Cadre Holdings, Inc. (CDRE) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Cadre Holdings, Inc. is a global leader in manufacturing and distributing safety equipment for law enforcement, first responders, military, and nuclear markets. The company operates through two segments: Product (manufacturing) and Distribution (one-stop shop for agencies). The company is currently classified as an Emerging Growth Company and an Accelerated Filer.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Net Sales | $207.1 million | $157.1 million | $362.6 million | $287.2 million |
| Gross Profit | $87.1 million (42.1% margin) | $64.2 million (40.9% margin) | $147.3 million (40.6% margin) | $120.4 million (41.9% margin) |
| Operating Income | $22.5 million | $14.7 million | $30.0 million | $28.2 million |
| Net Income | $11.4 million | $12.2 million | $13.4 million | $21.5 million |
| Diluted EPS | $0.26 | $0.30 | $0.31 | $0.52 |
| Adjusted EBITDA | $42.0 million | $27.0 million | $63.1 million | $47.5 million |
| Cash from Operations (YTD) | $44.7 million (2026) vs $20.0 million (2025) | |||
| Total Debt (Net) | $374.3 million (as of June 30, 2026) | |||
| Cash & Equivalents | $54.0 million (as of June 30, 2026) |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 31.8% in Q2 and 26.2% YTD, driven primarily by the acquisitions of TYR Tactical (Jan 2026) and Alien Gear (Apr 2026), as well as increased demand for nuclear safety and armor products.
- Profitability Pressure: Despite revenue growth, Net Income decreased 6.6% in Q2 and 37.6% YTD. This was caused by increased contingent consideration expense ($6.4M in Q2 vs $0.5M prior year), higher compensation costs, increased interest expense due to acquisition debt, and adverse foreign currency fluctuations.
- Segment Performance: The Product segment saw significant sales growth ($49.9M increase in Q2), while the Distribution segment saw a modest increase in Q2 but a decline YTD due to lower agency demand for hard goods.
- Backlog: Orders backlog surged to $367.7 million (up $177.9M from year-end 2025), driven by large orders for vehicle blast attenuation seats and remotely operated vehicles.
Guidance, Outlook, and Risks
- Acquisition Integration: Management is currently integrating TYR Tactical and Alien Gear into internal controls and operations. The company expects these acquisitions to drive future growth through expanded market reach.
- Debt Covenants: The company maintains a 2024 Credit Agreement with a maximum consolidated total net leverage ratio of 4.00:1.00 (temporarily adjustable to 4.50:1.00 for acquisitions) and a minimum fixed charge coverage ratio of 1.25:1.00.
- Key Risks:
- Contingent Consideration: Significant volatility in earnings due to fair value adjustments on earn-outs for TYR and ICOR acquisitions.
- Interest Rate Exposure: $375.8 million in floating rate debt exposes the company to interest rate hikes, partially mitigated by interest rate swaps.
- Foreign Currency: Exposure to Canadian Dollar and Mexican Peso fluctuations impacts reported sales and income.
- Regulatory/Political: Dependence on government contracts (federal, state, local) subject to budget appropriations and political shifts.
Investor Verification Checklist
- Acquisition Synergies: Verify the timeline for integrating TYR and Alien Gear and the realization of projected synergies.
- Contingent Consideration Volatility: Monitor the fair value adjustments for TYR and ICOR earn-outs, which significantly impacted YTD net income.
- Debt Servicing: Confirm compliance with leverage covenants given the increased debt load from recent acquisitions.
- Backlog Conversion: Assess the conversion rate of the record $367.7M backlog into actual revenue, noting potential budget appropriation risks for government orders.
- Foreign Exchange Impact: Evaluate the sensitivity of future earnings to CAD and MXN exchange rate movements.