Cadre Holdings, Inc. · NYSE:CDRE
Cadre — Q4 2023 Earnings Presentation
28 slides from Cadre's earnings presentation, Mar 5, 2024
Slide 1: Fourth Quarter 2023
LADRE HOLDINGS FOURTH QUARTER i= 2023
Slide 2: Forward-Looking Statements
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 an
Slide 3: Forward-Looking Statements - Continued
FORWARD-LOOKING STATEMENTS - CONTINUED our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our transitioning to upgraded or replacement systems; our ability to protect our trade secrets or other proprietary
Slide 4: Today's Presenters
TODAY’S PRESENTERS WARREN KANDERS BRAD WILLIAMS BLAINE BROWERS Chief Executive Officer and President Chief Financial Officer Chairman of the Board 4
Slide 5: Agenda
AGENDA • Q4 and FY Highlights • Business Overview • Financial Summary • Full Year Outlook • Conclusion and Q&A 5
Slide 6: Continued Execution in Q4
CONTINUED EXECUTION IN Q4 Cadre continues to deliver on strategic objectives, generating record quarterly Adj. EBITDA and achieving significant margin expansion Commentary: Pricing Growth: ✓ Exceeded target Q4 Mix: − As expected, lower EOD volume driving unfavorable mix Orders Backlog: ✓ Increased b
Slide 7: Macro Tailwinds Support Long Term Sustainable Growth Opportunity
MACRO TAILWINDS SUPPORT LONG TERM SUSTAINABLE GROWTH OPPORTUNITY Police protection expenditures have continued to trend upward even during previous financial and industrial recessions Major US cities continue to increase police budgets The American Rescue Plan provides $350 billion to hire more poli
Slide 8: Latest Market Trends
LATEST MARKET TRENDS North American • Spend per officer increasing but police departments still struggling to fill open Law Enforcement positions Geopolitical • Future opportunities to provide safety and survivability equipment—primarily EOD Landscape products—as war in Ukraine de-escalates Supply C
Slide 9: M&A
M&A 9
Slide 10: Cadre's Key M&A Criteria
CADRE'S KEY M&A CRITERIA CADRE'S KEY M&ACRITERIA Business Leading market position Cost structure where material > labor High cost of substitution Leading and defensible technology Mission-critical tocustomer Strong brand recognition Financial Recurring revenueprofile Asset-light Attractive ROIC Mark
Slide 11: Acquisition of Alpha Safety
ACQUISITION OF ALPHA SAFETY BUSINESS OVERVIEW & STRATEGIC RATIONALE CADRE’S KEY M&A CRITERIA MET • Alpha Safety is a provider of highly engineered, technical products and services spanning the • Leading market position nuclear value chain • Highly-visible, expected recurring revenue driven by long-t
Slide 12: Product and Service Overview
PRODUCT AND SERVICE OVERVIEW Alpha Safety’s Products/Services Span the Nuclear Value Chain; Supporting Commercial and Government Missions with Radioactive Elements Ventilation and Containment Engineered Containers Field Services and Maintenance Overview: Equipment and systems to contain and Over
Slide 13: Acquisition Expands Addressable Market
ACQUISITION EXPANDS ADDRESSABLE MARKET Alpha Safety’s large, total addressable market for domestic nuclear products and services immediately expands Cadre’s TAM and already well-developed serviceable addressable market (SAM) in its core categories CADRE’S EXPANDED OPPORTUNITY SET CADRE’S EXISTING SA
Slide 14: Attractive Market and Platform for M&A
ATTRACTIVE MARKET AND PLATFORM FOR M&A TURNKEY M&A PLATFORM …WITH PROVEN TRACK RECORD OF SUCCESSFUL ACQUISITIONS Proven track record of executing M&A and strong sector Strengthen Relationship With Key Customers and relationships Added Capabilities (2013) Consolidated platform offers high synergy pot
Slide 15: Acquisition of ICOR Technology
ACQUISITION OF ICOR TECHNOLOGY BUSINESS OVERVIEW & STRATEGIC RATIONALE CADRE’S KEY M&A CRITERIA MET • ICOR is a trusted global supplier of high-quality, reliable, innovative, and cost-effective Leading market position EOD robots • Headquartered in Ottawa, Ontario, strategically located near the nati
Slide 16: Q4 Financial Results
Q4 Financial Results 16
Slide 17: Fourth Quarter and Full Year 2023 Highlights
FOURTH QUARTER AND FULL YEAR 2023 HIGHLIGHTS Q4 2023 Q4 2022 FY 2023 FY 2022 NET SALES $124.6M $123.6M $482.5M $457.8M GROSS MARGIN 39.9% 39.2% 41.6% 38.4% $9.6M $6.6M $38.6M $5.8M1 NET INCOME / $0.25 / $0.17 / $1.02 / $0.16 per diluted share per diluted share per diluted share per diluted share ADJ
Slide 18: Net Sales and Adjusted EBITDA
NET SALES AND ADJUSTED EBITDA NET SALES ($MM) ADJ. EBITDA1 ($MM) % CAGR % CAGR 19.1% % Y/Y 10.8 % GROWTH % Y/Y GROWTH 23.5% at guidance 16.6% midpoint FY 2024 at guidance $85.8 Guidance $457.8 $482.5 midpoint FY 2024 $75.7 Range Guidance $104M to Range $108M $553M to $572M 2022 2023 2024E 2022 2023
Slide 19: Q4 2023 Capital Structure
Q4 2023 CAPITAL STRUCTURE December 31, 2023 (in thousands) Cash and cash equivalents $ 87,691 Debt: Revolver $ — Current portion of long-term debt 12,320 Long-term debt 128,962 Capitalized discount/issuance costs (1,150) Total debt, net $ 140,132 Net debt (Total debt net of cash) $ 52,441 Total debt
Slide 20: 2024 Management Outlook
2024 MANAGEMENT OUTLOOK 2024 GUIDANCE NET SALES $553M to $572M ADJ. EBITDA $104M to $108M CAPITAL EXPENDITURES $8M to $10M 1. A non-GAAP financial measure. See slide 27 for definitions and reconciliations to the nearest GAAP measures 20
Slide 21: Conclusion
CONCLUSION Outstanding execution in Q4 and 2024 YTD Ongoing implementation of Cadre operating model FY Revenue, Net Income and Adjusted EBITDA Growth Y/Y Committed to improving gross and Adj. EBITDA margins Continuously focused on M&A opportunities Capitalizing on strong macro tailwinds driving dema
Slide 22: Appendix
APPENDIX 22
Slide 23: Balance Sheet
BALANCE SHEET UNAUDITED (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) December 31, 2023 December 31, 2022 Assets Current assets Cash and cash equivalents $ 87,691 $ 45,286 Accounts receivable, net 58,360 64,557 Inventories 80,976 70,273 Prepaid expenses 11,930 10,091 Other current assets 6,886
Slide 24: Statement of Operations
STATEMENT OF OPERATIONS UNAUDITED (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net sales $ 124,583 $ 123,645 $ 482,532 $ 457,837 Cost of goods sold 74,825 75,117 281,806 282,159 Gross profit 49,758 48,528 200,726 175,6
Slide 25: Statement of Cash Flows
STATEMENT OF CASH FLOWS UNAUDITED (IN THOUSANDS) Year Ended December 31, 2023 2022 Cash Flows From Operating Activities: Net income $ 38,641 $ 5,820 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,737 15,651 Amortization of original
Slide 26: Statement of Cash Flows - Continued
STATEMENT OF CASH FLOWS - CONTINUED UNAUDITED (IN THOUSANDS) Year Ended December 31, 2023 2022 Cash Flows From Financing Activities: Proceeds from revolving credit facilities — 43,000 Principal payments on revolving credit facilities — (43,000) Proceeds from term loans — — Principal payments on term
Slide 27: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (IN THOUSANDS) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net income $ 9,594 $ 6,599 $ 38,641 $ 5,820 Add back: Depreciation and amortization 3,352 4,332 15,737 15,651 Interest expense 804 1,710 4,531 6,206 Provision for income taxes 2,820 6,0
Slide 28: Use of Non-GAAP Measures
USE OF NON-GAAP MEASURES The Company reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). The press release contains the non-GAAP measures: (i) earnings before interest, taxes, other income or expense, depreciation and amortization (“EBITDA”), (ii)