Cadre Q2 2026 Earnings: Sales Rise 32% but GAAP EPS Declines

Cadre Holdings (NYSE: CDRE) reported Q2 2026 net sales of $207.1 million, up 32% from $157.1 million a year earlier, while diluted EPS fell to $0.26 from $0.30. Acquisitions and increased demand for nuclear safety, armor, and duty gear drove revenue for the quarter ended June 30, 2026, while favorable pricing supported a higher gross margin. Adjusted EBITDA increased substantially, but contingent consideration, compensation costs, and foreign-exchange pressure weighed on GAAP net income.

Core Earnings Results

Cadre converted its revenue growth into higher gross profit and operating income. Gross margin expanded by 120 basis points as favorable pricing more than offset increased amortization related to acquisition inventory step-ups.

Adjusted EBITDA is a non-GAAP measure that excludes items including contingent consideration, stock-based compensation, transaction costs, and acquisition-related inventory step-up amortization.

Business and Segment Performance

The Product segment accounted for most of the quarter’s expansion. Its sales increased nearly 36%, while its gross margin improved by 90 basis points; Distribution grew more slowly and recorded modest margin compression.

Segment sales are shown before intercompany eliminations. For the first six months of 2026, Distribution sales fell approximately 11% to $47.4 million, and Cadre identified lower agency demand for hard goods in that segment as a partial offset to consolidated growth.

Cadre completed its acquisition of Alien Gear Holsters on April 7, adding a holster and gear business serving consumer, law-enforcement, military, and security markets. The company did not quantify the acquisition’s specific contribution to quarterly revenue.

Safariland was also selected as the ballistic panel provider for Predictive Ballistics’ Overt Armor Kit. Predictive Ballistics received a five-year, $61.0 million FBI contract, but Cadre did not disclose how much of that contract value may ultimately flow to Safariland.

Profitability, Cash Flow, and the Balance Sheet

Operating cash flow was $44.7 million for the first six months of 2026, up from $20.0 million in the comparable period. These are year-to-date figures rather than quarterly amounts. Q2 capital expenditures increased to $3.3 million from $1.3 million, while six-month capital expenditures were $6.4 million.

Acquisition spending materially changed the balance sheet. Cadre used $163.9 million of cash for business acquisitions during the first half and received $75.0 million from term loans. Cash declined to $54.0 million at June 30 from $122.9 million at the end of 2025, while total debt rose to $374.3 million from $307.3 million. As a result, net debt increased by $136.0 million to $320.3 million.

Inventory also rose to $129.1 million from $100.3 million over the same period. The financial statements do not separate how much of that increase came from acquired businesses versus underlying operating needs.

Operating Gains Did Not Fully Reach GAAP Earnings

The central earnings divergence was between improving operating performance and declining GAAP earnings. Operating income rose 53% and adjusted EBITDA increased 56%, but net income declined 7% and diluted EPS fell 13%.

Higher gross profit was offset further down the income statement by increased contingent consideration and compensation expenses, as well as unfavorable currency movements. The total other result shifted to a $5.5 million expense from $2.5 million of income a year earlier, while net interest expense increased to $5.0 million from $3.6 million.

The non-GAAP reconciliation excluded $6.4 million of contingent consideration expense, $3.0 million of stock-based compensation, and $2.4 million of inventory step-up amortization from Q2 adjusted EBITDA. Investors therefore need to distinguish the improvement in Cadre’s adjusted operating results from the costs reflected in its GAAP earnings.

2026 Guidance

Cadre raised its full-year outlook, citing its first-half performance, continued demand, and a record $368 million order backlog. The release did not provide the previous guidance ranges, so the size of the increase cannot be quantified from the available information.

Cadre did not provide net income guidance because certain expenses and gains affecting GAAP earnings are difficult to forecast. Its backlog reached a record for the second consecutive quarter, although the company did not provide a schedule for revenue conversion or the expected profitability of those orders.

Recent Insider Transactions

According to the supplied insider-transaction data, insiders purchased 60,044 shares across six transactions and sold 500,000 shares across three transactions during the latest six-month period. That represented net selling of 439,956 shares, or 3.60% of reported insider holdings of 11.88 million shares.

These filings establish the transactions but do not disclose the insider’s reasons, so they do not by themselves indicate a view on Cadre’s outlook.

Risks Investors Need to Watch

• Acquisition and leverage risk: Acquisitions helped drive sales, but acquisition spending also contributed to lower cash and higher debt. Net debt reached $320.3 million at quarter-end.
• GAAP earnings pressure: Contingent consideration, compensation costs, acquisition accounting, foreign exchange, and higher interest expense prevented stronger operating income from translating into higher net income.
• Distribution weakness: Distribution sales grew only 6% in Q2 and declined over the first six months, with lower agency demand for hard goods identified as a headwind.
• Backlog conversion: The $368 million backlog supports management’s outlook, but the timing and margins associated with converting those orders into revenue were not disclosed.
• Integration and inventory: Continued acquisition activity increases integration demands, while the rise in inventory and inventory step-up amortization could affect working capital and reported margins.

Summary

Cadre’s Q2 2026 results showed substantial sales growth and expanding adjusted profitability, led by acquisitions and demand across its Product segment. Favorable pricing improved gross margin, but acquisition-related expenses, compensation, currency movements, and higher interest costs caused GAAP EPS to decline. The raised outlook and record backlog support the second-half growth case, while leverage, Distribution demand, acquisition integration, and the conversion of adjusted earnings into GAAP profit remain the main areas to monitor.