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What changed in Cadre Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Cadre Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+283 added−272 removedSource: 10-K (2024-03-12) vs 10-K (2023-03-15)

Top changes in Cadre Holdings, Inc.'s 2023 10-K

283 paragraphs added · 272 removed · 213 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

66 edited+21 added−16 removed28 unchanged
Biggest changeThe following table describes the material patents and patent applications owned or licensed by us, segregated by product category, including the range of expiry dates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Range of ​ Range of ​ ​ ​ ​ Number of ​ Expiration ​ Number of ​ Expiration Dates ​ ​ ​ ​ Patents ​ Dates for ​ Pending Patent ​ (if Pending Patent Product Category Ownership Granted Granted Patents Applications Granted) Body Armor Safariland, LLC 38 2023 – 2041 3 2042 Body Armor Pacific Safety Products, Inc. 1 2023 — — Duty Gear Safariland, LLC 88 2023 – 2041 15 2036 – 2042 Duty Gear ​ Radar Leather Division S.r.l. ​ 60 ​ 2023 – 2039 ​ 3 ​ 2037 – 2039 EOD Med-Eng, LLC 93 2023 – 2045 2 2036 – 2040 Crowd Control Defense Technology, LLC 32 2026 – 2038 4 2035 – 2042 Crowd Control ​ Safariland, LLC ​ 1 ​ 2032 ​ — ​ — Crowd Control ​ Radar Leather Division S.r.l. ​ 4 ​ 2029 – 2031 ​ — ​ — Other – Diversified Safariland, LLC 32 2024 – 2041 3 2040 – 2041 Other – Diversified Cyalume Technologies 53 2023 – 2039 15 2038 – 2042 ​ Government Regulation We are subject to federal licensing requirements with respect to the sale of some of our products in foreign countries.
Biggest changeThe following table describes the material patents and patent applications owned or licensed by us, segregated by product category, including the range of expiry dates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Range of ​ Range of ​ ​ ​ ​ Number of ​ Expiration ​ Number of ​ Expiration Dates ​ ​ ​ ​ Patents ​ Dates for ​ Pending Patent ​ (if Pending Patent Product Category Ownership Granted Granted Patents Applications Granted) Body Armor Safariland, LLC 38 2025- 2048 3 2043 Duty Gear Safariland, LLC 107 2025 - 2048 43 2038 - 2043 Duty Gear ​ Radar Leather Division S.r.l. ​ 65 ​ 2024 – 2039 ​ 1 ​ 2039 EOD Med-Eng, LLC 93 2023 – 2045 1 2034 Crowd Control Defense Technology, LLC 41 2026 – 2048 9 2038 – 2048 Crowd Control ​ Safariland, LLC ​ 1 ​ 2032 ​ — ​ — Crowd Control ​ Radar Leather Division S.r.l. ​ 5 ​ 2029 – 2031 ​ — ​ 2031 Other – Diversified Safariland, LLC 31 2025 – 2048 2 2042 – 2043 Other – Diversified ​ Cyalume Technologies ​ 41 2027 – 2042 33 2038 – 2042 Nuclear Safety NucFil, LLC 6 2027 – 2036 — — 11 Table of Contents ​ Government Regulation We are subject to federal licensing requirements with respect to the sale of some of our products in foreign countries.
None of our competitors across individual product categories compete in each of our product verticals, making us the only one-stop provider of critical safety and survivability equipment solutions in the market. Certain of our products cross over into the broader outdoor and recreation market, which is highly fragmented and highly competitive.
None of our competitors across individual product categories compete in each of our product verticals, making us the only one-stop provider of critical safety equipment solutions in the market. Certain of our products cross over into the broader outdoor and recreation market, which is highly fragmented and highly competitive.
Department of Transportation Hazardous Material Regulations (“HMR”), which govern the transportation of hazardous materials in interstate, intrastate, and foreign commerce. Prior to transportation into and within the United States, explosives must be tested and classified by the U.S. Department of Transportation.
Department of Transportation Hazardous Material Regulations (“HMR”), which govern the transportation of hazardous and radioactive materials in interstate, intrastate, and foreign commerce. Prior to transportation into and within the United States, explosives must be tested and classified by the U.S. Department of Transportation.
We have dedicated research and development centers at our manufacturing sites that specialize in product categories, including ballistics developments and state-of-the-art testing laboratory in Ontario, California, blast impact and technology development for explosive ordnances in Ottawa, Canada, and holster development and design in Jacksonville, FL, each of which focus on quality and product performance in order to generate critical real-time feedback.
We have dedicated research and development centers at our manufacturing sites that specialize in product categories, including ballistics developments and state-of-the-art testing laboratory in Ontario, California, blast impact and technology development for explosive ordnances in Ottawa, Canada, and holster development and design in Jacksonville, Florida and Ontario, California, each of which focus on quality and product performance in order to generate critical real-time feedback.
Through our dedication to superior quality, we establish a direct covenant with end users that our products will perform and keep them safe when they are most needed. We sell a wide range of products including body armor, explosive ordnance disposal equipment and duty gear through both direct and indirect channels.
Through our dedication to superior quality, we establish a direct covenant with end users that our products will perform and keep them safe when they are most needed. We sell a wide range of products including body armor, explosive ordnance disposal equipment, duty gear and nuclear safety products through both direct and indirect channels.
Supplementary to our core product offerings, we design, manufacture, assemble, and market a suite of equipment to round out our product portfolio. Key products include communications gear, forensic and investigation products, firearms cleaning solutions, and crowd control products. These products are marketed under several well-known niche brands.
Supplementary to our core product offerings, we design, manufacture, assemble, and market a suite of equipment to round out our product portfolio. Key products include chem light solutions, communications gear, forensic and investigation products, firearms cleaning solutions, and crowd control products. These products are marketed under several well-known niche brands.
We maintain clear market-leadership positions in certain core product categories including body armor, explosive ordnance disposal equipment and duty gear. Over 80% of our product line is tied to customary or mandated refresh cycles of between five and ten years, which drives a highly predictable recurring revenue stream. The majority of the remaining revenue is associated consumable products.
We maintain clear market-leadership positions in certain core product categories including body armor, explosive ordnance disposal equipment and duty gear. Over 80% of our product sales are tied to customary or mandated refresh cycles of between five and ten years, which drives a highly predictable recurring revenue stream. The majority of the remaining revenue is associated consumable products.
The international market is also poised for growth as foreign governments face increasingly complex safety challenges and seek to replace legacy equipment. Additionally, we foresee the demand for safety and survivability equipment from overseas markets to increase due to heightened awareness of the importance and effectiveness of such products and as countries are exposed to new threats.
The international law enforcement market is also poised for growth as foreign governments face increasingly complex safety challenges and seek to replace legacy equipment. Additionally, we foresee the demand for safety equipment from overseas markets to increase due to heightened awareness of the importance and effectiveness of such products and as countries are exposed to new threats.
The loss of patent protection for patents expiring in 2023 is not expected to have a material effect on our business. Our material registered trademarks include SAFARILAND® and MED-ENG®.
The loss of patent protection for patents expiring in 2024 is not expected to have a material effect on our business. Our material registered trademarks include SAFARILAND ® and MED-ENG ® .
Among other things, the ATF conducts periodic audits of our facilities that hold Federal Firearms Licenses. 11 Table of Contents The Federal Acquisition Regulation (“FAR”) governs the majority of our contracts with U.S. federal agencies, mandating uniform policies and procedures across agencies and with each agency supplementing the FAR as needed. For example, the U.S.
Among other things, the ATF conducts periodic audits of our facilities that hold Federal Firearms Licenses. The Federal Acquisition Regulation (“FAR”) governs the majority of our contracts with U.S. federal agencies, mandating uniform policies and procedures across agencies and with each agency supplementing the FAR as needed. For example, the U.S.
We also estimate explosive ordnance disposal equipment to have an addressable market of approximately $245 million over the seven-to-ten year life cycle of the products’ installed base. Finally, the annual addressable market for holsters for the global law enforcement and military and consumer markets is estimated to be approximately $380 million.
We also estimate explosive ordnance disposal equipment to have an addressable market of approximately $245 million over the seven-to-ten year life cycle of the products’ installed base. Finally, the annual addressable market for safety holsters for the global law enforcement and military is estimated to be approximately $380 million.
We also manufacture body armor in Canada, England and Lithuania that is certified to meet applicable international armor standards. We also distribute a variety of third-party items, including helmets, and face shields for protection from blunt trauma and explosive shrapnel. Explosive Ordnance Disposal.
We also manufacture body armor in Canada, England and Lithuania that is certified to meet applicable international armor standards. We also distribute a variety of third-party items, including helmets, plates and face shields for protection from blunt trauma, ballistic threats and explosive shrapnel. Explosive Ordnance Disposal.
We own patents and pending patent applications in the United 10 Table of Contents States, Australia, Austria, Belgium, Brazil, Canada, the People’s Republic of China, Czech Republic, Denmark, France, Germany, Hong Kong, India, Ireland, Israel, Italy, Japan, Luxembourg, Mexico, New Zealand, Netherlands, Norway, Poland, Portugal, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, and the United Kingdom, as well as in the European Union.
We own patents and pending patent applications in the United States, Australia, Austria, Belgium, Brazil, Canada, the People’s Republic of China, Czech Republic, Denmark, France, Germany, Hong Kong, India, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, and the United Kingdom, as well as in the European Union.
Our primary competitors include, but are not limited to, Point Blank Enterprises, Inc., Avon Protection Systems, Inc., Central Lake Armor Express, Inc. (d/b/a Armor Express), as well as the Blackhawk division of Vista Outdoor Inc.
Our primary competitors include, but are not limited to, Point Blank Enterprises, Inc., Avon Protection Systems, Inc., Central Lake Armor Express, Inc. (d/b/a Armor Express), Alien Gear Holsters, as well as the Blackhawk division of Vista Outdoor Inc.
Our business has benefitted from key shifts serving as tailwinds to our growth strategy including the increasing focus on safety, replacement and modernization trends as well as demographic shifts and urbanization. Compelling organic and inorganic growth roadmap.
Our business has benefitted from key shifts serving as tailwinds to our growth strategy including the increasing focus on safety, replacement and modernization trends. Compelling organic and inorganic growth roadmap.
By way of reference, we sell concealable tactical, hard armor, or duty retention holsters to the majority of the top 50 police departments in the U.S. by size. Furthermore, we are a party to multi-year contracts for the largest bomb suit teams in the world including the DoD.
By way of reference, we sell concealable tactical, hard armor, or duty retention holsters to the majority of the top 50 police departments in the U.S. by size. For explosive ordnance disposal equipment, we are a party to multi-year contracts for the largest bomb suit teams in the world including the DoD.
Our products incorporate cutting-edge technology, innovative materials and processes in order to provide the best protection, reduce weight and optimize ergonomics for the end user. The majority of our armor products, which comply with NIJ or other applicable standards, are made-to-measure.
Our products incorporate cutting-edge technology, innovative materials and processes in order to provide the best protection, reduce weight and optimize ergonomics for the end user. The majority of our armor products, which comply with the National Institute of Justice (“NIJ”) standards or other applicable standards, are made-to-measure.
In particular, international expansion is an especially important initiative in our organic growth roadmap due to the significant market share opportunity and increasing investments in safety and survivability equipment in various key geographic markets. We expect to supplement our organic growth through a targeted M&A program spanning our existing core products and markets as well as attractive adjacencies.
In particular, international expansion is an especially important initiative in our organic growth roadmap due to the significant market share opportunity and increasing investments in safety equipment in various key geographic markets. We expect to supplement our organic growth through a targeted merger and acquisition (“M&A”) program spanning our existing core products and markets as well as attractive adjacencies.
Item 1. Business BUSINESS Business Overview For over 55 years, we have been a global leader in the manufacturing and distribution of safety and survivability equipment for first responders. Our equipment provides critical protection which allows its users to safely perform their duties and protect those around them in hazardous or life-threatening situations.
Item 1. Business BUSINESS Business Overview For over 60 years, we have been a global leader in the manufacturing and distribution of safety equipment for professionals. Our equipment provides critical protection which allows its users to safely perform their duties and protect those around them in hazardous or life-threatening situations.
Environmental Laws and Regulations Our operations are subject to a variety of federal, state, and local laws and regulations relating to environmental protection, including those governing the discharge, treatment, storage, transportation, remediation, and disposal of hazardous materials and wastes; the restoration of damages to the environment; and health and safety matters.
Environmental Laws and Regulations Our operations are subject to a variety of federal, state, and local laws and regulations relating to environmental protection, including those governing the discharge, treatment, storage, transportation, remediation, and disposal of hazardous materials including, without limitation, radioactive materials and waste; the restoration of damages to the environment; and health and safety matters.
We maintain long-term relationships with over 23,000 first responders and federal agencies both domestically and internationally, with top customer relationships averaging an excess of 15 years. Our global presence spans over 100 countries across North America, Europe and other regions. Products We design and manufacture a diversified product portfolio of critical safety and survivability equipment to protect first responders.
We maintain long-term relationships with over 23,000 first responders and federal agencies both domestically and internationally, with many top customer relationships in excess of 15 years. Our global presence spans over 100 countries across North America, Europe and other regions. Products We design and manufacture a diversified product portfolio of critical safety equipment.
While we believe that acceptance in this market is principally driven by the ability to bring new and innovative products to market, price point is critical. Human Capital We have a total of 2,274 employees.
While we believe that acceptance in this market is principally driven by the ability to bring new and innovative products to market, price point is critical. 10 Table of Contents Human Capital We have a total of 2,435 employees.
Body armor, explosive ordnance disposal equipment and duty gear comprise the core product areas in the safety and survivability equipment market and law enforcement personnel growth is a significant driver for our business. The U.S.
Body Armor, Duty Gear and Explosive Ordnance Disposal Body armor, duty gear, explosive ordnance disposal equipment are key product areas in the safety equipment market. Law enforcement personnel growth is a significant driver for our business. The U.S.
Our target end user base includes domestic and international first responders such as state and local law enforcement, fire and rescue, explosive ordnance disposal technicians, emergency medical technicians (“EMT”), fishing and wildlife enforcement and departments of corrections, as well as federal agencies including the U.S. Department of State (“DoS”), U.S. Department of Defense (“DoD”), U.S. Department of Interior (“DoI”), U.S.
Our target end user base includes state, local, and international law enforcement, fire and rescue, explosive ordnance disposal technicians, commercial nuclear power plants, emergency medical technicians (“EMT”), fishing and wildlife enforcement and departments of corrections, as well as federal agencies including the U.S. Department of State (“DoS”), U.S. Department of Defense (“DoD”), U.S. Department of Interior (“DoI”), U.S.
Our strong profitability combined with minimal capital expenditure requirements result in high free-cash-flow generation, which is a key driver for our internal research and development initiatives and targeted M&A program.
Our strong profitability combined with minimal capital expenditure requirements result in high free-cash-flow generation, which is a key driver for our internal research and development initiatives and targeted M&A program. Tenured management with significant public company platforms.
Examples of recent product innovation include the development of a 3D body sizing solution for soft armor, introduction of our next generation holsters, a new tactical armor solution, and working with key suppliers on the use of emerging materials for utilization in new armor products.
Examples of recent product innovation include the development of a 3D body sizing solution for soft armor, introduction of our next generation holsters, a new tactical armor solution, a new concealable armor solution, a variety of consumer-focused holsters and working with key suppliers on the use of emerging materials for utilization in new armor products. International Market Expansion.
We service the ever-changing needs of our end users by investing in research and development for new product innovation and technical advancements that continually raise the standards for safety and survivability equipment in the first responder market.
We service the ever-changing needs of our end users by investing in research and development for new product innovation and technical advancements that continually raise the standards for safety equipment in the markets we serve.
We believe that by combining our third party network with our in-house salesforce and our extensive owned distribution network, we create continuous customer interaction and best- in-class service and training, providing us with a distinct advantage over our peers.
In total, we have 67 salespeople domestically and 24 internationally. We believe that by combining our third party network with our in-house salesforce and our extensive owned distribution network, we create continuous customer interaction and best- in-class service and training, providing us with a distinct advantage over our peers.
In addition, like many other manufacturers, we are subject to compliance with the Fair Labor Standards Act (“FLSA”), the Occupational Safety and Health Act (“OSHA”), data privacy laws, and many other regulations surrounding employment law, environmental law, taxation, and consumer protection.
In addition, like many other manufacturers, we are subject to compliance with the Fair Labor Standards Act (“FLSA”), the Occupational Safety and Health Act (“OSHA”), data privacy laws, and many other regulations surrounding employment law, environmental law, taxation, and consumer protection. The operations of our Alpha Safety business are highly regulated by the U.S.
We are committed to honoring those who put their lives in danger through the SAVES CLUB®, which pays homage to first responders who experience a life-threatening incident in the line of work in which our armor or duty gear contribute to saving their lives. The SAVES CLUB® currently has over 2,000 members and counting.
In our law enforcement and military focused brands, we are committed to honoring those who put their lives in danger through the SAVES CLUB ® , which pays homage to first responders who experience a life-threatening incident in the line of work in which our armor or duty gear contribute to saving their lives.
Attractive macro-economic and secular tailwinds driving demand and visibility for our products. The vast majority of our end markets are acyclical in nature, as their demand is driven primarily by the first responder budgets, and relatively unaffected by economic cycles.
The majority of our remaining revenue is associated consumable products driving recurring sales based on replenishment needs. Attractive macro-economic and secular tailwinds driving demand and visibility for our products. The majority of our end markets are acyclical in nature, as their demand is driven primarily by the first responder budgets, and relatively unaffected by economic cycles.
Of these employees, 1,729 were engaged in manufacturing, 221 in sales, marketing, product management and customer support, 152 in corporate functions (IT, Finance, HR, Legal and Compliance, etc.), 127 in R&D, technical engineering, manufacturing engineering and project management, 33 retail store associates and 12 in various executive and administrative functions.
Of these employees, 1,838 were engaged in manufacturing, 232 in sales, marketing, product management and customer support, 191 in corporate functions (IT, Finance, HR, Legal and Compliance, etc.), 133 in R&D, technical engineering, manufacturing engineering and project management, 26 retail store associates and 15 in various executive and administrative functions.
Meanwhile, the explosive ordnance disposal equipment market is driven by the continued emergence of new global threats while duty gear is driven mainly by product use and replacement cycles. 5 Table of Contents Our management estimates the annual addressable market for soft body armor (including tactical soft armor) to be approximately $870 million.
Meanwhile, the explosive ordnance disposal equipment market is driven by the continued emergence of new global threats while duty gear is driven mainly by product use and replacement cycles as a result of changing or accessorizing firearms. Our management estimates the serviceable available market for soft body armor (including tactical soft armor) to be approximately $870 million.
Our history as a leading provider of high-quality safety and survivability equipment dates back to 1964. Our differentiated value proposition is built on superior quality combined with an unwavering focus on critical safety standards, making us the trusted brand name for first responders.
Competitive Strengths Leading, independent global provider of safety equipment. Our history as a leading provider of high-quality safety equipment dates back to 1964. Our differentiated value proposition is built on superior quality combined with an unwavering focus on critical safety standards, making us a trusted brand name. Strong market positions.
We are the industry leader in holster innovation and safety engineering and our products incorporate industry standard safety locking mechanisms on which a majority of first responders are trained.
Marines, FBI, ATF and all the armed forces of NATO countries. Duty Gear. We are the industry leader in holster innovation and safety engineering and our products incorporate industry standard safety locking mechanisms on which a majority of first responders are trained.
No supplier makes up more than 10% of total purchases. We are reliant on certain suppliers that provide us with the raw materials and components that we utilize in manufacturing our ballistic resistant garments.
We are reliant on certain suppliers that provide us with the raw materials and components that we utilize in manufacturing our ballistic resistant garments.
Together they bring an established track record of strong performance operating and growing public companies both organically and via acquisitions. This experience has created a differentiated approach to our operating model through their expertise in building a culture of operational and cultural excellence, complexity reduction, and innovation. Long-term customer relationships across diverse end markets and geographies.
This experience has created a differentiated approach to our operating model through their expertise in building a culture of operational and cultural excellence, complexity reduction, and innovation. Long-term customer relationships across diverse end markets and geographies.
We own a total of 447 patents and pending patent applications worldwide, of which 402 are patents granted and 45 are pending patent applications, with expiry dates ranging from 2023 to 2045 in 33 jurisdictions. Of those 447 patents and pending patent applications, 329 are for utility patents and 118 are for design patents.
We own a total of 520 patents and pending patent applications worldwide, of which 428 are patents granted and 92 are pending patent applications, with expiry dates ranging from 2023 to 2048 in 35 jurisdictions. Of those 520 patents and pending patent applications, 355 are for utility patents and 159 are for design patents.
Each site has capacity to scale up without further material investment in machinery and equipment. Additionally, we manage a diverse global supplier base of leading 9 Table of Contents textile, fabric and raw material providers. We have multiple sources for each input in order to limit our dependency on any single vendor.
Additionally, we manage a diverse global supplier base of leading textile, fabric and raw material providers. We have multiple sources for each input in order to limit our dependency on any single vendor. No supplier makes up more than 10% of total purchases.
Our Commercial channel consists primarily of sales through largely recognized e-commerce companies and retailers as well as through our own e-commerce sites. We service each of our channels through in-field technical salespeople and an owned distribution network.
Furthermore, we have long-standing contracts with key departments within the U.S. Army, U.S. Air Force, U.S. Navy and U.S. Marine Corps. Commercial. Our Commercial channel consists primarily of sales through largely recognized e-commerce companies and retailers as well as through our own e-commerce sites. We service each of our channels through in-field technical salespeople and an owned distribution network.
Demand for our products is driven by technological advancement as well as recurring modernization and replacement cycles for the equipment to maintain its efficiency, effective performance and regulatory compliance.
Demand for our products is driven by technological advancement as well as recurring modernization and replacement cycles for the equipment to maintain its efficiency, effective performance, and regulatory compliance. Domestically, we are a top provider of safety holsters and soft body armor for first responders, as well as a top provider of nuclear safety solutions.
Given our strong market standing, direct connection to the end users, extensive distribution network, long history of innovations and high-quality standards, we believe we are well positioned to capitalize on the positive market dynamics. Competitive Strengths Leading, independent global provider of safety and survivability equipment for first responders.
Our management team believes that the safety equipment industry represents a stable and growing market with long-term opportunities. Given our strong market standing, direct connection to the end users, extensive distribution network, long history of innovations and high-quality standards, we believe we are well positioned to capitalize on the positive market dynamics.
The market is driven by multiple factors including customer refresh cycles, growing number of personnel employed by first responder organizations, equipment replacement and modernization trends, greater emphasis on public and first responders’ safety and demographic shifts.
The market is driven by multiple factors including customer refresh cycles, growing number of personnel employed, equipment replacement and modernization trends, greater emphasis on public and first responders’ safety, increasing needs to modernize the U.S. nuclear stockpile, increasing demands for energy, and disposal and remediation of nuclear sites and products.
With the help of our suppliers, distributors and first responder end users, we strive to fulfill the Company creed: Together, We Save Lives. Industry Overview The market for safety and survivability equipment serving first responders focuses on providing a diverse set of protective and mission enhancing products and solutions to our target end users.
Industry Overview The market for safety equipment focuses on providing a diverse set of protective and mission enhancing products and solutions to our target end users.
We pair our in-house expertise with outside partners in order to provide our customers with the best service possible while maintaining a real-time understanding of end user needs. In total, we have 81 salespeople domestically and 21 internationally.
Our traditional distribution network consists of longstanding distribution partners and agents, retailers and e-commerce platforms and our own website where we sell directly to the end user. We pair our in-house expertise with outside partners in order to provide our customers with the best service possible while maintaining a real-time understanding of end user needs.
Our continuous investment in R&D supported by our existing IP portfolio, drives next- generation technologies designed to meet the ever-evolving threats for operators in the field. Select customers include the U.S. Army, U.S. Navy, U.S. Air Force, U.S. Marines, FBI, ATF and all the armed forces of NATO countries. 7 Table of Contents Duty Gear.
Med-Eng has a fielded installed base of bomb suits in over 100 countries, yielding predictable, recurring replacement cycles. Our continuous investment in R&D supported by our existing IP portfolio, drives next- generation technologies designed to meet the ever-evolving threats for operators in the field. Select customers include the U.S. Army, U.S. Navy, U.S. Air Force, U.S.
Given our leading domestic market position and our products’ high-quality standards and performance, we believe we are well positioned to take advantage of the growth in international demand for safety and survivability equipment for first responders. We intend to penetrate certain international markets through leveraging existing relationships, building local market teams and expansion into relevant market adjacencies. Targeted M&A Program.
We are also committed to increasing our market share internationally. Given our leading domestic market position and our products’ high-quality standards and performance, we believe we are well positioned to take advantage of the growth in international demand for safety equipment for first responders.
Over the past three years, we have sold products to more than 100 countries globally. We service foreign defense ministries, foreign national law enforcement agencies and other foreign agencies through our distribution partners as well as through agency agreements with representatives to help service broad regions. U.S. Federal Agencies.
We service foreign defense ministries, foreign national law enforcement agencies and other foreign agencies through our distribution partners as well as through agency agreements with representatives to help service broad regions. U.S. Federal Agencies. We sell to a variety of federal agencies including the DoS, DoD, DoI, DoJ, DHS Inc. and DoE.
Together these activities have helped enhance the Company’s manufacturing and sales operations, ultimately driving profitability growth. Customers and Selling Channels We sell our products through distributors and work directly with agencies to effectively reach end users. We classify our first responder customers into four categories: U.S. State and Local Agencies, International, U.S.
Customers and Selling Channels We sell our products through distributors and work directly with agencies to effectively reach end users. We classify our customers into four categories: U.S. State and Local Agencies, International, U.S. Federal Agencies, and Commercial (which includes our direct-to-consumer sites). U.S. State and Local Agencies.
Our brand name recognition and reputation among our customers, diversified product line and extensive distribution network are central to our marketing strategy. We leverage these advantages along with involvement and support of several law enforcement associations to market our products. Manufacturing and Raw Materials We operate a global manufacturing footprint with 16 sites across North America and Europe.
Our brand name recognition and reputation among our customers, diversified product line and extensive distribution network are central to our marketing strategy. Manufacturing and Raw Materials We operate a global manufacturing footprint with 21 sites across North America and Europe. Each site has capacity to scale up without significant further material investment in machinery and equipment.
We have an excellent workplace safety track record and believe that our operations are in material compliance with these laws and regulations. We incur expenses in complying with environmental requirements and could incur higher costs in the future as a result of more stringent requirements that may be enacted in the future.
We have an excellent workplace safety track record and believe that our operations are in material compliance with these laws and regulations.
In connection with the mission critical nature of duty gear products, we dedicate significant product development resources to ensure efficient and effective performance of our products. We manufacture and sell duty gear and commercial offerings under the widely recognized Safariland®, Radar® and Bianchi® brands. Other Protective and Law Enforcement Equipment.
In connection with the mission critical nature of duty gear products, we dedicate significant product development resources to ensure efficient and effective performance of our products. In fact, we launched a new family of duty holsters, the SafariVault ® .
As discussed below, we believe we have established leading market positions in our major product categories through high-quality standards, innovation and a direct connection to the end users, including being a leading provider of explosive ordnance disposal technician equipment globally as well as a leading provider of safety holsters and a top provider of soft body armor for first responders in the U.S.
Globally, we are a leading provider of explosive ordnance disposal technician equipment. We believe we have achieved these positions through our high-quality standards, innovation and a direct connection to the end users.
Federal Agencies, and Commercial (which includes our direct-to-consumer sites). U.S. State and Local Agencies. We have built relationships with the majority of domestic law enforcement agencies in the country, selling at least one product category to each of the top 50 major departments.
We have built relationships with the majority of domestic law enforcement agencies in the country, selling at least one product category to each of the top 50 major departments. Other end users in this category include fire and rescue, explosive ordnance disposal technicians, EMT, fishing and wildlife enforcement and departments of corrections.
As a result, stringent safety standards and customary warranty provisions create refresh cycles on over 80% of the equipment we supply to ensure efficient and effective performance at all times. Demand associated with these refresh cycles drives a highly predictable recurring revenue stream. The majority of our remaining revenue is associated consumable products driving recurring sales based on replenishment needs.
Our products provide critical protection to their end users as well as those around them, with limited or no room for error. As a result, stringent safety standards and customary warranty provisions create refresh cycles on over 80% of the equipment we supply via our product segment. Demand associated with these refresh cycles drives a highly predictable recurring revenue stream.
Our operating model, passion around connecting with customers and expansive channel help maximize the value created from our acquisitions. Continuous Margin Improvement Initiatives. Our management team has shown a strong track record of achieving cost structure optimization to drive operating leverage, as evidenced by past years’ margin improvements.
Our management team has shown a strong track record of achieving cost structure optimization to drive operating leverage, as evidenced by past years’ margin improvements. Our operating model starts with complexity reduction then uses lean tools and methods to continuously improve operational and commercial processes.
Our operating model starts with complexity reduction then uses lean tools and methods to continuously improve operational and commercial processes. Strategic initiatives completed over the past few years include among others, rationalizing the Company’s manufacturing footprint, divesting non-core activities, enhancing our supply chain and optimizing customer relationships and key contracts.
Strategic initiatives completed over the past few years including, among others, rationalizing the Company’s manufacturing footprint, divesting non-core activities, enhancing our supply chain and optimizing customer relationships and key contracts. Together these activities have helped enhance the Company’s manufacturing and sales operations, ultimately driving profitability growth.
Bureau of Labor Statistics projects the number of law enforcement personnel in the U.S. to increase at a faster rate than broader labor market growth over the 10-year period from 2019 to 2029, or 5%, from 813,500 in 2019 to 854,200 in 2029. Demand for first responder safety and survivability equipment is also fueled by increasing law enforcement budgets.
Bureau of Labor Statistics projects that the number of 5 Table of Contents openings for law enforcement personnel in the U.S. to be 64,500 on average over the decade from 2022 to 2032. Demand for first responder safety equipment is also fueled by increasing law enforcement budgets and increases in expenditures per officer.
Our management estimates our addressable number of total law enforcement personnel outside the U.S. to be approximately 9.7 million, representing a substantial market opportunity. Our management team believes that the safety and survivability equipment industry for first responders represents a stable and growing market with long-term opportunities.
Our management estimates our addressable number of total law enforcement personnel outside the U.S. to be approximately 9.7 million, representing a substantial market opportunity. Nuclear Safety Products The demand drivers for our highly engineered technical products centers around a global effort to ensure safe nuclear operations and material handling.
Other end users in this category include fire and rescue, explosive ordnance disposal technicians, EMT, fishing and wildlife enforcement and departments of corrections. We sell our products through a network of longstanding third-party distributors as well as an owned distribution platform, both of which interact directly with agencies and end users. International.
We sell our 9 Table of Contents products through a network of longstanding third-party distributors as well as an owned distribution platform, both of which interact directly with agencies and end users. International. Over the past three years, we have sold products to more than 100 countries globally.
In addition, you may request a copy of any such materials, without charge, by submitting a written request to: Cadre Holdings, Inc., c/o the Secretary, 12 Table of Contents 13386 International Parkway, Jacksonville, FL 32218. The contents of the websites identified above are not incorporated into this Annual Report on Form 10-K. ​
The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. In addition, you may request a copy of any such materials, without charge, by submitting a written request to: Cadre Holdings, Inc., c/o the Secretary, 13386 International Parkway, Jacksonville, FL 32218.
We recently launched an industry-first partnership to provide law enforcement officers and first responders with the ability to determine size through the use of mobile phone scanning and artificial intelligence technologies. Our principal body armor product offerings include concealable, corrections and tactical armor, which provide varying levels of protection against ballistic or sharp instrument threats.
We recently launched an industry-first partnership to provide law enforcement officers and first responders with the ability to determine their specific size through the use of our 3D body sizing app, XpertFit.
We maintain a robust pipeline of opportunistic M&A opportunities, spanning our existing core products and markets as well as attractive adjacencies within the safety and survivability landscape. We plan to utilize our relatively high free-cash-flow generation and historical success in acquisitions to drive favorable acquisition structures and efficient integration.
These strategic acquisitions have allowed us to expand our product and technology offerings, enter new markets and expand geographically to achieve attractive returns in our invested capital period. We maintain a robust pipeline of opportunistic M&A opportunities, spanning our existing core products and markets as well as attractive adjacencies within the safety landscape.
Our products continually exceed stringent industry safety standards and are recognized for advancements in performance through innovation and technological enhancement. Mission-critical products with recurring demand characteristics. Our products provide critical protection to their end users as well as those around them, with limited or no room for error.
Furthermore, our engineered container solution for the nuclear industry, the SAVY 400, is the only DoE compliant container. Our products continually exceed stringent industry safety standards and are recognized for advancements in performance through innovation and technological enhancement. 6 Table of Contents Mission-critical products with recurring demand characteristics.
Department of Justice (“DoJ”), U.S. Department of Homeland Security (“DHS”), U.S. Department of Corrections (“DoC”) and numerous foreign government agencies. We have a large and diverse customer base, with no individual customer representing more than 10% of our total revenue.
We have a large and diverse customer base, with no individual customer representing more than 10% of our total revenue. Our mission that binds our leading brands as one is Together, We Save Lives.
Our Adjusted EBITDA Conversion Rate (( Adjusted EBITDA less capital expenditures) / Adjusted EBITDA) has consistently been greater than 90%. 6 Table of Contents Tenured management with significant public company platforms. Our management team is comprised of executive officers with extensive experience at public company platforms including Armor Holdings Inc., Danaher Corporation, General Electric Company and IDEX Corporation.
Our management team is comprised of executive officers with extensive experience at public company platforms including Armor Holdings Inc., Danaher Corporation, General Electric Company and IDEX Corporation. Together they bring an established track record of strong performance operating and growing public companies both organically and via acquisitions.
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In addition to the macro industry trends, each of these product segments experience unique drivers in and of themselves. Increasing mandatory body armor use and refresh policies, evolving technical standards and increases in tactical or special weapons and tactics (“SWAT”) law enforcement personnel act as tailwinds to the body armor market.
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Department of Justice (“DoJ”), U.S. Department of Homeland Security (“DHS”), U.S. Department of Corrections (“DoC”), the Department of Energy (“DoE”), Los Alamos National Laboratories (“LANL”), Waste Isolation Plant (“WIPP”), numerous foreign government agencies and other companies involved in the nuclear industry.
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Our extensive product breadth allows us to serve as a one-stop shop for our end users and their safety and survivability equipment needs. Strong market positions.
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This mission lives in the hearts and minds of our associates around the world and remains in the forefront as we innovate new products and services and focus on processes to bring high quality standards to our customers.
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Our products provide end users with the latest protective technologies integrated with electronic components and communications equipment. Med-Eng has a fielded installed base of bomb suits in over 100 countries, yielding predictable, recurring replacement cycles.
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The SAVES CLUB ® currently has over 2,180 members and counting. Our mission is supported by our Cadre Operating Model (“COM”). The COM is a behavior-based, leadership centric, operating model that enables us to create greater value for our customers and stakeholders.
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We are also seeking to expand our leadership in high-growth technologies through the development of our blast sensor equipment for soldier protection. We believe this opportunity could represent a total potential addressable market opportunity of up to approximately $500 million based on the total size of the DoD branches ultimately participating in the program.
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It guides how we work, innovate, solve problems, improve and engage with each other, our customers and our communities. In our COM, we define six capabilities that all of our businesses give focus and learn as they master tools in their journey to excellence through our excellence maturity model.
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The requirement for blast sensors and the potential market for all branches of the U.S. military is supported by the Blast Pressure Exposure Study Improvement Act which was signed into law as part of the National Defense Authorization Act for Fiscal Year 2020. International Market Expansion. We are also committed to increasing our market share internationally.
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In addition, increasing mandatory body armor use and refresh policies, and evolving technical standards continue to drive the need for safety equipment for first responders.
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To supplement organic growth and internal research and development, our management team has historically undertaken a targeted M&A program, completing 14 transactions to date. These strategic acquisitions have allowed us to 8 Table of Contents expand our product and technology offerings, enter new markets and expand geographically to achieve attractive returns in our invested capital period.
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The significant increase (66.7%) in active shooter incidents since 2018, continues to be a tailwind that leaves law enforcement agencies with making the decision to upgrade body armor or armored equipment that provides higher protection to officers due to these threats.
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We sell to a variety of federal agencies including the DoS, DoD, DoI, DoJ and DHS Inc. Furthermore, we have long-standing contracts with key departments within the U.S. Army, U.S. Air Force, U.S. Navy and U.S. Marine Corps. Commercial.
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The three key missions that are highly regulated and that our products and services fulfill are environmental safety, national security and nuclear energy. Any interaction with radioactive waste requires highly engineered safety solutions and domain expertise.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWhile our customers appear to have resumed business operations that are similar to pre-COVID activities, we cannot predict whether future variants of COVID-19 might cause further slowdowns of cessation of business activities.
Biggest changeThe pandemic also resulted in thousands of hours of lost work time for our employees due to illness or steps taken to reduce the spread of the COVID-19 virus, as well as significant supply chain logistics issues that affected our inventory and revenues. 16 Table of Contents While our customers have resumed business operations that are similar to pre-COVID activities, we cannot predict whether future variants of COVID-19 or other pandemics might cause further slowdowns of cessation of business activities.
For example, our indebtedness or any additional financing may: ● make it more difficult for us to pay or refinance debts as they become due; ● require us to use a larger portion of cash flow for debt service, reducing funds available for other purposes; ● limit our ability to pursue business opportunities, such as potential acquisitions, and to react to changes in market or industry conditions; ● reduce the funds available for other purposes, such as implementing our strategy, funding capital expenditures and making distributions to stockholders; ● increase our vulnerability to adverse economic, industry or competitive developments; ● affect our ability to obtain additional financing; ● decrease our profitability or cash flow, or require us to dispose of significant assets in order to satisfy debts and other obligations if we are not able to satisfy these obligations using cash from operations or other sources; and 22 Table of Contents ● disadvantage us compared to competitors.
For example, our indebtedness or any additional financing may: ● make it more difficult for us to pay or refinance debts as they become due; ● require us to use a larger portion of cash flow for debt service, reducing funds available for other purposes; 22 Table of Contents ● limit our ability to pursue business opportunities, such as potential acquisitions, and to react to changes in market or industry conditions; ● reduce the funds available for other purposes, such as implementing our strategy, funding capital expenditures and making distributions to stockholders; ● increase our vulnerability to adverse economic, industry or competitive developments; ● affect our ability to obtain additional financing; ● decrease our profitability or cash flow, or require us to dispose of significant assets in order to satisfy debts and other obligations if we are not able to satisfy these obligations using cash from operations or other sources; and ● disadvantage us compared to competitors.
We may be unable to meet our labor needs and control our costs due to external factors such as the availability of a sufficient number of qualified persons in the workforce of the markets in which we operate, competition, unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics, health and other insurance costs, adoption of new or revised employment and labor laws and regulations, and the impacts of man-made or natural disasters, such as tornadoes, hurricanes, and public health emergencies, such as the ongoing COVID-19 pandemic.
We may be unable to meet our labor needs and control our costs due to external factors such as the availability of a sufficient number of qualified persons in the workforce of the markets in which we operate, competition, unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics, health and other insurance costs, adoption of new or revised employment and labor laws and regulations, and the impacts of man-made or natural disasters, such as tornadoes, hurricanes, and public health emergencies, such as the COVID-19 pandemic.
The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: ● actual or anticipated fluctuations in our results of operations; ● the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; ● failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; ● announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, operating results or capital commitments; ● changes in operating performance and stock market valuations of other technology or retail companies generally, or those in our industry in particular; ● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; ● changes in our board of directors or management; ● sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders; ● lawsuits threatened or filed against us; ● changes in laws or regulations applicable to our business; ● the expiration of contractual lock-up agreements; ● changes in our capital structure, such as future issuances of debt or equity securities; ● short sales, hedging and other derivative transactions involving our capital stock; ● general economic conditions in the United States and abroad; ● other events or factors, including those resulting from war, pandemics, incidents of terrorism or responses to these events; and ● the other factors described in the sections of the Annual Report on Form 10-K titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: ● actual or anticipated fluctuations in our results of operations; ● the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; ● failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; 27 Table of Contents ● announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, operating results or capital commitments; ● changes in operating performance and stock market valuations of other technology or retail companies generally, or those in our industry in particular; ● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; ● changes in our board of directors or management; ● sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders; ● lawsuits threatened or filed against us; ● changes in laws or regulations applicable to our business; ● the expiration of contractual lock-up agreements; ● changes in our capital structure, such as future issuances of debt or equity securities; ● short sales, hedging and other derivative transactions involving our capital stock; ● general economic conditions in the United States and abroad; ● other events or factors, including those resulting from war, pandemics, incidents of terrorism or responses to these events; and ● the other factors described in the sections of the Annual Report on Form 10-K titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
In pursuing our international expansion strategy, we face several additional risks, including: ● foreign laws and regulations, which may vary by country, that may impact how we conduct our business; ● uncertain costs of doing business in foreign countries, including different employment laws; ● potential adverse tax consequences if taxing authorities in different jurisdictions worldwide disagree with our interpretation of various tax laws or our determinations as to the income and expenses attributable to specific jurisdictions, which could result in our paying additional taxes, interest and penalties; ● technological differences that vary by marketplace, which we may not be able to support; ● longer payment cycles and foreign currency fluctuations; ● economic downturns; and ● uncertainty of sustained revenue growth outside of the United States.
In pursuing our international expansion strategy, we face several additional risks, including: ● foreign laws and regulations, which may vary by country, that may impact how we conduct our business; ● uncertain costs of doing business in foreign countries, including different employment laws; ● potential adverse tax consequences if taxing authorities in different jurisdictions worldwide disagree with our interpretation of various tax laws or our determinations as to the income and expenses attributable to specific jurisdictions, which could result in our paying additional taxes, interest and penalties; ● technological differences that vary by marketplace, which we may not be able to support; ● longer payment cycles and foreign currency fluctuations; 15 Table of Contents ● economic downturns; and ● uncertainty of sustained revenue growth outside of the United States.
We are an “emerging growth company,” as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including: ● not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act; ● reduced disclosure obligations regarding executive compensation in our periodic reports and annual report on Form 10-K; and ● exemptions from the requirements of holding non-binding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.
We are an “emerging growth company,” as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including: ● not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”); ● reduced disclosure obligations regarding executive compensation in our periodic reports and annual report on Form 10-K; and ● exemptions from the requirements of holding non-binding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.
While we intend to pay regular Quarterly Cash Dividends for the foreseeable future, all subsequent dividends will be reviewed quarterly and declared at the discretion and approval of our board of directors and will depend upon, among other things, our results of operations, capital requirements, general business conditions, contractual restrictions under our New Credit Agreement on the payment of dividends, legal and regulatory restrictions on the payment of dividends, and other factors our board of directors deems relevant.
While we intend to pay regular Quarterly Cash Dividends for the foreseeable future, all subsequent dividends will be reviewed quarterly and declared at the discretion and approval of our board of directors and will depend upon, among other things, our results of operations, capital requirements, general business conditions, contractual restrictions under our 2021 Credit Agreement on the payment of dividends, legal and regulatory restrictions on the payment of dividends, and other factors our board of directors deems relevant.
Therefore, you should not purchase our common stock if you need immediate or future income by way of dividends from your investment. In addition, upon an event of default under our New Credit Agreement, we are prohibited from declaring or paying any dividends on our common stock or generally making other distributions to our stockholders.
Therefore, you should not purchase our common stock if you need immediate or future income by way of dividends from your investment. In addition, upon an event of default under our 2021 Credit Agreement, we are prohibited from declaring or paying any dividends on our common stock or generally making other distributions to our stockholders.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act, new Securities and Exchange Commission regulations and NASDAQ rules, are creating uncertainty for companies such as ours.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, new Securities and Exchange Commission regulations and NASDAQ rules, are creating uncertainty for companies such as ours.
Additionally, information technology systems require periodic modifications, upgrades, and replacement that subject us to costs and risks, including potential disruption to our internal control structure, substantial capital expenditures, additional administration and 21 Table of Contents operating expenses, retention of sufficiently skilled personnel or outside firms to implement and operate existing or new systems, and other risks and costs of delays or difficulties in transitioning to new or modified systems or of integrating new or modified systems into our current systems.
Additionally, information technology systems require periodic modifications, upgrades, and replacement that subject us to costs and risks, including potential disruption to our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel or outside firms to implement and operate existing or new systems, and other risks and costs of delays or difficulties in transitioning to new or modified systems or of integrating new or modified systems into our current systems.
Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits 28 Table of Contents against our directors and officers, although our stockholders cannot waive our compliance with federal securities laws and the rules and regulations thereunder.
Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders cannot waive our compliance with federal securities laws and the rules and regulations thereunder.
Beginning in 2020, we felt the impact of the COVID-19 pandemic and related shelter-in-place orders which materially reduced the demand for many of our customers products and services which consequently negatively impacted the demand for our products and services from time to time.
Beginning in 2020, we felt the impact of the COVID-19 pandemic and related shelter-in-place orders which materially reduced the demand for many of our customers’ products and services which consequently negatively impacted the demand for our products and services from time to time.
In addition, the potential issuance of additional shares in connection with anticipated acquisitions could lessen demand for our common stock and result in a lower price than would otherwise be obtained. 29 Table of Contents Techniques employed by short sellers or other derivative traders may drive down the market price of our common stock and/or spur litigation or regulatory action.
In addition, the potential issuance of additional shares in connection with anticipated acquisitions could lessen demand for our common stock and result in a lower price than would otherwise be obtained. Techniques employed by short sellers or other derivative traders may drive down the market price of our common stock and/or spur litigation or regulatory action.
If we are unable to design and manufacture solutions for new products of our customers on a timely and cost-effective basis, such inability could have a material adverse effect on our business, financial condition, results of operations and liquidity. 18 Table of Contents We may be adversely affected by applicable environmental, health and safety laws and regulations.
If we are unable to design and manufacture solutions for new products of our customers on a timely and cost-effective basis, such inability could have a material adverse effect on our business, financial condition, results of operations and liquidity. We may be adversely affected by applicable environmental, health and safety laws and regulations.
As a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance 27 Table of Contents practices. We are committed to maintaining high standards of corporate governance and public disclosure.
As a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure.
Our amended and restated bylaws provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Our amended and restated bylaws provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or 30 Table of Contents liability created by the Exchange Act or the rules and regulations thereunder.
As it is in short sellers’ interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short.
As it is in short sellers’ interest for the price of the security to 31 Table of Contents decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short.
We are unable to predict the effect that such sales may have on the prevailing market price of our common stock. 26 Table of Contents If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
We are unable to predict the effect that such sales may have on the prevailing market price of our common stock. If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
We may be unable to monitor or control such third parties and the third parties having access to our other websites in their compliance with the terms of our privacy policies, terms of use, and other applicable contracts, and we may 20 Table of Contents be unable to prevent unauthorized access to, or use or disclosure of, customer information.
We may be unable to monitor or control such third parties and the third parties having access to our other websites in their compliance with the terms of our privacy policies, terms of use, and other applicable contracts, and we may be unable to prevent unauthorized access to, or use or disclosure of, customer information.
Our future operating results will depend to a significant extent on our ability to continue to provide design and manufacturing services for new products that compare favorably on the basis of time to introduction, cost and performance with the design and manufacturing capabilities.
Our future operating results will depend to a significant extent on our ability to continue to provide design and manufacturing services for new products that compare favorably on the basis of time to introduction, cost and performance with 18 Table of Contents the design and manufacturing capabilities.
Fixed-price contracts require us to price our contracts by forecasting our expenditures. When making proposals for fixed-price contracts, we rely on our estimates of costs and timing for completing these projects. These estimates reflect management’s judgments regarding our capability to complete projects efficiently and timely.
Fixed-price contracts require us to price our contracts by forecasting our expenditures. When making proposals for fixed-price contracts, we rely on our estimates of costs and timing for completing these projects. These estimates reflect management’s judgments regarding our capability to complete projects efficiently 19 Table of Contents and timely.
Further, we will be relying on these policies and procedures in preparing our financial and other reports as a public company, so any failure of acquired businesses to properly adopt these policies and procedures could impair our public 24 Table of Contents reporting.
Further, we will be relying on these policies and procedures in preparing our financial and other reports as a public company, so any failure of acquired businesses to properly adopt these policies and procedures could impair our public reporting.
Our future performance and profitability will depend in large part on our ability to attract and retain additional management and other key personnel; our ability to implement successful enhancements to our management, accounting and information technology systems; and our ability to adapt those systems, as necessary, to respond to any growth in our business. 17 Table of Contents We are dependent on industry relationships.
Our future performance and profitability will depend in large part on our ability to attract and retain additional management and other key personnel; our ability to implement successful enhancements to our management, accounting and information technology systems; and our ability to adapt those systems, as necessary, to respond to any growth in our business. We are dependent on industry relationships.
Government tax revenues and budgetary constraints, which fluctuate from time to time, can affect budgetary allocations for these customers. Many domestic and foreign government agencies have in the past experienced budget deficits that have led to decreased spending in defense, law enforcement and 16 Table of Contents other military and security areas.
Government tax revenues and budgetary constraints, which fluctuate from time to time, can affect budgetary allocations for these customers. Many domestic and foreign government agencies have in the past experienced budget deficits that have led to decreased spending in defense, law enforcement and other military and security areas.
A breach of, or the inability to comply with, the covenants in our term loan facility and revolving credit agreement could result in an event of default, in which case the lenders will have the right to declare all borrowings to be immediately due and payable, which would have a material adverse effect on our business, financial condition, results of operations and prospects and could lead to foreclosure on our assets In the future, we may need to refinance our indebtedness.
A breach of, or the inability to comply with, the covenants in our term loan facility and revolving credit agreement could result in an event of default, in which case the lenders will have the right to declare all borrowings to be immediately due and payable, which would have a material adverse effect on our business, financial condition, results of operations and prospects and could lead to foreclosure on our assets.
We are also required to comply with Controlled Goods Directorate Registration regime in Canada for explosive ordnance disposal products. Additionally, the failure to obtain applicable governmental approval and clearances could materially adversely affect our ability to continue to service the government contracts we maintain.
Department of Transportation for packaging and labeling. We are also required to comply with Controlled Goods Directorate Registration regime in Canada for explosive ordnance disposal products. Additionally, the failure to obtain applicable governmental approval and clearances could materially adversely affect our ability to continue to service the government contracts we maintain.
Our significant payment obligations under the terms of our long-term debt, $151.3 million of which was outstanding as of December 31, 2022, together with any additional indebtedness we may incur in the future (including under the New Credit Agreement (herein defined)), could adversely affect our business, financial condition, results of operations and prospects.
Our significant payment obligations under the terms of our long-term debt, $141.3 million of which was outstanding as of December 31, 2023, together with any additional indebtedness we may incur in the future (including under the 2021 Credit Agreement (herein defined)), could adversely affect our business, financial condition, results of operations and prospects.
Failure to receive these authorizations may materially adversely affect our revenues and in turn our business, financial condition, results of operations and liquidity from international sales. Furthermore, we have material contracts with governmental entities and are subject to rules, regulations and approvals applicable to government contractors. We are also subject to routine audits to assure our compliance with these requirements.
Failure to receive these authorizations may materially adversely affect our revenues and in turn our business, financial condition, results of operations and liquidity from international sales. Furthermore, we have material contracts with governmental entities and are subject to rules, regulations and approvals applicable to government contractors.
Our executive officers, directors and stockholders who own more than 5% of our outstanding common stock and their respective affiliates held, in the aggregate, shares representing approximately 49.3% of our outstanding voting stock.
Our executive officers, directors and stockholders who own more than 5% of our outstanding common stock and their respective affiliates held, in the aggregate, shares representing approximately 63.1% of our outstanding voting stock.
Our resources may be insufficient to manage demand. As we expand our operations, any growth may place significant demands on our management, administrative, operating and financial resources. The growth of our customer base, the types of services and products offered and the geographic markets we serve could place a significant strain on our resources.
As we expand our operations, any growth may place significant demands on our management, administrative, operating and financial resources. The growth of our customer base, the types of services and products offered and the geographic markets we serve could place a significant strain on our resources.
However, additional financing may not be available on favorable commercial terms to us, or at all. If, at such time, market conditions are materially different or our credit profile has deteriorated, the cost of refinancing such debt may be significantly higher than our indebtedness existing at that time. Furthermore, we may not be able to procure refinancing at all.
In the future, we may need to refinance our indebtedness. However, additional financing may not be available on favorable commercial terms to us, or at all. If, at such time, market conditions are materially different or our credit profile has deteriorated, the cost of refinancing such debt may be significantly higher than our indebtedness existing at that time.
If we and/or our cloud-based solution providers are not successful in preventing or effectively responding to outages and cyberattacks, our financial condition, results of operations and cash flow could be materially and adversely affected.
If we and/or our cloud-based solution providers are not successful in preventing or effectively responding to outages and cyberattacks, our business, operations, and financial results could be materially and adversely affected.
While we continually work to enhance our international trade compliance programs, we cannot assure you that we are or will be in full compliance at all times with applicable laws and regulations governing the export and deemed export of defense articles, defense services, and dual-use products and services that are controlled by U.S. and/or foreign governments.
We are also subject to routine audits to assure our compliance with these requirements. 14 Table of Contents While we continually work to enhance our international trade compliance programs, we cannot assure you that we are or will be in full compliance at all times with applicable laws and regulations governing the export and deemed export of defense articles, defense services, and dual-use products and services that are controlled by U.S. and/or foreign governments.
We rely on information technology systems, including third-party cloud-based solutions, and any failure of these systems may result in disruptions or outages, loss of processing capabilities, and/or loss of data, any of which may have a material adverse effect on our financial condition, results of operations or cash flow.
We rely on information technology systems, including third-party cloud-based solutions, and any failure of these systems, including, without limitation, due to outages and/or cyberattacks, may result in disruptions or outages, loss of processing capabilities, and/or loss of data, any of which may have a material adverse effect on our business, operations, and financial results .
Any failure to meet any future debt service obligations through use of cash flow, refinancing or otherwise, could have a material adverse effect on our business, financial condition, results of operations and prospects. Our business is significantly dependent on our ability to meet our labor needs.
Furthermore, we may not be able to procure refinancing at all. Any failure to meet any future debt service obligations through use of cash flow, refinancing or otherwise, could have a material adverse effect on our business, financial condition, results of operations and prospects. Our business is significantly dependent on our ability to meet our labor needs.
Thus, if our supply of any of these materials or components were materially reduced or cut off or if there were a material increase in the prices of these materials or components, our manufacturing operations could be adversely affected and our costs increased, and our business, financial condition, results of operations and liquidity could be materially adversely affected.
Thus, if our supply of any of these materials or components were materially reduced or cut off or if there were a material increase in the prices of these materials or components, our manufacturing operations could be adversely affected and our costs increased, and our business, financial condition, results of operations and liquidity could be materially adversely affected. 17 Table of Contents Our resources may be insufficient to manage demand.
Variations in financial results, announcements of material events, changes in our dividend policy, technological innovations or new products by us or our competitors, our quarterly operating results, changes in general conditions in the economy or government spending on law enforcement and military, other developments affecting us or our competitors or general price and volume fluctuations in the market are among the many factors that could cause the market price of our common stock to fluctuate substantially. 25 Table of Contents Our stock price may be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors.
Variations in financial results, announcements of material events, changes in our dividend policy, technological innovations or new products by us or our competitors, our quarterly operating results, changes in general conditions in the economy or government spending on law enforcement and military, other developments affecting us or our competitors or general price and volume fluctuations in the market are among the many factors that could cause the market price of our common stock to fluctuate substantially.
Therefore, we may incur losses on fixed price contracts that we had expected to be profitable, or such contracts may be less profitable than expected, which could have a material adverse effect on our business, financial condition, results of operations and liquidity.
Therefore, we may incur losses on fixed price contracts that we had expected to be profitable, or such contracts may be less profitable than expected, which could have a material adverse effect on our business, financial condition, results of operations and liquidity. Fixed-price contracts represented approximately 11% and 60% of 2023 Product and Distribution segment net sales, respectively.
Bureau of Alcohol, Tobacco and Firearms, and the Equal Employment Opportunity Commission. The U.S. Bureau of Alcohol, Tobacco and Firearms also regulates our manufacturing and distribution of certain destructive devices, firearms, and explosives. We also ship hazardous goods, and in doing so, must comply with the regulations of the U.S. Department of Transportation for packaging and labeling.
Bureau of Alcohol, Tobacco and Firearms, Nuclear Regulatory Commission, U.S. Department of Energy, and the Equal Employment Opportunity Commission. The U.S. Bureau of Alcohol, Tobacco and Firearms also regulates our manufacturing and distribution of certain destructive devices, firearms, and explosives. We also ship toxic, hazardous and radioactive materials, and in doing so, must comply with the regulations of the U.S.
Kanders, as well as any loss of officers or employees due to illness or other events outside of our control. ● We are uncertain of our ability to manage our growth. ● We have significant payment obligations under the terms of our long-term debt, $151.3 million of which was outstanding as of December 31, 2022. ● The concentration of our capital stock ownership with insiders will likely limit your ability to influence corporate matters.
Kanders, as well as any loss of officers or employees due to illness or other events outside of our control. ● We are uncertain of our ability to manage our growth. ● We have significant payment obligations under the terms of our long-term debt, $141.3 million of which was outstanding as of December 31, 2023. ● The concentration of our capital stock ownership with insiders will likely limit your ability to influence corporate matters. 13 Table of Contents ● We may face difficulty in integrating the operations of the businesses we have acquired and may acquire in the future.
Further, a disruption, infiltration or failure of our information technology systems or any of our data centers including the systems and data centers of our third-party vendors as a result of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or misuse, power disruptions, natural disasters or accidents could cause breaches of data security and loss of critical data, which in turn could materially adversely affect our business.
We also would be required to expend significant resources to mitigate the breach of security and to address related matters. 20 Table of Contents Further, a disruption, infiltration or failure of our information technology systems or any of our data centers including the systems and data centers of our third-party vendors as a result of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or misuse, power disruptions, natural disasters or accidents could cause breaches of data security and loss of critical data, which in turn could materially adversely affect our business.
In addition, global economic uncertainty relating to the effects of fiscal and political crises and political and economic disputes, current or future ‘trade wars,’ changes in consumer spending, foreign currency exchange rate fluctuations, political unrest, wars, terrorist acts, and/or military operations, could have a material adverse effect on our financial condition, results of operations and cash flows. 15 Table of Contents The conflict between Russia and Ukraine could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook. ​ There is continued, sustained military conflict between Russia and Ukraine and continued disruption in the region is likely.
In addition, global economic uncertainty relating to the effects of fiscal and political crises and political and economic disputes, current or future ‘trade wars,’ changes in consumer spending, foreign currency exchange rate fluctuations, political unrest, wars, terrorist acts, and/or military operations, could have a material adverse effect on our financial condition, results of operations and cash flows.
If some or our entire workforce were to become unionized and collective bargaining agreement terms were significantly different from our current compensation arrangements or work practice, it could have a material adverse effect on our business, financial condition, results of operations and liquidity.
If some or our entire workforce were to become unionized and collective bargaining agreement terms were significantly different from our current compensation arrangements or work practice, it could have a material adverse effect on our business, financial condition, results of operations and liquidity. 23 Table of Contents Reductions in the availability of energy supplies or an increase in energy costs may increase our operating costs.
If our due diligence fails to identify issues specific to an investment or acquisition, we may obtain a lower return from that transaction than the investment would return or otherwise subject ourselves to unexpected liabilities. We may face difficulty in integrating the operations of the businesses we have acquired and may acquire in the future.
If our due diligence fails to identify issues specific to an investment or acquisition, we may obtain a lower return from that transaction than the investment would return or otherwise subject ourselves to unexpected liabilities.
Increased competition for acquisition opportunities may impede our ability to acquire these companies because they choose another acquirer. It could also increase the price that we must pay for these companies. Either of these outcomes could reduce our growth, harm our business and adversely impact our ability to consummate acquisitions.
Increased competition for acquisition opportunities may impede our ability to acquire these companies because they choose another acquirer. It could also increase the price that we must pay for these companies.
We may be required to take write downs or write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.
This would harm the prospects of the businesses they manage, potentially causing us to lose money on our investment and harming our growth and financial results. 26 Table of Contents We may be required to take write downs or write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.
We may be subject to disruptions, failures or cyber-attacks in our information technology systems and network infrastructures that could have a material adverse effect on us. We maintain and rely extensively on information technology systems and network infrastructures for the effective operation of our business.
We may be subject to disruptions, failures or cyber-attacks in our information technology systems and network infrastructures that could disrupt our operations, damage our reputation and adversely affect our business, operations, and financial results. We maintain and rely extensively on information technology systems and network infrastructures for the effective operation of our business.
Additionally, our existing cloud-based solution providers have broad discretion to change and interpret their terms of service and other policies with respect to us, and they may take actions beyond our control that could harm our business. We also may not be able to control the quality of the systems and services we receive from our third-party cloud-based solution providers.
Additionally, our existing cloud-based solution providers have broad discretion to change and interpret their terms of service and other policies with respect to us, and they may take actions beyond our control that could harm 21 Table of Contents our business.
We may be unsuccessful in identifying suitable acquisition candidates, which may negatively impact our competitive position and our growth strategy. In addition to organic growth, our future growth will be driven by our selective acquisition of additional businesses, our competitors and complementary businesses. Our growth through acquisitions, to date, has consisted of 14 acquisitions and two divestitures.
In addition to organic growth, our future growth will be driven by our selective acquisition of additional businesses, our competitors and complementary businesses. Our growth through acquisitions, to date, has consisted of 16 acquisitions and two divestitures.
Any transition of the cloud-based solutions currently provided to different cloud providers would be difficult to implement and may cause us to incur significant time and expense.
We also may not be able to control the quality of the systems and services we receive from our third-party cloud-based solution providers. Any transition of the cloud-based solutions currently provided to different cloud providers would be difficult to implement and may cause us to incur significant time and expense.
Reductions in the availability of energy supplies or an increase in energy costs may increase our operating costs. Electricity and natural gas are used to operate equipment at manufacturing facilities. Over the past several years, prices for electricity and natural gas have fluctuated significantly.
Electricity and natural gas are used to operate equipment at manufacturing facilities. Over the past several years, prices for electricity and natural gas have fluctuated significantly.
On November 11, 2021, the Company announced that its board of directors approved the initiation of a quarterly cash dividend program of $0.08 per share of the Company’s common stock or $0.32 per share on an annualized basis (the “Quarterly Cash Dividend”).
On January 23, 2024, the Company announced that its board of directors approved the initiation of a quarterly cash dividend policy of $0.0875 per share of the Company’s common stock (the “Quarterly Cash Dividend”) or $0.35 per share on an annualized basis, representing an increase of 3 cents over the previous annualized dividend of $0.32 per share.
Violations of the Foreign Corrupt Practices Act may result in severe criminal penalties, which could have a material adverse effect on our business, financial condition, results of operations and liquidity. 14 Table of Contents We have significant international operations and assets and, therefore, are subject to additional financial and regulatory risks.
Violations of the Foreign Corrupt Practices Act may result in severe criminal penalties, which could have a material adverse effect on our business, financial condition, results of operations and liquidity. In addition, we are subject to governmental laws, regulations and other legal obligations related to privacy, data protection, and cybersecurity.
We sell our products in foreign countries and seek to increase our level of international business activity.
We have significant international operations and assets and, therefore, are subject to additional financial and regulatory risks. We sell our products in foreign countries and seek to increase our level of international business activity.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock, which may also have the consequence of depressing the market price of our common stock.
As a result, our efforts to comply with evolving laws, regulations, and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. 29 Table of Contents Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock, which may also have the consequence of depressing the market price of our common stock.
Our products include: body armor and plates designed to protect against ballistic and sharp instrument penetration; explosive ordnance disposal products; police duty gear; and crowd control products. 13 Table of Contents Claims have been made, and are pending against certain of our subsidiaries, involving permanent physical injury and death allegedly caused by our products or arising from the design, manufacture or sale of such goods.
Claims have been made, and are pending against certain of our subsidiaries, involving permanent physical injury and death allegedly caused by our products or arising from the design, manufacture or sale of such goods.
Although we typically seek to sign employment agreements with the managers of acquired businesses, it remains possible that these individuals will leave our organization. This would harm the prospects of the businesses they manage, potentially causing us to lose money on our investment and harming our growth and financial results.
Although we typically seek to sign employment agreements with the managers of acquired businesses, it remains possible that these individuals will leave our organization.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. 28 Table of Contents We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.
For our Distribution segment, we estimate that fixed-price contracts represented approximately 55% of annual net sales in 2022. 19 Table of Contents Our business is subject to various laws and regulations favoring the U.S. government’s contractual position, and our failure to comply with such laws and regulations could harm our operating results and prospects.
Our business is subject to various laws and regulations favoring the U.S. government’s contractual position, and our failure to comply with such laws and regulations could harm our operating results and prospects.
Future limitations on the availability or consumption of petroleum products and/or an increase in energy costs, particularly electricity for plant operations, could have a material adverse effect upon our business, financial condition, results of operations and liquidity. 23 Table of Contents Risks Related to our Acquisition Strategy A number of other companies are seeking to make acquisitions in our industry, which may make our acquisition strategy more difficult or expensive to pursue.
In addition, increased energy costs negatively impact our freight costs due to higher fuel prices. Future limitations on the availability or consumption of petroleum products and/or an increase in energy costs, particularly electricity for plant operations, could have a material adverse effect upon our business, financial condition, results of operations and liquidity.
Risks Related to Our Business Many of our customers have fluctuating budgets, which may cause substantial fluctuations in our results of operations.
As a result, we cannot predict the impact that pandemics akin to COVID-19 might have on our business and operating results in the future. Risks Related to Our Business Many of our customers have fluctuating budgets, which may cause substantial fluctuations in our results of operations.
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The pandemic also resulted in thousands of hours of lost work time for our employees due to illness or steps taken to reduce the spread of the COVID-19 virus.
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Our products include: body armor and plates designed to protect against ballistic and sharp instrument penetration; explosive ordnance disposal products; police duty gear; and crowd control products.
Removed
As a result, we cannot predict the impact that the COVID-19 pandemic might have on our business and operating results in the future The impacts of the COVID-19 pandemic have resulted in ongoing disruptions and delays in manufacturing, shipping and transportation of our products that have had an adverse effect on our business and results of operations, and we expect this adverse impact to continue. ​ The COVID-19 pandemic also has the potential to significantly impact our supply chain if the factories that manufacture our products, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers are disrupted, temporarily closed or experience worker shortages.
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We collect and otherwise process data, including personal data and other regulated or sensitive data, as part of our business processes and activities. This data is subject to a variety of U.S. and foreign laws and regulations, including oversight by various regulatory or other governmental bodies.
Removed
Current vessel, container and other transportation shortages, labor shortages and port congestion globally have delayed and are expected to continue to delay inventory orders and, in turn, deliveries to our customers. These supply chain and logistics disruptions have impacted our inventory levels and net revenues in 2022 and could impact our sales volumes in future periods.
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Many foreign countries and governmental bodies, including the European Union and other relevant jurisdictions where we conduct business, have laws and regulations concerning the collection and use of personal data, and other data obtained from their residents or by businesses operating within their jurisdictions that are currently more restrictive than those in the U.S.
Removed
We have also incurred in 2022 higher freight and other distribution costs, including air freight, to mitigate these delays. We are also seeing negative impacts to pricing of certain components of our products as a result of the COVID-19 pandemic.
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Any inability, or perceived inability, to adequately address privacy and data protection concerns, or to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, even if unfounded, could result in additional cost and liability to us, damage our reputation, inhibit sales and have a material adverse effect on our business, results of operations, and financial condition.
Removed
In the event we increase prices of our products, there can be no assurance that consumers will accept such increases, which could have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as the trading price of our common stock.
Added
The conflict between Russia and Ukraine could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook. ​ There is continued, sustained military conflict between Russia and Ukraine and continued disruption in the region is likely.
Removed
As it relates to our Product segment, fixed-price contracts represented less than 10% of annual net sales in 2022.
Added
Alpha Safety’s nuclear operations subject us to various environmental, regulatory, financial and other risks.
Removed
We also would be required to expend significant resources to mitigate the breach of security and to address related matters.
Added
Alpha Safety’s operations involve the design and manufacture of nuclear waste handling, transportation, and storage products, as well as radioactive material identification, protection, and alarms systems and services, including onsite support services, for commercial and governmental sectors, and subjects us to various risks, including: • potential liabilities relating to harmful effects on the environment and human health resulting from nuclear operations and the storage, handling and disposal of radioactive materials; • unplanned expenditures relating to maintenance, operation, security, defects, upgrades and repairs required by the NRC and other government agencies; • limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with nuclear operations; and • potential liabilities arising out of a nuclear, radiological or criticality incident, whether or not it is within our control.
Removed
In addition, increased energy costs negatively impact our freight costs due to higher fuel prices.
Added
Alpha Safety’s operations are subject to various safety-related requirements imposed by the U.S. Government, including the DoE and the NRC. In the event of non-compliance, these agencies might increase regulatory oversight, impose fines or shut down our operations, depending upon the assessment of the severity of the situation.
Removed
We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.
Added
Revised security and safety requirements promulgated by these agencies could necessitate substantial capital and other expenditures which could have a material adverse effect on our business, results of operations, and financial condition.
Removed
As a result, our efforts to comply with evolving laws, regulations, and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table identifies and provides certain information regarding our facilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Primary Activity Location Country Owned/Leased Sq Ft Corporate HQ and Manufacturing ​ Jacksonville, Florida ​ USA ​ Owned ​ 132,224 Manufacturing and R&D Jacksonville, Florida USA Owned 63,000 Warehouse and Distribution Jacksonville, Florida USA Leased 27,405 Manufacturing and R&D Ontario, California USA Leased 41,475 Sales and R&D Casper, Wyoming USA Owned 44,000 Manufacturing and R&D ​ Casper, Wyoming USA Owned ​ 10,500 Manufacturing ​ Casper, Wyoming USA Owned ​ 21,000 Manufacturing Dalton, Massachusetts USA Leased 33,862 Manufacturing Dover, Tennessee USA Leased 87,652 Manufacturing Ogdensburg, New York USA Leased 23,220 Manufacturing and R&D ​ West Springfield, Massachusetts ​ USA ​ Owned ​ 200,000 Manufacturing Tijuana, Baja California Mexico Leased 158,614 Sales and R&D Ottawa, Ontario Canada Leased 39,273 Manufacturing Pembroke, Ontario Canada Leased 26,154 Manufacturing Arnprior, Ontario Canada Leased 48,853 Manufacturing Warrington, Cheshire UK Leased 21,958 Manufacturing Kaunas Lithuania Leased 19,160 Manufacturing, Sales and R&D ​ Fucecchio ​ Italy ​ Leased/Owned ​ 30,375 Manufacturing and Sales ​ Aix-en-Provence ​ France ​ Owned ​ 20,387 ​ ​ 30 Table of Contents
Biggest changeThe following table identifies and provides certain information regarding our facilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Primary Activity Location Country Owned/Leased Sq Ft Corporate HQ and Manufacturing ​ Jacksonville, Florida ​ USA ​ Owned ​ 132,224 Manufacturing and R&D Jacksonville, Florida USA Owned 63,000 Warehouse and Distribution Jacksonville, Florida USA Leased 27,405 Manufacturing and R&D Ontario, California USA Leased 41,475 Sales and R&D Casper, Wyoming USA Owned 44,000 Manufacturing and R&D ​ Casper, Wyoming USA Owned ​ 10,500 Manufacturing ​ Casper, Wyoming USA Owned ​ 21,000 Manufacturing Dalton, Massachusetts USA Leased 33,862 Manufacturing Dover, Tennessee USA Leased 87,652 Manufacturing Ogdensburg, New York USA Leased 23,220 Manufacturing and R&D ​ West Springfield, Massachusetts ​ USA ​ Owned ​ 200,000 Manufacturing, Sales and R&D ​ Golden, Colorado ​ USA ​ Leased ​ 27,000 Manufacturing ​ Carlsbad, New Mexico ​ USA ​ Leased ​ 40,000 Manufacturing and Sales ​ Santa Fe, New Mexico ​ USA ​ Leased ​ 15,000 Manufacturing and Sales ​ Groton, Connecticut ​ USA ​ Leased ​ 9,899 Manufacturing Tijuana, Baja California Mexico Leased 158,614 Sales and R&D Ottawa, Ontario Canada Leased 39,273 Manufacturing Pembroke, Ontario Canada Leased 26,154 Manufacturing Arnprior, Ontario Canada Leased 48,853 Manufacturing, Sales and R&D ​ Ottawa, Ontario ​ Canada Leased ​ 27,500 Manufacturing Warrington, Cheshire UK Leased 21,958 Manufacturing Kaunas Lithuania Leased 19,160 Manufacturing, Sales and R&D ​ Fucecchio ​ Italy ​ Leased/Owned ​ 30,375 Manufacturing and Sales ​ Aix-en-Provence ​ France ​ Owned ​ 20,387 ​ ​
Additionally, we lease 11 retail locations across the East Coast that service our Distribution segment. Our properties are well maintained, and we consider them to be sufficient for our existing capacity requirements.
Additionally, we lease retail locations across the East Coast that service our Distribution segment. Our properties are well maintained, and we consider them to be sufficient for our existing capacity requirements.
Item 2. Properties We own our corporate headquarters located at 13386 International Parkway, Jacksonville, FL 32218 where we occupy approximately 36,941 square feet of office space and 95,283 square feet of manufacturing space. In total, we operate 19 facilities (8 owned) across the U.S., Canada, Mexico and Europe, spanning more than 1,000,000 square feet.
Item 2. Properties We own our corporate headquarters located at 13386 International Parkway, Jacksonville, FL 32218 where we occupy approximately 36,941 square feet of office space and 95,283 square feet of manufacturing space. In total, we operate 24 facilities (8 owned) across the U.S., Canada, Mexico and Europe, spanning more than 1,000,000 square feet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings Refer to Note 15 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference . ​ Item 4. Mine Safety Disclosures Not applicable. ​ PART II
Biggest changeItem 3. Legal Proceedings Refer to Note 14 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference . ​ Item 4. Mine Safety Disclosures Not applicable. 33 Table of Contents ​ PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividend Policy On November 11, 2021, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend program of $0.08 per share of the Company’s common stock or $0.32 per share on an annualized basis. In 2022, our total quarterly cash dividends were $11.5 million.
Biggest changeDividend Policy On January 23, 2024, the Company announced that its board of directors approved the initiation of a quarterly cash dividend policy of $0.0875 per share of the Company’s common stock or $0.35 per share on an annualized basis, representing an increase of 3 cents over the previous annualized dividend of $0.32 per share.
Issuer Repurchases of Equity Securities None. ​ Item 6. [Reserved] ​ 31 Table of Contents
Issuer Repurchases of Equity Securities None. ​ Item 6. [Reserved] ​ 35 Table of Contents
Any determination to pay dividends in the future will be at the discretion of our board of directors and will be dependent on a number of factors, including the terms of our New Credit Agreement, our earnings, capital requirements, our overall financial condition and other factors that our board of directors considers relevant . Recent Sales of Unregistered Securities None.
Any determination to pay dividends in the future will be at the discretion of our board of directors and will be dependent on a number of factors, including the terms of our 2021 Credit Agreement, our earnings, capital requirements, our overall financial condition and other factors that our board of directors considers relevant .
We expect to continue to pay a quarterly cash dividend of $0.08 per share, or $0.32 on an annualized basis, on our common stock for the foreseeable future, but we may elect to retain all of our future earnings, if any, to finance the growth and development of our business.
In 2023, our total quarterly cash dividends were $12.0 million. We expect to continue to pay a quarterly cash dividend of $0.0875 per share, or $0.35 on an annualized basis, on our common stock for the foreseeable future, but we may elect to retain all of our future earnings, if any, to finance the growth and development of our business.
Prior to that date, there was no public trading market for our common stock. ​ Holders of Record As of March 10, 2023, there were 17 holders of record of our common stock.
Prior to that date, there was no public trading market for our common stock. ​ Holders of Record As of March 8, 2024, there were 12 holders of record of our common stock.
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Performance Graph The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the S&P 500 Index and the S&P SmallCap 600 Index.
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The graph assumes an initial investment of $100 in our common stock at the market close on November 4, 2021, which was our initial trading day, and the reinvestment of dividends.
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Data for the S&P 500 index and the S&P SmallCap 600 Index assume an initial investment of $100 at market close on October 31, 2021 and the reinvestment of dividends.
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Historical stock price performance should not be relied on as indicative of future stock price performance. 34 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 11/4/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Cadre Holdings, Inc. ​ $ 100.00 ​ $ 166.89 $ 161.83 $ 130.02 ​ $ 159.57 ​ $ 133.94 $ 143.74 $ 146.05 ​ $ 179.16 ​ $ 221.73 S&P 500 ​ $ 100.00 ​ $ 103.76 $ 98.99 $ 83.05 ​ $ 78.99 ​ $ 84.97 $ 91.34 $ 99.32 ​ $ 96.07 ​ $ 107.30 S&P SmallCap 600 ​ $ 100.00 ​ $ 102.14 $ 96.39 $ 82.79 ​ $ 78.48 ​ $ 85.69 $ 87.90 $ 90.86 ​ $ 86.39 ​ $ 99.45 ​ Recent Sales of Unregistered Securities None.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] ​ 31 ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 32 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 42 ​ ​ ​ Item 8. Financial Statements and Supplementary Data ​ 43 ​ ​ ​
Biggest changeItem 6. [Reserved] ​ 35 ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 36 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 45 ​ ​ ​ Item 8. Financial Statements and Supplementary Data ​ 47 ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table presents data from our results of operations for the years ended December 31, 2022 and 2021 (in thousands unless otherwise noted): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ 2022 ​ 2021 ​ % Chg ​ Net sales ​ $ 457,837 ​ $ 427,288 ​ 7.1 % Cost of goods sold ​ 282,159 ​ 256,598 ​ 10.0 % Gross profit ​ 175,678 ​ 170,690 ​ 2.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 153,288 ​ 114,962 ​ 33.3 % Restructuring and transaction costs ​ 4,355 ​ 3,430 ​ 27.0 % Related party expense ​ 1,478 ​ 579 ​ 155.3 % Other general income ​ (159) ​ — ​ (100.0) % Total operating expenses ​ 158,962 ​ 118,971 ​ 33.6 % Operating income ​ 16,716 ​ 51,719 ​ (67.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other expense ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ (6,206) ​ (16,425) ​ (62.2) % Loss on extinguishment of debt ​ — ​ (15,155) ​ (100.0) % Other expense, net ​ (1,137) ​ (947) ​ 20.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total other expense, net ​ (7,343) ​ (32,527) ​ (77.4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before provision for income taxes ​ 9,373 ​ 19,192 ​ (51.2) % Provision for income taxes ​ (3,553) ​ (6,531) ​ (45.6) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 5,820 ​ $ 12,661 ​ (54.0) % ​ 35 Table of Contents The following table presents segment data for the years ended December 31, 2022 and 2021 (in thousands unless otherwise noted): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ Reconciling ​ ​ ​ ​ Product Distribution Items (1) Total Net sales $ 385,423 $ 97,106 ​ $ (24,692) $ 457,837 Cost of goods sold ​ ​ 230,245 ​ ​ 76,633 ​ ​ (24,719) ​ ​ 282,159 Gross profit ​ $ 155,178 ​ $ 20,473 ​ $ 27 ​ $ 175,678 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ Reconciling ​ ​ ​ ​ Product Distribution Items (1) Total Net sales $ 362,189 $ 90,043 $ (24,944) $ 427,288 Cost of goods sold ​ ​ 213,881 ​ ​ 67,649 ​ ​ (24,932) ​ ​ 256,598 Gross profit ​ $ 148,308 ​ $ 22,394 ​ $ (12) ​ $ 170,690 (1) Reconciling items consist primarily of intercompany eliminations and items not directly attributable to operating segments.
Biggest changeSegment information is consistent with how the chief operating decision maker, our chief executive officer, reviews the business, makes investing and resource allocation decisions and assesses operating performance . 38 Table of Contents The following table presents data from our results of operations for the years ended December 31, 2023 and 2022 (in thousands unless otherwise noted): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ 2023 ​ 2022 ​ % Chg ​ Net sales ​ $ 482,532 ​ $ 457,837 ​ 5.4 % Cost of goods sold ​ 281,806 ​ 282,159 ​ (0.1) % Gross profit ​ 200,726 ​ 175,678 ​ 14.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 140,519 ​ 153,129 ​ (8.2) % Restructuring and transaction costs ​ 2,192 ​ 4,355 ​ (49.7) % Related party expense ​ 1,496 ​ 1,478 ​ 1.2 % Total operating expenses ​ 144,207 ​ 158,962 ​ (9.3) % Operating income ​ 56,519 ​ 16,716 ​ 238.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other expense ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ (4,531) ​ (6,206) ​ (27.0) % Other income (expense), net ​ 936 ​ (1,137) ​ (182.3) % Total other expense, net ​ (3,595) ​ (7,343) ​ (51.0) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before provision for income taxes ​ 52,924 ​ 9,373 ​ 464.6 % Provision for income taxes ​ (14,283) ​ (3,553) ​ 302.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 38,641 ​ $ 5,820 ​ 563.9 % ​ The following table presents segment data for the years ended December 31, 2023 and 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ Reconciling ​ ​ ​ ​ Product Distribution Items (1) Total Net sales $ 410,825 ​ $ 102,371 ​ $ (30,664) $ 482,532 Cost of goods sold ​ ​ 233,937 ​ $ 78,335 ​ $ (30,466) ​ ​ 281,806 Gross profit ​ $ 176,888 ​ $ 24,036 ​ $ (198) ​ $ 200,726 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ Reconciling ​ ​ ​ ​ Product Distribution Items (1) Total Net sales $ 385,423 $ 97,106 ​ $ (24,692) $ 457,837 Cost of goods sold ​ ​ 230,245 ​ ​ 76,633 ​ ​ (24,719) ​ ​ 282,159 Gross profit ​ $ 155,178 ​ $ 20,473 ​ $ 27 ​ $ 175,678 (1) Reconciling items consist primarily of intercompany eliminations and items not directly attributable to operating segments.
The effective tax rate was 37.9% for the year ended December 31, 2022 and was higher than the statutory rate due to state taxes, executive compensation and the tax impact of our foreign earnings, partially offset by research and development tax credits.
For the year ended December 31, 2022, the effective tax rate was 37.9% and was higher than the statutory rate due to state taxes, executive compensation and the tax impact of our foreign earnings, partially offset by research and development tax credits.
The New Credit Agreement contains certain restrictive debt covenants, which require us to: (i) maintain a minimum fixed charge coverage ratio of 1.25 to 1.00, starting with the quarter ended December 31, 2021, which is to be determined for each quarter end on a trailing four quarter basis and (ii) maintain a quarterly maximum consolidated total net leverage ratio of 3.75 to 1.00 from the quarter ended December 31, 2021 until the quarter ended September 30, 2022, and thereafter 3.50 to 1.00, which is in each case to be determined on a trailing four quarter basis; provided that under certain circumstances and subject to certain limitations, in the event of a material acquisition, we may temporarily increase the consolidated total net leverage ratio by up to 0.50 to 1.00 for four fiscal quarters following such acquisition.
The 2021 Credit Agreement contains certain restrictive debt covenants, which require us to: (i) maintain a minimum fixed charge coverage ratio of 1.25 to 1.00, starting with the quarter ended December 31, 2021, which is to be determined for each quarter end on a trailing four quarter basis and (ii) maintain a quarterly maximum consolidated total net leverage ratio of 3.75 to 1.00 from the quarter ended December 31, 2021 until the quarter ended September 30, 2022, and thereafter 3.50 to 1.00, which is in each case to be determined on a trailing four quarter basis; provided that under certain circumstances and subject to certain limitations, in the event of a material acquisition, we may temporarily increase the consolidated total net leverage ratio by up to 0.50 to 1.00 for four fiscal quarters following such acquisition.
The New Credit Agreement also contains customary representations and warranties, and affirmative and negative covenants, including limitations on additional indebtedness, dividends, and other distributions, entry into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on liens on the assets of the Borrowers or any Guarantor, transactions with affiliates, amendments to organizational documents, accounting changes, sale and leaseback transactions, dispositions, and mandatory prepayments in connection with certain liquidity events.
The 2021 Credit Agreement also contains customary representations and warranties, and affirmative and negative covenants, including limitations on additional indebtedness, dividends, and other distributions, entry into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on liens on the assets of the Borrowers or any Guarantor, transactions with affiliates, amendments to organizational documents, accounting changes, sale and leaseback transactions, dispositions, and mandatory prepayments in connection with certain liquidity events.
Net cash provided by (used in) financing activities During the year ended December 31, 2022, net cash provided by financing activities of $24.5 million resulted primarily from proceeds from the secondary offering of $56.3 million, partially offset by principal payments on term loans of $10.1 million, taxes paid in connection with employee stock transactions of $6.3 million and dividends distributed of $11.5 million.
During the year ended December 31, 2022, net cash provided by financing activities of $24.5 million resulted primarily from proceeds from the secondary offering of $56.3 million, partially offset by principal payments on term loans of $10.1 million, taxes paid in connection with employee stock transactions of $6.3 million and dividends distributed of $11.5 million .
On July 14, 2022, the underwriters exercised a portion of their over-allotment option and purchased an additional 300,000 shares of common stock at a price of $23.50 per share, resulting in net proceeds to the Company of $6.4 million after underwriter discounts and commissions, fees and expenses of $0.7 million.
On July 14, 2022, the underwriters exercised a portion of their over-allotment option and purchased an additional 300,000 shares of common stock at a price of $23.50 per share, resulting in net proceeds to the Company of $6.6 million after underwriter discounts and commissions, fees and expenses of $0.4 million.
The Company’s net proceeds from the sale of shares were $47.0 million after underwriter discounts and commissions, fees and expenses of $2.7 million, of which $2.0 million was paid to Kanders & Company, Inc., a company controlled by Warren B. Kanders, our Chief Executive Officer .
The Company’s net proceeds from the sale of shares were $47.0 million after underwriter discounts and commissions, fees and expenses of $2.7 million, of which $2.0 million was paid to Kanders & Company, Inc., a company controlled by Warren Kanders, our Chief Executive Officer .
The majority of our products are generally processed and shipped within one to six weeks of an order being placed, though the fulfillment time for certain products, for example, explosive ordnance disposal equipment, may take three months or longer.
The majority of our products are generally processed and shipped within one to three weeks of an order being placed, though the fulfillment time for certain products, for example, explosive ordnance disposal equipment, may take three months or longer.
Net cash used in investing activities During the year ended December 31, 2022, we used $59.6 million of cash in investing activities, primarily consisting of $19.4 million for the acquisition of Radar, $36.2 million for the acquisition of Cyalume and $4.5 million for purchases of property and equipment.
During the year ended December 31, 2022, we used $59.6 million of cash in investing activities, primarily consisting of $19.4 million for the acquisition of Radar, $36.2 million for the acquisition of Cyalume and $4.5 million for purchases of property and equipment .
The Canadian Borrowers may elect to have borrowings either in United States dollars or Canadian dollars under the Canadian Loan Agreement, which will bear interest at a base rate or a LIBOR rate, in each case, plus an applicable margin, in the case of borrowings in United States dollars, or at a Canadian Prime Rate (as announced from time to time by PNC Canada) or a Canadian deposit offered rate (“CDOR”) as determined from time to time by PNC Canada in accordance with the Canadian Loan Agreement.
The Canadian Borrowers may elect to have borrowings either in United States dollars or Canadian dollars under the Canadian Loan Agreement, which will bear interest at a base rate or SOFR, in each case, plus an applicable margin, in the case of borrowings in United States dollars, or at a Canadian Prime Rate (as announced from time to time by PNC Canada) or a Canadian deposit offered rate (“CDOR”) as determined from time to time by PNC Canada in accordance with the Canadian Loan Agreement.
The New Credit Agreement contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, failure to make payment on, or defaults with respect to, certain other material indebtedness, bankruptcy and insolvency events, material judgments and change of control provisions.
The 2021 Credit Agreement contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, failure to make payment on, or defaults with respect to, certain other material indebtedness, bankruptcy and insolvency events, material judgments and change of control provisions.
The New Credit Agreement is guaranteed, jointly and severally, by the Guarantors and, subject to certain exceptions, secured by a first-priority security interest in substantially all of the assets of the Borrower and the Guarantors pursuant to a Security and Pledge Agreement and a Guaranty and Suretyship Agreement, each dated as of the Closing Date .
The 2021 Credit Agreement is guaranteed, jointly and severally, by the Guarantors and, subject to certain exceptions, secured by a first-priority security interest in substantially all of the assets of the Borrower and the Guarantors pursuant to a Security and Pledge Agreement and a Guaranty and Suretyship Agreement, each dated as of the Closing Date .
Upon the occurrence of an event of default, and after the expiration of any applicable grace period, payment of any outstanding loans under the New Credit Agreement may be accelerated and the Lenders could foreclose on their security interests in the assets of the Borrowers and the Guarantors.
Upon the occurrence of an event of default, and after the expiration of any applicable grace period, payment of any outstanding loans under the 2021 Credit Agreement may be accelerated and the Lenders could foreclose on their security interests in the assets of the Borrowers and the Guarantors.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Conversion Rate are not recognized measures under U.S. GAAP and are not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly-titled measures of performance of other companies.
EBITDA and Adjusted EBITDA are not recognized measures under U.S. GAAP and are not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly-titled measures of performance of other companies.
The Borrower may elect to have the Revolving Loan and Term Loan under the New Credit Agreement bear interest at a base rate or a LIBOR rate, in each case, plus an applicable margin.
The Borrower may elect to have the Revolving Loan and Term Loan under the 2021 Credit Agreement bear interest at a base rate or LIBOR, in each case, plus an applicable margin.
LIQUIDITY AND CAPITAL RESOURCES Liquidity refers to our ability to generate sufficient cash flows to meet the cash requirements of our business operations, including working capital needs, capital expenditures, service debt, acquisitions and other commitments. Our principal sources of liquidity have been cash provided by operating activities, cash on hand and amounts available under our revolving credit facility.
LIQUIDITY AND CAPITAL RESOURCES Liquidity refers to our ability to generate sufficient cash flows to meet the cash requirements of our business operations, including working capital needs, capital expenditures, debt service, acquisitions and other commitments. Our principal sources of liquidity have been cash provided by operating activities, cash on hand and amounts available under our revolving loans .
See “ Non-GAAP Measures ” below for our definition of, and additional information about, Adjusted EBITDA, and for a reconciliation to net income, the most directly comparable U.S.
See “ Non-GAAP Measures ” below for our definition of, and additional information about, Adjusted EBITDA, and for a reconciliation to net income, the most directly comparable U.S. GAAP financial measure.
The applicable margin for these borrowings will range from 0.50% to 1.50% per annum, in the case of base rate borrowings and Canadian Prime Rate borrowings, and 1.50% to 2.50% per annum, in the case of LIBOR borrowings and CDOR borrowings.
The applicable margin for these borrowings will range from 0.50% to 1.50% per annum, in the case of base rate borrowings and Canadian Prime Rate borrowings, and 1.50% to 2.50% per annum, in the case of SOFR borrowings and CDOR borrowings.
There were no amounts outstanding under the Revolving Loan as of December 31, 2022 and 2021. As of December 31, 2022, there were $2.4 million in outstanding letters of credit, and $97.6 million of availability .
There were no amounts outstanding under the Revolving Loan as of December 31, 2023 and 2022. As of December 31, 2023, there were $2.6 million in outstanding letters of credit and $97.4 million of availability .
Our future capital requirements will depend on several factors, including future acquisitions and investments in our manufacturing facilities and equipment. We could be required, or could elect, to seek additional funding through public or private equity or debt financings; however, additional funds may not be available on terms acceptable to us, if at all.
Our future capital requirements will depend on several factors, including future acquisitions and investments in our manufacturing facilities and equipment. We could be required, or could elect, to 41 Table of Contents seek additional funding through public or private equity or debt financings; however, additional funds may not be available on terms acceptable to us, if at all .
Adjusted EBITDA represents EBITDA that excludes restructuring and transaction costs, other general income, loss on extinguishment of debt, other expense, net, stock-based compensation expense, stock-based compensation payroll tax expense, long term incentive plan (“LTIP”) bonus, and amortization of inventory step-up as these items do not represent our core operating performance.
Adjusted EBITDA represents EBITDA that excludes restructuring and transaction costs, other general income, other (income) expense, net, stock-based compensation expense, stock-based compensation payroll tax expense, long-term incentive plan (“LTIP”) bonus and amortization of inventory step-up as these items do not represent our core operating performance .
Due to municipal government procurement rules, in certain cases orders included in backlog are subject to budget appropriation or other contract cancellation clauses. Consequently, our 33 Table of Contents orders backlog may differ from actual future sales. Orders backlog can be helpful to investors in evaluating the performance of our business and identify trends over time.
Due to municipal government procurement rules, in certain cases orders included in backlog are subject to budget appropriation or other contract cancellation clauses. Consequently, our orders backlog may differ from actual future sales. Orders backlog can be helpful to investors in evaluating the performance of our business and identifying trends over time .
Department of Justice (“DoJ”), U.S. Department of Homeland Security (“DHS”), U.S. Department of Corrections (“DoC”) and numerous foreign government agencies in over 100 countries. In January 2022, the Company acquired Radar Leather Division S.r.l. (“Radar”) for $19.4 million, net of cash acquired.
Department of Homeland Security, U.S. Department of Corrections and numerous foreign government agencies in over 100 countries . In January 2022, the Company acquired Radar Leather Division S.r.l. (“Radar”) for $19.4 million, net of cash acquired.
Our target end user base includes domestic and international first responders such as state and local law enforcement, fire and rescue, explosive ordnance disposal technicians, emergency medical technicians (“EMT”), fishing and wildlife enforcement and departments of corrections, as well as federal agencies including the U.S. Department of State (“DoS”), U.S. Department of Defense (“DoD”), U.S. Department of Interior (“DoI”), U.S.
Our target end user base includes domestic and international first responders such as state and local law enforcement, fire and rescue, explosive ordnance disposal technicians, emergency medical technicians, fishing and wildlife enforcement and departments of corrections, as well as federal agencies including the U.S. Department of State, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, U.S.
Upon the occurrence of an event of default, and after the expiration of any applicable grace period, payment of any outstanding loans under the Canadian Loan Agreement may be accelerated. As of March 10 , 2023, there were no amounts outstanding under the Revolving Canadian Loan .
Upon the occurrence of an event of default, and after the expiration of any applicable grace period, payment of any outstanding loans under the Canadian Loan Agreement may be accelerated. As of March 8, 2024, there were no amounts outstanding under the Revolving Canadian Loan .
There were no amounts outstanding under the Revolving Canadian Loan as of December 31, 2022.
There were no amounts outstanding under the Revolving Canadian Loan as of December 31, 2023 and 2022.
Investors should exercise caution in comparing our non-GAAP measures to any similarly titled measures used by other companies. These non-GAAP measures exclude certain items required by U.S. GAAP and should not be considered as alternatives to information reported in accordance with U.S.
Investors should exercise caution in comparing our non-GAAP measures to any similarly titled measures used by other 40 Table of Contents companies. These non-GAAP financial measures exclude certain items required by U.S. GAAP and should not be considered as alternatives to information reported in accordance with U.S. GAAP .
Overview and 2022 Financial Highlights Cadre is a global leader in the manufacturing and distribution of safety and survivability equipment for first responders. Our equipment provides critical protection to allow its users to safely and securely perform their duties and protect those around them in hazardous or life-threatening situations.
Overview and 2023 Financial Highlights Cadre is a global leader in the manufacturing and distribution of safety equipment. Our equipment provides critical protection to allow its users to safely and securely perform their duties and protect those around them in hazardous or life-threatening situations.
We believe that our cash flows from operations and cash on hand, and available borrowing capacity under Debt (as described below) will be adequate to meet our liquidity requirements for at least the 12 months following the date 38 Table of Contents of this Annual Report on Form 10-K.
We believe that our cash flows from operations and cash on hand, and available borrowing capacity under our existing credit facilities (as described below) will be adequate to meet our liquidity requirements for at least the 12 months following the date of this Annual Report on Form 10-K.
Comparison of Year Ended December 31, 2022 to Year Ended December 31, 2021 Net sales.
Comparison of Year Ended December 31, 2023 to Year Ended December 31, 2022 Net sales.
NON-GAAP MEASURES This Annual Report on Form 10-K includes EBITDA, Adjusted EBITDA and Adjusted EBITDA Conversion Rate, which are non-GAAP measures that we use to supplement our results presented in accordance with U.S. GAAP. EBITDA is defined as net income before depreciation and amortization expense, interest expense and provision for income taxes.
NON-GAAP MEASURES This Annual Report on Form 10-K i ncludes EBITDA and Adjusted EBITDA, which are non-GAAP financial measures that we use to supplement our results presented in accordance with U.S. GAAP. EBITDA is defined as net income before depreciation and amortization expense, interest expense and provision for income tax.
Related party expense increased by $0.9 million for the year ended December 31, 2022 as compared to 2021, primarily due to a $1.0 million transaction fee paid to Kanders & Company, Inc., a company controlled by our Chief Executive Officer, in connection with the acquisition of Cyalume .
Related party expense remained consistent for the year ended December 31, 2023 as compared to 2022 and primarily consisted of a $1.0 million transaction fee paid to Kanders & Company, Inc., a company controlled by our Chief Executive Officer, in connection with the acquisition of ICOR for the year ended December 31, 2023 and a $1.0 million transaction fee paid to Kanders & Company, Inc. in connection with the acquisition of Cyalume for the year ended December 31, 2022 .
New Credit Agreement On August 20, 2021 (the “Closing Date”), the Company refinanced its existing credit facilities and entered into a new credit agreement whereby Safariland, LLC, as borrower (the “Borrower”), the Company and certain domestic subsidiaries of the Borrower, as guarantors (the “Guarantors”), closed on and received funding under a credit agreement (initially entered into on July 23, 2021), pursuant to a First Amendment to Credit Agreement (as amended by the Second Amendment to Credit Agreement, dated as of December 14, 2022, collectively, the “New Credit Agreement”) with PNC Bank, National Association (“PNC”), as administrative agent, and the several lenders from time to time party thereto (together with PNC, the “Lenders”) pursuant to which the Borrower (i) borrowed $200.0 million under a term loan (the “Term Loan”), and (ii) may borrow up to $100.0 million under a revolving credit facility (including up to $15.0 million for letters of credit and up to $10.0 million for swing line loans) (the “Revolving Loan”).
Debt As of December 31, 2023 and December 31, 2022, we had $140.1 million and $149.7 million in outstanding debt, net of debt discounts and debt issuance costs, respectively, primarily related to the term loan facilities. 2021 Credit Agreement On August 20, 2021 (the “Closing Date”), the Company refinanced its existing credit facilities and entered into a new credit agreement whereby Safariland, LLC, as borrower (the “Borrower”), the Company and certain domestic subsidiaries of the Borrower, as guarantors (the “Guarantors”), closed on and received funding under a credit agreement (initially entered into on July 23, 2021), pursuant to a First Amendment to Credit Agreement (collectively, the “2021 Credit Agreement”) with PNC Bank, National Association (“PNC”), as administrative agent, and the several lenders from time to time party thereto (together with PNC, the “Lenders”) pursuant to which the Borrower (i) borrowed $200.0 million under a term loan (the “Term Loan”), and (ii) may borrow up to $100.0 million under a revolving credit facility (including up to $15.0 million for letters of credit and up to $10.0 million for swing line loans) (the “Revolving Loan”).
The following table presents our orders backlog as of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands) ​ 2022 ​ 2021 Orders backlog ​ $ 117,873 $ 113,840 ​ Orders comprising backlog as of a given balance sheet date are typically invoiced in subsequent periods.
The following table presents our orders backlog as of the periods indicated: ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ December 31, 2023 ​ December 31, 2022 Orders backlog ​ $ 126,683 ​ $ 117,873 ​ Orders comprising backlog as of a given balance sheet date are typically invoiced in subsequent periods.
(D/B/A The Safariland Group) (“Cadre,” “the Company” “we,” “us” and “our”) should be read together with our audited consolidated financial statements as of and for the years ended December 31, 2022 and 2021 in each case together with related notes thereto, included elsewhere in this Annual Report on Form 10-K.
(D/B/A The Safariland Group) (“Cadre,” “the Company” “we,” “us” and “our”) should be read together with our audited consolidated financial statements together with related notes thereto, included elsewhere in this Annual Report on Form 10-K.
As of March 10 , 2023, there were no amounts outstanding under the Revolving Loan .
As of March 8, 2024, there were no amounts outstanding under the Revolving Loan .
While our significant accounting policies are described in more detail in Note 1 41 Table of Contents of our consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements. Goodwill Goodwill is initially recorded at the fair value.
While our significant accounting policies are described in more detail in Note 1 of our consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
Changes in operating assets and liabilities were driven by an increase in accounts receivable of $4.6 million, an increase in inventories of $3.2, an increase in prepaid expense and other assets of $4.6 million and an increase in accounts payable and other liabilities of $2.7 million.
Changes in operating assets and liabilities were primarily driven by an increase in accounts receivable of $11.5 million, an increase in prepaid expense and other assets of $7.7 million and an increase in accounts payable and other liabilities of $5.5 million .
The foregoing description of the Canadian Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the Canadian Loan Agreement, which is incorporated by reference as exhibit 10.18 to this Annual Report on Form 10-K .
The foregoing description of the Canadian Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the Canadian Loan Agreement, which is exhibit 10.18 to our Annual Report on Form 10-K for the year ended December 31, 2022, and is incorporated herein by reference as though fully set forth herein .
Cash Flows The following table presents a summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2022 2021 Net cash provided by operating activities $ 46,409 $ 40,094 Net cash used in investing activities ​ (59,626) (2,832) Net cash provided by (used in) financing activities ​ 24,463 (6,596) Effects of foreign exchange rates on cash and cash equivalents ​ 183 318 Change in cash and cash equivalents ​ 11,429 30,984 Cash and cash equivalents, beginning of period ​ 33,857 2,873 Cash and cash equivalents, end of period ​ $ 45,286 $ 33,857 ​ Net cash provided by operating activities During the year ended December 31, 2022, net cash provided by operating activities of $46.4 million resulted primarily from net income of $5.8 million, a $31.9 million add back to net income for stock-based compensation, a $15.7 million add back to net income for depreciation and amortization, a $4.3 million add back to net income for amortization of inventory step-up and a $12.6 million deduction to net income from changes in operating assets and liabilities.
Cash Flows The following table presents a summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2023 2022 Net cash provided by operating activities ​ $ 73,209 $ 46,409 Net cash used in investing activities ​ (6,520) (59,626) Net cash (used in) provided by financing activities ​ (24,722) 24,463 Effects of foreign exchange rates on cash and cash equivalents ​ 438 183 Change in cash and cash equivalents ​ 42,405 11,429 Cash and cash equivalents, beginning of period ​ 45,286 33,857 Cash and cash equivalents, end of period ​ $ 87,691 $ 45,286 ​ 43 Table of Contents Net cash provided by operating activities During the year ended December 31, 2023, net cash provided by operating activities of $73.2 million resulted primarily from net income of $38.6 million, a $15.7 million add back to net income for depreciation and amortization, a $9.4 million add back to net income for stock-based compensation and a $10.1 million add back to net income from changes in operating assets and liabilities.
The following table sets forth a summary of our financial highlights for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands) ​ 2022 ​ 2021 Net sales $ 457,837 $ 427,288 Net income ​ $ 5,820 ​ $ 12,661 Adjusted EBITDA (1) ​ $ 75,731 ​ $ 71,384 (1) Adjusted EBITDA is a non-GAAP financial measure.
The following table sets forth a summary of our financial highlights for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands) ​ 2023 ​ 2022 Net sales $ 482,532 $ 457,837 Net income ​ $ 38,641 ​ $ 5,820 Adjusted EBITDA (1) ​ $ 85,818 ​ $ 75,731 36 Table of Contents (1) Adjusted EBITDA is a non-GAAP financial measure.
Distribution segment cost of goods sold increased by $9.0 million, or 13.3%, from $67.6 million to $76.6 million for the year ended December 31, 2022 as compared to 2021 primarily due to increased volume and costs to acquire products.
Distribution segment cost of goods sold increased by $1.7 million, or 2.2%, from $76.6 million to $78.3 million for the year ended December 31, 2023 as compared to 2022 primarily due to increased volume, partially offset by costs to acquire products .
The foregoing description of the New Credit Agreement does not purport to be complete and is qualified in its entirety by reference to exhibits 10.15 , 10.16 and 10.17 , respectively, to this Annual Report on Form 10-K . 39 Table of Contents Canadian Credit Facility On October 14, 2021, Med-Eng Holdings ULC and Pacific Safety Products Inc., the Company’s Canadian subsidiaries, as borrowers (the “Canadian Borrowers”), and Safariland, LLC, as guarantor (the “Canadian Guarantor”), closed on a line of credit pursuant to a Loan Agreement (the “Canadian Loan Agreement”) and a Revolving Line of Credit Note (the “Note”) with PNC Bank Canada Branch (“PNC Canada”), as lender pursuant to which the Canadian Borrowers may borrow up to CDN$10.0 million under a revolving line of credit (including up to $3.0 million for letters of credit) (the “Revolving Canadian Loan”).
Canadian Credit Facility On October 14, 2021, Med-Eng Holdings ULC and Pacific Safety Products Inc., the Company’s Canadian subsidiaries, as borrowers (the “Canadian Borrowers”), and Safariland, LLC, as guarantor (the “Canadian Guarantor”), closed on a line of credit pursuant to a Loan Agreement (the “Canadian Loan Agreement”) and a Revolving Line of Credit Note (the “Note”) with PNC Bank Canada Branch (“PNC Canada”), as lender pursuant to which the Canadian Borrowers may borrow up to CDN$10.0 million under a revolving line of credit (including up to $3.0 million for letters of credit) (the “Revolving Canadian Loan”).
The provision or benefit for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid.
Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The benefit or provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Conversion Rate are performance measures that we believe are useful to investors and analysts because they illustrate the underlying financial and business trends relating to our core, recurring results of operations and enhance comparability between periods.
EBITDA and Adjusted EBITDA are performance measures that we believe are useful to investors and analysts because they illustrate the underlying financial and business trends relating to our core, recurring results of operations and enhance comparability between periods. Adjusted EBITDA is considered by our board of directors and management as an important factor in determining performance-based compensation .
(5) Reflects compensation expense related to equity and liability classified stock-based compensation plans . (6) Reflects payroll taxes associated with vested stock-based compensation awards . (7) Reflects the cost of a cash-based long-term incentive plan awarded to employees that vests over three years .
(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 a result of our recent acquisitions.
Product segment net sales increased by $23.2 million or 6.4%, from $362.2 million to $385.4 million for the year ended December 31, 2022 as compared to 2021, primarily due to increases of $29.4 million from recent acquisitions and $11.4 million from higher demand for armor products, partially offset by reductions of $9.3 million from a large contractual armor order fulfilled in the prior year, $4.9 million for crowd control product due to higher demand in the prior year, $3.7 million from large international contractual orders for explosive ordnance disposals and $2.3 million for gun cleaning lubricants (higher prior year sales in support of firearms demand).
Product segment net sales increased by $25.4 million or 6.6%, from $385.4 million to $410.8 million for the year ended December 31, 2023 as compared to 2022, primarily due to $20.4 million from higher demand for armor products, $9.2 million from higher demand for crowd control products, $3.4 million from higher demand for duty gear products and $7.4 million from recent acquisitions, partially offset by a reduction of $13.7 million from large international orders for explosive ordnance disposal products fulfilled in the prior year .
For the year ended December 31, 2021, the effective tax rate was 34.0% and was higher than the statutory rate primarily due to state taxes and executive compensation, partially offset by research and development tax credits.
Provision for income taxes increased by $10.7 million for the year ended December 31, 2023 as compared to 2022. The effective tax rate was 27.0% for the year ended December 31, 2023 and was higher than the statutory rate due to state taxes and executive compensation, partially offset by research and development tax credits.
Cost of goods sold. Product segment cost of goods sold increased by $16.3 million, or 7.7%, from $213.9 million to $230.2 million for the year ended December 31, 2022 as compared to 2021 primarily due to increased volume and increasing costs to manufacture product (principally material and labor).
Product segment cost of goods sold increased by $3.7 million, or 1.6%, from $230.2 million to $233.9 million for the year ended December 31, 2023 as compared to 2022 primarily due to increased volume and increasing costs to manufacture product (principally material and labor), partially offset by prior year increases from the amortization of inventory step-up adjustments related to 2022 acquisitions, product mix and productivity .
Distribution segment gross profit as a percentage of net sales decreased 21.1% in 2022 from 24.9% in 2021 mainly driven by unfavorable channel mix with more volume going to agencies versus retail and e-commerce. Reconciling items consisting primarily of intercompany eliminations were $24.7 million and $24.9 million for year ended December 31, 2022 and 2021, respectively. Selling, general and administrative.
Distribution segment gross profit as a percentage of net sales increased by 240 basis points to 23.5% in 2023 from 21.1% in 2022 mainly driven by favorable product mix within the agency channel . Reconciling items consisting primarily of intercompany eliminations were $30.5 million and $24.7 million for year ended December 31, 2023 and 2022, respectively. Selling, general and administrative.
Related party expense primarily consists of rent expense related to distribution locations owned by related parties and any one-time transaction fees paid to related parties. 34 Table of Contents Other general income . Other general income consists primarily of gains from the disposition of a long-lived assets. Interest expense . Interest expense consists primarily of interest on outstanding debt.
Related party expense primarily consists of rent expense related to distribution locations owned by related parties and any one-time transaction fees paid to related parties. Interest expense . Interest expense consists primarily of interest on outstanding debt. Other expense, net . Other expense, net primarily consists of gains and losses from foreign currency transactions. Provision for income taxes .
RESULTS OF OPERATIONS In order to reflect the way our chief operation decision maker reviews and assesses the performance of the business, Cadre has determined that it has two reportable segments — the Product segment and the Distribution segment.
See Note 15 “Income Taxes” in our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. RESULTS OF OPERATIONS In order to reflect the way our chief operating decision maker reviews and assesses the performance of the business, Cadre has determined that it has two reportable segments — the Product segment and the Distribution segment.
For the year ended December 31, 2022, net cash provided by operating activities was $46.4 million and as of December 31, 2022, cash and cash equivalents were $45.3 million.
For the year ended December 31, 2022, net cash provided from operating activities was $73.2 million and as of December 31, 2023, cash and cash equivalents totaled $87.7 million.
Distribution segment net sales increased by $7.1 million or 7.8%, from $90.0 million to $97.1 million for the year ended December 31, 2022 as compared to 2021, primarily due to agency demand for hard goods. Reconciling items consisting primarily of intercompany eliminations were $24.7 million and $24.9 million for year ended December 31, 2022 and 2021, respectively.
Distribution segment net sales increased by $5.3 million or 5.4%, from $97.1 million to $102.4 million for the year ended December 31, 2023 as compared to 2022, primarily due to increased agency demand for hard goods .
GAAP. 37 Table of Contents The table below presents our EBITDA, Adjusted EBITDA and Adjusted EBITDA Conversion Rate reconciled to the most comparable GAAP measure for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2022 2021 Net income ​ $ 5,820 ​ $ 12,661 ​ Add back: ​ ​ Depreciation and amortization ​ 15,651 13,718 ​ Interest expense ​ 6,206 16,425 ​ Provision for income taxes ​ 3,553 6,531 ​ EBITDA ​ $ 31,230 $ 49,335 ​ Add back: ​ ​ Restructuring and transaction costs (1) ​ 5,355 3,430 ​ Other general income (2) ​ ​ (159) ​ ​ — ​ Loss on extinguishment of debt (3) ​ — 15,155 ​ Other expense, net (4) ​ 1,137 947 ​ Stock-based compensation expense (5) ​ ​ 32,239 ​ ​ 355 ​ Stock-based compensation payroll tax expense (6) ​ ​ 305 ​ ​ — ​ LTIP bonus (7) ​ 1,369 2,162 ​ Amortization of inventory step-up (8) ​ ​ 4,255 ​ ​ — ​ Adjusted EBITDA ​ $ 75,731 $ 71,384 ​ Less: Capital expenditures ​ (4,666) (3,029) ​ Adjusted EBITDA less capital expenditures ​ $ 71,065 $ 68,355 ​ Adjusted EBITDA conversion rate ​ 94 % 96 % (1) Reflects the “Restructuring and transaction costs” line item on our consolidated statement of operations, which primarily includes transaction costs composed of legal and consulting fees, and $1.0 million paid to Kanders & Company, Inc., a company controlled by our Chief Executive Officer, for services related to the acquisition of Cyalume, which is included in related party expense in the Company’s consolidated statements of operations and comprehensive income .
The table below presents our EBITDA and Adjusted EBITDA reconciled to the most comparable GAAP financial measures for the periods indicated : ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2023 2022 Net income ​ $ 38,641 ​ $ 5,820 ​ Add back: ​ ​ Depreciation and amortization ​ 15,737 15,651 ​ Interest expense ​ 4,531 6,206 ​ Provision for income taxes ​ 14,283 3,553 ​ EBITDA ​ $ 73,192 $ 31,230 ​ Add back: ​ ​ Restructuring and transaction costs (1) ​ 3,192 5,355 ​ Other general income (2) ​ ​ (92) ​ ​ (159) ​ Other (income) expense, net (3) ​ (936) 1,137 ​ Stock-based compensation expense (4) ​ ​ 9,368 ​ ​ 32,239 ​ Stock-based compensation payroll tax expense (5) ​ ​ 234 ​ ​ 305 ​ LTIP bonus (6) ​ 860 1,369 ​ Amortization of inventory step-up (7) ​ ​ — ​ ​ 4,255 ​ Adjusted EBITDA ​ $ 85,818 $ 75,731 ​ (1) Reflects the “Restructuring and transaction costs” line item on our consolidated statements of operations and comprehensive income, which primarily includes transaction costs composed of legal and consulting fees.
SG&A increased by $38.3 million, or 33.3%, for the year ended December 31, 2022 as compared to 2021 primarily due to increased stock-based compensation expense of $31.9 million in the current year and $6.9 million as a result of acquisitions . Restructuring and transaction costs.
SG&A decreased by $12.6 million, or 8.2%, for the year ended December 31, 2023 as compared to 2022 primarily due to a $22.9 million decrease in stock-based compensation expense, partially offset by an increase in employee compensation and related benefits. Restructuring and transaction costs.
Preparation of the financial statements requires us to make judgments, estimates and assumptions that impact the reported amount of net sales and expenses, assets and liabilities and the disclosure of contingent assets and liabilities.
Critical Accounting Policies and Significant Judgements and Estimates Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. Preparation of the financial statements requires us to make judgments, estimates and assumptions that impact the reported amount of net sales and expenses, assets and liabilities and the disclosure of contingent assets and liabilities.
Demand for our products is driven by technological advancement as well as recurring modernization and replacement cycles for the equipment to maintain its efficiency, effective performance and regulatory compliance.
Demand for our products is driven by technological advancement as well as recurring modernization and replacement cycles for the equipment to maintain its efficiency, effective performance and regulatory compliance . We service the ever-changing needs of our end users by investing in research and development for new product innovation and technical advancements that continually raise the standards for safety equipment.
During the year ended December 31, 2021, we used $2.8 million of cash in investing activities relating to the purchase of property and equipment.
Net cash used in investing activities During the year ended December 31, 2023, we used $6.5 million of cash in investing activities, primarily consisting of $6.7 million for purchases of property and equipment.
Product segment gross profit as a percentage of net sales decreased by 69 basis points to 40.3% in 2022 from 40.9% in 2021 mainly driven by 110 basis points related to amortization of inventory step-up recorded as part of the recent acquisitions, partially offset by favorable pricing net of mix and inflation.
Product segment gross profit as a percentage of net sales increased by 280 basis points to 43.1% in 2023 from 40.3% in 2022 mainly driven by favorable pricing, product mix and productivity, partially offset by inflation and pressure from a stronger Mexican peso .
(2) Includes scheduled cash principal payments on our debt, excluding interest, original issuance discount and debt issuance costs. (3) Includes the effect of our interest rate swap and assumes (a) one-month LIBOR rate in effect as of December 31, 2022; (b) applicable margins remain constant; (c) only mandatory debt repayments are made; and (d) no refinancing occurs at debt maturity.
(3) Includes the effect of our interest rate swap and assumes (a) one-month SOFR rate in effect as of December 31, 2023; (b) applicable margins remain constant; (c) only mandatory debt repayments are made; and (d) no refinancing occurs at debt maturity. 44 Table of Contents Off-Balance Sheet Arrangements We do not engage in off-balance sheet financing arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.
DESCRIPTION OF CERTAIN COMPONENTS OF FINANCIAL DATA Net sales We recognize revenue when a contract exists with a customer that specifies the goods and services to be provided at an agreed upon sales price and when the performance obligation is satisfied by transferring the goods or service to the customer.
Orders backlog increased by $8.8 million as of December 31, 2023 compared to December 31, 2022 , primarily due to $13.6 million from international demand for explosive ordnance disposal products and $1.3 million from international orders for crowd control, partially offset by reductions of $3.6 million from the Distribution segment and $3.0 million from chemiluminescent payloads . 37 Table of Contents DESCRIPTION OF CERTAIN COMPONENTS OF FINANCIAL DATA Net sales We recognize revenue when a contract exists with a customer that specifies the goods and services to be provided at an agreed upon sales price and when the performance obligation is satisfied by transferring the goods or service to the customer.
Changes in operating assets and liabilities were primarily driven by an increase in accounts receivable of $11.5 million, an increase in prepaid expense and other assets of $7.7 million and an increase in accounts payable and other liabilities of $5.5 million. 40 Table of Contents During the year ended December 31, 2021, net cash provided by operating activities of $40.1 million resulted primarily from net income of $12.7 million, a $15.2 million add back to net income for loss on extinguishment of debt, a $13.7 million add back to net income for depreciation and amortization, a $3.2 million add back to net income for amortization of original debt issuance discount and debt issuance costs and a $9.7 million deduction to net income from changes in operating assets and liabilities.
During the year ended December 31, 2022, net cash provided by operating activities of $46.4 million resulted primarily from net income of $5.8 million, a $31.9 million add back to net income for stock-based compensation, a $15.7 million add back to net income for depreciation and amortization, a $4.3 million add back to net income for amortization of inventory step-up and a $12.6 million deduction to net income from changes in operating assets and liabilities.
Contractual Obligations The following table summarizes our significant contractual obligations as of December 31, 2022 by period: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than ​ ​ ​ ​ ​ ​ ​ More than (in thousands) Total 1 year 1-3 Years 3-5 Years 5 Years Lease obligations (1) ​ $ 9,118 $ 4,012 $ 4,518 $ 588 $ — Debt (2) ​ 149,076 10,000 20,256 118,820 — Interest on debt (3) ​ 18,510 5,708 10,241 2,561 — Total contractual obligations ​ $ 176,704 $ 19,720 $ 35,015 $ 121,969 $ — (1) Includes future minimum lease payments required under non-cancelable operating and capital leases.
Contractual Obligations The following table summarizes our significant contractual obligations as of December 31, 2023 by period: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than ​ ​ ​ ​ ​ ​ ​ More than (in thousands) Total 1 year 1-3 Years 3-5 Years 5 Years Lease obligations (1) ​ $ 6,988 $ 3,438 $ 3,004 $ 515 $ 31 Debt (2) ​ 139,095 10,133 128,830 132 — Interest on debt (3) ​ 11,766 4,894 6,872 — — Total contractual obligations ​ $ 157,849 $ 18,465 $ 138,706 $ 647 $ 31 (1) Includes future minimum lease payments required under non-cancelable operating and capital leases.
During the year ended December 31, 2021, we used $6.6 million of cash in financing activities, primarily consisting of proceeds from the revolving credit facility of $258.0 million, proceeds from term loans of $198.7 million, and proceeds from the initial public offering, net of underwriter discounts of $83.4 million, offset by principal payments on the revolving credit facility of $258.6 million, principal payments on term loans of $266.0 million and dividends distributed of $12.7 million.
Net cash (used in) provided by financing activities During the year ended December 31, 2023, we used $24.7 million of cash in financing activities, primarily consisting principal payments on term loans of $10.0 million, taxes paid in connection with employee stock transactions of $2.7 million and dividends distributed of $12.0 million.
Net income decreased by $6.8 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily as a result of an increase in stock-based compensation expense, which was partially offset by an increase in net sales, lower interest expense and the loss on extinguishment of debt related to the August 2021 debt refinance.
Net income increased by $32.8 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily as a result of an increase in net sales and gross profit margin, accretive impact of recent acquisitions and a decrease in stock compensation expense.
The benefit or provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the book and tax bases of assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted.
Deferred taxes result from differences between the book and tax bases of assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.
Loss on extinguishment of debt decreased by $15.2 million due to the re financing of our long-term debt in August 2021 . Other expense, net. Other expense, net increased by $0.2 million, for the year ended December 31, 2022 as compared to 2021 primarily due to losses on foreign currency transactions . Provision for income taxes.
Other income, net was $0.9 million for the year ended December 31, 2023 compared to Other expense, net of $1.1 million for the year ended December 31, 2022, primarily due to changes in foreign currency exchange rates . Provision for income taxes.
(2) Reflects the “Other general income” line item on our consolidated statement of operations and includes a gain from a long-lived asset sale. (3) Reflects losses incurred in connection with the August 2021 debt refinancing. (4) Reflects the “Other expense, net” line item on our consolidated statement of operations and primarily includes losses on foreign currency transactions .
(2) Reflects gains from long-lived asset sales. (3) Reflects the “Other income (expense), net” line item on our consolidated statements of operations and comprehensive income and primarily includes gains and losses due to fluctuations in foreign currency exchange rates . (4) Reflects compensation expense related to equity and liability classified stock-based compensation plans .
(8) Reflects amortization expense related to the step-up inventory adjustment recorded as part of the recent acquisitions Adjusted EBITDA increased $4.3 million for the year ended December 31, 2022 as compared to 2021, primarily due to the increase in net sales, partially offset by increases in public company costs and marketing spend.
Adjusted EBITDA increased by $10.1 million for the year ended December 31, 2023 as compared to 2022, primarily due to an increase in net sales, an increase in gross profit margin and recent acquisitions.
Restructuring and transaction costs increased by $0.9 million, for the year ended December 31, 2022 as compared to 2021, which primarily consisted of expenses related to the Company’s various acquisition efforts and various initiatives implemented during the current quarter. Related party expense.
Restructuring and transaction costs decreased by $2.2 million for the year ended December 31, 2023 as compared to 2022 primarily due to costs incurred in 2022 associated with acquisitions . Related party expense.
Loss on extinguishment of debt . Loss on extinguishment of debt consists primarily of recorded losses associated with debt restructuring. Other expense, net . Other expense, net primarily consists of gains and losses from foreign currency transactions. Provision for income taxes . A provision or benefit for income tax is calculated for each of the jurisdictions in which we operate.
A provision or benefit for income tax is calculated for each of the jurisdictions in which we operate. The provision or benefit for income taxes is determined using the asset and liability approach of accounting for income taxes.
We recorded an allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. In May 2022, the Company acquired Cyalume Technologies, Inc, CT SAS Holdings, Inc. and Cyalume Technologies SAS (collectively “Cyalume”) for $36.2 million, net of cash acquired.
In May 2022, the Company acquired Cyalume Technologies, Inc., CT SAS Holdings, Inc. and Cyalume Technologies SAS (collectively “Cyalume”) for $36.2 million, net of cash acquired. In January 2024, the Company acquired ICOR Technology Inc. (“ICOR”) for approximately CDN $52.0 million (approximately $38.8 million), net of cash acquired.
We also recorded rent expense relating to distribution warehouses and retail stores that we lease from related parties. 36 Table of Contents Other general income.
We also recorded rent expense relating to distribution warehouses and retail stores that we lease from related parties. Interest expense. Interest expense decreased by $1.7 million, or 27.0%, for the year ended December 31, 2023 as compared to 2022 as a result of a decrease in outstanding borrowings . Other income (expense), net.
GAAP financial measure. 32 Table of Contents Net sales increased by $30.5 million for the year ended December 31, 2022 as compared to December 31, 2021 , primarily as a result of recent acquisitions and agency demand for hard goods through our Distribution segment.
Net sales increased by $24.7 million for the year ended December 31, 2023 as compared to December 31, 2022 , primarily as a result of higher demand for armor and crowd control products, as well as recent acquisitions, partially offset by a decrease from large international orders for explosive ordnance disposal products fulfilled in the prior year .
We recorded a preliminary allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. These estimates are preliminary and subject to adjustments as we complete our valuation process.
Business Combinations We allocate the purchase price, including contingent consideration, of our acquisitions to the assets and liabilities acquired, including identifiable intangible assets, based on their fair values at the date of acquisition. The fair values are primarily based on third-party valuations using our management assumptions that require significant judgments and estimates.
Removed
We service the ever-changing needs of our end users by investing in research and development for new product innovation and technical advancements that continually raise the standards for safety and survivability equipment in the first responder market.
Added
A discussion of changes in our financial condition and the results of operations from the year ended December 31, 2022 to December 31, 2021 can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 15, 2022.
Removed
Initial Public Offering On November 3, 2021, the Company completed its initial public offering (“IPO”) in which the Company issued and sold 6,900,000 shares of common stock, which included 900,000 shares that were offered and sold pursuant to the full exercise of the underwriters’ over-allotment option, at a public offering price of $13.00 per share.
Added
In March 2024, the Company acquired Alpha Safety Intermediate, LLC (“Alpha Safety”) for approximately $106.5 million, net of cash acquired .

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