Cadre Holdings, Inc. Q4 FY2024 earnings call

• Strong fourth quarter and full year results, with fourth quarter being the best as a public company, in line with full year 2024 guidance.
• M&A activity: Acquired the Engineering Division from Carr's Group in January 2025, which adds scale to the nuclear vertical, expands international footprint, and enters new areas like automation, robotics, and nuclear medicine.
• Positive mix in fourth quarter driven by higher Duty Gear volume; orders backlog ended flat vs prior year with $27M increase from recent acquisitions offset by shipments.
• Strong free cash flow generation enabled by low CapEx model, supporting core organic growth, M&A, and dividend increases; dividend raised to $0.38 per share annualized, a 9% increase.
• Tailwinds in public safety (law enforcement spending trending up) and nuclear safety (driven by environmental safety, national security, commercial nuclear energy, with nuclear modernization and national missile defense as priorities).

In the fourth quarter, Cadre achieved record quarterly revenue of $176 million, net income of $13 million, and adjusted EBITDA of $38.5 million. Full year revenue grew 18% and adjusted EBITDA grew 22%. The largest market segment is law enforcement, with police protection expenditures trending upward. The nuclear segment was boosted by the January 2025 acquisition of the Engineering Division from Carr's Group, which added scale to the nuclear vertical, a larger international footprint, and an expanded nuclear TAM, with the acquired businesses generating approximately GBP51 million in revenue for the fiscal year ended August 31, 2024, and 80% of revenue outside the US.

• 2025 net sales guidance: $572 million to $601 million.
• 2025 adjusted EBITDA guidance: $105 million to $115 million, implying adjusted EBITDA margins of 18.8%.
• Organic growth expectations: 2% at midpoint to 5% at high end for revenue; 5% at midpoint to 10% at high end for adjusted EBITDA.
• Guidance does not include impact from recently announced US tariffs (estimated $18M to $22M annualized impact) or the Carr's acquisition.
• 2025 revenue and adjusted EBITDA expected stronger in second half due to project timing, with Q1 expected to be about 20% of revenue, adjusted EBITDA margins 12% to 14% in Q1, returning to high teens for remainder of year.

• Macro uncertainties in 2025, including potential delays in federal agency transactional processes due to US government downsizing and shifting international relations.
• Tariff impacts: Currently announced tariffs have an annualized impact range of $18M to $22M, with mitigation actions lagging about three months due to timing, and tariff policy evolving in real-time making forecasting difficult.

Q: Larry Solow asked about guidance being wider than normal and impact of government spending uncertainty.

A: Brad Williams said the high end of guidance is 5% organic growth, teams executed well in Q4, and government impact is more of a rhythm offset than reduction in demand.

Q: Jeff Van Sinderen asked about SG&A for 2025 and Carr's inclusion in guidance.

A: Blaine Browers said Carr's not in guidance yet, SG&A roll forward includes baseline and incremental IT spend.

Q: Sheila Kahyaoglu asked about pricing and European law enforcement TAM.

A: Blaine Browers said pricing varies by product, blended overall 1.5% to 2% gross; Brad Williams said EOD product line is key in European cleanup activities.

Q: Matt Koranda asked about 2025 guidance, Q1 trends, and tariff impact.

A: Blaine Browers discussed core business growth, Q1 drivers including comp issues and EOD timing; Brad Williams talked about tariff mitigation actions.

Q: Mark Smith asked about Q1 lumpiness, EBITDA margins, and law enforcement hiring.

A: Blaine Browers said most Q1 issues from comp and EOD timing; Brad Williams said law enforcement hiring is stable with long-term tailwinds.

Q: Sheila Kahyaoglu asked about DOGE spending impact and exposure.

A: Blaine Browers said no meaningful impact on nuclear and federal law enforcement, exposure is compartmentalized and not severely impacted currently.