Earnings call transcript Q4 2022

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Operator

Good afternoon, and welcome to the Compass Diversified Fourth Quarter 2022 Conference Call. Today's call is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Cody Slach of Gateway Group for introductions and the reading of the Safe Harbor statement. Please go ahead, sir.

Cody Slach

to call. fourth welcome year and and conference XXXX you, Compass quarter Diversified's full Thank company are of the CFO; Representing today and Faulkingham, CEO; Pat CODI's Ryan Maciariello, COO Compass Management. Elias Group Sabo, CODI's

at company after XX-K market of The the are website begin, Relations adjusted full is with at XXXX and Investor earnings the discussed forma closed, reconciliations and also non-GAAP Form company's and we the filed its and financial the measures Relations reconciliations section compassdiversified.com. measure also sales includes including this year I'd out pro financial SEC press the certain point Before that website. section available to for call Investor QX available company's financial the on on release, of today at the tables non-GAAP which like adjusted the net EBITDA,

to or note financial provide adjusted to as reconciled to that the operations a to because Diversified year this Please full the refer EBITDA or or continuing references following call, adjusted does efforts. discussions is significant not will without EBITDA The reconciling from company in adjusted information we refer earnings its expected income EBITDA not CODI net reconciliation in Throughout XXXX as available of loss the filings. company's certain company. unreasonable Compass

Now allow me to Safe Harbor read the following statement.

are anticipates, subsidiaries, identify and CODI and its certain well these as predicting in filed such or including acquisitions XX-Q forward-looking statements expects, discussion plans, with statements material quarter the plans ESG from These and of for the impact timing Certain with in results statements, statements, uncertainties to are performance expressions subject a the may future forward-looking the projected forward-looking results other Words actual as this as could are conference statements. call, factors of Form make XX, enumerated projects to as such operational to similar filings. we in inherent During ended regard SEC and risk SEC to those and believes, in some intended basis future factor differ factors forward-looking future initiatives. in of the as December on conditions. these cause and XXXX, the the future expected

global revise as the particular, CODI or events of chain, CODI rates required otherwise. rising a result supply law, and may obligation domestic significant on our inflations any economic have labor whether statements by environment, subsidiary In future to interest as forward-looking disruptions, a Except companies. and undertakes update information, all impact or publicly no new and

I Sabo. call to time, like to the would turn over Elias this At

Elias Sabo

Good year by afternoon, rising rapidly changing everyone, CODI. and record inflation, produced thanks like was start would monetary for chain I for a XXXX that imbalances, phenomenal headwinds market driven joining persistent results. we us annual supply Despite today. and by policy, recognizing to

operational and branded year, that even drive basis, confirm a EBITDA. the full sales industrial with net sales of financial to up adjusted net adjusted a helping subsidiaries backdrop. consumer businesses the take expert XX% while combined can These niche diversified and up For X% were on were and our share results our difficult pro earnings grow record market execution form our in

recently I'd of Circuits. divestiture acknowledge like announced to Advanced our

are value XX for this partnership of we their which throughout contributions generated support success shareholders their partnership capital our our team started CODI's to forward continued grateful success. and than proud are and permanent and We and look for with more ago. structure has their years significant

over macro well various Jumping subsidiaries our manage the take our exceptionally we back continue to confident term. grow challenges in and remain and ability performance, share to their the to XXXX long market

by clouded term our some near outlook said, unique crosscurrents. That is

In that unfolded the subsidiaries inventory supply first headwinds. driven who the pandemic. issues. destocking significant consumer This from our from demand XXXX, their by out chain experiencing is help customers product are being to of with extremely needed exposure manage branded half own we events benefited Our of to high wholesale coming

With it has until right a the is effect the inventory pandemic winding created down ordered, they fact over retailers sized. whipsaw reckoning and some with that

further PrimaLoft, supply the chain exacerbated. For our like down the brands headwinds destocking and BOA are

comparisons Pat will brand of a from will shortly, reflect performance but we as is that back walk I reacceleration ease. through inventory companies expect half to lower the half of performance through with in just the first worked anticipated specific some say XXXX and our

the gives seeing the that This On material demand no the slowing of products continued are imbalance affluent and borrowing XXX our market with confidence the rising and business are direct our like have signs specifically, of sheet consumer that in customer that balance and More healthy. tells to their more to which of other hand, companies labor inflation is us rising offsetting to wages than we it the Lugano. we cost. components sell us many

positioned the study headwinds, long to achieve as our like this, our their subsidiaries how we highlight well Magnetics difficult demonstrate and of To targets. term industrial Notwithstanding to value one believe of climate shareholders. case macro a our growth niche are improve I'd Arnold we inventory businesses firmly for

decision magnets Arnold, XXXX the in energy at Arnold's transformation. Miller growth senior to XXXX, Dan technology enable leadership in in we acquired strong of bringing as and based replace the for management use tailwinds subassemblies industry to that made the on of CEO In the We permanent the business magnet permanent clean subsidiary.

an is with going new business Arnold opportunities of long repositioning challenging end business, confronted while Dan reminder, extremely situation. pipeline of the was the a some long weak. and was a As cycle programs reality is cycle especially life Restructuring of a and

Entering Ramco electric on a volume for and Arnold further Arnold's the repositioned high Arnold's end, among advance the economy. others, aerospace have Motors improve high its new customers, a to solutions, defense, successfully technical margin, We improve XXXX, which with of like Electric Arnold its priorities focus an its manufacturing and to low markets offer complete company. and match tech transition capabilities. business been center acquisition from turnkey to green products edge, products, its solutions positioning Arnold's technology partnership company to end engineering engineered supported Arnold's motor strategic added

this strategy for setting year year sales Arnold book-to-bill double and of the and for up $XX and ended in X.XX, executed well a EBITDA ratio record digit million reported strong a breaking bookings with XXXX. in growth. and Arnold it on backlog another year

decisions The which the business the long diversified maximize long underscores permanent to in of make strength enables creation capital runway of this for our for growth our term term shareholders. value model, power to us

been XX healthcare and partnership a first XXXX, Kurt more the to the the and but excited at with as M&A remain brings working Kurt we at of proactive decade announcement robust our suppressed In him with couldn't Roth of macro and leader. the pipeline Kurt years of new we and team CODI, experience vertical hard activity long his inevitable we coming joining, launched the into over his public Like have have developing vertical environment, entering prepared since turnaround. targets. been other for by markets, a helm. be Since our has deal

our strength and call to record Pat, permanent despite the year turning subsidiaries and power Before of XXXX proving performance over the headwinds our like unprecedented breaking to durability capital structure. outlook. of and the I summarize a was would our

the through these marketplace and We short recovery world. a growth of inventory headwinds our is back half in be its we working the expect performing expectations through businesses we our potential. way the few businesses of majority above sit will are making in well shock our lived and post-pandemic are As A that today, a believe achieve positioned are year. the here believe of their to the

real Our implicit headwinds. and financial into is in But these diversification outlook. this outlook takes power of consideration the

in demand but year up we we the inventory in are was outperform share to down headwind versus And positioning our our crosshair Notwithstanding example, poised of is the we market have niche destocking expect believe to weaker and robust a we of which be in For growth an XXXX. company's BOA, XXXX, year expect peers. industrial and currently who growth. competitive XXXX, our versus are to segment outlook, of confident another growth extraordinary

over With that, turn call I will the to Pat. now

Pat Maciariello

Thanks, Elias.

pro results, industrial consumer will niche form and grew as in exceeded businesses presentation, XXXX. in XXXX expectations. Throughout our both discuss Lugano combined our X, if EBITDA basis, be January revenue adjusted branded this we it from On significantly form a PrimaLoft own we when and and our pro and

year, $XXX million. the to by by grew revenue form pro and For XX% XX% EBITDA grew pro adjusted form

X% pro Advanced consolidated grew a Excluding form Circuits, by in pro basis, respectively. adjusted by X% XXXX. EBITDA adjusted XX% and and quarter, fourth our percent growing EBITDA In expectations revenue on growth met form the

get to of the quarter. our a want Before subsidiary I I to high provide view level results,

for our impacted in their segment As by consumer several these Elias consumer subsidiaries the therefore sales our mentioned supply inventory businesses chain in lagged end of demand were drawdowns in of products. the QX, and

supply impact and This our down businesses PrimaLoft. most chain, operate BOA pronounced was further specifically who that the

mentioned, trend we the continuing in this As see XXXX. half first of

quarter a in on consolidated challenges able we Despite the basis, to expectations. meet our the were

Our management continuously again executed well once subsidiary changing a environment. in teams

results. on to begin our with subsidiary industrial our Now, niche businesses. I'll

by increased XXXX. increased For XXXX, EBITDA X% X% and versus adjusted revenues by

EBITDA by XX% Circuits, Advanced XX% in and increased by Excluding revenues increased adjusted XXXX.

investments improving results, and driven and technology Driving sales meaningful made EBITDA benefiting higher revenue electrification. over last were from continued and shift focused is towards Arnold growth to by a Arnold the its years these margins on several industries mix Altor. show in adjusted from growth

the defense company's related a order the ratio book-to-bill remains continued quarter, and 'XX. last believe very mentioned but that very benefited we we As points against 'XX, in growth company to strong QX large comped

trend growth to Gross margins Altor QX 'XX. abate this expect sequentially had raw pressures efficiency and to management the And price achieves again continue in solid material we continue as once versus quarter. both Altor gains. improved and

will and normal was activities the the sales service the of from quarter business be and business continued to continued growth. we driven Though On food of basis, Group the and slightly conferences, value believe of return combined waxes. to in travel 'XX this benefiting pressure moderate a company down stable see is Sterno to 'XX. in The in and scented company's return likely levels line its will for

businesses. Turning to our consumer

BOA by increased pro strong finished in the to 'XX with form adjusted and and pro revenue form XX% XXXX, and revenues a XX% XX% adjusted XX% very For EBITDA and by year compared as growth EBITDA increased respectively. XXXX. had

part flat fourth of growth We For half returning chain of the EBITDA we these due to first in was year. the however, the XXXX, in to discussed. declined the half and approximately the pressures company continue of the will factors quarter, believe revenue supply back slightly

strong year, context. purchased the what in $XX $XX XXXX XXXX and XXXX. we in and in for seeing products most million $XX are BOA million Due put CODI company that over demand technology, of EBITDA significant To over over late share adjusted market in incorporating to EBITDA. and at the consumer the gains to slightly grew in in BOA's BOA produced company recently million

lead to in financial will short believe will be discussed We performance believe headwinds a term XXXX the XXXX. We inventory levels. destocking above performance in decline

We growth are also confident that to the as these company return then abates. will pressures

significant and expected fall BOA in model XX% strides accelerate which are it's share which technologies notwithstanding, of Brand used, initial its Partners. fall season XXXX is making will growth by winter expansion XXXX to of measured Headwinds discussions with BOA see market is the based products count in close on further winter to on

Alpine In BOA's technology partners pre-launched to the addition, BOA ski boots worked we company's recently brand the and four skiers performance. static giving Alpine at system unprecedented as of fit market integrating receptance the ski

in opportunity The quantities the believe the official season. brand its is to that industry. fall with revolutionize The the ski launch excitement BOA we significant. for partners, And fit this has are limited the until XXXX-XXXX

flagship Lugano's and Fashion benefited over Houston openings respectively. Island in Newport XX% year of EBITDA quarter Beach. Lugano's revenue salon and fourth and the by growth the In and salon grew continued XX% we both from for its recent quarter, the at and as the

benefit avenues the other the is additional company Washington DC from for expansion salons. and average and In continued open addition, size. in Greenwich locations transaction and geographic In company will new to flagship Connecticut increases in XXXX, considering

of new company Marucci continued in and markets. upon sell its were the continued its above line as and quarters strong CATX bats of through run growing expectations reorders of

supply strong grew in XX% Marucci's year, remained quarter the Marucci's as and revenue improve. chain and to the related XX% respectively. issues continue EBITDA For by margins

bat launching made product diversify markets geographically new new in and Marucci The company categories operations. adjacent major The and a and categories its mix inroads saw for apparel its growth significant products cat continued Japanese fueling significant drives optimism growth XXXX. opening in to in the a geographies The enter year represents and is through XXXX its company several and its year. without launch. glove

difficult of in remain environment. XXX in continue proud the X% of struggling buck the and brands respectively. We to EBITDA revenue trend and apparel X% XXXX performance and company's a by grew

fourth company. e-commerce quarter, a growth of we and be X.XX and is comps the XXXX strong solid start the it for believe In will remained EBITDA led sales. outpaced company's the to having DTC positive year growth revenue growth another by

pro slightly until and higher from EBITDA factors the XXXX PrimaLoft. fourth respectively. XXXX the XX% XX% Turning quarter, extraneous In company's XXXX. basis, forma increased now pro to growth not In grew end a forma increases and on and several EBITDA effect of by the QX price revenue led XXXX as to take declined slightly of in revenue did margins and

the Despite position will and this challenges confident we in the facing its believe in chain levels outlook similar and PrimaLoft remain medium channel, fuel for BOA within given business. supply the year the long-term growth inventory and

in business challenged fourth remained both remaining surges management the and working company's in innovation. of to structure rationalize focused and to cost continued struggle levels environment, outdoor the while to COVID-related its through following diligently activities. with Outdoor business the segments sell retail quarter at new remains inventory high this on archery as Velocity We're and

challenging a for half expect as proceed we in We path, first but confident down are of outcome. this the this business XXXX

pleased performance several places. half for our fourth is mixed for the XXXX. subsidiaries and of the was with businesses As Though several outlook in we are challenging whole, first year the a in the the of quarter very

our We outlook CODI. the of are confident and the businesses in positioning for

call will on results. I the to our turn for now additional comments financial over Ryan

Ryan Faulkingham

Thank you, Pat.

individual for results consolidated are with our my that the the Since to the December in ended XX, results filed for overall financial I largely to XXXX, will XX-K SEC our subsidiary CODI. detailed Form limit results the Moving today. earlier was comments quarter

in sale As are of results. our be and will the operations reminder, operations occurred to XXXX XXXX. reclassified quarter included our fourth a of quarter Advanced year in of of first XXXX Circuits quarter discontinued ACI's first in ACI full results our XX-Q. operating

XXXX that I'll guidance our ACI's make excludes discussion addition, In results. shortly

December to for year-over-year the to third increase This XX, compared $XXX.X of quarterly revenue quarter reflects XXXX. up Now consolidated consolidated basis, prior was the our during ended period. for X% million of results. On million quarter a PrimaLoft primarily XXXX $XXX.X acquisition the our year

sales basis. on at we combined consumer our addition, In strong had branded a subsidiaries growth

million Ergobaby an and loss management million fourth a decrease compared net income year. Consolidated the fourth interest in for prior primarily result PrimaLoft a of the acquisition third $XX.X $XX.X $XX.X and impairment net quarter the of as The to to the in was was fees our subsidiary million in in of expense quarter the due increase quarter.

million quarter XXXX. Adjusted $XX.X to EBITDA was the in of million in $XX.X up the fourth quarter compared fourth X%

acquisitions. CODI's was For the due ago. compared consumer the the benefit The performance the adjusted year at and full XX% year, to a up and was to of increase EBITDA branded PrimaLoft strong subsidiaries primarily Lugano $XXX.X million

of the fourth in in This PrimaLoft Adjusted year costs $XX.X of line earnings earnings quarter. slow for from and quarter, prior million the was at with quarter of acquisition its financing third primarily periods. expectations fourth seasonally for result our ahead a in decline $XX.X the down was million July

our preliminary shared January XXXX, Day. at is to on the Investor our expectations which outlook for we versus Now unchanged financial

now However, excludes Circuits. Advanced

full subsidiary year For $XXX adjusted $XXX EBITDA $XXX range adjusted we expect earnings million we to to and XXXX, between consolidated and and $XXX range expect million. million million between the

the and discussed expects the the As the covered Elias year. of half well, challenging first second a this then headwinds half Pat year in reacceleration outlook given have and a of

X.XX in our leverage we million times. to December approximately our Turning XX, balance of revolver $XX.X XXXX, and on approximately available our had as sheet cash, $XXX million was

additional to as by We revolver ability previously our an we upsize have million. $XXX and capacity have communicated substantial liquidity the

of With reduce they the capital and and repay they balance to growth subsidiaries compelling support opportunities liquidity use need, able opportunities from year we with our subsidiary act and invest stand end, we in to Advanced million revolver levels. Subsequent our $XXX leverage sale approximately received themselves. present provide and ready on the in financial acquisition we our Circuits, which net as to proceeds this

the million of term $XX.X at continue capital $XX.X used cash from demand. 'XX, to operating result support quarter now quarter to near inventory during working strong operations, We in fourth to of we flow, the received fourth increase primarily strategically of during Turning million and performance. levels cash a flow Lugano

to management the note Also the quarter, strong XXXX. in of expect conversion the of fee during owed We in produce the company manager XX% cash fourth consolidated waived by PrimaLoft. of respect

turning million timing X.XX the compared we their finally, of to year our result outs to the in during to was quarter growth. $XX.X The of primarily continued And at period. capital fourth expenditures subsidiaries the a expenditures, of million Lugano of prior $XX.X XXXX, in capital retail of existing support build increase incurred

of and returns in and spend will will several total CapEx on spend $XX anticipate full see capital to of invested strong with be million. have line our XXXX, million we For $XX continue XXXX, of subsidiaries they year payback at short between we This periods. growth believe

capital be as Connecticut D.C. as to retail count increase XXXX Beach, spend location expenditure its store expansion Washington and at XXX in retail Florida will salons well The at continue of Lugano stores. for as Greenwich, its new its from we primarily X.XX Palm current and

With call that, Elias. the over turn back now I to will

Elias Sabo

you, Thank Ryan.

on activity be by the continues I historical significantly our like levels. an below initiatives. to M&A to close M&A market providing would briefly strategic update and

half of We M&A are XXXX headwinds moderate. improves the environment hopeful that the if in back economic

excited a data enable On that key customized announce the our in initiatives the targets implemented will which we future. technology the quarter, ESG consider collection, to bound in platform ESG fourth advance for setting time and front, to continue we're we to us

already for we X subsidiaries. X Scope and to fact, In collect preparing our are data emissions

are of our improve metrics ensure advancement ESG in necessary order ESG continued tracking the we platform This regularly the strategy. will our in to aid and

website approach ESG on our access our which our to shareholders on released of corporate information and policy. publicly also citizenship provides We a summary our statement

we're to teams backdrop. conclusion, our which employees of commitment like of management ahead expectations their results, macro our proud continued thank despite to our and In challenging significantly XXXX success. were I'd a for

With up that, operator, Q&A. for lines please the open

Operator

Blair. Kennedy, from question line Your please Instructions] Cris William of Cris [Operator ahead. the first Kennedy from comes go

Your line is open.

Cris Kennedy

and the performance to-date challenging think first bit half. an half quarter trends Thank half It's you update first will to if relative can? us Yes, on give little half, the good the to questions. be clear more you taking Can should afternoon we you. thank of second how you relative for kind and a about the second

Elias Sabo

question. I in the that it's is really us mean, hearing are that Sure, half PrimaLoft to well. you challenge are due Cris the be in actually our and biggest companies the the having destocking. for the to Yes, products thank really and inventory apparent market going is what end selling and to we're I mean, that first is it BOA difficult

supply I overordering chain as so, 'XX to due of first And that we the in tried and then XX 'XX. caused issues think the abnormal end the highlight fulfillment a to was half an throughout in

kind our some headwind. So is and be I that it, inventory of in steep of think significant Pat model companies BOA this to to, 'XX we share think against inventory. and the are of to count much but kind the positioning kind taking, example, headwinds of it's if of you just growth the for within And just going really high indicator so that some market the kind off and it's up level north create of And XX% that we're better. here should of alluded best about some a where growth then burn have is of comping masking

that actually from And were of at the direct they read to where to BOA Lugano at than PrimaLoft the we exposure, would than I two today, say degree, Day. months you seeing, initial performing better I anticipated. kind kind if So and look companies better Investor feel business we can did Investor I in the you say Day in is frankly and the would right some XXX would of have of first both now probably consumer have that tell outside to we're trends

all businesses, too. And businesses like our beyond of entire industrial really good and that, them, we got three those Marucci companies feel

Day. kind on know, what actually little at felt, are ago of businesses of performing most our and a So month than expectation Investor whole, I don't we over better a

would of about product supply sits have the headwinds, chain severity the hand, a a the take so from the it, for say shoe excess I so like and especially On order manufacturer. which the they company far think other they retailer, BOA if down inventory don't you

our now their stocks bleed So back to with of to product to through reorder. up they getting only to not inventory then that kind get customer ordering, got our then has but and retailer through the customer

be So it problem to long terms we think through nothing with it's takes how that's going structurally company. work a little in but it's this, more bit elongated the to of a

positioned In we we to the fact, today years. hit company this we one partner at if the and look anything, just and which thing brand Alpine, the better which Alpine had is XX launched is said in biggest market

is the so And management on. that and think working just of market are kind from some this conditions build. that these is we inventory that's of revolutionary execution plus I BOA A their mean and causing are this things straight an is

digits down it specifically indicated, turning To double see had think I the at of the your kind first digits. We trending But down to low we see we high single trending kind that or quarter. around. see first half of Ryan answer in as least would question,

So would the for we quarter say for expect the quarter to comparisons be worst first I us.

And made then half the up we would be the first to expect down, to We that not expect we and make from reversal for down be of the but up the quarter headwinds much. as a second second have in to half. be to able any

to in our of gives strength normalized lot from and to terms what that inventory completed, we're stocking again, once of rate. in reverting And direct confidence would should product a sell us I partners that our is what our seeing we terms our through in this growth back say hearing we're consumer be consumer de of

Cris Kennedy

healthcare then initiative, And questions. Thanks taking the please? the on helpful. just quick a for update very Thank That's you.

Elias Sabo

Sure.

in our other explored now of our proprietary right are trying vertical forward. right is to engaged push being that and kind are meeting active plan now, of some team Kurt healthcare deal is kind of the of members of with for opportunities Kurt that a done we bankers lot have investment So create legwork also a working those market, here to and being intermediaries kind through with the

So of say I and are lot to for would that name in establish I'd are have our say investment huge great the consumer establish us healthcare banks we vertical a that the active a is of is banks across legwork lot space industrial, in positive vertical. the a being done that within and and work those also relationships banks.

have with us it healthcare before. influential gives relationships given credibility those Obviously, our through through consumer so, industrial disadvantage. instant that's a And practices, not and the banks, But in we our been these markets. in

robust that potential there pipeline being a built now is of So right is target companies.

of right or industrial, in up than As of weak Healthcare better mean, now, I market said, the are healthcare. including bit seized just is M&A it, the across something might like unfortunately, kind incredibly really weak. Pat all whole market be said, is consumer, the us in kind categories. may a I but little one have general, said markets of

that we 'XX. can into market best are in the some we continuing think year of do So build for the tee think year that contact up so later and in out thing make preliminary and right to coming to reach to is the opportunities now, the a starting to continuing we pipeline legwork, later and opportunities

Cris Kennedy

you. Thank Great.

Operator

Larry the comes question open. of Solow CJS from is next your line line Larry Solow, Securities. from Your

Larry Solow

a on Elias, acquisition follow-up question. just the

little kind you out do anyhow? a you're Xx. maybe you numbers, and in Wouldn't opportunistic levered In would bit historical acquisition terms -- be this a know today bit guys have don't a target small some want little of it year to to But But weigh little a acquisitions? I large still, earlier a probably versus position you like of a really leverage.

Elias Sabo

Yes.

think, there's good to not I is of transact the Larry, a again. news opportunities lot

now for because is weak pipeline a M&A think so I creates the right problem new just it So opportunities. don't on us

We of bound leverage. as are -- upper of down. kind the want -- we bounds XX/XX, is, terms we be That to the towards move at upward up as beyond were where -- of can of and of know, you in upper

we remember, Advanced sell did And Circuits.

not proceeds included towards in the and million application that so debt. is number the repayment the And $XXX what's that of of

significant virtue capital And expect of had in so over to of by course 'XX, cash 'XX we his create our exploded. that. alluded the inventory amount Ryan then build as lot of to And section. working we conversion, a deleverage to really of and and a We and

Now and inventory large, slowed by purchases. our we have,

we're so about and these market destocking kind talking broadly same of thing, hitting doing the ironic. our same the And with and but What vendors we're hitting is it's type in the of inventory are headwinds us, monetizing our we're inventory right? destocking,

that will a you're inventory. our guys of are from bunch most of companies is we but be talking monetizing of it So I'm to, hearing you going to -- the sure this I mean kind

is had like in. problem you this, we've the something when inventory that's Now flowing go through

saw so beginning. the a of capital get our the off while in to through expenses And inventory have accrued We took pay happens some our We working rises down, come thing that first our that we inventory, port. and is payables. actually the

how a we as too then it's eventually, expect might bit a buying, And But normal cash inventory, back have we but to accrues flood we and cash our to cycle. cycle get back granular, get conversion normal little it that we'll up. know cash a when conversion I AP be we of works. the monetize -- get And and through

come flow based cash amount from right expect as now, from of we're free a working would a peak working our liquidity 'XX operations so we at significant in I And monetization. expect what say plus capital, result plan, have and capital to we of on

is result So to we of be issue feel not would to statement, a the what deal kind even ingredients there really so it. weak interesting, incredibly deleveraging you we market of now. as we be have But in that, up place. right have with was act your that acquisition able were an is that all And an opened as It's think if for on we the with. to we that

Larry Solow

just then on the guidance. And it. Got

You ago, six inventory in front like And a shallow the supply think slowdown feels not recession shared you hoping hoping with were -- of continued of the in of back like in you concerned of on outlook, that in about as weeks it in concerns, kind that don't the happen, weeks the kind maybe concerns six us still was half. your impact for. ago, one, feels I think the or half maybe company. built perhaps sort I economic are even also, but economy, now think a could included you about year, the the your It you I guys

that PrimaLoft are of be little front facing loaded, maybe more So then two-pronged because less and but in year back bit question. issue it's much it's just the half. the trying and supply more a a that? more then bit clarity a a Would more also loaded they end. normally, of little just get in BOA So to this they're of I'm of little half And rebound in a kind more front-end kind front-end challenges more front on that inventory that. of

Elias Sabo

the and answer first BOA to question so Yes, answer PrimaLoft the I'll seasonality. I'll on Pat and ask

macroeconomic In I think look it. We of before. seen - sort terms coming terms see never I that's what that largely and don't outlook think a of any kind of in a at? we're recession really do And conditions we it of in signs we've it's of is

market labor where dramatically an We of labor. demand have exceeds for employment supply

push the because run while we pull apart, is through that surface month on not continuing these inflation monetary doing you But side. every if increases going in policy kind go side level. to it lot labor significantly inflation a it's is on inflation a rapid of thinking down good at high pretty has the And to

And of so as it We during transferred say we a U.S. macro a right? look we the today, the pandemic, have still standpoint savings in got would that at from lot

higher may graph, got the into trillion at was something and There was whittling than really consumers it and economy that but and start of pumped look still a we printed fattened $X that if the like you pre pandemic. the so savings be it down, it's of kind

still positive. are savings net a So

right at have labor that is that high. - and for is now jobs unprecedented You really the an demand creation, so level

spend. experience that mobility go money to have they and job, a have they over consumer when my has another spend a time to and they I job

And side. are down so, there the like coming inflation, I impacts good on is which think

So that right tighter lot actually kind is costs a positive, not them right. of are lot But policy, And a were going are of in and there's up. locked floating now. mortgages so monetary of financing

Because first double-digit - half, EBITDA end from that of driving affluent feel would healthy. we're And know seeing customer, slowdown. So spending hearing at that of the high down say, not know that's kind be but towards skew really you're we what in customers. well, single-digits more suffering ingredients not our I a for really, are the inventory. you market And strictly expecting kind demand are companies from an to consumer customers, we're in the that still from I but least to -

present we really are not Larry, So for feel a that good, recession. conditions

would is for us it's remains to anything, running if because wage growth from than market that predicting to that labor X% still is I given significantly strong go I might Now demand rates and hard see so plus. inflation have feel what down coming interest more the say, here

I think with generally consistent inflationary that's conditions.

prints, as that X historical the market. coming X XX norm a long compared labor as to kind the million demonstrates of this kind keeps with of And XX million just it out in has and million, or of JOLTS power today million

internationally, tailwind that's periodically nice comping China, through getting year. running I now dramatically. that against kind when for we're so, shutdowns you was And think are the country also which of happens zero of and kind it of the look the would that I in Asia COVID China, policy when a we say rest impacts

than was five that that times than energy really there. and magnitude were And operations so now inflation Ukraine have consumer invaded China likely to inflation as over seeing reopened, last a Asian in four Europe kind we and dealt dealing that that growth. with our hammered strength higher of international distribution has with an what us that's, in was of positive some of global year order tailwind to And higher the know, you we after Russia where we're and

a anything in going XXXX XXXX difficult still if their on, very dose but drop And the know now took a So of kind the I is we coming has there's inflation down. upside Europe severity war and in in from of of medicine XXXX.

I you, well - significantly would to interest year Larry, that if 'XX from feels So rest it go not I tell economy may have higher. sit, for end now of market rates bode the where sales better of terms up in and through this the

out us generally play But I about something economists that Fed and that's to of kind relatively feel looking XXXX, robust. we're think plan and will where for things and think the for have

that And that exceeding rate even growth given like we so, there's through today. our feel this core the destocking, I rate some consumer of think exist get growth nothing or dynamics possible makes isn't our inventory us core the within when

Larry Solow

I Okay, appreciate it.

Pat Maciariello

that. a year last not little maybe in but loaded front historically BOA end end on Larry, as 'XX, were loaded, as they front bit

they last probably and I to just year in loaded clarify… think clearly will be back 'XX than this end more year

Larry Solow

which I year PrimaLoft front least more loaded? - end is well, last at much was usually, believe,

Pat Maciariello

have PrimaLoft stronger are products the because much ago is year later, two customers in even they be our a the ago. don't or front did will than worries the later What's end. that back supply and the end happening years still chain they ordering in

get QX typical, bleed bigger And it'll a but business. front a we little and end a into be than proportionally so, little largely bit QX may a little still more maybe bleed,

Larry Solow

can I one If just more Okay. slip question.

the the then interest year that or year. million the it's pilot How the last $XXX come EBITDA some you level, full goes dropping tax million of the a there's on adjusted And income net million. interest this sale expense expense. But simplistic ACI year $XXX I from on sale $XXX Just the had get - is million ACI. mostly mean, to full EBITDA little higher back I and on also you to that's guess don't $XXX of ACI? on for

those - those trying two I'm dots? connect to just So

Ryan Faulkingham

are you're right. interest end, business adjusted right? right? the revolver $XXX year primarily And correct, we plus ACI, Yes, Larry, given was cost, - But It's earnings of highlighted come floating, million accurate. had down. got We've of Term you're that the or A which pretty million it's yes, The model. numbers contributor, at sale good the $XXX a just you

that from X%. rate call go X% and And roughly year, you've year it to seen now a X% a over half ago

general corporate to adjusted that's slowdown overlaying So really I'd that. in operating it's meaningful opportunity earnings. that's businesses, in of say costs from the terms No

Larry Solow

I interest that what's it? guess really base million sale $XX the it's plus So really doing yes, it's

Ryan Faulkingham

Correct.

Larry Solow

Okay, appreciate color the guy. I

Ryan Faulkingham

Yes.

Larry Solow

makes much that Okay, guys. sense. Thanks so

Elias Sabo

you, Thank Larry.

Operator

Your of next from open. ROTH. question the line from Matt your comes line now Matt Koranda, Koranda is

Elias Sabo

Matt.

Matt Koranda

taking the afternoon. for Hey, Thanks questions. guys. Good

make sure just I destocking commentary to So the specifically. more inventory understood wanted

may So versus that to it with more you like OEMs wanted us? but if could out it be retailers, sounds parse for see acute

like in the we And you're cycle back but the then destocking up half of also goes just it signaling the year. first sounds then should pick half, in

my comfort Just any that's comfort they give you in of your that seeing are you books? better on second Maybe get terms data first in there, half? order points things What can the question? the

Pat Maciariello

on Yes, varies your answer just sort quickly It level I'll inventory real question. geography-by-geography. of

excuse have been locked for Asia, people there - me. in is example, up as locked up retailers inventory So at

- and and Europe. at I in to in America As guess quite due not my the between much people have their it's retailers in be less been out North COVID in would as about and probably homes think somewhere

your then I'll question, let answer answer just and I'll other So that Matt. Elias

Elias Sabo

we gives things that then question that Yes have and improve. into a businesses, our and mean, half Matt, we company going generating those I the are of to the companies to right, presence, about going of and back your go like doing. well where again, are X.XX, sell and at we at confidence, a Marucci year Lugano's and least, what where at look if the DTC to consumer through we is us their sales if look other we both big look direct then how all consumer at the back

which out they XXXX. frankly in January We at businesses, our stronger even great than finished had look in a where and XXXX industrial come have

They run-up cycle, pandemic through ever they in go stop of so, some we strong. boom as weakening of other could don't when than that a bust a of go Velocity And incredibly encompasses that that right five know, it's right of had clock. doing Principally seeing doubled like the have are you sort our And and fine that unfortunately, characteristic companies And Ergo them, the and the down a through is cycles businesses outside right demand earnings. now at Velocity. more pendulum And there and where to of kind some businesses. is middle. we're a of

boom That's company right and bust is. we that demand past where kind would feel a cycle, have the now good. the cycle So is does not end mid-cycle it had we we market now look and one taking where say, of

where businesses of Outside nine that, market we have demand good. feels end

have of the forecasted. strength some like trust we robust at and customers, strength more our given to of economy, their there's there's to really PrimaLoft. customers, kind of the in our inventory kind we trust in But at BOA Now cases, with then in have outside us BOA everything velocity had more consumer destocking, the than and how it customers that feels and we know what believe just to leads and

be how based as if little say and half a may anything, back now things stand running. so in right we we on are And it conservative would incorporate into guidance the I bit our

How what that back we've and in back running in, than we imply things right that economic now, are a better Matt, softness built some built would so half we into suggests have from where today. inherently the stand half

half. feel to feeling to through the that when pretty going revert So we things this, get are do good back in we

on extraneous economies, a events, as dime. unless some turn generally, know, you don't there's And really

think falling off And so I we're cliff after. looking or the it's month -- a just the at don't month economy next

what 'XX a than sit today, from ago. like anticipated be a month standpoint could better so where we feels it we And GDP

Matt Koranda

XXXX is seems It our and expectations. coming like your healthy. Super ahead that Okay. margins specifically on And mean and more framework in on guidance helpful -- like of during given. like how Lugano. so least well I'm call super commentary at detail. it are the just contemplating Lugano it it curious the based - pretty grow within far, I that sounds to just in - just your looks consumer continues you've aggressively of Elias. you on then growth in are guys Thanks the

the how of curious you're just thinking growth So about XXXX? in segment that

Elias Sabo

Yes, for us hard. company continue. a that it's hard grows conservative. us company to hard But that that's love will own We we a to to for generally It's be owning a year. that like not forecast XX%

the there's so, in case. that the that months isn't that suggests now, And right nothing Matt, two first

January the But year, the would but growth strong last double-digit guidance to down speak and be XXXX. in good that come February can they materially Pat our from still we that levels in had were Lugano how to we a embedded is results and relative grower.

and think Now I Pat in January February, it's…

Pat Maciariello

and January line very is a February in not beginning was is saying, strong, fine is if little coming exactly Elias with the better. year of - what

Elias Sabo

we year-over-year conservative was. our have but carry Yes, so and But XXXX then be would been no In a and in the more that slowdown we at that deliver and Matt. that again, exited just forward. February there's results reasonable help - over QX for rate and - grow plan where business rather business January, from what going grow, to we

Matt Koranda

post after sense. $XXX point divestiture, million And proceeds one debt just if in much me. a repaid last then sort ACI just of from makes on you could from put fees. Okay, finer how do What of mentioned just a debt plenty paydown? that inventory. front And to net working you pro opportunity on of capital flush the leverage - then like kind form does to

that's investment maybe underappreciated among think community? I

how maybe if year? cash of that perhaps end inventory up and leverage kind contributes flush us and this that help just potential So this where up could the could shake that you year shape by have to the you of much

Ryan Faulkingham

paydown so that. to on Yes, made that assist there gain. that used happy revolver we will with proceeds Yes, profit be allocation $XXX we is to the there Matt, And a as sure mentioned. is million payment

net And will in that. be against calculated not that process. that amount So yet it's is

couple of of do that to of can proceeds would of kind So turn math and those our leverage. on effect you the the a yes, what tenths essentially do is

the XXXX capital. in we retained Investor And that just million second we Investor system so - had XXXX, of in And and be your that the to cash now about Day, we $XX cash pre-working deck we levels. at we Day expect to question, above highlighted highlighted had said or we the in retained have

Elias that amount as and next it think some working north So of as back sort then coming our in of year about of implies million. capital highlighted we $XX

we had that I throughout inventory used portion $XXX A million last of inventory. was year Now levels of about as year about think good working capital. the

to was Lugano. we hope support will Some inventory. Lugano still need that business some that though of to And will, as continues as it grow,

So, that don't we see coming inventory back.

year. Some of to last that had we growth XX% inventory support was just needed

there then system. addition in excess. And into But that, third the we another back is come expect retained that's to roughly of will that's what I that the cash mentioned

cash, And you, conversion dollars hard year's retained of to reasonable for a assume XXXX. last build then, roughly year. on put next working good third would level So of inventory - back no same but think be as use coming cash amount I capital in hopefully to that

Matt Koranda

Okay in very detail, helpful guys.

queue. So, I'll jump back you. in Thank

Elias Sabo

Matt. you, Thank

Operator

the comes from Robert question line of line next open. now Robert your is from James. Your Dodd, Raymond Dodd

Robert Dodd

guys. Hi,

I guess - questions is what been partially of And answered. these some

et you I products cetera? When but end into in - of look you - about talked on of half second the the the and BOA there, expectation on think, the rebound as year. through particularly the a is sell

I getting, second if for and firm that when in way be manifesting visibility orders, But talked to visibility when to of would mean, it's be the need would know, not would the you orders going you that be but booking but necessarily when half the you actually different expectation, coming put - the in can need inbound? terms I happen? to the about - much how And actually to

Pat Maciariello

of picture sort that better our of being right? QX sort a taking have is sort our there's confirmed believe six, sort of four, varies a at But weeks, usually of a know, It in short earnings good, pretty who's the is you end that the QX So Yes, of at the timeframe lag is trending. industry-by-industry on answer we'll of call in have beginning will of eight how on that the orders. kind picture we if good what QX.

from of sense that several we're have inventory, Elias' our So and statement. into sell-throughs. And picture at in the if partners also conference right? confidence and from little about that mine, that QX terms would what say OEM of call. hearing of our in what a different seeing makes about earnings factors play part model We'll a count, there's, though sort comes bit of we're I

Elias Sabo

backlog. is an we orders to We Robert, still can ship six we and when four Yes order - take the out in it. take weeks take can

time. would not lot I three where a It's you of kind it's - month monthly shorter a It's four it's lead have So that. a business a or than time. say like

we we third and the the to won't be are definitively of until can in get back kind kind look of able likely we're to quarter we're ship and trends - that. what starting half bookings So June, tell against July for going to like what

incredibly fourth we'll Probably lot and as on a where on, will will slow. by bookings you pretty was not inform first January that a it's gone good third the the has quarter I February have about tell read is. is the that have quarter great, awful. gotten from trend but standpoint quarter better. July, that a not

starting up pick seen that happen. been there's to so a And we've general already

might recover, QX. the in like short-term going this It how quickly we're point aren't the the We work see it kind kind can yet order. where to actually depth nature that QX given fulfill could we of of just to, be can seeing at business more - that in have of And recover of quickly. we're a drawdown to an

Robert Dodd

really extensive got Got I the you. Thank color. it, it. that - appreciate

you this and it working to biggest just XXXX. think, - To investing talked second you're there. been in open biggest I was, be the the of mean, change previous the clear, that salons? or I stores, I the probably - answered fact or it about the any to mean, answer. one you're schedule contributors Has in to still The one two you in build only, Lugano, is capital probably

Elias Sabo

the grow to made working we that that is not is sell, build… you that and had right? diamonds if the and cents to working - remind you'd want money up to The - sort you we'll right closest I other sell the know of widgets gold our this - on right? that inventory of fine thing to stones, going we're selling it closest capital. short continue mean, dollar, answer capital you We're have, to is in I

Robert Dodd

No really - been it's good.

So to be going because growth be to that's still good? the going Lugano the let's just on - is question still heavily it invested that say quite has in the been return

Elias Sabo

is plan I dramatically answer of growth a have that They're guidance more growth overall would conservative yes. with has our earlier, of much and be. and embedded planned this currently company. we Yes, Robert, I plan for mentioned the in Lugano yes, you the running would ahead where tell the

guidance. So requires us in capital. embedded That what in we've our to invest

additional yields that right in the continue an as we And XX% our on to if we're What like inventory to a ownership our sort that we've to margin. experienced is dollars and that long find about capital dollar seen continues we it, of that and invest do over of we of opportunities because what going can't as into. And course very that incremental on to invested deploy get trend able capital $X inventory, EBITDA we're margin, return that pretax XX% often $X revenue.

over weekly and of So remaining have relationships at course we the inventory are. and yield growth to monthly question on the and sales basis what they investment will ownership. and continuing frankly look so our they are far - is the consistent the a And our

continue in will the to of growth invest we So, Lugano.

$XX million, if million million $XX $XXX million have instead invest lot $XX $XX of we're probably And we'll to a having EBITDA. huge or there's not going capital be now, forecast not EBITDA and that be million because to growth amount invest kind of of to incremental generated million think all $XX million right so or inventory, of we going a to the our another I $XX in is put happy to of of

how it inventory, think help of us our financial could forecast kind I and the level. meaningful meaningful continue to a it. in exceed invest we we at more can to extent that's And - will on look it at a And

Robert Dodd

outputs of of the of to during that, course of the to assumptions the Right - that I number embedded forget. a way mean, and Is the so subject are a the say other years the budget it? and Lugano revisions nail don't greater businesses. and putting

Elias Sabo

Lugano - our we've probable based probability think the current based plan. current trends, seen upward on what January I has February forward going to and most highest of on revisions our in

Robert Dodd

Got it, thank you.

Elias Sabo

Thank you.

Operator

Matthew Your comes Howlett next Matthew from is line question of your now Riley. open. B. line from Howlett, the

Matthew Howlett

Oh question. taking thanks. my Good afternoon. Thanks for

First, just a about XXXX disrupt on company. of the rate $X long-term that still contemplates target long-term XX% billion growth the

going with subsidiaries? still You're - with good that, long-term forward the trajectory of still that's growth

Elias Sabo

of I Yes, that our with I things out Arnold. of it's been was the if than today really purpose is anything to the companies point positioning mean, one years. of to suggest so and that prior there's - is it's much wanted better The in doing

again of that mean, have and took the legs - like and perfect economy, really of a were the difficult a and Arnold positioned to part even that to in lot company Miller it's growth the they with difficult very team, around, created companies got and incredible turn I of was situation some management right? a complement something And lot I Dan a

regardless know grow drive to that going is Electrification going is still and the with and happens picture, in macroeconomics, to green what something economy that still green macroeconomic of it's we global the growth. the economy

are incredible go to grow I and have with management team to in so, it. margin grow the we Terry board, team drive all there, things example, And to doing efficiency we're and I but that seeing one his across touring that as use could and revenues and

companies And grow their Pat are taking this one even are They compared BOA year I suffering a to by and could every I model tell last much today our it. XX% market you they positioned pretty year. mentioned if across headwind. they're share. going count is of that to mean, over go better

on. look I look - everything like really can't that's the going the we So if at I at and execution happening management and that's

growth what There's nothing different in probably term that suggested. higher it's than of And anything, rate be we right achieving that if any suggests exceed long to probability would now. fact, our

of below our top great it grow. on not other that, On growth the Circuits It know, consolidated Advanced guys you company, was - was a but did materially as rate.

of high grower to growth. accretive to double-digit virtue by just So kind little of company than that and GDP was low removing single-digit a growth a less or GDP, we're of whose rate is kind

So of and going we're nothing through there this. me kind to our doing is likes firm nobody obviously we're is go conditions happy trust like one through no in

do last But how when executing, we teams executing are you. at to through extraordinary this an management our happening core know comps other be so at get year see outlined I about And what's that differently destocking were next year the could they don't and maybe our what customers are we've we're not if - supplying we you least think or than going growth think level. easier. But our I to the at levels

Matthew Howlett

huge everything off. mean, comps this - The year right. you're just throw I XXXX. Yes, in

I guys absolutely, beauties shut? about with X.XX I and the your I of mean, very appreciate question, portfolio guess I falls toward IPO you That's the I a recognize of And are the before target. it's that on one you the long-term holders. So the you that structure. and on great that to it conversations have bankers, were bankers close today mean,

for can - more markets a second Kurt bankers could that, of the rid give approached more little to are me could to out get what maybe maybe that's we I the in want out you - start, you half - half, of the there's be stuff a Would stock, the terms something? a expect smaller back Could about buy you rebound being in there? what things of capital that there back what look a saying If are to some the to is of, there And we stack do could sell and stock? window, approach something? capital, in you talk year? And maybe mean, your head appetite the

Pat Maciariello

has up a is all many sale, our matter it's of that So, many Elias for times of said I - mean, price. business

but at so, We out business out. actively this don't And we're going actively go any plans all. not market have year to and

the would market I to side, IPO X.XX say the the extent On opens next year.

has well of makes that one great powerful executing it's management And got - we've never never the and associated say company ever most been they're brands, the, if a team, with sense.

So those would how add. - you of those both what that I answer would be Elias

Elias Sabo

and capital the anticipate constantly are about have to The been dead. bankers and would markets. Yes we you Matt, bankers, talking markets

going think consumer there I if I'm correct to me in wrong, quarter, a XXXX. in see single not the first don't Pat, we're And I but I think one. IPO was think

we've incredible the with is. as IPO long shut gone So that this being it market

as the given surprising macro picture But Reserve and happened as it closed. It's the that the market are tight kind the overall not and and of being Federal uncertainty capital is. the markets in what's

I've and talked eventually up bit to day. just the but come will a us up. my sun team a It little remind always longer, take As comes might to - sun the

be like this capital to sun shut up up as again we would markets will rising M&A And But in open period things forever. it. day the these happen don't all isn't there a we'd open a where markets where I again, be just the where quickly as the Again, change, up, need work a conditions into will next that so if and new macro come long point, pause we of through been for markets our for to because in. way don't some on at they've year, year kind supply as open anticipate there's even

and valuations going so, decent I to the the kind to And next high like quality And giving a extent quarters. markets are X.XX is in probably it the companies, work of high our value companies through company. feels few that to of that and to very quality here high - open good we're way kind think quality

couple - ago like public would funded be consider investors. capital years did piece we and being the public requirements, that in market their by and we floated Than of a company taking a public having that the

public just wait is performance you to in could think companies I to other apparel have a ready is. very and space. So, relative we it the company much tell that company see and I its where

does Pat last attractiveness really the revenue public in a a other on I than apparel it had pressure when its margins, growth small to mean, think seeing revenue Over double-digit was we're as earlier, nothing deleveraging. indicated space growth companies investors. X% to and enhance huge EBITDA revenue time, almost amount generate year. difficult on only Because growth other percent are able X% of I and growth

it's even to when more is bow helps it of this it tie opens ago up, And I to time. a approached public market on probably considering company so, the is kind couple investors we the differentiated the So extraordinary think how is. conditions and when really this it I a think than company attractive last and of market strong was, years how

Matthew Howlett

I question. to the the to great we'll certainly be And really appreciate that. be was high I to very price leads be guess target last for It because would me for that. watching some And that that. that monetize able of

shareholder You guys friendly. are

companies repurchase You're the undervalued. put program could more You the times portfolio there, trading stock appetite worth to be XX what's your obviously, didn't in the think at XX, while you and was didn't than, a lot stock? if

Advanced of to cash return paydown the obviously with -- this conversion, from via what's capital If Circuits. What's get and some Thank the repurchases? you share appetite this you.

Elias Sabo

returned dividend. having said, know, as through amount as attractive a the our today place. mean, decent price I buyback you that is warrants of annual we a already Yes. stock capital so us in Matt, you it But

And so it we on prepared are to because it. we put in place act absolutely

kind all against generally As the price are, these where of is are scaled the buybacks they marketplace. in

what And any that results nothing there's if our a or shares investors of low a XXs. quarter were of back has the where kind and they impaired positioned holders the fundamentally they're than in year were their trading businesses. we because businesses These ago, better of these are such term looking our nature, we'll long-term by is, against advantage long view buying is short-term then a two at have

behalf. on that the benefit to to value time if long-term take -- sell then investors of So want accrete to to over their more our of shares on us we'll them, for shareholders advantage

we But are company, to capital in use a and to through and young subsidiaries. ultimately, would growth investment our we acquisition growth like facilitate our

in reality the our for stock we the against allocation a for the it's at. to of that down our shareholders is are best there may hard And this is deploy to back. just say buying condition. constantly XXs, not kind our So with But that it capital of capital be opportunity looking low here us look and temporary

and able companies we're so of hope to value rebounds prepared long-term hope for advantage that take and of and But would value in. and happen, term, the intrinsic the reflects of efforts to stock we and our putting kind because in kind that. these you're your of that dislocations sometimes the the shareholders, We we're near do

Matthew Howlett

Appreciate it.

You hip I'm And I sure Thank pocket. it. you. at it. have you'll appreciate your utilize it really

Elias Sabo

Thank you, Matt.

Operator

the question open. Sage Asset Barry Barry next is Management. Your Haimes comes from of line now from your line Haimes,

Barry Haimes

so I Thanks questions. two much. had

The first pressure inflation about upward labor side and and guys better issues, But tight is rates. the talked you the is of that some doing of consumer the flip market. one the macro the on

And are your it's moved about so to debt little moved bit. down, the back try raise up Obviously, to is, the or now you long-term want a yield question XX-year debt not? thinking whether how and you more

kind of capital. debt kind curious how long-term thinking you're So about I'm just of

I more over But think question many of And on the Lugano potentially of That on sort you're does to second to to opening year ROIC of feedback a steady the three new state? of lots locations. I'm a return what to three was then years? location? get five location locations thing? imagine Lugano. locations, at on two inventory. XX any on it great do two looked So those great. it potential you've And a would new the locations And do take or be are new next you curious, thing a since couple you color XX-month on get for How how Is a long that or

Elias Sabo

the for first debt question, 'XXs. you your remember, into locked Thank the our And is question. Yes. vast majority the late of

and And so if correct it's me I 'XX XXXX. wrong, like think, I'm Ryan,

Ryan Faulkingham

'XX and 'XX.

Elias Sabo

Okay.

So even longer, and 'XX 'XX.

fixed billion That the bonds billion. $X.X rate marketplace, of We have in and is $X.X respectively, X% outstanding. X.X%, the roughly

from the a that were of borrowings outstanding, We million As ACI. off had we but $XXX paid revolver know, loan. with proceeds we our you term kind had borrowings revolver

on billion million XX%. $XXX is $X.X So

XX% XX% have debt that We fixed is now, our that's right floating. of

if investors a debt if we market out to the, few of a trading we think, right the XXX% points in could, us and to Clearly, But we of talk. have and were kind than to we was enter could that's would are it just -- I debt, look rather that's we it we now. worst appetite basis than at that who our paying given wanted couple have talked is And more term And to basis of market problem where have indicates that we hundred to price our have XXs. kind talked and low right our fixed points bond you XXX what higher issued -- who currently. The we last bonds yield XXX, is now pricing tranches. bankers

kind at of of we'd terming I right small a than one going secured turn being think it's level. secured only a the rather sit than and debt of Remember, turn So that debt. capacity rather with less debt, very now, utilized secured out

financial availability. So a we have covenant from standpoint,

We have liquidity.

whatsoever. covenant no have pressure We

from But increase big that in consider to if put rate think obviously, on to have here the happening $XXX tranched it have million Now until rates make that rise, stabilizes a -- it's to still now. pressure right in continue I going rates we'd pretty it's million. to sense to some order picture have $XXX upward out

with later recover -- And going that. and to and year in do where patient interest now at think not makes can the be our it last picture of we if points think kind start for bond the we roughly a closer that starts a think XX% to right to to or fixed basis But and little to priced capacity. primary I the issuance of XXX secured structure. debt now, X% it's up our to we of XXX we sense to kind more in be bit market probably But if be of the were the I in spread free that to stabilizes rate able us to or think right I we would good down pretty our interesting narrow Xs, kind X.XX%. capital having bonds, feel look

Pat, Lugano? do talk about you want to

Pat Maciariello

is you I'm a when it in In payback give fast. factors very and on depends, give I'll I'll but -- Houston, you unsatisfactory I and open a opened have definitely open have internationally, an area little it's if and to that. a The answer, going some just that we lot When some we stores to that we in and apologize, if greenfield, XX that take 'XX, around wholly in say, months. we a in open is longer of already, location clientele under we bit see. may international

they On X if company on question, the not has it's sales, one formulaic. inventory it's salons And if they're opening as not open Y up more.

salon-dependent. less that of in of the add share It's gain is across a math sort XXX% a because necessarily that, we not Inventory and inventory salons. that. than do bit we little You little efficiencies and

out of to work build lot time -- And takes of develop. These well. are salons not And couple sort to But number it well. have digest talent something of I we're think looks then there this then that and need year that be stores, a to through may as remember, as as in it more. And that the takes relates that to manage one takes to targeting, probably highly-skilled to similar those time those, need people the we we a kind XXXX. that of it and mentioned it that's

Barry Haimes

locations, number the ultimate of that? feel any And for

Pat Maciariello

This year or next year?

Barry Haimes

many? how Just yes --

Pat Maciariello

I we that that massive amount not have does and have it on a -- no location where could was. one revenue of a a location it's based does

far ask, it's It's the respectfully. new in. of about penetrate not not can customers gaining So it's to more we what markets right sort question as almost as

Barry Haimes

Got it. Thanks. That's very helpful color. Appreciate it.

Pat Maciariello

you. Thank

Operator

back to There are no further the over questions Mr. I at this Elias. conference would now Sir? time. turn like to

Elias Sabo

operator. you, Thank

to in Thank support. always, your call. That for for continued I'd you like interest your As and today's call everyone thank our on again joining concludes us CODI. for

Operator

This Thank day. you, and call. concludes have conference Compass a great Diversified

Compass Diversified (CODI) 1 Mar 232022 Q4 Earnings call transcript