Compass Diversified Holdings, which owns controlling interest in several outdoor products companies, reported a net loss of $5.1 million for the fourth quarter of 2013 and net income of $78.8 million for the full year 2013.


 

The company’s owns a controlling stake in, and manages, eight middle market businesses, including CamelBak Products, Ergobaby, Fox Factory and Liberty Safe.

 

“During 2013, CODI generated cash flow of $73.5 million as we maintained our focus on leveraging the leadership position and comparative financial strength of our subsidiary businesses,” stated Alan Offenberg, CEO of Compass Diversified Holdings. “We are pleased by the record full year results posted by our Liberty Safe and Ergobaby subsidiaries. Although cash flow for the fourth quarter and full year 2013 was reduced due in large part to the exclusion of the results from our Fox subsidiary upon completion of its IPO in the third quarter, CODI generated substantial debt and equity proceeds from this offering while maintaining a majority interest in Fox, further strengthening our liquidity position. Additionally, we continued to reinvest in the long-term performance of our existing family of businesses as capital expenditures for 2013 increased year-over-year by more than 10 percent to $20.4 million.”

 

CODI reported cash flow (see note regarding use of Non-GAAP Financial Measures below) of $9.9 million for the quarter ended Dec. 31, 2013, as compared to $14.9 million for the prior year comparable quarter. CODI's weighted average number of shares outstanding for both the quarter ended Dec. 31, 2013 and Dec. 31, 2012 was approximately 48.3 million.

 

Cash flow for the fourth quarter of 2013 reflects year-over-year growth at Ergobaby and Arnold Magnetic businesses, offset by results at CamelBak business, which was adversely affected by expiration of a contract with the U.S. Marine Corps in the first quarter of 2013 as well as reduced demand from the U.S. Military resulting from the continued drawdown of combat troops. Additionally, cash flow for the fourth quarter of 2013 excluded results from the company's FOX subsidiary, which completed its initial public offering (IPO) on August 13, 2013. As a result of this offering, Fox is no longer included in CODI's calculation of CAD. Based on the company's debt and equity interests in Foix, CODI generated total net proceeds of approximately $142.4 million from the IPO and continues to hold a majority ownership in Fox.

 

For the year ended Dec. 31, 2013, CODI reported cash flow of $73.5 million, as compared to $77.7 million for the year ended Dec. 31, 2012. CODI's weighted average number of shares outstanding for the twelve month periods ended Dec. 31, 2013 and Dec. 31, 2012 was approximately 48.3 million.

 

 

“Going forward, with considerable cash on hand, availability under our revolving credit facility and a significant remaining ownership position in Fox, we will continue to actively pursue acquisitions of new platform companies utilizing our disciplined approach to valuation and diligence. Management is committed to capitalizing on both organic and acquisition-related growth opportunities that create value for our owners while delivering a steady stream of cash distributions as we have consistently done since going public. With the underlying fundamentals and future prospects intact for our diverse mix of leading middle market businesses combined with a strong balance sheet, CODI remains well positioned for 2014, and beyond.”

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 more than $270 million since going public in 2006.

 


The net loss for the quarter ended Dec. 31, 2013 was $5.1 million, as compared to a net loss of $5.2 million for the quarter ended Dec. 31, 2012. During the fourth quarter ended Dec. 31, 2013, CODI recorded a $12.0 million non-cash impairment charge for the Company's Tridien Medical subsidiary, reflecting a decline in the estimated current fair market value for this subsidiary.

 

For the year ended Dec. 31, 2013, CODI reported net income of $78.8 million, which included a $61.3 million supplemental put expense reversal in connection with the previously announced termination of the Supplemental Put Agreement in July 2013. For the year ended Dec. 31, 2012, CODI reported net income of $4.3 million.
Liquidity and Capital Resources

 

As of Dec. 31, 2013, CODI had approximately $113.2 million in cash and cash equivalents, $279.8 million outstanding on its term loan facility and no outstanding borrowings under its $320 million revolving credit facility. The