Compass Diversified (CODI) announced that its Board of Directors has declared a quarterly cash distribution of 25 cents per share on its common shares. The distribution for the three months ended December 31, 2021 is payable on January 20, 2022 to all holders of record of Common Shares as of January 13, 2022.
“We are excited to begin our first full year treated as a corporation for U.S. federal income tax purposes,” said Elias Sabo, CEO of CODI. “With the removal of certain administrative requirements for our shareholders, we expect to be able to expand our shareholder base and improve the likelihood of our stock’s inclusion within stock indices. CODI is now entering its next stage of growth and we are confident that our simplified tax structure puts us in position to unlock substantial long-term value for our shareholders.”
As previously announced and disclosed by CODI, the reduction in the fourth quarter common distribution is a result of its tax reclassification, which became effective on September 1, 2021, and the assumption of corporate tax liability. The 2021 Schedule K-1, which is anticipated to be issued to shareholders in late February 2022, will represent shareholder tax liability from the beginning of 2021 through the company’s tax reclassification and is expected to be the final Schedule K-1 distributed by the company.
CODI’s common and preferred cash distributions should constitute “qualified dividends” for U.S. federal income tax purposes to the extent paid from “earnings and profits” (as determined under U.S. federal income tax principles), provided that the requisite holding period is met. To the extent that the amount of the cash distributions exceeds earnings and profits, such distribution will first be treated as a non-taxable return of capital to the extent of the holder’s adjusted tax basis in the shares, and thereafter be treated as capital gain from the sale or exchange of such shares.
The Board also declared a quarterly cash distribution of $0.453125 per share on the company’s 7.250 percent Series A Preferred Shares (the “Series A Preferred Shares”). The distribution on the Series A Preferred Shares covers the period from, and including, October 30, 2021, up to, but excluding, January 30, 2022. The distribution for such period is payable on January 30, 2022 to all holders of record of Series A Preferred Shares as of January 15, 2022. The payment will occur on January 31, 2022, the next Business Day following the payment date.
The Board also declared a quarterly cash distribution of $0.4921875 per share on the company’s 7.875 percent Series B Preferred Shares (the “Series B Preferred Shares”). The distribution on the Series B Preferred Shares covers the period from, and including, October 30, 2021, up to, but excluding, January 30, 2022. The distribution for such period is payable on January 30, 2022 to all holders of record of Series B Preferred Shares as of January 15, 2022. The payment will occur on January 31, 2022, the next business day following the payment date.
The Board also declared a quarterly cash distribution of $0.4921875 per share on the company’s 7.875 percent Series C Preferred Shares (the “Series C Preferred Shares”). The distribution on the Series C Preferred Shares covers the period from, and including, October 30, 2021, up to, but excluding, January 30, 2022. The distribution for such period is payable on January 30, 2022 to all holders of record of Series C Preferred Shares as of January 15, 2022. The payment will occur on January 31, 2022, the next Business Day following the payment date.
CODI’s business holdings include 5.11, Boa Technology, Marucci Sports, and Velocity Outdoor in the active lifestyle space. Other businesses include Advanced Circuits, Arnold Magnetic Technologies, Ergobaby, Foam Fabricators, Lugano Diamonds and Sterno.
