Cadre holdings reports first quarter 2022 financial results
Jacksonville, fla.--(business wire)--cadre holdings, inc. (nyse: cdre) ("cadre" or "the company"), a global leader in the manufacturing and distribution of safety and survivability equipment for first responders, announced today its consolidated operating results for the three months ended march 31, 2022. first quarter 2022 highlights net sales of $104.4 million for the first quarter gross profit margin of 38.5% for the first quarter net loss of $10.2 million, including $23.6 million stock-based compensation expense, or $0.30 per share, for the first quarter adjusted ebitda of $14.2 million for the first quarter adjusted ebitda margin of 13.6% for the first quarter declared quarterly cash dividend of $0.08 per share in april 2022 orders backlog increased $3.3 million from year end 2021 “following a year of record net sales and adjusted ebitda, we continue to capitalize on attractive long-term tailwinds and recurring demand drivers in our entrenched mission-critical first responder markets,” said warren kanders, ceo and chairman. “during the quarter, we achieved pricing growth that significantly exceeded our target, generated strong adjusted ebitda conversion, and increased our backlog substantially. in the second half of the year, we expect a more favorable product portfolio mix and based on our success executing strategic objectives focused on accelerating growth we have increased our full year 2022 outlook.” mr. kanders added, “our resilient operating model continues to drive strong free cash flow generation that is enabling us to capitalize on attractive opportunities to unlock long-term shareholder value. in addition to january’s accretive acquisition of a premiere duty gear brand, which further expanded our international presence, we are excited to acquire the world leader in chemical light solutions for u.s. and nato military forces. in a short period of time, we have delivered on the strategy we laid out to investors, adding high margin companies with leading market positions and strong recurring revenues and cash flows. importantly, we maintain a robust acquisition pipeline, complementing our core organic growth initiatives.” first quarter 2022 operating results for the quarter ended march 31, 2022, cadre generated net sales of $104.4 million, as compared to $110.5 million for the quarter ended march 31, 2021. the decline was primarily the result of a large us federal duty gear shipment in last year’s first quarter, combined with strong commercial demand and higher demand for crowd control products in the comparable period last year. for the quarter ended march 31, 2022, cadre generated gross profit of $40.2 million, as compared to $44.0 million for the quarter ended march 31, 2021. gross profit margin was 38.5% for the quarter ended march 31, 2022, as compared to 39.8% for the quarter ended march 31, 2021, mainly driven by less favorable portfolio mix, partially offset by price. net loss was $10.2 million for the quarter ended march 31, 2022, as compared to net income of $6.9 million for the three months ended march 31, 2021. the decrease resulted primarily from the change in year over year revenue and stock-based compensation expense of $23.6 million. cadre generated $14.2 million of adjusted ebitda for the quarter ended march 31, 2022, as compared to $20.2 million for the quarter ended march 31, 2021. adjusted ebitda margin was 13.6% for the quarter ended march 31, 2022, as compared to 18.3% for the prior year period. product segment gross margin was 40.1% for the first quarter compared to 40.7% for the prior year period. distribution segment gross margin was 24.6% for the first quarter compared to 25.3% for the prior year period. liquidity, cash flows and capital allocation cash and cash equivalents decreased by $24.0 million from $33.9 million as of december 31, 2021 to $9.9 million as of march 31, 2022. total debt decreased by $3.3 million from $159.7 million as of december 31, 2021, to $156.4 million as of march 31, 2022. net debt (total debt net of cash and cash equivalents) increased by $20.7 million from $125.8 million as of december 31, 2021, to $146.5 million as of march 31, 2022. capital expenditures totaled $1.1 million for the three months ended march 31, 2022, compared with $0.8 million for the three months ended march 31, 2021. acquisition of cyalume technologies on may 5, 2022, cadre announced the completion of its accretive acquisition of cyalume technologies, a leading manufacturer of proprietary chemical illumination solutions for military, first responder and other commercial applications. the purchase price for the acquisition was $35.0 million, subject to customary adjustments for net working capital, transaction expenses and indebtedness, and was funded through a draw on its existing credit facilities. dividend on april 21, 2022, the company announced that its board of directors declared a quarterly cash dividend of $0.08 per share, or $0.32 per share on an annualized basis. cadre's dividend payment will be made on may 13, 2022, to shareholders of record as of the close of business on the record date of may 2, 2022. the declaration of any future dividend is subject to the discretion of the company's board of directors. 2022 outlook update cadre increased its full-year guidance and expects to generate net sales in 2022 of between $444.0 million and $452.0 million and adjusted ebitda in 2022 of between $72.5 and $77.5 million. cadre expects ebitda conversion in the range of 92-95% for the full year. conference call cadre management will host a conference call on thursday, may 12, 2022, at 5:00 pm est to discuss the latest corporate developments and financial results. the dial-in number for callers in the us is (888)-510-2553 and the dial-in number for international callers is 646-960-0473. the access code for all callers is 1410384. a live webcast will also be available on the company’s website at https://www.cadre-holdings.com/. a replay of the call will be available through may 26, 2022. to access the replay, please dial 800-770-2030 in the u.s. or +1-647-362-9199 if outside the u.s., and then enter the access code 1410384. about cadre headquartered in jacksonville, florida, cadre is a global leader in the manufacturing and distribution of safety and survivability products for first responders. cadre's equipment provides critical protection to allow users to safely and securely perform their duties and protect those around them in hazardous or life-threatening situations. the company's core products include body armor, explosive ordnance disposal equipment, and duty gear. our highly engineered products are utilized in over 100 countries by federal, state and local law enforcement, fire and rescue professionals, explosive ordnance disposal teams, and emergency medical technicians. our key brands include safariland® and med-eng®, amongst others. forward-looking statements except for historical information, certain matters discussed in this press release 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 anticipated levels of future performance. forward-looking statements involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed herein. any number of factors could cause actual results to differ materially from projections or forward-looking statements, including without limitation, global, social and political economic conditions, spending patterns of government agencies, competitive pressures, the impact of acquisitions and related integration activities, logistical challenges related to disruptions and delays, product liability claims, the success of new product introductions, currency exchange rate fluctuations and the risks of doing business in the markets in which we operate, including foreign countries. more information on potential factors that could affect the company’s financial results are more fully described from time to time in the company’s public reports filed with the securities and exchange commission, including the company’s annual report on form 10-k, quarterly reports on form 10-q, and current reports on form 8-k. all forward-looking statements included in this press release are based upon information available to the company as of the date of this press release, and speak only as of the date hereof. we assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release. cadre holdings, inc. consolidated balance sheets (unaudited) (in thousands, except share and per share amounts) march 31, 2022 december 31, 2021 assets current assets cash and cash equivalents $ 9,877 $ 33,857 accounts receivable, net of allowance for doubtful accounts of $749 and $645, respectively 52,001 48,344 inventories 69,401 63,978 prepaid expenses 7,747 10,353 other current assets 4,360 3,171 assets held for sale 271 278 total current assets 143,657 159,981 property and equipment, net of accumulated depreciation and amortization of $38,631 and $37,171, respectively 35,729 33,053 deferred tax assets, net 12,979 7,059 intangible assets, net 50,158 42,415 goodwill 72,510 66,262 other assets 5,965 3,026 total assets $ 320,998 $ 311,796 liabilities, mezzanine equity and shareholders' equity current liabilities accounts payable $ 27,477 $ 19,328 accrued liabilities 34,363 40,736 income tax payable 2,239 1,255 liabilities held for sale 120 128 current portion of long-term debt 11,700 13,174 total current liabilities 75,899 74,621 long-term debt 144,661 146,516 deferred tax liabilities 3,799 1,297 other liabilities 694 722 total liabilities 225,053 223,156 mezzanine equity preferred stock ($0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of march 31, 2022 and december 31, 2021) — — shareholders' equity common stock ($0.0001 par value, 190,000,000 shares authorized, 34,782,271 shares and 34,383,350 shares issued and outstanding as of march 31, 2022 and december 31, 2021, respectively) 3 3 additional paid-in capital 144,978 127,606 accumulated other comprehensive income (loss) 931 (1,917 ) accumulated deficit (49,967 ) (37,052 ) total shareholders’ equity 95,945 88,640 total liabilities, mezzanine equity and shareholders' equity $ 320,998 $ 311,796 cadre holdings, inc. consolidated statements of operations (unaudited) (in thousands, except share and per share amounts) three months ended march 31, 2022 2021 net sales $ 104,406 $ 110,536 cost of goods sold 64,217 66,577 gross profit 40,189 43,959 operating expenses selling, general and administrative 53,950 28,051 restructuring and transaction costs 599 321 related party expense 122 153 total operating expenses 54,671 28,525 operating (loss) income (14,482 ) 15,434 other expense interest expense (1,490 ) (5,044 ) other expense, net (205 ) (44 ) total other expense, net (1,695 ) (5,088 ) (loss) income before provision for income taxes (16,177 ) 10,346 benefit (provision) for income taxes 6,012 (3,482 ) net (loss) income $ (10,165 ) $ 6,864 net (loss) income per share: basic $ (0.30 ) $ 0.25 diluted $ (0.30 ) $ 0.25 weighted average shares outstanding: basic 34,446,318 27,483,350 diluted 34,446,318 27,483,350 cadre holdings, inc. consolidated statements of cash flows (unaudited) (in thousands) three months ended march 31, 2022 2021 cash flows from operating activities: net (loss) income $ (10,165 ) $ 6,864 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 3,544 3,539 amortization of original issue discount and debt issue costs 111 677 deferred income taxes (6,951 ) 3,319 stock-based compensation 23,588 — (recoveries from) provision for losses on accounts receivable 45 (91 ) foreign exchange loss 253 109 changes in operating assets and liabilities, net of impact of acquisition: accounts receivable (1,693 ) (5,626 ) inventories (2,956 ) (2,496 ) prepaid expenses and other assets 3,158 (141 ) accounts payable and other liabilities (18 ) 10,678 net cash provided by operating activities 8,916 16,832 cash flows from investing activities: purchase of property and equipment (950 ) (788 ) business acquisition, net of cash acquired (19,787 ) — net cash used in investing activities (20,737 ) (788 ) cash flows from financing activities: proceeds from revolving credit facilities — 88,593 principal payments on revolving credit facilities — (88,593 ) principal payments on term loans (2,506 ) (566 ) principal payments on insurance premium financing (1,474 ) (917 ) payment of capital leases (11 ) (7 ) taxes paid in connection with employee stock transactions (6,216 ) — dividends distributed (2,750 ) — net cash used in financing activities (12,957 ) (1,490 ) effect of foreign exchange rates on cash and cash equivalents 798 13 change in cash and cash equivalents (23,980 ) 14,567 cash and cash equivalents, beginning of period 33,857 2,873 cash and cash equivalents, end of period $ 9,877 $ 17,440 supplemental disclosure of cash flows information: cash (received) paid for income taxes, net $ (100 ) $ 15 cash paid for interest $ 1,282 $ 4,292 supplemental disclosure of non-cash investing and financing activities: accruals and accounts payable for capital expenditures $ 119 $ — cadre holdings, inc. segment information (unaudited) (in thousands) three months ended march 31, 2022 reconciling products distribution items(1) total net sales $ 85,386 $ 24,096 $ (5,076 ) $ 104,406 cost of goods sold 51,120 18,172 (5,075 ) 64,217 gross profit $ 34,266 $ 5,924 $ (1 ) $ 40,189 three months ended march 31, 2021 reconciling products distribution items(1) total net sales $ 93,818 $ 22,660 $ (5,942 ) $ 110,536 cost of goods sold 55,594 16,921 (5,938 ) 66,577 gross profit $ 38,224 $ 5,739 $ (4 ) $ 43,959 (1) reconciling items consist primarily of intercompany eliminations and items not directly attributable to operating segments. cadre holdings, inc. reconciliation of gaap to non-gaap financial measures (unaudited) (in thousands) year ended three months ended march 31, ltm december 31, 2021 2021 2022 march 31, 2022 net (loss) income $ 12,661 $ 6,864 $ (10,165 ) $ (4,368 ) add back: depreciation and amortization 13,718 3,539 3,544 13,723 interest expense 16,425 5,044 1,490 12,871 (benefit) provision for income taxes 6,531 3,482 (6,012 ) (2,963 ) ebitda $ 49,335 $ 18,929 $ (11,143 ) $ 19,263 add back: restructuring and transaction costs(1) 3,430 321 599 3,708 loss on extinguishment of debt(2) 15,155 — — 15,155 other expense, net(3) 947 44 205 1,108 stock-based compensation expense(4) 355 — 23,723 24,078 stock-based compensation payroll tax expense(5) — — 298 298 ltip bonus(6) 2,162 952 384 1,594 amortization of inventory step-up(7) — — 153 153 adjusted ebitda $ 71,384 $ 20,246 $ 14,219 $ 65,357 less: capital expenditures (3,029 ) (788 ) (1,069 ) (3,310 ) adjusted ebitda less capital expenditures $ 68,355 $ 19,458 $ 13,150 $ 62,047 adjusted ebitda conversion rate(8) 96 % 96 % 92 % 95 % adjusted ebitda margin(9) 16.7 % 18.3 % 13.6 % (1) reflects the “restructuring and transaction costs” line item on our consolidated statements of operations, which primarily includes transaction costs composed of legal and consulting fees. (2) reflects losses incurred in connection with the august 2021 debt refinance. (3) reflects the “other expense, net” line item on our consolidated statements of operations. for the three months ended march 31, 2022 and 2021, other expense, net primarily includes losses on foreign currency transactions. (4) reflects compensation expense related to equity and liability classified stock-based compensation plans. (5) reflects payroll taxes associated with vested stock-based compensation awards. (6) reflects the cost of a cash-based long-term incentive plan awarded to employees that vests over three years. (7) reflects amortization expense related to the step-up inventory adjustment recorded as part of the radar acquisition. (8) reflects (adjusted ebitda less capital expenditures) / adjusted ebitda. (9) reflects adjusted ebitda / net sales for the relevant periods.
