Compass Diversified (CODI) Bundle
A Brief History of Compass Diversified Holdings
Company Overview
Compass Diversified Holdings (CODI) is a publicly traded investment firm that specializes in acquiring and managing a diversified portfolio of middle-market companies. Established in 2006, CODI focuses on long-term value creation through operational improvements and strategic acquisitions.
Financial Performance
As of September 30, 2024, CODI reported net revenues of approximately $582.6 million for the third quarter, an increase from $521.1 million in the same period of 2023. The company's gross profit for the third quarter of 2024 was $274.6 million, reflecting a gross margin of 47.1%, compared to 43.2% in the prior year.
| Financial Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Revenues | $582.6 million | $521.1 million |
| Gross Profit | $274.6 million | $225.3 million |
| Gross Margin | 47.1% | 43.2% |
| Operating Income | $70.3 million | $17.4 million |
| Net Income | $31.5 million | ($3.8 million) |
Recent Acquisitions
In January 2024, CODI acquired The Honey Pot Co., contributing $31.5 million in net revenues in Q3 2024. The acquisition aligns with CODI’s strategy to enhance its portfolio in the consumer goods sector.
Stock Performance and Shareholder Returns
As of September 30, 2024, CODI had a total stockholders’ equity of approximately $1.5 billion, with 75,652,286 Trust common shares outstanding. The company declared a cash distribution of $0.25 per share for the quarter ending September 30, 2024, amounting to $18.9 million in total distributions.
| Shareholder Return Metric | Value |
|---|---|
| Cash Distribution per Share | $0.25 |
| Total Cash Distributions | $18.9 million |
| Total Shares Outstanding | 75,652,286 |
| Total Stockholders' Equity | $1.5 billion |
Strategic Initiatives
CODI remains committed to enhancing operational efficiencies across its portfolio companies. The company has also been actively managing its debt, with total liabilities reported at approximately $2.5 billion as of September 30, 2024. The current debt management strategy aims to reduce interest expenses and improve overall profitability.
Conclusion
As of 2024, Compass Diversified Holdings continues to demonstrate robust financial performance and strategic growth through acquisitions and operational enhancements. The company remains focused on creating long-term value for its shareholders.
A Who Owns Compass Diversified (CODI)
Ownership Structure
As of 2024, Compass Diversified (CODI) has a diverse ownership structure, which includes various classes of shares and interests held by both controlling and non-controlling shareholders.
| Share Class | Shares Issued | Shares Outstanding | Ownership Percentage |
|---|---|---|---|
| Trust Preferred Shares | 13,725 | 13,725 | — |
| Series A Preferred Shares | 4,159 | 4,159 | — |
| Series B Preferred Shares | 4,437 | 4,437 | — |
| Series C Preferred Shares | 5,129 | 5,129 | — |
| Trust Common Shares | 76,135 | 75,652 | — |
| Treasury Shares | — | — | — |
Major Shareholders
The significant shareholders of Compass Diversified as of September 30, 2024, include institutional investors and insiders.
| Shareholder Type | Percentage Ownership | Number of Shares |
|---|---|---|
| Institutional Investors | Approximately 45% | — |
| Insiders | Approximately 10% | — |
| Non-Controlling Interests | Approximately 17.6% | 264,916 |
Financial Overview
As of September 30, 2024, Compass Diversified reported the following financial metrics:
| Metric | Amount (in thousands) |
|---|---|
| Total Assets | $3,961,414 |
| Total Liabilities | $2,459,533 |
| Total Stockholders' Equity | $1,501,881 |
| Net Income (2024) | $23,519 |
| Cash and Cash Equivalents | $71,948 |
Recent Changes in Ownership
In January 2024, Compass Diversified acquired The Honey Pot Co., which impacted the ownership structure by introducing new shares and interests.
| Event | Impact |
|---|---|
| Acquisition of The Honey Pot Co. | — New equity interests were issued, impacting overall share distribution. |
| Sale of Marucci | — Distribution of $48.9 million to Allocation Interest Holders in February 2024. |
Debt Structure
As of September 30, 2024, Compass Diversified has the following debt obligations:
| Debt Instrument | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| 5.250% Notes | $1,000.0 | 5.250% | 2029 |
| 5.000% Notes | $300.0 | 5.000% | 2032 |
| Term Loan | $377.5 | Variable | 2027 |
| Revolving Credit Facility | $110.0 | Variable | — |
Dividends and Distributions
Compass Diversified has a history of paying dividends and distributions to its shareholders, with the latest data indicating:
| Distribution Type | Amount per Share | Payment Date |
|---|---|---|
| Trust Common Shares | $0.25 | October 30, 2024 |
| Trust Preferred Shares | $0.4921875 | October 30, 2024 |
Compass Diversified (CODI) Mission Statement
Company Overview
As of 2024, Compass Diversified (CODI) is a publicly traded holding company that focuses on acquiring and managing a diverse portfolio of middle-market businesses. The company aims to create long-term value for its shareholders through disciplined investment strategies and operational improvements.
Mission Statement
The mission statement of Compass Diversified emphasizes its commitment to enhancing value through strategic acquisitions and active management of its subsidiaries. This approach is aimed at achieving sustainable growth while delivering attractive returns to its shareholders.
Financial Performance
In the third quarter of 2024, Compass Diversified reported net sales of approximately $85.2 million, reflecting a 6.2% increase compared to the same period in 2023. For the nine months ended September 30, 2024, net sales totaled $223.8 million, a 2.6% decrease year-over-year, primarily due to shifts in consumer discretionary spending influenced by inflationary pressures.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Sales | $85.2 million | $80.2 million | $223.8 million | $230.0 million |
| Gross Profit | $21.1 million | $19.7 million | $58.8 million | $55.8 million |
| Gross Margin | 24.8% | 24.6% | 26.3% | 24.3% |
| SG&A Expenses | $9.9 million | $9.1 million | $26.5 million | $25.1 million |
| Operating Income | $7.0 million | $6.5 million | $19.6 million | $18.0 million |
| Net Income | $31.5 million | $(3.8) million | $23.5 million | $123.0 million |
Strategic Focus
Compass Diversified focuses on acquiring companies that have strong market positions and growth potential. This strategy is reflected in its recent acquisition of The Honey Pot Co. in January 2024, which aligns with its mission to diversify and enhance its portfolio.
Debt and Liquidity
As of September 30, 2024, Compass Diversified had total indebtedness of approximately $1.8 billion. This includes $1.0 billion in 5.250% Senior Notes due 2029 and $300 million in 5.000% Senior Notes due 2032. The company had $71.9 million in cash and cash equivalents.
Shareholder Returns
For the nine months ended September 30, 2024, Compass Diversified declared cash distributions of $0.75 per Trust common share, consistent with previous periods. The company aims to provide stable and predictable returns to its investors.
Conclusion of Financial Overview
Compass Diversified's strategic focus on operational excellence, combined with its disciplined acquisition strategy, positions the company to create long-term value for its shareholders while navigating market challenges effectively.
How Compass Diversified (CODI) Works
Overview of Business Model
Compass Diversified (CODI) operates as a private equity firm that acquires and manages a diversified portfolio of lower middle-market companies. The company focuses on generating long-term value through operational improvements and strategic investments in its subsidiaries.
Recent Financial Performance
As of September 30, 2024, CODI reported consolidated net revenues of approximately $582.6 million for the quarter, a significant increase of 11.8% compared to $521.1 million in the same period of 2023. For the nine months ended September 30, 2024, net revenues totaled $1.65 billion, up from $1.49 billion in 2023, indicating a growth rate of 10.6%.
| Financial Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Revenues | $582.6 million | $521.1 million | $1.65 billion | $1.49 billion |
| Gross Profit | $274.6 million | $225.3 million | $775.5 million | $647.0 million |
| SG&A Expenses | $158.8 million | $132.9 million | $460.9 million | $397.0 million |
| Operating Income | $70.3 million | $17.4 million | $170.2 million | $94.0 million |
| Net Income (Loss) | $31.5 million | $(14.0 million) | $20.2 million | $(2.3 million) |
Segment Performance
Compass Diversified's subsidiaries include brands across various sectors such as consumer goods, industrial products, and more. Notably, during Q3 2024, the company saw substantial increases in revenues from several segments:
- 5.11: $4.0 million increase
- BOA: $8.3 million increase
- Lugano: $39.8 million increase
- Arnold: $4.3 million increase
- Sterno: $5.0 million increase
- The Honey Pot Co. (acquired January 2024): $31.5 million in revenues
Cost Structure
The cost of revenues for Q3 2024 was approximately $308.0 million, leading to a gross profit margin of 47.1%, up from 43.2% in Q3 2023. The selling, general, and administrative (SG&A) expenses were $158.8 million, representing 27.2% of total revenues.
Debt and Liquidity
As of September 30, 2024, CODI had total indebtedness of approximately $1.7 billion, including:
- $1.0 billion associated with 5.250% 2029 Notes
- $300.0 million associated with 5.000% 2032 Notes
- $377.5 million outstanding on the 2022 Term Loan
- $110.0 million outstanding on the 2022 Revolving Credit Facility
The company maintains liquidity through its cash reserves, totaling $71.9 million as of the same date.
Recent Acquisitions and Divestitures
In January 2024, CODI acquired The Honey Pot Co., contributing approximately $31.5 million in net revenues for Q3 2024. In contrast, the divestiture of Crosman in April 2024 resulted in a significant decrease in revenues for the Velocity segment, impacting overall performance.
| Acquisition/Divestiture | Date | Impact on Revenue |
|---|---|---|
| The Honey Pot Co. | January 31, 2024 | +$31.5 million (Q3 2024) |
| Crosman | April 2024 | -$48.9 million (9M 2024) |
Conclusion of Financial Analysis
CODI's financial performance reflects strategic growth through acquisitions and operational improvements across its portfolio. The company continues to adapt to market conditions while managing its debt levels effectively.
How Compass Diversified (CODI) Makes Money
Revenue Sources
Compass Diversified (CODI) generates revenue primarily through its diverse portfolio of subsidiary companies across various sectors. For the nine months ended September 30, 2024, consolidated net revenues increased by approximately $157.6 million, or 10.6%, compared to the same period in 2023, reaching a total of $1.65 billion.
Key Subsidiaries and Performance
The performance of key subsidiaries significantly contributes to CODI's overall revenue. The Honey Pot Co., acquired on January 31, 2024, contributed $75.9 million in net revenues for the nine months ending September 30, 2024.
| Subsidiary | Net Sales (9 months ended September 30, 2024) | Net Sales (9 months ended September 30, 2023) | Increase/Decrease |
|---|---|---|---|
| BOA | $142.7 million | $113.4 million | $29.3 million increase |
| Lugano | $321.0 million | $203.6 million | $117.4 million increase |
| PrimaLoft | $61.5 million | $57.6 million | $3.9 million increase |
| Arnold | $61.5 million | $53.0 million | $8.5 million increase |
| Velocity | $77.4 million | $126.3 million | $48.9 million decrease |
| Altor Solutions | $23.9 million | $47.0 million | $23.1 million decrease |
| Sterno | $223.8 million | $229.8 million | $6.0 million decrease |
Gross Profit and Margins
For the nine months ended September 30, 2024, gross profit totaled $785.9 million, reflecting an increase from $773.3 million in the same period in 2023. Gross profit as a percentage of net revenues improved to approximately 47.0%, compared to 43.4% in the prior year.
Selling, General, and Administrative Expenses
Selling, general, and administrative (SG&A) expenses for the nine months ended September 30, 2024, were $361.5 million, or 21.9% of net sales, compared to $355.8 million, or 22.0% of net sales for the same period in 2023.
Segment Operating Income
Segment operating income for the nine months ended September 30, 2024, rose to $33.8 million, an increase of $2.2 million from $31.7 million in the same period in 2023.
Liquidity and Capital Resources
CODI generates cash primarily from the operations of its subsidiaries. As of September 30, 2024, the company had refreshed its at-the-market program, allowing for the potential issuance and sale of up to $500 million of common shares and $200 million of preferred shares.
Recent Developments
The company reported net income from continuing operations of $31.5 million for the three months ended September 30, 2024, compared to a loss of $13.9 million for the same period in 2023.
| Financial Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Revenues | $617.4 million | $553.1 million |
| Gross Profit | $291.9 million | $239.2 million |
| SG&A Expenses | $121.5 million | $102.7 million |
| Net Income | $31.5 million | ($13.9 million) |
Market Trends and Challenges
CODI faces challenges such as inflationary pressures affecting consumer discretionary spending, impacting sales across several segments. However, the company has managed to adapt and capture growth opportunities, particularly in its branded consumer businesses.
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Article updated on 8 Nov 2024
Resources:
- Compass Diversified (CODI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Compass Diversified (CODI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Compass Diversified (CODI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.