Larry Solow – CJS Securities, Inc Greg Mason – KBW Bernard Picchi – Palisade Capital Management Fin O'Shea – Raymond James & Associates, Inc Vernon Plack – BB&T Capital Markets

Good morning and welcome to the Compass Diversified Holdings 2014 Conference Call Earning. Today’s call is being recorded. All lines have been placed on mute. (Operator Instructions) At this time, I would like to turn the conference over to Matt Steinburg of The IGB Group for introductions and the reading of the Safe Harbor statement. Please go ahead, sir.

Thank you and welcome to the Compass Diversified Holdings third-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’d like to point out that the Q3 press release, including the financial tables and non-GAAP reconciliations, is available on the Company's website at www.compassdiversifiedholdings.com. The Company also filed its Form 10-Q 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 Securities and Exchange Commission 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 obligations 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 third quarter 2014 earnings conference call. Before, I discuss our performance for the third quarter, I would first like to highlight the recent success we have had capitalizing on our strong liquidity position to acquire two new subsidiaries in just over a two-month period. By adding Clean Earth and SternocandleLamp to our family of leading middle-market businesses, we have once again acquired two companies that met our strict criteria for acquiring business with a strong market position, experienced management team, solid and stable cash flow and attractive growth potential. These two platform acquisitions have significantly strengthened our earnings power and together are expected to contribute a total of approximately $0.48 to $0.52 per share of cash flow accretion on a full-year basis. On August 26, we acquired Clean Earth, a Hatboro, Pennsylvania-based Company that provides environmental services for a variety of contaminated material, including soils, dredge materials, hazardous waste and drill cuttings. Clean Earth has a long and proven history operating an advanced network of full-service treatment facilities providing turnkey soil solutions for customers across various end markets. Through its stellar environmental and safety records, Clean Earth has built a premier reputation in the specialty waste industry. We welcome CEO, Chris Dods and his team and intend to work closely with them to drive Clean Earth’s future performance by leveraging the company’s market leadership and scalable infrastructure, while expanding into new markets both organically and through strategic add-on acquisitions. Clean Earth will be part of our Niche industrial business. Early in the fourth quarter, we acquired SternoCandleLamp, a Corona, California-based manufacturer and marketer of portable food-warming fuel and creative table lighting solutions for the food service industry. For more than a century, the iconic Sterno brand has stood…

Thank you, Alan. I will begin by reviewing our niche industrial businesses, which includes Advanced Circuits, Arnold Magnetic, Tridien, AFM, and our recent acquisition, Clean Earth. Please note that the revenue and EBITDA numbers I provide for Clean Earth will be on a pro forma basis, as if Clean Earth was acquired on January 1, 2013. We are pleased to report a combined revenue increase of approximately 6% during the third quarter of 2014 as compared to the year earlier period. EBITDA on a combined basis increased by approximately 16% as compared to the year-earlier period and the combined EBIDTA margin was 16.7% for the quarter ended September 30, 2014 versus 15.2% for the quarter ended September 30, 2013. Advanced Circuits exceeded our expectations for the third quarter. Although revenue was flat compared to the year-earlier period, revenue on a sequential basis increased approximately 3.5% due to growth in quick turn production. Margins were higher by approximately 80 basis points year-over-year and 180 basis points sequentially, reflecting lower SG&A costs as a percentage of revenue. Arnold Magnetic posted third results that met our expectations. Revenue for the quarter was slightly lower as compared to the year-earlier period, reflecting continued declines in the reprographics component of the PMAG division. EBITDA declined year-over-year as we continue to build Arnold's infrastructure by investing in engineering talent to support our long-term growth objectives. On a sequential basis both revenue and EBITDA decreased 4% and 9% respectively. We believe the investments we are making to grow Arnold over the long-term will enhance the future prospects of the company. At Tridien, revenue increased year-over-year by approximately 12% and EBITDA increased approximately 4%. Margins in the quarter were impacted by higher sales of lower-margin non-powered products, as well as higher SG&A due to the ongoing increased investment…

Thank you, Elias. Today, I will discuss our consolidated financial results for the quarter ended September 30, 2014. I will limit my comments largely to the overall results for our Company since the individual subsidiary results are detailed in our Form 10-Q for the quarter that was filed with the SEC yesterday. My consolidated results discussion will exclude FOX, which we believe is a more meaningful discussion, due to the restriction on providing discontinued operations reporting for FOX. On a consolidated basis, revenue for the quarter ended September 30, 2014 was $195.6 million up 7% as compared to $183.2 million for prior-year period. This year-over-year increase was mainly attributable to meaningful revenue growth at ERGObaby, AFM, and Tridien, together with incremental net sales at Clean Earth from the acquisition based partially offset by the decrease in revenue at Liberty. Net income for the quarter was $262.5 million, as compared to net income of $78.3 million in the year-earlier period. For the quarter ended September 30, 2014, CODI recorded a one-time gain of approximately $264.3 million on the deconsolidation of FOX, which I will discuss in more detail momentarily. For the quarter ended September 30, 2013, CODI reversed approximately $61.3 million of supplemental put expense in connection with the termination of a supplemental put agreement on July 1, 2013. Cash flow for quarter ended September 30, 2014 was $13.4 million as compared to $19.4 million for the prior-year period. Cash flow for the third quarter of 2014 reflects year-over-year growth in our ERGObaby subsidiary business, as well as positive contributions from Advanced Circuits, AFM, and Clean Earth, offset by the lower results at Liberty. For the nine months period ended September 30, 2014, cash flow was $40.5 million as compared to $63.7million for the nine months ended September 30, 2013. Turning…

Thanks, Ryan. Third quarter performance was consistent with our expectations and we believe our latest acquisitions will enhance CODI’s future growth prospects and earnings potential. Clean Earth and SternoCandleLamp are two quality accretive additions to our leading middle market businesses that meet our strict acquisition criteria. As I mentioned, together they are expected to contribute a total of approximately $0.48 to $0.52 per share of cash flow accretion on a full year basis. Going forward, we will remain active in taking advantage of our liquidity and balance sheet strength to pursue other accretive and add-on acquisitions, while investing in our subsidiaries to generate organic growth. Finally, CODI’s strong history of delivering a steady stream of attractive cash distributions since going public remains a core part of our strategy. Based on our recent platform acquisitions, we expect to once again exceed our distributions on an annualized basis. This concludes our opening remarks, and we will be happy to take any questions you may have. Operator, please open the phone lines.

Thank you. (Operator Instructions) And our first question comes from the line of Larry Solow from CJS Securities. Larry Solow – CJS Securities, Inc: Hi, good morning guys.

Good morning Larry.

Good Morning. Larry Solow – CJS Securities, Inc: I was wondering if you could give us a little more color just on some of your larger holdings, I guess particularly Advanced Circuits and CamelBak. It looks like Advanced Circuits had a nice little sequential bump up and a little less year-over-year, but I know it's been sort of flat for two, three years, I guess so, so the outlook there, and then on CamelBak as well, would be great. Thanks.

Sure, I will have Elias will walk you through Advanced Circuits and then I’ll take you through CamelBak. Larry Solow – CJS Securities, Inc: Excellent.

Yes. Sure so Larry, first good morning. Larry Solow – CJS Securities, Inc: Good morning.

On Advanced Circuits, we assume, no – the third quarter was an improvement over the second quarter, year-over-year declines that we had been experiencing in the prior quarters had abated, and it was roughly flat. So, all of those were positive trends, we did see bookings, start to pick up, and so. Although it’s a little bit too early to declare victory and it’s been a tough period for Advanced Circuits over the last couple of years due to sequestration. I would say the outlook today is better than it’s been over the last couple of years. Larry Solow – CJS Securities, Inc: Okay, good.

And we feel the – barring any major setback the company has probably put in a bottom in the second quarter, as you’re looking at year-over-year trends and we’re starting to see some improvements and especially in booking levels. Even early in the fourth quarter, I would say booking levels have improved year-over-year, compared to a – I guess year-over-year is compared to the prior year. So I would say we generally are feeling better about direction of results, now that being said I would say there is still now a lot of spending that we’re seeing out of the Department of Defense, and so I wouldn’t go as far as saying that we’re going to see robust growth on any of the defense side, but it seems like it is at least kind of stabilized and the quick turn production which is our highest margin, continues to grow at a nice rate. So without that drag from the military any longer, we feel actually a better outlook today than we probably have anytime over the last couple of years. Larry Solow – CJS Securities, Inc: Okay, great.

Great, and with respect to CamelBak, I think that’s – if you think about when we first acquired CamelBak, we noted upon acquisition and as part of our investment thesis that, troop levels were coming down and expected to continue to do so. So we anticipated and factored in the military headwinds that they are experiencing now and have experienced really for quite a while now. And I think that what that does Larry, is somewhat mask the success when you look at the business’s performance on a consolidated basis of the other segments of the business, that the steady presence and dominant position in their pack business, the growth in continued success and continued growth in their bottle business, as well as the improvements that they have made internationally, you may recall over the last couple of years, we’ve talked about the company taking some exhaustive, making some exhaustive analytics and really trying to figure out the best way to approach the international market, and I think that they are now starting to bear the fruit of those efforts. And so, we are really pleased by CamelBak, it continued as you would expect in a company that does what they do, to introduce new products, those products have been well received and also we’re excited about their new product pipeline going forward. So we think the company’s performance is really strong. We expect a continued strong year for CamelBak, and would anticipate growth into the following year. So, really happy with their positioning and what they have done and to the extent – I guess this somewhat reconciles back to Elias’ comment about the sequestration as it relate to Advanced Circuits. The CamelBak Military business, just to refresh is really based much more on-base retail sales versus Department of…

Yes, I think that the environment Larry hasn’t really changed. I think that we had quite an extended period where we were not successful in acquiring new subsidiaries, and the fact that we acquired two is great, because we feel like we got two great companies, that meet all of our criteria, as well as valuations that we think, provide our shareholders with the great risk adjusted return, but the environment hasn’t changed. It is still really competitive and valuations can be high, over the years since we‘ve been a public company and even prior, you have probably heard me say that we tend to find a way to pick our spots where we can get something done, and I think that’s what happened here, but I don’t think the two recent acquisitions really reflect a change in the environment that we have described, really over the last year or so. I think that one of the great things about our model is we’ve got great management teams in place the run these companies. We obviously conducted exhaustive due diligence and spent a lot of time with the new acquisitions as well, all of our companies. So I think because they stand on an independent footing, it is not as though there is a lot of quote, unquote, digesting that we would need to do when compared to the digesting that a large company would make folding those operations into their existing operations. So I think the standalone nature of our business is, really take some of that notion of digesting out of the mix, so I think that we are – we stand ready and able to continue to build our business through both new subsidiary acquisitions as well as add-on acquisitions for our existing subsidiaries. We have got, post-Sterno, approximately of $140 million of available capital to invest, plus we also have our holdings in FOX, which are valued at approximately $230 million, which although there is no near-term expectations that we are going to monetize those holdings, they do serve as a potential source of future liquidity. So we think that we are well positioned to continue to build our business and look forward to doing that. Larry Solow – CJS Securities, Inc: Got it. Thanks.

Thank you. And our next question comes from the line of Greg Mason from KBW. Your line is open. Greg Mason – KBW: Good morning, gentlemen.

Good morning Greg. Greg Mason – KBW: And congratulations on the two new acquisitions, that’s great.

Thank you. Greg Mason – KBW: Usually when you make these acquisitions, you kind of have some long-term growth plans whether that’s through product line expansion or market expansion or geographic expansion. Can you just give us some of your thoughts regarding Clean Earth and CandleLamp on the value that you can bring and growing those businesses and have what your thought is for the growth in next phase of growth for these businesses?

Sure, Elias will lead off with SternoCandleLamp, and then I will follow-up with Clean Earth.

Sure. Thank you, Alan. So, SternoCandleLamp is by and far the market leader in the categories that it operates in, essentially Canned Heat. Because of the market share they have, we really expect that business to grow more in line with the Canned Heat market growth. And so as we think about growth in that business, says it's really a couple fold. As Alan mentioned, the Sterno brand has been around for 100 years. It truly is iconic in the food service industry, and we will continue and expect to continue to introduce new related products to the food service industry where you can benefit half of the brand. In addition to that, we look at acquisition opportunities and the ability to grow in other related areas in both the product lines, as well as geographic opportunities. This is predominantly a domestic distribution company, and so we would look at potential opportunities to expand through acquisition internationally and into new product lines. And I’ll turn it over to Alan on Clean Earth.

Great, thanks a lot. Yeah, with respect to Clean Earth, we think that there is growth opportunities that are multifaceted. I think that the company – and we’re supportive of all of these potential opportunities to grow the business. But the company has absolutely been a successful acquirer in the past, and we think that they can continue to do that with our support and backing, and believe that geographic expansion as well as waste stream expansion, can be achieved both organically and by acquisition. In addition, the company is in a leading market position, regionally, really an east coast business is how you should think about it, has an ability to just to continue to gain market share, given their strong track record history of performance as well as just an incredible track record of environmental and regulatory compliance, I think, make them a natural partner to work with for companies that want to make sure that they are adhering to the highest standards associated with the remediation of their waste. So, believe the company has both organic, as well as acquisition opportunities to pursue new geographies, new waste streams as well as to gain market share. Greg Mason – KBW: All right, great. And then one final thing, I know it can be lumpy finding new deals, but as you look at potentially finding new deals, you have the availability to borrow more on your revolving credit facility and you have got the FOX shares. Kind of what is your view between using those two sources of potential liquidity for funding potential capital needs going forward, should they arise?

Yeah, I think that lumpy is, by the way a perfect description and it is impossible to really predict when, in fact, we will be able to secure new opportunity. But as it relates to our liquidity, we look first to our revolver, undoubtedly, and would look to optimize that source of capital. And the FOX is more of a medium-term solutions for us, as you know, we just completed earlier this year a share – a sale of some of our FOX proceeds, and we really believe in the growth and future of that company and so we are pleased to own that. We certainly will evaluate that ownership on an ongoing basis relative to our liquidity needs but first and foremost, we would look to utilize our revolver to fund future opportunities. Greg Mason – KBW: Great. Thanks, guys. I appreciate it.

Thank you.

Our next question comes from the line of Bernard Picchi for Palisade Capital. Bernard Picchi – Palisade Capital Management: Good morning, Alan, Elias and Ryan. Good rundown and congratulations on the acquisitions. I just wanted to ask a question just delving a little bit more into Clean Earth. I guess we've all had experience with companies that have gotten involved in the environmental remediation business and have the willies thinking about it, because oftentimes these liabilities can be – extend beyond the life of the contracts and sometimes the contractor ends up with a substantial unexpected liability on cleanups. I'm just wondering what kind of due diligence you have done on Clean Earth. Can you give us some assurance that is something that wouldn't happen here? And I will just leave it at that, so I will let you guys answer it.

Sure. First, I would say that, our due diligence on this topic was exhaustive. It included both legal due diligence with specialty counsel that was an environmental lawyer that we've worked with for many, many years to provide extensive diligence in that segment, as well as utilizing a third-party environmental diligence firm. That is all they do is diligence, these type of situations. So, I can assure you that the diligence there was, as I said, exhaustive and comprehensive. Furthermore, as I alluded to earlier, the company’s track record from a compliance standpoint has been exemplary and was a huge factor in our being attracted to this opportunity. And we believe that we have not only diligenced this in the way that you would expect us to but also have examined any potential liabilities, anything that was something that needed addressing at the acquisition phase was certainly addressed at the contract level, when we acquire the company and we have full confidence that we are overseeing this managing that risk appropriately and don’t – look I share your concerns on the intellectual level but on the practical level, I feel as though the company has addressed this. And in addition, they’ve got the company has all these appropriate types of insurance coverage that you would expect them to have. So, in addition to all that, we also have another layer of protection in the form of insurance. So, absolutely appreciate your concern, we have it and certainly had it in the diligence phase, but feel as though it is something that we have addressed appropriately and have adequate protections. Bernard Picchi – Palisade Capital Management: Great, Alan. Could you talk a little bit about the customer mix, too? Is it industrial, government, and is it lumpy in the sense that you have one or two fairly large customers, like a GE, for example? Can you talk a little bit about that, without, obviously, you can't - confidences, but give us some color?

No problem. I would say that the company has a diverse customer base. So, it's not as though, it’s reliant on any one customer and they can range from, really anyone of – anyone that is going to put a shovel in the ground is a potential customer and anyone that is conducting dredging of the various waterways that gets dredged is a potential customer. So, it can be construction, oil and gas, utilities, environmental consultants, et cetera. I think it's a representative description of their customer base. I do want to touch, though, on the comment you made about lumpy. While I wouldn’t consider it lumpy in the context of a customer, the project nature of these waste streams as a result of – again a contractor's activity or a dredging activity can be somewhat lumpy. And so this company, I would say, more than others in our group of subsidiaries, is maybe going to be more challenging to forecast on a quarter-to-quarter basis. I think that on an annual basis, we have a good sense of what to expect, based on market conditions and pipeline, et cetera, but quarter-to-quarter, we might get a little trickier just because, as you said, sometimes you might have a customer that expected you to do something over a six month period, and then they may say, actually, we need this done in three months, not six months. So you are processing a lot more material than you may have otherwise expected. Conversely, it can go exactly the opposite direction, where you thought it was going to be a more condensed period of time to handle a project and it might spread out a little bit longer than you think. So, the business due to the project nature, can’t be a little lumpy on a quarter-to-quarter. I can’t promise you how that will present itself, but I can promise you that it will present itself during our partnership with Clean Earth. Bernard Picchi – Palisade Capital Management: Okay, that’s fair. Thanks, Alan.

Sure. Thank you, Bernie.

Thank you. Our next question comes from the line of Fin O'Shea. Your line is now open. Fin O'Shea – Raymond James & Associates, Inc: Hi, guys. Thank you.

Good morning. Fin O'Shea – Raymond James & Associates, Inc: Just a quick question on FOX, that marginal amount of revenue and EBITDA. Was that before it was deconsolidated for the quarter?

Fin, that’s right. We deconsolidated them effective July 10, so that was essentially 10 days of operations for that. Fin O’Shea - Raymond James & Associates, Inc: Okay, great, thank you. And do you have any color on – is there any seasonality with SternoCandleLamp?

Yes, there is a little bit of seasonality predominantly in the fourth quarter. This business, being tied to foodservice, experiences a little bit of increased growth in the fourth quarter relative to the other quarters, just as there is more holiday parties, corporate parties, things of that nature where portable heat is needed. Fin O’Shea - Raymond James & Associates, Inc: Okay, great. And on Liberty, it seems like that has deteriorated further. Do you have any color on the outlook on getting through the excess? And maybe, did a lot of competitors build capacity or something like that and it's getting more aggressive?

Well, I think that, let me first start with the getting through – Liberty getting through inventory issue. I think that, our plan and what management has executed upon very successfully is working specifically on getting through their inventory excess during this calendar year, in order to set the company up for what we like to call opening next year, quote, unquote, clean, with an appropriate level of inventory and prepared to bring production activity back to the normalized level that we referenced earlier in the call. So, I think that, your comment about further deterioration, I really think that the story hasn’t changed, since what we talked about last quarter and perhaps even the quarter before. I think that what Liberty had a harder time just figuring out in terms of the guidance, we gave last quarter versus, where they are coming out this quarter is really how the rest of the industry was also dealing with this problem, and I think now there is more visibility on that. So as we mentioned in our comments, the discounting that has existed in the marketplace. I think other competitors were certainly over inventoried themselves and I have got to believe that the customers not necessarily even Liberty's customers, but customers in general or retailers I should say that sell safes were all finding themselves relatively over inventory. So, I think what we had a harder time getting our arms around - and, candidly, it's still hard to do because the information is not readily available, it comes more from just market intelligence from being out in the market. It just feels as though that the situation impacted Liberty more than they would have thought, because this issue seem to be a bit more pervasive throughout the entire industry that maybe…

American Furniture, you're talking about a sequential third quarter versus second quarter. Fin O'Shea – Raymond James & Associates, Inc.: Yes, during the first half of the year, it was three four, three, three. I have one six in the third quarter.

Yes. That's really just normal business seasonality for American Furniture. It is a seasonally slow time in the business. Interestingly, we actually are pretty pleased with that level of performance, considering the seasonality the business typically experiences. As you may recall, really the first quarter and into the second quarter are typically the busiest times for the business, but historically first quarter has been the strongest. Second and third tend to be a little bit weaker, and then the fourth can ramp up a little bit, but that hasn’t been as meaningful as it’s been in some years past. But no typically seasonality and we really are thrilled with the performance of American Furniture, and the management team that we've got in place there for roughly the last two years is just doing an amazing job rebuilding that business during a time when the promotional furniture segment is not experiencing growth American has been growing really due to a great product assortment linear and more efficient operations which is led them to take some market share over these last couple of year which is led to their improved performance. Fin O'Shea - Raymond James & Associates, Inc.: Okay, guys, thanks so much and congratulations on the acquisitions this quarter.

Thank you, Fin.

Thank you. [Operator Instructions] Our next question comes from a line of Vernon Plack from BB&T Capital Markets. Vernon Plack – BB&T Capital Markets: Thank you very much. Alan, could you remind us, now that CAD is above the dividend, what your thoughts are on the dividend policy going forward?

Sure. As you’ve heard me say in the past our Board of Directors does set our distribution policy, so I will speak on behalf of the management team here. We believe that our current level of distribution is very attractive level for investors, and what we try to strike a balance between as we think about building our business for the future is both providing that strong and attractive level of distribution to our shareholders, alongside our ability to retaining and reinvest capital in our business going forward. We think we’ve done a pretty good of that historically and so I would say that from my standpoint, and the standpoint of the management team here at CODI, we have absolutely 100% commitment to maintaining our distribution and we would expect to do that going forward. I will say we also have an interest in retaining more capital in our business to build our business and that’s something that will going to continue to evaluate and hopefully have some capital in addition to the liquidity sources we have. In addition, but some capital from our cash flow of our businesses to reinvest in our businesses. So we have an absolute commitment to maintaining our level of distribution and certainly don't expect that distribution to be reduced ever, but at the same -- provided our performance warrants that level of distribution. But we think with the gains we have generated the liquidity sources we have, we consider our current level of distribution to be appropriate and one that we should be able to maintain without any issues going forward and we would again expect them to maintain it. Vernon Plack - BB&T Capital Markets: Okay, thank you, Alan.

Thank you, Vernon.

Thank you and I am showing no further questions at this time. I would like to hand the call back over to management for closing remarks.

I would like to thank everyone again for joining us on today's call and following the CODI story. We look forward to sharing our progress with you in the future. Thanks.

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