Compass Diversified Holdings Inc. reported sales at its CamelBak, Fox Factory, Liberty Safe and ERGObaby units unit grew 23.2, 6.5, 4.7 and 19.3 percent respectively in the first quarter.



CamelBak

At CamelBak, net sales for the three months ended March 31, 2012 were approximately $40.2 million, an increase of $7.6 million, or 23.2%, compared to the same period in 2011. The increase in gross sales is a result of increased sales in Hydration Systems ($7.1 million) and Bottles ($2.3 million) offset in part by a decrease in sales in Gloves ($2.1 million) and Accessories ($0.1 million). The increased sales during the three months ended March 31, 2012 compared to the same period in 2011 is attributable to the continued success of “Antidote”, CamelBak’s new reservoir for the recreational Hydration Systems line introduced in 2011, the expansion of offerings in Bottles such as the introduction of eddyTM, and the continued expansion in its customer base, including new and existing customers, for all product lines. The decrease in Glove sales is principally due to decreased demand from the U.S. military. Sales of Hydration Systems and Bottles represented approximately 84% of gross sales for the three months ended March 31, 2012 compared to 74% for the same period in 2011. Military sales represented approximately 35% of gross sales for the three months ended March 31, 2012 compared to 39% for the same period in 2011.

Cost of sales for the three months ended March 31, 2012 were approximately $22.0 million compared to approximately $18.7 million in the same period of 2011. The increase of $3.3 million is due principally to the corresponding increase in sales. Gross profit as a percentage of sales increased to 45.2% for the quarter ended March 31, 2012 compared to 42.7% in the quarter ended March 31, 2011. The increase is attributable to: (i) a favorable sales mix during the quarter compared to last year’s quarter, and (ii) the decrease in Glove sales, which carries a lower gross profit margin than CamelBak’s other product sectors.

Selling, general and administrative expense for the three months ended March 31, 2012 increased to approximately $8.5 million or 21.2% of net sales compared to $7.3 million or 22.4% of net sales for the same period of 2011. The $1.2 million increase in selling, general and administrative expenses incurred during the three months ended March 31, 2012 compared to the same period in 2011 is attributable to; (i) increases in sales commissions ($0.4 million); and (ii) increases in marketing costs ($0.2 million), with the balance of the increase due principally to increased infrastructure costs including personnel costs and benefits, and general overhead necessary to support expansion initiatives in connection with current and anticipated increased sales volume.


Income from operations for the three months ended March 31, 2012 was approximately $7.1 million, an increase of $3.0 million when compared to the same period in 2011, based on the factors described above.


Fox Factory Inc.
Fox Factory Inc., reported net sales for the three months ended March 31, 2012 increased approximately $2.8 million, or 6.5%, compared to the corresponding period in 2011. Sales growth was driven by sales to original equipment manufacturers, which increased $2.0 million to $36.0 million during the three months ended March 31, 2012 compared to $34.0 million for the same period in 2011. The increase in net sales is largely driven by increased spec with our customers and to a lesser degree by increased demand for carryover product.


Fox sells to more than 160 OEM and 7,600 Aftermarket customers across its market segments. In each of the years 2011, 2010 and 2009, approximately 80%, 78% and 76% of net sales were to OEM customers. The remaining net sales were to Aftermarket customers.


Cost of sales for the three months ended March 31, 2012 increased approximately $2.7 million, or 8.9%, compared to the corresponding period in 2011. The increase in cost of sales is primarily due to increased net sales and to a lesser degree attributable to increased overhead costs associated with consolidating Watsonville operations and increased expedited freight costs. Gross profit as a percentage of sales was approximately 28.7% for the three months ended March 31, 2012 compared to 30.3% for the same period in 2011. The 1.6% decrease in gross profit as a percentage of sales during 2012 is largely attributable to the increased overhead costs associated with consolidating Watsonville operations and increased expedited freight.


Selling, general and administrative expense increased approximately $0.9 million during the three months ended March 31, 2012 compared to the same period in 2011. This increase is primarily the result of increases in employee related expenses principally to support company growth.
Income from operations for the three months ended March 31, 2012 decreased approximately $0.7 million to $4.3 million compared to the corresponding period in 2011, based on the increase in costs of sales and selling, general and administrative costs, all as described above, partially offset by the increases in net sales.


Liberty Safe


Net sales for the quarter ended March 31, 2012 increased approximately $0.9 million or 4.7% compared to the corresponding quarter ended March 31, 2011. Non-Dealer sales were approximately $12.6 million in the three months ended March 31, 2012 and $12.6 million for the three months ended March 31, 2011. Dealer sales totaled approximately $8.5 million in the three months ended March 31, 2012 compared to $7.6 million in the same period in 2011, representing an increase of $0.9 million or 12.8%. Liberty began domestic production in the first quarter of 2012 for product that was previously being imported. The startup of this new production line negatively impacted Non-Dealer sales, as all of the demand for the product could not be met during the ramp up of the new production process during the quarter. The increase in Dealer sales is due, in large part, to sales generated by our national advertising campaign, which we expanded in 2012, in conjunction with those accounts that maintain consistent Liberty Safe product advertising at the local level. Demand in both the Non-Dealer and Dealer channel exceeded production capacity in the first quarter of 2012. Non-Dealer and Dealer sales are expected to remain strong throughout the balance of 2012 as Liberty continues its national advertising campaign.

Cost of sales for the quarter ended March 31, 2012 increased approximately $0.9 million when compared to the same period in 2011. Gross profit as a percentage of net sales totaled approximately 23.9% and 24.9% of net sales for the quarters ended March 31, 2012 and March 31, 2011, respectively. The increase in cost of sales is primarily attributable to the increase in net sales for the same period and manufacturing variances. The decrease in gross profit as a percentage of sales realized during the three months ended March 31, 2012 compared to the same period in 2011 is the result of startup costs associated with the new production line, which accounts for approximately one third of the increase with the remaining increase due to additional costs of adding an additional production shift to meet the strong demand during the first quarter of 2012.


Selling, general and administrative expense for the quarter ended March 31, 2012, increased approximately $0.3 million compared to the same period in 2011. This increase is principally the result of increases in the following costs: (i) commission for the increase in sales and compensation expense of $0.1 million, (ii) co-op advertising and national advertising totaling $0.1 million, (iii) other miscellaneous costs of $0.1 million, including depreciation, travel, legal, and other costs.
Income from operations decreased $0.3 million during the three-months ended March 31, 2012 compared to the same period in 2011 based on the factors described above.



ERGObaby


Net sales for the three months ended March 31, 2012 were $13.7 million, an increase of $2.2 million or 19.3% compared to the same period in 2011. The increase is primarily attributable to Orbit Baby sales of $3.5 million in the 2012 period compared to the same period in 2011 which does not include Orbit Baby performance. Domestic ERGObaby sales were approximately $3.5 million in the three months ended March 31, 2012 compared to approximately $3.4 million in the same period for 2011.


ERGObaby international sales, exclusive of Orbit Baby, were approximately $6.7 million in the three months ended March 31, 2012 compared to $8.1 million in 2011, a decrease of $1.4 million. This decrease in international sales is attributable to the timing of deliveries to international distributers. Excluding Orbit Baby sales of $3.5 million, baby carriers represented 88.2% of sales in the quarter ended March 31, 2012 compared to 88.5% of sales during the same period in 2011.


Cost of sales for the three months ended March 31, 2012 were approximately $5.7 million compared to $4.2 million in the same period of 2011. The increase of $1.5 million is due principally to the increase in sales in the same period and $0.6 million of amortization expense associated with Orbit Baby’s inventory fair value step-up as a result of the purchase price allocation in connections with the purchase of Orbit Baby in November 2011. Excluding this amortization expense in 2012, gross profit as a percentage of sales is 62.4% for the quarter ended March 31, 2012 compared to 63.3% for the same period in 2011. The 0.9% decrease is primarily attributable to lower margin Orbit Baby product sales in the March 31, 2012 period, offset in part by a lower percentage of organic baby carriers sold in 2012 compared to 2011 and a higher percentage of domestic sales in the first three-months of 2012 compared to 2011. Organic baby carriers are standard baby carriers made with organic cotton and generate a lower gross profit margin and domestic sales generally carry a higher price point and as a result generate higher gross profit margins.


Selling, general and administrative expense for the three months ended March 31, 2012 increased to approximately $5.4 million or 39.6% of net sales compared $4.1 million or 36.0% of net sales for the same period of 2011. The increase of $1.3 million is primarily attributable to the additional overhead as a result of the acquisition of Orbit Baby ($1.2 million).


Income from operations for the three months ended March 31, 2012 decreased $1.0 million to $1.6 million compared to $2.6 million during 2011 based principally on the factors described above.