Compass Diversified Holdings Reports
First Quarter 2017 Financial Results
Completes Accretive Add-On Acquisition for Clean Earth and Divestiture of Fox Factory Holding Corp., Increasing Total Gains Realized for Shareholders to Over $770 Million
Westport, Conn., May 3, 2017 – 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 months ended March 31, 2017.
First Quarter 2017 Highlights
|
|
|
•
|
Reported Cash Used in Operating Activities of $1.4 million for the first quarter of 2017, and Cash Flow Available for Distribution and Reinvestment (“CAD” or “Cash Flow”) of $14.9 million for the first quarter of 2017;
|
|
|
|
•
|
Reported net loss of $21.1 million for the first quarter of 2017;
|
|
|
|
•
|
Paid a first quarter 2017 cash distribution of $0.36 per share in April 2017, bringing cumulative distributions paid to $14.9952 per share since CODI’s IPO in May of 2006;
|
|
|
|
•
|
Appointed Sally McCoy to the Company’s Board of Directors;
|
|
|
|
•
|
Sold a total of 5,108,718 shares of Fox Factory Holding Corp. (“FOX”) common stock, with total net proceeds of approximately $136.1 million; and
|
|
|
|
•
|
Completed the accretive add-on acquisition of AERC Recycling Solutions (“AERC”) by CODI’s subsidiary Clean Earth, Inc. (“Clean Earth”).
|
“During the first quarter, our leading middle market businesses generated stable operating results that were consistent with management’s expectations,” stated Alan Offenberg, CEO of Compass Diversified Holdings. “These results reflect strong performances at our Clean Earth, Sterno Products, ERGObaby and 5.11 subsidiaries, with each reporting year-over-year, double-digit revenue increases.”
Mr. Offenberg added, “We continued to reinvest in our current subsidiaries during the quarter with the accretive add-on acquisition of AERC, which expands Clean Earth’s waste processing capabilities and creates new cross-selling opportunities. Complementing this, we strengthened our balance sheet by monetizing our remaining investment in FOX, increasing gains we have realized for shareholders to over $770 million. With our substantial liquidity, CODI is well positioned to pursue both platform and add-on acquisitions that build long-term value and support cash distributions for our shareholders.”
Operating Results
For the quarter ended March 31, 2017, CODI reported Cash Used in Operating Activities of $1.4 million, as compared to Cash Provided by Operating Activities of $6.0 million for the quarter ended March 31, 2016. CODI reported Cash Flow (see Note Regarding Use of Non-GAAP Financial Measures below) of $14.9 million for the quarter ended March 31, 2017, as compared to $13.6 million for the prior year’s comparable quarter. CODI’s weighted average number of shares outstanding for the quarters ended March 31, 2017 and March 31, 2016 were 59.9 million and 54.3 million, respectively.
Cash Flow for the first quarter of 2017 reflects year-over-year earnings growth in the Company’s Clean Earth, Sterno Products, ERGObaby and 5.11 businesses, offset by declines at the Company’s other businesses.
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 over $770 million since going public in 2006.
Net loss for the quarter ended March 31, 2017 was $21.1 million, as compared to net loss of $15.0 million for the quarter ended March 31, 2016. During the first quarter, CODI finalized the goodwill impairment testing at its Arnold subsidiary that had been recorded on a preliminary basis in the fourth quarter of 2016, and recorded an additional $8.9 million goodwill impairment expense.
Liquidity and Capital Resources
As of March 31, 2017, CODI had approximately $115.3 million in cash and cash equivalents, $564.2 million outstanding on its term loan facility and no outstanding borrowings under its revolving credit facility. The Company has no significant debt maturities until 2019 and had net borrowing availability of $546.1 million at March 31, 2017 under its revolving credit facility.
During the first quarter of 2017, the Company sold its remaining shares in its former subsidiary FOX in a secondary public offering for total net proceeds of approximately $136.1 million. Including this divestiture, CODI has realized approximately $525 million in proceeds from its investment in FOX.
First Quarter 2017 Distribution
On April 6, 2017, CODI’s Board of Directors declared a first quarter distribution of $0.36 per share. The cash distribution was paid on April 27, 2017 to all holders of record as of April 20, 2017. Since its IPO in May of 2006, CODI has paid a cumulative distribution of $14.9952 per share.