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Compass Diversified Reports Second Quarter 2024 Financial Results
المصدر: Nasdaq GlobeNewswire / 31 يوليو 2024 15:15:01 America/Chicago
WESTPORT, Conn., July 31, 2024 (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, 2024.
“I’m pleased to announce another strong quarter with results that exceeded our expectations, driven by continued strength in our consumer businesses,” said Elias Sabo, CEO of Compass Diversified. “While Q2 saw deteriorating economic conditions that negatively impacted our industrial vertical, our branded consumer businesses performed exceptionally well with net sales up close to 20%, or 11% on a pro forma basis, offsetting any weaknesses in our industrial businesses. As expected, destocking headwinds subsided this past quarter, which meant both BOA and PrimaLoft performed exceptionally well and Lugano continued to grow at an extraordinary pace.”
Second Quarter 2024 Financial Summary vs. Same Year-Ago Period (where applicable)
- Net sales up 11% to $542.6 million and up 6% on a pro forma basis.
- Branded Consumer net sales up 11% on a pro forma basis to $373.5 million.
- Industrial net sales down 4% to $169.1 million.
- Loss from continuing operations of $13.7 million vs. income from continuing operations of $10.1 million.
- Net loss of $(13.7) million vs. net income of $17.1 million, primarily due to the loss of $24.6 million from the divestiture of Crosman Corporation, a division of Velocity Outdoor.
- Adjusted Earnings, a non-GAAP financial measure, was up 36% to $39.8 million vs. $29.2 million.
- Adjusted EBITDA, a non-GAAP financial measure, was up 27% to $105.4 million.
- Paid a second quarter 2024 cash distribution of $0.25 per share on CODI's common shares in July 2024.
Recent Business Highlights
- On April 30, 2024, CODI announced the divestiture of Crosman Corporation, the air gun division of its Velocity Outdoor subsidiary.
- On April 18, 2024, The Honey Pot Co., a subsidiary of CODI and a leading, better-for-you feminine care brand, announced the appointment of three new female members to its board of directors.
Second Quarter 2024 Financial Results
Net sales in the second quarter of 2024 were $542.6 million, up 11% compared to $486.9 million in the second quarter of 2023. This was driven by CODI’s acquisition of The Honey Pot Co. in January 2024 and continued strong sales growth at Lugano and BOA. On a pro forma basis, assuming CODI had acquired The Honey Pot Co. on January 1, 2023, net sales were up 6%.
On a pro forma basis, Branded Consumer net sales increased 11% to $373.5 million compared to the second quarter of 2023.
Industrial net sales decreased 4% to $169.1 million compared to the second quarter of 2023.
Operating income for the second quarter of 2024 was $61.3 million compared to $42.1 million in the second quarter of 2023. Operating income in the second quarter of 2024 reflected higher gross profit at CODI’s Branded Consumer brands, offset by increased SG&A and amortization expense from CODI’s acquisition of The Honey Pot Co. in the first quarter of 2024.
Loss from continuing operations in the second quarter of 2024 was $(13.7) million compared to income from continuing operations of $10.1 million in the second quarter of 2023, primarily reflecting the loss on the divestiture of Crosman Corporation.
Net loss in the second quarter of 2024 was $(13.7) million compared to net income of $17.1 million in the second quarter of 2023, primarily reflecting the loss on the divestiture of Crosman Corporation.
Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the second quarter of 2024 increased 36% to $39.8 million compared to $29.2 million a year ago. CODI's weighted average number of shares outstanding in the second quarter of 2024 was 75.39 million compared to 71.93 million in the prior year second quarter.
Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below) in the second quarter of 2024 was $105.4 million, up 27% compared to $82.9 million in the second quarter of 2023. The increase was primarily due to strong results at BOA and Lugano, and the addition of The Honey Pot Co. in the first quarter of 2024. The Company no longer adds back management fees in its calculation of Adjusted EBITDA. Management fees incurred during the second quarter were $18.9 million.
Liquidity and Capital Resources
As of June 30, 2024, CODI had approximately $68.4 million in cash and cash equivalents, $54.0 million outstanding on its revolver, $380.0 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, 2024, the Company had no significant debt maturities until 2027 and had net borrowing availability of approximately $543.6 million under its revolving credit facility.
Second Quarter 2024 Distributions
On July 2, 2024, CODI’s board of directors declared a second quarter distribution of $0.25 per share on the Company's common shares. The cash distribution was paid on July 25, 2024, to all holders of record of common shares as of July 18, 2024.
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, 2024, up to, but excluding, July 30, 2024. The distribution for such period was payable on July 30, 2024, to all holders of record of Series A Preferred Shares as of July 15, 2024.
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, 2024, up to, but excluding, July 30, 2024. The distribution for such period was payable on July 30, 2024, to all holders of record of Series B Preferred Shares as of July 15, 2024.
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, 2024, up to, but excluding, July 30, 2024. The distribution for such period was payable on July 30, 2024, to all holders of record of Series C Preferred Shares as of July 15, 2024.
2024 Outlook
As a result of CODI’s financial performance in the second quarter, it’s expectations for the remainder of 2024 and its current view of the economy, the Company is maintaining its 2024 outlook.
CODI continues to expect its current subsidiaries, inclusive of The Honey Pot Co. as if it owned it from January 1, 2024, to produce Subsidiary Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the full year 2024 of between $480 million and $520 million.
Of this range, CODI now expects its Branded Consumer vertical to produce $365 million to $395 million, an upward revision of $10 million, and its Industrial vertical to produce $115 million to $125 million, a downward revision of $10 million. These estimates are based on the summation of the Company’s expectations for its current subsidiaries in 2024, and is absent additional acquisitions or divestitures, and excludes corporate expenses such as interest expense, management fees paid by CODI and corporate overhead.
CODI continues to expect to earn Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below), which includes management fees and corporate expenses, of $390 million to $430 million for the full year 2024. Adjusted EBITDA only includes results from The Honey Pot Co. from the date of acquisition.
In addition, the Company is maintaining its Adjusted Earnings guidance and expects to earn between $148 million and $163 million (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the full year 2024.
In reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, CODI has not reconciled 2024 Subsidiary Adjusted EBITDA, 2024 Adjusted EBITDA or 2024 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
In conjunction with this announcement, CODI will host a conference call on July 31, 2024, at 5:00 p.m. E.T. / 2:00 p.m. PT with the Company’s Chief Executive Officer, Elias Sabo, the Company’s Chief Financial Officer, Ryan Faulkingham, and Pat Maciariello the Chief Operating Officer of Compass Group Management. A live webcast of the call will be available on the Investor Relations section of CODI’s website. To access the call by phone, please go to this link (registration link) and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call 15 minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time on the Company’s website.
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.
Pro forma net sales is defined as net sales including the historical net sales relating to the pre-acquisition periods of The Honey Pot Co., assuming that the Company acquired The Honey Pot Co. on January 1, 2023. 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.
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 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 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.
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 2024 Subsidiary Adjusted EBITDA, our 2024 Adjusted EBITDA, our 2024 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, war, natural disasters or social, civil and political unrest; 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 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.comGateway Group
Cody Slach
949.574.3860
CODI@gateway-grp.comMedia Relations
Mediainquiry@compassdiversified.comThe IGB Group
Leon Berman
212.477.8438
lberman@igbir.comCompass Diversified Holdings
Condensed Consolidated Balance SheetsJune 30, 2024 December 31, 2023 (in thousands) (Unaudited) Assets Current assets Cash and cash equivalents $ 68,370 $ 450,477 Accounts receivable, net 358,530 318,241 Inventories, net 843,634 740,387 Prepaid expenses and other current assets 126,027 94,715 Total current assets 1,396,561 1,603,820 Property, plant and equipment, net 180,928 192,562 Goodwill 1,003,685 901,428 Intangible assets, net 1,088,647 923,905 Other non-current assets 188,373 195,266 Total assets $ 3,858,194 $ 3,816,981 Liabilities and stockholders’ equity Current liabilities Accounts payable and accrued expenses $ 268,874 $ 250,868 Due to related party 17,928 16,025 Current portion, long-term debt 10,000 10,000 Other current liabilities 37,486 35,465 Total current liabilities 334,288 312,358 Deferred income taxes 138,218 120,131 Long-term debt 1,712,084 1,661,879 Other non-current liabilities 204,852 203,232 Total liabilities 2,389,442 2,297,600 Stockholders' equity Total stockholders' equity attributable to Holdings 1,216,504 1,326,750 Noncontrolling interest 252,248 192,631 Total stockholders' equity 1,468,752 1,519,381 Total liabilities and stockholders’ equity $ 3,858,194 $ 3,816,981 Compass Diversified Holdings
Consolidated Statements of Operations
(Unaudited)Three Months Ended June 30, Six Months Ended June 30, (in thousands, except per share data) 2024 2023 2024 2023 Net sales $ 542,595 $ 486,889 $ 1,066,885 $ 970,822 Cost of sales 283,481 270,248 565,944 549,117 Gross profit 259,114 216,641 500,941 421,705 Operating expenses: Selling, general and administrative expense 151,446 133,755 302,160 264,019 Management fees 18,864 16,795 36,931 33,065 Amortization expense 27,461 23,978 53,749 47,951 Impairment expense — — 8,182 — Operating income 61,343 42,113 99,919 76,670 Other income (expense): Interest expense, net (26,561 ) (26,613 ) (50,136 ) (52,793 ) Amortization of debt issuance costs (1,004 ) (1,024 ) (2,009 ) (2,029 ) Loss on sale of Crosman (24,606 ) — (24,606 ) — Other income (expense), net (1,375 ) (105 ) (4,249 ) 1,055 Net income from continuing operations before income taxes 7,797 14,371 18,919 22,903 Provision for income taxes 21,520 4,320 30,206 11,240 Income (loss) from continuing operations (13,723 ) 10,051 (11,287 ) 11,663 Income from discontinued operations, net of income tax — 2,840 — 12,840 Gain on sale of discontinued operations — 4,232 3,345 102,221 Net income (loss) (13,723 ) 17,123 (7,942 ) 126,724 Less: Net income from continuing operations attributable to noncontrolling interest 5,806 3,498 13,235 7,669 Less: Net income from discontinued operations attributable to noncontrolling interest — 19 — 52 Net income (loss) attributable to Holdings $ (19,529 ) $ 13,606 $ (21,177 ) $ 119,003 Amounts attributable to Holdings Income (loss) from continuing operations $ (19,529 ) $ 6,553 $ (24,522 ) $ 3,994 Income from discontinued operations — 2,821 — 12,788 Gain on sale of discontinued operations, net of income tax — 4,232 3,345 102,221 Net income (loss) attributable to Holdings $ (19,529 ) $ 13,606 $ (21,177 ) $ 119,003 Basic income (loss) per common share attributable to Holdings Continuing operations $ (0.45 ) $ (0.45 ) $ (1.30 ) $ (0.59 ) Discontinued operations — 0.10 0.04 1.57 $ (0.45 ) $ (0.35 ) $ (1.26 ) $ 0.98 Basic weighted average number of common shares outstanding 75,389 71,932 75,332 72,055 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) 2024 2023 2024 2023 Net income (loss) $ (13,723 ) $ 17,123 $ (7,942 ) $ 126,724 Income from discontinued operations, net of tax — 2,840 — 12,840 Gain on sale of discontinued operations, net of tax — 4,232 3,345 102,221 Net income (loss) from continuing operations $ (13,723 ) $ 10,051 $ (11,287 ) $ 11,663 Less: income from continuing operations attributable to noncontrolling interest 5,806 3,498 13,235 7,669 Net income (loss) attributable to Holdings - continuing operations $ (19,529 ) $ 6,553 $ (24,522 ) $ 3,994 Adjustments: Distributions paid - preferred shares (6,101 ) (6,046 ) (12,146 ) (12,091 ) Amortization expense - intangibles and inventory step up 28,641 23,977 57,755 49,125 Impairment expense — — 8,182 — Loss on sale of Crosman 24,606 — 24,606 — Tax effect - loss on sale of Crosman 7,254 — 7,254 — Stock compensation 3,927 3,207 8,257 4,848 Acquisition expenses — — 3,479 — Integration services fee 875 1,188 875 2,375 Other 131 348 405 780 Adjusted Earnings $ 39,804 $ 29,227 $ 74,145 $ 49,031 Plus (less): Depreciation expense 10,504 12,107 21,396 23,262 Income tax provision 21,520 4,320 30,206 11,240 Interest expense 26,561 26,613 50,136 52,793 Amortization of debt issuance costs 1,005 1,024 2,009 2,029 Tax effect - loss on sale of Crosman (7,254 ) — (7,254 ) — Income from continuing operations attributable to noncontrolling interest 5,806 3,498 13,235 7,669 Distributions paid - preferred shares 6,101 6,046 12,146 12,091 Other (income) expense 1,375 105 4,249 (1,055 ) Adjusted EBITDA $ 105,422 $ 82,940 $ 200,268 $ 157,060 Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
Three Months Ended June 30, 2024
(Unaudited)Corporate 5.11 BOA Ergobaby Lugano PrimaLoft THP Velocity Outdoor Altor Arnold Sterno Consolidated Income (loss) from continuing operations $ (7,188 ) $ 5,457 $ 8,995 $ (1,277 ) $ 14,781 $ 325 $ (4,114 ) $ (39,226 ) $ 2,701 $ 2,258 $ 3,565 $ (13,723 ) Adjusted for: Provision (benefit) for income taxes — 1,807 1,930 1,689 4,625 664 (1,402 ) 8,717 1,098 1,190 1,202 21,520 Interest expense, net 26,450 1 (10 ) — — (3 ) (3 ) 11 — 115 — 26,561 Intercompany interest (40,896 ) 3,253 5,299 2,125 13,579 4,430 2,925 2,364 1,868 1,797 3,256 — Depreciation and amortization 180 5,708 5,411 2,189 2,525 5,323 5,507 2,006 4,085 2,261 4,955 40,150 EBITDA (21,454 ) 16,226 21,625 4,726 35,510 10,739 2,913 (26,128 ) 9,752 7,621 12,978 74,508 Other (income) expense 502 107 57 — (70 ) 4 (13 ) 26,195 (572 ) (61 ) (168 ) 25,981 Noncontrolling shareholder compensation — 552 1,419 247 699 315 472 176 252 5 (210 ) 3,927 Integration services fee — — — — — — 875 — — — — 875 Other — — — — — — — — — — 131 131 Adjusted EBITDA $ (20,952 ) $ 16,885 $ 23,101 $ 4,973 $ 36,139 $ 11,058 $ 4,247 $ 243 $ 9,432 $ 7,565 $ 12,731 $ 105,422 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 PrimaLoft Velocity Outdoor Altor Arnold Sterno Consolidated Income (loss) from continuing operations $ (12,952 ) $ 3,866 $ 5,526 $ 382 $ 6,916 $ 620 $ (3,480 ) $ 4,501 $ 2,503 $ 2,169 $ 10,051 Adjusted for: Provision (benefit) for income taxes — 1,344 737 (101 ) 2,698 (2,508 ) (1,499 ) 1,540 1,348 761 4,320 Interest expense, net 26,546 (1 ) (3 ) — — (4 ) 70 — 5 — 26,613 Intercompany interest (33,258 ) 5,422 1,669 2,191 7,446 4,386 3,309 2,760 1,723 4,352 — Depreciation and amortization 361 6,841 5,813 2,040 2,040 5,363 3,364 4,178 2,103 5,005 37,108 EBITDA (19,303 ) 17,472 13,742 4,512 19,100 7,857 1,764 12,979 7,682 12,287 78,092 Other (income) expense — (124 ) 66 29 (76 ) 243 (79 ) 359 (7 ) (306 ) 105 Noncontrolling shareholder compensation — 478 669 312 445 665 228 250 9 151 3,207 Integration services fee — — — — — 1,188 — — — — 1,188 Other — — — — — — — — — 348 348 Adjusted EBITDA $ (19,303 ) $ 17,826 $ 14,477 $ 4,853 $ 19,469 $ 9,953 $ 1,913 $ 13,588 $ 7,684 $ 12,480 $ 82,940 Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
Six Months Ended June 30, 2024
(Unaudited)Corporate 5.11 BOA Ergobaby Lugano PrimaLoft THP Velocity Outdoor Altor Arnold Sterno Consolidated Income (loss) from continuing operations $ (12,436 ) $ 8,857 $ 12,346 $ (3,108 ) $ 34,985 $ (988 ) $ (7,604 ) $ (55,199 ) $ 3,394 $ 3,909 $ 4,557 $ (11,287 ) Adjusted for: Provision (benefit) for income taxes — 3,010 2,469 380 11,668 584 (2,569 ) 9,297 1,726 1,986 1,655 30,206 Interest expense, net 50,041 (1 ) (12 ) — 3 (5 ) (25 ) 54 — 81 — 50,136 Intercompany interest (80,834 ) 6,780 10,791 4,248 25,337 9,046 4,920 5,582 3,877 3,497 6,756 — Depreciation and amortization 434 11,581 10,849 4,374 4,872 10,650 10,645 5,282 8,170 4,414 9,890 81,161 EBITDA (42,795 ) 30,227 36,443 5,894 76,865 19,287 5,367 (34,984 ) 17,167 13,887 22,858 150,216 Other (income) expense 463 73 132 (5 ) 7 3 (30 ) 25,898 2,664 (9 ) (341 ) 28,855 Non-controlling shareholder compensation — 1,086 2,848 506 1,203 995 617 370 504 9 119 8,257 Impairment expense — — — — — — — 8,182 — — — 8,182 Acquisition expenses — — — — — — 3,479 — — — — 3,479 Integration services fee — — — — — — 875 — — — — 875 Other — — — — — — 90 — — — 314 404 Adjusted EBITDA $ (42,332 ) $ 31,386 $ 39,423 $ 6,395 $ 78,075 $ 20,285 $ 10,398 $ (534 ) $ 20,335 $ 13,887 $ 22,950 $ 200,268 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 PrimaLoft Velocity Outdoor Altor Arnold Sterno Consolidated Income (loss) from continuing operations $ (27,164 ) $ 6,016 $ 10,894 $ (853 ) $ 16,884 $ (607 ) $ (7,981 ) $ 7,202 $ 4,808 $ 2,464 $ 11,663 Adjusted for: Provision (benefit) for income taxes — 2,070 1,359 (652 ) 6,085 (559 ) (2,954 ) 2,634 2,388 869 11,240 Interest expense, net 52,598 (2 ) (5 ) — 4 (6 ) 194 — 10 — 52,793 Intercompany interest (64,725 ) 10,221 3,461 4,340 13,730 8,708 6,437 5,634 3,372 8,822 — Depreciation and amortization 677 13,293 11,506 4,079 4,890 10,723 6,751 8,343 4,122 10,032 74,416 EBITDA (38,614 ) 31,598 27,215 6,914 41,593 18,259 2,447 23,813 14,700 22,187 150,112 Other (income) expense (128 ) (201 ) 180 29 (76 ) 139 (754 ) 563 (9 ) (798 ) (1,055 ) Non-controlling shareholder compensation — 730 1,333 624 840 (43 ) 458 566 18 322 4,848 Integration services fee — — — — — 2,375 — — — — 2,375 Other — — — — — — — — — 780 780 Adjusted EBITDA $ (38,742 ) $ 32,127 $ 28,728 $ 7,567 $ 42,357 $ 20,730 $ 2,151 $ 24,942 $ 14,709 $ 22,491 $ 157,060 Compass Diversified Holdings
Non-GAAP Adjusted EBITDA
(Unaudited)Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Branded Consumer 5.11 $ 16,885 $ 17,826 $ 31,386 $ 32,127 BOA 23,101 14,477 39,423 28,728 Ergobaby 4,973 4,853 6,395 7,567 Lugano 36,139 19,469 78,075 42,357 PrimaLoft 11,058 9,953 20,285 20,730 The Honey Pot Co.(1) 4,247 — 10,398 — Velocity Outdoor 243 1,913 (534 ) 2,151 Total Branded Consumer $ 96,646 $ 68,491 $ 185,428 $ 133,660 Niche Industrial Altor Solutions 9,432 13,588 20,335 24,942 Arnold Magnetics 7,565 7,684 13,887 14,709 Sterno 12,731 12,480 22,950 22,491 Total Niche Industrial $ 29,728 $ 33,752 $ 57,172 $ 62,142 Corporate expense (20,952 ) (19,303 ) (42,332 ) (38,742 ) Total Adjusted EBITDA $ 105,422 $ 82,940 $ 200,268 $ 157,060 (1) The above results for The Honey Pot Co. do not include management's estimate of Adjusted EBITDA, before the Company's ownership of $3.9 million for the six months ended June 30, 2024, and $4.7 million and $15.5 million, respectively, for the three and six months ended June 30, 2023. The Honey Pot Co. was acquired on January 31, 2024.
Compass Diversified Holdings
Net Sales to Pro Forma Net Sales Reconciliation
(unaudited)Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Net Sales $ 542,595 $ 486,889 $ 1,066,885 $ 970,822 Acquisitions(1) — 25,009 10,671 56,887 Pro Forma Net Sales $ 542,595 $ 511,898 $ 1,077,556 $ 1,027,709 (1) Acquisitions reflect the net sales for The Honey Pot Co. on a pro forma basis as if the Company had acquired The Honey Pot Co. on January 1, 2023.
Compass Diversified Holdings
Subsidiary Pro Forma Net Sales
(unaudited)Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Branded Consumer 5.11 $ 123,201 $ 126,030 $ 248,175 $ 250,482 BOA 54,160 38,123 97,063 76,109 Ergobaby 28,557 26,149 49,775 48,567 Lugano 99,358 60,949 202,397 124,836 PrimaLoft 25,291 22,160 47,832 46,689 The Honey Pot(1) 24,182 25,009 55,018 56,887 Velocity Outdoor 18,711 37,839 48,610 71,879 Total Branded Consumer $ 373,460 $ 336,259 $ 748,870 $ 675,449 Niche Industrial Altor Solutions 52,213 60,886 105,617 122,398 Arnold Magnetics 43,155 40,138 84,442 80,228 Sterno 73,767 74,615 138,627 149,634 Total Niche Industrial $ 169,135 $ 175,639 $ 328,686 $ 352,260 Total Subsidiary Net Sales $ 542,595 $ 511,898 $ 1,077,556 $ 1,027,709 (1) Net sales for The Honey Pot Co. are pro forma as if the Company had acquired this business on January 1, 2023.
Compass Diversified Holdings
Condensed Consolidated Cash Flows
(unaudited)Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Net cash provided by (used in) operating activities $ (35,182 ) $ 21,694 $ (48,383 ) $ 37,239 Net cash provided by (used in) investing activities 46,404 (36,895 ) (336,074 ) 117,829 Net cash provided by (used in) financing activities (7,539 ) 28,827 3,366 (149,619 ) Foreign currency impact on cash (28 ) 72 (1,017 ) 634 Net increase (decrease) in cash and cash equivalents 3,655 13,698 (382,108 ) 6,083 Cash and cash equivalents - beginning of the period(1) 64,715 53,656 450,478 61,271 Cash and cash equivalents - end of the period(2) $ 68,370 $ 67,354 $ 68,370 $ 67,354 (1) Includes cash from discontinued operations of $4.7 million at January 1, 2023.
(2) Includes cash from discontinued operations of $3.1 million at June 30, 2023.
Compass Diversified Holding Selected Financial Data - Cash Flows (unaudited) Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Changes in operating assets and liabilities $ (93,270 ) $ (55,222 ) $ (154,124 ) $ (92,114 ) Purchases of property and equipment $ (11,172 ) $ (13,707 ) $ (18,919 ) $ (28,604 ) Distributions paid - common shares $ (18,846 ) $ (17,987 ) $ (37,664 ) $ (36,038 ) Distributions paid - preferred shares $ (6,101 ) $ (6,046 ) $ (12,146 ) $ (12,091 ) 
