pass Diversified LLC(US:CODI)2020-07-30 04:16Financial Data and Key Metrics Changes - For Q2 2020, consolidated subsidiary adjusted EBITDA was $54 million, slightly down from $55.2 million in Q2 2019, but significantly above the guidance range of $28 million to $38 million [10][11] - Consolidated pro forma revenue for Q2 2020, including Marucci, declined by 4.5% to $334 million, while consolidated pro forma adjusted EBITDA decreased by 8% to $52 million [18] - Consolidated revenue for Q2 2020 was $333.6 million, down less than 1% from $336.1 million in the prior year period [55] Business Line Data and Key Metrics Changes - Niche industrial businesses saw revenues decline by 12.4% and EBITDA decrease by 19.1% year-over-year in Q2 2020 [31] - Branded consumer businesses, particularly Velocity Outdoor and Liberty Safe, experienced strong sales growth, with Liberty Safe's EBITDA up 80% year-over-year [41] - Marucci's revenue in Q2 2020 declined by 60%, with EBITDA dropping from approximately $1 million in 2019 to negative $200,000 in 2020 [42] Market Data and Key Metrics Changes - Demand for outdoor-related products surged, benefiting certain subsidiaries while others faced significant declines due to the pandemic [19] - Velocity Outdoor's EBITDA increased by 104% in Q2 2020, driven by heightened demand for outdoor activities [45] - The Sterno Group's EBITDA was down 29% in Q2 2020, but the consumer business saw record demand for wax and essential oil products [35] Company Strategy and Development Direction - The company plans to pursue a more aggressive acquisition strategy in 2020, leveraging its strong balance sheet to capitalize on growth opportunities [15][70] - The focus remains on selectively partnering with management teams that can benefit from the company's operational expertise and capital base [16] - The company is committed to enhancing its ESG initiatives and integrating these considerations into its investment process [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges posed by the COVID-19 pandemic but expressed optimism about the company's long-term positioning and growth potential [7][11] - The company anticipates a full-year consolidated EBITDA of between $210 million and $240 million, despite the uncertainty stemming from the pandemic [25] - Management highlighted the importance of maintaining distribution levels and the expectation of cash taxes reversing in the second half of 2020 [20][60] Other Important Information - The company raised approximately $290 million in additional capital during the quarter, enhancing its financial flexibility [13] - Cash flow available for distribution and reinvestment (CAD) during Q2 2020 was $13.5 million, exceeding expectations [20] - The company has a strong balance sheet with over $200 million in cash and approximately $600 million available on its revolver as of June 30, 2020 [60] Q&A Session Summary Question: Velocity Outdoor's mid-term outlook - Management expressed confidence in Velocity Outdoor's performance, noting no signs of slowing demand in July and August, with Q3 being a significant quarter for outdoor activities [74] Question: Sterno's year-over-year growth - Management acknowledged material growth in Sterno's consumer business, particularly in hand sanitizer sales, despite a near-complete halt in catering-related demand [75][77] Question: 5.11's business breakdown - The professional side of 5.11 accounted for slightly over 50% of the business in 2019, but the consumer side has grown significantly, now surpassing the professional side [78] Question: M&A environment and strategy - Management indicated a shift to a more aggressive M&A posture, focusing on both add-on and platform acquisitions, with a bias towards add-ons in the near term [92][96]