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, 2020.
First Quarter 2020
Highlights
- Reported net sales of $333.4 million;
- Reported net income of $4.9 million;
- Reported non-GAAP Adjusted EBITDA of $46.0 million;
- Reported Cash Provided by Operating Activities of $34.0 million
and non-GAAP Cash Flow Available for Distribution and Reinvestment
("CAD") of $17.7 million;
- Announced acquisition of the Marucci Sports platform, which
closed in April 2020;
- Paid a first quarter 2020 cash distribution of $0.36 per share
on CODI's common shares in April 2020, bringing cumulative
distributions paid to $19.3152 per common share since CODI's IPO in
May of 2006;
- Paid a quarterly cash distribution of $0.453125 per share on
the Company's 7.250% Series A Preferred Shares, $0.4921875 per
share on the Company's 7.875% Series B Preferred Shares, and
$0.4921875 per share on the Company's 7.875% Series C Preferred
Shares in April 2020; and
- Received abatement of $1.2 million in management fees
attributable to cash balances held at the Company as of March 31,
2020.
“The strong results we delivered this quarter
are a testament to the competitive advantage gained through our
permanent capital structure, disciplined approach and diverse
portfolio of leading businesses,” said Elias Sabo, CEO of Compass
Group Diversified Holdings LLC. “We entered 2020 with significant
capital resources that enabled us to de-risk our balance sheet and
provide CODI with financial flexibility to navigate current
challenges amid the global health pandemic, while supporting our
leading branded consumer and niche industrial businesses. We are
pleased with the first quarter performance of our subsidiaries,
generating an increase in cash flow from the prior year, and our
ability to declare our 37th consecutive quarter of distributions on
our common stock at an annualized $1.44 per share.”
Mr. Sabo continued, “While second quarter
results will undoubtedly be impacted by the abrupt halt to large
segments of the economy stemming from the global response to
COVID-19, we believe we are well-positioned to effectively operate
in a time of market dislocation and remain focused on taking
decisive actions that will allow us to emerge even stronger from
these unprecedented conditions. The health of our team,
stakeholders and the communities in which they operate remains our
top priority, as we focus on managing our business for the
long-term, maintaining our balance sheet strength and working
closely with our subsidiaries’ management teams to build enduring
value.”
Mr. Sabo concluded, “We sincerely thank those
who have been working to keep all of us safe through the crisis. We
are proud of how our subsidiaries have responded to COVID-19 and
congratulate 5.11’s success supporting first responders as well as
the important work Sterno has done producing cotton masks and hand
sanitizer for local hospitals and healthcare providers.”
Temporary Abatement of Management Fees
in Response to Impact from Global Crisis
The Company also announced today that Compass
Group Management LLC (“CGM”) has elected to waive the portion of
its management fee attributable to cash balances held at the
Company as of March 31, 2020. The cash flow savings impact of this
waiver was approximately $1.2 million. Additionally, as a result of
an expected decline in earnings and cash flows in the second
quarter of 2020, CGM has agreed to waive 50% of the management fee
calculated at June 30, 2020 that will be paid in July 2020. The
Company estimates the cash flow savings of this waiver will be
between $4.5 million and $5.0 million.
Mr. Sabo added, “CGM’s actions underscore our
unwavering focus on shareholder alignment always and especially
during this challenging time. We appreciate the trust and value our
shareholders put in the long-term prospects of our business and
believe the decision to waive fees associated with keeping extra
cash on hand is prudent in today’s environment and will contribute
to CODI’s long-term success. Additionally, recognizing the cost
this pandemic is having on so many businesses, we expect the relief
in the second quarter management fee will help offset the
challenges ahead.”
Operating Results
Net sales for the quarter ended March 31, 2020
were $333.4 million, as compared to $338.9 million for the quarter
ended March 31, 2019.
Net income for the quarter ended March 31, 2020
was $4.9 million, as compared to net income of $110.2 million for
the quarter ended March 31, 2019, which included a gain on the sale
of our Manitoba Harvest subsidiary.
Adjusted EBITDA (see "Note Regarding Use of
Non-GAAP Financial Measures" below) for the quarter ended March 31,
2020 was $46.0 million, as compared to $48.5 million for the
quarter ended March 31, 2019.
CODI reported CAD (see "Note Regarding Use of
Non-GAAP Financial Measures" below) of $17.7 million for the
quarter ended March 31, 2020, as compared to $17.6 million for the
prior year's comparable quarter. CODI's CAD is calculated after
taking into account all interest expenses, cash taxes paid,
preferred distributions and maintenance capital expenditures, and
includes the operating results of each of our businesses for the
periods during which CODI owned them. However, CAD excludes the
gains from monetizing interests in CODI's subsidiaries, which have
totaled over $1 billion since going public in 2006.
Liquidity and Capital
Resources
For the quarter ended March 31, 2020, CODI
reported Cash Provided by Operating Activities of $34.0 million, as
compared to Cash Used in Operating Activities of $8.9 million for
the quarter ended March 31, 2019. CODI's weighted average number of
shares outstanding for the quarters ended March 31, 2020 and March
31, 2019 were 59.9 million.
As of March 31, 2020, CODI had approximately
$291.0 million in cash and cash equivalents, $400.0 million
outstanding in 8.00% Senior Notes due 2026 and $200.0 million
outstanding borrowings under its revolving credit facility.
The Company has no significant debt maturities
until 2023 and had net borrowing availability of $396.4 million at
March 31, 2020 under its revolving credit facility. In March 2020,
as a proactive measure to ensure that the Company had sufficient
cash liquidity in light of the COVID-19 pandemic, CODI elected to
draw down $200.0 million on its revolving credit facility. The
Company subsequently used a portion of this revolver draw to close
the Marucci acquisition in April 2020.
First Quarter 2020
Distribution
On April 2, 2020, CODI's Board of Directors (the
"Board") declared a first quarter distribution of $0.36 per share
on the Company's common shares. The cash distribution was paid on
April 23, 2020 to all holders of record of common shares as of
April 16, 2020. Since its IPO in 2006, CODI has paid a cumulative
distribution of $19.3152 per common share.
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, January 30, 2020, up to, but excluding, April
30, 2020. The distribution for such period was paid on April 30,
2020 to all holders of record of Series A Preferred Shares as of
April 15, 2020.
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, January 30, 2020, up to, but excluding, April
30, 2020. The distribution for such period was paid on April 30,
2020 to all holders of record of Series B Preferred Shares as of
April 15, 2020.
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, January 30, 2020, up to, but excluding, April
30, 2020. The distribution for such period was paid on April 30,
2020 to all holders of record of Series C Preferred Shares as of
April 15, 2020.
Responding to the Increasing Economic
Uncertainties Created by COVID-19
The health of the CODI team and its various
stakeholders is the Company’s highest priority. The Company is
closely monitoring the impact of the COVID-19 outbreak on all
aspects of its business, including customers, employees, supply
chains, and distribution networks. CODI’s subsidiaries experienced
reductions in customer demand in several end-markets in the first
quarter of 2020 and the Company believes this will continue in the
near-term. The Company expects that government measures taken to
limit the spread of the virus, which have led to reductions in
production at certain facilities across the portfolio and limited
operations at some of their suppliers, will more meaningfully
impact operations in the second quarter of 2020.
The Company is working with management at each
of its businesses to reduce controllable costs, including
short-term actions to reduce labor costs (including layoffs and
furloughs), eliminating non-essential travel and reducing
discretionary spending. CODI’s businesses are proactively managing
working capital and the Company has reduced its capital spending
plan for the year, without deferring key strategic ongoing
initiatives. Additionally, CGM has waived certain management
fees.
Guidance Update
In light of current economic uncertainty caused
by COVID-19, the Company has decided to withdraw full-year 2020
Adjusted EBITDA and Payout Ratio guidance until a clearer picture
emerges for its businesses.
In the short term, the Company anticipates that
COVID-19 will have a negative impact on its results of operations,
financial condition and cash flows for the second quarter ended
June 30, 2020. The Company estimates its second quarter 2020
Total Adjusted EBITDA will decrease approximately 30% to 50% as
compared to the Total Adjusted EBITDA from the prior year second
quarter.
During 2019, the Company received an aggregate
total of $882 million in net cash proceeds as a result of the
divestitures of Manitoba Harvest and Clean Earth, as well as the
issuance and sale of Series C Preferred Shares. As a result, the
Company believes that it currently has adequate liquidity and
capital resources to meet its existing obligations and quarterly
distributions to its shareholders, as approved by the Board of
Directors, over the next twelve months. The ultimate impact of
COVID-19 on the Company’s business is dependent on future
developments, including the duration of the pandemic and the
related length of its impact on the global economy, which are
highly uncertain and cannot be accurately predicted at this time.
As detailed in our Form 10-Q for the period ending March 31, 2020,
the Company’s results of operations, financial condition and cash
flow could be impacted more dramatically than currently anticipated
and as a result, the Company’s liquidity and capital resources
could become more constrained than expected.
Conference Call
Management will host a conference call on
Thursday, April 30, 2020 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 (855) 212-2368 and the dial-in number
for international callers is (315) 625-6886. The access code for
all callers is 4462978. A live webcast will also be available on
the Company's website at https://www.compassequity.com.
A replay of the call will be available through
Friday, May 8, 2020. 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 4462978.
Note Regarding Use of Non-GAAP Financial
Measures
Adjusted EBITDA is a non-GAAP measure used by
the Company to assess its performance. We have reconciled Adjusted
EBITDA to Net Income (Loss) on the attached schedules. We consider
Net Income (Loss) to be the most directly comparable GAAP financial
measure to Adjusted EBITDA. We believe that Adjusted EBITDA
provides useful information to investors and reflects important
financial measures as it 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), Adjusted EBITDA is limited in that it does 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. This
presentation also 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. We believe Adjusted EBITDA is also
useful in measuring our ability to service debt and other payment
obligations.
CAD is a non-GAAP measure used by the Company to
assess its performance, as well as its ability to sustain quarterly
distributions. We have reconciled CAD to Net Income (Loss) and Cash
Flow from Operating Activities on the attached schedules. We
consider Net Income (Loss) and Cash Flow from Operating Activities
to be the most directly comparable GAAP financial measures to
CAD.
CAD 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. We believe
that CAD provides investors additional information to enable them
to evaluate our performance and ability to make anticipated
quarterly distributions.
Neither Adjusted EBITDA nor CAD is 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 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 nine majority-owned subsidiaries are engaged
in the following lines of business:
- The design and marketing of purpose-built technical 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);
- The design and marketing of wearable baby carriers, strollers
and related products (Ergobaby);
- The design and manufacture of custom molded protective foam
solutions and OE components (Foam
Fabricators);
- The design and manufacture of premium home and gun safes
(Liberty Safe);
- The design and manufacture of baseball and softball equipment
and apparel (Marucci Sports);
- The manufacture and marketing of portable food warming systems,
creative indoor and outdoor lighting, and home fragrance solutions
for the foodservice industry and consumer markets
(Sterno); and
- The design, manufacture and marketing of airguns, archery
products, optics and related accessories (Velocity
Outdoor).
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including expectations for our second quarter
results and other statements with regard to the future performance
of CODI. Forward-looking statements involve risks and
uncertainties, including, but not limited to, statements as to our
future operating results; the impact, in the near, medium and
long-term, of the COVID-19 pandemic on our business, results of
operations, financial position, liquidity, cash flows or ability to
make distributions; our business prospects and the prospects of our
portfolio companies; the impact of investments that we make or
expect to make; the dependence of our future success on the general
economy and its impact on the industries in which we operate; the
ability of our portfolio companies to achieve their objectives; the
adequacy of our cash resources and working capital; and the timing
of cash flows, if any, from the operations of our portfolio
companies.
We may use words such as “anticipates,”
“believes,” “expects,” “intends,” “will,” “should,” “may” 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; risks
associated with possible disruption in CODI’s operations or the
economy generally due to terrorism, natural disasters 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; 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.
Compass Diversified
HoldingsCondensed Consolidated Statements of
Operations(unaudited) |
|
|
|
|
|
Three months
ended March 31, |
(in thousands, except per
share data) |
2020 |
|
2019 |
Net sales |
$ |
333,449 |
|
|
$ |
338,857 |
|
Cost of sales |
213,961 |
|
|
219,302 |
|
Gross
profit |
119,488 |
|
|
119,555 |
|
Operating expenses: |
|
|
|
Selling, general and administrative expense |
83,800 |
|
|
81,397 |
|
Management fees |
8,620 |
|
|
10,957 |
|
Amortization expense |
13,505 |
|
|
13,590 |
|
Operating
income |
13,563 |
|
|
13,611 |
|
Other income (expense): |
|
|
|
Interest expense, net |
(8,597 |
) |
|
(18,454 |
) |
Amortization of debt issuance costs |
(525 |
) |
|
(927 |
) |
Loss on sale of Tilray securities |
— |
|
|
(5,300 |
) |
Other income (expense), net |
661 |
|
|
(434 |
) |
Income (loss) from
continuing operations before income taxes |
5,102 |
|
|
(11,504 |
) |
Provision for income taxes |
222 |
|
|
1,424 |
|
Income (loss) from
continuing operations |
4,880 |
|
|
(12,928 |
) |
Income from discontinued operations, net of income tax |
— |
|
|
1,427 |
|
Gain on sale of discontinued operations |
— |
|
|
121,659 |
|
Net income
(loss) |
4,880 |
|
|
110,158 |
|
Less: Income from continuing operations attributable to
noncontrolling interest |
1,215 |
|
|
1,368 |
|
Less: Loss from discontinued operations attributable to
noncontrolling interest |
— |
|
|
(518 |
) |
Net income
attributable to Holdings |
$ |
3,665 |
|
|
$ |
109,308 |
|
|
|
|
|
Basic income (loss) per common share attributable
to Holdings |
|
|
Continuing operations |
$ |
(0.26 |
) |
|
$ |
(0.34 |
) |
Discontinued operations |
— |
|
|
2.06 |
|
|
$ |
(0.26 |
) |
|
$ |
1.72 |
|
|
|
|
|
Basic weighted average number of common shares outstanding |
59,900 |
|
|
59,900 |
|
|
|
|
|
Cash distributions declared per Trust common share |
$ |
0.36 |
|
|
$ |
0.36 |
|
|
|
|
|
Compass Diversified Holdings |
Subsidiary Net Sales |
(unaudited) |
|
|
|
|
|
|
|
Three months ended March 31, |
(in thousands) |
|
2020 |
|
2019 |
|
|
|
|
|
Branded
Consumer |
|
|
|
|
5.11 Tactical |
|
$ |
95,781 |
|
|
$ |
88,089 |
|
Ergobaby |
|
19,649 |
|
|
22,452 |
|
Liberty |
|
24,960 |
|
|
22,204 |
|
Velocity Outdoor |
|
30,390 |
|
|
31,137 |
|
Total Branded Consumer |
|
$ |
170,780 |
|
|
$ |
163,882 |
|
|
|
|
|
|
Niche
Industrial |
|
|
|
|
Advanced Circuits |
|
$ |
21,696 |
|
|
$ |
23,069 |
|
Arnold Magnetics |
|
29,558 |
|
|
30,028 |
|
Foam Fabricators |
|
28,383 |
|
|
30,682 |
|
Sterno |
|
83,032 |
|
|
91,196 |
|
Total Niche Industrial |
|
$ |
162,669 |
|
|
$ |
174,975 |
|
|
|
|
|
|
Total Subsidiary Net
Sales |
|
$ |
333,449 |
|
|
$ |
338,857 |
|
|
|
|
|
|
|
|
|
|
Compass Diversified Holdings |
Net Income to Adjusted EBITDA and Cash Flow Available for
Distribution and Reinvestment |
(Unaudited) |
|
|
|
|
|
Three months
ended March 31, |
(in thousands) |
2020 |
|
2019 |
Net income (loss) |
$ |
4,880 |
|
|
$ |
110,158 |
|
Income from discontinued operations, net of income tax |
— |
|
|
1,427 |
|
Gain on sale of discontinued operations |
— |
|
|
121,659 |
|
Income (loss) from
continuing operations |
$ |
4,880 |
|
|
$ |
(12,928 |
) |
Provision for income taxes |
222 |
|
|
1,424 |
|
Income (loss) from
continuing operations before income taxes |
$ |
5,102 |
|
|
$ |
(11,504 |
) |
Other income (expense), net |
661 |
|
|
(434 |
) |
Amortization of debt issuance costs |
(525 |
) |
|
(927 |
) |
Loss on sale of Tilray securities |
— |
|
|
(5,300 |
) |
Interest expense, net |
(8,597 |
) |
|
(18,454 |
) |
Operating
income |
$ |
13,563 |
|
|
$ |
13,611 |
|
Adjusted
For: |
|
|
|
Depreciation |
8,301 |
|
|
7,996 |
|
Amortization |
13,505 |
|
|
13,590 |
|
Noncontrolling shareholder compensation |
2,055 |
|
|
1,728 |
|
Integration services fees |
— |
|
|
281 |
|
Management fees |
8,620 |
|
|
10,957 |
|
Impairment expense |
— |
|
|
— |
|
Other |
(1 |
) |
|
324 |
|
Adjusted
EBITDA |
$ |
46,043 |
|
|
$ |
48,487 |
|
Interest at Corporate, net of unused fee (1) |
(8,197 |
) |
|
(16,815 |
) |
Swap payment |
— |
|
|
(94 |
) |
Management fees |
(8,620 |
) |
|
(10,957 |
) |
Capital expenditures (maintenance) |
(3,260 |
) |
|
(3,647 |
) |
Current tax expense (cash taxes) (2) |
(2,914 |
) |
|
(3,455 |
) |
Preferred share distributions |
(5,542 |
) |
|
(3,781 |
) |
Discontinued operations |
— |
|
|
7,911 |
|
Miscellaneous items |
147 |
|
|
— |
|
Cash Flow Available
for Distribution and Reinvestment ("CAD") |
$ |
17,657 |
|
|
$ |
17,649 |
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
|
Interest expense at Corporate reflects consolidated interest
expense less non-cash components such as, unrealized gains and
losses on our swap and original issue discount amortization.
We include the cash component of our swap payment above in our
reconciliation to CAD. |
|
|
|
(2 |
) |
|
Current tax expense is calculated by deducting the change in
deferred tax from the statement of cash flows from the income tax
provision on the statement of operations. |
|
|
|
|
Compass Diversified Holdings |
Adjusted EBITDA (1) |
(unaudited) |
|
|
|
|
|
|
|
Three months
ended March 31, |
(in thousands) |
|
2020 |
|
2019 |
|
|
|
|
|
Branded
Consumer |
|
|
|
|
5.11 Tactical |
|
$ |
10,503 |
|
|
$ |
8,305 |
|
Ergobaby |
|
3,939 |
|
|
5,597 |
|
Liberty |
|
3,682 |
|
|
2,222 |
|
Velocity Outdoor |
|
2,859 |
|
|
3,987 |
|
Total Branded Consumer |
|
$ |
20,983 |
|
|
$ |
20,111 |
|
|
|
|
|
|
Niche
Industrial |
|
|
|
|
Advanced Circuits |
|
$ |
6,633 |
|
|
$ |
7,339 |
|
Arnold Magnetics |
|
3,425 |
|
|
3,210 |
|
Foam Fabricators |
|
7,005 |
|
|
7,226 |
|
Sterno |
|
11,295 |
|
|
13,900 |
|
Total Niche Industrial |
|
$ |
28,358 |
|
|
$ |
31,675 |
|
Corporate expense (2) |
|
(3,298 |
) |
|
(3,299 |
) |
Total Adjusted EBITDA |
|
$ |
46,043 |
|
|
$ |
48,487 |
|
|
|
|
|
|
|
|
|
|
(1 |
) |
|
Please refer to our recently filed Form 10-Q for detail on
subsidiary Adjusted EBITDA and reconciliation to net income. |
|
|
|
(2 |
) |
|
Please refer to the recently
filed Form 10-Q for a reconciliation of our Corporate expense to
Net Income. |
|
|
|
|
Compass Diversified HoldingsSummarized
Statement of Cash Flows(unaudited) |
|
|
|
|
|
Three months ended March 31, |
(in thousands) |
2020 |
|
2019 |
Net cash
provided by (used in) operating activities |
$ |
33,986 |
|
|
$ |
(8,936 |
) |
Net cash (used in) provided by investing activities |
(6,646 |
) |
|
168,944 |
|
Net cash provided by (used in) financing activities |
164,385 |
|
|
(172,448 |
) |
Effect of foreign currency on cash |
(1,026 |
) |
|
(1,049 |
) |
Net increase (decrease) in
cash and cash equivalents |
190,699 |
|
|
(13,489 |
) |
Cash and cash equivalents —
beginning of period (1) |
100,314 |
|
|
53,326 |
|
Cash and cash equivalents —
end of period |
$ |
291,013 |
|
|
$ |
39,837 |
|
|
|
|
|
(1) Includes cash from discontinued
operations of $4.6 million at January 1, 2019.
Compass Diversified HoldingsCondensed
Consolidated Table of Cash Flow Available for Distribution and
Reinvestment(unaudited) |
|
|
|
|
|
Three months
ended March 31, |
(in thousands) |
2020 |
|
2019 |
Net income |
$ |
4,880 |
|
|
$ |
110,158 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and
amortization |
21,806 |
|
|
28,638 |
|
Gain on sale of business |
— |
|
|
(121,659 |
) |
Amortization of debt issuance
costs and original issue discount |
525 |
|
|
1,079 |
|
Unrealized loss on interest
rate hedge |
— |
|
|
1,099 |
|
Noncontrolling stockholder
charges |
2,055 |
|
|
2,205 |
|
Provision for loss on
receivables |
883 |
|
|
696 |
|
Other |
(515 |
) |
|
334 |
|
Deferred taxes |
(2,692 |
) |
|
(2,323 |
) |
Changes in operating assets and liabilities |
7,044 |
|
|
(29,163 |
) |
Net cash provided by (used in) operating
activities |
33,986 |
|
|
(8,936 |
) |
Plus: |
|
|
|
Unused fee on revolving credit
facility |
400 |
|
|
387 |
|
Successful acquisition
costs |
— |
|
|
366 |
|
Integration services fee (1) |
— |
|
|
281 |
|
Realized loss from foreign currency effect (2) |
— |
|
|
363 |
|
Changes in operating assets and liabilities |
— |
|
|
29,163 |
|
Loss on sale of Tilray
securities |
— |
|
|
5,300 |
|
Less: |
|
|
|
Maintenance capital
expenditures (3) |
3,260 |
|
|
4,997 |
|
Payment of interest rate
swap |
— |
|
|
94 |
|
Changes in operating assets and liabilities |
7,044 |
|
|
— |
|
Preferred share
distributions |
5,542 |
|
|
3,781 |
|
Other (4) |
883 |
|
|
403 |
|
CAD |
$ |
17,657 |
|
|
$ |
17,649 |
|
|
|
|
|
Distribution paid in April
2020/ 2019 |
$ |
21,564 |
|
|
$ |
21,564 |
|
|
|
|
|
|
|
|
|
(1) Represents fees paid by
newly acquired companies to the Manager for integration services
performed during the first year of ownership, payable
quarterly.
(2) Reflects the foreign
currency transaction gain/ loss resulting from the Canadian dollar
intercompany loans issued to Manitoba Harvest.
(3) Represents maintenance
capital expenditures that were funded from operating cash flow, net
of proceeds from the sale of property, plant and equipment, and
excludes growth capital expenditures of approximately $3.3 million
for the three months ended March 31, 2020 and $2.5 million for the
three months ended March 31, 2019.
(4) Represents the effect
on earnings of reserves for inventory and accounts receivable.
Compass Diversified Holdings |
Maintenance Capital Expenditures |
(unaudited) |
|
|
|
|
|
Three months
ended March 31, |
(in thousands) |
|
2020 |
|
2019 |
Branded
Consumer |
|
|
|
|
5.11 Tactical |
|
$ |
174 |
|
|
$ |
212 |
|
Ergobaby |
|
98 |
|
|
71 |
|
Liberty |
|
186 |
|
|
126 |
|
Velocity Outdoor |
|
873 |
|
|
988 |
|
Total Branded Consumer |
|
$ |
1,331 |
|
|
$ |
1,397 |
|
|
|
|
|
|
Niche
Industrial |
|
|
|
|
Advanced Circuits |
|
$ |
17 |
|
|
$ |
188 |
|
Arnold Magnetics |
|
1,060 |
|
|
1,112 |
|
Foam Fabricators |
|
526 |
|
|
498 |
|
Sterno Group |
|
326 |
|
|
452 |
|
Total Niche Industrial |
|
$ |
1,929 |
|
|
$ |
2,250 |
|
|
|
|
|
|
Total maintenance capital
expenditures |
|
$ |
3,260 |
|
|
$ |
3,647 |
|
|
|
|
|
|
|
|
|
|
Compass Diversified HoldingsCondensed
Consolidated Balance Sheets |
|
|
|
|
|
March 31, 2020 |
|
December 31, 2019 |
(in thousands) |
(unaudited) |
|
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
291,013 |
|
|
$ |
100,314 |
|
Accounts receivable, net |
184,103 |
|
|
191,405 |
|
Inventories |
305,636 |
|
|
317,306 |
|
Prepaid expenses and other
current assets |
33,711 |
|
|
35,247 |
|
Total current assets |
814,463 |
|
|
644,272 |
|
Property, plant and equipment,
net |
143,799 |
|
|
146,428 |
|
Goodwill and intangible
assets, net |
987,249 |
|
|
1,000,465 |
|
Other non-current assets |
99,986 |
|
|
100,727 |
|
Total
assets |
$ |
2,045,497 |
|
|
$ |
1,891,892 |
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable and accrued
expenses |
$ |
165,812 |
|
|
$ |
178,857 |
|
Due to related party |
7,973 |
|
|
8,049 |
|
Current portion, long-term
debt |
— |
|
|
— |
|
Other current liabilities |
21,795 |
|
|
22,573 |
|
Total current liabilities |
195,580 |
|
|
209,479 |
|
Deferred income taxes |
31,726 |
|
|
33,039 |
|
Long-term debt |
594,664 |
|
|
394,445 |
|
Other non-current
liabilities |
88,444 |
|
|
89,054 |
|
Total liabilities |
910,414 |
|
|
726,017 |
|
Stockholders'
equity |
|
|
|
Total stockholders' equity
attributable to Holdings |
1,081,275 |
|
|
1,115,327 |
|
Noncontrolling interest |
53,808 |
|
|
50,548 |
|
Total stockholders'
equity |
1,135,083 |
|
|
1,165,875 |
|
Total liabilities and
stockholders’ equity |
$ |
2,045,497 |
|
|
$ |
1,891,892 |
|
|
|
|
|
Investor Relations: |
Media Contact: |
The IGB Group |
Joele Frank, Wilkinson Brimmer
Katcher |
Leon Berman |
Jon Keehner / Julie Oakes / Kate
Thompson |
212-477-8438 |
212-355-4449 |
lberman@igbir.com |
|
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