Compass Diversified Holdings Reports Third Quarter 2011 Financial Results

Compass Diversified Holdings Reports Third Quarter 2011 Financial Results

Compass Diversified Holdings has announced today its consolidated operating results for the three and nine months ended September 30, 2011.

Third Quarter 2011 Highlights

•           Generated Cash Flow Available for Distribution and Reinvestment ("CAD" or "Cash Flow") of $25.5 million for the third quarter of 2011;

•           Reported net income of $12.5 million for the third quarter of 2011;

•           Acquired a majority interest in CamelBak Products, LLC ("CamelBak") on August 24, 2011.

CODI reported Cash Flow of $25.5 million for the quarter ended September 30, 2011, as compared to $23.8 million for the comparable quarter of the prior year. CODI's weighted average number of shares outstanding for the quarter ended September 30, 2011 and September 30, 2010 was approximately 47.4 million and 41.9 million, respectively.

The improvement in Cash Flow for the third quarter of 2011 compared to the year-earlier period reflects solid performance at a majority of CODI's subsidiaries. In addition, the third quarter of 2011 was positively impacted by the full inclusion of results from ERGOBaby, a platform business acquired by CODI on September 16, 2010, as well as the partial inclusion of results from CamelBak, a platform business acquired by CODI on August 24, 2011.

CODI's Cash Flow is calculated after taking into account all interest expense, cash taxes paid and maintenance capital expenditures, and includes the operating results of each subsidiary for the periods during which CODI owned them. However, Cash Flow excludes the gains from sales of businesses.

Net income for the quarter ended September 30, 2011 was $12.5 million, as compared to a net loss of $29.4 million for the quarter ended September 30, 2010. During the third quarter of 2010, CODI recorded a $42.4 million non-cash impairment charge for the Company's American Furniture Manufacturing subsidiary.

On October 10, 2011, CODI's Board of Directors declared a third quarter distribution of $0.36 per share. The distribution was paid on October 31, 2011 to all holders of record as of October 25, 2011.

On October 17, 2011, CODI announced the sale of Staffmark whereby it received approximately $220 million of total proceeds from the sale at closing. The proceeds were used to repay substantially all of the outstanding debt under the Company's prior revolving credit facility. The Company anticipates recording a gain on the sale of Staffmark ranging between $75 million and $90 million for the quarter ended December 31, 2011.

CODI announced on October 27, 2011 it signed a credit agreement for a revolving credit facility totaling $290 million and a term loan facility in the amount of $225 million. The two facilities combine for $515 million in new debt financing and replace the Company's previous revolving credit facility and term loan facility. Upon closing, CODI had borrowing availability of approximately $287.1 million under its new revolving credit facility and no significant debt maturities until October 2016.

Commenting on the quarter, Alan Offenberg, CEO of Compass Group Diversified Holdings LLC, said, "Our strong results for the third quarter of 2011 were consistent with management's expectations, as Cash Flow increased more than 7% compared to the year-earlier period. We continue to benefit from the leadership position and comparative financial strength of our niche businesses. We also realized contributions from our newest platform company, CamelBak, which we acquired during the third quarter. CamelBak is an exciting addition to our family of subsidiary companies based on its market leadership, history of stable cash flows, proven management and attractive growth potential."

Mr. Offenberg added, "As we continue to pursue additional growth opportunities that create significant value for our owners, we recently took steps to further strengthen our financial flexibility. Specifically, during October we secured $515 million in new debt financing, which we used to refinance our existing debt and improve our mix of debt to equity within our capital structure. In addition, the opportunistic sale of Staffmark, one of the initial subsidiaries at the time of CODI's IPO, generated approximately $220 million of total proceeds in a highly profitable transaction for our Company. With substantial liquidity, we are in a strong position to invest in high-return organic growth initiatives and capitalize on accretive acquisitions of companies with a real reason to exist as we have consistently done in the past."