Cadre Holdings Reports Third Quarter 2021 Financial Results
Cadre Holdings, Inc. (CDRE), a leader in safety equipment for first responders, reported Q3 and nine-month results for 2021. Q3 net sales were $98.7 million, down from $105.7 million YoY, while nine-month sales rose to $323.8 million from $297.0 million. Q3 gross profit was $39.3 million, with a margin of 39.8%. The company incurred a net loss of $5.3 million due to a debt extinguishment of $15.2 million. Adjusted EBITDA was $15.4 million for Q3, with a margin of 15.6%. Cadre declared a quarterly cash dividend of $0.08 per share.
- Nine-month net sales increased from $297.0 million in 2020 to $323.8 million in 2021.
- Gross profit margin improved to 39.8% in Q3 2021 from 37.8% in Q3 2020.
- Adjusted EBITDA margin increased to 15.6% in Q3 2021 from 14.2% in Q3 2020.
- Q3 net sales declined to $98.7 million from $105.7 million YoY.
- Net loss of $5.3 million in Q3 2021 compared to net income of $6.4 million in Q3 2020.
- Net debt increased by $13.1 million from $212.8 million at the end of 2020 to $225.9 million by September 30, 2021.
JACKSONVILLE, Fla., Dec. 2, 2021 /PRNewswire/ -- 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 nine months ended September 30, 2021.
Third Quarter and Nine Month 2021 Highlights
- Net sales of
$98.7 million for the third quarter; net sales of$323.8 million for the nine months ended September 30, 2021 - Gross profit margin of
39.8% for the third quarter; gross profit margin of40.6% for the nine months ended September 30, 2021 - Net loss of
$5.3 million , or$0.19 per share, for the third quarter; net income of$8.4 million , or$0.30 per share, for the nine months ended September 30, 2021. Both periods reflect a$15.2 million loss on the extinguishment of debt incurred from the execution of a new credit agreement - Adjusted EBITDA of
$15.4 million for the third quarter; Adjusted EBITDA of$56.1 million for the nine months ended September 30, 2021 - Cadre generated LTM Adjusted EBITDA of
$71.6 million for the period ended September 30, 2021 - Adjusted EBITDA margin of
15.6% for the third quarter; Adjusted EBITDA margin of17.3% for the nine months ended September 30, 2021 - Declared quarterly cash dividend of
$0.08 per share in November 2021
"Our third quarter and year to date 2021 financial results highlight Cadre's ongoing success capitalizing on our leading positions in large and growing markets with recurring demand characteristics, as well our ability to generate strong operating cash flow," said Warren Kanders, CEO and Chairman. "We continue to build on Cadre's impressive track record of margin expansion and have improved gross profit and Adjusted EBITDA margins in the year to date period by 250 and 300 basis points, respectively."
Mr. Kanders continued, "With the recent completion of our successful IPO, we have achieved an important milestone in our company's storied history that dates back over 55 years. We believe that we are in a strong position to take advantage of the attractive tailwinds driving demand for Cadre's mission critical first responder products, as we focus on seeking to accelerate growth organically, as well as through our robust acquisition pipeline. As part of our disciplined capital allocation approach, we are also pleased to have implemented a regular quarterly dividend policy."
Third Quarter and Nine Month 2021 Operating Results
For the quarter ended September 30, 2021, Cadre generated net sales of
For the nine months ended September 30, 2021, Cadre generated net sales of
For the quarter ended September 30, 2021, Cadre generated gross profit of
Gross profit margin was
Gross profit margin was
Net loss was
Net income was
Cadre generated
Cadre generated
Product segment gross margin was
Distribution segment gross margin was
Liquidity, Cash Flows and Capital Allocation
Cadre's cash and cash equivalents increased by
During the quarter, the Company refinanced its existing credit facilities and closed on a new credit agreement that included a term loan, under which Cadre borrowed
On November 3, 2021, the Company completed the closing of its initial public offering ("IPO") of 6.9 million shares, including the full exercise of the underwriters' option, at a price to the public of
On November 9, 2021, the Company utilized proceeds received in connection with the IPO and repaid
Dividend
On November 11, 2021, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend policy of
Conference Call
Cadre management will host a conference call on Thursday, December 2, 2021, at 5:00 PM EST to discuss the latest corporate developments and financial results. The dial-in number for callers in the US is (844)-200-6205 and the dial-in number for international callers is (929)-526-1599. The access code for all callers is 996677. 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 December 16, 2021. To access the replay, please dial 866 813 9403 in the U.S. or +44 204 525 0658 if outside the U.S., and then enter the access code 515899.
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 by domestic and international first responders in state and local law enforcement, fire and rescue, explosive ordnance disposal, emergency medical technicians, as well as numerous federal agencies and foreign government agencies in 104 countries. 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"). This 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) LTM adjusted EBITDA . The Company believes that the presentation of certain non-GAAP measures, i.e.: (i) EBITDA, (ii) adjusted EBITDA, (iii) adjusted EBITDA margin, and (iv) LTM adjusted EBITDA, provide 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 global economic conditions, spending patterns of government agencies, competitive pressures, the impact of acquisitions and related integration activities, product liability claims, the success of new product introductions, currency exchange rate fluctuations and the risks of doing business in in the markets in which we operate, including foreign countries. More information on potential factors that could affect the Company's financial results are more fully described in our prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on November 5, 2021, and will be included 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.
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
lberman@igbir.com / mberkowitz@igbir.com
Media Contact:
Jonathan Keehner / Andrew Siegel
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
CADRE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share amounts) | ||||||
September 30, 2021 | December 31, 2020 | |||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 15,275 | $ | 2,873 | ||
Accounts receivable, net of allowance for doubtful accounts of | 42,230 | 43,646 | ||||
Inventories | 71,067 | 60,923 | ||||
Prepaid expenses | 9,212 | 6,665 | ||||
Other current assets | 5,859 | 3,362 | ||||
Total current assets | 143,643 | 117,469 | ||||
Property and equipment, net of accumulated depreciation and amortization of | 33,780 | 35,437 | ||||
Deferred tax assets, net | 11,696 | 12,900 | ||||
Intangible assets, net | 44,459 | 51,009 | ||||
Goodwill | 66,227 | 66,314 | ||||
Other assets | 2,219 | 150 | ||||
Total assets | $ | 302,024 | $ | 283,279 | ||
Liabilities, Mezzanine Equity and Shareholders' Equity | ||||||
Current liabilities | ||||||
Accounts payable | $ | 21,890 | $ | 21,978 | ||
Accrued liabilities | 40,238 | 36,004 | ||||
Income tax payable | 2,505 | 1,005 | ||||
Current portion of long-term debt | 12,904 | 3,496 | ||||
Total current liabilities | 77,537 | 62,483 | ||||
Long-term debt | 212,946 | 209,310 | ||||
Deferred tax liabilities | 2,430 | 2,085 | ||||
Other liabilities | 1,774 | 550 | ||||
Total liabilities | 294,687 | 274,428 | ||||
Mezzanine equity | ||||||
Preferred stock ( | — | — | ||||
Shareholders' equity | ||||||
Common stock ( | 3 | 3 | ||||
Additional paid-in capital | 48,670 | 48,670 | ||||
Accumulated other comprehensive loss | (2,747) | (2,860) | ||||
Accumulated deficit | (38,589) | (36,962) | ||||
Total shareholders' equity | 7,337 | 8,851 | ||||
Total liabilities, mezzanine equity and shareholders' equity | $ | 302,024 | $ | 283,279 | ||
CADRE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share amounts) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Net sales | $ | 98,654 | $ | 105,735 | $ | 323,751 | $ | 297,019 | ||||
Cost of goods sold | 59,346 | 65,739 | 192,256 | 183,869 | ||||||||
Gross profit | 39,308 | 39,996 | 131,495 | 113,150 | ||||||||
Operating expenses | ||||||||||||
Selling, general and administrative | 27,673 | 26,908 | 87,168 | 79,963 | ||||||||
Restructuring and transaction costs | (49) | 171 | 1,491 | 3,143 | ||||||||
Related party expense | 142 | 159 | 437 | 480 | ||||||||
Other general income | — | — | — | (10,950) | ||||||||
Total operating expenses | 27,766 | 27,238 | 89,096 | 72,636 | ||||||||
Operating income | 11,542 | 12,758 | 42,399 | 40,514 | ||||||||
Other expense | ||||||||||||
Interest expense | (3,464) | (5,668) | (14,129) | (18,275) | ||||||||
Loss on extinguishment of debt | (15,155) | — | (15,155) | — | ||||||||
Other (expense) income, net | (352) | (213) | (881) | 1,925 | ||||||||
Total other expense, net | (18,971) | (5,881) | (30,165) | (16,350) | ||||||||
(Loss) income before provision for income taxes | (7,429) | 6,877 | 12,234 | 24,164 | ||||||||
Benefit (provision) for income taxes | 2,123 | (430) | (3,861) | (1,491) | ||||||||
Net (loss) income | $ | (5,306) | $ | 6,447 | $ | 8,373 | $ | 22,673 | ||||
Net (loss) income per share: | ||||||||||||
Basic | $ | (0.19) | $ | 0.23 | $ | 0.30 | $ | 0.82 | ||||
Diluted | $ | (0.19) | $ | 0.23 | $ | 0.30 | $ | 0.82 | ||||
Weighted average shares outstanding: | ||||||||||||
Basic | 27,483,350 | 27,483,350 | 27,483,350 | 27,483,350 | ||||||||
Diluted | 27,483,350 | 27,483,350 | 27,483,350 | 27,483,350 | ||||||||
CADRE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) | ||||||
Nine Months Ended September 30, | ||||||
2021 | 2020 | |||||
Cash Flows From Operating Activities: | ||||||
Net income | $ | 8,373 | $ | 22,673 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 10,426 | 11,207 | ||||
Amortization of original issue discount and debt issue costs | 2,483 | 1,012 | ||||
Loss on extinguishment of debt | 15,155 | — | ||||
Non cash consideration received from sale of business | — | (6,821) | ||||
Deferred income taxes | 1,533 | 125 | ||||
Gain on sale of fixed assets | — | (6,218) | ||||
Provision for losses on accounts receivable | (254) | (130) | ||||
Foreign exchange loss (gain) | 45 | (752) | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | 1,549 | 10,922 | ||||
Inventories | (10,261) | (4,902) | ||||
Prepaid expenses and other assets | (4,642) | (2,332) | ||||
Accounts payable and other liabilities | 6,582 | 3,408 | ||||
Net cash provided by operating activities | 30,989 | 28,192 | ||||
Cash Flows From Investing Activities: | ||||||
Purchase of property and equipment | (2,225) | (3,913) | ||||
Proceeds from disposition of property and equipment | — | 12,386 | ||||
Proceeds from sale of equity securities | — | 5,591 | ||||
Net cash (used in) provided by investing activities | (2,225) | 14,064 | ||||
Cash Flows From Financing Activities: | ||||||
Proceeds from revolving credit facilities | 248,000 | 281,730 | ||||
Principal payments on revolving credit facilities | (223,132) | (283,887) | ||||
Proceeds from term loans | 198,735 | — | ||||
Principal payments on term loans | (224,547) | (40,841) | ||||
Proceeds from insurance premium financing | 4,269 | 2,733 | ||||
Principal payments on insurance premium financing | (2,611) | (1,998) | ||||
Payment of capital leases | (32) | (35) | ||||
Payments for debt issuance costs | (2,830) | — | ||||
Payments on extinguishment of debt | (4,215) | — | ||||
Dividends distributed | (9,996) | — | ||||
Net cash used in financing activities | (16,359) | (42,298) | ||||
Effect of foreign exchange rates on cash and cash equivalents | (3) | 6 | ||||
Change in cash and cash equivalents | 12,402 | (36) | ||||
Cash and cash equivalents, beginning of period | 2,873 | 2,520 | ||||
Cash and cash equivalents, end of period | 15,275 | 2,484 | ||||
CADRE HOLDINGS, INC. SEGMENT INFORMATION (Unaudited) (In thousands) | ||||||||||||
Three months ended September 30, 2021 | ||||||||||||
Reconciling | ||||||||||||
Products | Distribution | Items(1) | Total | |||||||||
Net sales | $ | 83,918 | $ | 21,507 | $ | (6,771) | $ | 98,654 | ||||
Cost of goods sold | 49,896 | 16,220 | (6,770) | 59,346 | ||||||||
Gross profit | $ | 34,022 | $ | 5,287 | $ | (1) | $ | 39,308 | ||||
Three months ended September 30, 2020 | ||||||||||||
Reconciling | ||||||||||||
Products | Distribution | Items(1) | Total | |||||||||
Net sales | $ | 88,858 | $ | 23,690 | $ | (6,813) | $ | 105,735 | ||||
Cost of goods sold | 54,325 | 18,273 | (6,859) | 65,739 | ||||||||
Gross profit | $ | 34,533 | $ | 5,417 | $ | 46 | $ | 39,996 | ||||
Nine months ended September 30, 2021 | ||||||||||||
Reconciling | ||||||||||||
Products | Distribution | Items(1) | Total | |||||||||
Net sales | $ | 274,039 | $ | 69,086 | $ | (19,374) | $ | 323,751 | ||||
Cost of goods sold | 159,924 | 51,696 | (19,364) | 192,256 | ||||||||
Gross profit | $ | 114,115 | $ | 17,390 | $ | (10) | $ | 131,495 | ||||
Nine months ended September 30, 2020 | ||||||||||||
Reconciling | ||||||||||||
Products | Distribution | Items(1) | Total | |||||||||
Net sales | $ | 251,441 | $ | 62,707 | $ | (17,129) | $ | 297,019 | ||||
Cost of goods sold | 153,233 | 47,897 | (17,261) | 183,869 | ||||||||
Gross profit | $ | 98,208 | $ | 14,810 | $ | 132 | $ | 113,150 | ||||
(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 September 30, | Nine Months Ended September 30, | ||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||
(in thousands) | |||||||||||||
Net (loss) income | $ | (5,306) | $ | 6,447 | $ | 8,373 | $ | 22,673 | |||||
Add back: | |||||||||||||
Depreciation and amortization | 3,406 | 3,537 | 10,426 | 11,207 | |||||||||
Interest expense | 3,464 | 5,668 | 14,129 | 18,275 | |||||||||
Provision for income taxes | (2,123) | 430 | 3,861 | 1,491 | |||||||||
EBITDA | $ | (559) | $ | 16,082 | $ | 36,789 | $ | 53,646 | |||||
Add back: | |||||||||||||
Restructuring and transaction costs(1) | (49) | 171 | 1,491 | 3,143 | |||||||||
Other general income(2) | — | — | — | (10,950) | |||||||||
Loss on extinguishment of debt(3) | 15,155 | — | 15,155 | — | |||||||||
Other (expense) income, net(4) | 352 | 213 | 881 | (1,925) | |||||||||
Contingent consideration(5) | — | (1,427) | — | (1,427) | |||||||||
LTIP bonus(6) | 520 | — | 1,804 | — | |||||||||
Adjusted EBITDA | $ | 15,419 | $ | 15,039 | $ | 56,120 | $ | 42,487 | |||||
Less: Capital expenditures | (719) | (1,275) | (2,225) | (3,913) | |||||||||
Adjusted EBITDA less capital expenditures | $ | 14,700 | $ | 13,764 | $ | 53,895 | $ | 38,574 | |||||
Adjusted EBITDA conversion rate | 95 | % | 92 | % | 96 | % | 91 | % | |||||
Adjusted EBITDA margin | 15.6 | % | 14.2 | % | 17.3 | % | 14.3 | % | |||||
(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. | |||||||||||||||||||
(2) | Reflects the "Other general income" line item on our consolidated statement of operations and includes a gain from a long-lived asset sale as well as earn-out stock payments for the nine months ended September 30, 2020. | |||||||||||||||||||
(3) | Reflects a loss incurred in connection with the August 2021 debt refinance. | |||||||||||||||||||
(4) | Reflects the "Other (expense) income, net" line item on our consolidated statement of operations. For the three and nine months ended September 30, 2021, other (expense) income, net primarily includes losses on foreign currency transactions. For the three and nine months ended September 30, 2020, other (expense) income, net primarily includes gains on foreign exchange transactions and unrealized gains on an investment in equity securities. | |||||||||||||||||||
(5) | Reflects a gain on the settlement of contingent consideration. | |||||||||||||||||||
(6) | Reflects the cost of a cash-based long-term incentive plan awarded to employees that vests over three years. | |||||||||||||||||||
(7) | Reflects Adjusted EBITDA / Net sales for the relevant periods. | |||||||||||||||||||
CADRE HOLDINGS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED (Unaudited) (In thousands) | ||||||||||||
Year Ended December | Nine Months Ended | Nine Months Ended | LTM | |||||||||
(in thousands) | ||||||||||||
Net (loss) income | $ | 38,453 | $ | 22,673 | $ | 8,373 | $ | 24,153 | ||||
Add back: | ||||||||||||
Depreciation and amortization | 14,733 | 11,207 | 10,426 | 13,952 | ||||||||
Interest expense | 24,388 | 18,275 | 14,129 | 20,242 | ||||||||
Provision for income taxes | (10,578) | 1,491 | 3,861 | (8,208) | ||||||||
EBITDA | $ | 66,996 | $ | 53,646 | $ | 36,789 | $ | 50,139 | ||||
Add back: | ||||||||||||
Restructuring and transaction costs(1) | 5,822 | 3,143 | 1,491 | 4,170 | ||||||||
Other general income(2) | (10,950) | (10,950) | - | - | ||||||||
Loss on extinguishment of debt(3) | 200 | - | 15,155 | 15,355 | ||||||||
Other (expense) income, net(4) | (2,659) | (1,925) | 881 | 147 | ||||||||
Contingent consideration(5) | (1,427) | (1,427) | - | - | ||||||||
LTIP bonus(6) | - | - | 1,804 | 1,804 | ||||||||
Adjusted EBITDA | $ | 57,982 | $ | 42,487 | $ | 56,120 | $ | 71,615 | ||||
Adjusted EBITDA margin | ||||||||||||
(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. | ||||||||||||
(2) | Reflects the "Other general income" line item on our consolidated statement of operations and includes a gain from a long-lived asset sale as well as earn-out stock payments for the nine months ended September 30, 2020. | ||||||||||||
(3) | Reflects a loss incurred in connection with the August 2021 debt refinance. | ||||||||||||
(4) | Reflects the "Other (expense) income, net" line item on our consolidated statement of operations. For the three and nine months ended September 30, 2021, other (expense) income, net primarily includes losses on foreign currency transactions. For the three and nine months ended September 30, 2020, other (expense) income, net primarily includes gains on foreign exchange transactions and unrealized gains on an investment in equity securities. | ||||||||||||
(5) | Reflects a gain on the settlement of contingent consideration. | ||||||||||||
(6) | Reflects the cost of a cash-based long-term incentive plan awarded to employees that vests over three years. | ||||||||||||
(7) | Reflects Adjusted EBITDA / Net sales for the relevant periods. | ||||||||||||
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SOURCE Cadre Holdings
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