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Compass Group Diversified Holdings Llc (1345122) SEC Filing 8-K Material Event for the period ending Wednesday, August 3, 2022

Compass Group Diversified Holdings Llc

CIK: 1345122

Exhibit 99.1

codilogo2020a02.jpg

Compass Diversified Reports Record Second Quarter 2022 Financial Results

Net Sales Growth of 19% Drives Record Quarterly Earnings

Raises Full-Year Outlook Given Continued Strong Performance and PrimaLoft Acquisition

Westport, Conn., August 3, 2022
– 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:Media:
Compass DiversifiedThe IGB Group
irinquiry@CompassDiversified.comLeon Berman
212.477.8438
lberman@igbir.com
Cody Slach
Gateway Group
949.574.3860
CODI@gatewayir.com





Compass Diversified Holdings
Condensed Consolidated Balance Sheets
June 30, 2022December 31, 2021
(in thousands)(Unaudited)
Assets
Current assets
Cash and cash equivalents
$102,709 $157,125 
Accounts receivable, net
268,530 268,262 
Inventories, net695,687 562,084 
Prepaid expenses and other current assets
66,530 56,575 
Current assets held-for-sale96,227 99,423 
Total current assets
1,229,683 1,143,469 
Property, plant and equipment, net182,989 178,393 
Goodwill and intangible assets, net1,649,174 1,688,082 
Other non-current assets141,487 134,317 
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-sale27,270 29,127 
Total current liabilities
365,335 381,528 
Deferred income taxes79,357 84,344 
Long-term debt1,285,747 1,284,826 
Other non-current liabilities118,048 109,033 
Total liabilities
1,848,487 1,859,731 
Stockholders' equity
Total stockholders' equity attributable to Holdings1,177,509 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)2022202120222021
Net sales$515,597 $431,525 $1,026,110 $840,081 
Cost of sales303,840 257,961 613,538 497,969 
Gross profit211,757 173,564 412,572 342,112 
Operating expenses:
Selling, general and administrative expense125,624 107,317 246,296 211,369 
Management fees14,901 11,058 29,337 21,856 
Amortization expense20,921 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), net737 (642)2,773 (2,870)
Net income from continuing operations before income taxes32,664 (13,264)61,017 5,126 
Provision for income taxes6,132 8,344 16,108 13,652 
Income (loss) from continuing operations26,532 (21,608)44,909 (8,526)
Income from discontinued operations, net of income tax5,004 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 interest3,635 1,967 8,572 3,870 
Less: Net income from discontinued operations attributable to noncontrolling interest955 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 operations0.04 0.12 0.18 0.24 
$0.17 $(0.38)$0.37 $(0.29)
Basic weighted average number of common shares outstanding70,227 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)2022202120222021
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 tax5,004 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 interest3,635 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 up22,471 18,837 45,837 37,426 
Loss on debt extinguishment33,305 — 33,305 
Stock compensation2,680 2,716 5,361 5,356 
Acquisition expenses— 11 216 310 
Integration Services Fee563 1,600 1,125 3,200 
Held for Sale corporate tax impact(4,338)— (4,338)— 
 Other1,027 1,032 2,829 (1,069)
Adjusted Earnings$39,254 $27,880 $75,276 $54,041 
Plus (less):
Depreciation10,355 8,946 20,282 17,503 
Income taxes6,132 8,344 16,108 13,652 
Held-for-sale tax impact - corporate4,338 — 4,338 — 
Interest expense, net17,519 14,947 34,938 28,752 
Amortization of debt issuance865 722 1,731 1,408 
Noncontrolling interest3,635 1,967 8,572 3,870 
Preferred distributions6,046 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)

Corporate5.11BOAErgoLuganoMarucci SportsVelocity OutdoorAltor SolutionsArnoldSternoConsolidated
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, net17,466 (16)(7)55 — — 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 expense301 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)
Corporate5.11BOAErgoMarucci SportsVelocity OutdoorAltor SolutionsArnoldSternoConsolidated
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, net14,892 — — 46 — — — 14,947 
Intercompany interest(15,694)2,799 2,076 507 641 1,866 1,680 1,353 4,772 — 
Loss on debt extinguishment33,305 — — — — — — — — 33,305 
Depreciation and amortization253 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) expense29 (289)25 — 894 227 131 — (375)642 
Non-controlling shareholder compensation— 659 523 403 276 262 256 329 2,716 
Acquisition expenses— — — — — — — 11 — 11 
Integration services fees— — 1,100 — 500 — — — — 1,600 
Other699 — — — — — — — 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)
Corporate5.11BOAErgoLuganoMarucci SportsVelocity OutdoorAltor SolutionsArnoldSternoConsolidated
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, net34,834 10 (12)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 expense637 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 (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)
Corporate5.11BOAErgoMarucci SportsVelocity OutdoorAltor SolutionsArnoldSternoConsolidated
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, net28,651 — — 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 extinguishment33,305 — — — — — — — — 33,305 
Depreciation and amortization459 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) expense149 (301)80 — 892 2,613 (133)— (430)2,870 
Non-controlling shareholder compensation— 1,287 1,083 807 551 524 513 583 5,356 
Acquisition expenses— — — — — — — 310 — 310 
Integration services fees— — 2,200 — 1,000 — — — — 3,200 
Other898 — — — — (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)2022202120222021
Branded Consumer
5.11 $18,260 $17,970 $29,987 $29,792 
BOA 24,474 17,921 49,175 31,726 
Ergobaby6,173 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 Magnetics7,201 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)2022202120222021
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)2022202120222021
Branded Consumer
5.11 $120,048 $110,033 $224,071 $209,910 
BOA 59,386 44,085 116,196 80,537 
Ergobaby26,506 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 Magnetics38,777 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)2022202120222021
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 activities18,049 (15,830)3,597 (17,323)
Foreign currency impact on cash(873)190 (1,132)
Net increase (decrease) in cash and cash equivalents1,422 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)2022202120222021
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)

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CIK: 1345122
Form Type: 8-K Corporate News
Accession Number: 0001345126-22-000048
Submitted to the SEC: Wed Aug 03 2022 4:18:34 PM EST
Accepted by the SEC: Wed Aug 03 2022
Period: Wednesday, August 3, 2022
Industry: Miscellaneous Products Of Petroleum And Coal
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Regulated Disclosure

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