Cadre Holdings, Inc. (CDRE) Earnings

Management highlights

### Financial and Operational Progress - Cadre delivered strong Q2 results with 32% year-over-year net sales growth and 56% year-over-year adjusted EBITDA growth, driven by resilient demand for mission-critical safety products across law enforcement, first responder, military, and nuclear end markets - The company's backlog increased to a new record high for the second consecutive quarter, establishing a strong forward demand foundation - Two major contract wins were secured in the quarter: a second $8.4 million purchase order for the U.S. military's Blast Exposure Monitoring (BMO) program (bringing total orders to date to $18.4 million), and selection of Safariland's SXHP Ballistic Panel for the FBI's 5-year, $61 million IDIQ armor contract, which also opens access to other Department of Justice agencies including the U.S. Marshals Service and DEA ### Market and End Market Trends - Public safety end markets have favorable long-term tailwinds: global rising safety threats paired with resilient, bipartisan public safety funding in the U.S. and Europe. Demand for mission-critical equipment has remained resilient despite municipal budget pressures, with no meaningful pullback observed - Distribution segment demand, which saw softness in discretionary products last quarter, normalized in Q2, helping push organic growth to the high end of the 3% to 5% target range - Nuclear end markets have strong multi-year demand: the U.S. National Nuclear Security Administration budget increased 29% year-over-year to support nuclear arsenal modernization, driving sustained demand for Cadre's nuclear safety products. Global governments are also increasing investment in nuclear environmental remediation, and the commercial nuclear renaissance (driven by AI and data center power demand) creates attractive long-term optionality, though it is not yet material to current revenue - The down blending executive order only impacts less than 8% of nuclear segment revenue, with no material impact on overall nuclear demand ### M&A Strategy - Disciplined, patient M&A remains a core long-term growth strategy. Since its IPO, Cadre has built a diversified portfolio of mission-critical safety products, and increased scale has expanded the range of acquisition opportunities the company can pursue - Cadre maintains clear acquisition criteria: target businesses must have leading defensible market positions, strong margins, mission-critical products, recurring revenue and cash flow, and clear value creation potential under the Cadre operating model - The company completed two acquisitions in 2026 year-to-date: large strategic acquisition Tier Tactical earlier this year, and smaller bolt-on acquisition Alien Gear (a leading holster brand) in Q2, which demonstrates the value of complementary smaller acquisitions - Management expects to complete at least one additional acquisition in 2026, and maintains a robust pipeline of opportunities across both public safety and nuclear verticals

Guidance

- Cadre has upwardly revised its full year 2026 guidance, now expecting full year net sales between $749 million and $769 million, and adjusted EBITDA between $139 million and $144 million. This implies 24.4% year-over-year revenue growth and 26.7% year-over-year adjusted EBITDA growth at the midpoints, with an implied adjusted EBITDA margin of 18.6% - Full year organic revenue growth is still projected to remain in the 3% to 5% range, unchanged from prior guidance - The updated guidance fully includes the Alien Gear acquisition and reflects stronger than expected Q2 execution and record backlog growth - Q3 2026 revenue is expected to be approximately $190 million, with adjusted EBITDA margins of around 18%, while Q4 2026 is expected to have a similar revenue and margin profile to Q2 2026 - The guidance range incorporates cautious risk-rating of large pending government contract awards, as procurement delays can shift revenue between quarters even when awards are expected

Segment performance

For the second quarter of 2026, Cadre Holdings reported total net sales of $207.1 million, a 32% year-over-year increase, with 5% organic net sales growth. Gross profit reached $87.1 million, up 36% year-over-year, while adjusted EBITDA increased 56% year-over-year. Organic growth was 5% overall, with public safety organic growth just below 5%, nuclear organic growth in the high single-digit to low double-digit range, and distribution segment organic growth at mid-single digits. Strength was broad-based across the public safety portfolio: armor, duty gear, crowd control, and EOD products all saw strong demand and backlog growth, with EOD backlog growing particularly significantly. The nuclear vertical segment saw a $13 million increase in backlog since the end of 2025, driven by growth in commercial nuclear and environmental remediation segments in both the U.S. and Europe, with national defense demand also remaining stable. The acquired segments Tier Tactical and Alien Gear both outperformed performance expectations in the quarter, with Alien Gear contributing $4.8 million in Q2 revenue.

Risks & headwinds

- Government procurement timelines are out of the company's control, and delays in expected contract awards can shift revenue between quarters, creating potential variability relative to guidance - Foreign exchange headwinds negatively impacted Q2 2026 bottom-line earnings by $6.6 million - A U.S. down blending executive order creates mixed margin pressure on a small subsegment of the nuclear business, impacting less than 8% of total nuclear segment revenue - Municipal budget pressures could potentially impact public safety spending, though to date no meaningful pullback in demand for Cadre's mission-critical products has been observed - Integration of newly acquired businesses is ongoing, and operating model efficiency gains from recent nuclear acquisitions are not expected to materialize at the consolidated level in 2026

Analyst Q&A

• Q: How is the $13 million year-to-date nuclear backlog increase split across segments, and what should we expect for nuclear margins in the second half and operating model synergies?

  A: Most of the backlog growth comes from commercial nuclear and environmental remediation in both the U.S. and Northern Europe, with demand momentum building in these segments. U.S. nuclear segment margins in the second half are expected to match Q2 levels, an improvement from the lower margin Q1. European nuclear margins will normalize after a high-margin mix Q2, returning to Q1 levels. Operating model integration for acquired nuclear businesses is still in early stages, so consolidated synergy benefits are not expected to appear in 2026.

• Q: What drove the strong Q2 upside, how is core law enforcement demand trending, and what explains the strong gross margin performance this quarter?

  A: Upside came from two main sources: unexpectedly strong early demand from core public safety businesses (armor, duty gear, crowd control) with multiple customers pulling shipments forward from Q3 into Q2, and stronger than expected performance from the newly acquired Tier Tactical and Alien Gear businesses. Broad-based backlog growth across all segments, including double-digit growth in armor and duty gear backlog even after adjusting for large EOD contracts, confirms broad strength. Gross margin strength came from temporary favorable high-margin mix in European nuclear and incremental volume leverage; margins will normalize slightly in Q3 before returning to Q2 levels in Q4.

• Q: How sustainable is the 5% Q2 organic growth rate into 2027, and what would drive results to the high vs low end of the 2026 guidance range?

  A: Underlying demand trends remain strong across both public safety and nuclear end markets, supported by favorable macro policy tailwinds and multiple recent large contract wins that confirm long-term momentum. The range between the low and high end of guidance reflects binary risk on pending large government contracts: most business units have upside potential if these contracts are awarded and can ship in 2026, but procurement delays outside of Cadre's control could shift revenue into 2027, so the range reflects a cautious approach to maintain forecast accuracy.

• Q: How has Alien Gear performed post-acquisition, what contribution can we expect, and when will FBI panel shipments begin?

  A: Alien Gear has outperformed initial expectations, driven by successful customer communication that the acquisition would preserve the brand and maintain normal operations, which reassured customers after Alien Gear exited bankruptcy. It contributed $4.8 million in Q2 revenue and is baked into 2026 guidance at $11 million total annual revenue, with management maintaining some caution given residual bankruptcy overhang. Long-term, Alien Gear is expected to reach Cadre-like margin levels after integration is complete. Shipments of SXHP ballistic panels for the FBI contract have already started, and the 5-year IDIQ contract allows other Department of Justice agencies to purchase off the vehicle as well.

• Q: Does current net leverage restrict M&A to only small tuck-in deals for the rest of 2026?

  A: Cadre's maximum target net leverage is 3.5x, and current net leverage is 2.5x, leaving ample dry powder for larger acquisitions if the right opportunity emerges. Smaller tuck-in bolt-on deals like Alien Gear (just over $10 million) remain consistently attractive, as they carry lower risk and clear synergy potential. Management maintains flexibility to pursue both small tuck-ins and larger strategic deals, and will remain disciplined in evaluating all opportunities.