Cadre Holdings, Inc. (CDRE)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered strong year-over-year growth with net sales up 42% to $155.9M, gross margin up 610 bps to 42.7%, and adjusted EBITDA up 120% to $29.8M; sequential gross margin rose 180 bps vs Q2 .
• Revenue modestly missed S&P Global consensus by ~$3.1M (-2.0%), while S&P “Primary EPS” beat by ~$0.12 (+44%); Cadre reported GAAP diluted EPS of $0.27 and reaffirmed FY25 guidance for revenue ($624–$630M) and adjusted EBITDA ($112–$116M) .
• Backlog improved sharply (+$20M organic QoQ), aided by a $50M DoD BEMO IDIQ award with an initial $10M PO shipping in 2026; management highlighted additional large orders in duty gear, armor, crowd control, and EOD .
• Strategic catalysts: agreement to acquire TYR Tactical ($175M total consideration) adding hard-armor pressing/autoclave capabilities and European military exposure; expected to be accretive to earnings and margins .

What Went Well and What Went Wrong

What Went Well

• Broad-based margin expansion: gross margin rose to 42.7% (+610 bps YoY, +180 bps QoQ), with adjusted EBITDA margin up to 19.1% (+670 bps YoY) on pricing, productivity, and mix improvements .
• Backlog momentum: organic backlog increased by $20M QoQ; Med-Eng won a $50M DoD IDIQ with a $10M initial PO, providing visibility into 2026 shipments .
• M&A pipeline execution: TYR Tactical acquisition agreement met Cadre’s criteria (leading position, strong brand, high-ROIC niche) and expands international military reach; expected accretion to earnings and adj. EBITDA .

Management quotes:

• “We again delivered on our strategic objectives… advancing Cadre’s track record of consistent and stable growth… organic backlog increased by $20 million sequentially” (Brad Williams) .
• “Fourth quarter gross margins expected between Q2 and Q3 rates, potentially on the higher end” (Blaine Browers) .
• “TYR brings significant hard armor capabilities via large presses and autoclaves… two large presses at 7,000 tons” (Brad Williams) .

What Went Wrong

• Top-line vs consensus: revenue of $155.9M modestly below S&P Global consensus of ~$159.0M*; sequential revenue declined ~$1.2M vs Q2 on timing .
• Nuclear orders timing: nuclear contribution faced timing shifts, with backlog bleed and concentration causing quarterly lumpiness; management remains bullish longer-term .
• GAAP EPS optics: company diluted EPS was $0.27, lower than S&P “Primary EPS” actual (normalized) of ~$0.38*, which can cause comparability issues across sources .

Financial Results

Segment breakdown:

KPIs and Balance Sheet Highlights:

Performance vs S&P Global Consensus (Q3 2025):

Note: Company reported GAAP diluted EPS of $0.27 .
Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “This continues to be an exciting time for Cadre… we continue to capitalize on Cadre’s robust M&A funnel… agreement to acquire TYR Tactical” (Warren Kanders) .
• “Organic backlog increased by $20 million sequentially… significant backlog growth is a promising sign reflective of progress booking previously delayed opportunities” (Brad Williams) .
• “For gross margins in Q4, we expect them between Q2 and Q3 rates, maybe a little higher-end based on backlog makeup” (Blaine Browers) .
• “TYR brings significant hard armor capabilities… two large presses at 7,000 tons… will be used by both companies” (Brad Williams) .

Q&A Highlights

• Margin drivers: sequential gross margin improvement was broad-based across categories, driven by pricing, productivity, and positive mix; not reliant on a single business .
• BEMO program cadence: initial $10M PO likely weights deliveries to 1H–mid 2026; follow-on order visibility impacted by government shutdown timing .
• Nuclear timing/lumpiness: backlog bleed is natural given concentration in fewer large projects; funnel remains bullish for Zircaloy/Carr’s/Alpha .
• Government shutdown impact: potential delays on shipment sign-offs/training-oriented pull-through are contemplated in Q4 guidance and monitored weekly .
• Inputs/inflation: input costs tracking consistently; pricing tools and Cadre operating model expected to offset pressures; no significant changes expected into next year .

Estimates Context

• Revenue modest miss vs S&P Global consensus ($155.9M actual vs $159.0M consensus, -2.0%)* .
• S&P “Primary EPS” beat ($0.377 actual vs $0.261 consensus, +44%); Company reported GAAP diluted EPS of $0.27 in 8-K, highlighting definitional differences between normalized and GAAP EPS .
  Values retrieved from S&P Global.

Key Takeaways for Investors

• Mix/pricing and operating model execution are driving durable margin expansion; expect Q4 gross margins between Q2 and Q3, potentially higher-end, supporting year-end profitability .
• Backlog momentum (organic +$20M QoQ) and the $50M BEMO IDIQ with a $10M PO enhance 2026 visibility and create optionality for international sensor demand expansion .
• TYR Tactical adds hard-armor pressing/autoclave capacity and European defense access; management expects accretion to earnings and adjusted EBITDA margins post-close .
• FY25 guidance reaffirmed: revenue $624–$630M, adjusted EBITDA $112–$116M, capex $7–$8M; near-term risks include government shutdown timing and tariffs, but mitigants include pricing and productivity tools .
• Segment dynamics: Product margins expanded to 43.9% (vs 37.4% LY), while Distribution margins remained stable; continued strength in armor/duty gear drove results .
• Capital structure improving with net debt down to ~$160M and LTM adjusted EBITDA up to ~$116M, providing flexibility for organic and inorganic investments .
• Trading setup: modest revenue miss vs S&P consensus offset by significant EPS beat on normalized basis*; narrative catalysts include backlog growth, DoD award, and TYR integration prospects .

Values retrieved from S&P Global.*