CDRE 10-K & 10-Q changes, risk factors and insider trading

We are subject to federal licensing requirements with respect to the export of some of our products. In addition, we are obligated to comply with a variety of federal, state and local regulations, both domestically and abroad, governing certain aspects of our sales, operations and workplace, including regulations promulgated by, among others, the U.S. Departments of Commerce, Defense, Justice, Treasury, State and Transportation, the Federal Aviation Administration, the U.S. Environmental Protection Agency, the ATF, the NRC, the DoE, and the Equal Employment Opportunity Commission. The ATF also regulates our manufacturing and distribution of certain destructive devices, firearms, and explosives. We also ship toxic, hazardous and radioactive materials, and in doing so, must comply with the regulations of the DoT for packaging and labeling. We are also required to comply with Controlled Goods Directorate Registration regime in Canada for explosive ordnance disposal products. Additionally, the failure to obtain applicable governmental approval and clearances could materially adversely affect our ability to continue to service the government contracts we maintain. Exports of some of our products to certain international destinations may require export authorization from U.S. export control authorities, including the U.S. Departments of Commerce and State, and authorizations may be conditioned on re-export restrictions. Failure to receive these authorizations may materially adversely affect our revenues and in turn our business, financial condition, results of operations and liquidity from international sales. Furthermore, we have material contracts with governmental entities and are subject to rules, regulations and approvals applicable to government contractors. We are also subject to routine audits to assureensure our compliance with these requirements While we continually work to enhance our international trade compliance programs, we cannot assure you that we are or will be in full compliance at all times with applicable laws and regulations governing the export and deemed export of defense articles, defense services, and dual-use products and services that are controlled by U.S. and/or foreign governments. In those instances where we have identified non-compliances with applicable lawsactual or regulations,potential non-compliance, we havemay takenincur affirmativeremediation stepscosts, reputational harm, and could be subject to correctenhanced oversight, penalties, suspension, or mitigatedebarment, sucheven identifiedwhere failureswe andtake tocorrective self-report them to the cognizant U.S. or foreign government agencies.actions. We also import significant volumes of foreign-made components and materials for use in our manufacturing processes, which may be subject to import duties and other regulations. Violations of international trade (export/ import) controls in the U.S. and elsewhere may result in severe criminal and/or civil penalties, which could have a material adverse effect on our business, financial condition, results of operations and liquidity.

One component of our strategy is to expand our operations into selected international markets. Military procurement, for example, has traditionally had a large international base. We actively market our products in Europe, North and South America, the Middle East, Africa, and Asia. However, we may be unable to execute our business model in these markets or new markets. Further, foreign providers of competing products and services may have a substantial advantage over us in attracting consumerscustomers and businesses in their countries due to earlier established businesses in those countries, greater knowledge with respect to the cultural differences of consumerscustomers and businesses residinglocated in those countries and/or their focus on a single market. In pursuing our international expansion strategy, we face several additional risks, including:

The conflictsconflict between Russia and Ukraine and Palestinethe conflicts in the Middle East, and Israel,the respectively,potential for these and other geopolitical conflicts to expand or intensify, including through the emergence of additional conflicts or heightened tensions in other regions, could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook.

There is continued, sustained military conflict between Russia and Ukraine as well as Palestinein andthe Israel,Middle East, and continued disruption in these regions and the broader global economic environment is likely. The uncertain consequences and duration of these conflicts, and the risk that they may expand in scope, escalate, or result in broader regional or global instability, including through the emergence of additional conflicts or heightened tensions in other regions, including the potential effects of any sanctions and countersanctions against officials, individuals and industries relating to these regions, including Russia, and the potential response to any such sanctions, as well as prolonged unrest and/or intensified military activities impacting these regions could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook.

Should these materials or components become unavailable for any reason, we would not necessarily be able to replace them with materials or components of like weight and strength, as our ballistic resistant garments must be manufactured to specific standards using specific materials and components that are not necessarily interchangeable based on metrics such as weight and strength. When we have faced shortages in the past, we have been able to ameliorate the issue by obtaining substitutable alternative materials and components from other commercially available sources. However, the use of alternative materials and components in our ballistic resistant garments requires research and development, recertification, as well as customer acceptance of the new products utilizing these alternative materials and components, and there is no guarantee that any such recertification or acceptance will be obtained by us. Thus, if our supply of any of these materials or components were materially reduced or cut off or if there werewas a material increase in the prices of these materials or components, our manufacturing operations could be adversely affected and our costs increased, and our business, financial condition, results of operations and liquidity could be materially adversely affected.

We are subject to federal, state, local and foreign laws and regulations governing environment, health and safety (“EHS”) matters, including those regulating discharges to the air and water, the management of wastes, the control of noise and odors, and the maintenance of a safe and healthy operating environment for our employees. We cannot assure you that we are at all times in complete compliance with all such requirements. Like all companies in our industry, we are subject to potentially significant fines or penalties if we fail to comply with various EHS requirements. Such requirements are complex, change frequently, and could become more stringent in the future. Accordingly, we cannot assure you whether these requirements will change in a manner requiring material capital or operating expenditures or will otherwise have a material adverse effect on us in the future. In addition, we are also subject to environmental laws requiring the investigation and clean-up of environmental contamination. We may be subject to liability, including liability for clean-up costs, if contamination is discovered at one of our current or former facilities, in some circumstances even if such contamination was caused by a third party such as a prior owner. We also may be subject to liability if contamination is discovered at a landfill or other location where we have disposed of wastes,waste, notwithstanding that historic disposal practices may have been in accordance with all applicable requirements. We use Orthochlorabenzalmalononitrile and Chloroacetophenone chemical agents in connection with our production of our crowd control products, and these chemicals are hazardous and could cause environmental damage if not handled and disposed of properly. Moreover, private parties may bring claims against us based on alleged adverse health impacts or property damage caused by our operations. The amount of liability for cleaning up contamination or defending against private party claims could be material and have a material adverse effect on our business, financial condition, results of operations and liquidity.

The effects of climate changechange, andtogether with increased focus by governmental and non-governmental organizations, customers, consumerscustomers and investors on sustainability issues, including thoseevolving climate and sustainability related todisclosure climate change and socially responsible activities,expectations, may adversely affect our business and financial results and damage our reputation.

The accuracy and appropriateness of certain costs and expenses used to substantiate our direct and indirect costs for the U.S. government under both cost-plus and fixed-price contracts are subject to extensive regulation and audit by the Defense Contract Audit Agency, an arm of the U.S. Department of Defense.DoW. Responding to governmental audits, inquiries or investigations may involve significant expense and divert management’s attention. Our failure to comply with these or other laws and regulations could result in contract termination, suspension or debarment from contracting with the federal government, civil fines and damages and criminal prosecution and penalties, any of which could have a material adverse effect on our business, financial condition, results of operations and liquidity.

Our reputation and ability to attract, retain and serve consumerscustomers is dependent upon the reliable performance of our underlying technology infrastructure and external service providers, including third-party cloud-based solutions. These systems are vulnerable to damage or interruption and we have experienced interruptions in the past. We rely on cloud-based solutions furnished by third parties primarily to allocate resources, pay vendors, collect from customers, process transactions, develop demand and supply plans, manage product design, production, transportation, and distribution, forecast and report operating results, meet regulatory requirements and administer employee payroll and benefits, among other functions. We have also designed a significant portion of our software and computer systems to utilize data processing and storage capabilities from third-party cloud solution providers. Both our on-premises and cloud-based infrastructure may be susceptible to outages due to any number of reasons, including, human error, fire, floods, power loss, telecommunications failures, terrorist attacks and similar events. Despite the implementation of security measures that we believe to be reasonable, both our on-premises and our cloud-based infrastructure may also be vulnerable to hacking, computer viruses, the installation of malware and similar disruptions either by third-parties or employees, which may result in outages. We do not have redundancy for all of our systems and our disaster recovery planning may not account for all eventualities. If we or our existing third-party cloud-based solution providers experience interruptions in service regularly or for a prolonged basis, or other similar issues, our business could be seriously harmed and, in some instances, our consumerscustomers may not be able to purchase our products, which could significantly and negatively affect our sales. Additionally, our existing cloud-based solution providers have broad discretion to change and interpret their terms of service and other policies with respect to us, and they may take actions beyond our control that could harm our business. We also may not be able to control the quality of the systems and services we receive from our third-party cloud-based solution providers. Any transition of the cloud-based solutions currently provided to different cloud providers would be difficult to implement and may cause us to incur significant time and expense.

The target end users of the products that we sell, which include firearms, ammunition and body armor, areinclude licensed professionals thatsuch includeas state and local law enforcement, federal agencies, foreign police, military agencies as well as private security firms. However, if any misuse of our products were to occur, the Company’s reputation could be harmed. The occurrence of any misuse of our products could seriously damage our reputation and the image of our brands or cause our customers to consider alternatives to the Company’s products, which could have a material adverse effect on our business, financial condition, results of operations and liquidity.

The success of our business depends significantly on our ability to hire and retain quality team members,employees, which include but are not limited to managers and other personnel. Competition for non-entry-level personnel, particularly those with experience in our industry, is highly competitive. We may be unable to meet our labor needs and control our costs due to external factors such as the availability of a sufficient number of qualified persons in the workforce of the markets in which we operate, competition, unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics, health and other insurance costs, adoption of new or revised employment and labor laws and regulations, and the impacts of man-made or natural disasters, such as tornadoes, hurricanes, and public health emergencies, such as the COVID-19 pandemic. We have experienced, and expect to continue to experience, a shortage of labor for certain functions, which has increased our labor costs and negatively impacted our profitability. The extent and duration of the effect of these labor market challenges are subject to numerous factors, including the availability of qualified persons in the markets where we and our vendors and customers operate and unemployment levels within these markets, behavioral changes, prevailing wage rates and other benefits, inflation, adoption of new or revised employment and labor laws and regulations (including increased minimum wage requirements) or government programs, safety levels of our operations, and our reputation within the labor market.

Recent or potential future legislative initiatives may seek to increase the federal minimum wage in the United States, as well as the minimum wage in a number of individual states or markets. As federal or state minimum wage rates increase, we may need to increase not only the wage rates of our minimum wage team members,employees, but also the wages paid to our other hourly team membersemployees as well. Further, should we fail to increase our wages competitively in response to increasing wage rates, the quality of our workforce could decline, causing our customer service to suffer. Additionally, the U.S. Department of Labor has enacted rules that may have salary and wage impact for “exempt” team members,employees, which could result in a substantial increase in store payroll expense. Any increase in the cost of our labor could have an adverse effect on our operating costs, financial condition and results of operations, which in turn can materially adversely affect our business.

Electricity and natural gas are used to operate equipment at our manufacturing facilities. Over the past several years, prices for electricity and natural gas have fluctuated significantly. An outbreak or escalation of hostilities between the United States and any foreign power, or between foreign powers, suchincluding asconflicts theor militaryheightened conflict between Israel and Palestine andtensions in Ukraine,regions that are significant producers, processors or transit routes for energy supplies, or a natural disaster, or the emergence of additional conflicts or heightened tensions in other regions, could result in a real or perceived shortage of petroleum and/or natural gas, which could result in an increase in the cost of electricity or energy generally as well as an increase in the cost of our raw materials, of which many are petroleum-based. In addition, increased energy costs negatively impact our freight costs due to higher fuel prices. Future limitations on the availabilityavailability, transportation, distribution or consumption of petroleum products and/or an increase in energy costs, particularly electricity for plant operations, could have a material adverse effect upon our business, financial condition, results of operations and liquidity.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, new Securities and Exchange Commission regulations and NASDAQNYSE rules, are creating uncertainty for companies such as ours. These new or changed laws, regulations, and standards are subject to varying interpretations, often due to their lack of specificity. As a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, our efforts to comply with evolving laws, regulations, and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

Cadre is a global leader in the manufacturing and distribution of safety equipment and other related products for the law enforcement, first responder, military and nuclear markets. Our equipment provides critical protection to allow its users to safely and securely perform their duties and protect those around them in hazardous or life-threatening situations. Through our dedication to superior quality, we establish a direct covenant with end users that our products will perform and keep them safe when they are most needed. We sell a wide range of products including body armor, explosive ordnance disposal equipmentequipment, duty gear, remote handling solutions, containers for the storage of radioactive materials, and dutyventilation gearand containment solutions through both direct and indirect channels. In addition, through our owned distribution, we serve as a one-stop shop for first responders providing equipment we manufacture as well as third-party products including uniforms, optics, boots, firearms and ammunition. The majority of our diversified product offering is governed by rigorous safety standards and regulations. Demand for our products is driven by technological advancement as well as recurring modernization and replacement cycles for the equipment to maintain its efficiency, effective performance and regulatory compliance.

We service the ever-changing needs of our end users by investing in research and development for new product innovation and technical advancements that continually raise the standards for safety equipment. Our target end user base includes domestic and international first responders such as state and local law enforcement, fire and rescue, explosive ordnance disposal technicians, emergency medical technicians, fishing and wildlife enforcement and departments of corrections, as well as federal agencies including DoS, DoD,DoW, DoI, DoJ, DHS, DoCDoC, DoE and numerous foreign government agencies in over 100 countries.

In JanuaryApril 2024,2025, the Company acquired ICOR Technology Inc. (“ICOR”)Zircaloy for $40.4$98.9 million.

In FebruaryJanuary 2024,2026, the Company acquired AlphaTYR Safety Intermediate,Tactical, LLC (“Alpha Safety”) for $107.1$174.0 million.

Net sales increased by $85.0$42.7 million for the year ended December 31, 20242025 as compared to December 31, 2023,2024, primarily as a result of the recent acquisitions and higher demand for armor, duty gear and crowd control products, as well as recent acquisitions, partially offset by a decline in accessories.EOD products and existing nuclear safety products.

Net income decreasedincreased by $2.5$8.0 million for the year ended December 31, 20242025 as compared to the year ended December 31, 2023,2024, primarily as a result of higher gross profit partially offset by an increase in selling, general and administrative expenses from acquisitions, acquisition related costs, higher interest expenseexpense, and lowerhigher productivitystock ascompensation a result of the cybersecurity incidents that we reported in 2024, partially offset by favorable pricing and volume.expense.

Orders comprising backlog as of a given balance sheet date are typically invoiced in subsequent periods. TheA majoritysubstantial portion of our products are generally processed and shipped within one60 to three weeksdays of an order being placed, though the fulfillment time for certain products, for example, explosive ordnance disposal equipment, may take three months or longer. Our orders backlog could experience volatility between periods, including as a result of customer order volumes and the speed of our order fulfillment, which in turn may be impacted by the nature of products ordered, the amount of inventory on hand and the necessary manufacturing lead time.

Orders backlog increased by $2.1$61.0 million as of December 31, 20242025 compared to December 31, 2023,2024, primarily due to an increaseincreases of $27.6$51.3 million from recentthe acquisitions,Zircaloy acquisition, $12.5 million from global EOD, $3.7 million from chemiluminescent products and $1.6 million from U.S. government and international channels for duty gear holsters, partially offset by reductions of $15.2$7.7 million from explosiveexisting ordnancenuclear disposalsafety products and $8.9 million from armor products, both due to large orders delivered in 2024.products.

At the time of revenue recognitionrecognition, we also provide for estimated sales returns and miscellaneous claims from customers as reductions to revenues. Charges for shipping and handling fees billed to customers are included in net sales. Taxes collected from customers and remitted to government authorities are reported on a net basis and are excluded from sales. See Note 1 “Significant Accounting Policies — Revenue Recognition” to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Related party expense. Related party expense primarily consists of rent expense related to distribution locations owned by certain employees and any one-time fees paid to related parties.parties for transaction related services.

Other income (expense) income,, net. Other income (expense) income,, net primarily consists of gains and losses from foreign currency transactions.

Net sales. Product segment net sales increased by $86.8$46.1 million, or 21.1%,9.3%, from $410.8$497.6 million to $497.6$543.7 million for the year ended December 31, 20242025 as compared to 2023,2024, primarily due to an increaseincreases of $73.3 million as a result of recent acquisitions, $8.2$49.2 million from higherthe Zircaloy acquisition and $19.0 million from stronger demand for global duty gear products, $7.5 million from higher North American demand for armor products, and $3.2 million from higher demand for crowd control products, partially offset by adecreases $6.2of $15.5 million declinefrom inEOD automotive.and $6.7 million from existing nuclear safety products. Distribution segment net sales increaseddecreased by $3.0$0.5 million or 3.0%,0.5%, from $102.4$105.4 million to $105.4$104.9 million for the year ended December 31, 20242025 as compared to 2023,2024, primarily due to increaseddecreased agency demand for hard goods. Reconciling items consistingconsist primarily of intercompany eliminations were $35.5 million and $30.7 million for year ended December 31, 2024 and 2023, respectively.eliminations.

Cost of goods sold. Product segment cost of goods sold increased by $54.0$19.2 million, or 23.1%,6.7%, from $233.9$287.9 million to $287.9$307.1 million for the year ended December 31, 20242025 as compared to 20232024 primarily due to the Zircaloy acquisition, increased volume, and increased costs to manufacture product (principally material and labor), and increases from the amortization of inventory step up adjustments related to 2024 acquisitions,product, partially offset by producta mix.decrease in inventory step-up amortization and continuous improvement projects. Product segment gross profit as a percentage of net sales decreasedincreased by 90137 basis points to 43.5% in 2025 from 42.2% in 2024 from 43.1% in 2023 mainly driven by theincreased amortizationvolume, favorable pricing net of inventorymaterial step up adjustments related to the recent acquisitions, lower productivity driven by the 2024 cybersecurity incidents, unfavorable mixinflation, and inflation,a decrease in inventory step-up amortization, partially offset by favorablelabor pricing.and overhead inflation. Distribution segment cost of goods sold increased by $3.3$0.2 million, or 4.2%,0.3%, from $78.3$81.6 million to $81.6$81.8 million for the year ended December 31, 20242025 as compared to 20232024 primarily due to increased volume, partially offsetdriven by costsunfavorable to acquire products.mix. Distribution segment gross profit as a percentage of net sales decreased by 9357 basis points to 22.0% in 2025 from 22.5% in 2024 from 23.5% in 2023 mainly driven by inflation and unfavorable mix. Reconciling items consistingconsist primarily of intercompany eliminations were $35.4 million and $30.5 million for year ended December 31, 2024 and 2023, respectively.eliminations.

Selling, general and administrative. SG&A increased by $17.8$24.8 million, or 12.7%,15.7%, for the year ended December 31, 20242025 as compared to 20232024 primarily due to recentthe acquisitions,Zircaloy acquisition, increased employee compensation and relatedassociated benefits, and professional services.services expenses.

Restructuring and transaction costs. Restructuring and transaction costs increased by $3.8$1.7 million for the year ended December 31, 20242025 as compared to 20232024 primarily due to costs incurred associated with the ICORZircaloy and Alpha SafetyTYR acquisitions.

Related party expense. Related party expense increaseddecreased by $0.9 million for the year ended December 31, 20242025 as compared to 20232024 and primarily consisted of a $1.8$1.0 million fee paid to Kanders & Company, Inc., a company controlled by our Chief Executive Officer, in connection with the acquisition of Alpha Safety, as well as a $0.3 million fee paid to Kanders & Company, Inc. in connection with the execution of our debt refinancingZircaloy for the year ended December 31, 2024,2025, and a $1.0$1.8 million fee paid to Kanders & Company, Inc. in connection with the acquisition of ICORAlpha Safety for the year ended December 31, 2023,2024, in each case forthe financialexpense advisory and otheris related to transaction services.

Interest expense. Interest expense increased by $3.3$4.7 million for the year ended December 31, 20242025 as compared to 20232024 primarily due to the addition of the incremental termdebt loanrelated into 2024.recent acquisitions.

Other income (expense), net. Other income, net.net was $7.5 million for the year ended December 31, 2025 compared to Other expense, net wasof $4.7 million for the year ended December 31, 2024 compared to Other income, net of $0.9 million for the year ended December 31, 2023,2024, primarily due to changes in foreign currency exchange rates.

Provision for income taxes. Provision for income taxes increased by $3.8$0.1 million for the year ended December 31, 20242025 as compared to 2023.2024. The effective tax rate was 33.4%29.2% for the year ended December 31, 20242025 and was higher than the statutory rate due to state taxes, acquisition related expenses and executive compensation, partially offset by equity-based compensation. For the year ended December 31, 2024, the effective tax rate was 33.4% and was higher than the statutory rate due to state taxes, transaction expenses and executive compensation, partially offset by research and development tax credits. For the year ended December 31, 2023, the effective tax rate was 27.0% and was higher than the statutory rate due to state taxes, limitation on executive compensation deduction, and the tax impact of our foreign earnings, partially offset by research and development tax credits.

This Annual Report on Form 10-K 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 general income, other expense (income), expense, net, stock-based compensation expense, stock-based compensation payroll tax expense, long-term incentive plan (“LTIP”) bonus andbonus, amortization of inventory step-upstep-up, and contingent consideration expense as these items do not represent our core operating performance.

The table below presents our EBITDA and Adjusted EBITDA reconciled to the most directly comparable GAAP financial measures for the periods indicated:

Adjusted EBITDA increased by $19.0$6.9 million for the year ended December 31, 20242025 as compared to 2023,2024, primarily due to recent acquisitions,acquisitions and favorable pricing net of material inflation, partially offset by the impact of the 2024 cybersecurity incidents and an increase in selling, general and administrative expenses.

Liquidity refers to our ability to generate sufficient cash flows to meet the cash requirements of our business operations, including working capital needs, capital expenditures, debt service, acquisitions and other commitments. Our principal sources of liquidity have been cash provided by operating activities, cash on hand and amounts available under our revolving loans.loans and other available borrowings under our existing credit facilities.

For the year ended December 31, 2024,2025, net cash provided from operating activities was $31.8$63.7 million and as of December 31, 2024,2025, cash and cash equivalents totaled $124.9$122.9 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 twelve months following the date of this Annual Report on Form 10-K. Our future capital requirements will depend on several factors, including future(i) acquisitionsthe timing and extent of capital expenditures, including investments in our manufacturing facilities and equipment.equipment, (ii) the size and timing of acquisitions and other strategic investments, (iii) the timing of debt service requirements, and (iv) general economic conditions and other factors affecting our business. 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. If we raise additional funds through the issuance of equity or convertible debt securities, our existing stockholders may experience dilution, and any new indebtedness could include restrictive covenants that limit our operating flexibility.

The 2024 Term Loans require scheduled quarterly principal payments of 1.25% of the original aggregate principal amount, beginning March 31, 2025, with the balance due at maturity. There were no amounts outstanding under the 2024 Revolving Loan, the DDTL A-1 Facility, or the DDTL A-2 Facility as of December 31, 2024.

Net cash provided by (used in) financing activities

We allocate the purchase price, including our estimate of contingent consideration, of our acquisitions to the assets and liabilities acquired, including identifiable intangible assets, based on their fair values at the date of acquisition. The fair values are primarily based on third-party valuations using our management assumptions that require significant judgments and estimates. The purchase price allocated to intangibles is based on unobservable factors, including but not limited to, projected revenues, expenses, customer attrition rates, royalty rates, and weighted average cost of capital, among others. The weighted average cost of capital uses a market participant’s cost of equity and after-tax cost of debt and reflects the risks inherent in the cash flows. The unobservable factors we use are based upon assumptions believed to be reasonable,reasonable but are subject to estimation uncertainty.

Net sales increased by $25.3$50.0 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025, primarily as a result of recentcurrent acquisitions,year partially offset by timing-related order fluctuationsacquisitions and lowerincreased demand for existing nuclear safetysafety, productsarmor, and lowerduty agencygear demand for hard goods in the Distribution segment.products.

Net income decreased by $7.3$0.8 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025, primarily as a result of increasesincreased incontingent consideration expense, increased compensation expense, interest expense, transaction expense and relatedadverse partyforeign expense,currency fluctuations, partially offset by increased gross profit.

Orders backlog increased by $165.6$177.9 million as of MarchJune 31,30, 2026 compared to December 31, 2025, primarily due to increases of $87.1$107.0 million from explosive ordnance disposal (“EOD”) products due to two large orders forof vehicle blast attenuation seats, $57.4blast exposure monitoring sensors, and remotely operated vehicles, $56.1 million from thecurrent TYRyear acquisition,acquisitions, $15.7$12.6 million from nuclear safety products, $5.4and $7.6 million fromdue to international and domestic channels for duty gear,gear holsters, partially offset by a $4.7 million decrease in international and $5.0domestic millionorders fromfor armor.crowd control products.

The following table presents data from our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands unless otherwise noted):

The following tables present segment data for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Comparison of Three monthsMonths Ended MarchJune 31,30, 2026 to Three monthsMonths Ended MarchJune 31,30, 2025

Net sales. Product segment net sales increased by $27.9$49.9 million, or 24.8%,35.6%, from $112.7$140.1 million to $140.6$190.0 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025, primarily due to an increaseincreases of $36.8$36.6 million from recentcurrent year acquisitions, partially offset by decreases of $3.6$8.4 million from U.S.higher armordemand productsfor andnuclear $2.9safety products, of which $3.3 million is organic, $3.2 million from EOD products, both attributable to order timing, and a $2.8 million decrease inincreased demand for existing nucleararmor products, and $2.3 million from higher demand for duty gear products. Distribution segment net sales decreasedincreased by $7.6$1.6 million, or 27.2%,6.3%, from $27.9$25.5 million to $20.3$27.1 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025, primarily due to lowerhigher demand for hard goods. Reconciling items consist primarily of intercompany eliminations.

Cost of goods sold and gross profit. Product segment cost of goods sold increased by $21.9$27.4 million, or 34.9%,33.5%, from $62.6$81.7 million to $84.5$109.1 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025, primarily due to recentcurrent year acquisitions, increased volume, inventory step-up amortization and increased costs to manufacture product, partially offset by continuous improvement projects. Product segment gross profit as a percentage of net sales decreasedincreased by 45190 basis points to 39.9%42.6% for the three months ended MarchJune 31,30, 2026 from 44.4%41.7% for the three months ended MarchJune 31,30, 2025, mainly driven by favorable pricing, net of material inflation, and favorable product mix, partially offset by an increase in inventory step-up amortization and unfavorable product mix, partially offset by favorable pricing, net of material inflation.amortization.

Distribution segment cost of goods sold decreasedincreased by $5.5$1.3 million, or 25.3%,6.8%, from $21.8$19.6 million to $16.3$20.9 million for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, primarily due to decreasedincreased volume. Distribution segment gross profit as a percentage of net sales decreased by 19630 basis points to 19.7%22.8% for the three months ended MarchJune 31,30, 2026 from 21.6%23.1% for the three months ended MarchJune 31,30, 2025, mainly driven by unfavorable mix. Reconciling items consist primarily of intercompany eliminations.

Selling, general and administrative. Selling, general and administrative increased by $7.1$18.1 million, or 17.0%,40.1%, for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, primarily due to recentcurrent year acquisitions, higher employee compensation and associated benefits, and professional services expenses.

Restructuring and transaction costs. Restructuring and transaction costs increaseddecreased by $1.1$1.9 million for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, primarily due to increasedhigher transaction costs associated with the Zircaloy acquisition ofin TYR.2025.

Related party expense. Related party expense, which primarily consists of one-time fees paid to related parties for transaction related services, increaseddecreased by $1.9$1.1 million for the three months ended MarchJune 31,30, 2026 as compared to the threesame monthsperiod ended March 31,in 2025, primarily due to a $2.0$1.0 million decrease in transaction feefees paid to Kanders & Company, Inc., a company controlled by our Chief Executive Officer, in connection with the acquisition of TYR.acquisitions.

Interest expense, net. Interest expense, net increased by $2.0$1.4 million for the three months ended MarchJune 31,30, 2026 as compared to the threesame monthsperiod ended March 31,in 2025, primarily due to the debt assumed as part of recent acquisitions.

Other (expense) income, net. Other (expense), net was $0.4$0.5 million for the three months ended MarchJune 31,30, 2026 as compared to Other income, net of $1.3$6.1 million for the three months ended MarchJune 31,30, 2025, primarily due to changes in foreign currency exchange rates.

Provision for income taxes. Provision for income taxes was $0.9$5.5 million for the three months ended MarchJune 31,30, 2026 compared to $3.4$5.0 million for the three months ended MarchJune 31,30, 2025. The effective tax rate was 30.2%32.6%% for the three months ended MarchJune 31,30, 2026 and was higher than the statutory rate primarily due to state taxes and non-deductible executive compensation. The effective tax rate was 26.6%29.0% for the three months ended MarchJune 31,30, 2025 and was higher than the statutory rate primarily due to state taxes and non-deductible executive compensation.

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, amortization of inventory step-up andstep-up, contingent consideration expense, and impairment expense as these items do not represent our core operating performance.

Adjusted EBITDA increased by $0.6$15.0 million for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, primarily due to an increase in gross profit from recentcurrent year acquisitions, partially offset by an increase in selling, general and administrative expenses from recentcurrent year acquisitions. Adjusted EBITDA increased by $15.6 million for the six months ended June 30, 2026 as compared to the same period in 2025, primarily due to an increase in gross profit from current and prior year acquisitions, partially offset by an increase in selling, general and administrative expenses from current and prior year acquisitions.

For the threesix months ended MarchJune 31,30, 2026, net cash provided by operating activities totaled $22.5$44.7 million and as of MarchJune 31,30, 2026, cash and cash equivalents totaled $41.3$54.0 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.

As of MarchJune 31,30, 2026 and December 31, 2025, we had $365.8$374.3 million and $307.3 million in outstanding debt, net of debt discounts and debt issuance costs, respectively, primarily related to the term loan facilities.

The 2024 Credit Agreement 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 2024 Borrower or any 2024 Guarantor, transactions with affiliates, amendments to organizational documents, accounting changes, sale and leaseback transactions, dispositions, and mandatory prepayments in connection with certain liquidity events. Additionally, the 2024 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, 2024, 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 4.00 to 1.00 from the quarter ended December 31, 2024 until the quarter ended March 31, 2026, 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, subject to a maximum consolidated total net leverage ratio of 4.00 to 1.00. Furthermore, the 2024 Credit Agreement also includes customary events of default, including non-payment of principal, interest, or fees, violation of covenants, inaccuracy of representations and warranties, failure to make payments on 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 2024 Credit Agreement may be accelerated, and the Lenders could foreclose on their security interests in the assets of the 2024 Borrower and the Guarantors. As of MayJuly 1,31, 2026, there waswere $62.5no millionamounts outstanding under the 2024 Revolving Loan.

In April 2025, in connection with the Zircaloy acquisition, the Company drew $97,500$97.5 million of the $115,000$115.0 million available under the DDTL- A-1 Facility. In June 2026, the Company drew $75.0 million under the DDTL-A-2 Facility. The DDTL-DDTL-A-1 A-1and FacilityDDTL-A-2 hasfacilities have the same terms and conditions as the 2024 Term Loan, including such items as interest rate, quarterly amortization payment requirements, and maturity date.

There was $62.5 million andwere no amounts outstanding under the 2024 Revolving Loan as of MarchJune 31,30, 2026 and December 31, 2025.2025, respectively.

On OctoberJuly 14,23, 2021,2026, Med-Eng Holdings ULC andULC, Pacific Safety Products Inc., ICOR Technology Inc. and TYR Tactical Canada ULC, 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 aan Amended and Restated Loan Agreement (the “Canadian Loan Agreement”) and aan Amended and Restated 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$10.0CDN$20.0 million under a revolving line of credit (including up to $3.0CDN$6.0 million for letters of credit) (the “Revolving Canadian Loan”). The Revolving Canadian Loan matures on JulyDecember 23,20, 2026.2029. The Canadian Loan Agreement is guaranteed by the Canadian Guarantor pursuant to aan Amended and Restated Guaranty and Suretyship Agreement. The Canadian Loan Agreement amends and restates the prior Canadian loan agreement, which was entered into on October 14, 2021, in its entirety.

The Canadian Borrowers may elect to have borrowings either in United States dollars or Canadian dollars under the Canadian Loan Agreement, which will bear interest at a base rate or SOFR, in each case, plus an applicable margin,interest, in the case of borrowings in United States dollars, at a base rate, daily SOFR or term SOFR, in each case, plus an applicable margin, and, in the case of borrowings in Canadian dollars, at a Canadian Prime Rate (as announced from time to time by PNC Canada) or athe daily Canadian depositOvernight offeredRepo rateRate Average (“CDORCORRA”) as determined from time to time by PNCthe Bank of Canada in(or accordanceany withsuccessor theadministrator Canadianof Loan Agreement.CORRA). The applicable margin for these borrowings will rangerange, based on the Company’s consolidated total net leverage ratio, from 0.50% to 1.50% per annum, in the case of base rate borrowings and Canadian Prime Rate borrowings, and 1.50% to 2.50% per annum, in the case of daily SOFR borrowings, term SOFR borrowings and CDORCORRA borrowings. The Canadian Loan Agreement also requires the Canadian Borrowers to pay (i) an unused line fee on the unused portion of the loan commitments in an amount ranging between 0.175% and 0.25% per annum, based upon the level of the Company’s consolidated total net leverage ratio, and (ii) an upfront fee equal to 0.25% of the principal amount of the Note.ratio.

There were no amounts outstanding under the Revolving Canadian Loan as of MarchJune 31,30, 2026 and December 31, 2025.

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 MayJuly 1,31, 2026, there were no amounts outstanding under the Revolving Canadian Loan.

The foregoing descriptiondescriptions of the Canadian Loan Agreement doesand the Note do not purport to be complete and isare qualified in itstheir entirety by reference to the full text of the Canadian Loan Agreement,Agreement and the Note, copies of which isare exhibitfiled 10.18as Exhibit 10.1 and Exhibit 10.2, respectively, to our AnnualCurrent Report on Form 10-K8-K forfiled theon yearJuly ended29, December 31, 2022,2026, and isare incorporated herein by reference as though fully set forth herein.

During the threesix months ended MarchJune 31,30, 2026, net cash provided by operating activities of $22.5$44.7 million resulted primarily from net income of $2.0$13.4 million, add-backs to net income of $5.7$11.9 million for depreciation and amortization, $2.6$4.9 million for amortization of inventory step-up, $1.9$4.9 million for stock-based compensation, $5.9 million for remeasurement of contingent consideration, and $10.0$5.6 million for changes in operating assets and liabilities. Changes in operating assets and liabilities were primarily driven by aan decreaseincrease in accounts receivable of $10.3$7.3 million, an increase in inventories of $10.5$8.3 million and an increase in accounts payable and other liabilities of $16.9$24.7 million.

During the threesix months ended MarchJune 31,30, 2025, net cash provided by operating activities of $17.4$20.0 million resulted primarily from net income of $9.2$21.5 million, add-backs to net income of $3.9a $8.5 million for depreciation and amortization, $2.0and $4.4 million for stock-based compensation, primarily offset by deductions to net income of $3.5 million for unrealized foreign currency transaction gains and $1.6$13.4 million for changes in operating assets and liabilities. Changes in operating assets and liabilities were primarily driven by a decrease in accounts receivable of $10.6$10.4 million andmillion, an increase in inventories of $9.1$11.3 million and a decrease in accounts payable and other liabilities of $15.8 million.

During the three months ended MarchJune 31,30, 2026, we used $156.2$170.0 million of cash in investing activities, consisting of $153.6 million for the acquisition of TYRTYR, $10.3 million for the acquisition of Alien Gear, and $2.7$6.1 million for the purchase of property and equipment.

During the threesix months ended MarchJune 31,30, 2025, we used $1.3$92.3 million of cash in investing activitiesactivities, primarily consisting of $89.6 million for the purchaseacquisition of property and equipment.Zircaloy.

Net cash provided by (used in) financing activities

During the three months ended MarchJune 31,30, 2026, net cash provided by financing activities of $52.9$57.3 million resulted primarily from proceeds from revolvingterm credit facilitiesdebt of $62.5$75.0 million, partially offset by principal payments on term loans of $4.0$8.1 million and dividends distributed of $4.3$8.6 million.

During the threesix months ended MarchJune 31,30, 2025, wenet usedcash $7.8provided by financing activities of $82.9 million resulted primarily from proceeds from term loans of cash$97.5 inmillion, financingpartially activities,offset consisting ofby principal payments on term loans of $2.8 million, taxes paid in connection with employee stock transactions of $1.1$5.7 million and dividends distributed of $3.9$7.7 million.

Our long-term contractual obligations generally include our debt and related interest payments and operating and finance lease payments for our property and equipment, and are expected to be funded from cash-on-hand, cash from operations and availability under our existing credit facilities. There were no significant changes to our contractual obligations from those disclosed in the AnnualQuarterly Report on Form 10-K10-Q for the yearthree months ended DecemberMarch 31, 2026, other than for the following obligations: