Compass Diversified Holdings (NYSE: CODI) ("CODI" or the
"Company"), an owner of leading middle market businesses, announced
today its consolidated operating results for the three and twelve
months ended December 31, 2019.
Fourth Quarter and Full Year 2019
Highlights
- Reported net sales of $387.0
million for the fourth quarter of 2019 and $1.5 billion for the
full year 2019;
- Reported net income of $5.4 million
for the fourth quarter of 2019 and $307.1 million for the full year
2019;
- Reported non-GAAP Adjusted EBITDA
of $61.7 million for the fourth quarter of 2019 and $226.1 million
for the full year 2019;
- Reported Cash Provided by Operating
Activities of $53.0 million for the fourth quarter of 2019 and
$84.6 million for the full year 2019, and non-GAAP Cash Flow
Available for Distribution and Reinvestment ("CAD") of $30.0
million for the fourth quarter of 2019 and $104.0 million for the
full year 2019;
- Completed an offering of 4,600,000
shares of 7.875% Series C Preferred Shares;
- Paid off the remaining $298.8
million of Term Loans;
- Paid a fourth quarter 2019 cash
distribution of $0.36 per share on CODI's common shares in January
2020, bringing cumulative distributions paid to $18.9552 per common
share since CODI's IPO in May of 2006; and
- Paid a quarterly cash distribution
of $0.453125 per share on the Company's 7.250% Series A Preferred
Shares, $0.4921875 per share on the Company's 7.875% Series B
Preferred Shares, and $0.38281 per share on the Company's 7.875%
Series C Preferred Shares in January 2020.
"Our success in 2019, both in strengthening our
diversified group of leading middle market businesses and unlocking
significant value for shareholders, underscores the benefits of
CODI's permanent capital structure as well as our team's deep
expertise investing across the niche industrial and branded
consumer sectors," said Elias Sabo, CEO of Compass Group
Diversified Holdings LLC. "During the year, we generated strong
cash flow and the highest full year CAD since going public and
achieved fourth quarter revenue and EBITDA growth that exceeded
expectations. Notably, we have begun to realize accelerated value
creation from investments in our subsidiaries, highlighted by
5.11's second consecutive quarter of double-digit revenue growth
and fourth consecutive quarter of double-digit EBITDA growth."
Mr. Sabo continued, "We are pleased to have
opportunistically monetized our investments in Clean Earth and
Manitoba Harvest at attractive valuations in 2019, enabling us to
realize gains in excess of $300 million and increase total gains to
over $1 billion since our IPO. Importantly, we redeployed the
proceeds from these two divestitures to pay down debt, enabling
CODI to have more capital resources available than ever before and
significant flexibility from having leverage below our target level
at only 1.5 times. We expect our strong balance sheet to serve CODI
well as we pursue accretive platform and add-on acquisitions
consistent with our disciplined and proven approach to acquiring,
managing and opportunistically divesting leading middle market
businesses. Looking ahead, we are well-positioned to continue
creating long-term shareholder value as we execute on our strategy
to work closely with our best in class management teams, invest in
our subsidiaries, return substantial capital with our $1.44 per
common share annual distribution and further enhance our commitment
to ESG initiatives across our portfolio."
Operating Results
Net sales for the quarter ended December 31,
2019 were $387.0 million, as compared to $370.9 million for the
quarter ended December 31, 2018. Net sales were $1.5 billion for
the year ended December 31, 2019, as compared to $1.4 billion for
the year ended December 31, 2018. Net sales for the year ended
December 31, 2018 do not include net sales attributable to Ravin
prior to CODI's ownership.
Net income for the quarter ended December 31,
2019 was $5.4 million, as compared to net loss of $6.5 million for
the quarter ended December 31, 2018. For the year ended December
31, 2019, CODI reported net income of $307.1 million, which
included $331.0 million in gains from sales of Clean Earth and
Manitoba Harvest. This compared to a net loss of $1.8 million for
the year ended December 31, 2018.
Adjusted EBITDA (see "Note Regarding Use of
Non-GAAP Financial Measures" below) for the quarter ended December
31, 2019 was $61.7 million, as compared to $56.5 million for the
quarter ended December 31, 2018. Adjusted EBITDA for the year ended
December 31, 2019 was $226.1 million, as compared to $202.1 million
for the year ended December 31, 2018. Adjusted EBITDA for the year
ended December 31, 2018 does not include the results of Ravin prior
to CODI's ownership.
CODI reported CAD (see "Note Regarding Use of
Non-GAAP Financial Measures" below) of $30.0 million for the
quarter ended December 31, 2019, as compared to $22.9 million for
the prior year's comparable quarter. CAD for the year ended
December 31, 2019 was $104.0 million, as compared to $93.7 million
for the year ended December 31, 2018. CODI's CAD is calculated
after taking into account all interest expenses, cash taxes paid,
preferred distributions and maintenance capital expenditures, and
includes the operating results of each of our businesses for the
periods during which CODI owned them. However, CAD excludes the
gains from monetizing interests in CODI's subsidiaries, which have
totaled over $1 billion since going public in 2006. The increase in
CAD over the prior year's quarter is primarily the result of 5.11's
improved operating performance and lower interest expense and
management fees, offset by the loss of cash flow from our two
divestitures in the first half of 2019.
Liquidity and Capital
Resources
For the quarter ended December 31, 2019, CODI
reported Cash Provided by Operating Activities of $53.0 million, as
compared to Cash Provided by Operating Activities of $55.7 million
for the quarter ended December 31, 2018. CODI's weighted average
number of shares outstanding for the quarters ended December 31,
2019 and December 31, 2018 were 59.9 million.
For the year ended December 31, 2019, CODI
generated Cash Provided by Operating Activities of $84.6 million,
as compared to Cash Provided by Operating Activities of $114.5
million for the year ended December 31, 2018. CODI's weighted
average number of shares outstanding for the twelve month periods
ended December 31, 2019 and December 31, 2018 were 59.9
million.
As of December 31, 2019, CODI had approximately
$100.3 million in cash and cash equivalents, $400.0 million
outstanding in 8.00% Senior Notes due 2026 and no outstanding
borrowings under its revolving credit facility. The Company repaid
$193.8 million of its 2018 Term Loan in July 2019, and repaid the
remaining $298.8 million due under the 2018 Term Loan in November
2019.
The Company has no significant debt maturities
until 2026 and had net borrowing availability of $596.4 million at
December 31, 2019 under its revolving credit facility.
In November 2019, the Company completed an
offering of 4,000,000 shares of 7.875% Series C Cumulative
Preferred Shares (the "Series C Preferred Shares") with a
liquidation preference of $25.00 per share. The underwriters
exercised in full their option to purchase an additional 600,000
Series C Preferred Shares, which resulted in total proceeds to the
Company of $111.0 million, after deducting the underwriting
discount and estimated offering expenses payable by the Company.
The Company used the net proceeds from the offering, together with
its own cash, to repay in full the outstanding balance of its 2018
Term Loan, and for general corporate purposes.
Concurrent with the June 2019 sale of Clean
Earth, Compass Group Management volunteered to waive the management
fee on cash balances held at CODI, commencing with the management
fee due for the quarter ended June 30, 2019 and continuing until
the quarter during which the Company next borrows under its
revolving credit facility.
Fourth Quarter 2019
Distributions
On January 6, 2020, CODI's Board of Directors
(the "Board") declared a fourth quarter distribution of $0.36 per
share on the Company's common shares. The cash distribution was
paid on January 23, 2020 to all holders of record of common shares
as of January 16, 2020. Since its IPO in 2006, CODI has paid a
cumulative distribution of $18.9552 per common share.
The Board also declared a quarterly cash
distribution of $0.453125 per share on the Company's 7.250% Series
A Preferred Shares (the "Series A Preferred Shares"). The
distribution on the Series A Preferred Shares covers the period
from, and including, October 30, 2019, up to, but excluding,
January 30, 2020. The distribution for such period was paid on
January 30, 2020 to all holders of record of Series A Preferred
Shares as of January 15, 2020.
The Board also declared a quarterly cash
distribution of $0.4921875 per share on the Company's 7.875% Series
B Preferred Shares (the "Series B Preferred Shares"). The
distribution on the Series B Preferred Shares covers the period
from, and including, October 30, 2019, up to, but excluding,
January 30, 2020. The distribution for such period was paid on
January 30, 2020 to all holders of record of Series B Preferred
Shares as of January 15, 2020.
The Board also declared a quarterly cash
distribution of $0.38281 per share on the Company's 7.875% Series C
Preferred Shares. The distribution on the Series C Preferred Shares
covers the period from, and including, November 20, 2019, the
original issue date of the Series C Preferred Shares, up to, but
excluding, January 30, 2020. The distribution for such period was
paid on January 30, 2020 to all holders of record of Series C
Preferred Shares as of January 15, 2020.
2020 Guidance
The Company expects its current subsidiaries to
produce consolidated Adjusted EBITDA in 2020 of between $238
million and $258 million. This estimate is based on the
summation of our expectations for our current subsidiaries in 2020,
absent additional acquisitions or divestitures, and excludes
corporate expense such as interest expense, management fees and
corporate overhead. In addition, our Payout Ratio, defined as
our prior year's annual distribution to common shareholders divided
by our 2020 estimate for CAD, is anticipated to be between 80% and
90%. These estimates assume an economic growth rate in 2020
that is similar to the growth rate experienced in 2019, and does
not take into account potential disruption from the
coronavirus. As discussed below, it is not possible to
reconcile, without unreasonable efforts, our consolidated Adjusted
EBITDA for 2020 or our 2020 Payout Ratio due to an inability to
identify the timing or occurrence of events and transactions that
could significantly impact future GAAP Net Income (Loss) and Cash
Flow from Operating Activities if they were to occur.
Conference Call
Management will host a conference call on
Wednesday, February 26, 2020 at 5:00 p.m. ET to discuss the latest
corporate developments and financial results. The dial-in number
for callers in the U.S. is (855) 212-2368 and the dial-in number
for international callers is (315) 625-6886. The access code for
all callers is 4209368. A live webcast will also be available on
the Company's website at https://www.compassequity.com.
A replay of the call will be available through
March 5, 2020. To access the replay, please dial (855) 859-2056 in
the U.S. and (404) 537-3406 outside the U.S., and then enter the
access code 4209368.
Note Regarding Use of Non-GAAP Financial
Measures
Adjusted EBITDA is a non-GAAP measure used by
the Company to assess its performance. We have reconciled
Adjusted EBITDA to Net Income (Loss) on the attached schedules. We
consider Net Income (Loss) to be the most directly comparable GAAP
financial measure to Adjusted EBITDA. We believe that Adjusted
EBITDA provides useful information to investors and reflects
important financial measures as it excludes the effects of items
which reflect the impact of long-term investment decisions, rather
than the performance of near term operations. When compared to Net
Income (Loss), Adjusted EBITDA is limited in that it does not
reflect the periodic costs of certain capital assets used in
generating revenues of our businesses or the non-cash charges
associated with impairments, as well as certain cash charges. This
presentation also allows investors to view the performance of our
businesses in a manner similar to the methods used by us and the
management of our businesses, provides additional insight into our
operating results and provides a measure for evaluating targeted
businesses for acquisition. We believe Adjusted EBITDA is also
useful in measuring our ability to service debt and other payment
obligations.
CAD is a non-GAAP measure used by the Company to
assess its performance, as well as its ability to sustain quarterly
distributions. We have reconciled CAD to Net Income (Loss)
and Cash Flow from Operating Activities on the attached schedules.
We consider Net Income (Loss) and Cash Flow from Operating
Activities to be the most directly comparable GAAP financial
measures to CAD.
CAD is calculated after taking into account all
interest expense, cash taxes paid and maintenance capital
expenditures, and includes the operating results of each of our
businesses for the periods during which CODI owned them. We
believe that CAD provides investors additional information to
enable them to evaluate our performance and ability to make
anticipated quarterly distributions.
Payout Ratio is a non-GAAP measure defined as
our prior year's annual distribution to common shareholders divided
by our CAD. We believe the Payout Ratio provides investors
additional information to enable them to evaluate our performance
and our ability to sustain quarterly distributions. We have
reconciled CAD to Net Income (Loss) and Cash Flow from Operating
Activities on the attached schedules. We consider Net Income (Loss)
and Cash Flow from Operating Activities to be the most directly
comparable GAAP financial measures to CAD. However, we do not
provide a reconciliation of the Payout Ratio since it is a
calculation investors can perform by dividing our distribution by
our CAD.
In reliance on the unreasonable efforts
exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, we
have not reconciled Adjusted EBITDA or the Payout Ratio to their
comparable GAAP measures because we do not provide guidance on the
applicable reconciling items as a result of the uncertainty
regarding, and the potential variability of, these items. The
actual amount of such reconciling items will have a significant
impact on our Adjusted EBITDA and the Payout Ratio and,
accordingly, a reconciliation is not available without unreasonable
effort.
None of Adjusted EBITDA, CAD nor Payout Ratio is
meant to be a substitute for GAAP measures and may be different
from or otherwise inconsistent with non-GAAP financial measures
used by other companies.
About Compass Diversified Holdings
("CODI")
CODI owns and manages a diverse family of
established North American middle market businesses. Each of its
current subsidiaries is a leader in its niche market.
CODI maintains controlling ownership interests
in each of its subsidiaries in order to maximize its ability to
impact long term cash flow generation and value. The Company
provides both debt and equity capital for its subsidiaries,
contributing to their financial and operating flexibility. CODI
utilizes the cash flows generated by its subsidiaries to invest in
the long-term growth of the Company and to make cash distributions
to its shareholders.
Our eight majority-owned subsidiaries are
engaged in the following lines of business:
- The design and marketing of
purpose-built technical apparel and gear serving a wide range of
global customers (5.11);
- The manufacture of quick-turn,
small-run and production rigid printed circuit boards
(Advanced Circuits);
- The manufacture of engineered
magnetic solutions for a wide range of specialty applications and
end-markets (Arnold Magnetic
Technologies);
- The design and marketing of
wearable baby carriers, strollers and related products
(Ergobaby);
- The design and manufacture of
custom molded protective foam solutions and OE components
(Foam Fabricators);
- The design and manufacture of
premium home and gun safes (Liberty
Safe);
- The manufacture and marketing of
portable food warming fuels for the hospitality and consumer
markets, flameless candles and house and garden lighting for the
home decor market, and wickless candle products used for home decor
and fragrance systems (Sterno); and
- The design, manufacture and
marketing of airguns, archery products, optics and related
accessories (Velocity Outdoor).
This press release may contain certain
forward-looking statements, including statements with regard to the
future performance of CODI. Words such as "believes," "expects,"
“anticipates,” “estimate,” "projects," and "future" or similar
expressions, are intended to identify forward-looking statements.
These forward-looking statements are subject to the inherent
uncertainties in predicting future results and conditions. Certain
factors could cause actual results to differ materially from those
projected in these forward-looking statements, and some of these
factors are enumerated in the risk factor discussion in the Form
10-K filed by CODI with the SEC for the year
ended December 31, 2019, and other filings with the SEC.
Except as required by law, CODI undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
|
Investor Relations: |
Media Contact: |
|
The IGB Group |
Joele Frank, Wilkinson Brimmer Katcher |
|
Leon Berman |
Jon Keehner / Julie Oakes / Kate Thompson |
|
212-477-8438 |
212-355-4449 |
|
lberman@igbir.com |
|
|
|
|
|
Compass Diversified Holdings |
|
Condensed Consolidated Statements of
Operations |
|
(unaudited) |
| |
|
|
|
|
|
|
|
| |
Three months ended |
|
Twelve months ended |
| |
December 31, |
|
December 31, |
| (in thousands, except per
share data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Net sales |
$ |
386,999 |
|
|
$ |
370,918 |
|
|
$ |
1,450,253 |
|
|
$ |
1,357,320 |
|
| Cost of sales |
246,209 |
|
|
247,439 |
|
|
930,810 |
|
|
887,478 |
|
| Gross
profit |
140,790 |
|
|
123,479 |
|
|
519,443 |
|
|
469,842 |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
91,445 |
|
|
78,832 |
|
|
335,181 |
|
|
320,085 |
|
|
Management fees |
8,678 |
|
|
11,239 |
|
|
37,030 |
|
|
43,443 |
|
|
Amortization expense |
13,523 |
|
|
14,153 |
|
|
54,155 |
|
|
49,686 |
|
|
Impairment expense (reversal) |
(500 |
) |
|
— |
|
|
32,881 |
|
|
— |
|
| Operating
income |
27,644 |
|
|
19,255 |
|
|
60,196 |
|
|
56,628 |
|
| Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense, net |
(9,792 |
) |
|
(20,018 |
) |
|
(58,216 |
) |
|
(55,245 |
) |
|
Amortization of debt issuance costs |
(689 |
) |
|
(927 |
) |
|
(3,314 |
) |
|
(3,905 |
) |
|
Loss on paydown of debt |
(7,281 |
) |
|
— |
|
|
(12,319 |
) |
|
(744 |
) |
|
Loss on sale of Tilray securities |
— |
|
|
— |
|
|
(10,193 |
) |
|
— |
|
|
Other expense, net |
(972 |
) |
|
(2,860 |
) |
|
(2,185 |
) |
|
(5,145 |
) |
| Income (loss) from
continuing operations before income taxes |
8,910 |
|
|
(4,550 |
) |
|
(26,031 |
) |
|
(8,411 |
) |
|
Provision for income taxes |
4,367 |
|
|
2,909 |
|
|
14,742 |
|
|
10,466 |
|
| Income (loss) from
continuing operations |
4,543 |
|
|
(7,459 |
) |
|
(40,773 |
) |
|
(18,877 |
) |
|
Income from discontinued operations, net of income tax |
— |
|
|
898 |
|
|
16,901 |
|
|
15,829 |
|
|
Gain on sale of discontinued operations |
810 |
|
|
93 |
|
|
331,013 |
|
|
1,258 |
|
| Net income
(loss) |
5,353 |
|
|
(6,468 |
) |
|
307,141 |
|
|
(1,790 |
) |
|
Less: Income from continuing operations attributable to
noncontrolling interest |
1,545 |
|
|
2,742 |
|
|
5,542 |
|
|
5,217 |
|
|
Less: Loss from discontinued operations attributable to
noncontrolling interest |
— |
|
|
(2,031 |
) |
|
(266 |
) |
|
(1,305 |
) |
| Net income (loss)
attributable to Holdings |
$ |
3,808 |
|
|
$ |
(7,179 |
) |
|
$ |
301,865 |
|
|
$ |
(5,702 |
) |
| |
|
|
|
|
|
|
|
| Basic income
(loss) per common share attributable to Holdings |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.24 |
) |
|
$ |
(0.30 |
) |
|
$ |
(2.17 |
) |
|
$ |
(0.73 |
) |
|
Discontinued operations |
0.01 |
|
|
(0.05 |
) |
|
5.81 |
|
|
0.31 |
|
| |
$ |
(0.23 |
) |
|
$ |
(0.35 |
) |
|
$ |
3.64 |
|
|
$ |
(0.42 |
) |
| |
|
|
|
|
|
|
|
| Basic weighted average number
of common shares outstanding |
59,900 |
|
|
59,900 |
|
|
59,900 |
|
|
59,900 |
|
| |
|
|
|
|
|
|
|
| Cash distributions declared
per Trust common share |
$ |
0.36 |
|
|
$ |
0.36 |
|
|
$ |
1.44 |
|
|
$ |
1.44 |
|
| |
|
|
|
|
|
|
|
|
Compass Diversified Holdings |
|
Net Sales to Pro Forma Net Sales
Reconciliation |
|
(unaudited) |
| |
|
|
|
|
|
|
|
| |
Three months ended |
|
Twelve months ended |
| |
December 31, |
|
December 31, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
| |
|
|
|
|
|
|
|
|
Net Sales |
$ |
386,999 |
|
|
$ |
370,918 |
|
|
$ |
1,450,253 |
|
|
$ |
1,357,320 |
|
|
Acquisitions (1) |
— |
|
|
— |
|
|
— |
|
|
39,828 |
|
| Pro Forma Net Sales |
$ |
386,999 |
|
|
$ |
370,918 |
|
|
$ |
1,450,253 |
|
|
$ |
1,397,148 |
|
| |
|
|
|
|
|
|
|
|
|
(1) |
|
Net sales of Foam Fabricators and Rimports (Sterno Group add-on) as
if those businesses were acquired January 1, 2018. |
|
|
|
|
|
|
Compass Diversified Holdings |
|
Subsidiary Pro Forma Net Sales |
|
(unaudited) |
| |
|
|
|
|
|
| |
Three months ended |
|
Twelve months ended |
| |
December 31, |
|
December 31, |
| (in thousands) |
2019 |
|
2018 |
|
2019 |
|
2018 |
| |
|
|
|
|
|
|
|
| Branded
Consumer |
|
|
|
|
|
|
|
|
5.11 Tactical |
$ |
109,667 |
|
|
$ |
95,900 |
|
|
$ |
388,645 |
|
|
$ |
347,922 |
|
| Ergobaby |
21,253 |
|
|
20,190 |
|
|
89,995 |
|
|
90,566 |
|
| Liberty |
28,598 |
|
|
20,917 |
|
|
96,164 |
|
|
82,658 |
|
| Velocity Outdoor
(2) |
40,447 |
|
|
37,031 |
|
|
147,842 |
|
|
131,296 |
|
|
Total Branded Consumer |
$ |
199,965 |
|
|
$ |
174,038 |
|
|
$ |
722,646 |
|
|
$ |
652,442 |
|
| |
|
|
|
|
|
|
|
| Niche
Industrial |
|
|
|
|
|
|
|
| Advanced Circuits |
$ |
23,386 |
|
|
$ |
24,057 |
|
|
$ |
90,791 |
|
|
$ |
92,511 |
|
| Arnold Magnetics |
29,544 |
|
|
27,374 |
|
|
119,948 |
|
|
117,860 |
|
| Foam Fabricators
(1) |
27,790 |
|
|
31,443 |
|
|
121,424 |
|
|
128,465 |
|
| Sterno Group
(1) |
106,312 |
|
|
114,006 |
|
|
395,444 |
|
|
405,870 |
|
|
Total Niche Industrial |
$ |
187,032 |
|
|
$ |
196,880 |
|
|
$ |
727,607 |
|
|
$ |
744,706 |
|
| |
|
|
|
|
|
|
|
| |
$ |
386,997 |
|
|
$ |
370,918 |
|
|
$ |
1,450,253 |
|
|
$ |
1,397,148 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Foam Fabricators and Rimports (Sterno Group add-on) are pro forma
as if those businesses were acquired January 1, 2018. |
| |
|
|
|
|
(2) |
|
The above 2018 results exclude management's estimate of net sales
of $33.5 million for the year ended December 31, 2018 at Ravin
before our ownership. Ravin was acquired by Velocity Outdoor
in September 2018. |
|
|
|
|
|
|
Compass Diversified Holdings |
|
Net Income to Adjusted EBITDA and Cash Flow Available for
Distribution and Reinvestment |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
| |
Three months
ended |
|
Twelve
months ended |
| |
December
31, |
|
December
31, |
| (in thousands) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Net income (loss) |
$ |
5,353 |
|
|
$ |
(6,468 |
) |
|
$ |
307,141 |
|
|
$ |
(1,790 |
) |
|
Income from discontinued operations, net of income tax |
— |
|
|
898 |
|
|
16,901 |
|
|
15,829 |
|
|
Gain on sale of discontinued operations |
810 |
|
|
93 |
|
|
331,013 |
|
|
1,258 |
|
| Income (loss) from
continuing operations |
$ |
4,543 |
|
|
$ |
(7,459 |
) |
|
$ |
(40,773 |
) |
|
$ |
(18,877 |
) |
|
Provision for income taxes |
4,367 |
|
|
2,909 |
|
|
14,742 |
|
|
10,466 |
|
| Income (loss) from
continuing operations before income taxes |
$ |
8,910 |
|
|
$ |
(4,550 |
) |
|
$ |
(26,031 |
) |
|
$ |
(8,411 |
) |
|
Other expense, net |
(8,253 |
) |
|
(2,860 |
) |
|
(14,504 |
) |
|
(5,145 |
) |
|
Amortization of debt issuance costs |
(689 |
) |
|
(927 |
) |
|
(3,314 |
) |
|
(3,905 |
) |
|
Loss on sale of Tilray securities |
— |
|
|
— |
|
|
(10,193 |
) |
|
(744 |
) |
|
Interest expense, net |
(9,792 |
) |
|
(20,018 |
) |
|
(58,216 |
) |
|
(55,245 |
) |
| Operating income
(loss) |
$ |
27,644 |
|
|
$ |
19,255 |
|
|
$ |
60,196 |
|
|
$ |
56,628 |
|
| Adjusted
For: |
|
|
|
|
|
|
|
|
Depreciation |
8,526 |
|
|
8,270 |
|
|
33,153 |
|
|
31,195 |
|
|
Amortization |
13,523 |
|
|
16,745 |
|
|
54,155 |
|
|
59,506 |
|
|
Non-controlling shareholder compensation |
1,789 |
|
|
739 |
|
|
6,054 |
|
|
6,711 |
|
|
Acquisition expenses |
— |
|
|
110 |
|
|
— |
|
|
3,661 |
|
|
Integration services fees |
— |
|
|
562 |
|
|
281 |
|
|
2,719 |
|
|
Management fees |
8,678 |
|
|
11,239 |
|
|
37,030 |
|
|
43,442 |
|
|
Impairment expense (reversal) |
(500 |
) |
|
— |
|
|
32,881 |
|
|
— |
|
|
Earnout provision adjustment |
2,022 |
|
|
(4,800 |
) |
|
2,022 |
|
|
(4,800 |
) |
|
Other |
— |
|
|
4,364 |
|
|
324 |
|
|
3,046 |
|
| Adjusted
EBITDA |
$ |
61,682 |
|
|
$ |
56,484 |
|
|
$ |
226,096 |
|
|
$ |
202,108 |
|
|
Interest at Corporate, net of unused fee (1) |
(9,281 |
) |
|
(15,441 |
) |
|
(52,417 |
) |
|
(53,615 |
) |
|
Swap payment |
— |
|
|
(339 |
) |
|
(675 |
) |
|
(1,783 |
) |
|
Management fees |
(8,678 |
) |
|
(11,237 |
) |
|
(37,030 |
) |
|
(43,442 |
) |
|
Capital expenditures (maintenance) |
(7,244 |
) |
|
(3,400 |
) |
|
(18,510 |
) |
|
(18,881 |
) |
|
Current tax expense (cash taxes) (2) |
(2,706 |
) |
|
(5,237 |
) |
|
(15,288 |
) |
|
(12,817 |
) |
|
Preferred share distributions |
(3,781 |
) |
|
(3,781 |
) |
|
(15,125 |
) |
|
(12,179 |
) |
|
Discontinued operations |
— |
|
|
7,187 |
|
|
16,987 |
|
|
34,602 |
|
|
Miscellaneous items |
— |
|
|
(1,326 |
) |
|
— |
|
|
(343 |
) |
| Cash Flow Available
for Distribution and Reinvestment ('CAD') |
$ |
29,992 |
|
|
$ |
22,910 |
|
|
$ |
104,038 |
|
|
$ |
93,650 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Interest expense at Corporate reflects consolidated interest
expense less non-cash components such as, unrealized gains and
losses on our swap and original issue discount amortization.
We include the cash component of our swap payment above in our
reconciliation to CAD. |
| |
|
|
|
|
(2) |
|
Current tax expense is calculated by deducting the change in
deferred tax from the statement of cash flows from the income tax
provision on the statement of operations. |
|
|
|
|
|
|
Compass Diversified Holdings |
|
Adjusted EBITDA (1) |
|
(unaudited) |
| |
|
|
|
|
|
|
|
| |
Three months ended |
|
Twelve months ended |
| |
December 31, |
|
December 31, |
| (in thousands) |
2019 |
|
2018 |
|
2019 |
|
2018 |
| |
|
|
|
|
|
|
|
| Branded
Consumer |
|
|
|
|
|
|
|
|
5.11 Tactical |
$ |
15,290 |
|
|
$ |
10,989 |
|
|
$ |
46,900 |
|
|
$ |
32,303 |
|
| Ergobaby |
3,574 |
|
|
3,724 |
|
|
20,263 |
|
|
21,138 |
|
| Liberty |
3,243 |
|
|
1,558 |
|
|
10,867 |
|
|
8,060 |
|
| Velocity Outdoor
(2) |
5,607 |
|
|
5,764 |
|
|
21,571 |
|
|
20,543 |
|
|
Total Branded Consumer |
$ |
27,714 |
|
|
$ |
22,035 |
|
|
$ |
99,601 |
|
|
$ |
82,044 |
|
| |
|
|
|
|
|
|
|
| Niche
Industrial |
|
|
|
|
|
|
|
| Advanced Circuits |
$ |
7,521 |
|
|
$ |
8,025 |
|
|
$ |
28,926 |
|
|
$ |
29,954 |
|
| Arnold Magnetics |
3,766 |
|
|
1,871 |
|
|
15,376 |
|
|
13,976 |
|
| Foam Fabricators
(2) |
5,856 |
|
|
7,433 |
|
|
28,531 |
|
|
26,556 |
|
| Sterno Group
(2) |
22,010 |
|
|
20,821 |
|
|
68,529 |
|
|
63,845 |
|
|
Total Niche Industrial |
$ |
39,153 |
|
|
$ |
38,150 |
|
|
$ |
141,362 |
|
|
$ |
134,331 |
|
|
|
|
|
|
|
|
|
|
| Corporate expense
(3) |
(5,186 |
) |
|
(3,702 |
) |
|
(14,867 |
) |
|
(14,267 |
) |
|
Total Adjusted EBITDA |
$ |
61,681 |
|
|
$ |
56,483 |
|
|
$ |
226,096 |
|
|
$ |
202,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Please refer to our recently filed Form 10-K for detail on
subsidiary pro forma Adjusted EBITDA, and reconciliation to net
income. |
| |
|
|
|
|
(2) |
|
The above 2018 results exclude management's estimate of Adjusted
EBITDA, before our ownership, of $5.5 million at Rimports, $2.8
million at Foam Fabricators and $10.8 million at Ravin for the year
ended December 31st. |
| |
|
|
|
|
(3) |
|
Please refer to the recently filed Form 10-K for a
reconciliation of our Corporate expense to Net Income. |
|
|
|
|
|
| Compass
Diversified Holdings |
| Summarized
Statement of Cash Flows |
|
(unaudited) |
| |
|
|
|
| |
Year ended December 31, |
| (in thousands) |
2019 |
|
2018 |
|
Net cash provided by operating activities |
$ |
84,562 |
|
|
$ |
114,452 |
|
|
Net cash provided by (used in) investing activities |
743,126 |
|
|
(604,080 |
) |
|
Net cash (used in) provided by financing activities |
(779,522 |
) |
|
500,111 |
|
| Effect of foreign currency on cash |
(1,178 |
) |
|
2,958 |
|
| Net increase in cash and cash
equivalents |
46,988 |
|
|
13,441 |
|
| Cash and cash equivalents —
beginning of period (1) |
53,326 |
|
|
39,885 |
|
| Cash and cash equivalents —
end of period |
$ |
100,314 |
|
|
$ |
53,326 |
|
| |
|
|
|
|
|
(1) |
|
Includes cash from discontinued operations of $4.6 million at
January 1, 2019 and $4.2 million at January 1, 2018. |
| |
|
|
|
| Compass
Diversified Holdings |
| Condensed
Consolidated Table of Cash Flow Available for Distribution and
Reinvestment |
|
(unaudited) |
| |
|
|
|
|
|
|
|
| |
Three months
ended |
|
Twelve
months ended |
| |
December
31, |
|
December
31, |
| (in thousands) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Net income |
$ |
5,353 |
|
|
$ |
(6,468 |
) |
|
$ |
307,141 |
|
|
$ |
(1,790 |
) |
| Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
22,049 |
|
|
32,697 |
|
|
100,462 |
|
|
120,575 |
|
|
Gain on sale of business |
(810 |
) |
|
(93 |
) |
|
(331,013 |
) |
|
(1,258 |
) |
|
Impairment expense (reversal) |
(500 |
) |
|
— |
|
|
32,881 |
|
|
— |
|
|
Amortization of debt issuance costs and original issue
discount |
751 |
|
|
1,080 |
|
|
3,773 |
|
|
4,483 |
|
|
Loss (gain) on interest rate derivative |
14 |
|
|
2,398 |
|
|
3,500 |
|
|
(2,251 |
) |
|
Noncontrolling stockholder charges |
1,789 |
|
|
1,281 |
|
|
7,993 |
|
|
8,975 |
|
|
Provision for loss on receivables |
770 |
|
|
(26 |
) |
|
3,556 |
|
|
433 |
|
|
Other |
8,478 |
|
|
961 |
|
|
14,438 |
|
|
1,007 |
|
|
Deferred taxes |
1,662 |
|
|
(2,850 |
) |
|
(12,876 |
) |
|
(9,472 |
) |
|
Changes in operating assets and liabilities |
13,423 |
|
|
26,700 |
|
|
(45,293 |
) |
|
(6,250 |
) |
| Net cash provided by operating activities |
52,979 |
|
|
55,680 |
|
|
84,562 |
|
|
114,452 |
|
| Plus: |
|
|
|
|
|
|
|
|
Unused fee on revolving credit facility |
458 |
|
|
348 |
|
|
1,851 |
|
|
1,630 |
|
|
Successful acquisition costs |
— |
|
|
348 |
|
|
596 |
|
|
5,343 |
|
|
Integration services fee (1) |
— |
|
|
563 |
|
|
281 |
|
|
2,719 |
|
|
Realized loss from foreign currency effect (2) |
— |
|
|
2,719 |
|
|
363 |
|
|
4,083 |
|
|
Changes in operating assets and liabilities |
— |
|
|
— |
|
|
45,293 |
|
|
6,250 |
|
|
Loss on sale of Tilray securities |
— |
|
|
— |
|
|
10,193 |
|
|
— |
|
|
Earnout provision adjustment |
2,022 |
|
|
— |
|
|
2,022 |
|
|
— |
|
|
Other (3) |
— |
|
|
4,296 |
|
|
— |
|
|
5,181 |
|
| Less: |
|
|
|
|
|
|
|
|
Maintenance capital expenditures (4) |
7,245 |
|
|
5,425 |
|
|
22,005 |
|
|
27,246 |
|
|
Payment of interest rate swap |
— |
|
|
339 |
|
|
675 |
|
|
1,783 |
|
|
Changes in operating assets and liabilities |
13,423 |
|
|
26,700 |
|
|
— |
|
|
— |
|
|
Preferred share distributions |
3,781 |
|
|
3,781 |
|
|
15,125 |
|
|
12,179 |
|
|
Earnout provision adjustment |
— |
|
|
4,800 |
|
|
— |
|
|
4,800 |
|
|
Other (5) |
1,018 |
|
|
— |
|
|
3,318 |
|
|
— |
|
| CAD |
$ |
29,992 |
|
|
$ |
22,909 |
|
|
$ |
104,038 |
|
|
$ |
93,650 |
|
| |
|
|
|
|
|
|
|
| Distribution paid in April
2019/ 2018 |
$ |
— |
|
|
$ |
— |
|
|
$ |
21,564 |
|
|
$ |
21,564 |
|
| Distribution paid in July
2019/ 2018 |
— |
|
|
— |
|
|
21,564 |
|
|
21,564 |
|
| Distribution paid in October
2019/ 2018 |
— |
|
|
— |
|
|
21,564 |
|
|
21,564 |
|
| Distribution paid in January
2020/ 2019 |
21,564 |
|
|
21,564 |
|
|
21,564 |
|
|
21,564 |
|
| |
$ |
21,564 |
|
|
$ |
21,564 |
|
|
$ |
86,256 |
|
|
$ |
86,256 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(1) |
|
Represents fees paid by newly acquired companies to the Manager for
integration services performed during the first year of ownership,
payable quarterly. |
| |
|
|
|
| |
(2) |
|
Reflects the foreign currency transaction gain/ loss resulting from
the Canadian dollar intercompany loans issued to Manitoba
Harvest. |
| |
|
|
|
| |
(3) |
|
Includes $4.2 million in additional reserves established during the
fourth quarter of 2018 for slow moving inventory acquired prior to
our ownership of 5.11 |
| |
|
|
|
| |
(4) |
|
Excludes growth capital expenditures of approximately $5.7 million
and $3.3 million for the three months ended December 31, 2019 and
2018, respectively, and $16.4 million and $24.3 million for the
twelve months ended December 31, 2019 and 2018, respectively. |
| |
|
|
|
| |
(5) |
|
Represents the effect on earnings of reserves for inventory and
accounts receivable. |
| |
|
|
|
|
Compass Diversified Holdings |
|
Maintenance Capital Expenditures |
|
(unaudited) |
| |
|
|
|
|
|
| |
Three months
ended |
|
Twelve
months ended |
| |
December
31, |
|
December
31, |
| (in thousands) |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Branded
Consumer |
|
|
|
|
|
|
|
|
5.11 Tactical |
$ |
696 |
|
|
$ |
(307 |
) |
|
$ |
2,243 |
|
|
$ |
2,322 |
|
| Ergobaby |
22 |
|
|
91 |
|
|
605 |
|
|
737 |
|
| Liberty |
(186 |
) |
|
91 |
|
|
534 |
|
|
1,130 |
|
| Velocity Outdoor |
803 |
|
|
705 |
|
|
2,899 |
|
|
3,768 |
|
|
Total Branded Consumer |
$ |
1,335 |
|
|
$ |
580 |
|
|
$ |
6,281 |
|
|
$ |
7,957 |
|
| |
|
|
|
|
|
|
|
| Niche
Industrial |
|
|
|
|
|
|
|
| Advanced Circuits |
$ |
3,663 |
|
|
$ |
419 |
|
|
$ |
4,790 |
|
|
$ |
1,588 |
|
| Arnold Magnetics |
988 |
|
|
1,548 |
|
|
3,862 |
|
|
4,708 |
|
| Foam Fabricators |
359 |
|
|
340 |
|
|
1,746 |
|
|
1,795 |
|
| Sterno Group |
899 |
|
|
374 |
|
|
1,831 |
|
|
2,694 |
|
|
Total Niche Industrial |
$ |
5,909 |
|
|
$ |
2,681 |
|
|
$ |
12,229 |
|
|
$ |
10,785 |
|
| |
|
|
|
|
|
|
|
| Total maintenance capital
expenditures |
$ |
7,244 |
|
|
$ |
3,261 |
|
|
$ |
18,510 |
|
|
$ |
18,742 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Compass
Diversified Holdings |
| Condensed
Consolidated Balance Sheets |
| |
|
|
|
| |
December 31, 2019 |
|
December 31, 2018 |
| (in thousands) |
|
|
|
| Assets |
|
|
|
| Current assets |
|
|
|
|
Cash and cash equivalents |
$ |
100,314 |
|
|
$ |
48,771 |
|
|
Accounts receivable, net |
191,405 |
|
|
205,545 |
|
|
Inventories |
317,306 |
|
|
307,437 |
|
|
Prepaid expenses and other current assets |
35,247 |
|
|
29,670 |
|
|
Current assets of discontinued operations |
— |
|
|
89,762 |
|
|
Total current assets |
644,272 |
|
|
681,185 |
|
| Property, plant and equipment,
net |
146,428 |
|
|
146,601 |
|
| Goodwill and intangible
assets, net |
1,000,465 |
|
|
1,086,707 |
|
| Other non-current assets |
100,727 |
|
|
8,378 |
|
| Non-current assets of
discontinued operations |
— |
|
|
449,464 |
|
| Total
assets |
$ |
1,891,892 |
|
|
$ |
2,372,335 |
|
| |
|
|
|
| Liabilities and
stockholders’ equity |
|
|
|
| Current liabilities |
|
|
|
|
Accounts payable and accrued expenses |
$ |
178,857 |
|
|
$ |
183,781 |
|
|
Due to related party |
8,049 |
|
|
11,093 |
|
|
Current portion, long-term debt |
— |
|
|
5,000 |
|
|
Other current liabilities |
22,573 |
|
|
6,912 |
|
|
Current liabilities of discontinued operations |
— |
|
|
52,494 |
|
|
Total current liabilities |
209,479 |
|
|
259,280 |
|
| Deferred income taxes |
33,039 |
|
|
33,984 |
|
| Long-term debt |
394,445 |
|
|
1,098,871 |
|
| Other non-current
liabilities |
89,054 |
|
|
12,615 |
|
| Non-current liabilities of
discontinued operations |
— |
|
|
48,243 |
|
|
Total liabilities |
726,017 |
|
|
1,452,993 |
|
| Stockholders'
equity |
|
|
|
| Total stockholders' equity
attributable to Holdings |
1,115,327 |
|
|
859,372 |
|
| Noncontrolling interest |
50,548 |
|
|
39,922 |
|
|
Noncontrolling interest of discontinued operations |
— |
|
|
20,048 |
|
|
Total stockholders' equity |
1,165,875 |
|
|
919,342 |
|
| Total liabilities and
stockholders’ equity |
$ |
1,891,892 |
|
|
$ |
2,372,335 |
|
| |
|
|
|
Compass Diversified (NYSE:CODI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Compass Diversified (NYSE:CODI)
Historical Stock Chart
From Apr 2023 to Apr 2024
