Compass Diversified Guides $345M–$395M EBITDA, Seeks Divestitures to Cut Leverage
Compass Diversified generated FY 2025 ex-Lugano subsidiary adjusted EBITDA of $345.8 million (up 8.8%), ended with $68 million cash, $96 million revolver availability and 5.47x covenant leverage. For 2026 it forecasts $345 million–$395 million EBITDA, plans divestitures to hit ~4.0x leverage by year-end and may repurchase shares.
1. FY 2025 Financial Results
Compass Diversified reported GAAP net revenue of $468.6 million in Q4, down 5.1%, and a GAAP net loss of $78.8 million that included over $25 million of investigation and restatement costs. Excluding Lugano, full-year net sales rose 3.9% to $1.8 billion and subsidiary adjusted EBITDA climbed 8.8% to $345.8 million.
2. Leverage and Liquidity Position
At year-end, the company held $68 million in cash, $96 million available on its revolver and covenant leverage of 5.47x. Management aims to reduce leverage to 3.0–3.5x long term and around 4.0x by end-2026 through asset sales, cash actions and a recent $11 million sale-leaseback at Altor.
3. Capital Allocation Framework
CEO Elias Sabo described a multi-step framework prioritizing deleveraging and investor confidence, noting 2025 was “painful” but core subsidiaries delivered mid-single-digit revenue growth and high-single-digit EBITDA gains. He said share repurchases could be considered if market conditions support closing the gap between share price and intrinsic value.
4. 2026 Outlook and Guidance
The company provided a wide subsidiary adjusted EBITDA range of $345 million to $395 million for 2026, reflecting macro and tariff uncertainty, with consumer EBITDA guidance of $220 million to $260 million and industrial at $125 million to $135 million. Capital expenditures are expected at $30 million–$40 million next year.