Q4 2021 Cadre Holdings Inc Earnings Call

March 10, 2022

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Okay.

Good afternoon and welcome to the Cadres Holdings fourth quarter and full year ended December 31st, 2021 conference call today's call.

Good afternoon, and welcome to the cadre holdings fourth quarter and full year ended December 31, 2021 conference call.

Operator: Good afternoon, and welcome to the Cadre Holdings Q4 and Full Year Ended 31 December 2021 conference call. Today's call is being recorded. All lines have been placed on mute. If you would like to ask a question at the end of the prepared remarks, please press the star key, then the number one on your touch tone phone. At this time, I would like to turn the conference over to Matt Berkowitz of The IGB Group for the introductions and the reading of the safe harbor statement. Please go ahead, sir.

Today's call is being recorded all lines have been placed on mute.

All lines have been placed on mute. If you would like to ask a question at the end of the prepared remarks, please press the star key, then the number one on your touch-tone phone.

You would like to ask a question at the end of the prepared remarks. Please press the star key then the number one on your Touchtone phone.

At this time, I would like to turn the conference over to Matt Berkowitz of the IGB group for the introductions and the reading of the State Harbor Statement. Please go ahead, sir.

At this time I would like to turn the conference over to Matt Berkowitz of the RGB group for the introductions and the reading of the Safe Harbor statement. Please go ahead Sir.

Thank you and welcome to cadre Holdings' fourth quarter 2021 conference call.

Matt Berkowitz: Thank you and welcome to Cadre Holdings fourth quarter 2021 conference call.

Matt Berkowitz: Thank you, and welcome to Cadre Holdings' Q4 2021 conference call. Before we begin, I would like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face Cadre in the industries and markets in which we operate. More information on potential factors that could affect Cadre's financial results is included from time to time in Cadre's public reports filed with the Securities and Exchange Commission.

Matthew Butler Koranda: Before we begin, I would like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Before we begin I would like to remind everyone that during today's call we will be making several forward looking statements and we make these statements under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Matthew Butler Koranda: These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today.

These forward looking statements reflect our best estimates and assumptions based on our understanding of information known to US today. These forward looking statements are subject to the risks and uncertainties that faced cadre in the industries and markets in which we operate more information on potential factors that could affect cadre of its financial results is included from time to time in countries public reports fall.

Matthew Butler Koranda: These forward-looking statements are subject to the risks and uncertainties that face Cadre and the industries and markets in which we operate. More information on potential factors that could affect Cadre's financial results is included from time to time in Cadre's public reports, files of the Securities and Exchange Commission. Please also note that we have posted presentation materials on our website at www.cadre-holdings.com, which supplement our comments this evening and include a reconciliation of certain non-GAAP financial measures.

The Securities and Exchange Commission. Please also note that we have posted presentation materials on our website at www Dot cadre Dash holdings Dot com, which supplement our comments. This evening and include a reconciliation of certain non-GAAP financial measures I would like to remind everyone that this call will be available for replay through March 16 2020.

Matt Berkowitz: Please also note that we have posted presentation materials on our website at www.cadre-holdings.com, which supplement our comments this evening and include a reconciliation of certain non-GAAP financial measures. I would like to remind everyone that this call will be available for replay through 16 March 2022, starting at 8:00PM Eastern time tonight. A webcast replay will also be available via the link provided in today's press release, as well as on Cadre's website. At this time, I would like to turn the call over to Cadre's Chairman and CEO, Warren Kanders.

Matt Berkowitz: I would like to remind everyone that this call will be available for replay through March 16, 2022, starting at 8 p.m. Eastern Time tonight. A webcast replay will also be available via the link provided in today's press release, as well as on Cadre's website.

Two starting at eight P M. Eastern time Tonight, a webcast replay will also be available via the link provided in today's press release as well as on cadre is website.

Matt Berkowitz: At this time, I would like to turn the call over to Cadre's Chairman and CEO , Warren Kanders.

At this time I would like to turn the call over to <unk>, Chairman and CEO Warren Candace.

Thank you very much good afternoon, and thank you for joining cadre is earnings call to discuss our fourth quarter and full year ended December 31, 2021 results I'm joined today by our President Brad Williams, and CFO Blayne Broward.

Warren Kanders: Thank you very much. Good afternoon and thank you for joining Cadre's Earnings Call to discuss our fourth quarter and full year ended December 31, 2021 results. I'm joined today by our president, Brad Williams, and CFO , Blaine Browers.

Warren Kanders: Thank you very much. Good afternoon, and thank you for joining Cadre's earnings call to discuss our Q4 and full year ended December 31, 2021 results. I'm joined today by our President, Brad Williams, and CFO, Blaine Browers. 2021 was a momentous year for Cadre as we successfully completed our IPO, representing an important milestone in our company's 55-year history. Immediately following our public offering, we are pleased to have capitalized on an attractive opportunity to further expand our international presence and provide Cadre another European foothold to diversify our global footprint and add multiple growth avenues. We're excited about our long-term outlook and continue to actively evaluate additional accretive acquisition opportunities within our robust pipeline, while also maintaining a strong position to continue to drive profitable organic long-term growth.

2021 was a momentous year for cadre as we successfully completed our IPO, representing an important milestone in our company's 55 year history.

Warren Kanders: 2021 was a momentous year for Cadre, as we successfully completed our IPO, representing an important milestone in our company's 55-year history.

Warren Kanders: Immediately following our public offering, we are pleased to have capitalized on an attractive opportunity to further expand our international presence.

Immediately following our public offering we are pleased to have capitalized on an attractive opportunity to further expand our international presence.

Warren Kanders: and provide Cadre, another European foothold, to diversify our global footprint and add multiple growth avenues.

And provide cadre another European foothold to diversify our global footprint.

And add multiple growth avenues.

We're excited about our long term outlook and continue to actively evaluate additional accretive acquisition opportunities with the in our robust pipeline.

Warren Kanders: to actively evaluate additional accretive acquisition opportunities within our robust pipeline.

Warren Kanders: while also maintaining a strong position to continue to drive profitable, organic, long-term growth.

While also maintaining a strong position to continue to drive profitable organic long term growth.

Before turning the call over to Brad I'd like to mention that all those affected by the violence in Ukraine are in our thoughts today.

Warren Kanders: Before turning the call over to Brad, I'd like to mention that all those affected by the violence in Ukraine are in our thoughts today, and we continue to watch the tragedy unfolding there with great concern. Preserving human life is literally in our company's mission statement, and while we are sensitive to discussing business implications during a humanitarian crisis, we at Cadre stand ready to assist however we can as events develop. Brad, over to you.

Speaker Change: Before turning the call over to Brad, I'd like to mention that all those affected by the violence in Ukraine are in our thoughts today.

And we continue to watch the tragedy unfolding there with great concern.

Brad Williams: And we continue to watch the tragedy unfolding there with great concern.

Preserving human life is literally in our company's mission statement.

Brad Williams: Preserving human life is literally in our company's mission statement.

Brad Williams: And while we are sensitive to discussing business implications during a humanitarian crisis,

While we are sensitive to discussing business implications during a humanitarian crisis, we had cadre stand ready to assist however, we can as events develop.

Brad Williams: We at Cadre stand ready to assist however we can as events develop.

Brad over to you.

Alright, Thanks Warren.

Brad Williams: All right. Thanks, Warren. So we're gonna start on slide four. On today's call, we'll cover recent highlights, provide a brief review of our business, including an update on our acquisition and M&A strategy, and discuss our financial performance in 2022 outlook. Then we'll wrap things up at the end with a Q&A session. First, turning to slide five, I'll discuss our Q4 and full year highlights. 2021 was a record year for Cadre. We not only hit all-time highs within most of our key metrics, but delivered on our strategic objectives in a challenging supply chain and inflationary environment. Our teams around the world have done an excellent job tackling the multiple daily challenges with discipline and persistence. We truly do have an amazing team. Demand for our trusted brands remains strong within our mission-critical first responder markets.

Speaker Change: All right. Thanks, Warren. So, we're going to start on slide four. On today's call, we'll cover recent highlights, provide a brief review of our business, include an update on our acquisition and M&A strategy, and discuss our financial performance in 2022 Outlook. And then we'll wrap things up at the end with a Q&A session.

So we're going to start on slide four on today's call will cover our recent highlights provide a brief review of our business, including an update on our acquisition of an M&A strategy and discuss our financial performance in 2022 outlook and then we'll wrap things up at the end with a Q&A session.

Speaker Change: First, turning to slide five, I'll discuss our two fuller and full-year highlights. 2021 was a record year for Cadre. We not only hit all-time highs within most of our key metrics but delivered on our strategic objectives in a challenging supply chain and inflationary environment. Our teams around the world have done an excellent job tackling the multiple daily challenges with discipline and persistence. We truly do have

First turning to slide five I'll discuss our Q4 and full year highlights 2021 was a record year for cadre, we not only hit all time highs within most of our key metrics, but delivered on our strategic objectives, and a challenging supply chain and inflationary environment. Our teams around the world have done an excellent job tackling.

Multiple daily challenges with disciplined and persistence.

Truly do have an amazing team.

Speaker Change: Demand for our trusted brands remains strong within our mission-critical first responder market.

Demand for our trusted brands remained strong within our mission critical first responder markets. We continue to see attractive long term tailwind and recurring demand drivers and our entrance domestic and higher growth international markets.

Speaker Change: We continue to see attractive long-term tailwinds and recurring demand drivers in our entranced domestic and higher growth international markets.

Brad Williams: We continue to see attractive long-term tailwinds and recurring demand drivers in our entrenched domestic and higher growth international markets. In addition to the long-term resilient demand for protected products within domestic law enforcement, the country is currently experiencing a shortage of officers that will take many years to grow headcount back to acceptable levels. Our year-over-year twelve-month financial results demonstrate our entrenched positions within our markets, as well as our strong operating cash flow generation and our focus on margin expansion. As you can see, we delivered strong year-over-year results with net sales growing 6%, gross profit margins expanding 210 basis points, adjusted EBITDA growing over 23%, and adjusted EBITDA margin improving by 240 basis points. For Q4, the resilience of Cadre's operating model was evident, highlighted by continued gross margin and adjusted EBITDA margin improvements.

In addition to the long term resilient demand for protected products within domestic law enforcement. The country is currently experienced a shortage of officers that will take many years to grow headcount back to acceptable levels.

Speaker Change: In addition to the long term resilient demand for protected products within domestic law enforcement, the country is currently experience a shortage of officers that will take many years to grow headcount back to acceptable level.

Speaker Change: Our year-over-year 12-month financial results demonstrate our entrenched positions within our markets as well as our strong operating cash flow generation and our focus on margin expansion.

Our year over year 12 month financial results demonstrate our entrenched positions within our markets as well as our strong operating cash flow generation and our focus on margin expansion.

Speaker Change: As you can see, we delivered strong year-over-year results with net sales growing 6%.

As you can see we delivered strong year over year results with net sales growing 6%.

Speaker Change: gross profit margins expanding 210 basis points, adjusted EBITDA growing over 23%, and adjusted EBITDA margin improving by 240 basis points.

Gross profit margins, expanding 210 basis points, adjusted EBITDA growing over 23% and adjusted EBITDA margin improving by 240 basis points for the fourth quarter. The resilience of countries operating model was evident highlighted by continued gross margin and adjusted EBITDA.

Speaker Change: For the fourth quarter, the resilience of Cadre's operating model was evident, highlighted by continued gross margin and adjusted EBITDA margin improvements.

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Speaker Change: Based on our low CapEx model, we continue to generate strong free cash flow.

Brad Williams: Based on our low CapEx, low CapEx model, we continue to generate strong free cash flow that enables us to capitalize on attractive opportunities to create long-term shareholder value. Following our IPO in November and subsequent deleveraging, we took advantage of our strengthened balance sheet and significant financial flexibility to continue to allocate capital in a disciplined manner and drive growth for the benefit of our shareholders. Later on the call, Blaine will discuss our accretive acquisition of Radar Leather Division, a premier family-owned duty gear brand with a history of innovation spanning more than 60 years. Now turning to slide 6, we lay out Cadre's strategic objectives focused on accelerating growth both organically and through acquisitions, as well as continuously improving gross and adjusted EBITDA margins. We are pleased to have met and exceeded these objectives in 2021.

Based on our low Capex low Capex model, we continue to generate strong free cash flow.

Speaker Change: that enables us to capitalize on attractive opportunities to create long-term shareholder value.

That enables us to capitalize on attractive opportunities to create long term shareholder value.

Speaker Change: Following our IPO in November and subsequent deleveraging, we took advantage of our strengthened balance sheet and significant financial flexibility to continue to allocate capital in a disciplined manner and drive growth for the benefit of our shareholders.

Following our IPO in November and subsequent deleveraging, we took advantage of our strengthened balance sheet and significant financial flexibility to continue to allocate capital in a disciplined manner and drive growth for the benefit of our shareholders. Later on the call Blaine will discuss our accretive acquisition of radar leather division our Premier <unk>.

Speaker Change: Later on the call, Blaine will discuss our creative acquisition of Radar Leather Division, a premier family-owned duty gear brand with a history of innovation spanning more than 60 years.

Duty gear brand with a history of innovation spanning more than 60 years.

Speaker Change: Now, turning to slide six, we lay out Cadre's strategic objectives, focused on accelerating growth, both organically and through acquisitions, as well as continuous improving growth and adjusted EBIT margin.

Turning to slide six we lay out cadre strategic objectives focused on accelerating growth, both organically and through acquisitions as well as continuous improving gross and adjusted EBIT margins were.

Speaker Change: We are pleased to have met and exceeded these objectives in 2021.

Pleased to have met and exceeded these objectives.

Objectives in 2021.

Brad Williams: In terms of our core revenue growth, we believe that our leading entrenched market positions across three of our life-saving product categories, body armor, duty gear, and EOD, continue to provide global growth opportunities. To drive long-term organic revenue growth, our focus is on launching new innovative products, increasing customer wallet share, and expanding our e-commerce and direct-to-consumer capabilities. In particular, international expansion is an especially important part of our organic roadmap. We believe that we have a significant long-term opportunity to take market share amid increasing investments in safety and survivability equipment across international markets. Turning to margins, we continue to achieve cost structure optimization to drive operating leverage, as highlighted by margin improvements in Q4 quarter-over-quarter and year-over-year in 2021. We're pleased with Cadre's continued execution, expanding margins, and we believe there is room to achieve further expansion going forward.

In terms of our core revenue growth, we believe that our leading insurance market positions across three.

Speaker Change: In terms of our core revenue growth, we believe that our leading entrance market positions across three

Speaker Change: of our life-saving product categories, body armor, duty gear, and EOD, continue to provide global growth opportunities.

Our lifesaving product categories body armor duty gear and E. O D continued cross provide global growth opportunities.

Speaker Change: To drive long-term organic revenue growth, our focus is on launching new innovative products.

To drive long term organic revenue growth our focus is on launching new innovative products.

Speaker Change: increasing customer wallet share and expanding our e-commerce and direct-to-consumer capability.

Creasing customer wallet share and expanding our e-commerce and direct to consumer capabilities in.

Speaker Change: In particular, international expansions is an especially important part of our organic roadmap.

In particular international expansion is an especially important part of our organic roadmap.

Speaker Change: We believe that we have a significant long-term opportunity to take market share amid increasing investments in safety and survivability equipment across international markets.

We believe that we have a significant long term opportunity to take market share amid increasing investments in safety and survivability equipment across international markets.

Turning to margins, we continue to achieve cost structure optimization to drive operating leverage as highlighted by margin improvements in Q4 quarter over quarter in 2021 year over year.

Speaker Change: Turning to margins, we continue to achieve cost structure optimization to drive operating leverage as highlighted by margin improvements in Q4, quarter over quarter, and 2021 year over year. We're pleased with Cadre's continued execution, expanding margins, and we believe there is room to achieve further expansion going forward. Complementing our

We're pleased with cadre is continued execution expanding margins and we believe there is room to achieve further expansion going forward.

Brad Williams: Complementing our organic growth initiatives and focus on margins is Cadre's targeted M&A strategy. We believe our strong acquisition track record and active and robust pipeline focused on smaller add-ons and more transformational accretive opportunities positions us well to expand our product and technology offerings, enter new markets, and grow our geographic footprint. Moving now to slide 7, we'll discuss macro tailwinds driving demand and visibility for Cadre's mission-critical products, both domestically and internationally. Our largest market segment is law enforcement, and police protection expenditures have continued to trend upward even during past financial and industrial recessions. This demonstrates the significant demand drivers for our products through economic cycles, as we've seen repeatedly that when prioritized spending, customers lean towards safety and survivability equipment to protect first responders. Despite Defund the Police protests, we've also seen major US cities continue to increase police budgets.

Complementing our organic growth initiatives and.

Speaker Change: and focus on margins is Cadre's targeted M&A strategy.

And focus on margins as countries targeted M&A strategy, we believe our strong acquisition track record and active and robust pipeline focused on smaller add ons and more transformational accretive opportunities positions us well to expand our product and technology offerings into new markets and grow geographically.

Speaker Change: We believe our strong acquisition track record and active and robust pipeline focused on smaller add-ons and more transformational creative opportunities positions us well to expand our product and technology offerings, enter new markets, and grow our geographic footprint.

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Moving now to slide seven we'll discuss macro tailwind driving demand and visibility for cadre of mission critical products, both domestically and internationally.

Speaker Change: Moving now to slide seven, we'll discuss macro tailwinds driving demand and visibility for Cadre's mission-critical products, both domestically and internationally.

Our largest market segment is law enforcement.

Speaker Change: and police protection expenditures have continued to trend upward even during past financial and industrial recessions.

And police protection expenditures have continued to trend upward even during past financial and industrial recessions.

Speaker Change: This demonstrates the significant demand drivers for our products through economic cycles, as we've seen repeatedly that when prioritized spending, customers lean towards safety and survivability equipment to protect first responders.

Demonstrates the significant demand drivers for our products through economic cycles, as we've seen repeatedly that wind prioritize spending customers lean towards safety and survivability equipment to protect first responders.

Speaker Change: Despite defund the police protests, we've also seen major U.S. cities continue to increase police budgets. In fact, given increased crime rates today, including a 2021 homicide rate 44 percent higher than 2019, there is now a push to refund the police. Notably, the American Rescue Plan provides $350 billion to hire more police.

Despite defund the police protests, we've also seen major U S cities continue to increased police budgets in fact, given increased crime rates today, including a 2021 homicide rate, 44% higher than 2019, there is now a push to refund the police.

Brad Williams: In fact, given increased crime rates today, including a 2021 homicide rate 44% higher than 2019, there is now a push to refund the police. Notably, the American Rescue Plan provides $350 billion to hire more police. We're also seeing positive demand fundamentals abroad. Two-thirds of all NATO countries spend less than 2% of GDP targets on defense and security. Particularly amidst current geopolitical turmoil, European leaders have advocated for significant increases in defense budgets. These developments are not necessarily tailwinds that will impact our business in the near term, but they support a long-term sustainable growth opportunity for Cadre over the next 5 to 10 years. Note that we do not do business in Russia. Supporting our business over the long term is the recurring demand characteristics of our life-saving products based on frequent recurring demand cycles.

Notably the American rescue plan provides $350 billion to hire more police.

Speaker Change: We're also seeing positive demand fundamentals abroad. Two-thirds of all NATO countries spend less than 2% of GDP targets on defense and security.

We're also seeing positive demand fundamentals abroad, two thirds of all NATO countries spend less than 2% of GDP targets on defense and security, particularly.

Speaker Change: Particularly amidst current geopolitical turmoil, European leaders have advocated for significant increases in the Fed's budget.

Particularly a miss current geopolitical turmoil European leadership advocated for significant increases in defense budgets. These developments are not necessarily tailwind that will impact your business in the near term, but they support a long term sustainable growth opportunity for cadre over the next five to 10 years also note that we do not do.

Speaker Change: These developments are not necessarily tailwinds that will impact your business in the near term, but they support a long-term sustainable growth opportunity for Cadre over the next five to ten years. Also note that we do not do business...

<unk> business in Russia.

Speaker Change: Also supporting our business over the long term is the recurring demand characteristics of our life-saving products based on frequent recurring

Also supporting our business over the long term as the recurring demand characteristics of our life saving products based on frequent recurring.

Demand cycles.

Speaker Change: demand cycles. A combination of market segment tailwinds and recurring demand characteristics results in a solid foundation for our business with a predictable revenue stream. I'll now turn the call over to our CFO , Blaine Browers.

Brad Williams: A combination of market segment tailwinds and recurring demand characteristics results in a solid foundation for our business with a predictable revenue stream. I'll now turn the call over to our CFO, Blaine Browers. Blaine?

<unk> nation, a market segment tailwind and recurring demand characteristics results and a solid foundation for our business with a predictable revenue stream.

Now I'll turn the call over to our CFO blayne per hours.

Okay.

Yeah.

Blaine Browers: Thank you, Brad. Slide eight. Building on Brad's comment about M&A, Cadre has a successful history of acquiring, integrating, and optimizing asset-light businesses with high free cash flow models. We take a very targeted approach and think about acquisitions in three buckets. The first bucket is focused on geographic expansion and expanding core products in new markets. The second is related to introducing new products in existing core markets. The final bucket is expanding our portfolio of safety products outside of our current law enforcement and military markets into attractive adjacencies within the safety and survivability landscape. Examples of this include fire, EMS, and industrial safety. We target businesses with a number 1 or number 2 market position that have leading and defensible technology and strong brand recognition.

Thank you Brian .

Blaine Browers: So slide eight, building on Brad's comment about M&A, Cadre has a successful history of acquiring, integrating, and optimizing asset light businesses with high free cash flow models.

So slide eight building on Brad's comment on M&A cadre has a successful history of acquiring integrating and optimizing asset light businesses with high free cash flow models.

Blaine Browers: We take a very targeted approach and think about acquisitions in three buckets.

We take a very targeted approach and think about acquisitions in three buckets. The first bucket is focused on geographic expansion and expanding core products.

Blaine Browers: The first bucket is focused on geographic expansion and expanding core products and

New markets.

Blaine Browers: The second is related to introducing new products in existing core markets. And the final bucket is expanding our portfolio of safety products outside of our current law enforcement and military markets into attractive adjacencies within the safety and survivability landscape.

The second is related to introducing new products in existing core markets.

Final bucket is extending our portfolio of safety products outside of our current law enforcement and military markets into attractive adjacencies within the safety and survivability landscape.

Blaine Browers: Examples of this include fire, EMS, and industrial safety.

Examples of this include fire, you mess and industrial safety.

Blaine Browers: We target businesses with a number one or number two market position to have leading and defensible technology and strong brand reputation.

We target businesses with a number one or number two market position to have leading indefensible technology and strong brand recognition from a financial perspective. It is important that a potential acquisition is recurring revenue profile high cash generation relative to EBITDA is asset light and has an attractive return on invested capital.

Blaine Browers: From a financial perspective, it is important that a potential acquisition has a recurring revenue profile, high cash generation relative to EBITDA, is asset light, and has an attractive return on invested capital. Our strong balance sheet and sizable cash flow enable Cadre to be opportunistic and pursue acquisitions consistent with these criteria. Additionally, we believe our operating model, customer relationships, and expansive channel help maximize the value created from acquisitions once completed. We have a robust pipeline of M&A opportunities that we continue to evaluate. Following the acquisition of Radar, which I will discuss in a moment, our team is currently in the process of actively evaluating other opportunities that we're excited about and that would enable us to expand the share of our existing customers' wallet. In terms of M&A valuations, we do expect, in the current environment, we will see multiples compress.

Blaine Browers: From a financial perspective, it is important that a potential acquisition has a recurring revenue profile.

Blaine Browers: high cash generation relative to EBITDA, is asset light and has an attractive return on invested capital.

Sure.

Blaine Browers: Our strong balance sheet and sidewall cash flow enable Cadre to be opportunistic.

Our strong balance sheet and sizable cash flow enable cadre to be opportunistic.

And pursue acquisitions consistent with these criteria.

Blaine Browers: and pursue acquisitions consistent with these criteria. Additionally, we believe our operating model, customer relationships, and expansive channel help maximize the value created from acquisitions once completed.

Additionally, believe our operating model customer relationships and expansive channel help maximize the value created from acquisitions once completed.

Blaine Browers: We have a robust pipeline of M&A opportunities that we continue to evaluate.

We have a robust pipeline of M&A opportunities M&A opportunities that we continue to evaluate.

Blaine Browers: Following an acquisition of Radar, which I will discuss in a moment, our team is currently in the process of actively evaluating other opportunities that we're excited about and that would enable us to expand the share of our existing customers' wallets.

Following the acquisition of radar, which I will discuss in a moment. Our team is currently in the process of actively evaluating other opportunities that we're excited about and that would enable us to expand the share of our existing customers' wallet.

In terms of M&A valuations, we do expect that the current environment, we will see multiples compress.

Blaine Browers: In terms of MA evaluations, we do expect in the current environment, we will see multiples compressed.

Blaine Browers: We are moving to slide nine. We are excited to have completed the acquisition of RADAR. It's a business with leading market shares and a reputation for innovation, safety, and quality.

We are moving to slide nine we're excited to have completed the acquisition of <unk>, It's a business with leading market shares and our reputation for innovation.

Blaine Browers: Moving to slide 9, we are excited to have completed the acquisition of Radar. It's a business with leading market shares and a reputation for innovation, safety, and quality that specializes in the production of high-quality holsters, belts, duty belts, and other accessories. Consistent with the criteria that I've just outlined, as well as the strategy we laid out with investors both during the IPO process and since, the acquisition enables us to advance the important strategic objective of furthering the penetration of our European markets, adding to that our international footprint in the UK and Lithuania, and providing multiple growth avenues. The integration process is well underway, and we're pleased with the progress we've made thus far. We welcome Pietro and Paolo Pellegrini and the rest of the Radar team to the Cadre family.

And quality.

Blaine Browers: that specializes in the production of high-quality holsters, belts, duty belts, and other accessories.

That specializes in the production of high quality holders belts duty valves and other accessories.

Blaine Browers: Consistent with the criteria that I've just outlined, as well as the strategy we laid out with investors, both during the IPO process and since, the acquisition enables us to advance the important strategic objective of furthering the penetration of our European market.

Consistent with the criteria that I've, just outlined as well as the strategy, we laid out with investors both during the IPO process and since the acquisition enables us to advance the important strategic objective of furthering the penetration of our European markets.

Blaine Browers: adding to our international footprint in the UK and Lithuania and providing multiple growth avenues.

Adding to that our international footprint in the U K in Lithuania, and providing multiple growth avenues.

Blaine Browers: The integration process is well underway and we're pleased with the progress we've made thus far. We welcome Pietro and Paolo Pellegrini and the rest of the radar team to the cadre family.

The integration process is well underway and we're pleased with the progress we've made thus far we welcome Pietro and Paolo Pellegrini and the rest of the radar teams of the contract family.

Blaine Browers: We expect continued growth in the European market, leveraging the strength of Radar's brand, customer relationships, and R&D, along with Cadre's operating expertise and global resources. On slide 10 and 11, we detail our full 2021 results as compared to 2019 and 2020, illustrating how our business performs in higher growth and lower growth scenarios. We continue to stay very focused on price, material inflation, supply chain constraints, and are very proud of the team's ability to execute in this environment. First, if you compare 2020 and 2019, we achieved about 1% top-line growth and expanded gross margins approximately 9% on a continued ops basis. EBITDA was up 33% in that period. Turning to the 12 months ended 31 December 2021, we achieved stronger growth, expanding sales 6% organically and increasing gross margins 6%. EBITDA expanded 23%.

We expect continued growth in the European market, leveraging the strength of radar strengthen customer relationships and R&D, along with cadre is operating expertise and global resources.

Blaine Browers: On slide 10 and 11, we detail our full 2021 results as compared to 2019 and 2020, illustrating how our business performs in higher growth and lower growth scenarios.

On slide 10, and 11, we detail our full 2021 results as compared with 2019 and 2020 illustrating how our business performs and higher growth in Barbara scenarios. We continue to stay very focused on price material inflation and supply chain constraints and are very proud of the team's ability to execute in this environment.

Blaine Browers: We continue to stay very focused on price, material inflation, supply chain constraints, and are very proud of the team's ability to execute.

First if you compare 2020 in 2019, we achieved about 1% topline growth and expanded gross margins approximately 9% on a continued ops basis EBITDA was up 33% in that period.

Blaine Browers: First, if you compare 2020 and 2019, we achieved about 1% top line growth and expanded gross margins approximately 9% on a continued ops basis. EBITDA was up 33%.

Turning to the 12 months ended December 31, 2021, we achieved stronger growth expanding sales, 6% organically and increasing gross margins, 6% EBITDA expanded 23%.

Blaine Browers: Turning to the 12 months ended December 31, 2021, we achieved stronger growth, expanding sales 6% organically and increasing gross margin 6%, EBITDA expanded 23%.

Blaine Browers: Notably, our 2021 net sales and gross profits were all-time high.

Blaine Browers: Notably, our 2021 net sales and gross profits were all-time highs. Looking at slide 11, I'd like to highlight the adjusted EBITDA conversion detailed on the bottom right of the slide. In 2021, EBITDA conversion was 96% versus 92% in the prior year. We are very proud of our successes generating significant free cash flow. We don't have seasonality in our business, and more importantly, from a cash generation perspective, we have very low CapEx needs at approximately 1% of revenue annually. We note that sales were down Q4 over Q4 from high demand in Q4 2020 for duty gear and crowd control products.

Notably our 2021 net sales and gross profits were all time highs.

Blaine Browers: Looking at slide 11, I'd like to highlight the adjusted EBITDA conversion detail on the bottom right of the slide.

Looking at Slide 11, I'd like to highlight the adjusted EBITDA conversion detailed on the bottom right of slide.

Blaine Browers: In 2021, EBITDA conversion was 96% versus 92% in the prior year.

In 2020 , one EBITDA conversion was 96% versus 19, 92% in the prior year.

Blaine Browers: We are very proud of our successes generating significant free cash flow. We don't have seasonality in our business, and more importantly, from a cash generation perspective, we have very low CapEx needs at approximately 1% of revenue.

We're very proud of our successes generating significant free cash flow, we don't have seasonality of our business and more importantly from a cash generation perspective, we have very low capex needs at approximately 1% of revenue annually.

We note that sales were down Q4 over Q4 from high demand in Q4, 2000, Twenty's with Judy aircraft control products.

Blaine Browers: We note that sales were down Q4 over Q4 from high demand in Q4 2020 due to the aircraft control product.

Blaine Browers: As we continue to execute on our strategic initiatives around organic growth through new products and geographic expansion and M&A, spikes in demand should become more muted to the overall business due to the size, scale, and the types of acquisitions that we expect to target. On slide 12, we present our capital structure as of December 31. Following the closing of the IPO, we used a portion of the proceeds to pay down debt as planned. We paid down $59.4 million of debt outstanding on our existing term loan and revolving loan under the new credit agreement we entered into during Q3. Our net leverage was reduced to approximately two turns, which provides us significant financial flexibility to grow organically and more importantly, inorganically through acquisitions. Turning to our 2022 outlook on slide 13.

We continued to execute on our strategic initiatives are on organic growth through new products and geographic expansion and M&A spikes in demand should become more muted to the overall business due to the size scale and the types of acquisitions that we expect and target.

Blaine Browers: On slide 12, we present our capital structure as of 12-31.

On slide 12, we present, our capital structure as of 12 31, following the closing of the IPO. We used a portion of the proceeds to pay down debt as planned.

Blaine Browers: Following the closing of the IPO, we used a portion of the proceeds to pay down debt as planned.

Blaine Browers: We paid down $59.4 million of debt outstanding on our existing term loan and revolving loan under the new credit agreement we entered into during the third quarter.

We paid down $59 $4 million of debt outstanding and our existing term loan and revolving loan under the new credit agreement, we entered in to the third quarter.

Blaine Browers: Our net leverage was reduced to approximately two turns, which provides us significant financial flexibility to grow organically, and more importantly, inorganically through acquisition.

Our net leverage was reduced to approximately two turns which provides us significant financial flexibility to grow organically and more importantly, inorganically through acquisitions.

Blaine Browers: Turning to our 2022 outlook on slide 13.

Turning to our 2020 to outlook on slide 13.

Blaine Browers: Cadre expects to generate net sales in 2022 between $434 and $441 million, and adjusted EBITDA in 2022 of between $70 and $75.5 million. Additionally, we expect adjusted EBITDA conversion to be between 92% and 95% for the full year of 2022. In terms of our quarterly outlook, we anticipate net sales between $101 and $103.5 million in Q1. This is driven by project timing as well as our growth initiatives ramping up later in the year. Please note that we do not expect to provide quarterly guidance on a go-forward basis. Now I'll turn it back over to Brad for the concluding remarks.

Blaine Browers: Cadre expects to generate net sales in 2022 between $434 million and $441 million, and adjusted EBITDA in 2022 of between $70 and $75.5 million.

Do you expect to generate net sales in 2022 between $434 million and $441 million and adjusted EBITDA in 2022 of between 70 and $75 5 million.

Blaine Browers: Additionally, we expect adjusted EBITDA conversion to be between 92 to 95 percent for the full year 2020.

Additionally, we expect adjusted EBITDA conversion to be between 92% to 95% for the full year 2022.

Blaine Browers: In terms of our quarterly outlook, we anticipate net sales between $101 million and $103.5 million in Q1. This is driven by project timing as well as our growth initiatives ramping up later in the year.

In terms of our quarterly outlook, we anticipate net sales between 101 and $103 5 million. In Q1. This is driven by project timing as well as our growth initiatives ramping up later in the year. Please.

Blaine Browers: Please note that we do not expect to provide quarterly guidance on a go-forward basis. Now I'll turn it back over to Brad.

Please note that we do not expect to provide quarterly guidance on a go forward basis now.

Now I'll turn it back over to Brad for the concluding remarks.

Thank you Blayne before opening the call to questions I note that coming off a record year.

Brad Williams: Thank you, Blaine. Before opening the call to questions, I'd note that coming off a record year where we delivered on our strategic objectives in a challenging supply chain and inflationary environment, we continue to effectively manage the business against these realities, drawing on our industry leadership and remarkable team of professionals. We're extremely optimistic about our long-term prospects underpinned by our rich history dating back to 1964 and the strong macro tailwinds driving demand and visibility for Cadre's mission-critical products, both domestically and internationally. Our focus going forward remains on accelerating growth, both organically and through acquisitions, as well as continuously improving gross and adjusted EBITDA margins. Taking advantage of our significant financial flexibility and strong cash flow generation, we are pleased to have completed our first acquisition following our recent IPO.

Brad Williams: Thank you, Blaine. Before opening the call to questions, I note that coming off a record year where we delivered on our strategic objectives in a challenging supply chain and inflationary environment, we continue to effectively manage the business against these realities, drawing on our industry leadership and remarkable team of professionals.

We delivered on our strategic objectives in a challenging supply chain in an inflationary environment. We continue to effectively manage the business against these realities trailing on our industry leadership and marketable team of professionals. We're extremely optimistic about our long range long term prospects underpinned by a rich history dating back to $19 64.

Brad Williams: We're extremely optimistic about our long-range, long-term prospects underpinned by our rich history dating back to 1964 and the strong macro tailwinds driving demand and visibility for Cadre's mission-critical products, both domestically and internationally. Our focus going

And the strong macro tailwind driving demand and visibility for cadre is mission critical products, both domestically and internationally our focus going forward.

Brad Williams: remains on accelerating growth, both organically and through acquisitions, as well as continuously improving gross and adjusted EBITDA margin.

Remaining on accelerating growth, both organically and through acquisitions as well as continuously improving gross and adjusted EBITDA margins, taking advantage of our significant financial flexibility and strong cash flow generation. We are pleased to have completed our first acquisition. Following a recent IPO. We're currently working through a robust pipeline.

Brad Williams: Taking advantage of our significant financial flexibility and strong cash flow generation, we're pleased to have completed our first acquisition following our recent IPO. We're currently working through a robust pipeline as we seek further capitalized on accretive opportunities that meet our stringent criteria and create enduring value for shareholders. With that, operator, please open up the lines for Q&A. Absolutely.

Brad Williams: We are currently working through a robust pipeline as we seek further capitalize on accretive opportunities that meet our stringent criteria and create enduring value for shareholders. With that, operator, please open up the lines for Q&A.

As we seek further capital is capitalize on accretive opportunities that meet our stringent criteria and create enduring value for shareholders with that operator, Please open up the lines for Q&A.

Absolutely we will now begin the Q&A session.

Operator: Absolutely. We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your touch-tone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly to allow questions to generate in queue. The first question is from the line of Matt Koranda with Roth Capital. You may proceed.

Brad Williams: If you would like to ask a question, please press star followed by one on your touchtone keypad.

We would like to ask a question. Please press star followed by one on the pitch chunky pad.

Brad Williams: If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one.

If for any reason you don't like to remove that question. Please press star followed by Tim again to ask a question press Star one.

Brad Williams: As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. We will pause here briefly to allow questions.

A reminder, if you are using a speaker phone. Please remember it to pick up your handset before asking a question.

We will pause briefly to allow questions to generate in Q.

The first question is from the line of Matt Koranda with Roth Capital You May proceed.

Brad Williams: The first question is from the line of Matt Coronda with Roth Capital. You may proceed.

Hey, guys, it's Mike Zebra and on for Matt.

Brad Williams: Hey guys, it's Mike Zaber and I'm for Matt. So regarding the geopolitical tension in Ukraine, any observations you've made in terms of change in quotation behavior for EOD equipment and any insight on near or long-term demand that could come from that?

Mike Xavier: Hey, guys, it's Mike Xavier in for Matt. Regarding the geopolitical tension in Ukraine, any observations you've made in terms of change in quotation behavior for EOD equipment and any insight on near or long-term demand that could come from that?

Regarding the geopolitical tension in Ukraine any observations you've made in terms of change in quotation behavior for EOD equipment.

Any insight on near long term demand that can come from that.

Hi, How's it going I appreciate the question on the <unk> side I think it's a little too early to tell.

Speaker Change: How's it going? I appreciate the question. You know, on the EOD side, I think it's a little too early to tell.

Blaine Browers: Hi, how's it going? Appreciate the question. You know, on the EOD side, I think it's a little too early to tell. You know, that demand can be driven by, you know, deployment of arms in the conflict zone. You know, something we're watching closely. We're staying very close to our customers and ready to serve them when the time comes, but we haven't seen too much on the EOD side. You know, as we kind of think about the armor side of the business, you know, we have seen requests for defensive armor, you know, in that region, both from, really primarily from NATO countries.

That demand can be driven by deployment of ours.

Speaker Change: You know, that demand can be driven by, you know, deployment of arms in the conflict zone. So, you know, something we're watching closely. We're staying very close to our customers and ready to serve them when the time comes. But we haven't seen too much on the EOD side.

And the conflict zones. So it's something we're watching closely we are staying very close to our customers and ready to serve them. When the time comes but we haven't seen too much on the ERP side.

Speaker Change: as we kind of think about the armor side of the business.

As we kind of think about the armor side of the business.

Speaker Change: We have seen requests for defensive armor.

We have seen requests for defensive armor.

Speaker Change: you know, in that region, really primarily some NATO countries.

And in that region, both from really primarily some NATO countries.

Blaine Browers: Now, none of this has really boiled to the point where they're firm orders, but it's something we're working again very closely with our end users and distributors being able to satisfy needs our customers may have.

Speaker Change: Now, none of this has really blown to the point where they're for mortars, but it's something we're working to get very closely with our end users and distributors, being able to satisfy needs our customers may have.

Now none of this is really born to the point, where they are firm orders, but it's something we're working together very closely with our end users and distributors being able to satisfy.

Tonight.

Yeah.

Got it okay, yeah that makes sense.

Mike Xavier: Got it. Okay. Yeah, that makes sense. Could you just speak to the margin cadence for 2022? Should we continue to expect some sequential pressure and maybe provide some insight on how inflationary and supply chain headwinds are factored into the guidance?

Speaker Change: And then, could you just speak to the margin cadence for 2022? Should we continue to expect some sequential pressure and maybe provide some insight on how inflationary and supply chain headwinds are factored into the guidance?

And then could you just speak to the margin cadence for 2022 should we continue to expect some sequential pressure in.

Maybe provide some insight on how you how inflationary and supply chain headwinds are factored into the guidance.

Speaker Change: Sure, so I think if we think about the full year,

Sure. So I think if we think about the full year.

Blaine Browers: Sure. I think if we think about the full year, you know, we'd expect, you know, as we kind of guide it on the top line, lower volume in Q1. As we kind of move through the rest of the year, we'd expect margins to expand from there. You know, I think on the pressures we're seeing in the market, you know, certainly on the supply chain side, you know, we're seeing more constraints, I think like most companies. You know, we haven't faced anything that's been, you know, critical or material, but it's something the teams do a really good job of mitigating and really kind of working that angle.

Yeah, we would expect.

Speaker Change: As we kind of guided on the top line, lower volume in Q1, and then as we kind of move through the rest of the year, we'd expect margins to expand from there.

So as we kind of got it on the top line lower volume in Q1.

And then as we kind of move through the rest of the year, we'd expect margins to expand from there.

Speaker Change: You know, I think on the pressures we're seeing in the market.

I think on the pressures we're seeing in the market.

Speaker Change: Certainly, on the supply chain side, we're seeing more constraints, I think, like most

You know certainly on the supply chain side, we're seeing more constraints I.

I think like most companies.

Speaker Change: You know, we haven't faced anything that's been critical or material, but it's something the teams do a really good job of mitigating and really kind of working that angle.

We haven't faced or anything thats been critical of material, but it's something the teams do a really job a really good job of mitigating and really kind of working that angle.

Speaker Change: You know, on the price inflation side, that's one thing we're certainly very proud of with the teams and the companies, the ability to execute on that price, and I think they did an overall excellent job in 2021, as you can see from the results of, you know, staying ahead of that curve. So, we're continuing to combat it, you know, both in the supply chain, but also from the price perspective, and, you know, comfortable with kind of what's going on.

Blaine Browers: You know, on the price inflation side, that's one thing we're certainly very proud of with the teams and the company is the ability to execute on that price, and I think they did an overall excellent job in 2021, as you can see from the results of, you know, staying ahead of that curve. We're continuing to combat it, you know, both in the supply chain, but also from the price perspective and, you know, comfortable with kind of where we're at. But the team has done just a great job of really getting in front of it and being proactive.

On the price inflation side, that's one thing we're certainly very proud of with the teams and the company's ability to execute on that price and I think they did a overall excellent job in 2021 as you can see from our results of staying ahead of that curve. So we're continue to combat it.

Both with the in the supply chain, but also from a price perspective.

And.

Comfortable with kind of where we're at but where.

Speaker Change: The team has done just a great job of really getting in front of it and being proactive.

The team has done just a great job of really getting in front of us being proactive.

Got it makes sense thanks, guys.

Mike Xavier: Got it. Makes sense. Thanks, guys.

Thank you Youre welcome.

Brad Williams: Thank you.

Blaine Browers: You're welcome.

Thank you.

Speaker Change: Thank you. The next question is from the line of Daniel Embrough with Stephen. You may proceed.

Operator: Thank you. The next question is from the line of Daniel Imbro with Stephens. You may proceed.

The next question is from the line of Daniel <unk> with Stephens You May proceed.

Yeah, Hey, good afternoon, guys I'm proud of my first question and then one follow up on a previous answer just around the NATO defense request I understand it that arent you know orders, yet, but I'm curious around the production side I mean, what's your capacity utilization today and if those requests turned into orders do you have the ability to turn on production quickly or would.

Daniel Imbro: Yeah. Hey, good afternoon, guys. Brad, my first question, I want to follow up on that previous answer just around the NATO defense requests. I understand that those aren't, you know, orders yet, but I'm curious around the production side. I mean, what's your capacity utilization today? And if those requests turned into orders, do you have the ability to turn on production quickly, or would you have to maybe produce those instead of other goods so maybe there's less upside to the guide if those turn into firm orders?

Daniel Embrough: yeah hey good afternoon guys uh... uh... first question on follow-up on a previous answer just around the nato defense request understand that aren't you know orders yet i'm curious around the production side i mean what's your capacity utilization today and and if those requests turned into orders do you have the ability to turn on production quickly or or would you have to maybe produce those instead of other good so there's less upside the guy at those turn into firm orders

You have to maybe.

Produce those instead of other goods, so maybe there's less upside to the guide if those turn into firm orders.

No I appreciate the question.

Brad Williams: No. You know, I appreciate the question. Overall, when you look at the type of products that, you know, we are getting inquiries on, it's really around what we call hard armor, so that'd be things like helmets and plates. Then also our, you know, soft armor line at this point is where we're seeing most of the activity. You know, some of the requests have been for inventory that we have in stock, because as you can imagine from a Ukraine perspective, there's, you know, some potentially urgent needs. We've seen some of that activity for some of those products in terms of quoting. In other cases, in terms of capacity, we're, you know, in most of the locations, we're running a single shift.

Daniel Embrough: So, overall, when you look at the type of products that, you know, we are getting inquiries on, it's really around what we call hard armor, so it'd be things like helmets and plates.

So overall when you look at the type of products that we are getting inquiries on its really around what we call hard armor. So it'll be things like helmets in place and then also are you know soft armor line at this point is where we're seeing most of the activity.

Daniel Embrough: And then also our, you know, soft armor line at this point is where we're seeing most of the activity. You know, some of the requests have been for inventory that we have in stock because as you can imagine from a Ukraine perspective, there's, you know, some potentially some urgent needs. So we've seen some of that activity for some of those products in terms of quoting.

Some of the requests have been for inventory.

Inventory that we have in stock because you can imagine promote Ukraine perspective.

There's some potentially some urgent needs.

So we've seen some of that activity for some of those products in terms of quoting.

Daniel Embrough: And then in other cases, in terms of capacity, we're, you know, in most of the locations, we're running a single ship. So, you know, we do have the capacity to be able to flex up. We've invested in a lot of capital, you know, for for us over the last few years to make sure we've got cutting capacity and and other capacities overall. So, you know, it just depends. I mean, if some of these orders end up being.

And then in other cases in terms of capacity. We're in most of the locations. We're running a single shift. So we do have the capacity to be able to flex up we've invested in a lot of capital.

Brad Williams: you know, we do have the capacity to be able to flex up. We've invested in a lot of capital, you know, for us over the last few years to make sure we've got cutting capacity and other capacities overall. you know, it just depends. I mean, if some of these orders end up being, you know, come to fruition, they're larger MOD type orders, you know, with large quantities, there's not many companies that would be able to immediately produce products like that. It would also take them over, you know, over a decent lead time.

You know for us over the last few years to make sure we've got cutting capacity in and other capacities. Overall. So you know it just depends I mean, if some of these orders end up being.

Daniel Embrough: You know, come to fruition, they're larger MOD-type orders, you know, with large, large quantities. There's not many companies that would be able to immediately produce products like that. It would also take them over, you know, over a decent lead time.

You know come to fruition in their larger M O D type orders.

Large large quantities, there's not many companies that would be able to immediately produce products like that it would also take them over.

Over a decent lead time.

Got it that's helpful.

Daniel Imbro: Got it. That's helpful. I wanna shift to the acquisition front. You know, Warren, I think in the release, or Brad, you mentioned Radar really providing a foothold to grow into Europe. I mean, as you envision your European expansion, is that gonna be country by country as in, you know, the next deal would be something in Italy and you keep building density there? Or could you immediately use Radar and leverage that asset over across borders into other countries, but they're in the same category?

Speaker Change: it. That's helpful. I want to shift to the acquisition front. You know, Warren, I think in the release, or Brad, you mentioned Radar really providing a foothold to grow into Europe . I mean, as you envision your European expansion, is that going to be country by country? As in, you know, the next deal would be something in Italy, and you keep building density there? Or could you immediately use Radar and leverage that asset over across borders into other countries? Are they in the same category? Yeah, it's a great question.

I wanted to shift to the acquisition front, you know Warren I think in the release or Brad you mentioned, a radar really providing a foothold to grow into Europe . I mean as you envision your European expansion is that going to be country by country and then the next deal would be something in Italy, and you keep building density there or could you immediately use radar and leverage.

That asset over across borders into other countries, but many of the same category.

Yeah. It's a great question. So you know on that one.

Brad Williams: Yeah, it's a great question. You know, on that one, you know, let me just start off, just as a reminder of our current footprint that we have, you know, over in Europe. You know, we have a facility in the UK from an acquisition that we made, actually two acquisitions, a hard armor company that was early 2017, and then a soft armor company in early 2017. Both of those were in the UK. We recently had consolidated one of those facilities into the other. We have a single location now. Then we also have a facility in Lithuania that is an armor facility. That was our current footprint before we added the Radar business.

Speaker Change: You know, let me just start off just as a reminder of our current footprint that we have, you know, over in Europe , you know, we have a facility in the UK from an acquisition that we made, actually two acquisitions, a hard armor company that was early 2017, and then a soft armor company in early 2017, both of those were in the UK. We recently consolidated one of those facilities into the other, so we have a single location now.

Let me just start off just.

Just as a reminder of our current footprint that we have over in Europe . You know we have a facility in the U K from the acquisition that we made actually two acquisitions are hard armor company that was early 2017, and then a soft armor company in early 2017, both of those were in the U K.

We recently consolidated.

One of those facilities into the others. So we have a single location now.

Speaker Change: And then, we also have a facility in Lithuania that is an armor facility. So that was our current footprint before we added the radar business. So radar gives us really a stronghold into the European market for our holster category.

And then we also have a facility in Lithuania.

Armour facility, so that that was our current footprint before we added the radar business. So radar gives us a really a stronghold in to the European market for our holster category. That's the way you should really think about it.

Brad Williams: Radar gives us a really stronghold into the European market for our holster category. That's the way you should really think about it. When we look at the holster landscape internationally, you know, we have a good base of the Safariland brand in that marketplace. Also Radar and another couple competitors, you know, make up a good portion of that market along with us. You know, that acquisition was really around holsters and giving us some, you know, the ability to be local with local customer service, you know, some more local salespeople to work with distributors.

Speaker Change: That's the way you should really think about it. And when we look at the holster landscape internationally, you know, we have a good base of the Safariland brand in that marketplace, but then also Radar and another couple of competitors, you know, make up a good portion of that market along with us. So, you know, that acquisition was really around holsters and giving us some, you know, the ability to be local with local customer service.

And when we look at the holster and landscape internationally.

Have a good base of the Safari land brand in that marketplace.

But then also radar and another couple of competitors make up a good portion of that market along with US. So now that acquisition was really around pollsters and giving us the ability to be local with the local customer service.

Speaker Change: some more local sales people to work with distributors. It gives us a manufacturing footprint that we can leverage with our Safariland branded holsters that we currently make here in the U.S. that in Mexico that we ship with freight and duties and lead time. So we feel like it's just an absolutely astounding opportunity for us there to expand that holster share within the marketplace.

Some more local salespeople to work with distributors. It gives us a manufacturing footprint that we can leverage with our safari land branded wholesalers that we currently make here in the U S.

Brad Williams: It gives us a manufacturing footprint that we can leverage with our Safariland branded holsters that we currently make here in the US, that in Mexico that we ship, you know, with freight and duties and lead time. We feel like it's just an absolutely astounding opportunity for us there to expand that holster share within the marketplace. You know, it's really much different in the armor world, so we don't view that acquisition as something that we would leverage from our armor perspective.

In Mexico that we ship them with freight and duties and lead time. So we feel like it's just absolutely astounding opportunity for us there to expand that holster share within the marketplace, but you know.

Speaker Change: It's really much different in the armor world, so we don't view that acquisition as something that we would leverage from an armor perspective.

It's really much different in the armor world. So we don't view that acquisition as something that we would leverage from a <unk> perspective.

Got it that's helpful. And then last one for me I think they are paired remarks, you talked about.

Daniel Imbro: Got it. That's helpful. Last one for me. I think in the prepared remarks you talked about, you know, the American Rescue Plan, what is it, $350 billion for more police funding. I'm curious, one, how long do you think that takes to get spent over how many years? How much of that is in existing Cadre categories where your TAM is actually gonna grow or in categories you plan on growing into so that you could actually go after some of that increased spending?

Speaker Change: That's helpful. And then the last one for me, I think there are a pair of marks you talked about, the American Rescue Plan, what is it, $350 billion for more police funding. I'm curious, one, how long do you think that takes to get spent, or how many years? And then how much of that is in existing cadre categories, where your TAM is actually going to grow, or in categories you plan on growing into so that you could actually go after some of that increased funding?

The American rescue plan, what is the $350 billion or for more bleed funding I'm curious one how long do you think that it takes to get spent over how many years and then how much of that is in existing cadre categories, where you where your Tam is actually going to grow or in categories. You plan on growing into so that you could actually go after some of that increased spending.

Speaker Change: You know, it's it's hard to tell, but a lot of the largest gap that's out there today is, you know, we had in the remarks is around headcount.

You know, it's it's hard to tell but a lot of the the largest gap that's out there today as you know we've had in the remarks is around head count. Okay. So when you look at U S. Domestic law enforcement you know as we saw over the last three.

Brad Williams: You know, it's hard to tell, but a lot of the largest gap that's out there today is, as you know, we had in the remarks, around headcount. Okay, so when you look at US domestic law enforcement, you know, as we saw over the last, you know, three years, you know, there's been a lot of retirements that have been going on, some early retirements. Retirements that have been on schedule. The headcount is in some cases we've seen, you know, double digits significant, anywhere from 15% to 20%, you know, down compared to what they were before 2019, for example.

Speaker Change: Okay, so when you look at U.S. domestic law enforcement, you know, as we saw over the last, you know, three years, you know, there's been a lot of retirements that have been going on, some early retirements, retirements that have been on schedule. The headcount is, in some cases, we've seen, you know, double digits, significant anywhere from 15 to 20 percent, you know, down compared to what they were before 2019, for example. So

Three years, there's been a lot of retirements that have been going on some early retirements retirements had been on schedule. The head count is in some cases, we've seen you know double digit significant anywhere from 15% to 20%.

Down compared to what they were before 2019 for example, so you know.

Brad Williams: You know, we expect a lot of that funding will be not just around hiring new officers, but if you think about new officers come in, they have to be outfitted with product, right, when they're put on the street. You know, they need uniforms, they need body armor, they need holsters, they need protective equipment. If they're SWAT team members, they'll need hard armor, which would be helmets, plates, shields, you know, different products like that also. You know, based on the protective nature of our product, we see opportunities for us when there's headcount that increases for us to follow that trend.

Speaker Change: You know, we expect a lot of that funding will be not just around hiring new officers, but if you think about new officers come in, they have to be outfitted with product, right, when they're put on the street. So, you know, they need uniforms, they need body armor, they need holsters, they need protective equipment. If they're SWAT team members, they'll need hard armor, which would be helmets, plates, shields, you know, different products like that also.

We expect a lot of that funding will be not just around hiring new officers, but if you think about the new officers come in they have to be outfitted with product right when they're when they're put on the street. So.

Uniforms, they need body armor, they need holstered, they need protective equipment, if theyre Swat team members, they will they'll need hard armor, which will be helmets plagues shields, you know different products like that also.

Speaker Change: You know, so we based on the protective nature of our product, we see, you know, opportunities for us when there's headcount that increases for us to, you know, follow that trend.

So we based on the protective nature of our product, we see opportunities for us when there's head count that increases for us to.

Followed that trend but.

Speaker Change: But we do know that, just like a lot of labor markets are right now, especially in this area, it is tough to recruit and have officers come in, you know, into that position. So we think it's going to take a significant amount of time for those headcounts to lift. Got it. Thanks so much for all the color and background.

Brad Williams: We do know that just like a lot of labor markets are right now, especially in this area, it is tough to recruit and have officers come in, you know, into that position. We think it's gonna take a significant amount of time for those headcounts to lift.

But we do know that just felt like a lot of labor markets are right now.

Especially in this area it is tough to recruit and have officers come in.

Into that position. So we think it's going to take a significant amount of time for those head counts to lift.

Got it thanks, so much for all the color and best of luck.

Daniel Imbro: Got it. Thanks so much for all the color and best of luck.

Youre welcome. Thanks.

Blaine Browers: You're welcome. Thanks.

Thank you.

Operator: Thank you. The next question is from the line of Mark Smith with Lake Street Capital Markets. You may proceed.

The next question is from the line of Mark Smith with Lake Street Capital markets. You May proceed.

Speaker Change: The next question is from the line of Mark Smith with Lake Street Capital Markets. You may proceed.

Hi, guys first one I just wanted to confirm if I heard right Blaine what did you say as far as Q1 revenue expectation.

Mark Eric Smith: Hi guys. First one, I just want to confirm if I heard right, Blaine, what did you say as far as Q1 revenue expectation?

Mark Smith: Hi, guys. First one, I just want to confirm if I heard right. Blaine, what did you say, as far as Q1 revenue expectation?

Between 101, and $103 5 million.

Blaine Browers: Between $101 and 103.5 million.

Speaker Change: Perfect, thank you. And then you guys talked about it a little bit, but can you give us any updates or changes maybe that you're seeing in the pipeline for acquisitions or maybe any changes that you're seeing in multiples out there?

Perfect. Thank you.

Mark Smith: Perfect. Thank you. You guys talked about a little bit, but can you give us any updates or changes maybe that you're seeing in the pipeline for acquisitions or maybe any changes that you're seeing in multiples out there?

And then you guys talked about a little bit, but can you give us any updates or changes maybe that you are seeing in the pipeline for acquisitions or maybe any changes that you're seeing in multiples out there.

Yeah. So I think the robustness of the funnel is very similar to how it's been.

Blaine Browers: Yeah. You know, I think the robustness of the funnel is very similar to how it's been in the past kind of six to nine months for us, which is a positive. We feel the funnel is very robust. I think on the multiples, you know, we're starting to see signs of softening. You know, I wouldn't say it's across the board or dramatic, but I think those kind of early signs coupled with what we're seeing in the macro environment lead us to believe that we will see some future softness and a little more widespread in the future. You know, and for us, with the balance sheet we have and the ability to be opportunistic, leads us to be pretty excited about the future.

Speaker Change: Yeah, so I think the robustness of the funnel is very similar to how it's been in the past kind of six to nine months for us, which is a positive. We feel the funnel is very robust. I think on the...

On the Paas kind of six to nine months for US, which is which is a positive we filled up.

Our funnel is very robust I think on the.

The multiples.

Speaker Change: you know, we're starting to see signs of softening. You know, I wouldn't say it.

We're starting to see signs of softening.

I wouldn't say, it's across the board or dramatic, but I think that was kind of early signs coupled with what we're seeing in the macro environment led us to believe that we will see some some future softness in that little more widespread in the future.

Speaker Change: across the board or dramatic. But I think those kind of early signs, coupled with what we're seeing in the macro environment, lead us to believe that we will see some future softness and a little more widespread in the future. You know, and for us, with the balance sheet we have and the ability to be opportunistic, leads us to be pretty excited about the future.

For us with the balance sheet, we have.

And the ability to be opportunistic.

It leads us to be pretty pretty excited about the future.

Perfect and then as we look at just inflationary pressures and supply chain issues persist out there.

Speaker Change: Perfect. And then as we look at just inflationary pressures and supply chain issues that persist out there, just walk us through your ability to take price and if you have taken any price in here recently.

Mark Smith: Perfect. As we look at just inflationary pressures and supply chain issues that persist out there, just walk us through your ability to take price and if you have taken any price in here recently.

Walk us through your ability to take price and and if you have taken any pricing here recently.

Yes so.

Blaine Browers: You know, we're again very proud of the team's ability to execute. Even going back to last year, you know, the company and the teams have been able to stay ahead of inflation. And I mean, stay ahead via price. We've been able to not only maintain but expand margins through 2021. You know, certainly what we've seen in the last you know 5 to 6 months, inflation ticking up even more than what we saw in the first 9 months of the year. Again, you know, that's been talked about, and we are out trying to stay ahead of that with you know incremental price increases. You know, again, the one of the really helpful things for us as a company is the positioning and brand of our products, right?

Speaker Change: Yeah, so you know, we're, again, very proud of the team's ability to execute. So even going back to last year, the company and the teams have been able to stay ahead of inflation. And I mean, stay ahead via price. So we've been able to, to not

Again, very proud of the team's ability to execute so even going back to last year.

And the teams have been able to stay ahead of inflation and then stay had via price. So we've been able to do.

Not only maintain but expand margins.

Speaker Change: uh, through 2021. You know, certainly what we've seen in the last, you know, five to six months, inflation picking up even more than what we saw in the first nine months of the year. Um, but again, you know, that's been talked about and

Through 2021, certainly what we've seen in the last five to six months inflation picking up even more than what we saw in the first nine months of the year.

But again, that's been talked about and we are out trying to stay ahead of that with incremental price increases.

Speaker Change: we are out trying to stay ahead of that with, you know, incremental price increases. You know, again, one of the really helpful things for us...

Again.

One of the really helpful things for us as a company is that positioning and brand of our products right. So we can.

Speaker Change: as a company is the positioning and brand of our product.

Speaker Change: Right, so we can, we have the ability and opportunity to kind of maintain that premium in this environment because of how our products perform, the engineering that goes into them, and the strong brand.

Blaine Browers: We have the ability and opportunity to kind of maintain that premium in this environment because of how our products perform, the engineering that goes into them, and the strong brand names. We're trying to stay ahead of it, and we're doing our best job on the pricing. We feel we're set up well for this year. You know, on the supply chain constraints, it's you know, a bit of a newer story for us here in the last, I would say six to seven months, similar to inflation. You know, we didn't see a lot of supply chain constraints in the you know, kind of first six to nine months of the year. You know, as we got into Q4, you know, we have seen more pinch points.

We have the ability and opportunity to kind of maintain that premium in this environment because of how our products perform the engineering that goes into a strong brand names.

Speaker Change: So we're trying to stay ahead of it. We're doing our best job on the pricing. Joe, we're set up well for this year.

So we're trying to stay ahead of it and we're doing our best job on pricing.

Set up well for this year.

Speaker Change: You know, on the supply chain constraints, it's a bit of a newer story for us here in the last, I would say, six to seven months, similar to inflation.

On the supply chain constraints, it's a bit of a newer story for us here.

The last I would say six to seven months similar to inflation.

Speaker Change: We didn't see a lot of supply chain constraints in the first six to nine months of the year. As we got into Q4, we had seen more pinch points. And it hasn't been any one large supplier or one critical product, but it's really managing the 20s on our supply chain that's become the challenge. So the teams have done a good job up to this point of mitigating that where needed. We've taken inventory positions to help kind of smooth out.

We didn't see a lot of <unk>.

Hi, Qin constraints in the first six to nine months of the year.

We got into Q4, we have seen more pinch points and it hasn't been any one large supplier when critical product, but it's it's really managing the twenties on our supply chain that's become the challenge. So the team has done a good job up to this point of mitigating that.

Blaine Browers: It hasn't been, you know, any one large supplier or one critical product, but it's really managing the tail on our supply chain that's become, you know, the challenge. The teams have done a good job up to this point of mitigating that. You know, where needed, we've taken, you know, inventory positions to help kind of smooth out some of that, some of those challenges, but it's something we watch closely. You know, like everyone, it's on everyone's radar, so we're trying to stay on top of it, stay in front of it, and regularly communicating internally on the challenges and how we overcome.

Where needed we've taken inventory positions.

To help kind of smooth out some of that.

Some of those challenges, but it's something we watch closely like everyone.

Speaker Change: some of those challenges, but it's something we watch closely, you know, like everyone, it's on everyone's radar. So, we're trying to stay on top of it, stay in front of it, and regularly communicate internally on the challenges and how we overcome.

It's on everyone's radar. So we're trying to stay on top of it and stay in front of the irregular communicate internally.

Challenges and how we overcome.

Excellent. Thanks for you guys.

Mark Smith: Excellent. Thank you, guys.

Blaine Browers: Thank you. You're welcome.

Youre welcome.

Thank you.

Operator: Thank you. The next question is from the line of Bert Subin with Stifel. You may proceed.

The next question is from the line of Barton W.

Speaker Change: The next question is from the line of part seven with stifle. You may proceed. Yeah, thank you.

With Stifel You May proceed.

Yeah. Thank you and good afternoon guys.

Bert Subin: Yeah. Thank you. Good afternoon, guys.

Blaine Browers: Hi, Bert.

Hey, Bert.

Okay.

Bert Subin: Hey. So you've added Radar as of January, plus it seems like demand from Europe is generally getting better. Can you walk through what the revenue headwinds are just relative to 2021? I assume they're primarily commercial. If that is the case, what are your expectations for that business as we go through 2022?

Stifle: Hey, so you've added radar as of January . Plus, it seems like demand from Europe is is generally getting better. Can you walk through what the revenue headwinds are just just relative to 2021? I assume they're primarily commercial. And if that is the case, what are your expectations for that business as we go through 2021?

So you've added radar hazard January close it seems like demand from Europe is generally getting better.

Can you walk through what the revenue headwinds are just just relative to 2021 I assume they're primarily commercial and if that is the case what are your expectations for that business as we go through 'twenty two.

Right No great question, Bert and I think you nailed the first part of it commercial.

Blaine Browers: Right. No, great question, Bert. You know, I think you nailed the first part of it. You know, commercial on H1 of last year was very strong for us. We saw that drop down in H2 and, you know, still above historical levels, but certainly down from H1, and that's creating some of the tough comp here as we move into H1. Now the team's working on some growth opportunities to help offset that as we move into H2. I think that's kind of the first component. The second component that makes it a bit of a tougher comp this year, you know, for the full year, you know, is really the crowd control.

Speaker Change: Great question, Bert, and I think you nailed the first part of it. Commercial on the first half of last year was very strong for us. We saw that drop down in the back half and still above historical levels.

The first half of last year was very strong for us.

We saw that drop down in the back half and you'll still above historical levels.

Speaker Change: but certainly down from the first half, and that's creating some of the tough comp here as we move into the first half.

But certainly down from the first half and that's creating some of the tough comp here as we move into the first half.

Speaker Change: Now the team's working on some growth opportunities to help offset that as we move into the back half. So I think that's kind of the first component. The second component that makes it a bit of a tougher comp this year, you know, for the full year, you know, is really the crowd control.

Now the team is working on some growth opportunities to help offset that as we move into the back half, but I think that's kind of the first component. The second component of it makes it a bit of a tougher comp this year for the full year. It was really the crowd control demand coming out of <unk>.

Blaine Browers: You know, demand coming out of 2020 was very strong, and it continued really into H1 2021, and we're seeing that it really kind of get to a normal level. You know, the commercial still, I would say kind of like commercial, still above historical levels. I think the law enforcement agencies are a little more attuned to what could happen and to be, I would say, a little have more stock on the shelves. I think, you know, previous to that, the stock probably wasn't as high as what they needed entering that summer of 2020. Those are really kind of the big components.

Speaker Change: the demand coming out of 2020 was very strong and it continued really into the first half of 2021. And we're seeing that it really kind of get to a normal level. Still, I would say, kind of like commercial, still above historical levels. I think the law enforcement agencies are a little

2020 was very strong and that continued really into the first half of 2021, and we're seeing that it really kind of get to a normal level.

Still I would say kind of like commercial still above historical levels and I think the law enforcement agencies are a little one of them.

More attuned to.

Speaker Change: you know, what could happen and to be, I would say, a little, have more stock on the shelves, I think.

What could happen and to be I would say a little more stock on the shelves I think previous to that probably wasn't as high as what they needed and turn to those that summer of 2020.

Speaker Change: previous to that, the stock probably wasn't as high as what they needed entering into those that summer of 2020. Those are those are really kind of the big components there.

Those are those are really kind of the big components, there as well.

Blaine Browers: There's, you know, we always have, you know, large projects, Bert, as we've talked about, that kind of come and go in a given year. Those are the two biggest pieces for us.

Speaker Change: You know, we always have, you know, large projects as we've talked about that kind of come and go.

We always have large projects part as we've talked about that kind of come and go.

Speaker Change: in a given year, but those are about the two biggest pieces for us.

Any given year, but.

Those are the two biggest pieces for us.

Speaker Change: That's helpful, Blayne, and just as a follow-up, I think, to the earlier question about the American Rescue Plan.

Bert Subin: That's helpful, Blaine. Just as a follow-up, I think to the earlier question about the American Rescue Plan, what is your view on officer headcount growth? I mean, it sounds like you think it's sort of gonna stay down for a period of time. If that shortage does remain intact, does that make you incrementally more interested in increasing your military exposure?

That's helpful Blaine and just as a follow up I think to the earlier question about the American rescue plan.

What is your view on officer head count growth I mean, it sounds like you think it's sort of going to stay down for a period of time, if that shortage does remain intact does that make you incrementally more interested in.

Speaker Change: What is your view on officer headcount growth? I mean, it sounds like you think it's sorta gonna stay down for a period of time. If that shortage does remain intact, does that make you incrementally more interested in increasing your military exposure?

Increasing your military exposure.

Blaine Browers: Incrementally interested in only if the margins match what, like we've talked about. You know, one of the things we talked about in the past is just, you know, our business so far from a military perspective is really around our bomb suits, Med-Eng, globally with military, and then also our US military branches with our holsters. Okay, those are our two biggest areas that we supply the military. You know, those are the two areas that we would continue to stay focused on. You know, if there's an opportunity outside of that in the military, we'd have to just really look at it closely and evaluate, especially if it's body armor.

Incrementally interested in only at the margins matchbook, what like we've talked about so one of the things we've talked about in the past is just.

Speaker Change: I'm incrementally interested in only if the margins match what, like we've talked about. So, you know, one of the things we talked about in the past is just

Speaker Change: You know, our business, so far, from a military perspective, is really around our bomb suits, med-ins, globally, with military, and then also our U.S. military branches with our holsters. Okay? So those are our two biggest areas that we supply the military. You know, those are the two areas that we would continue to stay focused on. You know, if there's an opportunity outside of that in the military, we'd have to just really, you know, look at it closely and evaluate, especially if it's body armor.

Our business so far from a military perspective is really around our bond suits met inch globally with military and then also our U S.

Military branches with their holders. Okay. So those are our two biggest areas that we supply the military.

The those are the two areas that we would continue to stay focused on.

You know if theres an opportunity outside of that in the military we'd have to just really look at it closely and evaluate them.

Especially if its body armor.

Okay. Thanks, Brian and just just to I guess, a clarification question on the supply chain comp.

Bert Subin: Okay. Thanks, Brad. Just a clarification question on the supply chain comments from earlier. Is there a particular region where you're seeing, you know, worse impact or more impact than others? It sounds like you're not, you know, at least experiencing some of the supply chain challenges that others are. Just curious if geographically you're seeing any impact.

Speaker Change: Okay. Thanks, Brad. And just to, I guess, a clarification question on the supply chain comments from earlier, is there a particular region where you're seeing, you know, worse impact or more impact than others? It sounds like you're not.

Comments from earlier is there a particular region, where you're seeing.

Worse impact or more impact than others, it sounds like youre not.

Speaker Change: you know, at least experiencing some of the supply chain challenges that others are just curious of geographically you're seeing any.

At least experiencing some of the supply chain challenges that others are just curious geographically you are seeing any impact.

No not necessarily geographically, but I want to make sure that we're clear just to kind of underscore something plain just answer a minute ago was just around.

Blaine Browers: No, not necessarily geographically, but I wanna make sure, you know, that we're clear just to kinda underscore something Blaine just answered a minute ago, was just around, you know, last year, we did not see as many issues on the supply chain side. Okay? But this year, we have seen, you know, those crop up. It's not necessarily from any one given region, it's in those, you know, areas Blaine mentioned the tail, which would be, you know, categories of suppliers that are smaller suppliers for us, that can be as critical as a, you know, more expensive component for our finished goods. That's the area that we're trying to manage by, you know, various, you know, suppliers and various products.

Speaker Change: No, not necessarily geographically, but I want to make sure, you know, that we're clear just to kind of underscore something Blaine just answered a minute ago. It was just around

Speaker Change: Last year, we did not see as many issues on the supply chain side, but this year, we have seen those crop up, so it's not necessarily from any one given region. It's in those areas, Blaine mentioned the 20s, which would be categories of suppliers that are smaller suppliers for us.

Last year, we did not see as many issues on the supply chain side, okay, but this year, we have seen those crop up so it's not necessarily from any one given region.

It's in those.

Areas Blaine mentioned, the Twenty's, which would be you know categories of suppliers that are smaller suppliers for us.

Speaker Change: um, that can be as critical as a, a, you know, more expensive component for our finished goods. So, that's the area that we're trying to manage by, um, you know, various, um, you know, suppliers and various, uh, products.

It can be as critical as a more expensive component for our finished goods. So that's the area that we're trying to manage by various some suppliers in various products.

Thanks, Brad.

Bert Subin: Thanks, Brad.

Youre welcome.

Blaine Browers: You're welcome.

Thank you.

Operator: Thank you. The next question is from the line of Jeff Van Sinderen with B. Riley. You may proceed.

The next question is from the line of Jeff Van <unk> B Riley you May proceed.

Speaker Change: The next question is from the line of Jeff Ben-Sidon with B. Riley. You may proceed.

Hi, everybody.

Jeff Van Sinderen: Hi, everybody. Just wanted to clarify a couple things. In terms of pricing, are there any areas where you have commitments, where prices are set, where you might have margin pressure?

Jeff Ben-Sidon: Hi, everybody. I just want to clarify a couple things. In terms of pricing, are there any areas where you have commitments, where prices are set, where you might have margin pressure?

Just wanted to clarify a couple of things.

In terms of pricing.

Are there any areas, where you have commitments where prices are set where you might have margin pressure.

Yes, so we do Jeff Hi, Jeff. Thanks for the question I. Appreciate you joining the call we do have some fixed price contracts.

Blaine Browers: Yeah, we do, Jeff. Hi, Jeff, thanks for the question. Appreciate you joining the call. You know, we do have some fixed price contracts. You know, in a lot of cases, you know, if we kinda think about there's a couple buckets inside there. You know, on the EOD side, you know, longer lead time products typically have the products ordered, you know. We order from the supply chain at the time we get the order. You know, fairly protected there. It becomes more of the ongoing or multiple shipments, but, you know, it's not terribly significant there. You know, in the US, we do not own a lot of contracts direct with agencies. In most cases, we go through distributors. We do have a bit of insulation there.

Speaker Change: Thanks for the question, appreciate you joining the call. We do have some fixed price contracts. In a lot of cases, if we kind of think about it, there's a couple of buckets inside there.

And a lot of cases.

Think about Theres, a couple of buckets inside there.

On the <unk> side.

Yep.

Longer lead time products typically have the products ordered.

Speaker Change: Longer lead time products typically have the products ordered, you know, we order from the supply chain at the time we get the order. So you're fairly protected there. It becomes more of the ongoing or multiple shipments, but, you know, it's not terribly significant there. You know, in the U.S. we do not own a lot of contracts direct with agencies. In most cases, we go through distributors. So we do have a bit of insulation there.

Reorders from the supply chain at the time, we get the order so fairly protected there it becomes more of the ongoing multiple shipments but.

It's not terribly significant there and the U S. We do not own a lot of cars.

Contracts direct with agencies in most cases, we go through distributors. So we do have a bit of installation there.

Blaine Browers: We also work with our distributors to pass along. I think, you know, one thing we've observed, and, you know, it's never easy to have the price discussion, but, you know, this is an environment where, you know, as a consumer, we're all paying more for standard things. I won't say it's easy and expected, but certainly, people understand kind of the reasoning there. You know, Europe, we own the, not Radar, but the UK business and Lithuanian business, they do have some contracts direct, and, you know, we've mitigated some of the pressure through fixed supply contracts for the life of those contracts. There's nothing out there that I think that worries us greatly.

But we also work with our distributors to pass along and I think.

Speaker Change: But we also work with other distributors to pass along. And I think one thing we've observed and it's never easy to have the price discussion, but this is an environment where, as a consumer, we're all paying more for standard things.

One thing we have observed and it's never easy to have the price discussion, but this is an environment, where the consumer will pay more per standard things. So I won't say, it's easy and expected, but certainly.

Speaker Change: So I won't say it's easy and expected, but certainly people understand kind of the reasoning there. In Europe , we do on the UK business and Lithuanian business.

People understand kind of what you're seeing there Europe , we do on the radar, but the U K are you.

The U K business and Lithuanian business.

They do have some contracts directed.

Speaker Change: mitigated some of the pressure through fixed supply contracts for the life of those contracts. There's nothing out there that can fix that.

Mitigating some of the pressure through fixed supply contracts for life of those contracts, but there.

There is nothing out there that think that.

Speaker Change: worries us greatly, and the successes we've had both last year and this year on price gives us some optimism that we can continue to stay in front of it. Now, it's a tough slog, right? It's kind of a day-to-day battle on there on getting price, but, you know, again, the teams have just done a fantastic job of doing that.

Worries us greatly and the successes we've had both last year and this year on price gives us some optimism that we can continue to stay in front of it now it's a tough slog.

Blaine Browers: You know, successes we've had both last year and this year on price gives us some little optimism that we can continue to stay in front of it. Now, it's a tough slog, right? It's kind of a day-to-day battle on there on getting price. You know, again, the teams have just done a fantastic job of doing that.

It's kind of a day to day battle on their own getting price but.

The teams have just done a fantastic job of doing that.

Okay, and then just as you kind of thinking about overall supply chain. It doesn't sound like it's impacting your ability to fill orders and I getting that right.

Jeff Van Sinderen: Okay. Just as you kind of think about overall supply chain, it doesn't sound like it's impacting your ability to fill orders. Am I getting that right?

Speaker Change: Okay, and then just as you kind of think about overall supply chain, it doesn't sound like it's impacting your ability to fill orders. Am I getting that right?

Yeah.

Theirs.

Blaine Browers: There's been some orders. I would just say it's not broad-based, right? This isn't a case where, you know, we have, you know, $5 or 10 million worth of shipments, you know, moving out a month due to supply chain now. You know, the teams are really kind of in hand-to-hand combat on this, right? You know, as you get an order push out for supply chain constraints, they're looking at order pull-ins, and they've done really, really well in that area. It's something we watch closely, and certainly, you know, a little different or a lot different than what we saw in like the first kind of 6 to 9 months of last year.

Speaker Change: There's been some orders. I would just say it's not broad-based, right? This isn't a case where, you know, we have, you know, $5 or $10 million worth of shipments.

Theres been some orders.

I would just say, it's not broad based right. This isn't a case, where we have five or $10 million worth of shipments moving out a month to supply chain now.

Speaker Change: You know, moving out a month to supply chain now, you know, the teams are really kind of in hand-to-hand combat on this, right? So, you know, as you get an order push out for supply chain constraints, they're looking at order pull-ins and they've done really, really well in that area, but it's something we watch closely.

The teams are really kind of in hand, then compound this right. So.

As you get an order push out.

For supply chain constraints that are looking at order pull ins and they've done really really well in that area, but it's something we watch closely.

Speaker Change: And certainly, you know, a little different or a lot different than what we saw in the first kind of six to nine months of last year.

And certainly a little different a lot different than what we saw in the first six to nine months of last year.

Okay, and then just any update on the the blast sensor program that you're working on.

Jeff Van Sinderen: Okay. Just any update on the blast sensor program that you're working on?

Speaker Change: Okay, and then just any update on the BLAST sensor program that you're working on?

Speaker Change: Um, I would say no major updates since the, um, since the last discussion. Um, you know, there has continued to be delays in, in the sensor project, not from our perspective, but overall from the, um, you know, from the military on that one. But, um, you know, we continue to work through the, um, the R and D list of, of, um, you know, additional testing and changes and things like that, that they have requested.

Blaine Browers: I would say no major updates since the last discussion. You know, there has continued to be delays in the sensor project, not from our perspective, but overall from the military on that one. You know, we continue to work through the R&D list of additional testing, changes, and things like that they have requested.

I would say no major updates since the since the last discussion.

There has continued to be delays in the sensor project not from our perspective, but overall from the.

From the military on that one, but we continue to work through the the R&D list of.

Additional testing and changes and things like that that they have requested.

Okay fair enough. Thanks for taking my questions and best of luck.

Jeff Van Sinderen: Okay, fair enough. Thanks for taking my questions, and best of luck.

Speaker Change: Okay, fair enough. Thanks for taking my questions and best of luck.

Yes. Thank you.

Blaine Browers: Yep. Thank you.

Thank you. The next question is from the line of Brian <unk> Raymond James You May proceed.

Speaker Change: Thank you. The next question is from the line of Brian Kistler, Raymond James. You may proceed.

Operator: Thank you. The next question is from the line of Brian Gesuale with Raymond James. You may proceed.

Hey, good evening, just a couple towards the end tier where you've had a radar under under your belt for a couple of months now can you talk maybe a little bit about the integration and synergies maybe both on the sales and cost side that you're seeing.

Brian Kistler: Hey, good evening. Just a couple towards the end here. You've had Radar under your belt for a couple of months now. Can you talk maybe a little bit about the integration and synergies, maybe both on the sales and cost side that you're seeing?

Brian Gesuale: Hey, good evening. Just a couple towards the end here. You've had Radar under your belts for a couple of months now. Can you talk maybe a little bit about the integration and synergies, maybe both on the sales and cost side that you're seeing?

Yes.

Yes, so like you said, it's a we're in the early phases.

Brad Williams: Yeah. Like you said, it's you know, we're in the early phases, you know, from an acquisition standpoint. You know, really where we're at from a synergy standpoint is, you know, we've put together some functional teams. These are more functional type teams like IT, tax, accounting, finance, that side of things. Those teams are together and fully executing on their 100-day plan. The second area is manufacturing. We put together a small team from Cadre plus also, you know, the folks from a Radar perspective that are now teamed up together.

Speaker Change: Yes. Like you said, we're in the early phases from an acquisition standpoint. So, really, where we're at from a synergy standpoint is we put together some functional teams that are working on what we call the first 100-day type basic. These are more functional type teams like IT and tech.

From an acquisition standpoint, so really where we're at from a synergy standpoint, as we've put together some functional teams that are working on what we call. The first 100 day type basic.

These are more functional type teams like <unk> and tax and accounting.

Speaker Change: you know, accounting, finance, that side of things. So those teams are together and fully executing on their 100-day plan.

<unk> finance on that side of things. So those those teams are together and fully executing on their 100 day plan.

Speaker Change: The second area is manufacturing. We put together a small team from Cadre plus also, you know, the folks from a Radar perspective that are now teamed up together. We have a trip on the calendar now for a couple of our manufacturing folks to go over and visit Radar and spend time learning how they manufacture and digging into their processes. So, you know, that piece is well underway. They have identified various areas of problems.

The second area is manufacturing, we put together a small team from cadre plus also the folks from a radar perspective that are now teamed up together.

Brad Williams: We have a trip on the calendar now for a couple of our manufacturing folks to go over and visit Radar and spend time learning how they manufacture and digging into their processes. You know, that piece is well underway. They have identified various areas of products from a Safariland perspective that, you know, we're targeting to take a look at for localization, which will continue to help us from a freight and duty standpoint when you look at the supply chain today.

We have a trip on the calendar now for a couple of our manufacturing folks to go over and visit radar and spend time.

Learning, how they manufacture and digging into their their processes. So that piece is well underway they have identified various areas.

From <unk> perspective that we're targeting to take a look at for localization, which will continue to help us from a freight and duty standpoint, when you look at the supply chain today and then we've got a small supply chain team that's been put together their diabetes into any of the leverage points.

Speaker Change: from a safari land perspective that we're targeting to take a look at for localization, which will continue to help us from a freight and duty standpoint when you look at the supply chain today.

Brad Williams: Then we've got a small supply chain team that's been put together that are diving into any of the leverage points, you know, in the commodities or the type of products and components that Radar uses in raw materials and versus our Safariland brand of holsters, so that we can look at leveraging those. Lastly, from a product management perspective, you know, we have both teams joined together handling various positioning activities as we see tenders and quotes come up internationally, so that we make sure that we're positioning the Safariland brand and the Radar brand appropriately on those tenders.

Speaker Change: And then we've got a small supply chain team that's been put together that are diving into any of the leverage points, you know, in the commodities or the type of products and components that radar uses in raw materials and versus our safari land brand of holsters so that we can look at leveraging those.

And the commodities.

Commodities are the type of products and components that radar users and raw materials versus our Safari land brand upholstery. So that we can look at leveraging those and then lastly from a product management perspective.

Speaker Change: And then lastly, from a product management perspective.

Speaker Change: You know, we have both teams joined together handling various positioning activities as we see tenders and quotes come up internationally so that we make sure that we're positioning the Safariland brand and the Radar brand appropriately on those tenders. You know, our objective overall, you know, for this is to make sure that we win, whether we win with Safariland with the position of that product or we win with Radar with the position of that product. You know, either way it goes, we're, you know, we're happy for the win.

We have both teams joined together handling various positioning activities as we see tenders in quotes come up internationally. So that we make sure that we're positioning the <unk> brand in the radar brands appropriately.

Those tenders are objective overall.

Brad Williams: You know, our objective overall, you know, for this is to make sure that we win, whether we win with Safariland, with the position of that product, or we win with Radar, with the position of that product. You know, either way it goes, we're, you know, we're happy for the win.

This is to make sure that we win whether we win with Safari land with the positioning of that product that we win with radar with the position of that product.

Either way it goes where we're happy for the win.

Great. Thanks for the color, maybe just one more I know you've answered a bunch on M&A, but can you just talk a little bit about.

Speaker Change: Great. Thanks for the color. Maybe just one more. I know you've answered a bunch on M&A, but can you just talk a little bit about what phase of maturity some of your discussions might be, and also if there are any type of manpower constraints on your end with integration? In other words, if multiples came in pretty attractively here and there were a bunch of opportunities, is there any bandwidth constraint that you have?

Brian Gesuale: Great. Thanks for the color. Maybe just one more. I know you've answered a bunch on M&A, but can you just talk a little bit about, you know, what phase of maturity some of your discussions might be? And also if there are any type of manpower constraints on your end with integration. In other words, if you know, multiples came in, you know, pretty attractively here and there were a bunch of opportunities, is there any bandwidth constraint that you have?

How what.

Phase of maturity some of some of your discussions might be and also if there are any type of manpower constraints on your end with integration. So in other words if.

Multiples came in pretty attractively here and there were a bunch of opportunities is there any bandwidth constraint that you have.

Yes.

Well you also you always get a.

Brad Williams: Well, you always get a, you know, if you know, we're fortunate enough, you know how M&A goes or, you know, it kind of cycles through depending on what opportunities are out there, whether they're things that we're cultivating or come through a process to us. You know, if we had three or four all at one time, yeah, we would, you know, have some bandwidth challenges and, you know, a lot of companies would no matter what size you are, you know, when you look at the lean nature of companies that are out there doing what we do and, you know, the type of operating models that we have. I think it just depends on the number.

Speaker Change: Well, you always get a, you know, it's, um...

Speaker Change: you know, we're fortunate enough, you know, how M&A goes, or, you know, it kind of cycles through depending on what opportunities are out there, whether they're things that we're cultivating or come through a process to us. You know, if we had three or four all at one time, yeah, we would, you know, have some bandwidth challenges and, you know, a lot of companies would, no matter what size you are. You know, when you look at the lean nature of companies that are out there doing what we do and, you know, the type of operating models that we have.

We're fortunate enough M&A goes or is the kind of cycles through depending on what opportunities are out there, whether they're things that we're cultivating or come through a process to us.

Three or four all at one time, yeah, we would have some bandwidth challenges in a lot of companies would no matter what size you are.

You look at the lean nature of companies that are that are out there doing what we do and the type of.

Models that that we have so I think it just depends on the number.

Speaker Change: So, I think it just depends on the number. In terms of maturity, as Blaine talked about a little bit earlier, we're excited about the funnel that we have today. We also have had some good opportunities to take a look at some assets over the last three or four months. We continue to operate with some great discipline in that process with our team, making sure that we're evaluating opportunities extremely closely, and I would just say that we'll continue to work the funnel hard. Thank you.

Brad Williams: In terms of maturity, as Blaine talked about a little bit earlier, we're excited about the funnel that we have today. We also, you know, have had some good opportunities to take a look at some assets over the last three or four months. You know, we continue to operate with some great discipline in that process with our team, making sure that, you know, we're evaluating opportunities extremely closely. I would just say that, you know, we'll continue to work the funnel hard.

In terms of maturity as Blake talked about a little bit earlier, we're excited about the funnel that we have today.

We also had some good opportunities to take a look at some some assets over the last three or four months, we continue to operate with some great discipline in that process with our team.

Ensure that we're evaluating opportunities extremely closely.

I would just say that we'll.

We'll continue to work the funnel heart.

Great. Thanks for taking my questions.

Brian Gesuale: Great. Thanks for taking my questions.

Thank you. Thank you.

Speaker Change: Thank you. Thank you.

Brad Williams: Thank you.

Operator: Thank you. There are no additional questions at this time. I will pass it back to Brad Williams for any further remarks.

Thank you.

Speaker Change: Thank you. There are no additional questions at this time. I will pass it back to Brad Williams for.

Operator: Thank you. There are no additional questions at this time. I will pass it back to Brad Williams for any further remarks.

There are no additional questions at this time I will pass it back to Brad Williams for any further remarks.

Thank you operator, I'd like to thank everyone again for joining us on today's call and your continued interest in cadre.

Brad Williams: Thank you, Operator. I'd like to thank everyone again for joining us on today's call and your continued interest in Cadre. Operator?

Brad Williams: Thank you, operator. I'd like to thank everyone again for joining us on today's call and your continued interest in Cadre. Operator?

Operator.

That concludes today's conference call. They can have a great day.

Operator: That concludes today's conference call. Thank you, and have a great day.

Thank you.

Brad Williams: Thank you.

Brad Williams: You

Uh huh.

Yes.

Uh huh.

Right.

Okay.

Yeah.

[music].

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