WESTPORT, Conn., March 2, 2015 /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 and twelve
months ended December 31, 2014.
Fourth Quarter 2014 Highlights
- Generated Cash Flow Available for Distribution and Reinvestment
("CAD" or "Cash Flow") of $17.5
million for the fourth quarter of 2014 and $58.0 million for the full year 2014;
- Reported net income of $8.9
million for the fourth quarter of 2014 and net income of
$291.2 million for the full year
2014, which includes a third quarter $264.3
million gain on deconsolidation of the Fox Factory Holding
Corp. ("FOX") subsidiary;
- Paid a fourth quarter 2014 cash distribution of $0.36 per share in January
2015, bringing cumulative distributions paid to $11.7552 per share since CODI's IPO in May of
2006;
- Consummated the platform acquisition of Candle Lamp Company,
LLC ("SternoCandleLamp");
- Consummated the acquisition of American Environmental Services,
Inc. ("AES") by the Company's Clean Earth subsidiary; and
- Completed a 6.0 million share offering in November 2014.
"We generated strong operating results for the fourth quarter
and full year 2014 as we benefitted from the leadership positions
and financial strength of our niche industrial and branded consumer
businesses," stated Alan Offenberg,
CEO of Compass Diversified Holdings. "During a time when we
capitalized on attractive growth opportunities, we achieved full
year 2014 Cash Flow of $58.0 million.
Our 2014 results reflect solid contributions from Ergobaby,
Camelbak and American Furniture Manufacturing as well as strong
performance from our latest platform acquisitions of Clean Earth
and SternoCandleLamp."
Mr. Offenberg added, "During 2014, we made significant progress
on key initiatives to strengthen the company from both a strategic
and financial perspective. Specifically, we acquired two leading
middle market businesses that meet our strict criteria and enhance
our earnings potential. We further improved our financial position
by completing a 6.0 million share offering, generating proceeds of
approximately $100 million, and
obtaining $725 million in new debt
financing under attractive terms. Additionally, we generated
approximately $65.5 million in net
proceeds from a partial divestiture of our interest in FOX, while
maintaining approximately 41% ownership. Looking ahead, our solid
balance sheet and financial flexibility enable us to continue
reinvesting in our current subsidiaries while taking advantage of
accretive platform and add-on acquisitions that enhance our future
prospects and add value for our shareholders."
Operating Results
CODI reported Cash Flow (see Note
Regarding Use of Non-GAAP Financial Measures below) of $17.5 million for the quarter ended December 31, 2014, as compared to $9.9 million for the prior year's comparable
quarter. CODI's weighted average number of shares outstanding for
the quarter ended December 31, 2014
was approximately 51.4 million as compared to approximately 48.3
million for the quarter ended December 31,
2013.
Cash Flow for the fourth quarter of 2014 reflects year-over-year
growth in the Company's Ergobaby, Camelbak, American Furniture
Manufacturing and Advanced Circuits businesses as well as positive
contributions from the Company's recent acquisitions of Clean Earth
and SternoCandleLamp, offset by a decline at the Company's
Liberty Safe and Arnold Magnetics
businesses. Cash Flow for the fourth quarter of 2014 included
contributions from SternoCandleLamp from the date of
acquisition.
For the year ended December 31,
2014, CODI reported Cash Flow of $58.0 million, as compared to $73.5 million for the year ended December 31, 2013. CODI's weighted average number
of shares outstanding for the twelve month period ended
December 31, 2014 was approximately
49.1 million as compared to approximately 48.3 million for the
twelve month period ended December 31,
2013.
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 approximately $340 million since going public in 2006.
Net income for the quarter ended December
31, 2014 was $8.9 million, as
compared to a net loss of $5.1
million for the quarter ended December 31, 2013. During the fourth quarter
ended December 31, 2013, CODI
recorded a $12.0 million non-cash
impairment charge for the Company's Tridien Medical subsidiary.
For the year ended December 31,
2014, CODI reported net income of $291.2 million, which included a one-time
accounting gain of approximately $264.3
million as a result of the deconsolidation of FOX that
occurred in the third quarter. For the year ended December 31, 2013, CODI reported net income of
$78.8 million, which included a
$61.3 million supplemental put
expense reversal in connection with the previously announced
termination of the Supplemental Put Agreement in July 2013.
Liquidity and Capital Resources
As of December 31, 2014, CODI had approximately
$23.7 million in cash and cash
equivalents, $323 million outstanding
on its term loan facility and $170
million of borrowings under its revolving credit facility.
The Company has no significant debt maturities until 2019 and had
borrowing availability of approximately $226
million at December 31, 2014
under its revolving credit facility. In addition, the
Company's equity investment in FOX is valued at $245 million.
In November 2014, CODI completed a
public offering of 6.0 million trust shares. CODI raised
approximately $100.0 million of net
proceeds from the offering, which was used to repay a portion of
the outstanding balance of its revolving credit facility.
Fourth Quarter 2014 Distribution
On January 8, 2015, CODI's Board of Directors
declared a fourth quarter distribution of $0.36 per share. The cash distribution was paid
on January 29, 2015 to all holders of
record as of January 22, 2015. Since
its IPO in May of 2006, CODI has paid a cumulative distribution of
$11.7552 per share.
Conference Call
Management will host a conference
call on Tuesday, March 3, 2015 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 77773141. 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 March 10, 2015. 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 77773141.
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 current subsidiaries is a leader in
its 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 shareholders.
Our nine majority-owned subsidiaries are engaged in the
following lines of business:
- The manufacture of quick-turn, small-run and production rigid
printed circuit boards (Advanced Circuits);
- The design and manufacture of promotionally priced upholstered
furniture (American Furniture Manufacturing);
- 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);
- The manufacture of engineered magnetic solutions for a wide
range of specialty applications and end-markets (Arnold Magnetic
Technologies);
- The design and manufacture of personal hydration products for
outdoor, recreation and military use (CamelBak
Products);
- Environmental services for a variety of contaminated materials
including soils, dredged material, hazardous waste and drill
cuttings (Clean Earth);
- 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); and
- The manufacture and marketing of portable food warming fuel and
creative table lighting solutions for the foodservice industry
(SternoCandleLamp).
In addition, we own approximately 41% of the common stock of Fox
Factory Holding Corp. ("FOX", Nasdaq: FOXF), a former subsidiary
business that completed its initial public offering in August 2013. FOX designs and manufactures
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.
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, 2014 and other filings
with the Securities and Exchange Commission. Except as required by
law, 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
|
|
|
December
31,
|
|
December
31,
|
(in
thousands)
|
2014
|
|
|
2013
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
23,703
|
|
|
$
|
113,229
|
|
Accounts receivable,
less allowance of $5,200 and $3,424
|
157,535
|
|
|
111,736
|
|
Inventories
|
111,214
|
|
|
152,948
|
|
Prepaid expenses and
other current assets
|
28,347
|
|
|
21,220
|
|
Total current
assets
|
320,799
|
|
|
399,133
|
|
Property, plant and
equipment, net
|
115,871
|
|
|
68,059
|
|
Equity method
investment
|
245,214
|
|
|
—
|
|
Goodwill and
intangible assets, net
|
846,400
|
|
|
556,970
|
|
Other non-current
assets
|
19,146
|
|
|
20,751
|
|
Total
assets
|
$
|
1,547,430
|
|
|
$
|
1,044,913
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
125,356
|
|
|
$
|
118,129
|
|
Due to related
party
|
6,193
|
|
|
4,528
|
|
Current portion,
long-term debt
|
3,250
|
|
|
2,850
|
|
Other current
liabilities
|
6,311
|
|
|
4,623
|
|
Total current
liabilities
|
141,110
|
|
|
130,130
|
|
Deferred income
taxes
|
97,582
|
|
|
60,024
|
|
Long-term
debt
|
485,547
|
|
|
280,389
|
|
Other non-current
liabilities
|
14,857
|
|
|
5,435
|
|
Total
liabilities
|
739,096
|
|
|
475,978
|
|
Stockholders'
equity
|
|
|
|
|
|
Total stockholders'
equity attributable to Holdings
|
767,431
|
|
|
473,385
|
|
Noncontrolling
interests
|
40,903
|
|
|
95,550
|
|
Total stockholders'
equity
|
808,334
|
|
|
568,935
|
|
Total liabilities
and stockholders' equity
|
$
|
1,547,430
|
|
|
$
|
1,044,913
|
|
Compass
Diversified Holdings
Condensed
Consolidated Statements of Operations
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
(in thousands,
except per share data)
|
December 31,
2014
|
|
December 31,
2013
|
|
December 31,
2014
|
|
December 31,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
264,028
|
|
|
$
|
232,685
|
|
|
$
|
982,300
|
|
|
$
|
985,539
|
|
Cost of
sales
|
191,303
|
|
|
163,056
|
|
|
688,631
|
|
|
679,708
|
|
Gross
profit
|
72,725
|
|
|
69,629
|
|
|
293,669
|
|
|
305,831
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expense
|
47,744
|
|
|
43,067
|
|
|
181,683
|
|
|
167,738
|
|
Supplemental put
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
(45,995)
|
|
Management
fees
|
7,088
|
|
|
4,990
|
|
|
22,722
|
|
|
18,632
|
|
Amortization
expense
|
11,811
|
|
|
7,248
|
|
|
33,606
|
|
|
29,632
|
|
Impairment
expense
|
—
|
|
|
12,018
|
|
|
—
|
|
|
12,918
|
|
Operating
income
|
6,082
|
|
|
2,306
|
|
|
55,658
|
|
|
122,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(10,626)
|
|
|
(4,771)
|
|
|
(27,068)
|
|
|
(19,376)
|
|
Amortization of debt
issuance costs
|
(545)
|
|
|
(570)
|
|
|
(2,243)
|
|
|
(2,123)
|
|
Loss on debt
extinguishment
|
—
|
|
|
—
|
|
|
(2,143)
|
|
|
(1,785)
|
|
Gain on
deconsolidation of subsidiary
|
—
|
|
|
—
|
|
|
264,325
|
|
|
—
|
|
Gain on equity method
investment
|
11,029
|
|
|
—
|
|
|
11,029
|
|
|
—
|
|
Other income
(expense), net
|
(447)
|
|
|
14
|
|
|
(139)
|
|
|
(77)
|
|
Income (loss) before
income taxes
|
5,493
|
|
|
(3,021)
|
|
|
299,419
|
|
|
99,545
|
|
Provision (benefit)
for income taxes
|
(3,440)
|
|
|
2,041
|
|
|
8,264
|
|
|
20,729
|
|
Net income
(loss)
|
8,933
|
|
|
(5,062)
|
|
|
291,155
|
|
|
78,816
|
|
Less: Net income
attributable to noncontrolling interest
|
1,574
|
|
|
1,286
|
|
|
12,320
|
|
|
10,752
|
|
Net income (loss)
attributable to Holdings
|
$
|
7,359
|
|
|
$
|
(6,348)
|
|
|
$
|
278,835
|
|
|
$
|
68,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and fully
diluted income (loss) per share
|
$
|
0.13
|
|
|
$
|
(0.47)
|
|
|
$
|
5.38
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and fully
diluted weighted average number of shares outstanding
|
51,430
|
|
|
48,300
|
|
|
49,089
|
|
|
48,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions
declared per share
|
$
|
0.36
|
|
|
$
|
0.36
|
|
|
$
|
1.44
|
|
|
$
|
1.44
|
|
Compass
Diversified Holdings
Summarized
Statement of Cash Flows
|
|
|
|
|
|
|
|
Year
Ended
|
(in
thousands)
|
December 31,
2014
|
|
December 31,
2013
|
Net cash provided by
operating activities
|
70,695
|
|
|
72,374
|
|
Net cash (used in)
provided by investing activities
|
(424,753)
|
|
|
66,286
|
|
Net cash provided by
(used in) financing activities
|
265,487
|
|
|
(44,122)
|
|
Effect of foreign
currency on cash
|
(955)
|
|
|
450
|
|
Net increase
(decrease) in cash and cash equivalents
|
(89,526)
|
|
|
94,988
|
|
Cash and cash
equivalents — beginning of period
|
113,229
|
|
|
18,241
|
|
Cash and cash
equivalents — end of period
|
$
|
23,703
|
|
|
$
|
113,229
|
|
|
|
|
|
|
|
|
|
Compass
Diversified Holdings
Condensed
Consolidated Table of Cash Flows Available for Distribution and
Reinvestment
(unaudited)
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
(in
thousands)
|
December 31,
2014
|
|
December 31,
2013
|
|
December 31,
2014
|
|
December 31,
2013
|
Net income
(loss)
|
$
|
8,933
|
|
|
$
|
(5,062)
|
|
|
$
|
291,155
|
|
|
$
|
78,816
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
19,812
|
|
|
11,557
|
|
|
55,696
|
|
|
46,227
|
|
Impairment
expense
|
—
|
|
|
12,018
|
|
|
—
|
|
|
12,918
|
|
Amortization of debt
issuance costs and original issue discount
|
713
|
|
|
877
|
|
|
3,125
|
|
|
3,366
|
|
Unrealized loss on
derivatives
|
4,913
|
|
|
62
|
|
|
7,722
|
|
|
130
|
|
Loss on debt
extinguishment
|
—
|
|
|
—
|
|
|
2,143
|
|
|
1,785
|
|
Excess tax benefit
from subsidiary stock options (1)
|
—
|
|
|
—
|
|
|
(1,662)
|
|
|
—
|
|
Supplemental put
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
(45,995)
|
|
Gain on
deconsolidation of subsidiary
|
—
|
|
|
—
|
|
|
(264,325)
|
|
|
—
|
|
Gain on equity method
investment
|
(11,029)
|
|
|
—
|
|
|
(11,029)
|
|
|
—
|
|
Noncontrolling
stockholders charges
|
1,152
|
|
|
1,316
|
|
|
4,744
|
|
|
4,683
|
|
Other
|
1,081
|
|
|
(276)
|
|
|
1,442
|
|
|
(87)
|
|
Deferred
taxes
|
(6,657)
|
|
|
(3,136)
|
|
|
(8,601)
|
|
|
(5,257)
|
|
Changes in operating
assets and liabilities
|
5,617
|
|
|
979
|
|
|
(9,715)
|
|
|
(24,212)
|
|
Net cash provided
by operating activities
|
24,535
|
|
|
18,335
|
|
|
70,695
|
|
|
72,374
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
|
|
Unused fee on
revolving credit facility (2)
|
279
|
|
|
611
|
|
|
1,914
|
|
|
2,349
|
|
Excess tax benefit
from subsidiary stock options (1)
|
—
|
|
|
—
|
|
|
1,662
|
|
|
—
|
|
Successful acquisition
costs
|
2,814
|
|
|
—
|
|
|
4,844
|
|
|
—
|
|
Integration services
fee (5)
|
1,000
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
—
|
|
|
—
|
|
|
9,715
|
|
|
24,212
|
|
Other
|
—
|
|
|
—
|
|
|
51
|
|
|
—
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance capital
expenditures (3)
|
4,636
|
|
|
4,251
|
|
|
13,637
|
|
|
14,208
|
|
FOX CAD (4)
|
—
|
|
|
3,845
|
|
|
15,716
|
|
|
11,189
|
|
Payment on
swap
|
506
|
|
|
—
|
|
|
2,008
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
5,617
|
|
|
979
|
|
|
—
|
|
|
—
|
|
Other
|
399
|
|
|
—
|
|
|
528
|
|
|
—
|
|
Estimated cash
flow available for distribution and reinvestment
|
$
|
17,470
|
|
|
$
|
9,871
|
|
|
$
|
57,992
|
|
|
$
|
73,538
|
|
Distribution paid in
April 2014/2013
|
|
|
|
|
|
|
$
|
17,388
|
|
|
$
|
17,388
|
|
Distribution paid in
July 2014/2013
|
|
|
|
|
|
|
17,388
|
|
|
17,388
|
|
Distribution paid in
October 2014/2013
|
|
|
|
|
|
|
17,388
|
|
|
17,388
|
|
Distribution paid in
January 2015/2014
|
$
|
19,548
|
|
|
$
|
17,388
|
|
|
19,548
|
|
|
17,388
|
|
|
$
|
19,548
|
|
|
$
|
17,388
|
|
|
$
|
71,712
|
|
|
$
|
69,552
|
|
(1) Represents the
non-cash excess tax benefit at FOX related to the exercise of stock
options.
|
(2) Represents the
commitment fee on the unused portion of the revolving credit
facility.
|
(3) Excludes growth
capital expenditures of approximately $0.6 million and $1.5 million
for the three months ended December 31, 2014 and 2013,
respectively, and $1.6 million and $6.2 million for the year ended
December 31, 2014 and 2013, respectively.
|
(4) Represents FOX
CAD subsequent to the FOX IPO date through the date FOX was
deconsolidated. For the year ended December 31, 2014, the
amount includes approximately $24.2 million of EBITDA, less: $3.8
million of cash taxes, $1.9 million of management fees, $2.4
million of maintenance capital expenditures and $0.4 million of
interest expense.
|
(5) Represents fees
paid by newly acquired companies to the Manager for integration
services performed during the first year of ownership, payable
quarterly.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/compass-diversified-holdings-reports-fourth-quarter-and-full-year-2014-financial-results-300043824.html
SOURCE Compass Diversified Holdings