Compass Diversified Holdings Reports First Quarter 2013 Financial Results Generates Cash Flow Available for Distribution and Reinvestment of $20.8 Million PR Newswire WESTPORT, Conn., May 7, 2013 WESTPORT, Conn., May 7, 2013 /PRNewswire/ --Compass Diversified Holdings (NYSE: CODI) ("CODI" or the "Company"), an owner of leading middle market businesses, announced today its consolidated operating results for the three months ended March 31, 2013. First Quarter 2013 Highlights oGenerated Cash Flow Available for Distribution and Reinvestment ("CAD" or "Cash Flow") of $20.8 million for the first quarter of 2013; oReported net income of $3.6 million for the first quarter of 2013; and oPaid a first quarter 2013 cash distribution of $0.36 per share in April 2013, bringing cumulative distributions paid to $9.2352 per share since CODI's IPO in May of 2006. "Our strong results for the first quarter of 2013 exceeded management's expectations, as Cash Flow increased 25.2% compared to the year-earlier period," stated Alan Offenberg, CEO of Compass Group Diversified Holdings LLC. "We continue to achieve considerable revenue and earnings growth on a combined basis across our branded products businesses consisting of CamelBak, ERGObaby, Fox and Liberty Safe. We also maintained relative stability in the performance of our four niche industrial businesses comprised of Advanced Circuits, American Furniture, Tridien Medical and Arnold Magnetic. Based on the continued application of our business model, we paid a first quarter distribution of $0.36 per share. As we continue to provide attractive cash distributions, we remain focused on leveraging our balance sheet strength to drive future performance. Our substantial liquidity bodes well for CODI to be able to continue to reinvest in our current family of leading middle market businesses while pursuing accretive acquisition opportunities that create significant value for our owners." Operating Results CODI reported Cash Flow (see note regarding use of Non-GAAP Financial Measures below) of $20.8 million for the quarter ended March 31, 2013, as compared to $16.6 million for the prior year comparable quarter. CODI's weighted average number of shares outstanding for both the quarter ended March 31, 2013 and March 31, 2012 was approximately 48.3 million. The improvement in Cash Flow for the first quarter 2013 as compared to the corresponding year-earlier period was largely attributable to the year-over-year growth in the Company's CamelBak, ERGObaby, Fox and Liberty Safe businesses. In addition, Cash Flow for the first quarter 2013 was positively impacted by the full inclusion of operating results from the Company's Arnold Magnetic subsidiary, which was acquired on March 5, 2012. Partially offsetting these factors, Cash Flow for the first quarter 2013 excluded results from the Company's HALO subsidiary, which was sold on May 1, 2012. 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 sales of businesses, which have totaled approximately $198 million since 2007. Net income for the quarter ended March 31, 2013 was $3.6 million, as compared to net income of $0.9 million for the quarter ended March 31, 2012. The year-over-year increase in the Company's net income reflects double-digit growth in each of net sales, gross profit and operating income. During the quarter ended March 31, 2013, CODI recorded a non-cash supplemental put accrual expense of $6.4 million based on the periodic review of current cash flow generation levels of its businesses as well as anticipated market multiples for those businesses in the event they were to be sold in the current environment. During the quarter ended March 31, 2012, the Company reversed approximately $1.5 million of its non-cash supplemental put accrual and expensed approximately $4.3 million of transaction costs related to its acquisition of Arnold Magnetic Technologies. Liquidity and Capital Resources As of March 31, 2013, CODI had $16.5 million in cash and cash equivalents, $251.9 million outstanding on its term loan facility and $27.0 million outstanding under its $290 million revolving credit facility. The Company has no significant debt maturities until 2017 and had borrowing availability of approximately $261 million at March 31, 2013 under its revolving credit facility. On April 3, 2013, CODI exercised an option under its credit agreement, dated as of October 27, 2011, to expand its term loan facility by $30 million, which increased the Company's aggregate outstanding term loan borrowings under the facility to $281.9 million. The net proceeds of the incremental term loan were used to repay outstanding borrowings under the Company's revolving credit facility. CODI also amended the pricing terms of both its term loan facility and revolving credit facility. Under the terms of the amendments, the interest rate for the term loan facility was reduced by 1.25% and the interest rate for the revolving credit facility was reduced by 0.50%. In addition, the unused fee for the revolving credit facility was reduced by 0.25% when leverage is lower than a defined ratio and the maturity date for the revolving credit facility was extended to April 2017. All other terms of the credit agreement remain unchanged. First Quarter 2013 Distribution On April 9, 2013, CODI's Board of Directors declared a first quarter distribution of $0.36 per share. The cash distribution was paid on April 30, 2013 to all holders of record as of April 23, 2013. Since its IPO in May of 2006, CODI has paid a cumulative distribution of $9.2352 per share. Conference Call Management will host a conference call on Wednesday, May 8, 2013 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 (888) 466-4462 and the dial-in number for international callers is (719) 457-2727. The access code for all callers is 5197923. 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 15, 2013. To access the replay, please dial (888) 203-1112 in the U.S. and (719) 457-0820 outside the U.S., and then enter the access code 5197923. 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 eight current businesses is a leader in their niche market. CODI maintains controlling ownership interests in each of its businesses 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 businesses, contributing to their financial and operating flexibility. CODI utilizes the cash flows generated by its businesses to invest in the long-term growth of the Company and to make cash distributions to its owners. Our businesses are engaged in the following lines of business: oThe manufacture of quick-turn, prototype and production rigid printed circuit boards (Advanced Circuits, www.advancedcircuits.com); oThe design and manufacture of promotionally priced upholstered furniture (American Furniture Manufacturing, www.americanfurn.net); oThe design and manufacture of medical therapeutic support surfaces and other wound treatment devices (Anodyne Medical Device, also doing business and known as Tridien Medical, www.tridien.com); oThe manufacture of engineered magnetic solutions for a wide range of specialty applications and end-markets (Arnold Magnetic Technologies, www.arnoldmagnetics.com); oThe design and manufacture of personal hydration products for outdoor, recreation and military use (CamelBak Products, www.camelbak.com); oThe design and marketing of wearable baby carriers, strollers and related products (ERGObaby, www.ergobaby.com); oThe design, manufacture and marketing of premium suspension products for mountain bikes and powered off-road vehicles (FOX, www.ridefox.com); oThe design and manufacture of premium home and gun safes (Liberty Safe, www.libertysafe.com). 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, 2012 and other filings with the Securities and Exchange Commission. 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 (in thousands) March 31, December 31, 2013 2012 (unaudited) Assets Current assets: Cash and cash equivalents $ 16,500 $ 18,241 Accounts receivable, less allowance of 119,354 100,647 $3,130 and $3,049 Inventories 129,247 127,283 Prepaid expenses and other current 20,488 21,488 assets Total current assets 285,589 267,659 Property, plant and equipment, net 67,504 68,488 Goodwill 257,527 257,527 Intangible assets, net 333,099 340,666 Deferred debt issuance costs, net 7,744 8,238 Other non-current assets 14,035 12,623 Total assets $ 965,498 $ 955,201 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued expenses $ 118,612 $ 100,346 Due to related party 3,825 3,765 Current portion of long-term debt 2,550 2,550 Current portion of supplemental put 5,603 5,185 obligation Other liabilities 2,055 1,953 Total current liabilities 132,645 113,799 Long-term debt 269,731 267,008 Supplemental put obligation 52,391 46,413 Deferred income taxes 63,679 63,982 Other non-current liabilities 7,109 7,787 Total liabilities 525,555 498,989 Stockholders' equity Trust shares, no par value, 500,000 650,043 650,043 authorized; 48,300 shares issued and outstanding at 3/31/13 and 12/31/12 Accumulated other comprehensive loss (850) (132) Accumulated deficit (251,077) (235,283) Total stockholders' equity attributable 398,116 414,628 to Holdings Noncontrolling interests 41,827 41,584 Total stockholders' equity 439,943 456,212 Total liabilities and stockholders' $ 965,498 $ 955,201 equity Compass Diversified Holdings Condensed Consolidated Statements of Operations (unaudited) Three Months Three Months Ended Ended (in thousands, except per share data) March 31, 2013 March 31, 2012 Net sales $ $ 241,567 195,327 Cost of sales 165,194 133,640 Gross profit 76,373 61,687 Operating expenses: Selling, general and 41,209 40,433 administrative expense Supplemental put expense 6,396 (1,540) (reversal) Management fees 4,316 4,532 Amortization expense 7,630 7,176 Operating income 16,822 11,086 Other income (expense): Interest income 2 33 Interest expense (5,341) (6,029) Amortization of debt issuance (485) (356) costs Other, net 327 (268) Income from continuing 11,325 4,466 operations before income taxes Provision for income taxes 7,699 4,099 Income from continuing 3,626 367 operations Income from discontinued operations, - 522 net of income tax benefit Net income 3,626 889 Net income from continuing operations attributable to noncontrolling 2,032 1,676 interest Net loss from discontinued operations attributable to noncontrolling - (1) interest Net income (loss) $ $ attributable to Holdings 1,594 (786) Basic and fully diluted income (loss) $ $ per share 0.03 (0.02) Weighted average number of shares 48,300 48,300 outstanding – basic and fully diluted Cash distributions declared per share $ $ 0.36 0.36 Compass Diversified Holdings Condensed Consolidated Statements of Cash Flows (unaudited) Three Months Three Months Ended Ended (in thousands) March 31, 2013 March 31, 2012 Cash flows from operating activities: Net income $ $ 3,626 889 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization 11,611 13,090 expense Amortization of debt issuance 845 731 costs and original issue discount Supplemental put expense 6,396 (1,540) (reversal) Noncontrolling stockholder notes 1,301 791 and other Deferred taxes (857) (49) Unrealized (gain) loss on interest rate and foreign currency (385) 345 derivatives Other (71) 830 Changes in operating assets and liabilities, net of acquisition: Increase in accounts receivable (18,130) (1,874) Increase in inventories (2,010) (5,107) Increase in prepaid expenses and (187) (629) other current assets Increase in accounts payable and 17,987 1,392 accrued expenses Payment of profit allocation - (13,675) Net cash provided by (used 20,126 (4,806) in) operating activities Cash flows from investing activities: Acquisition of businesses, net - (123,575) of cash acquired Purchases of property and (3,328) (3,405) equipment Proceeds released from escrow 93 5,045 related to Staffmark and HALO sales Purchase of Fox common stock - (1,466) Other investing activities - 268 Net cash used in investing (3,235) (123,133) activities Cash flows from financing activities: Net borrowing of debt 2,363 79,438 (Payments to) proceeds from (3,090) 4,628 noncontrolling equity issuances Redemption of CamelBak - (48,022) preferred stock Debt issuance costs - (638) Other (22) (106) Distributions paid (17,388) (17,388) Net cash provided by (used (18,137) 17,912 in) financing activities Foreign currency adjustment (495) 20 Net decrease in cash and cash (1,741) (110,007) equivalents Cash and cash equivalents — 18,241 132,370 beginning of period Cash and cash equivalents — end of $ $ period 16,500 22,363 Compass Diversified Holdings Condensed Consolidated Table of Cash Flows Available for Distribution and Reinvestment ("CAD") (unaudited) Three Months Three Months Ended Ended (in thousands) March 31, 2013 March 31, 2012 Net income $ $ 3,626 889 Adjustment to reconcile net income to cash provided by (used in) operating activities Depreciation and amortization 11,611 13,090 Amortization of debt issuance 845 731 costs and original issue discount Supplemental put expense 6,396 (1,540) (reversal) Noncontrolling stockholder 1,301 791 notes and other Deferred taxes (857) (49) Unrealized (gain) loss on interest rate and foreign currency (385) 345 derivatives Other (71) 830 Changes in operating assets (2,340) (19,893) and liabilities Net cash provided by (used in) 20,126 (4,806) operating activities Plus: Unused fee on revolving credit 645 660 facilities (1) Successful acquisition expense - 4,325 (2) Changes in operating assets 2,340 19,893 and liabilities Other 71 - Less: Maintenance capital 2,346 2,594 expenditures (3) Other - 830 Estimated cash flow available for $ $ distribution and reinvestment 20,836 16,648 Distribution paid in April 2013/2012 $ $ 17,388 17,388 (1) Represents the commitment fee on the unused portion of the Revolving Credit Facilities. (2) Represents transaction costs for successful acquisitions that were expensed during the period. (3) Represents maintenance capital expenditures that were funded from operating cash flow. Excludes $1.0 million and $0.8million of expenditures considered growth capital expenditures for the three months ended March 31, 2013 and 2012,respectively. SOURCE Compass Diversified Holdings Website: http://www.compassdiversifiedholdings.com Contact: Compass Diversified Holdings: James J. Bottiglieri, Chief Financial Officer, 203.221.1703, firstname.lastname@example.org; Investor Relations and Media Contacts: The IGB Group: Leon Berman, 212.477.8438, email@example.com, or Michael Cimini, 212.477.8261, firstname.lastname@example.org
Compass Diversified Holdings Reports First Quarter 2013 Financial Results
Press spacebar to pause and continue. Press esc to stop.