Good day, ladies and gentlemen and welcome to the Compass Diversified Holdings Q1 2014 Earnings Conference Call. At this time all participants will be in a listen only mode. Later there will be a chance to ask questions and instructions will be given at that time. (Operator Instructions). And as a reminder today’s conference is being recorded. Now, I would like to turn the conference over to your host Michael Cimmini from IGB Group.

Thank you. And welcome to Compass Diversified Holdings, first quarter 2014 conference call. Representing the Company today are Alan Offenberg, CEO, Ryan Faulkingham, CFO and Elias Sabo, a founding partner of Compass Group Management. Before we begin, I would like to point out that the Q1 press release, including the financial table is available on the Company’s website at www.compassdiversifiedholdings.com. The Company also filed its Form 10-K with the SEC last night. Please note that throughout this call we will refer to Compass Diversified Holdings as CODI or the Company. Now allow me to read the following Safe Harbor statement. During this conference call, we may make certain forward-looking statements, including statements with regard to the future performance of CODI. Words such as believes, expects, projects and future or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements. And some of these factors are enumerated in the Risk Factor discussion in the Form 10-K as filed with the SEC for the year ended December 31, 2013, as well as in other SEC filings. In particular, the domestic and global economic environment has a significant impact on our subsidiary companies. CODI undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. At this time, I would like to turn the call over to Alan Offenberg.

Good morning. Thank you, all for your time, and welcome to our first quarter 2014 earnings conference call. We are pleased to report first quarter results that exceeded management’s expectations. Within three months ended March 31, 2014; CODI generated cash flow available for distribution and reinvestment which we refer to as cash flow or CAD $14.6 million. Overall we continue to benefit from the operational and financial strength of our leading midmarket businesses. During the quarter we generated predictable and strong free cash flow across both our niche industrial businesses and our branded products businesses. As we have stated in our previous call FOX is no longer included in our calculation of our cash flow following the successful completion of the company’s August 2013 IPO, in which CODI generated debt and equity proceeds totaling approximately $142.4 million. FOX’s results however will continue to be consolidated with the results of our other subsidiaries until our ownership percentage drops below controlling interest. For the first quarter, we did cash distribution of $0.36 per share representing a current yield of approximately 7.9%. Since going public in May 2006, CODI has paid cumulative distributions of approximately $10.68 per share. Although our cash flow per share has been reduced to a level below our current distribution per share following the IPO by FOX which we expected our strong liquidity position provides with continuity of CODI’s current distribution as determined by our board. And as a reminder we have realized gains today of more than $217 million from the monetization of our interest in CODI subsidiaries including FOX which have never been included in our calculation of CAD. Going forward, we will maintain our focus on leveraging CODI significant liquidity and conservative balance sheet to deliver a steady stream of cash distributions and drive future performance.…

Thank you, Alan. I will begin by reviewing our niche industrial businesses. As Alan mentioned, these businesses continue to generate strong and predictable free cash flow. We’re pleased to have produced combined revenue growth of approximately 5% during the first quarter of 2014 as compared to the year earlier period representing the fourth consecutive quarter our niche industrial businesses reported year-over-year top line growth. EBITDA on a combined basis was the same year-over-year, however and the combined EBITDA margin declined to 12.8% for the quarter ended March 31, 2014 from 13.3% for the quarter ended March 31, 2013. Advanced Circuits posted first quarter results that met our expectations. While the company’s financial results declined as compared to the year earlier period revenue on a sequential basis was flat and EBITDA for the first quarter increased approximately 5% from the fourth quarter of 2013. We continue to experience growth in our assembly business while demand for the company’s core quick term production services remains relatively stable. Arnold Magnetics performed roughly in line with our expectations in the first quarter producing both revenue and EBITDA comparably to the first quarter of 2013. We remain focused on increasing Arnold’s global market share by leveraging its superior reputation for providing engineered magnetic solutions across the wide range of specialty application and end market while pursuing attractive opportunities to consolidate the industry. At Tridien revenue increased year-over-year by approximately 9% while EBITDA increased approximately 2%. On a sequential basis EBITDA increased approximately 18%, by bringing new innovative products to market that meets the increasing needs of the industry, we intent to strengthen that company’s diverse and scalable platform of leading medical support services and enhanced Tridien’s future growth prospects. Finally at AFM, this business continued to exceed our expectations as revenue in the first quarter…

Thank you, Elias. Today, I’ll discuss our consolidated financial results for the quarter ended March 31, 2014. On a consolidated basis, revenue for the quarter ended March 31, 2014 was $246 million, as compared to $241.6 million for the prior year period. This year-over-year increase was mainly attributable to meaningful revenue growth at ErgoBaby and AFM, partially offset by the decrease in revenue at CamelBak. Net income for the quarter was $7.4 million as compared to a net income of $3.6 million in the year earlier period. For the quarter ended March 31, 2014 we recorded lower interest expense of approximately 800,000 as compared to the prior year period, offset by higher selling general and administrative expense primarily at FOX due to its acquisition of Sport Truck. In addition, for the prior year quarter we recorded expense of $6.4 million related to CODI Supplemental Put Agreement, which was terminated in July 2013. Cash flow for the quarter ended March 31, 2014 was $14.6 million as compared to $20.8 million for the prior year period. Cash flow for the first quarter of 2014 reflects year-over-year growth in our Ergobaby and AFM subsidiary businesses, offset by the lower performance at CamelBak as well as the adverse impact on cash flow from the IPO of FOX. Turning now to the balance sheet, we had $86.6 million in cash and cash equivalents and the net working capital of $276.2 million as of March 31, 2014. We also had $279 million outstanding on our term debt facility and no borrowings outstanding under our revolving credit facility as of March 31, 2014 as well is no significant debt maturities until 2017. In addition we had borrowing availability of 380 million under our revolving credit facility as of March 31, 2014. This previous debt information excludes the FOX credit facility. During the first quarter of 2014, we incurred $3.1 million of maintenance capital expenditures as compared to maintenance CapEx of $2.3 million for the prior year period. Although maintenance CapEx increased year-over-year we came in below expected spend by $1.3 billion during the quarter due to the timing of certain expenditures on a consolidated basis which are expected to take effect later this year. For the full-year 2014, we remain on track to incur maintenance CapEx between $10 million and $12 million excluding FOX as we continue to invest in the long-term health of our subsidiaries. We also incurred 500,000 of growth CapEx during the first quarter as compared to growth CapEx of $1 million in the prior year period. For 2014, we anticipate gross capital expenditures between $5 million and $7 million, primarily for our initiatives at a CamelBak and Liberty subsidiaries. This growth CapEx range also excludes FOX. I will now turn the call back over to Alan.

Thank you, Ryan. We are pleased by a strong start to 2014. The study performance across our family of niche leading businesses combined with our substantial liquidity built well for CODI’s future prospects. Our focus remains on taking advantage of both organic and acquisition related growth opportunity that drives the long-term shareholder value while providing stable and attractive cash distributions as we have consistently done through our eight year history as a public company. This concludes our opening remarks. We will be happy to take any questions you may have. Operator, please open the phone lines.

(Operator Instructions) Our first question comes from Larry Solow from CJS Securities. Larry, please go ahead.

Good morning, guys. Wondering if you could just give us the general broad brush on how the economy is looking, trends over the last few months and how it might relate to your subsidiaries?

I think it’s easier for us to answer that question in the context of our subsidiaries as opposed to making a broader comment about ready economy, but I think, Larry, that we see pretty stable economy four or subsidiary companies with an environment that’s -- I wouldn’t call it robust or exceedingly hot, so to speak, but at the same time very steady and stable with good opportunities and one that we feel good about in the context of our company’s ability to perform well throughout the balance of 2014.

Okay. Great. Just a couple of company-specific questions. Just on CamelBak, being now that it's your largest holding, it's been probably the one sore of thumb the one holding that hasn't done so great in the last couple of years more or less macro than anything else, but what's your outlook there and do you think you can sort of get some rebound on the commercial side as we look at it to Fortune 15?

Yeah I think CamelBak is well positioned to continue its growth again the results of the last couple of years as we talked about are impacted by the one-time nature of the Marine Corp contract that we’ve referenced. But when you eliminate that from the company’s performance we think that continue to do quite well on the recreational side of the business. The military side of the business, I think we talked about even going back as early as when we acquire the business, it experiencing some of the headwinds that we anticipated with the reduction in troop deployment. That being said it’s still a nice piece of business and one that will continue to support the company’s cash flow. But on the recreational side of the business they’re seeing good performance in this first quarter and anticipated strong performance over the balance of the year, furthermore the introduction of new products we believe will help CamelBak both expand its presence in the current markets that is serves as well as hopefully penetrating new markets. On the last call we referenced the introduction of their relay filtration picture. Larry I think you actually were the one that even noticed that and hopefully you own one by now. But it’s a great new product that we think will provide entree into more of the home channel for CamelBak and should be a brand expander and a product that we have high hopes for moving forward. And CamelBak also continues as you would expect in all of our consumer oriented businesses to develop and strive to the introduction of even more new products. So we think the company is positioned well to achieve the growth objectives we have for the business going forward. So we’re really excited about it.

Excellent. Just last on Ergobaby, it had some very nice numbers last 1.5 year, two years. It sounds like maybe the double-digit growth on the top line isn’t quite sustainable. What do you think is sort of a good number to use and maybe you could just give us a brief one minute or two minutes on some of the newer products, exciting products. Thanks.

Well I don’t that we’re going to give you any specific number Larry and Elias will comment on some of the exciting things going on at Ergobaby but I think what you’ll find and Elias will elaborate is that the growth prospects for Ergobaby are excellent and I think that the results that they’ve achieved recently are ones that I think are such that we are honestly excited about it and think that there is a reason for continued excitement in terms of Ergobaby’s future growth but I’ll let Elias comment a bit more about some of the specifics going on there.

So Larry as Alan mentioned not getting specifics on growth, I would say we still view this as how they very growth prospects and amongst our portfolio this would be in the higher category of growth company as we look out into the future. And in terms of new products the company has had a push into expanding the line that we in the assortments that we have. Recently we came out with our new G3 stroller line, which is part of the Orbit stroller line; it’s been a very successful launch that happened in the first quarter. We’ve also come out with a forward facing carrier now which actually is four positions, so that it’s called the 360, can be both inward and outward facing. So also come out to great applause to the baby wearing community. We’ve come out with a new baby ramp and so there has been a number of products in addition to those are major categories that we’ve come into in addition to the natural kind of colors and other things that we’re doing kind of for spring and fall. So we feel very good that the company’s momentum is strong both with domestic distribution which continues to be broadened international distribution which we continued to broaden that as well. And then on top of that we’re getting more skew assortment. And this is all innovative products. So it’s coming out to a lot of good products as I said. So we’re very excited about the prospects for this company going forward.

Thank you. And our next question comes from Troy Ward from KBW. Troy Ward - Keefe, Bruyette, & Woods: Great thank you and good morning gentleman. Alan can you speak a minute on some color on the military spend. Obviously this is something that with the sequester and as you talked about the draw downs. Do you look at -- if you think about CamelBak or you think about Advanced Circuits? Is there some pent up demand there that you still anticipate will come from future end of sales, maybe in AC? Or do you think that that channel is just kind of permanently at a lower level going forward?

I think it’s our belief that, I think you alluded to it. I think with Advanced Circuits we believe that there is just been bit if a grinding halt in many aspects as it relates to the business that they would quote on that is either defense related that been impacted by the sequester. So I don’t believe that we would think that the Advanced Circuits business would be permanently at a lower level with respective those types of opportunities. And so, and we are very confident that we haven’t lost market share in that segment of our business but hope that overtime that business will come back. Predicting when that’s going to occur is very tough for us. On the CamelBak side I think it’s a bit less relevant in terms of pent-up demand. I think that, because most of their business is really not Department of defense driven or even sequester driven, I think it’s more driven by troop deployment levels than anything. So I think as the troop deployment levels are continuing to come down or stabilize at a certain level, I think CamelBak’s military business will perform in accordance with that level of military staffing. Should those troop levels increase our another conflict were to develop that led to deployment, I think that we would expect CamelBak’s military business to increase accordingly. But I don’t think the kind of ongoing development or coming out of sequester is really of an impact that will be dealt by CamelBak in any material way. Elias, would you add anything to the Advanced Circuits comment as it relates to business related to sequester.

No. I think you adequately described it.

And then, Alan, on the international side, it looks like CamelBak with regard to military, how big a channel -- how much penetration have you had in that channel and what type -- what are the opportunities for meaningful penetration there?

I think there are some opportunities there and they are pursuing some of those opportunities. But I don’t anticipate international military to be a driver of CamelBak’s future business. That being said, international rec business is something that CamelBak is very excited about and continues to pursue and see some successes there that we think will be more meaningful over the long term. So I do believe that CamelBak has international opportunity that they continue to work very hard on pursuing, but I don’t believe that the military side of the international business will be a material piece of their business going forward.

Okay, that's good color. Thanks. And then can you speak a little bit on the Tridien product rollout? Obviously, that's something that we've anticipated for probably 12 to 18 months. Just an update on how that product rollout's going and how the new products are being received and kind of what you think from that business in the remainder of 2014.

Sure, Elias will comment on that for you.

Yes. I think as you recall the numbers in fourth quarter of last year and the first quarter of this year, we’re starting to experience an accelerating revenue growth, I think a lot of that is due to some of the new products that we’re rolling out with some of our OEM partners. So far that’s being well received by the marketplace and we go through OEM partners, so we don’t have as much direct dialogue with the end customer of the product. But these are products that definitely meet current needs and are giving a tailwind to that business. I think in general the overall landscape for that business -- we think it is a continuing kind of steady growth business. It is being impacted negatively and has been over the last couple of years by the implementation of the new healthcare law, and that’s just due to reduced spending that’s occurring as a lot of the end providers are trying to figure out what their cost structure is going to be and adding more people into the healthcare system and what the reimbursement levels are. Alternately, we think that will reverse and turn into a tailwind. These are products that are driven by usage, and as you have greater numbers of usage driven by the healthcare law as well as the demographic changes that we talked about, which continue to be the obesity trends in America and ageing trends in America, all of that we think for the longer term both really well for this business. And we are very pleased that with some of the new products and new OEM partners that we have been launching with, that even through a period of uncertainty, we’ve been able to grow revenue and kind of mid-single digits.

Okay, great. And then one final one, Alan. If you could speak a little bit on what you're seeing in the middle market for new M&A ideas, how are you seeing trends? Are you seeing pricing or structures be kind of the big drawback to get a deal done or are you just -- are you seeing higher valuations from the sellers or are you starting to kind of meet in the middle and just some overall color on what you're seeing on potential new acquisitions, it'd be helpful.

Sure. We, as I mentioned in some of the opening remarks, deal flow has increased relatively to last year for sure. So we are seeing good improvement in deal flow, and arguably more importantly the improvement in high quality opportunities. We feel really good about that. I think the challenge remains and it’s been for some time in valuation. And valuation levels just remain robust. And I think that, it’s a similar story to what we’ve discussed over the last several quarters if not longer. I don’t think structurally there has been any challenges as it relates to structure and I don’t think that there is a development where sellers are lowering their expectations, I think it’s too much -- lot of capital out there, both equity capital as well as debt and support of that equity to help sustain high prices obviously in a low interest rate environment. And so I think it’s really just a function of us finding the right balance of opportunity when wait against valuation and trying to optimize that situation. So we get great opportunities, we’re busy looking at them, things were excited about certainly some things we’ve been priced out of which isn’t entirely surprised but we hope to find again the right blend of opportunity in valuation and when we find those opportunities we look forward to be as aggressive as we can in the context of also being responsible to players of capital.

Thank you. (Operator Instructions). So our next question comes from Fin O'Shea from Raymond James. Please go ahead.

We’ve talked about mostly business so far. Looking at American Furniture, that’s obviously picking up some momentum there. Can you talk about how much of that is turnaround efforts what you’re doing versus the economy and maybe a little bit about what we can expect?

Sure. I think American Furniture the management team there continues to do an excellent job of getting the business back on track as evidenced by their performance. I think in the segment of the furniture industry in which they operate which is the promotionally priced furniture segment, there really hasn’t been much in any of an economic rebound as we’ve come out of recession due to the ultimate consumer that purchases these product which is consumer with less disposable income and one that remains under meaningful levels of pressure relative to the more affluent consumer that I think has been healthy for quite a few years now. So I think one of the things that we consider to be even more impressive about American’s performance is that is being done in the context of a market that we think is relatively flat which is our way of telling you that we think the remaining market share. And I take that management introduction of new styles, new products as well as the continued focus on maintaining efficient operations, have all contributed to American’s recent success. I think going forward as we mentioned in the comments just a reminder that the first quarter is a seasonally strong quarter for American Furniture. So I would not suggest you look at that first quarter and extrapolate that to get a sense of results for the balance of the year. In fact again seasonally the next two quarters are typically more challenging quarters for American Furniture with a bit of a pick up towards the end of the year in the fourth quarter. So I think you should anticipate second quarter and third quarter results in line with first quarter results. And it’s a little early to say what fourth quarter results will look like but I would be fairly confident in telling you that I would expect fourth quarter to look better than second quarter and third quarter but hard to comment on how they may look like first quarter, probably not as strong if I had to make a prediction at this time.

And what’s d -- roughly the typical what you call consumer spend like price ticket per visit. And do they…

On American Furniture type product?

Yeah.

I mean I think at retail you’ll find their products typically 499 maybe $100 less maybe a $100 more. You might see combination so combinations for $899 or even approaching a $1,000 depending on the package. You may see recliners potentially out there for 299. But that’s the general price points, with some very variation obviously beyond those strong parameters.

Okay and just one more on the FOX factory they had a bit of a decline in margins specially. Was that related to the acquisition or is there something competitive going on there, operational?

I am going to have Elias comment on FOX, again I think that we can make some basic comments on FOX as its related to our disclosure but I might also refer you to their own public disclosures that they make as a public company but Elias I don’t know if you want to comment?

Yeah I don’t know that I would add anything Alan other than they did have their conference call last night and I think they described through their kind of earnings and their income statement and balance sheet items specifically, I don’t know if there’s anything else that would be prudent for us to add to that.

And our next question comes from Vernon Plack form BB&T Capital Markets; Vernon, please go ahead. Vernon Plack - BB&T Capital Markets: Thanks very much. Alan, given the increase in high-quality deal flow that you're seeing, are there any thoughts or initiatives underway regarding how you're staffed and how your people are spending their time? I'm just curious in terms of whether or not you're adding people or shifting people or would -- does that mean anything internally just in terms of level of activity?

Sure. With respect to human resources, we are more than adequately staffed for the level of activity that we have now and in fact I believe that we are staffed to accommodate a meaningful growth in the number of subsidiary companies that we manage. So I don’t think that it hasn’t resulted in any need to add people or reassign people, so I think that Vernon, we’re handling that level of activity just fine. And we have a really strong group of talented professionals at senior levels as well as support levels that allow us to maintain all of our sourcing and new business initiatives in conjunction with the work we do on a day-to-day basis without subsidiary company management teams. I mean, clearly, that's something that we will all continue to assess over the long term, but for the short and intermediate term, I don’t anticipate any challenges with respect to human resources. Vernon Plack - BB&T Capital Markets : Okay, great. And I'm trying to get a sense for where you're focusing your efforts, if I can put it that way, and looking with deal flow picking up, are you more excited these days about potential bolt-on opportunities or new platform companies or -

I think we share equal enthusiasm for both. I think that - the thing that can be nice about the bolt-on acquisitions is, sometimes, this is a very easy opportunity in that context with the subsidiary company management teams making those accusations to realize some immediate efficiencies. And therefore helped their companies performance, but also meaningful enhanced the performance of the acquired entity, and oftentimes those transactions can be sourced and developed through relationships as opposed to necessarily having to be subject to some of the competitive factors that may be present in the acquisition of a new subsidiary company. But I would go back to my opening response to your comment which is we remain equally excited about both add-on acquisitions and new subsidiary acquisitions and really just look to balance of the risk or reward associated with both. But I wouldn’t say there’s a greater enthusiasm for one versus the other. Vernon Plack - BB&T Capital Markets: Okay, and one final question as it relates to Arnold. I know that it was mentioned -- Elias mentioned that the goal is to increase global market share. Will that primarily be done through consolidation, through rollout, through acquisition? Is that the thought?

I think it’s more of an organic initiative, Vernon. Again, not that we're opposed to acquisitions for Arnold, but at the same time we believe that based on their own organic initiatives that they can continue to gain market share globally. So those comments were made really in the context of their own internal organic growth initiatives.

Our next question comes from James Stone from PSK Advisors; James, please go ahead.

Excuse me. Good morning, gentlemen. Nice work, doing there. Could you give us a little more flavor on what you're looking for in the acquisition? Are you looking to get into new fields or do something in the current areas and do you think there's a possibility, of low, medium, high type of thing of doing something this year?

Well, I would say that we remain focused on pursuing opportunities within our two current segments of business being niche industrial as well as branded products, in similar to the comments about bolt-on acquisitions versus new subsidiary acquisitions, we have equal enthusiasm to pursue opportunity in both of those verticals. So I think extending outside of those verticals at this time is not something that we anticipate, but focusing our efforts within those two segments is what we are doing and plan to continue to do. With respect to your second question, I would say that we are working diligently everyday and hope to be able to make an acquisition of a new subsidiary company in 2014. But as we have talked about historically these things are often times extremely unpredictable and as we talked about in our last call the year-end results we talked about an acquisition that didn’t get consummated at a very late stage of a process. So if you were to have ask me that question last September I probably would have, although I am not sure I would have used the words in my mind, I would have been thinking that we have very high probability at that time only to see if not come to fruition. So it’s very hard to make those type of proclamations with respect to confidence levels. So I refrain from that but I will tell you that we’re working very hard, we would certainly be disappointed if we were unable to achieve an acquisition in 2014, yet at the same time if that outcome was the result of prudent decision making as disappointing as it maybe it’s an outcome that we are prepared to endure, should that be the case.

And the other question is as we eventually begin seeing interest rates rise, how are you protected against that or do you see that impacting any of the operations here?

Well all of our companies do have intercompany debt with CODI those are often times floating rate instruments, so in advising interest rate environment they could see that there is higher debt service costs but I would say that all of our companies are also leveraged quite responsibly relative to some of the leverage levels that you may see in the marketplace. Furthermore at a corporate level we institute some hedging programs of our corporate credit facilities and have locked in some of our interest rates over the next several years. So I think we have a good level of protection there as well. So I think that it’s obviously something that we need to be mindful of both the subsidiary company level and at the corporate level. And I think that something that we collectively all focus on and try to manage that both through structuring initiatives as well as prudent levels of leverage.

Okay, I thank you; I have been a shareholder for a fair number of years now and hope to see that trend continue. Keep up the good work.

Thank you very much for your support, we appreciate it.

Thank you ladies and gentlemen. This does conclude our Q&A portion today. So I would like to turn the conference back to your hosts for any concluding remarks.

Thank you. I’d just like to thank everyone for joining us on today’s call and following the CODI story and we look forward to sharing our progress with you in the future. Thanks a lot.

Ladies and gentlemen this does conclude your conference. You may now disconnect and have a great day.