WESTPORT, Conn., March 01, 2023 (GLOBE NEWSWIRE) -- Compass Diversified (NYSE: CODI) (“CODI” 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, 2022.
“The quality and resilience of CODI’s subsidiary businesses were once again on display during our fourth quarter as we achieved solid financial performance,” said Elias Sabo, CEO of Compass Diversified. “End market demand for the majority of our core consumer brands remained strong, and we believe our high-quality, premium brands can take market share even in a difficult macroeconomic backdrop.”
Mr. Sabo continued, “As discussed at our Investor Day in January, while there are near-term market uncertainties brought on by rapidly changing monetary policy and inventory destocking at retail, we believe they are short-term in nature. We believe our group of market share-taking businesses can outperform the general market over the long-term, driving strong financial results and increasing shareholder value.”
Fourth Quarter and Full Year 2022 Financial Summary vs. Same Year-Ago Period (where applicable)
- Net sales up 6% to $594.9 million, and up 4% on a pro forma basis. For the full year 2022, net sales up 17% to $2.3 billion, and up 12% on a pro forma basis.
- Branded consumer net sales up 11% to $371.0 million, and up 7% on a pro forma basis. For the full year 2022, branded consumer net sales up 23% to $1.4 billion, and up 14% on a pro forma basis.
- Niche industrial net sales down 1% to $224.0 million. For the full year 2022, niche industrial net sales up 9% to $856.8 million.
- Net loss of $11.8 million vs. net income of $25.9 million due to a $20.6 million impairment expense associated with the Company’s Ergobaby subsidiary. For the full year 2022, net income was $51.4 million vs. $126.8 million in the year-ago period, primarily due to the $72.8 million gain on the sale of Liberty Safe in August 2021.
- Loss from continuing operations of $14.3 million vs. income from continuing operations of $25.9 million. For the full year 2022, income from continuing operations of $42.0 million vs. $46.4 million.
- Adjusted Earnings, a non-GAAP financial measure, was $28.7 million vs. $37.1 million. For the full year 2022, Adjusted Earnings was up 17% to $158.6 million.
- Adjusted EBITDA, a non-GAAP financial measure, was up 5% to $87.3 million. For the full year 2022, Adjusted EBITDA was up 20% to $369.8 million.
- Paid a fourth quarter 2022 cash distribution of $0.25 per share on CODI's common shares in January 2023.
Recent Business Highlights
- On November 3, 2022, CODI’s Manager appointed Kurt Roth as Partner and Head of Healthcare for Compass Group Management. In this role, Roth will work with the organization’s senior professionals to launch CODI’s new healthcare vertical.
- On January 19, 2023, CODI hosted an Investor Day in New York City, showcasing its consumer businesses as well as the Company’s newest acquisition, PrimaLoft. A replay of the PrimaLoft and Compass Diversified presentations can be viewed here.
- On January 19, 2023, CODI announced a $50 million share repurchase program, the first in the Company’s history.
- On February 15, 2023, CODI announced the closing of the sale of Advanced Circuits for an enterprise value of $220 million. CODI expects to realize a pre-tax gain on the sale of Advanced Circuits of between $100 million to $110 million.
Fourth Quarter and Full Year 2022 Financial Results
Net sales in the fourth quarter of 2022 were $594.9 million, up 6% compared to $559.9 million in the fourth quarter of 2021. For the full year 2022, net sales were $2.3 billion, up 17% compared to $1.9 billion a year ago. The increase was due to strong performance in the Company’s branded consumer subsidiaries. On a pro forma basis, assuming CODI had acquired Lugano and PrimaLoft on January 1, 2021, net sales were up 4% in the fourth quarter of 2022 and up 12% in 2022.
Branded consumer net sales, pro forma for the Lugano and PrimaLoft acquisitions, increased 7% in the fourth quarter of 2022 to $371.0 million compared to the fourth quarter of 2021 and increased to $1.5 billion in 2022, an increase of 14% as compared to 2021. Niche industrial net sales decreased 1% in the fourth quarter of 2022 to $224.0 million compared to the fourth quarter of 2021 and increased to $856.8 million in 2022 which is an increase of 9% as compared to 2021.
Net loss in the fourth quarter of 2022 was $11.8 million compared to net income of $25.9 million in the fourth quarter of 2021. Net loss from continuing operations for the fourth quarter of 2022 was $14.3 million compared to $25.9 million in net income from continuing operations in the fourth quarter of 2021. For the full year 2022, net income was $51.4 million compared to $126.8 million a year ago, and income from continuing operations was $42.0 million compared to $46.4 million a year ago. The decrease in both periods were primarily attributable to higher SG&A and interest expenses, as well as a $20.6 million impairment expense associated with the Company’s Ergobaby subsidiary. Additionally, the Company’s net income in 2021 included a $72.8 million gain from the sale of Liberty Safe in August 2021. Operating income for the fourth quarter of 2022 was $19.6 million compared to $39.6 million in the fourth quarter of 2021 due to the impairment expense associated with Ergobaby. For the full year 2022, operating income increased 7% to $175.6 million compared to $164.7 million a year ago.
Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the fourth quarter of 2022 was $28.7 million compared to $37.1 million a year ago. The decrease was a result of financing costs for the acquisition of PrimaLoft in July 2022 ahead of its seasonally slow third and fourth quarter earnings periods. For the full year 2022, Adjusted Earnings increased 17% to $158.6 million compared to $135.7 million a year ago. CODI's weighted average number of shares outstanding in the fourth quarter of 2022 was 72.2 million compared to 66.6 million in the prior year fourth quarter. For the full year 2022, CODI’s weighted average number of shares outstanding was 70.7 million compared to 65.4 million in 2021.
Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below) in the fourth quarter of 2022 was $87.3 million, up 5% compared to $83.3 million in the fourth quarter of 2021. For the full year 2022, Adjusted EBITDA was $369.8 million, up 20% compared to $308.2 million a year ago. The increase was primarily due to the strong performance at CODI’s branded consumer subsidiaries and the benefit of the PrimaLoft and Lugano acquisitions. The Company no longer adds back management fees in its calculation of Adjusted EBITDA. Management fees incurred during the fourth quarter and full year were $17.3 million and $63.6 million, respectively.
Liquidity and Capital Resources
As of December 31, 2022, CODI had approximately $61.3 million in cash and cash equivalents, $155.0 million outstanding on its revolver, $395.0 million outstanding in term loans, $1.0 billion outstanding in 5.250% Senior Notes due 2029 and $300.0 million outstanding in 5.000% Senior Notes due 2032.
As of December 31, 2022, the Company had no significant debt maturities until 2027 and had net borrowing availability of approximately $442.8 million under its revolving credit facility.
Fourth Quarter 2022 Distributions
On January 4, 2023, CODI’s Board of Directors (the “Board”) declared a fourth quarter distribution of $0.25 per share on the Company's common shares. The cash distribution was paid on January 26, 2023, to all holders of record of common shares as of January 19, 2023.
The Board also declared a quarterly cash distribution of $0.453125 per share on the Company’s 7.250% Series A Preferred Shares (the “Series A Preferred Shares”). The distribution on the Series A Preferred Shares covers the period from, and including, October 30, 2022, up to, but excluding, January 30, 2023. The distribution for such period was payable on January 30, 2023 to all holders of record of Series A Preferred Shares as of January 15, 2023.
The Board also declared a quarterly cash distribution of $0.4921875 per share on the Company’s 7.875% Series B Preferred Shares (the “Series B Preferred Shares”). The distribution on the Series B Preferred Shares covers the period from, and including, October 30, 2022, up to, but excluding, January 30, 2023. The distribution for such period was payable on January 30, 2023 to all holders of record of Series B Preferred Shares as of January 15, 2023.
The Board also declared a quarterly cash distribution of $0.4921875 per share on the Company’s 7.875% Series C Preferred Shares (the “Series C Preferred Shares”). The distribution on the Series C Preferred Shares covers the period from, and including, October 30, 2022, up to, but excluding, January 30, 2023. The distribution for such period was payable on January 30, 2023 to all holders of record of Series C Preferred Shares as of January 15, 2023.
2023 Outlook
CODI expects its current subsidiaries to produce consolidated subsidiary Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the full year 2023 of between $420 million and $460 million. This estimate is based on the summation of the Company’s expectations for its current subsidiaries in 2023, excluding ACI, and is absent additional acquisitions or divestitures, and excludes corporate expenses such as interest expense, management fees paid by CODI and corporate overhead. In addition, the Company expects to earn between $105 million and $135 million in Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the full year 2023.
In reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, CODI has not reconciled 2023 Adjusted EBITDA or 2023 Adjusted Earnings to their comparable GAAP measure because it does not provide guidance on Net Income (Loss) from Continuing Operations or Net Income (Loss) or the applicable reconciling items as a result of the uncertainty regarding, and the potential variability of, these items. For the same reasons, CODI is unable to address the probable significance of the unavailable information, which could be material to future results.
Conference Call
Management will host a conference call on Wednesday, March 1, 2023, at 5:00 p.m. ET to discuss the latest corporate developments and financial results. The dial-in number for callers in the U.S. is (888) 396-8049 and the dial-in number for international callers is (416) 764-8646. The Conference ID is 74552633. The conference call will also be available via a live listen-only webcast and can be accessed through the Investor Relations section of CODI's website. An online replay of the webcast will be available on the same website following the call. Please allow extra time prior to the call to visit the site and download any necessary software that may be needed to listen to the Internet broadcast. A replay of the call will be available through Wednesday, March 8, 2023. To access the replay, please dial (877) 674-7070 in the U.S. and (416) 764-8692 outside the U.S.
Note Regarding Use of Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted Earnings are non-GAAP measures used by the Company to assess its performance. We have reconciled Adjusted EBITDA to Income (Loss) from Continuing Operations and Adjusted Earnings to Net Income (Loss) on the attached schedules. We consider Income (Loss) from Continuing Operations to be the most directly comparable GAAP financial measure to Adjusted EBITDA and Net Income (Loss) to be the most directly comparable GAAP financial measure to Adjusted Earnings. We believe that Adjusted EBITDA and Adjusted Earnings provides useful information to investors and reflect important financial measures as each excludes the effects of items which reflect the impact of long-term investment decisions, rather than the performance of near-term operations. When compared to Net Income (Loss) and Income (Loss) from Continuing Operations, Adjusted Earnings and Adjusted EBITDA, respectively, are each limited in that they do not reflect the periodic costs of certain capital assets used in generating revenues of our businesses or the non-cash charges associated with impairments, as well as certain cash charges. The presentation of Adjusted EBITDA allows investors to view the performance of our businesses in a manner similar to the methods used by us and the management of our businesses, provides additional insight into our operating results and provides a measure for evaluating targeted businesses for acquisition. The presentation of Adjusted Earnings provides insight into our operating results and provides a measure for evaluating earnings from continuing operations available to common shareholders. We believe Adjusted EBITDA and Adjusted Earnings are also useful in measuring our ability to service debt and other payment obligations.
Pro forma net sales is defined as net sales including the historical net sales relating to the pre-acquisition periods of Lugano and PrimaLoft, assuming that the Company acquired Lugano and PrimaLoft on January 1, 2021. We have reconciled pro forma net sales to net sales, the most directly comparable GAAP financial measure, on the attached schedules. We believe that pro forma net sales is useful information for investors as it provides a better understanding of sales performance, and relative changes thereto, on a comparable basis. Pro forma net sales is not necessarily indicative of what the actual results would have been if the acquisition had in fact occurred on the date or for the periods indicated nor does it purport to project net sales for any future periods or as of any date.
In reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, we have not reconciled 2023 Adjusted EBITDA or 2023 Adjusted Earnings to their comparable GAAP measures because we do not provide guidance on Net Income (Loss) from Continuing Operations or Net Income (Loss) or the applicable reconciling items as a result of the uncertainty regarding, and the potential variability of, these items. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.
Adjusted EBITDA, Adjusted Earnings and pro forma net sales are not meant to be a substitute for GAAP measures and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies.
About Compass Diversified
Since its founding in 1998, and IPO in 2006, CODI has consistently executed on its strategy of owning and managing a diverse set of highly defensible, middle-market businesses across the niche industrial, branded consumer and healthcare sectors. The Company leverages its permanent capital base, long-term disciplined approach, and actionable expertise to maintain controlling ownership interests in each of its subsidiaries, maximizing its ability to impact long-term cash flow generation and value creation. 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 has consistently generated strong returns through its culture of transparency, alignment and accountability. For more information, please visit compassdiversified.com.
Forward Looking Statements
Certain statements in this press release may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements as to our future performance or liquidity, such as expectations regarding our results of operations and financial condition, our 2023 Adjusted EBITDA, our 2023 Adjusted Earnings, our pending acquisitions and divestitures, and other statements with regard to the future performance of CODI. We may use words such as “plans,” “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “seek,” “look,” and similar expressions to identify forward-looking statements. The forward-looking statements contained in this press release involve risks and uncertainties. Actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and elsewhere in CODI’s annual report on Form 10-K and its quarterly reports on Form 10-Q. Other factors that could cause actual results to differ materially include: changes in the economy, financial markets and political environment, including changes in inflation and interest rates; risks associated with possible disruption in CODI’s operations or the economy generally due to terrorism, natural disasters, social, civil and political unrest or the COVID-19 pandemic; future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); general considerations associated with the COVID-19 pandemic and its impact on the markets in which we operate; disruption in the global supply chain, labor shortages and high labor costs; our business prospects and the prospects of our subsidiaries; the impact of, and ability to successfully complete and integrate, acquisitions that we may make; the ability to successfully complete divestitures when we’ve executed divestitures agreements; the dependence of our future success on the general economy and its impact on the industries in which we operate; the ability of our subsidiaries to achieve their objectives; the adequacy of our cash resources and working capital; the timing of cash flows, if any, from the operations of our subsidiaries; and other considerations that may be disclosed from time to time in CODI’s publicly disseminated documents and filings. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. Although, except as required by law, CODI undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that CODI may make directly to you or through reports that it in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
| Investor Relations: irinquiry@compassdiversified.com Cody Slach Gateway Group 949.574.3860 | Media Contact: The IGB Group Leon Berman 212.477.8438 lberman@igbir.com |
| CODI@gatewayir.com |
Compass Diversified Holdings
Condensed Consolidated Balance Sheets
| (in thousands) | December 31, 2022 | December 31, 2021 | |||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | $ | 61,271 | $ | 160,733 | |
| Accounts receivable, net | 341,440 | 277,710 | |||
| Inventories, net | 732,428 | 565,743 | |||
| Prepaid expenses and other current assets | 75,046 | 57,006 | |||
| Total current assets | 1,210,185 | 1,061,192 | |||
| Property, plant and equipment, net | 205,474 | 186,477 | |||
| Goodwill | 1,133,404 | 882,083 | |||
| Intangible assets, net | 1,127,936 | 872,690 | |||
| Other non-current assets | 172,632 | 141,819 | |||
| Total assets | $ | 3,849,631 | $ | 3,144,261 | |
| Liabilities and stockholders’ equity | |||||
| Current liabilities | |||||
| Accounts payable | $ | 94,214 | $ | 124,203 | |
| Accrued expenses | 191,605 | 178,518 | |||
| Deferred revenue | 10,204 | 12,802 | |||
| Due to related parties | 15,745 | 11,830 | |||
| Current portion, long-term debt | 10,000 | — | |||
| Other current liabilities | 38,063 | 34,269 | |||
| Total current liabilities | 359,831 | 361,622 | |||
| Deferred income taxes | 156,642 | 97,763 | |||
| Long-term debt | 1,824,468 | 1,284,826 | |||
| Other non-current liabilities | 146,728 | 115,520 | |||
| Total liabilities | 2,487,669 | 1,859,731 | |||
| Stockholders' equity | |||||
| Total stockholders' equity attributable to Holdings | 1,136,920 | 1,111,816 | |||
| Noncontrolling interest | 225,042 | 172,714 | |||
| Total stockholders' equity | 1,361,962 | 1,284,530 | |||
| Total liabilities and stockholders’ equity | $ | 3,849,631 | $ | 3,144,261 | |
Compass Diversified Holdings
Consolidated Statements of Operations
| Three months ended December 31, | Year ended December 31, | ||||||||||||||
| (in thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | |||||||||||
| Net revenues | $ | 594,921 | $ | 559,889 | $ | 2,264,044 | $ | 1,932,155 | |||||||
| Cost of revenues | 360,090 | 346,842 | 1,356,300 | 1,165,149 | |||||||||||
| Gross profit | 234,831 | 213,047 | 907,744 | 767,006 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general and administrative expense | 150,209 | 136,666 | 553,637 | 474,481 | |||||||||||
| Management fees | 17,300 | 12,939 | 63,604 | 47,443 | |||||||||||
| Amortization expense | 27,192 | 23,845 | 94,383 | 80,347 | |||||||||||
| Impairment expense | 20,552 | — | 20,552 | — | |||||||||||
| Operating income | 19,578 | 39,597 | 175,568 | 164,735 | |||||||||||
| Other income (expense): | |||||||||||||||
| Interest expense, net | (25,769 | ) | (16,232 | ) | (83,506 | ) | (58,839 | ) | |||||||
| Amortization of debt issuance costs | (1,005 | ) | (812 | ) | (3,740 | ) | (2,979 | ) | |||||||
| Loss on debt extinguishment | — | — | (534 | ) | (33,305 | ) | |||||||||
| Other income (expense), net | (1,320 | ) | 424 | (714 | ) | (1,482 | ) | ||||||||
| Net income (loss) before income taxes | (8,516 | ) | 22,977 | 87,074 | 68,130 | ||||||||||
| Provision (benefit) for income taxes | 5,828 | (2,906 | ) | 45,029 | 21,756 | ||||||||||
| Income (loss) from continuing operations | (14,344 | ) | 25,883 | 42,045 | 46,374 | ||||||||||
| Income from discontinued operations, net of income tax | — | — | — | 7,665 | |||||||||||
| Gain on sale of discontinued operations | 2,500 | 25 | 9,393 | 72,770 | |||||||||||
| Net income (loss) | (11,844 | ) | 25,908 | 51,438 | 126,809 | ||||||||||
| Less: Net income attributable to noncontrolling interest | 124 | 3,820 | 15,051 | 11,735 | |||||||||||
| Less: Net income from discontinued operations attributable to noncontrolling interest | — | — | — | 522 | |||||||||||
| Net income (loss) attributable to Holdings | $ | (11,968 | ) | $ | 22,088 | $ | 36,387 | $ | 114,552 | ||||||
| Basic income (loss) per common share attributable to Holdings | |||||||||||||||
| Continuing operations | $ | (0.37 | ) | $ | (0.08 | ) | $ | (0.23 | ) | $ | (0.49 | ) | |||
| Discontinued operations | 0.03 | — | 0.13 | 1.22 | |||||||||||
| $ | (0.34 | ) | $ | (0.08 | ) | $ | (0.10 | ) | $ | 0.73 | |||||
| Basic weighted average number of common shares outstanding | 72,203 | 66,623 | 70,715 | 65,362 | |||||||||||
| Cash distributions declared per Trust common share | $ | 0.25 | $ | 0.25 | $ | 1.00 | $ | 2.21 | |||||||
Compass Diversified Holdings
Net Income to Non-GAAP Adjusted Earnings and Non-GAAP Adjusted EBITDA - 2022
(Unaudited)
| Three months ended | Year ended | ||||||||||||||||||
| (in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | December 31, 2022 | ||||||||||||||
| Net income (loss) | $ | 29,740 | $ | 30,957 | $ | 2,585 | $ | (11,844 | ) | $ | 51,438 | ||||||||
| Gain (loss) on sale of discontinued operations, net of tax | 5,993 | (579 | ) | 1,479 | 2,500 | 9,393 | |||||||||||||
| Net income (loss) from continuing operations | $ | 23,747 | $ | 31,536 | $ | 1,106 | $ | (14,344 | ) | $ | 42,045 | ||||||||
| Less: income from continuing operations attributable to noncontrolling interest | 5,978 | 4,590 | 4,359 | 124 | 15,051 | ||||||||||||||
| Net income (loss) attributable to Holdings - continuing operations | $ | 17,769 | $ | 26,946 | $ | (3,253 | ) | $ | (14,468 | ) | $ | 26,994 | |||||||
| Adjustments: | |||||||||||||||||||
| Distributions paid - preferred shares | (6,045 | ) | (6,046 | ) | (6,045 | ) | (6,045 | ) | (24,181 | ) | |||||||||
| Amortization expense - intangible assets and inventory step-up | 23,375 | 22,474 | 26,241 | 28,787 | 100,877 | ||||||||||||||
| Impairment expense | — | — | — | 20,552 | 20,552 | ||||||||||||||
| Tax effect - impairment expense | — | — | — | (3,557 | ) | (3,557 | ) | ||||||||||||
| Non-controlling interest - impairment expense | — | — | — | (3,120 | ) | (3,120 | ) | ||||||||||||
| Loss on debt extinguishment | — | 534 | — | 534 | |||||||||||||||
| Non-controlling shareholder compensation | 2,805 | 2,804 | 3,242 | 5,100 | 13,951 | ||||||||||||||
| Acquisition expense | 216 | — | 5,902 | — | 6,118 | ||||||||||||||
| Integration services fee | 563 | 563 | 1,625 | 1,313 | 4,064 | ||||||||||||||
| Corporate tax effect - ACI | — | (4,338 | ) | 16,457 | — | 12,119 | |||||||||||||
| Other | 1,803 | 1,026 | 1,287 | 119 | 4,235 | ||||||||||||||
| Adjusted earnings | $ | 40,486 | $ | 43,429 | $ | 45,990 | $ | 28,681 | $ | 158,586 | |||||||||
| Plus (less): | |||||||||||||||||||
| Depreciation expense | 10,438 | 10,866 | 11,284 | 11,837 | 44,425 | ||||||||||||||
| Income tax provision | 11,083 | 6,955 | 21,163 | 5,828 | 45,029 | ||||||||||||||
| Corporate tax effect - ACI | — | 4,338 | (16,457 | ) | — | (12,119 | ) | ||||||||||||
| Interest expense | 17,419 | 17,519 | 22,799 | 25,769 | 83,506 | ||||||||||||||
| Amortization of debt issuance costs | 866 | 865 | 1,004 | 1,005 | 3,740 | ||||||||||||||
| Income from continuing operations attributable to noncontrolling interest | 5,978 | 4,590 | 4,359 | 124 | 15,051 | ||||||||||||||
| Distributions paid - preferred shares | 6,045 | 6,046 | 6,045 | 6,045 | 24,181 | ||||||||||||||
| Tax effect - impairment expense | — | — | — | 3,557 | 3,557 | ||||||||||||||
| Non-controlling interest - impairment expense | — | — | — | 3,120 | 3,120 | ||||||||||||||
| Other | (1,988 | ) | (757 | ) | 2,139 | 1,320 | 714 | ||||||||||||
| Adjusted EBITDA | $ | 90,327 | $ | 93,851 | $ | 98,326 | $ | 87,286 | $ | 369,790 | |||||||||
Compass Diversified Holdings
Net Income (Loss) to Non-GAAP Adjusted Earnings and Non-GAAP Adjusted EBITDA - 2021
(Unaudited)
| Three months ended | Year ended | ||||||||||||||||||
| (in thousands) | March 31, 2021 | June 30, 2021 | September 30, 2021 | December 31, 2021 | December 31, 2021 | ||||||||||||||
| Net income (loss) | $ | 21,996 | $ | (11,251 | ) | $ | 90,156 | $ | 25,908 | $ | 126,809 | ||||||||
| Gain on sale of discontinued operations, net of tax | — | — | 72,745 | 25 | 72,770 | ||||||||||||||
| Income (loss) from discontinued operations, net of tax | 4,194 | 4,780 | (1,309 | ) | — | 7,665 | |||||||||||||
| Net income (loss) from continuing operations | $ | 17,802 | $ | (16,031 | ) | $ | 18,720 | $ | 25,883 | $ | 46,374 | ||||||||
| Less: income from continuing operations attributable to noncontrolling interest | 2,696 | 3,018 | 2,201 | 3,820 | 11,735 | ||||||||||||||
| Net income (loss) attributable to Holdings - continuing operations | $ | 15,106 | $ | (19,049 | ) | $ | 16,519 | $ | 22,063 | $ | 34,639 | ||||||||
| Adjustments: | |||||||||||||||||||
| Distributions paid - preferred shares | (6,045 | ) | (6,046 | ) | (6,045 | ) | (6,045 | ) | (24,181 | ) | |||||||||
| Amortization expense - intangible assets and inventory step-up | 18,599 | 18,847 | 19,056 | 26,606 | 83,108 | ||||||||||||||
| Loss on debt extinguishment | — | 33,305 | — | — | 33,305 | ||||||||||||||
| Non-controlling shareholder compensation | 2,764 | 2,840 | 2,892 | 2,941 | 11,437 | ||||||||||||||
| Acquisition expense | 299 | 11 | 1,866 | 1,415 | 3,591 | ||||||||||||||
| Integration services fee | 1,600 | 1,600 | 1,100 | 563 | 4,863 | ||||||||||||||
| Corporate tax effect - ACI | — | — | — | (12,119 | ) | (12,119 | ) | ||||||||||||
| Other | (2,101 | ) | 1,032 | 460 | 1,709 | 1,100 | |||||||||||||
| Adjusted earnings | $ | 30,222 | $ | 32,540 | $ | 35,848 | $ | 37,133 | $ | 135,743 | |||||||||
| Plus (less): | |||||||||||||||||||
| Depreciation expense | 9,064 | 9,460 | 10,372 | 10,493 | 39,389 | ||||||||||||||
| Income tax provision | 6,078 | 9,028 | 9,556 | (2,906 | ) | 21,756 | |||||||||||||
| Corporate tax effect - ACI | — | — | — | 12,119 | 12,119 | ||||||||||||||
| Interest expense | 13,805 | 14,947 | 13,855 | 16,232 | 58,839 | ||||||||||||||
| Amortization of debt issuance costs | 686 | 722 | 759 | 812 | 2,979 | ||||||||||||||
| Income from continuing operations attributable to noncontrolling interest | 2,696 | 3,018 | 2,201 | 3,820 | 11,735 | ||||||||||||||
| Distributions paid - preferred shares | 6,045 | 6,046 | 6,045 | 6,045 | 24,181 | ||||||||||||||
| Other | 2,232 | 706 | (1,032 | ) | (425 | ) | 1,481 | ||||||||||||
| Adjusted EBITDA | $ | 70,828 | $ | 76,467 | $ | 77,604 | $ | 83,323 | $ | 308,222 | |||||||||
Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
Three months ended December 31, 2022
(Unaudited)
| (in thousands) | Corporate | 5.11 | BOA | Ergo | Lugano | Marucci Sports | PrimaLoft | Velocity Outdoor | ACI | Altor Solutions | Arnold | Sterno | Consolidated | ||||||||||||||||||||||||||
| Net income (loss) from continuing operations | $ | (12,653 | ) | $ | 7,093 | $ | 5,491 | $ | (18,035 | ) | $ | 6,063 | $ | 3,152 | $ | (9,249 | ) | $ | (3,699 | ) | $ | 3,445 | $ | 2,513 | $ | 466 | $ | 1,069 | $ | (14,344 | ) | ||||||||
| Adjusted for: | |||||||||||||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | — | 2,126 | (292 | ) | (4,706 | ) | 6,026 | 1,499 | (308 | ) | (810 | ) | 1,016 | 267 | 561 | 449 | 5,828 | ||||||||||||||||||||||
| Interest expense, net | 25,684 | (12 | ) | (6 | ) | 8 | 4 | 1 | (3 | ) | 87 | — | — | 6 | — | 25,769 | |||||||||||||||||||||||
| Intercompany interest | (34,086 | ) | 4,260 | 1,776 | 2,026 | 4,932 | 2,328 | 4,261 | 3,295 | 1,808 | 2,898 | 1,571 | 4,931 | — | |||||||||||||||||||||||||
| Depreciation and amortization | 272 | 6,168 | 5,648 | 2,033 | 3,148 | 3,025 | 6,271 | 3,393 | 524 | 4,149 | 1,976 | 5,021 | 41,628 | ||||||||||||||||||||||||||
| EBITDA | (20,783 | ) | 19,635 | 12,617 | (18,674 | ) | 20,173 | 10,005 | 972 | 2,266 | 6,793 | 9,827 | 4,580 | 11,470 | 58,881 | ||||||||||||||||||||||||
| Other (income) expense | 17 | (310 | ) | 545 | 2 | — | (46 | ) | (148 | ) | 1,263 | 16 | 547 | (20 | ) | (545 | ) | 1,321 | |||||||||||||||||||||
| Non-controlling shareholder compensation | — | 301 | 622 | 325 | 379 | 368 | 2,142 | 229 | 124 | 411 | 2 | 197 | 5,100 | ||||||||||||||||||||||||||
| Impairment expense | — | — | — | 20,552 | — | — | — | — | — | — | — | — | 20,552 | ||||||||||||||||||||||||||
| Integration services fee | — | — | — | — | — | — | 1,313 | — | — | — | — | — | 1,313 | ||||||||||||||||||||||||||
| Other | — | — | — | — | — | — | — | — | — | — | — | 119 | 119 | ||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (20,766 | ) | $ | 19,626 | $ | 13,784 | $ | 2,205 | $ | 20,552 | $ | 10,327 | $ | 4,279 | $ | 3,758 | $ | 6,933 | $ | 10,785 | $ | 4,562 | $ | 11,241 | $ | 87,286 | ||||||||||||
Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
Three months ended December 31, 2021
(Unaudited)
| (in thousands) | Corporate | 5.11 | BOA | Ergo | Lugano | Marucci Sports | Velocity Outdoor | ACI | Altor Solutions | Arnold | Sterno | Consolidated | ||||||||||||||||||||||||||||||||
| Net income (loss) from continuing operations | $ | (570 | ) | $ | 5,834 | $ | 4,270 | $ | 2,008 | $ | 4,558 | $ | 747 | $ | 3,878 | $ | 3,812 | $ | 1,979 | $ | 1,174 | $ | (1,807 | ) | $ | 25,883 | ||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | (12,119 | ) | 2,048 | 1,394 | 661 | 1,790 | 150 | 856 | 872 | (248 | ) | (717 | ) | 2,407 | (2,906 | ) | ||||||||||||||||||||||||||||
| Interest expense, net | 16,175 | 8 | — | — | 9 | — | 40 | — | (1 | ) | 1 | — | 16,232 | |||||||||||||||||||||||||||||||
| Intercompany interest | (20,748 | ) | 3,125 | 2,261 | 446 | 1,902 | 1,220 | 1,875 | 1,733 | 2,483 | 1,327 | 4,376 | — | |||||||||||||||||||||||||||||||
| Depreciation and amortization | 263 | 5,593 | 5,246 | 2,058 | 4,687 | 2,257 | 3,215 | 554 | 3,916 | 3,066 | 7,056 | 37,911 | ||||||||||||||||||||||||||||||||
| EBITDA | (16,999 | ) | 16,608 | 13,171 | 5,173 | 12,946 | 4,374 | 9,864 | 6,971 | 8,129 | 4,851 | 12,032 | 77,120 | |||||||||||||||||||||||||||||||
| Other (income) expense | 1 | 427 | 187 | — | (6 | ) | (1,000 | ) | (38 | ) | 175 | 76 | 59 | (306 | ) | (425 | ) | |||||||||||||||||||||||||||
| Non-controlling shareholder compensation | — | 502 | 539 | 452 | 190 | 275 | 243 | 124 | 265 | 22 | 329 | 2,941 | ||||||||||||||||||||||||||||||||
| Acquisition expenses | — | — | — | — | — | 971 | — | — | 444 | — | — | 1,415 | ||||||||||||||||||||||||||||||||
| Integration services fee | — | — | — | — | 563 | — | — | — | — | — | — | 563 | ||||||||||||||||||||||||||||||||
| Other | 47 | — | — | — | — | 1,000 | — | — | — | — | 662 | 1,709 | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (16,951 | ) | $ | 17,537 | $ | 13,897 | $ | 5,625 | $ | 13,693 | $ | 5,620 | $ | 10,069 | $ | 7,270 | $ | 8,914 | $ | 4,932 | $ | 12,717 | $ | 83,323 | |||||||||||||||||||
Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
Year ended December 31, 2022
(Unaudited)
| (in thousands) | Corporate | 5.11 | BOA | Ergo | Lugano | Marucci Sports | PrimaLoft | Velocity Outdoor | ACI | Altor Solutions | Arnold | Sterno | Consolidated | |||||||||||||||||||||||||||||||||
| Net income (loss) from continuing operations | $ | (64,084 | ) | $ | 22,633 | $ | 42,613 | $ | (18,669 | ) | $ | 27,934 | $ | 11,526 | $ | (17,741 | ) | $ | 4,127 | $ | 12,955 | $ | 9,662 | $ | 7,683 | $ | 3,406 | $ | 42,045 | |||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 12,119 | 7,125 | 6,527 | (4,274 | ) | 11,889 | 4,320 | (3,878 | ) | 1,562 | 3,616 | 3,174 | 3,329 | (480 | ) | 45,029 | ||||||||||||||||||||||||||||||
| Interest expense, net | 83,243 | — | (25 | ) | 10 | 16 | 14 | (7 | ) | 229 | — | — | 26 | — | 83,506 | |||||||||||||||||||||||||||||||
| Intercompany interest | (105,813 | ) | 13,761 | 7,410 | 6,026 | 12,773 | 6,977 | 7,512 | 10,282 | 6,659 | 10,742 | 5,518 | 18,153 | — | ||||||||||||||||||||||||||||||||
| Loss on debt extinguishment | 534 | — | — | — | — | — | — | — | — | — | — | — | 534 | |||||||||||||||||||||||||||||||||
| Depreciation and amortization | 1,134 | 22,972 | 21,993 | 8,094 | 11,533 | 12,583 | 10,465 | 13,374 | 2,158 | 16,403 | 8,041 | 20,293 | 149,043 | |||||||||||||||||||||||||||||||||
| EBITDA | (72,867 | ) | 66,491 | 78,518 | (8,813 | ) | 64,145 | 35,420 | (3,649 | ) | 29,574 | 25,388 | 39,981 | 24,597 | 41,372 | 320,157 | ||||||||||||||||||||||||||||||
| Other (income) expense | (57 | ) | (217 | ) | 1,043 | 6 | 2 | (1,875 | ) | 112 | 2,417 | 267 | 766 | (20 | ) | (1,730 | ) | 714 | ||||||||||||||||||||||||||||
| Non-controlling shareholder compensation | — | 1,511 | 2,511 | 1,479 | 1,179 | 1,457 | 2,142 | 971 | 496 | 1,321 | 40 | 844 | 13,951 | |||||||||||||||||||||||||||||||||
| Impairment expense | — | — | — | 20,552 | — | — | — | — | — | — | — | — | 20,552 | |||||||||||||||||||||||||||||||||
| Acquisition expenses | — | — | — | — | — | — | 5,680 | 222 | — | 216 | — | — | 6,118 | |||||||||||||||||||||||||||||||||
| Integration services fee | — | — | — | — | 1,688 | — | 2,375 | — | — | — | — | — | 4,063 | |||||||||||||||||||||||||||||||||
| Other | — | — | — | 250 | — | 1,802 | — | — | 853 | — | — | 1,330 | 4,235 | |||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (72,924 | ) | $ | 67,785 | $ | 82,072 | $ | 13,474 | $ | 67,014 | $ | 36,804 | $ | 6,660 | $ | 33,184 | $ | 27,004 | $ | 42,284 | $ | 24,617 | $ | 41,816 | $ | 369,790 | |||||||||||||||||||
Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
Year ended December 31, 2021
(Unaudited)
| (in thousands) | Corporate | 5.11 | BOA | Ergo | Lugano | Marucci Sports | Velocity Outdoor | ACI | Altor Solutions | Arnold | Sterno | Consolidated | |||||||||||||||||||||||||||||
| Net income (loss) from continuing operations | $ | (65,287 | ) | $ | 20,152 | $ | 21,178 | $ | 5,079 | $ | 5,239 | $ | 10,232 | $ | 23,035 | $ | 14,178 | $ | 7,871 | $ | 5,013 | $ | (316 | ) | $ | 46,374 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | (12,119 | ) | 6,905 | 3,559 | 2,018 | 2,094 | 3,070 | 6,237 | 3,419 | 2,619 | 1,345 | 2,609 | 21,756 | ||||||||||||||||||||||||||||
| Interest expense, net | 58,639 | 16 | — | — | 9 | 5 | 165 | — | (1 | ) | 6 | — | 58,839 | ||||||||||||||||||||||||||||
| Intercompany interest | (73,982 | ) | 11,868 | 8,581 | 1,960 | 2,450 | 3,110 | 7,461 | 7,217 | 7,558 | 5,455 | 18,322 | — | ||||||||||||||||||||||||||||
| Loss on debt extinguishment | 33,305 | — | — | — | — | — | — | — | — | — | 33,305 | ||||||||||||||||||||||||||||||
| Depreciation and amortization | 904 | 22,355 | 20,279 | 8,435 | 4,757 | 8,634 | 12,704 | 2,212 | 12,938 | 8,888 | 23,369 | 125,475 | |||||||||||||||||||||||||||||
| EBITDA | (58,540 | ) | 61,296 | 53,597 | 17,492 | 14,549 | 25,051 | 49,602 | 27,026 | 30,985 | 20,707 | 43,984 | 285,749 | ||||||||||||||||||||||||||||
| Other (income) expense | (284 | ) | 125 | 377 | — | 16 | (119 | ) | 2,573 | 298 | (323 | ) | 8 | (1,189 | ) | 1,482 | |||||||||||||||||||||||||
| Non-controlling shareholder compensation | — | 2,428 | 2,194 | 1,693 | 190 | 1,101 | 1,020 | 496 | 1,035 | 38 | 1,242 | 11,437 | |||||||||||||||||||||||||||||
| Acquisition expenses | 39 | — | — | — | 1,827 | 971 | — | — | 444 | 310 | — | 3,591 | |||||||||||||||||||||||||||||
| Integration services fee | — | — | 3,300 | — | 563 | 1,000 | — | — | — | — | — | 4,863 | |||||||||||||||||||||||||||||
| Other | 1,132 | 273 | — | — | — | 1,000 | (2,300 | ) | — | — | — | 995 | 1,100 | ||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (57,653 | ) | $ | 64,122 | $ | 59,468 | $ | 19,185 | $ | 17,145 | $ | 29,004 | $ | 50,895 | $ | 27,820 | $ | 32,141 | $ | 21,063 | $ | 45,032 | $ | 308,222 | ||||||||||||||||
Compass Diversified Holdings
Adjusted EBITDA
(Unaudited)
| Three months ended December 31, | Year ended December 31, | |||||||||||||||
| (in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Branded Consumer | ||||||||||||||||
| 5.11 | $ | 19,626 | $ | 17,537 | $ | 67,785 | $ | 64,122 | ||||||||
| BOA | 13,784 | 13,897 | 82,072 | 59,468 | ||||||||||||
| Ergobaby | 2,205 | 5,625 | 13,474 | 19,185 | ||||||||||||
| Lugano (1) | 20,552 | 13,693 | 67,014 | 17,145 | ||||||||||||
| Marucci Sports | 10,327 | 5,620 | 36,804 | 29,004 | ||||||||||||
| PrimaLoft (2) | 4,279 | — | 6,660 | — | ||||||||||||
| Velocity Outdoor | 3,758 | 10,069 | 33,184 | 50,895 | ||||||||||||
| Total Branded Consumer | $ | 74,531 | $ | 66,441 | $ | 306,993 | $ | 239,819 | ||||||||
| Niche Industrial | ||||||||||||||||
| Advanced Circuits | $ | 6,933 | $ | 7,270 | $ | 27,004 | $ | 27,820 | ||||||||
| Altor Solutions | 10,785 | 8,914 | 42,284 | 32,141 | ||||||||||||
| Arnold Magnetics | 4,562 | 4,932 | 24,617 | 21,063 | ||||||||||||
| Sterno | 11,241 | 12,717 | 41,816 | 45,032 | ||||||||||||
| Total Niche Industrial | $ | 33,521 | $ | 33,833 | $ | 135,721 | $ | 126,056 | ||||||||
| Corporate expense | (20,766 | ) | (16,951 | ) | (72,924 | ) | (57,653 | ) | ||||||||
| Total Adjusted EBITDA | $ | 87,286 | $ | 83,323 | $ | 369,790 | $ | 308,222 | ||||||||
| (1 | ) | The above results for Lugano do not include management's estimate of Adjusted EBITDA, before our ownership, of $24.1 million for the twelve months ended December 31, 2021. Lugano was acquired on September 3, 2021. | |
| (2 | ) | The above results for PrimaLoft do not include management's estimate of Adjusted EBITDA, before our ownership, of $24.8 million for the twelve months ended December 31, 2022, and $4.9 million and $25.0 million, respectively, for the three and twelve months ended December 31, 2021. PrimaLoft was acquired on July 12, 2022. | |
Compass Diversified Holdings
Net Sales to Pro Forma Net Sales Reconciliation
(unaudited)
| Three months ended December 31, | Year ended December 31, | |||||||||||
| (in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Net Sales | $ | 594,921 | $ | 559,889 | $ | 2,264,044 | $ | 1,932,155 | ||||
| Acquisitions (1) | — | 13,494 | 55,185 | 136,940 | ||||||||
| Pro Forma Net Sales | $ | 594,921 | $ | 573,383 | $ | 2,319,229 | $ | 2,069,095 | ||||
(1) Acquisitions reflects the net sales for Lugano and PrimaLoft on a proforma basis as if we had acquired these businesses on January 1, 2021.
Compass Diversified Holdings
Subsidiary Pro Forma Net Sales
(unaudited)
| Three months ended December 31, | Year ended December 31, | |||||||||||
| (in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Branded Consumer | ||||||||||||
| 5.11 | $ | 135,605 | $ | 123,954 | $ | 486,213 | $ | 444,963 | ||||
| BOA | 42,473 | 45,117 | 208,688 | 165,150 | ||||||||
| Ergobaby | 20,179 | 24,531 | 88,435 | 93,631 | ||||||||
| Lugano (1) | 64,278 | 43,224 | 201,507 | 125,105 | ||||||||
| Marucci Sports | 42,930 | 31,838 | 165,411 | 118,166 | ||||||||
| PrimaLoft (1) | 14,032 | 13,494 | 79,929 | 65,882 | ||||||||
| Velocity Outdoor | 51,464 | 64,535 | 232,238 | 270,426 | ||||||||
| Total Branded Consumer | $ | 370,961 | $ | 346,693 | $ | 1,462,421 | $ | 1,283,323 | ||||
| Niche Industrial | ||||||||||||
| Advanced Circuits | $ | 22,309 | $ | 23,278 | $ | 89,503 | $ | 90,487 | ||||
| Altor Solutions | 61,748 | 57,635 | 261,338 | 180,217 | ||||||||
| Arnold Magnetics | 37,496 | 38,048 | 153,815 | 139,941 | ||||||||
| Sterno | 102,407 | 107,729 | 352,152 | 375,127 | ||||||||
| Total Niche Industrial | $ | 223,960 | $ | 226,690 | $ | 856,808 | $ | 785,772 | ||||
| Total Subsidiary Net Sales | $ | 594,921 | $ | 573,383 | $ | 2,319,229 | $ | 2,069,095 | ||||
(1) Net sales for Lugano and PrimaLoft are pro forma as if we had acquired these businesses on January 1, 2021.Historical net sales for Lugano prior to acquisition on September 3, 2021 were $71.1 million for the twelve months ended December 31, 2021. Historical net sales for PrimaLoft prior to acquisition on July 12, 2022 were $55.2 million for the twelve months ended December 31, 2022, and $13.5 million and $65.9 million, respectively, for the three and twelve months ended December 31, 2021.
Compass Diversified Holdings
Condensed Consolidated Cash Flows
| Three months ended December 31, | Year ended December 31, | |||||||||||||||
| (in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net cash provided by (used in) operating activities | $ | 11,632 | $ | (13,097 | ) | $ | (28,291 | ) | $ | 134,051 | ||||||
| Net cash used in investing activities | (27,774 | ) | (115,067 | ) | (626,725 | ) | (317,496 | ) | ||||||||
| Net cash provided by financing activities | 14,757 | 218,334 | 556,885 | 273,206 | ||||||||||||
| Foreign currency impact on cash | 1,404 | 324 | (1,331 | ) | 228 | |||||||||||
| Net increase (decrease) in cash and cash equivalents | 19 | 90,494 | (99,462 | ) | 89,989 | |||||||||||
| Cash and cash equivalents - beginning of the period(1) | 61,252 | 70,239 | 160,733 | 70,744 | ||||||||||||
| Cash and cash equivalents - end of the period | $ | 61,271 | $ | 160,733 | $ | 61,271 | $ | 160,733 | ||||||||
(1) Includes cash from discontinued operations of $4.3 million at January 1, 2021.
| Compass Diversified Holding | ||||||||||||||||
| Selected Financial Data - Cash Flows | ||||||||||||||||
| Three months ended December 31, | Year ended December 31, | |||||||||||||||
| (in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Changes in operating assets and liabilities | $ | (29,213 | ) | $ | (69,044 | ) | $ | (252,377 | ) | $ | (83,764 | ) | ||||
| Purchases of property and equipment | $ | (24,591 | ) | $ | (12,550 | ) | $ | (64,274 | ) | $ | (40,551 | ) | ||||
| Distributions paid - common shares | $ | (18,051 | ) | $ | (23,742 | ) | $ | (70,845 | ) | $ | (150,946 | ) | ||||
| Distributions paid - preferred shares | $ | (6,045 | ) | $ | (6,045 | ) | $ | (24,181 | ) | $ | (24,181 | ) | ||||
