Compass Diversified Holdings (CODI), the parent of Liberty Safe, Crossman and 5:11, said its cash flow grew to $26.2 million as compared to $22.6 million for the prior year’s comparable quarter. Cash Flow for the third quarter of 2017 reflects year-over-year earnings growth in the company’s Advanced Circuits, Arnold Magnetic and Clean Earth businesses, offset by declines at the company’s other businesses.

The company generated cash from  operating activities of $23.4 million in its third quarter as compared to $15.1 million for the same period a year ago.

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 its businesses for the periods during which CODI owned them. However, cash lfow excludes the gains from monetizing interests in CODI’s subsidiaries, which have totaled over $770 million since going public in 2006.

Net income for the quarter ended September 30, 2017 was $8.4 million, as compared to net income of $50.2 million for the quarter ended September 30, 2016. During the third quarter of 2016, CODI realized a net gain of $50.4 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.

“During the third quarter, our middle market businesses generated stable cash flow levels that were consistent with management’s expectations,” stated Alan Offenberg, CEO of Compass Diversified Holdings. “This included year-over-year EBITDA growth at our Advanced Circuits, Arnold Magnetic and Clean Earth subsidiaries.”

Offenberg added, “CODI also continued to reinvest in our subsidiaries’ continued growth with two accretive add-on acquisitions. This included Crosman’s acquisition of LaserMax’s Commercial business, which extends Crosman’s reach into new retail categories and creates new cross-selling opportunities with current big box retail and international customers. Additionally, our Sterno Products subsidiary completed the acquisition of sevenOKs, strengthening the company’s product offering for the foodservice market. With our strong balance sheet, CODI is well positioned to continue pursuing future acquisitions that build long-term shareholder value and support our ability to provide stable cash distributions.”

Liquidity and Capital Resources

As of September 30, 2017, CODI had approximately $41.5 million in cash and cash equivalents, $561.4 million outstanding on its term loan facility and $25.5 million in outstanding borrowings under its revolving credit facility. The company has no significant debt maturities until 2019 and had net borrowing availability of $523.2 millionat September 30, 2017 under its revolving credit facility.

Third Quarter 2017 Distributions

On October 5, 2017, CODI’s Board of Directors (the “Board”) declared a third quarter distribution of $0.36 per share on the company’s common shares (the “Common Shares”). The cash distribution was paid on October 26, 2017 to all holders of record of Common Shares as of October 19, 2017. Since its IPO in May of 2006, CODI has paid a cumulative distribution of $15.7152 per common share.

The Board also declared a quarterly cash distribution of $0.61423611 per share on the company’s 7.250 percent Series A Preferred Shares. The distribution on the Preferred Shares covered the period from and including June 28, 2017, the original issue date of the Preferred Shares, up to, but excluding, October 30, 2017. The distribution for such period was paid on October 30, 2017 to all holders of record of Preferred Shares as of October 15, 2017.

CODI’snine majority-owned subsidiaries are engaged in the following lines of business:

  • The design and marketing of purpose-built tactical apparel and gear serving a wide range of global customers (5.11);
  • The manufacture of quick-turn, small-run and production rigid printed circuit boards (Advanced Circuits);
  • The manufacture of engineered magnetic solutions for a wide range of specialty applications and end-markets (Arnold Magnetic Technologies);
  • Environmental services for a variety of contaminated materials including soils, dredged material, hazardous waste and drill cuttings (Clean Earth);
  • The design, manufacture and marketing of airguns, archery products, optics and related accessories (Crosman);
  • The design and marketing of wearable baby carriers, strollers and related products (Ergobaby);
  • The design and manufacture of premium home and gun safes (Liberty Safe);
  • The manufacture and marketing of branded, hemp-based food products (Manitoba Harvest); and
  • The manufacture and marketing of portable food warming fuels and creative ambience solutions for the hospitality and consumer markets (Sterno Products).