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01/11 03:09
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial metrics with an 8% revenue increase and a 28% rise in adjusted EBITDA. Positive guidance and strategic growth plans, including international expansion and innovation, are highlighted. The Q&A section reinforces optimism, with expectations of continued growth and successful inventory management. Despite some vague responses, the overall sentiment is positive. With a market cap of $1.64 billion, the stock is likely to experience a positive reaction, potentially in the range of 2% to 8%.
Consolidated Revenue $524.3 million, up 8% from $483.9 million in Q1 2023, primarily due to The Honey Pot Company and strong growth at Lugano and BOA.
Consolidated Net Income $5.8 million, down from $109.6 million in Q1 2023, impacted by an $8 million goodwill impairment charge at Velocity Outdoor and a $98 million gain on the sale of Advanced Circuits in the prior year.
Adjusted EBITDA $94.8 million, up 28% from $74.1 million in Q1 2023, driven by the acquisition of The Honey Pot Company and strong growth at Lugano and BOA.
Adjusted Earnings $34.3 million, significantly up from $19.8 million in Q1 2023, due to strong performances at Lugano and BOA.
Cash Flow from Operations Used $13 million in cash flow from operations, with Lugano using $65 million to support its growth, while other subsidiaries produced $52 million.
Capital Expenditures (CapEx) $7.7 million, down from $14.9 million in the prior year, primarily due to a decline in 5.11 store rollouts.
The Honey Pot Company: The Honey Pot Company, acquired in Q1 2024, is integrated with a new Board of Directors and is gaining significant shelf space across key retail partners.
Lugano: Lugano reported 61% revenue growth and 83% adjusted EBITDA growth, with the opening of a new London salon indicating strong international expansion potential.
BOA: BOA experienced 13% revenue growth and 15% adjusted EBITDA growth, with bookings outpacing revenue growth.
PrimaLoft: PrimaLoft saw a decline in revenue and adjusted EBITDA but reported bookings growth, indicating potential recovery.
International Expansion: Lugano's new London salon opening is expected to enhance international market presence.
Crosman Divestiture: Crosman was sold to Daisy Outdoor products, aligning with CODI's strategic focus on innovative and disruptive companies.
ESG Initiatives: CODI released its inaugural sustainability report, outlining its ESG framework and commitment to social and environmental benefits.
M&A Market Outlook: CODI expresses optimism in the M&A market, anticipating opportunities due to competitors struggling with financing.
Economic Environment: The domestic and global economic environment is a significant risk factor, with potential impacts from inflation, delayed rate cuts, and heightened geopolitical risks.
Supply Chain Challenges: Supply chain disruptions have been noted, particularly affecting the industrial vertical, which experienced a slight decline in revenues and adjusted EBITDA.
Labor Disruptions: Labor disruptions are mentioned as a risk that could impact operations and performance.
Inflation: Continued elevated inflation is highlighted as a challenge that negatively affects the industrial vertical.
Interest Rate Changes: Changing interest rates are identified as a risk factor that could impact the company's financial performance.
Competitive Pressures: The company acknowledges competitive pressures in the M&A market, particularly in the branded consumer sector, which could affect acquisition opportunities.
Goodwill Impairment: An $8 million goodwill impairment charge at Velocity Outdoor indicates potential valuation risks within subsidiaries.
Revenue Declines in Industrial Vertical: The industrial vertical saw a decline in revenues and adjusted EBITDA, indicating challenges in that segment.
Churn in Customer Projects: Altor experienced churn in projects with larger customers, which could impact future revenue growth.
Strategic Focus: CODI's strategy focuses on owning and managing innovative, disruptive businesses with industry-leading growth potential, which reduces financial volatility and accelerates annual core growth.
Divestiture of Crosman: The sale of Crosman aligns with CODI's strategic focus on managing innovative companies poised for growth, allowing for better positioning of Velocity Outdoor.
ESG Initiatives: CODI released its inaugural sustainability report, outlining its ESG framework and commitment to social and environmental benefits.
M&A Market Outlook: CODI expresses optimism in the M&A market, noting improved quality of businesses available and opportunities arising from competitors struggling with financing.
2024 Adjusted EBITDA Guidance: CODI raised its full year 2024 subsidiary adjusted EBITDA guidance by $10 million, maintaining a range of $480 million to $520 million.
2024 Adjusted Earnings Guidance: Adjusted earnings guidance for 2024 is increased by $3 million, now expected to be between $148 million and $163 million.
CapEx Expectations: Total CapEx for 2024 is anticipated to be between $50 million and $60 million, primarily for new retail salons at Lugano.
Revenue Expectations: Consolidated revenue for Q1 2024 was $524.3 million, with expectations for continued growth in the branded consumer vertical.
Full Year 2024 Adjusted Earnings Guidance: Expect adjusted earnings to be between $148 million and $163 million, translating to approximately $2.07 per share.
Debt Paydown: Paydown of revolver debt outstanding of approximately $60 million, which includes proceeds from the sale of Crosman.
Shareholder Returns Strategy: The company aims to identify, acquire, and manage disruptive and innovative companies to improve shareholder returns.
Liquidity Position: As of March 31, 2024, CODI had approximately $64.7 million in cash and $552 million available on its revolver, indicating strong liquidity to support growth and acquisitions.
Capital Expenditures: Anticipated total CapEx for 2024 is between $50 million and $60 million, primarily at Lugano for new retail salons.
The earnings call summary presents a mixed picture: strong financial metrics with a significant preferred equity raise and growth in Lugano, yet vague guidance and lack of clarity in management's responses during the Q&A. The market's reaction may be tempered by uncertainties in growth forecasts and unclear strategies, despite positive signals like deleveraging efforts and potential sales boosts from brand refreshes. Given the company's market cap and the mixed signals, a neutral stock price movement is likely in the short term.
The earnings call highlighted strong financial performance with significant revenue and EBITDA growth, along with a new $100 million share repurchase program. Despite supply chain and labor challenges, the optimistic guidance and strategic focus on M&A, along with increased consumer vertical EBITDA guidance, present a positive outlook. The market cap suggests moderate sensitivity to these factors, leading to a predicted positive stock movement of 2% to 8%.
CODI's earnings call shows strong financial performance with a 27% rise in adjusted EBITDA and increased guidance, offsetting the loss from Crosman's sale. The company's strategic focus on growth and successful acquisition of HoneyPot, along with strong performances in Lugano and BOA, bolster confidence. Despite some concerns in the industrial segment, the consumer segment's growth is robust. The Q&A reveals optimism about M&A opportunities and leverage management. Considering CODI's market cap, these factors suggest a positive stock price movement over the next two weeks.
The earnings call summary shows strong financial metrics with an 8% revenue increase and a 28% rise in adjusted EBITDA. Positive guidance and strategic growth plans, including international expansion and innovation, are highlighted. The Q&A section reinforces optimism, with expectations of continued growth and successful inventory management. Despite some vague responses, the overall sentiment is positive. With a market cap of $1.64 billion, the stock is likely to experience a positive reaction, potentially in the range of 2% to 8%.
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