Good morning and welcome to the Compass Diversified Holdings 2015 Third 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 Bryan Degnan of the IGB Group, for introductions and the reading of the Safe Harbor statement. Please go ahead, sir.

Thank you and welcome to Compass Diversified Holdings' third-quarter 2015 conference call. Representing the Company today are Alan Offenberg, CEO; Ryan Faulkingham, CFO; and Elias Sabo, a founding member of Compass Group management. Before we begin, I would like to point out that the Q3 press release, including the financial tables and non-GAAP reconciliation, 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, 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. Except as required by law, 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 third-quarter 2015 earnings conference call. Before I discuss our performance for the third quarter, I would like to briefly highlight certain positive events that occurred in the third quarter which demonstrate our ongoing success capitalizing on our balance sheet strength to acquire companies with a reason to exist, while realizing sizable gains for shareholders. First, we closed on our acquisition of Manitoba Harvest, a pioneering global leader in branded hemp-based foods. Based on the Company's passionate consumer following, experienced management team, and compelling expansion opportunities, we remain very excited about Manitoba Harvest's prospects for growth. We also completed the sale of CamelBak, which represented a very compelling opportunity to monetize our interest in one of our subsidiaries. Including the $165.3 million gain from this sale, we have now realized over $480 million in gains for shareholders since our IPO. In addition, subsequent to quarter end, we sold our American Furniture Manufacturing subsidiary and received net proceeds of $23.5 million. Turning now to our 2015 third-quarter results, our leading niche industrial and branded consumer businesses generated strong cash flow which exceeded our expectations and allowed us to meaningfully exceed our distribution. For the three months ended September 30, 2015, CODI generated cash flow available for distribution and reinvestment, which we refer to as cash flow or CAD, of $23.8 million, an increase of 77% compared to the third quarter of 2014. At our niche industrial businesses, we achieved solid combined sales and EBITDA growth. For the nine months ended September 30, 2015, our niche industrial businesses posted a combined revenue increase of approximately 3.4% as compared to the nine months ended September 30, 2014, on a pro forma basis. EBITDA increased by approximately 5.6% as compared to the corresponding…

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, 2014. Our niche industrial businesses continue to generate strong and predictable free cash flow. We reported a combined revenue increase of 1.4% during the third quarter of 2015 as compared to the year-earlier period. EBITDA on a combined basis increased by 11.1% as compared to the year-earlier period. The combined EBITDA margin increased approximately 180 basis points to 20.1% for the quarter ended September 30, 2015, from 18.3% in the prior-year quarter. Advanced Circuits' results for the third quarter were in line with management's expectations. Revenue increased 1% year-over-year, driven by growth in long lead time PCBs and offset by lower sales in quick turn PCBs. Third-quarter EBITDA margins were slightly lower by approximately 80 basis points compared to the year-ago period, reflecting a shift in sales mix. Arnold Magnetics reported solid results in the third quarter, in line with expectations. Revenue increased 3.6% year-over-year, reflecting higher PMAG sales as a result of new customer demand during the quarter. Precision thin metal sales also increased during the third quarter due to management's initiatives to identify new customers and applications. These results were partially offset by a decrease in Flexmag sales. Third-quarter EBITDA at Arnold increased by 21% year-over-year and EBITDA margins increased approximately 230 basis points, primarily attributable to increased margins in the PMAG sector due to the favorable impact of European restructuring activities. As we look ahead, all three business segments are performing as expected and we continue to anticipate modest 2015 full year-over-year earnings growth at Arnold. Turning to Tridien, results in the third quarter…

Thank you, Elias. Today I will discuss our consolidated financial results for the quarter ended September 30, 2015. 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 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 reporting for FOX. On a consolidated basis, revenue for the quarter ended September 30, 2015 was $208.1 million, up 55.6% as compared to $133.8 million for the prior-year period. This year-over-year increase was primarily attributable to contributions from our 2014 acquisitions of SternoCandleLamp and Clean Earth, as well as meaningful revenue growth in our Tridien and Liberty subsidiaries. Net income for the third quarter was $166 million compared to $262.5 million in the year-earlier period. During the third quarter of 2015, we recorded a gain on the sale of CamelBak of $165.3 million and a loss on the classification of AFM as held for sale of $14.3 million. Both of these businesses were accounted for as discontinued operations in our financial statements. In addition, we reported a gain on the equity method investment in FOX of $11.8 million as the result of an increase in FOX's share price during the quarter. During the prior-year third quarter, CODI recorded a one-time accounting gain of approximately $264.3 million as a result of the deconsolidation of FOX. Cash flow for the quarter ended September 30, 2015, was $23.8 million compared to $13.4 million for the prior-year period. Cash flow for the third quarter of 2015 primarily reflects year-over-year growth at our Liberty Safe, SternoCandleLamp and ERGObaby businesses, partially offset by a decline at the Company's Clean Earth business. Cash flow for…

Thanks, Ryan. During the third quarter, we generated strong results that exceeded our expectations and allowed us to meaningfully exceed our distribution, underscoring the leadership and financial strength of our niche industrial and branded consumer businesses. We also drew upon our significant liquidity position to consummate the acquisition of Manitoba Harvest as we continue to add leading businesses with strong market leadership, proven management, a passionate consumer following and compelling expansion opportunities to our group of subsidiaries. In addition, we completed the sale of CamelBak during the quarter, unlocking significant value and increasing the gains we have realized for shareholders to over $480 million since our IPO. I would like to close by briefly discussing M&A activity and our growth strategy going forward. Middle-market deal flow remained steady during 2015 year-to-date relative to 2014, due in part to continued attractive valuations for sellers. High valuation levels continue to be driven by the availability of debt capital with favorable terms and financial and strategic buyers seeking to deploy available equity capital. We remain focused on marketing the Company's attractive ownership and management attributes to potential sellers of middle-market businesses. In addition, we continue to pursue opportunities for add-on acquisitions by certain of our existing subsidiary companies, which can be particularly attractive from a strategic perspective. Subsequent to the sale of CamelBak and AFM, we have more than $600 million in available capital to deploy through cash on our balance sheet, our revolving credit facility, and our FOX ownership, to continue to pursue acquisitions. Consistent with our success completing three attractive platform acquisitions since August 2014, we will remain disciplined in acquiring leading middle-market businesses that meet our strict acquisition criteria. We will also draw upon our strong balance sheet to reinvest in our current subsidiaries to drive further future cash flow growth. This concludes our opening remarks and we will be happy to take any questions you may have. Operator, please open the phone lines.

Operator, we can start Q&A.

[Operator Instructions]. Vernon Plack, BB&T Capital Markets.

I wanted to get a little more color on the outlook for Tridien with the loss of a significant contract. Just wondering what was -- was Q3 a one-time event? Revenues were obviously up very strongly. So can you share with us the outlook for Tridien?

Yes. So Q3 was an outlier, in that fulfilled orders for a customer that we had been mentioning on a couple of conference calls now that did not renew its contract with us. And it will be finishing -- we will be finishing production for them in the fourth quarter. There was a significantly increased amount of orders that we've received from them to facilitate the transition. And so, I would say you should consider the third quarter to be an anomaly, and it should fall back from these levels.

Okay. And I'd also like to get a better understanding of -- with the recent acquisition of Manitoba; can you share your thoughts in terms of how you're going to help that company growth?

Sure. And I think we've said this on the last call and at our investor meeting as well. We are extremely excited about the prospects for Manitoba. One of the opportunities that we see is expanding the awareness levels of these products in the US. If you look at Canada, the household penetration rates are about 10 times greater than they are in the US, kind of order of magnitude 5%-ish in Canada versus about 0.5% in the US. Part of that is due to just different regulation, where cultivation of food-grade hemp product is legal. And it is not in the US. So there is just greater awareness. And the company started and focused on the Canadian market first. We think the opportunity in America is equally as rich as it is in Canada; just the US is farther behind in the development. So a lot of the efforts -- and as we have tried to suggest and lead for our investors and analysts is that we'd like to -- and we will be investing a significant amount into marketing and advertising to raise the awareness levels of these products, of the health benefits of these products. And we think that can drive accelerated gains in household penetration here in the US. So we remain really excited about it, Vernon. The Company has multiple prongs of growth. There is new products that are being introduced as well and continue to gain distribution throughout North America. But I think our primary focus in assisting the company will be definitely driving higher awareness through greater marketing and advertising spend.

Okay. That's helpful, thank you.

Kyle Joseph, Jefferies.

Congratulations on another good quarter. Just looking at it on a consolidated basis, it looks like your gross profit margin expanded a lot in the quarter. I'm wondering if there's any one-time items there or is that more of a mix shift of the portfolio? And your outlook for that to continue?

I think that it certainly is company dependent. But what you will see is some of our companies did have mix shifts that were favorable to their margins. In addition, there were also some favorable raw material pricing environments for some of our companies that looked as though they will remain favorable, I would say, through at least the balance of this year. It's hard to predict really into the following year what that's going to look like. But in terms of the balance of the year, those raw material prices look as though they will stay relatively stable to current levels. So between those two things and the mix shift, again, we can go company by company if you would like. But that was really, I think, the two primary drivers of improved margins on a consolidated basis, as well as in a couple of companies management just continues to always try to drive efficiencies throughout their operating processes.

Okay, thanks. And then just digging into Clean Earth a little bit, I know you saw EBITDA contract a little bit there. And pardon me, but I missed the commentary a little bit. None of that is related to commodity price movements or anything like that, if I'm not mistaken, right? What exactly drove that? I think you highlighted composition and --.

Yes. No, it wasn't driven by commodity prices at all. It was really largely attributable to the level of activity within their dredging segment. As we've talked about with this business, and although Clean Earth does operate in three real distinct segments, each of those segments can, in fact, be lumpy, which makes this company a little bit hard to predict sometimes quarter to quarter. However, with respect to dredge specifically, there was really a delay this year in anticipated dredge projects, so projects that are known and known to be coming out to the market yet, for whatever reason, just don't come as quickly as the company would have anticipated. So that was a primary driver of reduced dredge activity. In addition, it's competitive out there. And one of the things that Clean Earth is a premier provider of services. And they are very price disciplined in their approach to operating their business, which is why their margins are as good as they are. And they are not going to chase a project at a level that is unacceptable to them from a margin standpoint. So I would say there's also, in many ways, competitive factors can be viewed as negatively. In this context I view it very positively because it's reflective of management's ongoing, disciplined approach to how they operate their business. And we have all the confidence in the world that their status and success within dredge will be better going forward than it was in this quarter. So not something that is, at a macro level, concerning to us. But certainly, I think -- whether it's dredge, whether it's soil, whether it's hazardous -- we will see quarters at this company from time to time where we are having not necessarily the same explanations, but similar conversations about why did this segment fall a little short in a particular quarter. So this quarter it happens to be dredge. But on a consolidated basis we're still expecting very solid performance for Clean Earth. Very happy with the performance of the business and really are excited about its growth prospects.

Okay, thanks. And now that you guys just really have the term loan, could you, Ryan -- I know I can go back and check the Q and whatnot -- but can you remind us what the cost of funds is on the term loan versus the revolver?

Yes, sure. So, I'll start with the term loan. The term loan is LIBOR plus a spread of 3.25%. But we have a floor of 1% on that LIBOR rate. So it's essentially 4.25%. We have a swap outstanding that's out of the money, given the fact that rates have really stayed low versus expectations a year ago. So therefore our effective rate on the term loan starting April 1 will be a little over 6%. And then on the revolver it's LIBOR plus a spread that varies depending on leverage, between 2.5% and 3%. So hopefully that gives you a flavor for cost of our debt.

Yes, that's perfect. Thanks very much there. And then lastly, just given the amount of liquidity you guys have on your balance sheet, can you talk a little bit about the middle-market deal environment? And more in the context of -- we saw volatility in the broader public markets. Are you guys seeing any impact there? And what your outlook for deal is flow going forward?

Sure. Interestingly, the activities within the public markets seem to have had very little to no impact on middle-market pricing expectations. And so, consistent with a theme we have experienced now for what feels like at least a couple of years, it's a robust market for sellers. And that's driven by the availability of debt capital, by private equity buyers flush with cash, by strategic buyers flush with cash. And that really hasn't changed and I don't have any expectations that that will change anytime soon. So I think it remains a competitive market, relatively expensive market. And like we've done in the past, we're just going to maintain our disciplined approach to making acquisitions. And this is not the first time in our history that we've been flush with capital. Going back just a couple of years we were in a very similar situation and went through a pretty frustrating time as an acquirer, where we didn't make a new subsidiary acquisition for in excess of two years. And we have made three since 2014 in essentially the same environment. And people have asked, what have you all done differently? And I would say not much. We continue to market aggressively. We continue to review a lot of deals and acquisition opportunities. I think that when we feel very strongly and have a real conviction on an opportunity, as we most recently did with Manitoba Harvest, we try to go after it aggressively but still in a very disciplined manner, in a thorough approach to due diligence. We will not compromise any of that in the context of future deployment of capital. We think it's critical to our historical success and will be just as critical to our future success. Deal flow is solid. It's not -- in the…

[Multiple Speakers] No, no, not at all. That's very helpful and I appreciate it and thanks very much for answering my question.

Larry Solow, CJS Securities.

Just curious your thoughts on globally. Hearing obviously some rising concerns over slowing economy; some people are saying we are even in an industrial recession. Your industrial exposure is probably Clean Earth and I guess a little bit on Sterno and Advanced Circuits. But just curious what you are seeing on that side of the business. It sounds like things are going pretty well for you guys and then on the consumer side even a lot better. But just your general broad brush on progression over the last, maybe year-to-date, over the last few months. And however you could answer that [Multiple Speakers]. I know it's delivered different company by company, but --.

Yes. No. Look, I'll take a quick stab at it and then suggest maybe Elias to add to that commentary, as he is, I think, a far better economist than I am. But from my standpoint, my views are based largely on what we see within our group of subsidiary companies. I don't mean to suggest that I'm ignoring the statistics that come out. It seems as though they come out weekly that suggest weakness. What we see on a consolidated basis is a slow growth economy. And our companies are, by and large, doing well. It definitely does not feel like a robust economy or a strong growth economy. Again, there are pockets and you can see some of them even within our group of subsidiaries that you would suggest they seem to be operating in a great economy. But by and large, on a consolidated basis, I think that what we see is a modest growth opportunity. I know I remain cautiously optimistic that that can remain in place. But when you start to see some of the data that has come out recently, it does get a little bit concerning. I'll turn it over to Elias, who will, I am sure, if he is so inclined, provide a much more robust view of the economy from our perspective.

Well, I don't know that I will have a much more robust few, Alan. But I would say, Larry, to Alan's point, it does feel like things are steady, slow growth. I think that we have predominantly domestic exposure, especially through our industrial businesses. And so, if you just look at the amount of our earnings that comes domestically, it's the overwhelming majority. Feels that the US economy -- and I think everybody continues to say this -- feels better than the global economy. And so, who knows how that looks in the future? But the US feels like it's doing reasonably well and our companies are participating well within that. I think beyond that, there are a couple of crosscurrents that we see. One is in businesses that we do have international exposure, like an ERGObaby where greater than 50% of the revenues are derived outside of the US. The strength of the dollar is a real headwind. And even when we denominate in dollars, that just makes our products more expensive in those markets. And when you are dealing in markets in South America or Europe or Eastern Europe and into Russia, where you've seen their currencies devalue almost at unprecedented levels and the speed, that has been, I would say, a real challenge. Part of the offset to that is there is some alleviation from commodity prices, which have come down quite a bit. So it feels like the US, the domestic economy is staying reasonably steady, but I think the global economy does feel not quite as strong as maybe it did 6 months, 12 months ago.

Fair enough. Just looking at a couple of your larger holdings, you discussed Clean Earth, obviously, pretty well. ERGO, another good quarter. Just interested -- I know revenues flow down a good amount, as it was supposed to. But I thought that your expenses were going to jump up a little bit as you invested more in these new products. But yet you still managed to eke out a double-digit gain in EBITDA. So, was there a little slowdown or a timing of those investments? Or was it just a little better -- even a better quarter than expected despite all that?

So a little bit of everything you just said. Their timing is definitely part of it. Some of the marketing spend that we had anticipated is coming a little bit later in the year and will fall into the fourth quarter. Beyond that, though, I would say it was a little bit above our expectations. Part of that is our margins expanded. And as a lot of our sales in ERGObaby are out of the US, we also have some costs that are out of the US. And so the EU-denominated costs were clearly a little bit lower. So, I think it was a combination of things, Larry. The company is extraordinarily well managed and was able to generate EBITDA growth that was greater than what we had anticipated. I would say that the slowdown -- and we saw this coming in the third quarter in revenue growth -- really was due more to a tough comp. We had 360, which was really rolling out fully, especially internationally last year, and was in the back end of the second order and really gaining momentum in the third quarter. That created a tough comp. But the dollar strength was one thing that I would point out specifically with ERGO that had a disproportionate impact on revenue in this quarter. But again, some of our expenses came down because of the strong dollar, too, and I think that's why we did a little bit better.

Got you. And then just lastly, on SternoCandleLamp, you mentioned -- it was obviously -- it was a good quarter. And you mentioned some rising operating efficiencies. Is that partly due to -- I know, I think, Sterno and Candle Lamp merged I think, in 2013 or early 2014? I'm not exactly sure of the dates or timing of that, but I know there was a lot of efficiencies and some of them hadn't been realized yet. So is that part of that catching up? Or what else is helping drive some of those things?

Yes. You are right; it was in 2013 that the two businesses merged. There has been a continuing emphasis on process improvement, and that process improvement goes across everything. I would say this is a company that has an incredible culture about every year, every quarter, looking at what can be done to wring additional efficiencies out of the system. Some of those are benefits that are still being had from the merger and getting both businesses to the same level of efficiency. Some of it is just on better purchasing across a wide spectrum of products that we purchase, ranging from raw material to finished product that we may procure overseas. And so, it's really a combination of things. But what I would say, Larry, is this is a company that just is constantly looking for ways to improve their cost structure. It's no secret that the food service industry broadly is kind of a GDP-ish type growth business. And so, if you are going to try to leverage up GDP growth rates into something that looks like, hopefully, higher than that levels of EBITDA growth, you just have to be constantly looking for process improvement to drive efficiencies. And this Company does an extraordinary job at it.

Got it. Okay. Great, thanks a lot. I appreciate it.

[Operator Instructions]. Leslie Vandegrift, Raymond James.

I just had a quick question on Liberty Safe. Obviously, you had some good growth year-over-year there. But I believe a lot of that tends to be political climate that gets huge growth bumps in that. Do you expect that to continue? Or is that looking to stabilize out a bit over the next few quarters or year?

So your comment about the political environment can certainly have an impact on Liberty Safe, particularly when there are discussions surrounding potential changes in gun legislation. But I think what you are seeing in Liberty, and not just for the quarter but from the year-to-date, is really a resumption of Liberty's activity to -- while I would have called it earlier in the year normalized, the word strong was not used by accident when describing this quarter. So they are in a period of strong demand. And just to go back in time, a couple of years ago they had their greatest year in terms of EBITDA and revenues in their history, generating just under $20 million in EBITDA, followed by a year where they had one of their worst years -- in fact, I think it was their worst year in their history, where EBITDA was down at the $4 million range or so. So they had a boom and bust cycle driven by an extraordinary ramp up in demand. The channel really starting to then normalize. So sales at retail of safes still continued, but the crazy level of excessive demand reduced, such that the retailers of safes had more than enough inventory to continue to satisfy the demand of the retail customer without needing to buy more safes from Liberty. Going back to previous calls and comments, what we really looked for Liberty to do in 2014 was to work through that situation and to take the year to right-size their own inventory levels, to work with their customers, to right-size their inventory levels, and to hopefully enter 2015, quote-unquote clean, with that through the system. And that's really exactly what they did. And what's happened now in 2015 is -- again, going to the earlier parts…

Okay, perfect. Thank you.

Brian Hogan, William Blair.

A similar question when you were talking about Liberty. What is your outlook for ERGO? Obviously, you're going through some comps things and some foreign currency headwinds. But what is the long-term growth rate? It has been a very nice grower. What are your thoughts there?

Well, I don't know that we every given out specific, long-term growth targets. I would say we are optimistic and bullish on the future for this company; think there's a couple of different opportunities that we continue to penetrate. First is we are expanding our distribution internationally and we've got a number of new products in our core carrier segment, starting with the 360 that launched last year and a pretty nice pipeline that we think really can address some market share opportunities globally. And so, we feel that there is an opportunity within the core segment. Beyond that, and as we've said for a while, we believe the ERGObaby brand is one that resonates with its customer and creates real elasticity around that brand to be able to extend into other products. And so, I'll point out a product that we launched, which is a nursing pillow. It has recently won the JPMA Innovation Award in its category. It was voted by moms on a thing called BabyList as the product they would most like to have. And so, I think it just shows that with good innovation around even some categories that aren't within the core carrier segment, the brand has elasticity to move. And so, we feel really bullish about the future of the ERGObaby business and that it can have growth rates that, I would say within the portfolio of companies that we have that should be near the upper of what our companies are growing within our portfolio.

Thanks. That's actually very helpful. On the Clean Earth, what gives you confidence in the -- finish the 2015 strong from the dredging perspective? Is it just that you're looking to the contract timing? And you did mention it's pretty competitive as well.

Yes. It's primarily driven by our evaluation of their existing pipeline of opportunities.

All right. And you said this is going to spill over into next year, too. Is that --?

You know, dredging projects really don't go away, yet they can also be influenced by weather and things of that nature. So, a project that, for example, is not completed, call it by the end of this year, that might even be something that has been awarded to Clean Earth, could carry over. But it might carry over to the following April or May, because it might be too cold, or it might be too windy or equipment might not be available. Or the person that awarded the business says, you know what? We just have another delay for some administrative reason. So things can carry over. But, unlike -- and I'm just using this for the sake of example -- unlike a Liberty Safe or an ERGObaby that is delivering a consumer product where sometimes the person you are selling it to says I just need it sooner. So you could talk about, hey, some revenue was pulled forward into a month or someone says, our trucks are busy, I can't get it for three weeks. It might spill over to the next month. There is an inherent potential for lumpiness in the Clean Earth business that carryover can mean next month or it can mean two quarters from now. So again, as I said earlier, it makes it a little bit harder to be accurate on a quarter-to-quarter basis. But from what we've seen as owners of the business and working with an exceptional management team, I think we have been pretty good at giving you, call it at the beginning of this year, a good view for what this full year would look like. And I think we will be where we thought we would be on a consolidated basis. But if you were to then say, take it to the next level and predict next year's dredge, hazardous and soil, I'd almost guarantee you we won't get that 100% right. But I feel really good about where we can get on a consolidated basis.

Sure. And one last question. With American Furniture, can you guys describe what led to the decision to sell the business and why now? And --.

Sure. As you know, we had owned American Furniture for quite some time and bought them, arguably, at a difficult time, just ahead of a very, very real and long recession. And the company's financial performance suffered. In addition, early on in our ownership, the company had a massive fire at its facility, burning down about two-thirds of it, including its finished goods warehouse during the busiest time that the company had from the seasonal standpoint. I'm really very, very proud of the efforts of everyone that works at American Furniture, and particularly the management team that we partnered with a couple years ago, really bringing the company back to profitability. Back to a growth mode from where it was at its darkest moment, where it was losing in excess of $4 million in EBITDA. As we looked at the company's great performance relative to the prior couple of years, the great performance of the last few years, what we found was really great growth, market share gains, increased placement within retail. But what we also observed during our ownership was a situation where furniture sales at retail really changed. And when we acquired the company, there were a lot of what we would just broadly refer to as mid-tier furniture retailers. The furniture industry, for promotionally priced furniture, certainly has changed and is now dominated by a lot larger retailers. And I think that that, for the entire industry, began to put pressure on margins, as well as just the competitive environment of furniture. The barriers to entry in promotionally priced furniture are not that high. Which was, going back, a mistake that we made in evaluating the opportunity. And despite the company's profitability and growth these last several years, which has been outstanding, we were really faced with…

All right, thank you for your time.

Vernon Plack, BB&T.

Alan, could you repeat your comments that you mentioned in the beginning regarding the outlook for cash flow versus the dividend?

[Multiple Speakers] Yes. There is a script. I will try to do it without referring specifically to how I said it in the script. But I believe what we said was that we expect that with the sale of CamelBak and American Furniture, that we would expect our CAD to fall below our level of distribution. But reiterating that CAD does not include gains, of which we have now generated more than $480 million, plus the fact that we've got upwards of $600 million of available capital to deploy into CAD-generating assets. So that was the comment. I'll stop there to see if there's a specific part you want me to elaborate on or that you want to follow up on.

And that's an annual basis, correct? Or at least annualized?

On an annualized basis, yes.

Okay. All right, that's great. Thank you.

I am showing no more questions in the queue and would like to turn the call back to Alan Offenberg for any closing remarks.

I'd just like to thank you for joining us on today's call and for following CODI. We look forward to speaking with you next quarter. Thanks.

Ladies and gentlemen, thank you for joining the program today. This does conclude our event and you may all disconnect. Everyone, have a wonderful day.