Business news :Compass Diversified Reports Better than Expected Q2

Compass Diversified Holdings (CODI) called out its Fox mountain biking and Liberty gun safe businesses as big contributors to strong financial results that exceeded management expectations for the second quarter.

CODI’s portofolio includes companies that make CamelBak hydration products, ERGObaby infant carriers, Fox Factory suspension parts for mountain bikes and motorsports and Liberty gun safes. The company also owns businesses that manufacture printed circuit boards, furniture, medical devices and magnetic products.

For the quarter ended June 30, 2012, the company reported net income reached $2.2 million, as compared to net income of $8.3 million for the quarter ended June 30, 2011. CODI recorded a loss from discontinued operations of $1.7 million, consisting primarily of transaction-related costs from the sale of HALO. The company also recorded higher interest expense for the second quarter of 2012 as compared to the prior year period due in large part to higher average debt balances, amortization of original issue discount and changes in the fair value of interest rate swaps.
“We continue to leverage the leadership position and comparative financial strength of our subsidiaries to expand their relative market share with particularly strong results at Fox and Liberty where we posted double-digit revenue growth,” said Alan Offenberg, CEO for CODI. “Our results for the quarter also reflect notable contributions from our newest platform businesses, Arnold Magnetic and CamelBak, both of which were acquired less than a year ago."

As of June 30, 2012, CODI had $16.0 million in cash and cash equivalents, $253.8 million outstanding on its term loan facility and $19.5 million outstanding under its $290 million revolving credit facility. The Company has no significant debt maturities until October 2016 and had borrowing availability of approximately $270 million at June 30, 2012 under its revolving credit facility.

On April 2, 2012, CODI exercised an option under its credit agreement, dated as of October 27, 2011, to increase its term loan facility by $30 million. The Company's aggregate outstanding borrowings under its term loan facility increased to approximately $254.4 million after this borrowing. The net proceeds of the borrowing were used to repay existing borrowings under the Company's revolving credit facility. Concurrent with this increased term loan borrowing, CODI amended the pricing terms of its term loan facility. Under the terms of the amendment, amounts borrowed bear interest at LIBOR plus a margin of 5.00%, as compared to the previous margin of 6.00%, and the LIBOR floor was reduced to 1.25% from 1.50%. All other terms of the credit agreement remain unchanged.

On May 1, 2012, CODI completed the sale of its majority owned subsidiary, HALO, whereby the Company received approximately $66.4 million of total proceeds from the sale at closing. The proceeds were used to repay borrowings under the Company's revolving credit facility.