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Compass Diversified Reports Record Second Quarter 2022 Financial Results
来源: Nasdaq GlobeNewswire / 03 8月 2022 15:15:02 America/Chicago
Net Sales Growth of 19% Drives Record Quarterly Earnings
Raises Full-Year Outlook Given Continued Strong Performance and PrimaLoft Acquisition
WESTPORT, Conn., Aug. 03, 2022 (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 months ended June 30, 2022.
“The second quarter marks our sixth consecutive quarter of record financial performance, which is a continued testament to the strength of our management teams and quality of the companies we own,” said Elias Sabo, CEO of Compass Diversified. “Despite the significant macroeconomic challenges that have curbed consumer discretionary spending, ongoing global supply chain constraints, and inflationary concerns, CODI reported another quarter of double-digit sales and earnings growth. Based on our strong performance and our current view of the economy, we are raising our full-year outlook. We believe we remain well-positioned to drive continued value for our shareholders.”
Second Quarter 2022 Financial Highlights vs. Same Year-Ago Quarter (where applicable)
- Net sales up 19% to $515.6 million, and up 13% on a pro forma basis.
- Branded consumer net sales up 21% to $326.5 million, and up 12% on a pro forma basis.
- Niche industrial net sales up 16% to $189.1 million.
- Operating income up 38% to $50.3 million.
- Income from continuing operations up considerably to $26.5 million vs. $(21.6) million.
- Net income up considerably to $31.0 million vs. $(11.3) million.
- Adjusted Earnings, a non-GAAP financial measure, up 41% to $39.3 million.
- Adjusted EBITDA, a non-GAAP financial measure, up 26% to $87.4 million.
- Paid a second quarter 2022 cash distribution of $0.25 per share on CODI's common shares in July 2022.
Second Quarter 2022 Business Highlights
- Joined the Russell 2000 and 3000 Indexes, providing the Company with increased visibility in the public markets.
- Announced the acquisition of PrimaLoft Technologies Holdings, Inc., the parent company of PrimaLoft, Inc. ("PrimaLoft"), a leading provider of branded, high-performance synthetic insulation and materials used primarily in outerwear and accessories. The Company completed the acquisition on July 12, 2022.
Second Quarter 2022 Financial Results
Net sales in the second quarter of 2022 were $515.6 million, up 19% compared to $431.5 million in the second quarter of 2021. The increase was due to strong performance at its branded consumer and niche industrial subsidiaries. On a pro forma basis, assuming CODI had acquired Lugano on January 1, 2021, net sales were up 13% compared to the prior year period.
Branded consumer net sales increased 21% in the second quarter of 2022 to $326.5 million. On a pro forma basis, assuming CODI had acquired Lugano on January 1, 2021, branded consumer net sales were up 12% compared to the prior year period. Niche industrial net sales increased 16% in the second quarter of 2022 to $189.1 million compared to $162.5 million in the second quarter of 2021.
Net income for the second quarter of 2022 increased to $31.0 million compared to a net loss of $11.3 million in the second quarter of 2021. Income from continuing operations for the second quarter of 2022 increased to $26.5 million compared to a loss from continuing operations of $21.6 million in the second quarter of 2021. The increases in both were due to the strong performance across the branded consumer and niche industrial businesses on a combined basis. In addition, the second quarter of 2021 included a loss on debt extinguishment of $33.3 million in connection with the redemption of CODI’s 8.000% Senior Notes due 2026 on April 1, 2021. Operating income for the second quarter of 2022 increased $14.0 million to a record $50.3 million compared to $36.4 million in the second quarter of 2021.
Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the second quarter of 2022 was $39.3 million, up 41% compared to $27.9 million in the second quarter of 2021. CODI's weighted average number of shares outstanding for the quarter ended June 30, 2022, was 70.2 million and, for the quarter ended June 30, 2021, was 64.9 million.
Adjusted EBITDA (see "Note Regarding Use of Non-GAAP Financial Measures" below) in the second quarter of 2022 was $87.4 million, up 26% compared to $69.5 million in the second quarter of 2021. The increase was primarily due to the strong performance across the branded consumer and niche industrial businesses on a combined basis. The Company no longer adds back management fees in its calculation of Adjusted EBITDA. Management fees incurred during the second quarter were $14.9 million.
Liquidity and Capital Resources
As of June 30, 2022, CODI had approximately $102.7 million in cash and cash equivalents, no borrowings outstanding on its revolver, $1.0 billion outstanding in 5.250% Senior Notes due 2029 and $300 million outstanding in 5.000% Senior Notes due 2032.
As of June 30, 2022, the Company had no significant debt maturities until 2029 and had net borrowing availability of $597.7 million under its revolving credit facility.
On July 12, 2022, the Company amended and restated its credit agreement, which now provides a new $400 million term loan with the final installment payment due July 2027, in addition to a maximum aggregate amount of $600 million in revolving loans. The due date of all amounts outstanding under the revolving line of credit has also been extended to July 2027. The credit agreement also permits the Company, prior to the maturity date, to increase the revolving loan commitment and/or obtain additional term loans in an aggregate amount of up to $250 million, subject to certain restrictions and conditions.
Second Quarter 2022 Distributions
On July 1, 2022, CODI's Board of Directors (the “Board”) declared a second quarter distribution of $0.25 per share on the Company's common shares. The cash distribution was paid on July 28, 2022, to all holders of record of common shares as of July 21, 2022.
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, April 30, 2022, up to, but excluding, July 30, 2022. The distribution for such period was payable on July 30, 2022, to all holders of record of Series A Preferred Shares as of July 15, 2022. The payment occurred on August 1, 2022, the next business day following the payment date.
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, April 30, 2022, up to, but excluding, July 30, 2022. The distribution for such period was payable on July 30, 2022, to all holders of record of Series B Preferred Shares as of July 15, 2022. The payment occurred on August 1, 2022, the next business day following the payment date.
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, April 30, 2022, up to, but excluding, July 30, 2022. The distribution for such period was payable on July 30, 2022, to all holders of record of Series C Preferred Shares as of July 15, 2022. The payment occurred on August 1, 2022, the next business day following the payment date.
Increases 2022 Outlook
As a result of CODI’s strong financial performance in the second quarter, its expectations for the remainder of 2022 and its current view of the economy, the Company is raising its outlook. CODI expects its current subsidiaries, including PrimaLoft, to produce consolidated subsidiary Adjusted EBITDA for the full year 2022 of between $445 million and $470 million. This estimate is based on the summation of the Company’s expectations for its current subsidiaries in 2022, absent additional acquisitions or divestitures, includes a reduction for management fees paid at the subsidiaries of approximately $8 million and excludes corporate expenses such as interest expense, management fees paid at CODI and corporate overhead. In addition, the Company expects to earn between $130 million and $145 million in Adjusted Earnings for the full year 2022, including PrimaLoft, and including Advanced Circuits as a result of the expectation of reclassifying Advanced Circuits to continuing operations during the third quarter.
Conference Call
Management will host a conference call on Wednesday, August 3, 2022, 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 68393459. 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. 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, August 10, 2022. 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 reflects important financial measures as it 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, assuming that the Company acquired Lugano 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 2022 Adjusted EBITDA or 2022 Adjusted Earnings to their comparable GAAP measure 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 (“CODI”)
Since its founding in 1998, CODI has consistently executed on its strategy of owning and managing a diverse set of highly defensible, middle-market businesses across the niche industrial and branded consumer 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 2022 Adjusted EBITDA, our 2022 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; 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
949.574.3860Media Contact:
The IGB Group
Leon Berman
212.477.8438
lberman@igbir.comCODI@gatewayir.com Compass Diversified Holdings
Condensed Consolidated Balance SheetsJune 30, 2022 December 31, 2021 (in thousands) (Unaudited) Assets Current assets Cash and cash equivalents $ 102,709 $ 157,125 Accounts receivable, net 268,530 268,262 Inventories, net 695,687 562,084 Prepaid expenses and other current assets 66,530 56,575 Current assets held-for-sale 96,227 99,423 Total current assets 1,229,683 1,143,469 Property, plant and equipment, net 182,989 178,393 Goodwill and intangible assets, net 1,649,174 1,688,082 Other non-current assets 141,487 134,317 Total assets $ 3,203,333 $ 3,144,261 Liabilities and stockholders’ equity Current liabilities Accounts payable and accrued expenses $ 292,278 $ 295,206 Due to related party 13,501 11,705 Other current liabilities 32,286 45,490 Current liabilities held-for-sale 27,270 29,127 Total current liabilities 365,335 381,528 Deferred income taxes 79,357 84,344 Long-term debt 1,285,747 1,284,826 Other non-current liabilities 118,048 109,033 Total liabilities 1,848,487 1,859,731 Stockholders' equity Total stockholders' equity attributable to Holdings 1,177,509 1,111,816 Noncontrolling interest 177,707 175,328 Noncontrolling interest held-for-sale (370 ) (2,614 ) Total stockholders' equity 1,354,846 1,284,530 Total liabilities and stockholders’ equity $ 3,203,333 $ 3,144,261 Compass Diversified Holdings
Consolidated Statements of Operations
(Unaudited)Three months ended June 30, Six months ended June 30, (in thousands, except per share data) 2022 2021 2022 2021 Net sales $ 515,597 $ 431,525 $ 1,026,110 $ 840,081 Cost of sales 303,840 257,961 613,538 497,969 Gross profit 211,757 173,564 412,572 342,112 Operating expenses: Selling, general and administrative expense 125,624 107,317 246,296 211,369 Management fees 14,901 11,058 29,337 21,856 Amortization expense 20,921 18,837 42,026 37,426 Operating income 50,311 36,352 94,913 71,461 Other income (expense): Interest expense, net (17,519 ) (14,947 ) (34,938 ) (28,752 ) Amortization of debt issuance costs (865 ) (722 ) (1,731 ) (1,408 ) Loss on debt extinguishment — (33,305 ) — (33,305 ) Other income (expense), net 737 (642 ) 2,773 (2,870 ) Net income from continuing operations before income taxes 32,664 (13,264 ) 61,017 5,126 Provision for income taxes 6,132 8,344 16,108 13,652 Income (loss) from continuing operations 26,532 (21,608 ) 44,909 (8,526 ) Income from discontinued operations, net of income tax 5,004 10,357 10,374 19,271 Gain (loss) on sale of discontinued operations (579 ) — 5,414 — Net income 30,957 (11,251 ) 60,697 10,745 Less: Net income from continuing operations attributable to noncontrolling interest 3,635 1,967 8,572 3,870 Less: Net income from discontinued operations attributable to noncontrolling interest 955 1,412 1,996 2,511 Net income (loss) attributable to Holdings $ 26,367 $ (14,630 ) $ 50,129 $ 4,364 Basic income (loss) per common share attributable to Holdings Continuing operations $ 0.13 $ (0.50 ) $ 0.19 $ (0.53 ) Discontinued operations 0.04 0.12 0.18 0.24 $ 0.17 $ (0.38 ) $ 0.37 $ (0.29 ) Basic weighted average number of common shares outstanding 70,227 64,900 69,804 64,900 Cash distributions declared per Trust common share $ 0.25 $ 0.36 $ 0.50 $ 0.72 Compass Diversified Holdings
Net Income (Loss) to Non-GAAP Adjusted Earnings and Non-GAAP Adjusted EBITDA
(Unaudited)Three months ended June 30, Six months ended June 30, (in thousands) 2022 2021 2022 2021 Net income (loss) $ 30,957 $ (11,251 ) $ 60,697 $ 10,745 Gain (loss) on sale of discontinued operations (579 ) — 5,414 — Income from discontinued operations, net of tax 5,004 10,357 10,374 19,271 Income (loss) from continuing operations $ 26,532 $ (21,608 ) $ 44,909 $ (8,526 ) Less: income from continuing operations attributable to noncontrolling interest 3,635 1,903 8,572 3,870 Net income (loss) attributable to Holdings - continuing operations $ 22,897 $ (23,511 ) $ 36,337 $ (12,396 ) Adjustments: Distributions paid - Preferred Shares (6,046 ) (6,046 ) (12,091 ) (12,091 ) Amortization expense - intangibles and inventory step up 22,471 18,837 45,837 37,426 Loss on debt extinguishment 33,305 — 33,305 Stock compensation 2,680 2,716 5,361 5,356 Acquisition expenses — 11 216 310 Integration Services Fee 563 1,600 1,125 3,200 Held for Sale corporate tax impact (4,338 ) — (4,338 ) — Other 1,027 1,032 2,829 (1,069 ) Adjusted Earnings $ 39,254 $ 27,880 $ 75,276 $ 54,041 Plus (less): Depreciation 10,355 8,946 20,282 17,503 Income taxes 6,132 8,344 16,108 13,652 Held-for-sale tax impact - corporate 4,338 — 4,338 — Interest expense, net 17,519 14,947 34,938 28,752 Amortization of debt issuance 865 722 1,731 1,408 Noncontrolling interest 3,635 1,967 8,572 3,870 Preferred distributions 6,046 6,046 12,091 12,091 Other expense (income) (737 ) 642 (2,773 ) 2,870 Adjusted EBITDA $ 87,407 $ 69,494 $ 170,563 $ 134,187 Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
Three months ended June 30, 2022
(Unaudited)Corporate 5.11 BOA Ergo Lugano Marucci Sports Velocity Outdoor Altor Solutions Arnold Sterno Consolidated Income (loss) from continuing operations (1) $ (9,790 ) $ 6,990 $ 13,988 $ 1,604 $ 5,282 $ (1,990 ) $ 2,434 $ 2,448 $ 2,782 $ 2,784 $ 26,532 Adjusted for: Provision (benefit) for income taxes (4,338 ) 2,274 2,566 443 1,802 (794 ) 754 1,043 1,219 1,163 6,132 Interest expense, net 17,466 (16 ) (7 ) 1 4 9 55 — 7 — 17,519 Intercompany interest (20,460 ) 3,078 1,798 1,476 2,453 1,320 2,137 2,558 1,278 4,362 — Depreciation and amortization expense 301 5,584 5,451 2,020 3,048 2,865 3,292 4,140 1,903 5,087 33,691 EBITDA (16,821 ) 17,910 23,796 5,544 12,589 1,410 8,672 10,189 7,189 13,396 83,874 Other (income) expense — (68 ) 45 — — (18 ) (26 ) (203 ) — (467 ) (737 ) Non-controlling shareholder compensation — 418 633 379 204 276 251 267 12 240 2,680 Integration services fee — — — — 563 — — — — — 563 Other — — — 250 — — — — — 777 1,027 Adjusted EBITDA (2) $ (16,821 ) $ 18,260 $ 24,474 $ 6,173 $ 13,356 $ 1,668 $ 8,897 $ 10,253 $ 7,201 $ 13,946 $ 87,407 (1) Income (loss) from continuing operations does not include income from discontinued operations for the three months ended June 30, 2022.
(2) As a result of the classification of ACI as Held for Sale at June 30, 2022, Adjusted EBITDA for the three months ended June 30, 2022 does not include $6.4 million in Adjusted EBITDA from ACI.
Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
Three months ended June 30, 2021
(Unaudited)Corporate 5.11 BOA Ergo Marucci Sports Velocity Outdoor Altor Solutions Arnold Sterno Consolidated Income (loss) from continuing operations (1) $ (46,509 ) $ 7,096 $ 7,108 $ 2,559 $ (278 ) $ 5,364 $ 1,083 $ 636 $ 1,333 $ (21,608 ) Adjusted for: Provision (benefit) for income taxes — 2,259 2,172 681 (109 ) 1,541 596 468 735 8,343 Interest expense, net 14,892 7 — — 2 46 — — — 14,947 Intercompany interest (15,694 ) 2,799 2,076 507 641 1,866 1,680 1,353 4,772 — Loss on debt extinguishment 33,305 — — — — — — — — 33,305 Depreciation and amortization 253 5,439 4,917 2,102 2,053 3,200 3,193 2,056 5,293 28,506 EBITDA (13,753 ) 17,600 16,273 5,849 2,309 12,017 6,552 4,513 12,133 63,493 Other (income) expense 29 (289 ) 25 — 894 227 131 — (375 ) 642 Non-controlling shareholder compensation — 659 523 403 276 262 256 8 329 2,716 Acquisition expenses — — — — — — — 11 — 11 Integration services fees — — 1,100 — 500 — — — — 1,600 Other 699 — — — — — — — 333 1,032 Adjusted EBITDA (2) $ (13,025 ) $ 17,970 $ 17,921 $ 6,252 $ 3,979 $ 12,506 $ 6,939 $ 4,532 $ 12,420 $ 69,494 (1) Income (loss) from continuing operations does not include income from discontinued operations for the three months ended June 30, 2021.
(2) As a result of the sale of Liberty Safe in August 2021, and the classification of ACI as Held for Sale at December 31, 2021, Adjusted EBITDA for the three month ended June 30, 2021 does not include $ 6.5 million in Adjusted EBITDA from Liberty and $7.1 million in Adjusted EBITDA from ACI.
Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
Six months ended June 30, 2022
(Unaudited)Corporate 5.11 BOA Ergo Lugano Marucci Sports Velocity Outdoor Altor Solutions Arnold Sterno Consolidated Income (loss) from continuing operations (1) $ (24,771 ) $ 9,635 $ 28,187 $ 125 $ 13,776 $ 4,144 $ 3,147 $ 4,384 $ 3,742 $ 2,540 $ 44,909 Adjusted for: Provision (benefit) for income taxes (4,338 ) 3,093 5,043 842 4,697 1,212 956 2,102 2,231 270 16,108 Interest expense, net 34,834 10 (12 ) 2 9 10 72 — 13 — 34,938 Intercompany interest (39,735 ) 5,998 3,826 2,263 4,578 2,837 3,990 5,023 2,545 8,675 — Depreciation and amortization expense 637 11,038 10,768 4,028 5,302 7,054 6,561 8,130 4,129 10,203 67,850 EBITDA (33,373 ) 29,774 47,812 7,260 28,362 15,257 14,726 19,639 12,660 21,688 163,805 Other (income) expense — (616 ) 95 4 2 (1,828 ) 183 109 — (722 ) (2,773 ) Non-controlling shareholder compensation — 829 1,268 792 444 552 502 535 25 414 5,361 Acquisition expenses — — — — — — — 216 — — 216 Integration services fee — — — — 1,125 — — — — — 1,125 Other — — — 250 — 1,802 — — — 777 2,829 Adjusted EBITDA (2) $ (33,373 ) $ 29,987 $ 49,175 $ 8,306 $ 29,933 $ 15,783 $ 15,411 $ 20,499 $ 12,685 $ 22,157 $ 170,563 (1) Income (loss) from continuing operations does not include income from discontinued operations for the six months ended June 30, 2022.
(2) As a result of the classification of ACI as Held for Sale at June 30, 2022, Adjusted EBITDA for the six months ended June 30, 2022 does not include $13.6 million in Adjusted EBITDA from ACI.
Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
Six months ended June 30, 2021
(Unaudited)Corporate 5.11 BOA Ergo Marucci Sports Velocity Outdoor Altor Solutions Arnold Sterno Consolidated Income (loss) from continuing operations (1) $ (57,916 ) $ 9,095 $ 12,652 $ 3,602 $ 7,250 $ 10,589 $ 3,298 $ 1,594 $ 1,310 $ (8,526 ) Adjusted for: Provision (benefit) for income taxes — 3,027 1,465 1,028 2,289 3,047 1,531 1,004 260 13,651 Interest expense, net 28,651 7 — — 4 90 — — — 28,752 Intercompany interest (31,825 ) 5,783 4,362 1,073 1,193 3,684 3,418 2,815 9,497 — Loss on debt extinguishment 33,305 — — — — — — — — 33,305 Depreciation and amortization 459 10,894 9,884 4,327 4,222 6,328 5,816 3,817 10,591 56,338 EBITDA (27,326 ) 28,806 28,363 10,030 14,958 23,738 14,063 9,230 21,658 123,520 Other (income) expense 149 (301 ) 80 — 892 2,613 (133 ) — (430 ) 2,870 Non-controlling shareholder compensation — 1,287 1,083 807 551 524 513 8 583 5,356 Acquisition expenses — — — — — — — 310 — 310 Integration services fees — — 2,200 — 1,000 — — — — 3,200 Other 898 — — — — (2,300 ) — — 333 (1,069 ) Adjusted EBITDA (2) $ (26,279 ) $ 29,792 $ 31,726 $ 10,837 $ 17,401 $ 24,575 $ 14,443 $ 9,548 $ 22,144 $ 134,187 (1) Income (loss) from continuing operations does not include income from discontinued operations for the six months ended June 30, 2021.
(2) As a result of the sale of Liberty Safe in August 2021, and the classification of ACI as Held for Sale at December 31, 2021, Adjusted EBITDA for the six months ended June 30, 2021 does not include $12.5 million in Adjusted EBITDA from Liberty and $13.1 million in Adjusted EBITDA from ACI.
Compass Diversified Holdings
Non-GAAP Adjusted EBITDA
(Unaudited)Three months ended June 30, Six months ended June 30, (in thousands) 2022 2021 2022 2021 Branded Consumer 5.11 $ 18,260 $ 17,970 $ 29,987 $ 29,792 BOA 24,474 17,921 49,175 31,726 Ergobaby 6,173 6,252 8,306 10,837 Lugano (1) 13,356 — 29,933 — Marucci Sports 1,668 3,979 15,783 17,401 Velocity Outdoor 8,897 12,506 15,411 24,575 Total Branded Consumer $ 72,828 $ 58,628 $ 148,595 $ 114,331 Niche Industrial Altor Solutions $ 10,253 $ 6,939 20,499 14,443 Arnold Magnetics 7,201 4,532 12,685 9,548 Sterno 13,946 12,420 22,157 22,144 Total Niche Industrial $ 31,400 $ 23,891 $ 55,341 $ 46,135 Corporate expense (16,821 ) (13,025 ) (33,373 ) (26,279 ) Total Adjusted EBITDA $ 87,407 $ 69,494 $ 170,563 $ 134,187 (1 ) The above results for Lugano do not include management's estimate of Adjusted EBITDA, before the Company’s ownership, of $7.1 million and $18.6 million, respectively, for the three and six months ended June 30, 2021. Lugano was acquired on September 3, 2021. Compass Diversified Holdings
Net Sales to Pro Forma Net Sales Reconciliation
(unaudited)Three months ended June 30, Six months ended June 30, (in thousands) 2022 2021 2022 2021 Net Sales $ 515,597 $ 431,525 $ 1,026,110 $ 840,081 Acquisitions (1) — 22,944 — 52,383 Pro Forma Net Sales $ 515,597 $ 454,469 $ 1,026,110 $ 892,464 (1) Acquisitions reflects the net sales for Lugano on a pro forma basis as if the Company had acquired this business on January 1, 2021.
Compass Diversified Holdings
Subsidiary Pro Forma Net Sales
(unaudited)Three months ended June 30, Six months ended June 30, (in thousands) 2022 2021 2022 2021 Branded Consumer 5.11 $ 120,048 $ 110,033 $ 224,071 $ 209,910 BOA 59,386 44,085 116,196 80,537 Ergobaby 26,506 26,956 46,716 49,284 Lugano (1) 39,065 22,944 86,084 52,383 Marucci Sports 27,636 24,640 79,728 61,288 Velocity Outdoor 53,846 63,358 105,292 128,990 Total Branded Consumer $ 326,487 $ 292,016 $ 658,087 $ 582,392 Niche Industrial Altor Solutions $ 66,144 $ 40,640 $ 129,972 $ 78,460 Arnold Magnetics 38,777 32,556 76,942 65,041 Sterno 84,189 89,257 161,109 166,571 Total Niche Industrial $ 189,110 $ 162,453 $ 368,023 $ 310,072 Total Subsidiary Net Sales $ 515,597 $ 454,469 $ 1,026,110 $ 892,464 (1) Net sales for Lugano are pro forma as if the Company had acquired this business on January 1, 2021.
Compass Diversified Holdings
Condensed Consolidated Cash Flows
(unaudited)Three months ended June 30, Six months ended June 30, (in thousands) 2022 2021 2022 2021 Net cash provided by (used in) operating activities $ (1,808 ) $ 73,044 $ (35,337 ) $ 109,434 Net cash used in investing activities (13,946 ) (10,429 ) (22,238 ) (52,696 ) Net cash provided by (used in) financing activities 18,049 (15,830 ) 3,597 (17,323 ) Foreign currency impact on cash (873 ) 190 (1,132 ) 8 Net increase (decrease) in cash and cash equivalents 1,422 46,975 (55,110 ) 39,423 Cash and cash equivalents - beginning of the period (1) 104,201 63,192 160,733 70,744 Cash and cash equivalents - end of the period (2) $ 105,623 $ 110,167 $ 105,623 $ 110,167 (1) Includes cash from discontinued operations of $3.6 million at January 1, 2022 and $10.7 million at January 1, 2021.
(2) Includes cash from discontinued operations of $2.9 million at June 30, 2022 and $5.3 million at June 30, 2021.
Compass Diversified Holding Selected Financial Data - Cash Flows (unaudited) Three months ended June 30, Six months ended June 30, (in thousands) 2022 2021 2022 2021 Changes in operating assets and liabilities $ (63,478 ) $ 23,241 $ (159,195 ) $ (2,318 ) Purchases of property and equipment $ (14,044 ) $ (8,793 ) $ (24,435 ) $ (16,096 ) Distributions paid - common shares $ (17,511 ) $ (23,364 ) $ (34,863 ) $ (46,728 ) Distributions paid - preferred shares $ (6,046 ) $ (6,046 ) $ (12,091 ) $ (12,091 ) 
