Cadre (US:CDRE)2024-11-06 21:20Financial Performance - Net sales for the three months ended September 30, 2024, decreased by $15.7 million to $109.4 million, primarily due to cybersecurity incidents [116]. - Net income for the three months ended September 30, 2024, decreased by $7.4 million to $3.7 million, driven by lower productivity from the cybersecurity incidents [117]. - Adjusted EBITDA for the three months ended September 30, 2024, was $13.5 million, a decrease of 43% compared to $23.7 million for the same period in 2023 [115]. - Gross profit for the three months ended September 30, 2024, was $40.0 million, a decrease of 25.3% from $53.6 million in the same period in 2023 [124]. - Operating income for the three months ended September 30, 2024, was $5.4 million, down 67.6% from $16.7 million in the prior year [124]. - For the three months ended September 30, 2024, net income was $3.655 million, a decrease from $11.053 million for the same period in 2023 [145]. - Adjusted EBITDA for the three months ended September 30, 2024, decreased by $10.2 million to $13.525 million compared to $23.731 million in 2023, primarily due to a decrease in gross profit from Cybersecurity Incidents [148]. Sales and Orders - Orders backlog increased by $40.6 million to $167.2 million as of September 30, 2024, primarily due to recent acquisitions and higher demand for hard goods [122]. - The Company reported a 9.4% increase in net sales for the nine months ended September 30, 2024, totaling $391.6 million compared to $357.9 million in the same period in 2023 [124]. - Product segment net sales decreased by $12.0 million, or 11.1%, from $108.5 million to $96.5 million for the three months ended September 30, 2024, primarily due to Cybersecurity Incidents and project timing [127]. - Distribution segment net sales decreased by $6.4 million, or 26.3%, from $24.2 million to $17.8 million for the same period, primarily due to Cybersecurity Incidents [127]. - Product segment net sales increased by $38.6 million, or 12.7%, from $305.1 million to $343.7 million for the nine months ended September 30, 2024, primarily due to recent acquisitions [135]. Expenses and Costs - Product segment gross profit as a percentage of net sales decreased by 690 basis points to 37.4% for the three months ended September 30, 2024, driven by lower productivity due to Cybersecurity Incidents [128]. - Selling, general and administrative expenses decreased by $2.3 million, or 6.4%, for the three months ended September 30, 2024, primarily due to employee compensation [129]. - Selling, general and administrative expenses increased by $7.7 million, or 7.3%, for the nine months ended September 30, 2024, primarily due to recent acquisitions and employee compensation [137]. - Restructuring and transaction costs increased by $2.5 million, or 219.9%, for the nine months ended September 30, 2024, primarily due to costs associated with acquisitions [138]. - Interest expense increased by 85.6% to $2.0 million for the three months ended September 30, 2024, compared to $1.1 million in the same period in 2023 [124]. - Interest expense increased by $0.9 million, or 85.6%, for the three months ended September 30, 2024, primarily due to the addition of an incremental term loan [132]. Cash Flow and Debt - For the nine months ended September 30, 2024, net cash provided from operating activities totaled $8.1 million, with cash and cash equivalents at $93.0 million as of the same date [150]. - As of September 30, 2024, the company had $208.1 million in outstanding debt, up from $140.1 million at the end of 2023 [151]. - The company refinanced its credit facilities under the 2021 Credit Agreement, borrowing $200.0 million under a term loan and having access to a $100.0 million revolving credit facility [152]. - The company entered into an Incremental Facility Amendment to the 2021 Credit Agreement, securing an additional $80.0 million term loan for the acquisition of Alpha Safety [157]. - There were no amounts outstanding under the Revolving Loan as of September 30, 2024, with $97.9 million available [153]. - The company anticipates that cash flows from operations and cash on hand will be adequate to meet liquidity requirements for at least the next 12 months [150]. - Net cash provided by operating activities for the nine months ended September 30, 2024, was $8.1 million, down from $46.3 million in the same period of 2023 [166][167]. - Net cash used in investing activities increased significantly to $146.1 million in 2024, primarily due to the acquisition of ICOR and Alpha Safety, compared to $4.0 million in 2023 [168]. - Net cash provided by financing activities was $142.8 million for the nine months ended September 30, 2024, driven by proceeds from term loans and a secondary offering, compared to a cash outflow of $18.2 million in 2023 [169][170]. - Cash and cash equivalents at the end of the period increased to $92.99 million as of September 30, 2024, from $69.41 million at the end of September 2023 [165]. Currency and Interest Rate Impact - A 10% fluctuation in the Canadian dollar would have impacted reported net sales by approximately $1.3 million for the nine months ended September 30, 2024 [186]. - A 100 basis point change in interest rates would result in a $2.1 million change in interest expense on the principal amount of debt [181]. - The company utilized forward contracts to hedge forecasted costs denominated in Mexican pesos, designated as cash flow hedges [184].