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Compass Diversified Holdings, an owner of leading middle market businesses, announced today its consolidated operating results for the three months ended September 30, 2015.
Third Quarter 2015 Highlights
- Generated Cash Flow Available for Distribution and Reinvestment ("CAD" or "Cash Flow") of $23.8 million for the third quarter of 2015;
- Reported net income of $166.0 million for the third quarter of 2015;
- Paid a third quarter 2015 cash distribution of $0.36 per share in October 2015, bringing cumulative distributions paid to $12.8352 per share since CODI's IPO in May of 2006;
- Consummated the platform acquisition of Fresh Hemp Foods Ltd. ("Manitoba Harvest"); and
- Completed the sale of our CamelBak Products, LLC ("CamelBak") subsidiary.
"We generated strong operating results during the quarter, which both exceeded our expectations and significantly covered our distribution," stated Alan Offenberg, CEO of Compass Diversified Holdings. "Our third quarter performance reflects strong cash flow contributions from Liberty Safe, SternoCandleLamp and Ergobaby, underscoring the leadership and financial strength of our niche industrial and branded consumer businesses."
Offenberg added, "During the third quarter, we closed on our acquisition of Manitoba Harvest, highlighting our success adding niche leading businesses with a strong market leadership, proven management, a passionate consumer following and compelling expansion opportunities. We also completed the sale of CamelBak, unlocking significant value and increasing the gains we have realized for shareholders to over $480 million since our IPO. We continue to benefit from a strong balance sheet, positioning CODI to capitalize on compelling acquisition opportunities as well as reinvest in its current subsidiaries to further drive future cash flow growth."
CODI reported Cash Flow (see Note Regarding Use of Non-GAAP Financial Measures below) of $23.8 million for the quarter ended September 30, 2015, as compared to $13.4 million for the prior year's comparable quarter. CODI's weighted average number of shares outstanding for the quarters ended September 30, 2015 and September 30, 2014 were 54.3 million and 48.3 million, respectively.
Cash Flow for the third quarter of 2015 reflects year-over-year growth in the Company's Liberty Safe, SternoCandleLamp, Ergobaby, American Furniture Manufacturing, and Tridien businesses, partially offset by a decline at the Company's Advanced Circuits and Clean Earth businesses. Cash flow for the third quarter of 2015 included contributions from Manitoba Harvest from the date of acquisition and CamelBak through the date of sale.
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 more than $480 million since going public in 2006, including a $165 million gain from the sale of CamelBak recorded in the third quarter.
Net income for the quarter ended September 30, 2015 was $166.0 million, as compared to net income of $262.5 million for the quarter ended September 30, 2014. During the third quarter of 2015, CODI recorded a gain on the sale of CamelBak of $165.3 million and a loss on the classification of AFM as held for sale of $14.3 million. In addition, during the third quarter of 2015, CODI's equity method investment in Fox Factory Holding Corp. ("FOX", Nasdaq: FOXF) increased $11.8 million. During the third quarter of 2014, CODI recorded a one-time accounting gain of approximately $264.3 million as a result of the deconsolidation of FOX.
For the nine month period ended September 30, 2015, CODI reported net income of $167.3 million, as compared to net income of $282.2 million for the nine months ended September 30, 2014, which included results from FOX until its deconsolidation in July 2014.
Liquidity and Capital Resources
As of September 30, 2015, CODI had approximately $88.7 million in cash and cash equivalents, $321 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 approximately $395 million at September 30, 2015 under its revolving credit facility. In addition, the Company's equity investment in its former subsidiary FOX is valued at $254.7 million at September 30, 2015. Subsequent to the quarter end, the Company sold American Furniture Manufacturing and received net proceeds of $23.5 million.
Third Quarter 2015 Distribution
On October 7, 2015, CODI's Board of Directors declared a third quarter distribution of $0.36 per share. The cash distribution was paid on October 29, 2015 to all holders of record as of October 22, 2015. Since its IPO in May of 2006, CODI has paid a cumulative distribution of $12.8352 per share.
About Compass Diversified Holdings
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.