Net Income Increased to $72.6 million, from $2.5 million for the Prior Year Period
Cash Flow Available for Distribution and Reinvestment Increased by 47.7%, to $13.9 million, from $9.4 million for the Prior Year Period
Cash Flow Available for Distribution and Reinvestment Guidance of between $51 million and $56 million given for Fiscal Year 2008
WESTPORT, Conn., Aug. 11 /PRNewswire-FirstCall/ -- Compass Diversified
Holdings (Nasdaq: CODI) ('CODI' or the 'Company'), a leading acquirer and
manager of middle market businesses, announced today its consolidated
operating results for the three and six months ended June 30, 2008.
2008 Second Quarter Highlights include:
-- Increase in Net Income in the current year quarter to $72.6 million
from $2.5 million for the comparable prior year period, driven by the
successful sale of two subsidiary companies for a combined gain to CODI of
approximately $72.3 million;
-- Generation of Cash Flow Available for Distribution and Reinvestment
('Cash Flow' or 'CAD') of $13.9 million, up from $9.4 million in the prior
year quarter, a 47.7 % increase;
-- Acquisition of more than 200,000 shares of CODI in the open market by
the Company's Board of Directors and management team since May 15, 2008; and
-- Declaration of cash distribution of $0.325 per share for the second
quarter.
CODI increased its Cash Flow (see note regarding use of Non-GAAP Financial
Measures below) to $13.9 million for the quarter ended June 30, 2008, as
compared to $9.4 million for the prior year period. On a trailing twelve
month basis, CODI's Cash Flow for the period ending June 30, 2008 was $54.3
million. CODI's weighted average number of shares for the quarter ending June
30, 2008, the quarter ending June 30, 2007 and the twelve months ending June
30, 2008 were approximately 31.5 million, 26.8 million and 31.5 million,
respectively.
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 for each of our subsidiaries for the periods during
which CODI owned them. However, Cash Flow excludes the gains from sales of
businesses.
Net income for the quarter ended June 30, 2008 was $72.6 million, as
compared to $2.5 million for the quarter ended June 30, 2007. This increase
primarily was due to the sale of two subsidiary businesses, Silvue
Technologies Group, Inc. ('Silvue') and Aeroglide Holdings Inc. ('Aeroglide'),
in June of 2008, which collectively produced $72.3 million in gains.
As of June 30, 2008, CODI had approximately $100.2 million in cash and
cash equivalents and approximately $300 million in availability under its
revolving credit facility. The Company has no significant debt maturities
until 2012.
Based on the strength of the Company's performance, on July 10, 2008,
CODI's Board of Directors declared a distribution of $0.325 per share, which
was paid on July 29, 2008 to all CODI shareholders of record as of July 24,
2008.
Commenting on the quarter, Joe Massoud, CEO of Compass Diversified
Holdings, said, 'As a whole, our current family of subsidiary companies
performed very well in the second quarter of 2008. We are pleased with the
47.7% growth in Cash Flow as compared to the prior year, despite a difficult
economic environment. For the full year, given how we currently see our
businesses responding to the economy, we expect our company to produce between
$51 million and $56 million of Cash Flow. These estimates assume retention of
the substantial cash on our balance sheet and no additional deployment of this
significant capital capacity prior to the end of the year. Should we be able
to consummate an accretive acquisition this year, which we hope to do, 2008
Cash Flow would be higher.'
Massoud continued, 'From a shareholder point of view, we are currently
valued at less than seven times the midpoint of our 2008 estimate for Cash
Flow. We consider this an attractive valuation for a business with our
demonstrated track record and prospects for growth. We also pay our
shareholders a current yield of approximately 11%, while reinvesting the
substantial remainder of our Cash Flow into our business on behalf of our
shareholders. In addition, we provide an extraordinarily high level of
reporting transparency, allowing shareholders to clearly understand our
earnings and cash flow, as well as our ability to continue to pay and grow
these distributions.'
'In the second quarter, we completed the sale of two subsidiary companies,
Aeroglide and Silvue. In combination with our sale of Crosman in early 2007,
we have now proven the value of our underlying businesses through the
generation of over $100 million in gains for our shareholders in just over two
years. In addition, these sales provide substantial liquidity for us at a
time when the environment provides us ample opportunities to take advantage of
our unique financing model. Our current experience is that we are virtually
without competitors in terms of our ability to make attractive acquisitions
without dependence on the credit markets. We hope to acquire at least one
additional platform subsidiary in 2008,' concluded Massoud.
On June 24, 2008, CODI consummated the sale of Aeroglide and on June 25,
2008 consummated the sale of Silvue. Aeroglide was sold to Buhler Holding AG
('Buhler') for a total enterprise value of $95 million and CODI received
approximately $85.6 million of total proceeds from the sale. The Company
recorded a gain on the sale of Aeroglide of approximately $34 million in the
fiscal quarter ended June 30, 2008. Pursuant to a definitive agreement signed
on May 9, 2008, Silvue was sold to Mitsui Chemicals, Inc. for a total
enterprise value of approximately $95 million, and CODI received approximately
$70.6 million of total proceeds from the sale. The Company recorded a gain on
the sale of Silvue of approximately $38.3 million.
Conference Call
Management will host a conference call this morning at 9:00 a.m. ET to
discuss the latest corporate developments and financial results. The dial-in
number for callers in the U.S. is (877) 440-5804 and the dial-in number for
international callers is (719) 325-4915. The access code for all callers is
4595917. A live webcast will also be available on the Company's website at
www.compassdiversifiedholdings.com.
A replay of the call will be available through August 23, 2008. To access
the replay, please dial (888) 203-1112 in the U.S. and (719) 457-0820 outside
the U.S., and then enter the access code 4595917.
Note Regarding Use of Non-GAAP Financial Measures
CAD or Cash Flow, are non-GAAP measures used by the Company to assess its
performance, as well as its ability to sustain and increase quarterly
distributions. A number of CODI's businesses have seasonal earnings patterns,
with the first quarter typically being the slowest of the year. Accordingly,
the Company believes that the most appropriate measure of its performance is
over a trailing or expected 12 month period.
