PART I FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for the three months ended March 31, 2022, with comparative data for 2021 Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$320,998** | **$311,796** | | Total Current Assets | $143,657 | $159,981 | | Goodwill | $72,510 | $66,262 | | **Total Liabilities** | **$225,053** | **$223,156** | | Total Current Liabilities | $75,899 | $74,621 | | Long-term Debt | $144,661 | $146,516 | | **Total Shareholders' Equity** | **$95,945** | **$88,640** | Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Sales | $104,406 | $110,536 | | Gross Profit | $40,189 | $43,959 | | Operating (Loss) Income | $(14,482) | $15,434 | | Net (Loss) Income | $(10,165) | $6,864 | | Diluted (Loss) Income Per Share | $(0.30) | $0.25 | Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,916 | $16,832 | | Net cash used in investing activities | $(20,737) | $(788) | | Net cash used in financing activities | $(12,957) | $(1,490) | | Change in cash and cash equivalents | $(23,980) | $14,567 | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations for items in the financial statements, covering significant accounting policies, the acquisition of Radar, revenue disaggregation, debt structure, compensation plans, segment performance, and subsequent events - On January 11, 2022, the Company acquired Radar Leather Division S.r.l. for **$19.8 million**, net of cash acquired, with the acquisition expected to be accretive[63](index=63&type=chunk)[64](index=64&type=chunk) Net Sales by Channel (in thousands) | Channel | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | U.S. state and local agencies | $57,923 | $59,377 | | Commercial | $11,034 | $11,842 | | U.S. federal agencies | $7,914 | $15,593 | | International | $27,019 | $21,994 | | **Total Net Sales** | **$104,406** | **$110,536** | - As of March 31, 2022, total debt was **$156.6 million**, including a **$200 million** Term Loan and a **$100 million** Revolving Loan facility, both maturing in July 2026[80](index=80&type=chunk)[82](index=82&type=chunk) - A modification to the executive compensation plan on March 9, 2022, resulted in the recognition of **$23.0 million** in compensation expense during the first quarter[117](index=117&type=chunk) - In May 2022, subsequent to the quarter end, the Company acquired Cyalume Technologies for approximately **$35.0 million**, funded by a draw on its Revolving Loan facility[124](index=124&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides an analysis of the financial results for Q1 2022 compared to Q1 2021, covering business overview, acquisitions, key metrics, operational results by segment, liquidity, and critical accounting policies [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Net sales for Q1 2022 decreased by 5.5% to $104.4 million from $110.5 million in Q1 2021, primarily due to a large prior-year federal shipment and increased stock-based compensation expense - Product segment net sales decreased by **$8.4 million (9.0%)** YoY, mainly due to a large US Federal shipment in the prior year and lower demand for less lethal products compared to Q1 2021[150](index=150&type=chunk) - Selling, general and administrative (SG&A) expenses increased by **$25.9 million (92.3%)** YoY, primarily due to **$23.7 million** in stock-based compensation expense[152](index=152&type=chunk) - Interest expense decreased by **$3.6 million (70.5%)** YoY due to debt refinancing at a lower interest rate and debt repayments[155](index=155&type=chunk) [Key Performance Metrics](index=34&type=section&id=KEY%20PERFORMANCE%20METRICS) The company monitors its order backlog as a forward-looking indicator of potential sales, which increased as of March 31, 2022 Orders Backlog (in thousands) | Date | Orders Backlog | | :--- | :--- | | March 31, 2022 | $117,146 | | December 31, 2021 | $113,840 | - The order backlog increased by **$3.3 million** from Q4 2021 to Q1 2022, driven by higher demand for soft armor and duty gear, partially offset by shipments of large contractual orders[143](index=143&type=chunk) [Non-GAAP Measures](index=38&type=section&id=NON-GAAP%20MEASURES) The company uses non-GAAP measures such as EBITDA and Adjusted EBITDA to supplement its GAAP results, with Adjusted EBITDA decreasing to $14.2 million in Q1 2022 Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net (loss) income | $(10,165) | $6,864 | | EBITDA | $(11,143) | $18,929 | | Stock-based compensation expense | $23,723 | $— | | **Adjusted EBITDA** | **$14,219** | **$20,246** | | Adjusted EBITDA conversion rate | 92% | 96% | - Adjusted EBITDA decreased by **$6.0 million** in Q1 2022 compared to Q1 2021, primarily due to the decrease in net sales and unfavorable product portfolio mix, partially offset by favorable pricing[169](index=169&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's primary liquidity sources are cash from operations, cash on hand, and its revolving credit facility, with $8.9 million in net cash from operations in Q1 2022 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,916 | $16,832 | | Net cash used in investing activities | $(20,737) | $(788) | | Net cash used in financing activities | $(12,957) | $(1,490) | - As of March 31, 2022, the company had **$156.4 million** in outstanding debt, primarily related to its term loan facilities[174](index=174&type=chunk) - As of March 31, 2022, there were no amounts outstanding under the Revolving Loan, with **$96.9 million** of availability, and subsequently **$35.0 million** was drawn in May 2022 to fund the Cyalume acquisition[176](index=176&type=chunk)[181](index=181&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that as a smaller reporting company, it is not required to provide the information for this item - As a smaller reporting company, Cadre is not required to provide quantitative and qualitative disclosures about market risk[206](index=206&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[207](index=207&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[208](index=208&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 7 of the financial statements, detailing ongoing legal matters including a DOJ investigation and a personal injury lawsuit - The company is subject to a Department of Justice (DOJ) False Claims Act investigation regarding allegations that soft body armor accessory panels were falsely labeled as compliant with National Institute of Justice standards[100](index=100&type=chunk) - A subsidiary, Safariland, LLC, received a **$7.5 million** jury verdict in a personal injury case, which the company is appealing and believes any potential losses would be covered by insurance[102](index=102&type=chunk) [Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to its risk factors from its last Annual Report on Form 10-K, except for no longer being a "controlled company" under NYSE rules - The company is no longer a "controlled company" under NYSE rules as CEO Warren B. Kanders no longer beneficially owns a majority of the outstanding common stock following equity issuances for employee compensation[215](index=215&type=chunk) - Due to the change in status, the company must meet certain NYSE corporate governance requirements, such as having a majority-independent board, within specified transition periods[215](index=215&type=chunk) [Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the 10-Q report, including the Stock Purchase Agreement for the Cyalume Technologies acquisition and officer certifications - A key exhibit filed is the Stock Purchase Agreement dated May 3, 2022, for the acquisition of Cyalume Technologies Holdings, Inc[219](index=219&type=chunk)

Financial Data and Key Metrics Changes - Q1 2022 net sales were $104.5 million, exceeding the high end of guidance, but down from the previous year due to a large federal duty gear shipment in Q1 2021 [32] - Gross profit margin for Q1 was 38.5%, impacted by a less favorable product mix, but expected to expand in the second half of 2022 [33] - The net loss for the quarter was $10.2 million, primarily due to a $23.6 million stock compensation expense, while EBITDA conversion remained strong at 92% [34] Business Line Data and Key Metrics Changes - Volumes in higher-margin duty gear and EOD product categories were down, offset by growth in the Distribution segment [12] - Orders backlog increased by $3.3 million, driven by demand for soft body armor and U.S. domestic duty gear [13] Market Data and Key Metrics Changes - Demand for mission-critical products remains strong within law enforcement, first responder, and military markets, despite ongoing supply chain disruptions and inflationary pressures [10][12] - The company anticipates a more favorable product mix in the second half of the year, with larger duty orders expected to ship [44] Company Strategy and Development Direction - The company has completed two accretive acquisitions since its IPO, enhancing its international presence and growth avenues [7][15] - The M&A strategy focuses on geographic expansion, introducing new products in existing markets, and expanding safety product offerings [25] - The company aims to leverage its strong acquisition track record to expand product and technology offerings and grow its geographic footprint [39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term prospects, supported by a robust pipeline and macro tailwinds driving demand for mission-critical products [41] - The company has increased its 2022 guidance based on strong backlog expectations and progress in executing strategic objectives [14][36] Other Important Information - The acquisition of Cyalume Technologies for $35 million is expected to generate approximately $25 million in pro forma revenues for 2022 [28] - The company maintains a net debt of $147 million, with a net leverage around 2x, providing financial flexibility for growth [36] Q&A Session Summary Question: Revenue outlook and normalization of comparisons - Management indicated that comparisons will normalize in the back half of the year, with larger duty orders expected to ship [42][44] Question: Strategic synergies from the Cyalume acquisition - Management highlighted operational excellence and leveraging customer relationships as key synergies to accelerate growth [45][48] Question: Supply chain and inflationary cost pressures - Management noted ongoing challenges with electronics and raw materials but emphasized strong relationships with suppliers [52][54] Question: Police officer shortage and its impact - Management acknowledged a mixed situation across the U.S. regarding police hiring, with some agencies struggling to fill positions [61][64] Question: European sales opportunities due to geopolitical events - Management reported limited immediate impact from the Ukraine conflict but noted potential long-term opportunities in EOD solutions [68][71] Question: Guidance adjustments and core business performance - Management clarified that guidance adjustments were due to cautious outlooks on larger orders and core business performance [73][74]

Cadre Holdings Inc. (NYSE:CDRE) Q4 2021 Earnings Conference Call March 10, 2022 5:00 PM ET Company Participants Warren Kanders – Chairman and Chief Executive Officer Brad Williams – President Blaine Browers – Chief Financial Officer Matt Berkowitz – IGB Group Conference Call Participants Mike Jay – ROTH Capital Daniel Imbro – Stephens Mark Smith – Lake Street Capital Bert Subin – Stifel Jeff Van Sinderen – B. Riley Brian Gesuale – Raymond James Operator Good afternoon and welcome to the Cadre Holdings Four ...

Market Opportunities - The annual addressable market for soft body armor is estimated to be approximately $870 million[32]. - The addressable market for explosive ordnance disposal equipment is estimated at approximately $245 million over a seven-to-ten year product lifecycle[32]. - The annual addressable market for holsters in the global law enforcement and military markets is estimated to be approximately $380 million[32]. - The company aims to capture a total potential addressable market opportunity of approximately $500 million for blast sensor equipment based on the U.S. Department of Defense branches participating in the program[55]. - The international market for safety and survivability equipment is expected to grow due to increasing safety challenges faced by foreign governments[33]. Growth Strategy - The company plans to drive profitable organic revenue growth through new product development and geographic expansion, particularly in international markets[39]. - The growth strategy includes driving profitable core revenue growth through new product introductions, international market expansion, and targeted acquisitions[54]. - The company has completed 13 strategic acquisitions to expand product and technology offerings and enter new markets[57]. Financial Performance - The Adjusted EBITDA Conversion Rate is consistently greater than 90%[40]. - Continuous margin improvement initiatives have led to past years' margin improvements through cost structure optimization and operational enhancements[61]. - The company has significant long-term debt obligations, with $161.7 million outstanding as of December 31, 2021[99]. - The company incurred higher freight and distribution costs, including air freight, to mitigate delays caused by supply chain disruptions[126]. Operational Challenges - The ongoing COVID-19 pandemic has caused disruptions in global supply chains, leading to increased costs for raw materials, storage, and shipping[91]. - The COVID-19 pandemic has caused ongoing disruptions in manufacturing, shipping, and transportation, adversely affecting the company's business and results of operations[125]. - Limited sources for raw materials and components may significantly curtail manufacturing operations, impacting production capabilities[132]. - The company faces risks related to fluctuating budgets of customers, particularly government agencies, which can lead to substantial fluctuations in results of operations[127]. Regulatory and Compliance Risks - The company is subject to extensive government regulations, which could materially restrict operations and lead to substantial penalties[107]. - The company is subject to extensive regulation and audit by the Defense Contract Audit Agency, which could impact its operating results and prospects[152]. - Environmental, health, and safety regulations may impose significant compliance costs and liabilities, potentially affecting financial results[142]. - The company may incur significant expenses in responding to governmental audits and inquiries, which could divert management's attention[152]. Market Position and Relationships - The company maintains long-term relationships with over 23,000 first responders and federal agencies, with top customer relationships averaging over 15 years[43]. - The company has built relationships with nearly every domestic law enforcement agency, selling at least one product category to each of the top 50 major departments[63]. - The company actively markets its products in various international markets, including Europe, North and South America, the Middle East, Africa, and Asia[115]. Risks and Uncertainties - The company faces risks related to international operations, including U.S.-imposed embargoes and foreign import controls that could disrupt supplies[112]. - The company is uncertain about its ability to manage growth effectively, which could impact its financial condition[99]. - The company is exposed to risks associated with foreign currency fluctuations and longer payment cycles in international markets[116]. - The company’s operations could be adversely affected by geopolitical events, such as the ongoing conflict in Ukraine and related sanctions[120]. Corporate Governance - The company is classified as a "controlled company," with Warren B. Kanders owning over 50% of the voting power, affecting its corporate governance structure[183]. - The company’s executive officers, directors, and principal stockholders control approximately 67.41% of the outstanding voting stock, allowing them to significantly influence shareholder decisions[187]. Stock Market Considerations - An active trading market for the company’s common stock may not develop, which could hinder the ability to sell shares without affecting market price[188]. - The market price of the company’s common stock may be volatile, influenced by factors such as operating performance fluctuations and changes in financial projections[189]. - Substantial future sales of shares could lead to a decline in the market price of the company’s common stock, impacting capital raising efforts[192]. - Approximately 27,509,050 shares of common stock will become eligible for sale after the expiration of the 180-day lock-up period[193]. Research and Development - The company must continue to invest in research and development to adapt to technological advances and maintain competitive positioning[140]. - The company relies heavily on information technology systems, and any disruptions or cyber-attacks could materially affect its business[156].

| --- | --- | --- | --- | --- | --- | |-----------------------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | INVESTOR PRESENTATION | | | | | | | January 2022 | | | | | | FORWARD-LOOKING STATEMENTS Except for historical information, certain matters discussed in this presentation 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 antici ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended: September 30, 2021 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to _________ | --- | --- | |--------------------------------------------------------------------------|-----------------------------| | ...