WESTPORT, Conn., May 9, 2012 /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 months ended
March 31, 2012.
First Quarter 2012 Highlights
- Generated Cash Flow Available for Distribution and Reinvestment
("CAD" or "Cash Flow") of $16.6
million for the first quarter of 2012;
- Reported net income of $0.9
million for the first quarter of 2012;
- Paid a first quarter 2012 cash distribution of $0.36 per share in April
2012, bringing cumulative distributions paid to $7.7952 per share since CODI's IPO in May of
2006; and
- Consummated the platform acquisition of Arnold Magnetic
Technologies Holdings Corporation ("Arnold").
"We are pleased to report strong financial results for the first
quarter of 2012 as CAD increased approximately 16% compared to the
year-earlier period," stated Alan
Offenberg, CEO of Compass Group Diversified Holdings LLC.
"During the quarter, we maintained our focus on taking advantage of
the relative operating and financial strength of our subsidiaries
to increase market share. In particular, we are pleased by the
performance at our CamelBak subsidiary, which reported strong sales
following the acquisition of this business less than a year ago. We
also realized contributions from Arnold, our newest platform
company acquired during the first quarter. Arnold is an exciting
addition to the CODI family and represents our fourth platform
acquisition over the past two years."
Mr. Offenberg added, "The success we have achieved in acquiring
companies with strong and defensible market positions under
favorable valuations and terms has significantly strengthened
CODI's growth prospects. With substantial liquidity, we are poised
to further expand our diverse mix of niche leading businesses
utilizing our disciplined approach while reinvesting in our current
subsidiaries to enhance their future performance."
Operating Results
CODI reported Cash Flow (see note regarding use of Non-GAAP
Financial Measures below) of $16.6
million for the quarter ended March
31, 2012, as compared to $14.3
million for the prior year comparable quarter. CODI's
weighted average number of shares outstanding for the quarter ended
March 31, 2012 and March 31, 2011 was approximately 48.3 million and
46.7 million, respectively.
The improvement in Cash Flow for the first quarter 2012 as
compared to the year-earlier period was largely due to the
inclusion of results from CamelBak, a platform businesses acquired
by CODI on August 24, 2011, partially
offset by the exclusion of results from the Company's Staffmark
subsidiary, which was sold on October 17,
2011. CODI also benefitted from the partial inclusion of
results from Arnold, a platform business acquired by CODI on
March 5, 2012.
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, which have totaled
approximately $198 million since
2007.
Net income for the quarter ended March
31, 2012 was $0.9 million, as
compared to a net loss of $6.6
million for the quarter ended March
31, 2011. During the quarter ended March 31, 2012, CODI expensed approximately
$4.3 million of transaction costs
related to its acquisition of Arnold and reversed approximately
$1.5 million of its non-cash
supplemental put accrual. During the first quarter of 2011, CODI
recorded a non-cash supplemental put accrual expense of
$3.2 million as well as a non-cash
impairment charge of $7.7 million
related to the Company's American Furniture Manufacturing
subsidiary.
Liquidity and Capital Resources
As of March 31, 2012, CODI had
$22.4 million in cash and cash
equivalents, $224.4 million
outstanding on its term loan facility and $80 million outstanding under its $290 million revolving credit facility. The
Company has no significant debt maturities until October 2016 and had borrowing availability of
approximately $209 million at
March 31, 2012 under its revolving
credit facility.
On April 2, 2012, CODI exercised
an option under its credit agreement, dated as of October 27, 2011, to increase the Term Loan
Facility by $30 million. The
Company's aggregate outstanding borrowings under its term loan
facility increased to approximately $254.4
million after this borrowing. The net proceeds of the
borrowing were used to repay existing borrowings under the
Company's revolving credit facility. Concurrent with this increased
term loan borrowing, CODI amended the pricing terms of its term
loan facility. Under the terms of the amendment, amounts borrowed
bear interest at LIBOR plus a margin of 5.00%, as compared to the
previous margin of 6.00%. In addition, the LIBOR floor was reduced
to 1.25% from 1.50%. All other terms of the credit agreement remain
unchanged.
On May 1, 2012, CODI completed the
sale of its majority owned subsidiary, HALO Branded Solutions,
whereby the Company received approximately $66.5 million of total proceeds from the sale at
closing. The proceeds were used to repay borrowings under the
Company's revolving credit facility and left only $2.5 million of revolver borrowings outstanding
after the sale.
First Quarter 2012 Distribution
On April 10, 2012, CODI's Board of
Directors declared a first quarter distribution of $0.36 per share. The cash distribution was paid
on April 30, 2012 to all holders of
record as of April 24, 2012. Since
its IPO in May of 2006, CODI has paid a cumulative distribution of
$7.7952 per share.
Conference Call
Management will host a conference call on Thursday, May 10, 2012 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 (888) 539-3624 and the dial-in number for
international callers is (719) 325-2440. The access code for all
callers is 2954032. 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 May 17, 2012. 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 2954032.
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. 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")
CODI owns and manages a diverse family of established North
American middle market businesses. Each of its eight current
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.
Our 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.tridien.com);
- The manufacture of engineered magnetic solutions for a wide
range of specialty applications and end-markets (Arnold Magnetic
Technologies, www.arnoldmagnetics.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, strollers
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 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, 2011 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)
|
|
March
31,
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and
cash equivalents
|
|
$
22,363
|
|
$
132,370
|
Accounts
receivable, less allowance of $3,686 and $2,684
|
|
120,338
|
|
99,389
|
Inventories
|
|
124,631
|
|
101,021
|
Prepaid
expenses and other current assets
|
|
26,446
|
|
27,441
|
|
|
|
|
|
Total current assets
|
|
293,778
|
|
360,221
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
66,367
|
|
45,235
|
Goodwill
|
|
292,829
|
|
245,340
|
Intangible
assets, net
|
|
389,655
|
|
358,104
|
Deferred
debt issuance costs, net
|
|
7,218
|
|
6,942
|
Other
non-current assets
|
|
23,345
|
|
14,064
|
|
|
|
|
|
Total
assets
|
|
$
1,073,192
|
|
$
1,029,906
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$116,057
|
|
$
96,319
|
Due to
related party
|
|
4,399
|
|
4,239
|
Current
portion of long-term debt
|
|
2,250
|
|
2,250
|
Current
portion of supplemental put obligation
|
|
-
|
|
13,675
|
Other
liabilities
|
|
777
|
|
1,679
|
|
|
|
|
|
Total current liabilities
|
|
123,483
|
|
118,162
|
|
|
|
|
|
Long-term
debt
|
|
293,813
|
|
214,000
|
Supplemental put obligation
|
|
34,274
|
|
35,814
|
Deferred
income taxes
|
|
80,421
|
|
62,484
|
Other
non-current liabilities
|
|
5,260
|
|
2,968
|
|
|
|
|
|
Total
liabilities
|
|
537,251
|
|
433,428
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
Trust
shares, no par value, 500,000 authorized; 48,300 shares issued
and
|
|
658,361
|
|
658,361
|
outstanding at 3/31/12 and 12/31/11
|
|
|
|
|
Accumulated other comprehensive income
|
|
30
|
|
-
|
Accumulated deficit
|
|
(179,963)
|
|
(160,852)
|
Total
stockholders' equity attributable to Holdings
|
|
478,428
|
|
497,509
|
Noncontrolling interests
|
|
57,513
|
|
98,969
|
Total stockholders'
equity
|
|
535,941
|
|
596,478
|
Total
liabilities and stockholders' equity
|
|
$
1,073,192
|
|
$
1,029,906
|
|
|
|
|
|
|
|
|
|
|
Compass
Diversified Holdings
|
Condensed
Consolidated Statements of Operations
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
Three
Months
|
|
|
Ended
|
|
Ended
|
(in
thousands, except per share data)
|
|
March
31, 2012
|
|
March
31, 2011
|
|
|
|
|
|
Net
sales
|
|
$
232,403
|
|
$
177,326
|
Cost of
sales
|
|
155,810
|
|
121,233
|
Gross profit
|
|
76,593
|
|
56,093
|
Operating
expenses:
|
|
|
|
|
Selling, general and
administrative expense
|
|
54,051
|
|
36,117
|
Supplemental put
expense (reversal)
|
|
(1,540)
|
|
3,228
|
Management
fees
|
|
4,657
|
|
3,544
|
Amortization
expense
|
|
7,800
|
|
5,323
|
Impairment
expense
|
|
-
|
|
7,700
|
Operating income
|
|
11,625
|
|
181
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
Interest
income
|
|
33
|
|
2
|
Interest
expense
|
|
(6,029)
|
|
(2,080)
|
Amortization of debt
issuance costs
|
|
(356)
|
|
(459)
|
Other expense,
net
|
|
(268)
|
|
(16)
|
Income (loss) from continuing operations before income
taxes
|
|
5,005
|
|
(2,372)
|
Provision
for income taxes
|
|
4,116
|
|
3,089
|
Income (loss) from continuing operations
|
|
889
|
|
(5,461)
|
Loss from
discontinued operations, net of income tax benefit
|
|
-
|
|
(1,106)
|
Net income (loss)
|
|
889
|
|
(6,567)
|
Net income
from continuing operations attributable to noncontrolling
interest
|
|
1,675
|
|
877
|
Net loss
from discontinued operations attributable to noncontrolling
interest
|
|
-
|
|
(470)
|
Net loss attributable to Holdings
|
|
$
(786)
|
|
$
(6,974)
|
|
|
|
|
|
Basic and
fully diluted loss per share
|
|
$
(0.02)
|
|
$
(0.15)
|
|
|
|
|
|
Weighted
average number of shares outstanding – basic and fully
diluted
|
|
48,300
|
|
46,725
|
|
|
|
|
|
Cash
distributions declared per share
|
|
$
0.36
|
|
$
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compass
Diversified Holdings
|
Condensed
Consolidated Statements of Cash Flows
|
(unaudited)
|
|
|
|
|
|
|
|
Three
Months
|
|
Three
Months
|
|
|
Ended
|
|
Ended
|
(in
thousands)
|
|
March
31, 2012
|
|
March
31, 2011
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
Net income
(loss )
|
|
$
889
|
|
$
(6,567)
|
Adjustments to reconcile net income (loss) to net
cash provided by
|
|
|
|
|
(used in) operating activities
|
|
|
|
|
Depreciation and amortization expense
|
|
13,090
|
|
10,314
|
Amortization of debt issuance costs and original issue
discount
|
|
731
|
|
459
|
Impairment expense
|
|
-
|
|
7,700
|
Supplemental put expense (reversal)
|
|
(1,540)
|
|
3,228
|
Noncontrolling stockholder notes and other
|
|
791
|
|
852
|
Deferred taxes
|
|
(49)
|
|
(993)
|
Unrealized loss on interest rate swap
|
|
345
|
|
-
|
Other
|
|
830
|
|
292
|
|
|
|
|
|
Changes in
operating assets and liabilities, net of acquisition:
|
|
|
|
|
(Increase) decrease in accounts receivable
|
|
(1,874)
|
|
5,041
|
Increase in inventories
|
|
(5,107)
|
|
(654)
|
Increase in prepaid expenses and other current assets
|
|
(629)
|
|
(3,302)
|
Increase in accounts payable and accrued expenses
|
|
1,392
|
|
23,388
|
Payment
of profit allocation
|
|
(13,675)
|
|
-
|
Net cash provided by (used in) operating activities
|
|
(4,806)
|
|
39,758
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
Acquisition of businesses, net of cash acquired
|
|
(123,575)
|
|
-
|
Purchases of
property and equipment
|
|
(3,405)
|
|
(4,565)
|
Proceeds
released from escrow related to Staffmark sale
|
|
5,045
|
|
-
|
Purchase of Fox
common stock
|
|
(1,466)
|
|
-
|
Other investing
activities
|
|
268
|
|
62
|
Net cash used in investing activities
|
|
(123,133)
|
|
(4,503)
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
Net borrowing
(repayment) of debt
|
|
79,438
|
|
(15,500)
|
Proceeds from
noncontrolling equity issuances
|
|
4,628
|
|
-
|
Redemption of
CamelBak preferred stock
|
|
(48,022)
|
|
-
|
Debt issuance
costs
|
|
(638)
|
|
-
|
Other
|
|
(106)
|
|
(284)
|
Distributions
paid
|
|
(17,388)
|
|
(15,887)
|
Net cash provided by (used in) financing activities
|
|
17,912
|
|
(31,671)
|
|
|
|
|
|
Foreign
currency adjustment
|
|
20
|
|
-
|
Net
increase (decrease) in cash and cash equivalents
|
|
(110,007)
|
|
3,584
|
Cash and
cash equivalents — beginning of period
|
|
132,370
|
|
13,536
|
Cash and
cash equivalents — end of period
|
|
$
22,363
|
|
$
17,120
|
|
|
|
|
|
|
Compass
Diversified Holdings
|
Condensed
Consolidated Table of Cash Flows Available for Distribution and
Reinvestment ("CAD")
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Three
Months Ended
|
(in
thousands)
|
|
March
31, 2012
|
|
March
31, 2011
|
|
|
|
|
|
Net income
(loss)
|
|
$
889
|
|
$
(6,567)
|
Adjustment to reconcile net income (loss) to cash provided
by (used in)
|
|
|
|
|
operating activities
|
|
|
|
|
Depreciation
and amortization
|
|
13,090
|
|
10,314
|
Amortization of
debt issuance costs and original issue discount
|
|
731
|
|
459
|
Impairment
expense
|
|
-
|
|
7,700
|
Supplemental
put expense (reversal)
|
|
(1,540)
|
|
3,228
|
Noncontrolling
stockholder notes and other
|
|
791
|
|
1,144
|
Deferred
taxes
|
|
(49)
|
|
(993)
|
Unrealized loss
on interest rate swap
|
|
345
|
|
-
|
Other
|
|
830
|
|
-
|
Changes in
operating assets and liabilities
|
|
(19,893)
|
|
24,473
|
Net cash
provided by (used in) operating activities
|
|
(4,806)
|
|
39,758
|
Plus:
|
|
|
|
|
Unused fee on
revolving credit facilities (1)
|
|
660
|
|
776
|
Successful
acquisition expense (2)
|
|
4,325
|
|
500
|
Changes in
operating assets and liabilities
|
|
19,893
|
|
(24,473)
|
Less:
|
|
|
|
|
Maintenance
capital expenditures (3)
|
|
2,594
|
|
2,267
|
Other
|
|
830
|
|
-
|
|
|
|
|
|
Estimated cash flow available for distribution and
reinvestment
|
|
$
16,648
|
|
$
14,294
|
|
|
|
|
|
|
|
|
|
|
Distribution paid in April 2012/2011
|
|
$
17,388
|
|
$
16,821
|
|
|
|
|
|
|
|
|
|
|
(1)
Represents the commitment fee on the unused portion of the
Revolving Credit Facilities.
|
|
|
|
|
|
(2)
Represents transaction costs for successful acquisitions that were
expensed during the period.
|
|
|
|
|
|
|
(3)
Represents maintenance capital expenditures that were funded from
operating cash flow. Excludes $0.8 million and $2.2
|
million of
expenditures considered growth capital expenditures for the three
months ended March 31, 2012 and 2011, respectively.
|
|
|
|
|
|
SOURCE Compass Diversified Holdings