• Compass Diversified Reports Second Quarter 2023 Financial Results

    来源: Nasdaq GlobeNewswire / 02 8月 2023 16:15:01   America/New_York

    WESTPORT, Conn., Aug. 02, 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 months ended June 30, 2023.

    “Our second quarter results were once again driven by the strength and diversification of CODI’s subsidiary businesses,” said Elias Sabo, CEO of Compass Diversified. “The easing of inflationary pressures in our niche industrials businesses drove solid Adjusted EBITDA expansion, and in our consumer businesses, despite inventory destocking headwinds continuing to constrain growth, end-market demand across most of our brands performed at or above our expectations. Given our resilient performance, we remain confident that our diversified group of subsidiaries will continue to drive value for our shareholders in 2023 and beyond.”

    Second Quarter 2023 Financial Summary vs. Same Year-Ago Period (where applicable)

    • Net sales up 2% and down 3% on a pro forma basis to $524.2 million.
    • Branded consumer pro forma net sales down 1% to $348.5 million.
    • Niche industrial net sales down 7% to $175.6 million.
    • Net income of $17.1 million vs. $31.0 million primarily due to higher SG&A expense, interest and amortization expenses.
    • Income from continuing operations of $12.9 million vs. $26.5 million.
    • Adjusted Earnings, a non-GAAP financial measure, was $35.6 million vs. $39.3 million.
    • Adjusted EBITDA, a non-GAAP financial measure, was up 3% to $90.1 million.
    • Paid a second quarter 2023 cash distribution of $0.25 per share on CODI's common shares in July 2023.

    Recent Business Highlights

    • On April 4, 2023, Marucci Sports, a subsidiary of CODI and leading designer and manufacturer of baseball and fastpitch equipment and apparel, announced the acquisition of Baum Enterprises LLC, a designer and manufacturer of composite wood bats.
    • On July 5, 2023, subsequent to quarter-end, CODI announced that Mr. C. Sean Day retired from the Board of Directors of Compass Group Diversified Holdings LLC, effective June 30, 2023. The Board elected Ms. Heidi Locke Simon to fill the vacancy resulting from Mr. Day’s departure from the Board. Ms. Locke Simon’s election became effective as of July 5, 2023.
    • On July 17, 2023, subsequent to quarter-end, The Sterno Group, a subsidiary of CODI and manufacturer and marketer of portable food warming systems, creative indoor and outdoor lighting, and home fragrance solutions for the foodservice industry and consumer markets, announced the appointment of Geoffrey Feil as CEO.

    Second Quarter 2023 Financial Results

    Net sales in the second quarter of 2023 were $524.2 million, up 2% compared to $515.6 million in the second quarter of 2022. The increase was primarily due to the acquisition of PrimaLoft, the strong performance at Lugano and Marucci, partially offset by lower sales at BOA due to inventory destocking in the footwear industry and lower sales at Velocity in the second quarter of 2023. On a pro forma basis, assuming CODI had acquired PrimaLoft on January 1, 2022, net sales were down 3% in the second quarter of 2023 as compared to prior year.

    Branded consumer net sales, pro forma for the PrimaLoft acquisition, decreased 1% in the second quarter of 2023 to $348.5 million compared to the second quarter of 2022. Niche industrial net sales decreased 7% in the second quarter of 2023 to $175.6 million compared to the second quarter of 2022.

    Net income in the second quarter of 2023 was $17.1 million compared to $31.0 million in the second quarter of 2022. Net income from continuing operations in the second quarter of 2023 was $12.9 million compared to $26.5 million in the second quarter of 2022. The decrease in net income and net income from continuing operations are due to higher SG&A expense, interest expense, and amortization expense. Operating income for the second quarter of 2023 was $45.1 million compared to $50.3 million in the second quarter of 2022 due to higher SG&A and amortization expenses.

    Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the second quarter of 2023 was $35.6 million compared to $39.3 million a year ago.   CODI's weighted average number of shares outstanding in the second quarter of 2023 was 71.9 million compared to 70.2 million in the prior year second quarter.

    Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below) in the second quarter of 2023 was $90.1 million, up 3% compared to $87.4 million in the second quarter of 2022. The increase was primarily due to the acquisition of PrimaLoft. The Company no longer adds back management fees in its calculation of Adjusted EBITDA. Management fees incurred during the second quarter of 2023 were $16.9 million.

    Liquidity and Capital Resources

    As of June 30, 2023, CODI had approximately $67.4 million in cash and cash equivalents, $92.0 million outstanding on its revolver, $390.0 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 June 30, 2023, the Company had no significant debt maturities until 2027 and had net borrowing availability of approximately $505.8 million under its revolving credit facility.

    Second Quarter 2023 Distributions

    On July 5, 2023, 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 27, 2023, to all holders of record of common shares as of July 20, 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, April 30, 2023, up to, but excluding, July 30, 2023. The distribution for such period was payable on July 30, 2023, to all holders of record of Series A Preferred Shares as of July 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, April 30, 2023, up to, but excluding, July 30, 2023. The distribution for such period was payable on July 30, 2023, to all holders of record of Series B Preferred Shares as of July 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, April 30, 2023, up to, but excluding, July 30, 2023. The distribution for such period was payable on July 30, 2023, to all holders of record of Series C Preferred Shares as of July 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 $430 million and $460 million. This estimate is based on the summation of the Company’s expectations for its current subsidiaries in 2023 and is absent additional acquisitions or divestitures, and excludes corporate expenses such as interest expense, management fees paid by CODI and corporate overhead. For the full year 2023, CODI expects to earn between $110 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 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, August 2, 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) 886-7786 and the dial-in number for international callers is (416) 764-8658. The Conference ID is 88847585. 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, August 9, 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 PrimaLoft, assuming that the Company acquired PrimaLoft on January 1, 2022. 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; environmental risks affecting the business or operations of our subsidiaries; 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




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


    Compass Diversified Holdings
    Condensed Consolidated Balance Sheets
        
     June 30, 2023 December 31, 2022
    (in thousands)(Unaudited)  
    Assets   
    Current assets   
    Cash and cash equivalents$67,354  $57,880 
    Accounts receivable, net 296,291   331,396 
    Inventories, net 788,283   728,083 
    Prepaid expenses and other current assets 95,245   74,700 
    Current assets of discontinued operations    18,126 
    Total current assets 1,247,173   1,210,185 
    Property, plant and equipment, net 204,804   198,525 
    Goodwill 1,072,951   1,066,726 
    Intangible assets, net 1,096,260   1,127,936 
    Other non-current assets 174,505   166,412 
    Non-current assets of discontinued operations    79,847 
    Total assets$3,795,693  $3,849,631 
        
    Liabilities and stockholders’ equity   
    Current liabilities   
    Accounts payable and accrued expenses$268,521  $286,643 
    Due to related party 15,402   15,495 
    Current portion, long-term debt 10,000   10,000 
    Other current liabilities 36,951   36,545 
    Current liabilities of discontinued operations    11,148 
    Total current liabilities 330,874   359,831 
    Deferred income taxes 137,466   145,643 
    Long-term debt 1,757,673   1,824,468 
    Other non-current liabilities 152,075   141,535 
    Non-current liabilities of discontinued operations    16,192 
    Total liabilities 2,378,088   2,487,669 
    Stockholders' equity   
    Total stockholders' equity attributable to Holdings 1,176,790   1,136,920 
    Noncontrolling interest 240,815   223,509 
    Noncontrolling interest of discontinued operations    1,533 
    Total stockholders' equity 1,417,605   1,361,962 
    Total liabilities and stockholders’ equity$3,795,693  $3,849,631 
        


    Compass Diversified Holdings
    Consolidated Statements of Operations
    (Unaudited)
        
     Three Months Ended June 30, Six Months Ended June 30,
    (in thousands, except per share data) 2023   2022   2023   2022 
    Net sales$524,159  $515,597  $1,066,387  $1,026,110 
    Cost of sales 287,269   303,840   591,666   613,538 
    Gross profit 236,890   211,757   474,721   412,572 
    Operating expenses:       
    Selling, general and administrative expense 148,218   125,624   294,383   246,296 
    Management fees 16,920   14,901   33,315   29,337 
    Amortization expense 26,677   20,921   53,051   42,026 
    Operating income  45,075   50,311   93,972   94,913 
    Other income (expense):       
    Interest expense, net (26,615)  (17,519)  (52,795)  (34,938)
    Amortization of debt issuance costs (1,024)  (865)  (2,029)  (1,731)
    Other income (expense), net (101)  737   1,026   2,773 
    Net income from continuing operations before income taxes 17,335   32,664   40,174   61,017 
    Provision for income taxes 4,444   6,132   14,280   16,108 
    Income from continuing operations 12,891   26,532   25,894   44,909 
    Income (loss) from discontinued operations, net of income tax    5,004   (1,391)  10,374 
    Gain (loss) on sale of discontinued operations 4,232   (579)  102,221   5,414 
    Net income  17,123   30,957   126,724   60,697 
    Less: Net income from continuing operations attributable to noncontrolling interest 3,517   3,635   8,498   8,572 
    Less: Net income (loss) from discontinued operations attributable to noncontrolling interest    955   (777)  1,996 
    Net income attributable to Holdings$13,606  $26,367  $119,003  $50,129 
            
    Amounts attributable to Holdings       
    Income from continuing operations$9,374  $22,897  $17,396  $36,337 
    Income (loss) from discontinued operations    4,049   (614)  8,378 
    Gain (loss) on sale of discontinued operations, net of income tax 4,232   (579)  102,221   5,414 
    Net income attributable to Holdings$13,606  $26,367  $119,003  $50,129 
            
    Basic income (loss) per common share attributable to Holdings       
    Continuing operations$(0.41) $0.13  $(0.43) $0.19 
    Discontinued operations 0.06   0.04   1.41   0.18 
     $(0.35) $0.17  $0.98  $0.37 
            
    Basic weighted average number of common shares outstanding 71,932   70,227   72,055   69,804 
            
    Cash distributions declared per Trust common share$0.25  $0.25  $0.50  $0.50 


     
    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) 2023   2022   2023   2022 
    Net income$17,123  $30,957  $126,724  $60,697 
    Income (loss) from discontinued operations, net of tax    5,004   (1,391)  10,374 
    Gain (loss) on sale of discontinued operations, net of tax 4,232   (579)  102,221   5,414 
    Income from continuing operations$12,891  $26,532  $25,894  $44,909 
    Less: income from continuing operations attributable to noncontrolling interest 3,517   3,635   8,498   8,572 
    Net income attributable to Holdings - continuing operations$9,374  $22,897  $17,396  $36,337 
    Adjustments:       
    Distributions paid - preferred shares (6,046)  (6,046)  (12,091)  (12,091)
    Amortization expense - intangibles and inventory step up 26,677   22,471   54,185   45,837 
    Stock compensation 3,666   2,680   5,711   5,361 
    Acquisition expenses 364      364   216 
    Integration services fee 1,188   563   2,375   1,125 
    Held for sale corporate tax impact    (4,338)     (4,338)
    Other 348   1,027   780   2,829 
    Adjusted Earnings$35,571  $39,254  $68,720  $75,276 
    Plus (less):       
    Depreciation expense 12,765   10,355   24,574   20,282 
    Income tax provision 4,444   6,132   14,280   16,108 
    Held for sale corporate tax impact    4,338      4,338 
    Interest expense 26,615   17,519   52,795   34,938 
    Amortization of debt issuance costs 1,024   865   2,029   1,731 
    Income from continuing operations attributable to noncontrolling interest 3,517   3,635   8,498   8,572 
    Distributions paid - preferred shares 6,046   6,046   12,091   12,091 
    Other (income) expense 101   (737)  (1,026)  (2,773)
    Adjusted EBITDA$90,083  $87,407  $181,961  $170,563 


     
    Compass Diversified Holdings
    Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
    Three Months Ended June 30, 2023
    (Unaudited)
                             
      Corporate  5.11  BOA Ergobaby Lugano Marucci Sports PrimaLoft Velocity Outdoor Altor  Arnold Sterno Consolidated
    Income (loss) from continuing operations $(10,517) $3,866  $5,526  $382  $6,916  $405  $620  $(3,480) $4,501 $2,503  $2,169  $12,891
    Adjusted for:                        
    Provision (benefit) for income taxes     1,344   737   (101)  2,698   124   (2,508)  (1,499)  1,540  1,348   761   4,444
    Interest expense, net  26,547   (1)  (3)        1   (4)  70     5      26,615
    Intercompany interest  (35,647)  5,422   1,669   2,191   7,446   2,389   4,386   3,309   2,760  1,723   4,352   
    Depreciation and amortization  315   6,841   5,813   2,040   2,040   3,404   5,363   3,364   4,178  2,103   5,005   40,466
    EBITDA  (19,302)  17,472   13,742   4,512   19,100   6,323   7,857   1,764   12,979  7,682   12,287   84,416
    Other (income) expense  (1)  (124)  66   29   (76)  (3)  243   (79)  359  (7)  (306)  101
    Non-controlling shareholder compensation     478   669   312   445   459   665   228   250  9   151   3,666
    Acquisition expenses                 364                 364
    Integration services fee                    1,188              1,188
    Other                               348   348
    Adjusted EBITDA $(19,303) $17,826  $14,477  $4,853  $19,469  $7,143  $9,953  $1,913  $13,588 $7,684  $12,480  $90,083


       
    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 Ergobaby Lugano Marucci Sports Velocity Outdoor Altor  Arnold Sterno Consolidated
    Income (loss) from continuing operations $(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  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 $(16,821) $18,260  $24,474  $6,173 $13,356 $1,668  $8,897  $10,253  $7,201 $13,946  $87,407 


     
    Compass Diversified Holdings
    Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
    Six Months Ended June 30, 2023
    (Unaudited)
                             
      Corporate  5.11  BOA Ergobaby Lugano Marucci Sports PrimaLoft Velocity Outdoor Altor  Arnold Sterno Consolidated
    Income (loss) from continuing operations $(22,352) $6,016  $10,894  $(853) $16,884  $9,419 $(607) $(7,981) $7,202 $4,808  $2,464  $25,894 
    Adjusted for:                        
    Provision (benefit) for income taxes     2,070   1,359   (652)  6,085   3,040  (559)  (2,954)  2,634  2,388   869   14,280 
    Interest expense, net  52,598   (2)  (5)     4   2  (6)  194     10      52,795 
    Intercompany interest  (69,453)  10,221   3,461   4,340   13,730   4,728  8,708   6,437   5,634  3,372   8,822    
    Depreciation and amortization  594   13,293   11,506   4,079   4,890   6,455  10,723   6,751   8,343  4,122   10,032   80,788 
    EBITDA  (38,613)  31,598   27,215   6,914   41,593   23,644  18,259   2,447   23,813  14,700   22,187   173,757 
    Other (income) expense  (128)  (201)  180   29   (76)  29  139   (754)  563  (9)  (798)  (1,026)
    Non-controlling shareholder compensation     730   1,333   624   840   863  (43)  458   566  18   322   5,711 
    Acquisition expenses                 364                364 
    Integration services fee                   2,375              2,375 
    Other                              780   780 
    Adjusted EBITDA $(38,741) $32,127  $28,728  $7,567  $42,357  $24,900 $20,730  $2,151  $24,942 $14,709  $22,491  $181,961 


     
    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 Ergobaby Lugano Marucci Sports Velocity Outdoor Altor  Arnold Sterno Consolidated
    Income (loss) from continuing operations $(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  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 $(33,373) $29,987  $49,175  $8,306 $29,933 $15,783  $15,411 $20,499 $12,685 $22,157  $170,563 


     
    Compass Diversified Holdings
    Non-GAAP Adjusted EBITDA
    (Unaudited)
            
     Three Months Ended June 30, Six Months Ended June 30,
    (in thousands) 2023   2022   2023   2022 
            
    Branded Consumer       
    5.11$17,826  $18,260  $32,127  $29,987 
    BOA 14,477   24,474   28,728   49,175 
    Ergobaby 4,853   6,173   7,567   8,306 
    Lugano 19,469   13,356   42,357   29,933 
    Marucci Sports 7,143   1,668   24,900   15,783 
    PrimaLoft (1) 9,953      20,730    
    Velocity Outdoor 1,913   8,897   2,151   15,411 
    Total Branded Consumer$75,634  $72,828  $158,560  $148,595 
            
    Niche Industrial       
    Altor Solutions 13,588   10,253   24,942   20,499 
    Arnold Magnetics 7,684   7,201   14,709   12,685 
    Sterno 12,480   13,946   22,491   22,157 
    Total Niche Industrial$33,752  $31,400  $62,142  $55,341 
    Corporate expense (19,303)  (16,821)  (38,741)  (33,373)
    Total Adjusted EBITDA$90,083  $87,407  $181,961  $170,563 


    (1) The above results for PrimaLoft do not include management's estimate of Adjusted EBITDA, before the Company's ownership, of $11.6 million and $22.9 million, respectively, for the three and six months ended June 30, 2022. PrimaLoft was acquired on July 12, 2022.


            
    Compass Diversified Holdings
    Net Sales to Pro Forma Net Sales Reconciliation
    (unaudited)
            
     Three Months Ended June 30, Six Months Ended June 30,
    (in thousands) 2023   2022   2023   2022 
            
    Net Sales$524,159  $515,597  $1,066,387  $1,026,110 
    Acquisitions (1)    27,118      52,866 
    Pro Forma Net Sales$524,159  $542,715  $1,066,387  $1,078,976 


    (1) Acquisitions reflects the net sales for PrimaLoft on a pro forma basis as if the Company had acquired PrimaLoft on January 1, 2022.


     
    Compass Diversified Holdings
    Subsidiary Pro Forma Net Sales
    (unaudited)
            
     Three Months Ended June 30, Six Months Ended June 30,
    (in thousands) 2023   2022   2023   2022 
            
    Branded Consumer       
    5.11$126,030  $120,048  $250,482  $224,071 
    BOA 38,123   59,386   76,109   116,196 
    Ergobaby 26,149   26,506   48,567   46,716 
    Lugano 60,949   39,065   124,836   86,084 
    Marucci Sports 37,270   27,636   95,565   79,728 
    PrimaLoft (1) 22,160   27,118   46,689   52,866 
    Velocity Outdoor 37,839   53,846   71,879   105,292 
    Total Branded Consumer$348,520  $353,605  $714,127  $710,953 
            
    Niche Industrial       
    Altor Solutions 60,886   66,144   122,398   129,972 
    Arnold Magnetics 40,138   38,777   80,228   76,942 
    Sterno 74,615   84,189   149,634   161,109 
    Total Niche Industrial$175,639  $189,110  $352,260  $368,023 
            
    Total Subsidiary Net Sales$524,159  $542,715  $1,066,387  $1,078,976 


    (1) Net sales for PrimaLoft are pro forma as if the Company had acquired this business on January 1, 2022.


     
    Compass Diversified Holdings
    Condensed Consolidated Cash Flows
    (unaudited)

     Three Months Ended June 30, Six Months Ended June 30,
    (in thousands) 2023   2022   2023   2022 
            
    Net cash provided by (used in) operating activities$21,694  $(1,808) $37,239  $(35,337)
    Net cash provided by (used in) investing activities (36,895)  (13,946)  117,829   (22,238)
    Net cash provided by (used in) financing activities 28,827   18,049   (149,619)  3,597 
    Foreign currency impact on cash 72   (873)  634   (1,132)
    Net increase (decrease) in cash and cash equivalents 13,698   1,422   6,083   (55,110)
    Cash and cash equivalents - beginning of the period 53,656   104,201   61,271   160,733 
    Cash and cash equivalents - end of the period$67,354  $105,623  $67,354  $105,623 


    Compass Diversified Holding
    Selected Financial Data - Cash Flows
    (unaudited)
            
     Three Months Ended June 30, Six Months Ended June 30,
    (in thousands) 2023   2022   2023   2022 
            
    Changes in operating assets and liabilities$(33,652) $(63,478) $(65,197) $(159,195)
    Purchases of property and equipment$(15,460) $(14,044) $(31,540) $(24,435)
    Distributions paid - common shares$(17,987) $(17,511) $(36,038) $(34,863)
    Distributions paid - preferred shares$(6,046) $(6,046) $(12,091) $(12,091)

     


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