Compass Diversified Holdings (CODI) generated cash provided by operating activities of $37.3 million, as compared to cash provided by operating activities of $39.5 million for the quarter ended June 30, 2016.
Compass Diversified Holding’s brands include 5.11, Advanced Circuits, Clean Earth, Crosman, Ergobaby, Liberty Safe, Manitoba Harvest and Sterno Products.
Second Quarter 2017 Highlights
- Generated Cash Provided by Operating Activities of $37.3 million, and Cash Flow Available for Distribution and Reinvestment of $25.5 million for the second quarter of 2017;
- Reported net loss of $2.7 million for the second quarter of 2017;
- Paid a second quarter 2017 cash distribution of 36 cents per share in July 2017, bringing cumulative distributions paid to $15.3552 per share since CODI’s IPO in May of 2006;
- Consummated the accretive platform acquisition of Crosman Corporation
- Completed an offering of 4,000,000 shares of its 7.250 percent Series A Preferred Shares; and
- Subsequent to quarter end, completed the accretive add-on acquisition of the Commercial business of LaserMax, Inc. by CODI’s subsidiary Crosman.
“Our niche leading businesses continued to generate consistent free cash flow in the second quarter with strong EBITDA growth at our Advanced Circuits, Ergobaby, Manitoba Harvest and 5.11 subsidiaries,” stated Alan Offenberg, CEO of Compass Diversified Holdings. “Additionally, during the quarter CODI expanded its outdoor branded consumer presence with the accretive, platform acquisition of Crosman.”
Offenberg added, “Crosman’s leadership in airgun products and continued penetration into the archery market makes it a strong addition to our family of leading middle market businesses. Subsequent to quarter end, CODI completed the add-on acquisition of LaserMax’s Commercial business for Crosman, supporting the company’s expansion into complementary markets while creating new cross-selling opportunities. During the second quarter, we also completed an offering of 4 million preferred shares, generating $100 million in gross proceeds. With an enhanced capital structure and over $500 million of available liquidity, CODI is well positioned to pursue attractive platform and add-on acquisitions that generate strong free cash flow and support our ability to provide attractive and consistent cash distributions.”
For the quarter ended June 30, 2017, CODI generated cash provided by operating activities of $37.3 million, as compared to cash provided by operating activities of $39.5 million for the quarter ended June 30, 2016. CODI reported Cash Flow of $25.5 million for the quarter ended June 30, 2017, as compared to $15.6 million for the prior year’s comparable quarter. CODI’s weighted average number of shares outstanding for the quarters ended June 30, 2017 and June 30, 2016 were 59.9 million and 54.3 million, respectively.
Cash Flow for the second quarter of 2017 reflects year-over-year earnings growth in the company’s Advanced Circuits, Sterno Products, Ergobaby, Manitoba Harvest and 5.11 businesses, offset by declines at the company’s Arnold Magnetic and Clean Earth businesses. The acquisition of Crosman also contributed to the second quarter earnings growth.
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 over $770 million since going public in 2006.
Net loss for the quarter ended June 30, 2017 was $2.7 million, as compared to net income of $19.4 million for the quarter ended June 30, 2016. During the second quarter of 2016, CODI realized a net gain of $18.9 million related to its equity investment in its former subsidiary Fox Factory Holding Corp. During the first quarter of 2017, the company sold its remaining shares in FOX in a secondary public offering.
Liquidity and Capital Resources
As of June 30, 2017, CODI had approximately $39.3 million in cash and cash equivalents, $562.8 million outstanding on its term loan facility and $3.7 million in outstanding borrowings under its revolving credit facility. The company has no significant debt maturities until 2019 and had net borrowing availability of $544.6 million at June 30, 2017 under its revolving credit facility.
In June 2017, the company completed a public offering of 4 million of its 7.250 percent Series A Preferred Shares with a liquidation preference of $25 per share. CODI raised $96.6 million of net proceeds from the offering, which was used to repay a portion of the outstanding balance of its revolving credit facility and for general corporate purposes.
Second Quarter 2017 Distribution
On July 6, 2017, CODI’s Board of Directors declared a second quarter distribution of 36 cents per share. The cash distribution was paid on July 27, 2017 to all holders of record as of July 20, 2017. Since its IPO in May of 2006, CODI has paid a cumulative distribution of $15.3552 per share.
Photo courtesy 5.11