WESTPORT, Conn. - Compass Diversified (NYSE: CODI), a company that owns leading middle market businesses, announced today that its Board of Directors has approved a share repurchase program of up to $100 million of its issued and outstanding common shares. This decision underscores the company's belief in its long-term strategy and growth prospects.
The repurchase authorization allows Compass Diversified to buy back shares through various methods, including open market transactions, structured deals through investment banks, privately negotiated transactions, or direct purchases. The program is set to run until December 31, 2024, but may be extended at the Board's discretion.
According to Elias Sabo, CEO of Compass Diversified, "This new $100 million repurchase program reflects our confidence in CODI's long-term strategy and our continued growth prospects." The timing and volume of the repurchases will be determined by the company based on market conditions, legal and credit requirements, and other corporate considerations, in compliance with SEC regulations.
Since its initial public offering in 2006, Compass Diversified has focused on owning and managing a diverse portfolio of defensible middle-market businesses in the industrial, branded consumer, and healthcare sectors. The company aims to maintain controlling interests in its subsidiaries, fostering long-term cash flow and value creation. Compass Diversified provides both debt and equity capital to its subsidiaries, enhancing their financial and operational flexibility. The company's subsidiaries contribute cash flows that are reinvested into the long-term growth of Compass Diversified, which has historically provided strong returns.
This press release includes forward-looking statements regarding the future performance of Compass Diversified and its subsidiaries. These statements are based on current expectations and come with inherent uncertainties. Factors that could affect actual results include those discussed in the company's SEC filings, including its Form 10-K for the year ended December 31, 2023.
The information for this article is based on a press release statement from Compass Diversified.
In other recent news, Compass Diversified announced significant changes in its executive team with the departure of CFO Ryan J. Faulkingham and the appointment of Stephen Keller as his successor. The company also reported an 11% increase in Q2 2024 revenue, driven by its branded consumer vertical, despite a net loss of $13.7 million. However, adjusted EBITDA rose by 27%, indicating a positive financial outlook. On the merger front, Compass Diversified's subsidiary, Altor Solutions, acquired Lifoam Industries in a cash transaction valued at $137 million, expected to diversify Altor Solutions' revenue streams. B.Riley analysts maintained their Buy rating for Compass Diversified, noting an increase in full-year subsidiary adjusted EBITDA projections, now expected to be between $480 million and $520 million. The company also amended its sales agreements for preferred and common shares, enhancing the availability of shares for potential sale. These are recent developments shaping the financial landscape of Compass Diversified.
InvestingPro Insights
Compass Diversified's (NYSE: CODI) decision to initiate a $100 million share repurchase program aligns well with several key financial indicators and analyst perspectives. According to InvestingPro data, CODI's market capitalization stands at $1.64 billion, suggesting that the repurchase program represents a significant commitment of approximately 6% of the company's market value.
The company's revenue growth of 10.29% over the last twelve months and a quarterly growth of 11.44% in Q2 2024 demonstrate a solid trajectory, supporting management's confidence in the company's prospects. This growth is further underscored by a robust EBITDA growth of 28.96% over the same period, indicating improved operational efficiency.
InvestingPro Tips highlight that CODI has maintained dividend payments for 19 consecutive years, with a current dividend yield of 4.76%. This consistent dividend policy, coupled with the new share repurchase program, signals a strong commitment to shareholder returns. Additionally, the tip noting that liquid assets exceed short-term obligations suggests financial stability, which is crucial for executing the repurchase program without compromising the company's operational flexibility.
While the company was not profitable over the last twelve months, with a negative adjusted P/E ratio of -5.65, InvestingPro Tips indicate that analysts predict CODI will be profitable this year. This expectation aligns with the company's optimistic outlook and the decision to buy back shares.
It's worth noting that CODI's stock price movements are quite volatile, which could present opportunities for strategic share repurchases. The company's price-to-book ratio of 1.82 suggests that the stock may be reasonably valued, potentially making the repurchase program a timely initiative.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights on Compass Diversified. In fact, there are 7 more InvestingPro Tips available for CODI, providing a deeper understanding of the company's financial health and market position.
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