Grew Quarterly Net Sales 19% and Net Income 14%
Year-Over-Year
Increased Quarterly Adjusted EBITDA of $28.3
Million and Adjusted EBITDA Margin of 19.6%
Cadre Holdings, Inc. (NYSE: CDRE) (“Cadre” or “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 and six months ended
June 30, 2024.
- Net sales of $144.3 million for the second quarter; net sales
of $282.2 million for the six months ended June 30, 2024.
- Gross profit margin of 40.6% for the second quarter; gross
profit margin of 41.2% for the six months ended June 30, 2024.
- Net income of $12.6 million, or $0.31 per diluted share, for
the second quarter; net income of $19.5 million, or $0.49 per
diluted share, for the six months ended June 30, 2024.
- Adjusted EBITDA of $28.3 million for the second quarter;
Adjusted EBITDA of $52.8 million for the six months ended June 30,
2024.
- Adjusted EBITDA margin of 19.6% for the second quarter;
Adjusted EBITDA margin of 18.7% for the six months ended June 30,
2024.
- Declared quarterly cash dividend of $0.0875 per share in July
2024.
“Cadre delivered strong second quarter results, driven by
outstanding execution in line with our strategic objectives, as
well as significant demand for our mission-critical safety
equipment,” said Warren Kanders, CEO and Chairman. “The value of
the Cadre operating model continues to be evident, as we increased
quarterly net sales, net income and adjusted EBITDA both
sequentially and year-over-year. Importantly, Q2 adjusted EBITDA
margin improved 80 basis points year-over-year and 180 basis points
versus the first quarter.”
Mr. Kanders added, “Supported by Cadre’s entrenched positions
and favorable industry trends across our law enforcement, first
responder, military, and nuclear end-markets, we continue to see
attractive long-term growth opportunities throughout the business.
M&A remains an essential component of our strategy to increase
value, and consistent with our patient and disciplined approach, we
are actively evaluating a robust pipeline of potential
transactions. We remain on track to deliver double-digit net sales
and adjusted EBITDA growth in 2024 and are focused on taking
advantage of both organic and inorganic opportunities ahead to
enhance our market positions and accelerate growth.”
Second Quarter and Six-Month 2024 Operating Results
For the quarter ended June 30, 2024, Cadre generated net sales
of $144.3 million, as compared to $121.1 million for the quarter
ended June 30, 2023. This increase was primarily a result of recent
acquisitions, as well as higher demand for armor and duty gear
products.
For the six months ended June 30, 2024, Cadre generated net
sales of $282.2 million, as compared to $232.8 million for the six
months ended June 30, 2023, also mainly driven by recent
acquisitions, as well as the higher demand for armor and duty gear
products.
For the quarter ended June 30, 2024, Cadre generated gross
profit of $58.7 million, as compared to $50.7 million for the
quarter ended June 30, 2023. For the six months ended June 30,
2024, Cadre generated gross profit of $116.3 million, as compared
to $97.4 million for the prior year period.
Gross profit margin was 40.6% for the quarter ended June 30,
2024, as compared to 41.9% for the quarter ended June 30, 2023,
mainly driven by amortization of inventory step up adjustments
related to recent acquisitions and inflation, partially offset by
favorable pricing and product mix. Amortization of inventory
step-up and intangibles related to the acquisitions in the second
quarter was $2.5 million representing 170 bps of impact to gross
margin. Gross profit margin was 41.2% for the six months ended June
30, 2024, as compared to 41.8% for the prior year period. In the
six months ended June 30, amortization of inventory step-up and
intangibles related to acquisitions was $3.8 million or 133bps of
impact to gross margin.
Net income was $12.6 million for the quarter ended June 30,
2024, as compared to net income of $11.0 million for the quarter
ended June 30, 2023. The increase resulted primarily as a result of
an increase in gross profit and recent acquisitions, partially
offset by an increase in selling, general and administrative
expenses due to acquisitions and employee compensation and related
benefits.
Net income was $19.5 million for the six months ended June 30,
2024, as compared to net income of $18.0 million for the prior year
period, also primarily as a result of the increase in gross profit
and recent acquisitions, partially offset by an increase in
selling, general and administrative expenses due to acquisitions
and employee compensation and related benefits.
Cadre generated $28.3 million of Adjusted EBITDA for the quarter
ended June 30, 2024, as compared to $22.8 million for the quarter
ended June 30, 2023. Adjusted EBITDA margin was 19.6% for the
quarter ended June 30, 2024, as compared to 18.8% for the prior
year period.
Cadre generated $52.8 million of Adjusted EBITDA for the six
months ended June 30, 2024, as compared to $41.4 million for the
prior period. Adjusted EBITDA margin was 18.7% for the six months
ended June 30, 2023, as compared to 17.8% for the prior year
period.
Product segment gross margin was 41.1% and 42.0% for the second
quarter and first half of 2024, respectively, compared to 43.7% and
43.6% for the prior year periods.
Distribution segment gross margin was 22.9% and 23.2% for the
second quarter and first half of 2024, respectively, compared to
23.1% and 23.6% for the prior year periods.
Liquidity, Cash Flows and Capital Allocation
- Cash and cash equivalents increased by $18.2 million from $87.7
million as of December 31, 2023 to $105.9 million as of June 30,
2024.
- Total debt increased by $71.3 million from $140.1 million as of
December 31, 2023 to $211.4 million as of June 30, 2024.
- Net debt (total debt net of cash and cash equivalents)
increased by $53.0 million from $52.4 million as of December 31,
2023 to $105.5 million as of June 30, 2024.
- Capital expenditures totaled $2.1 million for the second
quarter and $3.4 million for the six months ended June 30, 2024,
compared with $1.5 million for the second quarter and $2.5 million
for the six months ended June 30, 2023.
Dividend
On July 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 August 16, 2024 to shareholders of record as of the
close of business on the record date of August 2, 2024. The
declaration of any future dividend is subject to the discretion of
the Company's Board of Directors.
2024 Outlook
As disclosed in our 8-K filed on July 19, 2024, Cadre
experienced a cyber incident on July 15, 2024. The Company believes
it has permanently contained and ended the incident and its
associated risks and has either resumed or is in the process of
resuming all affected business operations. The incident caused
Cadre to limit production in a number of its facilities while the
incident was being investigated and remediated. Cadre engaged a
number of outside experts to assist in this effort. Due to the
limited production during this time, the Company has modified its
full year guidance for 2024, Cadre now expects to generate net
sales in the range of $571 million to $582 million and Adjusted
EBITDA in the range of $103 million and $109 million. We expect
capital expenditures to be in the range of $7 million to $9
million.
Conference Call
Management will host a conference call on Monday, August 12,
2024, at 11:00 AM 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 August 26, 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, potential legal, reputational,
operational and financial effects on the Company resulting from the
cybersecurity incident that the Company reported in July 2024
and/or future cybersecurity incidents on the Company’s business,
operations and financial results as well as the effectiveness of
the Company’s response and mitigation efforts to any such
cybersecurity incidents, as well as 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)
June 30, 2024
December 31, 2023
Assets
Current assets
Cash and cash equivalents
$
105,903
$
87,691
Accounts receivable, net of allowance for
doubtful accounts of $1,349 and $635, respectively
72,685
58,360
Inventories
95,637
80,976
Prepaid expenses
9,751
11,930
Other current assets
11,014
6,886
Total current assets
294,990
245,843
Property and equipment, net of accumulated
depreciation and amortization of $51,186 and $50,968,
respectively
46,718
44,647
Operating lease assets
9,624
6,554
Deferred tax assets, net
3,835
4,004
Intangible assets, net
112,229
43,472
Goodwill
148,141
81,667
Other assets
5,095
4,992
Total assets
$
620,632
$
431,179
Liabilities, Mezzanine Equity and
Shareholders' Equity
Current liabilities
Accounts payable
$
31,489
$
28,418
Accrued liabilities
46,645
44,524
Income tax payable
1,788
9,944
Current portion of long-term debt
13,128
12,320
Total current liabilities
93,050
95,206
Long-term debt
198,233
127,812
Long-term operating lease liabilities
6,062
3,186
Deferred tax liabilities
18,852
4,843
Other liabilities
5,055
2,970
Total liabilities
321,252
234,017
Mezzanine equity
Preferred stock ($0.0001 par value,
10,000,000 shares authorized, no shares issued and outstanding as
of June 30, 2024 and December 31, 2023)
—
—
Shareholders' equity
Common stock ($0.0001 par value,
190,000,000 shares authorized, 40,607,988 and 37,587,436 shares
issued and outstanding as of June 30, 2024 and December 31, 2023,
respectively)
4
4
Additional paid-in capital
302,603
212,630
Accumulated other comprehensive income
226
634
Accumulated deficit
(3,453
)
(16,106
)
Total shareholders’ equity
299,380
197,162
Total liabilities, mezzanine equity and
shareholders' equity
$
620,632
$
431,179
CADRE HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share
and per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net sales
$
144,309
$
121,087
$
282,169
$
232,835
Cost of goods sold
85,659
70,340
165,891
135,470
Gross profit
58,650
50,747
116,278
97,365
Operating expenses
Selling, general and administrative
38,577
34,051
79,296
69,301
Restructuring and transaction costs
19
693
3,106
693
Related party expense
101
115
1,944
263
Total operating expenses
38,697
34,859
84,346
70,257
Operating income
19,953
15,888
31,932
27,108
Other expense
Interest expense
(2,003
)
(1,013
)
(3,640
)
(2,654
)
Other (expense) income, net
(336
)
346
(1,780
)
710
Total other expense, net
(2,339
)
(667
)
(5,420
)
(1,944
)
Income before provision for income
taxes
17,614
15,221
26,512
25,164
Provision for income taxes
(5,047
)
(4,229
)
(7,017
)
(7,170
)
Net income
$
12,567
$
10,992
$
19,495
$
17,994
Net income per share:
Basic
$
0.31
$
0.29
$
0.50
$
0.48
Diluted
$
0.31
$
0.29
$
0.49
$
0.48
Weighted average shares
outstanding:
Basic
40,606,825
37,586,031
39,276,700
37,480,367
Diluted
40,855,185
37,850,708
39,701,755
37,758,998
CADRE HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended June
30,
2024
2023
Cash Flows From Operating
Activities:
Net income
$
19,495
$
17,994
Adjustments to reconcile net
income to net cash provided by operating activities:
Depreciation and amortization
8,562
8,220
Amortization of original issue
discount and debt issue costs
502
374
Amortization of inventory
step-up
2,310
—
Deferred income taxes
(1,915
)
14
Stock-based compensation
4,151
4,852
Remeasurement of contingent
consideration
509
—
Provision for losses on accounts
receivable
769
(21
)
Foreign exchange loss (gain)
971
(776
)
Other loss (gain)
251
(433
)
Changes in operating assets and
liabilities, net of impact of acquisitions:
Accounts receivable
(3,387
)
7,605
Inventories
2,355
(11,986
)
Prepaid expenses and other
assets
705
3,397
Accounts payable and other
liabilities
(21,998
)
(971
)
Net cash provided by operating
activities
13,280
28,269
Cash Flows From Investing
Activities:
Purchase of property and
equipment
(3,365
)
(2,404
)
Proceeds from disposition of
property and equipment
49
206
Business acquisitions, net of
cash acquired
(141,813
)
—
Net cash used in investing
activities
(145,129
)
(2,198
)
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
(6,065
)
(5,000
)
Principal payments on insurance
premium financing
(2,187
)
(2,189
)
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
91,776
—
Deferred offering costs
(683
)
—
Dividends distributed
(6,842
)
(5,993
)
Other
37
—
Net cash provided by (used in)
financing activities
149,881
(15,907
)
Effect of foreign exchange rates
on cash and cash equivalents
180
332
Change in cash and cash
equivalents
18,212
10,496
Cash and cash equivalents,
beginning of period
87,691
45,286
Cash and cash equivalents, end of
period
$
105,903
$
55,782
Supplemental Disclosure of
Cash Flows Information:
Cash paid for income taxes,
net
$
21,605
$
7,288
Cash paid for interest
$
6,458
$
4,859
Supplemental Disclosure of
Non-Cash Investing and Financing Activities:
Accruals and accounts payable for
capital expenditures
$
58
$
129
CADRE HOLDINGS, INC.
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended June 30,
2024
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
128,433
$
25,588
$
(9,712
)
$
144,309
Cost of goods sold
75,621
19,723
(9,685
)
85,659
Gross profit
$
52,812
$
5,865
$
(27
)
$
58,650
Three Months Ended June 30,
2023
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
103,368
$
25,726
$
(8,007
)
$
121,087
Cost of goods sold
58,216
19,779
(7,655
)
70,340
Gross profit
$
45,152
$
5,947
$
(352
)
$
50,747
Six Months Ended June 30,
2024
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
247,218
$
53,779
$
(18,828
)
$
282,169
Cost of goods sold
143,385
41,280
(18,774
)
165,891
Gross profit
$
103,833
$
12,499
$
(54
)
$
116,278
Six Months Ended June 30,
2023
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
196,562
$
50,386
$
(14,113
)
$
232,835
Cost of goods sold
110,824
38,476
(13,830
)
135,470
Gross profit
$
85,738
$
11,910
$
(283
)
$
97,365
____________________________
(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
Six Months Ended
Last Twelve
December 31,
June 30,
June 30,
Months
2023
2024
2023
2024
2023
June 30, 2024
Net income
$
38,641
$
12,567
$
10,992
$
19,495
$
17,994
$
40,142
Add back:
Depreciation and amortization
15,737
4,620
3,959
8,562
8,220
16,079
Interest expense
4,531
2,003
1,013
3,640
2,654
5,517
Provision for income taxes
14,283
5,047
4,229
7,017
7,170
14,130
EBITDA
$
73,192
$
24,237
$
20,193
$
38,714
$
36,038
$
75,868
Add back:
Restructuring and transaction costs(1)
3,192
19
693
4,856
693
7,355
Other general income(2)
(92
)
—
—
—
—
(92
)
Other (income) expense, net(3)
(936
)
336
(346
)
1,780
(710
)
1,554
Stock-based compensation expense(4)
9,368
2,084
2,105
4,151
4,852
8,667
Stock-based compensation payroll tax
expense(5)
234
48
—
441
220
455
LTIP bonus(6)
860
(1
)
160
49
304
605
Amortization of inventory step-up(7)
—
1,541
—
2,310
—
2,310
Contingent consideration expense(8)
—
58
—
509
—
509
Adjusted EBITDA
$
85,818
$
28,322
$
22,805
$
52,810
$
41,397
$
97,231
Adjusted EBITDA margin(9)
16.5
%
19.6
%
18.8
%
18.7
%
17.8
%
____________________________
(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 six months ended June 30, 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/20240809871263/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
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