• Compass Diversified Reports Fourth Quarter and Full Year 2022 Financial Results

    来源: Nasdaq GlobeNewswire / 01 3月 2023 16:15:01   America/New_York

    WESTPORT, Conn., March 01, 2023 (GLOBE NEWSWIRE) -- Compass Diversified (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, 2022.

    “The quality and resilience of CODI’s subsidiary businesses were once again on display during our fourth quarter as we achieved solid financial performance,” said Elias Sabo, CEO of Compass Diversified. “End market demand for the majority of our core consumer brands remained strong, and we believe our high-quality, premium brands can take market share even in a difficult macroeconomic backdrop.”

    Mr. Sabo continued, “As discussed at our Investor Day in January, while there are near-term market uncertainties brought on by rapidly changing monetary policy and inventory destocking at retail, we believe they are short-term in nature. We believe our group of market share-taking businesses can outperform the general market over the long-term, driving strong financial results and increasing shareholder value.”

    Fourth Quarter and Full Year 2022 Financial Summary vs. Same Year-Ago Period (where applicable)

    • Net sales up 6% to $594.9 million, and up 4% on a pro forma basis. For the full year 2022, net sales up 17% to $2.3 billion, and up 12% on a pro forma basis.
    • Branded consumer net sales up 11% to $371.0 million, and up 7% on a pro forma basis. For the full year 2022, branded consumer net sales up 23% to $1.4 billion, and up 14% on a pro forma basis.
    • Niche industrial net sales down 1% to $224.0 million. For the full year 2022, niche industrial net sales up 9% to $856.8 million.
    • Net loss of $11.8 million vs. net income of $25.9 million due to a $20.6 million impairment expense associated with the Company’s Ergobaby subsidiary. For the full year 2022, net income was $51.4 million vs. $126.8 million in the year-ago period, primarily due to the $72.8 million gain on the sale of Liberty Safe in August 2021.
    • Loss from continuing operations of $14.3 million vs. income from continuing operations of $25.9 million. For the full year 2022, income from continuing operations of $42.0 million vs. $46.4 million.
    • Adjusted Earnings, a non-GAAP financial measure, was $28.7 million vs. $37.1 million. For the full year 2022, Adjusted Earnings was up 17% to $158.6 million.
    • Adjusted EBITDA, a non-GAAP financial measure, was up 5% to $87.3 million. For the full year 2022, Adjusted EBITDA was up 20% to $369.8 million.
    • Paid a fourth quarter 2022 cash distribution of $0.25 per share on CODI's common shares in January 2023.

    Recent Business Highlights

    • On November 3, 2022, CODI’s Manager appointed Kurt Roth as Partner and Head of Healthcare for Compass Group Management. In this role, Roth will work with the organization’s senior professionals to launch CODI’s new healthcare vertical.
    • On January 19, 2023, CODI hosted an Investor Day in New York City, showcasing its consumer businesses as well as the Company’s newest acquisition, PrimaLoft. A replay of the PrimaLoft and Compass Diversified presentations can be viewed here.
    • On January 19, 2023, CODI announced a $50 million share repurchase program, the first in the Company’s history.
    • On February 15, 2023, CODI announced the closing of the sale of Advanced Circuits for an enterprise value of $220 million. CODI expects to realize a pre-tax gain on the sale of Advanced Circuits of between $100 million to $110 million.

    Fourth Quarter and Full Year 2022 Financial Results

    Net sales in the fourth quarter of 2022 were $594.9 million, up 6% compared to $559.9 million in the fourth quarter of 2021. For the full year 2022, net sales were $2.3 billion, up 17% compared to $1.9 billion a year ago. The increase was due to strong performance in the Company’s branded consumer subsidiaries. On a pro forma basis, assuming CODI had acquired Lugano and PrimaLoft on January 1, 2021, net sales were up 4% in the fourth quarter of 2022 and up 12% in 2022.

    Branded consumer net sales, pro forma for the Lugano and PrimaLoft acquisitions, increased 7% in the fourth quarter of 2022 to $371.0 million compared to the fourth quarter of 2021 and increased to $1.5 billion in 2022, an increase of 14% as compared to 2021. Niche industrial net sales decreased 1% in the fourth quarter of 2022 to $224.0 million compared to the fourth quarter of 2021 and increased to $856.8 million in 2022 which is an increase of 9% as compared to 2021.

    Net loss in the fourth quarter of 2022 was $11.8 million compared to net income of $25.9 million in the fourth quarter of 2021. Net loss from continuing operations for the fourth quarter of 2022 was $14.3 million compared to $25.9 million in net income from continuing operations in the fourth quarter of 2021. For the full year 2022, net income was $51.4 million compared to $126.8 million a year ago, and income from continuing operations was $42.0 million compared to $46.4 million a year ago. The decrease in both periods were primarily attributable to higher SG&A and interest expenses, as well as a $20.6 million impairment expense associated with the Company’s Ergobaby subsidiary. Additionally, the Company’s net income in 2021 included a $72.8 million gain from the sale of Liberty Safe in August 2021. Operating income for the fourth quarter of 2022 was $19.6 million compared to $39.6 million in the fourth quarter of 2021 due to the impairment expense associated with Ergobaby. For the full year 2022, operating income increased 7% to $175.6 million compared to $164.7 million a year ago.

    Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the fourth quarter of 2022 was $28.7 million compared to $37.1 million a year ago. The decrease was a result of financing costs for the acquisition of PrimaLoft in July 2022 ahead of its seasonally slow third and fourth quarter earnings periods. For the full year 2022, Adjusted Earnings increased 17% to $158.6 million compared to $135.7 million a year ago. CODI's weighted average number of shares outstanding in the fourth quarter of 2022 was 72.2 million compared to 66.6 million in the prior year fourth quarter. For the full year 2022, CODI’s weighted average number of shares outstanding was 70.7 million compared to 65.4 million in 2021.

    Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below) in the fourth quarter of 2022 was $87.3 million, up 5% compared to $83.3 million in the fourth quarter of 2021. For the full year 2022, Adjusted EBITDA was $369.8 million, up 20% compared to $308.2 million a year ago. The increase was primarily due to the strong performance at CODI’s branded consumer subsidiaries and the benefit of the PrimaLoft and Lugano acquisitions. The Company no longer adds back management fees in its calculation of Adjusted EBITDA. Management fees incurred during the fourth quarter and full year were $17.3 million and $63.6 million, respectively.

    Liquidity and Capital Resources

    As of December 31, 2022, CODI had approximately $61.3 million in cash and cash equivalents, $155.0 million outstanding on its revolver, $395.0 million outstanding in term loans, $1.0 billion outstanding in 5.250% Senior Notes due 2029 and $300.0 million outstanding in 5.000% Senior Notes due 2032.

    As of December 31, 2022, the Company had no significant debt maturities until 2027 and had net borrowing availability of approximately $442.8 million under its revolving credit facility.

    Fourth Quarter 2022 Distributions

    On January 4, 2023, CODI’s Board of Directors (the “Board”) declared a fourth quarter distribution of $0.25 per share on the Company's common shares. The cash distribution was paid on January 26, 2023, to all holders of record of common shares as of January 19, 2023.

    The Board also declared a quarterly cash distribution of $0.453125 per share on the Company’s 7.250% Series A Preferred Shares (the “Series A Preferred Shares”). The distribution on the Series A Preferred Shares covers the period from, and including, October 30, 2022, up to, but excluding, January 30, 2023. The distribution for such period was payable on January 30, 2023 to all holders of record of Series A Preferred Shares as of January 15, 2023.

    The Board also declared a quarterly cash distribution of $0.4921875 per share on the Company’s 7.875% Series B Preferred Shares (the “Series B Preferred Shares”). The distribution on the Series B Preferred Shares covers the period from, and including, October 30, 2022, up to, but excluding, January 30, 2023. The distribution for such period was payable on January 30, 2023 to all holders of record of Series B Preferred Shares as of January 15, 2023.

    The Board also declared a quarterly cash distribution of $0.4921875 per share on the Company’s 7.875% Series C Preferred Shares (the “Series C Preferred Shares”). The distribution on the Series C Preferred Shares covers the period from, and including, October 30, 2022, up to, but excluding, January 30, 2023. The distribution for such period was payable on January 30, 2023 to all holders of record of Series C Preferred Shares as of January 15, 2023.

    2023 Outlook

    CODI expects its current subsidiaries to produce consolidated subsidiary Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the full year 2023 of between $420 million and $460 million. This estimate is based on the summation of the Company’s expectations for its current subsidiaries in 2023, excluding ACI, and is absent additional acquisitions or divestitures, and excludes corporate expenses such as interest expense, management fees paid by CODI and corporate overhead. In addition, the Company expects to earn between $105 million and $135 million in Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the full year 2023.

    In reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, CODI has not reconciled 2023 Adjusted EBITDA or 2023 Adjusted Earnings to their comparable GAAP measure because it does not provide guidance on Net Income (Loss) from Continuing Operations or Net Income (Loss) or the applicable reconciling items as a result of the uncertainty regarding, and the potential variability of, these items. For the same reasons, CODI is unable to address the probable significance of the unavailable information, which could be material to future results.

    Conference Call

    Management will host a conference call on Wednesday, March 1, 2023, at 5:00 p.m. ET to discuss the latest corporate developments and financial results. The dial-in number for callers in the U.S. is (888) 396-8049 and the dial-in number for international callers is (416) 764-8646. The Conference ID is 74552633. The conference call will also be available via a live listen-only webcast and can be accessed through the Investor Relations section of CODI's website. An online replay of the webcast will be available on the same website following the call. Please allow extra time prior to the call to visit the site and download any necessary software that may be needed to listen to the Internet broadcast. A replay of the call will be available through Wednesday, March 8, 2023. To access the replay, please dial (877) 674-7070 in the U.S. and (416) 764-8692 outside the U.S.

    Note Regarding Use of Non-GAAP Financial Measures

    Adjusted EBITDA and Adjusted Earnings are non-GAAP measures used by the Company to assess its performance. We have reconciled Adjusted EBITDA to Income (Loss) from Continuing Operations and Adjusted Earnings to Net Income (Loss) on the attached schedules. We consider Income (Loss) from Continuing Operations to be the most directly comparable GAAP financial measure to Adjusted EBITDA and Net Income (Loss) to be the most directly comparable GAAP financial measure to Adjusted Earnings. We believe that Adjusted EBITDA and Adjusted Earnings provides useful information to investors and reflect important financial measures as each excludes the effects of items which reflect the impact of long-term investment decisions, rather than the performance of near-term operations. When compared to Net Income (Loss) and Income (Loss) from Continuing Operations, Adjusted Earnings and Adjusted EBITDA, respectively, are each limited in that they do not reflect the periodic costs of certain capital assets used in generating revenues of our businesses or the non-cash charges associated with impairments, as well as certain cash charges. The presentation of Adjusted EBITDA allows investors to view the performance of our businesses in a manner similar to the methods used by us and the management of our businesses, provides additional insight into our operating results and provides a measure for evaluating targeted businesses for acquisition. The presentation of Adjusted Earnings provides insight into our operating results and provides a measure for evaluating earnings from continuing operations available to common shareholders. We believe Adjusted EBITDA and Adjusted Earnings are also useful in measuring our ability to service debt and other payment obligations.

    Pro forma net sales is defined as net sales including the historical net sales relating to the pre-acquisition periods of Lugano and PrimaLoft, assuming that the Company acquired Lugano and PrimaLoft on January 1, 2021. We have reconciled pro forma net sales to net sales, the most directly comparable GAAP financial measure, on the attached schedules. We believe that pro forma net sales is useful information for investors as it provides a better understanding of sales performance, and relative changes thereto, on a comparable basis. Pro forma net sales is not necessarily indicative of what the actual results would have been if the acquisition had in fact occurred on the date or for the periods indicated nor does it purport to project net sales for any future periods or as of any date.

    In reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, we have not reconciled 2023 Adjusted EBITDA or 2023 Adjusted Earnings to their comparable GAAP measures because we do not provide guidance on Net Income (Loss) from Continuing Operations or Net Income (Loss) or the applicable reconciling items as a result of the uncertainty regarding, and the potential variability of, these items. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

    Adjusted EBITDA, Adjusted Earnings and pro forma net sales are not meant to be a substitute for GAAP measures and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies.

    About Compass Diversified

    Since its founding in 1998, and IPO in 2006, CODI has consistently executed on its strategy of owning and managing a diverse set of highly defensible, middle-market businesses across the niche industrial, branded consumer and healthcare sectors. The Company leverages its permanent capital base, long-term disciplined approach, and actionable expertise to maintain controlling ownership interests in each of its subsidiaries, maximizing its ability to impact long-term cash flow generation and value creation. 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 has consistently generated strong returns through its culture of transparency, alignment and accountability. For more information, please visit compassdiversified.com.

    Forward Looking Statements

    Certain statements in this press release may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements as to our future performance or liquidity, such as expectations regarding our results of operations and financial condition, our 2023 Adjusted EBITDA, our 2023 Adjusted Earnings, our pending acquisitions and divestitures, and other statements with regard to the future performance of CODI. We may use words such as “plans,” “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “seek,” “look,” and similar expressions to identify forward-looking statements. The forward-looking statements contained in this press release involve risks and uncertainties. Actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and elsewhere in CODI’s annual report on Form 10-K and its quarterly reports on Form 10-Q. Other factors that could cause actual results to differ materially include: changes in the economy, financial markets and political environment, including changes in inflation and interest rates; risks associated with possible disruption in CODI’s operations or the economy generally due to terrorism, natural disasters, social, civil and political unrest or the COVID-19 pandemic; future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); general considerations associated with the COVID-19 pandemic and its impact on the markets in which we operate; disruption in the global supply chain, labor shortages and high labor costs; our business prospects and the prospects of our subsidiaries; the impact of, and ability to successfully complete and integrate, acquisitions that we may make; the ability to successfully complete divestitures when we’ve executed divestitures agreements; the dependence of our future success on the general economy and its impact on the industries in which we operate; the ability of our subsidiaries to achieve their objectives; the adequacy of our cash resources and working capital; the timing of cash flows, if any, from the operations of our subsidiaries; and other considerations that may be disclosed from time to time in CODI’s publicly disseminated documents and filings. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. Although, except as required by law, CODI undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that CODI may make directly to you or through reports that it in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

    Investor Relations:
    irinquiry@compassdiversified.com

    Cody Slach
    Gateway Group
    949.574.3860    		Media Contact:
    The IGB Group
    Leon Berman
    212.477.8438
    lberman@igbir.com
    CODI@gatewayir.com 


    Compass Diversified Holdings
    Condensed Consolidated Balance Sheets

        
    (in thousands)December 31, 2022 December 31, 2021
        
    Assets   
    Current assets   
    Cash and cash equivalents$61,271 $160,733
    Accounts receivable, net 341,440  277,710
    Inventories, net 732,428  565,743
    Prepaid expenses and other current assets 75,046  57,006
    Total current assets 1,210,185  1,061,192
    Property, plant and equipment, net 205,474  186,477
    Goodwill 1,133,404  882,083
    Intangible assets, net 1,127,936  872,690
    Other non-current assets 172,632  141,819
    Total assets$3,849,631 $3,144,261
        
    Liabilities and stockholders’ equity   
    Current liabilities   
    Accounts payable$94,214 $124,203
    Accrued expenses 191,605  178,518
    Deferred revenue 10,204  12,802
    Due to related parties 15,745  11,830
    Current portion, long-term debt 10,000  —
    Other current liabilities 38,063  34,269
    Total current liabilities 359,831  361,622
    Deferred income taxes 156,642  97,763
    Long-term debt 1,824,468  1,284,826
    Other non-current liabilities 146,728  115,520
    Total liabilities 2,487,669  1,859,731
    Stockholders' equity   
    Total stockholders' equity attributable to Holdings 1,136,920  1,111,816
    Noncontrolling interest 225,042  172,714
    Total stockholders' equity 1,361,962  1,284,530
    Total liabilities and stockholders’ equity$3,849,631 $3,144,261
        


    Compass Diversified Holdings
    Consolidated Statements of Operations

     Three months ended December 31, Year ended December 31,
    (in thousands, except per share data) 2022   2021   2022   2021 
    Net revenues$594,921  $559,889  $2,264,044  $1,932,155 
    Cost of revenues 360,090   346,842   1,356,300   1,165,149 
    Gross profit 234,831   213,047   907,744   767,006 
    Operating expenses:       
    Selling, general and administrative expense 150,209   136,666   553,637   474,481 
    Management fees 17,300   12,939   63,604   47,443 
    Amortization expense 27,192   23,845   94,383   80,347 
    Impairment expense 20,552   —   20,552   — 
    Operating income  19,578   39,597   175,568   164,735 
    Other income (expense):       
    Interest expense, net (25,769)  (16,232)  (83,506)  (58,839)
    Amortization of debt issuance costs (1,005)  (812)  (3,740)  (2,979)
    Loss on debt extinguishment —   —   (534)  (33,305)
    Other income (expense), net (1,320)  424   (714)  (1,482)
    Net income (loss) before income taxes (8,516)  22,977   87,074   68,130 
    Provision (benefit) for income taxes 5,828   (2,906)  45,029   21,756 
    Income (loss) from continuing operations (14,344)  25,883   42,045   46,374 
    Income from discontinued operations, net of income tax —   —   —   7,665 
    Gain on sale of discontinued operations 2,500   25   9,393   72,770 
    Net income (loss)  (11,844)  25,908   51,438   126,809 
    Less: Net income attributable to noncontrolling interest 124   3,820   15,051   11,735 
    Less: Net income from discontinued operations attributable to noncontrolling interest —   —   —   522 
    Net income (loss) attributable to Holdings$(11,968) $22,088  $36,387  $114,552 
            
    Basic income (loss) per common share attributable to Holdings       
    Continuing operations$(0.37) $(0.08) $(0.23) $(0.49)
    Discontinued operations 0.03   —   0.13   1.22 
     $(0.34) $(0.08) $(0.10) $0.73 
            
    Basic weighted average number of common shares outstanding 72,203   66,623   70,715   65,362 
            
    Cash distributions declared per Trust common share$0.25  $0.25  $1.00  $2.21 


    Compass Diversified Holdings
    Net Income to Non-GAAP Adjusted Earnings and Non-GAAP Adjusted EBITDA - 2022
    (Unaudited)

     Three months ended Year ended
    (in thousands)March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 December 31, 2022
    Net income (loss)$29,740  $30,957  $2,585  $(11,844) $51,438 
    Gain (loss) on sale of discontinued operations, net of tax 5,993   (579)  1,479   2,500   9,393 
    Net income (loss) from continuing operations$23,747  $31,536  $1,106  $(14,344) $42,045 
    Less: income from continuing operations attributable to noncontrolling interest 5,978   4,590   4,359   124   15,051 
    Net income (loss) attributable to Holdings - continuing operations$17,769  $26,946  $(3,253) $(14,468) $26,994 
    Adjustments:         
    Distributions paid - preferred shares (6,045)  (6,046)  (6,045)  (6,045)  (24,181)
    Amortization expense - intangible assets and inventory step-up 23,375   22,474   26,241   28,787   100,877 
    Impairment expense —   —   —   20,552   20,552 
    Tax effect - impairment expense —   —   —   (3,557)  (3,557)
    Non-controlling interest - impairment expense —   —   —   (3,120)  (3,120)
    Loss on debt extinguishment —     534   —   534 
    Non-controlling shareholder compensation 2,805   2,804   3,242   5,100   13,951 
    Acquisition expense 216   —   5,902   —   6,118 
    Integration services fee 563   563   1,625   1,313   4,064 
    Corporate tax effect - ACI —   (4,338)  16,457   —   12,119 
    Other 1,803   1,026   1,287   119   4,235 
    Adjusted earnings$40,486  $43,429  $45,990  $28,681  $158,586 
    Plus (less):         
    Depreciation expense 10,438   10,866   11,284   11,837   44,425 
    Income tax provision 11,083   6,955   21,163   5,828   45,029 
    Corporate tax effect - ACI —   4,338   (16,457)  —   (12,119)
    Interest expense 17,419   17,519   22,799   25,769   83,506 
    Amortization of debt issuance costs 866   865   1,004   1,005   3,740 
    Income from continuing operations attributable to noncontrolling interest 5,978   4,590   4,359   124   15,051 
    Distributions paid - preferred shares 6,045   6,046   6,045   6,045   24,181 
    Tax effect - impairment expense —   —   —   3,557   3,557 
    Non-controlling interest - impairment expense —   —   —   3,120   3,120 
    Other (1,988)  (757)  2,139   1,320   714 
    Adjusted EBITDA$90,327  $93,851  $98,326  $87,286  $369,790 


    Compass Diversified Holdings
    Net Income (Loss) to Non-GAAP Adjusted Earnings and Non-GAAP Adjusted EBITDA - 2021
    (Unaudited)

     Three months ended Year ended
    (in thousands)March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021 December 31, 2021
    Net income (loss)$21,996  $(11,251) $90,156  $25,908  $126,809 
    Gain on sale of discontinued operations, net of tax —   —   72,745   25   72,770 
    Income (loss) from discontinued operations, net of tax 4,194   4,780   (1,309)  —   7,665 
    Net income (loss) from continuing operations$17,802  $(16,031) $18,720  $25,883  $46,374 
    Less: income from continuing operations attributable to noncontrolling interest 2,696   3,018   2,201   3,820   11,735 
    Net income (loss) attributable to Holdings - continuing operations$15,106  $(19,049) $16,519  $22,063  $34,639 
    Adjustments:         
    Distributions paid - preferred shares (6,045)  (6,046)  (6,045)  (6,045)  (24,181)
    Amortization expense - intangible assets and inventory step-up 18,599   18,847   19,056   26,606   83,108 
    Loss on debt extinguishment —   33,305   —   —   33,305 
    Non-controlling shareholder compensation 2,764   2,840   2,892   2,941   11,437 
    Acquisition expense 299   11   1,866   1,415   3,591 
    Integration services fee 1,600   1,600   1,100   563   4,863 
    Corporate tax effect - ACI —   —   —   (12,119)  (12,119)
    Other (2,101)  1,032   460   1,709   1,100 
    Adjusted earnings$30,222  $32,540  $35,848  $37,133  $135,743 
    Plus (less):         
    Depreciation expense 9,064   9,460   10,372   10,493   39,389 
    Income tax provision 6,078   9,028   9,556   (2,906)  21,756 
    Corporate tax effect - ACI —   —   —   12,119   12,119 
    Interest expense 13,805   14,947   13,855   16,232   58,839 
    Amortization of debt issuance costs 686   722   759   812   2,979 
    Income from continuing operations attributable to noncontrolling interest 2,696   3,018   2,201   3,820   11,735 
    Distributions paid - preferred shares 6,045   6,046   6,045   6,045   24,181 
    Other 2,232   706   (1,032)  (425)  1,481 
    Adjusted EBITDA$70,828  $76,467  $77,604  $83,323  $308,222 


    Compass Diversified Holdings
    Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
    Three months ended December 31, 2022
    (Unaudited)

    (in thousands)Corporate 5.11 BOAErgoLugano Marucci SportsPrimaLoftVelocity OutdoorACI Altor Solutions ArnoldSternoConsolidated
    Net income (loss) from continuing operations $(12,653)$7,093 $5,491 $(18,035)$6,063 $3,152 $(9,249)$(3,699)$3,445 $2,513 $466 $1,069 $(14,344)
    Adjusted for:                
    Provision (benefit) for income taxes —  2,126  (292) (4,706) 6,026  1,499  (308) (810) 1,016  267  561  449  5,828 
    Interest expense, net 25,684  (12) (6) 8  4  1  (3) 87  —  —  6  —  25,769 
    Intercompany interest (34,086) 4,260  1,776  2,026  4,932  2,328  4,261  3,295  1,808  2,898  1,571  4,931  — 
    Depreciation and amortization 272  6,168  5,648  2,033  3,148  3,025  6,271  3,393  524  4,149  1,976  5,021  41,628 
    EBITDA (20,783) 19,635  12,617  (18,674) 20,173  10,005  972  2,266  6,793  9,827  4,580  11,470  58,881 
    Other (income) expense 17  (310) 545  2  —  (46) (148) 1,263  16  547  (20) (545) 1,321 
    Non-controlling shareholder compensation —  301  622  325  379  368  2,142  229  124  411  2  197  5,100 
    Impairment expense —  —  —  20,552  —  —  —  —  —  —  —  —  20,552 
    Integration services fee —  —  —  —  —  —  1,313  —  —  —  —  —  1,313 
    Other —  —  —  —  —  —  —  —  —  —  —  119  119 
    Adjusted EBITDA$(20,766)$19,626 $13,784 $2,205 $20,552 $10,327 $4,279 $3,758 $6,933 $10,785 $4,562 $11,241 $87,286 


    Compass Diversified Holdings
    Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
    Three months ended December 31, 2021
    (Unaudited)

    (in thousands) Corporate  5.11 BOA Ergo Lugano Marucci Sports Velocity Outdoor ACI Altor Solutions Arnold Sterno Consolidated
    Net income (loss) from continuing operations  $(570) $5,834 $4,270 $2,008 $4,558  $747  $3,878  $3,812 $1,979  $1,174  $(1,807) $25,883 
    Adjusted for:                        
    Provision (benefit) for income taxes  (12,119)  2,048  1,394  661  1,790   150   856   872  (248)  (717)  2,407   (2,906)
    Interest expense, net  16,175   8  —  —  9   —   40   —  (1)  1   —   16,232 
    Intercompany interest  (20,748)  3,125  2,261  446  1,902   1,220   1,875   1,733  2,483   1,327   4,376   — 
    Depreciation and amortization  263   5,593  5,246  2,058  4,687   2,257   3,215   554  3,916   3,066   7,056   37,911 
    EBITDA  (16,999)  16,608  13,171  5,173  12,946   4,374   9,864   6,971  8,129   4,851   12,032   77,120 
    Other (income) expense  1   427  187  —  (6)  (1,000)  (38)  175  76   59   (306)  (425)
    Non-controlling shareholder compensation  —   502  539  452  190   275   243   124  265   22   329   2,941 
    Acquisition expenses  —   —  —  —  —   971   —   —  444   —   —   1,415 
    Integration services fee  —   —  —  —  563   —   —   —  —   —   —   563 
    Other  47   —  —  —  —   1,000   —   —  —   —   662   1,709 
    Adjusted EBITDA $(16,951) $17,537 $13,897 $5,625 $13,693  $5,620  $10,069  $7,270 $8,914  $4,932  $12,717  $83,323 


    Compass Diversified Holdings
    Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
    Year ended December 31, 2022
    (Unaudited)

    (in thousands)Corporate  5.11  BOA Ergo Lugano Marucci Sports PrimaLoft Velocity Outdoor ACI Altor Solutions Arnold Sterno Consolidated
    Net income (loss) from continuing operations $(64,084) $22,633  $42,613  $(18,669) $27,934 $11,526  $(17,741) $4,127 $12,955 $9,662 $7,683  $3,406  $42,045
    Adjusted for:                         
    Provision (benefit) for income taxes 12,119   7,125   6,527   (4,274)  11,889  4,320   (3,878)  1,562  3,616  3,174  3,329   (480)  45,029
    Interest expense, net 83,243   —   (25)  10   16  14   (7)  229  —  —  26   —   83,506
    Intercompany interest (105,813)  13,761   7,410   6,026   12,773  6,977   7,512   10,282  6,659  10,742  5,518   18,153   —
    Loss on debt extinguishment 534   —   —   —   —  —   —   —  —  —  —   —   534
    Depreciation and amortization 1,134   22,972   21,993   8,094   11,533  12,583   10,465   13,374  2,158  16,403  8,041   20,293   149,043
    EBITDA (72,867)  66,491   78,518   (8,813)  64,145  35,420   (3,649)  29,574  25,388  39,981  24,597   41,372   320,157
    Other (income) expense (57)  (217)  1,043   6   2  (1,875)  112   2,417  267  766  (20)  (1,730)  714
    Non-controlling shareholder compensation —   1,511   2,511   1,479   1,179  1,457   2,142   971  496  1,321  40   844   13,951
    Impairment expense —   —   —   20,552   —  —   —   —  —  —  —   —   20,552
    Acquisition expenses —   —   —   —   —  —   5,680   222  —  216  —   —   6,118
    Integration services fee —   —   —   —   1,688  —   2,375   —  —  —  —   —   4,063
    Other —   —   —   250   —  1,802   —   —  853  —  —   1,330   4,235
    Adjusted EBITDA$(72,924) $67,785  $82,072  $13,474  $67,014 $36,804  $6,660  $33,184 $27,004 $42,284 $24,617  $41,816  $369,790


    Compass Diversified Holdings
    Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
    Year ended December 31, 2021
    (Unaudited)

    (in thousands) Corporate  5.11 BOA Ergo Lugano Marucci Sports Velocity Outdoor ACI Altor Solutions Arnold Sterno Consolidated
    Net income (loss) from continuing operations  $(65,287) $20,152 $21,178 $5,079 $5,239 $10,232  $23,035  $14,178 $7,871  $5,013 $(316) $46,374
    Adjusted for:                        
    Provision (benefit) for income taxes  (12,119)  6,905  3,559  2,018  2,094  3,070   6,237   3,419  2,619   1,345  2,609   21,756
    Interest expense, net  58,639   16  —  —  9  5   165   —  (1)  6  —   58,839
    Intercompany interest  (73,982)  11,868  8,581  1,960  2,450  3,110   7,461   7,217  7,558   5,455  18,322   —
    Loss on debt extinguishment  33,305   —  —  —  —  —   —     —   —  —   33,305
    Depreciation and amortization  904   22,355  20,279  8,435  4,757  8,634   12,704   2,212  12,938   8,888  23,369   125,475
    EBITDA  (58,540)  61,296  53,597  17,492  14,549  25,051   49,602   27,026  30,985   20,707  43,984   285,749
    Other (income) expense  (284)  125  377  —  16  (119)  2,573   298  (323)  8  (1,189)  1,482
    Non-controlling shareholder compensation  —   2,428  2,194  1,693  190  1,101   1,020   496  1,035   38  1,242   11,437
    Acquisition expenses  39   —  —  —  1,827  971   —   —  444   310  —   3,591
    Integration services fee  —   —  3,300  —  563  1,000   —   —  —   —  —   4,863
    Other  1,132   273  —  —  —  1,000   (2,300)  —  —   —  995   1,100
    Adjusted EBITDA $(57,653) $64,122 $59,468 $19,185 $17,145 $29,004  $50,895  $27,820 $32,141  $21,063 $45,032  $308,222


    Compass Diversified Holdings
    Adjusted EBITDA
    (Unaudited)

      Three months ended December 31, Year ended December 31,
    (in thousands)  2022   2021   2022   2021 
             
    Branded Consumer        
    5.11 $19,626  $17,537  $67,785  $64,122 
    BOA  13,784   13,897   82,072   59,468 
    Ergobaby  2,205   5,625   13,474   19,185 
    Lugano (1)  20,552   13,693   67,014   17,145 
    Marucci Sports  10,327   5,620   36,804   29,004 
    PrimaLoft (2)  4,279   —   6,660   — 
    Velocity Outdoor  3,758   10,069   33,184   50,895 
    Total Branded Consumer $74,531  $66,441  $306,993  $239,819 
             
    Niche Industrial        
    Advanced Circuits $6,933  $7,270  $27,004  $27,820 
    Altor Solutions  10,785   8,914   42,284   32,141 
    Arnold Magnetics  4,562   4,932   24,617   21,063 
    Sterno  11,241   12,717   41,816   45,032 
    Total Niche Industrial $33,521  $33,833  $135,721  $126,056 
    Corporate expense  (20,766)  (16,951)  (72,924)  (57,653)
    Total Adjusted EBITDA $87,286  $83,323  $369,790  $308,222 


    (1) The above results for Lugano do not include management's estimate of Adjusted EBITDA, before our ownership, of $24.1 million for the twelve months ended December 31, 2021. Lugano was acquired on September 3, 2021.
       
    (2) The above results for PrimaLoft do not include management's estimate of Adjusted EBITDA, before our ownership, of $24.8 million for the twelve months ended December 31, 2022, and $4.9 million and $25.0 million, respectively, for the three and twelve months ended December 31, 2021. PrimaLoft was acquired on July 12, 2022.
       

    Compass Diversified Holdings
    Net Sales to Pro Forma Net Sales Reconciliation
    (unaudited)

      Three months ended December 31, Year ended December 31,
    (in thousands)  2022  2021  2022  2021
             
    Net Sales $594,921 $559,889 $2,264,044 $1,932,155
    Acquisitions (1)  —  13,494  55,185  136,940
    Pro Forma Net Sales $594,921 $573,383 $2,319,229 $2,069,095

    (1) Acquisitions reflects the net sales for Lugano and PrimaLoft on a proforma basis as if we had acquired these businesses on January 1, 2021.


    Compass Diversified Holdings
    Subsidiary Pro Forma Net Sales
    (unaudited)

      Three months ended December 31, Year ended December 31,
    (in thousands)  2022  2021  2022  2021
             
    Branded Consumer        
    5.11 $135,605 $123,954 $486,213 $444,963
    BOA  42,473  45,117  208,688  165,150
    Ergobaby  20,179  24,531  88,435  93,631
    Lugano (1)  64,278  43,224  201,507  125,105
    Marucci Sports  42,930  31,838  165,411  118,166
    PrimaLoft (1)  14,032  13,494  79,929  65,882
    Velocity Outdoor  51,464  64,535  232,238  270,426
    Total Branded Consumer $370,961 $346,693 $1,462,421 $1,283,323
             
    Niche Industrial        
    Advanced Circuits $22,309 $23,278 $89,503 $90,487
    Altor Solutions  61,748  57,635  261,338  180,217
    Arnold Magnetics  37,496  38,048  153,815  139,941
    Sterno  102,407  107,729  352,152  375,127
    Total Niche Industrial $223,960 $226,690 $856,808 $785,772
             
    Total Subsidiary Net Sales $594,921 $573,383 $2,319,229 $2,069,095

    (1) Net sales for Lugano and PrimaLoft are pro forma as if we had acquired these businesses on January 1, 2021.Historical net sales for Lugano prior to acquisition on September 3, 2021 were $71.1 million for the twelve months ended December 31, 2021. Historical net sales for PrimaLoft prior to acquisition on July 12, 2022 were $55.2 million for the twelve months ended December 31, 2022, and $13.5 million and $65.9 million, respectively, for the three and twelve months ended December 31, 2021.


    Compass Diversified Holdings
    Condensed Consolidated Cash Flows

      Three months ended December 31, Year ended December 31,
    (in thousands)  2022   2021   2022   2021 
             
    Net cash provided by (used in) operating activities $11,632  $(13,097) $(28,291) $134,051 
    Net cash used in investing activities  (27,774)  (115,067)  (626,725)  (317,496)
    Net cash provided by financing activities  14,757   218,334   556,885   273,206 
    Foreign currency impact on cash  1,404   324   (1,331)  228 
    Net increase (decrease) in cash and cash equivalents  19   90,494   (99,462)  89,989 
    Cash and cash equivalents - beginning of the period(1)  61,252   70,239   160,733   70,744 
    Cash and cash equivalents - end of the period $61,271  $160,733  $61,271  $160,733 

    (1) Includes cash from discontinued operations of $4.3 million at January 1, 2021.


    Compass Diversified Holding
    Selected Financial Data - Cash Flows
             
      Three months ended December 31, Year ended December 31,
    (in thousands)  2022   2021   2022   2021 
             
    Changes in operating assets and liabilities $(29,213) $(69,044) $(252,377) $(83,764)
    Purchases of property and equipment $(24,591) $(12,550) $(64,274) $(40,551)
    Distributions paid - common shares $(18,051) $(23,742) $(70,845) $(150,946)
    Distributions paid - preferred shares $(6,045) $(6,045) $(24,181) $(24,181)

     


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