A private equity firm that acquired and merged several businesses working for the Department of Energy sold the rolled-up companies to Cadre Holdings, a Jacksonville, Fla., maker of law-enforcement equipment.
Cadre bought Alpha Safety Group, created by Benford Capital Partners of Chicago in 2021 from the former Nuclear Filter Technologies, for a little more than $105 million, the acquiring company announced in a press release. Benford still listed Alpha as a portfolio company on Friday.
It is the publicly traded Cadre’s first foray into the nuclear business. Alpha, built over the last three years from at least four much older companies, derives about half its revenue from the Department of Energy’s defense-nuclear programs, Cadre officials said Tuesday on a conference call with investor analysts.
Cadre did not say how it financed the acquisition, but the company’s pro forma leverage, essentially a ratio of its debt to its operating income, was “just a tad under two” on Wednesday, Blaine Browers, Cadre’s chief financial officer, said on Tuesday’s call. The ratio was 1.6 as of Sept. 30, according to an investor presentation posted on Cadre’s website.
“We think this is a real opportunity to have a very different-looking business,” Brad Williams, president of Cadre, said on Tuesday’s conference call.
Impending production of plutonium pits at the Los Alamos National Laboratory was a key factor in the decision to buy, Williams said, but there is also some customer overlap “with Cadre’s Armor Business serving key commercial nuclear sites,” according to slides briefed during Tuesday’s call.
Cadre also is counting on “late-decade growth” in the power market “as advanced nuclear reactors are commercialized,” according to the slides.
Alpha has about 120 employees, Williams said. These include seven nuclear physicists, 27 engineers and 12 associates with security clearances from the Department of Energy and the Department of Defense, Williams said.
In an email on Wednesday, Marc Rood, Alpha’s executive vice president for strategy and business development, said he was being kept on after the acquisition, along with his boss Terry Wickland, the CEO, and Mike Cornelius, Alpha’s chief operating officer.
Without using names, Williams on Tuesday called three members of Alpha’s senior management “high-quality individuals,” though he did not directly answer an analyst’s question about whether these people and other Alpha employees would stay with the company after the acquisition.
Cadre was also coy Tuesday about whether it might expand further into the nuclear business. Asked by one analyst whether another nuclear acquisition was in the works, Warren Kanders, chairman and CEO of Cadre, said “we’ll see.”
Cadre expects that the Alpha business could see revenue growth of 4% to 6% annually, mostly due to pits, Browser said on Tuesday’s call.
Post-acquisition, Alpha’s financial results will be reported within Cadre’s Product segment, by far the larger of the acquiring company’s two reporting segments. Alpha will add about $44 million in revenue for the calendar year that ended Dec. 31, Cadre said in its press release Tuesday.
Using that estimate, and relative to Cadre’s 2022 year-end financial results, the most recent yearly numbers available on Wednesday, Alpha would provide Cadre with an average quarterly revenue boost of about 9%.
Cadre was scheduled to report its earnings for 2023 on March 5.
