Will Compass report net debt/EBITDA of 4.0x or below by Q2 2026 (first two quarters combined)?

The mathematical constraint on Q2 2026 leverage is unchanged. Net debt ≈ $2.66B (LTD $3.14B − cash $484M); TTM Adj. EBITDA at Q2 close is bounded by the addition of Q1 actual ($61M) plus Q2 guide midpoint ($330M) plus pre-merger Anywhere standalone H2 2025 (~$175-225M typical). That sums to roughly $565-616M PF TTM EBITDA. Net debt / PF TTM EBITDA = $2.66B / $590M ≈ 4.5x. Even under generous Anywhere standalone H2 contribution, TTM doesn't reach the $665M needed for 4.0x. Wahlers' commitment to repay $500M of 9.75% notes only kicks in April 2027 — outside the H1 2026 resolution window. Probability stays at 0.10.

Slight uptick from 0.10 to 0.12 reflects upside from a possible Q2 2026 EBITDA print above the $350M guide high end. Q1 2026 actual was meaningfully above guidance ($61M vs. $15-35M, ~75% above midpoint). If Q2 prints similarly above ($380M+) and management uses TTM PF reporting that includes accelerated synergy realization, the math could compress closer to 4.2-4.3x. Combined with Wahlers's 'well within net leverage covenant' commentary, there is non-zero probability the disclosed leverage ratio sits closer to 4.0x than the mid-cycle estimate suggests. The credit-agency upgrades and positive outlook support that the agencies see ratio trajectory more favorably than mechanical TTM math alone implies.

The structural constraint is the inclusion of pre-merger Anywhere quarters in the Q2 2026 TTM denominator. Anywhere standalone H1 2025 was operationally weaker; even with synergy ramp-up post-close, TTM at Q2 2026 averages over a partially-pre-merger period. Compass standalone TTM contribution alone wouldn't push TTM EBITDA above $400M, and Anywhere standalone H2 2025 plus combined Q1-Q2 2026 unlikely to push aggregate above ~$600M. The 4.0x bar requires $665M — a 10%+ overshoot. FCF expected breakeven/slightly negative in Q2 (per Wahlers) means net debt won't materially reduce. Probability stays at 0.10.

The Q1 print is strongly favorable to the company narrative but doesn't change the Q2 2026 measurement. Q1 EBITDA of $61M is dramatically above guidance, but $61M alone is too small to materially shift TTM math. Q2 guide of $310-350M implies $1.3B+ annualized run-rate — the trajectory reaches the leverage target eventually, but the Q2 2026 measurement window catches the entity at the crossover point. Cash position increased to $484M but Wahlers signaled FCF breakeven/negative in Q2 due to severance and integration payments. Net debt won't drop below ~$2.6B by Q2 close. Probability slightly above prior at 0.11.

There's a calibration question about whether Compass discloses leverage on a 'pro forma TTM' basis (treating the combined entity as if it had existed for the full TTM period) vs. a 'reported TTM' basis (mixing pre- and post-merger quarters). If management uses pro forma TTM with full annualization of post-merger run-rate plus actioned synergies, the ratio could land closer to 4.0-4.2x. Resolution criteria says 'net debt/EBITDA ratio... as reported or calculable from Q2 2026... financial statements' and 'use Adjusted EBITDA as defined by Compass management.' If Compass discloses a forward-looking PF TTM ratio that captures Q2's $310-350M run-rate annualized, the ratio approaches 4.0x. Probability slightly elevated at 0.13.

Resolution criterion specifies trailing twelve month Adjusted EBITDA. TTM at Q2 2026 includes Q3 2025 + Q4 2025 + Q1 2026 + Q2 2026. Q3 2025 + Q4 2025 are pre-merger Compass standalone (~$70-90M each) plus Anywhere standalone (~$90-120M each) — combined pro forma standalone H2 2025 EBITDA likely $300-400M total. Add Q1 2026 PF $61M and Q2 2026 guide $330M = $391M. Aggregate PF TTM ≈ $700M at upper bound, $560M at lower. Net debt $2.66B / $700M = 3.8x at favorable upper bound. There is a thin path to YES but it requires both upper-bound H2 2025 PF EBITDA AND Q2 actual at high end of guide. Probability stays at 0.10 reflecting the low conjunction.

Q1 print is strongly above guidance ($61M vs. $15-35M) and Q2 guide implies $1.3B+ annualized run-rate. But the 4.0x bar requires TTM EBITDA $665M with net debt ~$2.66B. Aggregating Q1 + Q2 + pre-merger H2 2025 yields roughly $560-620M typical, $700M optimistic. Probability stays low at 0.11.

Q1 actual ~75% above guidance midpoint. If Q2 prints similarly above $310-350M range and management discloses pro forma TTM that captures combined run-rate, leverage could approach 4.0x. Slight elevation from prior 0.10 to 0.13 reflects this upside scenario. But base case still puts ratio above 4.0x.

Strong execution doesn't change the H1 2026 measurement. Net debt $2.66B essentially fixed (no prepayment before April 2027, FCF breakeven/negative Q2). TTM EBITDA constrained by inclusion of pre-merger Anywhere quarters. Math yields ~4.4-6.5x range across scenarios. Probability stays at 0.10.