CDRE Cadre Holdings Inc

Achieves Record Quarterly Net Sales of $137.9 Million and Gross Profit of $57.6 Million

Reaffirms 2024 Full-Year Guidance

Cadre Holdings, Inc. (NYSE: CDRE) (“Cadre” or “the Company”), a global leader in the manufacturing and distribution of safety equipment and other related products for the law enforcement, first responder, military and nuclear markets, announced today its consolidated operating results for the three months ended March 31, 2024.

• Net sales of $137.9 million for the first quarter
• Gross profit margin of 41.8% for the first quarter
• Net income of $6.9 million, or $0.18 per diluted share, for the first quarter
• Adjusted EBITDA of $24.5 million for the first quarter
• Adjusted EBITDA margin of 17.8% for the first quarter
• Declared quarterly cash dividend of $0.0875 per share in April 2024.

“Building on a year of record net sales and Adjusted EBITDA, we continued to successfully increase net sales and gross margin sequentially and year over year,” said Warren Kanders, CEO and Chairman. “The effectiveness of our operating model and resilience of our businesses was evident, highlighted by Q1 net sales growth of 23% and Adjusted EBITDA margin improvement of 120 basis points versus last year. Based on strong and recurring demand for our mission-critical safety equipment, underpinned by positive industry fundamentals, we have reaffirmed our full-year guidance and look forward to continuing to deliver on our strategic objectives.”

“During the first quarter, we completed the acquisitions of ICOR Technology and Alpha Safety, two leading high-margin safety businesses, representing important progress expanding and diversifying our platform. We believe there are additional attractive opportunities in our M&A funnel to accelerate growth. We will continue to focus on our current verticals, which include the law enforcement, military and nuclear markets in the near future and believe there are ample targets to drive continued growth in the business. Patience and discipline have always been hallmarks of our approach, and we remain committed to evaluating M&A consistent with our highly selective key criteria focused on companies with strong margins, leading and defensible market positions, along with recurring revenues and cash flows.”

First Quarter 2024 Operating Results

For the quarter ended March 31, 2024, Cadre generated net sales of $137.9 million, as compared to $111.7 million for the quarter ended March 31, 2023. This increase was primarily a result of recent acquisitions, higher demand for armor products and EOD products and increased agency demand for hard goods through our Distribution segment.

For the quarter ended March 31, 2024, Cadre generated gross profit of $57.6 million, as compared to $46.6 million for the quarter ended March 31, 2023.

Gross profit margin was 41.8% for the quarter ended March 31, 2024, as compared to 41.7% for the quarter ended March 31, 2023, mainly driven by favorable pricing and mix, offset by amortization of inventory step up adjustments related to acquisition and inflation.

Net income was $6.9 million for the quarter ended March 31, 2024, as compared to net income of $7.0 million for the quarter ended March 31, 2023. The decrease resulted primarily from an increase in selling, general and administrative expenses due to acquisitions and transaction expenses, partially offset by an increase in gross profit and recent acquisitions.

Cadre generated $24.5 million of Adjusted EBITDA for the quarter ended March 31, 2024, as compared to $18.6 million for the quarter ended March 31, 2023. Adjusted EBITDA margin was 17.8% for the quarter ended March 31, 2024, as compared to 16.6% for the prior year period.

Product segment gross profit margin was 43.0% for the first quarter, compared to 43.6% for the prior year period.

Distribution segment gross profit margin was 23.5% for the first quarter, compared to 24.2% for the prior year period.

Liquidity, Cash Flows and Capital Allocation

• Cash and cash equivalents decreased by $0.6 million from $87.7 million as of December 31, 2023 to $87.1 million as of March 31, 2024.
• Total debt increased by $75.7 million from $140.1 million as of December 31, 2023 to $215.8 million as of March 31, 2024.
• Net debt (total debt net of cash and cash equivalents) increased by $76.3 million from $52.4 million as of December 31, 2023 to $128.8 million as of March 31, 2024.
• Capital expenditures totaled $1.3 million for the three months ended March 31, 2024, compared with $0.8 million for the three months ended March 31, 2023.

Dividend

On April 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. Cadre's dividend payment will be made on May 17, 2024 to shareholders of record as of the close of business on the record date of May 3, 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 9, 2024, Cadre completed its 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.

Acquisition of Alpha Safety

On March 1, 2024, Cadre completed its accretive acquisition of Alpha Safety, a leading nuclear safety solutions company.

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.

Conference Call

Management will host a conference call on Tuesday, May 7, 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 May 21, 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, duty gear and nuclear safety products. 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. We do not provide a reconciliation of the non-GAAP guidance measure Adjusted EBITDA for the fiscal year 2024 to net income for the fiscal year 2024, the most comparable GAAP financial measure, due to the inherent difficulty of forecasting certain types of expenses and gains, without unreasonable effort, which affect net income but not Adjusted EBITDA. 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

Please note that in this press release we may use words such as “appears,” “anticipates,” “believes,” “plans,” “expects,” “intends,” “future,” and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this press release, include, but are 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.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

 

 

 

 

 

 

March 31, 2024

 

December 31, 2023

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

87,052

 

 

$

87,691

 

Accounts receivable, net of allowance for doubtful accounts of $1,087 and $635, respectively

 

 

68,107

 

 

 

58,360

 

Inventories

 

 

95,759

 

 

 

80,976

 

Prepaid expenses

 

 

12,365

 

 

 

11,930

 

Other current assets

 

 

6,045

 

 

 

6,886

 

Total current assets

 

 

269,328

 

 

 

245,843

 

Property and equipment, net of accumulated depreciation and amortization of $49,904 and $50,968, respectively

 

 

46,709

 

 

 

44,647

 

Operating lease assets

 

 

9,987

 

 

 

6,554

 

Deferred tax assets, net

 

 

3,969

 

 

 

4,004

 

Intangible assets, net

 

 

115,011

 

 

 

43,472

 

Goodwill

 

 

148,912

 

 

 

81,667

 

Other assets

 

 

5,526

 

 

 

4,992

 

Total assets

 

$

599,442

 

 

$

431,179

 

 

 

 

 

 

 

 

Liabilities, Mezzanine Equity and Shareholders' Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

30,282

 

 

$

28,418

 

Accrued liabilities

 

 

47,467

 

 

 

44,524

 

Income tax payable

 

 

2,573

 

 

 

9,944

 

Current portion of long-term debt

 

 

15,234

 

 

 

12,320

 

Total current liabilities

 

 

95,556

 

 

 

95,206

 

Long-term debt

 

 

200,601

 

 

 

127,812

 

Long-term operating lease liabilities

 

 

5,822

 

 

 

3,186

 

Deferred tax liabilities

 

 

21,554

 

 

 

4,843

 

Other liabilities

 

 

5,208

 

 

 

2,970

 

Total liabilities

 

 

328,741

 

 

 

234,017

 

 

 

 

 

 

 

 

Mezzanine equity

 

 

 

 

 

 

Preferred stock ($0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of March 31, 2024 and December 31, 2023)

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

Common stock ($0.0001 par value, 190,000,000 shares authorized, 40,060,444 and 37,587,436 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

282,176

 

 

 

212,630

 

Accumulated other comprehensive income

 

 

988

 

 

 

634

 

Accumulated deficit

 

 

(12,467

)

 

 

(16,106

)

Total shareholders’ equity

 

 

270,701

 

 

 

197,162

 

Total liabilities, mezzanine equity and shareholders' equity

 

$

599,442

 

 

$

431,179

 

CADRE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2024

 

2023

Net sales

 

$

137,860

 

 

$

111,748

 

Cost of goods sold

 

 

80,232

 

 

 

65,130

 

Gross profit

 

 

57,628

 

 

 

46,618

 

Operating expenses

 

 

 

 

 

 

Selling, general and administrative

 

 

40,719

 

 

 

35,250

 

Restructuring and transaction costs

 

 

3,087

 

 

 

—

 

Related party expense

 

 

1,843

 

 

 

148

 

Total operating expenses

 

 

45,649

 

 

 

35,398

 

Operating income

 

 

11,979

 

 

 

11,220

 

Other expense

 

 

 

 

 

 

Interest expense

 

 

(1,637

)

 

 

(1,641

)

Other (expense) income, net

 

 

(1,444

)

 

 

364

 

Total other expense, net

 

 

(3,081

)

 

 

(1,277

)

Income before provision for income taxes

 

 

8,898

 

 

 

9,943

 

Provision for income taxes

 

 

(1,970

)

 

 

(2,941

)

Net income

 

$

6,928

 

 

$

7,002

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

Basic

 

$

0.18

 

 

$

0.19

 

Diluted

 

$

0.18

 

 

$

0.19

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

37,946,576

 

 

 

37,373,529

 

Diluted

 

 

38,554,185

 

 

 

37,629,498

 

CADRE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2024

 

2023

Cash Flows From Operating Activities:

 

 

 

 

 

 

Net income

 

$

6,928

 

 

$

7,002

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

3,942

 

 

 

4,261

 

Amortization of original issue discount and debt issue costs

 

 

149

 

 

 

64

 

Amortization of inventory step-up

 

 

769

 

 

 

—

 

Deferred income taxes

 

 

1,546

 

 

 

183

 

Stock-based compensation

 

 

2,067

 

 

 

2,747

 

Remeasurement of contingent consideration

 

 

451

 

 

 

—

 

Provision for losses on accounts receivable

 

 

480

 

 

 

40

 

Foreign exchange loss (gain)

 

 

934

 

 

 

(213

)

Other loss (gain)

 

 

52

 

 

 

(103

)

Changes in operating assets and liabilities, net of impact of acquisitions:

 

 

 

 

 

 

Accounts receivable

 

 

2,696

 

 

 

9,075

 

Inventories

 

 

1,818

 

 

 

(5,830

)

Prepaid expenses and other assets

 

 

2,028

 

 

 

(556

)

Accounts payable and other liabilities

 

 

(21,723

)

 

 

(3,948

)

Net cash provided by operating activities

 

 

2,137

 

 

 

12,722

 

Cash Flows From Investing Activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,343

)

 

 

(781

)

Proceeds from disposition of property and equipment

 

 

—

 

 

 

201

 

Business acquisitions, net of cash acquired

 

 

(141,293

)

 

 

—

 

Net cash used in investing activities

 

 

(142,636

)

 

 

(580

)

Cash Flows From Financing Activities:

 

 

 

 

 

 

Proceeds from revolving credit facilities

 

 

5,500

 

 

 

—

 

Principal payments on revolving credit facilities

 

 

(5,500

)

 

 

—

 

Proceeds from term loans

 

 

80,000

 

 

 

—

 

Principal payments on term loans

 

 

(2,500

)

 

 

(2,500

)

Principal payments on insurance premium financing

 

 

(1,083

)

 

 

(1,092

)

Payments for debt issuance costs

 

 

(844

)

 

 

—

 

Taxes paid in connection with employee stock transactions

 

 

(5,311

)

 

 

(2,725

)

Proceeds from secondary offering, net of underwriter discounts

 

 

73,535

 

 

 

—

 

Deferred offering costs

 

 

(722

)

 

 

—

 

Dividends distributed

 

 

(3,289

)

 

 

(2,986

)

Net cash provided by (used in) financing activities

 

 

139,786

 

 

 

(9,303

)

Effect of foreign exchange rates on cash and cash equivalents

 

 

74

 

 

 

169

 

Change in cash and cash equivalents

 

 

(639

)

 

 

3,008

 

Cash and cash equivalents, beginning of period

 

 

87,691

 

 

 

45,286

 

Cash and cash equivalents, end of period

 

$

87,052

 

 

$

48,294

 

Supplemental Disclosure of Cash Flows Information:

 

 

 

 

 

 

Cash paid for income taxes, net

 

$

9,369

 

 

$

3,141

 

Cash paid for interest

 

$

2,498

 

 

$

2,359

 

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

 

 

 

 

 

 

Accruals and accounts payable for capital expenditures

 

$

210

 

 

$

238

 

CADRE HOLDINGS, INC.

SEGMENT INFORMATION

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2024

 

 

 

 

 

 

 

 

Reconciling

 

 

 

 

 

Product

 

Distribution

 

Items(1)

 

Total

Net sales

 

$

118,785

 

$

28,191

 

$

(9,116

)

 

$

137,860

Cost of goods sold

 

 

67,764

 

 

21,557

 

 

(9,089

)

 

 

80,232

Gross profit

 

$

51,021

 

$

6,634

 

$

(27

)

 

$

57,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

______________________

(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

 

 

2023

 

2024

 

2023

 

March 31, 2024

Net income

 

$

38,641

 

 

$

6,928

 

$

7,002

 

 

$

38,567

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

15,737

 

 

 

3,942

 

 

4,261

 

 

 

15,418

 

Interest expense

 

 

4,531

 

 

 

1,637

 

 

1,641

 

 

 

4,527

 

Provision for income taxes

 

 

14,283

 

 

 

1,970

 

 

2,941

 

 

 

13,312

 

EBITDA

 

$

73,192

 

 

$

14,477

 

$

15,845

 

 

$

71,824

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and transaction costs(1)

 

 

3,192

 

 

 

4,837

 

 

—

 

 

 

8,029

 

Other general income(2)

 

 

(92

)

 

 

—

 

 

—

 

 

 

(92

)

Other (income) expense, net(3)

 

 

(936

)

 

 

1,444

 

 

(364

)

 

 

872

 

Stock-based compensation expense(4)

 

 

9,368

 

 

 

2,067

 

 

2,747

 

 

 

8,688

 

Stock-based compensation payroll tax expense(5)

 

 

234

 

 

 

393

 

 

220

 

 

 

407

 

LTIP bonus(6)

 

 

860

 

 

 

50

 

 

144

 

 

 

766

 

Amortization of inventory step-up(7)

 

 

—

 

 

 

769

 

 

—

 

 

 

769

 

Contingent consideration expense(8)

 

 

—

 

 

 

451

 

 

—

 

 

 

451

 

Adjusted EBITDA

 

$

85,818

 

 

$

24,488

 

$

18,592

 

 

$

91,714

 

Adjusted EBITDA margin(9)

 

 

16.5

 

%

 

17.8

%

 

16.6

 

%

 

 

______________________

(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 a $1.0 million transaction fee payable to Kanders & Company, Inc. for services related to the acquisition of ICOR that was accrued for during the year ended December 31, 2023 and a $1.8 million transaction fee paid to Kanders & Company, Inc. for services related to the acquisition of Alpha Safety for the three months ended March 31, 2024, which are 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 contingent consideration expense related to the acquisition of ICOR.

 

(9)

Reflects Adjusted EBITDA / Net sales for the relevant periods.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240507465810/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