Compass Diversified Holdings (CODI) said it will continue to actively pursue acquisitions of other companies. The public company has controlling interests in Camelbak Products, Ergobaby and Liberty Safe, and it spun off a minority stake in Fox Factory to the stock exchange last year, earning net proceeds of $142.4 million from the transaction. It ended the year with cash and cash equivalents of $113.2 million and outstanding debt of $279.8 million through a term loan.
Indirectly, CODI made a new acquisition on March 5 with the takeover by Fox Factory of Sport Truck, a full-service global distributor of aftermarket suspension solutions. The move came after the promotion in February of Mario Gallasso to the new position of president of the company. Known especially for its suspensions and forks for premium mountain bikes, Fox is gearing up to enter the electric-bicycle market, which is particularly buoyant in Europe with sales estimated at around one million units a year.
Fox Factory has reported a 69.6 percent increase in net income to $24.1 million for the past financial year on 15.6 percent higher revenues of $272.7 million and an improvement of 2.8 percentage points in the gross margin to 29.4 percent. Fox's operating earnings jumped by 48.3 percent to $38.8 million. The positive results of Fox Factory helped CODI to book a much higher net profit of $78.8 million for 2013, up from $4.3 million in the previous year.
In the past year, Camelbak, which is 89 percent owned by CODI, suffered in contrast a sales decline of 11.2 percent to $139.9 million, mainly due to lower military orders due to the drawdown of U.S. troops, which has also affected other major U.S. suppliers such as Granite Gear and Oakley. The present financial year looks even worse as total orders were down by 26 percent to $21.6 million at the end of last year as compared to the end of 2012.
Camelbak's sales to non-military clients increased by nearly 13 percent and represented 38 percent of the total turnover, or an implied level of $53.2 million. Sales to its largest recreational customer went up by 33 percent to around $16.8 million. The brand's sales outside the U.S. grew by 3 percent to $30.8 million.
Including sales to the U.S. military, the company's sales of water bottles increased by 10 percent last year to an indicated $58.8 million. Hydration packs fell on the other hand by 22 percent to $61.6 million and globes were off by 56 percent to $4.2 million. Accessories declined by 3 percent to $15.4 million.
Operating earnings fell by 29.7 percent to $17.9 million for Camelbak last year, and the net profit dropped by 29.8 percent to $17.9 million.
As of the end of last year, Camelbak had 252 employees. It held 51 active patents plus an additional 33 pending patent applications.
CODI expects Camelbak to resume its overall growth this year, but operating results are expected to remain flat due to a shift to less profitable consumer products such as its new Relay pitcher, which filters water much faster than competing products such as those of Brita, according to the company.