WESTPORT, Conn., Feb. 29, 2016 /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, 2015.
Fourth Quarter 2015 Highlights
- Generated Cash Flow Available for Distribution and Reinvestment
("CAD" or "Cash Flow") of $16.1
million for the fourth quarter of 2015 and $82.4 million for the full year 2015;
- Reported net loss of $1.5 million
for the fourth quarter of 2015 and net income of $165.8 million for the full year 2015;
- Paid a fourth quarter 2015 cash distribution of $0.36 per share in January
2016, bringing cumulative distributions paid to $13.1952 per share since CODI's IPO in May of
2006; and
- Completed the add-on acquisition of Hemp Oil Canada, Inc.
("HOCI") by the Company's subsidiary Fresh Hemp Foods Ltd.
("Manitoba Harvest").
"We generated solid operating results for the fourth quarter
2015 and achieved a 42% increase in Cash Flow for the full-year
2015," stated Alan Offenberg, CEO of
Compass Diversified Holdings. "Our fourth quarter performance
reflects the continued strength of our middle market niche
industrial and branded consumer businesses, including robust cash
flow contributions from Clean Earth, Sterno Products, Liberty Safe and Ergobaby."
Mr. Offenberg added, "Reinvesting in the growth of our
subsidiaries remains a core part of our strategy and we are pleased
to have completed an accretive add-on acquisition for our Manitoba
Harvest subsidiary in the fourth quarter, which will further drive
the Company's already strong growth trajectory. In addition, we
completed an add-on acquisition at Sterno Products subsequent to
year end. We also completed the sale of American Furniture,
realizing approximately $23.5 million
of proceeds from the sale. Going forward, our emphasis remains on
identifying attractive platform and add-on acquisition
opportunities in leading niche businesses, as we seek to further
grow our cash flows and provide attractive cash distributions to
our shareholders."
Operating Results
CODI reported Cash Flow (see Note
Regarding Use of Non-GAAP Financial Measures below) of $16.1 million for the quarter ended December 31, 2015, as compared to $17.5 million for the prior year's comparable
quarter. CODI's weighted average number of shares outstanding for
the quarters ended December 31, 2015
and December 31, 2014 were 54.3
million and 51.4 million, respectively.
Cash Flow for the fourth quarter of 2015 reflects year-over-year
growth in the Company's Clean Earth, Liberty Safe, Ergobaby, Sterno Products and
Arnold Magnetic businesses, partially offset by a decline at the
Company's Tridien and Advanced Circuits businesses. Cash flow for
the fourth quarter of 2015 included contributions from HOCI from
the date of acquisition.
For the year ended December 31,
2015, CODI reported Cash Flow of $82.4 million, as compared to $58.0 million for the year ended December 31, 2014. CODI's weighted average number
of shares outstanding for the twelve month period ended
December 31, 2015 was approximately
54.3 million, as compared to approximately 49.1 million for the
twelve month period ended December 31,
2014.
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 $480 million since going public in 2006.
Net loss for the quarter ended December
31, 2015 was $1.5 million, as
compared to net income of $8.9
million for the quarter ended December 31, 2014. During the fourth quarter of
2015, CODI reduced the previously recorded gain on the sale of
CamelBak by $1.3 million as a result
of a working capital adjustment. In addition, during the fourth
quarter of 2015, CODI's equity method investment in Fox Factory
Holding Corp. ("FOX", Nasdaq: FOXF) decreased $5.0 million. During the fourth quarter of 2014,
CODI's equity method investment in FOX increased $11.0 million.
For the year ended December 31,
2015, CODI reported net income of $165.8 million, primarily as a result of the gain
on the sale of CamelBak. This compared to net income of
$291.2 million for the year ended
December 31, 2014, which included a
one-time accounting gain of approximately $264.3 million as a result of the deconsolidation
of FOX, and results from FOX until its deconsolidation in
July 2014.
Liquidity and Capital Resources
As of December 31, 2015, CODI had approximately
$85.9 million in cash and cash
equivalents, $320 million outstanding
on its term loan facility and no outstanding borrowings under its
revolving credit facility. The Company has no significant debt
maturities until 2019 and had net borrowing availability of
approximately $396 million at
December 31, 2015 under its revolving
credit facility. In addition, the Company's equity investment in
its former subsidiary FOX is valued at $249.7 million at December
31, 2015.
Fourth Quarter 2015 Distribution
On January 7, 2016, CODI's Board of Directors
declared a fourth quarter distribution of $0.36 per share. The cash distribution was paid
on January 28, 2016 to all holders of
record as of January 21, 2016. Since
its IPO in May of 2006, CODI has paid a cumulative distribution of
$13.1952 per share.
Conference Call
Management will host a conference
call on Tuesday, March 1, 2016 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 47935087. 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 9, 2016. 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 47935087.
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 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 eight 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 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);
- 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);
- The manufacture and marketing of branded, hemp-based food
products (Manitoba Harvest); and
- The manufacture and marketing of portable food warming fuels
and creative ambience solutions for the hospitality and consumer
industries (Sterno Products).
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.
This press release may contain certain forward-looking
statements, including statements with regard to the future
performance of CODI. 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 SEC for the year ended December 31, 2015 and other filings with the SEC.
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,
|
|
|
2015
|
|
|
2014
|
|
(in
thousands)
|
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
85,869
|
|
|
$
|
21,946
|
|
Accounts receivable,
net
|
114,320
|
|
|
118,852
|
|
Inventories
|
68,371
|
|
|
58,308
|
|
Prepaid expenses and
other current assets
|
22,803
|
|
|
23,357
|
|
Current assets of
discontinued operations
|
—
|
|
|
98,336
|
|
Total current
assets
|
291,363
|
|
|
320,799
|
|
Property, plant and
equipment, net
|
118,050
|
|
|
106,981
|
|
Equity method
investment
|
249,747
|
|
|
245,214
|
|
Goodwill and
intangible assets, net
|
751,892
|
|
|
677,725
|
|
Other non-current
assets
|
14,593
|
|
|
16,884
|
|
Non-current assets of
discontinued operations
|
—
|
|
|
179,827
|
|
Total
assets
|
$
|
1,425,645
|
|
|
$
|
1,547,430
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
98,362
|
|
|
$
|
101,229
|
|
Due to related
party
|
5,863
|
|
|
6,068
|
|
Current portion,
long-term debt
|
3,250
|
|
|
3,250
|
|
Other current
liabilities
|
9,004
|
|
|
6,311
|
|
Current liabilities of
discontinued operations
|
—
|
|
|
24,373
|
|
Total current
liabilities
|
116,479
|
|
|
141,231
|
|
Deferred income
taxes
|
103,745
|
|
|
91,616
|
|
Long-term
debt
|
313,242
|
|
|
485,547
|
|
Other non-current
liabilities
|
18,960
|
|
|
14,039
|
|
Non-current
liabilities of discontinued operations
|
—
|
|
|
6,663
|
|
Total
liabilities
|
552,426
|
|
|
739,096
|
|
Stockholders'
equity
|
|
|
|
Total stockholders'
equity attributable to Holdings
|
826,084
|
|
|
767,431
|
|
Noncontrolling
interests of continuing operations
|
47,135
|
|
|
25,711
|
|
Noncontrolling
interests of discontinued operations
|
—
|
|
|
15,192
|
|
Total stockholders'
equity
|
873,219
|
|
|
808,334
|
|
Total liabilities
and stockholders' equity
|
$
|
1,425,645
|
|
|
$
|
1,547,430
|
|
Compass
Diversified Holdings
Condensed
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
(in thousands,
except per share data)
|
December
31,
2015
|
|
|
December
31,
2014
|
|
|
December
31,
2015
|
|
|
December
31,
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
218,086
|
|
|
$
|
194,644
|
|
|
$
|
805,384
|
|
|
$
|
703,929
|
|
Cost of
sales
|
148,979
|
|
|
139,701
|
|
|
551,511
|
|
|
484,749
|
|
Gross
profit
|
69,107
|
|
|
54,943
|
|
|
253,873
|
|
|
219,180
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative expense
|
41,011
|
|
|
36,797
|
|
|
146,957
|
|
|
138,032
|
|
Management
fees
|
6,148
|
|
|
6,963
|
|
|
26,008
|
|
|
22,222
|
|
Amortization
expense
|
7,752
|
|
|
9,620
|
|
|
30,529
|
|
|
24,842
|
|
Impairment
expense
|
—
|
|
|
—
|
|
|
9,165
|
|
|
—
|
|
Operating
income
|
14,196
|
|
|
1,563
|
|
|
41,214
|
|
|
34,084
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense,
net
|
(1,877)
|
|
|
(10,625)
|
|
|
(25,924)
|
|
|
(27,061)
|
|
Gain (loss) on equity
method investment
|
(4,985)
|
|
|
11,029
|
|
|
4,533
|
|
|
11,029
|
|
Gain on
deconsolidation of subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
264,325
|
|
Amortization of debt
issuance costs
|
(561)
|
|
|
(545)
|
|
|
(2,212)
|
|
|
(2,243)
|
|
Loss on debt
extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,143)
|
|
Other expense,
net
|
(1,332)
|
|
|
(417)
|
|
|
(2,315)
|
|
|
(594)
|
|
Income from continuing
operations before income taxes
|
5,441
|
|
|
1,005
|
|
|
15,296
|
|
|
277,397
|
|
Provision (benefit)
for income taxes
|
5,700
|
|
|
(3,393)
|
|
|
14,974
|
|
|
5,092
|
|
Net income (loss) from
continuing operations
|
(259)
|
|
|
4,398
|
|
|
322
|
|
|
272,305
|
|
Income from
discontinued operations, net of tax
|
—
|
|
|
4,535
|
|
|
15,650
|
|
|
18,850
|
|
Gain (loss) on sale
of discontinued operations, net of tax
|
(1,277)
|
|
|
—
|
|
|
149,798
|
|
|
—
|
|
Net income
(loss)
|
(1,536)
|
|
|
8,933
|
|
|
165,770
|
|
|
291,155
|
|
Less: Income from
continuing operations attributable to noncontrolling
interest
|
681
|
|
|
1,489
|
|
|
3,303
|
|
|
11,853
|
|
Less: Income from
discontinued operations attributable to noncontrolling
interest
|
—
|
|
|
85
|
|
|
629
|
|
|
467
|
|
Net income (loss)
attributable to Holdings
|
$
|
(2,217)
|
|
|
$
|
7,359
|
|
|
$
|
161,838
|
|
|
$
|
278,835
|
|
|
|
|
|
|
|
|
|
Basic and fully
diluted income (loss) per share
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.37)
|
|
|
$
|
0.05
|
|
|
$
|
(0.43)
|
|
|
$
|
5.01
|
|
Discontinued
operations
|
(0.02)
|
|
|
0.09
|
|
|
3.04
|
|
|
0.37
|
|
|
$
|
(0.39)
|
|
|
$
|
0.14
|
|
|
$
|
2.61
|
|
|
$
|
5.38
|
|
|
|
|
|
|
|
|
|
Basic and fully
diluted weighted average number of shares outstanding
|
54,300
|
|
|
51,430
|
|
|
54,300
|
|
|
49,089
|
|
|
|
|
|
|
|
|
|
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,
2015
|
|
|
December 31,
2014
|
|
Net cash provided by
operating activities
|
$
|
84,548
|
|
|
$
|
70,695
|
|
Net cash provided by
(used in) investing activities
|
233,880
|
|
|
(424,753)
|
|
Net cash (used in)
provided by financing activities
|
(254,357)
|
|
|
265,487
|
|
Effect of foreign
currency on cash
|
(1,905)
|
|
|
(955)
|
|
Net increase
(decrease) in cash and cash equivalents
|
62,166
|
|
|
(89,526)
|
|
Cash and cash
equivalents — beginning of period
|
23,703
|
|
|
113,229
|
|
Cash and cash
equivalents — end of period
|
$
|
85,869
|
|
|
$
|
23,703
|
|
Compass
Diversified Holdings
Condensed
Consolidated Table of Cash Flows Available for Distribution and
Reinvestment
(unaudited)
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
(in
thousands)
|
December
31,
2015
|
|
|
December
31,
2014
|
|
|
December
31,
2015
|
|
|
December
31,
2014
|
|
Net income
(loss)
|
$
|
(1,536)
|
|
|
$
|
8,933
|
|
|
$
|
165,770
|
|
|
$
|
291,155
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
13,329
|
|
|
19,812
|
|
|
63,072
|
|
|
55,696
|
|
Impairment
expense
|
—
|
|
|
—
|
|
|
9,165
|
|
|
—
|
|
(Gain) loss on sale of
businesses, net
|
1,277
|
|
|
—
|
|
|
(149,798)
|
|
|
—
|
|
Amortization of debt
issuance costs and original issue discount
|
729
|
|
|
713
|
|
|
2,883
|
|
|
3,125
|
|
Unrealized (gain) loss
on derivatives
|
(2,382)
|
|
|
4,913
|
|
|
5,662
|
|
|
7,722
|
|
Loss on debt
extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
2,143
|
|
Excess tax benefit
from subsidiary stock options (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,662)
|
|
Gain (loss) on equity
method investment
|
4,985
|
|
|
(11,029)
|
|
|
(4,533)
|
|
|
(11,029)
|
|
Gain on
deconsolidation of subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
(264,325)
|
|
Noncontrolling
stockholders charges
|
1,110
|
|
|
1,152
|
|
|
3,737
|
|
|
4,744
|
|
Other
|
(290)
|
|
|
1,081
|
|
|
34
|
|
|
1,442
|
|
Deferred
taxes
|
732
|
|
|
(6,657)
|
|
|
(3,131)
|
|
|
(8,601)
|
|
Changes in operating
assets and liabilities
|
20,123
|
|
|
5,617
|
|
|
(8,313)
|
|
|
(9,715)
|
|
Net cash provided
by operating activities
|
38,077
|
|
|
24,535
|
|
|
84,548
|
|
|
70,695
|
|
Plus:
|
|
|
|
|
|
|
|
Unused fee on
revolving credit facility (2)
|
550
|
|
|
279
|
|
|
1,612
|
|
|
1,914
|
|
Excess tax benefit
from subsidiary stock options (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,662
|
|
Successful acquisition
costs
|
700
|
|
|
2,814
|
|
|
1,826
|
|
|
4,844
|
|
Integration services
fee (3)
|
250
|
|
|
1,000
|
|
|
3,500
|
|
|
1,000
|
|
Realized loss from
foreign currency effect (4)
|
1,264
|
|
|
—
|
|
|
2,561
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
—
|
|
|
—
|
|
|
8,313
|
|
|
9,715
|
|
Other
|
409
|
|
|
—
|
|
|
200
|
|
|
51
|
|
Less:
|
|
|
|
|
|
|
|
Maintenance capital
expenditures (5)
|
4,509
|
|
|
4,636
|
|
|
18,194
|
|
|
13,637
|
|
FOX CAD
(6)
|
—
|
|
|
—
|
|
|
—
|
|
|
15,716
|
|
Payment on
swap
|
505
|
|
|
506
|
|
|
2,007
|
|
|
2,008
|
|
Changes in operating
assets and liabilities
|
20,123
|
|
|
5,617
|
|
|
—
|
|
|
—
|
|
Other
|
—
|
|
|
399
|
|
|
—
|
|
|
528
|
|
Estimated cash
flow available for distribution and reinvestment
|
$
|
16,113
|
|
|
$
|
17,470
|
|
|
$
|
82,359
|
|
|
$
|
57,992
|
|
Distribution paid in
April 2015/2014
|
|
|
|
|
$
|
19,548
|
|
|
$
|
17,388
|
|
Distribution paid in
July 2015/ 2014
|
|
|
|
|
19,548
|
|
|
17,388
|
|
Distribution paid in
October 2015/2014
|
|
|
|
|
19,548
|
|
|
17,388
|
|
Distribution paid in
January 2016/2015
|
$
|
19,548
|
|
|
$
|
19,548
|
|
|
19,548
|
|
|
19,548
|
|
|
$
|
19,548
|
|
|
$
|
19,548
|
|
|
$
|
78,192
|
|
|
$
|
71,712
|
|
(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)
|
Reflects the foreign
currency transaction loss resulting from the Canadian dollar
intercompany loans issued to Manitoba Harvest.
|
(5)
|
Excludes growth
capital expenditures of approximately $0.6 million for the three
months ended December 31, 2014, and $1.0 million and $1.6 million
for the year ended December 31, 2015 and 2014.
|
(6)
|
Represents FOX CAD
subsequent to IPO date. For the twelve months 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.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/compass-diversified-holdings-reports-fourth-quarter-and-full-year-2015-financial-results-300227834.html
SOURCE Compass Diversified Holdings