• Compass Diversified Reports Third Quarter 2023 Financial Results

    Источник: Nasdaq GlobeNewswire / 02 ноя 2023 16:15:01   America/New_York

    WESTPORT, Conn., Nov. 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 September 30, 2023.

    “Our third quarter results were remarkably strong, driven by Lugano’s continued outperformance and the majority of our companies performing above expectations,” said Elias Sabo, CEO of Compass Diversified. “The consistent resilience of our results against a challenging economic backdrop reflects not only the diversification of our subsidiaries, but our ability to find strong businesses that produce above-trend growth. Given our strong performance, we remain confident that our diversified group of subsidiaries will continue to drive value for our shareholders in 2023 and beyond.”

    Mr. Sabo continued: “As announced today, we have made the strategic decision to sell Marucci to Fox Factory Holding Corp. We purchased the business in 2020 for $200 million and after approximately $70 million in add-on acquisitions, have agreed to sell the brand for $572 million. Our ability to sell this business for a large premium in the current consumer discretionary market further underscores the strength of our brands, as well as our ability to drive uncorrelated market returns. Ultimately, this fuels our lower cost of capital, deepens our economic moat, and provides us the greater ability to increase shareholder returns.”

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

    • Net sales down 1% and down 1% on a pro forma basis to $569.6 million.
    • Branded consumer pro forma net sales up 2% to $388.3 million.
    • Niche industrial net sales down 8% to $181.2 million.
    • Net loss of $3.8 million vs. net income of $2.6 million primarily due to a $32.6 million non-cash impairment expense associated with the Company’s Velocity Outdoor subsidiary and higher interest expense.
    • Loss from continuing operations of $5.0 million vs. $3.0 million.
    • Adjusted Earnings, a non-GAAP financial measure, was $41.0 million vs. $41.6 million.
    • Adjusted EBITDA, a non-GAAP financial measure, was up 13% to $103.9 million.
    • Paid a third quarter 2023 cash distribution of $0.25 per share on CODI's common shares in October 2023.

    Recent Business Highlights

    • Today, CODI announced the sale of Marucci Sports to Fox Factory Holding Corp. (Nasdaq: FOXF) for an enterprise value of $572 million.
    • On July 5, 2023, CODI announced that Mr. C. Sean Day retired from the Board of Directors (the “Board”) 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, 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.

    Third Quarter 2023 Financial Results

    Net sales in the third quarter of 2023 were $569.6 million, down 1% compared to $575.8 million in the third quarter of 2022. Strong performance at Lugano and Marucci roughly offset lower sales at BOA due to inventory destocking in the footwear industry and lower sales at Velocity Outdoor in the third quarter of 2023. On a pro forma basis, assuming CODI had acquired PrimaLoft on January 1, 2022, net sales were down 1% in the third quarter of 2023 as compared to the prior year.

    Branded consumer net sales, pro forma for the PrimaLoft acquisition, increased 2% in the third quarter of 2023 to $388.3 million compared to the third quarter of 2022. Niche industrial net sales decreased 8% in the third quarter of 2023 to $181.2 million compared to the third quarter of 2022.

    Operating income for the third quarter of 2023 was $28.4 million compared to $43.8 million in the third quarter of 2022. The decline was due primarily to a $32.6 million non-cash impairment expense associated with the Company’s Velocity Outdoor subsidiary in the third quarter of 2023. Net loss in the third quarter of 2023 was $3.8 million compared to net income of $2.6 million in the third quarter of 2022. Net loss from continuing operations in the third quarter of 2023 was $5.0 million compared to $3.0 million in the third quarter of 2022. The increases in net loss and net loss from continuing operations are due to the non-cash impairment expense, as well as higher interest expense.

    Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the third quarter of 2023 was $41.0 million compared to $41.6 million a year ago. CODI's weighted average number of shares outstanding in the third quarter of 2023 was 71.88 million compared to 71.91 million in the prior year third quarter.

    Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below) in the third quarter of 2023 was $103.9 million, up 13% compared to $91.9 million in the third quarter of 2022. The increase was primarily due to strong results at Lugano, Marucci, Sterno and Altor. The Company no longer adds back management fees in its calculation of Adjusted EBITDA. Management fees incurred during the third quarter of 2023 were $18.6 million.

    Liquidity and Capital Resources

    As of September 30, 2023, CODI had approximately $64.7 million in cash and cash equivalents, $112.0 million outstanding on its revolver, $387.5 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 September 30, 2023, the Company had no significant debt maturities until 2027 and had net borrowing availability of approximately $486 million under its revolving credit facility.

    Third Quarter 2023 Distributions

    On October 3, 2023, CODI’s Board declared a third quarter distribution of $0.25 per share on the Company's common shares. The cash distribution was paid on October 26, 2023, to all holders of record of common shares as of October 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, July 30, 2023, up to, but excluding, October 30, 2023. The distribution for such period was payable on October 30, 2023, to all holders of record of Series A Preferred Shares as of October 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, July 30, 2023, up to, but excluding, October 30, 2023. The distribution for such period was payable on October 30, 2023, to all holders of record of Series B Preferred Shares as of October 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, July 30, 2023, up to, but excluding, October 30, 2023. The distribution for such period was payable on October 30, 2023, to all holders of record of Series C Preferred Shares as of October 15, 2023.

    2023 Outlook

    As a result of CODI’s strong financial performance in the third quarter, the Company is raising its Adjusted EBITDA and Adjusted Earnings outlook (see “Note Regarding Use of Non-GAAP Financial Measures” below). For the full year 2023, CODI now expects consolidated subsidiary Adjusted EBITDA of between $450 million and $465 million. This estimate is based on the summation of the Company’s expectations for its current subsidiaries in 2023, including Marucci, 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, including Marucci, CODI now expects to earn between $130 million and $140 million in Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below).

    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 Thursday, November 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) 259-6580 and the dial-in number for international callers is (416) 764-8624. The Conference ID is 90701822. 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 Thursday, November 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 divestiture of Marucci, 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 (including the divestiture of Marucci) 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@gateway-grp.com 


     
    Compass Diversified Holdings
    Condensed Consolidated Balance Sheets
     
     September 30, 2023 December 31, 2022
    (in thousands)(Unaudited)  
    Assets   
    Current assets   
    Cash and cash equivalents$64,737 $57,880
    Accounts receivable, net 349,839  331,396
    Inventories, net 801,887  728,083
    Prepaid expenses and other current assets 98,974  74,700
    Current assets of discontinued operations   18,126
    Total current assets 1,315,437  1,210,185
    Property, plant and equipment, net 203,512  198,525
    Goodwill 1,041,469  1,066,726
    Intangible assets, net 1,069,995  1,127,936
    Other non-current assets 180,399  166,412
    Non-current assets of discontinued operations   79,847
    Total assets$3,810,812 $3,849,631
        
    Liabilities and stockholders’ equity   
    Current liabilities   
    Accounts payable and accrued expenses$291,294 $286,643
    Due to related party 17,230  15,495
    Current portion, long-term debt 10,000  10,000
    Other current liabilities 35,795  36,545
    Current liabilities of discontinued operations   11,148
    Total current liabilities 354,319  359,831
    Deferred income taxes 133,118  145,643
    Long-term debt 1,775,776  1,824,468
    Other non-current liabilities 157,850  141,535
    Non-current liabilities of discontinued operations   16,192
    Total liabilities 2,421,063  2,487,669
    Stockholders' equity   
    Total stockholders' equity attributable to Holdings 1,139,580  1,136,920
    Noncontrolling interest 250,169  223,509
    Noncontrolling interest of discontinued operations   1,533
    Total stockholders' equity 1,389,749  1,361,962
    Total liabilities and stockholders’ equity$3,810,812 $3,849,631
        


     
    Compass Diversified Holdings
    Consolidated Statements of Operations
    (Unaudited)
     
     Three Months Ended
    September 30,
     Nine Months Ended
    September 30,
    (in thousands, except per share data) 2023   2022   2023   2022 
    Net sales$569,565  $575,819  $1,635,952  $1,601,929 
    Cost of sales 315,347   346,260   907,013   959,798 
    Gross profit 254,218   229,559   728,939   642,131 
    Operating expenses:       
    Selling, general and administrative expense 147,962   144,040   442,345   390,336 
    Management fees 18,596   16,592   51,911   45,929 
    Amortization expense 26,657   25,152   79,708   67,178 
    Impairment expense 32,568      32,568    
    Operating income  28,435   43,775   122,407   138,688 
    Other income (expense):       
    Interest expense, net (27,560)  (22,799)  (80,355)  (57,737)
    Amortization of debt issuance costs (1,005)  (1,004)  (3,034)  (2,735)
    Loss on debt extinguishment    (534)     (534)
    Other income (expense), net 1,043   (1,917)  2,069   856 
    Net income from continuing operations before income taxes 913   17,521   41,087   78,538 
    Provision for income taxes 5,947   20,493   20,227   36,601 
    Income (loss) from continuing operations (5,034)  (2,972)  20,860   41,937 
    Income (loss) from discontinued operations, net of income tax    4,078   (1,391)  14,452 
    Gain on sale of discontinued operations 1,274   1,479   103,495   6,893 
    Net income (loss) (3,760)  2,585   122,964   63,282 
    Less: Net income from continuing operations attributable to noncontrolling interest 6,394   3,675   14,892   12,247 
    Less: Net income (loss) from discontinued operations attributable to noncontrolling interest    684   (777)  2,680 
    Net income (loss) attributable to Holdings$(10,154) $(1,774) $108,849  $48,355 
            
    Amounts attributable to Holdings       
    Income (loss) from continuing operations$(11,428) $(6,647) $5,968  $29,690 
    Income (loss) from discontinued operations    3,394   (614)  11,772 
    Gain on sale of discontinued operations, net of income tax 1,274   1,479   103,495   6,893 
    Net income (loss) attributable to Holdings$(10,154) $(1,774) $108,849  $48,355 
            
    Basic income (loss) per common share attributable to Holdings       
    Continuing operations$(0.35) $(0.27) $(0.74) $(0.04)
    Discontinued operations 0.02   0.06   1.43   0.24 
     $(0.33) $(0.21) $0.69  $0.20 
            
    Basic weighted average number of common shares outstanding 71,881   71,910   71,996   70,514 
            
    Cash distributions declared per Trust common share$0.25  $0.25  $0.75  $0.75 


     
    Compass Diversified Holdings
    Net Income (Loss) to Non-GAAP Adjusted Earnings and Non-GAAP Adjusted EBITDA
    (Unaudited)
     
     Three Months Ended
    September 30,
     Nine Months Ended
    September 30,
    (in thousands) 2023   2022   2023   2022 
    Net income (loss)$(3,760) $2,585  $122,964  $63,282 
    Income (loss) from discontinued operations, net of tax    1,479   (1,391)  6,893 
    Gain on sale of discontinued operations, net of tax 1,274   4,078   103,495   14,452 
    Income (loss) from continuing operations$(5,034) $(2,972) $20,860  $41,937 
    Less: income from continuing operations attributable to noncontrolling interest 6,394   3,675   14,892   12,247 
    Net income (loss) attributable to Holdings - continuing operations$(11,428) $(6,647) $5,968  $29,690 
    Adjustments:       
    Distributions paid - preferred shares (6,045)  (6,045)  (18,136)  (18,136)
    Amortization expense - intangibles and inventory step up 26,658   26,241   80,843   72,078 
    Impairment expense 32,568      32,568    
    Tax effect - impairment expense (4,308)     (4,308)   
    Loss on debt extinguishment    534      534 
    Stock compensation 3,174   3,118   8,885   8,479 
    Acquisition expenses 28   5,902   392   6,118 
    Integration services fee    1,626   2,375   2,751 
    Held for sale corporate tax impact    16,457      12,119 
    Other 349   434   1,129   3,263 
    Adjusted Earnings$40,996  $41,620  $109,716  $116,896 
    Plus (less):       
    Depreciation expense 12,690   10,776   37,264   31,058 
    Income tax provision 5,947   20,493   20,227   36,601 
    Held for sale corporate tax impact    (16,457)     (12,119)
    Interest expense 27,560   22,799   80,355   57,737 
    Amortization of debt issuance costs 1,005   1,004   3,034   2,735 
    Tax effect - impairment expense 4,308      4,308    
    Income from continuing operations attributable to noncontrolling interest 6,394   3,675   14,892   12,247 
    Distributions paid - preferred shares 6,045   6,045   18,136   18,136 
    Other (income) expense (1,043)  1,917   (2,069)  (856)
    Adjusted EBITDA$103,902  $91,872  $285,863  $262,435 


     
    Compass Diversified Holdings
    Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
    Three Months Ended September 30, 2023
    (Unaudited)
     
      Corporate  5.11  BOA Ergobaby Lugano Marucci Sports PrimaLoft Velocity Outdoor Altor  Arnold Sterno Consolidated
    Income (loss) from continuing operations $(11,506) $5,834  $4,257  $(261) $14,584 $6,706 $(4,893) $(28,881) $5,042  $2,103 $1,981  $(5,034)
    Adjusted for:                        
    Provision (benefit) for income taxes     1,920   865   (620)  4,210  2,110  (2,566)  (2,951)  1,460   876  643   5,947 
    Interest expense, net  27,524   (2)  (4)       1  (3)  38      6     27,560 
    Intercompany interest  (36,908)  5,477   1,571   2,144   8,930  2,200  4,635   3,633   2,549   1,706  4,063    
    Loss on debt extinguishment                                 
    Depreciation and amortization  335   6,573   5,930   2,033   2,081  3,443  5,361   3,272   4,215   2,126  4,984   40,353 
    EBITDA  (20,555)  19,802   12,619   3,296   29,805  14,460  2,534   (24,889)  13,266   6,817  11,671   68,826 
    Other (income) expense  2   98   (63)     71    (9)  (425)  (362)  8  (363)  (1,043)
    Non-controlling shareholder compensation     258   736   312   472  424  262   228   234   8  240   3,174 
    Impairment expense                     32,568           32,568 
    Acquisition expenses                28                28 
    Other                             349   349 
    Adjusted EBITDA $(20,553) $20,158  $13,292  $3,608  $30,348 $14,912 $2,787  $7,482  $13,138  $6,833 $11,897  $103,902 
                             


    Compass Diversified Holdings
    Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
    Three Months Ended September 30, 2022
    (Unaudited)
     
      Corporate  5.11 BOA Ergobaby Lugano Marucci Sports PrimaLoft Velocity Outdoor Altor  Arnold Sterno Consolidated
    Income (loss) from continuing operations $(31,602) $5,905 $8,935  $(759) $8,095 $4,230  $(8,492) $4,679 $2,765 $3,475 $(203) $(2,972)
    Adjusted for:                        
    Provision (benefit) for income taxes  16,457   1,906  1,776   (410)  1,166  1,609   (3,570)  1,416  805  537  (1,199)  20,493 
    Interest expense, net  22,725   2  (7)     3  3   (4)  70    7     22,799 
    Intercompany interest  (27,141)  3,503  1,808   1,737   3,263  1,812   3,251   2,997  2,821  1,402  4,547    
    Loss on debt extinguishment  534                            534 
    Depreciation and amortization  315   5,766  5,577   2,033   3,083  2,504   4,194   3,420  4,124  1,936  5,069   38,021 
    EBITDA  (18,712)  17,082  18,089   2,601   15,610  10,158   (4,621)  12,582  10,515  7,357  8,214   78,875 
    Other (income) expense  (72)  709  403        (1)  260   971  110    (463)  1,917 
    Non-controlling shareholder compensation     381  621   362   356  537      240  375  13  232   3,117 
    Acquisition expenses                  5,680   222         5,902 
    Integration services fee             563     1,063            1,626 
    Other                           434   434 
    Adjusted EBITDA $(18,784) $18,172 $19,113  $2,963  $16,529 $10,694  $2,382  $14,015 $11,000 $7,370 $8,417  $91,871 


     
    Compass Diversified Holdings
    Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
    Nine Months Ended September 30, 2023
    (Unaudited)
     
      Corporate  5.11  BOA Ergobaby Lugano Marucci Sports PrimaLoft Velocity Outdoor Altor  Arnold Sterno Consolidated
    Income (loss) from continuing operations $(33,858) $11,850  $15,151  $(1,114) $31,468  $16,125 $(5,500) $(36,862) $12,244 $6,911  $4,445  $20,860 
    Adjusted for:                        
    Provision (benefit) for income taxes     3,990   2,224   (1,272)  10,295   5,150  (3,125)  (5,905)  4,094  3,264   1,512   20,227 
    Interest expense, net  80,122   (4)  (9)     4   3  (9)  232     16      80,355 
    Intercompany interest  (106,361)  15,698   5,032   6,484   22,660   6,928  13,343   10,070   8,183  5,078   12,885    
    Depreciation and amortization  929   19,866   17,436   6,112   6,971   9,898  16,084   10,023   12,558  6,248   15,016   121,141 
    EBITDA  (59,168)  51,400   39,834   10,210   71,398   38,104  20,793   (22,442)  37,079  21,517   33,858   242,583 
    Other (income) expense  (126)  (103)  117   29   (5)  29  130   (1,179)  201  (1)  (1,161)  (2,069)
    Non-controlling shareholder compensation     988   2,069   936   1,312   1,287  219   686   800  26   562   8,885 
    Impairment expense                      32,568           32,568 
    Acquisition expenses                 392                392 
    Integration services fee                   2,375              2,375 
    Other                              1,129   1,129 
    Adjusted EBITDA $(59,294) $52,285  $42,020  $11,175  $72,705  $39,812 $23,517  $9,633  $38,080 $21,542  $34,388  $285,863 


     
    Compass Diversified Holdings
    Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
    Nine Months Ended September 30, 2022
    (Unaudited)
     
      Corporate  5.11 BOA Ergobaby Lugano Marucci Sports PrimaLoft Velocity Outdoor Altor  Arnold Sterno Consolidated
    Income (loss) from continuing operations $(56,373) $15,540 $37,122  $(634) $21,871 $8,374  $(8,492) $7,826 $7,149 $7,217 $2,337  $41,937 
    Adjusted for:                        
    Provision (benefit) for income taxes  12,119   4,999  6,819   432   5,863  2,821   (3,570)  2,372  2,907  2,768  (929)  36,601 
    Interest expense, net  57,559   12  (19)  2   12  13   (4)  142    20     57,737 
    Intercompany interest  (66,876)  9,501  5,634   4,000   7,841  4,649   3,251   6,987  7,844  3,947  13,222    
    Loss on debt extinguishment  534                            534 
    Depreciation and amortization  952   16,804  16,345   6,061   8,385  9,558   4,194   9,981  12,254  6,065  15,272   105,871 
    EBITDA  (52,085)  46,856  65,901   9,861   43,972  25,415   (4,621)  27,308  30,154  20,017  29,902   242,680 
    Other (income) expense  (72)  93  498   4   2  (1,829)  260   1,154  219    (1,185)  (856)
    Non-controlling shareholder compensation     1,210  1,889   1,154   800  1,089      742  910  38  647   8,479 
    Acquisition expenses                  5,680   222  216       6,118 
    Integration services fee             1,688     1,063            2,751 
    Other          250     1,802            1,211   3,263 
    Adjusted EBITDA $(52,157) $48,159 $68,288  $11,269  $46,462 $26,477  $2,382  $29,426 $31,499 $20,055 $30,575  $262,435 


     
    Compass Diversified Holdings
    Non-GAAP Adjusted EBITDA
    (Unaudited)
     
     Three Months Ended
    September 30,
     Nine Months Ended
    September 30,
    (in thousands) 2023   2022   2023   2022 
            
    Branded Consumer       
    5.11$20,158  $18,172  $52,285  $48,159 
    BOA 13,292   19,113   42,020   68,288 
    Ergobaby 3,608   2,963   11,175   11,269 
    Lugano 30,348   16,529   72,705   46,462 
    Marucci Sports 14,912   10,694   39,812   26,477 
    PrimaLoft (1) 2,787   2,382   23,517   2,382 
    Velocity Outdoor 7,482   14,015   9,633   29,426 
    Total Branded Consumer$92,587  $83,868  $251,147  $232,463 
            
    Niche Industrial       
    Altor Solutions 13,138   11,000   38,080   31,499 
    Arnold Magnetics 6,833   7,370   21,542   20,055 
    Sterno 11,897   8,417   34,388   30,575 
    Total Niche Industrial$31,868  $26,787  $94,010  $82,129 
    Corporate expense (20,553)  (18,784)  (59,294)  (52,157)
    Total Adjusted EBITDA$103,902  $91,871  $285,863  $262,435 


    (1)The above results for PrimaLoft do not include management's estimate of Adjusted EBITDA, before the Company's ownership, of $1.4 million and $24.8 million, respectively, for the three and nine months ended September 30, 2022. PrimaLoft was acquired on July 12, 2022.


     
    Compass Diversified Holdings
    Net Sales to Pro Forma Net Sales Reconciliation
    (unaudited)
     
     Three Months Ended
    September 30,
     Nine Months Ended
    September 30,
    (in thousands) 2023   2022   2023   2022 
            
    Net Sales$569,565  $575,819  $1,635,952  $1,601,929 
    Acquisitions (1)    2,319      55,185 
    Pro Forma Net Sales$569,565  $578,138  $1,635,952  $1,657,114 


    (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
    September 30,
     Nine Months Ended
    September 30,
    (in thousands) 2023   2022   2023   2022 
            
    Branded Consumer       
    5.11$135,213  $126,537  $385,695  $350,608 
    BOA 37,281   50,019   113,390   166,215 
    Ergobaby 23,218   21,540   71,785   68,256 
    Lugano 78,735   51,145   203,571   137,229 
    Marucci Sports 48,500   42,753   144,065   122,481 
    PrimaLoft (1) 10,930   13,031   57,619   65,897 
    Velocity Outdoor 54,469   75,482   126,348   180,774 
    Total Branded Consumer$388,346  $380,507  $1,102,473  $1,091,460 
            
    Niche Industrial       
    Altor Solutions 59,215   69,618   181,613   199,590 
    Arnold Magnetics 41,819   39,377   122,047   116,319 
    Sterno 80,185   88,636   229,819   249,745 
    Total Niche Industrial$181,219  $197,631  $533,479  $565,654 
            
    Total Subsidiary Net Sales$569,565  $578,138  $1,635,952  $1,657,114 

     

    (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
    September 30,
     Nine Months Ended
    September 30,
    (in thousands) 2023   2022   2023   2022 
            
    Net cash provided by (used in) operating activities$19,713  $(4,586) $56,952  $(39,923)
    Net cash provided by (used in) investing activities (13,538)  (576,713)  104,291   (598,951)
    Net cash provided by (used in) financing activities (8,308)  538,531   (157,927)  542,128 
    Foreign currency impact on cash (484)  (1,603)  150   (2,735)
    Net increase (decrease) in cash and cash equivalents (2,617)  (44,371)  3,466   (99,481)
    Cash and cash equivalents - beginning of the period 67,354   105,623   61,271   160,733 
    Cash and cash equivalents - end of the period$64,737  $61,252  $64,737  $61,252 


    Compass Diversified Holding
    Selected Financial Data - Cash Flows
    (unaudited)
            
     Three Months Ended
    September 30,
     Nine Months Ended
    September 30,
    (in thousands) 2023   2022   2023   2022 
            
    Changes in operating assets and liabilities$(48,685) $(62,803) $(113,882) $(221,998)
    Purchases of property and equipment$(12,108) $(15,036) $(43,648) $(39,471)
    Distributions paid - common shares$(17,974) $(17,931) $(54,012) $(52,794)
    Distributions paid - preferred shares$(6,045) $(6,045) $(18,136) $(18,136)

     


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