Cadre (US:CDRE)2025-08-05 20:16PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements and detailed notes for periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets Total assets increased to $794.4 million by June 30, 2025, with liabilities rising significantly and shareholders' equity seeing a modest increase | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Total Assets | $794,437 | $652,713 | $141,724 | | Total Liabilities | $461,977 | $341,198 | $120,779 | | Total Shareholders' Equity | $332,460 | $311,515 | $20,945 | Condensed Consolidated Statements of Operations and Comprehensive Income Q2 2025 net sales increased 8.9% but net income decreased 2.8%; H1 2025 net sales grew 1.8% with net income up 10.1% | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Net sales | $157,109 | $144,309 | 8.9% | $287,215 | $282,169 | 1.8% | | Gross profit | $64,249 | $58,650 | 9.5% | $120,380 | $116,278 | 3.5% | | Operating income | $14,685 | $19,953 | (26.4)% | $28,237 | $31,932 | (11.6)% | | Net income | $12,211 | $12,567 | (2.8)% | $21,459 | $19,495 | 10.1% | | Basic EPS | $0.30 | $0.31 | (3.2)% | $0.53 | $0.50 | 6.0% | | Diluted EPS | $0.30 | $0.31 | (3.2)% | $0.52 | $0.49 | 6.1% | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased to $20.0 million for H1 2025, while investing used $92.3 million and financing provided $82.9 million | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash from operating activities | $19,979 | $13,280 | | Net cash used in investing activities | $(92,317) | $(145,129) | | Net cash from financing activities | $82,943 | $149,881 | | Change in cash and cash equivalents | $12,536 | $18,212 | | Cash and cash equivalents, end of period | $137,469 | $105,903 | Condensed Consolidated Statements of Shareholders' Equity Shareholders' equity increased from $311.5 million to $332.5 million by June 30, 2025, primarily due to net income and stock-based compensation | Metric (in thousands) | Balance, December 31, 2024 | Balance, June 30, 2025 | | :-------------------- | :------------------------- | :--------------------- | | Total Shareholders' Equity | $311,515 | $332,460 | | Net income | $21,459 (6 months) | $21,459 (6 months) | | Dividends declared | $(7,721) (6 months) | $(7,721) (6 months) | | Stock-based compensation | $4,393 (6 months) | $4,393 (6 months) | Notes to Condensed Consolidated Financial Statements Detailed notes explain significant accounting policies, acquisitions, revenue, assets, debt, derivatives, commitments, taxes, leases, related parties, and segment data 1. Significant Accounting Policies This section outlines the company's operations as a global leader in safety equipment and its key accounting policies, including its emerging growth company status - Cadre Holdings, Inc. (D/B/A The Safariland Group) is a global leader in manufacturing and distributing safety equipment for law enforcement, first responders, military, and nuclear markets, operating 20 manufacturing plants across multiple countries26 - The Company is an "emerging growth company" and has elected to use the extended transition period for complying with new or revised accounting standards, which may affect comparability with other public companies3031 2. Acquisitions The company completed the Zircaloy acquisition in April 2025 for $89.6 million, and ICOR and Alpha Safety in 2024, boosting goodwill and intangible assets - Zircaloy Acquisition (April 22, 2025): * Total consideration, net of cash acquired: $89,590 thousand * Goodwill recognized: $23,803 thousand, expected to be non-deductible for tax purposes * Acquired exclusive rights to trademarks, customer relationships, and product technologies * Zircaloy revenue included in Product segment: $13,434 thousand for the period ended June 30, 202549505152 - ICOR Acquisition (January 9, 2024): * Total consideration, net of cash acquired: $41,508 thousand (including contingent consideration) * Goodwill recognized: $18,602 thousand, expected to be non-deductible for tax purposes * Contingent consideration liability: $2,225 thousand as of January 9, 2024, remeasured to $4,249 thousand as of June 30, 20255355565759 - Alpha Safety Acquisition (February 29, 2024): * Total consideration, net of cash acquired: $102,531 thousand * Goodwill recognized: $49,133 thousand, expected to be non-deductible for tax purposes606162 3. Revenue Recognition Revenue is recognized from product sales upon control transfer, with long-term contracts recognized over time; net sales are disaggregated by channel and geography | Net Sales by Channel (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | U.S. state and local agencies | $77,600 | $72,811 | $151,009 | $147,803 | | Commercial | $11,887 | $11,911 | $22,906 | $23,176 | | U.S. federal agencies | $29,022 | $20,688 | $50,506 | $41,874 | | International | $36,859 | $35,189 | $59,740 | $64,626 | | Other | $1,741 | $3,710 | $3,05