D/b/a Compass Diversified Holdings Shares Of Beneficial Interest · NYSE:CODI
D/b/a Compass Diversified Holdings Shares Of Beneficial Interest — Compass Diversified Holdings — Investor Day (January 2024)
61 slides from D/b/a Compass Diversified Holdings Shares Of Beneficial Interest's investor day presentation, Jan 17, 2024
Slide 1: CODI Investor Day
JANUARY 17, 2024 CODI Investor Day 2024
Slide 2: Legal Disclaimer
Legal Disclaimer This presentation does not constitute an offer or invitation for the sale or purchase of securities and has been prepared solely for informational purposes. This presentation contains certain forward- looking statements within the meaning of Section 27A of the Securities Act of 1933
Slide 3: CODI Presenters
CODI Presenters ELIAS SABO RYAN FAULKINGHAM PATRICK MACIARIELLO ZOE KOSKINAS Founding Partner & CEO CFO COO Vice President & Head of ESG ▪ Joined The Compass Group in 1998 ▪ Joined The Compass Group in 2008 ▪ Joined The Compass Group ▪ Joined The Compass Group in 2021 as one of its founding partners
Slide 4: CODI's Value Creation Model & Differentiation
CODI’s Value Creation Model & Differentiation
Slide 5: Who is CODI?
SUBSIDIARIES CODI BY THE NUMBERS As of 9/30/23 $7.0B+ Aggregate Acquisitions 23 Platforms & 33 Add-Ons Who is CODI? $3.2B+ Invested Capital (1) ▪ Compass Diversified (NYSE: CODI) owns and manages a diverse group of leading $2.2B+ TTM Proforma Revenue middle market businesses ▪ Long-term ownership ap
Slide 6: We Are Not Private Equity
We Are Not Private Equity… Traditional PE Model – Trading Companies on Short & Predetermined Timelines ▪ Required to invest and divest along fund life parameters ▪ Finance at portfolio company level on a stand-alone basis, often incurring a high cost of capital ▪ Focus on costs and efficiencies to i
Slide 7: CODI's Value Creation Model
CODI’s Value Creation Model Our “Buy, Build and Grow” Long-term Management Model ▪ Disciplined and patient approach to investing on our timeline ▪ Invest in the infrastructure of our subsidiaries to accelerate growth and increase enterprise value ▪ Permanent capital and our flexible model allow for
Slide 8: 01. Cost of Capital Advantage
CODI’s Value Differentiation 01. Cost of Capital Advantage ▪ Use financing only at the parent company, significantly lowering our cost of capital ▪ Access to financing not available to our competitors (high-yield bonds, low-cost bank debt, and hybrid securities like preferred stock) ▪ Strategic shif
Slide 9: 02. Duration of Capital Advantage
CODI’s Value Differentiation 02. Duration of Capital Advantage ▪ Duration of capital to match the duration of opportunity ▪ Early institutional money – typically the first or second institutional capital in ▪ Own subsidiaries for the long-term – we invest significantly in innovation and growth ▪ Per
Slide 10: 03. Our People—A Team with Deep and Diverse Expertise
CODI’s Value Differentiation 03. Our People—A Team with Deep and Diverse Expertise ▪ Our human capital is unique – Our Buy, Build and Grow Strategy means our operations team has both transactional and strategic ownership/management skills ▪ Compass Group Management (CGM) employs 44 people across ope
Slide 11: CODI: Building Better Businesses
CODI: Building Better Businesses CODI uses the diverse expertise of our team to develop a bespoke approach to building better businesses: 01. 03. 05. Personnel Strategy Quality Additions Development of Earnings 02. & Optimization 04. Long-term ESG at Capital Subsidiaries Investment 11
Slide 12: Value Creation Case Study: Altor
Value Creation Case Study COMPETITIVE STRENGTHS Engineering and design capabilities meeting complex and customized customer packaging Unmatched national footprint with 17 needs with high cost of failure manufacturing locations across North High performance culture focused on innovation America provi
Slide 13: Value Creation Case Study: ACI
Value Creation Case Study COMPETITIVE STRENGTHS Insulated from Asian manufacturing due to small, customized order size and requirements Largest quick turn manufacturer in the US; for rapid turnaround approximately 165 customer orders daily Industry leading number of unique orders per day Diverse cus
Slide 14: Delivering Shareholder Return
Delivering Shareholder Return We have outperformed our benchmark since inception From IPO to Dec 2018 – outperformed The Russell 2000 Index by 31.8%* Jan 2019 to Dec 2023 – outperformed The Russell 2000 Index by 85.3%* Over the last five years, we’ve nearly doubled the benchmark $24.36 of cash distr
Slide 15: Financial Update and 2024 Guidance
Financial Update and 2024 Guidance
Slide 16: Q4 2023 Financial Update
Q4 2023 Financial Update Expect to report strong fourth Q4 Subsidiary Adj. EBITDA implied guidance $105M - $120M quarter results Marucci est. Q4 $(10)M - $(10)M Two material Q4 items to mention: ▪ BOA recapitalization created Q4 guidance ex-Marucci $95M - $110M $3M compensation expense ▪ PrimaLoft i
Slide 17: Updated Full Year Outlook
Updated Full Year Outlook 2023 Subsidiary Adj. EBITDA Guidance $450M - $465M(1) Marucci $(50)M - $(50)M(2) Subsidiary Adj. EBITDA with $480M - $520M The Honey Pot $29M - $29M(3) The Honey Pot midpoint $500M 12.6% Revised for Marucci $428M - $444M and the Honey Pot 2023 Guidance 2024 Guidance Note: A
Slide 18: Net Income
Net Income Net Income and Net Income attributable to Holdings – Common - 2019 through 9/30/23 18
Slide 19: Pro Forma Subsidiary Adjusted EBITDA Growth
Pro Forma Subsidiary Adjusted EBITDA Growth $ in millions Companies owned as of 12/31/2018 Companies owned as of 12/31/2023 including The Honey Pot Sterno BOA 4.7%* 4-YEAR CAGR 14.4% 4-YEAR CAGR Clean Earth 5.11 $430.5 $444.0 $278.5 $277.3 Lugano $268.0 5.11 $379.6 $247.7 Velocity Altor $207.0 $259.
Slide 20: Subsidiary Adjusted EBITDA Growth Towards $1B Goal
Subsidiary Adjusted EBITDA Growth Towards $1B Goal $ in millions 12.5% 5-YEAR CAGR $838.0 Significant Increase in Subsidiary Adj. EBITDA since 2018 $442.7 $465.0 $379.7 $257.1 12.5% Subsidiary Adj EBITDA sustained $258.2 $257.7 growth rate produces >$838M by 2028 Maintain our 2028 goal of $1B Subsid
Slide 21: Increasing Retained Cash
Increasing Retained Cash Significant increase in retained Retained Cash Over Past Few Years ($in millions) cash since 2019 (Before change in working capital) $64.8 $55.3 $55.0 Strong subsidiary operating performance leading to increased retained cash $3.7 Robust retained cash offers enhanced opportu
Slide 22: History of Successfully Deleveraging
History of Successfully Deleveraging CODI has a demonstrated history of paying down its debt and is committed to staying conservatively levered 3.87 4.08 4.03 3.9 3.9 3.93 3.7 3.6 3.5 3.5 Sales 3.2 Est. 3.1 3 3.04 2.96 2.98 2.9 2.9 2.9 2.8 2.6 2.6 2.5 FOXF Secondary Sale Sales 1.9 1.9 1.9 1.8 1.75 S
Slide 23: Adjusted Earnings
Adjusted Earnings Note: All data below includes Adj. Earnings contributed Continue to Leverage up Growth Rate in Adj. Earnings up through distribution date for Liberty, ACI and Marucci 18.7% 3-YEAR CAGR $158.6 $146.4 $140.0 $83.7 $135.7 $158.6 $140.0 $71.0 $12.7 $10.7 2020 2021 2022 2023E* Liberty's
Slide 24: Strong Balance Sheet as of September 30, 2023
Strong Balance Sheet as of September 30, 2023 72% of debt fixed at blended 5.20% Rate on debt: 5.9% Cash: $64.7M Rate on preferred: 7.7% Revolver: $112M $1,000 M Term Loan: $388M 5.25% Fixed Due 2029 38% Leverage and Availability 53% Leverage: ~4.03x $300M Revolver Availability: ~$486M 5.0% Fixed 9%
Slide 25: CODI's Competitive Advantage in 2024
CODI’s Competitive Advantage in 2024
Slide 26: 2024 Economic Conditions Align With CODI's Competitive Advantage
2024 Economic Conditions Align With CODI’s Competitive Advantage In recent history, our competitors’ returns were buoyed by low interest rates and the ability to over leverage their portfolio companies, easily earning returns through multiple arbitrage With the current higher cost of borrowing and w
Slide 27: 2020 vs. Today
When markets are behaving as they currently are, 2020 vs. Today CODI traditionally finds its most compelling opportunities Two of CODI’s most successful deals were consummated Similar to 2020, debt markets remain weak for against a similar backdrop in 2020—Marucci and BOA. Both single asset buyouts.
Slide 28: Q&A
Q&A MPASS VERSIFIED
Slide 29: Appendix
Appendix - COMPASS DIVERSIFIED
Slide 30: ESG - What to Expect in 2024
ESG - What to Expect in 2024 Inaugural sustainability report ▪ GHG Reporting ▪ Human Capital ▪ Governance Continued operationalization of our ESG data collection and reporting efforts to deepen our subsidiary engagement strategy and address regulatory demands Continued stakeholder engagement and str
Slide 31: Retained Cash Calculation
Appendix – Retained Cash Calculation 31
Slide 32: Net Income to Non-GAAP Adjusted Earnings
Appendix – Net Income to Non-GAAP Adjusted Earnings Compass Diversified Holdings Net Income (loss) to Adjusted Earnings 3-month 9-month Year ended Year ended Year ended 12/31/22 09/30/23 12/31/22 12/31/21 12/31/20 Net income (loss) $ (11,844) $ 122,964 $ 51,438 $ 126,809 $ 27,197 Gain on sale of dis
Slide 33: TTM Revenue
Appendix – TTM Revenue Amount In $000s Three months ended Three months ended December 31, September 30, 2022 2023 Branded Consumer 5.11 Tactical $ 135,605 $ 385,694 Boa 42,473 113,390 Ergobaby 20,179 71,785 Lugano 64,278 203,571 Marucci 42,930 144,065 PrimaLoft 14,032 57,619 Velocity Outdoor 51,464
Slide 34: Adj. EBITDA from Q3 2023 Earnings Release
Appendix – Adj. EBITDA from Q3 2023 Earnings Release Amount In $000s 34
Slide 35: Adj. EBITDA from Q4 2022
Appendix – Adj. EBITDA from Q4 2022 Quarter Ended December 31, 2022 Marucci Velocity In OOO’s Corporate 5.11 BOA Ergo Lugano PrimaLoft ACI Altor Solutions Arnold Sterno Consolidated Sports Outdoor Net income (loss) from continuing operations $ (12,653) $ 7,093 $ 5,491 $ (18,035) $ 6,063 $ 3,152 $ (9
Slide 36: Adj. EBITDA from 2022 10K
Appendix – Adj. EBITDA from 2022 10K Amount In $000s 36
Slide 37: PF reconciliation to Adj. EBITDA from 2022 10K
Appendix – PF reconciliation to Adj. EBITDA from 2022 10K Amount In $000s FY 2022 Pro Forma Adjusted EBITDA Reconciliation Corporate 5.11 BOA Ergobaby Lugano Marucci(5) PrimaLoft(2) Velocity ACI(3) Altor Arnold Sterno The Honey Pot(4) Consolidated Adjusted EBITDA $ (72,924) $ 67,785 $ 82,072 $ 13,47
Slide 38: Adj. EBITDA from 2021 10K
Appendix – Adj. EBITDA from 2021 10K Amount In $000s 38
Slide 39: PF reconciliation to Adj. EBITDA from 2021 10K
Appendix – PF reconciliation to Adj. EBITDA from 2021 10K Amount In $000s FY 2021 Pro Forma Adjusted EBITDA Reconciliation (2) Corporate 5.11 BOA Ergobaby Lugano Marucci(6) PrimaLoft(3) Velocity ACI(4) Altor Arnold Sterno The Honey Pot Consolidated (5) Adjusted EBITDA $ (16,147) $ 65,122 $ 60,468 $
Slide 40: Adj. EBITDA from 2020 10K
Appendix – Adj. EBITDA from 2020 10K Amount In $000s 40
Slide 41: PF reconciliation to Adj. EBITDA from 2020 10K
Appendix – PF reconciliation to Adj. EBITDA from 2020 10K Amount In $000s FY 2020 Pro Forma Adjusted EBITDA Reconciliation Corporate 5.11 BOA(8) (2) (2) (3) Ergobaby Lugano Marucci PrimaLoft Velocity ACI (4) Altor Arnold Sterno The Honey Pot(5) Liberty(6) Consolidated Adjusted EBITDA $ (13,879) $ 54
Slide 42: Adj. EBITDA from 2019 10K
Appendix – Adj. EBITDA from 2019 10K Amount In $000s 42
Slide 43: PF reconciliation to Adj. EBITDA from 2019 10K
Appendix – PF reconciliation to Adj. EBITDA from 2019 10K Amount In $000s FY 2019 Pro Forma Adjusted EBITDA Reconciliation Corporate 5.11 BOA(2) (3) Ergobaby Lugano Marucci (4) PrimaLoft(5) Velocity ACI(6) Altor Arnold Sterno The Honey Pot(7) Liberty(8) Consolidated Adjusted EBITDA $ (14,867) $ 46,9
Slide 44: Adj. EBITDA from 2018 10K
Appendix – Adj. EBITDA from 2018 10K Amount In $000s 44
Slide 45: PF reconciliation to Adj. EBITDA from 2018 10K
Appendix – PF reconciliation to Adj. EBITDA from 2018 10K Amount In $000s FY 2018 Pro Forma Adjusted EBITDA Reconciliation American (2) (3) (4) (5) Corporate 5.11 CamelBak Ergobaby Liberty Manitoba ACI Furniture Velocity(6) Arnold Altor(7) Clean Earth(8) Sterno(9) Tridien(10) Consolidated Adjusted E
Slide 46: Adj. EBITDA from 2017 10K
Appendix – Adj. EBITDA from 2017 10K Amount In $000s 46
Slide 47: PF reconciliation to Adj. EBITDA from 2017 10K
Appendix – PF reconciliation to Adj. EBITDA from 2017 10K Amount In $000s FY 2017 Pro Forma Adjusted EBITDA Reconciliation American (2) (3) (4) Corporate 5.11 CamelBak Ergobaby Liberty Manitoba ACI Furniture(5) Velocity(6) Arnold Altor(7) Clean Earth(8) Sterno(9) Tridien(10) Consolidated Adjusted EB
Slide 48: Adj. EBITDA from 2016 10K
Appendix – Adj. EBITDA from 2016 10K Amount In $000s 48
Slide 49: PF reconciliation to Adj. EBITDA from 2016 10K
Appendix – PF reconciliation to Adj. EBITDA from 2016 10K Amount In $000s FY 2016 Pro Forma Adjusted EBITDA Reconciliation American (2) (3) (4) (5) Corporate 5.11 CamelBak Ergobaby Liberty Manitoba ACI Furniture Velocity(6) Arnold Altor(7) Clean Earth(8) Sterno(9) Tridien(10) Consolidated Adjusted E
Slide 50: Adj. EBITDA from 2015 10K
Appendix – Adj. EBITDA from 2015 10K Amount In $000s 50
Slide 51: PF reconciliation to Adj. EBITDA from 2015 10K
Appendix – PF reconciliation to Adj. EBITDA from 2015 10K Amount In $000s FY 2015 Pro Forma Adjusted EBITDA Reconciliation American (2) (3) (4) Corporate 5.11 CamelBak Ergobaby Liberty Manitoba ACI Furniture(5) Velocity(6) Arnold Altor(7) Clean Earth(8) Sterno(9) Tridien(10) Consolidated Adjusted EB
Slide 52: Adj. EBITDA from 2014 10K
Appendix – Adj. EBITDA from 2014 10K Amount In $000s 52
Slide 53: PF reconciliation to Adj. EBITDA from 2014 10K
Appendix – PF reconciliation to Adj. EBITDA from 2014 10K Amount In $000s FY 2014 Pro Forma Adjusted EBITDA Reconciliation American (2) (3) (4) Corporate 5.11 CamelBak Ergobaby Liberty Manitoba ACI Furniture(5) Velocity(6) Arnold Altor(7) Clean Earth(8) Sterno(9) Tridien(10) Consolidated Adjusted EB
Slide 54: Actual earned Subsidiary Adj. EBITDA 2018 and 2019
Appendix – Actual earned Subsidiary Adj. EBITDA 2018 and 2019 Amount In $000s FY 2018 Actual Earned Adjusted EBITDA Reconciliation Corporate 5.11 Ergobaby Liberty Manitoba ACI Velocity Arnold Altor Clean Earth Sterno Consolidated Adjusted EBITDA as reported in 10K $ (14,267) $ 32,303 $ 21,138 $ 8,06
Slide 55: Actual earned Subsidiary Adj. EBITDA 2020 and 2021
Appendix – Actual earned Subsidiary Adj. EBITDA 2020 and 2021 Amount In $000s FY 2020 Actual Earned Adjusted EBITDA Reconciliation Corporate 5.11 BOA Ergobaby Marucci Velocity ACI Altor Arnold Sterno Liberty Consolidated Adjusted EBITDA as reported in 10K $ (13,879) $ 54,660 $ 8,857 $ 15,616 $ 9,859
Slide 56: Actual earned Subsidiary Adj. EBITDA 2022
Appendix – Actual earned Subsidiary Adj. EBITDA 2022 Amount In $000s FY 2022 Actual Earned Adjusted EBITDA Reconciliation Corporate 5.11 BOA Ergobaby Lugano Marucci PrimaLoft Velocity ACI Altor Arnold Sterno Consolidated Adjusted EBITDA as reported in 10K $ (72,924) $ 67,785 $ 82,072 $ 13,474 $ 67,0
Slide 57: Financial Information Provided by the management of The Honey Pot
Appendix – Financial Information Provided by the management of The Honey Pot Amount In $000s 57
Slide 58: Altor Case Study
Appendix – Altor Case Study Amount In $000s 58
Slide 59: ACI Case Study – Cash on cash yield
Appendix – ACI Case Study – Cash on cash yield Amount In $000s Advanced Circuits Cash on Cash Yield 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Acquisition 2006 $ 78,732 add-on 2010 16,100 add-on 2012 2,300 Cumulative Purchase Price $ 97,132 $ 97,132 $ 97,132 $ 97,132 $ 97,132 $ 97,132 $ 97,13
Slide 60: ACI Case Study – Return on Invested Capital
Appendix – ACI Case Study – Return on Invested Capital Amount In $000s Advanced Circuits Current Return on Invested Capital 5/16/06 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 2/14/23 ($ in 0
Slide 61: Thank You.
Thank You. compassdiversified.com 61
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