pass Diversified LLC(US:CODI)2020-10-29 03:44Financial Data and Key Metrics Changes - Consolidated subsidiary pro forma revenue for Q3 2020 increased by 3.9% to $419 million, while consolidated pro forma adjusted EBITDA increased by 10% to $77 million [17][41] - Cash flow available for distribution (CAD) for Q3 2020 was $43.5 million, a growth of 44% compared to $30.2 million in Q3 2019 [18][42] - Year-to-date CAD of $74.7 million exceeded the prior year-to-date of $74 million, covering distribution payments to common shareholders of $68.3 million [19] Business Line Data and Key Metrics Changes - Branded consumer businesses saw pro forma revenues and adjusted EBITDA increase by 15.2% and 42.3% respectively in Q3 2020 compared to the same quarter in 2019 [31] - Niche industrial businesses experienced a revenue decline of 8.1% and EBITDA decrease of 18.3% in Q3 2020 compared to the prior year [26] - Liberty Safe's EBITDA increased by 96% in Q3 2020 compared to the previous year, driven by strong demand [33] Market Data and Key Metrics Changes - BOA Technology, acquired in October 2020, produced revenue and EBITDA growth of 20% and 67% respectively during Q3 2020 [17] - Certain companies within the portfolio, such as Arnold Magnetic, faced challenges with EBITDA declining from $4.4 million to $1.3 million due to demand decreases in aerospace and oil and gas markets [27] Company Strategy and Development Direction - The company is focused on a more aggressive acquisition strategy amid the pandemic, having closed two platform acquisitions in 2020 [9][52] - Continued investment in digital transformation is a priority, as increased consumer demand for online retail is expected to persist beyond the pandemic [15][54] - The company aims to enhance competitive positioning through strategic investments and acquisitions, while also focusing on ESG initiatives [54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing recovery trends, particularly in outdoor categories, despite challenges in certain sectors like hospitality [56] - The outlook remains uncertain due to the pandemic, with management noting the importance of flexibility in operations and capital allocation [20][76] - Management highlighted the strong performance of subsidiaries and the ability to manage supply chain challenges effectively [69] Other Important Information - The company anticipates a CAD payout ratio for the year of 100% to 90%, a significant improvement from previous guidance [22] - The company has over $175 million in cash and approximately $600 million available on a revolver, maintaining a strong balance sheet [45] Q&A Session Summary Question: General outlook on recovery trends - Management feels similar to the end of Q2, with businesses running well and outdoor categories benefiting significantly, though challenges remain in certain industrial sectors [56] Question: Performance of 5.11 - The growth in EBITDA for 5.11 was driven by increased margins and effective cost control during COVID, despite flat sales [58][59] Question: Future acquisition appetite - The company remains open to both platform and add-on acquisitions, with a focus on finding compelling opportunities in a fluid market [72][75] Question: Drivers of Marucci's strength - The successful launch of the CAT9 line significantly contributed to Marucci's performance, although seasonality remains uncertain due to COVID [80][82] Question: BOA onboarding and performance - The onboarding process has been positive, with BOA showing strong growth in revenue and EBITDA, driven by favorable market conditions [85][86]