v3.26.1
Discontinued Operations
 6 Months Ended
Jun. 30, 2025
Disposal Group, Including Discontinued Operations [Line Items]  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] ote B — Dispositions
Sale of Sterno and Distribution of Rimports
On March 28, 2026, the LLC, in its capacity as representative of the holders of common stock of SternoCandleLamp Holdings, Inc. (“Sterno”), a then-majority-owned subsidiary of the LLC, and, for the limited purposes of the Rimports Distribution described below, entered into a definitive Agreement and Plan of Merger (the “Sterno Agreement”) with WCHG Buyer, Inc. (“Parent”), WCHG Heat Merger Sub, Inc. (“Merger Sub”) and Sterno. Pursuant to the Sterno Agreement, Parent agreed to acquire Sterno through the merger of Merger Sub with and into Sterno, with Sterno surviving the merger as a wholly owned subsidiary of Parent.
Immediately prior to the closing of the merger, on April 30, 2026, Sterno completed the distribution of all of the limited liability company interests of its indirect wholly owned subsidiary Rimports, LLC (“Rimports”), which operates Sterno’s home fragrance business, to Rimports Holdings, Inc., the equity of which was, in turn, distributed pro rata to the Sterno stockholders, including the LLC (the “Rimports Distribution”), with Rimports remaining a majority owned subsidiary of the LLC. On May 1, 2026, the parties completed the merger pursuant to the Sterno Agreement, resulting in the sale of Sterno’s food service business.
The purchase consideration for Sterno’s food service business was based on an enterprise value of $292.5 million and was subject to customary adjustments, including for transaction expenses, change-of-control payments, option termination payments and the net working capital, cash and debt balances of Sterno and its subsidiaries, excluding Rimports and its subsidiaries, at closing. Approximately $2.6 million of the closing proceeds were placed in escrow to satisfy post-closing purchase price true-ups, if any.
After allocation of the purchase consideration to Sterno’s noncontrolling stockholders and payment of transaction costs, CODI received approximately $282 million of total proceeds at closing, representing amounts received with respect to the Company’s outstanding loans to Sterno, including accrued interest, and its equity interests in Sterno. The Company used the proceeds received from the sale to repay outstanding borrowings under its senior credit facility.
The Rimports Distribution represented a transfer of equity interests between entities under common control because the Company controlled Sterno, inclusive of Rimports, before the distribution and continues to control Rimports after the distribution. Accordingly, the Rimports Distribution was accounted for as a transaction between entities under common control at historical carrying amounts, and no gain or loss was recognized in the Company’s condensed consolidated financial statements as a result of the distribution.
As of March 31, 2026, the Company had classified Sterno’s food service business as held for sale. Because the Company retained Rimports following the Rimports Distribution, the assets and liabilities of Rimports were excluded from the held-for-sale disposal group and continued to be presented within the Company’s condensed consolidated balance sheet. Upon completion of the sale on May 1, 2026, the Company deconsolidated Sterno’s food service business and recognized a gain on the sale of approximately $182.3 million within income from continuing operations during the three months ended June 30, 2026.
The sale did not represent a strategic shift that had, or will have, a major effect on the Company’s operations or financial results and therefore did not qualify for discontinued operations presentation. Accordingly, the results of operations and cash flows of Sterno’s food service business through the date of sale, and Rimports for all periods presented, are included within continuing operations in the Company’s condensed consolidated statements of operations and cash flows.
Summarized results of operations of Sterno for the three and six months ended June 30, 2026 through the date of disposition and the three and six months ended June 30, 2025 are as follows (in thousands):
(in thousands)For the period April 1, 2026 through dispositionThree months ended 
 June 30, 2025		For the period January 1, 2026 through dispositionSix Months ended 
 June 30, 2025
Net sales$13,424 $41,223 $45,125 $71,546 
Gross profit$3,889 $12,825 $14,096 $22,302 
Operating income$3,703 $7,181 $8,519 $11,936 
Net income from operations before income taxes (1)
$3,451 $4,943 $7,122 $7,414 
Provision for income taxes$597 $2,145 $2,084 $3,142 
Net income$2,854 $2,798 $5,038 $4,272 
(1) The results of operations for the periods from April 1, 2026 through disposition, January 1, 2026 through disposition, and the three and six months ended June 30, 2025, each exclude $0.3 million and $1.4 million, $2.2 million and $4.5 million, respectively, of intercompany interest expense which is eliminated in consolidation.
Lugano
Deconsolidation
On November 16, 2025, Lugano and certain of its subsidiaries filed a voluntary Chapter 11 petition under the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Lugano Bankruptcy”). The Lugano Bankruptcy resulted in the deconsolidation of Lugano as of the date of the bankruptcy filing. The Company retained its equity ownership of Lugano subsequent to the bankruptcy but has neither control nor significant influence over Lugano due to the bankruptcy filing. The Company elected the fair value option under Accounting Standards Codification ("ASC") 825 - Financial Instruments to account for its retained financial interest. Accordingly, the investment is measured at fair value on a recurring basis, with changes in fair value, if any, recognized in earnings each reporting period. As a result of this accounting election, the carrying value of the investment, and the related impact on the Company’s results of operations, may fluctuate from period to period due
to non‑cash mark‑to‑market adjustments. These fair value adjustments do not impact the Company’s cash flows or liquidity.
Separately, prior to the bankruptcy filing, the Company had outstanding intercompany indebtedness owed by Lugano (the "Lugano intercompany loan"), including amounts that were secured by certain Lugano assets. Because intercompany balances are eliminated in consolidation, the fair value of intercompany indebtedness owed by Lugano to the Company was recognized upon deconsolidation in accordance with ASC 810. Any expected recovery (or lack thereof) on the secured claim is reflected through the measurement of the receivable/claim due from affiliate (including any impairment or allowance), rather than through the fair value of any retained equity interest.
The Company recorded a receivable based on management's estimate of recoveries expected from the Lugano bankruptcy proceedings with respect to the Company’s senior secured receivable/claim against Lugano as of the deconsolidation date, measured using the fair value option under ASC 825. The receivable is remeasured at fair value at each reporting date, and changes in fair value are recognized in earnings in the period in which they occur. During the three months ended June 30, 2026, the estimated fair value of the receivable decreased from $97.0 million to $39.0 million following CODI’s entry on June 24, 2026 into a Settlement Agreement and Mutual Release and a Plan Support Agreement with Lugano, the official committee of unsecured creditors and the other parties thereto. Subject to creditor approval, bankruptcy court confirmation and effectiveness of the proposed Plan of Liquidation, CODI would be entitled to receive 34.79% of specified net inventory, tax-refund and insurance proceeds, 45% of net proceeds from specified litigation against a third party and 25% of net proceeds from certain other litigation claims. The Settlement Agreement will become effective and binding only upon satisfaction or waiver of its conditions, including the effective date of the Plan of Liquidation, and there can be no assurance as to confirmation, effectiveness, timing or the amount of recoveries. These revised recovery amounts and timing assumptions resulted in the $58.0 million decrease in fair value. At June 30, 2026, the receivable due from unconsolidated affiliate was estimated to have a value of $39.0 million, with $19.2 million classified as current and $19.8 million classified as noncurrent in the condensed consolidated balance sheet. At December 31, 2025, the receivable due from unconsolidated affiliate was estimated to have a value of $97.0 million, with $71.0 million classified as current and $26.0 million classified as noncurrent in the condensed consolidated balance sheet. The classification between current and noncurrent is based on management’s estimate of the timing of expected cash receipts from the Lugano bankruptcy proceedings. Refer to "Note J - Fair Value Measurements" for additional information.
The following table summarizes Lugano's results of operations that are included in the Company's consolidated results of operations for the period from January 1, 2025 through June 30, 2025:
(in thousands)Three months ended June 30, 2025Six months ended 
 June 30, 2025
Net sales$26,771 $53,616 
Gross profit$13,446 $26,624 
Operating loss$(46,782)$(60,441)
Net loss from operations before income taxes (1)
$(51,879)$(87,929)
Provision for income taxes$— $(256)
Net loss$(51,879)$(87,673)
(1) The results of operations for the three and six months ended June 30, 2025 exclude $16.9 million and $32.8 million, respectively, of intercompany interest expense which is eliminated in consolidation.