Arnold Magnetic Technologies, a subsidiary of Compass Diversified Holdings, and USA Rare Earth, Inc. have entered into a mutual sales and distribution agreement that will allow each company to sell and distribute the other's products while remaining independent contractors. Under the deal, Arnold will supply USA Rare Earth’s processed and refined neodymium‑iron‑boron (NdFeB) materials and finished magnets, and USA Rare Earth will provide Arnold’s finished samarium‑cobalt (SmCo) and NdFeB permanent magnets.
The partnership is designed to reinforce the domestic supply chain for high‑performance rare‑earth magnets that power electric vehicles, wind turbines, advanced industrial equipment, and defense systems. By combining Arnold’s manufacturing capabilities with USA Rare Earth’s U.S.‑based NdFeB processing and refining, the two companies aim to deliver a more resilient American supply chain from raw material to finished magnet products, supporting U.S. policy initiatives to reduce dependence on foreign suppliers.
Compass Diversified’s Q4 2025 earnings highlighted the challenges facing the group. The company reported an earnings per share of –$1.20 versus an analyst expectation of $0.70, and revenue of $468.6 million against a forecast of $677.9 million. The miss was largely driven by the deconsolidation of the Lugano subsidiary and associated investigation and restructuring costs, which created a significant one‑time charge. Despite the loss, core subsidiaries such as BOA Fit Systems and The Honey Pot performed strongly, and excluding Lugano, Compass Diversified posted positive full‑year net sales growth. Management guided 2026 adjusted EBITDA to a range of $345 million to $395 million, reflecting confidence in core business resilience while acknowledging the impact of the Lugano situation.
Management commentary underscored the strategic value of the partnership. Barbara Humpton, CEO of USA Rare Earth, said, “This agreement strengthens our ability to deliver American‑made magnet solutions at both scale and precision.” Matt Blake, CEO of Arnold Magnetic Technologies, noted that the collaboration aims to expand access to domestically produced magnet solutions. Elias Sabo, CEO of Compass Diversified, highlighted the resilience of consumer businesses and the importance of governance improvements, emphasizing ongoing efforts to enhance internal controls and transparency.
The partnership aligns with U.S. national security interests and positions both companies to meet the growing demand for high‑performance magnets in critical sectors. By integrating USA Rare Earth’s mine‑to‑magnet strategy with Arnold’s manufacturing expertise, the alliance is expected to accelerate the deployment of domestically produced magnets and support the U.S. goal of eliminating reliance on foreign rare‑earth supply chains by 2027.
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