Increased Quarterly Revenue, Net Income, and
Gross Margin Sequentially and Year-Over-Year
Second Consecutive Quarter of Record Adjusted
EBITDA and Adjusted EBITDA Margin
Expects Record Full-Year 2023 Net Sales Between
$477 to $481 Million and Raises 2023 Full-Year Adjusted EBITDA
Guidance Range to $82 to $85 Million
Cadre Holdings, Inc. (NYSE: CDRE) ("Cadre" or "the Company"), a
global leader in the manufacturing and distribution of safety and
survivability equipment for first responders, announced today its
consolidated operating results for the three and nine months ended
September 30, 2023.
- Net sales of $125.1 million for the third quarter; net sales of
$357.9 million for the nine months ended September 30, 2023
- Gross profit margin of 42.8% for the third quarter; gross
profit margin of 42.2% for the nine months ended September 30,
2023
- Net income of $11.1 million, or $0.29 per diluted share, for
the third quarter; net income of $29.0 million, or $0.77 per
diluted share, for the nine months ended September 30, 2023
- Adjusted EBITDA of $23.7 million for the third quarter;
Adjusted EBITDA of $65.1 million for the nine months ended
September 30, 2023
- Adjusted EBITDA margin of 19.0% for the third quarter; Adjusted
EBITDA margin of 18.2% for the nine months ended September 30,
2023
- Declared quarterly cash dividend of $0.08 per share in October
2023
“Cadre’s outstanding third quarter is a testament to our team’s
continued strategic execution, together with strong, sustained
demand for our mission-critical safety and survivability
equipment,” said Warren Kanders, CEO and Chairman. “The
implementation of the Cadre operating model, focused on constant
improvement and the optimization of outcomes, continued to drive
our strong financial performance, highlighted by record Adjusted
EBITDA margins and gross margins. For the second consecutive
quarter, we achieved our highest Adjusted EBITDA in history, while
generating increased net sales and net income both sequentially and
year-over-year.”
Mr. Kanders added, “We are pleased to once again raise our full
year Adjusted EBITDA outlook based on Cadre’s outperformance to
date and confidence in our businesses’ fundamentals for the
remainder of 2023. In both the US and internationally, we have seen
a broad push to prioritize public safety and believe Cadre is
ideally positioned to capitalize on these secular tailwinds over
the medium and long term. We continue to actively pursue M&A
opportunities to either enhance our market dominance or enter
attractive, new adjacencies consistent with our key criteria. With
entrenched positions in law enforcement, first responder and
military markets, we are on pace to deliver record full year net
sales in 2023 and remain excited about the opportunity to further
grow our leading platform of premium safety brands moving
forward.”
Third Quarter and Nine-Month 2023 Operating Results
For the quarter ended September 30, 2023, Cadre generated net
sales of $125.1 million, as compared to $111.6 million for the
quarter ended September 30, 2022. This increase was primarily the
result of higher domestic demand for armor products and large
international orders for crowd control products, partially offset
by decreased agency demand for hard goods.
For the nine months ended September 30, 2023, Cadre generated
net sales of $357.9 million, as compared to $334.2 million for the
prior year period, mainly driven by recent acquisitions and higher
demand for armor and crowd control products, partially offset by
timing for our EOD products.
For the quarter ended September 30, 2023, Cadre generated gross
profit of $53.6 million, as compared to $43.7 million for the
quarter ended September 30, 2022. For the nine months ended
September 30, 2023, Cadre generated gross profit of $151.0 million,
as compared to $127.2 million for the prior year period.
Gross profit margin was 42.9% for the quarter ended September
30, 2023, as compared to 39.2% for the quarter ended September 30,
2022. Gross profit margin was 42.2% for the nine months ended
September 30, 2023, as compared to 38.0% for the prior year period,
mainly driven by favorable pricing and product mix, prior year
amortization of inventory step-up related to acquisitions, and
productivity, partially offset by inflation.
Net income was $11.1 million for the quarter ended September 30,
2023, as compared to a net income of $4.9 million for the quarter
ended September 30, 2022. The increase resulted primarily from the
change in year-over-year sales and the increase in gross profit
margin.
Net income was $29.0 million for the nine months ended September
30, 2023, as compared to a net loss of $0.8 million for the prior
year period, primarily due to the change in year-over-year sales,
the increase in gross profit margin, and a decrease in stock-based
compensation expense.
Cadre generated $23.7 million of Adjusted EBITDA for the quarter
ended September 30, 2023, as compared to $20.7 million for the
quarter ended September 30, 2022. Adjusted EBITDA margin was 19.0%
for the quarter ended September 30, 2023, as compared to 18.6% for
the prior year period.
Cadre generated $65.1 million of Adjusted EBITDA for the nine
months ended September 30, 2023, as compared to $53.3 million for
the prior year period. Adjusted EBITDA margin was 18.2% for the
nine months ended September 30, 2023, as compared to 16.0% for the
prior year period.
Product segment gross margin was 44.3% and 43.9% for the third
quarter and first nine months of 2023, respectively, compared to
41.6% and 40.2% for the respective prior year periods.
Distribution segment gross margin was 22.7% and 23.3% for the
third quarter and first nine months of 2023, respectively, compared
to 19.8% and 20.9% for the respective prior year periods.
Liquidity, Cash Flows and Capital Allocation
- Cash and cash equivalents increased by $24.1 million from $45.3
million as of December 31, 2022 to $69.4 million as of September
30, 2023.
- Total debt decreased by $6.1 million from $149.7 million as of
December 31, 2022, to $143.6 million as of September 30, 2023.
- Net debt (total debt net of cash and cash equivalents)
decreased by $30.3 million from $104.4 million as of December 31,
2022, to $74.2 million as of September 30, 2023.
- Capital expenditures totaled $1.8 million for the third quarter
and $4.3 million for the nine months ended September 30, 2023,
compared with $0.7 million for the third quarter and $3.2 million
for the nine months ended September 30, 2022.
Dividend
On October 24, 2023, the Company announced that its Board of
Directors declared a quarterly cash dividend of $0.08 per share, or
$0.32 per share on an annualized basis. Cadre's dividend payment
will be made on November 17, 2023, to shareholders of record as of
the close of business on the record date of November 3, 2023. The
declaration of any future dividend is subject to the discretion of
the Company's Board of Directors.
2023 Outlook Update
As a result of the Company's third-quarter performance and
management's outlook for the remainder of the year, Cadre raised
the midpoint of its full-year Adjusted EBITDA guidance range and
increased net sales guidance. For the full year 2023, Cadre expects
to generate net sales in the range of $477 million to $481 million
and Adjusted EBITDA in the range of $82 million to $85 million. We
expect capital expenditures to be in the range of $7.0 million to
$8.0 million.
Conference Call
Cadre management will host a conference call on Wednesday,
November 8, 2023, at 5:00 PM EST to discuss the latest corporate
developments and financial results. The dial-in number for callers
in the US is (888)-510-2553 and the dial-in number for
international callers is 646-960-0473. The access code for all
callers is 1410384. A live webcast will also be available on the
Company’s website at https://www.cadre-holdings.com/.
A replay of the call will be available through November 22,
2023. To access the replay, please dial 800-770-2030 in the U.S. or
+1-647-362-9199 if outside the U.S., and then enter the access code
1410384.
About Cadre
Headquartered in Jacksonville, Florida, Cadre is a global leader
in the manufacturing and distribution of safety and survivability
products for first responders. Cadre's equipment provides critical
protection to allow users to safely and securely perform their
duties and protect those around them in hazardous or
life-threatening situations. The Company's core products include
body armor, explosive ordnance disposal equipment, and duty gear.
Our highly engineered products are utilized in over 100 countries
by federal, state and local law enforcement, fire and rescue
professionals, explosive ordnance disposal teams, and emergency
medical technicians. Our key brands include Safariland® and
Med-Eng®, amongst others.
Use of Non-GAAP Measures
The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (“GAAP”). The press
release contains the non-GAAP measures: (i) earnings before
interest, taxes, other income or expense, depreciation and
amortization (“EBITDA”), (ii) adjusted EBITDA, (iii) adjusted
EBITDA margin and (iv) last twelve months adjusted EBITDA. The
Company believes the presentation of these non-GAAP measures
provides useful information for the understanding of its ongoing
operations and enables investors to focus on period- over-period
operating performance, and thereby enhances the user’s overall
understanding of the Company’s current financial performance
relative to past performance and provides, along with the nearest
GAAP measures, a baseline for modeling future earnings
expectations. Non-GAAP measures are reconciled to comparable GAAP
financial measures within this press release. The Company cautions
that non-GAAP measures should be considered in addition to, but not
as a substitute for, the Company’s reported GAAP results.
Additionally, the Company notes that there can be no assurance that
the above referenced non-GAAP financial measures are comparable to
similarly titled financial measures used by other publicly traded
companies.
Forward-Looking Statements
Except for historical information, certain matters discussed in
this press release may be forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include but are not limited to all
projections and anticipated levels of future performance.
Forward-looking statements involve risks, uncertainties and other
factors that may cause our actual results to differ materially from
those discussed herein. Any number of factors could cause actual
results to differ materially from projections or forward-looking
statements, including without limitation, changes to global, social
and political economic conditions, spending patterns of government
agencies, competitive pressures, the impact of acquisitions and
related integration activities, logistical challenges related to
disruptions and delays, product liability claims, the success of
new product introductions, currency exchange rate fluctuations and
the risks of doing business in the markets in which we operate,
including foreign countries. More information on potential factors
that could affect the Company’s financial results are more fully
described from time to time in the Company’s public reports filed
with the Securities and Exchange Commission, including the
Company’s Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, and Current Reports on Form 8-K. All forward-looking
statements included in this press release are based upon
information available to the Company as of the date of this press
release, and speak only as of the date hereof. We assume no
obligation to update any forward-looking statements to reflect
events or circumstances after the date of this press release.
CADRE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands, except share
and per share amounts)
September 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
69,412
$
45,286
Accounts receivable, net of allowance for
doubtful accounts of $819 and $924, respectively
61,261
64,557
Inventories
82,546
70,273
Prepaid expenses
14,667
10,091
Other current assets
8,836
6,811
Total current assets
236,722
197,018
Property and equipment, net of accumulated
depreciation and amortization of $48,994 and $42,694,
respectively
43,657
45,285
Operating lease assets
6,643
8,489
Deferred tax assets, net
2,299
2,255
Intangible assets, net
44,333
50,695
Goodwill
81,212
81,576
Other assets
5,639
6,634
Total assets
$
420,505
$
391,952
Liabilities, Mezzanine Equity and
Shareholders' Equity
Current liabilities
Accounts payable
$
30,733
$
23,406
Accrued liabilities
38,673
38,720
Income tax payable
7,049
4,584
Liabilities held for sale
—
—
Current portion of long-term debt
13,251
12,211
Total current liabilities
89,706
78,921
Long-term debt
130,309
137,476
Long-term operating lease liabilities
3,603
4,965
Deferred tax liabilities
5,047
3,508
Other liabilities
1,843
1,192
Total liabilities
230,508
226,062
Mezzanine equity
Preferred stock ($0.0001 par value,
10,000,000 shares authorized, no shares issued and outstanding as
of September 30, 2023 and December 31, 2022)
—
—
Shareholders' equity
Common stock ($0.0001 par value,
190,000,000 shares authorized, 37,586,031 and 37,332,271 shares
issued and outstanding as of September 30, 2023 and December 31,
2022, respectively)
4
4
Additional paid-in capital
210,543
206,540
Accumulated other comprehensive income
2,143
2,087
Accumulated deficit
(22,693
)
(42,741
)
Total shareholders’ equity
189,997
165,890
Total liabilities, mezzanine equity and
shareholders' equity
$
420,505
$
391,952
CADRE HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share
and per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net sales
$
125,114
$
111,554
$
357,949
$
334,192
Cost of goods sold
71,511
67,814
206,981
207,042
Gross profit
53,603
43,740
150,968
127,150
Operating expenses
Selling, general and administrative
36,314
31,732
105,615
118,431
Restructuring and transaction costs
439
1,578
1,132
3,380
Related party expense
116
112
379
1,346
Total operating expenses
36,869
33,422
107,126
123,157
Operating income
16,734
10,318
43,842
3,993
Other expense
Interest expense
(1,073
)
(1,567
)
(3,727
)
(4,496
)
Other (expense) income, net
(315
)
(1,851
)
395
(2,812
)
Total other expense, net
(1,388
)
(3,418
)
(3,332
)
(7,308
)
Income (loss) before provision for income
taxes
15,346
6,900
40,510
(3,315
)
(Provision) benefit for income taxes
(4,293
)
(1,959
)
(11,463
)
2,536
Net income (loss)
$
11,053
$
4,941
$
29,047
$
(779
)
Net income (loss) per share:
Basic
$
0.29
$
0.13
$
0.77
$
(0.02
)
Diluted
$
0.29
$
0.13
$
0.77
$
(0.02
)
Weighted average shares
outstanding:
Basic
37,586,031
37,289,880
37,515,976
35,697,891
Diluted
37,930,888
37,747,614
37,830,790
35,697,891
CADRE HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended September
30,
2023
2022
Cash Flows From Operating
Activities:
Net income (loss)
$
29,047
$
(779
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
12,385
11,319
Amortization of original issue discount
and debt issue costs
359
554
Amortization of inventory step-up
—
3,055
Deferred income taxes
1,317
(2,755
)
Stock-based compensation
7,060
28,988
Gain on sale of fixed assets
(98
)
—
Provision for losses on accounts
receivable
37
245
Foreign exchange (gain) loss
(243
)
3,006
Other
(296
)
—
Changes in operating assets and
liabilities, net of impact of acquisitions:
Accounts receivable
3,429
(3,271
)
Inventories
(12,229
)
(7,187
)
Prepaid expenses and other assets
(3,131
)
986
Accounts payable and other liabilities
8,623
(4,660
)
Net cash provided by operating
activities
46,260
29,501
Cash Flows From Investing
Activities:
Purchase of property and equipment
(4,248
)
(2,938
)
Proceeds from disposition of property and
equipment
206
—
Business acquisitions, net of cash
acquired
—
(55,039
)
Net cash used in investing activities
(4,042
)
(57,977
)
Cash Flows From Financing
Activities:
Proceeds from revolving credit
facilities
—
43,000
Principal payments on revolving credit
facilities
—
(43,000
)
Principal payments on term loans
(7,500
)
(7,514
)
Proceeds from insurance premium
financing
3,949
3,989
Principal payments on insurance premium
financing
(2,909
)
(3,878
)
Payment of capital leases
—
(26
)
Taxes paid in connection with employee
stock transactions
(2,725
)
(6,216
)
Proceeds from secondary offering, net of
underwriter discounts
—
56,329
Deferred offering costs
—
(2,953
)
Dividends distributed
(8,999
)
(8,521
)
Net cash (used in) provided by financing
activities
(18,184
)
31,210
Effect of foreign exchange rates on cash
and cash equivalents
92
(241
)
Change in cash and cash equivalents
24,126
2,493
Cash and cash equivalents, beginning of
period
45,286
33,857
Cash and cash equivalents, end of
period
$
69,412
$
36,350
Supplemental Disclosure of Cash Flows
Information:
Cash paid for income taxes, net
$
7,923
$
710
Cash paid for interest
$
7,389
$
3,860
Supplemental Disclosure of Non-Cash
Investing and Financing Activities:
Accruals and accounts payable for capital
expenditures
$
24
$
272
CADRE HOLDINGS, INC.
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended September
30, 2023
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
108,495
$
24,208
$
(7,589
)
$
125,114
Cost of goods sold
60,380
18,724
(7,593
)
71,511
Gross profit
$
48,115
$
5,484
$
4
$
53,603
Three Months Ended September
30, 2022
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
92,718
$
26,012
$
(7,176
)
$
111,554
Cost of goods sold
54,125
20,859
(7,170
)
67,814
Gross profit
$
38,593
$
5,153
$
(6
)
$
43,740
Nine Months Ended September
30, 2023
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
305,057
$
74,594
$
(21,702
)
$
357,949
Cost of goods sold
171,204
57,200
(21,423
)
206,981
Gross profit
$
133,853
$
17,394
$
(279
)
$
150,968
Nine Months Ended September
30, 2022
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
277,941
$
73,836
$
(17,585
)
$
334,192
Cost of goods sold
166,192
58,437
(17,587
)
207,042
Gross profit
$
111,749
$
15,399
$
2
$
127,150
_________________ (1)
Reconciling items consist primarily of
intercompany eliminations and items not directly attributable to
operating segments.
CADRE HOLDINGS, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands)
Year ended
Three Months
Three Months Ended
Nine Months Ended
Last Twelve
December 31,
Ended June 30,
September 30,
September 30,
Months
2022
2023
2023
2022
2023
2022
September 30, 2023
Net income (loss)
$
5,820
$
10,992
$
11,053
$
4,941
$
29,047
$
(779
)
$
35,646
Add back:
Depreciation and amortization
15,651
3,959
4,165
3,939
12,385
11,319
16,717
Interest expense
6,206
1,013
1,073
1,567
3,727
4,496
5,437
Provision (benefit) for income taxes
3,553
4,229
4,293
1,959
11,463
(2,536
)
17,552
EBITDA
$
31,230
$
20,193
$
20,584
$
12,406
$
56,622
$
12,500
$
75,352
Add back:
Restructuring and transaction costs(1)
5,355
693
439
1,578
1,132
4,380
2,107
Other general income(2)
(159
)
—
—
—
—
—
(159
)
Other expense (income), net(3)
1,137
(346
)
315
1,851
(395
)
2,812
(2,070
)
Stock-based compensation expense(4)
32,239
2,105
2,208
2,820
7,060
29,361
9,938
Stock-based compensation payroll tax
expense(5)
305
—
—
—
220
305
220
LTIP bonus(6)
1,369
160
185
375
489
933
925
Amortization of inventory step-up(7)
4,255
—
—
1,711
—
3,055
1,200
Adjusted EBITDA
$
75,731
$
22,805
$
23,731
$
20,741
$
65,128
$
53,346
$
87,513
Adjusted EBITDA margin(8)
16.5
%
18.8
%
19.0
%
18.6
%
18.2
%
16.0
%
_________________
(1)
Reflects the “Restructuring and transaction costs” line item on
our condensed consolidated statement of operations, which primarily
includes transaction costs composed of legal and consulting fees,
and $1.0 million paid to Kanders & Company, Inc., a company
controlled by our Chief Executive Officer, for services related to
the acquisition of Cyalume, which is included in related party
expense in the Company’s consolidated statements of operations for
the year ended December 31, 2022.
(2)
Reflects the “Other general income” line item on our condensed
consolidated statement of operations and includes a gain from a
long-lived asset sale.
(3)
Reflects the “Other (income) expense, net” line item on our
condensed consolidated statement of operations and primarily
includes gains and losses on foreign currency transactions.
(4)
Reflects compensation expense related to equity and liability
classified stock-based compensation plans.
(5)
Reflects payroll taxes associated with vested stock-based
compensation awards.
(6)
Reflects the cost of a cash-based long-term incentive plan
awarded to employees that vests over three years.
(7)
Reflects amortization expense related to the step-up inventory
adjustment recorded as a result of our recent acquisitions.
(8)
Reflects Adjusted EBITDA / Net Sales for the relevant
periods.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108483737/en/
Gray Hudkins Cadre Holdings, Inc. 203-550-7148
gray.hudkins@cadre-holdings.com
Investor Relations: The IGB Group Leon Berman / Matt
Berkowitz 212-477-8438 / 212-227-7098 lberman@igbir.com /
mberkowitz@igbir.com
Media: Jonathan Keehner / Andrew Siegel Joele Frank,
Wilkinson Brimmer Katcher 212-355-4449
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