Compass Diversified (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, 2020.
Fourth Quarter and Full Year 2020
Highlights
- Reported net sales of $474.8
million for the fourth quarter 2020 and $1.561 billion for the full
year 2020;
- Reported net income of $8.8 million
for the fourth quarter 2020 and $27.2 million for the full year
2020;
- Reported non-GAAP Adjusted EBITDA
of $79.8 million for the fourth quarter 2020 and $249.2 million for
the full year 2020;
- Reported Cash Provided by Operating
Activities of $35.8 million for the fourth quarter 2020 and $148.6
million for the full year 2020, and non-GAAP Cash Flow Available
for Distribution and Reinvestment ("CAD") of $36.0 million for the
fourth quarter 2020 and $110.6 million for the full year 2020;
- Paid a fourth quarter 2020 cash
distribution of $0.36 per share on CODI's common shares in January
2021; and
- Paid quarterly cash distributions
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 $0.4921875 per share on the Company's 7.875%
Series C Preferred Shares payable on January 30, 2021.
“I am incredibly proud of our strong fourth
quarter and full year results, which underscore how CODI’s
differentiated model has continued to perform across economic
cycles,” said Elias Sabo, CEO of Compass Diversified. “We drove
impressive organic growth year-over-year and our permanent capital
strategy enabled us to take advantage of multiple exciting
opportunities in the market. At a time when uncertainty and
unprecedented volatility paralyzed many market participants, we
acquired Marucci and BOA, two highly aspirational and rapidly
growing consumer businesses, and we have already begun to see the
impact of these strong brands.”
Mr. Sabo continued, “Our performance in 2020 is
also a testament to the strategic diversification across our
portfolio and the high quality of our subsidiary companies. We look
forward to continuing to partner with our leading niche brands to
enhance value for shareholders in the year to come.”
Operating Results
Net sales for the quarter ended December 31,
2020 were $474.8 million, as compared to $387.0 million for the
quarter ended December 31, 2019. Net sales were $1.561 billion for
the year ended December 31, 2020, as compared to $1.450 billion for
the year ended December 31, 2019.
Net income for the quarter ended December 31, 2020 was $8.8
million, as compared to $5.4 million for the quarter ended December
31, 2019. For the year ended December 31, 2020, CODI reported net
income of $27.2 million compared to net income of $307.1 million,
which included $331.0 million in gains from sales of Clean Earth
and Manitoba Harvest, for the year ended December 31, 2019.
Adjusted EBITDA (see "Note Regarding Use of
Non-GAAP Financial Measures" below) for the quarter ended December
31, 2020 was $79.8 million, as compared to $61.7 million for the
quarter ended December 31, 2019. Adjusted EBITDA
for the year ended December 31, 2020 was $249.2 million, as
compared to $226.1 million for the year ended December 31, 2019.
The year-over-year increase in Adjusted EBITDA for the fourth
quarter and full year 2020 was primarily a result of our 2020
acquisitions of BOA and Marucci, as well as strong performance in
the branded consumer companies.
Liquidity and Capital
Resources
For the quarter ended December 31, 2020, CODI
reported Cash Provided by Operating Activities of $35.8 million, as
compared to Cash Provided by Operating Activities of $53.0 million
for the quarter ended December 31, 2019.
CODI reported CAD (see "Note Regarding Use of
Non-GAAP Financial Measures" below) of $36.0 million for the
quarter ended December 31, 2020, as compared to $30.0 million for
the prior year's comparable quarter. 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 $1.0 billion since going public in 2006.
CODI's weighted average number of shares
outstanding for the quarter ended December 31, 2020 was 64.9
million, and for the quarter ended December 31, 2019 was 59.9
million.
As of December 31, 2020, CODI had approximately
$70.7 million in cash and cash equivalents, $307 million
outstanding on its revolver and $600 million outstanding in 8.00%
Senior Notes due 2026.
The Company has no significant debt maturities
until 2026 and had net borrowing availability of $292 million at
December 31, 2020 under its revolving credit facility.
Fourth Quarter 2020
Distributions
On January 4, 2021, 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 22, 2021 to all holders of record of common shares
as of January 15, 2021. Since its IPO in 2006, CODI has paid a
cumulative distribution of $20.3952 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, 2020, up to, but excluding,
January 30, 2021. The distribution for such period was payable on
January 30, 2021 to all holders of record of Series A Preferred
Shares as of January 15, 2021. The payment occurred on February 1,
2021, the next business day following the payment date.
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, 2020, up to, but excluding,
January 30, 2021. The distribution for such period was payable on
January 30, 2021 to all holders of record of Series B Preferred
Shares as of January 15, 2021. The payment occurred on February 1,
2021, the next business day following the payment date.
The Board also declared a quarterly cash
distribution of $0.4921875 per share on the Company’s 7.875% Series
C Preferred Shares (the “Series C Preferred Shares”). The
distribution on the Series C Preferred Shares covers the period
from, and including, October 30, 2020, up to, but excluding,
January 30, 2021. The distribution for such period was payable on
January 30, 2021 to all holders of record of Series C Preferred
Shares as of January 15, 2021. The payment occurred on February 1,
2021, the next business day following the payment date.
Guidance Update
The Company expects its current subsidiaries to
produce consolidated Adjusted EBITDA (see "Note Regarding Use of
Non-GAAP Financial Measures" below) in 2021 of between $305 million
and $325 million. This estimate is based on the summation of our
expectations for our current subsidiaries in 2021, absent
additional acquisitions or divestitures, and excludes corporate
expense such as interest expense, management fees and corporate
overhead. In addition, our Payout Ratio (see "Note Regarding Use of
Non-GAAP Financial Measures" below), defined as our prior year's
annual distribution to common shareholders divided by our 2021
estimate for CAD, is anticipated to be between 80% and
70%.
Corporate Structure
The Company is exploring a change in its tax
structure, including the possibility of electing to be taxed as a C
corporation. The Company is evaluating the costs and benefits of
such a change, as well as the implications of current and future
tax law, corporate law, and the potential impacts of such a change
to the Company’s access to the capital markets, distribution
policy, corporate debt ratings, cost of capital, amongst many other
considerations. The Company expects to provide updates on this
process as appropriate.
Conference Call
Management will host a conference call on
Wednesday, February 24, 2021 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 (833) 900-1532 and the dial-in number
for international callers is (236) 712-2273. The access code for
all callers is 1291438. A live webcast will also be available on
the Company's website at
https://www.compassdiversified.com.
A replay of the call will be available through
March 3, 2021. To access the replay, please dial (800) 585-8367 in
the U.S. and (416) 621-4642 outside the U.S., and then enter the
access code 1291438.
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.
In reliance on the unreasonable efforts
exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, we
have not reconciled 2021 Adjusted EBITDA or 2021 Payout Ratio
(which requires an estimate of 2021 CAD) to their comparable GAAP
measure because we do not provide guidance on Net Income (Loss),
Cash Flow Provided by Operating Activities or the applicable
reconciling items as a result of the uncertainty regarding, and the
potential variability of, these items. For the same reasons, we are
unable to address the probable significance of the unavailable
information, which could be material to future results.
Accordingly, undue reliance should not be placed on these
estimates.
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 (“CODI”)
CODI owns and manages a diverse set of highly defensible North
American middle market businesses. Each of its current subsidiaries
is a leader in its niche market. For more information, visit
compassdiversified.com.
Leveraging its permanent capital base, long-term disciplined
approach and actionable expertise, CODI maintains controlling
ownership interests in each of its subsidiaries, maximizing its
ability to impact long-term cash flow generation and value
creation. 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
has consistently generated strong returns through its culture of
transparency, alignment, and accountability.
Our ten 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 design and manufacture of custom packaging, insulation and
componentry (Altor Solutions);
- The manufacture of engineered magnetic solutions for a wide
range of specialty applications and end-markets (Arnold
Magnetic Technologies);
- The design and marketing of dial-based fit systems that deliver
performance fit across footwear, headwear and medical bracing
products (BOA Technology);
- The design and marketing of wearable baby carriers, strollers
and related products (Ergobaby);
- The design and manufacture of premium home and gun safes
(Liberty Safe);
- The design and manufacture of baseball and softball equipment
and apparel (Marucci Sports);
- The manufacture and marketing of portable food warming systems
used in the foodservice industry, creative indoor and outdoor
lighting, and home fragrance solutions for the consumer markets
(Sterno); and
- The design, manufacture and marketing of airguns, archery
products, optics and related accessories (Velocity
Outdoor).
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include, but are not
limited to, statements as to our future performance or liquidity,
such as expectations regarding our results of operations, financial
condition and cash flows for the full year of 2021, our 2021 Total
Adjusted EBITDA, 2021 Payout Ratio and 2021 CAD and our ability to
meet existing obligations as well as other statements with regard
to the future performance of CODI. We may use words such as
“anticipate,” “believe,” “expect,” “intend,” “will,” “should,”
“may,” “seek,” “look,” and similar expressions to identify
forward-looking statements. Actual results could differ materially
from those implied or expressed in the forward-looking statements
for any reason, including the factors set forth in “Risk Factors”
and elsewhere in CODI’s annual report on Form 10-K and its
quarterly reports on Form 10-Q. Forward-looking statements involve
risks and uncertainties, including, but not limited to, changes in
the economy, financial markets and political environment, including
the impact, in the near, medium and long-term, of the COVID-19
pandemic or social or political unrest on our business, results of
operations, financial position, liquidity, cash flows or ability to
make distributions; our business prospects and the prospects of our
portfolio companies; risks associated with possible disruption in
CODI’s operations or the economy generally due to terrorism and
natural disasters; future changes in laws or regulations (including
the interpretation of these laws and regulations by regulatory
authorities); the impact of investments that we make or expect to
make; the dependence of our future success on the general economy
and its impact on the industries in which we operate; the ability
of our portfolio companies to achieve their objectives; the
adequacy of our cash resources and working capital; the timing of
cash flows, if any, from the operations of our portfolio companies;
whether a change in tax structure will be made, and if made, the
timing, terms or benefits of such change; and other considerations
that may be disclosed from time to time in CODI’s publicly
disseminated documents and filings. Undue reliance should not be
placed on such forward-looking statements as such statements speak
only as of the date on which they are made. Although, except as
required by law, CODI undertakes no obligation to revise or update
any forward-looking statements, whether as a result of new
information, future events or otherwise, you are advised to consult
any additional disclosures that CODI may make directly to you or
through reports that it in the future may file with the SEC,
including annual reports on Form 10-K, quarterly reports on Form
10-Q and current reports on Form 8-K.
Investor Relations:The IGB Group
Leon Berman 212-477-8438 lberman@igbir.com |
Media Contact:Joele Frank,
Wilkinson Brimmer KatcherJon Keehner / Kate Thompson / Lyle
Weston212-355-4449 |
Compass Diversified
HoldingsConsolidated Statements of
Operations
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
(in thousands, except per
share data) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net sales |
$ |
474,778 |
|
|
$ |
386,999 |
|
|
$ |
1,560,757 |
|
|
$ |
1,450,253 |
|
Cost of sales |
302,672 |
|
|
246,209 |
|
|
997,976 |
|
|
930,810 |
|
Gross
profit |
172,106 |
|
|
140,790 |
|
|
562,781 |
|
|
519,443 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative expense |
110,414 |
|
|
91,445 |
|
|
371,264 |
|
|
335,181 |
|
Management fees |
11,313 |
|
|
8,678 |
|
|
34,749 |
|
|
37,030 |
|
Amortization expense |
18,429 |
|
|
13,523 |
|
|
61,935 |
|
|
54,155 |
|
Impairment expense |
— |
|
|
(500 |
) |
|
— |
|
|
32,881 |
|
Operating
income |
31,950 |
|
|
27,644 |
|
|
94,833 |
|
|
60,196 |
|
Other income (expense): |
|
|
|
|
|
|
|
Interest expense, net |
(13,646 |
) |
|
(9,792 |
) |
|
(45,768 |
) |
|
(58,216 |
) |
Amortization of debt issuance costs |
(659 |
) |
|
(689 |
) |
|
(2,454 |
) |
|
(3,314 |
) |
Loss on paydown of debt |
— |
|
|
(7,281 |
) |
|
— |
|
|
(12,319 |
) |
Loss on sale of Tilray securities |
— |
|
|
— |
|
|
— |
|
|
(10,193 |
) |
Other expense, net |
(448 |
) |
|
(972 |
) |
|
(2,620 |
) |
|
(2,185 |
) |
Income (loss) from
continuing operations before income taxes |
17,197 |
|
|
8,910 |
|
|
43,991 |
|
|
(26,031 |
) |
Provision for income taxes |
8,417 |
|
|
4,367 |
|
|
16,894 |
|
|
14,742 |
|
Income (loss) from
continuing operations |
8,780 |
|
|
4,543 |
|
|
27,097 |
|
|
(40,773 |
) |
Income from discontinued operations, net of income tax |
— |
|
|
— |
|
|
— |
|
|
16,901 |
|
Gain on sale of discontinued operations |
— |
|
|
810 |
|
|
100 |
|
|
331,013 |
|
Net
income |
8,780 |
|
|
5,353 |
|
|
27,197 |
|
|
307,141 |
|
Less: Income from continuing operations attributable to
noncontrolling interest |
414 |
|
|
1,545 |
|
|
4,417 |
|
|
5,542 |
|
Less: Loss from discontinued operations attributable to
noncontrolling interest |
— |
|
|
— |
|
|
— |
|
|
(266 |
) |
Net income
attributable to Holdings |
$ |
8,366 |
|
|
$ |
3,808 |
|
|
$ |
22,780 |
|
|
$ |
301,865 |
|
|
|
|
|
|
|
|
|
Basic income
(loss) per common share attributable to Holdings |
|
|
|
|
|
|
Continuing operations |
$ |
(0.06 |
) |
|
$ |
(0.79 |
) |
|
$ |
(0.34 |
) |
|
$ |
(2.17 |
) |
Discontinued operations |
— |
|
|
0.01 |
|
|
— |
|
|
5.81 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.78 |
) |
|
$ |
(0.34 |
) |
|
$ |
3.64 |
|
|
|
|
|
|
|
|
|
Basic weighted average number
of common shares outstanding |
64,900 |
|
|
59,900 |
|
|
63,151 |
|
|
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 December 31, |
|
Twelve months ended December 31, |
(in thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Net Sales |
|
$ |
474,778 |
|
|
$ |
386,999 |
|
|
$ |
1,560,757 |
|
|
$ |
1,450,253 |
|
Acquisitions (1) |
|
3,913 |
|
|
44,977 |
|
|
103,587 |
|
|
172,800 |
|
Pro Forma Net Sales |
|
$ |
478,691 |
|
|
$ |
431,976 |
|
|
$ |
1,664,344 |
|
|
$ |
1,623,053 |
|
(1) Acquisitions reflects the
net sales for Marucci Sports and Boa on a pro forma basis as if we
had acquired this business on January 1, 2019.
Compass Diversified Holdings |
Subsidiary Net Sales |
(unaudited) |
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
(in thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Branded
Consumer |
|
|
|
|
|
|
|
|
5.11 |
|
$ |
119,284 |
|
|
$ |
109,667 |
|
|
$ |
401,106 |
|
|
$ |
388,645 |
|
BOA (1) |
|
29,193 |
|
|
28,440 |
|
|
106,365 |
|
|
106,276 |
|
Ergobaby |
|
15,557 |
|
|
21,253 |
|
|
74,728 |
|
|
89,995 |
|
Liberty |
|
32,516 |
|
|
28,598 |
|
|
113,115 |
|
|
96,164 |
|
Marucci Sports
(1) |
|
18,633 |
|
|
16,537 |
|
|
65,942 |
|
|
66,524 |
|
Velocity Outdoor |
|
67,756 |
|
|
40,449 |
|
|
215,996 |
|
|
147,842 |
|
Total Branded Consumer |
|
$ |
282,939 |
|
|
$ |
244,944 |
|
|
$ |
977,252 |
|
|
$ |
895,446 |
|
|
|
|
|
|
|
|
|
|
Niche
Industrial |
|
|
|
|
|
|
|
|
Advanced Circuits |
|
$ |
20,652 |
|
|
$ |
23,386 |
|
|
$ |
88,075 |
|
|
$ |
90,791 |
|
Arnold Magnetics |
|
22,543 |
|
|
29,544 |
|
|
98,990 |
|
|
119,948 |
|
Foam Fabricators |
|
40,708 |
|
|
27,790 |
|
|
130,046 |
|
|
121,424 |
|
Sterno |
|
111,849 |
|
|
106,312 |
|
|
369,981 |
|
|
395,444 |
|
Total Niche Industrial |
|
$ |
195,752 |
|
|
$ |
187,032 |
|
|
$ |
687,092 |
|
|
$ |
727,607 |
|
|
|
|
|
|
|
|
|
|
Total Subsidiary Net
Sales |
|
$ |
478,691 |
|
|
$ |
431,976 |
|
|
$ |
1,664,344 |
|
|
$ |
1,623,053 |
|
(1) Net sales for Marucci Sports and BOA are
pro forma as if we had acquired this business on January 1,
2019.
Compass Diversified Holdings |
Net Income to Adjusted EBITDA and Cash Flow Available for
Distribution and Reinvestment |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
(in thousands) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income |
$ |
8,780 |
|
|
$ |
5,353 |
|
|
$ |
27,197 |
|
|
$ |
307,141 |
|
Income from discontinued operations, net of income tax |
— |
|
|
— |
|
|
— |
|
|
16,901 |
|
Gain on sale of discontinued operations |
— |
|
|
810 |
|
|
100 |
|
|
331,013 |
|
Income (loss) from
continuing operations |
$ |
8,780 |
|
|
$ |
4,543 |
|
|
$ |
27,097 |
|
|
$ |
(40,773 |
) |
Provision for income taxes |
8,417 |
|
|
4,367 |
|
|
16,894 |
|
|
14,742 |
|
Income (loss) from
continuing operations before income taxes |
$ |
17,197 |
|
|
$ |
8,910 |
|
|
$ |
43,991 |
|
|
$ |
(26,031 |
) |
Other expense, net |
(448 |
) |
|
(8,253 |
) |
|
(2,620 |
) |
|
(14,504 |
) |
Amortization of debt issuance costs |
(659 |
) |
|
(689 |
) |
|
(2,454 |
) |
|
(3,314 |
) |
Loss on sale of Tilray securities |
— |
|
|
— |
|
|
— |
|
|
(10,193 |
) |
Interest expense, net |
(13,646 |
) |
|
(9,792 |
) |
|
(45,768 |
) |
|
(58,216 |
) |
Operating
income |
$ |
31,950 |
|
|
$ |
27,644 |
|
|
$ |
94,833 |
|
|
$ |
60,196 |
|
Adjusted
For: |
|
|
|
|
|
|
|
Depreciation |
9,262 |
|
|
8,526 |
|
|
34,954 |
|
|
33,153 |
|
Amortization |
19,912 |
|
|
13,523 |
|
|
67,798 |
|
|
54,155 |
|
Noncontrolling shareholder compensation |
2,879 |
|
|
1,789 |
|
|
8,995 |
|
|
6,054 |
|
Acquisition expenses |
2,517 |
|
|
— |
|
|
4,832 |
|
|
— |
|
Integration services fees |
1,625 |
|
|
— |
|
|
2,125 |
|
|
281 |
|
Management fees |
11,313 |
|
|
8,678 |
|
|
34,749 |
|
|
37,030 |
|
Impairment expense |
— |
|
|
(500 |
) |
|
— |
|
|
32,881 |
|
Earnout provision adjustment |
— |
|
|
2,022 |
|
|
— |
|
|
2,022 |
|
Other |
325 |
|
|
— |
|
|
922 |
|
|
324 |
|
Adjusted
EBITDA |
$ |
79,783 |
|
|
$ |
61,682 |
|
|
$ |
249,208 |
|
|
$ |
226,096 |
|
Interest at Corporate, net of unused fee (1) |
(13,491 |
) |
|
(9,281 |
) |
|
(44,604 |
) |
|
(52,417 |
) |
Swap payment |
— |
|
|
— |
|
|
— |
|
|
(675 |
) |
Management fees |
(11,313 |
) |
|
(8,678 |
) |
|
(34,749 |
) |
|
(37,030 |
) |
Capital expenditures (maintenance) |
(6,717 |
) |
|
(7,244 |
) |
|
(17,084 |
) |
|
(18,510 |
) |
Current tax expense (cash taxes) (2) |
(5,846 |
) |
|
(2,706 |
) |
|
(17,675 |
) |
|
(15,288 |
) |
Preferred share distributions |
(6,045 |
) |
|
(3,781 |
) |
|
(23,678 |
) |
|
(15,125 |
) |
Discontinued operations |
— |
|
|
— |
|
|
— |
|
|
16,987 |
|
Miscellaneous items |
(378 |
) |
|
— |
|
|
(772 |
) |
|
— |
|
Cash Flow Available
for Distribution and Reinvestment ("CAD") |
$ |
35,993 |
|
|
$ |
29,992 |
|
|
$ |
110,646 |
|
|
$ |
104,038 |
|
(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 |
(Unaudited) |
Year ended December 31, 2020 |
|
|
Corporate |
|
5.11 |
|
BOA |
|
Ergobaby |
|
Liberty |
|
Marucci Sports |
|
Velocity Outdoor |
|
ACI |
|
Arnold |
|
Foam Fabricators |
|
Sterno |
|
Consolidated |
Net income (loss) |
|
$ |
(19,065 |
) |
|
$ |
12,356 |
|
|
$ |
(2,640 |
) |
|
$ |
725 |
|
|
$ |
9,902 |
|
|
$ |
(4,785 |
) |
|
$ |
11,161 |
|
|
$ |
13,170 |
|
|
$ |
(3,539 |
) |
|
$ |
6,092 |
|
|
$ |
3,820 |
|
|
$ |
27,197 |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes |
|
— |
|
|
1,808 |
|
|
(535 |
) |
|
2,033 |
|
|
3,288 |
|
|
(1,390 |
) |
|
3,560 |
|
|
3,431 |
|
|
(198 |
) |
|
2,554 |
|
|
2,343 |
|
|
16,894 |
|
Interest expense, net |
|
45,610 |
|
|
19 |
|
|
— |
|
|
— |
|
|
— |
|
|
7 |
|
|
131 |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
45,768 |
|
Intercompany interest |
|
(70,449 |
) |
|
14,085 |
|
|
2,043 |
|
|
2,405 |
|
|
3,548 |
|
|
1,843 |
|
|
8,915 |
|
|
5,778 |
|
|
5,730 |
|
|
7,084 |
|
|
19,018 |
|
|
— |
|
Depreciation and amortization |
|
399 |
|
|
21,483 |
|
|
5,589 |
|
|
8,199 |
|
|
1,742 |
|
|
10,203 |
|
|
12,781 |
|
|
2,773 |
|
|
6,805 |
|
|
12,722 |
|
|
22,510 |
|
|
105,206 |
|
EBITDA |
|
(43,505 |
) |
|
49,751 |
|
|
4,457 |
|
|
13,362 |
|
|
18,480 |
|
|
5,878 |
|
|
36,548 |
|
|
25,152 |
|
|
8,798 |
|
|
28,452 |
|
|
47,692 |
|
|
195,065 |
|
Gain on sale of business |
|
(100 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(100 |
) |
Other (income) expense |
|
— |
|
|
1,420 |
|
|
39 |
|
|
— |
|
|
7 |
|
|
(42 |
) |
|
931 |
|
|
154 |
|
|
9 |
|
|
(38 |
) |
|
140 |
|
|
2,620 |
|
Non-controlling shareholder compensation |
|
— |
|
|
2,489 |
|
|
469 |
|
|
1,156 |
|
|
29 |
|
|
634 |
|
|
1,549 |
|
|
495 |
|
|
(20 |
) |
|
1,028 |
|
|
1,166 |
|
|
8,995 |
|
Acquisition expenses |
|
— |
|
|
— |
|
|
2,517 |
|
|
— |
|
|
— |
|
|
2,042 |
|
|
— |
|
|
— |
|
|
— |
|
|
273 |
|
|
— |
|
|
4,832 |
|
Integration services fee |
|
— |
|
|
— |
|
|
1,125 |
|
|
— |
|
|
— |
|
|
1,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,125 |
|
Other |
|
324 |
|
|
— |
|
|
— |
|
|
598 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
922 |
|
Management fees |
|
29,402 |
|
|
1,000 |
|
|
250 |
|
|
500 |
|
|
500 |
|
|
347 |
|
|
500 |
|
|
500 |
|
|
500 |
|
|
750 |
|
|
500 |
|
|
34,749 |
|
Adjusted
EBITDA |
|
$ |
(13,879 |
) |
|
$ |
54,660 |
|
|
$ |
8,857 |
|
|
$ |
15,616 |
|
|
$ |
19,016 |
|
|
$ |
9,859 |
|
|
$ |
39,528 |
|
|
$ |
26,301 |
|
|
$ |
9,287 |
|
|
$ |
30,465 |
|
|
$ |
49,498 |
|
|
$ |
249,208 |
|
Compass Diversified Holdings |
Adjusted EBITDA |
(Unaudited) |
Year ended December 31, 2019 |
|
|
Corporate |
|
5.11 |
|
Ergobaby |
|
Liberty |
|
Velocity Outdoor |
|
ACI |
|
Arnold |
|
Foam Fabricators |
|
Sterno |
|
Consolidated |
Net income (loss) (1) |
|
$ |
282,240 |
|
|
$ |
2,059 |
|
|
$ |
4,793 |
|
|
$ |
3,130 |
|
|
$ |
(36,982 |
) |
|
$ |
14,970 |
|
|
$ |
700 |
|
|
$ |
2,883 |
|
|
$ |
16,447 |
|
|
$ |
290,240 |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes |
|
— |
|
|
2,520 |
|
|
2,250 |
|
|
932 |
|
|
(2,782 |
) |
|
3,896 |
|
|
1,280 |
|
|
1,258 |
|
|
5,388 |
|
|
14,742 |
|
Interest expense, net |
|
57,980 |
|
|
(24 |
) |
|
17 |
|
|
— |
|
|
242 |
|
|
(2 |
) |
|
(1 |
) |
|
— |
|
|
4 |
|
|
58,216 |
|
Intercompany interest |
|
(80,556 |
) |
|
17,567 |
|
|
3,325 |
|
|
4,364 |
|
|
11,194 |
|
|
6,543 |
|
|
6,295 |
|
|
8,635 |
|
|
22,633 |
|
|
— |
|
Loss on debt extinguishment |
|
12,319 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
12,319 |
|
Depreciation and amortization |
|
1,598 |
|
|
21,540 |
|
|
8,561 |
|
|
1,667 |
|
|
13,222 |
|
|
2,551 |
|
|
6,545 |
|
|
12,452 |
|
|
22,486 |
|
|
90,622 |
|
EBITDA |
|
273,581 |
|
|
43,662 |
|
|
18,946 |
|
|
10,093 |
|
|
(15,106 |
) |
|
27,958 |
|
|
14,819 |
|
|
25,228 |
|
|
66,958 |
|
|
466,139 |
|
Gain on sale of business |
|
(331,013 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(331,013 |
) |
(Gain) loss on sale of fixed assets |
|
92 |
|
|
(122 |
) |
|
(11 |
) |
|
16 |
|
|
952 |
|
|
122 |
|
|
1 |
|
|
1,247 |
|
|
(112 |
) |
|
2,185 |
|
Non-controlling shareholder compensation |
|
— |
|
|
2,360 |
|
|
828 |
|
|
(8 |
) |
|
322 |
|
|
288 |
|
|
56 |
|
|
1,025 |
|
|
1,183 |
|
|
6,054 |
|
Impairment expense |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
32,881 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
32,881 |
|
Inventory adjustment |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
281 |
|
|
— |
|
|
281 |
|
Adjustment to earnout provision |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,022 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,022 |
|
(Gain) loss on foreign currency transaction and other |
|
10,193 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
10,193 |
|
Integration services fee |
|
— |
|
|
— |
|
|
— |
|
|
266 |
|
|
— |
|
|
58 |
|
|
— |
|
|
— |
|
|
— |
|
|
324 |
|
Management fees |
|
32,280 |
|
|
1,000 |
|
|
500 |
|
|
500 |
|
|
500 |
|
|
500 |
|
|
500 |
|
|
750 |
|
|
500 |
|
|
37,030 |
|
Adjusted
EBITDA |
|
$ |
(14,867 |
) |
|
$ |
46,900 |
|
|
$ |
20,263 |
|
|
$ |
10,867 |
|
|
$ |
21,571 |
|
|
$ |
28,926 |
|
|
$ |
15,376 |
|
|
$ |
28,531 |
|
|
$ |
68,529 |
|
|
$ |
226,096 |
|
Compass Diversified Holdings |
Adjusted EBITDA |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
(in thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Branded
Consumer |
|
|
|
|
|
|
|
|
5.11 |
|
$ |
18,336 |
|
|
$ |
15,290 |
|
|
$ |
54,660 |
|
|
$ |
46,900 |
|
BOA (1) |
|
8,857 |
|
|
— |
|
|
8,857 |
|
|
— |
|
Ergobaby |
|
1,823 |
|
|
3,574 |
|
|
15,616 |
|
|
20,263 |
|
Liberty |
|
5,105 |
|
|
3,243 |
|
|
19,016 |
|
|
10,867 |
|
Marucci Sports
(2) |
|
5,244 |
|
|
— |
|
|
9,859 |
|
|
— |
|
Velocity Outdoor |
|
14,489 |
|
|
5,607 |
|
|
39,528 |
|
|
21,571 |
|
Total Branded Consumer |
|
$ |
53,854 |
|
|
$ |
27,714 |
|
|
$ |
147,536 |
|
|
$ |
99,601 |
|
|
|
|
|
|
|
|
|
|
Niche
Industrial |
|
|
|
|
|
|
|
|
Advanced Circuits |
|
$ |
5,414 |
|
|
$ |
7,521 |
|
|
$ |
26,301 |
|
|
$ |
28,926 |
|
Arnold Magnetics |
|
1,314 |
|
|
3,766 |
|
|
9,287 |
|
|
15,376 |
|
Foam Fabricators |
|
8,454 |
|
|
5,856 |
|
|
30,465 |
|
|
28,531 |
|
Sterno |
|
14,654 |
|
|
22,010 |
|
|
49,498 |
|
|
68,529 |
|
Total Niche Industrial |
|
$ |
29,836 |
|
|
$ |
39,153 |
|
|
$ |
115,551 |
|
|
$ |
141,362 |
|
Corporate expense
(3) |
|
(3,907 |
) |
|
(5,185 |
) |
|
(13,879 |
) |
|
(14,867 |
) |
Total Adjusted EBITDA |
|
$ |
79,783 |
|
|
$ |
61,682 |
|
|
$ |
249,208 |
|
|
$ |
226,096 |
|
(1 |
) |
|
The above results for BOA does not include management's estimate of
Adjusted EBITDA, before our ownership, of $0.3 million and $24.5
million, respectively, for the three months and twelve months ended
December 31, 2020, and $7.1 million and $30.2 million,
respectively, for the three and twelve months ended December 31,
2019. BOA was acquired on October 16, 2020. |
|
|
|
(2 |
) |
|
The above results for Marucci Sports does not include management's
estimate of Adjusted EBITDA, before our ownership, of $3.9 million
for the twelve months ended December 31, 2020, and $3.2 million and
$14.2 million, respectively, for the three and twelve months ended
December 31, 2019. Marucci Sports was acquired on April 20,
2020. |
|
|
|
(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)
|
|
|
|
|
Twelve months ended December 31, |
(in thousands) |
2020 |
|
2019 |
Net cash provided by operating activities |
$ |
148,625 |
|
|
$ |
84,562 |
|
Net cash (used in) provided by investing activities |
(700,834 |
) |
|
743,126 |
|
Net cash provided by (used in) financing activities |
521,725 |
|
|
(779,522 |
) |
Effect of foreign currency on
cash |
914 |
|
|
(1,178 |
) |
Net increase (decrease) in
cash and cash equivalents |
(29,570 |
) |
|
46,988 |
|
Cash and cash equivalents —
beginning of period (1) |
100,314 |
|
|
53,326 |
|
Cash and cash equivalents —
end of period |
$ |
70,744 |
|
|
$ |
100,314 |
|
|
|
|
|
(1) Includes cash from discontinued
operations of $4.6 million at January 1, 2019.
Compass Diversified
HoldingsConsolidated Table of Cash Flow Available
for Distribution and
Reinvestment(unaudited)
|
Three months ended December 31, |
|
Twelve months ended December 31, |
(in thousands) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss) |
$ |
8,780 |
|
|
$ |
5,353 |
|
|
$ |
27,197 |
|
|
$ |
307,141 |
|
Adjustments to reconcile net
income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
29,174 |
|
|
22,049 |
|
|
102,752 |
|
|
100,462 |
|
Gain on sale of business |
— |
|
|
(810 |
) |
|
(100 |
) |
|
(331,013 |
) |
Impairment expense |
— |
|
|
(500 |
) |
|
— |
|
|
32,881 |
|
Amortization of debt issuance costs and premium/ discount |
576 |
|
|
751 |
|
|
2,232 |
|
|
3,773 |
|
Unrealized loss on interest rate hedge |
— |
|
|
14 |
|
|
— |
|
|
3,500 |
|
Noncontrolling stockholder charges |
2,879 |
|
|
1,789 |
|
|
8,995 |
|
|
7,993 |
|
Provision for reserves |
(1,565 |
) |
|
770 |
|
|
2,809 |
|
|
3,556 |
|
Other |
396 |
|
|
8,478 |
|
|
2,172 |
|
|
14,438 |
|
Deferred taxes |
2,571 |
|
|
1,662 |
|
|
(781 |
) |
|
(12,876 |
) |
Changes in operating assets and liabilities |
(7,058 |
) |
|
13,423 |
|
|
3,349 |
|
|
(45,293 |
) |
Net cash provided by
operating activities |
35,753 |
|
|
52,979 |
|
|
148,625 |
|
|
84,562 |
|
Plus: |
|
|
|
|
|
|
|
Unused fee on revolving credit facility |
238 |
|
|
458 |
|
|
1,386 |
|
|
1,851 |
|
Successful acquisition costs |
2,517 |
|
|
— |
|
|
4,832 |
|
|
596 |
|
Integration services fee (1) |
1,625 |
|
|
— |
|
|
2,125 |
|
|
281 |
|
Realized loss from foreign currency effect (2) |
— |
|
|
— |
|
|
— |
|
|
363 |
|
Changes in operating assets and liabilities |
7,058 |
|
|
— |
|
|
— |
|
|
45,293 |
|
Loss on sale of Tilray securities |
— |
|
|
— |
|
|
— |
|
|
10,193 |
|
Earnout provision adjustment |
— |
|
|
2,022 |
|
|
— |
|
|
2,022 |
|
Less: |
|
|
|
|
|
|
|
Maintenance capital expenditures (3) |
6,718 |
|
|
7,245 |
|
|
17,084 |
|
|
22,005 |
|
Payment of interest rate swap |
— |
|
|
— |
|
|
— |
|
|
675 |
|
Changes in operating assets and liabilities |
— |
|
|
13,423 |
|
|
3,349 |
|
|
— |
|
Preferred share distributions |
6,045 |
|
|
3,781 |
|
|
23,678 |
|
|
15,125 |
|
Other (4) |
(1,565 |
) |
|
1,018 |
|
|
2,211 |
|
|
3,318 |
|
CAD |
$ |
35,993 |
|
|
$ |
29,992 |
|
|
$ |
110,646 |
|
|
$ |
104,038 |
|
|
|
|
|
|
|
|
|
Distribution paid in April
2020/ 2019 |
$ |
— |
|
|
$ |
— |
|
|
$ |
21,564 |
|
|
$ |
21,564 |
|
Distribution paid in July
2020/ 2019 |
— |
|
|
— |
|
|
23,364 |
|
|
21,564 |
|
Distribution paid in October
2020/ 2019 |
— |
|
|
— |
|
|
23,364 |
|
|
21,564 |
|
Distribution paid in January
2021/ 2020 |
23,364 |
|
|
21,564 |
|
|
23,364 |
|
|
21,564 |
|
|
$ |
23,364 |
|
|
$ |
21,564 |
|
|
$ |
91,656 |
|
|
$ |
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) Represents maintenance
capital expenditures that were funded from operating cash flow, net
of proceeds from the sale of property, plant and equipment, and
excludes growth capital expenditures of approximately $4.0 million
and $5.7 million, respectively, for the three months ended December
31, 2020 and 2019, and $13.7 million and $16.4 million,
respectively, for the twelve months ended December 31, 2020 and
2019.
(4) Represents the effect
on earnings of reserves for inventory and accounts receivable.
Compass Diversified Holdings |
Maintenance Capital Expenditures |
(unaudited) |
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
(in thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Branded
Consumer |
|
|
|
|
|
|
|
|
5.11 |
|
$ |
365 |
|
|
$ |
696 |
|
|
|
$ |
1,262 |
|
|
$ |
2,243 |
|
Boa |
|
794 |
|
|
— |
|
|
|
794 |
|
|
— |
|
Ergobaby |
|
108 |
|
|
22 |
|
|
|
482 |
|
|
605 |
|
Liberty |
|
266 |
|
|
(186 |
) |
|
|
704 |
|
|
534 |
|
Marucci Sports |
|
629 |
|
|
— |
|
|
|
849 |
|
|
— |
|
Velocity Outdoor |
|
1,108 |
|
|
803 |
|
|
|
3,851 |
|
|
2,899 |
|
Total Branded Consumer |
|
$ |
3,270 |
|
|
$ |
1,335 |
|
|
|
$ |
7,942 |
|
|
$ |
6,281 |
|
|
|
|
|
|
|
|
|
|
Niche
Industrial |
|
|
|
|
|
|
|
|
Advanced Circuits |
|
$ |
240 |
|
|
$ |
3,663 |
|
|
|
$ |
594 |
|
|
$ |
4,790 |
|
Arnold Magnetics |
|
2,123 |
|
|
988 |
|
|
|
4,884 |
|
|
3,862 |
|
Foam Fabricators |
|
769 |
|
|
359 |
|
|
|
2,287 |
|
|
1,746 |
|
Sterno Group |
|
316 |
|
|
899 |
|
|
|
1,377 |
|
|
1,831 |
|
Total Niche Industrial |
|
$ |
3,448 |
|
|
$ |
5,909 |
|
|
|
$ |
9,142 |
|
|
$ |
12,229 |
|
|
|
|
|
|
|
|
|
|
Total maintenance capital
expenditures |
|
$ |
6,718 |
|
|
$ |
7,244 |
|
|
|
$ |
17,084 |
|
|
$ |
18,510 |
|
Compass Diversified
HoldingsCondensed Consolidated Balance
Sheets
|
|
|
|
|
December 31, 2020 |
|
December 31, 2019 |
(in thousands) |
|
|
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
70,744 |
|
|
$ |
100,314 |
|
Accounts receivable, net |
232,507 |
|
|
191,405 |
|
Inventories |
363,373 |
|
|
317,306 |
|
Prepaid expenses and other current assets |
41,743 |
|
|
35,247 |
|
Total current assets |
708,367 |
|
|
644,272 |
|
Property, plant and equipment,
net |
172,669 |
|
|
146,428 |
|
Goodwill and intangible
assets, net |
1,603,168 |
|
|
1,000,465 |
|
Other non-current assets |
114,314 |
|
|
100,727 |
|
Total
assets |
$ |
2,598,518 |
|
|
$ |
1,891,892 |
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable and accrued expenses |
$ |
253,798 |
|
|
$ |
178,857 |
|
Due to related party |
10,238 |
|
|
8,049 |
|
Current portion, long-term debt |
— |
|
|
— |
|
Other current liabilities |
30,679 |
|
|
22,573 |
|
Total current liabilities |
294,715 |
|
|
209,479 |
|
Deferred income taxes |
83,541 |
|
|
33,039 |
|
Long-term debt |
899,460 |
|
|
394,445 |
|
Other non-current
liabilities |
100,654 |
|
|
89,054 |
|
Total liabilities |
1,378,370 |
|
|
726,017 |
|
Stockholders'
equity |
|
|
|
Total stockholders' equity
attributable to Holdings |
1,100,024 |
|
|
1,115,327 |
|
Noncontrolling interest |
120,124 |
|
|
50,548 |
|
Total stockholders' equity |
1,220,148 |
|
|
1,165,875 |
|
Total liabilities and
stockholders’ equity |
$ |
2,598,518 |
|
|
$ |
1,891,892 |
|
|
|
|
|
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