Compass Diversified (NYSE: CODI) (“CODI” or the “Company”), an
owner of leading middle market businesses, announced today its
consolidated operating results for the three months ended March 31,
2023.
“The strength and durability of our diversified
subsidiaries were especially apparent in the first quarter,” said
Elias Sabo, CEO of Compass Diversified. “The fact that we were able
to grow sales on a consolidated basis amidst the backdrop of broad
and unique macroeconomic challenges is an extraordinary result for
CODI. This certainly proves our thesis that our high-quality,
premium brands can still take market share in difficult economic
environments.”
Mr. Sabo continued: “While our Q1 performance
was outstanding, we cannot ignore market headwinds that continue to
cloud our near-term outlook, such as inventory destocking trends at
retail and rapidly changing monetary policy. But quarters like this
give us confidence that CODI’s diversified subsidiaries are setup
to drive strong long-term financial results, translating into
meaningful shareholder value creation.”
First Quarter 2023 Financial Summary vs.
Same Year-Ago Period (where applicable)
- Net sales up 6% and 1% on a pro
forma basis to $542.2 million.
- Branded consumer pro forma net
sales up 2% to $365.6 million.
- Niche industrial net sales down 1%
to $176.6 million.
- Net income of $109.6 million vs.
$29.7 million, primarily due to the $98.0 million gain on the sale
of Advanced Circuits in February 2023.
- Income from continuing operations
of $13.0 million vs. $18.4 million.
- Adjusted Earnings, a non-GAAP
financial measure, was $33.2 million vs. $36.0 million.
- Adjusted EBITDA, a non-GAAP
financial measure, was up 11% to $91.9 million.
- Paid a first quarter 2023 cash
distribution of $0.25 per share on CODI's common shares in April
2023.
Recent Business Highlights
- On January 19, 2023, CODI hosted an
Investor Day in New York City, showcasing its consumer businesses
as well as the Company’s newest acquisition, PrimaLoft.
- On January 19, 2023, CODI announced
a $50 million share repurchase program, the first in the Company’s
history, through December 31, 2023.
- On February 15, 2023, CODI
announced the closing of the sale of Advanced Circuits for an
enterprise value of $220 million. CODI realized an after-tax gain
on the sale of Advanced Circuits of $98 million.
- On March 28, 2023, CODI nominated
Ms. Nancy B. Mahon as a new director candidate for election at the
Company’s 2023 Annual Meeting of Shareholders to be held on May 25,
2023.
- On April 4, 2023, subsequent to
quarter-end, Marucci Sports, a subsidiary of CODI and leading
designer and manufacturer of baseball and fastpitch equipment and
apparel, announced the acquisition of Baum Enterprises LLC, a
designer and manufacturer of composite wood bats.
First Quarter 2023 Financial
Results
Net sales in the first quarter of 2023 were
$542.2 million, up 6% compared to $510.5 million in the first
quarter of 2022. The increase was primarily due to the Company’s
acquisition of PrimaLoft in July 2022. On a pro forma basis,
assuming CODI had acquired PrimaLoft on January 1, 2022, net sales
were up 1% in the first quarter of 2023.
Branded consumer net sales, pro forma for the
PrimaLoft acquisition, increased 2% in the first quarter of 2023 to
$365.6 million compared to the first quarter of 2022. Niche
industrial net sales decreased 1% in the first quarter of 2023 to
$176.6 million compared to the first quarter of 2022.
Net income in the first quarter of 2023 was
$109.6 million compared to $29.7 million in the first quarter of
2022 due to the $98.0 million gain on sale of Advanced Circuits in
February 2023. Net income from continuing operations in the first
quarter of 2023 was $13.0 million compared to $18.4 million in the
first quarter of 2022. The decrease was primarily attributable to
higher interest expenses in the first quarter of 2023. Operating
income for the first quarter of 2023 was $48.9 million compared to
$44.6 million in the first quarter of 2022 due to the higher net
sales.
Adjusted Earnings (see “Note Regarding Use of
Non-GAAP Financial Measures” below) for the first quarter of 2023
was $33.2 million compared to $36.0 million a year ago. The
decrease was a result of financing costs for the acquisition of
PrimaLoft in July 2022. CODI's weighted average number of shares
outstanding in the first quarter of 2023 was 72.2 million compared
to 69.4 million in the prior year first quarter.
Adjusted EBITDA (see “Note Regarding Use of
Non-GAAP Financial Measures” below) in the first quarter of 2023
was $91.9 million, up 11% compared to $83.2 million in the first
quarter of 2022. The increase was primarily due to the acquisition
of PrimaLoft. The Company no longer adds back management fees in
its calculation of Adjusted EBITDA. Management fees incurred during
the first quarter of 2023 were $16.4 million.
Liquidity and Capital
Resources
As of March 31, 2023, CODI had approximately
$53.7 million in cash and cash equivalents, $8.0 million
outstanding on its revolver, $392.5 million outstanding in term
loans, $1.0 billion outstanding in 5.250% Senior Notes due 2029 and
$300.0 million outstanding in 5.000% Senior Notes due 2032.
As of March 31, 2023, the Company had no
significant debt maturities until 2029 and had net borrowing
availability of approximately $590 million under its revolving
credit facility.
First Quarter 2023
Distributions
On April 3, 2023, CODI’s Board of Directors (the
“Board”) declared a first quarter distribution of $0.25 per share
on the Company's common shares. The cash distribution was paid on
April 27, 2023, to all holders of record of common shares as of
April 20, 2023.
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, January 30, 2023, up to, but excluding, April
30, 2023. The distribution for such period was payable on April 30,
2023, to all holders of record of Series A Preferred Shares as of
April 15, 2023.
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, January 30, 2023, up to, but excluding, April
30, 2023. The distribution for such period was payable on April 30,
2023, to all holders of record of Series B Preferred Shares as of
April 15, 2023.
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, January 30, 2023, up to, but excluding, April
30, 2023. The distribution for such period was payable on April 30,
2023, to all holders of record of Series C Preferred Shares as of
April 15, 2023.
2023 Outlook
As a result of CODI’s strong financial
performance in the first quarter, the Company is raising its
Adjusted EBITDA outlook (see “Note Regarding Use of Non-GAAP
Financial Measures” below). For the full year 2023, CODI now
expects consolidated subsidiary Adjusted EBITDA of between $430
million and $460 million. This estimate is based on the summation
of the Company’s expectations for its current subsidiaries in 2023
and is absent additional acquisitions or divestitures, and excludes
corporate expenses such as interest expense, management fees paid
by CODI and corporate overhead. In addition, the Company is raising
its Adjusted Earnings outlook. For the full year 2023, CODI now
expects to earn between $110 million and $135 million in Adjusted
Earnings (see “Note Regarding Use of Non-GAAP Financial Measures”
below) for the full year 2023.
In reliance on the unreasonable efforts
exception provided under Item 10(e)(1)(i)(B) of Regulation S-K,
CODI has not reconciled 2023 Adjusted EBITDA or 2023 Adjusted
Earnings to their comparable GAAP measure because it does not
provide guidance on Income (Loss) from Continuing Operations or Net
Income (Loss) or the applicable reconciling items as a result of
the uncertainty regarding, and the potential variability of, these
items. For the same reasons, CODI is unable to address the probable
significance of the unavailable information, which could be
material to future results.
Conference Call
Management will host a conference call on
Wednesday, May 3, 2023, 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 (888) 886-7786 and the dial-in number
for international callers is (416) 764-8658. The Conference ID is
91629076. The conference call will also be available via a live
listen-only webcast and can be accessed through the Investor
Relations section of CODI's website. An online replay of the
webcast will be available on the same website following the call.
Please allow extra time prior to the call to visit the site and
download any necessary software that may be needed to listen to the
Internet broadcast. A replay of the call will be available through
Wednesday, May 10, 2023. To access the replay, please dial (877)
674-7070 in the U.S. and (416) 764-8692 outside the U.S.
Note Regarding Use of Non-GAAP Financial
Measures
Adjusted EBITDA and Adjusted Earnings are
non-GAAP measures used by the Company to assess its performance. We
have reconciled Adjusted EBITDA to Income (Loss) from Continuing
Operations and Adjusted Earnings to Net Income (Loss) on the
attached schedules. We consider Income (Loss) from Continuing
Operations to be the most directly comparable GAAP financial
measure to Adjusted EBITDA and Net Income (Loss) to be the most
directly comparable GAAP financial measure to Adjusted Earnings. We
believe that Adjusted EBITDA and Adjusted Earnings provides useful
information to investors and reflect important financial measures
as each 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) and Income
(Loss) from Continuing Operations, Adjusted Earnings and Adjusted
EBITDA, respectively, are each limited in that they do 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. The presentation of
Adjusted EBITDA 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. The presentation of Adjusted Earnings
provides insight into our operating results and provides a measure
for evaluating earnings from continuing operations available to
common shareholders. We believe Adjusted EBITDA and Adjusted
Earnings are also useful in measuring our ability to service debt
and other payment obligations.
Pro forma net sales is defined as net sales
including the historical net sales relating to the pre-acquisition
periods of PrimaLoft, assuming that the Company acquired PrimaLoft
on January 1, 2022. We have reconciled pro forma net sales to net
sales, the most directly comparable GAAP financial measure, on the
attached schedules. We believe that pro forma net sales is useful
information for investors as it provides a better understanding of
sales performance, and relative changes thereto, on a comparable
basis. Pro forma net sales is not necessarily indicative of what
the actual results would have been if the acquisition had in fact
occurred on the date or for the periods indicated nor does it
purport to project net sales for any future periods or as of any
date.
In reliance on the unreasonable efforts
exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, we
have not reconciled 2023 Adjusted EBITDA or 2023 Adjusted Earnings
to their comparable GAAP measures because we do not provide
guidance on Net Income (Loss) from Continuing Operations or Net
Income (Loss) 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.
Adjusted EBITDA, Adjusted Earnings and pro forma
net sales are not 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
Since its founding in 1998, and IPO in 2006,
CODI has consistently executed on its strategy of owning and
managing a diverse set of highly defensible, middle-market
businesses across the niche industrial, branded consumer and
healthcare sectors. The Company leverages its permanent capital
base, long-term disciplined approach, and actionable expertise to
maintain 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. For more
information, please visit compassdiversified.com.
Forward Looking Statements
Certain statements in this press release may be
deemed 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 and financial condition, our 2023 Adjusted
EBITDA, our 2023 Adjusted Earnings, our pending acquisitions and
divestitures, and other statements with regard to the future
performance of CODI. We may use words such as “plans,”
“anticipate,” “believe,” “expect,” “intend,” “will,” “should,”
“may,” “seek,” “look,” and similar expressions to identify
forward-looking statements. The forward-looking statements
contained in this press release involve risks and uncertainties.
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. Other factors that could cause actual results to differ
materially include: changes in the economy, financial markets and
political environment, including changes in inflation and interest
rates; risks associated with possible disruption in CODI’s
operations or the economy generally due to terrorism, natural
disasters, social, civil and political unrest or the COVID-19
pandemic; future changes in laws or regulations (including the
interpretation of these laws and regulations by regulatory
authorities); general considerations associated with the COVID-19
pandemic and its impact on the markets in which we operate;
disruption in the global supply chain, labor shortages and high
labor costs; our business prospects and the prospects of our
subsidiaries; the impact of, and ability to successfully complete
and integrate, acquisitions that we may make; the ability to
successfully complete divestitures when we’ve executed divestitures
agreements; the dependence of our future success on the general
economy and its impact on the industries in which we operate; the
ability of our subsidiaries 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 subsidiaries; 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: |
Media Contact: |
irinquiry@compassdiversified.com |
The IGB Group |
|
Leon Berman |
Cody
Slach |
212.477.8438 |
Gateway
Group |
lberman@igbir.com |
949.574.3860 |
|
CODI@gatewayir.com |
|
Compass Diversified Holdings |
Condensed Consolidated Balance Sheets |
|
|
|
|
|
March 31, 2023 |
|
December 31, 2022 |
(in thousands) |
(Unaudited) |
|
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
53,656 |
|
$ |
57,880 |
Accounts receivable, net |
|
326,744 |
|
|
331,396 |
Inventories, net |
|
764,029 |
|
|
728,083 |
Prepaid expenses and other
current assets |
|
64,189 |
|
|
74,700 |
Current assets of discontinued
operations |
|
— |
|
|
18,126 |
Total current assets |
|
1,208,618 |
|
|
1,210,185 |
Property, plant and equipment,
net |
|
202,729 |
|
|
198,525 |
Goodwill |
|
1,066,726 |
|
|
1,066,726 |
Intangible assets, net |
|
1,102,360 |
|
|
1,127,936 |
Other non-current assets |
|
177,492 |
|
|
166,412 |
Non-current assets of
discontinued operations |
|
— |
|
|
79,847 |
Total
assets |
$ |
3,757,925 |
|
$ |
3,849,631 |
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable and accrued
expenses |
$ |
279,762 |
|
$ |
286,643 |
Due to related party |
|
15,034 |
|
|
15,495 |
Current portion, long-term
debt |
|
10,000 |
|
|
10,000 |
Other current liabilities |
|
40,075 |
|
|
36,545 |
Current liabilities of
discontinued operations |
|
— |
|
|
11,148 |
Total current liabilities |
|
344,871 |
|
|
359,831 |
Deferred income taxes |
|
139,645 |
|
|
145,643 |
Long-term debt |
|
1,675,571 |
|
|
1,824,468 |
Other non-current
liabilities |
|
153,205 |
|
|
141,535 |
Non-current liabilities of
discontinued operations |
|
— |
|
|
16,192 |
Total liabilities |
|
2,313,292 |
|
|
2,487,669 |
Stockholders'
equity |
|
|
|
Total stockholders' equity
attributable to Holdings |
|
1,214,941 |
|
|
1,136,920 |
Noncontrolling interest |
|
229,692 |
|
|
223,509 |
Noncontrolling interest of
discontinued operations |
|
— |
|
|
1,533 |
Total stockholders'
equity |
|
1,444,633 |
|
|
1,361,962 |
Total liabilities and
stockholders’ equity |
$ |
3,757,925 |
|
$ |
3,849,631 |
|
|
|
|
Compass Diversified Holdings |
Consolidated Statements of Operations |
(Unaudited) |
|
|
|
Three months ended |
|
March 31, |
(in thousands, except per share data) |
|
2023 |
|
|
|
2022 |
|
Net sales |
$ |
542,228 |
|
|
$ |
510,513 |
|
Cost of sales |
|
304,397 |
|
|
|
309,698 |
|
Gross
profit |
|
237,831 |
|
|
|
200,815 |
|
Operating expenses: |
|
|
|
Selling, general and administrative expense |
|
146,165 |
|
|
|
120,672 |
|
Management fees |
|
16,395 |
|
|
|
14,436 |
|
Amortization expense |
|
26,374 |
|
|
|
21,105 |
|
Operating
income |
|
48,897 |
|
|
|
44,602 |
|
Other income (expense): |
|
|
|
Interest expense, net |
|
(26,180 |
) |
|
|
(17,419 |
) |
Amortization of debt issuance costs |
|
(1,005 |
) |
|
|
(866 |
) |
Other income (expense), net |
|
1,127 |
|
|
|
2,036 |
|
Net income from
continuing operations before income taxes |
|
22,839 |
|
|
|
28,353 |
|
Provision for income taxes |
|
9,836 |
|
|
|
9,976 |
|
Income from continuing
operations |
|
13,003 |
|
|
|
18,377 |
|
Income (loss) from discontinued operations, net of income tax |
|
(1,391 |
) |
|
|
5,370 |
|
Gain on sale of discontinued operations |
|
97,989 |
|
|
|
5,993 |
|
Net
income |
|
109,601 |
|
|
|
29,740 |
|
Less: Net income from continuing operations attributable to
noncontrolling interest |
|
4,981 |
|
|
|
4,937 |
|
Less: Net income (loss) from discontinued operations attributable
to noncontrolling interest |
|
(777 |
) |
|
|
1,041 |
|
Net income
attributable to Holdings |
$ |
105,397 |
|
|
$ |
23,762 |
|
|
|
|
|
Amounts attributable
to Holdings |
|
|
|
Income from continuing operations |
$ |
8,022 |
|
|
$ |
13,440 |
|
Income (loss) from discontinued operations |
|
(614 |
) |
|
|
4,329 |
|
Gain on sale of discontinued operations, net of income tax |
|
97,989 |
|
|
|
5,993 |
|
Net income
attributable to Holdings |
$ |
105,397 |
|
|
$ |
23,762 |
|
|
|
|
|
Basic income (loss)
per common share attributable to Holdings |
|
|
|
Continuing operations |
$ |
(0.06 |
) |
|
$ |
— |
|
Discontinued operations |
|
1.35 |
|
|
|
0.14 |
|
|
$ |
1.29 |
|
|
$ |
0.14 |
|
|
|
|
|
Basic weighted average number
of common shares outstanding |
|
72,178 |
|
|
|
69,375 |
|
|
|
|
|
Cash distributions declared
per Trust common share |
$ |
0.25 |
|
|
$ |
0.25 |
|
Compass Diversified Holdings |
Net Income (Loss) to Non-GAAP Adjusted Earnings and
Non-GAAP Adjusted EBITDA |
(Unaudited) |
|
|
|
Three months ended |
|
March 31, |
(in thousands) |
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
109,601 |
|
|
$ |
29,740 |
|
Income (loss) from
discontinued operations, net of tax |
|
(1,391 |
) |
|
|
5,370 |
|
Gain on sale of discontinued
operations, net of tax |
|
97,989 |
|
|
|
5,993 |
|
Income from continuing
operations |
$ |
13,003 |
|
|
$ |
18,377 |
|
Less: income from continuing
operations attributable to noncontrolling interest |
|
4,981 |
|
|
|
4,937 |
|
Net income attributable to
Holdings - continuing operations |
$ |
8,022 |
|
|
$ |
13,440 |
|
Adjustments: |
|
|
|
Distributions paid - preferred
shares |
|
(6,045 |
) |
|
|
(6,045 |
) |
Amortization expense -
intangibles and inventory step up |
|
27,508 |
|
|
|
23,366 |
|
Stock compensation |
|
2,045 |
|
|
|
2,681 |
|
Acquisition expenses |
|
— |
|
|
|
216 |
|
Integration services fee |
|
1,188 |
|
|
|
563 |
|
Other |
|
432 |
|
|
|
1,802 |
|
Adjusted
Earnings |
$ |
33,150 |
|
|
$ |
36,023 |
|
Plus (less): |
|
|
|
Depreciation expense |
|
11,809 |
|
|
|
9,927 |
|
Income tax provision |
|
9,836 |
|
|
|
9,976 |
|
Interest expense |
|
26,180 |
|
|
|
17,419 |
|
Amortization of debt issuance
costs |
|
1,005 |
|
|
|
866 |
|
Income from continuing
operations attributable to noncontrolling interest |
|
4,981 |
|
|
|
4,937 |
|
Distributions paid - preferred
shares |
|
6,045 |
|
|
|
6,045 |
|
Other (income) expense |
|
(1,127 |
) |
|
|
(2,036 |
) |
Adjusted
EBITDA |
$ |
91,879 |
|
|
$ |
83,157 |
|
Compass Diversified Holdings |
Net Income (Loss) from Continuing Operations to Non-GAAP
Consolidated Adjusted EBITDA Reconciliation |
Three months ended March 31, 2023 |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
5.11 |
|
|
BOA |
|
Ergobaby |
|
Lugano |
|
MarucciSports |
|
PrimaLoft |
|
VelocityOutdoor |
|
Altor |
|
Arnold |
|
Sterno |
|
Consolidated |
Income (loss) from continuing operations |
|
$ |
(11,835 |
) |
|
$ |
2,150 |
|
|
$ |
5,368 |
|
|
$ |
(1,235 |
) |
|
$ |
9,968 |
|
$ |
9,014 |
|
$ |
(1,227 |
) |
|
$ |
(4,501 |
) |
|
$ |
2,701 |
|
$ |
2,305 |
|
|
$ |
295 |
|
|
$ |
13,003 |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income
taxes |
|
|
— |
|
|
|
726 |
|
|
|
622 |
|
|
|
(551 |
) |
|
|
3,387 |
|
|
2,916 |
|
|
1,949 |
|
|
|
(1,455 |
) |
|
|
1,094 |
|
|
1,040 |
|
|
|
108 |
|
|
|
9,836 |
|
Interest expense, net |
|
|
26,051 |
|
|
|
(1 |
) |
|
|
(2 |
) |
|
|
— |
|
|
|
4 |
|
|
1 |
|
|
(2 |
) |
|
|
124 |
|
|
|
— |
|
|
5 |
|
|
|
— |
|
|
|
26,180 |
|
Intercompany interest |
|
|
(33,806 |
) |
|
|
4,799 |
|
|
|
1,792 |
|
|
|
2,149 |
|
|
|
6,284 |
|
|
2,339 |
|
|
4,322 |
|
|
|
3,128 |
|
|
|
2,874 |
|
|
1,649 |
|
|
|
4,470 |
|
|
|
— |
|
Depreciation and
amortization |
|
|
279 |
|
|
|
6,452 |
|
|
|
5,693 |
|
|
|
2,039 |
|
|
|
2,850 |
|
|
3,051 |
|
|
5,360 |
|
|
|
3,387 |
|
|
|
4,165 |
|
|
2,019 |
|
|
|
5,027 |
|
|
|
40,322 |
|
EBITDA |
|
|
(19,311 |
) |
|
|
14,126 |
|
|
|
13,473 |
|
|
|
2,402 |
|
|
|
22,493 |
|
|
17,321 |
|
|
10,402 |
|
|
|
683 |
|
|
|
10,834 |
|
|
7,018 |
|
|
|
9,900 |
|
|
|
89,341 |
|
Other (income) expense |
|
|
(127 |
) |
|
|
(77 |
) |
|
|
114 |
|
|
|
— |
|
|
|
— |
|
|
32 |
|
|
(104 |
) |
|
|
(675 |
) |
|
|
204 |
|
|
(2 |
) |
|
|
(492 |
) |
|
|
(1,127 |
) |
Non-controlling shareholder
compensation |
|
|
— |
|
|
|
252 |
|
|
|
664 |
|
|
|
312 |
|
|
|
395 |
|
|
404 |
|
|
(708 |
) |
|
|
230 |
|
|
|
316 |
|
|
9 |
|
|
|
171 |
|
|
|
2,045 |
|
Integration services fee |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
1,188 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
1,188 |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
432 |
|
|
|
432 |
|
Adjusted
EBITDA |
|
$ |
(19,438 |
) |
|
$ |
14,301 |
|
|
$ |
14,251 |
|
|
$ |
2,714 |
|
|
$ |
22,888 |
|
$ |
17,757 |
|
$ |
10,778 |
|
|
$ |
238 |
|
|
$ |
11,354 |
|
$ |
7,025 |
|
|
$ |
10,011 |
|
|
$ |
91,879 |
|
Compass Diversified Holdings |
Net Income (Loss) from Continuing Operations to Non-GAAP
Consolidated Adjusted EBITDA Reconciliation |
Three months ended March 31, 2022 |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
5.11 |
|
|
BOA |
|
Ergobaby |
|
Lugano |
|
Marucci Sports |
|
Velocity Outdoor |
|
Altor |
|
Arnold |
|
Sterno |
|
Consolidated |
Income (loss) from continuing operations |
$ |
(14,981 |
) |
|
$ |
2,645 |
|
|
$ |
14,199 |
|
|
$ |
(1,479 |
) |
|
$ |
8,494 |
|
$ |
6,134 |
|
|
$ |
713 |
|
$ |
1,936 |
|
$ |
960 |
|
$ |
(244 |
) |
|
$ |
18,377 |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income
taxes |
|
— |
|
|
|
819 |
|
|
|
2,477 |
|
|
|
399 |
|
|
|
2,895 |
|
|
2,006 |
|
|
|
202 |
|
|
1,059 |
|
|
1,012 |
|
|
(893 |
) |
|
|
9,976 |
|
Interest expense, net |
|
17,368 |
|
|
|
26 |
|
|
|
(5 |
) |
|
|
1 |
|
|
|
5 |
|
|
1 |
|
|
|
17 |
|
|
— |
|
|
6 |
|
|
— |
|
|
|
17,419 |
|
Intercompany interest |
|
(19,275 |
) |
|
|
2,920 |
|
|
|
2,028 |
|
|
|
787 |
|
|
|
2,125 |
|
|
1,517 |
|
|
|
1,853 |
|
|
2,465 |
|
|
1,267 |
|
|
4,313 |
|
|
|
— |
|
Depreciation and amortization
expense |
|
336 |
|
|
|
5,454 |
|
|
|
5,317 |
|
|
|
2,008 |
|
|
|
2,254 |
|
|
4,189 |
|
|
|
3,269 |
|
|
3,990 |
|
|
2,226 |
|
|
5,116 |
|
|
|
34,159 |
|
EBITDA |
|
(16,552 |
) |
|
|
11,864 |
|
|
|
24,016 |
|
|
|
1,716 |
|
|
|
15,773 |
|
|
13,847 |
|
|
|
6,054 |
|
|
9,450 |
|
|
5,471 |
|
|
8,292 |
|
|
|
79,931 |
|
Other (income) expense |
|
— |
|
|
|
(548 |
) |
|
|
50 |
|
|
|
4 |
|
|
|
2 |
|
|
(1,810 |
) |
|
|
209 |
|
|
312 |
|
|
— |
|
|
(255 |
) |
|
|
(2,036 |
) |
Non-controlling shareholder
compensation |
|
— |
|
|
|
411 |
|
|
|
635 |
|
|
|
413 |
|
|
|
240 |
|
|
276 |
|
|
|
251 |
|
|
268 |
|
|
13 |
|
|
174 |
|
|
|
2,681 |
|
Acquisition expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
216 |
|
|
— |
|
|
— |
|
|
|
216 |
|
Integration services fee |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
563 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
563 |
|
Other |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
1,802 |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
1,802 |
|
Adjusted
EBITDA |
$ |
(16,552 |
) |
|
$ |
11,727 |
|
|
$ |
24,701 |
|
|
$ |
2,133 |
|
|
$ |
16,578 |
|
$ |
14,115 |
|
|
$ |
6,514 |
|
$ |
10,246 |
|
$ |
5,484 |
|
$ |
8,211 |
|
|
$ |
83,157 |
|
Compass Diversified Holdings |
Non-GAAP Adjusted EBITDA |
(Unaudited) |
|
|
|
Three months ended March 31, |
(in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Branded
Consumer |
|
|
|
|
5.11 |
|
$ |
14,301 |
|
|
$ |
11,727 |
|
BOA |
|
|
14,251 |
|
|
|
24,701 |
|
Ergobaby |
|
|
2,714 |
|
|
|
2,133 |
|
Lugano |
|
|
22,888 |
|
|
|
16,578 |
|
Marucci Sports |
|
|
17,757 |
|
|
|
14,115 |
|
PrimaLoft(1) |
|
|
10,778 |
|
|
|
— |
|
Velocity Outdoor |
|
|
238 |
|
|
|
6,514 |
|
Total Branded
Consumer |
|
$ |
82,927 |
|
|
$ |
75,768 |
|
|
|
|
|
|
Niche
Industrial |
|
|
|
|
Altor Solutions |
|
|
11,354 |
|
|
|
10,246 |
|
Arnold Magnetics |
|
|
7,025 |
|
|
|
5,484 |
|
Sterno |
|
|
10,011 |
|
|
|
8,211 |
|
Total Niche
Industrial |
|
$ |
28,390 |
|
|
$ |
23,941 |
|
Corporate expense |
|
|
(19,438 |
) |
|
|
(16,552 |
) |
Total Adjusted
EBITDA |
|
$ |
91,879 |
|
|
$ |
83,157 |
|
(1 |
) |
|
The above results for PrimaLoft do not include management's
estimate of Adjusted EBITDA, before the Company's ownership, of
$11.3 million for the three months ended March 31, 2022. PrimaLoft
was acquired on July 12, 2022. |
Compass Diversified Holdings |
Net Sales to Pro Forma Net Sales
Reconciliation |
(unaudited) |
|
|
|
|
|
|
|
|
Three months ended March 31, |
(in thousands) |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
Net Sales |
|
$ |
542,228 |
|
$ |
510,513 |
Acquisitions(1) |
|
|
— |
|
|
25,748 |
Pro Forma Net Sales |
|
$ |
542,228 |
|
$ |
536,261 |
(1) Acquisitions reflects the net
sales for PrimaLoft on a pro forma basis as if the Company had
acquired PrimaLoft on January 1, 2022.
Compass Diversified Holdings |
Subsidiary Pro Forma Net Sales |
(unaudited) |
|
|
|
|
|
|
|
Three months ended March 31, |
(in thousands) |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
Branded
Consumer |
|
|
|
|
5.11 |
|
$ |
124,452 |
|
$ |
104,023 |
BOA |
|
|
37,986 |
|
|
56,810 |
Ergobaby |
|
|
22,418 |
|
|
20,210 |
Lugano |
|
|
63,887 |
|
|
47,019 |
Marucci Sports |
|
|
58,295 |
|
|
52,092 |
PrimaLoft(1) |
|
|
24,529 |
|
|
25,748 |
Velocity Outdoor |
|
|
34,040 |
|
|
51,446 |
Total Branded Consumer |
|
$ |
365,607 |
|
$ |
357,348 |
|
|
|
|
|
Niche
Industrial |
|
|
|
|
Altor Solutions |
|
|
61,512 |
|
|
63,828 |
Arnold Magnetics |
|
|
40,090 |
|
|
38,165 |
Sterno |
|
|
75,019 |
|
|
76,920 |
Total Niche Industrial |
|
$ |
176,621 |
|
$ |
178,913 |
|
|
|
|
|
Total Subsidiary Net
Sales |
|
$ |
542,228 |
|
$ |
536,261 |
(1) Net sales for PrimaLoft are
pro forma as if the Company had acquired this business on January
1, 2022.
Compass Diversified Holdings |
Condensed Consolidated Cash Flows |
(unaudited) |
|
|
|
Three months ended March 31, |
(in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Net cash provided by
(used in) operating activities |
$ |
15,545 |
|
|
$ |
(33,529 |
) |
Net cash provided by
(used in) investing activities |
|
154,724 |
|
|
|
(8,292 |
) |
Net cash used in
financing activities |
|
(178,446 |
) |
|
|
(14,452 |
) |
Foreign currency impact on
cash |
|
562 |
|
|
|
(259 |
) |
Net decrease in cash and cash
equivalents |
|
(7,615 |
) |
|
|
(56,532 |
) |
Cash and cash equivalents -
beginning of the period |
|
61,271 |
|
|
|
160,733 |
|
Cash and cash
equivalents - end of the period |
$ |
53,656 |
|
|
$ |
104,201 |
|
Compass Diversified Holding |
Selected Financial Data - Cash Flows |
(unaudited) |
|
|
|
|
|
|
|
Three months ended March 31, |
(in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Changes in operating assets
and liabilities |
|
$ |
(31,545 |
) |
|
$ |
(95,717 |
) |
Purchases of property and
equipment |
|
$ |
(16,080 |
) |
|
$ |
(10,391 |
) |
Distributions paid - common
shares |
|
$ |
(18,051 |
) |
|
$ |
(17,352 |
) |
Distributions paid - preferred
shares |
|
$ |
(6,045 |
) |
|
$ |
(6,045 |
) |
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