WESTPORT, Conn., Nov. 9 /PRNewswire-FirstCall/ -- Compass Diversified Holdings (NASDAQ:CODI) and Compass Group Diversified Holdings LLC (collectively, "CODI" or the "Company") announced today the consolidated results of operations for the three and nine months ended September 30, 2007.
CODI reported cash flow available for distribution ("CAD") of $12.8 million for the quarter ended September 30, 2007, compared to $7.9 million in the prior year quarter. For the nine-months ended September 30, 2007, CAD was $28.6 million. Cumulatively, from its initial public offering on May 16, 2006 through September 30, 2007, CODI has reported CAD of $52.3 million and a coverage ratio of approximately 1.3x on all distributions paid though October 26, 2007. The CAD for the quarter ended and nine months ended September 30, 2007 only reflects the cash flows of American Furniture Manufacturing, Inc. ("American Furniture") since its date of acquisition on August 31, 2007 and the cash flows of Halo Branded Solutions, Inc. and Aeroglide Corporation from the date of their acquisition on February 28, 2007.
On October 9, 2007, CODI's Board of Directors declared a distribution of $0.325 per share, which was paid on October 26, 2007 to all CODI shareholders of record as of October 23, 2007. The Company intends to continue to declare and pay regular quarterly cash distributions on all outstanding shares.
Commenting on the Company's performance, Joe Massoud, CEO of Compass Diversified Holdings, stated, "We are pleased with the performance of each of our seven subsidiary businesses, including the three acquired platform subsidiaries added in 2007. Their contributions have allowed us to increase our quarterly cash distribution by approximately 24% since our initial public offering in May of 2006. While there is evidence that the economy appears to be softening, we believe that our diversified mix of subsidiaries will continue to perform well and anticipate the combined operating results for our seven subsidiary businesses will continue to be in line with our expectations for the remainder of 2007. On the whole, our businesses serve numerous domestic and international geographic markets, participate in a wide variety of industries and have limited exposure to individual customers. Even the most cyclical of our businesses, our staffing company, has substantially outperformed its industry and its competitors in revenue maintenance and growth over the course of 2007.
"We are excited about the opportunity presented by the current economic environment and financing conditions in our markets. Our business model allows us to finance add-on or new platform acquisitions efficiently without specific transaction financing, giving us a significant advantage as compared to other potential acquirors. We are confident in our ability to capitalize on this advantage over the coming twelve to eighteen months.
Mr. Massoud added, "In preparing for what we consider to be a potentially attractive acquisition environment, we are considering the potential issuance of up to $200 million of term debt to raise additional capital. If raised, this term debt would supplement our current revolver, increasing our capacity to pursue interesting add-on and platform subsidiary opportunities. Accordingly, we have asked S&P and Moody's to rate the company as well as the potential term debt issuance. We received a corporate credit rating and a term debt rating of BB- from S&P and a Ba3 corporate credit rating and a term loan rating of B1 from Moody's.
"One other recent item on which I would like to comment is our recent filing of two registration statements. One of these enables our board to implement a distribution reinvestment plan for our shareholders, and the other registers CODI shares held by Compass Group Investments, Ltd., Concorde Equity, Inc. and Pharos Inc. This was done under a contractual commitment that we made at the time of the issuance of the shares and not in response to any specific demand made by any of these shareholders. To our knowledge, there are currently no plans by any of these parties to sell any of their owned shares," concluded Massoud.
As of September 30, 2007, CODI had approximately $6.4 million in cash and cash equivalents. The Company had $24.0 million in revolving loans outstanding and approximately $228 million in availability under its revolving credit facility with Madison Capital Funding LLC.
On August 31, 2007, CODI acquired American Furniture for approximately $95.6 million, representing under five and a half times American Furniture's current earnings before interest, taxes, depreciation and amortization ("EBITDA").
Management will host a conference call this morning 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 (888) 677-8769 and the dial-in number for international callers is (913) 312-0394. The access code for all callers is 6435957. A live webcast will also be available on the Company's website at www.compassdiversifiedholdings.com.
A replay of the call will be available through November 22, 2007. 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 6435957.
About Compass Diversified Holdings ("CODI")
CODI was formed to acquire and manage a group of middle market businesses that are headquartered in North America. CODI provides public investors with an opportunity to participate in the ownership and growth of companies which have historically been owned by private equity firms, wealthy individuals or families. CODI's disciplined approach to its target market provides opportunities to methodically purchase attractive businesses at values that are accretive to its shareholders. For sellers of businesses, CODI's unique structure allows CODI to acquire businesses efficiently with no financing contingencies and, following acquisition, to provide its companies with substantial access to growth capital.
Upon acquisition, CODI works with the executive teams of its subsidiary companies to identify and capitalize on opportunities to grow those companies' earnings and cash flows. These cash flows support distributions to CODI shareholders, which are intended to be steady and growing over the long term.
Subsidiary Businesses Aeroglide Holdings, Inc. and its consolidated subsidiaries, referred to as Aeroglide, is a designer and manufacturer of industrial drying and cooling equipment, primarily used in the production of a variety of human foods, animal and pet feeds, and industrial products. Aeroglide is based in Cary, NC. American Furniture Manufacturing, Inc., and its consolidated subsidiaries, referred to as American Furniture, is a low-cost manufacturer of upholstered stationary and motion furniture, including sofas, loveseats, sectionals, recliners and complementary products. American Furniture has the ability to ship any product in its line within 48 hours of receiving an order. American Furniture is based in Ecru, MS. Anodyne Medical Device, Inc. and its consolidated subsidiaries, referred to as AMD, is a manufacturer of medical support surfaces and patient positioning devices, primarily used for the prevention and treatment of pressure wounds experienced by patients with limited or no mobility. AMD is based in Los Angeles, CA. CBS Personnel Holdings, Inc. and its consolidated subsidiaries, referred to as CBS Personnel, is a provider of temporary staffing services in the United States. CBS Personnel is headquartered in Cincinnati, OH and operates 144 branch locations in 18 states. Compass AC Holdings, Inc. and its consolidated subsidiaries, referred to as Advanced Circuits, is a manufacturer of low-volume quick-turn and prototype rigid printed circuit boards ("PCBs"). Advanced Circuits is based in Aurora, CO. Halo Lee Wayne LLC and its consolidated subsidiaries, referred to as Halo, is a distributor of customized promotional products and serves more than 30,000 customers as a one-stop-shop resource for design, sourcing, management and fulfillment across all categories of its customers' promotional products needs. Halo is based in Sterling, IL. Silvue Technologies Group, Inc. and its consolidated subsidiaries, referred to as Silvue, is a developer and manufacturer of proprietary, high-performance coating systems for polycarbonate, glass, acrylic, metals and other substrate materials used in the premium eyewear, aerospace, automotive and industrial markets. Silvue is based in Anaheim, CA.
To find out more about Compass Diversified Holdings, please visit www.compassdiversifiedholdings.com.
Cautionary and Forward-Looking Statements
The overview of Compass Diversified Holdings' results in this press release may not be adequate for making an informed investment judgment. Investors are urged to read CODI's 10-Q, which will be posted at www.compassdiversifiedholdings.com, as well as to take into consideration the seasonal nature of certain of the Company's subsidiary businesses and their results.
This press release may contain certain forward-looking statements, including statements with regard to the future performance of CODI. 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 10K filed by CODI with the Securities and Exchange Commission for the year ended December 31, 2006 and the Form 10Qs filed by CODI for the quarters ended March 31, 2006, June 30, 2006, September 30, 2006, March 31, 2007 and June 30, 2007 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.
Compass Diversified Holdings Condensed Consolidated Balance Sheet (unaudited) (in thousands) September 30, 2007 Assets Current assets: Cash and cash equivalents $6,397 Accounts receivable, less allowance of $3,649 126,398 Inventories 33,238 Prepaid expenses and other current assets 17,123 Total current assets 183,156 Property, plant and equipment, net 27,017 Goodwill 265,025 Intangible assets, net 209,017 Deferred debt issuance costs, net 5,249 Other non-current assets 18,753 Total assets $708,217 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued expenses $97,972 Due to related party 524 Current portion of long-term debt 26,864 Total current liabilities 125,360 Supplemental put obligation 19,167 Deferred income taxes 67,339 Other non-current liabilities 19,494 Total liabilities 231,360 Minority interests 30,393 Stockholders' equity Trust shares, no par value, 500,000 authorized; 31,525 shares issued and outstanding 443,634 Accumulated earnings 2,830 Total stockholders' equity 446,464 Total liabilities and stockholders' equity $708,217 Compass Diversified Holdings Condensed Consolidated Statement of Operation (Unaudited) Three Three Nine Nine Months Months Months Months Ended Ended Ended Ended (in thousands, except per share Sept. 30, Sept. 30, Sept. 30, Sept. 30, data) 2007 2006 2007 2006 Net sales $235,282 $159,073 $629,820 $239,267 Cost of sales 172,290 120,903 466,037 182,193 Gross profit 62,992 38,170 163,783 57,074 Operating expenses: Staffing expense 13,440 13,468 41,922 20,439 Selling, general and administrative expenses 31,335 13,118 78,114 20,769 Supplemental put expense 2,174 8,016 4,591 8,016 Fees to manager 2,692 1,784 7,477 2,573 Amortization expense 4,969 2,738 14,382 3,966 Operating income (loss) 8,382 (954) 17,297 1,311 Other income (expense): Interest income 569 347 1,898 463 Interest expense (1,202) (2,338) (4,271) (3,411) Amortization of debt issuance costs (308) (321) (861) (479) Other income, net 245 320 275 612 Income (loss) from continuing operations before income taxes and minority interests 7,686 (2,946) 14,338 (1,504) Provision for income taxes 2,711 2,603 5,699 3,400 Minority interest 620 780 869 1,095 Income (loss) from continuing operations 4,355 (6,329) 7,770 (5,999) Income from discontinued operations, net of income tax - 2,445 - 4,227 Gain on sale of discontinued operations, net of income taxes - - 36,038 - Net income (loss) $4,355 $(3,884) $43,808 $(1,772) Basic and fully diluted income (loss) per share $0.14 $(0.19) $1.67 $(0.18) Weighted average number of shares outstanding - basic and fully diluted 31,525 20,120 26,316 10,031 Cash distributions declared per share $0.325 $0.2625 $0.925 $0.3952 Compass Diversified Holdings Condensed Consolidated Statement of Cash Flows (unaudited) Nine Months Nine Months Ended Ended (in thousands) Sept. 30, 2007 Sept. 30, 2006 Cash flows from operating activities: Net income (loss) $43,808 $(1,772) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Gain on sale of Crosman (36,038) - Depreciation and amortization expense 17,988 5,682 Amortization of debt issuance costs 857 479 Supplemental put expense 4,591 8,016 Minority interests 869 1,896 Stockholder notes and other 226 1,543 Deferred taxes (2,373) (624) Changes in operating assets and liabilities, net of acquisition: Increase in accounts receivable (14,511) (4,357) Increase in inventories (787) (8,323) Decrease in prepaid expenses and other current assets 2,433 408 Increase in accounts payable and accrued expenses 12,386 7,349 Decrease in supplemental put obligation (7,880) - Net cash provided by operating activities 21,569 10,297 Cash flows from investing activities: Acquisition of businesses, net of cash acquired (224,799) (341,809) Crosman disposition 119,856 - Purchases of property and equipment (4,969) (4,031) Net cash used in investing activities (109,912) (345,840) Cash flows from financing activities: Proceeds from issuance of trust shares, net 168,673 284,962 Net borrowing (repayment) of debt (60,733) 71,574 Debt issuance costs (1,079) (6,307) Other 2,655 756 Distributions paid (21,728) (2,587) Net cash provided by financing activities 87,788 348,398 Net increase (decrease) in cash and cash equivalents (555) 12,855 Foreign currency adjustment (54) 94 Cash and cash equivalents - beginning of period 7,006 100 Cash and cash equivalents - end of period $6,397 $13,049 Compass Diversified Holdings Condensed Consolidated Table of Cash Flows Available for Distribution ("CAD") (unaudited) Three Three Nine Nine Months Months Months Months Ended Ended Ended Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, (in thousands) 2007 2006 2007 2006 Net income (loss) $4,355 $(3,884) $43,808 $(1,772) Adjustment to reconcile net income (loss) to cash provided by operating activities: Gain on sale of Crosman - - (36,038) - Depreciation and amortization 7,001 3,813 17,988 5,682 Amortization of debt issuance costs 304 321 857 479 Supplemental put expense 2,174 8,016 4,591 8,016 Stockholder notes and other (207) 331 225 1,881 Minority interest 620 1,187 869 1,896 Deferred taxes (1,217) (652) (2,373) (624) Changes in operating assets and liabilities 2,838 (7,444) (8,359) (5,261) Net cash provided by operating activities 15,868 1,688 21,568 10,297 Plus: Unused fee on revolving credit facility (1) 864 554 1,915 842 Changes in operating assets and liabilities (2,838) 7,444 8,359 5,261 Less: Maintenance capital expenditures (2) 1,109 1,804 3,256 2,517 Estimated cash flow available for distribution $12,785 $7,882 $28,586 $13,883 Distribution paid in April 2007 $6,135 Distribution paid in July 2006/2007 9,458 $2,547 Distribution paid in October 2006/2007 $10,246 $5,368 10,246 5,368 $10,246 $5,368 $25,839 $7,915 (1) Represents the 1% commitment fee on the unused portion of the Revolving Credit Facility. (2) Represents maintenance capital expenditures that were funded from operating cash flow and excludes approximately $1.7 million of growth capital expenditures for the nine months ended Sept. 30, 2007. Compass Diversified Holdings Investor Relations Contact: James J. Bottiglieri KCSA Worldwide Chief Financial Officer Jeffrey Goldberger / Garth Russell 203.221.1703 212.896.1249 / 212.896.1250 email@example.com firstname.lastname@example.org / email@example.com
Source: Compass Diversified Holdings