Compass Diversified Holdings Reports Fourth Quarter and Full Year 2012 Financial Results

WESTPORT, Conn., March 6, 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 and twelve months ended December 31, 2012.

Fourth Quarter 2012 Highlights

• Generated Cash Flow Available for Distribution and Reinvestment ("CAD" or "Cash Flow") of $14.9 million for the fourth quarter of 2012 and $77.7 million for the full year 2012;
• Reported a net loss of $5.2 million for the fourth quarter of 2012 and net income of $4.3 million for the full year 2012; and
• Paid a fourth quarter 2012 cash distribution of $0.36 per share in January 2013, bringing cumulative distributions paid to $8.8752 per share since CODI's IPO in May of 2006.

Alan Offenberg, CEO of Compass Group Diversified Holdings LLC, stated, "We are pleased to post strong operating results for the fourth quarter and full year 2012. CODI's Cash Flow for the three and twelve months ended December 31, 2012 increased year-over-year by 38.6% and 12.6%, respectively. The success we achieved throughout the year in leveraging the leadership position and comparative financial strength of our subsidiaries led to strong revenue and earnings growth, particularly in our branded product businesses consisting of CamelBak, ERGObaby, Fox and Liberty Safe. We also benefited from our newest platform business, Arnold Magnetic, which we acquired in March of 2012. As we maintain our focus on acquiring new businesses that are accretive to CAD, we continue to reinvest in our existing family of businesses. In 2012, capital expenditures totaled approximately $18.5 million, enhancing our ability to ensure the long-term health of our niche market leaders and drive future performance. With a strong balance sheet, we remain committed to capitalizing on both organic and acquisition-related growth opportunities while providing attractive cash distributions for our owners as we have consistently done in the past."

Operating Results
CODI reported Cash Flow (see note regarding use of Non-GAAP Financial Measures below) of $14.9 million for the quarter ended December 31, 2012, as compared to $10.7 million for the prior year comparable quarter. CODI's Cash Flow for the year ended December 31, 2012 was $77.7 million as compared to $69.0 million for the prior year period. CODI's weighted average number of shares outstanding for both the quarter and twelve months ended December 31, 2012 was approximately 48.3 million, as compared to 48.3 million and 47.3 million for the quarter and twelve months ended December 31, 2011, respectively.

The improvement in Cash Flow for the fourth quarter and full year 2012 as compared to the corresponding year-earlier periods was primarily due to the full inclusion of operating results from the Company's CamelBak subsidiary, which was acquired by CODI on August 24, 2011. In addition, Cash Flow for the fourth quarter and full year 2012 was positively impacted by the 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 fourth quarter and full year 2012 excluded the results from the Company's Staffmark subsidiary, which was sold on October 17, 2011. Additionally, Cash Flow for the second half of 2012 excluded the seasonally strong operating 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 subsidiary 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.

The net loss for the quarter ended December 31, 2012 was $5.2 million, as compared to net income of $58.6 million for the quarter ended December 31, 2011.  CODI recorded approximately $3.9 million in higher non-cash supplemental put expense in the 2012 fourth quarter as compared to the corresponding previous quarter. This expense is based on the periodic review of current cash flow generation of its subsidiaries, as well as anticipated market multiples for those businesses in the event they were to be sold in the current environment. During the fourth quarter ended December 31, 2011, CODI recorded an $88.6 million gain on the sale of Staffmark, partially offset by a $20.1 million non-cash impairment charge for the Company's American Furniture Manufacturing subsidiary.

For the twelve months ended December 31, 2012, CODI reported net income of $4.3 million, as compared to net income of $72.8 million for the twelve months ended December 31, 2011, which included the previously mentioned $88.6 million gain on the sale of Staffmark.

Liquidity and Capital Resources
As of December 31, 2012, CODI had approximately $18.2 million in cash and cash equivalents, $252.5 million outstanding on its term loan facility and $24.0 million outstanding under its $290 million revolving credit facility. The Company has no significant debt maturities until October 2016 and had borrowing availability of approximately $264 million at December 31, 2012 under its revolving credit facility.

Fourth Quarter 2012 Distribution
On January 10, 2013, CODI's Board of Directors declared a fourth quarter distribution of $0.36 per share. The cash distribution was paid on January 31, 2013 to all holders of record as of January 25, 2013. Since its IPO in May of 2006, CODI has paid a cumulative distribution of $8.8752 per share.

Conference Call
Management will host a conference call on Thursday, March 7, 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 (866) 307-3343 and the dial-in number for international callers is (678) 894-3054. The access code for all callers is 92499964. A live webcast will also be available on the Company's website at www.compassdiversifiedholdings.com.   

A replay of the call will be available through March 14, 2013. 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 92499964.

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 subsidiaries 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 subsidiaries is a leader in their 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 owners.

Our subsidiaries are engaged in the following lines of business:

• The manufacture of quick-turn, prototype and production rigid printed circuit boards (Advanced Circuits, www.advancedcircuits.com);
• The design and manufacture of promotionally priced upholstered furniture (American Furniture Manufacturing, www.americanfurn.net);
• The 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);
• The manufacture of engineered magnetic solutions for a wide range of specialty applications and end-markets (Arnold Magnetic Technologies, www.arnoldmagnetics.com);
• The design and manufacture of personal hydration products for outdoor, recreation and military use   (CamelBak Products, www.camelbak.com);
• The design and marketing of wearable baby carriers, strollers and related products (ERGObaby, www.ergobabycarriers.com);
• The design, manufacture and marketing of premium suspension products for mountain bikes and powered off-road vehicles (FOX, www.ridefox.com);
• The 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.

 

SOURCE Compass Diversified Holdings