Attached files
file | filename |
---|---|
8-K - FORM 8-K - Compass Group Diversified Holdings LLC | w81931e8vk.htm |
Exhibit 99.1
Compass Diversified Holdings
|
Investor Relations and Media Contacts: | |
James J. Bottiglieri Chief Financial Officer 203.221.1703 jbottiglieri@compassdiversifiedholdings.com |
The IGB Group Leon Berman / Michael Cimini 212.477.8438 / 212.477.8261 lberman@igbir.com / mcimini@igbir.com |
Compass Diversified Holdings Reports Fourth Quarter and Full Year 2010 Financial Results
Generates Cash Flow Available for Distribution and Reinvestment of $21.4 Million for Fourth
Quarter Ended December 31, 2010 and $71.3 Million for Full Year 2010
Quarter Ended December 31, 2010 and $71.3 Million for Full Year 2010
Westport, Conn., March 10, 2011 Compass Diversified Holdings (NYSE: CODI) (CODI or the
Company), an owner of leading middle market businesses, announced today its consolidated
operating results for the three and twelve months ended December 31, 2010.
Fourth Quarter 2010 Highlights
| Generated Cash Flow Available for Distribution and Reinvestment (CAD or Cash Flow) of $21.4 million for the fourth quarter of 2010 and $71.3 million for the full year 2010; | ||
| Reported net income of $0.7 million for the fourth quarter of 2010 and a net loss of $44.8 million for the full year 2010, which includes a $38.8 million non-cash impairment charge; | ||
| Paid a fourth quarter 2010 cash distribution of $0.34 per share in January 2011, bringing cumulative distributions paid to $5.9952 per share since CODIs IPO in May of 2006; and | ||
| Completed a 4.85 million share offering in December 2010. |
CODI reported Cash Flow (see note regarding use of Non-GAAP Financial Measures below) of $21.4
million for the quarter ended December 31, 2010, as compared to $17.9 million for the prior year
comparable quarter. CODIs Cash Flow for the year ended December 31, 2010 was $71.3 million as
compared to $37.0 million for the prior year period. CODIs weighted average number of shares
outstanding for the quarter and twelve months ended December 31, 2010 was approximately 44.1
million and 40.9 million, respectively, as compared to 36.6 million and 34.4 million for the
quarter and twelve months ended December 31, 2009, respectively.
The improvement in Cash Flow for the fourth quarter and full year 2010 as compared to the
year-earlier periods was substantially due to higher revenue levels at our subsidiary companies,
which
also resulted in greater operating efficiencies at a number of our businesses. In addition,
the fourth
quarter of 2010 was positively impacted by the inclusion of results from Circuit Express, which was
acquired by our subsidiary, Advanced Circuits, on March 11, 2010, as well as from Liberty Safe and
ERGObaby, two new CODI platform businesses which were acquired on March 31, 2010 and September 16,
2010, respectively.
CODIs 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 subsidiary for the
periods during which CODI owned them. However, Cash Flow excludes the gains from sales of
businesses, which have totaled over $109 million since 2007.
Net income for the quarter ended December 31, 2010 was $0.7 million, as compared to a net loss of
$0.1 million for the quarter ended December 31, 2009. CODI reported a net loss for the year ended
December 31, 2010 of $44.8 million, as compared to a net loss of $39.6 million for the prior year
period. During 2010, CODI recorded a $38.8 million non-cash impairment charge for the Companys
American Furniture Manufacturing subsidiary. During the first quarter of 2009, CODI recorded $59.8
million of non-cash impairment expense for the Companys Staffmark subsidiary, partially offset by
the associated tax benefit related to this impairment of $22.5 million.
As of December 31, 2010, CODI had $13.5 million in cash and cash equivalents on hand, $74.0 million
outstanding on its term loan facility and $22.0 million outstanding under its $340 million
revolving credit facility. The Company has no significant debt maturities until late 2012 and had
borrowing availability of approximately $248 million at December 31, 2010 under its revolving
credit facility.
In December 2010, CODI completed a public offering of 4,850,000 trust shares. CODI raised
approximately $78.0 million of net proceeds from the offering of which $70.0 million was used to
repay revolver borrowings outstanding.
On January 5, 2011, CODIs Board of Directors declared a distribution of $0.34 per share. The
distribution was paid on January 28, 2011 to all holders of record as of January 21, 2011.
Commenting on the quarter and the full year, Alan Offenberg, interim Chief Executive Officer of
Compass Diversified Holdings, stated, We are pleased to post strong operating results for the
fourth quarter and full year 2010. CODIs Cash Flow for the three and twelve months ended December
31, 2010 increased year-over-year by approximately 19% and 93%, respectively. Throughout the year,
we capitalized on the leadership position and comparative financial strength of our subsidiaries to
expand their relative market share and experienced increased operating leverage by maintaining an
efficient cost structure as revenue trends strengthened. We also benefited from the accretive
acquisition of two platform companies, increasing our family of niche leading businesses to eight,
as well as one add-on to an existing company.
Mr. Offenberg added, During the fourth quarter, we further strengthened our balance sheet by
completing a 4.85 million share offering, resulting in net proceeds of $78.0 million and
demonstrating the continued support we have received from the capital markets. With continuing
access to capital, we remain well positioned to consummate acquisitions under favorable valuations
and terms as we have in the past. In addition, we plan to reinvest in our current subsidiaries to
enhance our high return organic growth initiatives and drive future performance.
Conference Call
Management will host a conference call today at 9:00 a.m. ET to discuss the latest corporate
developments and financial results. The dial-in number for callers in the U.S. is (877) 723-9511
and the dial-in number for international callers is (719) 325-4919. The access code for all callers
is 3563786. A live webcast will also be available on the Companys website at
www.compassdiversifiedholdings.com.
A replay of the call will be available through March 17, 2011. To access the replay, please dial
(888) 203-1112 in the U.S. and (719) 457-0820 outside the U.S., and then enter the access code
3563786.
Note Regarding Use of Non-GAAP Financial Measures
CAD, or Cash Flow, is a non-GAAP measure used by the Company to assess its performance, as well as
its ability to sustain and increase quarterly distributions. A number of CODIs businesses have
seasonal earnings patterns, with the first quarter typically being the slowest of the year.
Accordingly, the Company believes that the most appropriate measure of its performance is over a
trailing or expected 12-month period. We have reconciled CAD, or Cash Flow, to Net Income and Cash
Flow Provided by Operating Activities on the Attached Schedules. We consider Net Income and Cash
Flow Provided by Operating Activities to be the most directly comparable GAAP financial measures to
CAD, or Cash Flow.
About Compass Diversified Holdings (CODI)
Compass Diversified Holdings (CODI) owns and manages a diverse family of established North
American middle market businesses. Each of its eight subsidiaries is a leader in their niche
market.
CODI maintains controlling ownership interests in each of its subsidiaries in order to maximize its
ability to impact long term cash flow generation and value. The Company provides both debt and
equity capital for its subsidiaries, contributing to their financial and operating flexibility.
CODI utilizes the cash flows generated by its subsidiaries to invest in the long-term growth of the
Company and to make cash distributions to its owners.
Our subsidiaries are engaged in the following lines of business:
| The manufacture of quick-turn, prototype and production rigid printed circuit boards (Advanced Circuits, www.advancedcircuits.com); | ||
| The design and manufacture of promotionally priced upholstered furniture (American Furniture Manufacturing, www.americanfurn.net); | ||
| The design and manufacture of medical therapeutic support surfaces and other wound treatment devices (Anodyne Medical Device, also doing business and known as Tridien Medical, www.anodynemedicaldevice.com); |
| The design and marketing of wearable baby carriers and related products (ERGObaby, www.ergobabycarriers.com); | ||
| The design, manufacture and marketing of premium suspension products for mountain bikes and powered off-road vehicles (Fox Racing Shox, www.foxracingshox.com); | ||
| The design, sourcing and fulfillment of logo based promotional products (Halo Lee Wayne, www.haloleewayne.com); | ||
| The design and manufacture of premium home and gun safes (Liberty Safe, www.libertysafe.com); and | ||
| The provision of temporary staffing services, operating approximately 300 locations in 29 states (Staffmark, www.staffmark.com). |
To find out more about Compass Diversified Holdings, please visit
www.compassdiversifiedholdings.com.
This press release may contain certain forward-looking statements, including statements with regard
to the future performance of the Company. Words such as believes, expects, projects, and
future or similar expressions, are intended to identify forward-looking statements. These
forward-looking statements are subject to the inherent uncertainties in predicting future results
and conditions. Certain factors could cause actual results to differ materially from those
projected in these forward-looking statements, and some of these factors are enumerated in the risk
factor discussion in the Form 10-K filed by CODI with the Securities and Exchange Commission for
the year ended December 31, 2010 and other filings with the Securities and Exchange Commission.
CODI undertakes no obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
A copy of this press release, and of past press releases, is available on Compass Diversified
Holdings website located at www.compassdiversifiedholdings.com.
Compass Diversified Holdings
Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets
December 31, | December 31, | |||||||
(in thousands) | 2010 | 2009 | ||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 13,536 | $ | 31,495 | ||||
Accounts receivable, less allowance of
$5,481 and $5,409 |
208,487 | 165,550 | ||||||
Inventories |
77,412 | 51,727 | ||||||
Prepaid expenses and other current assets |
33,904 | 26,255 | ||||||
Total current assets |
333,339 | 275,027 | ||||||
Property, plant and equipment, net |
33,484 | 25,502 | ||||||
Goodwill |
325,851 | 288,028 | ||||||
Intangible assets, net |
269,672 | 216,365 | ||||||
Deferred debt issuance costs, net |
3,822 | 5,326 | ||||||
Other non-current assets |
17,873 | 20,764 | ||||||
Total assets |
$ | 984,041 | $ | 831,012 | ||||
Liabilities and stockholders equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 127,499 | $ | 99,395 | ||||
Due to related party |
2,692 | 3,300 | ||||||
Current portion of long-term debt |
2,000 | 2,500 | ||||||
Current portion of workers compensation liability |
18,170 | 22,126 | ||||||
Other liabilities |
1,043 | 2,566 | ||||||
Total current liabilities |
151,404 | 129,887 | ||||||
Supplemental put obligation |
44,598 | 12,082 | ||||||
Deferred income taxes |
74,457 | 60,397 | ||||||
Long-term debt |
94,000 | 74,000 | ||||||
Workers compensation liability |
40,588 | 38,913 | ||||||
Other non-current liabilities |
3,084 | 7,667 | ||||||
Total liabilities |
408,131 | 322,946 | ||||||
Stockholders equity |
||||||||
Trust shares, no par value, 500,000 authorized; 46,725 and
36,625 shares issued and
outstanding at 12/31/10 and 12/31/09,
respectively |
638,763 | 485,790 | ||||||
Accumulated other comprehensive loss |
(143 | ) | (2,001 | ) | ||||
Accumulated deficit |
(150,550 | ) | (46,628 | ) | ||||
Total stockholders equity attributable to
Holdings |
488,070 | 437,161 | ||||||
Noncontrolling interests |
87,840 | 70,905 | ||||||
Total stockholders equity |
575,910 | 508,066 | ||||||
Total liabilities and stockholders equity |
$ | 984,041 | $ | 831,012 | ||||
Compass Diversified Holdings
Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Operations
Three Months | Three Months | Year | Year | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
December 31, 2010 | December 31, 2009 | December 31, 2010 | December 31, 2009 | |||||||||||||
(in thousands, except per share data) | (unaudited) | (unaudited) | ||||||||||||||
Net sales |
$ | 438,901 | $ | 362,059 | $ | 1,657,609 | $ | 1,248,740 | ||||||||
Cost of sales |
339,743 | 283,149 | 1,302,202 | 976,991 | ||||||||||||
Gross profit |
99,158 | 78,910 | 355,407 | 271,749 | ||||||||||||
Operating expenses: |
||||||||||||||||
Staffing expense |
20,254 | 18,135 | 81,250 | 74,279 | ||||||||||||
Selling, general and administrative expenses |
50,117 | 37,855 | 179,154 | 145,948 | ||||||||||||
Supplemental put expense (reversal) |
13,886 | 7,189 | 32,516 | (1,329 | ) | |||||||||||
Management fees |
3,997 | 3,275 | 15,380 | 13,100 | ||||||||||||
Amortization expense |
8,243 | 5,995 | 29,312 | 24,609 | ||||||||||||
Impairment expense |
(3,600 | ) | | 38,835 | 59,800 | |||||||||||
Operating income (loss) |
6,261 | 6,461 | (21,040 | ) | (44,658 | ) | ||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
2 | 1,067 | 20 | 1,178 | ||||||||||||
Interest expense |
(3,057 | ) | (2,818 | ) | (11,544 | ) | (11,736 | ) | ||||||||
Amortization of debt issuance costs |
(460 | ) | (433 | ) | (1,789 | ) | (1,776 | ) | ||||||||
Loss on debt repayment |
| | | (3,652 | ) | |||||||||||
Other income (expense), net |
(34 | ) | 312 | 718 | (282 | ) | ||||||||||
Income (loss) from continuing operations before income taxes |
2,712 | 4,589 | (33,635 | ) | (60,926 | ) | ||||||||||
Income tax expense (benefit) |
2,035 | 4,639 | 11,135 | (21,281 | ) | |||||||||||
Net income (loss) |
677 | (50 | ) | (44,770 | ) | (39,645 | ) | |||||||||
Net income (loss) attributable to noncontrolling interest |
1,946 | 1,630 | 3,987 | (13,375 | ) | |||||||||||
Net loss attributable to Holdings |
$ | (1,269 | ) | $ | (1,680 | ) | $ | (48,757 | ) | $ | (26,270 | ) | ||||
Basic and fully diluted loss per share attributable to Holdings |
$ | (0.03 | ) | $ | (0.05 | ) | $ | (1.19 | ) | $ | (0.76 | ) | ||||
Weighted average number of shares outstanding basic and
fully diluted |
44,122 | 36,625 | 40,928 | 34,403 | ||||||||||||
Cash distributions declared per share |
$ | 0.34 | $ | 0.34 | $ | 1.36 | $ | 1.36 | ||||||||
Compass Diversified Holdings
Condensed Consolidated Statements of Cash Flows
Condensed Consolidated Statements of Cash Flows
Year | Year | |||||||
Ended | Ended | |||||||
(in thousands) | December 31, 2010 | December 31, 2009 | ||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (44,770 | ) | $ | (39,645 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortization expense |
43,909 | 34,772 | ||||||
Impairment expense |
38,835 | 59,800 | ||||||
Supplemental put expense (reversal) |
32,516 | (1,329 | ) | |||||
Noncontrolling interest and noncontrolling stockholders charges |
7,637 | 1,555 | ||||||
Loss on debt repayment |
| 3,652 | ||||||
Deferred taxes |
(7,146 | ) | (24,964 | ) | ||||
Other |
441 | 107 | ||||||
Changes in operating assets and liabilities, net of acquisition: |
||||||||
(Increase) decrease in accounts receivable |
(22,500 | ) | 143 | |||||
Increase in inventories |
(13,030 | ) | (557 | ) | ||||
Increase in prepaid expenses and other current assets |
(3,812 | ) | (4,442 | ) | ||||
Increase (decrease) in accounts payable and accrued expenses |
12,761 | (8,879 | ) | |||||
Net cash provided by operating activities |
44,841 | 20,213 | ||||||
Cash flows from investing activities: |
||||||||
Acquisition of businesses, net of cash acquired |
(173,732 | ) | (1,435 | ) | ||||
Purchases of property and equipment |
(8,668 | ) | (3,585 | ) | ||||
Other |
8 | 38 | ||||||
Net cash used in investing activities |
(182,392 | ) | (4,982 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of trust shares, net |
152,973 | 42,085 | ||||||
Net borrowing (repayment) of debt |
19,500 | (76,500 | ) | |||||
Swap termination fee |
| (2,517 | ) | |||||
Debt issuance costs |
(259 | ) | | |||||
Changes in noncontrolling interests |
2,671 | 2,546 | ||||||
Other |
(128 | ) | (481 | ) | ||||
Distributions paid |
(55,165 | ) | (46,342 | ) | ||||
Net cash provided by (used in) financing activities |
119,592 | (81,209 | ) | |||||
Net decrease in cash and cash equivalents |
(17,959 | ) | (65,978 | ) | ||||
Cash and cash equivalents beginning of period |
31,495 | 97,473 | ||||||
Cash and cash equivalents end of period |
$ | 13,536 | $ | 31,495 | ||||
Compass Diversified Holdings
Condensed Consolidated Table of Cash Flows Available for Distribution and Reinvestment (CAD)
(unaudited)
Condensed Consolidated Table of Cash Flows Available for Distribution and Reinvestment (CAD)
(unaudited)
Three Months | Three Months | Year Ended | Year Ended | |||||||||||||
Ended | Ended | |||||||||||||||
(in thousands) | December 31, 2010 | December 31, 2009 | December 31, 2010 | December 31, 2009 | ||||||||||||
Net income (loss) |
$ | 677 | $ | (50 | ) | $ | (44,770 | ) | $ | (39,645 | ) | |||||
Adjustment to reconcile net income (loss) to cash provided by
(used in) |
||||||||||||||||
operating activities: |
||||||||||||||||
Depreciation and amortization |
14,136 | 8,007 | 42,120 | 32,996 | ||||||||||||
Amortization of debt issuance costs |
460 | 433 | 1,789 | 1,776 | ||||||||||||
Supplemental put expense (reversal) |
13,886 | 7,189 | 32,516 | (1,329 | ) | |||||||||||
Impairment expense |
(3,600 | ) | | 38,835 | 59,800 | |||||||||||
Loss on debt repayment |
| | | 3,652 | ||||||||||||
Noncontrolling interest and noncontrolling stockholders charges |
(572 | ) | 177 | 7,637 | 1,555 | |||||||||||
Deferred taxes |
(2,031 | ) | 3,143 | (7,146 | ) | (24,964 | ) | |||||||||
Other |
196 | 361 | 441 | 107 | ||||||||||||
Changes in operating assets and liabilities |
(7,138 | ) | (20,481 | ) | (26,581 | ) | (13,735 | ) | ||||||||
Net cash provided by (used in) operating activities |
16,014 | (1,221 | ) | 44,841 | 20,213 | |||||||||||
Plus: |
||||||||||||||||
Unused fee on revolving credit facilitities (1) |
644 | 873 | 3,022 | 3,454 | ||||||||||||
Successful acquisition expense (2) |
4 | | 3,974 | | ||||||||||||
Staffmark integration and restructuring expenses |
| 54 | | 4,076 | ||||||||||||
Changes in operating assets and liabilities |
7,138 | 20,481 | 26,581 | 13,735 | ||||||||||||
Less: |
||||||||||||||||
Advanced Circuits interest income related to loan forgiveness |
| 1,047 | | 1,047 | ||||||||||||
Maintenance capital expenditures (3) |
2,417 | 1,222 | 7,120 | 3,403 | ||||||||||||
Estimated cash flow available for distribution and reinvestment |
$ | 21,383 | $ | 17,918 | $ | 71,298 | $ | 37,028 | ||||||||
Distribution paid in April 2010/2009 |
$ | 14,238 | $ | 10,718 | ||||||||||||
Distribution paid in July 2010/2009 |
14,238 | 12,452 | ||||||||||||||
Distribution paid in October 2010/2009 |
14,238 | 12,453 | ||||||||||||||
Distribution paid in January 2011/2010 |
$ | 15,886 | $ | 12,452 | 15,886 | 12,452 | ||||||||||
$ | 15,886 | $ | 12,452 | $ | 58,600 | $ | 48,075 | |||||||||
(1) | Represents the commitment fee on the unused portion of the Revolving Credit Facilities. | |
(2) | Represents transaction costs for successful acquiistions that were expensed during the period. | |
(3) | Represents maintenance capital expenditures that were funded from operating cash flow and excludes approximately $1.6 million of growth capital expenditures incurred by Fox Factory, Inc. for the year ended Dec. 31, 2010. |