Compass Diversified Holdings (CODI) 2015 Q4 法說會逐字稿

Good morning and welcome to the Compass Diversified Holdings 2015 fourth-quarter and full-year 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. Please go ahead, sir.

Thank you and welcome to Compass Diversified Holdings' fourth-quarter and full-year 2015 conference call. 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'd like to point out that the fourth-quarter press release including the financial tables and non-GAAP reconciliation is available on the Company's website at www.compass diversifiedholdings.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 forward-looking statements, including certain statements in regards 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 uncertainty in projecting 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, 2015, as well as in other SEC filings.

In particular, the domestic and global economic environment [as expected] an impact on our subsidiary company. 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 fourth-quarter and full-year 2015 earnings conference call. During 2015, we generated cash flow, or CAD, of $82.4 million, representing a 42% year-over-year increase and reflecting the continued strength of our middle-market niche industrial and branded consumer businesses.

Complementing this success, we continued the sound execution of our business plan, drawing on our balance sheet strength to capitalize on attractive platform and add-on acquisitions while opportunistically realizing sizable gains for shareholders.

In terms of platform acquisitions, we continue to identify leading niche businesses with strong reasons to exist, as evidenced by our July acquisition of Manitoba Harvest, a pioneering global leader in branded hemp-based foods. Consistent with our previous platform positions of leading branded consumer businesses, Manitoba Harvest possesses several qualities critical for success. Specifically, the company is a leader that operates in a large and expanding marketplace, has a passionate consumer following, an experienced management team, and compelling expansion opportunities. We remain very enthusiastic regarding Manitoba's growth prospects as the Company's products are the fastest-growing in the hemp food market and among the fastest growing in the natural foods industry.

Reinvesting in the growth of our subsidiaries remains a core part of our strategy. And in the fourth quarter, we worked with Manitoba Harvest to complete the accretive add-on acquisition of Hemp Oil Canada, a leading bulk wholesale producer, private-label packager, and custom processor of hemp-based food products and ingredients. We expect this acquisition to further build on Manitoba Harvest's already strong growth trajectory through an expanded ingredients business, increased manufacturing capacity, and a broader and diversified customer base.

In addition to this attractive add-on acquisition, subsequent to the year end, Sterno Products acquired Northern International, an industry leader in flameless candles and outdoor lighting products for the retail segment. This accretive add-on acquisition builds on the strength of the iconic Sterno brand and expands the company's business into complementary categories and channels serving Sterno's primary food service and retail markets.

In 2015, we also continued to successfully unlock value for our shareholders, completing the sale of CamelBak. After a very successful four-year relationship, during which CamelBak increased customer penetration, improved cash flows, and established itself as the global leader in personal hydration products, we saw a very compelling opportunity to monetize our interest in this subsidiary for a gain of $164 million. In the fourth quarter, we also sold our American Furniture Manufacturing subsidiary for net proceeds of $23.5 million.

Turning to our results, our niche industrial businesses, including contributions from Sterno Products and Clean Earth, each on a pro forma basis as if the companies were acquired on January 1, 2014, posted combined annual revenue and EBITDA increases of approximately 3.2% and 5.7%, respectively, compared to the 2014 full-year period. In addition, these businesses produced a combined EBITDA margin of 17.7% as compared to 17.3% for the year ended December 31, 2014.

Turning to our branded consumer businesses, combined revenue on a pro forma basis, including the contributions from Manitoba as if it was acquired on January 1, 2014, and excluding FOX, increased approximately 9.8% for the year ended December 31, 2015, as compared to the prior year. These businesses also generated strong EBITDA growth during the year of 50.1%. The combined EBITDA margin for the year ended December 31, 2015, increased 21.2% compared to 15.5% for the 2014 full-year period.

For the fourth quarter, we paid a cash distribution of $0.36 per share, representing a current yield of approximately 9.8%. Since going public in May of 2006, CODI has paid cumulative distributions of approximately $13.20 per share.

We continue to believe we are well positioned to deliver growth in our underlying subsidiaries while maintaining attractive cash distributions to our shareholders due to our financial strength, our diverse mix of leading middle-market businesses, and their proven ability to generate strong cash flows. Our focus remains on identifying attractive platform and add-on acquisition opportunities in leading niche businesses as we seek to strategically deploy capital to support our future growth.

I will now turn the call over to Elias to review the quarterly performance of our current group of subsidiaries.

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 Sterno Products will be on a pro forma basis as if these businesses were acquired on January 1, 2014.

Our niche industrial businesses continued to generate solid free cash flow. We reported a combined revenue increase of 2.6% during the fourth quarter of 2015 as compared to the year-earlier period. EBITDA on a combined basis increased by 3.7% as compared to the year-earlier period, while the combined EBITDA margin increased to 17% for the quarter ended December 31, 2015, from 16.8% in the prior-year quarter.

Advanced Circuits' revenue decreased 4%, while EBITDA decreased 9.6% year over year during the fourth quarter, primarily due to lower sales and long lead time PCBs, partially offset by growth in assembly and quick-turn PCBs. For the year, Advanced Circuits' results were in line with management's expectation.

Fourth-quarter EBITDA margins for this subsidiary was slightly lower, at 30.2% compared to 32% in the year-ago period, reflecting a shift in sales mix. Looking ahead, we expect to achieve modest growth in this business during 2016.

Arnold Magnetics' revenues were down by 5% for the fourth quarter year over year due to lower reprographic sales and lower PMAG European sales as a result of a weaker oil and gas sector. EBITDA increased by 6.4% during the same period, and EBITDA margins increased approximately 137 basis points, primarily attributable to increased margins in the PMAG sector due to the favorable impact of European restructuring activity.

In regards to PMAG, our European restructuring activities are now fully completed. As a result, we expect that PMAG's performance going forward will reflect the benefits of this restructuring. Overall, we anticipate revenues to decline slightly due to lower reprographic sales, yet modest EBITDA growth for Arnold in 2016.

Clean Earth finished the year with strong operating results in lines with our expectation. For the fourth quarter, revenue increased 9%, while EBITDA climbed over 35% due to the impact of including results from the AES acquisition, which we acquired in December 2014 and higher sales in soil and hazardous waste. EBITDA margins increased by approximately 410 basis points during the quarter ended December 31, 2015, compared to the same period last year, primarily due to sales mix. We continue to be pleased with Clean Earth's performance and expect to see this modest growth continue in 2016.

Sterno Products generated strong fourth-quarter results that came in ahead of our expectation, as lower raw material costs and increased manufacturing efficiencies continued to bolster EBITDA performance. During the 2015 fourth quarter, revenue on a pro forma basis was flat compared to the year-earlier period, while EBITDA increased 17.6% and EBITDA margins increased by approximately 273 basis points. In 2016, we would expect modest growth in Sterno's core business, excluding the expected contribution from the Northern International add-on acquisition in January 2016.

Turning to Tridien, fourth-quarter results were impacted by several negative factors, resulting in negative EBITDA for the quarter. While sales at Tridien increased by 12%, we recorded approximately $2.5 million of cost during the fourth quarter related to legal expenses, inventory write-downs, and warranty expense.

As previously mentioned, the fourth quarter marked the official termination of a contract between Tridien and one of its major customers. As a result of this, we expect Tridien's revenues -- Tridien's results in 2016 to be lower, reflecting the loss of this customer's revenue.

Next, I will turn to our branded consumer businesses, which include Liberty Safe, ERGObaby, and Manitoba Harvest. The discussion of results to follow excludes the FOX results from 2014, as we no longer hold the controlling [interest]. Please note that the revenue and EBITDA numbers I provide for Manitoba Harvest will be on a pro forma basis as if this business was acquired on January 1, 2014.

Our branded consumer businesses achieved solid results for the fourth quarter of 2015. Combined revenue increased 11% compared to the year-earlier period and EBITDA increased 28% compared to last year's fourth quarter. The combined EBITDA margin increased to 20.1% for the quarter ended December 31, 2015, compared to 17.4% in the prior-year period.

Fourth-quarter results at our Liberty subsidiary exceeded our expectations, reflecting strong demand and continued operational efficiency. For the fourth quarter of 2015, revenue increased 21% compared to the year-ago period. EBITDA grew approximately 280% compared to last year's fourth quarter. Fourth-quarter EBITDA margins were 18.4% compared with 5.9% in the year-ago period. The significant increase in EBITDA margin was driven by improved operating efficiencies and lower raw material costs.

In 2016, we would expect top-line and EBITDA performance consistent with 2015. However, if current demand levels continue and operating efficiency levels remain, we may see modest growth in both revenue and EBITDA.

Our ERGObaby subsidiary experienced another quarter of solid performance in line with our expectation. For the fourth quarter, revenue increased 8% year over year, reflecting strong US and international carrier sales, offset by a slight decline in Orbit Baby.

EBITDA increased approximately 11% from the prior year due to improved margins based on channel mix. This business has now posted double-digit earnings growth on a year-over-year basis for 13 out of the past 14 quarters. In 2016, we expect continued growth in the business.

Lastly, fourth-quarter revenues from Manitoba Harvest, which we acquired on July 10, 2015, decreased by 6% compared to the prior-year period. On a constant currency basis, revenues increased approximately 9%. Sales growth on a constant currency basis was lower in the fourth quarter than expected due to lower organic seed supply and the timing of customer promotion. EBITDA decreased $1.7 million for the fourth quarter of 2015 as compared to the prior year, reflecting our continued investment in marketing and advertising in this business.

For 2016, we expect solid top-line growth on a constant currency basis. However, as we have mentioned previously, we will continue to invest in this business to facilitate growth at the expense of near-term EBITDA growth. We continue to anticipate long-term double-digit growth rates for this business as we expand awareness of the benefits of hemp-based food products. Lastly, I would also note that the Canadian loonie has depreciated markedly against the US dollar and thus result, especially in the first half of 2016, will reflect currency headwinds.

I now would like to turn the call over to Ryan to add his comments on our financial results.

Thank you, Elias. Today I will discuss our solid consolidated financial results for the quarter and the year ended December 31, 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-K 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 December 31, 2015, was $218.1 million, up 12% as compared to $194.6 million for the prior-year period. This year-over-year increase was primarily attributable to contributions from our 2014 acquisitions of Sterno Products and Clean Earth, our 2015 acquisition of Manitoba Harvest, as well as meaningful revenue growth in our ERGObaby, Liberty, and Tridien subsidiaries.

Revenue for the year ended December 31, 2015, increased to $805.4 million, an increase of approximately $251.5 million or 45.4% compared to $553.9 million for the prior year. The increase in revenue year over year is primarily the result of the full-year contributions from Clean Earth and Sterno Products acquired in the second half of 2014.

Net loss for the fourth quarter was $1.5 million compared to net income of $8.9 million in the year-earlier period. During the fourth quarter of 2015, we recorded a provision of $1.3 million against the previously recorded gain on the sale of CamelBak as a result of working capital true-ups. This business was accounted for as a discontinued operations in our financial statements. In addition, we recorded a loss on the equity method investment in FOX of $5 million during the quarter compared to a gain of $11 million in the prior-year fourth quarter.

For the year ended December 31, 2015, net income was $165.8 million, primarily due to the gain on sale of CamelBak. Net income for the year ended December 31, 2014, was $291.2 million, which included a one-time accounting gain of approximately $264.3 million as a result of the deconsolidation of FOX and results from FOX until its deconsolidation in July 2014.

Cash flow available for distribution or reinvestment, which we refer to as CAD, for the quarter ended December 31, 2015, was $16.1 million compared to $17.5 million for the prior-year period. The decline in cash flow for the fourth quarter of 2015 reflects the loss in cash flow from the CamelBak and AFM businesses sold during 2015, partially offset by the acquisition of Manitoba Harvest and net EBITDA growth in our subsidiary businesses.

For the year ended December 31, 2015, cash flow was $82.4 million as compared to $58 million for the prior year. The increase in cash flow for the full year 2015 over the prior year was primarily the result of the acquisitions in 2014 and 2015, offset by the divestitures previously mentioned.

With our strong cash flow results in 2015, we were pleased to cover our distribution on a full-year basis. As result of the 2015 divestitures of CamelBak and AFM and absent our redeployment of net proceeds from these sales into cash-flow-accretive acquisitions, we anticipate that for 2016, our cash flow will be below our distribution on an annualized basis.

Turning now to the balance sheet, we had $85.9 million in cash and cash equivalents and net working capital of $174.9 million as of December 31, 2015. We had approximately $320 million outstanding on our term debt facility as of December 31, 2015. We have no significant debt maturities until 2019.

In addition, we had net borrowing availability of approximately $396 million under our revolving credit facility at quarter's end. Additionally, our 15.1 million shares of FOX, which are recorded as an equity method investment on our balance sheet, had a value of $249.7 million at December 31, 2015.

Turning now to capital expenditures, during the fourth quarter of 2015, we incurred $4.5 million of maintenance CapEx compared to $4.6 million in the prior-year period. For the full year of 2015, we incurred maintenance CapEx of $18.2 million as compared to maintenance CapEx of $13.6 million for the year ended December 31, 2014. The increase is primarily attributable to our acquisitions in 2014 and 2015, partially offset by our divestitures in 2015.

For the full year 2016, we estimate our maintenance CapEx will be between $16 million and $20 million and growth CapEx will be between $2 million and $4 million as we continue to invest in the long-term health of our subsidiaries.

I'll now turn the call back over to Alan.

Thank you, Ryan. To summarize, in 2015, we generated solid results that were consistent with our expectations, demonstrating the continued strength and leadership of our niche industrial and branded consumer businesses.

Utilizing our strong balance sheet, we also consummated the platform acquisition of Manitoba Harvest and the accretive add-on acquisition of Hemp Oil Canada. Subsequent to year's end, we continued reinvesting in our subsidiaries, with Sterno completing the add-on acquisition of Northern International in January 2016. In addition, during 2015, we completed the sales of CamelBak and AFM and have now realized approximately $480 million in gains for our shareholders since our IPO in 2006.

As Ryan mentioned earlier, on a full-year basis in 2016, we anticipate our CAD, absent our redeployment of capital into cash-flow-accretive acquisitions, will be below our distribution due to the reduction in cash flow following the sales of CamelBak and AFM, which produced sizable net proceeds and a net $150 million gain. As a reminder, while these sales certainly provided value for our shareholders, they are never a component of our cash flow calculation.

This impact on cash flow following the sales of CamelBak and AFM is consistent with certain divestitures we've made in the past. This includes the sale of FOX, after which our annualized cash flow dropped below our distribution until those proceeds plus additional cash were redeployed into the cash-flow-accretive platform acquisitions of Clean Earth and Sterno Products.

We continued to consistently pay our distribution following the FOX sale until we redeployed those proceeds. And based on our current balance sheet strength, sizable liquidity, and cash-flow-generating subsidiaries, we expect to consistently pay our distribution in 2016. Of course, the timing of capital redeployment is always difficult to predict. However, should we find compelling opportunities to acquire accretive add-on and platform businesses in 2016 and beyond, we would anticipate meeting or exceeding our distribution on an annualized basis going forward.

I'd like to close by commenting briefly on M&A activity. During the fourth quarter, middle-market deal flow ticked down a bit as compared to earlier in 2015 as high valuation levels persisted. Relative to the fourth quarter, deal flow during the early part of 2016 seemed steady. Our focus remains on identifying attractive acquisition opportunities that meet our strict acquisition criteria.

Consistent with our strategy, we intend to continue to maintain a disciplined approach to valuation and diligence, seeking profitable companies with a strong reason to exist. At the same time, we continue to reinvest in our current subsidiaries to drive further cash flow growth. With approximately $600 million in available capital, we remain confident in our continued ability to execute on this strategy.

This concludes our opening remarks and we will be happy to take any questions you may have. Operator, please open the phone lines.

(Operator Instructions) Larry Solow, CJS Securities.

Wondering if you could maybe -- just my usual question. Obviously, there's a little more concerns over the economy, and I think it's more on the industrial side. But maybe Elias or Alan -- not both of you, but one of you guys could sort of take a broad-brush overview of how you see things going on in your businesses? Although I realize there are some nuances for business to business, but sort of translate into that -- into what you're seeing in your overall view on the economy and the outlook?

Sure, I'll take a stab at it. I think, Larry, as you can see, our businesses had on balance a pretty solid year. And I think that we are certainly aware of why people are concerned with the global economy and certainly share many of those concerned. Yet those concerns haven't really impacted our group of companies on a consolidated basis as negatively as one might expect, considering what you hear in the public from the various commentators, etc.

So we remain cautious about the global economy for reasons that you are well aware, yet continue to believe that our companies are well positioned to continue their solid performance in 2016 and beyond. So we are concerned, but haven't really seen it impact our group of companies as negatively as one might expect considering the chatter about the economy.

Right. And at least a couple of your subsidiaries, you are getting some benefit on the raw material side, right?

Yes. No, for sure. To the extent that there are certain commodity prices that are lower that are absolutely helping our companies. Yet, as you heard in the opening remarks, there are some currency headwinds that are working in the other direction.

So in total -- again, on a consolidated basis, I think we feel really pretty good, yet obviously take a conservative view towards the future, yet believe our companies are well positioned.

Good. Just one or two questions on the subsidiaries in particular. At Advanced Circuits -- they're actually one of your larger subsidiaries post the sale of CamelBak -- it sounds like your outlook for next year remains. You still see some modest growth, I think Elias mentioned.

The pretty decent sized drop in the quarter, is that -- you mentioned some drop in the long run, but was that more timing related? I guess the full year did wound up okay, so is that more of a timing-related issue than anything else?

Yes, Larry. There was no trend that was developing during the fourth quarter. I would say it was just kind of quarter-to-quarter timing. As you saw throughout the year, some quarters we had nice year-over-year growth. Some quarters, we were down a little bit.

I would say unlike in prior years, where the business has seen more a consistent level of either growth or, unfortunately, there's been times of more consistent declines, this was a year that was a little choppier. We would have growth, then a little bit of decline. On balance, it was, as you said, a solid slightly up year.

So we look at 2016 as kind of starting out similar to 2015 in that same manner. And that's why our current view is this business will have kind of a very modest growth from 2015.

Got it. Okay, great. Thank you.

Leslie Vandegrift, Raymond James.

Just calling to get a checkup on -- obviously you talked about Tridien in the prepared remarks a little bit. Failed fix charge coverage ratio at 12/31. Talked about a waiver in the K as well as kind of color on that and the costs in the fourth quarter and kind of outlook for keeping that on the books or possibly searching for a way to divest that in the coming year?

So Tridien obviously had a fourth quarter. I think we were throughout the year forecasting in the fourth quarter we would have a large customer that was ending a long-term relationship. And during the fourth quarter, we had a number of costs, some of which ran through kind of some inventory write-down as well as some other charges that we took, some of which were very one-time in nature.

And so I would say that the business struggled more than we anticipated with the loss of that customer -- it was a material customer, one of our top three. And trying to -- there were a number of factors that were going on. During the fourth quarter, we were downsizing one of our facilities to account for the lower revenue level. We were removing some of these products to a Midwestern facility. There was a lot of operational friction that ended up occurring.

And during that, there was some inventory charges and other charges that were more unique and one-time and unexpected. I would say the level of loss that we incurred in the fourth quarter, which was an outright EBITDA loss, is not expected and is a 2015 event for -- or 2016 event, I'm sorry -- on a full-year basis. So we do expect this business to be producing positive EBITDA.

In terms of whether this is something that we'll keep on our books, it's obviously a small business for us at this point. It doesn't really have a lot of impact on our cash flow one way or another. That being said, we are seeking to have this business produce gains again in both revenue and cash flow and have positive trends so that at a time when we do seek to exit the business, it will achieve the best valuation possible for our shareholders.

Okay. And a quick question on I guess the reversal of part of the recorded gain on CamelBak. Can you just give a little bit of color on that $1.3 million?

Sure, Leslie. In a normal course post an acquisition, we go through working capital true-ups where there's some fluctuation in our estimates. So that was in the acquirer's favor and our detriment of about $1.3 million. We expect to finalize that in 2016, so it's possible that moves a little bit more in Q2 or Q3, but that's normal course.

Okay. All right. That's all for me. Thanks.

Vernon Plack, BB&T Capital Markets.

Hi, thanks. I was looking for some color on how the integration with Hemp Oil and Manitoba has been going?

So I mean, Elias will comment on it more specifically, but at a high level, so far so good. Elias?

Vernon, it's going really well so far. We're excited about the business. And as we said on the call, the currency headwinds were stiffer than anybody had anticipated and we see the Canadian currency continue to devalue, so that will be from an operational standpoint a headwind that we are facing, although it did recently pick up a little bit in February from January's level. Notwithstanding currency has been a struggle.

The hockey acquisition -- the Hemp Oil Canada -- we refer to it as hockey, but Hemp Oil Canada acquisition -- went really well. We think it's a great add-on for this business. Gets the Company into the bulk wholesale business, which was a line of business that's growing pretty rapidly and we think one that positions the Company really well.

There's a lot of manufacturing and supply opportunities here, which we're really excited about. And so we think strategically, this was a wonderful transaction and so far the integration of Hemp Oil into Manitoba Harvest has gone exceptionally well from an operational standpoint.

So we're pleased so far. It wasn't actually something we had on our radar when we did Manitoba Harvest, that this acquisition would be so quick from Hemp Oil. But this was a very pleasant surprise that the opportunity came about. And as I said, I think it really strengthens our strategic positioning within the industry.

Okay. Thanks for the update.

(Operator instructions) Brian Hogan, William Blair.

A similar question to the last one, but can you go through kind of the synergies and rationale -- strategic rationale for the Northern International acquisition?

Absolutely.

Yes. So I think it will be a little bit -- in the Manitoba and Hemp Oil acquisition, there was probably a little bit more overlapping opportunities from a manufacturing synergy and some of the duplicative costs and supply chain. I think it will be a little bit less here with Sterno and Northern International in terms of kind of duplicative kind of overlapping cost and savings in that manner because the product lines are slightly different.

But the product line we think is a great add-on to what Sterno is doing. A lot of Sterno's business is really -- and if you think about Sterno's business, it's primarily the flame lit or flame heat for buffet tables and other mobile applications where you want to provide heat. But then there's a large part which is flame decorative.

So if you think about going to a fine dining establishment where they have a actual candle with a flame that's using a typically liquid wax -- a paraffin wax, that is likely a Sterno product. One of the products that continues to make inroads and at different typically today lower price points within dining are flameless candles.

So the decorative lighting channel, which is where Northern International participates, is a natural product line extension for Sterno. And in fact, Sterno had created a relationship with Northern International almost a year ago starting to carry some of their product line prior to the acquisition into the food service industry. So we think it's a natural in terms of product line extension, and there's also some retail opportunities that the companies have, where we are each working with certain retailers where we think we can probably cross-sell some of our products into each other's customer bases.

But that would really be the rationale and we think that this is a great product line extension. And we would seek similar type of opportunities like this as we continue to build out the Sterno portfolio of products.

I don't recall -- did you give a revenue number for Northern and margins? And then how does that compare to Sterno?

Yes. So I have that handy, Elias. Within the press release that we had published back in January, Brian, we had Canadian revenue CAD118 million; EBITDA was CAD7 million. And being that it's an add-on acquisition and the size of it being immaterial, we traditionally don't disclose any prior financials because we don't have to with the SEC.

Right. All right. Can we go back to -- Alan, you mentioned the acquisition opportunities and deal flow being down in 4Q and steady in 1Q. What have you seen from a multiple perspective in competition for deals?

Yes, I think that remains consistent. The multiples remain quite robust. There's still a lot of available capital to be invested into mid-market M&A, and so we haven't really seen any changes whatsoever between the valuation expectations of seller as we sit here in early part of 2016 relative to 2015. Notwithstanding the volatility in the public markets.

So there does appear to be some dislocation there. Time will tell as to whether or not that eventually does impact the middle market M&A valuations, but for now, remains very robust and competition remains very fierce.

All right. And then previously, we talked about the Clean Earth backlog and pipeline. And obviously, it came in as expected for the year. Can you give any color on the Clean Earth backlog and pipeline? Obviously, first Q is always seasonally soft due to weather and related things, but can you give the pipeline there, please?

Yes, I think it's the macro level of Clean Earth is well positioned with respect to visibility on its results for the early part of this year. So we are pretty confident, as we said in the prepared remarks, that Clean Earth is poised for modest growth in 2016, and everything we see as we sit here today certainly supports that view.

I know you discussed the economy earlier, but do you see a differences in the industrial businesses versus the consumer?

You know, I would say that -- let me take that a couple different ways. I think first and foremost from the performance standpoint, I think that the enthusiast consumer businesses do tend to outperform when times can be a little bit less certain due to the passion of the customers acquiring those products such that it may have less direct correlation to global or even more specific North American economic outlooks.

Whereas the industrials I think are more specifically impacted by general economic conditions. Yet our industrial companies continue to perform well.

From a valuation standpoint in terms of the private M&A markets, the consumer companies historically, certainly, have earned larger multiples typically as a result of their growth prospects of any industrial. The industrial segment in our view has gotten a bit more competitive over the last, call it, six months or so, where we've seen some valuations for industrial companies that we've pursued tick up a bit in a way that has made that segment maybe a little bit harder to get our arms around from a valuation standpoint.

But in terms of the overall performance, I think that our consumer businesses and our industrial businesses are performing largely in line with our expectations. And that, as we've said historically, our consumer businesses tend to be faster-growing businesses than our industrial businesses. So I think that we have not seen any real change in that broad statement over the last year or as it relates to the current economy. We wouldn't really change that view as we look at our group of subsidiary companies.

All right. Thanks for your time.

Thank you. And at this time, I'll turn the conference back over for closing remarks.

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. Thanks a lot.

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day.