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CODI Compass Group Diversified

Participants
Matthew Berkowitz Investor Relations
Elias Sabo Chief Executive Officer
Pat Maciariello Chief Operating Officer
Ryan Faulkingham Executive Vice President and Chief Financial Officer
Dave Abate Vice President and Treasurer
Larry Solow CJS Securities
Kyle Joseph Jefferies
Matt Koranda ROTH Capital
Robert Dodd Raymond James
Derek Hewett Bank of America
Call transcript
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Operator

Good afternoon, and welcome to the Compass Diversified Third Quarter 2020 Conference Call. Today's call is being recorded. All lines have been placed on mute. [Operator Instructions] At this time, I would like to turn the conference over to Matt Berkowitz of the IGB Group for introductions and the reading of the Safe Harbor statement. Please go ahead, sir.

Matthew Berkowitz

to Third welcome Call. XXXX and you, Compass Quarter Diversified Conference Thank Group the Sabo, Pat CFO; Compass Elias today Maciariello, CEO; of Representing are CODI's CODI's company Ryan Faulkingham, COO management. and

includes adjusted like on to we XXXX release, site the at measure at its filed the company's the the The net XX-Q refer reconciled did including the its I of financial Web EBITDA, as is in adjusted to income not certain as XXXX the following Before tables of non-GAAP XXXX SEC measures are discussions filings. point note Web will refer also site. or press after provide on and is EBITDA our payout Please Compass expected without which Relations or The begin, www.compassdiversified.com. today this we to because to financial Throughout call market closed, reconciliations Company. full company's that the available of assets. that not the out the CODI financial Investor discussed QX with would Form references ratio EBITDA reconciliations call, available year financial reconciliation information the Diversified Relations non-GAAP and company reconciling significant unreasonable company at section this also a in Investor section to available

following statement. the Harbor Safe to read Now allow me

and results basis these those differ the uncertainties forward-looking regard projects expressions the These on as call, a similar could conference cause in performance such statements actual and to to to statements. to with inherent this identify we CODI factors in During future intended projected or statements statements. results and forward-looking may are future certain plans, predicting subsidiaries, including future of Certain make subject expects, conditions. forward-looking believes, words material from its forward-looking statements, are

year ended SEC with are updated XX, Form filed enumerated as and the particular, December risk quarters the further these other In as in filings. as XXXX the XX-K ended as XX, factor well in XX, of the XXXX September as with SEC filed the SEC for in And and March Form XXXX XX, for the in June some the factors discussion XXXX, XX-Q environment of to the and by to like this by revise impact publicly turn a the otherwise. At impacted call or economic our Elias statements global Except required CODI pandemic new has Sabo. subsidiary the events to future update currently undertakes domestic would whether significant or information, COVID-XX companies. obligation no law, any over a I on as result as forward-looking time, has

Elias Sabo

Good afternoon. quarter conference for all you call. third welcome your and our earnings Thank time to

for continued results, ways like are challenging pleased well would and has This pandemic. in our pro forma year the adjusted which brought managing that take XX% of consumer through many by over exceeded XX% to produce exceeded people. results the EBITDA respectively, growth This year. subsidiary you January branded moment Marucci’s your And million XXXX outperformance we by pandemic. a consolidated driven including from many substantially report businesses, expectations, impact to period discussing hope that Despite pro prior results challenges I consolidated quarter and I'm the X, of prior adjusted acknowledge on been of XX%. brief change. revenue third was Before to XX.X of year and the and forma COVID-XX our so this our our by EBITDA families

debt of our consumer compared shareholders. joins pandemic to the of acquisition finance differentiated driving our second acquisition is our aggressively value others clear to subsidiaries the acquisitions including model, businesses, strategic were our incredibly on patient. for Sports, BOA close to employed Marucci our private am and ability our industry success sheet. the of few continue as and months, balance April. acquired deploying to and peers. capitalized to The and we approach to Looking leading market of allowed of XXXX have be long-term capital portfolio, used source two we subsidiaries and closed favorable for work past proud testament the and a conditions, permanent capital, amid the the Notably, team as model branded the our to the our in equity Throughout position in divested back we our we XXXX, our us done permanent I transform capital opportunistically we among Instead, these proceeds while on our BOA which market year on the platform lineup Technology’s, of height by repay while traditional strengthen

Now, to the market more peers credit in to pandemic dislocation XXXX, and our access has a team has strategy, created struggled acquisition the aggressive have pivoted while market.

our Our the in a of model of end only results. that leading strong enhance our owning significant a of third BOA to diversification more serve been addition market period niche in And in further pronounced that of and diverse The and serve variety serve. diversification results the end have breath of of the the set volatility never of reducing markets. the financial market advantages companies reflect quarter benefits year-to-date Marucci and

of past also in made across enhancing depth to proud have of addition the company. allocation strides talent accomplishments years, capital we the over management couple I significant our our our and subsidiary am In

Camelback, Jason CFO executive recently Jason we experienced of is in quarter, capacity talented with During of and many as a the Ergobaby. to CODI third and CEO most first has Ergobaby. worked for years, CFO who as Frame of promoted his

Director end a as of CEO the to for Don thank the Hinshaw's the and that Carnes of retirement We his Sterno with of planned at assuming I the would be him look Sterno. Sterno role we want continuing the of Group, to all announced in to to CODI year. contributions years. Craig following over forward his work Additionally, Don capacity

both their new and in We are confident respect role. have the both that succeed for Craig utmost highly will Jason, and

digitize demand significant as our pandemic combination will investment and remain of of time the online We building and presence our digital Our subsidiary last infrastructure. is and that created over enabled push where their of we pandemic our is few financial businesses, capability, and we long in towards performance possible, our our resources increased on a strong the after past modernizing enhancing transform seismic businesses reducing contained. has results. physical digital retail further all enhanced digitally to Across further subsidiary. digitally our The years our have reliance XXXX been has believe a the consumer on our businesses, to shift been for focused subsidiary

the demand across subsidiary throughout times. each during chain. to their results struggled large And quarter, supply impact decline stress to due subsidiary pandemic. expectations management of teams additional third exceptional I the of our hire would to companies in exceeded on companies our in has caused our service, subsidiaries, ongoing of like strain While to continue their their our revenue experienced increase challenging these have market, experienced the our most of leadership in the while we end dedication have see sudden Certain our for thank others that the human capital. and

quarter EBITDA during forma compared up consolidated Of our million pro $XX the by $XXX turning consolidated by X.X% Now is of quarter forma subsidiaries, we XX% We subsidiary and third respectively, BOA XX% and to adjusted for CAD results, nine six to of and pro as financial to generated million. for This growth of of increased quarter revenue million EBITDA expectation. cash that to our the CAD EBITDA third revenue far although produced increased of did after all revenue on virtually close Technology’s BOA as third available XXXX that exceeded our prior in of exceeded we and and companies XX% were expectation. over also distribution growth estimates our year the $XX.X reinvestment, not showed $XX.X refer quarter, Management XXXX. growth expectations. on flat produced the the basis ahead of during a of flow and and our XX% BOA our million which results year-to-date is And until quarter to third third X%.

his without detail cash reversal. was by quarter third will second Ryan quarter our as cash a section, from this However, the at tax in Even Outdoor. tax reversal boosted CAD Velocity

basis, covered a significantly year-to-date million. payments CAD CAD of our distribution and On of Our exceeded of our prior $XX million million our XX.X year-to-date expectations. to XX.X exceeded common shareholders

for our coming continued uncertainty continues guidance, every to to the the outlook change due which months pandemic, Turning visibility. day and to means ongoing limited

XXXX. as we were partners that with January the anticipate. currently shareholders Marucci our was and some of continued Please than While X, provide We impact performance. guidance expected economy our results visibility certain it felt important could BOA, acquired on they into our capital shutdowns our note both and if more to areas includes negatively of

pro and XXXX million. year adjusted $XXX of between full For we subsidiary anticipate consolidated forma million EBITDA $XXX

expect between we BOA, million and pro million, expect midpoint, distribution, CAD to due previous XX%, to to annual improvement X.X%. now to our an of excluding or forma $XX between notwithstanding year the EBITDA XXX% adjusted purposes, $XXX of over XXX%. a a We guidance of million exists an cover pandemic. full at we consolidated reflecting anticipate of of and improvement XXXX for $XXX comparison previous as that to economic million ratio payout the substantial headwinds For million increase the Notably, compared guidance $XXX $XXX year XXX% the of subsidiary

that, expenditures section, with we in an spend increased Pat. seeking fourth to will strengthen are quarter of detail businesses With positioning. in as year, of will turn over his As our areas the I performance their their call Ryan throughout have amount to capital but now later the competitive many will now the that forecasting capital expenditure reduced are capital improved invest in

Pat Maciariello

Elias. Thanks,

predominantly generally in to effect want the from to pandemic on our quarter, throughout continued exceeded subsidiary companies. and stoppages face and Similar our expectations result, and benefit slowdowns subsidiary experienced businesses increased for to and to demand our branded touch which continue a as consumer hospitality earnings our businesses growth, our categories, in expectations. strong industrial as Before in niche I quarter I last our the the sales results of begin group, due continue earnings work the industries. to exceeded sales though headwinds and a also aerospace outdoor

our industrial on begin the I'll with Now subsidiary for quarter. niche results businesses. to our

For by comparable the quarter and in declined EBITDA revenues the XX.X% over X.X% XXXX, decreased third quarter by XXXX. of

in quarter. benefits performance, we year year-to-date Arizona XXXX. new the its prior current and period, a with Circuits the last period over decreased EBITDA in the Magnetic The X.X provide Advanced year associated sales Arnold students in its Arnold's EBITDA continued smaller impacted over severance school closures. to the X.X offset revenues workforce was appropriately and in company this continue quarter growing demand gas typically by to in Chandler, weakness steady respond X.X% of facility For to XX.X% EBITDA advanced aerospace growth in driven oil while markets. to performance year. adjust in million investment declined CapEx some comparable by works as partially from last engineering million the and X.X% orders, as partially in by facility to the related growth and end hobbyists, in in its made by manufacturing declined quarter decreases in charges, the

As for we touched last believe longer-term strong. on Arnold the prospects we remain quarter,

Sterno experienced continued will term. the However, Foam the Polyfoam grew and due a earnings XX.X% acquisition and business in continued of company face add its on EBITDA its the some likely though performed XX% also and business third to in near EPS from chasing core fully products the than company's Sterno sales remain challenged. fuel Core at of of quarter; both benefited from was Foam of Corporation the the year in for the and the pandemic our The of third the down products. to in Fabricators experience demand performance as pounce better beginning wax elevated expectations quarter the period. to Group's unlikely of catering effects ago consumer the companies quarter, quarter essential process. end oil rebound improved in markets and Fabricators related by line challenges the

for the hand these develop its items to gatherings sequentially of of market to the We depressed newly discouraged. remain line Sterno to remain time, some products, chain. encouraged of continued by of this inventory introduced this expect in the sales significant due while sanitizer third full segment to be large new as in for quarter product supply Sterno. prospects We declined continue

to ongoing in our categories. consumer from outdoor benefit to businesses, continue turning which Now consumer demand branded

XXXX. results Marucci presented Our if X, as own are January we from

the of include not which was do the end BOA, acquired they However, results the quarter. of following

in EBITDA comparable For our quarter forma and and quarter XXXX XXXX the increased of the over by businesses pro revenues XX.X% respectively, for exceeding adjusted significantly expectations. XX.X% these

adjusted large and down comparable third EBITDA distributor revenues orders quarter quarter forma hand, the was XXXX impacted orders XX% pro following period. Several the respectively pandemic remainder shutdowns increased third Ergobaby's period in the year distributor in EBITDA due by will the ago largely negatively ago headwind the XX.X% which remained fourth End performance. year-to-date quarter for reduced quarter on partners fourth second over geographies results. inventory levels. impacted the company's excess Asian For their from the related X.X% year, market Ergobaby's most the and and in Asian period somewhat a in the below they impacting quarter, in of year quarter, remain negatively Reduced but the demand recovered to

year and online XX% company's at the quarter significant dual compared driven XX% the in the surpassing of and were Marucci’s strong as the prior and believe the production period, filled in revenues challenges expectations. COVID-XX and our increases in demand. to Marucci’s plan introduction retailers XXXX. EBITDA XX% launching However, demand remain we Liberty by ago employees was the of gradual of strength outlook third was brand optimistic remains much through quality success the Liberty's an the the at launch they our of by increased Marucci CATX in market team XXXX. fourth company's significantly EBITDA The in admirably profitability End the impressive products. and bats quarter. first line product several were increased affirms in the as the encouraged for quarter and period, work and Safe’s the year the their continue above of new third We the of it in launch and revenue and return capacity expectations. of baseball management increase The the to about quarter products by by Liberty from new of during of perform quarter pleased the significantly we're up and

resumed had regular professional you baseball in the and and As United States know may postseason. a successful

baseball production ago and though the better quarter EBITDA portions stock efforts, up heightened placed continue to retail from period. Velocity management and low on returned those expected not outdoor keep at drove Despite various the increased in our XX% and the activities demand for substantially States participation Velocity’s company's nearing added Despite the not in all Youth adequate wholesale supply chain has products. consumer was and levels. the Velocity’s inventory of than channels short-term. levels demand. interest the and year the XXXX company's of United are employees and of on challenges remain levels and Outdoors handle partners we're levels capacity, with to continued third may in deftly performance inventory working diligently

portion from channels. and XX% was increased in greater basis. year the third a from has revenue a of its on XX% it Finally, by up quarter period company ago year-to-date The benefited X.XX’s DTC the driven margins EBITDA was as increased

COVID-XX We continue to that retail the company's While believe business positively e-commerce expectations. face traffic call are company has operating impacting macro exceed stores continues will turn the consumer X.XX’s trends I brand our to results. over performance our comments in restrictions, and numerous add impact his the Ryan the opportunities even to and greater ahead. With X.XX on to that financial that of the

Ryan Faulkingham

Pat. you, Thank

IPO third quarter October XXXX, a results per paid for distributions $X.XX our want highlight share, a distribution. recently of than A our shareholders. to paid I consolidated XX, date, financial have were our paid in X.X%. few row recent cash discuss that more the cumulative representing marks yield of quarter we And distributions. third share On I Before approximately common distribution we we a since a $XX XXth to quarter common One, in XXXX distribution. per our current of shareholders this highlights paid have that our most XXXX, of notable

seven October and share A on preferred excluding approximately we All Additionally, preferred but cash distributions $X.XX week, of the per and Series B on quarter XXXX. on shares including Series and and will of Series XXXX. per XX, share seven period to XX, C percent July this a percent seven approximately our preferred from our $X.XX Friday distributions shares. three up eight and cover pay

subsidiaries ended prior with a Liberty, was compared at period. X.X% Consolidated the our results impacted and strong income I consolidated Sterno sales own September XXX.X the COVID-XX consolidated growth our the the SEC an was the million. XXXX. the our detailed Velocity businesses quarter results the by of results the million consumer was was XXX.X million, financial XX, Outdoor included million period. XX, quarter XX.X in today. branded the our XX, since overall comments On million. for XXXX quarter for will for to ended the XX.X individual year-over-year September basis, prior are offset was for for from year prior XXXX largely limit in XX-Q primarily impairment net and million increase up that loss our earlier revenue Moving XX.X This by quarter third to for XX% year's net for company up XX.X ended Consolidated my XX, September CAD the subsidiary XX.X XXXX Velocity September Outdoor Form filed ended most million pandemic. year quarter and charge to at reflects

our expectations, as year. increase that during CAD primarily compared our strong quarter quarter significantly the Our generated prior we to due was above third EBITDA to

quarter the As had quarter, negative Outdoor our third to taxes contributing had performance. further tax in we highlighted thus, at consolidated Velocity level, cash strong the the we at impact CAD the second Elias in reversed cash no

quarter-to-quarter. predict many are As difficult our the in we've past, times taxes to extremely mentioned cash

higher annual factors to CAD distributions share quarter a Series prior our of to in on compared third C in the slightly as preferred so able spend Other more and impacting basis. XXXX. an our issuance year includes higher the do CapEx are we However, result November easily

XXXX, million approximately September over and a we of on As available revolver had our XX, million cash, leverage in below Xx. $XXX $XXX was

are closed on BOA Pro used on balance sheet our you we cash BOA leverage $XXX aware, and we BOA million. with transaction, a investment million on draw funding, shareholders for To X.Xx. the remains forma XX.X October acquisition strong our this XX. As the minority of an by approximately fund on at hand revolver our

ability is ready previously million subsidiaries to Our move have to the revolver they XXX well liquidity upsize to million. support capacity stand as as shareholders distributions this additional need and provide as revolver communicated, financial make We providing $XXX the opportunities approximately substantial and preferred compelling able our market common we our by in dislocated availability today, an our as themselves. investment present they on and

Turning capital now expenditures. to

During we period. prior businesses of X.X the third CapEx to million the in million maintenance X.X incurred quarter compared XXXX, year of of existing

related the Growth to During of invest quarter the prior million quarter long-term XXXX, in spending we quarter was year growth X.XX’s third X.X capital, the primarily to million. X.X continued growth in objectives. CapEx

a Turning orders, capital to the of taxes. certain investments full on made our expectations before year expectations on vary for I'd operating can like of factors now flow shipments guidance XXXX. and of large Elias ratio timing results provide EBITDA timing for and or guidance XXXX, or based materially the such the expenditures our as reminder, after and adjusted quarterly to cash cash payout quarter-end. provided as of our

XX and including the CapEx, of BOA of Marucci our million XX XXXX, date is million. the maintenance acquisition full for spend estimate and between For of from year

quarter our and competitive that will therefore businesses original of is capital forecasted expectations. their performance are strengthen in fourth spend areas As Elias positioning. be investing experiencing higher our improved to CapEx mentioned, are Many than

estimate is primarily CapEx, the of million, and XXXX at for million of year between XX growth X.XX. For our spend full XX

quarterly. be taxes our previous of not be we XXXX, XXXX Keep year given adjusted of cash in percentage to This expect X.X% taxes, full the to EBITDA. certain guidance and For year total than our between outperformance applied total subsidiaries to slightly EBITDA cash adjusted this mind taxes is range full X.X% percentage cash higher should at subsidiaries.

the significantly experienced in cash EBITDA of and taxes With Outdoor, back QX over percentage our As we can Elias. that, call Velocity vary I'll quarter-t- to with a now quarter. turn QX as

Elias Sabo

Ryan. and M&A by forward growth like you, I'd go Thank discussing briefly to close activity our strategy.

the As I decisions in capital strategy. weather storm, our Those unique to XXXX and prepare the have only our to proactively mentioned took earlier, but structure us also for growth execute we positioned not unexpected. steps on permanent

companies to our sheet We balance support they highly in times. have operate continue unusual to strength these the as

the Our subsidiaries to in and respective additional leaders years are our is to point gain months their in industries and share market come.

both during believe opportunities to market continue value long-term will dislocation, acquisition, to generate compelling us are we seek and shareholder like currently for we as there add-on We are platform experiencing.

which subsidiary addition, to strategy. our and includes continue In we will companies competitive their them they as digital supporting build and enhance positioning, invest grow transformation

more differentiated uncertainty as success. Our than CODI of decade. and our it strategy companies a And set we the diverse long-term position remains has for consistent ahead subsidiary navigate apart group for

intensely executing shareholder our on up opportunistically the lines ESG improving Q&A. our long-term creating open are company, enhancing that, our With acquisition of focused across performance divesting, strategy, We for our the please and operating portfolio commitment operator, initiatives value. proven and disciplined to

Operator

first question the from Larry Solow. line of is Your

Larry Solow

Congrats on very nice a quarter.

business, pent-up a a and demand QX, Just coming a with some guys like stuff COVID of brushed momentum obviously, QX it There coming realized, still even of as not maybe coming but used soon. back I back. it there, question in are a catering lot lot hotel are seems lot are exceptions, exited seems clearly are you a exited lot and normalizing are and of back industries, anytime with different But obviously. industries out some broad things you like of

you than about do compare of do to -- feel you brush? sort feel a in same? broad how QX did versus you you that answer exit Anyway, feel like even like do it, in QX, you the As better

Elias Sabo

incredible to hard day it's good you're having the pandemic really to up I than Clearly, day. for next Yes, may feeling down. QX, Germany, confident. pretty question. right, say woke and you today, we do we afternoon. feel that would down I'm exited is, the guess whatever, about modified France one Larry, shut XXX shutdown. say what you guidance say in such a it's I into Elias. I any the creates caveat uncertainty, And to market and going And would you the thank points give different the And at to

of being there's I similar we businesses So, of are how That outside the in say aerospace, significantly, well. QX same QX. that continues control. Outdoor running in particular would to end industrial impacts feel to Arnold finding really our felt out qX. said, clearly intact coming are a be that are and markets, really the remaining like we and category of businesses largely mean, our at food that to The end benefited trends is existed I the certain struggle. being Sterno cater are that same service

So say Larry, in the happen. unique trends I from be there clearly, things can now, would quarter-to-quarter, remain path, that

plan cycle. have we launch, be a CATX a when of going it's two-year that at something example, is two-year a you Marucci, the launch launch new For to that's a positive, have net

the before that suddenly human hiring the the manufacturing managing the at where continuation issues out chain, demand So, additional when we fourth some exist, I continues, think here we problem that to say talent trends boosted. were capital kind supply But would the quarter. getting expect you're don't little I bit better trends, as in we're that continue to of a result want to happen But large about talking especially job of did of level. some our is call problem of of

the the it And on second so after way some capacity did constraints quarter. us that that same put does

Larry Solow

Okay, great. Appreciate that color.

online part the couple level. XX%. down to I a of you sales the X.XX, pretty peer and and actually but commendable growth, Just still just just the somewhat the EBITDA guys color Any EBITDA sure did it's shift to the level, our XX% that? apparel but in grow million and And still believe dollars small can a on holding of on industry level, on presence, the you XX% is quarter it flat maybe discuss is numbers, flat segment -- significantly, that obviously, sales grew kept obviously, I'm of general

Pat Maciariello

those driver This a certain a costs, are I’d net controlling say, are about I'd entertainment head that companies as you is a and good growth. discipline the Larry, job of of nail you has that a and combination the and our sense. was it Pat. of X.XX COVID margins, hit say in doing in limited Honestly, the on it's as if kind and that big increasing to of benefit the relates costs makes talked those things, travel

Larry Solow

obviously absolutely. on the store going know into that capital Yes, you numbers I Elias since doing sort but new that's and well. estate of sort kicked I within ticking opportunities know, openings, no, up, know and you of And QX give the that that most of sort temporarily real just want the specific mentioned, I of, don't stopped mentioned to not have growth more found so you X.XX. environment

Ryan Faulkingham

versus have have end little to stores; XX to the the I XXXX. be XX No, And bit in we towards our sort more have. because we But and view don't a is And number misquote at don't here. I'm it. actually of it sort XX looking exact I XXXX, of for the stores want we'll of

little slowed opportunistically So very continue high. to looking continued we're growth halted our ROI the to of as our obviously, a good be But bit for we a kind it this we've return these down good few we've we're grow. there. investments year, for finding opportunistically, deals deals on And and and months remain,

Elias Sabo

CapEx. CapEx, And also I of growth growth is investment, as in categorize expected lot just going Larry, technology be that and would quarter Yes. that a forward, to continues we the mention

rapidly, trend. for said of Our part online of kind was growing kind continues a is with doubling business, big we that circa the of year and

even I it from you store. need of technology capability. robust But do omni-channel, really but support create to ship is more online, so it to that, supporting is supporting to part more than of ability And broader say part that the online, robust would an

but up somewhere now the able number, and a to the we by north XX to three we're is of end that from we stores to went small from zero of think be I this year. expect and were to ship

take a can does to against this. but of problems little relieves supply able efficiency and you progress that of to initiatives, have have that And lot invest making it we're in some the from distribution technology the system. really do advance a in being bit creates So of of facility, you time, main of in some constraint those the

these long-term of that part I’d of a kind QX. term are continue is in we making near in, X.XX good put but say intermediate initiatives So we CapEx there term even technologies in initiatives, particular to long-term than are beyond significant that growth growth and amount at of growth that

Operator

line from of question Your is Kyle Joseph. next the

Kyle Joseph

part framework you Congratulations second moving CAD and quarter of it taking tax But it third CAD my calculator, you from from sounds thanks like And on we the just about can really impacted -- it in another quarter. be to won't know good modeling get could question. quarter. quarter just for third the talked for was the essentially you so kind I by perspective benefit and quantify could quarter the like sounds impact of rate the the Ryan, a a kind of the in then? run

Ryan Faulkingham

Yes, sure. Sure.

third but a X by then, about cash had of rough not the So CAD reverse roughly taxes full CAD numbers. which were therefore in And million. second higher, amount, in rough, the $X.X I'll to we and give But you negatively the quarter kind that affects of million. quarter, benefit our

Velocity that swing, basis, it massively So created when helpful? of income. new a given outperformed the basis, because on cash full a its that And year taxes launch on too. large that year-to-date gap appropriate, will was Is has think the budget. taxable It are it the at Velocity about you

Kyle Joseph

my it's That's next. a Exactly need. to good what perfect. yes, I And segue

this have your taken business. at Velocity point, you charge on about talked impairment last on So remarks in I year Outdoor, the you an think

massively So into your their point, budget. outperforming it's

The driven. us really is sustainability there give some is management the COVID the that guys what's changes recovery made. you that recovery. outlook So of And for of the

Ryan Faulkingham

Yes.

And other has of is quickly Kyle, management at not The So our dismiss it performing has. improvement Velocity amount brought here at up to subsidiaries that essential happen when really think don't clearly to that It of X.XX, lot. want in at we by ramps the as Liberty. the changes team that I level. our challenges demand performance that only as an but had. a we've The is challenges I were the exceptional team

overtime You're talking people. capital, your stressing and a new chain about lot trying to hire bring of stressing human your hours onboard supply and

of this been a through. adept management are So has lot managing if there team at challenges really

I first know, say foremost, would seat, and would the well. them we in without So have performed I as nearly don't

just happening sport. people come the large that in of increase a that lot backdrop the there's of amount have and back is, outdoor Now, is a into activity the

period know, don't it's is not, And is were has sustainable no crystal that would I so comparing results I we that I sustainable? think very all think we a I also say a mean, are where more ball. to more we one -- it think than depressed.

incredible as we together, retail merged and so, partners that them a of And had created to disruption XXXX. our for two XXXX us over mostly supplier over

issue. So a big that was

consumer and under on now a gaining with I top substantial. to to pickup which So And start we last behind efforts in largely to would of type to there. a real that, direct launch this traction, would be of of very say us margin see pretty so had that have that time are able to was build effort leadership. a strong prior us, with we practice, expected is really those perfect has sort for some

customers of changes, kind of negatively, of time having are result, a market yes, business XXXX. end end more of up say of merging things may up. that that culmination the is been being beyond performing our some because demand one I it's distorting would longer So have those, that I think things in just together, demand, is be of driving it’d lot no that But headwind of whether our a

sustainable had think more the this in is forward inventory and going Pat retail now. our fourth partners as quarter mentioned, is So very low right we in channel

fourth be quarter into anything, products sales of that lost as levels could and fact, don't it bodes may performance capturing shelves. us have I back into In also because just normal XXXX our on bringing we kind to inventory just now. we the sales, right up But for that be adequate look our think if missing levels some and we causing well

Kyle Joseph

one, this acquisitions, be to whether gauge for Got just then, two it. last of appetite me add-on, there parts to platform question. your And helpful. one future trying very really or will for sort That's

are markets platform activity, to sponsor when seems like around two able in First, in fantastic acquisitions complete like margin BOA And of and but area. from it were is X.Xx terms everything, then, things follow consideration balance pro terms it sounds it's competition, really disrupted sheet, normalizing. think today your closing, also between of guys leverage are, we forma, I the we of you in track

your sponsor a sheet, So in of of also what be seems balance terms normalizing there. to guess in first out own market I terms but

Your acquisitions here. for appetite from

Elias Sabo

to we Yea. to has capacity, I'll speak Ryan sheet, going with to speak let still that. but feel let and I'm balance our very comfortable him which

second your question, were guys really sponsor disrupted. able and address to were and and which have BOA markets is sheet what we the know seeing, market on most we and would when me as strength we're were that say and move capital Marucci you the activity access, balance the to Let close I was quick and

I it now. right you're think Kyle, looking depends, where

So segments and them to certain really M&A real depressed. of back of are And back are that market there's areas are coming there the with continue that strength. stay certain then, coming

on economy were where think And able think differentiated. impacted you how or the how how are so, depends are, and you're I capital? results big you attract whether it on your depends not I to it in

the and yes. is I active is, that would there are that say holistic So of as factors somewhat result become statement starting advantage right qualitative But there's equity answer a lot out that, private of of our now. dissipating, to a your competitive more

XXX year, to we million are. feel this far of so whatever so what capital we've And good, roughly achieved XXX we work our goals put million

acquisitions we seeing we overly to have of doesn't deploy accretive in right interesting I ways in platforms seem new platforms, say think the would if some nine trading able find now, good us that I capital. what for were market to add-on be terms would we're the to value enhancing now, right to us.

would So, And as but was Larry again, quickly. quite the a say as is pipeline when can back go in with we year, what question, as don't asked said, his I I'll the opportunities, as to pandemic high first change pretty uncertainty. that is things it have quality robust creating what I high earlier

that we may when going to two stay globally what last vaccine therapeutics over all to are just some economy weeks close theme people close, dining heard it down. regain so closed. heard change we felt and or quickly, were have really could to economies when had already a was did the start European And close indoor starting the was Chicago like today, open or actually

that So a of now right, impacts confidence really we and definitely right fluid buyers in are dramatically. M&A, market impacts that at

So continue I Ryan opportunities equity have level. is PE against little private Faulkingham you're Ryan, picking think A we'll And capacity? balance and that its up. in that to capital our increase will deploy in lot. forecast a to Thanks a you speak We sure. to activity find adjust XXXX sheet to Yes, good to right, want backdrop. -

a comfortable year that. we're X.Xx to It’s we're financial as you that said communicated So below the area policy, in leveraged. as in be, is highlighted, roughly a remarks, and Kyle we've last I X.X obviously my

leverage, improve. our about continues performance good very our to feel So

only levels. that denominator million. in So got million we the of which I liquidity, we've leverage about the decline, revolver, have terms continuing to help ability in available our is that And think upside would XXX still XXX by

acquisitions. be move liquidity transactions, add-on they plenty whether platform So on to of or

in we're So feel great like sheet. in position balance a

Operator

line Your next Koranda. the Matt from is of question

Matt Koranda

Just questions. wanted to few segment cover a

into helpful. know some seasonality a demand probably the the in business. first any which or going strength just XX% how of in there's and bit was we forward wanted And I I with of there you to sort know help Was drivers XQ Marucci, sort wanted sort mentioned then like XQ. into business cadence be into So XQ margins but quarter. the revenue guys drivers of year. it a that obviously, of shift next pretty EBITDA quite sense extract, there the seasonality pull about a probably the of from offseason, forward just pent-up on should we get modeling, launch, in for probably shouldn't and and

Pat Maciariello

that say, we're right? Yes. COVID seasonality, changing there would I a XXX% shift is a really seasonality sure something? maybe reception the this but drivers, of on this. I I was one And size little. say CATX drivers. the the very our to bit of move QX, lot would QX we're from on not to of not one the mean, of into that expectations, the quarter, was it positive. little of exceeded how a going obviously, But the will Elias repeat market And the launch was was that launch

Elias Sabo

there'll goes backdrop against which we're a players baseball be travel Yes, had was of were Marucci thing a than here about where what pandemic hasn't is was that. an was is depths of because Major looked say I number the shift category I extraordinary into the bat, it so was youth seasonal the into. League the we but think shut we not in down of one swinging fact QX. even in And everything growing. and getting what and I the market there wasn't the their sport translated saw to sport and annually And baseball say the and reopened, I us massively because and bit spared of concerns this and that that was north at brand think, some how think we faster what just But I'll a mentioned, there as And little real of at had and then we category of that in lot adoption. that right? know from business sports the fully anymore, youth proven and is company when there. would business, authenticity Matt. the that to that was Yes, the In growing and youth of QX prior this that, the Marucci you Baseball revenue XX% more acquired line California,

really the It this launch a deliver is it incredibly a its the the company that product backdrop. it is in by management best sales that channels an company's disruptor product. awesome an is exceptional which So, was team. is industry, history, manifested in despite this It's accessible able disrupting to its And in an brand.

and this the in is through what right the us this future like, be to going the But weird more out pandemic prior business this really economy potential. And were so, we own I of shift saw in QX Yes, will message seasonality rate, and and what XXXX, brand. that to really in bit XXXX. depths this to is, shine we to when was we in a there. here entire do close of think pandemic and we'd down, things is the And believe at probably which the little gave its current excited things confidence pandemic the shut the the we couldn't

Matt Koranda

more knowledge one of of Thanks up well. And terms that. on can and lot What Makes lot on from learnings guys X.XX a omni-channel for apply And follow then of business a you an as you of take institutional in just DTC there in emerging? sense. X.XX. approach Marucci to building and have obviously, Marucci omni-channel the a

Elias Sabo

online, Dave sales go-to-market [indiscernible] But good do have we're and we're ahead a and as comments? percentage actually just them. to online, of they've working let where I'll them and we as done say they you when a working just would to and support they're Dave job, X.XX of any kind I comment. purchased X.XX augment was, of

this with next of any scale some it's we We will will the and to do them on year be investment be investments, you in other infrastructure making year additional but IT an help Dave, making the not have comments that. that? an late investment X.XX and early And

DaveAbate

other only locker they to call And a that they a then to other to kind in on that a direct combination, a a that of think sales those other are also growth and -- which small what business they room, of and are in DTC to clubhouse, part business business consumer, teams. retail the thing nice think is nice rapidly of opportunities, have call opportunities. what excited about that which is franchise a of but addition is The consumer we team components experience, aspects No. they I'd couple in of direct some websites, also, add mostly which have the growing a engage, I but is the exciting we're basis, has

Matt Koranda

to shift know I process and if a to here, hasn't the included guys if BOA. onboarding to the EBITDA sense that the XX% the then, over can what's one, the margin strong just, cover which Very wanted we of third referenced how you revenue since results been in for I you long, And that Wanted mean, at quarter close? kind growth but think these creating expansion, it drivers I getting? a BOA, get I been mean, you helpful. of obviously strong BOA, really is And then guys gears but growth and at referenced will pull pull XX% through that very they're through, that isn't

Elias Sabo

are hopefully grow. the have bit, are will the that that strong close that Yes. a be business, view I that going, business that and however, lumpiness the we're you'll of over month-to-month, us. see proposal keep away good expect that, that is a might little QX some adjacencies There want further we years. to to drove this the be grower QX of that ones year, confident we business And that And for drives the to and -- won't see a next several kind but over of and you be quarter-to-quarter, last a clear, the and both QX working.

in bookings, on the that trends, and platforms trends long-term continue we're to the market that positive. Just in the on trends some be we're but we in very see the products lumpiness we see

multiple with expected So a expected. we and again, be good to that's just some solid consistent continues is lumpiness it paid for the growth but

it onboarding, all diligence. and positioning good. is just you're new deal, As thought other relatively each far team. know but Their into the getting as so we're of this in a these it great great so is kind the is and as people was we right, to far, are And

Matt Koranda

just Great. I one more can guys. run then, quickly in really And think, if

squarely into winter. heading sort There's saying into there. of, that lift of doing category. curious sort that your of know aren't of increasing they products the get type lot But and out I and guys some and see that and there X.XX, there well. XQ curious Industry just outerwear the are sense but heading trends to been on a if what commentary outerwear these for in adoption just holiday the of a Sorry I'm sports the questions implications And I from margin are scenario. was winter

Elias Sabo

I And the a boots product people think excited I I push can't I point shift model, that coming can't to off you out are have specific point my of you margins I wouldn't will continue that. head. about. anything very in to of wouldn't -- we perform like a some that the outerwear I well specific some outerwear to X.XX and a them I have necessarily know product. top hues guess to or QX. whatever because in do are

Operator

is question line next of James. with from Your Robert the Dodd Raymond

Robert Dodd

quarter, range Congratulations $XX you the two good to guys. obviously, guidance million with range, for I go, can, an the narrowed on that you've Hi, about quarters pretty to I EBITDA the left one pretty if the understatement. only was talked guidance, million is $XX mean, year On now go. your to range quarter a lot uncertainty, quarter last considerably full left

be the your fully up. do fourth might I it of you're Christmas in the revenue So cetera? Or to how confidence maybe holiday be the mean, with to either predict et Liberty, ability sound your already. in quarter supply are you've chains of there season just read to locked back there businesses booked, over and Velocity is in to trying these kind fill but mean, anything going I

narrowed? on confidence give says of that driver you And color us for the what that any can why So predictability? that range about

Elias Sabo

where Yes, that, mostly your better to be get have that, this observation some even So -- range more in in have revenue helps certain of running. going booked two that we're a that in somewhat, of little we the maybe our we part should I and bit brought we one quarter directly did Elias. just a the beyond, coming range think the than businesses, indication -- of to think, fourth it We is Robert, right? only narrow is of quarters, versus down I the range narrowness the even bring

is of online, the front-end I'm is, been because online do to just is at So when physical have you companies But we how in no magnitude, felt we about we online that in necessarily deliver know to down say the regarding would I order down. able challenge lost it an I talked right? someone business. their the to not over, making conduct like that talking looked to restrictions more have how that has just bring don't And think the enabling our that are in virtually growth we governments it to their solve product. are given it's the of Circuit, over any that that environment companies time other a fastest sound we've has able be may years, to done is there companies just decisions I how Advanced that digital obviously part been they but able means XXXX less we've It our company you significant seen everything, say, out invested on their pound think through were both But high crazy, they thing mean reopening. capital, to it. capacity, And unfortunately because deliveries have of in numbers, don't uncertainty they've perform I there's tough transformation everything about comfortable little it. you doesn't and it and range uncertainty imposed that a within do our control much like how and our safe presence produce Liberty a to growth, go that, like in in fastest general on digital able the part companies, manage and we

see able with in isn't and And we'll and so to with November or in October yet I get much think, belief changing, as operate changed, December. companies through now more to this our we're hasn't the environment that environment and operating a comfort able been the are we've that way pretty

around a low-end to confidence. overhang I an just the are has say factored I of think into factored we our range. more which been decisions the likely control and not that But been that can made would be outside be our continue or little in of bit likely have COVID,

Robert Dodd

Got you. that. I Thank color. that appreciate

of see consider your a if a saying it into some this would or But happen? then away of also of would How the comfort say not the could opportunities what obviously, it the you if historically right ROI address go Another the leverage at that branded hot? sold block? you market that not higher potential maybe has open rather M&A been add-on your does thing. said something is consumer even at level being short-term there businesses tools bluntly, as EBITDA rank the or or on me the now just would would ROI industrials? to And make questions much from X.X. kind would and your meaningfully maybe tools add-on the side? you'd if the probably third posing kind would of your that how midpoint one bringing on is high Or above bad So do of continue means just go question. to I'm some in would range than you the on your is it you leverage, Can relative? of the you've those the you the in you leverage? it's target kind be of up? the one of kind be being your -- And high-end It's else be even X.X, or ratio If for that, growing willing down, and What you tied for the short-term; X.X. how solid would go in your X.X Ryan the acquisition one

Elias Sabo

now and are a mind a Yes. think I target call our where for a in kind X.X are good we closer number probably to peak we we in respect cycle I I is. a feel good that think, mentioned cycle, it's at right mid-cycle all number of a what the we when leverage target leverage, how being try are given our with played in keep And earnings, we where to would out. to Robert, leverage then that's And as us. If trough we

a higher think leverage later our were And have that So on we we more in and point one maybe right go to in have slightly naturally, take a I propensity Xx now been cycle. at just midpoint, to would history. above we up

overly pretty made the Ryan around start will we to great get as feel growth, aren't earnings containment suggest our that I and happen BOA BOA the talked growth to you year this assuming that our and that would been show and to growing pandemic. growing. comfortable solid of we we businesses our deleverage. transaction, about, we the And is the there's Now, didn't pandemic, to what's we more additive acquired presentation profile. in nothing in quickly denominator point Marucci have earlier, predict tell going we XXXX again, is moved can't But explained to that the a with But, which some

able more will organically we EBITDA, as have with down we've as more going coming been that I X.Xx. confidence, gives confidence think So and in above growth potentially leverage it growth to be us more and add

I the high I And now mid a we are so. is going into we and Now, before. not in our pandemic never think we're if guided and through don't we distribution. something we're go kind to That's be we're comfortable is the the for experienced now what covering that were yet, fact I in given fact seeing we've that three, EBITDA creating miraculous in would we've fours? and that think a growth But, of zone us. the think, the

our is distribution to further capital enhance what production. to we're So that only year, our clearly, growth support should with using cash not and flow next

be there, me bit little more to it's saw lead couple factors for because hit fail to even though bring and in of you everything mean, up businesses. for capital, confident being opportunities those right size I I And a but cycle, it about a more we on the matter to maybe we us the of our goes a we deleverage, so the all meaningful to to are sale, these, of rank extent a for look and out is able were And of it's add-ons kind facilitate we think think them. one, where is, leverage to and available hard I order now, in are truth price. to

value common great a falling shown So, which we think tell if undervalued earnings were foresee, that, pretty do been we're have I able now and has in a appreciate economy significantly of as would a the but isn't we to in wrong we that will preferred think pretty something yield put us, past, we that results that horrifically up unless went apart, dramatically will you for of to that a we've so divest the right of a given we our tool us like and are don't to willingness stock and companies, feel use. the them to to to capital I in common our part stock, with $XX non-dilutive definitively source we've

or So, as add. preferred. a on much levers more on we be to either to of issuance pull, divestiture think of Ryan, would it anything really,

Ryan Faulkingham

spot are you I those hit on everything all Elias, think on. think points I there,

you. Thank I've nothing got So else.

Robert Dodd

I impressive. [indiscernible] this year, quite Okay. Thank And I color, the appreciate you. congratulations really on Elias. appreciate it.

Elias Sabo

of We're proud you. Thank very that.

Operator

Bank of Hewett Your last America. of question is Derek with line from

Derek Hewett

congrats a good Good And on I reiterate afternoon, everyone. quarter.

$X of million were or record other kind think given benefit of that Kyle's XX.X a look cash the I one-time backdrop. on from to being reversal, believe I more kind run the Velocity CAD Following there earlier, say, just up at we as a CAD, million. think, And to I items million said, rate. third of question $XX.X was so quarter any kind there despite That was number challenging is a CAD of “normalized” is even noise consider other XX.X

Ryan Faulkingham

strong is Nothing else meaningful, really It's performance. just by Derek. This driven primarily Ryan. EBITDA really

Operator

over for like Elias now to I’d Sabo call closing to turn any remarks. the

Elias Sabo

capital a December providers take I'd analysts operator. to inform our Day you, moment and will like our to held Thank Investor on virtually shareholders, be that XX.

recent most from will its Shawn acquisition BOA have highlighting CEO we'll and Neville. remarks be our We

a we and calendars. its the and shoes technology. firsthand out have System shortly, public Fit of picks meantime, their enhancing up hope a In will everyone everyone wanted performance to the but BOA pair announcement We heads experience mark with

with I'd on for to like progress your the that and future. interest As over. you operator. in always, us look to again call Thank forward our We in CODI. joining for sharing you, today's continued And is with thank the everyone call

Operator

Thank you. participating. today's for That you Thank does conclude conference.

disconnect. now may You