Achieved Annual Net Sales of $483 Million,
Gross Margin of 41.6% and Net Income of $39 million
Generated Record Annual Adjusted EBITDA and
Adjusted EBITDA Margin
Expects Full Year 2024 Net Sales of $553 to
$572 Million and Adjusted EBITDA of $104 to $108 Million
Cadre Holdings, Inc. (NYSE: CDRE) ("Cadre" or "the Company"), a
global leader in the manufacturing and distribution of safety
equipment, announced today its consolidated operating results for
the quarter and year ended December 31, 2023.
- Net sales of $124.6 million for the fourth quarter; net sales
of $482.5 million for the year ended December 31, 2023
- Gross profit margin of 39.9% for the fourth quarter; gross
profit margin of 41.6% for the year ended December 31, 2023
- Net income of $9.6 million, or $0.25 per diluted share, for the
fourth quarter; net income of $38.6 million, or $1.02 per diluted
share, for the year ended December 31, 2023
- Adjusted EBITDA of $20.7 million for the fourth quarter;
Adjusted EBITDA of $85.8 million for year ended December 31,
2023
- Adjusted EBITDA margin of 16.6% for the fourth quarter;
Adjusted EBITDA margin of 17.8% for the year ended December 31,
2023
- Declared quarterly cash dividend of $0.0875 per share in
January 2024. On an annualized basis, this dividend represents an
increase of $0.03 per share, or 9.4% per share, over the previous
annualized dividend of $0.32 per share.
“2023 was a record year, reflective of Cadre’s outstanding
strategic execution and the strong and recurring demand for our
best-in-class, mission-critical safety equipment,” said Warren
Kanders, CEO and Chairman. “Strong fourth quarter results capped
off an outstanding year, in which we generated our highest annual
revenue, Adjusted EBITDA, gross margin, and Adjusted EBITDA margin
since inception. Based on the ongoing, successful implementation of
the Cadre operating model, strong secular tailwinds, and confidence
in our leading platform of premium safety brands moving forward,
our 2024 guidance shared today implies at its midpoints full-year
revenue and adjusted EBITDA growth next year of 16.5% and 23.5%,
respectively.”
Mr. Kanders added, “M&A has been a key tenet of our strategy
to seek to unlock long-term value, and we are pleased to have
recently capitalized on attractive opportunities to add two
high-margin safety businesses with recurring revenues. With the
acquisition of ICOR Technology, we’ve considerably expanded our
ability to provide mission-critical EOD robots to law enforcement
agencies and military organizations. Additionally, the acquisition
of Alpha Safety represents an important step in diversifying
Cadre’s platform, as we enter an attractive new adjacent vertical
with a large and growing total addressable market. Supported by a
robust acquisition pipeline, as well as favorable industry
dynamics, we believe Cadre is ideally positioned to continue to
grow our platform and further enhance our market leadership over
the long-term.”
Fourth Quarter and Year Ended 2023 Operating Results
For the quarter ended December 31, 2023, Cadre generated net
sales of $124.6 million, as compared to $123.6 million for the
quarter ended December 31, 2022. Net sales were impacted by a
decrease in the Product segment primarily resulting from project
timing in our explosive ordnance disposal (“EOD”) products which
were offset by an increased demand for armor products, duty gear
products and crowd control products. Net sales were also impacted
by an increase in the Distribution segment primarily the result of
agency demand for hard goods.
For the year ended December 31, 2023, Cadre generated net sales
of $482.5 million, as compared to $457.8 million for the prior year
period, mainly driven by higher demand for armor and crowd control
products, as well as recent acquisitions, partially offset by a
decrease from large international orders for EOD products fulfilled
in the prior year.
For the quarter ended December 31, 2023, Cadre generated gross
profit of $49.8 million, as compared to $48.5 million for the
quarter ended December 31, 2022. For the year ended December 31,
2023, Cadre generated gross profit of $200.7 million, as compared
to $175.7 million for the prior year period.
Gross profit margin was 39.9% for the quarter ended December 31,
2023, as compared to 39.2% for the quarter ended December 31, 2022
mainly driven by favorable pricing and product mix.
Gross profit margin was 41.6% for the year ended December 31,
2023, as compared to 38.4% for the prior year period, mainly driven
by favorable pricing, product mix and productivity, partially
offset by inflation and pressure from a stronger Mexican peso.
Net income was $9.6 million for the quarter ended December 31,
2023, as compared to net income of $6.6 million for the quarter
ended December 31, 2022. The increase resulted primarily from
increased net sales, unrealized foreign exchange and lower tax
expense.
Net income was $38.6 million for the year ended December 31,
2023, as compared to net income of $5.8 million for the prior year
period, primarily as a result of an increase in net sales and
decreased stock-based compensation expense.
Cadre generated $20.7 million of Adjusted EBITDA for the quarter
ended December 31, 2023, as compared to $22.4 million for the
quarter ended December 31, 2022. Adjusted EBITDA margin was 16.6%
for the quarter ended December 31, 2023, as compared to 18.1% for
the prior year period.
Cadre generated $85.8 million of Adjusted EBITDA for the year
ended December 31, 2023, as compared to $75.7 million for the prior
year period. Adjusted EBITDA margin was 17.8% for the year ended
December 31, 2023, as compared to 16.5% for the prior year
period.
Product segment gross profit margin was 40.7% for the fourth
quarter and 43.1% for the year ended December 31, 2023. This
compares to 40.4% and 40.3% for the respective prior year
periods.
Distribution segment gross profit margin was 23.9% for the
fourth quarter and 23.5% for the year ended December 31, 2023. This
compares to 21.8% and 21.1% for the respective prior year
periods.
Liquidity, Cash Flows and Capital Allocation
- Cash and cash equivalents increased by $42.4 million from $45.3
million as of December 31, 2022 to $87.7 million as of December 31,
2023.
- Total debt decreased by $9.6 million from $149.7 million as of
December 31, 2022, to $140.1 million as of December 31, 2023.
- Net debt (total debt net of cash and cash equivalents)
decreased by $52.0 million from $104.4 million as of December 31,
2022, to $52.4 million as of December 31, 2023.
- Capital expenditures totaled $2.7 million for the fourth
quarter and $7.0 million for the year ended December 31, 2023,
compared with $1.5 million for the fourth quarter and $4.7 million
for the year ended December 31, 2022.
Dividend
On January 23, 2024, the Company announced that its Board of
Directors declared a quarterly cash dividend of $0.0875 per share,
or $0.35 per share on an annualized basis, which represents an
increase of $0.03 per share, or 9.4% per share, over the previous
annualized dividend of $0.32 per share. Cadre's dividend payment
was made on February 16, 2024, to shareholders of record as of the
close of business on the record date of February 2, 2024. The
declaration of any future dividend is subject to the discretion of
the Company's Board of Directors.
Acquisition of ICOR Technology
On January 10, 2024, Cadre announced the completion of its
accretive acquisition of ICOR Technology, a leading manufacturer
and distributor of EOD and tactical robots and specialized
protective security equipment for EOD and military organizations
worldwide. The purchase price was funded through available cash on
the Company’s balance sheet.
Acquisition of Alpha Safety
On March 1, 2024, Cadre completed its accretive acquisition of
Alpha Safety, a leading nuclear safety solutions company, for
$106.5 million (including working capital and certain other
adjustments at closing). The transaction was funded through
available cash on the Company’s balance sheet and an increase in
term debt under its existing credit facility.
2024 Outlook
For the full year 2024, Cadre expects to generate net sales in
the range of $553 million to $572 million and Adjusted EBITDA in
the range of $104 million and $108 million. We expect capital
expenditures to be in the range of $8 million to $10 million. Cadre
has not provided net income guidance due to the inherent difficulty
of forecasting certain types of expenses and gains, which affect
net income but not Adjusted EBITDA. Therefore, we do not provide a
reconciliation of Adjusted EBITDA guidance to net income
guidance.
Conference Call
Cadre management will host a conference call on Tuesday, March
5, 2024, 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)-596-4144 and the dial-in number for
international callers is 646-968-2525. The access code for all
callers is 3272793. 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 March 19, 2024.
To access the replay, please dial 800-770-2030 in the U.S. or
+1-609-800-9909 if outside the U.S., and then enter the access code
3272793.
About Cadre
Headquartered in Jacksonville, Florida, Cadre is a global leader
in the manufacturing and distribution of safety products. 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, including without limitation, the availability of
capital to satisfy our working capital requirements; anticipated
trends and challenges in our business and the markets in which we
operate; our ability to anticipate market needs or develop new or
enhanced products to meet those needs; our expectations regarding
market acceptance of our products; the success of competing
products by others that are or become available in the market in
which we sell our products; the impact of adverse publicity about
the Company and/or its brands, including without limitation,
through social media or in connection with brand damaging events
and/or public perception; changes in political, social, economic or
regulatory conditions generally and in the markets in which we
operate; our ability to maintain or broaden our business
relationships and develop new relationships with strategic
alliances, suppliers, customers, distributors or otherwise; our
ability to retain and attract senior management and other key
employees; our ability to quickly and effectively respond to new
technological developments; the effect of an outbreak of disease or
similar public health threat, such as the COVID-19 pandemic, on the
Company’s business; the possibility that the Company may be
adversely affected by other economic, business, and/or competitive
factors; the ability of our information technology systems or
information security systems to operate effectively, including as a
result of security breaches, viruses, hackers, malware, natural
disasters, vendor business interruptions or other causes; our
ability to properly maintain, protect, repair or upgrade our
information technology systems or information security systems, or
problems with our transitioning to upgraded or replacement systems;
our ability to protect our trade secrets or other proprietary
rights and operate without infringing upon the proprietary rights
of others and prevent others from infringing on the proprietary
rights of the Company; our ability to maintain a quarterly
dividend; logistical challenges related to supply chain disruptions
and delays; the impact of inflation; the increased expenses
associated with being a public company; and the related increased
disclosure and reporting obligations; our ability to integrate the
operations of the businesses we have acquired, including, without
limitation, ICOR Technology Inc. and Alpha Safety, and may acquire
in the future; and any material differences in the actual financial
results of the Company’s past and future acquisitions as compared
with the Company’s expectation. 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.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands, except share
and per share amounts)
December 31,
2023
2022
Assets
Current assets
Cash and cash equivalents
$
87,691
$
45,286
Accounts receivable, net
58,360
64,557
Inventories
80,976
70,273
Prepaid expenses
11,930
10,091
Other current assets
6,886
6,811
Total current assets
245,843
197,018
Property and equipment, net
44,647
45,285
Operating lease assets
6,554
8,489
Deferred tax assets, net
4,004
2,255
Intangible assets, net
43,472
50,695
Goodwill
81,667
81,576
Other assets
4,992
6,634
Total assets
$
431,179
$
391,952
Liabilities, Mezzanine Equity and
Shareholders' Equity
Current liabilities
Accounts payable
$
28,418
$
23,406
Accrued liabilities
44,524
38,720
Income tax payable
9,944
4,584
Current portion of long-term debt
12,320
12,211
Total current liabilities
95,206
78,921
Long-term debt
127,812
137,476
Long-term operating lease liabilities
3,186
4,965
Deferred tax liabilities
4,843
3,508
Other liabilities
2,970
1,192
Total liabilities
234,017
226,062
Mezzanine equity
Preferred stock ($0.0001 par value,
10,000,000 shares authorized, no shares issued and outstanding as
of December 31, 2023 and December 31, 2022)
—
—
Shareholders' equity
Common stock ($0.0001 par value,
190,000,000 shares authorized, 37,587,436 and 37,332,271 shares
issued and outstanding as of December 31, 2023 and December 31,
2022, respectively)
4
4
Additional paid-in capital
212,630
206,540
Accumulated other comprehensive income
634
2,087
Accumulated deficit
(16,106
)
(42,741
)
Total shareholders’ equity
197,162
165,890
Total liabilities, mezzanine equity and
shareholders' equity
$
431,179
$
391,952
CADRE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except share
and per share amounts)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net sales
$
124,583
$
123,645
$
482,532
$
457,837
Cost of goods sold
74,825
75,117
281,806
282,159
Gross profit
49,758
48,528
200,726
175,678
Operating expenses
Selling, general and administrative
34,904
34,698
140,519
153,129
Restructuring and transaction costs
1,060
975
2,192
4,355
Related party expense
1,117
132
1,496
1,478
Total operating expenses
37,081
35,805
144,207
158,962
Operating income
12,677
12,723
56,519
16,716
Other expense
Interest expense
(804
)
(1,710
)
(4,531
)
(6,206
)
Other income (expense), net
541
1,675
936
(1,137
)
Total other expense, net
(263
)
(35
)
(3,595
)
(7,343
)
Income before provision for income
taxes
12,414
12,688
52,924
9,373
Provision for income taxes
(2,820
)
(6,089
)
(14,283
)
(3,553
)
Net income
$
9,594
$
6,599
$
38,641
$
5,820
Net income per share:
Basic
$
0.26
$
0.18
$
1.03
$
0.16
Diluted
$
0.25
$
0.17
$
1.02
$
0.16
Weighted average shares
outstanding:
Basic
37,586,756
37,332,271
37,533,818
36,109,844
Diluted
38,125,787
37,887,600
37,920,488
36,122,374
CADRE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(In thousands)
Year Ended December
31,
2023
2022
2021
Cash Flows From Operating
Activities:
Net income
$
38,641
$
5,820
$
12,661
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
15,737
15,651
13,718
Amortization of original issue discount
and debt issue costs
479
740
3,193
Amortization of inventory step-up
—
4,255
—
Loss on extinguishment of debt
—
—
15,155
Deferred income taxes
(210
)
(1,087
)
4,772
Stock-based compensation
9,368
31,858
355
Provision for (recoveries from) losses on
accounts receivable
66
417
(188
)
Foreign exchange (gain) loss
(602
)
1,517
102
Other
(381
)
(170
)
—
Changes in operating assets and
liabilities, net of impact of acquisitions:
Accounts receivable
6,602
(11,536
)
(4,641
)
Inventories
(10,223
)
1,162
(3,189
)
Prepaid expenses and other assets
(302
)
(7,711
)
(4,564
)
Accounts payable and other liabilities
14,034
5,493
2,720
Net cash provided by operating
activities
73,209
46,409
40,094
Cash Flows From Investing
Activities:
Purchase of property and equipment
(6,727
)
(4,494
)
(2,832
)
Proceeds from disposition of property and
equipment
207
411
—
Business acquisitions, net of cash
acquired
—
(55,543
)
—
Net cash used in investing activities
(6,520
)
(59,626
)
(2,832
)
Cash Flows From Financing
Activities:
Proceeds from revolving credit
facilities
—
43,000
257,980
Principal payments on revolving credit
facilities
—
(43,000
)
(258,612
)
Proceeds from term loans
—
—
198,716
Principal payments on term loans
(10,000
)
(10,116
)
(266,000
)
Proceeds from insurance premium
financing
3,949
3,989
5,010
Principal payments on insurance premium
financing
(3,973
)
(4,952
)
(3,061
)
Payments for debt issuance costs
—
—
(2,198
)
Payments on extinguishment of debt
—
—
(4,217
)
Taxes paid in connection with employee
stock transactions
(2,725
)
(6,300
)
—
Proceeds from initial public offering, net
of underwriter discounts
—
—
83,421
Proceeds from secondary offering, net of
underwriter discounts
—
56,329
—
Deferred offering costs
—
(2,953
)
(4,841
)
Dividends distributed
(12,006
)
(11,509
)
(12,751
)
Other
33
(25
)
(43
)
Net cash (used in) provided by financing
activities
(24,722
)
24,463
(6,596
)
Effect of foreign exchange rates on cash
and cash equivalents
438
183
318
Change in cash and cash equivalents
42,405
11,429
30,984
Cash and cash equivalents, beginning of
period
45,286
33,857
2,873
Cash and cash equivalents, end of
period
$
87,691
$
45,286
$
33,857
Supplemental Disclosure of Cash Flows
Information:
Cash paid for income taxes, net
$
8,729
$
1,395
$
1,158
Cash paid for interest
$
10,090
$
6,109
$
13,336
Supplemental Disclosure of Non-Cash
Investing and Financing Activities:
Accruals and accounts payable for capital
expenditures
$
234
$
172
$
197
CADRE HOLDINGS, INC.
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended December
31, 2023
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
105,768
$
27,777
$
(8,962
)
$
124,583
Cost of goods sold
62,733
21,135
(9,043
)
74,825
Gross profit
$
43,035
$
6,642
$
81
$
49,758
Three Months Ended December
31, 2022
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
107,482
$
23,270
$
(7,107
)
$
123,645
Cost of goods sold
64,053
18,196
(7,132
)
75,117
Gross profit
$
43,429
$
5,074
$
25
$
48,528
Year Ended December 31,
2023
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
410,825
$
102,371
$
(30,664
)
$
482,532
Cost of goods sold
233,937
$
78,335
$
(30,466
)
281,806
Gross profit
$
176,888
$
24,036
$
(198
)
$
200,726
Year Ended December 31,
2022
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
385,423
$
97,106
$
(24,692
)
$
457,837
Cost of goods sold
230,245
76,633
(24,719
)
282,159
Gross profit
$
155,178
$
20,473
$
27
$
175,678
_______________________
(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)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net income
$
9,594
$
6,599
$
38,641
$
5,820
Add back:
Depreciation and amortization
3,352
4,332
15,737
15,651
Interest expense
804
1,710
4,531
6,206
Provision for income taxes
2,820
6,089
14,283
3,553
EBITDA
$
16,570
$
18,730
$
73,192
$
31,230
Add back:
Restructuring and transaction costs(1)
2,060
975
3,192
5,355
Other general income(2)
(92
)
(159
)
(92
)
(159
)
Other (income) expense, net(3)
(541
)
(1,675
)
(936
)
1,137
Stock-based compensation expense(4)
2,308
2,878
9,368
32,239
Stock-based compensation payroll tax
expense(5)
14
—
234
305
LTIP bonus(6)
371
436
860
1,369
Amortization of inventory step-up(7)
—
1,200
—
4,255
Adjusted EBITDA
$
20,690
$
22,385
$
85,818
$
75,731
Adjusted EBITDA margin(8)
16.6
%
18.1
%
17.8
%
16.5
%
_______________________
(1)
Reflects the “Restructuring and
transaction costs” line item on our consolidated statement of
operations and comprehensive income, which primarily includes
transaction costs composed of legal and consulting fees. In
addition, this line item reflects $1.0 million transaction fees
paid to Kanders & Company, Inc. for services related to the
acquisition of ICOR and Cyalume for the years ended December 31,
2023 and 2022, respectively, which is included in related party
expense in the Company’s consolidated statements of operations.
Kanders & Company, Inc. is a company controlled by Warren B.
Kanders, our Chairman of the Board and Chief Executive Officer.
(2)
Reflects gains from long-lived
asset sales.
(3)
Reflects the “Other income
(expense), net” line item on our consolidated statements of
operations and primarily includes gains and losses due to
fluctuations in foreign currency exchange rates.
(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/20240305028123/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
Cadre (NYSE:CDRE)
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