Cadre (CDRE) - 2025 Q1 - Quarterly Results

First Quarter 2025 Results Overview Cadre Holdings reports strong Q1 2025 results and raises full-year guidance, driven by strategic acquisitions and improved margins First Quarter 2025 Financial Highlights 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 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] - 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] - M&A remains an essential component of the company's strategy, with an active evaluation of a robust pipeline of potential transactions[2] Financial Results This section details Cadre's first quarter 2025 operating results, segment performance, and liquidity position First Quarter 2025 Operating Results 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] - The increase in net income was primarily a result of lower acquisition-related costs incurred in Q1 2025 compared to Q1 2024[5][20] Segment Performance 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 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] - 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] Corporate Developments and Outlook 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 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] - The acquired division includes industry-leading brands such as Wälischmiller GmbH, CarrsMSM, Bendalls Engineering, NW Total Engineered Solutions, and NuVision Engineering, Inc[9] Dividend Declaration 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] - The dividend is payable on May 16, 2025, to shareholders of record as of May 2, 2025[10] Full Year 2025 Outlook 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] - A reconciliation for Adjusted EBITDA guidance to net income guidance is not provided due to the difficulty in forecasting certain expenses and gains[11] Financial Statements This section presents the company's condensed consolidated balance sheets, statements of operations, cash flows, and non-GAAP reconciliations Condensed Consolidated Balance Sheets 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 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 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 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 This section provides details on the upcoming conference call, the company's use of non-GAAP measures, and forward-looking statements Conference Call Information 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] - A replay of the call will be available through May 21, 2025[13] Use of Non-GAAP Measures 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] Forward-Looking Statements 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]