.453125	$	1,813	January 15, 2019	January 30, 2019	October 30, 2018 - January 29, 2019	$	0.453125	$	1,813	January 15, 2019	January 30, 2019
July 30, 2018 - October 29, 2018	$	0.453125	$	1,813	October 15, 2018	October 30, 2018
April 30, 2018 - July 29, 2018	$	0.453125	$	1,813	July 16, 2018	July 30, 2018
January 30, 2018 - April 29, 2018	$	0.453125	$	1,813	April 15, 2018	April 30, 2018
October 30, 2017 - January 29, 2018	$	0.453125	$	1,813	January 15, 2018	January 30, 2018

Series B Preferred Shares:							Series B Preferred Shares:
July 30, 2019 - October 29, 2019 ⁽¹⁾	$	0.4921875	$	1,969	October 15, 2019	October 30, 2019
July 30, 2020 - September 29, 2020 (1)							July 30, 2020 - September 29, 2020 (1)	$	0.4921875	$	1,969	October 15, 2020	October 30, 2020
April 30, 2020 - July 29, 2020							April 30, 2020 - July 29, 2020	$	0.4921875	$	1,969	July 15, 2020	July 30, 2020
January 30, 2020 - April 29, 2020							January 30, 2020 - April 29, 2020	$	0.4921875	$	1,969	April 15, 2020	April 30, 2020
October 30, 2019 - January 29, 2020							October 30, 2019 - January 29, 2020	$	0.4921875	$	1,969	January 15, 2020	January 30, 2020
July 30, 2019 - October 29, 2019							July 30, 2019 - October 29, 2019	$	0.4921875	$	1,969	October 15, 2019	October 30, 2019
April 30, 2019 - July 29, 2019	$	0.4921875	$	1,969	July 15, 2019	July 30, 2019	April 30, 2019 - July 29, 2019	$	0.4921875	$	1,969	July 15, 2019	July 30, 2019
January 30, 2019 - April 29, 2019	$	0.4921875	$	1,969	April 15, 2019	April 30, 2019	January 30, 2019 - April 29, 2019	$	0.4921875	$	1,969	April 15, 2019	April 30, 2019
October 30, 2018 - January 29, 2019	$	0.4921875	$	1,969	January 15, 2019	January 30, 2019	October 30, 2018 - January 29, 2019	$	0.4921875	$	1,969	January 15, 2019	January 30, 2019
July 30, 2018 - October 29, 2018	$	0.4921875	$	1,969	October 15, 2018	October 30, 2018
March 13, 2018 - July 29, 2018	$	0.74	$	2,960	July 16, 2018	July 30, 2018

Series C Preferred Shares:							Series C Preferred Shares:
July 30, 2020 - September 29, 2020 (1)							July 30, 2020 - September 29, 2020 (1)	$	0.4921875	$	2,264	October 15, 2020	October 30, 2020
April 30, 2020 - July 29, 2020							April 30, 2020 - July 29, 2020	$	0.4921875	$	2,264	July 15, 2020	July 30, 2020
January 30, 2020 - April 29, 2020							January 30, 2020 - April 29, 2020	$	0.4921875	$	2,264	April 15, 2020	April 30, 2020
November 20, 2019 - January 29, 2020							November 20, 2019 - January 29, 2020	$	0.38281	$	1,531	January 15, 2020	January 30, 2020

⁽¹⁾


	Fair Value Measurements at December 31, 2019
	Carrying Value		Level 1		Level 2		Level 3
Liabilities:
Put option of noncontrolling shareholders (1)	$	(111)	$	0	$	0	$	(111)



Total recorded at fair value	$	(111)	$	0	$	0	$	(111)

(1)Represents put option issued to noncontrolling shareholders in connection with the 5.11 and Liberty acquisitions.

~~Represents put option issued to noncontrolling shareholders in connection with the 5.11 Tactical and Liberty acquisitions.~~


⁽²⁾	~~Represents potential earn-out payable as additional purchase price consideration by Velocity Outdoor in connection with the acquisition of Ravin.~~

Reconciliations of the change in the carrying value of the Level 3 fair value measurements from January 1, ~~2018~~2019 through September 30, ~~2019~~2020 are as follows (in thousands):

Level 3
Balance at January 1, 2018 $ (178 )
Contingent consideration - Rimports ⁽¹⁾
(4,800 )
Contingent consideration - Ravin ⁽²⁾
(4,734 )
Decrease in the fair value of put option of noncontrolling shareholder - 5.11 5
Adjustment to Ravin contingent consideration 360
Reversal of contingent consideration - Rimports 4,800
Balance at January 1, 2019 $ (4,547 )
Decrease in the fair value of put option of noncontrolling shareholder - Liberty 42
Balance at September 30, 2019 $ (4,505 )


	Level 3
Balance at January 1, 2019	$	(4,547)
Decrease in the fair value of put option of noncontrolling shareholder - Liberty	72

Increase in the fair value of put option of noncontrolling shareholder - 5.11	(10)
Adjustment to Ravin contingent consideration (1)	(2,022)
Payment of contingent consideration - Ravin (1)	6,396
Balance at December 31, 2019	$	(111)
Increase in the fair value of put option of noncontrolling shareholder - Liberty	(151)
Increase in the fair value of put option of noncontrolling shareholder - 5.11	(41)
Balance at September 30, 2020	$	(303)

⁽¹⁾The contingent consideration relates to Sterno's acquisition of Rimports in February 2018. The purchase price of Rimports includes a potential earn-out of up to $25 million contingent on the attainment of certain future performance criteria of Rimports for the twelve-month period from May 1, 2017 to April 30, 2018 and the fourteen month period from March 1, 2018 to April 30, 2019. The fair value of the contingent consideration related to the earn-out was estimated at $4.8 million at acquisition date and was calculated as the present value of a probability adjusted earnout payment based on the expected term of the payment and a risk-adjusted discount rate. At December 31, 2018, the Company determined that the probability of achieving the earn-out was zero and therefore reversed the amount that was recorded as part of the purchase consideration.

⁽²⁾ The contingent consideration ~~relates~~related to Velocity's acquisition of Ravin in September 2018. The purchase price of Ravin ~~includes~~included a potential earn-out of up to $25.0 million contingent on the achievement of certain financial metrics for the trailing twelve month period ending December 31, 2018. The fair value of the contingent consideration was estimated at $4.7 million at acquisition date and was calculated using a risk-adjusted option pricing model. The earnout was adjusted to ~~$4.3~~$6.4 million atand paid out during the year ended December 31, ~~2018 based on actual results to date. The earnout is currently subject to arbitration and will be paid once the final amount is determined through the arbitration process.~~2019.

Valuation Techniques

~~2018 Term Loan~~

We classify our fixed and floating rate debt as Level 2 items based on quoted market prices for similar debt issues. In April 2018, the Company issued $400.0 million aggregate principal amount of its Senior Notes due 2026. The fair value of the Senior Notes was determined based on quoted market prices obtained through an external pricing source which derives its price valuations from daily marketplace transactions, with adjustments to reflect the spreads of benchmark bonds, credit risk and certain other variables. We have determined this to be a Level 2 measurement as all significant inputs into the quote provided by our pricing source are observable in active markets. At September 30, 2019, the carrying value of the principal under the Company’s outstanding 2018 Term Loan, including the current portion, was $298.8 million, which approximates fair value because it has a variable interest rate that reflects market changes in interest rates and changes in the Company's net leverage ratio.

The Company has not changed its valuation techniques in measuring the fair value of any of its other financial assets and liabilities during the period. For details of the Company’s fair value measurement policies under the fair value hierarchy, refer to the Company’s Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2018.~~2019.

Nonrecurring Fair Value Measurements

There were no assets or liabilities measured on a non-recurring basis during the quarter ended September 30, 2020. The following table provides the assets and liabilities carried at fair value measured on a non-recurring basis as of ~~September 30,~~December 31, 2019. Refer to "Note G – Goodwill and Other Intangible Assets", for a description of the valuation techniques used to determine fair value of the assets measured on a non-recurring basis in the table below. ~~There were no assets and liabilities carried at fair value measured on a non-recurring basis as of December 31, 2018.~~


									Expense
	Fair Value Measurements at December 31, 2019								Year ended
(in thousands)	Carrying Value		Level 1		Level 2		Level 3		December 31, 2019
Goodwill - Velocity Outdoor	$	30,079	$	—	$	—	$	30,079	$	32,881

Expense
Fair Value Measurements at September 30, 2019 Nine months ended
(in thousands) Carrying
Value Level 1 Level 2 Level 3 September 30, 2019
Goodwill - Velocity Outdoor $ 29,579
$ —
$ —
$ 29,579
$ 33,381



Lease Term and Discount Rate
Weighted-average remaining lease term (years)	~~6.41~~		6.05
Weighted-average discount rate	~~7.83~~7.65	%

Supplemental balance sheet information related to leases was as follows (in thousands):

Line Item in the Company’s Consolidated Balance Sheet September 30, 2019

Operating lease right-of-use assets Other non-current assets $ 89,159
Current portion, operating lease liabilities Other current liabilities $ 18,499
Operating lease liabilities Other non-current liabilities $ 72,730


	Line Item in the Company’s Consolidated Balance Sheet	September 30, 2020

Operating lease right-of-use assets	Other non-current assets	$	94,464
Current portion, operating lease liabilities	Other current liabilities	$	20,739
Operating lease liabilities	Other non-current liabilities	$	77,791

Supplemental cash flow information related to leases was as follows (in thousands):

Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 18,574
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 14,178


	Nine months ended September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	22,816
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	9,913

Note P — Related Party Transactions

Management Services Agreement

The Company entered into ~~a Management Services Agreement ("MSA")~~the MSA with CGM effective May 16, 2006. The MSA provides for, among other things, CGM to perform services for the Company in exchange for a management fee paid quarterly and equal to 0.5% of the Company's adjusted net assets, as defined in the MSA. Concurrent with the June 2019 sale of Clean Earth (refer to Note C - Discontinued Operations), CGM agreed to waive the management fee on cash balances held at the Company, commencing with the quarter ended June 30, 2019 and continuing until the quarter during which the Company next ~~borrows~~borrowed under the 2018 Revolving Credit Facility. In March 2020, as a proactive measure to provide the Company with additional cash liquidity in light of the COVID-19 pandemic, the Company elected to draw down $200 million on our 2018 Revolving Credit Facility. The Company and CGM entered into a waiver agreement whereby CGM agreed to waive the portion of the management fee attributable to the cash balances held at the Company as of March 31, 2020. In addition, due to the unprecedented uncertainty as a result of the COVID-19 pandemic, CGM agreed to waive 50% of the management fee calculated at June 30, 2020 that was paid in July 2020. Further, for the third quarter of 2020, the Company and CGM entered into a waiver agreement whereby CGM agreed to waive the portion of the management fee attributable to the cash balances held at the Company as of September 30, 2020.

Integration Services Agreements

~~Foam Fabricators,~~Marucci Sports, which was acquired in ~~2018, and Velocity Outdoor, which was acquired in 2017, each~~April 2020, entered into an Integration Services Agreement ("ISA") with CGM. The ISA provides for CGM to provide services for new platform acquisitions to, amongst other things, assist the management at the acquired entities in establishing a corporate governance program, implement compliance and reporting requirements of the Sarbanes-Oxley Act of 2002, as amended, and align the acquired entity's policies and procedures with our other subsidiaries. ~~Each ISA is for the~~CGM will receive integration service fees of $2.0 million payable quarterly over a twelve month period ~~subsequent to~~as services are rendered beginning in the ~~acquisition. Velocity Outdoor paid CGM a total of $1.5 million~~quarter ended September 30, 2020. Foam Fabricators, which was acquired in ~~integration services fees,~~2018, entered into an ISA with ~~$0.75 million paid in 2018.~~CGM. Foam Fabricators paid CGM $2.3 million over the term of the ISA, with $2.0 million paid in 2018 and $0.3 million in 2019. Integration ~~services~~service fees are included in selling, general and administrative expense on the subsidiaries' statement of operations in the period in which they are incurred.

~~The~~he Company and its businesses have the following significant related party transactions:

~~Sterno Recapitalization~~

In January 2018, the Company completed a recapitalization at Sterno whereby the Company entered into an amendment to the intercompany loan agreement with Sterno (the "Sterno Loan Agreement"). The Sterno Loan Agreement was amended to (i) provide for term loan borrowings of $56.8 million to fund a distribution to the Company, which owned 100% of the outstanding equity of Sterno at the time of the recapitalization, and (ii) extend the maturity dates of the term loans. In connection with the recapitalization, Sterno's management team exercised all of their vested stock options, which represented 58,000 shares of Sterno. The Company then used a portion of the distribution to repurchase the 58,000 shares from management for a total purchase price of $6.0 million. In addition, Sterno issued new stock options to replace the exercised options, thus maintaining the same percentage of fully diluted non-controlling interest that existed prior to the recapitalization.

5.11

Related Party Vendor Purchases - 5.11 purchases inventory from a vendor who is a related party to 5.11 through one of the executive officers of 5.11 via the executive's 40% ownership interest in the vendor. ~~During~~5.11 purchased approximately $0.7 million and $2.3 million during the three and nine months ended September 30, ~~2019, 5.11 purchased approximately~~2020, respectively, and $1.1 million and $3.2 million, during the three and nine months endedSeptember 30, 2019, respectively, in inventory from the vendor.

NOTE Q - SUBSEQUENT EVENT

On September 20, 2020, the Company, through its newly formed acquisition subsidiaries, BOA Holdings Inc., a Delaware corporation (“BOA Holdings”) and BOA Parent Inc., a Delaware corporation (“Buyer”) and a wholly-owned subsidiary of BOA Holdings, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Reel Holding Corp., a Delaware corporation (“BOA”) and the sole stockholder of Boa Technology, Inc., BOA Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Buyer (“Merger Sub”), and Shareholder Representative Services LLC (in its capacity as the representative of the stockholders of BOA). Pursuant to the Merger Agreement, on October 16, 2020, Merger Sub was merged with and into BOA (the “Merger”) such that the separate existence of Merger Sub ceased, and BOA survived the Merger as a wholly-owned subsidiary of Buyer. BOA, creators of the award-winning BOA® Fit System featured in performance footwear, action sports, outdoor and medical products worldwide, was founded in 2001 and is headquartered in Denver, Colorado. The total purchase price for the acquisition of BOA was $454 million (excluding working capital and certain other adjustments upon closing, and transaction costs). The Company funded the acquisition with cash on hand and a $300 million draw on its 2018 Revolving Credit Facility. The Company's initial equity ownership in BOA is approximately 82%, as certain existing stockholders in BOA invested in the transaction alongside the Company.

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 our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 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") was incorporated in Delaware on November 18, 2005. Compass Group Diversified Holdings LLC (the "Company") was also formed on November 18, 2005. Holdings and the Company (collectively, "CODI") were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. The Company is the operating entity and is a controlling owner of ~~eight~~nine businesses, or operating segments, at September 30, ~~2019.~~2020. The segments are as follows: 5.11 Acquisition Corp. ("5.11" ~~or "5.11 Tactical"~~), The Ergo Baby Carrier, Inc. ("Ergobaby"), Liberty Safe and Security Products, Inc. ("Liberty Safe" or "Liberty"), Marucci Sports, LLC ("Marucci" or Marucci Sports"), Velocity Outdoor, Inc. (formerly Crosman Corp.) ("Velocity Outdoor" or "Velocity"), Compass AC Holdings, Inc. ("ACI" or "Advanced Circuits"), AMT Acquisition Corporation ("Arnold"), FFI Compass, Inc. ("Foam Fabricators" or "Foam"), and The Sterno Group, LLC ("Sterno").

We acquired our existing businesses (segments) that we own at September 30, ~~2019~~2020 as follows:


		Ownership Interest - September 30, 2019				Ownership Interest - September 30, 2020
Business	Acquisition Date	Primary	Diluted	Business	Acquisition Date	Primary	Diluted
Advanced Circuits	May 16, 2006	69.4%	65.4%	Advanced Circuits	May 16, 2006	69.3%	65.4%
Liberty Safe	March 31, 2010	91.2%	88.4%	Liberty Safe	March 31, 2010	91.2%	86.0%
Ergobaby	September 16, 2010	81.9%	75.8%	Ergobaby	September 16, 2010	81.4%	72.6%
Arnold	March 5, 2012	96.7%	80.2%	Arnold	March 5, 2012	96.7%	82.4%
Sterno	October 10, 2014	100.0%	88.5%	Sterno	October 10, 2014	100.0%	88.5%
5.11 Tactical	August 31, 2016	97.5%	88.9%
5.11				5.11	August 31, 2016	97.6%	88.1%
Velocity Outdoor	June 2, 2017	99.2%	93.0%	Velocity Outdoor	June 2, 2017	99.3%	88.0%
Foam Fabricators	February 15, 2018	100.0%	91.5%	Foam Fabricators	February 15, 2018	100.0%	91.5%
Marucci Sports				Marucci Sports	April 20, 2020	92.2%	83.8%

~~Adjusted EBITDA~~

~~Nine months ended September 30, 2019~~


Adjusted EBITDA
Nine months ended September 30, 2020
	Corporate		5.11		Ergobaby		Liberty		Marucci Sports		Velocity Outdoor		ACI		Arnold		Foam		Sterno		Consolidated
Net income (loss)	$	(10,535)	$	5,515	$	1,837	$	7,119	$	(5,344)	$	4,245	$	10,980	$	(1,719)	$	4,188	$	2,131	$	18,417
Adjusted for:
Provision (benefit) for income taxes	—		(55)		2,265		2,357		(2,351)		1,386		2,878		(56)		1,891		162		8,477
Interest expense, net	31,971		43		—		—		6		102		—		—		—		—		32,122
Intercompany interest	(51,429)		10,770		1,818		2,748		1,194		6,945		4,176		4,300		5,290		14,188		—

Depreciation and amortization	467		16,033		6,152		1,294		8,031		9,651		1,980		5,040		9,473		17,251		75,372
EBITDA	(29,526)		32,306		12,072		13,518		1,536		22,329		20,014		7,565		20,842		33,732		134,388
Gain on sale of business	(100)		—		—		—		—		—		—		—		—		—		(100)
Other (income) expense	3		1,398		—		(4)		(46)		1,048		126		(1)		(438)		86		2,172
Noncontrolling shareholder compensation	—		1,870		748		22		361		1,287		372		34		771		651		6,116
Acquisition expenses and other	—		—		—		—		2,042		—		—		—		273		—		2,315

Integration services fee	—		—		—		—		500		—		—		—		—		—		500
Other	—		—		598		—		—		—		—		—		—		—		598
Management fees	19,651		750		375		375		222		375		375		375		563		375		23,436
Adjusted EBITDA	$	(9,972)	$	36,324	$	13,793	$	13,911	$	4,615	$	25,039	$	20,887	$	7,973	$	22,011	$	34,844	$	169,425

Corporate 5.11 Ergobaby Liberty Velocity Outdoor ACI Arnold Foam Sterno Consolidated
Net income (loss) ⁽¹⁾
$ 292,440
$ (1,071 ) $ 4,251
$ 1,404
$ (35,242 ) $ 11,035
$ (132 ) $ 3,383
$ 8,819
$ 284,887
Adjusted for:
Provision (benefit) for income taxes —
742
2,248
1,058
(2,198 ) 2,934
1,679
1,492
2,420
10,375
Interest expense, net 48,247
2
—
—
173
(1 ) (1 ) —
4
48,424
Intercompany interest (61,609 ) 13,500
2,640
3,278
8,484
5,029
4,777
6,675
17,226
—
Loss on debt extinguishment 5,038
—
—
—
—
—
—
—
—
5,038
Depreciation and amortization 1,333
16,037
6,566
1,248
9,937
1,830
4,883
9,258
16,793
67,885
EBITDA 285,449
29,210
15,705
6,988
(18,846 ) 20,827
11,206
20,808
45,262
416,609
Gain on sale of business (330,203 ) —
—
—
—
—
—
—
—
(330,203 )
Other (income) expense 91
(92 ) (11 ) 10
968
(22 ) (3 ) 256
16
1,213
Noncontrolling shareholder compensation —
1,742
620
(15 ) 86
167
32
767
866
4,265
Impairment expense —
—
—
—
33,381
—
—
—
—
33,381
Loss on sale of investment 10,193
—
—
—
—
—
—
—
—
10,193
Integration services fee —
—
—
—
—
—
—
281
—
281
Other —
—
—
266
—
58
—
—
—
324
Management fees 24,789
750
375
375
375
375
375
563
375
28,352
Adjusted EBITDA $ (9,681 ) $ 31,610
$ 16,689
$ 7,624
$ 15,964
$ 21,405
$ 11,610
$ 22,675
$ 46,519
$ 164,415

⁽¹⁾~~Net income (loss) does not include income from discontinued operations for the nine months ended September 30, 2019.~~

~~Adjusted EBITDA~~


Adjusted EBITDA
Nine months ended September 30, 2019
	Corporate		5.11		Ergobaby		Liberty		Marucci Sports	Velocity Outdoor		ACI		Arnold		Foam		Sterno		Consolidated
Net income (loss) (1)	$	292,440	$	(1,071)	$	4,251	$	1,404		$	(35,242)	$	11,035	$	(132)	$	3,383	$	8,819	$	284,887
Adjusted for:
Provision (benefit) for income taxes	—		742		2,248		1,058			(2,198)		2,934		1,679		1,492		2,420		10,375
Interest expense, net	48,247		2		—		—			173		(1)		(1)		—		4		48,424
Intercompany interest	(61,609)		13,500		2,640		3,278		Not Applicable	8,484		5,029		4,777		6,675		17,226		—
Loss on debt extinguishment	5,038		—		—		—			—		—		—		—		—		5,038
Depreciation and amortization	1,333		16,037		6,566		1,248			9,937		1,830		4,883		9,258		16,793		67,885
EBITDA	285,449		29,210		15,705		6,988			(18,846)		20,827		11,206		20,808		45,262		416,609
Gain on sale of businesses	(330,203)		—		—		—			—		—		—				—		(330,203)
Other (income) expense	91		(92)		(11)		10			968		(22)		(3)		256		16		1,213
Noncontrolling shareholder compensation	—		1,742		620		(15)			86		167		32		767		866		4,265
Impairment expense	—		—		—		—			33,381		—		—		—		—		33,381
Loss on sale of investment	10,193		—		—		—			—		—		—		—		—		10,193
Integration services fee	—		—		—		—			—		—		—		281		—		281
Other	—		—		—		266			—		58		—		—		—		324
Management fees	24,789		750		375		375			375		375		375		563		375		28,352
Adjusted EBITDA	$	(9,681)	$	31,610	$	16,689	$	7,624		$	15,964	$	21,405	$	11,610	$	22,675	$	46,519	$	164,415

~~Nine months ended September 30, 2018~~

Corporate 5.11 Ergobaby Liberty Velocity Outdoor ACI Arnold Foam Sterno Consolidated
Net income (loss)⁽¹⁾
$ (19,267 ) $ (9,612 ) $ 4,550
$ 1,282
$ (934 ) $ 10,646
$ (330 ) $ 530
$ 2,882
$ (10,253 )
Adjusted for:

Provision (benefit) for income taxes —
(586 ) 1,697
420
(736 ) 2,790
2,446
689
837
7,557
Interest expense, net 34,979
13
1
—
235
(2 ) —
—
1
35,227
Intercompany interest (57,311 ) 12,904
3,661
3,139
6,401
5,605
4,660
5,898
15,043
—
Loss on debt extinguishment 744
—
—
—
—
—
—
—
—
744
Depreciation and amortization 1,352
16,201
6,397
1,190
6,252
2,497
4,789
7,912
21,758
68,348
EBITDA (39,503 ) 18,920
16,306
6,031
11,218
21,536
11,565
15,029
40,521
101,623
Gain on sale of businesses (1,165 ) —
—
—
—
—
—
—
(1,165 )
Gain (loss) on sale of fixed assets —
(259 ) —
59
—
—
48
72
—
(80 )
Noncontrolling shareholder compensation —
1,903
733
37
1,074
18
117
594
1,496
5,972
Acquisition related expenses 5
—
—
—
1,362
—
—
1,552
632
3,551
Integration services fee —
—
—
—
750
—
—
1,406
—
2,156
Loss on foreign currency transactions 1,364
—
—
—
—
—
—
—
—
1,364
Management fees 28,734
750
375
375
375
375
375
470
375
32,204
Adjusted EBITDA ⁽²⁾
$ (10,565 ) $ 21,314
$ 17,414
$ 6,502
$ 14,779
$ 21,929
$ 12,105
$ 19,123
$ 43,024
$ 145,625

⁽¹⁾Net income (loss) does not include loss from discontinued operations for the nine months ended September 30, ~~2018.~~2019.

⁽²⁾

~~As a result~~

Reconciliation of the sales of Manitoba Harvest in February 2019 and Clean Earth in June 2019, Adjusted EBITDA for the nine months ended September 30, 2018 does not include Adjusted EBITDA from Manitoba Harvest of $4.9 million and Clean Earth of $32.9 million.

Cash Flow Available for Distribution and Reinvestment

The table below details cash receipts and payments that are not reflected on our income statement in order to provide an additional measure of management's estimate of cash flow available for distribution ("CAD"). CAD is a non-GAAP measure that we believe provides additional, useful information to our shareholders in order to enable them to evaluate our ability to make anticipated quarterly distributions. CAD is 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.

The following table reconciles CAD to net income (loss) and cash flows provided by operating activities, which we consider to be the most directly comparable financial measure calculated and presented in accordance with GAAP.


	Nine Months Ended
(in thousands)	September 30, 2020		September 30, 2019
Net income	$	18,417	$	301,788
Adjustment to reconcile net income to cash provided by operating activities:
Depreciation and amortization	73,578		78,413
Impairment expense	—		33,381
Gain on sale of businesses	(100)		(330,203)
Amortization of debt issuance costs, discount and premium	1,656		3,022
Unrealized loss on interest rate hedge	—		3,486
Noncontrolling shareholder charges	6,116		6,204
Provision for loss on receivables	4,374		2,786
Deferred taxes	(3,352)		(14,538)
Other	1,776		5,961
Changes in operating assets and liabilities	10,407		(58,716)
Net cash provided by operating activities	112,872		31,584
Plus:
Unused fee on revolving credit facility	1,148		1,393
Integration services fee (1)	500		281
Successful acquisition costs	2,315		596
Realized loss from foreign currency (2)	—		363
Loss on sale of Tilray Common Stock	—		10,193
Changes in operating assets and liabilities	—		58,716

Less:
Payment of interest rate swap	—		675
Changes in operating assets and liabilities	10,407		—
Maintenance capital expenditures: (3)
Compass Group Diversified Holdings LLC	—		—
5.11	897		1,547
Advanced Circuits	354		1,126
Arnold	2,761		2,874
Clean Earth	—		3,495
Ergobaby	374		583
Foam Fabricators	1,518		1,387
Liberty	438		720
Marucci Sports	220		—
Sterno	1,061		932
Velocity Outdoor	2,743		2,096
Other	3,776		2,301
Preferred share distribution	17,633		11,344
Estimated cash flow available for distribution and reinvestment	$	74,653	$	74,046

Nine Months Ended
(in thousands) September 30, 2019 September 30, 2018
Net income $ 301,788
$ 4,678
Adjustment to reconcile net income to cash provided by operating activities:

Depreciation and amortization 78,413
87,878
Impairment expense 33,381
—
Gain on sale of businesses (330,203 ) (1,165 )
Amortization of debt issuance costs and original issue discount 3,022
3,403
Unrealized (gain) loss on interest rate hedge 3,486
(4,649 )
Noncontrolling shareholder charges 6,204
7,694
Provision for loss on receivables 2,786
459
Deferred taxes (14,538 ) (6,622 )
Other 5,961
46
Changes in operating assets and liabilities (58,716 ) (32,950 )
Net cash provided by operating activities 31,584
58,772
Plus:

Unused fee on revolving credit facility 1,393
1,282
Integration services fee ⁽¹⁾
281
2,156
Successful acquisition costs 596
4,995
Realized loss from foreign currency ⁽²⁾
363
1,364
Loss on sale of Tilray Common Stock 10,193
—
Changes in operating assets and liabilities 58,716
32,950
Other —
885
Less:

Payment of interest rate swap 675
1,444
Maintenance capital expenditures: ⁽³⁾

Compass Group Diversified Holdings LLC —
—
5.11 Tactical 1,547
2,629
Advanced Circuits 1,126
1,169
Arnold 2,874
3,160
Clean Earth 3,495
5,998
Ergobaby 583
646
Foam Fabricators 1,387
1,455
Liberty 720
1,039
Manitoba Harvest —
342
Sterno 932
2,320
Velocity Outdoor 2,096
3,063
Other 2,301
—
Preferred share distribution 11,344
8,398
Estimated cash flow available for distribution and reinvestment $ 74,046
$ 70,741

Distribution paid in April 2019/2018 $ (21,564 ) $ (21,564 )
Distribution paid in July 2019/2018 (21,564 ) (21,564 )
Distribution paid in October 2019/2018 (21,564 ) (21,564 )
$ (64,692 ) $ (64,692 )


Distribution paid in April 2020/2019	$	(21,564)	$	(21,564)
Distribution paid in July 2020/2019	(23,364)		(21,564)
Distribution paid in October 2020/2019	(23,364)		(21,564)
	$	(68,292)	$	(64,692)

⁽¹⁾Represents fees paid by newly acquired companies to the Manager for integration services performed during the first year of ownership, payable quarterly.

⁽²⁾ Reflects the foreign currency transaction gain or loss resulting from the Canadian dollar intercompany loans issued to Manitoba Harvest.


⁽³⁾ (3) Represents maintenance capital expenditures that were funded from operating cash flow, net of proceeds from the sale of property, plant and equipment, and excludes growth capital expenditures of approximately $9.7 million for the nine months ended September 30, 2020 and $10.7 million for the nine months ended September 30, 2019.	Represents maintenance capital expenditures that were funded from operating cash flow, net of proceeds from the sale of property, plant and equipment, and excludes growth capital expenditures of approximately $10.7 million for the nine months ended September 30, 2019 and $19.2 million for the nine months ended September 30, 2018.

Seasonality

Earnings of certain of our operating segments are seasonal in nature due to various recurring events, holidays and seasonal weather patterns, as well as the timing of our acquisitions during a given year. Historically, the third and fourth quarter produce the highest net sales during our fiscal year.

Related Party Transactions

Management Services Agreement

We entered into ~~a Management Services Agreement ("MSA")~~the MSA with CGM effective May 16, 2006. The MSA provides for, among other things, CGM to perform services for the Company in exchange for a management fee paid quarterly and equal to 0.5% of the Company's adjusted net assets, as defined in the MSA. Concurrent with the June 2019 sale of Clean Earth (refer to Note C - Discontinued Operations), CGM agreed to waive the management fee on cash balances held at the Company, commencing with the quarter ended June 30, 2019 and continuing until the quarter during which the Company next ~~borrows~~borrowed under the 2018 Revolving Credit Facility. In March 2020, as a proactive measure to provide the Company with additional cash liquidity in light of the COVID-19 pandemic, the Company elected to draw down $200 million on our 2018 Revolving Credit Facility. The Company and CGM entered into a waiver agreement whereby CGM agreed to waive the portion of the management fee attributable to the cash balances held at the Company as of March 31, 2020. In addition, as a result of an expected decline in earnings and cash flows in the second quarter of 2020, CGM agreed to waive 50% of the management fee calculated at June 30, 2020 that was paid in July 2020. Further, for the third quarter of 2020, the Company and CGM entered into a waiver agreement whereby CGM agreed to waive the portion of the management fee attributable to the cash balances held at the Company as of September 30, 2020.

Integrations Services Agreements

~~Foam Fabricators,~~Marucci Sports, which was acquired in ~~2018,~~April 2020, entered into an Integration Services Agreement ("ISA") with CGM. The ISA provides for CGM to provide services for new platform acquisitions to, amongst other things, assist the management at the acquired entities in establishing a corporate governance program, implement compliance and reporting requirements of the Sarbanes-Oxley Act of 2002, as amended, and align the acquired entity's policies and procedures with our other subsidiaries. ~~Each~~CGM will receive integration service fees of $2.0 million payable quarterly over a twelve month period as services are rendered beginning in the quarter ended September 30, 2020. Foam Fabricators, which was acquired in 2018, entered into an ISA ~~is for the twelve-month period subsequent to the acquisition.~~ with CGM. Foam Fabricators paid CGM $2.3 million over the term of the ISA, with $2.0 million paid in 2018 and $0.3 million in 2019.

5.11 - Related Party Vendor Purchases

5.11 purchases inventory from a vendor who is a related party to 5.11 through one of the executive officers of 5.11 via the executive's 40% ownership interest in the vendor. During the three and nine months ended September 30, ~~2019,~~2020, 5.11 purchased approximately ~~$3.2~~$0.7 million and $2.3 million, respectively, in inventory from the vendor.

Profit Allocation Payments

October 2019 represented the five-year anniversary of the Company's acquisition of Sterno, which qualified as a Holding Event under the Company's LLC Agreement (the "Sterno Holding Event"). During the first quarter of 2020, the Company declared and paid a distribution of $9.1 million to the Allocation Member related to the Sterno Holding

Event. The ten-year anniversary of Liberty occurred in March 2020 which represented a Holding Event. The holders of the Allocation Interests elected to defer the distribution of $3.3 million until after the end of 2020. The ten-year anniversary of Ergo occurred in September 2020 which represented a Holding Event. The Holders elected to defer the distribution of $2.0 million until after the end of 2020.

The sales of Manitoba Harvest in February 2019 and Clean Earth in June 2019 each qualified as a Sale Event under the Company's LLC Agreement. During the second quarter of 2019, the Company declared and paid a distribution to the Allocation Member ~~in connection with~~of $8.0 million related to the ~~Sale Event~~sale of Manitoba Harvest ~~of $7.7 million which was paid in the second quarter of 2019.~~and working capital settlements from prior Sale Events. The profit allocation distribution was calculated based on the portion of the gain on sale related to the Closing Date Consideration, less the loss on sale of shares that were received as part of the Closing Consideration. ~~An additional profit allocation distribution related to the Sale Event of Manitoba Harvest will be declared subsequent to receipt of the Deferred Consideration in August 2019.~~ During the third quarter of 2019, the Company declared and paid a distribution to the Allocation Member ~~in connection with the Sale Event of Clean Earth~~ of $43.3 million ~~which was paid in~~related to the ~~third quarter~~sale of ~~2019.~~Clean Earth. During the fourth quarter of 2019, the Company declared and paid a distribution to the Allocation Member ~~in connection with~~of $9.1 million related to the Deferred Consideration ~~received related to~~from the Manitoba Harvest sale and the working capital settlement received from the sale of ~~$8.7 million.~~Clean Earth.

Off-Balance Sheet Arrangements

We have no special purpose entities or off-balance sheet arrangements.

Contractual Obligations

Long-term contractual obligations, except for our long-term debt obligations and operating lease liabilities, are generally not recognized in our consolidated balance sheet. Non-cancelable purchase obligations are obligations we incur during the normal course of business, based on projected needs.

The table below summarizes the payment schedule of our contractual obligations at September 30, ~~2019:~~2020:


(in thousands)	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		(in thousands)	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Long-term debt obligations ⁽¹⁾	$	993,024	$	25,076	$	104,647	$	103,837	$	759,464	Long-term debt obligations (1)	$	865,233	$	24,000	$	96,000	$	97,233	$	648,000
Operating lease obligations ⁽²⁾	132,816		4,775		47,251		33,914		46,876		Operating lease obligations (2)	133,114		4,841		52,393		32,424		43,456
Purchase obligations ⁽³⁾	351,708		126,063		108,594		81,609		35,442		Purchase obligations (3)	767,926		192,371		288,114		287,441		—
Total ⁽⁴⁾	$	1,477,548	$	155,914	$	260,492	$	219,360	$	841,782	Total (4)	$	1,766,273	$	221,212	$	436,507	$	417,098	$	691,456


	Three months ended September 30,				Nine months ended September 30,
(in thousands, except per share data)	2020		2019		2020		2019
Net revenues	$	418,903	$	388,313	$	1,085,979	$	1,063,254
Cost of revenues	265,119		251,778		695,304		684,601
Gross profit	153,784		136,535		390,675		378,653
Operating expenses:
Selling, general and administrative expense	93,036		82,027		260,850		243,736
Management fees	9,659		8,874		23,436		28,352
Amortization expense	15,222		13,520		43,506		40,632
Impairment expense	0		33,381		0		33,381
Operating income (loss)	35,867		(1,267)		62,883		32,552
Other income (expense):
Interest expense, net	(12,351)		(11,525)		(32,122)		(48,424)
Loss on sale of securities (refer to Note C)	0		(4,893)		0		(10,193)
Amortization of debt issuance costs	(660)		(770)		(1,795)		(2,625)
Loss on debt extinguishment	0		(5,038)		0		(5,038)
Other income (expense), net	(447)		(689)		(2,172)		(1,213)
Income (loss) from continuing operations before income taxes	22,409		(24,182)		26,794		(34,941)
Provision for income taxes	1,606		4,400		8,477		10,375
Income (loss) from continuing operations	20,803		(28,582)		18,317		(45,316)

Income from discontinued operations, net of income tax	0		0		0		16,901
Gain on sale of discontinued operations	100		2,039		100		330,203
Net income (loss)	20,903		(26,543)		18,417		301,788
Less: Net income from continuing operations attributable to noncontrolling interest	1,717		1,242		4,003		3,997
Less: Net loss from discontinued operations attributable to noncontrolling interest	0		0		0		(266)
Net income (loss) attributable to Holdings	$	19,186	$	(27,785)	$	14,414	$	298,057

Amounts attributable to Holdings
Income (loss) from continuing operations	$	19,086	$	(29,824)	$	14,314	$	(49,313)
Income from discontinued operations, net of income tax	0		0		0		17,167
Gain on sale of discontinued operations, net of income tax	100		2,039		100		330,203
Net income (loss) attributable to Holdings	$	19,186	$	(27,785)	$	14,414	$	298,057

Basic income (loss) per common share attributable to Holdings (refer to Note J)
Continuing operations	$	0.08	$	(1.33)	$	(0.33)	$	(1.95)
Discontinued operations	0		0.03		0		5.80
	$	0.08	$	(1.30)	$	(0.33)	$	3.85

Basic weighted average number of shares of common shares outstanding	64,900		59,900		62,556		59,900

Cash distributions declared per Trust common share (refer to Note J)	$	0.36	$	0.36	$	1.08	$	1.08



	Three months ended September 30,						Nine months ended September 30,
(in thousands, except per share data)	2019			2018			2019			2018
Net revenues	$	388,313		$	360,283		$	1,063,254		$	986,402
Cost of revenues	251,778			236,286			684,601			640,039
Gross profit	136,535			123,997			378,653			346,363
Operating expenses:
Selling, general and administrative expense	82,027			79,577			243,736			241,253
Management fees	8,874			10,768			28,352			32,204
Amortization expense	13,520			12,788			40,632			35,533
Impairment expense	33,381			—			33,381			—
Operating income (loss)	(1,267		)	20,864			32,552			37,373
Other income (expense):
Interest expense, net	(11,525		)	(15,635		)	(48,424		)	(35,227		)
Loss on sale of securities (refer to Note C)	(4,893		)	—			(10,193		)	—
Amortization of debt issuance costs	(770		)	(927		)	(2,625		)	(2,978		)
Loss on debt extinguishment	(5,038		)	—			(5,038		)	(744		)
Other income (expense), net	(689		)	511			(1,213		)	(2,285		)
Income (loss) from continuing operations before income taxes	(24,182		)	4,813			(34,941		)	(3,861		)
Provision for income taxes	4,400			5,470			10,375			7,557
Income (loss) from continuing operations	(28,582		)	(657		)	(45,316		)	(11,418		)
Income from discontinued operations, net of income tax	—			6,423			16,901			14,931
Gain on sale of discontinued operations	2,039			—			330,203			1,165
Net income (loss)	(26,543		)	5,766			301,788			4,678
Less: Net income from continuing operations attributable to noncontrolling interest	1,242			688			3,997			2,475
Less: Net income (loss) from discontinued operations attributable to noncontrolling interest	—			352			(266		)	726
Net income (loss) attributable to Holdings	$	(27,785	)	$	4,726		$	298,057		$	1,477

Amounts attributable to Holdings
Income (loss) from continuing operations	$	(29,824	)	$	(1,345	)	$	(49,313	)	$	(13,893	)
Income from discontinued operations, net of income tax	—			6,071			17,167			14,205
Gain on sale of discontinued operations, net of income tax	2,039			—			330,203			1,165
Net income (loss) attributable to Holdings	$	(27,785	)	$	4,726		$	298,057		$	1,477

Basic income (loss) per common share attributable to Holdings (refer to Note J)
Continuing operations	$	(1.33	)	$	(0.16	)	$	(1.95	)	$	(0.45	)
Discontinued operations	0.03			0.09			5.80			0.25
	$	(1.30	)	$	(0.07	)	$	3.85		$	(0.20	)

Basic weighted average number of shares of common shares outstanding	59,900			59,900			59,900			59,900
Cash distributions declared per Trust common share (refer to Note J)	$	0.36		$	0.36		$	1.08		$	1.08


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2020		2019		2020		2019

Net income (loss)	$	20,903	$	(26,543)	$	18,417	$	301,788
Other comprehensive income (loss)
Foreign currency translation adjustments	913		(861)		(1,038)		(608)
Foreign currency amounts reclassified from accumulated other comprehensive income (loss) that increase net income:
Disposition of Manitoba Harvest	0		0		0		4,791
Pension benefit liability, net	168		(690)		524		(1,470)
Other comprehensive income (loss)	1,081		(1,551)		(514)		2,713
Total comprehensive income (loss), net of tax	21,984		(28,094)		17,903		304,501
Less: Net income attributable to noncontrolling interests	1,717		1,242		4,003		3,731
Less: Other comprehensive income (loss) attributable to noncontrolling interests	39		(67)		16		(97)
Total comprehensive income (loss) attributable to Holdings, net of tax	$	20,228	$	(29,269)	$	13,884	$	300,867



	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2019			2018		2019			2018

Net income (loss)	$	(26,543	)	$	5,766	$	301,788		$	4,678
Other comprehensive income (loss)
Foreign currency translation adjustments	(861		)	1,603		(608		)	(2,424		)
Foreign currency amounts reclassified from accumulated other comprehensive income (loss) that increase (decrease) net income:
Disposition of Manitoba Harvest	—			—		4,791			—
Pension benefit liability, net	(690		)	34		(1,470		)	643
Other comprehensive income (loss)	(1,551		)	1,637		2,713			(1,781		)
Total comprehensive income (loss), net of tax	$	(28,094	)	$	7,403	$	304,501		$	2,897
Less: Net income attributable to noncontrolling interests	1,242			1,040		3,731			3,201
Less: Other comprehensive income (loss) attributable to noncontrolling interests	(67		)	266		(97		)	(462		)
Total comprehensive income (loss) attributable to Holdings, net of tax	$	(29,269	)	$	6,097	$	300,867		$	158

COMPASS DIVERSIFIED HOLDINGS CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

	Nine months ended September 30,
(in thousands)	2019			2018
Cash flows from operating activities:
Net income	$	301,788		$	4,678
Income from discontinued operations, net of income tax	16,901			14,931
Gain on sale of discontinued operations	330,203			1,165
Loss from continuing operations	(45,316		)	(11,418		)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense	24,628			22,826
Amortization expense	40,632			42,860
Impairment expense	33,381			—
Amortization of debt issuance costs and original issue discount	3,022			3,403
Unrealized (gain) loss on interest rate swap	3,486			(4,649		)
Noncontrolling stockholder stock based compensation	4,265			5,973
Provision for loss on receivables	2,539			481
Deferred taxes	(2,208		)	(23		)
Loss on debt extinguishment	5,038			744
Other	853			(431		)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(19,187		)	(28,181		)
Inventories	(24,863		)	(26,514		)
Other current and non-current assets	(11,826		)	(4,786		)
Accounts payable and accrued expenses	27,278			35,805
Cash provided by operating activities - continuing operations	41,722			36,090
Cash (used in) provided by operating activities - discontinued operations	(10,138		)	22,682
Cash provided by operating activities	31,584			58,772
Cash flows from investing activities:
Acquisitions, net of cash acquired	—			(495,136		)
Purchases of property and equipment	(21,964		)	(34,690		)
Payment of interest rate swap	(675		)	(1,444		)
Proceeds from sale of businesses	501,895			—
Other investing activities	1,673			(9		)
Cash provided by (used in) investing activities - continuing operations	480,929			(531,279		)
Cash provided by (used in) investing activities - discontinued operations	279,219			(63,426		)
Cash provided by (used in) investing activities	760,148			(594,705		)



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


(in thousands)	Trust Preferred Shares						Trust Common Shares		Accumulated Deficit		Accumulated Other Comprehensive Loss		Stockholders' Equity Attributable to Holdings		Non- Controlling Interest		Non- Controlling Interest Attributable to Disc. Ops.		Total Stockholders’ Equity
	Series A		Series B		Series C
Balance — July 1, 2019	$	96,417	$	96,504	$	0	$	924,680	$	17,715	$	(4,512)	$	1,130,804	$	45,977	$	0	$	1,176,781
Net income (loss)	—		—		—		—		(27,785)		—		(27,785)		1,242		0		(26,543)
Total comprehensive loss, net	—		—		—		—		—		(1,551)		(1,551)		—		—		(1,551)
Option activity attributable to noncontrolling shareholders	—		—		—		—		—		—		—		936		0		936
Purchase of noncontrolling interest	—		—		—		—		—		—		—		(710)		—		(710)
Distributions paid - Allocation interests	—		—		—		—		(43,313)		—		(43,313)		—		—		(43,313)
Distributions paid - Trust Common Shares	—		—		—		—		(21,564)		—		(21,564)		—		—		(21,564)
Distributions paid - Trust Preferred Shares	—		—		—		—		(3,781)		—		(3,781)		—		—		(3,781)
Balance — September 30, 2019	$	96,417	$	96,504	$	0	$	924,680	$	(78,728)	$	(6,063)	$	1,032,810	$	47,445	$	0	$	1,080,255

Balance — July 1, 2020	$	96,417	$	96,504	$	110,997	$	1,008,588	$	(177,912)	$	(5,528)	$	1,129,066	$	67,816	$	0	$	1,196,882
Net income	—		—		—		—		19,186		—		19,186		1,717		0		20,903
Total comprehensive income, net	—		—		—		—		—		1,081		1,081		—		—		1,081
Issuance of trust common shares, net of offering costs	—		—		—		(24)		—		—		(24)		—		—		(24)
Option activity attributable to noncontrolling shareholders	—		—		—		—		—		—		—		2,171		—		2,171
Effect of subsidiary stock option exercise	—		—		—		—		—		—		—		2,203		—		2,203
Purchase of noncontrolling interest	—		—		—		—		—		—		—		(3,113)		—		(3,113)
Distributions paid - Trust Common Shares	—		—		—		—		(23,364)		—		(23,364)		—		—		(23,364)
Distributions paid - Trust Preferred Shares	—		—		—		—		(6,046)		—		(6,046)		—		—		(6,046)
Balance — September 30, 2020	$	96,417	$	96,504	$	110,997	$	1,008,564	$	(188,136)	$	(4,447)	$	1,119,899	$	70,794	$	0	$	1,190,693


	Preliminary Purchase Price Allocation		Measurement Period Adjustments		Preliminary Purchase Price Allocation
(in thousands)					As of September 30, 2020
Assets
Cash	2,730		0		2,730
Accounts Receivable (1)	11,471		0		11,471
Inventory (2)	14,795		(314)		14,481
Property, plant and equipment (3)	10,681		(374)		10,307
Intangible assets	99,249		0		99,249
Goodwill	67,733		238		67,971
Other current and noncurrent assets	956		1,252		2,208
Total Assets	207,615		802		208,417

Liabilities and noncontrolling interest
Current liabilities	6,207		294		6,501
Other liabilities	42,100		958		43,058

Noncontrolling interest	11,127		0		11,127
Total liabilities and noncontrolling interest	59,434		1,252		60,686

Net assets acquired	148,181		(450)		147,731
Noncontrolling interest	11,127		0		11,127
Intercompany loans	42,100		0		42,100
	$	201,408	$	(450)	$	200,958


Acquisition consideration
Purchase price	$	200,000	$	0	$	200,000
Cash acquired	3,750		(1,019)		2,731
Net working capital adjustment	158		569		727
Other adjustments	(2,500)		0		(2,500)
Total purchase consideration	$	201,408	$	(450)	$	200,958
Less: Transaction costs	2,042		0		2,042
Net purchase price	$	199,366	$	(450)	$	198,916


Intangible Assets	Amount		Estimated Useful Life
Tradename	$	83,929	15 years
Customer relationships	11,120		15 years
Technology	4,200		15 years
	$	99,249



(in thousands)	Nine months ended September 30, 2018
Net revenues	$	1,026,230
Gross profit	356,782
Operating income	40,481
Net loss	(13,055		)
Net loss attributable to Holdings	(15,530		)
Basic and fully diluted net loss per share attributable to Holdings	$	(0.49	)


	Three months ended			Nine months ended
(in thousands, except per share data)		September 30, 2019		September 30, 2020		September 30, 2019
Net sales		$	403,259	$	1,108,479	$	1,113,241
Gross profit		$	144,952	$	403,105	$	405,477
Operating income		$	(1,684)	$	62,062	$	30,242
Net income (loss) from continuing operations		$	(30,692)	$	14,920	$	(52,375)
Net income (loss) from continuing operations attributable to Holdings		$	(31,958)	$	10,957	$	(56,383)
Basic and fully diluted net loss per share attributable to Holdings		$	(1.37)	$	(0.38)	$	(2.07)



	Three months ended September 30, 2018			For the period January 1, 2019 through disposition			Nine months ended September 30, 2018
Net sales	$	71,116		$	132,737		$	199,579
Gross profit	18,610			39,678			56,589
Operating income	4,278			6,232			12,495
Income from continuing operations before income taxes	4,202			5,880			12,215
Benefit for income taxes	(2,627		)	(11,607		)	(2,247		)
Income from discontinued operations ⁽¹⁾	$	6,829		$	17,487		$	14,462



	December 31, 2018
	Manitoba Harvest		Clean Earth		Total
Assets:
Cash and cash equivalents	$	2,577	$	1,978	$	4,555
Accounts receivable, net	7,169		59,689		66,858
Inventories	11,436		—		11,436
Prepaid expenses and other current assets	773		6,140		6,913
Current assets of discontinued operations	$	21,955	$	67,807	$	89,762
Property, plant and equipment, net	18,157		62,060		80,217
Goodwill	37,777		144,778		182,555
Intangible assets, net	53,533		129,530		183,063
Other non-current assets	—		3,629		3,629
Non-current assets of discontinued operations	$	109,467	$	339,997	$	449,464
Liabilities:
Accounts payable	4,259		26,135		30,394
Accrued expenses	4,313		16,063		20,376
Due to related party	350		—		350
Other current liabilities	507		867		1,374
Current liabilities of discontinued operations	$	9,429	$	43,065	$	52,494
Deferred income taxes	12,675		28,300		40,975
Other non-current liabilities	2,093		5,175		7,268
Non-current liabilities of discontinued operations	$	14,768	$	33,475	$	48,243
Noncontrolling interest of discontinued operations	$	11,160	$	8,888	$	20,048


	Three months ended September 30, 2018																			Nine months ended September 30, 2019
	5.11		Ergo		Liberty		Velocity		ACI		Arnold		Foam		Sterno		Total			5.11		Ergo		Liberty		Velocity		ACI		Arnold		Foam		Sterno		Total
United States	$	62,085	$	8,190	$	17,263	$	29,862	$	23,424	$	18,202	$	28,378	$	110,274	$	297,678	United States	$	225,124	$	20,738	$	65,797	$	93,243	$	67,405	$	53,778	$	78,508	$	273,002	$	877,595
Canada	1,465		697		609		2,062		—		264		—		2,934		8,031		Canada	6,211		2,552		1,769		5,232		0		516		0		12,361		28,641
Europe	6,871		7,962		—		1,231		—		9,390		—		248		25,702		Europe	20,658		21,026		0		5,253		0		28,584		0		1,383		76,904
Asia Pacific	3,919		7,176		—		375		—		1,311		—		110		12,891		Asia Pacific	9,007		23,656		0		671		0		4,479		0		2,273		40,086
Other international	9,002		235		—		759		—		724		4,959		302		15,981		Other international	17,978		769		0		2,996		0		3,047		15,126		112		40,028
	$	83,342	$	24,260	$	17,872	$	34,289	$	23,424	$	29,891	$	33,337	$	113,868	$	360,283		$	278,978	$	68,741	$	67,566	$	107,395	$	67,405	$	90,404	$	93,634	$	289,131	$	1,063,254


•	~~Liberty Safe~~ is a designer, manufacturer and marketer of premium home, gun and office safes in North America. From its over 300,000 square foot manufacturing facility, Liberty produces a wide range of home and gun safe models in a broad assortment of sizes, features and styles. Liberty is headquartered in Payson, Utah.


•	~~Advanced Circuits~~ is an electronic components manufacturing company that provides small-run, quick-turn and volume production rigid printed circuit boards. ACI manufactures and delivers custom printed circuit boards to customers primarily in North America. ACI is headquartered in Aurora, Colorado.


Segment profit (loss) (1)	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2020		2019		2020		2019

5.11	$	8,681	$	5,977	$	17,969	$	13,388
Ergobaby	2,363		3,220		5,943		9,151
Liberty	5,736		2,726		12,281		5,812
Marucci	1,265		0		(6,478)		0
Velocity Outdoor	11,062		(27,902)		13,896		(27,635)
ACI	6,205		6,122		18,272		19,087
Arnold	(495)		2,681		2,601		6,385
Foam Fabricators	4,759		4,141		11,118		12,011
Sterno	7,674		12,724		16,906		28,821
Total	47,250		9,689		92,508		67,020
Reconciliation of segment profit (loss) to consolidated income (loss) before income taxes:
Interest expense, net	(12,351)		(11,525)		(32,122)		(48,424)
Other income (expense), net	(447)		(689)		(2,172)		(1,213)
Corporate and other (2)	(12,043)		(21,657)		(31,420)		(52,324)
Total consolidated income (loss) before income taxes	$	22,409	$	(24,182)	$	26,794	$	(34,941)


Segment profit (loss) ⁽¹⁾	Three months ended September 30,						Nine months ended September 30,
Depreciation and Amortization Expense													Depreciation and Amortization Expense	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2019			2018			2019			2018			(in thousands)	2020			2019			2020			2019

5.11 Tactical	$	5,977		$	1,740		$	13,388		$	3,143
5.11													5.11	$	5,296		$	5,275		$	15,734		$	15,730
Ergobaby	3,220			4,191			9,151			10,106			Ergobaby	2,038			2,319			6,129			6,543
Liberty	2,726			467			5,812			4,894			Liberty	412			388			1,233			1,185
Marucci													Marucci	3,281			0			7,968			0
Velocity Outdoor ⁽²⁾	(27,902		)	1,833			(27,635		)	5,125			3,120			3,217			9,480			9,757
ACI	6,122			6,902			19,087			19,202			ACI	595			525			1,867			1,717
Arnold	2,681			2,287			6,385			6,957			Arnold	1,697			1,616			4,969			4,818
Foam Fabricators	4,141			4,100			12,011			7,856			Foam Fabricators	3,304			3,044			9,286			9,054
Sterno	12,724			11,634			28,821			19,113			Sterno	5,649			5,539			16,912			16,456
Total	9,689			33,154			67,020			76,396			Total	25,392			21,923			73,578			65,260
Reconciliation of segment profit (loss) to consolidated income (loss) before income taxes:
Interest expense, net	(11,525		)	(15,635		)	(48,424		)	(35,227		)
Other income (expense), net	(689		)	1,255			(1,213		)	(2,285		)
Corporate and other ⁽³⁾	(21,657		)	(13,961		)	(52,324		)	(42,745		)
Total consolidated income (loss) before income taxes	$	(24,182	)	$	4,813		$	(34,941	)	$	(3,861	)
Reconciliation of segment to consolidated total:													Reconciliation of segment to consolidated total:
Amortization of debt issuance costs, original issue discount and bond premium													Amortization of debt issuance costs, original issue discount and bond premium	577			863			1,656			3,022
Consolidated total													Consolidated total	$	25,969		$	22,786		$	75,234		$	68,282


⁽²⁾	~~Velocity Outdoor - Operating loss from Velocity Outdoor for the three and nine months ended September 30, 2019 includes $33.4 million in goodwill impairment expense.~~ ~~Refer to Note G - " Goodwill and Other Intangible Assets."~~


⁽³⁾	Primarily relates to management fees expensed and payable to CGM, and corporate overhead expenses. The three and nine months ended September 30, 2019 include a loss of $4.9 million and $10.2 million, respectively, related to the loss on the sale of Tilray securities.



	Accounts Receivable						Identifiable Assets
	September 30,			December 31,			September 30,		December 31,
(in thousands)	2019			2018			2019 ⁽¹⁾		2018 ⁽¹⁾
5.11 Tactical	$	48,408		$	52,069		$	363,933	$	319,583
Ergobaby	10,549			11,361			92,850		100,679
Liberty	15,320			10,416			40,606		27,881
Velocity Outdoor	29,300			21,881			204,321		209,398
ACI	6,339			9,193			26,297		13,407
Arnold	18,572			16,298			74,223		66,744
Foam Fabricators	29,903			23,848			158,749		155,504
Sterno	77,905			72,361			262,135		253,637
Allowance for doubtful accounts	(14,873		)	(11,882		)	—		—
Total	221,423			205,545			1,223,114		1,146,833
Reconciliation of segment to consolidated total:
Corporate and other identifiable assets	—			—			251,664		8,357
Assets of discontinued operations	—			—			—		540,485
Total	$	221,423		$	205,545		$	1,474,778	$	1,695,675


⁽¹⁾	~~Does not include accounts receivable balances per schedule above or goodwill balances - refer to~~ ~~Note G - "Goodwill and Other Intangible Assets"~~.



	September 30, 2019			December 31, 2018
Machinery and equipment	$	182,889		$	174,983
Furniture, fixtures and other	33,052			29,096
Leasehold improvements	38,181			34,786
Buildings and land	9,976			9,818
Construction in process	11,509			8,869
	275,607			257,552
Less: accumulated depreciation	(133,316		)	(110,951		)
Total	$	142,291		$	146,601


	September 30, 2020		December 31, 2019
Raw materials	$	72,873	$	59,888
Work-in-process	15,300		14,318
Finished goods	278,231		262,352
Less: obsolescence reserve	(22,368)		(19,252)
Total	$	344,036	$	317,306


	Nine months ended September 30, 2020		Year ended December 31, 2019











Goodwill - gross carrying amount	$	566,209	$	496,264
Accumulated impairment losses	(57,745)		(57,745)
Goodwill - net carrying amount	$	508,464	$	438,519



	Nine months ended September 30, 2019			Year ended December 31, 2018
Goodwill - gross carrying amount	$	502,553		$	502,268
Accumulated impairment losses	(64,534		)	(31,153		)
Goodwill - net carrying amount	$	438,019		$	471,115


	Balance at January 1, 2020		Acquisitions		Goodwill Impairment		Other		Balance at September 30, 2020
5.11	$	92,966	$	—	$	—	$	—	$	92,966
Ergobaby	61,031		—		—		—		61,031
Liberty	32,828		—		—		—		32,828
Marucci	0		67,971		—		—		67,971
Velocity Outdoor	30,079		—		—		—		30,079
ACI	58,019		—		—		—		58,019
Arnold	26,903		—		—		—		26,903
Foam Fabricators	72,708		1,974		—		—		74,682
Sterno	55,336		—		—		—		55,336
Corporate (1)	8,649		—		—		—		8,649
Total	$	438,519	$	69,945	$	—	$	—	$	508,464


⁽¹⁾(1) Represents goodwill resulting from purchase accounting adjustments not "pushed down" to the ACI segment. This amount is allocated back to the ACI segment for purposes of goodwill impairment testing.	~~Represents goodwill resulting from purchase accounting adjustments not "pushed down" to the ACI segment. This amount is allocated back to the ACI segment for purposes of goodwill impairment testing.~~



	September 30, 2019							December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	462,686	$	(146,606	)	$	316,080	$	462,686	$	(120,786	)	$	341,900
Technology and patents	79,972		(27,422		)	52,550		79,646		(23,409		)	56,237
Trade names, subject to amortization	189,180		(43,006		)	146,174		189,056		(32,506		)	156,550
Licensing and non-compete agreements	7,515		(6,950		)	565		7,515		(6,655		)	860
Distributor relations and other	726		(726		)	—		726		(726		)	—
Total	740,079		(224,710		)	515,369		739,629		(184,082		)	555,547
Trade names, not subject to amortization	59,985		—			59,985		60,045		—			60,045
Total intangibles, net	$	800,064	$	(224,710	)	$	575,354	$	799,674	$	(184,082	)	$	615,592



Warranty liability	Nine months ended September 30, 2019			Year ended December 31, 2018

Beginning balance	$	1,624		$	2,197
Provision for warranties issued during the period	2,185			3,531
Fulfillment of warranty obligations	(2,152		)	(4,258		)
Other ⁽¹⁾	—			154
Ending balance	$	1,657		$	1,624


Warranty liability	Nine months ended September 30, 2020		Year ended December 31, 2019

Beginning balance	$	1,583	$	1,624
Provision for warranties issued during the period	2,511		2,238
Fulfillment of warranty obligations	(2,307)		(2,279)
Other (1)	104		0
Ending balance	$	1,891	$	1,583



	September 30, 2019			December 31, 2018
Senior Notes	$	400,000		$	400,000
Revolving Credit Facility	—			228,000
Term Loan	298,750			496,250
Less: Unamortized discounts and debt issuance costs	(13,237		)	(20,379		)
Total debt	$	685,513		$	1,103,871
Less: Current portion, term loan facilities	(5,000		)	(5,000		)
Long term debt	$	680,513		$	1,098,871


	September 30, 2020		December 31, 2019
Unamortized premiums and debt issuance costs	$	16,466	$	13,252
Accumulated amortization	(5,461)		(3,667)
Unamortized premiums and debt issuance costs, net	$	11,005	$	9,585

Balance sheet classification:
Other noncurrent assets	$	3,112	$	4,030
Long-term debt	7,893		5,555
	$	11,005	$	9,585