WESTPORT, Conn., May 6, 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 months ended
March 31, 2015.
First Quarter 2015 Highlights
- Generated Cash Flow Available for Distribution and Reinvestment
("CAD" or "Cash Flow") of $15.5
million for the first quarter of 2015;
- Reported a net loss of $25.3
million for the first quarter of 2015;
- Paid a first quarter 2015 cash distribution of $0.36 per share in April
2015, bringing cumulative distributions paid to $12.1152 per share since CODI's IPO in May of
2006.
"During the first quarter, our leading niche industrial and
branded consumer businesses generated predictable levels of free
cash flow that were consistent with management's expectations,"
stated Alan Offenberg, CEO of
Compass Diversified Holdings. "We are particularly pleased with the
performances of our Ergobaby, American Furniture Manufacturing and
Arnold Magnetics subsidiaries, with each reporting solid
year-over-year revenue increases as well as double-digit operating
income growth. Our latest acquisitions, Clean Earth and
SternoCandleLamp, also delivered positive contributions to CAD
reflecting their healthy and stable cash flows."
Mr. Offenberg added, "Our initiatives over the past year to
enhance our liquidity and balance sheet have us well positioned to
benefit from potential market opportunities. We will continue to
reinvest in our current subsidiaries to drive future performance
and complement their growth with attractive add-on acquisitions.
Building on our past success, we will remain disciplined in
deploying our capital into new platform acquisitions that
strengthen our future prospects, while maintaining our commitment
to provide cash distributions to our shareholders."
Operating Results
CODI reported Cash Flow (see Note
Regarding Use of Non-GAAP Financial Measures below) of $15.5 million for the quarter ended March 31, 2015, as compared to $14.6 million for the prior year's comparable
quarter. CODI's weighted average number of shares outstanding for
the quarter ended March 31, 2015 was
approximately 54.3 million as compared to approximately 48.3
million for the quarter ended March 31,
2014.
Cash Flow for the first quarter of 2015 reflects year-over-year
growth in the Company's Ergobaby, American Furniture Manufacturing
and Arnold Magnetics businesses, offset by a decline at the
Company's Camelbak and Liberty Safe
businesses.
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.
The net loss for the quarter ended March
31, 2015 was $25.3 million, as
compared to net income of $7.4
million for the quarter ended March
31, 2014. During the first quarter ended March 31, 2015, CODI recorded an $8.9 million non-cash impairment charge for the
Company's Tridien Medical subsidiary, reflecting a decline in the
estimated current fair market value for this subsidiary. In
addition, during the first quarter of 2015, CODI's equity method
investment in FOX Factory Holding Corp. ("FOX") declined
$13.4 million. The net income
during the quarter ended March 31,
2014 included results of FOX which was deconsolidated from
the financial statements in July
2014.
Liquidity and Capital Resources
As of March 31, 2015, CODI had approximately
$20.5 million in cash and cash
equivalents, $323 million outstanding
on its term loan facility and $189
million of borrowings under its revolving credit facility.
The Company has no significant debt maturities until 2019 and had
borrowing availability of approximately $207
million at March 31, 2015
under its revolving credit facility. In addition, the Company's
equity investment in its former subsidiary Fox Factory Holding
Corp. is valued at $232 million.
First Quarter 2015 Distribution
On April 9, 2015, CODI's Board of Directors declared
a first quarter distribution of $0.36
per share. The cash distribution was paid on April 29, 2015 to all holders of record as of
April 22, 2015. Since its IPO in May
of 2006, CODI has paid a cumulative distribution of $12.1152 per share.
Conference Call
Management will host a
conference call on Thursday, May 7,
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 26582938. 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 14, 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 26582938.
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
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2015
|
|
2014
|
(in
thousands)
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
20,450
|
|
|
$
|
23,703
|
|
Accounts receivable,
less allowance of $5,044 and $5,200
|
153,511
|
|
|
157,535
|
|
Inventories
|
114,166
|
|
|
111,214
|
|
Prepaid expenses and
other current assets
|
28,166
|
|
|
28,347
|
|
Total current
assets
|
316,293
|
|
|
320,799
|
|
Property, plant and
equipment, net
|
113,613
|
|
|
115,871
|
|
Equity method
investment
|
231,767
|
|
|
245,214
|
|
Goodwill and
intangible assets, net
|
828,713
|
|
|
846,400
|
|
Other non-current
assets
|
18,469
|
|
|
19,146
|
|
Total
assets
|
$
|
1,508,855
|
|
|
$
|
1,547,430
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
108,591
|
|
|
$
|
125,477
|
|
Due to related
party
|
6,146
|
|
|
6,193
|
|
Current portion,
long-term debt
|
3,250
|
|
|
3,250
|
|
Other current
liabilities
|
6,044
|
|
|
6,311
|
|
Total current
liabilities
|
124,031
|
|
|
141,231
|
|
Deferred income
taxes
|
97,642
|
|
|
97,731
|
|
Long-term
debt
|
504,177
|
|
|
485,547
|
|
Other non-current
liabilities
|
18,636
|
|
|
14,587
|
|
Total
liabilities
|
744,486
|
|
|
739,096
|
|
Stockholders'
equity
|
|
|
|
Total stockholders'
equity attributable to Holdings
|
722,831
|
|
|
767,431
|
|
Noncontrolling
interests
|
41,538
|
|
|
40,903
|
|
Total stockholders'
equity
|
764,369
|
|
|
808,334
|
|
Total liabilities
and stockholders' equity
|
$
|
1,508,855
|
|
|
$
|
1,547,430
|
|
Compass
Diversified Holdings
Condensed
Consolidated Statements of Operations
(unaudited)
|
|
|
|
|
|
Three Months
Ended
|
(in thousands,
except per share data)
|
March 31,
2015
|
|
March 31,
2014
|
|
|
|
|
Net sales
|
$
|
257,271
|
|
|
$
|
246,048
|
|
Cost of
sales
|
185,355
|
|
|
169,696
|
|
Gross
profit
|
71,916
|
|
|
76,352
|
|
Operating
expenses:
|
|
|
|
Selling, general and
administrative expense
|
44,028
|
|
|
46,173
|
|
Management
fees
|
6,858
|
|
|
4,735
|
|
Amortization
expense
|
10,013
|
|
|
7,349
|
|
Impairment
expense
|
8,907
|
|
|
—
|
|
Operating
income
|
2,110
|
|
|
18,095
|
|
Other income
(expense):
|
|
|
|
Interest expense,
net
|
(9,718)
|
|
|
(4,572)
|
|
Amortization of debt
issuance costs
|
(545)
|
|
|
(570)
|
|
Loss on equity method
investment
|
(13,447)
|
|
|
—
|
|
Other income
(expense), net
|
(307)
|
|
|
184
|
|
Income (loss) before
income taxes
|
(21,907)
|
|
|
13,137
|
|
Provision for income
taxes
|
3,380
|
|
|
5,764
|
|
Net income
(loss)
|
(25,287)
|
|
|
7,373
|
|
Less: Net income
(loss) attributable to noncontrolling interest
|
(385)
|
|
|
2,714
|
|
Net income (loss)
attributable to Holdings
|
$
|
(24,902)
|
|
|
$
|
4,659
|
|
|
|
|
|
Basic and fully
diluted income (loss) per share
|
$
|
(0.47)
|
|
|
$
|
0.08
|
|
|
|
|
|
Basic and fully
diluted weighted average number of shares outstanding
|
54,300
|
|
|
48,300
|
|
|
|
|
|
Cash distributions
declared per share
|
$
|
0.36
|
|
|
$
|
0.36
|
|
Compass
Diversified Holdings
Summarized
Statement of Cash Flows
(unaudited)
|
|
|
|
|
|
Three months
ended
|
(in
thousands)
|
March 31,
2015
|
|
March 31,
2014
|
Net cash provided by
(used in) operating activities
|
3,287
|
|
|
(6,040)
|
|
Net cash used in by
investing activities
|
(5,160)
|
|
|
(46,416)
|
|
Net cash (used in)
provided by financing activities
|
(1,313)
|
|
|
25,838
|
|
Effect of foreign
currency on cash
|
(67)
|
|
|
11
|
|
Net decrease in cash
and cash equivalents
|
(3,253)
|
|
|
(26,607)
|
|
Cash and cash
equivalents — beginning of period
|
23,703
|
|
|
113,229
|
|
Cash and cash
equivalents — end of period
|
$
|
20,450
|
|
|
$
|
86,622
|
|
|
|
|
|
|
|
|
|
Compass
Diversified Holdings
Condensed
Consolidated Table of Cash Flows Available for Distribution and
Reinvestment
(unaudited)
|
|
|
|
|
|
Three Months
Ended
|
(in
thousands)
|
March 31,
2015
|
|
March 31,
2014
|
Net income
(loss)
|
$
|
(25,287)
|
|
|
$
|
7,373
|
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
Depreciation and
amortization
|
16,535
|
|
|
11,985
|
|
Impairment
expense
|
8,907
|
|
|
—
|
|
Amortization of debt
issuance costs and original issue discount
|
713
|
|
|
864
|
|
Unrealized loss on
derivatives
|
4,314
|
|
|
92
|
|
Excess tax benefit
from subsidiary stock options (1)
|
—
|
|
|
(1,061)
|
|
Gain (loss) on equity
method investment
|
13,447
|
|
|
—
|
|
Noncontrolling
stockholders charges
|
1,024
|
|
|
1,365
|
|
Other
|
427
|
|
|
(53)
|
|
Deferred
taxes
|
(806)
|
|
|
(594)
|
|
Changes in operating
assets and liabilities
|
(15,987)
|
|
|
(26,011)
|
|
Net cash provided
by (used in) operating activities
|
3,287
|
|
|
(6,040)
|
|
Plus:
|
|
|
|
Unused fee on
revolving credit facility (2)
|
309
|
|
|
600
|
|
Excess tax benefit
from subsidiary stock options (1)
|
—
|
|
|
1,061
|
|
Integration services
fee (3)
|
1,000
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
15,987
|
|
|
26,011
|
|
Other
|
—
|
|
|
53
|
|
Less:
|
|
|
|
Maintenance capital
expenditures (4)
|
4,289
|
|
|
3,104
|
|
FOX CAD
(5)
|
—
|
|
|
3,494
|
|
Payment on
swap
|
495
|
|
|
495
|
|
Changes in operating
assets and liabilities
|
—
|
|
|
—
|
|
Other
|
305
|
|
|
—
|
|
Estimated cash
flow available for distribution and reinvestment
|
$
|
15,494
|
|
|
$
|
14,592
|
|
Distribution paid in
April 2015/2014
|
$
|
19,548
|
|
|
$
|
17,388
|
|
|
|
(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)
|
Represents fees paid
by newly acquired companies to the Manager for integration services
performed during the first year of ownership, payable
quarterly.
|
|
|
(4)
|
Excludes growth
capital expenditures of approximately $0.5 million for both the
three months ended March 31, 2015 and 2014.
|
|
|
(5)
|
Represents FOX CAD
subsequent to IPO date. For the quarter ended March 31, 2014,
the amount includes approximately $7.6 million of EBITDA, less:
$2.2 million of cash taxes, $0.9 million of management fees and
$0.9 million of maintenance capital expenditures.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/compass-diversified-holdings-reports-first-quarter-2015-financial-results-300078924.html
SOURCE Compass Diversified Holdings