WESTPORT, Conn., Nov. 8, 2011 /PRNewswire/ -- 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 nine months ended September 30, 2011.
Third Quarter 2011 Highlights
- Generated Cash Flow Available for Distribution and Reinvestment
("CAD" or "Cash Flow") of $25.5
million for the third quarter of 2011;
- Reported net income of $12.5
million for the third quarter of 2011;
- Paid a third quarter 2011 cash distribution of $0.36 per share in October
2011, bringing cumulative distributions paid to $7.0752 per share since CODI's IPO in May of
2006; and
- Acquired a majority interest in CamelBak Products, LLC
("CamelBak") on August 24, 2011.
CODI reported Cash Flow (see note regarding use of Non-GAAP
Financial Measures below) of $25.5
million for the quarter ended September 30, 2011, as compared to $23.8 million for the comparable quarter of the
prior year. CODI's weighted average number of shares outstanding
for the quarter ended September 30,
2011 and September 30, 2010
was approximately 47.4 million and 41.9 million, respectively.
The improvement in Cash Flow for the third quarter of 2011
compared to the year-earlier period reflects solid performance at a
majority of CODI's subsidiaries. In addition, the third quarter of
2011 was positively impacted by the full inclusion of results from
ERGOBaby, a platform business acquired by CODI on September 16, 2010, as well as the partial
inclusion of results from CamelBak, a platform business acquired by
CODI on August 24, 2011.
CODI's Cash Flow is calculated after taking into account all
interest expense, cash taxes paid and maintenance capital
expenditures, and includes the operating results of each subsidiary
for the periods during which CODI owned them. However, Cash Flow
excludes the gains from sales of businesses.
Net income for the quarter ended September 30, 2011 was $12.5 million, as compared to a net loss of
$29.4 million for the quarter ended
September 30, 2010. During the third
quarter of 2010, CODI recorded a $42.4
million non-cash impairment charge for the Company's
American Furniture Manufacturing subsidiary.
On October 10, 2011, CODI's Board
of Directors declared a third quarter distribution of $0.36 per share. The distribution was paid on
October 31, 2011 to all holders of
record as of October 25, 2011.
On October 17, 2011, CODI
announced the sale of Staffmark whereby it received approximately
$220 million of total proceeds from
the sale at closing. The proceeds were used to repay substantially
all of the outstanding debt under the Company's prior revolving
credit facility. The Company anticipates recording a gain on the
sale of Staffmark ranging between $75
million and $90 million for the quarter ended December 31, 2011.
CODI announced on October 27, 2011
it signed a credit agreement for a revolving credit facility
totaling $290 million and a term loan
facility in the amount of $225
million. The two facilities combine for $515 million in new debt financing and replace
the Company's previous revolving credit facility and term loan
facility. Upon closing, CODI had borrowing availability of
approximately $287.1 million under
its new revolving credit facility and no significant debt
maturities until October 2016.
Commenting on the quarter, Alan
Offenberg, CEO of Compass Group Diversified Holdings LLC,
said, "Our strong results for the third quarter of 2011 were
consistent with management's expectations, as Cash Flow increased
more than 7% compared to the year-earlier period. We continue to
benefit from the leadership position and comparative financial
strength of our niche businesses. We also realized contributions
from our newest platform company, CamelBak, which we acquired
during the third quarter. CamelBak is an exciting addition to our
family of subsidiary companies based on its market leadership,
history of stable cash flows, proven management and attractive
growth potential."
Mr. Offenberg added, "As we continue to pursue additional growth
opportunities that create significant value for our owners, we
recently took steps to further strengthen our financial
flexibility. Specifically, during October we secured $515 million in new debt financing, which we used
to refinance our existing debt and improve our mix of debt to
equity within our capital structure. In addition, the opportunistic
sale of Staffmark, one of the initial subsidiaries at the time of
CODI's IPO, generated approximately $220
million of total proceeds in a highly profitable transaction
for our Company. With substantial liquidity, we are in a strong
position to invest in high-return organic growth initiatives and
capitalize on accretive acquisitions of companies with a real
reason to exist as we have consistently done in the past."
Conference Call
Management will host a conference call on Wednesday, November 9, 2011 at 9:00 a.m. ET to discuss the latest corporate
developments and financial results. The dial-in number for callers
in the U.S. is (877) 879-6209 and the dial-in number for
international callers is (719) 325-4783. The access code for all
callers is 4404832. A live webcast will also be available on the
Company's website at www.compassdiversifiedholdings.com.
A replay of the call will be available through November 16, 2011. To access the replay, please
dial (888) 203-1112 in the U.S. and (719) 457-0820 outside the
U.S., and then enter the access code 4404832.
Note Regarding Use of Non-GAAP Financial Measures
CAD, or Cash Flow, is a non-GAAP measure used by the Company to
assess its performance, as well as its ability to sustain and
increase quarterly distributions. A number of CODI's businesses
have seasonal earnings patterns, with the first quarter typically
being the slowest of the year. Accordingly, the Company believes
that the most appropriate measure of its performance is over a
trailing or expected 12-month period. We have reconciled CAD, or
Cash Flow, to Net Income and Cash Flow Provided by Operating
Activities on the Attached Schedules. We consider Net Income and
Cash Flow Provided by Operating Activities to be the most directly
comparable GAAP financial measures to CAD, or Cash Flow.
About Compass Diversified Holdings ("CODI")
Compass Diversified Holdings ("CODI") owns and manages a diverse
family of established North American middle market businesses. Each
of its eight subsidiaries is a leader in their 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
owners.
CODI's subsidiaries are engaged in the following lines of
business:
- The manufacture of quick-turn, prototype and production rigid
printed circuit boards (Advanced Circuits,
www.advancedcircuits.com);
- The design and manufacture of promotionally priced upholstered
furniture (American Furniture Manufacturing,
www.americanfurn.net);
- The design and manufacture of medical therapeutic support
surfaces and other wound treatment devices (Anodyne Medical
Device, also doing business and known as Tridien Medical,
www.anodynemedicaldevice.com);
- The design and manufacture of personal hydration products for
outdoor, recreation and military use (CamelBak
Products, www.camelbak.com);
- The design and marketing of wearable baby carriers and related
products (ERGObaby, www.ergobabycarriers.com);
- The design, manufacture and marketing of premium suspension
products for mountain bikes and powered off-road vehicles (Fox
Racing Shox, www.foxracingshox.com);
- The design, sourcing and fulfillment of logo based promotional
products (HALO Branded Solutions, www.halo.com); and
- The design and manufacture of premium home and gun safes
(Liberty Safe,
www.libertysafe.com).
To find out more about Compass Diversified Holdings, please
visit www.compassdiversifiedholdings.com.
This press release may contain certain forward-looking
statements, including statements with regard to the future
performance of the Company. Words such as "believes," "expects,"
"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 Securities and Exchange Commission for the year ended
December 31, 2010 and other filings
with the Securities and Exchange Commission. CODI undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Compass
Diversified Holdings
|
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
September
30,
|
|
December
31,
|
|
|
|
2011
|
|
2010
|
|
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
10,564
|
|
$
13,536
|
|
Accounts receivable, less
allowance of $4,893 and $5,481
|
|
253,541
|
|
208,487
|
|
Inventories
|
|
108,970
|
|
77,412
|
|
Prepaid expenses and other
current assets
|
|
32,464
|
|
33,904
|
|
|
|
|
|
|
|
Total current
assets
|
|
405,539
|
|
333,339
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
50,329
|
|
33,484
|
|
Goodwill
|
|
325,312
|
|
325,851
|
|
Intangible assets,
net
|
|
437,015
|
|
269,672
|
|
Deferred debt issuance
costs, net
|
|
2,865
|
|
3,822
|
|
Other non-current
assets
|
|
31,052
|
|
17,873
|
|
|
|
|
|
|
|
Total assets
|
|
$
1,252,112
|
|
$
984,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’
equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
160,820
|
|
$
127,499
|
|
Due to related
party
|
|
4,839
|
|
2,692
|
|
Current portion, long-term
debt
|
|
2,000
|
|
2,000
|
|
Current portion of
workers' compensation liability
|
|
18,775
|
|
18,170
|
|
Other current
liabilities
|
|
977
|
|
1,043
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
187,411
|
|
151,404
|
|
|
|
|
|
|
|
Long-term debt
|
|
290,500
|
|
94,000
|
|
Supplemental put
obligation
|
|
43,801
|
|
44,598
|
|
Deferred income taxes
|
|
76,328
|
|
74,457
|
|
Workers' compensation
liability
|
|
42,126
|
|
40,588
|
|
Other non-current
liabilities
|
|
1,162
|
|
3,084
|
|
|
|
|
|
|
|
Total liabilities
|
|
641,328
|
|
408,131
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Trust shares, no par value,
500,000 authorized; 48,300 and 46,725 shares issued
and
|
|
658,447
|
|
638,763
|
|
outstanding at 9/30/11
and 12/31/10, respectively
|
|
|
|
|
|
Accumulated other comprehensive
loss
|
|
-
|
|
(143)
|
|
Accumulated deficit
|
|
(199,652)
|
|
(150,550)
|
|
Total
stockholders' equity attributable to Holdings
|
|
458,795
|
|
488,070
|
|
Noncontrolling
interests
|
|
151,989
|
|
87,840
|
|
Total
stockholders' equity
|
|
610,784
|
|
575,910
|
|
Total liabilities and
stockholders’ equity
|
|
$
1,252,112
|
|
$
984,041
|
|
|
|
|
|
|
Compass
Diversified Holdings
|
|
Condensed
Consolidated Statements of Operations
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
Three
Months
|
|
Nine
Months
|
|
Nine
Months
|
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
(in thousands, except per share
data)
|
|
September 30, 2011
|
|
September 30, 2010
|
|
September 30, 2011
|
|
September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
489,955
|
|
$
460,767
|
|
$
1,342,164
|
|
$
1,218,708
|
|
Cost of sales
|
|
378,755
|
|
361,236
|
|
1,047,111
|
|
962,459
|
|
Gross profit
|
|
111,200
|
|
99,531
|
|
295,053
|
|
256,249
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Staffing
expense
|
|
21,659
|
|
21,089
|
|
65,379
|
|
60,996
|
|
Selling, general
and administrative expense
|
|
54,676
|
|
44,101
|
|
145,840
|
|
129,037
|
|
Supplemental put
expense
|
|
1,200
|
|
1,639
|
|
6,095
|
|
18,630
|
|
Management
fees
|
|
5,255
|
|
4,010
|
|
13,033
|
|
11,383
|
|
Amortization
expense
|
|
8,472
|
|
7,469
|
|
23,863
|
|
21,069
|
|
Impairment
expense
|
|
-
|
|
42,435
|
|
7,700
|
|
42,435
|
|
Operating income (loss)
|
|
19,938
|
|
(21,212)
|
|
33,143
|
|
(27,301)
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
2
|
|
1
|
|
4
|
|
18
|
|
Interest
expense
|
|
(2,631)
|
|
(2,926)
|
|
(7,510)
|
|
(8,487)
|
|
Amortization of
debt issuance costs
|
|
(542)
|
|
(493)
|
|
(1,543)
|
|
(1,329)
|
|
Other income,
net
|
|
222
|
|
361
|
|
813
|
|
752
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
16,989
|
|
(24,269)
|
|
24,907
|
|
(36,347)
|
|
Income tax expense
|
|
4,519
|
|
5,148
|
|
10,738
|
|
9,100
|
|
Net income (loss)
|
|
12,470
|
|
(29,417)
|
|
14,169
|
|
(45,447)
|
|
Net income attributable to
noncontrolling interest
|
|
4,374
|
|
642
|
|
6,669
|
|
2,041
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Holdings
|
|
$
8,096
|
|
$
(30,059)
|
|
$
7,500
|
|
$
(47,488)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and fully diluted net
income (loss) per share
|
|
$
0.17
|
|
$
(0.72)
|
|
$
0.16
|
|
$
(1.19)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding –basic and fully diluted
|
|
47,376
|
|
41,875
|
|
46,944
|
|
39,852
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions declared per
share
|
|
$
0.36
|
|
$
0.34
|
|
$
1.08
|
|
$
1.02
|
|
|
|
|
|
|
|
|
|
|
Compass
Diversified Holdings
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Nine
Months
|
|
Nine
Months
|
|
|
|
Ended
|
|
Ended
|
|
(in thousands)
|
|
September
30, 2011
|
|
September
30, 2010
|
|
|
|
|
|
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
Net income (loss)
|
|
$
14,169
|
|
$
(45,447)
|
|
Adjustments to reconcile net
income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
34,896
|
|
29,313
|
|
Impairment
expense
|
|
7,700
|
|
42,435
|
|
Supplemental put
expense
|
|
6,095
|
|
18,630
|
|
Noncontrolling interests
and noncontrolling stockholders charges
|
|
2,210
|
|
8,209
|
|
Deferred taxes
|
|
(5,687)
|
|
(5,115)
|
|
Other
|
|
1,036
|
|
245
|
|
|
|
|
|
|
|
Changes in operating assets and
liabilities, net of acquisition:
|
|
|
|
|
|
Increase in accounts
receivable
|
|
(23,229)
|
|
(44,692)
|
|
Increase in
inventories
|
|
(146)
|
|
(18,983)
|
|
Increase in prepaid
expenses and other current assets
|
|
(806)
|
|
(3,793)
|
|
Increase in accounts
payable and accrued expenses
|
|
21,559
|
|
48,025
|
|
Net cash provided by operating activities
|
|
57,797
|
|
28,827
|
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
Acquisition of businesses, net
of cash acquired
|
|
(258,559)
|
|
(173,689)
|
|
Purchases of
property and equipment
|
|
(15,099)
|
|
(4,703)
|
|
Other
|
|
140
|
|
7
|
|
Net cash used in investing activities
|
|
(273,518)
|
|
(178,385)
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
Proceeds
from issuance of Trust shares, net
|
|
19,684
|
|
74,977
|
|
Net
borrowing (repayment) of debt
|
|
196,500
|
|
99,300
|
|
Debt
issuance costs
|
|
(593)
|
|
(259)
|
|
Distributions paid
|
|
(49,529)
|
|
(40,928)
|
|
Net proceeds
related to noncontrolling interest
|
|
47,016
|
|
9,485
|
|
Other
|
|
(329)
|
|
(44)
|
|
Net cash provided by financing activities
|
|
212,749
|
|
142,531
|
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents
|
|
(2,972)
|
|
(7,027)
|
|
Cash and cash equivalents —
beginning of period
|
|
13,536
|
|
31,495
|
|
Cash and cash equivalents — end
of period
|
|
$
10,564
|
|
$
24,468
|
|
|
|
|
|
|
Compass
Diversified Holdings
|
|
Condensed
Consolidated Table of Cash Flows Available for Distribution and
Reinvestment ("CAD")
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
Nine Month Ended
|
|
(in thousands)
|
|
September 30, 2011
|
|
September 30, 2010
|
|
September 30, 2011
|
|
September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
12,470
|
|
$
(29,417)
|
|
$
14,169
|
|
$
(45,447)
|
|
Adjustment to reconcile
net income (loss) to cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
12,553
|
|
10,254
|
|
33,353
|
|
27,984
|
|
Impairment expense
|
|
-
|
|
42,435
|
|
7,700
|
|
42,435
|
|
Amortization of debt issuance costs
|
|
542
|
|
493
|
|
1,543
|
|
1,329
|
|
Supplemental put expense
|
|
1,200
|
|
1,639
|
|
6,095
|
|
18,630
|
|
Noncontrolling interests and noncontrolling stockholders
charges
|
|
995
|
|
768
|
|
2,210
|
|
8,209
|
|
Other
|
|
949
|
|
405
|
|
1,036
|
|
245
|
|
Deferred taxes
|
|
(3,761)
|
|
(3,053)
|
|
(5,687)
|
|
(5,115)
|
|
Changes in operating assets and liabilities
|
|
(15,635)
|
|
(2,266)
|
|
(2,622)
|
|
(19,443)
|
|
Net cash provided by operating
activities
|
|
9,313
|
|
21,258
|
|
57,797
|
|
28,827
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
Unused fee
on revolving credit facility (1)
|
|
499
|
|
749
|
|
2,041
|
|
2,378
|
|
Successful
acquisition expense (2)
|
|
3,347
|
|
2,046
|
|
4,197
|
|
3,970
|
|
Changes in
operating assets and liabilities
|
|
15,635
|
|
2,266
|
|
2,622
|
|
19,443
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Maintenance
capital expenditures (3)
|
|
2,343
|
|
2,522
|
|
7,467
|
|
4,703
|
|
Other
|
|
930
|
|
-
|
|
930
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Estimated cash flow available
for distribution and reinvestment
|
|
$
25,521
|
|
$
23,797
|
|
$
58,260
|
|
$
49,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution paid in March 2011
and April 2010
|
|
|
|
|
|
$
16,821
|
|
$
14,238
|
|
Distribution paid in July
2011/2010
|
|
|
|
|
|
16,821
|
|
14,238
|
|
Distribution paid in October
2011/2010
|
|
$
17,388
|
|
$
14,238
|
|
17,388
|
|
14,238
|
|
|
|
$
17,388
|
|
$
14,238
|
|
$
51,030
|
|
$
42,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents the commitment
fee on the unused portion of the Revolving Credit
Facility.
|
|
|
|
(2) Represents transaction costs
for successful acquisitions that were expensed during the
period.
|
|
|
|
(3) Excludes growth capital
expenditures of approximately $1.4 million for the three months
ended September 30, 2011 and $7.6 million for the nine months ended
Sept. 30, 2011.
|
|
|
|
|
|
|
|
|
|
|
SOURCE Compass Diversified Holdings