CODI Investor Presentation JULY 2020
Confidential Draft Legal Disclaimer This presentation contains certain forward-looking statements within the meaning of the federal securities laws. These statements may be made a part of this presentation or by reference to other documents we file with the SEC. Some of the forward-looking statements can be identified by the use of forward-looking words. Statements that are not historical in nature, including the words “anticipate,” “may,” “estimate,” “should,” “seek,” “expect,” “plan,” “believe,” “intend,” and similar words, or the negatives of those words, are intended to identify forward-looking statements. Certain statements regarding the following particularly are forward-looking in nature: future financial performance, market forecasts or projections, projected capital expenditures; and our business strategy. All forward-looking statements are based on our management’s beliefs, assumptions and expectations of our future economic performance, taking into account the information currently available to it. These statements are not statements of historical fact. Forward-looking statements are subject to a number of factors, risks and uncertainties, some of which are not currently known to us, that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial position. Our actual results may differ materially from the results discussed in forward-looking statements. Factors that might cause such a difference include but are not limited to the risks set forth in “Risk Factors” included in our SEC filings. In addition, our discussion may include references to Adjusted EBITDA, EBITDA, cash flow, CAD or other non-GAAP measures. A reconciliation of the most directly comparable GAAP financial measures to such non-GAAP financial measures is included in our annual and quarterly reports in Forms 10-K and 10-Q filed with the SEC as well as the attached Appendix. 2
Business Overview 3
Confidential Draft Experienced Leadership Team ELIAS SABO RYAN FAULKINGHAM Found Fo unding ng Partne ner & CEO EVP & CFO EVP Responsible for directing CODI’s strategy Responsible for capital raising, accounting and reporting, financial controls, as well as risk assessment Investment Committee Member Investment Committee Member Joined The Compass Group in 1998 as one of its founding partners Joined The Compass Group in 2008 Graduate of Rensselaer Polytechnic Institute Graduate of Lehigh University and Fordham University COMPANY MANAGEMENT TEAM CODI has been executing the same Private equity-like compensation 14+ year history as a public company Highly accountable organization strategy for more than 22 years and has structure aligns interest of shareholders manager, patient deployer of capital, focused on consistently exceeding our consistently generated superior results and management team and allows for willing to net divest weighted average cost of capital on all recruitment of top-level talent invested capital 4 4
Confidential Draft CODI BY THE NUMBERS As of 6/30/2020 Compass Diversified Holdings (NYSE: CODI) Offers Shareholders a Unique Opportunity To Own a Diverse 1998 FOUNDED IPO in 2006 Group of Leading Middle-Market Businesses $ 5.9 B + AGGREGATE TRANSACTIONS Provides access to a strategy typically reserved for private equity investors 20 Platforms & 27 Add-Ons without the barriers to entry $ 1.1 B + REALIZED GAINS SINCE IPO Founded in 1998, CODI is an experienced acquirer, manager and opportunistic divestor of 11 Divestitures To Date established North American middle-market businesses; currently the portfolio is made up of 5 branded consumer and 4 niche industrial subsidiaries 131 %+ IPO PRICE DISTRIBUTED 279% Total Return Since IPO KEY DIFFERENTIATORS $ 2.0 B ASSETS MANAGED 9 Current Platforms Long-term, Opportunistic Value Creation Through Superior Governance and ~$ 1.0 B DRY POWDER Approach through Permanent Sector Expertise Transparency Permanent Capital Base Capital Base 5 5
Confidential Draft Benefits of Owning CODI CONSISTENT ACCESS TO AN ATTRACTIVE SUPERIOR GOVERNANCE LIQUIDITY VIA TRADEABLE OUTPERFORMANCE OF SEGMENT OF THE MARKET MODEL SHARES BENCHMARKS HISTORICALLY RESERVED FOR • Majority of Board of Directors PRIVATE EQUITY MANAGERS independent with Chairman and • CODI total return of 279% since CEO roles separated; Independent IPO versus total return of 151% for • Experienced manager with aligned Lead Director the Russell 2000 compensation model • Transparency into each of the • Consistent distribution which has operating subsidiaries never been reduced • SOX compliance with 404 pushed • Paid distribution during Financial down to each operating subsidiary Crisis and Q1 and Q2 of Pandemic 6
Confidential Draft A History of Outperformance Compared to both publicly-traded peers and market indices, CODI has consistently generated superior returns through its culture of transparency, alignment and accountability TOTAL RETURN FROM MAY 16, 2006 DISTRIBUTIONS PAID SINCE IPO THROUGH JULY 27, 2020 ($19.68 Per Share) ~9.0% Yield At 07/27/20 279.4% 19.68 18.96 216.1% 17.52 16.08 14.64 13.20 151.2% 11.75 10.32 8.88 7.44 6.00 4.64 3.28 22.8% 1.95 1.33 1.36 1.36 1.44 1.44 1.44 1.44 1.44 1.44 1.44 1.44 1.44 1.25 0.70 0.70 0.72 CODI S&P 500 Russell 2000 XLF 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Distributions Paid Per Year Cumulative Distributions Paid $1.00 invested at IPO is worth $3.79 today vs. $3.16 in the S&P 500 or $2.51 in the Russell 2000 7
Investment Thesis 8
Confidential Draft Why CODI? CODI’s core principles — which have differentiated our business for nearly 15 years — have never been more relevant or produced stronger results for shareholders Permanent Capital Benefits to Owning a Family Clear Alignment 01 02 03 Is Strategic Capital of Uncorrelated Subsidiaries with Investors • Opportunistic in capital deployment • Lower cost of capital versus financing each • Compensation structure aligns interest of company separately shareholders and management team and allows • Enables long-term approach for recruitment of top-level talent • Defensive positioning • “Eliminates” traditional PE investment • Transparency / regular reporting horizon pressure • Professionalization at scale • History of waiving management fees when • Diversity of subsidiaries provides consistency appropriate in earnings and cash flow • Significant and growing ownership of CODI shares by Manager partners and employees By offering access to a diverse portfolio of middle market businesses, CODI’s strategy offers a differentiated liquid alternative 9 9
Confidential Draft STRONG BALANCE SHEET CODI IS POSITIONED TO DELIVER REGARDLESS OF ECONOMIC • Leverage <2.0x CLIMATE • Approximately $1B of availability to deploy • If If e economic e expansion — nine remaining subsidiaries producing strong Cash Flow LOWEST COST OF CAPITAL IN OUR which on an annualized basis is Why CODI HISTORY expected to exceed distribution; poised to grow in economic expansion • $200mm tack on of unsecured debt in Now? May 2020 • If If e economic d downturn — Cash Flow from existing subsidiaries expected to decline, • 2018 debt refinancing extended however offset by $1B in available maturities and added $400mm of capital to deploy into acquisitions at unsecured debt with flexible covenants attractive prices • Roughly half of capital, non-dilutive, at an average cost of 7.9% • If entire Revolver availability of $600mm was deployed, average cost of debt would decline to 5.5% 10
Confidential Draft Significant Events in 2020 Reported Positive Accessed $290 Million Closed on Marucci Second Quarter of Additional Capital in Sports in April Financial Results Early May • Beat second quarter Adjusted EBITDA • Acquired for $200mm; • Issued ~$83.9 million in net proceeds in guidance mid-point by >50% common equity offering • Leading manufacturer and distributor of baseball and softball equipment under the • Branded Consumer businesses QTD net • Added $200 million in unsecured bonds to Marucci and Victus brands sales up 2.9% and adjusted EBITDA up existing 2026 notes priced at 101% 7.5% • Highly passionate consumer base; ‘fastest • Upgraded by Moody’s and S&P growing brand in baseball’ • 3 consumer ‘readiness-focused’ brands sales up 11.3% and adjusted EBITDA up 30.6% in Q2 11 11
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