Compass Diversified ( NYSE: CODI ) rose 3.3% after the company provided initial 2023 guidance during its investor day and announced a $50M stock buyback program .
The firm, which manages middle market businesses, guided for 2023 subsidiary adj. EBITDA of $465M (vs. $465M in 2022E) and adj. earnings $140M (vs. $150M in 2022E).
Compass ( CODI ) said higher adj. earnings growth rate will be driven by leverage gained from fixed expenses such as management fees, corporate expenses, interest and preferred costs.
The company issued 2028 outlook, guiding for adj earnings growth of 12%-15% vs. 2023E (~$265M).
Compass ( CODI ) expects an uptick in relevant deal activity in 2023, driven by either improved growth prospects, more solid economic footing or more distressed deals in recessionary scenario.
The company also provided an update on its expansion in the healthcare sector. IT expects positive trends to drive increased spending for healthcare such as aging demographic trends, growth in R&D spend, and increasingly complex supply chains and regulatory environment.
Compass ( CODI ) will focus on businesses with stable and growing EBITDA of over $20M, and high free cash flow. It will focus on outsourced pharma, medical manufacturing and provider services.
Earlier, Compass ( CODI ) announced a deal to sell Advanced Circuits for $220M enterprise value .
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Compass Diversified issues conservative guidance at investor day, stock rises 3%