Cadre Holdings Inc

Previous wording

Net sales increased by $23.2 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily as a result of recent acquisitions and higher demand for armor and duty gear products. Net sales increased by $49.3 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily as a result of recent acquisitions and higher demand for armor and duty gear products.

Current wording

Net sales decreased by $15.7 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily as a result of the cybersecurity incident that we reported in July 2024, and a subsequent, negligible cybersecurity incident that occurred in September 2024, each of which led the Company to take certain containment and mitigation measures out of an abundance of caution, resulting in some interruptions or disruptions of normal business operations for some of our facilities which temporarily impacted the Company’s production and order fulfillment activities (collectively, the “Cybersecurity Incidents”). This decrease was partially offset by recent acquisitions. Net sales increased by $33.6 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily as a result of recent acquisitions and higher demand for armor and duty gear products, partially offset by the Cybersecurity Incidents. Consequently, the Company has determined that the Cybersecurity Incidents have negatively impacted its results of operations for the three months ended September 30, 2024, however, the Company believes that the Cybersecurity Incidents will not significantly affect its overall financial condition or results of operations.

Previous wording

Net income increased by $1.6 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily as a result of an increase in gross profit and recent acquisitions partially offset by an increase in selling, general and administrative expenses due to acquisitions and employee compensation and related benefits. Net income increased by $1.5 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily as a result of an increase in gross profit and recent acquisitions partially offset by an increase in selling, general and administrative expenses due to acquisitions and employee compensation and related benefits.

Current wording

Net income decreased by $7.4 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily as a result of a decrease in gross profit driven by lower productivity due to the Cybersecurity Incidents. Net income decreased by $5.9 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily as a result of an increase in gross profit driven by recent acquisitions, partially offset by an increase in selling, general and administrative expenses due to recent acquisitions.

Previous wording

Orders backlog increased by $24.5 million as of June 30, 2024 compared to December 31, 2023, primarily due to an increase of $41.3 million from recent acquisitions, partially offset by reductions of $14.0 million from explosive ordnance disposal products due to large orders delivered in 2024 and $3.3 million from duty gear due to large government and international orders delivered in 2024.

Current wording

Orders backlog increased by $40.6 million as of September 30, 2024 compared to December 31, 2023, primarily due to increases of $35.6 million from recent acquisitions, $4.7 million from higher demand for hard goods and $3.7 million from demand for international orders in crowd control, partially offset by a reduction of $5.1 million from explosive ordinance disposal products due to large orders delivered during 2024.

Previous wording

The following table presents data from our results of operations for the three and six months ended June 30, 2024 and 2023 (in thousands unless otherwise noted):

Current wording

The following table presents data from our results of operations for the three and nine months ended September 30, 2024 and 2023 (in thousands unless otherwise noted):

Previous wording

The following tables present segment data for the three and six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following tables present segment data for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

*Cost of goods sold and gross profit.*Product segment cost of goods sold increased by $32.6 million, or 29.4%, from $110.8 million to $143.4 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to increased volume, increased costs to manufacture product (principally material and labor), and increases from the amortization of inventory step up adjustments related to 2024 acquisitions, partially offset by product mix. Product segment gross profit as a percentage of net sales decreased by 162 basis points to 42.0% for the six months ended June 30, 2024 from 43.6% for the six months ended June 30, 2023, mainly driven by increases from the amortization of inventory step up adjustments related to the recent acquisitions and inflation, partially offset by favorable pricing. Distribution segment cost of goods sold increased by $2.8 million, or 7.3%, from $38.5 million to $41.3 million for the six months ended June 30, 2024 as compared to the same period in 2023, primarily due to increased volume. Distribution segment gross profit as a percentage of net sales decreased by 40 basis points to 23.2% for the six months ended June 30, 2024 from 23.6% for the six months ended June 30, 2023, mainly driven by unfavorable mix. Reconciling items consisting primarily of intercompany eliminations were $18.8 million and $13.8 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

*Cost of goods sold and gross profit.*Product segment cost of goods sold was flat at $60.4 million for the three months ended September 30, 2024 and 2023, primarily due to lower volumes, offset by lower productivity due to the Cybersecurity Incidents and the amortization of inventory step up adjustments related to 2024 acquisitions. Product segment gross profit as a percentage of net sales decreased by 690 basis points to 37.4% for the three months ended September 30, 2024 from 44.3% for the three months ended September 30, 2023, mainly driven by lower productivity due to the Cybersecurity Incidents, amortization of inventory step up adjustments related to the recent acquisitions, partially offset by favorable pricing net of material inflation. Distribution segment cost of goods sold decreased by $4.8 million, or 25.6%, from $18.7 million to $13.9 million for the three months ended September 30, 2024 as compared to the same period in 2023, primarily due to decreased volume. Distribution segment gross profit as a percentage of net sales decreased by 80 basis points to 21.9% for the three months ended September 30, 2024 from 22.7% for the three months ended September 30, 2023, mainly driven by unfavorable mix. Reconciling items consisting primarily of intercompany eliminations were $4.9 million and $7.6 million for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

*Selling, general and administrative.*Selling, general and administrative increased by $10.0 million, or 14.4%, for the six months ended June 30, 2024 as compared to the same period in 2023, primarily due to recent acquisitions, employee compensation and related benefits, and professional services.

Current wording

*Selling, general and administrative.*Selling, general and administrative decreased by $2.3 million, or 6.4%, for the three months ended September 30, 2024 as compared to the same period in 2023, primarily due to employee compensation.

Previous wording

*Interest expense.*Interest expense increased by $1.0 million, or 97.7%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to the addition of the incremental term loan in 2024.

Current wording

*Interest expense.*Interest expense increased by $0.9 million, or 85.6%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to the addition of the incremental term loan in 2024.

Previous wording

*Other (expense) income, net.*Other expense, net was $0.3 million for the three months ended June 30, 2024 as compared to Other income, net of $0.3 million for the three months ended June 30, 2023, primarily due to changes in foreign currency exchange rates.

Current wording

*Other income (expense), net.*Other income, net was $1.6 million for the three months ended September 30, 2024 as compared to Other expense, net of $0.3 million for the three months ended September 30, 2023, primarily due to changes in foreign currency exchange rates.

Previous wording

*Provision for income taxes.*Provision for income taxes was $5.0 million for the three months ended June 30, 2024 compared to $4.2 million for the three months ended June 30, 2023. The effective tax rate was 28.7% for the three months ended June 30, 2024 and was higher than the statutory rate primarily due to non-deductible executive compensation. The effective tax rate was 27.8% for the three months ended June 30, 2023 and higher than the statutory rate primarily due to state taxes and non-deductible executive compensation, partially offset by research and development tax credits.

Current wording

*Provision for income taxes.*Provision for income taxes was $1.3 million for the three months ended September 30, 2024 compared to $4.3 million for the three months ended September 30, 2023. The effective tax rate was 26.8% for the three months ended September 30, 2024 and was higher than the statutory rate primarily due to non-deductible executive compensation. The effective tax rate was 28.0% for the three months ended September 30, 2023 and higher than the statutory rate primarily due to state taxes and non-deductible executive compensation, partially offset by research and development tax credits.

Previous wording

*Net sales.*Product segment net sales increased by $50.6 million, or 25.8%, from $196.6 million to $247.2 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to increases of $25.8 million as a result of recent acquisitions, $14.8 million from higher North American demand for armor products and $7.8 million from higher demand for duty gear products. Distribution segment net sales increased by $3.4 million, or 6.7%, from $50.4 million to $53.8 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to increased agency demand for hard goods. Reconciling items consisting primarily of intercompany eliminations were $18.8 million and $14.1 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

*Net sales.*Product segment net sales increased by $38.6 million, or 12.7%, from $305.1 million to $343.7 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to increases of $47.4 million as a result of recent acquisitions, $11.2 million from higher North American demand for armor products and $5.0 million from higher demand for duty gear products, partially offset by decreases of $22.3 million due to the Cybersecurity Incidents and $2.7 million from chemiluminescent solutions. Distribution segment net sales decreased by $3.0 million, or 4.0%, from $74.6 million to $71.6 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to the Cybersecurity Incidents, partially offset by increased agency demand for hard goods. Reconciling items consisting primarily of intercompany eliminations were $23.7 million and $21.7 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

*Cost of goods sold and gross profit.*Product segment cost of goods sold increased by $17.4 million, or 29.9%, from $58.2 million to $75.6 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to increased volume, increased costs to manufacture product (principally material and labor), and increases from the amortization of inventory step up adjustments related to 2024 acquisitions. Product segment gross profit as a percentage of net sales decreased by 260 basis points to 41.1% for the three months ended June 30, 2024 from 43.7% for the three months ended June 30, 2023, mainly driven by increases from the amortization of inventory step up adjustments related to the recent acquisitions and inflation, partially offset by favorable pricing and product mix. Distribution segment cost of goods sold decreased by $0.1 million, or 0.3%, from $19.8 million to $19.7 million for the three months ended June 30, 2024 as compared to the same period in 2023, primarily due to decreased volume. Distribution segment gross profit as a percentage of net sales decreased by 20 basis points to 22.9% for the three months ended June 30, 2024 from 23.1% for the three months ended June 30, 2023, mainly driven by unfavorable mix. Reconciling items consisting primarily of intercompany eliminations were $9.7 million and $7.7 million for the three months ended June 30, 2024 and 2023, respectively.

Current wording

*Cost of goods sold and gross profit.*Product segment cost of goods sold increased by $32.6 million, or 19.0%, from $171.2 million to $203.8 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to increased volumes, increased costs to manufacture product (principally material and labor), and increases from the amortization of inventory step up adjustments related to 2024 acquisitions, partially offset by product mix. Product segment gross profit as a percentage of net sales decreased by 316 basis points to 40.7% for the nine months ended September 30, 2024 from 43.9% for the nine months ended September 30, 2023, mainly driven by lower productivity driven by the Cybersecurity Incidents, increases from the amortization of inventory step up adjustments related to the recent acquisitions, and unfavorable mix, partially offset by favorable pricing net of material inflation. Distribution segment cost of goods sold decreased by $2.0 million, or 3.5%, from $57.2 million to $55.2 million for the nine months ended September 30, 2024 as compared to the same period in 2023, primarily due to decreased volume. Distribution segment gross profit as a percentage of net sales decreased by 42 basis points to 22.9% for the nine months ended September 30, 2024 from 23.3% for the nine months ended September 30, 2023, mainly driven by unfavorable mix. Reconciling items consisting primarily of intercompany eliminations were $23.7 million and $21.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

*Selling, general and administrative.*Selling, general and administrative increased by $4.5 million, or 13.3%, for the three months ended June 30, 2024 as compared to the same period in 2023, primarily due to recent acquisitions, employee compensation and related benefits, and professional services.

Current wording

*Selling, general and administrative.*Selling, general and administrative increased by $7.7 million, or 7.3%, for the nine months ended September 30, 2024 as compared to the same period in 2023, primarily due to recent acquisitions, employee compensation and related benefits, and professional services.

Previous wording

*Restructuring and transaction costs.*Restructuring and transaction costs increased by $2.4 million, or 348.2%, for the six months ended June 30, 2024 primarily due to costs incurred associated with the ICOR and Alpha Safety acquisitions.

Current wording

*Restructuring and transaction costs.*Restructuring and transaction costs increased by $2.5 million, or 219.9%, for the nine months ended September 30, 2024 primarily due to costs incurred associated with the ICOR and Alpha Safety acquisitions.

Previous wording

*Related party expense.*Related party expense, which ordinarily consists of rent expense related todistribution warehouses and retail stores that we lease from related parties, increased by $1.7 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily due to a$1.8 million transaction fee paid to Kanders & Company, Inc., a company controlled by our Chief Executive Officer, in connection with the acquisition of Alpha Safety.

Current wording

*Related party expense.*Related party expense, which ordinarily consists of rent expense related todistribution warehouses and retail stores that we lease from related parties, increased by $1.7 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily due to a$1.8 million transaction fee paid to Kanders & Company, Inc., a company controlled by our Chief Executive Officer, in connection with the acquisition of Alpha Safety.

Previous wording

*Interest expense.*Interest expense increased by $1.0 million, or 37.2%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to the addition of the incremental term loan in 2024.

Current wording

*Interest expense.*Interest expense increased by $1.9 million, or 51.1%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to the addition of the incremental term loan in 2024.

Previous wording

*Other (expense) income, net.*Other expense, net was $1.8 million for the six months ended June 30, 2024 as compared to Other income, net of $0.7 million for the six months ended June 30, 2023, primarily due to changes in foreign currency exchange rates.

Current wording

*Other income (expense), net.*Other expense, net was $0.2 million for the nine months ended September 30, 2024 as compared to Other income, net of $0.4 million for the nine months ended September 30, 2023, primarily due to changes in foreign currency exchange rates.

Previous wording

Provision for income taxes. Provision for income taxes was $7.0 million for the six months ended June 30, 2024 compared to $7.2 million for the six months ended June 30, 2023. The effective tax rate was 26.5% for the six months ended June 30, 2024 and was higher than the statutory rate primarily due to non-deductible executive compensation. The effective tax rate was 28.5% for the six months ended June 30, 2023 and was higher than the statutory rate primarily due to state taxes and non-deductible executive compensation, partially offset by research and development tax credits.

Current wording

Provision for income taxes. Provision for income taxes was $8.4 million for the nine months ended September 30, 2024 compared to $11.5 million for the nine months ended September 30, 2023. The effective tax rate was 26.5% for the nine months ended September 30, 2024 and was higher than the statutory rate primarily due to non-deductible executive compensation. The effective tax rate was 28.3% for the nine months ended September 30, 2023 and was higher than the statutory rate primarily due to state taxes and non-deductible executive compensation, partially offset by research and development tax credits.

Previous wording

This Quarterly Report on Form 10-Q includes 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. Adjusted EBITDA represents EBITDA that excludes restructuring and transaction costs, other expense (income), net, stock-based compensation expense, stock-based compensation payroll tax expense, long-term incentive plan (“LTIP”) bonus, amortization of inventory step-up and contingent consideration expense as these items do not represent our core operating performance.

Current wording

This Quarterly Report on Form 10-Q includes 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. Adjusted EBITDA represents EBITDA that excludes restructuring and transaction costs, other (income) expense, net, stock-based compensation expense, stock-based compensation payroll tax expense, long-term incentive plan (“LTIP”) bonus, amortization of inventory step-up and contingent consideration expense as these items do not represent our core operating performance.

Previous wording

Adjusted EBITDA increased by $5.5 million for the three months ended June 30, 2024 as compared to 2023, primarily due to an increase in gross profit and recent acquisitions, partially offset by an increase in selling, general and administrative expenses. Adjusted EBITDA increased by $11.4 million for the six months ended June 30, 2024 as compared to 2023, primarily due to an increase in gross profit and recent acquisitions, partially offset by an increase in selling, general and administrative expenses.

Current wording

Adjusted EBITDA decreased by $10.2 million for the three months ended September 30, 2024 as compared to 2023, primarily due to a decrease in gross profit due to the Cybersecurity Incidents, partially offset by recent acquisitions and a decrease in selling, general and administrative expenses. Adjusted EBITDA increased by $1.2 million for the nine months ended September 30, 2024 as compared to 2023, primarily due to recent acquisitions, partially offset by the impact of the Cybersecurity Incidents and an increase in selling, general and administrative expenses.

Previous wording

For the six months ended June 30, 2024, net cash provided from operating activities totaled $13.3 million and as of June 30, 2024, cash and cash equivalents totaled $105.9 million. 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 Quarterly Report on Form 10-Q. 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.

Current wording

For the nine months ended September 30, 2024, net cash provided from operating activities totaled $8.1 million and as of September 30, 2024, cash and cash equivalents totaled $93.0 million. 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 Quarterly Report on Form 10-Q. 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.

Previous wording

As of June 30, 2024 and December 31, 2023, we had $211.4 million and $140.1 million in outstanding debt, net of debt discounts and debt issuance costs, respectively, primarily related to the term loan facilities.

Current wording

As of September 30, 2024 and December 31, 2023, we had $208.1 million and $140.1 million in outstanding debt, net of debt discounts and debt issuance costs, respectively, primarily related to the term loan facilities.

Previous wording

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”). Each of the Term Loan and the Revolving Loan mature on July 23, 2026. Commencing

Current wording

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”). Each of the Term Loan and the Revolving Loan mature on July 23, 2026. Commencing December 31, 2021, the New Term Loan requires scheduled quarterly payments in amounts equal to 1.25% per quarter of the original aggregate principal amount of the Term Loan, with the balance due at maturity. The 2021 Credit Agreement is guaranteed, jointly and severally, by the Guarantors and, subject to certain exceptions, is 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.

Previous wording

There were no amounts outstanding under the Revolving Loan as of June 30, 2024 and December 31, 2023. As of June 30, 2024, there were $4.5 million in outstanding letters of credit and $95.5 million of availability.

Current wording

There were no amounts outstanding under the Revolving Loan as of September 30, 2024 and December 31, 2023. As of September 30, 2024, there were $2.1 million in outstanding letters of credit and $97.9 million of availability.

Previous wording

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. 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 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. 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. As of August 5, 2024, there were no amounts outstanding under the Revolving Loan.

Current wording

mandatory prepayments in connection with certain liquidity events. 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 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. 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. As of November 4, 2024, there were no amounts outstanding under the Revolving Loan.

Previous wording

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 Revolving Canadian Loan matures on July 23, 2026. The Canadian Loan Agreement is guaranteed by the Canadian Guarantor pursuant to a Guaranty and Suretyship Agreement.

Current wording

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 Revolving Canadian Loan matures on July 23, 2026. The Canadian Loan Agreement is guaranteed by the Canadian Guarantor pursuant to a Guaranty and Suretyship Agreement.

Previous wording

The Canadian Loan Agreement also contains customary representations and warranties, and affirmative and negative covenants, including, among others, limitations on additional indebtedness, entry into new lines of business, entry into guarantee agreements, making of any loans or advances to, or investments in, any other person, restrictions on liens on the assets of the Canadian Borrowers and mergers, transfers of assets and acquisitions. The Canadian Loan Agreement and Note also contain 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. 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 August 5, 2024, there were no amounts outstanding under the Revolving Canadian Loan.

Current wording

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. 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 November 4, 2024, there were no amounts outstanding under the Revolving Canadian Loan.

Previous wording

During the six months ended June 30, 2024, net cash provided by operating activities of $13.3 million resulted primarily from net income of $19.5 million, a $8.6 million add back to net income for depreciation and amortization, a $4.2 million add back to net income for stock-based compensation and a net deduction to net income of $22.3 million for changes in operating assets and

Current wording

During the nine months ended September 30, 2024, net cash provided by operating activities of $8.1 million resulted primarily from net income of $23.2 million, a $12.3 million add back to net income for depreciation and amortization, a $6.3 million add back to net income for stock-based compensation, a deduction to net income of $11.6 million for deferred income taxes and a net deduction to net income of $27.7 million for changes in operating assets and liabilities. Changes in operating assets and liabilities were primarily driven by a decrease in accounts payable and other liabilities of $21.1 million and an increase in prepaid expenses and other assets of $4.2 million.

Previous wording

During the six months ended June 30, 2023, net cash provided by operating activities of $28.3 million resulted primarily from net income of $18.0 million, a $8.2 million add back to net income for depreciation and amortization, a $4.9 million add back to net income for stock-based compensation and changes in operating assets and liabilities of $2.0 million. Changes in operating assets and liabilities were primarily driven by a decrease in accounts receivable of $7.6 million, an increase in inventories of $12.0 million and a decrease in prepaid expenses and other assets of $3.4 million.

Current wording

During the nine months ended September 30, 2023, net cash provided by operating activities of $46.3 million resulted primarily from net income of $29.0 million, a $12.4 million add back to net income for depreciation and amortization, a $7.1 million add back to net income for stock-based compensation and changes in operating assets and liabilities of $3.3 million. Changes in operating assets and liabilities were primarily driven by a decrease in accounts receivable of $3.4 million, an increase in inventories of $12.2 million and an increase in accounts payable and other liabilities of $8.6 million.

Previous wording

During the six months ended June 30, 2024, we used $145.1 million of cash in investing activities, primarily consisting of $141.8 million for the acquisition of ICOR and Alpha Safety.

Current wording

During the nine months ended September 30, 2024, we used $146.1 million of cash in investing activities, primarily consisting of $141.8 million for the acquisition of ICOR and Alpha Safety.

Previous wording

During the six months ended June 30, 2023, we used $2.2 million of cash in investing activities, primarily consisting of $2.4 million for purchases of property and equipment.

Current wording

During the nine months ended September 30, 2023, we used $4.0 million of cash in investing activities, primarily consisting of $4.2 million for purchases of property and equipment.

Previous wording

During the six months ended June 30, 2024, net cash provided by financing activities of $149.9 million resulted primarily from proceeds from term loans of $80.0 million and proceeds from the secondary offering, including option exercise, of $91.8 million, partially offset byprincipal payments on term loans of $6.1 million, taxes paid in connection with employee stock transactions of $5.3 million and dividends distributed of $6.8 million.

Current wording

During the nine months ended September 30, 2024, net cash provided by financing activities of $142.8 million resulted primarily from proceeds from term loans of $80.0 million and proceeds from the secondary offering, including option exercise, of $91.8 million, partially offset byprincipal payments on term loans of $9.6 million, taxes paid in connection with employee stock transactions of $5.3 million and dividends distributed of $10.4 million.

Previous wording

During the six months ended June 30, 2023, we used $15.9 million of cash in financing activities, primarily consisting of principal payments on term loans of $5.0 million, taxes paid in connection with employee stock transactions of $2.7 million and dividends distributed of $6.0 million.

Current wording

During the nine months ended September 30, 2023, we used $18.2 million of cash in financing activities, primarily consisting of principal payments on term loans of $7.5 million, taxes paid in connection with employee stock transactions of $2.7 million and dividends distributed of $9.0 million.