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