Favorable Market Trends Continue to Drive
Strong Demand for Cadre’s Mission Critical Safety Equipment
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 nine months ended
September 30, 2024.
- Net sales of $109.4 million for the third quarter; net sales of
$391.6 million for the nine months ended September 30, 2024.
- Gross profit margin of 36.6% for the third quarter; gross
profit margin of 39.9% for the nine months ended September 30,
2024.
- Net income of $3.7 million, or $0.09 per diluted share, for the
third quarter; net income of $23.2 million, or $0.58 per diluted
share, for the nine months ended September 30, 2024.
- Adjusted EBITDA of $13.5 million for the third quarter;
Adjusted EBITDA of $66.3 million for the nine months ended
September 30, 2024.
- Adjusted EBITDA margin of 12.4% for the third quarter; Adjusted
EBITDA margin of 16.9% for the nine months ended September 30,
2024.
- Declared quarterly cash dividend of $0.0875 per share in
October 2024.
“During the third quarter we continued to see strong and
recurring demand for Cadre’s best-in-class, mission-critical safety
equipment,” said Warren Kanders, CEO and Chairman. “While events
unrelated to business macros have impacted our short-term financial
performance, we’ve been pleased with the teams’ overall progress
and execution leveraging the Cadre operating model to drive
constant organizational improvement and create greater value for
customers and shareholders. Cadre continues to benefit from an
innovative product offering, premium brands, and leading positions
across our law enforcement, first responder, military and nuclear
markets, supported by outstanding leadership.”
Mr. Kanders added, “Cadre’s resilience through cycles is a
primary strength of our business, highlighted by the Company’s
track record of consistent and stable growth regardless of
economic, political or geopolitical conditions. We remain focused
on taking advantage of the favorable industry trends fueling strong
global demand for our highly engineered safety products. With a
robust M&A pipeline, we continue to diligently evaluate
potential transactions to add complementary businesses with strong
margins, leading and defensible market positions, and recurring
revenue profiles. We are confident in Cadre's forward outlook and
believe we are ideally positioned to further expand our platforms
and enhance our market leadership positions.”
Third Quarter and Nine-Month 2024 Operating Results
For the quarter ended September 30, 2024, Cadre generated net
sales of $109.4 million, as compared to $125.1 million for the
quarter ended September 30, 2023. This was primarily a result of
the cybersecurity incident that Cadre reported in July 2024 and a
subsequent, negligible cybersecurity incident that occurred in
September 2024. Each of these incidents led the Company to take
certain containment and mitigation measures out of an abundance of
caution, resulting in temporary interruptions or disruptions of
normal business operations for select business units, which
temporarily impacted the Company’s production and order fulfillment
activities.
For the nine months ended September 30, 2024, Cadre generated
net sales of $391.6 million, as compared to $357.9 million for the
nine months ended September 30, 2023, primarily as a result of
recent acquisitions and higher demand for armor and duty gear
products, partially offset by the cybersecurity incidents.
For the quarter ended September 30, 2024, Cadre generated gross
profit of $40.0 million, as compared to $53.6 million for the
quarter ended September 30, 2023. For the nine months ended
September 30, 2024, Cadre generated gross profit of $156.3 million,
as compared to $151.0 million for the prior year period.
Gross profit margin was 36.6% for the quarter ended September
30, 2024, as compared to 42.8% for the quarter ended September 30,
2023, mainly driven by lower productivity in the Product segment
due to the cybersecurity incidents and the amortization of
inventory step up adjustments related to 2024 acquisitions, as well
as unfavorable mix in the Distribution segment. Gross profit margin
was 39.9% for the nine months ended September 30, 2024, as compared
to 42.2% for the prior year period.
Net income was $3.7 million for the quarter ended September 30,
2024, as compared to net income of $11.1 million for the quarter
ended September 30, 2023. The decrease resulted primarily from
reduced gross profit driven by lower productivity and lower revenue
due to the cybersecurity incidents.
Net income was $23.2 million for the nine months ended September
30, 2024, as compared to net income of $29.0 million for the prior
year period, primarily as a result of an increase in gross profit
driven by recent acquisitions, offset by an increase in selling,
general and administrative expenses.
Cadre generated $13.5 million of Adjusted EBITDA for the quarter
ended September 30, 2024, as compared to $23.7 million for the
quarter ended September 30, 2023. Adjusted EBITDA margin was 12.4%
for the quarter ended September 30, 2024, as compared to 19.0% for
the prior year period.
Cadre generated $66.3 million of Adjusted EBITDA for the nine
months ended September 30, 2024, as compared to $65.1 million for
the prior period. Adjusted EBITDA margin was 16.9% for the nine
months ended September 30, 2023, as compared to 18.2% for the prior
year period.
Product segment gross margin was 37.4% and 40.7% for the third
quarter and first nine months of 2024, respectively, compared to
44.3% and 43.9% for the prior year periods.
Distribution segment gross margin was 21.9% and 22.9% for the
third quarter and first nine months of 2024, respectively, compared
to 22.7% and 23.3% for the prior year periods.
Liquidity, Cash Flows and Capital Allocation
- Cash and cash equivalents increased by $5.3 million from $87.7
million as of December 31, 2023 to $93.0 million as of September
30, 2024.
- Total debt increased by $68.0 million from $140.1 million as of
December 31, 2023 to $208.1 million as of September 30, 2024.
- Net debt (total debt net of cash and cash equivalents)
increased by $62.7 million from $52.4 million as of December 31,
2023 to $115.1 million as of September 30, 2024.
- Capital expenditures totaled $1.1 million for the third quarter
and $4.5 million for the nine months ended September 30, 2024,
compared with $1.8 million for the third quarter and $4.3 million
for the nine months ended September 30, 2023.
Dividend
On October 22, 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 November 15, 2024 to shareholders of record as of
the close of business on the record date of November 1, 2024. The
declaration of any future dividend is subject to the discretion of
the Company's Board of Directors.
2024 Outlook
Following the July cybersecurity incident and subsequent
incident that occurred in September 2024, Cadre has implemented a
number of countermeasures to improve the Company’s infrastructure
and will continue implementing additional countermeasures to
protect its systems and data. Cadre has engaged a number of outside
experts to assist in this effort. The Company believes it has
contained the threat posed by the cybersecurity incidents and their
associated risks and has resumed all affected business operations.
The incidents caused Cadre to limit production to a greater extent
than was originally forecasted in a number of its facilities during
the investigation and remediation periods. As a result, the Company
has modified its full year guidance for 2024 and now expects to
generate net sales in the range of $560 million to $571 million and
Adjusted EBITDA in the range of $101 million and $107 million. We
expect capital expenditures to be in the range of $6 million to $8
million.
Conference Call
Management will host a conference call on Wednesday, November 6,
2024, at 5:00 p.m. EST to discuss the latest corporate developments
and financial results. The dial-in number for callers in the US is
(800)-715-9871 and the dial-in number for international callers is
646-307-1963. 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 November 20,
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)
September 30, 2024
December 31, 2023
Assets
Current assets
Cash and cash equivalents
$
92,989
$
87,691
Accounts receivable, net of allowance for
doubtful accounts of $1,317 and $635, respectively
69,432
58,360
Inventories
99,583
80,976
Prepaid expenses
15,603
11,930
Other current assets
8,305
6,886
Total current assets
285,912
245,843
Property and equipment, net of accumulated
depreciation and amortization of $53,098 and $50,968,
respectively
46,221
44,647
Operating lease assets
16,922
6,554
Deferred tax assets, net
3,870
4,004
Intangible assets, net
111,024
43,472
Goodwill
148,944
81,667
Other assets
3,722
4,992
Total assets
$
616,615
$
431,179
Liabilities, Mezzanine Equity and
Shareholders' Equity
Current liabilities
Accounts payable
$
27,565
$
28,418
Accrued liabilities
47,241
44,524
Income tax payable
7,141
9,944
Current portion of long-term debt
13,134
12,320
Total current liabilities
95,081
95,206
Long-term debt
194,949
127,812
Long-term operating lease liabilities
12,032
3,186
Deferred tax liabilities
8,782
4,843
Other liabilities
5,490
2,970
Total liabilities
316,334
234,017
Mezzanine equity
Preferred stock ($0.0001 par value,
10,000,000 shares authorized, no shares issued and outstanding as
of September 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 September 30, 2024 and December 31,
2023, respectively)
4
4
Additional paid-in capital
304,707
212,630
Accumulated other comprehensive (loss)
income
(1,079
)
634
Accumulated deficit
(3,351
)
(16,106
)
Total shareholders’ equity
300,281
197,162
Total liabilities, mezzanine equity and
shareholders' equity
$
616,615
$
431,179
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,
2024
2023
2024
2023
Net sales
$
109,408
$
125,114
$
391,577
$
357,949
Cost of goods sold
69,392
71,511
235,283
206,981
Gross profit
40,016
53,603
156,294
150,968
Operating expenses
Selling, general and administrative
33,981
36,314
113,277
105,615
Restructuring and transaction costs
515
439
3,621
1,132
Related party expense
94
116
2,038
379
Total operating expenses
34,590
36,869
118,936
107,126
Operating income
5,426
16,734
37,358
43,842
Other expense
Interest expense
(1,991
)
(1,073
)
(5,631
)
(3,727
)
Other income (expense), net
1,555
(315
)
(225
)
395
Total other expense, net
(436
)
(1,388
)
(5,856
)
(3,332
)
Income before provision for income
taxes
4,990
15,346
31,502
40,510
Provision for income taxes
(1,335
)
(4,293
)
(8,352
)
(11,463
)
Net income
$
3,655
$
11,053
$
23,150
$
29,047
Net income per share:
Basic
$
0.09
$
0.29
$
0.58
$
0.77
Diluted
$
0.09
$
0.29
$
0.58
$
0.77
Weighted average shares
outstanding:
Basic
40,607,988
37,586,031
39,723,702
37,515,976
Diluted
40,949,461
37,930,888
40,118,729
37,830,790
CADRE HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended September
30,
2024
2023
Cash Flows From Operating
Activities:
Net income
$
23,150
$
29,047
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
12,325
12,385
Amortization of original issue discount
and debt issue costs
787
359
Amortization of inventory step-up
3,851
—
Deferred income taxes
(11,627
)
1,317
Stock-based compensation
6,255
7,060
Remeasurement of contingent
consideration
685
—
Provision for losses on accounts
receivable
757
37
Foreign exchange gain
(788
)
(243
)
Other loss (gain)
355
(394
)
Changes in operating assets and
liabilities, net of impact of acquisitions:
Accounts receivable
162
3,429
Inventories
(2,589
)
(12,229
)
Prepaid expenses and other assets
(4,161
)
(3,131
)
Accounts payable and other liabilities
(21,096
)
8,623
Net cash provided by operating
activities
8,066
46,260
Cash Flows From Investing
Activities:
Purchase of property and equipment
(4,381
)
(4,248
)
Proceeds from disposition of property and
equipment
74
206
Business acquisitions, net of cash
acquired
(141,813
)
—
Net cash used in investing activities
(146,120
)
(4,042
)
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
(9,562
)
(7,500
)
Proceeds from insurance premium
financing
—
3,949
Principal payments on insurance premium
financing
(2,187
)
(2,909
)
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
(10,395
)
(8,999
)
Other
37
—
Net cash provided by (used in) financing
activities
142,831
(18,184
)
Effect of foreign exchange rates on cash
and cash equivalents
521
92
Change in cash and cash equivalents
5,298
24,126
Cash and cash equivalents, beginning of
period
87,691
45,286
Cash and cash equivalents, end of
period
$
92,989
$
69,412
Supplemental Disclosure of Cash Flows
Information:
Cash paid for income taxes, net
$
22,761
$
7,923
Cash paid for interest
$
10,523
$
7,389
Supplemental Disclosure of Non-Cash
Investing and Financing Activities:
Accruals and accounts payable for capital
expenditures
$
112
$
24
CADRE HOLDINGS, INC.
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended September
30, 2024
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
96,493
$
17,836
$
(4,921
)
$
109,408
Cost of goods sold
60,386
13,936
(4,930
)
69,392
Gross profit
$
36,107
$
3,900
$
9
$
40,016
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
Nine Months Ended September
30, 2024
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
343,711
$
71,615
$
(23,749
)
$
391,577
Cost of goods sold
203,771
$
55,216
$
(23,704
)
235,283
Gross profit
$
139,940
$
16,399
$
(45
)
$
156,294
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
____________________________
(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
Nine Months Ended
Last Twelve
December 31,
September 30,
September 30,
Months
2023
2024
2023
2024
2023
September 30, 2024
Net income
$
38,641
$
3,655
$
11,053
$
23,150
$
29,047
$
32,744
Add back:
Depreciation and amortization
15,737
3,763
4,165
12,325
12,385
15,677
Interest expense
4,531
1,991
1,073
5,631
3,727
6,435
Provision for income taxes
14,283
1,335
4,293
8,352
11,463
11,172
EBITDA
$
73,192
$
10,744
$
20,584
$
49,458
$
56,622
$
66,028
Add back:
Restructuring and transaction costs(1)
3,192
515
439
5,371
1,132
7,431
Other general income(2)
(92
)
—
—
—
—
(92
)
Other (income) expense, net(3)
(936
)
(1,555
)
315
225
(395
)
(316
)
Stock-based compensation expense(4)
9,368
2,104
2,208
6,255
7,060
8,563
Stock-based compensation payroll tax
expense(5)
234
—
—
441
220
455
LTIP bonus(6)
860
—
185
49
489
420
Amortization of inventory step-up(7)
—
1,541
—
3,851
—
3,851
Contingent consideration expense(8)
—
176
—
685
—
685
Adjusted EBITDA
$
85,818
$
13,525
$
23,731
$
66,335
$
65,128
$
87,025
Adjusted EBITDA margin(9)
16.5
%
12.4
%
19.0
%
16.9
%
18.2
%
____________________________
(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. 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 nine months ended September 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/20241106263231/en/
Contact: 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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