8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 3, 2024

COMPASS DIVERSIFIED HOLDINGS

(Exact name of registrant as specified in its charter)

Delaware	001-34927	57-6218917
(State or other jurisdiction<br>of incorporation)	(Commission<br>File Number)	(I.R.S. Employer<br>Identification No.)

COMPASS GROUP DIVERSIFIED HOLDINGS LLC

(Exact name of registrant as specified in its charter)

Delaware	001-34926	20-3812051
(State or other jurisdiction<br>of incorporation)	(Commission<br>File Number)	(I.R.S. Employer<br>Identification No.)

301 Riverside Avenue, Second Floor, Westport, CT 06880

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (203) 221-1703

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Shares representing beneficial interests in Compass Diversified Holdings	CODI	New York Stock Exchange
Series A Preferred Shares representing beneficial interests in Compass Diversified Holdings	CODI PR A	New York Stock Exchange
Series B Preferred Shares representing beneficial interests in Compass Diversified Holdings	CODI PR B	New York Stock Exchange
Series C Preferred Shares representing beneficial interests in Compass Diversified Holdings	CODI PR C	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Section 8    Other Events

Item 8.01     Other Events

As previously disclosed in the Current Report on Form 8-K filed on February 1, 2024 (the "Original Report"), Compass Group Diversified Holdings LLC (the “Company” and, together with Compass Diversified, “CODI”), through its newly formed acquisition subsidiaries, THP Topco, Inc., a Delaware corporation (“Topco”) and THP Intermediate, Inc., a Delaware corporation (“Buyer”), acquired The Honey Pot Company Holdings, LLC (“THP”) and certain of its affiliated entities pursuant to a Merger and Stock Purchase Agreement (the “Purchase Agreement”) by and among Buyer, THP, VMG Honey Pot Blocker, Inc. (“Blocker I”), NVB1, Inc. (“Blocker II”), VMG Tax-Exempt IV, L.P. (“Blocker I Seller”), New Voices Fund, LP (“Blocker II Seller”), THP Merger Sub, LLC (“Merger Sub”), VMG Honey Pot Holdings, LLC, as the Sellers’ Representative, and certain remaining equity holders of THP (the “THP Sellers”, together with Blocker I Seller and Blocker II Seller, each a “Seller” and collectively, the “Sellers”). Pursuant to the Purchase Agreement, subsequent to certain internal reorganizations, Buyer acquired all of the issued and outstanding equity of Blocker I and Blocker II and, thereafter, Merger Sub merged with and into THP (the “Merger”), with THP surviving such that the separate existence of Merger Sub ceased, with THP surviving the Merger as a wholly-owned, indirect subsidiary of the Topco. THP is the parent company of The Honey Pot Company (DE), LLC.

On April 10, 2024, we filed a form 8-K/A to amend the Original Report to provide certain historical financial statements of THP and pro forma financial information of CODI in accordance with item 9.01 of Form 8-K. We are filing this Current Report on Form 8-K to provide additional pro forma financial information of CODI related to the Merger.

Section 9    Financial Statements and Exhibits

Item 9.01     Financial Statements and Exhibits

(b) Pro Forma Financial Information.

The following unaudited pro forma financial information of CODI is attached hereto as Exhibit 99.1 and is incorporated by reference into this Item 9.01(b) and made a part hereof: unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2024 and notes thereto.

(d) Exhibits.

99.1	Unaudited Pro Forma Condensed Combined Statement of Operations for the six months ended June 30, 2024 and notes thereto
104	Cover Page Interactive Data File (embedded with the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: September 3, 2024	COMPASS DIVERSIFIED HOLDINGS
	By:	/s/ Stephen Keller
		Stephen Keller
		Regular Trustee

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: September 3, 2024	COMPASS GROUP DIVERSIFIED HOLDINGS LLC
	By:	/s/ Stephen Keller
		Stephen Keller
		Chief Financial Officer

Document

Exhibit 99.1

COMPASS DIVERSIFIED HOLDINGS

PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(UNAUDITED)

The following pro forma condensed combined financial statements give effect to the acquisition of The Honey Pot Company Holdings, LLC ("The Honey Pot" or "THP") with a total purchase price of approximately $380.1 million, as further described on the Form 8-K that we filed on February 1, 2024.

The following pro forma condensed combined statement of operations for the six months ended June 30, 2024 gives effect to the acquisition of THP as if the acquisition had occurred on January 1, 2024.

The "pre-Merger" financial information of THP is derived from the unaudited historical financial statements The Honey Pot Company Holdings, LLC for the period from January 1, 2024 through January 30, 2024, The "as reported" financial information for Compass Diversified Holdings (the "Company" or "Holdings") is derived from the unaudited financial statements of the Company for the six months ended June 30, 2024 as filed on Form 10-Q dated July 31, 2024. The "as reported" of the Company for the six months ended June 30, 2024 includes the results of operations of THP from the date of acquisition, January 31, 2024, through June 30, 2024.

Assumptions underlying the pro forma adjustments necessary to reasonably present this unaudited pro forma condensed combined financial information are described in the accompanying notes. The pro forma adjustments described in the accompanying notes have been made based on the available information and, in the opinion of management, are reasonable. The unaudited pro forma condensed combined statement of operations reflects the adjustments to the historical consolidated results of operations that are expected to have a continuing effect. The unaudited pro forma condensed combined statement of operations does not include certain items such as transaction costs related to the acquisition.

The historical consolidated financial information has been adjusted to give effect to estimated pro forma events that are directly attributable to the acquisition, factually supportable and, with respect to the unaudited pro forma condensed combined statement of operations, expected to have a continuing impact on the consolidated results of operations. The unaudited pro forma condensed combined financial information should not be considered indicative of actual results that would have been achieved had the acquisition occurred on the date indicated and do not purport to indicate results of operations for any future period.

You should read these unaudited pro forma condensed combined financial statements in conjunction with the accompanying notes, and the consolidated financial statements of the Company, including the notes thereto as previously filed.

Compass Diversified Holdings

Pro Forma Condensed Combined Statement of Operations

for the six months ended June 30, 2024

(unaudited)

(in thousands, except per share data)	Compass Diversified Holdings as Reported (unaudited)		THP pre-Merger (unaudited)		Pro Forma Adjustments			Pro Forma Combined Compass Diversified Holdings
Net revenues	$	1,066,885	$	10,671	$	—		$	1,077,556
Cost of revenues	565,944		4,337		—			570,281
Gross Profit	500,941		6,334		—			507,275
Operating expenses:
Selling, general and administrative expense	302,160		2,536		250		(a)	304,946
Management fees	36,931		—		1,900		(b)	38,831
Amortization expense	53,749		—		1,339		(c)	55,088
	8,182		—		—			8,182
Operating income	99,919		3,798		(3,489)			100,228
Other income (expense):
Interest income (expense), net	(50,136)		(21)		21		(d)	(50,136)
Amortization of debt issuance cost	(2,009)		—		—			(2,009)
Loss on sale of Crosman	(24,606)		—		—			(24,606)
Other income (expense), net	(4,249)		—		—			(4,249)
Income (loss) from continuing operations before income taxes	18,919		3,777		(3,468)			19,228
Provision for income taxes	30,206		—		481		(e)	30,687
Net income from continuing operations	(11,287)		3,777		(3,949)			(11,459)
Less: Net income from continuing operations attributable to noncontrolling interest	13,235		—		221		(f)	13,456
Net income (loss) attributable to Holdings from continuing operations	(24,522)		3,777		(4,170)			(24,915)
Basic and fully diluted loss per share attributable to Holdings	$	(1.30)						$	(1.31)
Weighted average number of shares	75,332							75,332

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information.

Compass Diversified Holdings

Notes to Pro Forma Condensed Combined Financial Statements

(Unaudited)

Pro forma information is intended to reflect the impact of the acquisition of THP on the Company’s results of operations through adjustments that are directly attributable to the transaction, that are factually supportable and, with respect to the pro forma condensed combined statements of operations that are expected to have a continuing impact. This information in Note 1 provides a description of each of the pro forma adjustments from each line item in the pro forma condensed combined financial statement together with information explaining how the adjustments were derived or calculated, and represents the effects of the acquisition of THP as if the Company had acquired THP on January 1, 2024.

Note 1. Pro Forma Adjustments

Statement of Operations

The following adjustments correspond to those included in the unaudited pro forma condensed combined statement of operations for the period presented:

(a) Stock compensation expense

To record the adjustment to stock compensation expense included in selling, general and administrative expense for the revised stock compensation amount associated with the preliminary allocation of the purchase price of THP (in thousands):

Selling, general and administrative expense	For the six months ended June 30, 2024
Historical stock compensation expense	$	(40)
Revised stock compensation expense	290
	$	250

(b) Management fee

To record the annual management fee payable to Compass Group Management (our Manager) calculated as 2% of the aggregate purchase price of THP.

(in thousands)	For the six months ended June 30, 2024
Management Fee	$	1,900

(c) To record the adjustment to amortization expense for the intangible assets associated with the preliminary allocation of the purchase price of THP.

(in thousands)	For the six months ended June 30, 2024
Historical amortization expense	$	—
Revised amortization expense	1,339
	$	1,339

(d)    To record the elimination of interest expense associated with THP for the period presented. The acquisition of THP was financed with cash on hand.

(in thousands)	For the six months ended June 30, 2024
Historical interest expense	$	(41)
Revised interest expense	41
	$	—

(e)    To record the provision for income taxes associated with THP for the period presented.

(in thousands)	For the six months ended June 30, 2024
Historical income tax expense	$	—
Revised income tax expense	481
	$	481

(f)    To record the noncontrolling interest associated with THP's net income for the period presented.

(in thousands)	For the six months ended June 30, 2024
THP Net Income	$	1,457
Noncontrolling interest ownership percentage	15.2		%
	$	221

Note 2. Earnings Per Share

Basic and fully diluted earnings per Trust common share is computed using the two-class method which requires companies to allocate participating securities that have rights to earnings that otherwise would have been available to common shareholders as a separate class of securities in calculating earnings per share. The Company has granted Allocation Interests that contain participating rights to receive profit allocations upon the occurrence of certain events, and has issued preferred shares that have rights to distributions when, and if, declared by the Company's Board of Directors. The calculation of basic and fully diluted earnings per Trust common share is computed by dividing income available to common shareholders by the weighted average number of Trust common shares outstanding during the period. Earnings per common share reflects the effect of distributions that were declared and paid to holders of the Allocation Interests, and distributions that were paid or cumulative on preferred shares during the period.

Reconciliation of pro forma net income (loss) from continuing operations available to common shares of Holdings

The following table reconciles net income (loss) attributable to the common shares of Holdings:

(in thousands)	For the six months ended June 30, 2024
Pro forma net income from continuing operations attributable to Holdings	$	(24,951)
Less: Distributions paid - Allocation Interests	48,941
Less: Distributions paid - Preferred Shares	12,146
Less: Accrued distributions - Preferred Shares	2,991
Pro forma net loss from continuing operations attributable to Holdings	$	(89,029)

Pro forma earnings per share - continuing operations

	For the six months ended June 30, 2024
(in thousands, except per share data)
Pro forma net loss from continuing operations attributable to Holdings	$	(89,029)
Less: Effect of Contribution based profit - Holding Event	9,502
Pro forma loss from Holdings attributable to common shares	$	(98,531)
Basic and fully diluted weighted average common shares of Holdings	75,332
Basic and fully diluted pro forma loss per share attributable to Holdings
Continuing operations	$	(1.31)