Cadre Holdings Reports Fourth Quarter and Full Year 2023 Financial Results
Achieved Annual
Generated Record Annual Adjusted EBITDA and Adjusted EBITDA Margin
Expects Full Year 2024 Net Sales of
-
Net sales of
$124.6 million for the fourth quarter; net sales of$482.5 million for the year endedDecember 31, 2023 -
Gross profit margin of 39.9% for the fourth quarter; gross profit margin of 41.6% for the year ended
December 31, 2023 -
Net income of
$9.6 million , or$0.25 per diluted share, for the fourth quarter; net income of$38.6 million , or$1.02 per diluted share, for the year endedDecember 31, 2023 -
Adjusted EBITDA of
$20.7 million for the fourth quarter; Adjusted EBITDA of$85.8 million for year endedDecember 31, 2023 -
Adjusted EBITDA margin of 16.6% for the fourth quarter; Adjusted EBITDA margin of 17.8% for the year ended
December 31, 2023 -
Declared quarterly cash dividend of
$0.0875 per share inJanuary 2024 . On an annualized basis, this dividend represents an increase of$0.03 per share, or 9.4% per share, over the previous annualized dividend of$0.32 per share.
“2023 was a record year, reflective of Cadre’s outstanding strategic execution and the strong and recurring demand for our best-in-class, mission-critical safety equipment,” said
Fourth Quarter and Year Ended 2023 Operating Results
For the quarter ended
For the year ended
For the quarter ended
Gross profit margin was 39.9% for the quarter ended
Gross profit margin was 41.6% for the year ended
Net income was
Net income was
Cadre generated
Cadre generated
Product segment gross profit margin was 40.7% for the fourth quarter and 43.1% for the year ended
Distribution segment gross profit margin was 23.9% for the fourth quarter and 23.5% for the year ended
Liquidity, Cash Flows and Capital Allocation
-
Cash and cash equivalents increased by
$42.4 million from$45.3 million as ofDecember 31, 2022 to$87.7 million as ofDecember 31, 2023 . -
Total debt decreased by
$9.6 million from$149.7 million as ofDecember 31, 2022 , to$140.1 million as ofDecember 31, 2023 . -
Net debt (total debt net of cash and cash equivalents) decreased by
$52.0 million from$104.4 million as ofDecember 31, 2022 , to$52.4 million as ofDecember 31, 2023 . -
Capital expenditures totaled
$2.7 million for the fourth quarter and$7.0 million for the year endedDecember 31, 2023 , compared with$1.5 million for the fourth quarter and$4.7 million for the year endedDecember 31, 2022 .
Dividend
On
Acquisition of ICOR Technology
On
Acquisition of Alpha Safety
On
2024 Outlook
For the full year 2024, Cadre expects to generate net sales in the range of
Conference Call
Cadre management will host a conference call on
A replay of the call will be available through
About Cadre
Headquartered in
Use of Non-GAAP Measures
The Company reports its financial results in accordance with
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, the availability of capital to satisfy our working capital requirements; anticipated trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs or develop new or enhanced products to meet those needs; our expectations regarding market acceptance of our products; the success of competing products by others that are or become available in the market in which we sell our products; the impact of adverse publicity about the Company and/or its brands, including without limitation, through social media or in connection with brand damaging events and/or public perception; changes in political, social, economic or regulatory conditions generally and in the markets in which we operate; our ability to maintain or broaden our business relationships and develop new relationships with strategic alliances, suppliers, customers, distributors or otherwise; our ability to retain and attract senior management and other key employees; our ability to quickly and effectively respond to new technological developments; the effect of an outbreak of disease or similar public health threat, such as the COVID-19 pandemic, on the Company’s business; the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; the ability of our information technology systems or information security systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes; our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our transitioning to upgraded or replacement systems; our ability to protect our trade secrets or other proprietary rights and operate without infringing upon the proprietary rights of others and prevent others from infringing on the proprietary rights of the Company; our ability to maintain a quarterly dividend; logistical challenges related to supply chain disruptions and delays; the impact of inflation; the increased expenses associated with being a public company; and the related increased disclosure and reporting obligations; our ability to integrate the operations of the businesses we have acquired, including, without limitation,
CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share amounts) |
||||||||
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||||||
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2023 |
|
2022 |
||||
Assets |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
87,691 |
|
|
$ |
45,286 |
|
Accounts receivable, net |
|
|
58,360 |
|
|
|
64,557 |
|
Inventories |
|
|
80,976 |
|
|
|
70,273 |
|
Prepaid expenses |
|
|
11,930 |
|
|
|
10,091 |
|
Other current assets |
|
|
6,886 |
|
|
|
6,811 |
|
Total current assets |
|
|
245,843 |
|
|
|
197,018 |
|
Property and equipment, net |
|
|
44,647 |
|
|
|
45,285 |
|
Operating lease assets |
|
|
6,554 |
|
|
|
8,489 |
|
Deferred tax assets, net |
|
|
4,004 |
|
|
|
2,255 |
|
Intangible assets, net |
|
|
43,472 |
|
|
|
50,695 |
|
|
|
|
81,667 |
|
|
|
81,576 |
|
Other assets |
|
|
4,992 |
|
|
|
6,634 |
|
Total assets |
|
$ |
431,179 |
|
|
$ |
391,952 |
|
|
|
|
|
|
|
|
||
Liabilities, Mezzanine Equity and Shareholders' Equity |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
28,418 |
|
|
$ |
23,406 |
|
Accrued liabilities |
|
|
44,524 |
|
|
|
38,720 |
|
Income tax payable |
|
|
9,944 |
|
|
|
4,584 |
|
Current portion of long-term debt |
|
|
12,320 |
|
|
|
12,211 |
|
Total current liabilities |
|
|
95,206 |
|
|
|
78,921 |
|
Long-term debt |
|
|
127,812 |
|
|
|
137,476 |
|
Long-term operating lease liabilities |
|
|
3,186 |
|
|
|
4,965 |
|
Deferred tax liabilities |
|
|
4,843 |
|
|
|
3,508 |
|
Other liabilities |
|
|
2,970 |
|
|
|
1,192 |
|
Total liabilities |
|
|
234,017 |
|
|
|
226,062 |
|
|
|
|
|
|
|
|
||
Mezzanine equity |
|
|
|
|
|
|
||
Preferred stock ( |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
||
Shareholders' equity |
|
|
|
|
|
|
||
Common stock ( |
|
|
4 |
|
|
|
4 |
|
Additional paid-in capital |
|
|
212,630 |
|
|
|
206,540 |
|
Accumulated other comprehensive income |
|
|
634 |
|
|
|
2,087 |
|
Accumulated deficit |
|
|
(16,106 |
) |
|
|
(42,741 |
) |
Total shareholders’ equity |
|
|
197,162 |
|
|
|
165,890 |
|
Total liabilities, mezzanine equity and shareholders' equity |
|
$ |
431,179 |
|
|
$ |
391,952 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share amounts) |
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Three Months Ended |
|
Year Ended |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net sales |
|
$ |
124,583 |
|
|
$ |
123,645 |
|
|
$ |
482,532 |
|
|
$ |
457,837 |
|
Cost of goods sold |
|
|
74,825 |
|
|
|
75,117 |
|
|
|
281,806 |
|
|
|
282,159 |
|
Gross profit |
|
|
49,758 |
|
|
|
48,528 |
|
|
|
200,726 |
|
|
|
175,678 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
34,904 |
|
|
|
34,698 |
|
|
|
140,519 |
|
|
|
153,129 |
|
Restructuring and transaction costs |
|
|
1,060 |
|
|
|
975 |
|
|
|
2,192 |
|
|
|
4,355 |
|
Related party expense |
|
|
1,117 |
|
|
|
132 |
|
|
|
1,496 |
|
|
|
1,478 |
|
Total operating expenses |
|
|
37,081 |
|
|
|
35,805 |
|
|
|
144,207 |
|
|
|
158,962 |
|
Operating income |
|
|
12,677 |
|
|
|
12,723 |
|
|
|
56,519 |
|
|
|
16,716 |
|
Other expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
(804 |
) |
|
|
(1,710 |
) |
|
|
(4,531 |
) |
|
|
(6,206 |
) |
Other income (expense), net |
|
|
541 |
|
|
|
1,675 |
|
|
|
936 |
|
|
|
(1,137 |
) |
Total other expense, net |
|
|
(263 |
) |
|
|
(35 |
) |
|
|
(3,595 |
) |
|
|
(7,343 |
) |
Income before provision for income taxes |
|
|
12,414 |
|
|
|
12,688 |
|
|
|
52,924 |
|
|
|
9,373 |
|
Provision for income taxes |
|
|
(2,820 |
) |
|
|
(6,089 |
) |
|
|
(14,283 |
) |
|
|
(3,553 |
) |
Net income |
|
$ |
9,594 |
|
|
$ |
6,599 |
|
|
$ |
38,641 |
|
|
$ |
5,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income per share: |
|
|
|
|
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|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.26 |
|
|
$ |
0.18 |
|
|
$ |
1.03 |
|
|
$ |
0.16 |
|
Diluted |
|
$ |
0.25 |
|
|
$ |
0.17 |
|
|
$ |
1.02 |
|
|
$ |
0.16 |
|
Weighted average shares outstanding: |
|
|
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|
|
|
||||
Basic |
|
|
37,586,756 |
|
|
|
37,332,271 |
|
|
|
37,533,818 |
|
|
|
36,109,844 |
|
Diluted |
|
|
38,125,787 |
|
|
|
37,887,600 |
|
|
|
37,920,488 |
|
|
|
36,122,374 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) |
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Year Ended |
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|
|
2023 |
|
2022 |
|
2021 |
||||||
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
38,641 |
|
|
$ |
5,820 |
|
|
$ |
12,661 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
15,737 |
|
|
|
15,651 |
|
|
|
13,718 |
|
Amortization of original issue discount and debt issue costs |
|
|
479 |
|
|
|
740 |
|
|
|
3,193 |
|
Amortization of inventory step-up |
|
|
— |
|
|
|
4,255 |
|
|
|
— |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
15,155 |
|
Deferred income taxes |
|
|
(210 |
) |
|
|
(1,087 |
) |
|
|
4,772 |
|
Stock-based compensation |
|
|
9,368 |
|
|
|
31,858 |
|
|
|
355 |
|
Provision for (recoveries from) losses on accounts receivable |
|
|
66 |
|
|
|
417 |
|
|
|
(188 |
) |
Foreign exchange (gain) loss |
|
|
(602 |
) |
|
|
1,517 |
|
|
|
102 |
|
Other |
|
|
(381 |
) |
|
|
(170 |
) |
|
|
— |
|
Changes in operating assets and liabilities, net of impact of acquisitions: |
|
|
|
|
|
|
|
|
|
|||
Accounts receivable |
|
|
6,602 |
|
|
|
(11,536 |
) |
|
|
(4,641 |
) |
Inventories |
|
|
(10,223 |
) |
|
|
1,162 |
|
|
|
(3,189 |
) |
Prepaid expenses and other assets |
|
|
(302 |
) |
|
|
(7,711 |
) |
|
|
(4,564 |
) |
Accounts payable and other liabilities |
|
|
14,034 |
|
|
|
5,493 |
|
|
|
2,720 |
|
Net cash provided by operating activities |
|
|
73,209 |
|
|
|
46,409 |
|
|
|
40,094 |
|
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
|
|||
Purchase of property and equipment |
|
|
(6,727 |
) |
|
|
(4,494 |
) |
|
|
(2,832 |
) |
Proceeds from disposition of property and equipment |
|
|
207 |
|
|
|
411 |
|
|
|
— |
|
Business acquisitions, net of cash acquired |
|
|
— |
|
|
|
(55,543 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(6,520 |
) |
|
|
(59,626 |
) |
|
|
(2,832 |
) |
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
|
|||
Proceeds from revolving credit facilities |
|
|
— |
|
|
|
43,000 |
|
|
|
257,980 |
|
Principal payments on revolving credit facilities |
|
|
— |
|
|
|
(43,000 |
) |
|
|
(258,612 |
) |
Proceeds from term loans |
|
|
— |
|
|
|
— |
|
|
|
198,716 |
|
Principal payments on term loans |
|
|
(10,000 |
) |
|
|
(10,116 |
) |
|
|
(266,000 |
) |
Proceeds from insurance premium financing |
|
|
3,949 |
|
|
|
3,989 |
|
|
|
5,010 |
|
Principal payments on insurance premium financing |
|
|
(3,973 |
) |
|
|
(4,952 |
) |
|
|
(3,061 |
) |
Payments for debt issuance costs |
|
|
— |
|
|
|
— |
|
|
|
(2,198 |
) |
Payments on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
(4,217 |
) |
Taxes paid in connection with employee stock transactions |
|
|
(2,725 |
) |
|
|
(6,300 |
) |
|
|
— |
|
Proceeds from initial public offering, net of underwriter discounts |
|
|
— |
|
|
|
— |
|
|
|
83,421 |
|
Proceeds from secondary offering, net of underwriter discounts |
|
|
— |
|
|
|
56,329 |
|
|
|
— |
|
Deferred offering costs |
|
|
— |
|
|
|
(2,953 |
) |
|
|
(4,841 |
) |
Dividends distributed |
|
|
(12,006 |
) |
|
|
(11,509 |
) |
|
|
(12,751 |
) |
Other |
|
|
33 |
|
|
|
(25 |
) |
|
|
(43 |
) |
Net cash (used in) provided by financing activities |
|
|
(24,722 |
) |
|
|
24,463 |
|
|
|
(6,596 |
) |
Effect of foreign exchange rates on cash and cash equivalents |
|
|
438 |
|
|
|
183 |
|
|
|
318 |
|
Change in cash and cash equivalents |
|
|
42,405 |
|
|
|
11,429 |
|
|
|
30,984 |
|
Cash and cash equivalents, beginning of period |
|
|
45,286 |
|
|
|
33,857 |
|
|
|
2,873 |
|
Cash and cash equivalents, end of period |
|
$ |
87,691 |
|
|
$ |
45,286 |
|
|
$ |
33,857 |
|
Supplemental Disclosure of Cash Flows Information: |
|
|
|
|
|
|
|
|
|
|||
Cash paid for income taxes, net |
|
$ |
8,729 |
|
|
$ |
1,395 |
|
|
$ |
1,158 |
|
Cash paid for interest |
|
$ |
10,090 |
|
|
$ |
6,109 |
|
|
$ |
13,336 |
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|
|
|
|
|||
Accruals and accounts payable for capital expenditures |
|
$ |
234 |
|
|
$ |
172 |
|
|
$ |
197 |
|
SEGMENT INFORMATION (Unaudited) (In thousands) |
|||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|||||||||||
|
|
|
|
|
|
|
|
Reconciling |
|
|
|
||
|
|
Product |
|
Distribution |
|
Items(1) |
|
Total |
|||||
Net sales |
|
$ |
105,768 |
|
$ |
27,777 |
|
$ |
(8,962 |
) |
|
$ |
124,583 |
Cost of goods sold |
|
|
62,733 |
|
|
21,135 |
|
|
(9,043 |
) |
|
|
74,825 |
Gross profit |
|
$ |
43,035 |
|
$ |
6,642 |
|
$ |
81 |
|
|
$ |
49,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|||||||||||
|
|
|
|
|
|
|
|
Reconciling |
|
|
|
||
|
|
Product |
|
Distribution |
|
Items(1) |
|
Total |
|||||
Net sales |
|
$ |
107,482 |
|
$ |
23,270 |
|
$ |
(7,107 |
) |
|
$ |
123,645 |
Cost of goods sold |
|
|
64,053 |
|
|
18,196 |
|
|
(7,132 |
) |
|
|
75,117 |
Gross profit |
|
$ |
43,429 |
|
$ |
5,074 |
|
$ |
25 |
|
|
$ |
48,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|||||||||||
|
|
|
|
|
|
|
|
Reconciling |
|
|
|
||
|
|
Product |
|
Distribution |
|
Items(1) |
|
Total |
|||||
Net sales |
|
$ |
410,825 |
|
$ |
102,371 |
|
$ |
(30,664 |
) |
|
$ |
482,532 |
Cost of goods sold |
|
|
233,937 |
|
$ |
78,335 |
|
$ |
(30,466 |
) |
|
|
281,806 |
Gross profit |
|
$ |
176,888 |
|
$ |
24,036 |
|
$ |
(198 |
) |
|
$ |
200,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|||||||||||
|
|
|
|
|
|
|
|
Reconciling |
|
|
|
||
|
|
Product |
|
Distribution |
|
Items(1) |
|
Total |
|||||
Net sales |
|
$ |
385,423 |
|
$ |
97,106 |
|
$ |
(24,692 |
) |
|
$ |
457,837 |
Cost of goods sold |
|
|
230,245 |
|
|
76,633 |
|
|
(24,719 |
) |
|
|
282,159 |
Gross profit |
|
$ |
155,178 |
|
$ |
20,473 |
|
$ |
27 |
|
|
$ |
175,678 |
_______________________ | |
(1) |
Reconciling items consist primarily of intercompany eliminations and items not directly attributable to operating segments. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
Year Ended |
|
||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
||||
Net income |
|
$ |
9,594 |
|
|
$ |
6,599 |
|
|
$ |
38,641 |
|
|
$ |
5,820 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
3,352 |
|
|
|
4,332 |
|
|
|
15,737 |
|
|
|
15,651 |
|
|
Interest expense |
|
|
804 |
|
|
|
1,710 |
|
|
|
4,531 |
|
|
|
6,206 |
|
|
Provision for income taxes |
|
|
2,820 |
|
|
|
6,089 |
|
|
|
14,283 |
|
|
|
3,553 |
|
|
EBITDA |
|
$ |
16,570 |
|
|
$ |
18,730 |
|
|
$ |
73,192 |
|
|
$ |
31,230 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring and transaction costs(1) |
|
|
2,060 |
|
|
|
975 |
|
|
|
3,192 |
|
|
|
5,355 |
|
|
Other general income(2) |
|
|
(92 |
) |
|
|
(159 |
) |
|
|
(92 |
) |
|
|
(159 |
) |
|
Other (income) expense, net(3) |
|
|
(541 |
) |
|
|
(1,675 |
) |
|
|
(936 |
) |
|
|
1,137 |
|
|
Stock-based compensation expense(4) |
|
|
2,308 |
|
|
|
2,878 |
|
|
|
9,368 |
|
|
|
32,239 |
|
|
Stock-based compensation payroll tax expense(5) |
|
|
14 |
|
|
|
— |
|
|
|
234 |
|
|
|
305 |
|
|
LTIP bonus(6) |
|
|
371 |
|
|
|
436 |
|
|
|
860 |
|
|
|
1,369 |
|
|
Amortization of inventory step-up(7) |
|
|
— |
|
|
|
1,200 |
|
|
|
— |
|
|
|
4,255 |
|
|
Adjusted EBITDA |
|
$ |
20,690 |
|
|
$ |
22,385 |
|
|
$ |
85,818 |
|
|
$ |
75,731 |
|
|
Adjusted EBITDA margin(8) |
|
|
16.6 |
% |
|
18.1 |
% |
|
17.8 |
% |
|
16.5 |
% |
_______________________ | |
(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 |
(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 Adjusted EBITDA / Net sales for the relevant periods. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240305028123/en/
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