CODI Compass Diversified

WESTPORT, Conn., May 7, 2014 /PRNewswire/ -- Compass Diversified Holdings (NYSE: CODI) ("CODI," "we," "our" or the "Company"), an owner of leading middle market businesses, announced today its consolidated operating results for the three months ended March 31, 2014.

First Quarter 2014 Highlights

• Generated Cash Flow Available for Distribution and Reinvestment ("CAD" or "Cash Flow") of $14.6 million for the first quarter of 2014;
• Reported net income of $7.4 million for the first quarter of 2014; and
• Paid a first quarter 2014 cash distribution of $0.36 per share in April 2014, bringing cumulative distributions paid to $10.6752 per share since CODI's IPO in May of 2006.

"We are pleased to report financial results for the first quarter of 2014 that exceeded management's expectations," stated Alan Offenberg, CEO of Compass Diversified Holdings. "During the quarter, we continued to benefit from the relative operating and financial strength of our leading middle market businesses with a particularly strong performance at Ergobaby, which posted double-digit revenue and earnings growth. We also generated stable Cash Flow across our niche industrial businesses in the quarter. With significant liquidity and a conservative balance sheet, we remain well positioned to continue to invest in high-return organic growth initiatives and pursue favorable platform and add-on acquisitions that are accretive to Cash Flow. Complementing our approach to capitalizing on organic and acquisition-related growth opportunities that create long-term value for our shareholders, we remain committed to providing a steady stream of cash distributions as we have consistently done in the past."

Operating Results
CODI reported Cash Flow (see note regarding use of Non-GAAP Financial Measures below) of $14.6 million for the quarter ended March 31, 2014, as compared to $20.8 million for the prior year comparable quarter. CODI's weighted average number of shares outstanding for both the quarter ended March 31, 2014 and March 31, 2013 was approximately 48.3 million.  

Cash Flow for the first quarter of 2014 reflects year-over-year growth in the Company's Ergobaby and American Furniture Manufacturing businesses, offset by the Company's CamelBak business. The year-over-year comparison of CamelBak's performance for the quarter ended March 31, 2014 was adversely affected by the fulfillment of a contract with the U.S. Marine Corps that was completed in the first quarter of 2013. Additionally, Cash Flow for the first quarter of 2014 excluded results from the Company's FOX subsidiary, which completed its initial public offering ("IPO") on August 13, 2013. As a result of this offering, FOX is no longer included in CODI's calculation of CAD. Based on the Company's debt and equity interests in FOX, CODI generated total net proceeds of approximately $142.4 million from the IPO and continues to hold majority ownership in FOX.

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 of our businesses for the periods during which CODI owned them. However, Cash Flow excludes the gains from monetizing interests in CODI's subsidiaries, which have totaled more than $270 million since going public in 2006.

Net income for the quarter ended March 31, 2014 was $7.4 million, as compared to net income of $3.6 million for the quarter ended March 31, 2013. During the first quarter of 2014, CODI recorded lower interest expense of approximately $0.8 million as compared to the prior year period due to a reduction in borrowing costs and changes in the fair value of interest rate swaps, offset by higher selling, general and administrative expense. In addition, for the quarter ended March 31, 2013, CODI recorded a non-cash expense of $6.4 million related to the Company's Supplemental Put Agreement, which was terminated in July 2013.

Liquidity and Capital Resources
As of March 31, 2014, CODI had approximately $86.6 million in cash and cash equivalents, $279 million outstanding on its term loan facility and no outstanding borrowings under its $320 million revolving credit facility. The Company's FOX subsidiary has $50 million outstanding on its term loan facility and no outstanding borrowings on its $60 million revolving credit facility.  The Company has no significant debt maturities until 2017 and had borrowing availability of approximately $318 million at March 31, 2014 under its revolving credit facility.

First Quarter 2014 Distribution
On April 10, 2014, CODI's Board of Directors declared a first quarter distribution of $0.36 per share. The cash distribution was paid on April 30, 2014 to all holders of record as of April 23, 2014. Since its IPO in May of 2006, CODI has paid a cumulative distribution of $10.6752 per share.

Conference Call
Management will host a conference call on Thursday, May 8, 2014 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 (855) 212-2368 and the dial-in number for international callers is (315) 625-6886. The access code for all callers is 33613108. 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 15, 2014. To access the replay, please dial (855) 859-2056 in the U.S. and (404) 537-3406 outside the U.S., and then enter the access code 33613108.

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 businesses is a leader in its niche market. 

CODI maintains controlling ownership interests in each of its businesses 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 businesses, contributing to their financial and operating flexibility. CODI utilizes the cash flows generated by its businesses to invest in the long-term growth of the Company and to make cash distributions to its shareholders.

Our businesses 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.ergobaby.com);
• The design and manufacture of high-performance suspension products primarily for mountain bikes, side-by-side vehicles, on-road and off-road vehicles and trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, and motorcycles (FOX, www.ridefox.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, 2013 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.

SOURCE Compass Diversified Holdings