Achieved Revenue, Net Income and Adjusted
EBITDA Growth; Expanded Gross and Adjusted EBITDA Margins
Reaffirms 2023 Full-Year Guidance
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 months ended March 31,
2023.
- Net sales of $111.7 million for the first quarter
- Gross profit margin of 41.7% for the first quarter
- Net income of $7.0 million, or $0.19 per diluted share, for the
first quarter
- Adjusted EBITDA of $18.6 million for the first quarter
- Adjusted EBITDA margin of 16.6% for the first quarter
- Declared quarterly cash dividend of $0.08 per share in April
2023
“Following a record year of net sales and adjusted EBITDA, our
strong first quarter results reflect continued strategic execution
and sustained demand for our mission-critical safety and
survivability equipment,” said Warren Kanders, CEO and Chairman.
“Driven by our entrenched positions in law enforcement, first
responder and military markets, as well as our commitment to
innovation, we have exceeded our pricing growth target every
quarter since going public. In addition to generating
year-over-year adjusted EBITDA growth of 31% in the first quarter,
we have maintained a focus on margin expansion, as we further
implemented our resilient and proven operating model. Notably,
gross profit and adjusted EBITDA margins increased 320 and 300
basis points, respectively.”
Mr. Kanders added, “Supported by macro tailwinds related to
increasing public safety budgets and favorable industry dynamics,
we have reaffirmed our guidance and believe we are ideally
positioned to execute strategic objectives focused on accelerating
growth and further enhancing our market leadership over the
long-term. While the current M&A environment has not allowed
for deal making thus far in 2023, we remain confident that
attractive opportunities in line with our key criteria will
materialize this year. We have a decades-long track record taking a
patient and disciplined approach to M&A and will continue to
actively evaluate potential transactions, complementing our core
organic growth initiatives.”
First Quarter 2023 Operating Results
For the quarter ended March 31, 2023, Cadre generated net sales
of $111.7 million, as compared to $104.4 million for the quarter
ended March 31, 2022. The increase was mainly driven by recent
acquisitions, armor and duty gear products demand, and agency
demand for hard goods through our Distribution segment, partially
offset by shipment timing for our EOD products.
For the quarter ended March 31, 2023, Cadre generated gross
profit of $46.6 million, as compared to $40.2 million for the
quarter ended March 31, 2022.
Gross profit margin was 41.7% for the quarter ended March 31,
2023, as compared to 38.5% for the quarter ended March 31, 2022,
mainly driven by favorable pricing above material inflation,
productivity and product mix.
Net income was $7.0 million for the quarter ended March 31,
2023, as compared to a net loss of $10.2 million for the quarter
ended March 31, 2022. The increase resulted primarily from the
change in year over year revenue and a decrease in stock-based
compensation expense.
Cadre generated $18.6 million of Adjusted EBITDA for the quarter
ended March 31, 2023, as compared to $14.2 million for the quarter
ended March 31, 2022. Adjusted EBITDA margin was 16.6% for the
quarter ended March 31, 2023, as compared to 13.6% for the prior
year period.
Product segment gross profit margin was 43.6% for the first
quarter compared to 40.1% for the prior year period.
Distribution segment gross profit margin was 24.2% for the first
quarter compared to 24.6% for the prior year period.
Liquidity, Cash Flows and Capital Allocation
- Cash and cash equivalents increased by $3.0 million from $45.3
million as of December 31, 2022 to $48.3 million as of March 31,
2023.
- Total debt decreased by $3.5 million from $149.7 million as of
December 31, 2022, to $146.2 million as of March 31, 2023.
- Net debt (total debt net of cash and cash equivalents)
decreased by $6.5 million from $104.4 million as of December 31,
2022 to $97.9 million as of March 31, 2023.
- Capital expenditures totaled $1.0 million for the three months
ended March 31, 2023 compared with $1.1 million for the three
months ended March 31, 2022.
Dividend
On April 25, 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 May 19, 2023, to shareholders of record as of the
close of business on the record date of May 5, 2023. The
declaration of any future dividend is subject to the discretion of
the Company's Board of Directors.
2023 Outlook
For the full year 2023, Cadre expects to generate net sales in
the range of $463 million to $493 million and Adjusted EBITDA in
the range of $76 million to $82 million. We expect capital
expenditures to be in the range of $8.5 million to $9.5
million.
Conference Call
Cadre management will host a conference call on Tuesday, May 9,
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 May 23, 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 and (iii) adjusted
EBITDA margin. 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 in this press release, including, but not limited to,
those risks and uncertainties more fully described from time to
time in the Company’s public reports filed with the Securities and
Exchange Commission, including under the section titled “Risk
Factors” in the Company's Annual Report on Form 10-K, and/or
Quarterly Reports on Form 10-Q, as well as in the Company’s 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.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands, except share
and per share amounts)
March 31, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
48,294
$
45,286
Accounts receivable, net of allowance for
doubtful accounts of $930 and $924, respectively
55,704
64,557
Inventories
76,343
70,273
Prepaid expenses
11,782
10,091
Other current assets
6,376
6,811
Total current assets
198,499
197,018
Property and equipment, net of accumulated
depreciation and amortization of $44,840 and $42,694,
respectively
45,095
45,285
Operating lease assets
7,691
8,489
Deferred tax assets, net
2,289
2,255
Intangible assets, net
48,761
50,695
Goodwill
81,292
81,576
Other assets
5,348
6,634
Total assets
$
388,975
$
391,952
Liabilities, Mezzanine Equity and
Shareholders' Equity
Current liabilities
Accounts payable
$
27,313
$
23,406
Accrued liabilities
32,899
38,720
Income tax payable
4,086
4,584
Liabilities held for sale
—
—
Current portion of long-term debt
11,119
12,211
Total current liabilities
75,417
78,921
Long-term debt
135,098
137,476
Long-term operating lease liabilities
4,204
4,965
Deferred tax liabilities
3,606
3,508
Other liabilities
1,200
1,192
Total liabilities
219,525
226,062
Mezzanine equity
Preferred stock ($0.0001 par value,
10,000,000 shares authorized, no shares issued and outstanding as
of March 31, 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 March 31, 2023 and December 31, 2022,
respectively)
4
4
Additional paid-in capital
206,451
206,540
Accumulated other comprehensive income
1,720
2,087
Accumulated deficit
(38,725
)
(42,741
)
Total shareholders’ equity
169,450
165,890
Total liabilities, mezzanine equity and
shareholders' equity
$
388,975
$
391,952
CADRE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except share
and per share amounts)
Three Months Ended March
31,
2023
2022
Net sales
$
111,748
$
104,406
Cost of goods sold
65,130
64,217
Gross profit
46,618
40,189
Operating expenses
Selling, general and administrative
35,250
53,950
Restructuring and transaction costs
—
599
Related party expense
148
122
Total operating expenses
35,398
54,671
Operating income (loss)
11,220
(14,482
)
Other expense
Interest expense
(1,641
)
(1,490
)
Other expense, net
364
(205
)
Total other expense, net
(1,277
)
(1,695
)
Income (loss) before provision for income
taxes
9,943
(16,177
)
(Provision) benefit for income taxes
(2,941
)
6,012
Net income (loss)
$
7,002
$
(10,165
)
Net income (loss) per share:
Basic
$
0.19
$
(0.30
)
Diluted
$
0.19
$
(0.30
)
Weighted average shares
outstanding:
Basic
37,373,529
34,446,318
Diluted
37,629,498
34,446,318
CADRE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended March
31,
2023
2022
Cash Flows From Operating
Activities:
Net income (loss)
$
7,002
$
(10,165
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
4,261
3,544
Amortization of original issue discount
and debt issue costs
64
111
Deferred income taxes
183
(6,951
)
Stock-based compensation
2,747
23,588
Gain on sale of fixed assets
(103
)
—
Provision for losses on accounts
receivable
40
45
Foreign exchange (gain) loss
(213
)
253
Changes in operating assets and
liabilities, net of impact of acquisitions:
Accounts receivable
9,075
(1,693
)
Inventories
(5,830
)
(2,956
)
Prepaid expenses and other assets
(556
)
3,158
Accounts payable and other liabilities
(3,948
)
(18
)
Net cash provided by operating
activities
12,722
8,916
Cash Flows From Investing
Activities:
Purchase of property and equipment
(781
)
(950
)
Proceeds from disposition of property and
equipment
201
—
Business acquisitions, net of cash
acquired
—
(19,787
)
Net cash used in investing activities
(580
)
(20,737
)
Cash Flows From Financing
Activities:
Principal payments on term loans
(2,500
)
(2,506
)
Principal payments on insurance premium
financing
(1,092
)
(1,474
)
Payment of capital leases
—
(11
)
Taxes paid in connection with employee
stock transactions
(2,725
)
(6,216
)
Dividends distributed
(2,986
)
(2,750
)
Net cash used in financing activities
(9,303
)
(12,957
)
Effect of foreign exchange rates on cash
and cash equivalents
169
798
Change in cash and cash equivalents
3,008
(23,980
)
Cash and cash equivalents, beginning of
period
45,286
33,857
Cash and cash equivalents, end of
period
$
48,294
$
9,877
Supplemental Disclosure of Cash Flows
Information:
Cash paid (received) for income taxes,
net
$
3,141
$
(100
)
Cash paid for interest
$
2,359
$
1,282
Supplemental Disclosure of Non-Cash
Investing and Financing Activities:
Accruals and accounts payable for capital
expenditures
$
238
$
119
CADRE HOLDINGS, INC.
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three months ended March 31,
2023
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
93,194
$
24,660
$
(6,106
)
$
111,748
Cost of goods sold
52,608
$
18,697
$
(6,175
)
65,130
Gross profit
$
40,586
$
5,963
$
69
$
46,618
Three months ended March 31,
2022
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
85,386
$
24,096
$
(5,076
)
$
104,406
Cost of goods sold
51,120
18,172
(5,075
)
64,217
Gross profit
$
34,266
$
5,924
$
(1
)
$
40,189
_________________
(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 Ended
Last Twelve
December 31,
March 31,
Months
2022
2023
2022
March 31, 2023
Net income (loss)
$
5,820
$
7,002
$
(10,165
)
$
22,987
Add back:
Depreciation and amortization
15,651
4,261
3,544
16,368
Interest expense
6,206
1,641
1,490
6,357
Provision (benefit) for income taxes
3,553
2,941
(6,012
)
12,506
EBITDA
$
31,230
$
15,845
$
(11,143
)
$
58,218
Add back:
Restructuring and transaction costs(1)
5,355
—
599
4,756
Other general income(2)
(159
)
—
—
(159
)
Other expense, net(3)
1,137
(364
)
205
568
Stock-based compensation expense(4)
32,239
2,747
23,723
11,263
Stock-based compensation payroll tax
expense(5)
305
220
298
227
LTIP bonus(6)
1,369
144
384
1,129
Amortization of inventory step-up(7)
4,255
—
153
4,102
Adjusted EBITDA
$
75,731
$
18,592
$
14,219
$
80,104
Adjusted EBITDA margin(8)
16.5
%
16.6
%
13.6
%
_________________
(1)
Reflects the “Restructuring and
transaction costs” line item on our 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 consolidated statement of operations and includes a
gain from a long-lived asset sale.
(3)
Reflects the “Other expense, net” line
item on our 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/20230509006077/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 Contact: Jonathan Keehner / Andrew Siegel Joele
Frank, Wilkinson Brimmer Katcher 212-355-4449
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