WESTPORT, Conn., Nov. 10 /PRNewswire-FirstCall/ -- Compass Diversified Holdings (Nasdaq: CODI) ("CODI" or the "Company"), a leading acquirer and manager of middle market businesses, announced today its consolidated operating results for the three and nine months ended September 30, 2008.
2008 Third Quarter Highlights
-- Generated Cash Flow Available for Distribution and Reinvestment ("Cash Flow" or "CAD") of $15.7 million, up from $12.8 million in the prior year quarter, a 22.5% increase; and
-- Increased third quarter cash distribution by 5% to $0.34 per share. Distribution has now been increased by approximately 30% since May 2006 IPO.
CODI increased its Cash Flow (see note regarding use of Non-GAAP Financial Measures below) to $15.7 million for the quarter ended September 30, 2008, as compared to $12.8 million for the prior year period. On a trailing twelve month basis, CODI's Cash Flow for the period ending September 30, 2008 was $57.1 million. CODI's weighted average number of shares for the quarter ending September 30, 2008, the quarter ending September 30, 2007 and the twelve months ending September 30, 2008 was approximately 31.5 million for each respective period.
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 for each of our subsidiaries for the periods during which CODI owned them. However, Cash Flow excludes the gains from sales of businesses which have totaled over $105 million since CODI's initial public offering.
Net income for the quarter ended September 30, 2008 was $5.3 million, as compared to $4.4 million for the quarter ended September 30, 2007.
As of September 30, 2008, CODI had $89.7 million in cash and cash equivalents and over $280 million in availability under its revolving credit facility. The Company has no significant debt maturities until 2012.
On October 9, 2008, CODI's Board of Directors declared an increase in the Company's dividend by 5% to $0.34 per share. The distribution was paid on October 31, 2008 to all CODI shareholders of record as of October 24, 2008.
Joe Massoud, CEO of Compass Diversified Holdings, said, "During the third quarter, we once again posted solid results and increased our dividend while positioning the Company for strong operating performance through economically difficult times. Specifically, we expanded cash available for distribution 22.5% to $15.7 million. We also declared our third dividend increase since going public in 2006, based on the successful application of our unique business model and performance of our portfolio of subsidiary companies. We have now increased our distributions by approximately 30% in the two and a half years since going public. "
Mr. Massoud continued, "Going forward, with a diverse mix of leading niche businesses and considerable financial flexibility, we believe CODI remains well positioned over the long term. While near term macroeconomic conditions are challenging and will impact certain subsidiary businesses, our overall portfolio remains strong, and will continue to generate Cash Flow that will allow us to both pay sizeable distributions to our shareholders and reinvest in our business. We also plan to take advantage of our substantial available capital and extremely healthy liquidity position. In accomplishing this important objective, we intend to use our financial strength to enhance the market positions of our subsidiaries and actively pursue attractive new platform business opportunities that meet our strict valuation and diligence requirements."
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 (877) 795-3610 and the dial-in number for international callers is (719) 325-4807. The access code for all callers is 4411756. 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 24, 2008. 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 4411756.
Note Regarding Use of Non-GAAP Financial Measures
CAD or Cash Flow, are non-GAAP measures used by the Company to assess its performance, as well as its ability to sustain and increase quarterly distributions. A number of CODI's 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")
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.
AFM Holdings Corporation and its consolidated subsidiaries, referred to as American Furniture, is a low-cost manufacturer of upholstered stationary and motion furniture with 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 Coral Springs, FL.
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 435 branch locations in 35 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.
Fox Factory Holding Corp. and its consolidated subsidiaries, referred to as Fox, is a designer, manufacturer and marketer of high-end suspension products for mountain bikes, all terrain vehicles, snowmobiles and other off- road vehicles. Fox is based in Watsonville, CA.
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.
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, 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.
A copy of this press release, and of past press releases, is available on the
Compass Diversified Holdings website located at www.compassdiversifiedholdings.com. Compass Diversified Holdings James J. Bottiglieri Chief Financial Officer 203.221.1703 firstname.lastname@example.org Investor Relations and Media Contacts: The IGB Group Leon Berman / Tyler Wilson 212.477.8438 / 646.673.9701 email@example.com / firstname.lastname@example.org Compass Diversified Holdings Condensed Consolidated Balance Sheets (unaudited) (in thousands) September 30, December 31, 2008 2007 Assets Current assets: Cash and cash equivalents $89,676 $115,500 Accounts receivable, less allowances of $6,190 and $3,204 192,907 111,718 Inventories 50,418 35,492 Prepaid expenses and other current assets 25,037 11,088 Current assets of discontinued operations - 25,443 Total current assets 358,038 299,241 Property, plant and equipment, net 29,804 20,437 Goodwill 314,346 218,817 Intangible assets, net 255,684 163,378 Deferred debt issuance costs, net 8,722 9,613 Other non-current assets 17,926 17,549 Assets of discontinued operations - 98,967 Total assets $984,520 $828,002 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued expenses $152,024 $75,716 Due to related party 689 814 Current portion of long-term debt 2,000 2,000 Current liabilities of discontinued operations - 28,083 Total current liabilities 154,713 106,613 Long-term debt 151,500 148,000 Supplemental put obligation 12,858 21,976 Deferred income taxes 63,043 59,478 Other non-current liabilities 45,290 21,419 Non-current liabilities of discontinued operations - 15,799 Total liabilities 427,404 373,285 Minority interests 77,510 21,867 Stockholders' equity Trust shares, no par value, 500,000 authorized; 31,525 shares issued and outstanding 412,969 443,705 Accumulated other comprehensive income 426 - Accumulated earnings (deficit) 66,211 (10,855) Total stockholders' equity 479,606 432,850 Total liabilities and stockholders' equity $984,520 $828,002 Compass Diversified Holdings Condensed Consolidated Statements of Operations (unaudited) Three Months Ended Nine Months Ended (in thousands, except September September September September per share data) 30, 2008 30, 2007 30, 2008 30, 2007 Net sales $413,601 $215,476 $1,163,646 $578,404 Cost of sales 322,606 161,868 909,982 440,777 Gross profit 90,995 53,608 253,664 137,627 Operating expenses: Staffing expense 25,872 13,440 78,412 41,922 Selling, general and administrative expenses 42,597 24,818 121,121 61,642 Supplemental put expense (765) 2,174 5,829 4,591 Fees to manager 3,758 2,479 10,953 6,921 Amortization expense 6,171 3,324 18,432 8,912 Operating income 13,362 7,373 18,917 13,639 Other income (expense): Interest income 559 568 1,140 1,895 Interest expense (4,199) (1,184) (13,545) (4,215) Amortization of debt issuance costs (491) (305) (1,473) (858) Other income, net 48 247 405 248 Income (loss) from continuing operations before income taxes and minority interest 9,279 6,699 5,444 10,709 Provision for income taxes 3,067 2,706 3,622 5,381 Minority interest in net income (loss) 1,590 538 2,295 439 Income (loss) from continuing operations 4,622 3,455 (473) 4,889 Income from discontinued operations, net of income tax - 900 4,607 2,881 Gain on sale of discontinued operations, net of income tax 636 - 72,932 36,038 Net income $5,258 $4,355 $77,066 $43,808 Basic and fully diluted net income per share $0.17 $0.14 $2.44 $1.67 Weighted average number of shares outstanding - basic and fully diluted 31,525 31,525 31,525 26,316 Cash distributions declared per share $0.34 $0.325 $0.99 $0.925 Compass Diversified Holdings Condensed Consolidated Statements of Cash Flows (unaudited) Nine Months Nine Months Ended Ended September 30, September 30, (in thousands) 2008 2007 Cash flows from operating activities: Net income $77,066 $43,808 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of 2008 dispositions (72,932) - Gain on sale of 2007 disposition - (36,038) Depreciation and amortization expense 26,580 17,988 Amortization of debt issuance costs 1,445 857 Supplemental put expense 5,829 4,591 Minority interests 2,844 869 Stockholder notes and option costs 1,943 226 Deferred taxes (7,010) (2,373) Other 296 - Changes in operating assets and liabilities, net of acquisition: Increase in accounts receivable (310) (14,511) (Increase) decrease in inventories 93 (787) (Increase) decrease in prepaid expenses and other current assets (8,672) 2,433 Increase in accounts payable and accrued expenses 13,631 12,386 Decrease in supplemental put obligation (14,947) (7,880) Net cash provided by operating activities 25,856 21,569 Cash flows from investing activities: Acquisition of businesses, net of cash acquired (173,561) (224,799) Proceeds from 2008 dispositions 153,439 - Proceeds from 2007 disposition - 119,856 Purchases of property and equipment (8,587) (4,969) Other (328) - Net cash used in investing activities (29,037) (109,912) Cash flows from financing activities: Proceeds from issuance of Trust shares, net - 168,673 Net borrowing (repayment) of revolving line of credit borrowings 2,968 (60,733) Debt issuance costs (551) (1,079) Distributions paid (30,736) (21,728) Other 1,898 2,655 Net cash provided by financing activities (26,421) 87,788 Net decrease in cash and cash equivalents (29,602) (555) Foreign currency adjustment (80) (54) Cash and cash equivalents - beginning of period 119,358 7,006 Cash and cash equivalents - end of period $89,676 $6,397 Compass Diversified Holdings
Condensed Consolidated Table of Cash Flows Available for Distribution and
Reinvestment ("CAD") (unaudited) Three Months Ended Nine Months Ended September September September September (in thousands) 30, 2008 30, 2007 30, 2008 30, 2007 Net income $5,258 $4,355 $77,066 $43,808 Adjustment to reconcile net income to cash provided by operating activities: Gain on sale of businesses (636) - (72,932) (36,038) Depreciation and amortization 8,362 6,448 26,580 17,988 Amortization of debt issuance costs 463 308 1,445 857 Supplemental put expense (765) 2,174 5,829 4,591 Stockholder notes and other 809 706 1,943 589 Minority interest 1,590 620 2,844 869 Deferred taxes (1,249) (1,217) (7,010) (2,373) Other 458 (364) 296 (364) Changes in operating assets and liabilities (13,488) 2,837 (10,205) (8,359) Net cash provided by operating activities 802 15,867 25,856 21,568 Plus: Unused fee on credit facilities (1) 863 864 2,255 1,915 Staffmark integration and restructuring expenses 2,018 - 6,476 - Changes in operating assets and liabilities 13,488 (2,837) 10,205 8,359 Less: Maintenance capital expenditures (2) 1,507 1,109 5,396 3,256 Estimated cash flow available for distribution $15,664 $12,785 $39,396 $28,586 Distribution paid in April 2008/2007 $10,246 $6,135 Distribution paid in July 2008/2007 10,246 9,458 Distribution paid in October 2008/2007 $10,719 $10,246 10,719 10,246 $10,719 $10,246 $31,211 $25,839 (1) Represents the commitment fee on the unused portion of the Credit Facilities. (2) Represents maintenance capital expenditures that were funded from operating cash flow and excludes approximately $3.2 million and $1.7 million of growth capital expenditures for the nine months ended Sept. 30, 2008 and Sept. 30, 2007, respectively.
SOURCE Compass Diversified Holdings