Compass Diversified Holdings (Codi) has announced the acquisition of Sterno Candle Lamp Company, which is well known in the outdoor sector for its Sterno branded fuel canisters, stoves and fire starters for camping, tailgating and other users. Most of its revenues, which reached $133.6 million last year, come from the food service industry. Don Hinshaw will continue to run the company.
The purchase price of $163 million for Sterno Candle Lamp is based on an enterprise value of $161.5 million and is equal to eight times its operating earnings before amortization (Ebitda) for the 12 months ended in September. Codi has also provided a loan of $91.6 million to Sterno as part of the transaction.
Codi's net profit jumped to $262.1 million in the third quarter ended Sept. 30, following a reduction in its stake in Fox Factory Holdings from 53 to 41 percent last July 10, but its operating profit fell sharply to $9.7 million because of a loss at Liberty Safe following a big drop in its sales of firearms, partly offset by higher sales for Ergobaby.
Camelbak Products saw its net sales decline by 3.4 percent to $33.5 million during the quarter. The decrease was due to lower sales of hydration systems, accessories and gloves, partly offset by increased sales of bottles.
Camelbak's income from operations was around $2.8 million, $0.7 million less than in the same period in 2013. Gross profit as a percentage of sales decreased to 41.0 percent from 43.8 percent. The decrease was principally attributed to increased costs from a bottle supplier that were not passed on to customers and an unfavorable sales mix in hydration systems.
Sales of hydration systems and bottles represented around 86 percent of gross sales as compared to 84 percent for the same period in 2013. Military sales were around 26 percent of gross sales, down from 30 percent for the same period in 2013. International sales made around 19 percent of gross sales, versus 18 percent for the same period in 2013.