Financial Data and Key Metrics Changes - The company reported Q1 net sales of $130.1 million and adjusted EBITDA of $20.5 million, both exceeding expectations [25] - First quarter gross margin improved by 130 basis points year-over-year, driven by prior year inventory step-up amortization and favorable pricing [26][70] - The company expects full-year revenue and adjusted EBITDA growth of 11% to 11.5% at the midpoints, reflecting the completed acquisition of the engineering division [27] Business Line Data and Key Metrics Changes - Orders backlog increased by $22.4 million during the quarter, primarily driven by EOD and Silume demand [13] - The armor business generated more revenue than expected in Q1, contributing to the overall positive results [72] - The EOD space was noted to be light in Q1, which is not typical for the business, indicating variability in project availability [70] Market Data and Key Metrics Changes - The law enforcement sector is expected to continue seeing positive spending related to personal protection equipment, supported by bipartisan support for public safety [16] - The nuclear market is anticipated to grow at a rate of 4% to 6% over time, with consistent demand observed [62] - The company is monitoring broader weakening trends in the consumer channel, which represents approximately 7% of contract sales [19] Company Strategy and Development Direction - The company aims to evolve into a multi-vertical provider of engineered mission-critical safety products, with a focus on nuclear and law enforcement markets [4][5] - The recent acquisition of the engineering division is seen as a critical step to deepen exposure to the nuclear market and expand into new sub-verticals [5][24] - The company maintains a robust pipeline of M&A opportunities across all current verticals, including nuclear, law enforcement, first responders, and military markets [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's long-term outlook, emphasizing resilience in navigating economic turbulence [7] - The current operating environment is characterized by unpredictability, but the company has delivered consistent and stable growth [6] - Management is optimistic about the potential for organic and inorganic growth opportunities moving forward [7] Other Important Information - The company has increased its dividend by 9% this year, marking the fourteenth consecutive increase, reflecting confidence in business strength [14][15] - The company is actively evaluating attractive M&A opportunities to add complementary businesses with strong margins and recurring revenue profiles [31] Q&A Session Summary Question: Pricing commentary and contribution in Q1 - Management indicated that normal pricing adjustments were made at the start of the year, with expectations to fully offset tariffs moving forward [34][35] Question: Revenue synergy opportunities from the engineering acquisition - The acquisition is expected to enhance geographic expansion and customer relationships, particularly in the nuclear sector [36] Question: Timing and flow of business for the rest of the year - Management expects Q2 to be up from Q1, with Q4 anticipated to be the strongest quarter of the year [40][42] Question: Tariff mitigation strategies - The company is implementing various strategies, including productivity acceleration and product line shifts, to mitigate tariff impacts [44][47] Question: Nuclear market demand and M&A focus - The company has a robust funnel for both nuclear and law enforcement M&A opportunities, with consistent demand observed in the nuclear sector [56][62] Question: Q1 results and year-over-year drop - The year-over-year drop was primarily due to tough comparisons from a strong Q1 last year, particularly in the armor business [68][70] Question: Margin improvements and future opportunities - Management noted that margin improvements were driven by strong execution on pricing and productivity, with expectations for continued improvement [73] Question: Cars acquisition and outlook - The company is taking a practical approach to guidance post-acquisition, maintaining core organic guidance flat while assessing future opportunities [75][77] Question: Production footprint reconsideration - The company is satisfied with its current production footprint and has made adjustments to mitigate costs in specific locations [93][96]

Financial Data and Key Metrics Changes - Q1 net sales reached $130.1 million, with adjusted EBITDA of $20.5 million, both exceeding expectations [23] - Gross margin improved by 130 basis points year-over-year, driven by favorable pricing and prior year inventory step-up amortization [24][70] - The company expects full-year revenue growth of 11% to 11.5% and adjusted EBITDA growth of 11% to 11.5% at the midpoints [26] Business Line Data and Key Metrics Changes - Orders backlog increased by $22.4 million during the quarter, primarily driven by EOD and Silume demand [13] - The armor business generated more revenue than expected in Q1, contributing positively to overall results [72] - EOD space was noted to be light in Q1, with limited bomb suit opportunities impacting revenue [70] Market Data and Key Metrics Changes - The law enforcement market is expected to continue positive spending trends, supported by bipartisan support for public safety [15] - The nuclear market is anticipated to grow at a rate of 4% to 6% over time, with strong demand driven by national security and environmental safety initiatives [62] Company Strategy and Development Direction - The company aims to evolve into a multi-vertical provider of engineered mission-critical safety products, with a focus on nuclear and law enforcement sectors [4][5] - The recent acquisition of the engineering division from KARS is seen as a critical step in expanding the nuclear vertical and enhancing international presence [5][22] - The company maintains a robust M&A pipeline across all current verticals, indicating a strategic focus on both organic and inorganic growth opportunities [6][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's long-term outlook despite current economic uncertainties, highlighting resilience as a key differentiator [7] - The company is proactively strategizing to mitigate potential tariff impacts and is optimistic about offsetting any pressure generated by existing tariffs [28][91] - Management noted that the second half of the year is expected to be stronger than the first half, driven by armor and EOD project timing [29] Other Important Information - The company increased its dividend by 9% this year, marking the fourteenth consecutive increase, reflecting confidence in business strength [14] - The engineering division acquisition is expected to enhance capabilities in remote handling and robotics, positioning the company favorably in the nuclear market [22] Q&A Session Summary Question: Pricing commentary and contribution to the rest of the year - Management indicated that normal pricing adjustments were made at the start of the year, with expectations to fully offset tariffs moving forward [34][35] Question: Revenue synergy opportunities from the engineering acquisition - The acquisition is expected to enhance geographic expansion and customer relationships, particularly in the UK and Japan [36] Question: Timing and flow of business for the rest of the year - Management expects Q2 to be up from Q1, with Q4 anticipated to be the strongest quarter of the year [41] Question: Tariff mitigation strategies - The company is exploring product line shifts and productivity acceleration to mitigate tariff impacts [44][47] Question: Nuclear market demand and M&A focus - The company has a robust M&A funnel for both nuclear and law enforcement sectors, with consistent demand observed in the nuclear market [55][62] Question: Q1 results and year-over-year drop - The year-over-year drop was attributed to tough comparisons from a strong Q1 last year, particularly in the armor business [68][70] Question: Margin improvements and future opportunities - Management noted that margin improvements were driven by strong execution on pricing and productivity, with expectations for continued growth [74] Question: Cars acquisition and outlook - The company is taking a cautious approach to guidance post-acquisition, maintaining core organic guidance flat while assessing future opportunities [76][78] Question: Production footprint reconsideration - Management expressed satisfaction with the current production footprint and ongoing efforts to mitigate costs in specific regions [93][96]

Company Performance - Cadre Holdings, Inc. reported quarterly earnings of $0.23 per share, exceeding the Zacks Consensus Estimate of $0.13 per share, and up from $0.18 per share a year ago, representing an earnings surprise of 76.92% [1] - The company posted revenues of $130.11 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 4.82%, although this is a decline from year-ago revenues of $137.86 million [2] - Over the last four quarters, Cadre Holdings has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Stock Performance - Shares of Cadre Holdings have declined approximately 7.8% since the beginning of the year, compared to a decline of 3.9% for the S&P 500 [3] - The current Zacks Rank for Cadre Holdings is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.32 on revenues of $150.57 million, and for the current fiscal year, it is $1.26 on revenues of $608.07 million [7] - The outlook for the Security and Safety Services industry, to which Cadre Holdings belongs, is currently in the bottom 36% of over 250 Zacks industries, which may impact the stock's performance [8]

Financial Performance - Net sales for Q1 2025 were $130.1 million, compared to $137.9 million in Q1 2024[33] - Gross margin improved to 43.1% in Q1 2025, a 130 bps increase year-over-year[33] - Net income for Q1 2025 was $9.2 million, or $0.23 per diluted share, compared to $6.9 million, or $0.18 per diluted share in Q1 2024[33] - Adjusted EBITDA for Q1 2025 was $20.5 million, with an adjusted EBITDA margin of 15.8%[33] Acquisition and Outlook - Completed the acquisition of Carr's Engineering division in April 2025 for £75 million[28] - Carr's Engineering division contributed £51 million in revenue for FY 2024[28] - The company reaffirms its 2025 guidance, projecting net sales between $618 million and $648 million and adjusted EBITDA between $112 million and $122 million[41] - The 2025 guidance assumes approximately $46 million in net sales and $6.5 million in EBITDA from the acquired Engineering Division[41] Strategic Objectives - The company continues to execute its strategic objectives and capitalize on favorable market trends[14] - The company is focused on M&A opportunities[43]

Financial Performance - Net sales for Q1 2025 were $130.1 million, a decrease of 5.1% compared to $137.9 million in Q1 2024[20] - Gross profit for Q1 2025 was $56.1 million, resulting in a gross margin of 43.2%, slightly down from 41.7% in Q1 2024[20] - Operating income increased to $13.6 million in Q1 2025, up 13.2% from $12.0 million in Q1 2024[20] - Net income for Q1 2025 was $9.2 million, representing a 33.5% increase from $6.9 million in Q1 2024[20] - Basic net income per share rose to $0.23 in Q1 2025, compared to $0.18 in Q1 2024, reflecting a 27.8% increase[20] - The company reported a comprehensive income of $9.1 million for Q1 2025, compared to $7.3 million in Q1 2024[20] - Adjusted EBITDA for the three months ended March 31, 2025, was $20.5 million, down from $24.5 million in the same period of 2024, representing a decrease of 16.3%[144] - Net income increased by $2.3 million, or 33.5%, to $9.2 million for the three months ended March 31, 2025, primarily due to the non-recurrence of acquisition-related costs incurred in 2024[122][130] Assets and Liabilities - Total current assets increased to $332.5 million as of March 31, 2025, up from $327.6 million at the end of 2024[17] - Total liabilities decreased to $338.7 million as of March 31, 2025, down from $341.2 million at the end of 2024[17] - Cash and cash equivalents at the end of Q1 2025 were $133.4 million, an increase from $124.9 million at the end of 2024[23] - As of March 31, 2025, total shareholders' equity increased to $317,562, up from $311,515 on December 31, 2024, reflecting a growth of approximately 1.7%[24] - Outstanding debt as of March 31, 2025, was $220.5 million, a slight decrease from $223.2 million as of December 31, 2024[149] - As of March 31, 2025, total long-term debt, net of unamortized debt discount and issuance costs, was $209,134,000, a slight decrease from $211,830,000 as of December 31, 2024[73] Cash Flow - Net cash provided by operating activities was $17.4 million in Q1 2025, significantly higher than $2.1 million in Q1 2024[23] - Net cash used in investing activities was $1.3 million for the three months ended March 31, 2025, significantly lower than $142.6 million in the same period of 2024, which included acquisitions[171] - The company paid dividends of $3.9 million during the three months ended March 31, 2025[172] Acquisitions and Investments - The company completed the acquisition of ICOR Technology Inc. for a total consideration of $41,508,000, which includes $2,226,000 in contingent consideration[51] - The acquisition of Alpha Safety Intermediate, LLC was completed for a total consideration of $102,531,000, with goodwill recognized at $49,133,000[57] - The Company acquired Carr's Engineering Limited and Carr's Engineering (US), Inc. for approximately $99,750 in April 2025[112] - The Company drew $97,500 of the $115,000 available under the DDTL- A-1 Facility in connection with the acquisition of the Nuclear Engineering Division[114] Segment Performance - Net sales for the Product segment were $112,735 and for the Distribution segment were $27,862 for the three months ended March 31, 2025, totaling $130,106[111] - The Product segment net sales decreased by $6.1 million, or 5.1%, to $112.7 million for the three months ended March 31, 2025, primarily due to decreases in explosive ordnance disposal and armor products[132] - The Distribution segment net sales decreased by $0.3 million, or 1.2%, to $27.9 million for the three months ended March 31, 2025, primarily due to decreased demand for hard goods[132] Expenses and Costs - Cost of goods sold for the Product segment decreased by $5.2 million, or 7.6%, to $62.6 million for the three months ended March 31, 2025[133] - Selling, general and administrative expenses increased by $1.0 million, or 2.5%, for the three months ended March 31, 2025, primarily due to recent acquisitions[134] - Interest expense increased by $0.6 million, or 36.3%, to $2.2 million for the three months ended March 31, 2025, primarily due to debt refinancing[136] Tax and Compliance - The effective tax rate for the three months ended March 31, 2025, was 26.6%, higher than the statutory rate due to state taxes and non-deductible executive compensation[99] - The effective tax rate for the three months ended March 31, 2025, was 26.6%, compared to 22.1% for the same period in 2024[137] - The company follows U.S. GAAP for financial reporting, ensuring compliance with SEC regulations and maintaining transparency in financial statements[26] Market and Risk Factors - A 10% increase or decrease in the value of the Canadian dollar would have caused reported net sales to increase or decrease by approximately $0.9 million for the three months ended March 31, 2025[190] - A 10% increase or decrease in the value of the Mexican peso would have caused reported net income to increase or decrease by approximately $0.5 million for the same period[190] - There have been no material changes in market risk exposures as of March 31, 2025[182] Internal Controls and Governance - The company's disclosure controls and procedures were deemed effective as of March 31, 2025[191] - No changes in internal control over financial reporting occurred during the three months ended March 31, 2025[192]

[First Quarter 2025 Results Overview](index=1&type=section&id=Cadre%20Holdings%20Reports%20First%20Quarter%202025%20Financial%20Results) Cadre Holdings reports strong Q1 2025 results and raises full-year guidance, driven by strategic acquisitions and improved margins [First Quarter 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20Highlights) Cadre reported Q1 2025 net sales of **$130.1 million** and net income of **$9.2 million**, increasing full-year 2025 guidance for net sales to **$618-$648 million** and Adjusted EBITDA to **$112-$122 million** Q1 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Sales | $130.1 million | | Gross Profit Margin | 43.1% | | Net Income | $9.2 million ($0.23 per share) | | Adjusted EBITDA | $20.5 million | | Adjusted EBITDA Margin | 15.8% | | Quarterly Dividend | $0.095 per share | Updated Full Year 2025 Outlook | Metric | Guidance Range | | :--- | :--- | | Net Sales | $618 - $648 million | | Adjusted EBITDA | $112 - $122 million | | Capital Expenditures | $8 - $10 million | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management emphasized strong Q1 gross margin growth and the strategic importance of the Carr's Engineering Division acquisition, highlighting M&A as a key growth driver - Gross margins increased **130 basis points** year-over-year in Q1, demonstrating the team's ability to navigate challenges and drive continuous improvement[2](index=2&type=chunk) - Completed the acquisition of the Engineering Division from Carr's Group to scale the nuclear safety vertical, capitalizing on increasing global demand in energy, defense, and nuclear waste sectors[2](index=2&type=chunk) - M&A remains an essential component of the company's strategy, with an active evaluation of a robust pipeline of potential transactions[2](index=2&type=chunk) [Financial Results](index=1&type=section&id=Financial%20Results) This section details Cadre's first quarter 2025 operating results, segment performance, and liquidity position [First Quarter 2025 Operating Results](index=1&type=section&id=First%20Quarter%202025%20Operating%20Results) Q1 2025 saw net sales decrease to **$130.1 million** due to shipment timing, yet gross profit margin improved to **43.1%** and net income increased to **$9.2 million** Q1 Operating Results Comparison (YoY, in millions) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $130.1 | $137.9 | -5.7% | | Gross Profit | $56.1 | $57.6 | -2.6% | | Gross Profit Margin | 43.1% | 41.8% | +130 bps | | Net Income | $9.2 | $6.9 | +33.3% | | Adjusted EBITDA | $20.5 | $24.5 | -16.3% | | Adjusted EBITDA Margin | 15.8% | 17.8% | -200 bps | - The decrease in net sales was primarily due to the timing of large order shipments for explosive ordnance disposal (EOD) and armor products, partially offset by acquisitions and higher demand for crowd control products[3](index=3&type=chunk) - The increase in net income was primarily a result of lower acquisition-related costs incurred in Q1 2025 compared to Q1 2024[5](index=5&type=chunk)[20](index=20&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) The Product segment's gross profit margin increased to **44.4%** in Q1 2025, while the Distribution segment's margin declined to **21.6%** Segment Gross Profit Margin (Q1 2025 vs Q1 2024) | Segment | Q1 2025 Margin | Q1 2024 Margin | | :--- | :--- | :--- | | Product | 44.4% | 43.0% | | Distribution | 21.6% | 23.5% | [Liquidity, Cash Flows and Capital Allocation](index=2&type=section&id=Liquidity%2C%20Cash%20Flows%20and%20Capital%20Allocation) The company significantly improved its liquidity in Q1 2025, with cash increasing to **$133.4 million** and net cash from operations rising to **$17.4 million** Balance Sheet and Liquidity Changes (Q1 2025, in millions) | Metric | March 31, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $133.4 | $124.9 | +$8.5 | | Total debt | $220.5 | $223.2 | -$2.7 | | Net debt | $87.1 | $98.3 | -$11.2 | - Net cash provided by operating activities significantly increased to **$17.4 million** for the three months ended March 31, 2025, compared to **$2.1 million** for the same period in 2024[21](index=21&type=chunk) - Capital expenditures totaled **$1.4 million** for the first quarter of 2025, remaining relatively flat compared to **$1.3 million** in the prior year period[14](index=14&type=chunk) [Corporate Developments and Outlook](index=2&type=section&id=Corporate%20Developments%20and%20Outlook) This section outlines recent corporate actions, including a key acquisition and dividend declaration, alongside the updated full-year 2025 financial outlook [Acquisition of Carr's Engineering Division](index=2&type=section&id=Acquisition%20of%20Carr%27s%20Engineering%20Division) Cadre completed the acquisition of Carr's Engineering Division for an enterprise value of **£75 million**, expanding its nuclear safety market capabilities with key brands - The acquisition of Carr's Engineering Division was completed on April 22, 2025, for an enterprise value of **£75 million**[9](index=9&type=chunk) - The acquired division includes industry-leading brands such as Wälischmiller GmbH, CarrsMSM, Bendalls Engineering, NW Total Engineered Solutions, and NuVision Engineering, Inc[9](index=9&type=chunk) [Dividend Declaration](index=2&type=section&id=Dividend) The Board declared a quarterly cash dividend of **$0.095 per share**, payable on May 16, 2025 - A quarterly cash dividend of **$0.095 per share** (**$0.38 annualized**) was declared on April 22, 2025[10](index=10&type=chunk) - The dividend is payable on May 16, 2025, to shareholders of record as of May 2, 2025[10](index=10&type=chunk) [Full Year 2025 Outlook](index=2&type=section&id=2025%20Outlook) Cadre raised its full-year 2025 guidance, projecting net sales of **$618-$648 million** and Adjusted EBITDA of **$112-$122 million** Full Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Net Sales | $618M - $648M | | Adjusted EBITDA | $112M - $122M | | Capital Expenditures | $8M - $10M | - The guidance incorporates the estimated impact of the recent acquisition and current tariffs, assuming mitigating actions will help offset potential impacts[11](index=11&type=chunk) - A reconciliation for Adjusted EBITDA guidance to net income guidance is not provided due to the difficulty in forecasting certain expenses and gains[11](index=11&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents the company's condensed consolidated balance sheets, statements of operations, cash flows, and non-GAAP reconciliations [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets reached **$656.3 million** and total shareholders' equity increased to **$317.6 million** Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $332,515 | $327,571 | | **Total assets** | **$656,293** | **$652,713** | | Total current liabilities | $93,666 | $94,125 | | **Total liabilities** | **$338,731** | **$341,198** | | **Total shareholders' equity** | **$317,562** | **$311,515** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q1 2025 net sales were **$130.1 million**, with net income increasing to **$9.2 million** or **$0.23 per diluted share** Consolidated Statement of Operations Summary (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net sales | $130,106 | $137,860 | | Gross profit | $56,131 | $57,628 | | Operating income | $13,552 | $11,979 | | **Net income** | **$9,248** | **$6,928** | | Diluted EPS | $0.23 | $0.18 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash provided by operating activities significantly increased to **$17.4 million** in Q1 2025, contributing to an **$8.5 million** rise in cash and cash equivalents Consolidated Statement of Cash Flows Summary (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $17,391 | $2,137 | | Net cash used in investing activities | ($1,309) | ($142,636) | | Net cash (used in) provided by financing activities | ($7,812) | $139,786 | | **Change in cash and cash equivalents** | **$8,498** | **($639)** | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=8&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20NON-GAAP%20FINANCIAL%20MEASURES) Net income of **$9.2 million** for Q1 2025 was reconciled to Adjusted EBITDA of **$20.5 million** through various adjustments Reconciliation of Net Income to Adjusted EBITDA (Q1 2025, in thousands) | Line Item | Q1 2025 | | :--- | :--- | | Net income | $9,248 | | Depreciation and amortization | $3,856 | | Interest expense | $2,231 | | Provision for income taxes | $3,360 | | **EBITDA** | **$18,695** | | Restructuring and transaction costs | $698 | | Other expense (income), net | ($1,287) | | Stock-based compensation expense | $1,968 | | Other adjustments | $454 | | **Adjusted EBITDA** | **$20,497** | [Supplementary Information](index=2&type=section&id=Supplementary%20Information) This section provides details on the upcoming conference call, the company's use of non-GAAP measures, and forward-looking statements [Conference Call Information](index=2&type=section&id=Conference%20Call) A conference call to discuss financial results is scheduled for May 7, 2025, with a replay available until May 21, 2025 - A conference call to discuss results is scheduled for Wednesday, May 7, 2025, at 10:00 a.m. EST[12](index=12&type=chunk) - A replay of the call will be available through May 21, 2025[13](index=13&type=chunk) [Use of Non-GAAP Measures](index=3&type=section&id=Use%20of%20Non-GAAP%20Measures) The company utilizes non-GAAP measures such as EBITDA and Adjusted EBITDA to enhance understanding of its operational performance - The company uses non-GAAP measures such as EBITDA, adjusted EBITDA, and adjusted EBITDA margin to provide useful information for understanding ongoing operations and performance[16](index=16&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section includes forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ materially - The press release contains forward-looking statements that are based on current expectations and are not guarantees of future performance[17](index=17&type=chunk)

Cadre (CDRE) Q4 2024 Earnings Call March 12, 2025 07:47 PM ET Company Participants Matthew Berkowitz - Managing DirectorWarren Kanders - Chairman and CEOBrad Williams - PresidentBlaine Browers - CFOSheila Kahyaoglu - Managing Director Conference Call Participants Larry Solow - Partner & Managing director - Equity AnalystJeff Van Sinderen - Senior AnalystMatthew Koranda - MD & Senior Research AnalystMark Smith - Senior Research Analyst Operator Good morning, and welcome to Cadre Holdings Fourth Quarter of tw ...

Financial Data and Key Metrics Changes - The company reported record quarterly revenue, gross margin, adjusted EBITDA, and adjusted EBITDA margin in Q4 2024, with full-year revenue growing by 18% and adjusted EBITDA by 22%, resulting in a year-over-year adjusted EBITDA margin improvement of 70 basis points [7][36][40] - Q4 net sales reached $176 million, net income was $13 million, and adjusted EBITDA was $38.5 million, all-time records for the company [36] Business Line Data and Key Metrics Changes - The company experienced a positive mix in Q4, driven by higher Duty Gear volume, with the orders backlog ending flat compared to the prior year [17] - The acquisition of the Engineering Division from Carr's Group is expected to add scale to the nuclear vertical and expand the addressable market [10][18] Market Data and Key Metrics Changes - The law enforcement market segment continues to show stable growth, with police protection expenditures trending upward [21] - The nuclear safety market is supported by long-term contracts and recurring purchase orders, with significant growth drivers identified in environmental safety, national security, and commercial nuclear energy [22] Company Strategy and Development Direction - The company is focused on mergers and acquisitions as a key strategy, with a robust pipeline of targets in both nuclear and law enforcement sectors [11][35] - The company aims to leverage its strong balance sheet and financial flexibility to pursue organic and inorganic growth opportunities [12][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate uncertainties in 2025, emphasizing the resilience of its business model and the importance of public safety spending [13][14] - The company anticipates that revenue and adjusted EBITDA will be stronger in the second half of 2025, driven by project timing in EOD, Duty Gear, and Armor [43] Other Important Information - The company raised its quarterly dividend to $0.38 per share, reflecting confidence in its fundamentals [20] - The guidance for 2025 includes net sales expectations between $572 million and $601 million, with adjusted EBITDA guidance of $105 million to $115 million [39] Q&A Session Summary Question: Guidance and Government Spending Impact - Management indicated that the high end of the guidance reflects a 5% organic growth, with no significant long-term reduction in demand anticipated despite government spending uncertainties [50][52] Question: Tariff Impact and Mitigation - The company expects tariffs to impact revenue by $18 million to $22 million annually, primarily from Mexico and Canada, and is actively working on mitigation strategies [41][101] Question: Pricing Strategy - The pricing strategy for 2025 is expected to remain stable, with organic pricing projected around 1.5% to 2% across the portfolio [78] Question: European Defense Market - The company sees growth opportunities in the European defense market, particularly in EOD products related to cleanup activities in conflict zones [88] Question: Q1 Performance Drivers - Q1 is expected to be lighter in revenue due to project timing and a comparison to a record Q1 in the previous year, with typical seasonal trends affecting the Armor business [97][98] Question: Law Enforcement Hiring Trends - Management noted stable hiring trends in law enforcement, with potential long-term tailwinds as economic conditions change [116] Question: Exposure to Federal Agencies - The company has exposure to federal law enforcement agencies but has not seen significant impacts from recent government changes, maintaining optimism for long-term demand [124][126]

FOURTH QUARTER 2024 FORWARD-LOOKING STATEMENTS Please note that in this presentation 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 numb ...

Financial Performance - The company reported a net income of $6.1 million for the year ended December 31, 2024, compared to a net loss of $16.1 million in 2023, indicating a turnaround in profitability[326]. - Net income for 2024 was $36,133, a decrease of 6.5% compared to $38,641 in 2023[328]. - Basic earnings per share for 2024 was $0.90, down from $1.03 in 2023, while diluted earnings per share also decreased to $0.90 from $1.02[395]. - The total provision for income taxes for 2024 was $18.1 million, up from $14.3 million in 2023, indicating a year-over-year increase of 26.5%[484]. - The effective tax rate for 2024 was 33.4%, significantly higher than 27.0% in 2023, primarily due to changes in state income taxes and permanent items[484]. Revenue and Sales - Net sales for 2024 reached $567,561, an increase of 17.6% compared to $482,532 in 2023[328]. - Total net sales for the year ended December 31, 2024, reached $567,561, an increase of 17.7% compared to $482,532 in 2023[413]. - Gross profit for 2024 was $233,481, reflecting a gross margin of 41.1%, up from $200,726 in 2023[328]. - The gross profit for 2024 was $233.5 million, compared to $200.7 million in 2023, reflecting a gross margin improvement from 41.6% to 41.1%[502]. Assets and Liabilities - As of December 31, 2024, the company reported total assets of $652.7 million, an increase from $431.2 million in 2023, representing a growth of approximately 51.3%[326]. - Long-term debt increased significantly to $211.8 million in 2024 from $127.8 million in 2023, which is an increase of 65.7%[326]. - The company’s total shareholders' equity increased to $311.5 million in 2024 from $197.2 million in 2023, reflecting a growth of 57.8%[326]. - The company reported a significant increase in intangible assets, which rose to $107.5 million in 2024 from $43.5 million in 2023, representing a growth of 147.5%[326]. - The company's total long-term debt increased to $211,830 as of December 31, 2024, compared to $127,812 in 2023, reflecting a significant rise of 65.6%[428]. Cash Flow and Investments - Cash flows from operating activities were $31,777 in 2024, down from $73,209 in 2023[332]. - The company reported a net cash used in investing activities of $147,426 in 2024, significantly higher than $6,520 in 2023, primarily due to business acquisitions[332]. - Cash and cash equivalents increased to $124.9 million in 2024 from $87.7 million in 2023, reflecting a growth of 42.5%[326]. - Cash and cash equivalents at the end of 2024 totaled $124,933, an increase from $87,691 at the end of 2023[332]. Acquisitions - The company completed the acquisition of ICOR Technology Inc. for total consideration of $41,508, which included $40,350 in cash paid[403]. - The acquisition of Alpha Safety Intermediate, LLC was completed for total consideration of $102,531, with cash paid amounting to $107,138[409]. - The Company entered into a share purchase agreement to acquire Carr's Engineering Limited and Carr's Engineering, Inc. for approximately $91.5 million[503]. - The acquisition targets provide engineering solutions, including manufacturing and technical services[503]. Debt and Financing - The company has $225.0 million in outstanding floating rate debt, with an interest rate of 4.38% plus 1.75% as of December 31, 2024[310]. - The Company entered into an Incremental Facility Amendment to the 2021 Credit Agreement for an incremental term loan of $80,000 to fund the acquisition of Alpha Safety on March 1, 2024[432]. - The term loan outstanding principal balance was $225,000, with an interest rate of 6.13%[443]. - The Company recorded a loss on debt modification of $139 for the year ended December 31, 2024, in connection with the refinancing[440]. Shareholder Information - The company declared dividends of $0.0875 per share in 2024, totaling $13.948 million, compared to $12.006 million in 2023, representing an increase of approximately 16.2%[334]. - The Company completed a secondary offering on March 19, 2024, issuing 2,200,000 shares at $35.00 per share, resulting in net proceeds of $72,813 after expenses[460]. Research and Development - Total research and development costs for the year ended December 31, 2024, were $8,380 million, compared to $6,954 million in 2023 and $7,086 million in 2022, indicating a year-over-year increase of approximately 20.4% from 2023 to 2024[379]. Operational Metrics - The company operates 20 manufacturing plants across multiple countries, including the U.S., Mexico, Canada, the UK, Italy, France, and Lithuania, enhancing its global distribution capabilities[337]. - The Company established a warranty reserve at the time of sale to cover estimated costs based on historical warranty repairs and replacements[372]. - The ending accrued warranty expense increased to $1,760 million in 2024 from $1,610 million in 2023, reflecting a rise of approximately 9.3%[373].