Good morning, and welcome to Compass Diversified Holdings 2016 Second Quarter Conference Call. Today's call is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Scott Eckstein of The IGB Group for introductions and the reading of the safe harbor statement. Please go ahead, sir.

Good morning and welcome to Compass Diversified Holdings 2016 second quarter conference call. Today's call is being recorded. Representing the Company today are Alan Offenberg, Chief Executive Officer; Ryan Faulkingham, Chief Financial Officer; and Elias Sabo, a founding partner of Compass Group Management. Before we begin, I would like to point out that the second quarter 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 regards to the future performance of CODI. Words such as believe, 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 that could cause actual results to differ on a material basis from these projected in these forward-looking statements. And some of these factors are enumerated in the risk factors discussion in the Form 10-K as filed with the Securities and Exchange Commission for the year ended December 31st, 2015, 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 second quarter 2016 earnings conference call. During 2016 second quarter and subsequent to quarter end, we continued to use our financial strength to capitalize on market opportunities to invest in the growth of our current subsidiaries as well as announced a definitive agreement to acquire a new platform acquisition that met our strict acquisition criteria. Before I discuss our performance for the second quarter, I would like to highlight our recent successes on the acquisition front. Starting with our niche industrial companies, during the quarter, our Clean Earth subsidiary completed the add-on acquisitions of Phoenix Soil, which provides environmental services for nonhazardous contaminated materials from a new 58,000-square-foot state-of-the-art thermal desorption facility located in Connecticut, and EWS Alabama [indiscernible] wide range of hazardous and nonhazardous waste management services to 250 customers in 11 states across the country. Together, these strengthen Clean Earth's soil treatment and waste management capabilities and considerably expanded our market presence. We are excited to work with Clean Earth as it reaches into new markets, increasing its considerable growth prospects. On the branded consumer side, during the second quarter, our subsidiary ERGObaby consummated the accretive add-on acquisition of Baby Tula. This transaction expands ERGObaby's product offering and direct channel presence, as Tula's premium baby carriers, toddler carriers, slings, blankets, and wraps are sold to retailers and consumers in more than 70 countries worldwide. We look forward to working with Tula's management team to capitalize on the addition of this premium brand and continue ERGObaby's historically strong growth. Following the quarter end, we announced that we entered into a definitive agreement to acquire 5.11 Tactical, a leading provider of tactical apparel and gear. 5.11 represents a strong addition to our family of leading middle market branded…

Thank you, Alan. I will begin by reviewing our niche industrial businesses. Please note that revenue and EBITDA numbers I provide for Clean Earth include contributions from the add-on acquisitions of Phoenix Soil and EWS Alabama. Our niche industrial businesses continued to generate solid cash flow. We reported a combined revenue increase of approximately 9% during the second quarter of 2016 as compared to last year's quarter. EBITDA on a combined basis increased by approximately 13% as compared to the year earlier period, while the combined EBITDA margin was 18.9% for the quarter ended June 30th, 2016, compared to 18.2% in the prior year quarter. Advanced Circuits experienced some softness during the second quarter as revenue decreased 6% and EBITDA decreased 15.2% year over year, primarily due to lower sales and long lead time PCBs and quick turn PCBs, partially offset by growth in assembly and subcontract sales. Second quarter EBITDA margins for this subsidiary were slightly lower at 29.7% compared to 33% in the year-ago period. Based on ACI's results to date, we believe full-year 2016 earnings will be in line or slightly below 2015's full-year results. Arnold Magnetics reported solid results in the second quarter consistent with our expectations. Revenue decreased slightly by 3% year over year, reflecting lower North American PMAG and precision thin metal sales, which was partially offset by increased international sales volume. EBITDA margins increased by 297 basis points, reflecting favorable currency movement and cost management. During the quarter, Tim Wilson made a personal decision to retire from his role as Arnold CEO. The entire team at CODI would like to thank Tim for his contributions, commitment, and dedication to Arnold. Tim has graciously agreed to assist in business development activities during a transition period. And we appreciate his ongoing guidance and support. I'd…

Thank you, Elias. Today, I will discuss our consolidated financial results for the quarter ended June 30, 2016. 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. On a consolidated basis, revenue for the quarter ended June 30, 2016, was 229.4 million, up 15% as compared to 199.7 million for the prior year period. This year-over-year increase reflects notable revenue growth in our ERGObaby, Clean Earth, and Sterno subsidiaries, due primarily to contributions from our add-on acquisitions. Net income for the second quarter was 19.4 million compared to 26.6 million in the year earlier period. The decrease was primarily due to the loss on disposal of assets associated with our Orbit Baby wind-down and higher interest expense related to the movement in our swap value as compared to the prior year period. Cash flow available for distribution or reinvestment, which we refer to as CAD, for the quarter ended June 30, 2016, was 15.6 million compared to 27 million for the prior year period. The decline in cash flow for the second quarter reflects the loss of cash flow from the CamelBak and AFM businesses sold during 2015, partially offset by our acquisitions of Manitoba Harvest in July 2015 and the add-ons completed in late 2015 and 2016 previously mentioned. As Alan mentioned earlier, our CAD per share during the second quarter was negatively impacted by two factors that were timing related. The first impact was CapEx spend. Specifically, Advanced Circuits accelerated spend into the second quarter to take advantage of reduced pricing on capital equipment. The second impact was higher-than-anticipated cash taxes we incurred during the second quarter primarily related to Clean Earth. In total, these timing…

Thanks, Ryan. In closing, during the second quarter, we continued to use our strong balance sheet to complete several attractive, accretive acquisitions, both to reinvest in the growth of our current subsidiaries and to add another leading niche business to our operations that will drive increased cash flow and further our continued growth. Also, during the second quarter, our current businesses continued to generate stable operating results that were consistent with our expectations. I'd like to finish by commenting briefly on M&A activity. During the second quarter, middle market deal flow was down compared to 2015, as high valuation levels persisted due to the availability of debt capital with favorable terms and financial and strategic buyers seeking to deploy available equity capital. As we continue through 2016, our focus remains on identifying attractive platform acquisition opportunities, seeking profitable companies with a strong reason to exist. At the same time, we continue to pursue add on acquisitions that support the growth of our current subsidiaries and provide increased cash flow. As always, we continue to maintain a disciplined approach to valuation and diligence. We remain confident in our ability to continue executing on our investment strategy. 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]. Your first question comes from the line of Doug Mewhirter from SunTrust.

Hi, good morning. This is Matia on for Doug. Thank you for taking my questions.

Good morning.

Morning. On Liberty, I know you're expecting some pullback due to seasonality and manufacturing improvements. Do you anticipate any additional shutdowns in 3Q?

No, we do not. The second quarter shutdown was part of a scheduled plan to maintain equipment. And so, we do not expect the need to do that going forward this year.

Okay. And then on the write-off of Orbit Baby, can you comment on the extent of the additional charges for the rest of 2016?

Yes, sure. This is, Matia, this is Ryan. They're really not going to be that material. They may be some lease charges we incur over the back half of the year with respect to closing some facilities down as well as potentially inventory charges or write-downs, should we need to, based on selling prices and such. But, I don't believe those amounts will be material.

Okay. Thank you. That's all I have for now.

Thank you.

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

Hi, good morning, guys.

Morning.

Wonder if maybe you can, just on the announced acquisition of 5.11 Tactical, obviously, a significant acquisition, I think your biggest historically, on historical basis. Could you maybe just spend a couple minutes talking about the sort of the historical growth profile of the company, the competitive landscape, and maybe some of the potential initiatives you guys might do while -- when it's under your umbrella?

Sure. Elias will be pleased to answer that for you, Larry.

Sure, Larry. Good morning. So, you are correct in that 5.11 is the largest acquisition that we've consummated to date or will consummate, I should correct myself. It's signed, should consummate the next 45 days. The company, and as you are aware primarily has served kind of the law enforcement and overall kind of what we generalize as the protector community. And that has been the basis for where the company really grew up out of. In the, kind of over the past four or five years, the company's been growing kind of at a high single-digit, low double-digit growth rate top line and been able to get some EBITDA leverage off of that, so kind of into the low double digits on the EBITDA line. In terms of what we view as the continuing growth opportunities and what we look to do under our ownership, one of the really exciting things that 5.11 did prior to our ownership was to move out of its core professional services market and to start to move into more of the consumer market. It started that originally in a lot of wholesale accounts and so retail partners, the likes of what should be like a Bass Pro or a Cabela's, to give you a sense of the kind of companies that they sell through. And them more recently, initiatives have been more on the direct-to-consumer side, both through the e-commerce site, which is growing very rapidly, and through retail stores. So, our focus, and clearly, the majority of the business today and the, a great stable provider of cash flow is the professional segment. We view that as a segment that's attractive, that is a acyclical segment, where the, 5.11 has a in certain products, a kind of the leading market share. And…

Okay. Great. That was very helpful. Just on Advanced Circuits, obviously, a little bit of a downturn this quarter, and I guess this business has sort of been in the flat mode for several years now. Is this more of a -- it sounds like, to you guys, it's more of a timing-related thing or a temporary thing, not that you're predicting growth in the back half of the year, but at least seems like it's relatively stable. Is that fair?

Yes, I think that's a fair statement, Larry. I think the business is stable. It's kind -- what we're seeing is choppiness. And so, what you'll see is Q1 was a good quarter year over year. Q2 was a little bit weak. If you look at the first half over first half of last year, we're down slightly, not kind of real meaningfully. But, it's choppy and I would say the defense side of the business continues to remain relatively weak and has not popped back up. And this business is tied really we see kind of too, what the economy is doing. The first half of the year didn't have great GDP growth numbers and this business was kind of just muted. The good news is it continues to serve the same R&D markets, which are kind of stable here. But in terms of this business expectations, I think your point of it kind of is we look at this kind of as a flattish business right now is a I think good expectation.

Right. And hopefully, I guess, just it would be really an increase in defense spending and to get to that I guess back at the growth mode.

Yes, I think for growth mode to resume, we would need for defense spending to pick back up. And that just hasn't been the case over the last few years.

Absolutely. And just lastly on Manitoba, I know it's a relatively new holding and obviously very small. So, things could -- the needle could move a lot -- looks like it's moving a lot bigger than it really is. But just on the issues this quarter with a lack of organic seed supply, was that an execution issue? Was that something to do with a bad harvest, or any color on that would be great?

Yes, so, the -- this has been a problem actually that the company has encountered really repeatedly. And one of the problems is in converting farmland to organic has a multiyear process. So it's not something that we can just on the turn of kind of a switch get our organic harvest to kind of come online. We've been working on getting more quality organic supply contracted for us, Larry, over the last few years. And I saw we the company had been doing that prior to our ownership. But, the growth in demand right now predominantly remains in the organic side. And as I think we'd mentioned to everybody at our Investor Day, Mike Fata did a great presentation on this. The U.S. market, which is kind of the primary growth market that we're looking at right now, is still really a nascent market. It's kind of a tiny household penetration, well less than 1%. But, that group that's buying is really more oriented towards kind of that organic product. And so, our view is, as we grow this to be something, and to say mainstream is really probably too strong of a word. But, as we grow the awareness significantly and hopefully towards what the Canadian levels are, we think that that will drive a lot more of the natural. But, for right now, organic really is what is in demand. And we're trying to convert as much farmland as we possibly can. But, we think coming into 2016, to this crop season at the fall here we're going to be in far better place because we have a lot more acres that are planted. And right now, it looks like there will be a good harvest. So, it wasn't an issue with harvest. It's just an issue that demand continues to outstrip kind of the supply and the speed at which we can get kind of traditional farmland converted over to organic. I would also mention that there's some things that we're doing in terms of some facility improvements and upgrades that will allow us to also bring in some additional organic supply that may not have historically met our quality thresholds, but with some process improvements in our facility will allow us to do that. So, we think, on a number of measures, we're addressing this -- or on a number of fronts, we're addressing this issue head on. And we think that the next crop cycle, which should go from fall of this year until kind of early, late summer of next year, will be far, far better. And hopefully, we'll have adequate supply to meet the rising demand levels.

Got it. Great. Appreciate the response. Thanks a lot.

Your next question comes from the line of Kyle Joseph from Jefferies. Your line is open.

Morning, guys. Thanks for taking my questions.

Morning, Kyle.

I just want to get, for modeling purposes, just on some of the companies that have add-on acquisitions, if you can give us a little sense of organic growth versus the combined growth, I guess. But, just of ERGObaby, Clean Earth, and Sterno on a standalone basis, how do those compare to historicals? And how much of the growth is driven by the add-on acquisitions?

Sure, yes. Kyle, I'll take a stab at that. It's something that we typically we don't pro forma add-ons. So, I know, when you look at our reporting, it's probably a little difficult to decipher. So, I'll talk at somewhat of a high level here and starting with Sterno. As you can see when you look at the numbers that NII put up top line, Sterno's top line remains flat. And again, that's consistent with our expectations, a business that really follows GDP growth and Elias mentioned somewhat flat or slightly up year to date. But, NII contributed meaningfully to top line. But, Sterno's core business has done great from a margin standpoint. They continue to have excellent manufacturing efficiencies and operating leverage. They're also been able to apply a lot of their skills to NII and NII seeing some really, really strong margin improvement. So, core Sterno is doing very well and, as we mentioned in the comments, exceeding our expectations. ERGO base business from a carrier standpoint did well. It was up a couple percent. We're still a little slow top line growth because of our distribution change we mentioned on prior calls. But, really, what impacted ERGO's top line base business was the decline in Orbit Baby. So, that had a significant decline year over, quarter over quarter and, hence, one of the reasons why we decided to wind that business down. So, core ERGO remains strong. The Tula business we're very happy about. So, things look good there. And Clean Earth, same thing I'd say. We mentioned EWS and Phoenix are both exceeding our expectations, and core Clean Earth as well. Top line, what was modest increase in revenue, but there was some good margin expansion. A lot of that has to do with product mix. Dredge had a nice rebound late in the second quarter. So, by and large, for those three businesses, core underlying businesses are performing well.

Great. Thanks for that color. And then in terms of the 2016 guidance for CAD, at or above the dividend, so quick calculation, that's about $0.90 for the back half. In terms of timing there, does it, it probably depends on the closing of 5.11. But, can you give us a sense for is that going to be backend weighted? So, is the fourth quarter going to be more substantial than the third quarter I guess is what I'm looking for?

Yes, I assume that you're including 5.11 in those numbers, Kyle?

Right, that's what I assume you guys are including, right, to get to.

Yes.

CAD.

That's right.

Okay.

Yes, look, it's a little hard to decipher 5.11's timing with respect to its contribution to CAD. So, given that it's going to be late in the third quarter, I would think that fourth quarter would be higher, obviously, relative to their performance. And then historically, if you look back at our prior years, third quarter is typically one of our highest CAD accreting quarters. And I think that that we expect that to continue. So, if you're thinking about back half of the year, I'd follow prior years of CAD percent quarter contribution as a percentage of the full year as a good guide.

Great. Thanks. And then just on the accordion feature, is that just going to be an extension of your revolver, or are you looking to put that more as term debt? Can you give us an idea of what your capital structure is going to look like once you exercise the accordion?

Sure. So, that's all in process now. But, we given the purchase price of 400 million, we have the ability to put up to approximately 300 million on our revolver, given our $318 million availability. But, as you might've noticed in our 8 K, we did have a commitment letter issued by Bank of America associated with that accordion that allows us to term out 150 million of that. And we may decide to do more, depending on market conditions. So, it's a little difficult to predict exactly what the capital structure will look like. But, we have the opportunity to use both revolver and term in those manners.

That's helpful. Thank you. And then just one last one from me. You guys have done an amazing job deploying capital since the CamelBak sale. Now that you've deployed a substantial amount of that, does that change your sort of your position on or thoughts on the potential sale of one of of an existing business at all?

No, Kyle, I don't think it changes our thoughts on that at all. As, we have multiple avenues to pursue in terms of accessing capital. And over the years, we've kind of pulled each and every one of those levers. And we are going to maintain our discipline, focus. We would love to deploy more capital to the extent the right situations provide themselves, be it for add-on acquisitions or for new subsidiary add-ons sorry, acquisitions. But, no, our thoughts haven't changed at all. And as you've heard us say in the past, our divestitures historically have been opportunistic in nature. And so, to the extent a situation presents itself that is in the best interests of our shareholders, as we have in the past, we'd always consider that. But, in terms of a change of strategy, I would say there's no change whatsoever.

Great. Well, thanks for answering my questions. And congratulations on the 5.11 acquisition.

Thank you, Kyle.

Your next question comes from the line of Leslie Vandegrift, Raymond James. Please go ahead.

Good morning. Sorry, I might've missed this at the beginning of the call. I was just jumping in a few minutes late. But, on the 5.11 Tactical acquisition, the multiple there was about 10.5 times from the $400 million purchase price we saw. Now, for a retail deal, that's high even for your traditional standards there. So, what was, I know you said you look to really grow the consumer side of this business. But, with consumer retail, I know people throwing out a bit of omens on that industry right now, what was the main driver for being willing to pay that multiple? And then other than consumer retail, do you guys see some more professional contracts coming in for this company to possibly just cushion their core earnings there?

Sure. So, this is Elias. So, you are right on the absolute EBITDA multiple. One thing I think we tried to highlight here is that there's significant tax assets that were acquired as well. And that will lower the effective multiple. And so, we think of it as probably about a turn less than kind of the headline number when taking into account the tax assets that are here. I think, in terms of kind of the valuation that was paid for the business, we think, in the, and I guess we look at this a little bit less in the terms of retail. Yes, they have a small retail presence today. We think there's a nice opportunity to grow the retail. But, this is really much more of a kind of professional with a growing consumer component to the business. And we think that kind of the multiple that was paid really is in line with kind of the multiples that are paid for kind of businesses of this quality. I would also mention that, just generally, this is a company that has a great market position and really has an extraordinary management team and we think has all of the infrastructure necessary for growth. So, we take that into account whenever we're looking at the valuation of a business. So, in all, I think we feel that this is kind of where the market is today for these types of companies, especially for really high-quality companies. And with respect to your question on kind of growth, the consumer side of the business and why I mentioned that earlier is that's what we view as the higher growth potential for the company because it's a newer entrant into consumer. There's a huge market opportunity there. And it's just starting…

Okay. All right. Thanks for the color. I appreciate it.

Your next question comes from a line of Brian Hogan from William Blair. Your line is open.

A few questions by subsidiary and some other ones, but start with Liberty. In the 10-Q, you mentioned shipments to one customer were down materially. Is that expected to return, or did you lose that customer? Clarify that, please.

Yes, no, it's really just attributable to that customer's management of its own business and inventory levels, things of that nature. It's not indicative of anything other than that. And that customer continues to order from us and continues to sell Liberty products. So, it's really just I think normal fluctuations that you may have customer to customer, quarter to quarter.

All right. Thanks. That's helpful. And then going back to Manitoba, the discussion about the supply, was the supply of seed down year over year, too? I'm just trying to understand the kind of constant currency organic growth being down slightly.

The supply of seed over the crop year was stable. But, one of the things that happened is we were selling more organic seed earlier and kind of our organic and natural channel was just taking more product because that is growing rapidly. And so, as we are now at the tail end of this crop year, understand that harvest is kind of late summer, early fall. And so, we start processing the product in the kind of late third quarter, early in the fourth quarter, and are ready to ship. So, we are right now at the tail end of the crop year. Unfortunately, the -- because we were getting much more demand on organic seed that was coming in earlier in the year and the crop supply was about the same, it's left us in more of a kind of a hole here until the new crop year comes in. So, I would say one of the things that we knew, and it was a little bit disappointing is that we weren't able to get more crops converted from the 2015 crop year into this crop year. But, we do have that coming for next year, as I mentioned. This is just a really long conversion process. Unless you're working with soil that has been used for organic farming, it can take up to three years to convert a traditional farm to that capable of growing organic supply. So, it's not a kind of a simple fix. And this has been on our radar, and we've been working on it for a while. We do feel pretty good that, going forward, we're going to get ahead of this situation. But, part of that's going to also depend on where demand falls out. But, we are tackling it. But, the short answer is no, the crop was not down year-over-year. It was just the acceleration of demand into the earlier part of the shipping cycle.

All right. And then moving onto ERGO, the distribution change, have you seen the -- what effects have you seen from that? Has it been a positive shift? And then follow up on ERGO, the Orbit Baby seeing declining sales, is that due to competition? Is it being eaten by another one of your products? Just kind of clarify that, please.

Sure. So, first, on the ERGO distribution switch, and as we mentioned in the, after our Q1 call, we decided to go direct in a couple of markets. That's actually going [indiscernible] slightly ahead of expectations. We feel pretty good now in the markets that we're in. Clearly, there's some additional tweaking that we'll need to do. And it's early days there. But, it looks to be tracking to expectations and maybe even slightly a little better. And so, we feel good about that. In terms of Orbit Baby, Orbit, when we acquired Orbit Baby, it was a really great product and had a lot of -- from the consumers that use the product, they really loved the product. And we felt that, once again a low awareness business that has a great product and has consumers who are really passionate about it, those are ingredients for creating success. The hurdle that we ended up finding with Orbit was all around the price point. And as we were able to raise awareness, and we did spend a lot of money into raising awareness of this business, what we ended up finding is that it was very difficult to expand the audience because the purchase of the system -- and remember, when you're buying an Orbit, it's not just a stroller. It's the stroller, the car seat, potentially a toddler seat, a bassinet. It's a multifaceted. And given the premiumness of this, it's just a huge commitment typically being made prior to the arrival of the baby. And for a lot of parents, the commitment is so large that, regardless of how much we were able to raise the awareness of it, it was just extremely limited in the audience. And it was catering to a highly, highly affluent customer base.…

What were the revenue contribution from Orbit, and what were the margins?

Yes, that's okay. Go ahead.

Ryan, I was going to say we haven't historically given out revenue contribution. Ryan, do you want to I don't know if we want to do that today. I'll.

No, that's yes, just not historically something that we've disclosed as part of our public reporting. But, not I would say the margins are less than carrier but, again, not something that we've historically provided. And, Brian, the other thing that may be embedded in your question that I think that, to the extent there is a change in our outlook on the business attributable to that or any other thing that is different than we provided you with and others with kind of our 2016 outlook comments for each company on a previous call, we would certainly alert you to those changes. And this is a smaller segment of ERGObaby. And while your questions are 100% on point, I don't think the shutdown of Orbit from a operating cash flow standpoint or revenue standpoint will have a material impact on your or anyone else's expectations for the performance of the business in 2016.

All right. That's helpful. And then moving to Clean Earth, in the 10 Q, you actually broke out for all the other subsidiaries that you've done add on acquisitions, you've done a revenue breakout, but not for Clean Earth. So, I was just curious if you were able to quantify the contributions from those two add ons or not.

That's correct. We disclosed the other add ons because they weren't very meaningful in terms of dollars to the top line. And the businesses that we've acquired for Clean Earth are much smaller. So, that's the reason why we hadn't. And not again, being that they're small, not something that we'll probably provide, given that the change is not material.

All right. That's fine. Moving onto bigger picture, can you comment on leverage, and how much dry powder do you have, or where are you, are you comfortable with leverage? What's your, kind of your target leverage? And you kind of briefly talked about, with the acquisition pipeline, you keep on looking and stuff like that. More color there, please.

Yes, sure. So, after the close of 5.11, which we anticipate occurring within the next 45 days, our leverage profile pro forma today, essentially, we would be a little over 3.5 times we anticipate. And as you're aware, we have with our existing credit facility the ability to have an acquisition spike, which allows us to go over the 3.5 into this acquisition spike range, again, maximum being 4.25, so still well within that maximum. And look, the great thing, too, here is that, once we close on 5.11, as we mentioned in our comments, we will be, on a full-year basis meaningfully exceed our distribution and, with that, free cash flow begin to be able to delever over the course of the next year. So, in terms of availability, a little hard to predict, given business fluctuations that occur every month. But, we think we'll have plenty of capital to deploy, should we find the right acquisition, both platform and add-ons. And so, is that good color for you?

Yes, that's plenty. Appreciate the time. Thanks.

And with respect to the pipeline, I would, as I mentioned in some of the opening remarks, the market continues to be, compared to prior year, a bit down with respect to transactions being completed in middle-market M&A. Estimates through the quarter ending June suggest that volumes again, in terms of number of transactions, down upwards of 20-plus percent, which is a little bit an improvement relative to the first quarter, but still not the most robust market. That being said, we continue to look at all opportunities and are in the market for both add-ons and new subsidiary company acquisitions. Throughout the course of our 10-year history as a public company, this is without question the hardest thing for us to predict, when we're going to acquire something. So, it's hard for it remains difficult for us to do that at this time. So, the best I can tell you is that, from all we can tell, based on some of the metrics that we track, we are seeing the opportunities we should see. We're being active in pursuing them as appropriate and remaining disciplined in our approach to making acquisitions. So, the pipeline in the context of the market is solid, but I would not characterize this as the most robust M&A market that we've seen. But, certainly, as you can tell from our activity, we've found great opportunities to deploy capital on the add-on side and are thrilled to have found an opportunity of the quality of 5.11 for a new subsidiary company. And as Elias referenced earlier, particularly when taking into account the tax assets and the fact that 5.11 is a leading consumer branded company, we feel very good about the valuation at which we're able to deploy that capital. So, we'll keep doing what we do and see how the rest of the year turns out. But, again, going forward is always the hardest thing to predict in terms of when that next transaction will occur.

Thanks for your time.

Thank you.

There are no further questions at this time. I would like to turn the call back over to management.

I'd 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 the Diversified Holdings conference call. You may now disconnect.