EX-99.1 2 exhibit991earningsreleaseq.htm EX-99.1 Document

Exhibit 99.1

codilogo2020a02a.jpg

Compass Diversified Reports Fourth Quarter and Full Year 2022 Financial Results
Premium Consumer Brands Drive Strong Full Year Financial Performance

Westport, Conn., March 1, 2023 – Compass Diversified (NYSE: CODI) (“CODI” or the “Company”), an owner of leading middle market businesses, announced today its consolidated operating results for the three and twelve months ended December 31, 2022.
“The quality and resilience of CODI’s subsidiary businesses were once again on display during our fourth quarter as we achieved solid financial performance,” said Elias Sabo, CEO of Compass Diversified. “End market demand for the majority of our core consumer brands remained strong, and we believe our high-quality, premium brands can take market share even in a difficult macroeconomic backdrop.”
Mr. Sabo continued, “As discussed at our Investor Day in January, while there are near-term market uncertainties brought on by rapidly changing monetary policy and inventory destocking at retail, we believe they are short-term in nature. We believe our group of market share-taking businesses can outperform the general market over the long-term, driving strong financial results and increasing shareholder value.”
Fourth Quarter and Full Year 2022 Financial Summary vs. Same Year-Ago Period (where applicable)
•Net sales up 6% to $594.9 million, and up 4% on a pro forma basis. For the full year 2022, net sales up 17% to $2.3 billion, and up 12% on a pro forma basis.
•Branded consumer net sales up 11% to $371.0 million, and up 7% on a pro forma basis. For the full year 2022, branded consumer net sales up 23% to $1.4 billion, and up 14% on a pro forma basis.
•Niche industrial net sales down 1% to $224.0 million. For the full year 2022, niche industrial net sales up 9% to $856.8 million.
•Net loss of $11.8 million vs. net income of $25.9 million due to a $20.6 million impairment expense associated with the Company’s Ergobaby subsidiary. For the full year 2022, net income was $51.4 million vs. $126.8 million in the year-ago period, primarily due to the $72.8 million gain on the sale of Liberty Safe in August 2021.
•Loss from continuing operations of $14.3 million vs. income from continuing operations of $25.9 million. For the full year 2022, income from continuing operations of $42.0 million vs. $46.4 million.
•Adjusted Earnings, a non-GAAP financial measure, was $28.7 million vs. $37.1 million. For the full year 2022, Adjusted Earnings was up 17% to $158.6 million.
•Adjusted EBITDA, a non-GAAP financial measure, was up 5% to $87.3 million. For the full year 2022, Adjusted EBITDA was up 20% to $369.8 million.
•Paid a fourth quarter 2022 cash distribution of $0.25 per share on CODI's common shares in January 2023.



Recent Business Highlights
•On November 3, 2022, CODI’s Manager appointed Kurt Roth as Partner and Head of Healthcare for Compass Group Management. In this role, Roth will work with the organization’s senior professionals to launch CODI’s new healthcare vertical.
•On January 19, 2023, CODI hosted an Investor Day in New York City, showcasing its consumer businesses as well as the Company’s newest acquisition, PrimaLoft. A replay of the PrimaLoft and Compass Diversified presentations can be viewed here.
•On January 19, 2023, CODI announced a $50 million share repurchase program, the first in the Company’s history.
•On February 15, 2023, CODI announced the closing of the sale of Advanced Circuits for an enterprise value of $220 million. CODI expects to realize a pre-tax gain on the sale of Advanced Circuits of between $100 million to $110 million.
Fourth Quarter and Full Year 2022 Financial Results
Net sales in the fourth quarter of 2022 were $594.9 million, up 6% compared to $559.9 million in the fourth quarter of 2021. For the full year 2022, net sales were $2.3 billion, up 17% compared to $1.9 billion a year ago. The increase was due to strong performance in the Company’s branded consumer subsidiaries. On a pro forma basis, assuming CODI had acquired Lugano and PrimaLoft on January 1, 2021, net sales were up 4% in the fourth quarter of 2022 and up 12% in 2022.
Branded consumer net sales, pro forma for the Lugano and PrimaLoft acquisitions, increased 7% in the fourth quarter of 2022 to $371.0 million compared to the fourth quarter of 2021 and increased to $1.5 billion in 2022, an increase of 14% as compared to 2021. Niche industrial net sales decreased 1% in the fourth quarter of 2022 to $224.0 million compared to the fourth quarter of 2021 and increased to $856.8 million in 2022 which is an increase of 9% as compared to 2021.
Net loss in the fourth quarter of 2022 was $11.8 million compared to net income of $25.9 million in the fourth quarter of 2021. Net loss from continuing operations for the fourth quarter of 2022 was $14.3 million compared to $25.9 million in net income from continuing operations in the fourth quarter of 2021. For the full year 2022, net income was $51.4 million compared to $126.8 million a year ago, and income from continuing operations was $42.0 million compared to $46.4 million a year ago. The decrease in both periods were primarily attributable to higher SG&A and interest expenses, as well as a $20.6 million impairment expense associated with the Company’s Ergobaby subsidiary. Additionally, the Company’s net income in 2021 included a $72.8 million gain from the sale of Liberty Safe in August 2021. Operating income for the fourth quarter of 2022 was $19.6 million compared to $39.6 million in the fourth quarter of 2021 due to the impairment expense associated with Ergobaby. For the full year 2022, operating income increased 7% to $175.6 million compared to $164.7 million a year ago.
Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the fourth quarter of 2022 was $28.7 million compared to $37.1 million a year ago. The decrease was a result of financing costs for the acquisition of PrimaLoft in July 2022 ahead of its seasonally slow third and fourth quarter earnings periods. For the full year 2022, Adjusted Earnings increased 17% to $158.6 million compared to $135.7 million a year ago. CODI's weighted average number of shares outstanding in the fourth quarter of 2022 was 72.2 million compared to 66.6 million in the prior year fourth quarter. For the full year 2022, CODI’s weighted average number of shares outstanding was 70.7 million compared to 65.4 million in 2021.
Adjusted EBITDA (see "Note Regarding Use of Non-GAAP Financial Measures" below) in the fourth quarter of 2022 was $87.3 million, up 5% compared to $83.3 million in the fourth quarter of 2021. For the full year 2022, Adjusted EBITDA was $369.8 million, up 20% compared to $308.2 million a year ago. The increase was primarily due to the strong performance at CODI’s branded consumer subsidiaries and the benefit of the PrimaLoft and Lugano acquisitions. The Company no longer adds back management fees


in its calculation of Adjusted EBITDA. Management fees incurred during the fourth quarter and full year were $17.3 million and $63.6 million, respectively.
Liquidity and Capital Resources
As of December 31, 2022, CODI had approximately $61.3 million in cash and cash equivalents, $155.0 million outstanding on its revolver, $395.0 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 December 31, 2022, the Company had no significant debt maturities until 2027 and had net borrowing availability of approximately $442.8 million under its revolving credit facility.
Fourth Quarter 2022 Distributions
On January 4, 2023, CODI's Board of Directors (the “Board”) declared a fourth quarter distribution of $0.25 per share on the Company's common shares. The cash distribution was paid on January 26, 2023, to all holders of record of common shares as of January 19, 2023.
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, October 30, 2022, up to, but excluding, January 30, 2023. The distribution for such period was payable on January 30, 2023 to all holders of record of Series A Preferred Shares as of January 15, 2023.
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, October 30, 2022, up to, but excluding, January 30, 2023. The distribution for such period was payable on January 30, 2023 to all holders of record of Series B Preferred Shares as of January 15, 2023.
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, October 30, 2022, up to, but excluding, January 30, 2023. The distribution for such period was payable on January 30, 2023 to all holders of record of Series C Preferred Shares as of January 15, 2023.
2023 Outlook
CODI expects its current subsidiaries to produce consolidated subsidiary Adjusted EBITDA (see "Note Regarding Use of Non-GAAP Financial Measures" below) for the full year 2023 of between $420 million and $460 million. This estimate is based on the summation of the Company’s expectations for its current subsidiaries in 2023, excluding ACI, and is absent additional acquisitions or divestitures, and excludes corporate expenses such as interest expense, management fees paid by CODI and corporate overhead. In addition, the Company expects to earn between $105 million and $135 million in Adjusted Earnings (see "Note Regarding Use of Non-GAAP Financial Measures" below) for the full year 2023.
In reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, CODI has not reconciled 2023 Adjusted EBITDA or 2023 Adjusted Earnings to their comparable GAAP measure because it does not provide guidance on Net Income (Loss) from Continuing Operations or Net Income (Loss) or the applicable reconciling items as a result of the uncertainty regarding, and the potential variability of, these items. For the same reasons, CODI is unable to address the probable significance of the unavailable information, which could be material to future results.
Conference Call
Management will host a conference call on Wednesday, March 1, 2023, at 5:00 p.m. ET to discuss the latest corporate developments and financial results. The dial-in number for callers in the U.S. is (888) 396-8049 and the dial-in number for international callers is (416) 764-8646. The Conference ID is 74552633. The conference call will also be available via a live listen-only webcast and can be accessed


through the Investor Relations section of CODI's website. An online replay of the webcast will be available on the same website following the call. Please allow extra time prior to the call to visit the site and download any necessary software that may be needed to listen to the Internet broadcast. A replay of the call will be available through Wednesday, March 8, 2023. To access the replay, please dial (877) 674-7070 in the U.S. and (416) 764-8692 outside the U.S.
Note Regarding Use of Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted Earnings are non-GAAP measures used by the Company to assess its performance. We have reconciled Adjusted EBITDA to Income (Loss) from Continuing Operations and Adjusted Earnings to Net Income (Loss) on the attached schedules. We consider Income (Loss) from Continuing Operations to be the most directly comparable GAAP financial measure to Adjusted EBITDA and Net Income (Loss) to be the most directly comparable GAAP financial measure to Adjusted Earnings. We believe that Adjusted EBITDA and Adjusted Earnings provides useful information to investors and 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 and provides a measure for evaluating earnings from continuing operations available to common shareholders. We believe Adjusted EBITDA and Adjusted Earnings are also useful in measuring our ability to service debt and other payment obligations.
Pro forma net sales is defined as net sales including the historical net sales relating to the pre-acquisition periods of Lugano and PrimaLoft, assuming that the Company acquired Lugano and PrimaLoft on January 1, 2021. We have reconciled pro forma net sales to net sales, the most directly comparable GAAP financial measure, on the attached schedules. We believe that pro forma net sales is useful information for investors as it provides a better understanding of sales performance, and relative changes thereto, on a comparable basis. Pro forma net sales is not necessarily indicative of what the actual results would have been if the acquisition had in fact occurred on the date or for the periods indicated nor does it purport to project net sales for any future periods or as of any date.
In reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, we have not reconciled 2023 Adjusted EBITDA or 2023 Adjusted Earnings to their comparable GAAP measures because we do not provide guidance on Net Income (Loss) from Continuing Operations or Net Income (Loss) or the applicable reconciling items as a result of the uncertainty regarding, and the potential variability of, these items. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.
Adjusted EBITDA, Adjusted Earnings and pro forma net sales are not meant to be a substitute for GAAP measures and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies.
About Compass Diversified
Since its founding in 1998, and 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 niche 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.
Forward Looking Statements
Certain statements in this press release may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements as to our future performance or liquidity, such as expectations regarding our results of operations and financial condition, our 2023 Adjusted EBITDA, our 2023 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, natural disasters, social, civil and political unrest or the COVID-19 pandemic; future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); general considerations associated with the COVID-19 pandemic and its impact on the markets in which we operate; disruption in the global supply chain, labor shortages and high labor costs; our business prospects and the prospects of our subsidiaries; the impact of, and ability to successfully complete and integrate, acquisitions that we may make; the ability to successfully complete divestitures when we’ve executed divestitures agreements; the dependence of our future success on the general economy and its impact on the industries in which we operate; the ability of our subsidiaries to achieve their objectives; the adequacy of our cash resources and working capital; the timing of cash flows, if any, from the operations of our subsidiaries; and other considerations that may be disclosed from time to time in CODI’s publicly disseminated documents and filings. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. Although, except as required by law, CODI undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that CODI may make directly to you or through reports that it in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Investor Relations
Compass Diversified
irinquiry@compassdiversified.com

Gateway Group
Cody Slach
949.574.3860
CODI@gatewayir.com

Media Relations
The IGB Group    
Leon Berman
212-477-8438
lberman@igbir.com



Compass Diversified Holdings
Condensed Consolidated Balance Sheets
(in thousands)December 31, 2022December 31, 2021
Assets
Current assets
Cash and cash equivalents
$61,271 $160,733 
Accounts receivable, net
341,440 277,710 
Inventories, net732,428 565,743 
Prepaid expenses and other current assets
75,046 57,006 
Total current assets
1,210,185 1,061,192 
Property, plant and equipment, net205,474 186,477 
Goodwill1,133,404 882,083 
Intangible assets, net1,127,936 872,690 
Other non-current assets172,632 141,819 
Total assets$3,849,631 $3,144,261 
Liabilities and stockholders’ equity
Current liabilities
Accounts payable $94,214 $124,203 
Accrued expenses191,605 178,518 
Deferred revenue10,204 12,802 
Due to related parties15,745 11,830 
Current portion, long-term debt10,000 — 
Other current liabilities38,063 34,269 
Total current liabilities359,831 361,622 
Deferred income taxes156,642 97,763 
Long-term debt1,824,468 1,284,826 
Other non-current liabilities146,728 115,520 
Total liabilities2,487,669 1,859,731 
Stockholders' equity
Total stockholders' equity attributable to Holdings1,136,920 1,111,816 
Noncontrolling interest 225,042 172,714 
Total stockholders' equity
1,361,962 1,284,530 
Total liabilities and stockholders’ equity$3,849,631 $3,144,261 




Compass Diversified Holdings
Consolidated Statements of Operations

Three months ended December 31,Year ended December 31,
(in thousands, except per share data)2022202120222021
Net revenues$594,921 $559,889 $2,264,044 $1,932,155 
Cost of revenues360,090 346,842 1,356,300 1,165,149 
Gross profit234,831 213,047 907,744 767,006 
Operating expenses:
Selling, general and administrative expense150,209 136,666 553,637 474,481 
Management fees17,300 12,939 63,604 47,443 
Amortization expense27,192 23,845 94,383 80,347 
Impairment expense20,552 — 20,552 — 
Operating income 19,578 39,597 175,568 164,735 
Other income (expense):
Interest expense, net(25,769)(16,232)(83,506)(58,839)
Amortization of debt issuance costs(1,005)(812)(3,740)(2,979)
Loss on debt extinguishment— — (534)(33,305)
Other income (expense), net(1,320)424 (714)(1,482)
Net income (loss) before income taxes(8,516)22,977 87,074 68,130 
Provision (benefit) for income taxes5,828 (2,906)45,029 21,756 
Income (loss) from continuing operations(14,344)25,883 42,045 46,374 
Income from discontinued operations, net of income tax— — — 7,665 
Gain on sale of discontinued operations2,500 25 9,393 72,770 
Net income (loss) (11,844)25,908 51,438 126,809 
Less: Net income attributable to noncontrolling interest124 3,820 15,051 11,735 
Less: Net income from discontinued operations attributable to noncontrolling interest— — — 522 
Net income (loss) attributable to Holdings$(11,968)$22,088 $36,387 $114,552 
Basic income (loss) per common share attributable to Holdings
Continuing operations$(0.37)$(0.08)$(0.23)$(0.49)
Discontinued operations0.03 — 0.13 1.22 
$(0.34)$(0.08)$(0.10)$0.73 
Basic weighted average number of common shares outstanding72,203 66,623 70,715 65,362 
Cash distributions declared per Trust common share$0.25 $0.25 $1.00 $2.21 



Compass Diversified Holdings
Net Income to Non-GAAP Adjusted Earnings and Non-GAAP Adjusted EBITDA - 2022
(Unaudited)
Three months endedYear ended
(in thousands)March 31, 2022June 30, 2022September 30, 2022December 31, 2022December 31, 2022
Net income (loss)$29,740 $30,957 $2,585 $(11,844)$51,438 
Gain (loss) on sale of discontinued operations, net of tax5,993 (579)1,479 2,500 9,393 
Net income (loss) from continuing operations$23,747 $31,536 $1,106 $(14,344)$42,045 
Less: income from continuing operations attributable to noncontrolling interest5,978 4,590 4,359 124 15,051 
Net income (loss) attributable to Holdings - continuing operations$17,769 $26,946 $(3,253)$(14,468)$26,994 
Adjustments:
Distributions paid - preferred shares(6,045)(6,046)(6,045)(6,045)(24,181)
Amortization expense - intangible assets and inventory step-up23,375 22,474 26,241 28,787 100,877 
Impairment expense— — — 20,552 20,552 
Tax effect - impairment expense— — — (3,557)(3,557)
Non-controlling interest - impairment expense— — — (3,120)(3,120)
Loss on debt extinguishment— 534 — 534 
Non-controlling shareholder compensation2,805 2,804 3,242 5,100 13,951 
Acquisition expense216 — 5,902 — 6,118 
Integration services fee563 563 1,625 1,313 4,064 
Corporate tax effect - ACI— (4,338)16,457 — 12,119 
Other1,803 1,026 1,287 119 4,235 
Adjusted earnings$40,486 $43,429 $45,990 $28,681 $158,586 
Plus (less):
Depreciation expense10,438 10,866 11,284 11,837 44,425 
Income tax provision11,083 6,955 21,163 5,828 45,029 
Corporate tax effect - ACI— 4,338 (16,457)— (12,119)
Interest expense17,419 17,519 22,799 25,769 83,506 
Amortization of debt issuance costs866 865 1,004 1,005 3,740 
Income from continuing operations attributable to noncontrolling interest5,978 4,590 4,359 124 15,051 
Distributions paid - preferred shares6,045 6,046 6,045 6,045 24,181 
Tax effect - impairment expense— — — 3,557 3,557 
Non-controlling interest - impairment expense— — — 3,120 3,120 
Other(1,988)(757)2,139 1,320 714 
Adjusted EBITDA$90,327 $93,851 $98,326 $87,286 $369,790 







Compass Diversified Holdings
Net Income (Loss) to Non-GAAP Adjusted Earnings and Non-GAAP Adjusted EBITDA - 2021
(Unaudited)
Three months endedYear ended
(in thousands)March 31, 2021June 30, 2021September 30, 2021December 31, 2021December 31, 2021
Net income (loss)$21,996 $(11,251)$90,156 $25,908 $126,809 
Gain on sale of discontinued operations, net of tax— — 72,745 25 72,770 
Income loss from discontinued operations, net of tax4,194 4,780 (1,309)— 7,665 
Net income (loss) from continuing operations$17,802 $(16,031)$18,720 $25,883 $46,374 
Less: income from continuing operations attributable to noncontrolling interest2,696 3,018 2,201 3,820 11,735 
Net income (loss) attributable to Holdings - continuing operations$15,106 $(19,049)$16,519 $22,063 $34,639 
Adjustments:
Distributions paid - preferred shares(6,045)(6,046)(6,045)(6,045)(24,181)
Amortization expense - intangible assets and inventory step-up18,599 18,847 19,056 26,606 83,108 
Loss on debt extinguishment— 33,305 — — 33,305 
Non-controlling shareholder compensation2,764 2,840 2,892 2,941 11,437 
Acquisition expense299 11 1,866 1,415 3,591 
Integration services fee1,600 1,600 1,100 563 4,863 
Corporate tax effect - ACI— — — (12,119)(12,119)
Other(2,101)1,032 460 1,709 1,100 
Adjusted earnings$30,222 $32,540 $35,848 $37,133 $135,743 
Plus (less):
Depreciation expense9,064 9,460 10,372 10,493 39,389 
Income tax provision6,078 9,028 9,556 (2,906)21,756 
Corporate tax effect - ACI— — — 12,119 12,119 
Interest expense13,805 14,947 13,855 16,232 58,839 
Amortization of debt issuance costs686 722 759 812 2,979 
Income from continuing operations attributable to noncontrolling interest2,696 3,018 2,201 3,820 11,735 
Distributions paid - preferred shares6,045 6,046 6,045 6,045 24,181 
Other2,232 706 (1,032)(425)1,481 
Adjusted EBITDA$70,828 $76,467 $77,604 $83,323 $308,222 


Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
Three months ended December 31, 2022
(Unaudited)
(in thousands)Corporate5.11BOAErgoLuganoMarucci SportsPrimaLoftVelocity OutdoorACIAltor SolutionsArnoldSternoConsolidated
Net income (loss) from continuing operations $(12,653)$7,093 $5,491 $(18,035)$6,063 $3,152 $(9,249)$(3,699)$3,445 $2,513 $466 $1,069 $(14,344)
Adjusted for:
Provision (benefit) for income taxes— 2,126 (292)(4,706)6,026 1,499 (308)(810)1,016 267 561 449 5,828 
Interest expense, net25,684 (12)(6)8 4 1 (3)87 — — 6 — 25,769 
Intercompany interest(34,086)4,260 1,776 2,026 4,932 2,328 4,261 3,295 1,808 2,898 1,571 4,931 — 
Depreciation and amortization272 6,168 5,648 2,033 3,148 3,025 6,271 3,393 524 4,149 1,976 5,021 41,628 
EBITDA(20,783)19,635 12,617 (18,674)20,173 10,005 972 2,266 6,793 9,827 4,580 11,470 58,881 
Other (income) expense17 (310)545 2 — (46)(148)1,263 16 547 (20)(545)1,321 
Non-controlling shareholder compensation— 301 622 325 379 368 2,142 229 124 411 2 197 5,100 
Impairment expense— — — 20,552 — — — — — — — — 20,552 
Integration services fee— — — — — — 1,313 — — — — — 1,313 
Other— — — — — — — — — — — 119 119 
Adjusted EBITDA
$(20,766)$19,626 $13,784 $2,205 $20,552 $10,327 $4,279 $3,758 $6,933 $10,785 $4,562 $11,241 $87,286 











Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
Three months ended December 31, 2021
(Unaudited)
(in thousands)Corporate5.11BOAErgoLuganoMarucci SportsVelocity OutdoorACIAltor SolutionsArnoldSternoConsolidated
Net income (loss) from continuing operations $(570)$5,834 $4,270 $2,008 $4,558 $747 $3,878 $3,812 $1,979 $1,174 $(1,807)$25,883 
Adjusted for:
Provision (benefit) for income taxes(12,119)2,048 1,394 661 1,790 150 856 872 (248)(717)2,407 (2,906)
Interest expense, net16,175 8 — — 9 — 40 — (1)1 — 16,232 
Intercompany interest(20,748)3,125 2,261 446 1,902 1,220 1,875 1,733 2,483 1,327 4,376 — 
Depreciation and amortization263 5,593 5,246 2,058 4,687 2,257 3,215 554 3,916 3,066 7,056 37,911 
EBITDA(16,999)16,608 13,171 5,173 12,946 4,374 9,864 6,971 8,129 4,851 12,032 77,120 
Other (income) expense1 427 187 — (6)(1,000)(38)175 76 59 (306)(425)
Non-controlling shareholder compensation— 502 539 452 190 275 243 124 265 22 329 2,941 
Acquisition expenses— — — — — 971 — — 444 — — 1,415 
Integration services fee— — — — 563 — — — — — — 563 
Other47 — — — — 1,000 — — — — 662 1,709 
Adjusted EBITDA
$(16,951)$17,537 $13,897 $5,625 $13,693 $5,620 $10,069 $7,270 $8,914 $4,932 $12,717 $83,323 











Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
Year ended December 31, 2022
(Unaudited)

(in thousands)Corporate5.11BOAErgoLuganoMarucci SportsPrimaLoftVelocity OutdoorACIAltor SolutionsArnoldSternoConsolidated
Net income (loss) from continuing operations $(64,084)$22,633 $42,613 $(18,669)$27,934 $11,526 $(17,741)$4,127 $12,955 $9,662 $7,683 $3,406 $42,045 
Adjusted for:
Provision (benefit) for income taxes12,119 7,125 6,527 (4,274)11,889 4,320 (3,878)1,562 3,616 3,174 3,329 (480)45,029 
Interest expense, net83,243 — (25)10 16 14 (7)229 — — 26 — 83,506 
Intercompany interest(105,813)13,761 7,410 6,026 12,773 6,977 7,512 10,282 6,659 10,742 5,518 18,153 — 
Loss on debt extinguishment534 — — — — — — — — — — — 534 
Depreciation and amortization1,134 22,972 21,993 8,094 11,533 12,583 10,465 13,374 2,158 16,403 8,041 20,293 149,043 
EBITDA(72,867)66,491 78,518 (8,813)64,145 35,420 (3,649)29,574 25,388 39,981 24,597 41,372 320,157 
Other (income) expense(57)(217)1,043 6 2 (1,875)112 2,417 267 766 (20)(1,730)714 
Non-controlling shareholder compensation— 1,511 2,511 1,479 1,179 1,457 2,142 971 496 1,321 40 844 13,951 
Impairment expense— — — 20,552 — — — — — — — — 20,552 
Acquisition expenses— — — — — — 5,680 222 — 216 — — 6,118 
Integration services fee— — — — 1,688 — 2,375 — — — — — 4,063 
Other— — — 250 — 1,802 — — 853 — — 1,330 4,235 
Adjusted EBITDA$(72,924)$67,785 $82,072 $13,474 $67,014 $36,804 $6,660 $33,184 $27,004 $42,284 $24,617 $41,816 $369,790 









Compass Diversified Holdings
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated EBITDA Reconciliation
Year ended December 31, 2021
(Unaudited)

(in thousands)Corporate5.11BOAErgoLuganoMarucci SportsVelocity OutdoorACIAltor SolutionsArnoldSternoConsolidated
Net income (loss) from continuing operations $(65,287)$20,152 $21,178 $5,079 $5,239 $10,232 $23,035 $14,178 $7,871 $5,013 $(316)$46,374 
Adjusted for:
Provision (benefit) for income taxes(12,119)6,905 3,559 2,018 2,094 3,070 6,237 3,419 2,619 1,345 2,609 21,756 
Interest expense, net58,639 16 — — 9 5 165 — (1)6 — 58,839 
Intercompany interest(73,982)11,868 8,581 1,960 2,450 3,110 7,461 7,217 7,558 5,455 18,322 — 
Loss on debt extinguishment33,305 — — — — — — — — — 33,305 
Depreciation and amortization904 22,355 20,279 8,435 4,757 8,634 12,704 2,212 12,938 8,888 23,369 125,475 
EBITDA(58,540)61,296 53,597 17,492 14,549 25,051 49,602 27,026 30,985 20,707 43,984 285,749 
Other (income) expense(284)125 377 — 16 (119)2,573 298 (323)8 (1,189)1,482 
Non-controlling shareholder compensation— 2,428 2,194 1,693 190 1,101 1,020 496 1,035 38 1,242 11,437 
Acquisition expenses39 — — — 1,827 971 — — 444 310 — 3,591 
Integration services fee— — 3,300 — 563 1,000 — — — — — 4,863 
Other1,132 273 — — — 1,000 (2,300)— — — 995 1,100 
Adjusted EBITDA$(57,653)$64,122 $59,468 $19,185 $17,145 $29,004 $50,895 $27,820 $32,141 $21,063 $45,032 $308,222 


Compass Diversified Holdings
Adjusted EBITDA
(Unaudited)
Three months ended December 31,Year ended December 31,
(in thousands)2022202120222021
Branded Consumer
5.11 $19,626 $17,537 $67,785 $64,122 
BOA13,784 13,897 82,072 59,468 
Ergobaby2,205 5,625 13,474 19,185 
Lugano (1)
20,552 13,693 67,014 17,145 
Marucci Sports10,327 5,620 36,804 29,004 
PrimaLoft (2)
4,279 — 6,660 — 
Velocity Outdoor 3,758 10,069 33,184 50,895 
Total Branded Consumer$74,531 $66,441 $306,993 $239,819 
Niche Industrial
Advanced Circuits$6,933 $7,270 $27,004 $27,820 
Altor Solutions10,785 8,914 42,284 32,141 
Arnold Magnetics4,562 4,932 24,617 21,063 
Sterno 11,241 12,717 41,816 45,032 
Total Niche Industrial$33,521 $33,833 $135,721 $126,056 
Corporate expense
(20,766)(16,951)(72,924)(57,653)
Total Adjusted EBITDA$87,286 $83,323 $369,790 $308,222 
(1)The above results for Lugano do not include management's estimate of Adjusted EBITDA, before our ownership, of $24.1 million for the twelve months ended December 31, 2021. Lugano was acquired on September 3, 2021.
(2)The above results for PrimaLoft do not include management's estimate of Adjusted EBITDA, before our ownership, of $24.8 million for the twelve months ended December 31, 2022, and $4.9 million and $25.0 million, respectively, for the three and twelve months ended December 31, 2021. PrimaLoft was acquired on July 12, 2022.




Compass Diversified Holdings
Net Sales to Pro Forma Net Sales Reconciliation
(unaudited)
Three months ended December 31,Year ended December 31,
(in thousands)2022202120222021
Net Sales$594,921 $559,889 $2,264,044 $1,932,155 
Acquisitions (1)
— 13,494 55,185 136,940 
Pro Forma Net Sales$594,921 $573,383 $2,319,229 $2,069,095 
(1) Acquisitions reflects the net sales for Lugano and PrimaLoft on a proforma basis as if we had acquired these businesses on January 1, 2021.


Compass Diversified Holdings
Subsidiary Pro Forma Net Sales
(unaudited)
Three months ended December 31,Year ended December 31,
(in thousands)2022202120222021
Branded Consumer
5.11 $135,605 $123,954 $486,213 $444,963 
BOA42,473 45,117 208,688 165,150 
Ergobaby20,179 24,531 88,435 93,631 
Lugano (1)
64,278 43,224 201,507 125,105 
Marucci Sports42,930 31,838 165,411 118,166 
PrimaLoft (1)
14,032 13,494 79,929 65,882 
Velocity Outdoor 51,464 64,535 232,238 270,426 
Total Branded Consumer$370,961 $346,693 $1,462,421 $1,283,323 
Niche Industrial
Advanced Circuits$22,309 $23,278 $89,503 $90,487 
Altor Solutions61,748 57,635 261,338 180,217 
Arnold Magnetics37,496 38,048 153,815 139,941 
Sterno 102,407 107,729 352,152 375,127 
Total Niche Industrial$223,960 $226,690 $856,808 $785,772 
Total Subsidiary Net Sales$594,921 $573,383 $2,319,229 $2,069,095 
(1) Net sales for Lugano and PrimaLoft are pro forma as if we had acquired these businesses on January 1, 2021.Historical net sales for Lugano prior to acquisition on September 3, 2021 were $71.1 million for the twelve months ended December 31, 2021. Historical net sales for PrimaLoft prior to acquisition on July 12, 2022 were $55.2 million for the twelve months ended December 31, 2022, and $13.5 million and $65.9 million, respectively ,for the three and twelve months ended December 31, 2021.



Compass Diversified Holdings
Condensed Consolidated Cash Flows


Three months ended December 31,Year ended December 31,
(in thousands)2022202120222021
Net cash provided by (used in) operating activities$11,632 $(13,097)$(28,291)$134,051 
Net cash used in investing activities(27,774)(115,067)(626,725)(317,496)
Net cash provided by financing activities14,757 218,334 556,885 273,206 
Foreign currency impact on cash1,404 324 (1,331)228 
Net increase (decrease) in cash and cash equivalents19 90,494 (99,462)89,989 
Cash and cash equivalents - beginning of the period(1)
61,252 70,239 160,733 70,744 
Cash and cash equivalents - end of the period$61,271 $160,733 $61,271 $160,733 

(1) Includes cash from discontinued operations of $4.3 million at January 1, 2021.




Compass Diversified Holding
Selected Financial Data - Cash Flows
Three months ended December 31,Year ended December 31,
(in thousands)2022202120222021
Changes in operating assets and liabilities$(29,213)$(69,044)$(252,377)$(83,764)
Purchases of property and equipment$(24,591)$(12,550)$(64,274)$(40,551)
Distributions paid - common shares$(18,051)$(23,742)$(70,845)$(150,946)
Distributions paid - preferred shares$(6,045)$(6,045)$(24,181)$(24,181)