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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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001-34927
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57-6218917
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(State or other jurisdiction of
incorporation or organization)
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(Commission
file number)
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(I.R.S. employer
identification number)
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Delaware
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001-34926
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20-3812051
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(State or other jurisdiction of
incorporation or organization)
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(Commission
file number)
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(I.R.S. employer
identification number)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller Reporting Company
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¨
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Emerging growth company
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¨
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Page
Number
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Part I
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Part II
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Item 1.
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Item 1A.
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Item 6.
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•
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the "Trust" and "Holdings" refer to Compass Diversified Holdings;
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•
|
"businesses," "operating segments," "subsidiaries" and "reporting units" refer to, collectively, the businesses controlled by the Company;
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•
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the "Company" refer to Compass Group Diversified Holdings LLC;
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•
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the "Manager" refer to Compass Group Management LLC ("CGM");
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•
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the "Trust Agreement" refer to the Second Amended and Restated Trust Agreement of the Trust dated as of December 6, 2016;
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•
|
the "2011 Credit Facility" refer to a credit agreement (as amended) with a group of lenders led by Toronto Dominion (Texas) LLC, as agent, which provided for the 2011 Revolving Credit Facility and the 2011 Term Loan Facility;
|
•
|
the "2014 Credit Facility" refer to the credit agreement, as amended from time to time, entered into on June 6, 2014 with a group of lenders led by Bank of America N.A. as administrative agent, which provides for a Revolving Credit Facility and a Term Loan;
|
•
|
the "2014 Revolving Credit Facility" refer to the $550 million Revolving Credit Facility provided by the 2014 Credit Facility that matures in June 2019;
|
•
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the "2014 Term Loan" refer to the $325 million Term Loan Facility, provided by the 2014 Credit Facility that matures in June 2021;
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•
|
the "2016 Incremental Term Loan" refer to the $250 million Tranche B Term Facility provided by the 2014 Credit Facility (together with the 2014 Term Loan, the "Term Loans");
|
•
|
the "LLC Agreement" refer to the fifth amended and restated operating agreement of the Company dated as of December 6, 2016; and
|
•
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"we," "us" and "our" refer to the Trust, the Company and the businesses together.
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•
|
our ability to successfully operate our businesses on a combined basis, and to effectively integrate and improve future acquisitions;
|
•
|
our ability to remove CGM and CGM’s right to resign;
|
•
|
our organizational structure, which may limit our ability to meet our dividend and distribution policy;
|
•
|
our ability to service and comply with the terms of our indebtedness;
|
•
|
our cash flow available for distribution and reinvestment and our ability to make distributions in the future to our shareholders;
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•
|
our ability to pay the management fee and profit allocation if and when due;
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•
|
our ability to make and finance future acquisitions;
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•
|
our ability to implement our acquisition and management strategies;
|
•
|
the regulatory environment in which our businesses operate;
|
•
|
trends in the industries in which our businesses operate;
|
•
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changes in general economic or business conditions or economic or demographic trends in the United States and other countries in which we have a presence, including changes in interest rates and inflation;
|
•
|
environmental risks affecting the business or operations of our businesses;
|
•
|
our and CGM’s ability to retain or replace qualified employees of our businesses and CGM;
|
•
|
costs and effects of legal and administrative proceedings, settlements, investigations and claims; and
|
•
|
extraordinary or force majeure events affecting the business or operations of our businesses.
|
(in thousands)
|
March 31,
2017 |
|
December 31,
2016 |
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
115,281
|
|
|
$
|
39,772
|
|
Accounts receivable, net
|
172,885
|
|
|
181,191
|
|
||
Inventories
|
208,326
|
|
|
212,984
|
|
||
Prepaid expenses and other current assets
|
18,234
|
|
|
18,872
|
|
||
Total current assets
|
514,726
|
|
|
452,819
|
|
||
Property, plant and equipment, net
|
143,172
|
|
|
142,370
|
|
||
Investment in FOX (refer to Note F)
|
—
|
|
|
141,767
|
|
||
Goodwill
|
489,877
|
|
|
491,637
|
|
||
Intangible assets, net
|
529,579
|
|
|
539,211
|
|
||
Other non-current assets
|
9,153
|
|
|
9,351
|
|
||
Total assets
|
$
|
1,686,507
|
|
|
$
|
1,777,155
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
59,273
|
|
|
$
|
61,512
|
|
Accrued expenses
|
88,292
|
|
|
91,041
|
|
||
Due to related party
|
542
|
|
|
20,848
|
|
||
Current portion, long-term debt
|
5,685
|
|
|
5,685
|
|
||
Other current liabilities
|
13,013
|
|
|
23,435
|
|
||
Total current liabilities
|
166,805
|
|
|
202,521
|
|
||
Deferred income taxes
|
103,232
|
|
|
110,838
|
|
||
Long-term debt
|
545,536
|
|
|
551,652
|
|
||
Other non-current liabilities
|
16,500
|
|
|
17,600
|
|
||
Total liabilities
|
832,073
|
|
|
882,611
|
|
||
Stockholders’ equity
|
|
|
|
||||
Trust common shares, no par value, 500,000 authorized; 59,900 shares issued and outstanding at March 31, 2017 and December 31, 2016
|
924,680
|
|
|
924,680
|
|
||
Accumulated other comprehensive loss
|
(8,428
|
)
|
|
(9,515
|
)
|
||
Accumulated deficit
|
(101,929
|
)
|
|
(58,760
|
)
|
||
Total stockholders’ equity attributable to Holdings
|
814,323
|
|
|
856,405
|
|
||
Noncontrolling interest
|
40,111
|
|
|
38,139
|
|
||
Total stockholders’ equity
|
854,434
|
|
|
894,544
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,686,507
|
|
|
$
|
1,777,155
|
|
|
Three months ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
(in thousands, except per share data)
|
|
|
|
||||
Net sales
|
$
|
242,716
|
|
|
$
|
155,001
|
|
Service revenues
|
47,276
|
|
|
38,286
|
|
||
Total net revenues
|
289,992
|
|
|
193,287
|
|
||
Cost of sales
|
160,318
|
|
|
99,617
|
|
||
Cost of service revenues
|
35,341
|
|
|
29,551
|
|
||
Gross profit
|
94,333
|
|
|
64,119
|
|
||
Operating expenses:
|
|
|
|
||||
Selling, general and administrative expense
|
78,723
|
|
|
42,287
|
|
||
Management fees
|
7,848
|
|
|
6,371
|
|
||
Amortization expense
|
10,310
|
|
|
7,380
|
|
||
Impairment expense
|
8,864
|
|
|
—
|
|
||
Operating income (loss)
|
(11,412
|
)
|
|
8,081
|
|
||
Other income (expense):
|
|
|
|
||||
Interest expense, net
|
(7,136
|
)
|
|
(11,462
|
)
|
||
Amortization of debt issuance costs
|
(933
|
)
|
|
(570
|
)
|
||
Loss on investment in FOX
|
(5,620
|
)
|
|
(10,623
|
)
|
||
Other income (expense), net
|
(22
|
)
|
|
3,256
|
|
||
Loss from continuing operations before income taxes
|
(25,123
|
)
|
|
(11,318
|
)
|
||
(Benefit) provision for income taxes
|
(3,648
|
)
|
|
3,296
|
|
||
Loss from continuing operations
|
(21,475
|
)
|
|
(14,614
|
)
|
||
Loss from discontinued operations, net of income tax
|
—
|
|
|
(413
|
)
|
||
Gain on sale of discontinued operations, net of income tax
|
340
|
|
|
—
|
|
||
Net loss
|
(21,135
|
)
|
|
(15,027
|
)
|
||
Less: Net income attributable to noncontrolling interest
|
470
|
|
|
1,137
|
|
||
Less: Net loss from discontinued operations attributable to noncontrolling interest
|
—
|
|
|
(141
|
)
|
||
Net loss attributable to Holdings
|
$
|
(21,605
|
)
|
|
$
|
(16,023
|
)
|
Amounts attributable to Holdings
|
|
|
|
||||
Loss from continuing operations
|
(21,945
|
)
|
|
(15,751
|
)
|
||
Loss from discontinued operations, net of income tax
|
—
|
|
|
(272
|
)
|
||
Gain on sale of discontinued operations, net of income tax
|
340
|
|
|
—
|
|
||
Net loss attributable to Holdings
|
$
|
(21,605
|
)
|
|
$
|
(16,023
|
)
|
Basic and fully diluted income (loss) per share attributable to Holdings (refer to Note L)
|
|
|
|
|
|||
Continuing operations
|
$
|
(0.61
|
)
|
|
$
|
(0.31
|
)
|
Discontinued operations
|
0.01
|
|
|
—
|
|
||
|
$
|
(0.60
|
)
|
|
$
|
(0.31
|
)
|
Weighted average number of shares of trust stock outstanding – basic and fully diluted
|
59,900
|
|
|
54,300
|
|
||
Cash distributions declared per share (refer to Note L)
|
$
|
0.36
|
|
|
$
|
0.36
|
|
|
Three months ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
(in thousands)
|
|
|
|
||||
Net loss
|
$
|
(21,135
|
)
|
|
$
|
(15,027
|
)
|
Other comprehensive income (loss)
|
|
|
|
||||
Foreign currency translation adjustments
|
1,031
|
|
|
5,220
|
|
||
Pension benefit liability, net
|
56
|
|
|
(523
|
)
|
||
Other comprehensive income (loss)
|
1,087
|
|
|
4,697
|
|
||
Total comprehensive loss, net of tax
|
(20,048
|
)
|
|
(10,330
|
)
|
||
Less: Net income attributable to noncontrolling interests
|
470
|
|
|
996
|
|
||
Less: Other comprehensive income attributable to noncontrolling interests
|
185
|
|
|
1,226
|
|
||
Total comprehensive loss attributable to Holdings, net of tax
|
$
|
(20,703
|
)
|
|
$
|
(12,552
|
)
|
(in thousands)
|
Number of
Shares
|
|
Amount
|
|
Accumulated Deficit
|
|
Accumulated Other
Comprehensive
Loss
|
|
Stockholders' Equity Attributable
to Holdings
|
|
Non-
Controlling
Interest
|
|
Total
Stockholders’
Equity
|
|||||||||||||
Balance — January 1, 2017
|
59,900
|
|
|
$
|
924,680
|
|
|
$
|
(58,760
|
)
|
|
$
|
(9,515
|
)
|
|
$
|
856,405
|
|
|
$
|
38,139
|
|
|
$
|
894,544
|
|
Net loss
|
—
|
|
|
—
|
|
|
(21,605
|
)
|
|
—
|
|
|
(21,605
|
)
|
|
470
|
|
|
(21,135
|
)
|
||||||
Total comprehensive income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
1,087
|
|
|
1,087
|
|
|
—
|
|
|
1,087
|
|
||||||
Option activity attributable to noncontrolling shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,452
|
|
|
1,452
|
|
||||||
Effect of issuance of subsidiary stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
50
|
|
||||||
Distributions paid
|
—
|
|
|
—
|
|
|
(21,564
|
)
|
|
—
|
|
|
(21,564
|
)
|
|
—
|
|
|
(21,564
|
)
|
||||||
Balance — March 31, 2017
|
59,900
|
|
|
$
|
924,680
|
|
|
$
|
(101,929
|
)
|
|
$
|
(8,428
|
)
|
|
$
|
814,323
|
|
|
$
|
40,111
|
|
|
$
|
854,434
|
|
Compass Diversified Holdings
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
|||||||
|
Three months ended March 31,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(21,135
|
)
|
|
$
|
(15,027
|
)
|
Loss from discontinued operations
|
—
|
|
|
(413
|
)
|
||
Gain on sale of discontinued operations, net
|
340
|
|
|
—
|
|
||
Net loss from continuing operations
|
(21,475
|
)
|
|
(14,614
|
)
|
||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
||||
Depreciation expense
|
8,046
|
|
|
5,668
|
|
||
Amortization expense
|
23,349
|
|
|
8,620
|
|
||
Impairment expense
|
8,864
|
|
|
—
|
|
||
Amortization of debt issuance costs and original issue discount
|
1,199
|
|
|
738
|
|
||
Unrealized (gain) loss on interest rate swap
|
(229
|
)
|
|
7,228
|
|
||
Noncontrolling stockholder stock based compensation
|
1,452
|
|
|
1,188
|
|
||
Loss on investment in FOX
|
5,620
|
|
|
10,623
|
|
||
Provision for loss on receivables
|
3,318
|
|
|
130
|
|
||
Deferred taxes
|
(7,634
|
)
|
|
(74
|
)
|
||
Other
|
318
|
|
|
(266
|
)
|
||
Changes in operating assets and liabilities, net of acquisition:
|
|
|
|
||||
Decrease in accounts receivable
|
5,710
|
|
|
4,037
|
|
||
Increase in inventories
|
(8,076
|
)
|
|
(1,473
|
)
|
||
Increase in prepaid expenses and other current assets
|
(967
|
)
|
|
(299
|
)
|
||
Decrease in accounts payable and accrued expenses
|
(20,909
|
)
|
|
(15,996
|
)
|
||
Net cash (used in) provided by operating activities - continuing operations
|
(1,414
|
)
|
|
5,510
|
|
||
Net cash provided by operating activities - discontinued operations
|
—
|
|
|
515
|
|
||
Cash (used in) provided by operating activities
|
(1,414
|
)
|
|
6,025
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Acquisitions, net of cash acquired
|
(6,721
|
)
|
|
(35,553
|
)
|
||
Purchases of property and equipment
|
(8,693
|
)
|
|
(4,195
|
)
|
||
Net proceeds from sale of equity investment
|
136,147
|
|
|
47,685
|
|
||
Payment of interest rate swap
|
(1,089
|
)
|
|
(500
|
)
|
||
Purchase of noncontrolling interest
|
—
|
|
|
(1,475
|
)
|
||
Proceeds from sale of business
|
340
|
|
|
182
|
|
||
Other investing activities
|
31
|
|
|
(86
|
)
|
||
Net cash provided by investing activities - continuing operations
|
120,015
|
|
|
6,058
|
|
||
Net cash used in investing activities - discontinued operations
|
—
|
|
|
(211
|
)
|
||
Cash provided by investing activities
|
120,015
|
|
|
5,847
|
|
Compass Diversified Holdings
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
|||||||
|
Three months ended March 31,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings under credit facility
|
51,500
|
|
|
—
|
|
||
Repayments under credit facility
|
(57,321
|
)
|
|
(813
|
)
|
||
Distributions paid
|
(21,564
|
)
|
|
(19,548
|
)
|
||
Net proceeds provided by noncontrolling shareholders
|
40
|
|
|
3,755
|
|
||
Distributions paid to noncontrolling shareholders
|
—
|
|
|
(5,253
|
)
|
||
Distributions paid to allocation interest holders (refer to Note L)
|
(13,354
|
)
|
|
—
|
|
||
Debt issuance costs
|
(1,414
|
)
|
|
—
|
|
||
Other
|
(783
|
)
|
|
(282
|
)
|
||
Net cash used in financing activities
|
(42,896
|
)
|
|
(22,141
|
)
|
||
Foreign currency impact on cash
|
(196
|
)
|
|
(3,033
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
75,509
|
|
|
(13,302
|
)
|
||
Cash and cash equivalents — beginning of period
(1)
|
39,772
|
|
|
85,869
|
|
||
Cash and cash equivalents — end of period
(2)
|
$
|
115,281
|
|
|
$
|
72,567
|
|
5.11 Tactical
|
|
|
||
(in thousands)
|
|
|
||
Amounts recognized as of the acquisition date
|
|
|
||
Assets:
|
|
|
||
Cash
|
|
$
|
12,581
|
|
Accounts receivable
(1)
|
|
38,323
|
|
|
Inventory
(2)
|
|
160,304
|
|
|
Property, plant and equipment
(3)
|
|
22,723
|
|
|
Intangible assets
|
|
127,890
|
|
|
Goodwill
|
|
92,966
|
|
|
Other current and noncurrent assets
|
|
4,884
|
|
|
Total assets
|
|
459,671
|
|
|
|
|
|
||
Liabilities and noncontrolling interest:
|
|
|
||
Current liabilities
|
|
$
|
38,229
|
|
Other liabilities
|
|
180,231
|
|
|
Deferred tax liabilities
|
|
10,163
|
|
|
Noncontrolling interest
|
|
5,568
|
|
|
Total liabilities and noncontrolling interest
|
|
234,191
|
|
|
|
|
||
Net assets acquired
|
|
225,480
|
|
|
Noncontrolling interest
|
|
5,568
|
|
|
Intercompany loans to business
|
|
179,237
|
|
|
|
|
$
|
410,285
|
|
|
|
|
||
Acquisition Consideration
|
|
|
||
Purchase price
|
|
$
|
400,000
|
|
Working capital adjustment
|
|
(2,296
|
)
|
|
Cash
|
|
12,581
|
|
|
Total purchase consideration
|
|
$
|
410,285
|
|
Less: Transaction costs
|
|
2,063
|
|
|
Purchase price, net
|
|
$
|
408,222
|
|
Intangible assets
|
|
Amount
|
|
Estimated Useful Life
|
||
Trade name
|
|
$
|
48,665
|
|
|
15 years
|
Customer relationships
|
|
75,218
|
|
|
15 years
|
|
Technology
|
|
4,007
|
|
|
10 years
|
|
|
|
$
|
127,890
|
|
|
|
|
Three months ended
|
||
(in thousands)
|
March 31, 2016
|
||
Net sales
|
$
|
261,265
|
|
Gross profit
|
94,216
|
|
|
Operating income
|
6,769
|
|
|
Net loss
|
(19,236
|
)
|
|
Net loss attributable to Holdings
|
(20,343
|
)
|
|
Basic and fully diluted net loss per share attributable to Holdings
|
$
|
(0.39
|
)
|
|
Three months ended March 31, 2016
|
||
(in thousands)
|
Tridien
|
||
Net sales
|
$
|
14,760
|
|
Gross profit
|
2,142
|
|
|
Operating loss
|
(577
|
)
|
|
Income from continuing operations before income taxes
|
413
|
|
|
Provision for income taxes
|
—
|
|
|
Income from discontinued operations
(1)
|
$
|
413
|
|
•
|
5.11 Tactical
is a leading provider of purpose-built tactical apparel and gear for law enforcement, firefighters, EMS, and military special operations as well as outdoor and adventure enthusiasts. 5.11 is a brand known for innovation and authenticity, and works directly with end users to create purpose-built apparel and gear designed to enhance the safety, accuracy, speed and performance of tactical professionals and enthusiasts worldwide. Headquartered in Irvine, California, 5.11 operates
|
•
|
Ergobaby,
headquartered in Los Angeles, California, is a designer, marketer and distributor of wearable baby carriers and accessories, blankets and swaddlers, nursing pillows, and related products. Ergobaby primarily sells its Ergobaby and Baby Tula branded products through brick-and-mortar retailers, national chain stores, online retailers, its own websites and distributors and derives approximately
57%
of its sales from outside of the United States.
|
•
|
Liberty Safe
is a designer, manufacturer and marketer of premium home, gun and office safes in North America. From it’s over
300,000
square foot manufacturing facility, Liberty produces a wide range of home and gun safe models in a broad assortment of sizes, features and styles. Liberty is headquartered in Payson, Utah.
|
•
|
Manitoba Harvest
is a pioneer and leader in the manufacture and distribution of branded, hemp-based foods and hemp based ingredients. Manitoba Harvest’s products, which include Hemp Hearts™, Hemp Heart Bites™, Hemp Heart Bars™, and Hemp protein powders, are currently carried in over
13,000
retail stores across the U.S. and Canada. Manitoba Harvest is headquartered in Winnipeg, Manitoba.
|
•
|
Advanced Circuits,
an electronic components manufacturing company, is a provider of small-run, quick-turn and volume production rigid printed circuit boards. ACI manufactures and delivers custom printed circuit boards to customers primarily in North America. ACI is headquartered in Aurora, Colorado.
|
•
|
Arnold Magnetics
is a global manufacturer of engineered magnetic solutions for a wide range of specialty applications and end-markets, including aerospace and defense, motorsport/automotive, oil and gas, medical, general industrial, electric utility, reprographics and advertising specialty markets. Arnold Magnetics produces high performance permanent magnets (PMAG), flexible magnets (FlexMag) and precision foil products (Precision Thin Metals) that are mission critical in motors, generators, sensors and other systems and components. Based on its long-term relationships, Arnold has built a diverse and blue-chip customer base totaling more than
2,000
clients worldwide. Arnold Magnetics is headquartered in Rochester, New York.
|
•
|
Clean Earth
provides environmental services for a variety of contaminated materials including soils, dredged material, hazardous waste and drill cuttings. Clean Earth analyzes, treats, documents and recycles waste streams generated in multiple end-markets such as power, construction, oil and gas, infrastructure, industrial and dredging. Clean Earth is headquartered in Hatboro, Pennsylvania and operates
18
facilities in the eastern United States.
|
•
|
Sterno Products
is a manufacturer and marketer of portable food warming fuel and creative table lighting solutions for the food service industry and flameless candles and outdoor lighting products for consumers. Sterno's products include wick and gel chafing fuels, butane stoves and accessories, liquid and traditional wax candles, catering equipment and outdoor lighting products. Sterno Products is headquartered in Corona, California.
|
Net sales of operating segments
|
Three months ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
5.11 Tactical
|
$
|
78,513
|
|
|
$
|
—
|
|
Ergobaby
|
22,613
|
|
|
19,415
|
|
||
Liberty
|
27,978
|
|
|
29,000
|
|
||
Manitoba Harvest
|
13,128
|
|
|
13,717
|
|
||
ACI
|
21,460
|
|
|
21,517
|
|
||
Arnold Magnetics
|
26,496
|
|
|
27,383
|
|
||
Clean Earth
|
47,276
|
|
|
38,286
|
|
||
Sterno Products
|
52,528
|
|
|
43,969
|
|
||
Total
|
289,992
|
|
|
193,287
|
|
||
Reconciliation of segment revenues to consolidated revenues:
|
|
|
|
||||
Corporate and other
|
—
|
|
|
—
|
|
||
Total consolidated revenues
|
$
|
289,992
|
|
|
$
|
193,287
|
|
Profit (loss) of operating segments
(1)
|
Three months ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
5.11 Tactical
|
$
|
(9,485
|
)
|
|
$
|
—
|
|
Ergobaby
|
5,200
|
|
|
4,090
|
|
||
Liberty
|
2,480
|
|
|
4,841
|
|
||
Manitoba Harvest
|
223
|
|
|
363
|
|
||
ACI
|
5,640
|
|
|
5,832
|
|
||
Arnold Magnetics
|
(8,397
|
)
|
|
626
|
|
||
Clean Earth
|
(446
|
)
|
|
(958
|
)
|
||
Sterno Products
|
3,652
|
|
|
2,412
|
|
||
Total
|
(1,133
|
)
|
|
17,206
|
|
||
Reconciliation of segment profit to consolidated income (loss) before income taxes:
|
|
|
|
||||
Interest expense, net
|
(7,136
|
)
|
|
(11,462
|
)
|
||
Other income (expense), net
|
(22
|
)
|
|
3,256
|
|
||
Loss on equity method investment
|
(5,620
|
)
|
|
(10,623
|
)
|
||
Corporate and other
(2)
|
(11,212
|
)
|
|
(9,695
|
)
|
||
Total consolidated loss before income taxes
|
$
|
(25,123
|
)
|
|
$
|
(11,318
|
)
|
(1)
|
Segment profit (loss) represents operating income (loss).
|
(2)
|
Primarily relates to management fees expensed and payable to CGM, and corporate overhead expenses.
|
|
Accounts Receivable
|
|
Identifiable Assets
|
|
Depreciation and Amortization Expense
|
||||||||||||||||||
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
December 31,
|
|
Three months ended
March 31, |
||||||||||||||
|
2017
|
|
2016
|
|
2017
(1)
|
|
2016
(1)
|
|
2017
|
|
2016
|
||||||||||||
5.11 Tactical
|
$
|
46,707
|
|
|
$
|
49,653
|
|
|
$
|
294,159
|
|
|
$
|
311,560
|
|
|
$
|
17,532
|
|
|
$
|
—
|
|
Ergobaby
|
9,359
|
|
|
11,018
|
|
|
113,559
|
|
|
113,814
|
|
|
653
|
|
|
835
|
|
||||||
Liberty
|
14,941
|
|
|
13,077
|
|
|
26,399
|
|
|
26,344
|
|
|
599
|
|
|
656
|
|
||||||
Manitoba Harvest
|
5,568
|
|
|
6,468
|
|
|
96,164
|
|
|
97,977
|
|
|
1,510
|
|
|
1,314
|
|
||||||
ACI
|
6,598
|
|
|
6,686
|
|
|
16,404
|
|
|
16,541
|
|
|
873
|
|
|
841
|
|
||||||
Arnold Magnetics
|
15,145
|
|
|
15,195
|
|
|
65,490
|
|
|
64,209
|
|
|
2,045
|
|
|
2,237
|
|
||||||
Clean Earth
|
46,142
|
|
|
45,619
|
|
|
189,979
|
|
|
193,250
|
|
|
5,227
|
|
|
4,955
|
|
||||||
Sterno Products
|
36,547
|
|
|
38,986
|
|
|
135,514
|
|
|
134,661
|
|
|
2,956
|
|
|
3,451
|
|
||||||
Allowance for doubtful accounts
|
(8,122
|
)
|
|
(5,511
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
172,885
|
|
|
181,191
|
|
|
937,668
|
|
|
958,356
|
|
|
31,395
|
|
|
14,289
|
|
||||||
Reconciliation of segment to consolidated total:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate and other identifiable assets
(2)
|
—
|
|
|
—
|
|
|
86,077
|
|
|
145,971
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of debt issuance costs and original issue discount
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,199
|
|
|
738
|
|
||||||
Total
|
$
|
172,885
|
|
|
$
|
181,191
|
|
|
$
|
1,023,745
|
|
|
$
|
1,104,327
|
|
|
$
|
32,594
|
|
|
$
|
15,027
|
|
(1)
|
Does not include accounts receivable balances per schedule above or goodwill balances - refer to
Note H - "Goodwill and Other Intangible Assets"
.
|
(2)
|
Corporate and other identifiable assets for the year ended December 31, 2016 includes the Company's investment in FOX, which was sold during the first quarter of 2017 - refer to
Note F - "Investment in FOX"
.
|
International Revenues
|
Three months ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
5.11 Tactical
|
$
|
25,266
|
|
|
$
|
—
|
|
Ergobaby
|
12,814
|
|
|
10,377
|
|
||
Manitoba Harvest
|
5,895
|
|
|
6,130
|
|
||
Arnold Magnetics
|
11,055
|
|
|
10,799
|
|
||
Sterno Products
|
634
|
|
|
5,192
|
|
||
|
$
|
55,664
|
|
|
$
|
32,498
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Machinery and equipment
|
$
|
151,876
|
|
|
$
|
155,591
|
|
Furniture, fixtures and other
|
20,876
|
|
|
13,737
|
|
||
Leasehold improvements
|
15,207
|
|
|
14,156
|
|
||
Buildings and land
|
35,551
|
|
|
35,392
|
|
||
Construction in process
|
12,592
|
|
|
8,308
|
|
||
|
236,102
|
|
|
227,184
|
|
||
Less: accumulated depreciation
|
(92,930
|
)
|
|
(84,814
|
)
|
||
Total
|
$
|
143,172
|
|
|
$
|
142,370
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Raw materials and supplies
|
$
|
30,404
|
|
|
$
|
29,708
|
|
Work-in-process
|
9,570
|
|
|
8,281
|
|
||
Finished goods
|
176,669
|
|
|
182,886
|
|
||
Less: obsolescence reserve
|
(8,317
|
)
|
|
(7,891
|
)
|
||
Total
|
$
|
208,326
|
|
|
$
|
212,984
|
|
|
Three months ended March 31, 2017
|
|
Year ended
December 31, 2016 |
||||
Goodwill - gross carrying amount
|
514,741
|
|
|
507,637
|
|
||
Accumulated impairment losses
|
(24,864
|
)
|
|
(16,000
|
)
|
||
Goodwill - net carrying amount
|
$
|
489,877
|
|
|
$
|
491,637
|
|
|
Corporate (1)
|
|
5.11
|
|
Ergobaby
|
|
Liberty
|
|
Manitoba Harvest
|
|
ACI
|
|
Arnold (2)
|
|
Clean Earth
|
|
Sterno
|
|
Total
|
||||||||||||||||||||
Balance as of January 1, 2017
|
$
|
8,649
|
|
|
$
|
92,966
|
|
|
$
|
61,031
|
|
|
$
|
32,828
|
|
|
$
|
44,171
|
|
|
$
|
58,019
|
|
|
$
|
35,767
|
|
|
$
|
118,224
|
|
|
$
|
39,982
|
|
|
$
|
491,637
|
|
Acquisition
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,722
|
|
|
—
|
|
|
6,722
|
|
||||||||||
Impairment expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,864
|
)
|
|
—
|
|
|
—
|
|
|
(8,864
|
)
|
||||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
385
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
382
|
|
||||||||||
Balance as of March 31, 2017
|
$
|
8,649
|
|
|
$
|
92,966
|
|
|
$
|
61,028
|
|
|
$
|
32,828
|
|
|
$
|
44,556
|
|
|
$
|
58,019
|
|
|
$
|
26,903
|
|
|
$
|
124,946
|
|
|
$
|
39,982
|
|
|
$
|
489,877
|
|
(1)
|
Represents goodwill resulting from purchase accounting adjustments not "pushed down" to the ACI segment. This amount is allocated back to the ACI segment for purposes of goodwill impairment testing.
|
(2)
|
Arnold Magnetics has three reporting units PMAG, FlexMag and Precision Thin Metals with goodwill balances of
$15.6 million
,
$4.8 million
and
$6.5 million
, respectively.
|
(3)
|
The goodwill related to an acquisition by Clean Earth is based on a preliminary purchase price allocation.
|
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Weighted
Average
Useful Lives
|
||||
Customer relationships
|
|
$
|
305,151
|
|
|
$
|
304,751
|
|
|
13
|
Technology and patents
|
|
44,850
|
|
|
44,710
|
|
|
9
|
||
Trade names, subject to amortization
|
|
128,697
|
|
|
128,675
|
|
|
13
|
||
Licensing and non-compete agreements
|
|
7,845
|
|
|
7,845
|
|
|
4
|
||
Permits and airspace
|
|
113,321
|
|
|
113,295
|
|
|
13
|
||
Distributor relations and other
|
|
606
|
|
|
606
|
|
|
5
|
||
|
|
600,470
|
|
|
599,882
|
|
|
|
||
Accumulated amortization:
|
|
|
|
|
|
|
||||
Customer relationships
|
|
(84,776
|
)
|
|
(79,607
|
)
|
|
|
||
Technology and patents
|
|
(19,451
|
)
|
|
(18,290
|
)
|
|
|
||
Trade names, subject to amortization
|
|
(8,394
|
)
|
|
(6,833
|
)
|
|
|
||
Licensing and non-compete agreements
|
|
(6,113
|
)
|
|
(5,987
|
)
|
|
|
||
Permits and airspace
|
|
(23,841
|
)
|
|
(21,531
|
)
|
|
|
||
Distributor relations and other
|
|
(606
|
)
|
|
(606
|
)
|
|
|
||
Total accumulated amortization
|
|
(143,181
|
)
|
|
(132,854
|
)
|
|
|
||
Trade names, not subject to amortization
|
|
72,290
|
|
|
72,183
|
|
|
|
||
Total intangibles, net
|
|
$
|
529,579
|
|
|
$
|
539,211
|
|
|
|
April 1, 2016 through Dec. 31, 2017
|
|
$
|
30,606
|
|
2018
|
|
39,420
|
|
|
2019
|
|
38,130
|
|
|
2020
|
|
37,644
|
|
|
2021
|
|
37,341
|
|
|
|
|
$
|
183,141
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Deferred debt issuance costs
|
$
|
20,122
|
|
|
$
|
18,960
|
|
Accumulated amortization
|
(7,180
|
)
|
|
(6,248
|
)
|
||
Deferred debt issuance costs, less accumulated amortization
|
$
|
12,942
|
|
|
$
|
12,712
|
|
|
|
|
|
||||
Balance Sheet classification:
|
|
|
|
||||
Other non-current assets
|
$
|
4,219
|
|
|
$
|
4,698
|
|
Long-term debt
|
8,723
|
|
|
8,014
|
|
||
|
$
|
12,942
|
|
|
$
|
12,712
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Revolving Credit Facility
|
$
|
—
|
|
|
$
|
4,400
|
|
Term Loan
|
564,236
|
|
|
565,658
|
|
||
Original issue discount
|
(4,292
|
)
|
|
(4,706
|
)
|
||
Debt issuance costs - term loan
|
(8,723
|
)
|
|
(8,015
|
)
|
||
Total debt
|
$
|
551,221
|
|
|
$
|
557,337
|
|
Less: Current portion, term loan facilities
|
(5,685
|
)
|
|
(5,685
|
)
|
||
Long term debt
|
$
|
545,536
|
|
|
$
|
551,652
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Other current liabilities
|
$
|
3,568
|
|
|
$
|
4,010
|
|
Other noncurrent liabilities
|
5,834
|
|
|
6,709
|
|
||
Total fair value
|
$
|
9,402
|
|
|
$
|
10,719
|
|
|
Fair Value Measurements at March 31, 2017
|
||||||||||||||
|
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Put option of noncontrolling shareholders
(1)
|
$
|
(180
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(180
|
)
|
Contingent consideration - acquisitions
(2)
|
(4,830
|
)
|
|
—
|
|
|
—
|
|
|
(4,830
|
)
|
||||
Interest rate swap
|
(9,402
|
)
|
|
—
|
|
|
(9,402
|
)
|
|
—
|
|
||||
Total recorded at fair value
|
$
|
(14,412
|
)
|
|
$
|
—
|
|
|
$
|
(9,402
|
)
|
|
$
|
(5,010
|
)
|
(1)
|
Represents put option issued to noncontrolling shareholders in connection with the 5.11 Tactical and Liberty acquisitions.
|
(2)
|
Represents potential earn-outs payable by Sterno Products for the acquisition of NII and Ergobaby in connection with their acquisition of Baby Tula.
|
|
Fair Value Measurements at December 31, 2016
|
||||||||||||||
|
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Equity method investment - FOX
|
$
|
141,767
|
|
|
$
|
141,767
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Put option of noncontrolling shareholders
|
(180
|
)
|
|
—
|
|
|
—
|
|
|
(180
|
)
|
||||
Contingent consideration
|
(4,830
|
)
|
|
—
|
|
|
—
|
|
|
(4,830
|
)
|
||||
Interest rate swap
|
(10,719
|
)
|
|
—
|
|
|
(10,719
|
)
|
|
—
|
|
||||
Total recorded at fair value
|
$
|
126,038
|
|
|
$
|
141,767
|
|
|
$
|
(10,719
|
)
|
|
$
|
(5,010
|
)
|
|
2017
|
|
2016
|
||||
Balance at January 1st
|
$
|
(5,010
|
)
|
|
$
|
(50
|
)
|
Contingent consideration - acquisition
|
—
|
|
|
(1,500
|
)
|
||
Balance at March 31st
|
$
|
(5,010
|
)
|
|
$
|
(1,550
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Fair Value Measurements at March 31, 2017
|
|
Three months ended
|
|||||||||||
(in thousands)
|
Carrying
Value |
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Expense
|
|||||
|
|
|
|
|
|
|
|
|
|
|||||
Goodwill
(1)
|
26,903
|
|
|
—
|
|
|
—
|
|
|
26,903
|
|
|
8,864
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Fair Value Measurements at December 31, 2016
|
|
Year ended
|
|||||||||||
(in thousands)
|
Carrying
Value |
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Expense
|
|||||
|
|
|
|
|
|
|
|
|
|
|||||
Goodwill
|
35,767
|
|
|
—
|
|
|
—
|
|
|
35,767
|
|
|
16,000
|
|
Property, Plant and Equipment
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,824
|
|
Tradename
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
317
|
|
Technology
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,460
|
|
Customer relationships
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,426
|
|
Permits
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,177
|
|
|
|
Three months ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Loss from continuing operations attributable to Holdings
|
|
$
|
(21,945
|
)
|
|
$
|
(15,751
|
)
|
Less: Profit Allocation paid to Holdings
|
|
13,354
|
|
|
—
|
|
||
Less: Effect of contribution based profit - Holding Event
|
|
1,258
|
|
|
850
|
|
||
Loss from continuing operation attributable to Trust shares
|
|
$
|
(36,557
|
)
|
|
$
|
(16,601
|
)
|
|
|
|
|
|
||||
Income (loss) from discontinued operations attributable to Holdings
|
|
$
|
340
|
|
|
$
|
(272
|
)
|
Less: Effect of contribution based profit
|
|
—
|
|
|
—
|
|
||
Income (loss) from discontinued operations attributable to Trust shares
|
|
$
|
340
|
|
|
$
|
(272
|
)
|
|
|
|
|
|
||||
Basic and diluted weighted average shares outstanding
|
|
59,900
|
|
|
54,300
|
|
||
|
|
|
|
|
||||
Basic and fully diluted income (loss) per share attributable to Holdings
|
|
|
|
|
||||
Continuing operations
|
|
$
|
(0.61
|
)
|
|
$
|
(0.31
|
)
|
Discontinued operations
|
|
0.01
|
|
|
—
|
|
||
|
|
$
|
(0.60
|
)
|
|
$
|
(0.31
|
)
|
•
|
On
January 26, 2017
, the Company paid a distribution of
$0.36
per share to holders of record as of
January 19, 2017
. This distribution was declared on
January 5, 2017
.
|
•
|
On
April 27, 2017
, the Company paid a distribution of
$0.36
per share to holders of record as of
April 21, 2017
. This distribution was declared on
April 6, 2017
.
|
|
Three months ended March 31, 2017
|
|
Year ended
December 31, 2016 |
||||
Warranty liability:
|
|
|
|
||||
Beginning balance
|
$
|
1,258
|
|
|
$
|
1,259
|
|
Accrual
|
45
|
|
|
252
|
|
||
Warranty payments
|
(42
|
)
|
|
(253
|
)
|
||
Ending balance
|
$
|
1,261
|
|
|
$
|
1,258
|
|
|
% Ownership
(1)
March 31, 2017
|
|
% Ownership
(1)
December 31, 2016
|
||||
|
Primary
|
|
Fully
Diluted
|
|
Primary
|
|
Fully
Diluted
|
5.11 Tactical
|
97.5
|
|
85.1
|
|
97.5
|
|
85.1
|
Ergobaby
|
83.5
|
|
77.3
|
|
83.5
|
|
76.9
|
Liberty
|
88.6
|
|
84.7
|
|
88.6
|
|
84.7
|
Manitoba Harvest
|
76.6
|
|
65.1
|
|
76.6
|
|
65.6
|
ACI
|
69.4
|
|
69.3
|
|
69.4
|
|
69.3
|
Arnold Magnetics
|
96.7
|
|
84.7
|
|
96.7
|
|
84.7
|
Clean Earth
|
97.5
|
|
79.8
|
|
97.5
|
|
79.8
|
Sterno Products
|
100.0
|
|
89.5
|
|
100.0
|
|
89.5
|
(1)
|
The principal difference between primary and diluted percentages of our operating segments is due to stock option issuances of operating segment stock to management of the respective businesses.
|
|
Noncontrolling Interest Balances
|
||||||
(in thousands)
|
March 31, 2017
|
|
December 31, 2016
|
||||
5.11 Tactical
|
6,336
|
|
|
5,934
|
|
||
Ergobaby
|
19,063
|
|
|
18,647
|
|
||
Liberty
|
2,783
|
|
|
2,681
|
|
||
Manitoba Harvest
|
13,640
|
|
|
13,687
|
|
||
ACI
|
(10,333
|
)
|
|
(11,220
|
)
|
||
Arnold Magnetics
|
1,235
|
|
|
1,536
|
|
||
Clean Earth
|
5,797
|
|
|
5,469
|
|
||
Sterno Products
|
1,490
|
|
|
1,305
|
|
||
Allocation Interests
|
100
|
|
|
100
|
|
||
|
$
|
40,111
|
|
|
$
|
38,139
|
|
|
Three months ended March 31,
|
||||
|
2017
|
|
2016
|
||
United States Federal Statutory Rate
|
(35.0
|
)%
|
|
(35.0
|
)%
|
State income taxes (net of Federal benefits)
|
(2.0
|
)
|
|
1.7
|
|
Foreign income taxes
|
4.4
|
|
|
7.9
|
|
Expenses of Compass Group Diversified Holdings, LLC representing a pass through to shareholders
(1)
|
1.0
|
|
|
21.7
|
|
Impairment expense
|
12.7
|
|
|
—
|
|
Effect of loss on equity method investment
(2)
|
7.8
|
|
|
32.9
|
|
Impact of subsidiary employee stock options
|
0.4
|
|
|
1.1
|
|
Domestic production activities deduction
|
(0.7
|
)
|
|
(2.3
|
)
|
Effect of undistributed foreign earnings
|
0.7
|
|
|
—
|
|
Non-recognition of NOL carryforwards at subsidiaries
|
(2.7
|
)
|
|
(0.6
|
)
|
Other
|
(1.1
|
)
|
|
1.6
|
|
Effective income tax rate
|
(14.5
|
)%
|
|
29.0
|
%
|
(1)
|
The effective income tax rate for the three months ended
March 31, 2017
and 2016 includes a loss at the Company's parent, which is taxed as a partnership.
|
(2)
|
The investment in FOX is held at the Company's parent, which is taxed as a partnership, resulting in the gain or loss on the investment as a reconciling item in deriving the effective tax rate.
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Service cost
|
$
|
131
|
|
|
$
|
109
|
|
Interest cost
|
23
|
|
|
34
|
|
||
Expected return on plan assets
|
23
|
|
|
5
|
|
||
Net periodic benefit cost
|
$
|
177
|
|
|
$
|
148
|
|
•
|
North American base of operations;
|
•
|
stable and growing earnings and cash flow;
|
•
|
maintains a significant market share in defensible industry niche (i.e., has a "reason to exist");
|
•
|
solid and proven management team with meaningful incentives;
|
•
|
low technological and/or product obsolescence risk; and
|
•
|
a diversified customer and supplier base.
|
•
|
utilizing structured incentive compensation programs tailored to each business to attract, recruit and retain talented managers to operate our businesses;
|
•
|
regularly monitoring financial and operational performance, instilling consistent financial discipline, and supporting management in the development and implementation of information systems to effectively achieve these goals;
|
•
|
assisting management in their analysis and pursuit of prudent organic cash flow growth strategies (both revenue and cost related);
|
•
|
identifying and working with management to execute attractive external growth and acquisition opportunities; and
|
•
|
forming strong subsidiary level boards of directors to supplement management in their development and implementation of strategic goals and objectives.
|
•
|
first, to meet capital expenditure requirements, management fees and corporate overhead expenses;
|
•
|
second, to fund distributions from the businesses to the Company; and
|
•
|
third, to be distributed by the Trust to shareholders.
|
|
|
|
|
Ownership Interest - March 31, 2017
|
||
Business
|
|
Acquisition Date
|
|
Primary
|
|
Diluted
|
Advanced Circuits
|
|
May 16, 2006
|
|
69.4%
|
|
69.3%
|
Liberty Safe
|
|
March 31, 2010
|
|
88.6%
|
|
84.7%
|
Ergobaby
|
|
September 16, 2010
|
|
83.5%
|
|
77.3%
|
Arnold Magnetics
|
|
March 5, 2012
|
|
96.7%
|
|
84.7%
|
Clean Earth
|
|
August 7, 2014
|
|
97.5%
|
|
79.8%
|
Sterno Products
|
|
October 10, 2014
|
|
100.0%
|
|
89.5%
|
Manitoba Harvest
|
|
July 10, 2015
|
|
76.6%
|
|
65.1%
|
5.11 Tactical
|
|
August 31, 2016
|
|
97.5%
|
|
85.1%
|
|
Three months ended
|
||||||
|
March 31, 2017
|
|
March 31, 2016
|
||||
(in thousands)
|
|
|
|
||||
Net sales
|
$
|
289,992
|
|
|
$
|
193,287
|
|
Cost of sales
|
195,659
|
|
|
129,168
|
|
||
Gross profit
|
94,333
|
|
|
64,119
|
|
||
Selling, general and administrative expense
|
78,723
|
|
|
42,287
|
|
||
Fees to manager
|
7,848
|
|
|
6,371
|
|
||
Amortization of intangibles
|
10,310
|
|
|
7,380
|
|
||
Impairment expense
|
8,864
|
|
|
—
|
|
||
Operating (loss) income
|
$
|
(11,412
|
)
|
|
$
|
8,081
|
|
|
Three months ended
|
||||||
(in thousands)
|
March 31, 2017
|
|
March 31, 2016
|
||||
|
|
|
(Pro forma)
|
||||
Net sales
|
$
|
78,513
|
|
|
$
|
67,978
|
|
Cost of sales
(1)
|
54,663
|
|
|
37,881
|
|
||
Gross profit
|
23,850
|
|
|
30,097
|
|
||
Selling, general and administrative expense
(2)
|
30,763
|
|
|
27,244
|
|
||
Fees to manager
(3)
|
250
|
|
|
250
|
|
||
Amortization of intangibles
(4)
|
2,322
|
|
|
2,165
|
|
||
Income (loss) from operations
|
$
|
(9,485
|
)
|
|
$
|
438
|
|
|
Three months ended
|
||||||
(in thousands)
|
March 31, 2017
|
|
March 31, 2016
|
||||
Net sales
|
$
|
22,613
|
|
|
$
|
19,415
|
|
Cost of sales
|
7,515
|
|
|
6,802
|
|
||
Gross profit
|
15,098
|
|
|
12,613
|
|
||
Selling, general and administrative expense
|
9,307
|
|
|
7,825
|
|
||
Fees to manager
|
125
|
|
|
125
|
|
||
Amortization of intangibles
|
466
|
|
|
573
|
|
||
Income from operations
|
$
|
5,200
|
|
|
$
|
4,090
|
|
|
Three months ended
|
||||||
(in thousands)
|
March 31, 2017
|
|
March 31, 2016
|
||||
Net sales
|
$
|
27,978
|
|
|
$
|
29,000
|
|
Cost of sales
|
20,138
|
|
|
19,699
|
|
||
Gross profit
|
7,840
|
|
|
9,301
|
|
||
Selling, general and administrative expense
|
4,979
|
|
|
4,071
|
|
||
Fees to manager
|
125
|
|
|
125
|
|
||
Amortization of intangibles
|
256
|
|
|
264
|
|
||
Income from operations
|
$
|
2,480
|
|
|
$
|
4,841
|
|
|
Three months ended
|
||||||
(in thousands)
|
March 31, 2017
|
|
March 31, 2016
|
||||
Net sales
|
$
|
13,128
|
|
|
$
|
13,717
|
|
Cost of sales
|
6,912
|
|
|
6,668
|
|
||
Gross profit
|
6,216
|
|
|
7,049
|
|
||
Selling, general and administrative expense
|
4,795
|
|
|
5,742
|
|
||
Fees to manager
|
88
|
|
|
88
|
|
||
Amortization of intangibles
|
1,110
|
|
|
856
|
|
||
Income from operations
|
$
|
223
|
|
|
$
|
363
|
|
|
Three months ended
|
||||||
(in thousands)
|
March 31, 2017
|
|
March 31, 2016
|
||||
Net sales
|
$
|
21,460
|
|
|
$
|
21,517
|
|
Cost of sales
|
11,839
|
|
|
11,826
|
|
||
Gross profit
|
9,621
|
|
|
9,691
|
|
||
Selling, general and administrative expense
|
3,544
|
|
|
3,423
|
|
||
Fees to manager
|
125
|
|
|
125
|
|
||
Amortization of intangibles
|
312
|
|
|
311
|
|
||
Income from operations
|
$
|
5,640
|
|
|
$
|
5,832
|
|
•
|
Permanent Magnet and Assemblies and Reprographics (PMAG) (historically approximately 70% of net sales) - High performance magnets for precision motor/generator sensors as well as beam focusing and reprographics applications;
|
•
|
Flexmag (historically approximately 20% of net sales) - Flexible bonded magnetic materials for advertising, consumer and industrial applications; and
|
•
|
Precision Thin Metals (PTM) (historically approximately 10% of net sales) - Ultra thin metal foil products utilizing magnetic and non- magnetic alloys.
|
|
Three months ended
|
||||||
(in thousands)
|
March 31, 2017
|
|
March 31, 2016
|
||||
Net sales
|
$
|
26,496
|
|
|
$
|
27,383
|
|
Cost of sales
|
20,226
|
|
|
21,499
|
|
||
Gross profit
|
6,270
|
|
|
5,884
|
|
||
Selling, general and administrative expense
|
4,797
|
|
|
4,252
|
|
||
Fees to manager
|
125
|
|
|
125
|
|
||
Amortization of intangibles
|
881
|
|
|
881
|
|
||
Impairment expense
|
8,864
|
|
|
—
|
|
||
(Loss) income from operations
|
$
|
(8,397
|
)
|
|
$
|
626
|
|
|
Three months ended
|
||||||
(in thousands)
|
March 31, 2017
|
|
March 31, 2016
|
||||
Service revenues
|
$
|
47,276
|
|
|
$
|
38,286
|
|
Cost of services
|
35,341
|
|
|
29,551
|
|
||
Gross profit
|
11,935
|
|
|
8,735
|
|
||
Selling, general and administrative expense
|
9,151
|
|
|
6,592
|
|
||
Fees to manager
|
125
|
|
|
125
|
|
||
Amortization of intangibles
|
3,105
|
|
|
2,976
|
|
||
Loss from operations
|
$
|
(446
|
)
|
|
$
|
(958
|
)
|
|
Three months ended
|
||||||
(in thousands)
|
March 31, 2017
|
|
March 31, 2016
|
||||
Net sales
|
$
|
52,528
|
|
|
$
|
43,969
|
|
Cost of sales
|
39,025
|
|
|
33,123
|
|
||
Gross Profit
|
13,503
|
|
|
10,846
|
|
||
Selling, general and administrative expenses
|
7,867
|
|
|
6,790
|
|
||
Management fees
|
125
|
|
|
125
|
|
||
Amortization of intangibles
|
1,859
|
|
|
1,519
|
|
||
Income from operations
|
$
|
3,652
|
|
|
$
|
2,412
|
|
|
|
Three months ended
|
||||||
(in thousands)
|
|
March 31, 2017
|
|
March 31, 2016
|
||||
Cash (used in) provided by operations
|
|
$
|
(1,414
|
)
|
|
$
|
6,025
|
|
Cash provided by investing activities
|
|
120,015
|
|
|
5,847
|
|
||
Cash used in financing activities
|
|
(42,896
|
)
|
|
(22,141
|
)
|
||
Effect of exchange rates on cash and cash equivalents
|
|
(196
|
)
|
|
(3,033
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
|
$
|
75,509
|
|
|
$
|
(13,302
|
)
|
Description of Required Covenant Ratio
|
|
Covenant Ratio Requirement
|
|
Actual Ratio
|
Fixed Charge Coverage Ratio
|
|
greater than or equal to 1.50:1.0
|
|
3.32:1.0
|
Total Debt to EBITDA Ratio
|
|
less than or equal to 4.25:1.0
|
|
2.46:1.0
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Interest on credit facilities
|
$
|
6,116
|
|
|
$
|
3,439
|
|
Unused fee on Revolving Credit Facility
|
777
|
|
|
500
|
|
||
Amortization of original issue discount
|
266
|
|
|
168
|
|
||
Unrealized loss (gain) on interest rate derivatives
(1)
|
(229
|
)
|
|
7,228
|
|
||
Letter of credit fees
|
29
|
|
|
24
|
|
||
Other
|
188
|
|
|
119
|
|
||
Interest expense
|
$
|
7,147
|
|
|
$
|
11,478
|
|
Average daily balance of debt outstanding
|
$
|
593,223
|
|
|
$
|
320,116
|
|
Effective interest rate
(1)
|
4.8
|
%
|
|
14.3
|
%
|
|
|
Three months ended March 31,
|
||||
|
|
2017
|
|
2016
|
||
United States Federal Statutory Rate
|
|
(35.0
|
)%
|
|
(35.0
|
)%
|
State income taxes (net of Federal benefits)
|
|
(2.0
|
)
|
|
1.7
|
|
Foreign income taxes
|
|
4.4
|
|
|
7.9
|
|
Expenses of Compass Group Diversified Holdings, LLC representing a pass through to shareholders
(1)
|
|
1.0
|
|
|
21.7
|
|
Impairment expense
|
|
12.7
|
|
|
—
|
|
Effect of loss on equity method investment
(2)
|
|
7.8
|
|
|
32.9
|
|
Impact of subsidiary employee stock options
|
|
0.4
|
|
|
1.1
|
|
Domestic production activities deduction
|
|
(0.7
|
)
|
|
(2.3
|
)
|
Effect of undistributed foreign earnings
|
|
0.7
|
|
|
—
|
|
Non-recognition of NOL carryforwards at subsidiaries
|
|
(2.7
|
)
|
|
(0.6
|
)
|
Other
|
|
(1.1
|
)
|
|
1.6
|
|
Effective income tax rate
|
|
(14.5
|
)%
|
|
29.0
|
%
|
|
Corporate
|
|
5.11 Tactical
|
|
Ergobaby
|
|
Liberty
|
|
Manitoba Harvest
|
|
Advanced
Circuits
|
|
Arnold
Magnetics
|
|
Clean Earth
|
|
Sterno Products
|
|
Consolidated
|
||||||||||||||||||||
Net income (loss)
|
$
|
(6,672
|
)
|
|
$
|
(7,748
|
)
|
|
$
|
1,794
|
|
|
$
|
1,024
|
|
|
$
|
(939
|
)
|
|
$
|
2,885
|
|
|
$
|
(10,547
|
)
|
|
$
|
(2,388
|
)
|
|
$
|
1,456
|
|
|
$
|
(21,135
|
)
|
Adjusted for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Provision (benefit) for income taxes
|
—
|
|
|
(5,384
|
)
|
|
1,139
|
|
|
456
|
|
|
(71
|
)
|
|
580
|
|
|
365
|
|
|
(1,444
|
)
|
|
711
|
|
|
(3,648
|
)
|
||||||||||
Interest expense, net
|
6,991
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|
—
|
|
|
7,136
|
|
||||||||||
Intercompany interest
|
(15,503
|
)
|
|
3,528
|
|
|
1,635
|
|
|
988
|
|
|
1,115
|
|
|
2,092
|
|
|
1,711
|
|
|
3,224
|
|
|
1,210
|
|
|
—
|
|
||||||||||
Depreciation and amortization
|
(105
|
)
|
|
17,655
|
|
|
1,254
|
|
|
621
|
|
|
1,539
|
|
|
939
|
|
|
2,130
|
|
|
5,348
|
|
|
3,213
|
|
|
32,594
|
|
||||||||||
EBITDA
|
(15,289
|
)
|
|
8,080
|
|
|
5,822
|
|
|
3,089
|
|
|
1,648
|
|
|
6,496
|
|
|
(6,341
|
)
|
|
4,852
|
|
|
6,590
|
|
|
14,947
|
|
||||||||||
Gain on sale of business
|
(340
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(340
|
)
|
||||||||||
(Gain) loss on sale of fixed assets
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
(10
|
)
|
|
(9
|
)
|
|
(42
|
)
|
|
—
|
|
|
(58
|
)
|
||||||||||
Non-controlling shareholder compensation
|
—
|
|
|
544
|
|
|
121
|
|
|
(15
|
)
|
|
172
|
|
|
6
|
|
|
51
|
|
|
388
|
|
|
185
|
|
|
1,452
|
|
||||||||||
Impairment expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,864
|
|
|
—
|
|
|
—
|
|
|
8,864
|
|
||||||||||
Integration services fee
|
—
|
|
|
875
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
875
|
|
||||||||||
Loss on equity method investment
|
5,620
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,620
|
|
||||||||||
Gain on foreign currency transaction and other
|
(390
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(390
|
)
|
||||||||||
Management fees
|
6,761
|
|
|
250
|
|
|
125
|
|
|
125
|
|
|
87
|
|
|
125
|
|
|
125
|
|
|
125
|
|
|
125
|
|
|
7,848
|
|
||||||||||
Adjusted EBITDA
|
$
|
(3,638
|
)
|
|
$
|
9,749
|
|
|
$
|
6,068
|
|
|
$
|
3,202
|
|
|
$
|
1,907
|
|
|
$
|
6,617
|
|
|
$
|
2,690
|
|
|
$
|
5,323
|
|
|
$
|
6,900
|
|
|
$
|
38,818
|
|
|
Corporate
|
|
5.11 Tactical
|
|
Ergobaby
|
|
Liberty
|
|
Manitoba Harvest
|
|
Advanced
Circuits
|
|
Arnold
Magnetics
|
|
Clean Earth
|
|
Sterno Products
|
|
Consolidated
|
||||||||||||||||||
Net income (loss)
(1)
|
$
|
(17,284
|
)
|
|
|
|
$
|
2,129
|
|
|
$
|
2,490
|
|
|
$
|
(799
|
)
|
|
$
|
3,063
|
|
|
$
|
(1,538
|
)
|
|
$
|
(2,361
|
)
|
|
$
|
28
|
|
|
$
|
(14,272
|
)
|
Adjusted for:
|
|
|
Not Applicable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Provision (benefit) for income taxes
|
—
|
|
|
|
1,368
|
|
|
1,188
|
|
|
138
|
|
|
1,477
|
|
|
389
|
|
|
(1,608
|
)
|
|
344
|
|
|
3,296
|
|
||||||||||
Interest expense, net
|
11,314
|
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
136
|
|
|
12
|
|
|
11,462
|
|
||||||||||
Intercompany interest
|
(10,097
|
)
|
|
|
517
|
|
|
1,045
|
|
|
858
|
|
|
1,251
|
|
|
1,687
|
|
|
2,758
|
|
|
1,981
|
|
|
—
|
|
||||||||||
Depreciation and amortization
|
109
|
|
|
|
914
|
|
|
780
|
|
|
1,368
|
|
|
934
|
|
|
2,323
|
|
|
5,074
|
|
|
3,512
|
|
|
15,014
|
|
||||||||||
EBITDA
|
(15,958
|
)
|
|
|
4,928
|
|
|
5,503
|
|
|
1,566
|
|
|
6,725
|
|
|
2,860
|
|
|
3,999
|
|
|
5,877
|
|
|
15,500
|
|
||||||||||
(Gain) loss on sale of fixed assets
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
1
|
|
|
(5
|
)
|
|
—
|
|
|
(14
|
)
|
||||||||||
Non-controlling shareholder compensation
|
—
|
|
|
|
195
|
|
|
298
|
|
|
230
|
|
|
6
|
|
|
55
|
|
|
270
|
|
|
134
|
|
|
1,188
|
|
||||||||||
Acquisition related expenses
|
—
|
|
|
|
300
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
189
|
|
|
489
|
|
||||||||||
Integration services fee
|
—
|
|
|
|
—
|
|
|
—
|
|
|
250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
250
|
|
||||||||||
Loss on equity method investment
|
10,623
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
10,623
|
|
|||||||||||
Gain on foreign currency transaction and other
|
(3,317
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,317
|
)
|
||||||||||
Management fees
|
5,536
|
|
|
|
125
|
|
|
125
|
|
|
84
|
|
|
125
|
|
|
125
|
|
|
125
|
|
|
125
|
|
|
6,370
|
|
||||||||||
Adjusted EBITDA
(2)
|
$
|
(3,116
|
)
|
|
|
$
|
5,548
|
|
|
$
|
5,926
|
|
|
$
|
2,130
|
|
|
$
|
6,846
|
|
|
$
|
3,041
|
|
|
$
|
4,389
|
|
|
$
|
6,325
|
|
|
$
|
31,089
|
|
|
Three Months Ended
|
||||||
(in thousands)
|
March 31, 2017
|
|
March 31, 2016
|
||||
Net loss
|
$
|
(21,135
|
)
|
|
$
|
(15,027
|
)
|
Adjustment to reconcile net loss to cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
31,395
|
|
|
14,908
|
|
||
Impairment expense
|
8,864
|
|
|
—
|
|
||
Gain on sale of businesses
|
(340
|
)
|
|
—
|
|
||
Amortization of debt issuance costs and original issue discount
|
1,199
|
|
|
738
|
|
||
Unrealized (gain) loss on interest rate hedges
|
(229
|
)
|
|
7,228
|
|
||
Loss on equity method investment
|
5,620
|
|
|
10,623
|
|
||
Noncontrolling shareholder charges
|
1,452
|
|
|
1,189
|
|
||
Provision for loss on receivables
|
3,318
|
|
|
130
|
|
||
Deferred taxes
|
(7,634
|
)
|
|
214
|
|
||
Other
|
318
|
|
|
(191
|
)
|
||
Changes in operating assets and liabilities
|
(24,242
|
)
|
|
(13,787
|
)
|
||
Net cash (used in) provided by operating activities
|
(1,414
|
)
|
|
6,025
|
|
||
Plus:
|
|
|
|
||||
Unused fee on revolving credit facility
|
777
|
|
|
500
|
|
||
Integration services fee
(1)
|
875
|
|
|
250
|
|
||
Successful acquisition costs
|
—
|
|
|
489
|
|
||
Changes in operating assets and liabilities
|
24,242
|
|
|
13,787
|
|
||
Less:
|
|
|
|
||||
Payments on swap
|
1,089
|
|
|
500
|
|
||
Maintenance capital expenditures:
(2)
|
|
|
|
||||
Compass Group Diversified Holdings LLC
|
—
|
|
|
—
|
|
||
5.11 Tactical
|
1,462
|
|
|
—
|
|
||
Advanced Circuits
|
34
|
|
|
465
|
|
||
Arnold
|
668
|
|
|
670
|
|
||
Clean Earth
|
1,762
|
|
|
902
|
|
||
Ergobaby
|
137
|
|
|
45
|
|
||
Liberty
|
143
|
|
|
643
|
|
||
Manitoba Harvest
|
158
|
|
|
210
|
|
||
Sterno Products
|
367
|
|
|
538
|
|
||
Tridien
|
—
|
|
|
211
|
|
||
Realized gain from foreign currency
(3)
|
390
|
|
|
3,079
|
|
||
Other
(4)
|
3,356
|
|
|
187
|
|
||
Estimated cash flow available for distribution and reinvestment
|
$
|
14,914
|
|
|
$
|
13,601
|
|
|
|
|
|
||||
Distribution paid in April 2017/2016
|
$
|
(21,564
|
)
|
|
$
|
(19,548
|
)
|
(3)
|
Reflects the foreign currency transaction gain or loss resulting from the Canadian dollar intercompany loans issued to Manitoba Harvest.
|
(4)
|
Includes amounts for the establishment of accounts receivable reserves related to a retail customer who filed bankruptcy during the first quarter of 2017.
|
|
|
2017
|
||
Balance January 1, 2017
|
|
$
|
141,767
|
|
Proceeds from sale of FOX shares
|
|
(136,147
|
)
|
|
Mark-to-market adjustment - March 7, 2017
(1)
|
|
(5,620
|
)
|
|
Balance March 31, 2017
|
|
$
|
—
|
|
|
Total
|
|
Less than 1
Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
Long-term debt obligations
(1)
|
$
|
681,565
|
|
|
$
|
32,589
|
|
|
$
|
68,131
|
|
|
$
|
580,845
|
|
|
|
|
|
Operating lease obligations
(2)
|
92,467
|
|
|
12,013
|
|
|
24,695
|
|
|
17,333
|
|
|
38,426
|
|
|||||
Purchase obligations
(3)
|
313,524
|
|
|
158,096
|
|
|
89,928
|
|
|
65,500
|
|
|
|
|
|||||
Total
(4)
|
$
|
1,087,556
|
|
|
$
|
202,698
|
|
|
$
|
182,754
|
|
|
$
|
663,678
|
|
|
$
|
38,426
|
|
(1)
|
Reflects commitment fees and letter of credit fees under our 2014 Revolving Credit Facility and amounts due, together with interest on our 2014 Term Loan and 2016 Incremental Term Loan.
|
(2)
|
Reflects various operating leases for office space, manufacturing facilities and equipment from third parties with various lease terms.
|
(3)
|
Reflects non-cancelable commitments as of
March 31, 2017
, including: (i) shareholder distributions of $86.3 million; (ii) estimated management fees of $32.8 million per year over the next five years, and (iii) other obligations including amounts due under employment agreements. Distributions to our shareholders are approved by our Board of Directors each quarter. The amount ultimately approved as future quarterly distributions may differ from the amount included in this schedule.
|
(4)
|
The contractual obligation table does not include approximately $10.5 million in liabilities associated with unrecognized tax benefits as of
March 31, 2017
as the timing of the recognition of this liability is not certain. The amount of the liability is not expected to significantly change in the next twelve months.
|
*
|
Filed herewith.
|
+
|
In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.
|
|
COMPASS DIVERSIFIED HOLDINGS
|
||
|
|
|
|
|
By:
|
|
/s/ Ryan J. Faulkingham
|
|
|
|
Ryan J. Faulkingham
|
|
|
|
Regular Trustee
|
|
COMPASS GROUP DIVERSIFIED HOLDINGS LLC
|
||
|
|
|
|
|
By:
|
|
/s/ Ryan J. Faulkingham
|
|
|
|
Ryan J. Faulkingham
|
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Exhibit Number
|
|
Description
|
|
|
|
10.1*
|
|
Fourth Amendment to the Credit Agreement, dated March 16, 2017, by and among Compass Group Diversified Holdings LLC, Bank of America, N.A., and the lenders thereto
|
|
|
|
12.1*
|
|
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Distributions
|
|
|
|
31.1*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Registrant
|
|
|
|
31.2*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Registrant
|
|
|
|
32.1*
+
|
|
Certification of Chief Executive Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2*
+
|
|
Certification of Chief Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith.
|
+
|
In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.
|
3.1
|
Amendment
. Receipt by the Administrative Agent of executed counterparts of this Amendment properly executed by a Responsible Officer of the Borrower, the Lenders constituting Required Lenders (including the Administrative Agent on behalf of each Lender holding a portion of the Term Loan that delivers a consent to this Amendment in a form acceptable to the Administrative Agent) and the Administrative Agent.
|
3.2
|
Accrued Interest and Fees
. Receipt by the Administrative Agent from the Borrower of all accrued interest and fees owing on the Term Loan as of the date hereof for the benefit of the Lenders holding the Term Loan immediately before giving effect to this Amendment.
|
3.3
|
Fees
. Receipt by the Administrative Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and the Lenders of any fees required to be paid on or before the date of this Amendment.
|
BORROWER:
|
|
COMPASS GROUP DIVERSIFIED HOLDINGS, LLC,
|
||
|
|
a Delaware limited liability company
|
||
|
|
|
|
|
|
|
By:
|
|
/s/ Ryan J. Faulkingham
|
|
|
Name:
|
|
Ryan J. Faulkingham
|
|
|
Title:
|
|
Chief Financial Officer
|
ADMINISTRATIVE AGENT:
|
|
BANK OF AMERICA, N.A., as Administrative Agent on behalf of itself and on behalf of each consenting Lender holding a portion of the Term Loan
|
||
|
|
|||
|
|
|
|
|
|
|
By:
|
|
/s/ Renee Marion
|
|
|
Name:
|
|
Renee Marion
|
|
|
Title:
|
|
Assistant Vice President
|
LENDERS:
|
|
BANK OF AMERICA, N.A.
|
||
|
|
|
|
|
|
|
By:
|
|
/s/ Christopher T. Phelan
|
|
|
Name:
|
|
Christopher T. Phelan
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
SUNTRUST BANK
|
||
|
|
By:
|
|
/s/ Johnetta Bush
|
|
|
Name:
|
|
Johnetta Bush
|
|
|
Title:
|
|
Director
|
|
|
|
|
|
|
|
U.S. BANK NATIONAL ASSOCIATION
|
||
|
|
By:
|
|
/s/ Jason Nadler
|
|
|
Name:
|
|
Jason Nadler
|
|
|
Title:
|
|
Managing Director
|
|
|
|
|
|
|
|
TD BANK, N.A.
|
||
|
|
By:
|
|
/s/ Bernadette Collins
|
|
|
Name:
|
|
Bernadette Collins
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
MUFG UNION BANK, N.A.
|
||
|
|
By:
|
|
/s/ Ravneet Mumick
|
|
|
Name:
|
|
Ravneet Mumick
|
|
|
Title:
|
|
Director
|
|
|
|
|
|
|
|
FIFTH THIRD BANK
|
||
|
|
By:
|
|
/s/ Nick Jevic
|
|
|
Name:
|
|
Nick Jevic
|
|
|
Title:
|
|
Vice President
|
LENDERS:
|
|
THE PRIVATE BANK
|
||
|
|
|
|
|
|
|
By:
|
|
/s/ Rettig E. Deinlein
|
|
|
Name:
|
|
Rettig E. Deinlein
|
|
|
Title:
|
|
Associate Managing Director
|
|
|
|
|
|
|
|
WEBSTER BANK, N.A.
|
||
|
|
By:
|
|
/s/ George G. Sims
|
|
|
Name:
|
|
George G. Sims
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
SIEMENS FINANCIAL SERVICES, INC.
|
||
|
|
By:
|
|
/s/ Maria Levy
|
|
|
Name:
|
|
Maria Levy
|
|
|
Title:
|
|
Vice President
|
|
|
|
|
|
|
|
By:
|
|
/s/ Michael Holvik
|
|
|
Name:
|
|
Michael Holvik
|
|
|
Title:
|
|
Vice President
|
|
|
|
|
|
|
|
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
|
||
|
|
By:
|
|
/s/ Keith A. Sherman
|
|
|
Name:
|
|
Keith A. Sherman
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Three months ended
March 31, |
|
Fiscal Years Ended December 31,
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
(in thousands, except ratio computation)
|
||||||||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations
|
|
$
|
(21,475
|
)
|
|
$
|
53,749
|
|
|
$
|
8,991
|
|
|
$
|
270,077
|
|
|
$
|
71,052
|
|
Interest
|
|
7,136
|
|
|
24,651
|
|
|
25,924
|
|
|
27,060
|
|
|
19,378
|
|
|||||
Earnings available for fixed charges
|
|
$
|
(14,339
|
)
|
|
$
|
78,400
|
|
|
$
|
34,915
|
|
|
$
|
297,137
|
|
|
$
|
90,430
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest
|
|
$
|
7,136
|
|
|
$
|
24,651
|
|
|
$
|
25,924
|
|
|
$
|
27,060
|
|
|
$
|
19,378
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to combined fixed charges and preferred share distributions
(1)
|
|
—
|
|
|
3.2
|
|
|
1.3
|
|
|
11.0
|
|
|
4.7
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Compass Group Diversified Holdings LLC (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Alan B. Offenberg
|
|
Alan B. Offenberg
|
|
Chief Executive Officer of
Compass Group Diversified Holdings LLC
(Principal executive officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Compass Diversified Holdings and Compass Group Diversified Holdings LLC (each, the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Ryan J. Faulkingham
|
|
Ryan J. Faulkingham
|
|
Regular Trustee Compass, Diversified Holdings and
Chief Financial Officer,
Compass Group Diversified Holdings LLC
(Principal Financial and Accounting Officer
)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Compass Group Diversified Holdings LLC.
|
Dated:
|
May 3, 2017
|
/s/ Alan B. Offenberg
|
|
|
Alan B. Offenberg
|
|
|
Chief Executive Officer,
Compass Group Diversified Holdings LLC
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Compass Diversified Holdings and Compass Group Diversified Holdings, LLC.
|
Dated:
|
May 3, 2017
|
/s/ Ryan J. Faulkingham
|
|
|
Ryan J. Faulkingham
|
|
|
Regular Trustee, Compass Diversified Holdings
and Chief Financial Officer,
Compass Group Diversified Holdings LLC
|