Achieved Revenue, Net Income, Gross Margin and
Adjusted EBITDA Growth
Achieves Record Quarterly Adjusted EBITDA of
$22.8 Million and Adjusted EBITDA Margin of 18.8%
Expects Full-Year 2023 Net Sales of $427 to
$484 Million and Raises 2023 Full-Year Adjusted EBITDA Range to $80
to $84 Million
Cadre Holdings, Inc. (NYSE: CDRE) ("Cadre" or "the Company"), a
global leader in the manufacturing and distribution of safety and
survivability equipment for first responders, announced today its
consolidated operating results for the three and six months ended
June 30, 2023.
- Net sales of $121.1 million for the second quarter; net sales
of $232.8 million for the six months ended June 30, 2023
- Gross profit margin of 41.9% for the second quarter; gross
profit margin of 41.8% for the six months ended June 30, 2023
- Net income of $11.0 million, or $0.29 per diluted share, for
the second quarter; net income of $18.0 million, or $0.48 per
diluted share, for the six months ended June 30, 2023
- Adjusted EBITDA of $22.8 million for the second quarter;
Adjusted EBITDA of $41.4 million for the six months ended June 30,
2023
- Adjusted EBITDA margin of 18.8% for the second quarter;
Adjusted EBITDA margin of 17.8% for the six months ended June 30,
2023
- Declared quarterly cash dividend of $0.08 per share in July
2023
“Our significant momentum continued in the second quarter, as we
generated improvements in quarterly net sales, adjusted EBITDA, and
net income both sequentially and year-over-year,” said Warren
Kanders, CEO and Chairman. “Based on outstanding strategic
execution and strong and recurring demand for our best-in-class
mission-critical safety and survivability equipment, we are pleased
to increase our full year 2023 adjusted EBITDA outlook. We
continued to make progress expanding margins in the second quarter,
driven by further implementation of our resilient and proven
operating model. Our Q2 adjusted EBITDA margin of 18.8% was our
highest since going public, with gross margins increasing 530 basis
points compared to last year.”
Mr. Kanders added, “The consistency and strength of our
financial results are a testament to Cadre’s innovative product
offering, premium brands, and superior execution, underpinned by
leading positions in law enforcement, first responder and military
markets. We remain on track to deliver record full year net sales
in 2023 and are ideally positioned to capitalize on organic and
inorganic opportunities ahead to further enhance our market
leadership over the long-term. As we continue to actively evaluate
a robust pipeline of potential M&A transactions, we are
steadfast in our patient and disciplined approach and focus on high
margin companies with leading market positions and strong recurring
revenues and cash flows.”
Second Quarter and Six-Month 2023 Operating Results
For the quarter ended June 30, 2023, Cadre generated net sales
of $121.1 million, as compared to $118.2 million for the quarter
ended June 30, 2022. The increase was primarily the result of the
Cyalume acquisition, armor and holster volume, and agency demand
for hard goods, partially offset by timing for our EOD
products.
For the six months ended June 30, 2023, Cadre generated net
sales of $232.8 million, as compared to $222.6 million for the six
months ended June 30, 2022, mainly driven by recent acquisitions,
armor and holster volume, and agency demand for hard goods,
partially offset by timing for our EOD products.
For the quarter ended June 30, 2023, Cadre generated gross
profit of $50.7 million, as compared to $43.2 million for the
quarter ended June 30, 2022. For the six months ended June 30,
2023, Cadre generated gross profit of $97.4 million, as compared to
$83.4 million for the prior year period.
Gross profit margin was 41.9% for the quarter ended June 30,
2023, as compared to 36.6% for the quarter ended June 30, 2022,
mainly driven by favorable pricing, favorable product mix, prior
year amortization of inventory step up related to acquisitions and
productivity net of inflation. Gross profit margin was 41.8% for
the six months ended June 30, 2023, as compared to 37.5% for the
prior year period.
Net income was $11.0 million for the quarter ended June 30,
2023, as compared to $4.4 million for the three months ended June
30, 2022. The increase resulted primarily from the change in
year-over-year revenue and the increase in gross profit margin.
Net income was $18.0 million for the six months ended June 30,
2023, as compared to a net loss of $5.7 million for the prior year
period, primarily due to the change in year-over-year revenue, the
increase in gross profit margin, and a decrease in stock-based
compensation expense.
Cadre generated $22.8 million of Adjusted EBITDA for the quarter
ended June 30, 2023, as compared to $18.4 million for the quarter
ended June 30, 2022. Adjusted EBITDA margin was 18.8% for the
quarter ended June 30, 2023, as compared to 15.6% for the prior
year period.
Cadre generated $41.4 million of Adjusted EBITDA for the six
months ended June 30, 2023, as compared to $32.6 million for the
prior period. Adjusted EBITDA margin was 17.8% for the six months
ended June 30, 2023, as compared to 14.6% for the prior year
period.
Product segment gross margin was 43.7% and 43.6% for the second
quarter and first half of 2023, respectively, compared to 39.0% and
39.5% for the prior year periods.
Distribution segment gross margin was 23.1% and 23.6% for the
second quarter and first half of 2023, respectively, compared to
18.2% and 21.4% for the prior year periods.
Liquidity, Cash Flows and Capital Allocation
- Cash and cash equivalents increased by $10.5 million from $45.3
million as of December 31, 2022 to $55.8 million as of June 30,
2023.
- Total debt decreased by $7.0 million from $149.7 million as of
December 31, 2022, to $142.7 million as of June 30, 2023.
- Net Debt (total debt net of cash and cash equivalents)
decreased by $17.4 million from $104.4 million as of December 31,
2022, to $87.0 million as of June 30, 2023.
- Capital expenditures totaled $1.5 million for the second
quarter and $2.5 million for the six months ended June 30, 2023,
compared with $1.4 million for the second quarter and $2.5 million
for the six months ended June 30, 2022.
Dividend
On July 25, 2023, the Company announced that its Board of
Directors declared a quarterly cash dividend of $0.08 per share, or
$0.32 per share on an annualized basis. Cadre's dividend payment
will be made on August 18, 2023, to shareholders of record as of
the close of business on the record date of August 4, 2023. The
declaration of any future dividend is subject to the discretion of
the Company's Board of Directors.
2023 Outlook Update
As a result of the Company's second-quarter performance and
management's outlook for the remainder of the year, Cadre increased
its full-year Adjusted EBITDA guidance. For the full year 2023,
Cadre expects to generate net sales in the range of $472 million to
$484 million and Adjusted EBITDA in the range of $80 million to $84
million. We expect capital expenditures to be in the range of $8.0
million to $9.0 million.
Conference Call
Cadre management will host a conference call on Tuesday, August
8, 2023, at 5:00 PM EST to discuss the latest corporate
developments and financial results. The dial-in number for callers
in the US is (888)-510-2553 and the dial-in number for
international callers is (646)-960-0473. The access code for all
callers is 1410384. A live webcast will also be available on the
Company’s website at https://www.cadre-holdings.com/.
A replay of the call will be available through August 22, 2023.
To access the replay, please dial (800)-770-2030 in the U.S. or
+1-647-362-9199 if outside the U.S., and then enter the access code
1410384.
About Cadre
Headquartered in Jacksonville, Florida, Cadre is a global leader
in the manufacturing and distribution of safety and survivability
products for first responders. Cadre's equipment provides critical
protection to allow users to safely and securely perform their
duties and protect those around them in hazardous or
life-threatening situations. The Company's core products include
body armor, explosive ordnance disposal equipment, and duty gear.
Our highly engineered products are utilized in over 100 countries
by federal, state and local law enforcement, fire and rescue
professionals, explosive ordnance disposal teams, and emergency
medical technicians. Our key brands include Safariland® and
Med-Eng®, amongst others.
Use of Non-GAAP Measures
The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (“GAAP”). The press
release contains the non-GAAP measures: (i) earnings before
interest, taxes, other income or expense, depreciation and
amortization (“EBITDA”), (ii) adjusted EBITDA and (iii) adjusted
EBITDA margin. The Company believes the presentation of these
non-GAAP measures provides useful information for the understanding
of its ongoing operations and enables investors to focus on
period-over-period operating performance, and thereby enhances the
user’s overall understanding of the Company’s current financial
performance relative to past performance and provides, along with
the nearest GAAP measures, a baseline for modeling future earnings
expectations. Non-GAAP measures are reconciled to comparable GAAP
financial measures within this press release. The Company cautions
that non-GAAP measures should be considered in addition to, but not
as a substitute for, the Company’s reported GAAP results.
Additionally, the Company notes that there can be no assurance that
the above referenced non-GAAP financial measures are comparable to
similarly titled financial measures used by other publicly traded
companies.
Forward-Looking Statements
Except for historical information, certain matters discussed in
this press release may be forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include but are not limited to all
projections and anticipated levels of future performance.
Forward-looking statements involve risks, uncertainties and other
factors that may cause our actual results to differ materially from
those discussed herein. Any number of factors could cause actual
results to differ materially from projections or forward-looking
statements in this press release, including, but not limited to,
those risks and uncertainties more fully described from time to
time in the Company’s public reports filed with the Securities and
Exchange Commission, including under the section titled “Risk
Factors” in the Company's Annual Report on Form 10-K, and/or
Quarterly Reports on Form 10-Q, as well as in the Company’s Current
Reports on Form 8-K. All forward-looking statements included in
this press release are based upon information available to the
Company as of the date of this press release and speak only as of
the date hereof. We assume no obligation to update any
forward-looking statements to reflect events or circumstances after
the date of this press release.
CADRE HOLDINGS, INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands, except share
and per share amounts)
June 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
55,782
$
45,286
Accounts receivable, net of allowance for
doubtful accounts of $800 and $924, respectively
57,361
64,557
Inventories
82,777
70,273
Prepaid expenses
10,009
10,091
Other current assets
6,406
6,811
Total current assets
212,335
197,018
Property and equipment, net of accumulated
depreciation and amortization of $47,046 and $42,694,
respectively
44,531
45,285
Operating lease assets
6,657
8,489
Deferred tax assets, net
2,351
2,255
Intangible assets, net
46,919
50,695
Goodwill
81,560
81,576
Other assets
5,566
6,634
Total assets
$
399,919
$
391,952
Liabilities, Mezzanine Equity and
Shareholders' Equity
Current liabilities
Accounts payable
$
29,640
$
23,406
Accrued liabilities
34,480
38,720
Income tax payable
4,279
4,584
Liabilities held for sale
—
—
Current portion of long-term debt
10,022
12,211
Total current liabilities
78,421
78,921
Long-term debt
132,712
137,476
Long-term operating lease liabilities
3,211
4,965
Deferred tax liabilities
3,759
3,508
Other liabilities
1,314
1,192
Total liabilities
219,417
226,062
Mezzanine equity
Preferred stock ($0.0001 par value,
10,000,000 shares authorized, no shares issued and outstanding as
of June 30, 2023 and December 31, 2022)
—
—
Shareholders' equity
Common stock ($0.0001 par value,
190,000,000 shares authorized, 37,586,031 and 37,332,271 shares
issued and outstanding as of June 30, 2023 and December 31, 2022,
respectively)
4
4
Additional paid-in capital
208,492
206,540
Accumulated other comprehensive income
2,746
2,087
Accumulated deficit
(30,740
)
(42,741
)
Total shareholders’ equity
180,502
165,890
Total liabilities, mezzanine equity and
shareholders' equity
$
399,919
$
391,952
CADRE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except share
and per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net sales
$
121,087
$
118,232
$
232,835
$
222,638
Cost of goods sold
70,340
75,011
135,470
139,228
Gross profit
50,747
43,221
97,365
83,410
Operating expenses
Selling, general and administrative
34,051
32,749
69,301
86,699
Restructuring and transaction costs
693
1,203
693
1,802
Related party expense
115
1,112
263
1,234
Total operating expenses
34,859
35,064
70,257
89,735
Operating income (loss)
15,888
8,157
27,108
(6,325
)
Other expense
Interest expense
(1,013
)
(1,439
)
(2,654
)
(2,929
)
Other income (expense), net
346
(756
)
710
(961
)
Total other expense, net
(667
)
(2,195
)
(1,944
)
(3,890
)
Income (loss) before provision for income
taxes
15,221
5,962
25,164
(10,215
)
(Provision) benefit for income taxes
(4,229
)
(1,517
)
(7,170
)
4,495
Net income (loss)
$
10,992
$
4,445
$
17,994
$
(5,720
)
Net income (loss) per share:
Basic
$
0.29
$
0.13
$
0.48
$
(0.16
)
Diluted
$
0.29
$
0.12
$
0.48
$
(0.16
)
Weighted average shares
outstanding:
Basic
37,586,031
35,320,314
37,480,367
34,888,703
Diluted
37,850,708
35,688,620
37,758,998
34,888,703
CADRE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended June
30,
2023
2022
Cash Flows From Operating
Activities:
Net income (loss)
$
17,994
$
(5,720
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
8,220
7,380
Amortization of original issue discount
and debt issue costs
374
367
Amortization of inventory step-up
—
1,344
Deferred income taxes
14
(4,594
)
Stock-based compensation
4,852
26,327
Gain on sale of fixed assets
(108
)
—
(Recoveries from) provision for losses on
accounts receivable
(21
)
240
Foreign exchange (gain) loss
(776
)
1,107
Other
(325
)
—
Changes in operating assets and
liabilities, net of impact of acquisitions:
Accounts receivable
7,605
(3,243
)
Inventories
(11,986
)
(1,461
)
Prepaid expenses and other assets
3,397
3,616
Accounts payable and other liabilities
(971
)
(345
)
Net cash provided by operating
activities
28,269
25,018
Cash Flows From Investing
Activities:
Purchase of property and equipment
(2,404
)
(2,473
)
Proceeds from disposition of property and
equipment
206
—
Business acquisitions, net of cash
acquired
—
(55,039
)
Net cash used in investing activities
(2,198
)
(57,512
)
Cash Flows From Financing
Activities:
Proceeds from revolving credit
facilities
—
48,000
Principal payments on revolving credit
facilities
—
(48,000
)
Principal payments on term loans
(5,000
)
(5,009
)
Principal payments on insurance premium
financing
(2,189
)
(2,853
)
Payment of capital leases
—
(22
)
Taxes paid in connection with employee
stock transactions
(2,725
)
(6,216
)
Proceeds from secondary offering, net of
underwriter discounts
—
49,703
Deferred offering costs
—
(2,715
)
Dividends distributed
(5,993
)
(5,533
)
Net cash (used in) provided by financing
activities
(15,907
)
27,355
Effect of foreign exchange rates on cash
and cash equivalents
332
144
Change in cash and cash equivalents
10,496
(4,995
)
Cash and cash equivalents, beginning of
period
45,286
33,857
Cash and cash equivalents, end of
period
$
55,782
$
28,862
Supplemental Disclosure of Cash Flows
Information:
Cash paid for income taxes, net
$
7,288
$
241
Cash paid for interest
$
4,859
$
2,330
Supplemental Disclosure of Non-Cash
Investing and Financing Activities:
Accruals and accounts payable for capital
expenditures
$
129
$
17
CADRE HOLDINGS, INC.
SEGMENT INFORMATION
(Unaudited)
(In thousands)
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
Three Months Ended June 30,
2022
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
99,837
$
23,728
$
(5,333
)
$
118,232
Cost of goods sold
60,947
19,406
(5,342
)
75,011
Gross profit
$
38,890
$
4,322
$
9
$
43,221
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
Six Months Ended June 30,
2022
Reconciling
Product
Distribution
Items(1)
Total
Net sales
$
185,223
$
47,824
$
(10,409
)
$
222,638
Cost of goods sold
112,067
37,578
(10,417
)
139,228
Gross profit
$
73,156
$
10,246
$
8
$
83,410
_______________________________
(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
Three Months Ended
Six Months Ended
Last Twelve
December 31,
Ended March 31,
June 30,
June 30,
Months
2022
2023
2023
2022
2023
2022
June 30, 2023
Net income (loss)
$
5,820
$
7,002
$
10,992
$
4,445
$
17,994
$
(5,720
)
$
29,534
Add back:
Depreciation and amortization
15,651
4,261
3,959
3,836
8,220
7,380
16,491
Interest expense
6,206
1,641
1,013
1,439
2,654
2,929
5,931
Provision (benefit) for income taxes
3,553
2,941
4,229
1,517
7,170
(4,495
)
15,218
EBITDA
$
31,230
$
15,845
$
20,193
$
11,237
$
36,038
$
94
$
67,174
Add back:
Restructuring and transaction costs(1)
5,355
—
693
2,203
693
2,802
3,246
Other general income(2)
(159
)
—
—
—
—
—
(159
)
Other expense (income), net(3)
1,137
(364
)
(346
)
756
(710
)
961
(534
)
Stock-based compensation expense(4)
32,239
2,747
2,105
2,818
4,852
26,541
10,550
Stock-based compensation payroll tax
expense(5)
305
220
—
7
220
305
220
LTIP bonus(6)
1,369
144
160
174
304
558
1,115
Amortization of inventory step-up(7)
4,255
—
—
1,191
—
1,344
2,911
Adjusted EBITDA
$
75,731
$
18,592
$
22,805
$
18,386
$
41,397
$
32,605
$
84,523
Adjusted EBITDA margin(8)
16.5
%
16.6
%
18.8
%
15.6
%
17.8
%
14.6
%
________________________
(1)
Reflects the “Restructuring and
transaction costs” line item on our consolidated statement of
operations, which primarily includes transaction costs composed of
legal and consulting fees, and $1.0 million paid to Kanders &
Company, Inc., a company controlled by our Chief Executive Officer,
for services related to the acquisition of Cyalume, which is
included in related party expense in the Company’s consolidated
statements of operations for the year ended December 31, 2022.
(2)
Reflects the “Other general
income” line item on our consolidated statement of operations and
includes a gain from a long-lived asset sale.
(3)
Reflects the “Other (income)
expense, net” line item on our consolidated statement of operations
and primarily includes gains and losses on foreign currency
transactions.
(4)
Reflects compensation expense
related to equity and liability classified stock-based compensation
plans.
(5)
Reflects payroll taxes associated
with vested stock-based compensation awards.
(6)
Reflects the cost of a cash-based
long-term incentive plan awarded to employees that vests over three
years.
(7)
Reflects amortization expense
related to the step-up inventory adjustment recorded as a result of
our recent acquisitions.
(8)
Reflects Adjusted EBITDA / Net
Sales for the relevant periods.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808946301/en/
Gray Hudkins Cadre Holdings, Inc. 203-550-7148
gray.hudkins@cadre-holdings.com Investor Relations: The IGB
Group Leon Berman / Matt Berkowitz 212-477-8438 / 212-227-7098
lberman@igbir.com / mberkowitz@igbir.com Media Contact:
Jonathan Keehner / Andrew Siegel Joele Frank, Wilkinson Brimmer
Katcher 212-355-4449
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