Good morning and welcome to Compass Diversified Holdings 2014 Fourth Quarter Conference Call. 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 fourth 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 Q4 press release, including the financial tables and the non-GAAP reconciliations, is available on the Company's Web site 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 belief, expect, project 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, 2014 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 fourth quarter 2014 earnings conference call. During the 2014 fourth quarter and full year period, we generated strong operating results as we continue to benefit from the leadership positions and financial strength of our middle market businesses. During the time when we capitalized on expected acquisition opportunities and monetizing investment added value for our shareholders, we are pleased to have generated cash flow available for distribution and reinvestment which we refer to as cash flow or CAD of 58 million for the 2014 full year. Complementing our considerable success enhancing the prospects of CODI's existing family of leading niche businesses, we made significant progress during the year implementing key initiatives to strengthen the company from both the strategic and financial perspective. Notably, we acquired Clean Earth and SternoCandleLamp. Two attractive businesses with strong market position, experienced management teams, healthy and stable cash flows and solid growth potential. In addition to acquiring these two attractive platform companies which has significantly strengthened our earnings power, we further enhanced the future prospects of Clean Earth with the add-on acquisition of American Environmental Services or AES, a provider of environmental services managing hazardous and non-hazardous waste from outside generators. During the year, we also further strengthened our financial and liquidity position. Specifically, we refinanced our debt which lowered our borrowing cost, extended our maturities and increased our total debt capacity by approximately 120 million to 725 million. Additionally, we completed a public offering of late approximately 100 million of net proceeds which were used to repay a portion of the outstanding balance of our revolving credit facility. In July, FOX completed a secondary share offering in which CODI participated and received total net proceed of approximately 65.5 million. With these proceeds combined…

Thank you, Alan. I will begin by reviewing our niche industrial businesses. Please note that the revenue and EBITDA numbers I provide for Clean Earth and SternoCandleLamp will be on a pro forma basis, as if these businesses were acquired on January 1, 2013. We are pleased to report a combined revenue increase of 6% during the fourth quarter of 2014 as compared to the year earlier period. EBITDA on a combined basis increased by 2% as compared to the year earlier period; however the combined EBIDTA margin declined to 14.4% for the quarter ended December 31, 2014 from 15.1% in the prior year quarter. Advanced Circuits posted results that exceeded our expectations for the fourth quarter. Revenue increased by 4% year-over-year driven primarily by continued strong performance in assembly sale. EBITDA margins were higher by approximately 110 basis points compared to the year-ago period reflecting lower SG&A cost as a percentage of revenue. Looking at 2015 we anticipate consistent performance for ACI as compared to the 2014 results. Arnold Magnetics reported softer than expected results in the quarter. Revenue declined 9% year-over-year reflecting the continued decline in the sales of reprographics component of the PMAG division, which was anticipated as well as the decline in sales in Europe attributable to one customer. Fourth quarter EBITDA at Arnold declined 12% year-over-year. We anticipate growth in Arnold’s earnings in 2015 as compared to 2014. At Tridien, although fourth quarter revenue grew by nearly 17%, EBITDA was slightly lower compared to the year ago period. Margins in the quarter were affected by higher sales of lower margin non-powered products as well as higher SG&A expenses due to ongoing increased investment in R&D and administrative cost. Looking ahead we expect 2015 results for Tridien will be consistent with 2014. At AFM performance remained…

Thank you, Elias. Today I will discuss our consolidated financial results for the quarter and year ended December 31, 2014. I will limit my comments largely to the overall results for our company and individual subsidiary results are detailed in our Form 10-Q that was filed with the SEC yesterday. My consolidated revenue discussion will exclude FOX, which we believe is a more meaningful discussion due to the restriction on providing discontinued operations reported for FOX. On a consolidated basis, revenue for the quarter ended December 31, 2014 was 264 million, up 58% as compared to 167.4 million for the prior year period. The year-over-year increase was mainly attributable to meaningful revenue growth at ERGObaby, CamelBak and AFM and Tridien together with incremental net sales at Clean Earth and SternoCandleLamp from their acquisition dates partially offset by the decrease in revenue at Liberty and Arnold. Revenue for the year ended December 31, 2014 increased to 832.3 million from 712.8 million for the prior year. Net income for the fourth quarter was 8.9 million compared to a net loss of 5.1 million in the year earlier period. In the 2013 fourth quarter, we recorded a non-cash impairment charge of approximately 12 million at our Tridien subsidiary. For the year ended December 31, 2014 net income was 291.2 million which included a one-time gain of approximately 264.3 million on a deconsolidation of FOX. Net income for the year ended December 31, 2013 was 78.8 million which included a 61.3 million supplemental put expense reversal in connection with the previously announced termination of the supplemental put agreement. Cash flow for the quarter ended December 31, 2014 was 17.5 million as compared to 9.9 million for the prior year period. Cash flow for the fourth quarter of 2014 reflects year-over-year growth at our ERGObaby,…

Thank you Ryan. To recap we made considerable progress on our long-term goals in 2014. Specifically we continued to actively manage and create value for our family of leading middle market businesses. Secondly, we acquired two accretive platform companies that will increase our 2015 CAD to a level that we believe will cover our distribution on an annualized basis. Lastly we improved our financial flexibility by accepting capital markets in various equity offerings and generated new debt financing under attractive terms. I would like to close by commenting briefly on acquisition activity. Currently the M&A environment for middle market businesses remains competitive and valuations remain high. As we have done in the past we will continue to employ the same disciplined approach to valuation and diligence as we seek to add profitable companies to our family of businesses that need our strict acquisition criteria and have a reason to exist. This concludes our opening remarks and we'll be happy to take any questions you may have. Operator, please open the phone lines.

[Operator Instructions]. Our first question comes from Larry Solow with CJS Securities. Your line is open.

Just a quick more general question. The general polls on the economy it seems to be getting a little better, I guess almost you are -- if you are an NGO related company obviously you wouldn’t say that. But I guess most of your companies probably would not been that. But I'll tell you -- would you guys sort of agree with that statement over the last in the back half of '14 as enter '15 in terms of just generally how you look at your companies?

Larry as we think about our group of companies and look at 2015, I think it’s reflected in the comments that we made here today. I think we think that we are in a slow growth economy right now. And not being economist I certainly don’t think we are prepared to really make prediction beyond that but based on what we see from companies, the economy seems reasonably solid albeit a more of a slow growth mode than a high growth mode.

And just in terms of energy impact, I guess that Clean Earth and Arnold would have some impact on that. Did you guys see any of that? Do you anticipate any impact on that? And also FX maybe not on an operational basis but your international sales competitive reasons would that -- maybe impact you guys at all, stronger dollar?

Interestingly Clean Earth has virtually no impact attributable to energy. They have some businesses located in the Pennsylvania area where the developments -- oil and gas development is happening but it’s a very, very small piece of business. So immaterial really to their results in the context of your question. And Arnold has had a bit more of an impact although energy represents approximately 10% or less of Arnold's business and not all of that energy business has been impacted by the recent disruption in the energy market as many of their applications are used to reduce the cost associated with oil and gas exploration activities. So it certainly had an impact, it remains to be seen what type of ongoing impact, but I don’t think that we really anticipate any meaningful degradation to Arnold 's 2015 results associated with anticipated problems in the energy segment.

And just in terms of couple of your newer acquisitions Sterno and Clean Earth again. You said you had a few months now to sort of look under the hood, anything positive surprise or negative surprise as you look out?

Certainly negative surprises and I think I wouldn’t call it positive surprise, but I think as you said after a few months, you do get a different look at a company than you're going to have when you're in the due diligence period. But we're just really pleased with the strength of the management teams, the strength of the business model and really looking forward to long successful partnerships with both companies.

Just lastly with a competitive acquisition environment obviously you guys -- still you got to complete two quite nice strategic acquisitions, but prices obviously remain high. And I know you have most of them done some add-on acquisitions including one this quarter, but might we see a potential acceleration on the small add-in tucking side of the things?

I think that's something we always pursue, historically we've seen Advanced Circuit do that a lot more recently you've seen Clean Earth do that, Liberty Safe has done a small add-on in the past. And so that's a model we really like and we think all of our subsidiary company management teams are very capable acquirers and integrators, so that's a model that we have always pursued and we'll continue to pursue. And so I hesitate to call it when acceleration of those efforts rather I'd refer to it as the continuation of those ongoing efforts.

Thank you. Our next question comes from Vernon Plack with BB&T Securities. Your line is open.

And I was looking for perhaps some more color on SternoCandleLamp, it's a meaningful contributor to total EBITDA. And just wondering how do you increase cash flow on the company longer term? What are the priorities? Is it focusing on greater market shares, expanding the product offering, maybe operational efficiencies, do you have businesses to it? I'm just -- we'll be interested in your thoughts on SternoCandleLamp.

Vernon its Elias. So Sterno is a very strong market share player in the core canned heat market for food service. So I think, thinking that it will continue to take market share in order to grow is probably not something that is a realistic growth target just because its share is so high. This is extraordinarily well managed team; it's an incredibly efficient operator. So I think we see a couple of areas of growth. One is the Sterno brand, it really has great meaning and its core categories and we think it has the ability to be broadened into adjacent markets and on organic basis where we can come into some new adjacencies and develop product in new adjacencies. Second you hit on acquisition possibilities, this is a really phenomenal management team and very efficient operator as we think that there are some adjacent categories within the distribution channels that we serve currently that we'll be able to acquire into this management team and be able to increase cash flow that way. So I think it's really kind of more on new product development and acquisition rather than on kind of market share growth. We also think that the market overall rose in line with the economy and we have no reason to believe that, we would have any market share losses and so we would expect to have just gains that are produced along the lines of economic growth.

[Operator Instructions]. Our next question comes from Greg Mason with KBW. Your line is open.

First on the available capital I know you said you have 226 million of borrowing capacity and 245 million of FOX capital. How do you view your existing availability of capital as you're looking through a market set of potential opportunities? And can you increase that borrowing capacity or is it much more of a fixed basis you'd have to increase equity and debt going forward that bank capacity?

I think if we were to see our cash flows from our subsidiaries growth we hope that could also had some capacity to the items that you referenced. But I do think you hit on the two largest areas where our capital is going to come from. And I think relative to our strategy which is a consistent strategy that we have deployed since being a public company. We feel good about that level of capital in the context of it being sufficient to support our add-on as well as platform company acquisition. I think as we grow our business that’s certainly something we would like to grow as well over the long-term. And as you have seen over the years within our company we sometimes go from periods of having a lot available capital more than what we have that this time to after an acquisition or two finding ourselves with less available capital. And so those cycles I think will be normal for us as they have been in the past, but right now and as we entered 2015, we feel as we have adequate available capital to execute on our strategy.

And then looking at Arnold, I know you talked about the oil impact, but what about just the general commodity complex has declined pretty meaningfully. And I know there is a rare earth metals ETF out there it’s down like 30% since August. How is that impacting the business just the decline in the commodities complex.

We don’t believe it has much impact at all the rare entities that you are referring to are largely suppliers of materials to Arnold. And so with that really doesn’t impact Arnold’s end markets so much or their business. But it is something we obviously pay attention to but at least during the period of our ownership we really have not seen any material impact that Arnold business associated with shifting commodities markets.

And how could that flow through the cost of goods sold and the end operating profit margin. It looks like cost of sales actually went up in the fourth quarter as commodities are going down. How is thinking that maybe the cost of goods sold could decline a bit? Could you just talk about that dynamic?

I think it can have a modest impact depending on the product mix associated with Arnold, but again it’s not like some businesses for example if you look at American Furniture for example where they are huge users of foam and the price of foam one way or another can have a dramatic impact on that company’s margins either negatively or positively. I don’t believe that Arnold base in similar dynamic with respect to the inputs of the materials that are used to manufacture their magnets and magnetic assemblies.

Our next question comes from Bob Napoli with William Blair. Your line is open.

Given that the environment is so competitive today for new acquisitions and the pricing is high. Are there any thoughts in 2015 around divestments, I mean this is probably a great market is there something that you don’t think fit as well or just the timing was right to do that. And so I was just wondering your thoughts around potential divestments.

Sure, just pointing out before I get to your question directly. The market was very similar in 2014, it’s not exactly the same as what we are seeing today. And we were able to consummate two new platform acquisitions. And so I think that the markets are always a little bit tough to predict although prior to those two acquisitions we had an extended period of inactivity because we were unable to find companies that we thought provided good risk adjusted returns for our shareholders. So we are cautiously optimistic that we can find good opportunities to be acquired in 2015. And to answer your question directly, I think that part of our business model has been and will continue to be opportunistically divesting subsidiaries from time-to-time. So I don’t think 2015 necessarily represents a thought process that is inconsistent with how we done things historically. Although I don’t mean to be dismiss above your question. I mean we do see what’s going on in the market; some of the prices that are paid can help but make you question what some of your subsidiaries maybe worth. However what we really do focused on first and foremost is to build these businesses both organically and via acquisition to reinvest in the businesses to really plan to own them forever. And if opportunistic opportunities arise for us to consider a divestment, we certainly would consider that.

Is there anything today in your portfolio that you think fits less well?

I will say as probably been said before but I will say it again. That’s like asking me to pick -- to answer you which one of my children do I like more than the other. So I think they all are wonderful bids and I am dodging your question a little bit. But I will say that we do look at all of our businesses that's in the same way we love them all equally and we will continue to try to optimize and build and grow all of them. And so that's a really hard question for me to answer directly other than in the manner in which I just answered it.

Thank you. I'm showing no further questions. I would like to turn the call back 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.

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