Cadre Holdings, Inc. (CDRE) Earnings

Management highlights

- Overall Financial and Operational Progress * Delivered 19% year-over-year net sales growth to start 2026, reflecting sustained strong demand for mission-critical safety products across law enforcement, first responder, military, and nuclear end markets * Ended Q1 with an all-time record orders backlog of $355 million, including $108 million of organic growth from Q4 2025 to Q1 2026; $87 million of organic growth came from a seven-year blast attenuation seat contract with General Dynamics European Land Systems, $22 million came from strong demand for duty gear and armor, and $57 million came from the acquisition of Tier Tactical * Q1 2026 margins were in line with expectations, and management expects margins to improve through the year on better product mix and operating leverage from growing revenue - M&A Activity and Capital Allocation * Completed two acquisitions in 2026 year-to-date: Pure Tactical (a $175 million strategic platform) in January, and Alien Gear Holsters (a $10 million bolt-on acquisition via bankruptcy auction) in April; this marked the seventh acquisition since IPO * Acquisitions follow strict criteria: leading defensible market positions, strong margins, mission-critical products, and recurring revenue/cash flow * Management maintains a robust acquisition pipeline across public safety and nuclear markets, and expects additional M&A in 2026 to expand product offerings and increase customer wallet share * Strong free cash flow supports M&A, organic growth investment, and consistent dividends; the May 2026 dividend will be the 17th consecutive dividend since IPO * As of March 31, 2026, net leverage is just under 3x, and less than 2.5x when including a full year of Tier Tactical earnings, leaving ample financial flexibility - End Market Demand Trends * Public safety: Long-term demand is supported by rising global security threats, replacement cycles, and increased U.S. federal public safety investment; softness was observed in discretionary third-party products in the company-owned distribution segment, but no weakness was seen in Cadre's own mission-critical products; the consumer channel gained market share with 6.7% year-over-year growth despite broader consumer headwinds * Nuclear safety: Long-term demand is supported by global environmental remediation mandates, national defense modernization, and growing investment in commercial nuclear power for energy security; the 2027 DOE budget proposed a 10% overall increase, with an 11% cut to non-NNSA (clean energy focused) funding and a corresponding increase in defense-related nuclear funding, which benefits Cadre's CAS, ventilation, containment, robotic arm, and container businesses

Guidance

- Management reaffirmed full-year 2026 guidance, with net sales expected in the range of $736 million to $758 million, and adjusted EBITDA expected between $136 million and $141 million, implying 18.5% adjusted EBITDA margins at the midpoint - At guidance midpoints, this represents 22.4% year-over-year revenue growth and 24% year-over-year adjusted EBITDA growth, consistent with prior expectations of over 20% full-year growth - Full-year organic revenue growth is still expected to be in the 3% to 5% range, unchanged from prior guidance - Q2 2026 revenue is expected to be approximately $178 million, with adjusted EBITDA margins around 17.5%; approximately 55% of full-year 2026 revenue is expected to be realized in the second half of the year, driven by better product mix, operating leverage, and the full quarter impact of the Tier Tactical acquisition - Alien Gear Holsters, closed in April 2026, is not included in 2026 guidance as management is still completing integration planning

Segment performance

Cadre Holdings did not break out full segment-level financial results for Q1 2026. The company reported total consolidated net sales of $155.4 million, representing a 19% year-over-year increase. The results included $2.6 million of inventory step-up amortization and $1 million of depreciation and amortization related to Zirka. The company cited mix headwinds for the armor and nuclear segments, partially offset by lower distribution revenue in the quarter. The consumer channel grew 6.7% year-over-year in Q1.

Risks & headwinds

- Some U.S. state and local law enforcement budgets are facing publicized budget challenges for the first time since COVID and the defund the police movement, which could create pressure for spending cuts; historically, mission-critical safety equipment has been prioritized during budget downturns, and management has not yet observed any drop in demand for Cadre's products - Softness in discretionary third-party products in the company-owned distribution segment was observed in early Q1 2026, though revenue improved month-over-month through the quarter, suggesting a potential temporary lull; management continues to monitor this segment closely - Non-NNSA (clean energy-focused) nuclear funding in the proposed 2027 DOE budget is down 11%, reflecting a shift in administration priorities to defense-related nuclear spending, creating near-term headwinds for environmental cleanup-focused portions of Cadre's nuclear business - Input cost inflation and energy price volatility, particularly for European operations, remains a monitored risk, though most exposure is hedged via fixed contracts and no material impacts have been observed to date - The $87 million seven-year blast attenuation contract will primarily convert to revenue starting in 2027, with minimal revenue recognition in 2026

Analyst Q&A

• Q: What early synergies and performance trends have been seen from the recent Tier Tactical acquisition, and how should investors think about backlog conversion to revenue in 2026? /

  A: Tier Tactical has met and exceeded pre-acquisition performance commitments, with active cross-functional projects underway for new product development across Tier, Safariland, and Med-Eng EOD, as well as go-to-market optimization. Of the $355 million record backlog, the $87 million blast attenuation contract will mostly convert to revenue in 2027, but the majority of the remaining backlog (across armor, duty gear, crowd control, and EOD) will ship and recognize in 2026, which underpins management's confidence in full-year guidance. (292 characters)

• Q: How concerning is the recent softness observed in the company-owned distribution segment, and has the 3% to 5% organic growth guidance changed? /

  A: The softness is limited to third-party discretionary products, which make up the majority of the distribution segment; Cadre's own mission-critical products have not seen any weakness, which aligns with historical trends where safety equipment is prioritized during budget cuts. Organic growth guidance of 3% to 5% remains unchanged, with Tier Tactical performing in line with expectations after two months of ownership. (337 characters)

• Q: What is the update on plutonium down blending operations, and what nuclear M&A priorities does Cadre have today? /

  A: The plutonium down blending suspension remains unchanged due to existing executive orders, but a long-term fundamental mismatch remains between DOE obligations to eliminate surplus plutonium by 2037 and the slow scaling of alternative reuse options, so demand will eventually resume. For M&A, Cadre continues to prioritize expansion of existing defense-aligned nuclear product categories (containers, critical alarm systems, ventilation, containment) that align with the DOE's increased defense-focused budget. (372 characters)

• Q: What can you share about the recently acquired Alien Gear Holsters, and how does Cadre balance debt repayment with other capital priorities? /

  A: Alien Gear was acquired via bankruptcy auction, so historical results are not indicative of future performance; it generated ~$20 million in revenue last year with ~10% EBITDA margins, and is not included in 2026 guidance as integration proceeds. Cadre plans to apply free cash flow to debt reduction after funding dividends and planned M&A, targeting a long-term net leverage level of 2x, which is only modestly below the current ~2.5x level. (351 characters)