Compass Diversified Holdings reported sales at 5.11 Tactical rose 19 percent in its fourth quarter while Liberty Safe’s fourth-quarter revenue rose 7 percent.
On a conference call with analysts, Alan Offenberg, CEO, said 5.11 Tactical, the manufacturer of tactical apparel and gear, has performed in line with expectations since its acquisition in August 2016. On a pro-forma basis assuming the company had owned the brand a year ago, revenue increased 19 percent for the quarter and EBITDA jumped over 51 percent. The increase in EBITDA was primarily due to the timing of a direct-to-agency order and growth in the higher-margin retail and e-commerce distribution channels during the latest period. 5.11 Tactical is expected to grow in 2017 and investments are being made to support growth going forward.
Said Offenberg, “We are very excited about 5.11’s growth prospects as it continues to serve tactical professionals and expanded consumer penetration worldwide.”
Liberty Safe’s fourth-quarter revenue gain of 7 percent was in line with expectations. The gains reflect continued strong overall consumer demand, specifically in the dealer channel. Fourth-quarter EBITDA margins eroded to approximately 15 percent compared with 18.4 percent a year ago due to higher steel prices. Given continued demand for Liberty’s products, modest revenue growth is expected in 2017. With steel prices returning to more normalized levels, 2017 earnings are expected to be down slightly compared with 2016.
Asked whether the changeover to a Republican administration has had any impact on Liberty Safe, Offenberg said demand for the gun storage maker has “remained fairly consistent and strong.” He added, “It’s been a long time, obviously, since there has been a pro-firearms administration. And so we will have to see how the year shapes out, but based on what we see, right now, demand levels remain steady and we are certainly hopeful of that to continue throughout the rest of the year.”
Compass Diversified has reduced its presence in the active space with it sale of Camelback to Vista Outdoor in July 2015 and the sale last year of much of its stake in Fox Factory. It continues to own 14 percent of the cycling specialist.
The company’s other brands include ERGObaby, Manitoba Harvest in its Branded Consumer business and Advanced Circuits, Arnold Magnetic, Cleaner and Sterno Products in its Industrial segment. On the industrial side, its brands include Advanced Circuits, Arnold Magnetic, Cleaner and Sterno Products.
