Compass Diversified Holdings Inc. reported consolidated revenue at its four branded product companies – CamelBak, Fox Factory, Liberty Safe and Ergobaby – rose 15 percent to $413 million in the third quarter ended Sept. 30.


The $53.8 million increase in revenue accounted for 74 percent of revenue growth at CODI, a publicly traded equity fund that also owns four niche industrial companies.  Revenue at those companies declined 4.1 percent to $288.7 million during the quarter. 


CODI has acquired all four branded product companies since 2008. On a consolidated basis, they generated EBITDA of $83.5 million for the company in the third quarter, up 19.7 percent compared to the same quarter a year earlier.


CamelBak hurt by declining military orders
CamelBak was the lone branded products company in the portfolio to report lower revenue and income. Net sales at the hydration products company slipped by $1.6 million, or 4.3 percent, to approximately $36.7 million in the three months ended Sept. 30, 2012 as a $3.3 million increase in sales of Bottles could not offset decreased sales in Hydration Systems ($0.1 million), Accessories ($1.1 million) and Gloves ($3.9 million). The decline in glove sales was attributed to a drawdown of U.S. combat troops that has diminished demand. Military sales declined to 38 percent from 45 percent of sales compared to the third quarter of 2011.


Gross margin increased 470 basis points (b.p.) points, due in part to fewer, lower-margin military sales. SG&A grew to 24.7 percent of net sales, up 560 b.p. due to $800,000 in additional compensation expense, $400,000 in added marketing costs, $200,000 increase in bad debt and higher general overhead.


Income from operations for the three months reached $5.1 million, a 15 percent decline from a year earlier.


Fox Factory sees strong OEM demand

At Fox Factory, which derives most of its revenue providing suspension components to mountain bike manufacturers, net sales increased 18.1 percent to $72.9 million, driven by a 19.0 percent increase in OEM sales as more bicycle, motorcycle, snowmobile and 4WD OEMs specified its products. Gross margin fell 300 b.p. to 27.6 percent as the company continue to absorb costs from consolidating its Watsonville, CA operations, expanding its Taiwanese operations, higher warranty costs and expedited freight costs.  SG&A as a percentage of net sales fell 150 b.p. to 10.5 percent. Income from operations increased 10 percent to $11 million.

Libert Safe sees big shift in distribution


Liberty Safe reported net sales reached $23.4 million, up 7.3 percent from the third quarter of 2011. Non-Dealer sales, or sales through sporting goods and home improvement retail outlets, decreased 9.3 percent to $12.6 million due to the absence of a holiday promotion with a national retailer. Dealer sales, or sales through specialty gun dealers, increased 37.6 percent to $10.8 million. Gross margin increased 190 b.p. to 26.8 percent due large to price increases and a more favorable sales mix. SG&G reached 12.3 percent of net sales, up 60 basis points due large to higher direct commission and co-op advertising costs. Income from operations reached $2.1 million, up 43 percent.  

Ergobaby boosted by acquisition


At Ergobaby, net sales increased $7.8 million, or 72.9 percent to $18.5 million, thanks in part to $3.8 million in sales from Orbit Baby, a maker of premium stroller travel systems acquired in November 2011.  Gross margin fell 500 b.p. to 61.4 percent, due primarily to the lower margin sales of Orbit Baby products as well as growing international sales. SG&A reached 33.0 percent of net sales, down 360 b.p. from the third quarter of 2011.