Osmosis Holdings L.P.

Overview Key strengths Key risks Leading global market positions in point-of-use water filtration. Highly leveraged balance sheet under financial sponsor ownership. Growing geographic diversification. Aggressive merger and acquisition (M&A) strategy that has hindered cash generating capacity. Large recurring revenue base in the commercial sector that softens the impact from economic downturns. Remains vulnerable to integration risk following two large acquisitions, but the risk is moderating. Osmosis Holdings (d/b/a Culligan) continues to aggressively pursue tuck-in acquisitions while also incurring integration costs associated with its larger acquisitions of Waterlogic in late 2022 and Primo Europe at the end of 2023. As a result of the high integration costs associated with these large acquisitions and transaction costs associated with ongoing tuck-in M&A, its

...Cash flow remains pressured and leverage elevated, but we expect improvement in the second half of 2024 and into 2025. Osmosis Holdings (d/b/a Culligan) continues to aggressively pursue tuck-in acquisitions while also incurring integration costs associated with its larger acquisitions of Waterlogic in late 2022 and Primo Europe at the end of 2023. As a result of the high integration costs associated with these large acquisitions and transaction costs associated with ongoing tuck-in M&A, its trailing 12-month free operating cash flow (FOCF), as of June 30, 2024, was extremely negative at about $150 million. Its leverage, pro forma for full year contributions from acquisitions and machines installed in field (i.e. water dispensers installed at...

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