WESTPORT, Conn., March 1, 2017 /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, 2016.
Fourth Quarter 2016 Highlights
- Generated Cash Provided by Operating Activities of $50.8 million for the fourth quarter of 2016 and
$111.4 million for the full year
2016, and Cash Flow Available for Distribution and Reinvestment
("CAD" or "Cash Flow") of $24.6
million for the fourth quarter of 2016 and $76.4 million for the full year 2016;
- Reported net income of $2.0
million for the fourth quarter of 2016 and $56.5 million for the full year 2016;
- Paid a fourth quarter 2016 cash distribution of $0.36 per share in January
2017, bringing cumulative distributions paid to $14.6352 per share since CODI's IPO in May of
2006;
- Sold a total of 3,500,000 shares of Fox Factory Holding Corp.
("FOX") common stock, with total net proceeds of $71.8 million while retaining approximately 14%
ownership of FOX;
- Completed a 5,600,000 share offering in December 2016; and
- Subsequent to year end, appointed Sally
McCoy to the Company's Board of Directors.
"Our niche industrial and branded consumer businesses generated
solid levels of cash flow for the fourth quarter and full year
2016," stated Alan Offenberg, CEO of
Compass Diversified Holdings. "Results at our Sterno Products,
ERGObaby, Manitoba Harvest and 5.11 subsidiaries were especially
strong during the fourth quarter, with each reporting
year-over-year, double-digit revenue and EBITDA growth."
Mr. Offenberg added, "In 2016, we capitalized on market
opportunities with the accretive, platform acquisition of 5.11,
whose industry leadership, broad customer base and product line
make it a welcome addition to the CODI family. We are excited about
the company's strong growth prospects and look forward to working
with 5.11 as it expands its consumer penetration worldwide. During
2016, we also continued to reinvest in our current subsidiaries by
completing two add-on acquisitions for Clean Earth and acquisitions
at Sterno Products and ERGObaby. Additionally, we continued to
strengthen our balance sheet, realizing $182.5 million in proceeds from partially
monetizing our interest in FOX, increasing the gains we have
achieved for shareholders to approximately $650 million. We also completed a 5.6 million
share offering, generating $99.7
million in net proceeds. Moving ahead, CODI is well
positioned to build value and support distributions for our
shareholders and to pursue compelling acquisition
opportunities."
Operating Results
For the quarter ended December 31,
2016, CODI generated Cash Provided by Operating Activities
of $50.8 million, as compared to Cash
Provided by Operating Activities of $38.1
million for the quarter ended December 31, 2015. CODI reported Cash Flow (see
Note Regarding Use of Non-GAAP Financial Measures below) of
$24.6 million for the quarter ended
December 31, 2016, as compared to
$16.1 million for the prior year's
comparable quarter. CODI's weighted average number of shares
outstanding for the quarters ended December
31, 2016 and December 31, 2015
were 55.5 million and 54.3 million, respectively.
Cash Flow for the fourth quarter of 2016 reflects year-over-year
earnings growth in the Company's Advanced Circuits, Sterno
Products, ERGObaby, Manitoba Harvest and 5.11 businesses, offset by
declines at the Company's other businesses.
For the year ended December 31,
2016, CODI generated Cash Provided by Operating Activities
of $111.4 million, as compared to
Cash Provided by Operating Activities of $84.5 million for the year ended December 31, 2015. CODI reported Cash Flow of
$76.4 million for the year ended
December 31, 2016, as compared to
$82.4 million for the year ended
December 31, 2015. CODI's weighted
average number of shares outstanding for the twelve month period
ended December 31, 2016 was
approximately 54.6 million, as compared to approximately 54.3
million for the twelve month period ended December 31, 2015.
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 $650 million since going public in 2006.
Net income for the quarter ended December
31, 2016 was $2.0 million, as
compared to net loss of $1.5 million
for the quarter ended December 31,
2015. During the fourth quarter of 2016 and 2015, CODI's
investment in FOX increased by $15.8
million and decreased by $5.0
million, respectively. In addition, during the fourth
quarter, CODI recorded a $16.0
million impairment of goodwill at its Arnold subsidiary.
For the year ended December 31,
2016, CODI reported net income of $56.5 million, primarily as a result of a
$74.5 million gain on CODI's
investment in FOX. This compared to net income of $165.8 million for the year ended December 31, 2015, primarily as a result of the
gain on the sale of CamelBak.
Liquidity and Capital Resources
As of December 31, 2016, CODI had
approximately $39.8 million in cash
and cash equivalents, $565.7 million
outstanding on its term loan facility and $4.4 million in borrowings under its revolving
credit facility. The Company has no significant debt maturities
until 2019 and had net borrowing availability of $541.2 million at December
31, 2016 under its revolving credit facility. In addition,
the Company's investment in its former subsidiary FOX is valued at
$141.8 million at December 31, 2016.
In December 2016, CODI completed a
public offering of 5.6 million trust shares. CODI raised
approximately $99.7 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 2016 Distribution
On January 5, 2017, CODI's Board
of Directors declared a fourth quarter distribution of $0.36 per share. The cash distribution was paid
on January 26, 2017 to all holders of
record as of January 19, 2017. Since
its IPO in May of 2006, CODI has paid a cumulative distribution of
$14.6352 per share.
Conference Call
Management will host a conference call on Thursday, March 2, 2017 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 60500138. 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, 2017. 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 60500138.
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 eight majority-owned subsidiaries are engaged in the
following lines of business:
- The design and marketing of purpose-built tactical apparel and
gear serving a wide range of global customers (5.11);
- The manufacture of quick-turn, small-run and production rigid
printed circuit boards (Advanced Circuits);
- 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
markets (Sterno Products).
In addition, we own approximately 14% 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, 2016 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,
|
|
2016
|
|
2015
|
(in
thousands)
|
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
39,772
|
|
|
$
|
85,240
|
|
Accounts receivable,
net
|
181,191
|
|
|
105,910
|
|
Inventories
|
212,984
|
|
|
59,905
|
|
Prepaid expenses and
other current assets
|
18,872
|
|
|
21,536
|
|
Current assets of
discontinued operations
|
—
|
|
|
18,772
|
|
Total current
assets
|
452,819
|
|
|
291,363
|
|
Property, plant and
equipment, net
|
142,370
|
|
|
115,948
|
|
Investment
|
141,767
|
|
|
249,747
|
|
Goodwill and
intangible assets, net
|
1,030,848
|
|
|
741,342
|
|
Other non-current
assets
|
9,351
|
|
|
9,819
|
|
Non-current assets of
discontinued operations
|
—
|
|
|
12,823
|
|
Total
assets
|
$
|
1,777,155
|
|
|
$
|
1,421,042
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
152,553
|
|
|
$
|
89,907
|
|
Due to related
parties
|
20,848
|
|
|
5,863
|
|
Current portion,
long-term debt
|
5,685
|
|
|
3,250
|
|
Other current
liabilities
|
23,435
|
|
|
9,004
|
|
Current liabilities
off discontinued operations
|
—
|
|
|
8,455
|
|
Total current
liabilities
|
202,521
|
|
|
116,479
|
|
Deferred income
taxes
|
110,838
|
|
|
103,635
|
|
Long-term
debt
|
551,652
|
|
|
308,639
|
|
Other non-current
liabilities
|
17,600
|
|
|
18,960
|
|
Non-current
liabilities of discontinued operations
|
—
|
|
|
110
|
|
Total
liabilities
|
882,611
|
|
|
547,823
|
|
Stockholders'
equity
|
|
|
|
Total stockholders'
equity attributable to Holdings
|
856,405
|
|
|
826,084
|
|
Noncontrolling
interests
|
38,139
|
|
|
46,219
|
|
Noncontrolling
interests of discontinued operations
|
—
|
|
|
916
|
|
Total stockholders'
equity
|
894,544
|
|
|
873,219
|
|
Total liabilities
and stockholders' equity
|
$
|
1,777,155
|
|
|
$
|
1,421,042
|
|
Compass
Diversified Holdings
Condensed
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
(in thousands,
except per share data)
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
318,561
|
|
|
$
|
199,531
|
|
|
$
|
978,309
|
|
|
$
|
727,978
|
|
Cost of
sales
|
215,195
|
|
|
131,753
|
|
|
651,739
|
|
|
487,242
|
|
Gross
profit
|
103,366
|
|
|
67,778
|
|
|
326,570
|
|
|
240,736
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative expense
|
77,128
|
|
|
38,014
|
|
|
217,830
|
|
|
136,399
|
|
Management
fees
|
8,012
|
|
|
6,061
|
|
|
29,406
|
|
|
25,658
|
|
Amortization
expense
|
11,103
|
|
|
7,306
|
|
|
35,069
|
|
|
28,761
|
|
Loss on disposal/
impairment expense
|
17,990
|
|
|
—
|
|
|
25,204
|
|
|
—
|
|
Operating income
(loss)
|
(10,867)
|
|
|
16,397
|
|
|
19,061
|
|
|
49,918
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense,
net
|
(1,447)
|
|
|
(1,877)
|
|
|
(24,651)
|
|
|
(25,924)
|
|
Gain (loss) on equity
method investment
|
15,810
|
|
|
(4,985)
|
|
|
74,490
|
|
|
4,533
|
|
Amortization of debt
issuance costs
|
(936)
|
|
|
(561)
|
|
|
(2,763)
|
|
|
(2,212)
|
|
Other income
(expense), net
|
(1,067)
|
|
|
(1,340)
|
|
|
(2,919)
|
|
|
(2,323)
|
|
Income from continuing
operations before income taxes
|
1,493
|
|
|
7,634
|
|
|
63,218
|
|
|
23,992
|
|
Provision (benefit)
for income taxes
|
(309)
|
|
|
5,795
|
|
|
9,469
|
|
|
15,001
|
|
Net income from
continuing operations
|
1,802
|
|
|
1,839
|
|
|
53,749
|
|
|
8,991
|
|
Income (loss) from
discontinued operations, net of tax
|
—
|
|
|
(2,098)
|
|
|
473
|
|
|
6,981
|
|
Gain (loss) on sale
of discontinued operations, net of tax
|
174
|
|
|
(1,277)
|
|
|
2,308
|
|
|
149,798
|
|
Net income
(loss)
|
1,976
|
|
|
(1,536)
|
|
|
56,530
|
|
|
165,770
|
|
Less: Income from
continuing operations attributable to noncontrolling
interest
|
212
|
|
|
1,127
|
|
|
1,961
|
|
|
5,133
|
|
Less: Loss from
discontinued operations attributable to noncontrolling
interest
|
—
|
|
|
(446)
|
|
|
(116)
|
|
|
(1,201)
|
|
Net income (loss)
attributable to Holdings
|
$
|
1,764
|
|
|
$
|
(2,217)
|
|
|
$
|
54,685
|
|
|
$
|
161,838
|
|
|
|
|
|
|
|
|
|
Basic and fully
diluted income (loss) per share
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.14)
|
|
|
$
|
(0.34)
|
|
|
$
|
0.46
|
|
|
$
|
(0.30)
|
|
Discontinued
operations
|
—
|
|
|
(0.05)
|
|
|
0.05
|
|
|
2.91
|
|
|
$
|
(0.14)
|
|
|
$
|
(0.39)
|
|
|
$
|
0.51
|
|
|
$
|
2.61
|
|
|
|
|
|
|
|
|
|
Basic and fully
diluted weighted average number of shares outstanding
|
55,457
|
|
|
54,300
|
|
|
54,591
|
|
|
54,300
|
|
|
|
|
|
|
|
|
|
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,
2016
|
|
December 31,
2015
|
Net cash provided by
operating activities
|
$
|
111,372
|
|
|
$
|
84,548
|
|
Net cash (used in)
provided by investing activities
|
(363,021)
|
|
|
233,880
|
|
Net cash provided by
(used in) financing activities
|
208,726
|
|
|
(254,357)
|
|
Effect of foreign
currency on cash
|
(3,174)
|
|
|
(1,905)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(46,097)
|
|
|
62,166
|
|
Cash and cash
equivalents — beginning of period
|
85,869
|
|
|
23,703
|
|
Cash and cash
equivalents — end of period
|
$
|
39,772
|
|
|
$
|
85,869
|
|
Compass
Diversified Holdings
Condensed
Consolidated Table of Cash Flows Available for Distribution and
Reinvestment
(unaudited)
|
|
Three Months
Ended
|
|
Year
Ended
|
(in
thousands)
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
Net income
(loss)
|
$
|
1,976
|
|
|
$
|
(1,536)
|
|
|
$
|
56,530
|
|
|
$
|
165,770
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
33,433
|
|
|
13,329
|
|
|
87,405
|
|
|
63,072
|
|
Loss on disposal/
impairment expense
|
17,990
|
|
|
—
|
|
|
25,204
|
|
|
9,165
|
|
(Gain) loss on sale of
businesses, net
|
(173)
|
|
|
1,277
|
|
|
(2,308)
|
|
|
(149,798)
|
|
Amortization of debt
issuance costs and original issue discount
|
1,202
|
|
|
729
|
|
|
3,565
|
|
|
2,883
|
|
Unrealized (gain) loss
on derivatives
|
(6,783)
|
|
|
(2,382)
|
|
|
1,539
|
|
|
5,662
|
|
(Gain) loss on equity
method investment
|
(15,810)
|
|
|
4,985
|
|
|
(74,490)
|
|
|
(4,533)
|
|
Noncontrolling
stockholders charges
|
1,370
|
|
|
1,110
|
|
|
4,382
|
|
|
3,737
|
|
Excess tax benefit on
stock compensation
|
(797)
|
|
|
—
|
|
|
(1,163)
|
|
|
—
|
|
Other
|
1,485
|
|
|
(290)
|
|
|
1,893
|
|
|
34
|
|
Deferred
taxes
|
(5,390)
|
|
|
732
|
|
|
(9,669)
|
|
|
(3,131)
|
|
Changes in operating
assets and liabilities
|
22,275
|
|
|
20,123
|
|
|
18,484
|
|
|
(8,313)
|
|
Net cash provided
by operating activities
|
50,778
|
|
|
38,077
|
|
|
111,372
|
|
|
84,548
|
|
Plus:
|
|
|
|
|
|
|
|
Unused fee on
revolving credit facility (1)
|
591
|
|
|
550
|
|
|
1,947
|
|
|
1,612
|
|
Successful acquisition
costs
|
—
|
|
|
700
|
|
|
3,888
|
|
|
1,826
|
|
Integration services
fee (2)
|
875
|
|
|
250
|
|
|
1,667
|
|
|
3,500
|
|
Realized loss from
foreign currency effect (3)
|
1,069
|
|
|
1,264
|
|
|
—
|
|
|
2,561
|
|
Excess tax benefit on
stock compensation
|
797
|
|
|
—
|
|
|
1,163
|
|
|
—
|
|
Earnout provision
adjustment
|
394
|
|
|
—
|
|
|
394
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
8,313
|
|
Other
|
177
|
|
|
409
|
|
|
421
|
|
|
200
|
|
Less:
|
|
|
|
|
|
|
|
Maintenance capital
expenditures (4)
|
6,619
|
|
|
4,509
|
|
|
20,363
|
|
|
18,194
|
|
Payment on
swap
|
1,189
|
|
|
505
|
|
|
4,303
|
|
|
2,007
|
|
Changes in operating
assets and liabilities
|
22,275
|
|
|
20,123
|
|
|
18,484
|
|
|
—
|
|
Realized gain from
foreign currency effect (3)
|
—
|
|
|
—
|
|
|
1,327
|
|
|
—
|
|
Estimated cash
flow available for distribution and reinvestment
|
$
|
24,598
|
|
|
$
|
16,113
|
|
|
$
|
76,375
|
|
|
$
|
82,359
|
|
|
|
|
|
|
|
|
|
Distribution paid in
April 2016/2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,548
|
|
|
$
|
19,548
|
|
Distribution paid in
July 2016/ 2015
|
—
|
|
|
—
|
|
|
19,548
|
|
|
19,548
|
|
Distribution paid in
October 2016/ 2015
|
—
|
|
|
—
|
|
|
19,548
|
|
|
19,548
|
|
Distribution paid in
January 2017/ 2016
|
21,564
|
|
|
19,548
|
|
|
21,564
|
|
|
19,548
|
|
|
$
|
21,564
|
|
|
$
|
19,548
|
|
|
$
|
80,208
|
|
|
$
|
78,192
|
|
(1)
|
Represents the
commitment fee on the unused portion of the Revolving Credit
Facility.
|
(2)
|
Represents fees paid
by newly acquired companies to the Manager for integration services
performed during the first year of ownership, payable
quarterly.
|
(3)
|
Reflects the foreign
currency transaction gain/ loss resulting from the Canadian dollar
intercompany loans issued to Manitoba Harvest.
|
(4)
|
Excludes growth
capital expenditures of approximately $2.1 million for the three
months ended December 31, 2016, and $3.4 million and $1.0 million
for the years ended December 31, 2016 and 2015,
respectively.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/compass-diversified-holdings-reports-fourth-quarter-and-full-year-2016-financial-results-300416201.html
SOURCE Compass Diversified Holdings