Q1 2024 Cadre Holdings Inc Earnings Call
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Operator: Good afternoon, and welcome to Cadre Holdings' first quarter 2024 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 dial 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 introductions and the reading of the Safe Harbor Statement. Please go ahead, sir.
Speaker Change: Good afternoon, and welcome to cadre Holdings first quarter 'twenty 'twenty four conference call today's call is being recorded.
Speaker Change: All lines have been placed on mute if you would like to ask a question at the end of the third remarks. Please press. The Sarky then the number one on your Touchstone phone.
Matthew Berkowitz: Thank you, and welcome to today's conference call to discuss Cadre's first quarter results. Before we begin, I'd 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 and the industries and markets in which we operate.
Speaker Change: At this time I would like to turn the conference over to Matt They call it.
Matt: The IGD group of introductions and the reading of the Safe Harbor statement. Please go ahead Sir.
Matthew Berkowitz: 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. 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 reconciliation of certain non-GAAP financial measures. I'd like to remind everyone that this call will be available for replay through May 21, 2024, starting at 8 p.m. Eastern Time tonight.
Matt: Thank you and welcome to today's conference call to discuss <unk> first quarter results.
Matthew Berkowitz: 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'd like to turn the call over to Cadre's Chairman and CEO, Warren Kanders.
Matthew Berkowitz: Before we begin I'd like to remind everyone that during today's call, we'll be making several forward looking statements that we make these statements under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Matt: Looking statements reflect our best estimates and assumptions based on our understanding of information known to us today.
Warren B. Kanders: These forward looking statements are subject to the risks and uncertainties that faced cadre in the industries and markets in which we operate.
Matt: More information on potential factors that could affect cadre of its financial results in credits from time to time in Congress public reports.
Securities and Exchange Commission.
Matt: 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.
Matt: I'd like to remind everyone that this call will be available for replay through May 21, 2024, 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 countries website.
Warren B. Kanders: At this time I'd like to turn the call over to <unk>, Chairman and CEO Warren Kantor.
Warren B. Kanders: Good afternoon, and thank you for joining Cadre's earnings call to discuss our results for the first quarter of 2024. I am joined today by our President, Brad Williams, and our Chief Financial Officer, Blaine Browers.
Warren B. Kanders: Good afternoon, and thank you for joining <unk> earnings call to discuss our results for the first quarter of 2024.
Warren B. Kanders: I am joined today by our President, Brad Williams, and our Chief Financial Officer Blaine Broward.
Warren B. Kanders: Following a year of record net sales and adjusted EBITDA, our significant momentum continued in the first quarter, driven by the team's outstanding strategic execution, together with strong sustained demand for our mission-critical safety equipment. We generated first quarter net sales and adjusted EBITDA that were the highest in our history and represented increases of 23% and 32%, respectively. At the same time, our intense focus on margin expansion continues to deliver incremental benefits. On a sequential basis versus the fourth quarter, gross margins improved 190 basis points, and adjusted EBITDA margins improved 120 basis points.
Warren B. Kanders: Following a year of record net sales and adjusted EBITDA are significant momentum continued in the first quarter.
Warren B. Kanders: Driven by the team's outstanding strategic execution together with strong sustained demand for our mission critical safety equipment.
Warren B. Kanders: We generated.
Warren B. Kanders: First quarter net sales and adjusted EBITDA were the highest in our history and represented increases of 23% and 32% respectively.
Warren B. Kanders: At the same time, our intense focus on margin expansion continues to deliver incremental benefits.
Warren B. Kanders: On a sequential basis versus the fourth quarter gross margins improved 190 basis points and adjusted EBITDA margins improved 120 basis points.
Warren B. Kanders: As we have highlighted in depth, the rollout of the cadre operating model is an ongoing process that has driven enhanced performance and execution and guides how our teams work, innovate, and solve problems on a daily basis. We are pleased with the operating model success to date and are excited about the potential to continue to build a culture of operational excellence throughout our organization, particularly as we grow and scale. For Cadre, complementing our core organic growth initiatives, the company's M&A program is crucial to our long-term growth objective. During the first quarter, we completed two accretive acquisitions. I-Corps Technology and Alpha Safety.
Warren B. Kanders: As we've highlighted in depth the rollout of the cadre operating model is an ongoing process that has driven enhanced performance and execution and guys. How our teams work innovate and solve problems on a daily basis.
Warren B. Kanders: We are pleased with the operating model success to date and are excited about the potential to continue to build a culture of operational excellence throughout.
Warren B. Kanders: Throughout our organization.
Warren B. Kanders: Particularly as we grow in scale.
Warren B. Kanders: Four cadre complementing our core organic growth initiatives. The company's M&A program is crucial to our long term growth objectives.
Matt: During the first quarter, we completed two accretive acquisitions.
Warren B. Kanders: <unk> core technology and Alpha safety.
Warren B. Kanders: Moving forward, we intend to remain patient and disciplined and are committed to evaluating M&A consistent with our highly selective key criteria. We expect to continue to be active in our existing law enforcement, military, and nuclear markets, with a longer-term focus on opportunistically exploring new verticals to go to further diversify our platform. For now, our primary objective is to integrate and build out the businesses we currently own, with ample opportunities to accelerate growth in our existing portfolio.
Matt: Moving forward, we intend to remain patient and disciplined and are committed to evaluating M&A consistent with our highly selective key criteria.
Warren B. Kanders: We expect to continue to be active in our existing law enforcement military and nuclear markets with a longer term focus on opportunistically exploring new verticals to go to further diversify our platform.
Warren B. Kanders: For now our primary objective is to integrate and build out the businesses, we currently own with ample opportunities to accelerate growth in our existing portfolio.
Warren B. Kanders: As we have shared previously, Alpha Safety, for example, has a proven track record of executing M&A, and the platform comes with 100-plus potential targets that we have begun to evaluate. Based on these opportunities and others, we believe we are well positioned to complete one to two transactions before the end of 2024. Following a follow-on equity offering of common stock in March, which yielded proceeds to cadre of approximately $77 million.
Warren B. Kanders: As we have shared previously Alpha safety for example, as a proven track record of executing M&A and the platform comes with 100 plus potential targets that we have begun to evaluate.
Warren B. Kanders: Based on these opportunities and others. We believe we are well positioned to complete one to two transactions before the end of 2024.
Warren B. Kanders: After our follow on equity offering of common stock in March which yielded proceeds cadre of approximately $77 million.
Warren B. Kanders: We have reloaded our balance sheet with additional capital to opportunistically execute on our M&A objectives. From a macroeconomic perspective, we continue to see signs that the secular trends driving demand for our mission-critical, life-saving products around the world are only growing stronger. Conflicts in Ukraine and the Middle East carry on with no end in sight, creating geopolitical uncertainty and underscoring the importance of robust defense budgets. In the U.S., while first responder recruiting has been slow, crime rates are a focus, and we have seen increased levels of protest and civil unrest.
Warren B. Kanders: We have reloaded, our balance sheet with additional capital to Opportunistically execute on our M&A objectives.
Warren B. Kanders: From a macro perspective, we continue to see signs that the secular trends driving demand for our mission critical lifesaving products around the world are only growing stronger.
Warren B. Kanders: Conflicts in Ukraine, and the middle East carry on with no end in sight, creating geopolitical uncertainty and underscoring the importance of robust defense budgets.
Warren B. Kanders: In the U S. While first responder recruiting has been slow.
Warren B. Kanders: Our primary focus and we have seen increased levels of protest and civil unrest.
Warren B. Kanders: Historically, our businesses have been resilient across economic, political, geopolitical, and other cycles, and we expect this will continue to be the case. We maintain a bullish outlook on Cadre's prospects for 2024 and beyond and look forward to capitalizing on attractive opportunities to further grow our platform and enhance our market leadership over the long term. With that, thank you for being with us today, and I will turn the call over to Brad. Brad, it's over to you.
Warren B. Kanders: Historically, our businesses have been resilient across economic political geopolitical and other cycles and we expect this will continue to be the case.
Brad: We maintain a bullish outlook on <unk> prospects for 2024, and beyond and we look forward to capitalizing on attractive opportunities to further grow our platform and enhance our market leadership over the long term.
Warren B. Kanders: With that thank you for being with US today, and I will turn the call over to Brad.
Brad: Over to you.
Brad E. Williams: Thank you, Warren. On today's call, Blaine and I will provide a Q1 update and business overview, including recent trends and financial performance, followed by a Q&A session. We'll begin on slide five.
Brad: Thank you Warren on today's call Blaine and I will provide a Q1 update and business overview, including recent trends and financial performance followed by a Q&A session will begin on slide five we continued to see stronger recurring demand for our mission critical safety equipment and made further progress implementing our operating model as well.
Brad E. Williams: We continued to see strong and recurring demand for our mission critical safety equipment and made further progress implementing our operating model, as Warren alluded to, driving strong Q1 results. Despite a neutral mix in the quarter, which reflected positive product mix offset by a less favorable portfolio mix, the resilience of our businesses was evident. We generated record quarterly revenue and adjusted EBITDA in the first quarter, with adjusted EBITDA margins of 17.8% versus 16.6% last year.
Brad E. Williams: Warren alluded to driving strong Q1 results.
Brad E. Williams: Despite the neutral mix in the quarter, which reflected positive product mix offset by less favorable portfolio mix. The resilience of our businesses was evident.
Brad E. Williams: We generated record quarterly revenue and adjusted EBITDA in the first quarter with adjusted EBITDA margins of 17, 8% versus 16, 6% last year.
Brad E. Williams: Our teams have done an outstanding job and continue to pursue the idea of getting a little better every day as the Cadre operating model gains traction. From a customer standpoint, we value Cadre's strong relationships and are pleased with the company's success in the first quarter managing our portfolio of premium products in the market. We maintained a strong order backlog, which was $159 million as of March 31st. As expected, we saw reductions in the EOD and armor backlog, both due to large orders delivered in the first quarter.
Brad E. Williams: The teams have done an outstanding job and continue to pursue the idea of getting a little better every day as the cadre operating model gains traction from.
Brad E. Williams: From a customer standpoint, we value cadre of strong relationships and are pleased with the companys success.
Brad E. Williams: In the first quarter, managing our portfolio of premium products in the market.
Brad E. Williams: We maintained our strong orders backlog, which was $159 million as of March 31.
Brad E. Williams: As expected we saw reductions in the EOD and armored backlog, both due to large orders delivered in the first quarter.
Brad E. Williams: In terms of M&A, we've had a productive start to the year. During the quarter, we completed the acquisitions of I-Corps Technology and Alpha Safety, both of which support mission-critical initiatives with highly visible revenue and compelling growth opportunities. The integration process is underway, and we've been pleased with the early progress. At I-Corps, we've completed all the functional integration activities that we have planned and are shifting to the fundamental stage of implementing our operating model.
Brad E. Williams: In terms of M&A, we've had a productive start to the year during the quarter. We completed the acquisitions of <unk> technology, and Alpha safety, both of which support mission critical initiatives with highly visible revenue and compelling growth opportunities.
Brad E. Williams: The integration process is underway and we've been pleased with the early progress.
Brad E. Williams: Core we've completed all of the functional integration activities that we have planned and are shifting to the fundamental stage of implementing our operating model for Alpha safety, we're midway through functional integration in conjunction with the initial rollout of the operating model, where we completed a country operating model bootcamp related to the fundamentals.
Brad E. Williams: For Alpha Safety, we're midway through functional integration in conjunction with the initial rollout of the operating model, where we completed a cadre operating model boot camp related to the fundamental stage. We're extremely pleased with how well the Alpha leadership team has embraced our culture and the tools they were taught during the boot camp. M&A will continue to be a focus, and we're excited about our funnel of opportunities, particularly in the nuclear space. Blaine will discuss the funnel in more depth shortly.
Blaine: Page, we're extremely pleased with how well the alpha leadership team has embraced our culture and the tools. They were taught during the boot camp.
Brad E. Williams: <unk> will continue to be a focus and we're excited about our funnel of opportunities, particularly in the nuclear space.
Brad E. Williams: Blaine will discuss the funnel in more depth shortly.
Brad E. Williams: Based on our asset-light business model with minimal CapEx needs, we continue to generate strong free cash flow. This enables Cadre to pursue attractive acquisition opportunities while also prioritizing the return of capital to shareholders. We have paid 10 consecutive quarterly dividends since going public and raised our dividend earlier this year to $0.35 per share on an annualized basis.
Brad E. Williams: Based on our asset light business model with minimal Capex needs. We continue to generate strong free cash flow. This enables cadre to pursue attractive acquisition opportunities. While also prioritizing the return of capital to shareholders. We paid 10 consecutive quarterly dividends since going public and raised our dividend earlier this year to 35.
Brad E. Williams: <unk> per share on an annualized basis, turning to slide six I'd like to reiterate the macro public safety tailwind underpinning countries' growth remain intact and also highlight not long term nuclear safety demand drivers following our acquisition of Alpha safety the.
Brad E. Williams: Turning to slide six, I'd like to reiterate the macro public safety tailwinds underpinning Cadre's growth remain intact and also highlight long-term nuclear safety demand drivers following our acquisition of AlphaSafe. The importance of public safety spending is becoming more and more clear, and the upward trend of police budgets and protection expenditures reflects these priorities both in the U.S. and Europe. Regarding nuclear safety, we believe the long-term tailwinds driving growth in that market are best understood by highlighting the three key nuclear missions that our suite of products and services address.
Brad E. Williams: The importance of public safety spending is becoming more and more clear and the upward trend of police budgets and protection expenditures reflects these priorities both in the U S and Europe.
Brad E. Williams: Regarding nuclear safety, we believe the long term tailwind is driving growth in that market are best understood by highlighting the three key nuclear missions that our suite of products and services address.
Brad E. Williams: The first, and Alpha Safety's largest by revenue, is environmental safety. There is growing demand related to decades of U.S. nuclear material processing and handling. These include Department of Energy mission-critical and mandated cleanup efforts spanning numerous sites from decades of nuclear weapon development and government-sponsored nuclear energy research. Second, there is national security, with expanding national defense programs driving consistent and growing demand. Third, investment in nuclear power is growing based on increasing global demand for sustainable and clean energy. For alpha safety, this includes the decommissioning and decontamination of legacy nuclear power plants, as well as providing engineered container solutions and ventilation and containment systems.
Brad E. Williams: First an alpha safety's largest by revenue is environmental safety. There is growing demand related to decades of U S nuclear material processing and handling.
Brad E. Williams: These include Department of Energy mission critical and mandated cleanup efforts spanning numerous sites from decades of nuclear weapons development and government sponsored nuclear energy research second is national security with expanding national defense programs, driving consistent and growing demand third investment in nuclear.
Brad E. Williams: Is growing based on increasing global demand for sustainable and clean energy for Alto safety. This concludes the decommissioning and decontamination of legacy nuclear power plants, as well as providing engineered container solutions and ventilation and containment systems.
Brad E. Williams: Turning to slide seven, I'll take a moment to zoom in on current market trends and their impact on our business. These are mostly unchanged from when we provided our last quarterly update. I would highlight that spend per officer remains stable, but we continue to see departments struggling to fill open positions. Regarding our supply chain, thanks to our team's efforts to practically address issues, we're experiencing a level of improved stability since the start of the year.
Brad E. Williams: Turning to slide seven I'll take a moment to zoom in on current market trends and their impact on our business. These are mostly unchanged from when we provided our last quarterly update I.
Brad E. Williams: I would highlight that spend per officer remained stable, but we continue to see department struggling to fill open positions.
Brad E. Williams: Guarding our supply chain, thanks to our team's efforts to practically address issues, we're experiencing a level of improved stability since the start of the year.
Brad E. Williams: In terms of consumer trends, we saw a 15.7% growth in duty gear sales in the consumer channel driven by our innovative products focused on the needs of consumers. As investors familiar with Cadre know, innovation is at the heart of everything we do. Last quarter, I spoke about APEX, a groundbreaking concealable body armor vest system that redefines the standards of agility, comfort, and safety for those who dedicate their lives to safeguarding others. We continue to hear positive feedback and work to get the product into the hands of customers. I'll now turn the call over to our CFO, Blaine Browers.
Brad E. Williams: In terms of consumer trends, we saw a 15, 7% growth in duty gear sales in the consumer channel channel driven by our innovative products focused on the needs of consumers as investors familiar with cadre know innovation is at the heart of everything we do last quarter I spoke about the introduction of apex.
Blaine Browers: <unk>, a groundbreaking consumable body armor vest system that redefine standards of agility comfort and safety for those who dedicate their lives safeguarding others. We continue to hear positive feedback and work to get the product into the hands of customers.
Blaine Browers: I'll now turn the call over to our CFO blame for hours.
Blaine Browers: Thanks Brad. I'll kick off my comments with a review of our M&A strategy on slide 8. We remain committed to a patient and disciplined approach and intend to continue to evaluate M&A consistent with our highly selective key criteria. We seek companies with strong margins, leading defensible market positions, as well as recurring revenues and cash flows. While larger M&A that enables Cadre to enter into new adjacent verticals remains a longer-term priority, we are currently focused on building out our nuclear platform and continuing to evaluate bolt-ons for our core law enforcement and military market. As we previously discussed, our acquisition of Alpha Safety was an important step in the diversification of Cadre and also one that provides a new platform for M&A in the nuclear market.
Blaine Browers: Thanks, Brad ill kick off my comments with a review of our M&A strategy on slide eight.
Blaine Browers: We remain committed to a patient and disciplined approach and intend to continue to evaluate M&A consistent with our highly selective key criteria.
Blaine Browers: We see companies with strong margins, leading and defensible market positions as well as recurring revenues and cash flows.
Blaine Browers: While larger M&A that enables cadre to enter into new adjacent verticals remains a longer term priority. We are currently focused on building out our nuclear platform and continue to evaluate bolt ons for our core law enforcement and military markets.
Blaine Browers: As we previously discussed our acquisition of Alpha safety was an important step in the diversification of cadre and also one that provides a new platform for M&A in the nuclear market.
Blaine Browers: The pipeline of targets is extensive, though we are spending time to identify only the most attractive opportunities, those with the potential to expand the customer base, increase wallet share, and offer value-added protective products and services. Turning now to a summary of Cadre's financial performance, slides 10 and 11 detail our Q1 results. As you can see on slide 10, on both a year-over-year and sequential basis, we generated increased net sales, gross margin, adjusted EBITDA, and adjusted EBITDA margin. First quarter revenues of $137.9 million and adjusted EBITDA of $24.5 million were the highest since Cadre's inception.
Blaine Browers: The pipeline of targets is extensive though we are spending time to identify only the most attractive opportunities those with potential to expand the customer base increased wallet share and offer value added protective products and services.
Blaine Browers: I'd also like to note that during the quarter, transaction expenses related to the acquisitions, as well as the amortization of step-up, inventory step-up, and intangibles related to acquisitions, were about 12 cents of headwind on EPS. As we continue to roll out our operating model and manage the positioning of our portfolio of premium products, we've made significant progress driving margin expansion. I'd like to note that our Q1 gross margin was impacted, as I just mentioned, by amortization and intangibles.
Blaine Browers: Turning now to a summary of <unk> financial performance slides 10, and 11 detail. Our Q1 results as you can see on slide 10 on both a year over year and sequential basis, we generated increased net sales gross margin adjusted EBITDA and adjusted EBITDA margin.
Blaine Browers: First quarter revenues of $137 9 million and adjusted EBITDA of $24 5 million were the highest since <unk> inception.
Blaine Browers: I'd also like to note that during the quarter transaction expenses related to the acquisitions as well as the amortization of step up of inventory step up and intangibles related to acquisitions was about 12 cents of headwind on EPS.
Blaine Browers: As we continue to rollout our operating model and manage the positioning of our portfolio of premium products, we've made significant progress driving margin expansion.
Blaine Browers: I'd like to note that our Q1 gross margin was impacted as I, just mentioned by amortization and intangibles.
Blaine Browers: The intangibles.
Blaine Browers: We continue to see inflationary pressures at pre-COVID levels, and the businesses have done a great job of offsetting these pressures with price and product. Illustrated on slide 11 is net sales and adjusted EBITDA growth year over year, including our 2024 guidance, which I'll discuss in more detail in a moment. You'll see that it's midpoints.
Blaine Browers: We continue to see inflationary pressures at pre COVID-19 levels and the businesses have done a great job of offsetting these pressures with price and productivity.
Blaine Browers: Illustrated on slide 11, as net sales and adjusted EBITDA growth year over year, including our 2024 guidance, which I'll discuss in more detail in a moment.
Blaine Browers: This outlook implies a full year revenue and adjusted EBITDA growth this year of 16.6% and 23.5%, respectively. We're pleased to be on track to deliver on our double-digit growth objective. On slide 12, we present our capital structure as of March 31. Our net debt after completing the acquisitions of I-Corps and Alpha Safety was $128.8 million.
Blaine Browers: Youll see that mid points. This outlook implies a full year revenue and adjusted EBITDA growth this year of $16, six and 23, 5% respectively.
Blaine Browers: We're pleased to be on track to deliver on our double digit growth objective.
Blaine Browers: On slide 12, we present, our capital structure as of March 31, our net debt after completing the acquisitions of Eichorn Alpha safety was $128 8 million.
Blaine Browers: Our net debt leverage was 1.4 times after the offering, giving the company ample dry powder to continue to pursue acquisitions. We provide our 2024 guidance on slide 20, which we have reaffirmed after a solid Q1. We still expect net sales for the full year to be between $553 million and $572 million and adjusted EBITDA to be between $104 million and $108 million. As we often discuss, for the majority of our revenue, we typically only have 30 to 60 days of visibility.
Blaine Browers: Our net debt leverage was one four times after the offering giving the company ample dry powder to continue to pursue acquisitions.
Blaine Browers: We provide our 2024 guidance on slide 20 in which we have reaffirmed after a solid Q1, we still expect net sales for the full year to be between $553 million and $572 million and adjusted EBITDA to be between $104 million and $108 million.
Blaine Browers: As we often discuss for the majority of our revenue. We typically only have 30 to 60 days of visibility as the year has progressed, we now expect Q3 to be the high point on revenue for the year, but this could change as we fell on our backlog in Q2.
Blaine Browers: As the years progress, we now expect Q3 to be the high point on revenue for the year, but this could change as we fall behind in our backlog in Q2. For Q2, we expect revenue to be up about 4% from Q1, but with margins down sequentially due to a full quarter of the acquisition accounting impact and a slightly Negative Portfolio and Product Mix. Still ahead of Q4. Outside of transaction expenses, we do expect SG&A to be fairly flat through the year. I'll now turn it back to Brad for his concluding comments. Thank you, Blaine. In summary...
Blaine Browers: For Q2, we expect revenue to be up about 4% from Q1, but with margins down sequentially due to a full quarter of acquisition accounting impacts.
Blaine Browers: And slightly negative portfolio and product mix.
Brad: Still ahead of Q4.
Blaine Browers: Outside of transaction expenses, we do expect SG&A to be fairly level through the year.
Blaine Browers: I'll now turn it back to Brad for concluding comments.
Brad E. Williams: Thank you, Blaine. In summary, we are highly pleased with our team's execution, which is reflected in our strong first quarter financial results. We generated record revenue and adjusted EBITDA as well as margin expansion. The integration of our recent ICORN Alpha safety acquisitions is moving along as planned, and we remain confident that we will see additional attractive M&A opportunities as the remainder of the year plays out. Backed by macro tailwinds related to increasing public safety budgets and favorable industry dynamics, we have reaffirmed our full year of guidance and look forward to continuing to deliver on our strategic objectives. With that, Operator, please open up the lines for Q&A.
Brad: Thank you Blayne in summary, we are highly pleased with their teams execution, which is reflected in our strong first quarter financial results, we generated record revenue and adjusted EBITDA as well as margin expansion. The integration of our recent eichorn Alpha safety acquisitions is moving along as planned and we remain.
Brad E. Williams: Confident that we will see additional attractive M&A opportunities as the remainder of the year plays out backed by macro tailwind related to increasing public safety budgets and favorable industry dynamics, we have reaffirmed our full year guidance and look forward to continuing to deliver on our strategic objectives with that operator.
Brad E. Williams: Please note to open up the lines for Q&A.
Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to redraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the chat. Your first question comes from the line of Jeff Van Sinderen. Your line is open.
Operator: Thank you the floor is now open for questions.
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Speaker Change: Your first question comes from the line of Jeff, Jeff Zhang seen Darrin.
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Jeffrey Wallin Van Sinderen: Good afternoon, everybody, and let me say congratulations on the strong Q1 metrics. Considering the EBITDA margins running ahead of expectations, I was wondering what your latest thinking is about the long-term EBITDA margin potential for the company as you scale and leverage.
Speaker Change: Good afternoon, everybody and let me say congratulations on strong Q1 metrics.
Speaker Change: Considering the EBITDA margins running ahead of expectations wondering what your latest thinking is about the long term EBITDA margin potential for the company as you scale and leverage.
Blaine Browers: Hi Jeff. Thanks. And appreciate the question. You know, long term, we see a path to clearly get into the 20s with the core business, right? And then obviously, as we think about acquisitions and find accretive opportunities, you know, we think we can push into the mid 20s. And that's really kind of what we're focused on in the longer term. But it all starts day to day with just execution by the businesses.
Speaker Change: Hi, Jeff Thanks, and I. Appreciate the question long term, we see a path to clearly getting to the twenties.
Blaine Browers: With the core business right and then obviously as we think about acquisitions and find accretive opportunities.
Blaine Browers: We think we can push push into the mid Twenty's and Thats really kind of what we're focused on the longer term, but it all starts day to day with just the execution by the businesses.
Blaine Browers: You know, Brad and Warren and I have been really pleased with the, I mean, consistent execution across the businesses. We're excited about the I-Corps and Alpha teams coming on board, as Brad mentioned. We had the opportunity to have the Alpha team down in Jacksonville to go through the operating model boot camp. And really, it was great to see how excited that team was and really embrace the tool. So I think it shows a lot about the resiliency of the model, the applicability of the model that's agnostic to markets. And, you know, we're excited to see what the team can do in the future.
Blaine Browers: Brad I want it then just really pleased with the.
Blaine Browers: Consistent execution across the businesses, we're excited about the eikon Alpha teams coming on board as Brad mentioned.
Brad E. Williams: Okay, great. And understand that you are still in the process here of integrating I-Corps and Alpha. But maybe you could speak a little bit more about what you're seeing in both of those recent acquisitions relevant to demand and the outlook for those business lines. And then, also, as kind of a follow-up to that, I know you mentioned the Alpha pipeline and your excitement there. So maybe anything you could touch on there as far as what you're seeing? And does it seem like you might lean into an Alpha acquisition next?
Speaker Change: I had the opportunity to have the alpha team down in Jacksonville to go through the operating model boot camp and and really it was great to see how excited that team lives and really embrace the tool. So I think it shows a lot about the resiliency of the model the applicability of the model that is agnostic and end markets.
Brad E. Williams: We're excited to see what the what the team can do in the future.
Brad E. Williams: Okay, Great and understand that you are you still on the process here of integrating eichorn Alpha.
Brad E. Williams: But maybe you can speak a little bit more about what youre seeing at both of those recent acquisitions relevant to demand and the outlook for those business lines and then also I was kind of a follow up to that.
Brad E. Williams: I know you mentioned the alpha pipeline and your excitement there. So maybe anything you could touch on there as far as what Youre seeing and does it seem like you might lean into an alpha acquisition next.
Brad E. Williams: Hey, Jeff, it's Brad. I'll take that one.
Brad: Hey, Jeff It's Brad.
Brad: I'll take that one so I would say overall for both ichor in alpha from what were seeing pre acquisition through diligence and then where we're at today feel like where we would expect to be not only from an integration standpoint, but also from a demand standpoint based on the.
Brad E. Williams: So, you know, overall, for both I-Corps and Alpha, from what we're seeing pre-acquisition through diligence and then where we're at today, I feel like we're where we would expect to be, not only from an integration standpoint, but also from a demand standpoint, based on the funnels that the team has as we're looking forward at demand and the activities that they're working on that we talked about through the diligence process So we're really pleased with that and where we're tracking.
Brad E. Williams: Funnels that the team have as we're looking forward at demand and the activities that they are working that we talked about through the diligence process. So we're really pleased with that and where we're tracking and then I think the second question was around.
Brad E. Williams: And then I think the second question was around, you know, would it be likely that the next acquisition is in the nuclear space? I would say when you step back and you look at our funnel at the moment, which would be a funnel composed of, you know, our legacy law enforcement military side of things, plus nuclear, because of the Alpha acquisition, the nuclear side of the funnel is weighted more heavily. So we'll see.
Brad E. Williams: Would it be likely that the next acquisition is in the nuclear space I would say when you step back and you look at our funnel at the moment, which would be a funnel composed of.
Brad E. Williams: Our legacy law enforcement military side of things plus nuclear.
Brad E. Williams: Because of the Alpha acquisition.
Brad E. Williams: The nuclear side of the funnel is weighted more heavily so we'll.
Brad E. Williams: As Warren stated, I think in his remarks, we're evaluating those. It's a long list. And as you know, we're very, very thoughtful around the deals that we go into and making sure that they're a fit, not just financially, but culturally and how well they fit from a macro standpoint as we move forward. So we're taking that time, and we're running down the list. Okay.
Brad E. Williams: We will see as Warren stated I think within his remarks, we're evaluating those it's a it's a long list and as you know we are very very thoughtful around the deals that we go into and making sure that they are fit not just financially, but culturally in how well do they fit from a macro standpoint, as we move forward. So.
Brad E. Williams: We're taking that time and we're running down the list.
Brad E. Williams: Okay, I appreciate that, and I think last quarter you said one more acquisition this year was what you were targeting. I'm just wondering if that's still the target. Yes, it is.
Speaker Change: I appreciate that and I think <unk>.
Speaker Change: Last quarter, you said one more acquisition. This year is what you were targeting I'm just wondering if that's still the target.
Speaker Change: It is.
Brad E. Williams: Okay, perfect. Thanks for taking my questions. I'll take the rest offline.
Speaker Change: Okay perfect. Thanks for taking my questions I'll take the rest offline.
Brad E. Williams: Yeah.
Speaker Change: Thank you thanks, Jeff.
Brad E. Williams: Yes.
Matthew Butler Koranda: Your next question comes from the line of Matt Koranda with the Roth MKM. Your line is open.
Brad E. Williams: Your next question comes from the line of Matt Koranda with Roth.
Matthew Butler Koranda: Your line is open.
Blaine Browers: Hey guys, good evening. Just curious if you could clarify for us what organic growth was in the first quarter. Just wanted to get a rough sense of the contribution from I-Corps and Alpha. And then just in terms of the overall fit with the reiteration for the guide, is it still the expectation that organic growth is likely kind of in that low single to mid single digit range for the full year for 24?
Matthew Butler Koranda: Hey, guys good evening.
Blaine Browers: Just curious if you could clarify for us what was organic growth in the first quarter just wanted to get a rough sense for the contribution from my core and Alpha.
Blaine Browers: Then just in terms of the overall fit with the reiteration for the guide is it still the expectation that organic growth is likely kind of in that low single to mid single digit range for the full year for 'twenty four.
Blaine Browers: Yeah, we don't disclose the exact numbers, but the organic growth, you know, in Q1 was actually fairly significant and a lot, frankly, a lot higher than we would expect as we see through the rest of the year, primarily driven by some of those large projects that Armour shipped out and EOD shipped out. We'll continue to evaluate and kind of watch closely, but I think out of the gates for both I-Corps and Alpha, pleased with their execution on revenue and Q1, and still tracking to that mid-singles organic.
Speaker Change: Yes, Yeah, we don't disclose the exact.
Blaine Browers: <unk> numbers, but the organic growth in Q1 was.
Blaine Browers: But it was actually fairly fairly significant and lot frankly, a lot higher than we would expect as we see through the rest of the year, primarily driven by some of those large projects that armor shipped out an EOD shipped out.
Blaine Browers: We'll continue to evaluate and kind of watch closely but I think out of the gates for both eichorn Alpha So pleased with our execution on on revenue in Q1.
Blaine Browers: Phil still tracking to that mid singles organic.
Blaine Browers: Okay, that helps. And then just in terms of the EBITDA margin, I guess we need to see a bit of a step up sequentially relative to where we were in the first quarter to hit the midpoint of the full year guide. Just wondering, where does the bulk of that come from? Is that just better integration on I-Corps and Alpha, and we should see a flow through in terms of margin improvement? Or is more of that coming from the expectation of the typical algorithm that you guys have in terms of pricing and efficiency that drives margin improvement for the rest of the year?
Speaker Change: Okay that helps and then just in terms of the EBIT margin I guess.
Blaine Browers: We need to see a bit of a step up sequentially relative to where we were in the first quarter.
Blaine Browers: To hit the midpoint of the full year guide.
Blaine Browers: Just wondering where does the bulk of that come from is that just better integration on eikon Alpha and we should see a flow through in terms of margin improvement.
Blaine Browers: Or is more of that coming from the expectation of the typical algorithm that you guys have in terms of pricing.
Blaine Browers: And efficiency that drives that drives margin of error for us there.
Blaine Browers: I mean, one of the large impacts is getting a full quarter of Alpha under our belts, where we just had them for the month of March in Q1. So that's significant. And then, you know, we are seeing some sequentially favorable mix really driven by, you know, duty gear into Q2. And then portfolio mix sequentially would also be positive as distribution had a, you know, quite a large Q1. And obviously, as their contribution decreases, that drives our EBITDA margins up.
Speaker Change: I mean, one of the large impacts is getting a full quarter of alpha under under our belt, where we just had them just for the month of March in Q1, So thats.
Blaine Browers: Significant.
Blaine Browers: <unk>.
Blaine Browers: And then we are seeing some sequentially favorable mix really driven by <unk>.
Blaine Browers: Duty gear.
Blaine Browers: Into Q2, and then portfolio mix sequentially, but also be positive as distribution had a quite a large Q1.
Blaine Browers: Besides our contribution decreases that drives our EBITDA margins up.
Matthew Butler Koranda: Okay, that helps. I'll leave it there. Thanks, guys. Thanks.
Speaker Change: Okay that helps so I'll leave it there thanks guys.
Operator: Thanks. Thanks a lot.
Speaker Change: Thanks, Matt.
Sheila Karin Kahyaoglu: The next question comes from the line of Sheila Kahyaoglu with Jeffreys. Your line is open.
Operator: Next question comes from the line of Sheila <unk> with Jefferies. Your line is open.
Sam Gatsis: Hi guys, this is Sam Gatsis on here for Sheila. I just want to ask you, you know, you posted a really nice 23% growth here in Q1, but, you know, the guide's been reaffirmed, so it kind of implies a deceleration throughout the rest of the year. How should we think about the drivers of that? I mean, you just mentioned core business had a really strong Q1, but, you know, obviously, you're gonna have some additional contribution from M&A, so what does that look like in terms of puts and takes, you know, for the rest of the year?
Sheila Karin Kahyaoglu: Hi, guys. This is Sam gets us on here for Sheila.
Sam Gatsis: I just wanted to ask you posted a really nice 23% growth year in <unk>.
Sam Gatsis: Q1.
Sam Gatsis: The guidance has been reaffirmed so kind of implies a deceleration throughout the rest of the year. How should we think about the drivers of that I mean, you just mentioned core business had a really strong Q1, but obviously you're going to have some additional contribution from M&A. So what does that look like in terms of puts and takes for the rest of the year.
Blaine Browers: Sure, we really expect revenue to increase from Q to Q, from Q1 to Q2, and then also from Q2 to Q3, and then it just about levels out in Q4 versus Q3. You know, a big part of the 23%, though, is the comp in Q1 of last year. You know, we did about 111 million. It was the biggest. You know, by far our slowest quarter of last year as we stepped up into the $120 million range in revenue for Q2 to Q4. So we'll see that 23% come down just as the comps get a little bit tougher, but we do expect the business to step up on a revenue-dollar basis as we progress through this year.
Speaker Change: Sure, we really expect revenue to increase from Q.
Blaine Browers: From Q1 to Q2, and then also Q2 to Q3, and then right now about levels out in Q4 versus Q3.
Blaine Browers: A big part of the 23%, though as the comp in Q1 of last year.
Blaine Browers: We did about $111 million was the.
Blaine Browers: By far is our slowest quarter of of last year as we stepped up into the $120 million range in revenue for Q2 to Q4, So we will see that 23% come down just as.
Blaine Browers: The comps get a little bit tougher.
Blaine Browers: But we do expect the business to step up on a revenue dollars basis as we progress through this year.
Sam Gatsis: Got it, yes, helpful. And then I guess just a quick follow-up, again, looking at sort of the rest of the year, you know, you had, you know, a 23% incremental here in Q1. Sky kind of implies 25%. Can you bridge us to what that looks like for the rest of the year, given, you know, there's a little bit of a step up, you've got more of that M&A contribution, you know, was it, you know, kind of you're going to lap some of that distribution revenue here in Q1? I mean, what does that look like just in terms of the bridge that we can think through for the rest of the year?
Speaker Change: Got it helpful. And then and then I guess just a quick follow up again looking at sort of the rest of the year you had a.
Sam Gatsis: At 23% Incrementals here in Q1 guide kind of implies 25% can you bridge us to what that looks like for the rest of the year given it was a little bit of a step up <unk>.
Sam Gatsis: You've got you've got more of that M&A contribution.
Sam Gatsis: Was it.
Sam Gatsis: You're going to lap some of that distribution revenue here in Q1, I mean, what does that look like just in terms of the bridge that we can think through for the rest of the year.
Blaine Browers: The bridge is driven by products or
Sam Gatsis: The British driven by by products are.
Sam Gatsis: Yeah, I mean, sure, byproducts are great. I mean, obviously, you know, you've got more of that alpha contribution, which should be accretive, but
Blaine Browers: Yes.
Speaker Change: Sure by byproducts is great I mean, obviously, you're you've got more you've got more of that alpha contribution which should be accretive.
Blaine Browers: Yeah, so that certainly helps, right? And I think we talked on an LTM basis about alpha being in the mid-40s from a revenue perspective, but they are, you know, heavily weighted towards the back end of the year. They're particularly heavy in Q4, so that certainly picks up. So not only do you get a full quarter in Q2, but then as you go into Q3 and Q4, you know, the revenue steps up pretty significantly.
Sam Gatsis: Yes, so that certainly helps right.
Blaine Browers: Yes, I think we talked about GM basis Alpha band.
Blaine Browers: Mid forty's from a revenue perspective.
Blaine Browers: But they are heavily weighted towards the back end of the year.
Blaine Browers: Particularly having Q4, so thats certainly picks up so not only do you get a full quarter in Q2, but then as you go into Q3 and Q4 the.
Blaine Browers: Our revenue steps up pretty pretty significantly.
Blaine Browers: You know, I-Corps, you know, fairly level through the year distribution, you know, right now as we kind of view it, and keep in mind they have a really short visibility, not a lot of backlog, Q1 looks to be the high watermark for them, you know, I'm expecting to be slightly up year on year. You know, maybe, you know, one to 2% on a revenue basis. You know, as we move through, you know, the rest of the year, armor looks to have a really strong back half. That's both US armor as well as international armor.
Blaine Browers: Ichor.
Blaine Browers: Fairly level through the year.
Blaine Browers: Distribution right now as we kind of view it and keep in mind never really short visibility not a lot of backlog Q1 looks to be the high watermark for them.
Blaine Browers: We expect them to be slightly up year on year maybe.
Blaine Browers: 1% to 2% on a revenue basis.
Blaine Browers: As we move through the rest of the year.
Blaine Browers: Armour looks to have a really strong back half.
Blaine Browers: And that's both U S armour as well as international armor.
Blaine Browers: And then we have, You know, a couple of large projects that touch our crowd-controlled business, as well as the duty here business that will ship out in the rest of the year. So it's, you know, no single driver, but as you kind of move across, I think the things that changed this year, really, alpha, you know, being that back half heavy where, Can we think about Q4 looks to be? About 30% of their revenue in the year. So it's that definitely changes the profile as we move through the year.
Blaine Browers: And then we have.
Blaine Browers: A couple of large projects that touch our crowd control business as well as the <unk> business that will ship out in the rest of the year. So it's no one single driver, but as you kind of move across and I think the things that change this year.
Blaine Browers: Really alpha being that back half heavy where we.
Blaine Browers: Do we think about Q4 looks to be.
Blaine Browers: Yeah.
Blaine Browers: About 30% of that revenue in the year. So it is definitely.
Blaine Browers: Definitely changes the profile as we move through the year.
Speaker Change: Great. Thanks, so much.
Mark Eric Smith: Your last question comes from the line of Mark Smith with Lake Street. Your line is open.
Blaine Browers: Your last question comes from the line of Mike Smith with Lake Street. Your line is open.
Brad E. Williams: Hi guys. Just as we think about, you know, opportunities within M&A, it doesn't seem like we talk as much about military applications and products. Is that an area that is interesting, or does the kind of cycles there just make that maybe not as appealing as, you know, law enforcement, and now nuclear safety?
Mark Eric Smith: Hi, guys, just as we think about opportunities within the M&A.
Brad E. Williams: It doesn't seem like we've talked as much about kind of military applications and products.
Brad E. Williams: Is that a area that is that it's interesting doors.
Brad E. Williams: Cycles, there just just make that maybe not as appealing as law enforcement nuclear safety.
Brad E. Williams: Yeah, hey, Mark, it's Brad. So there's parts of the military side of things that, as you know, we play in today that, you know, we feel like is a strong part of our business. You know, we've been fortunate enough to win most of the U.S. military holster business for the past four or five years. That's a big, big part of the business and important to us as we win those.
Brad E. Williams: Yes, Hey, Mark it's Brad.
Brad E. Williams: So.
Brad E. Williams: Theres parts of military side of things that that as you know we play in today.
Brad E. Williams: We feel like is a strong part of our business.
Brad E. Williams: We've been fortunate to win most of U S military holster business.
Brad E. Williams: In the past four five years.
Brad E. Williams: It's a big big part of the business and important to us as we won those.
Brad E. Williams: Just as one example, and, you know, militaries around the world are also buying our EOD, our Explosive Ordnance Disposal, bomb suits, so that's another big customer base for I-Corps, from a robot standpoint. It is a part of what we do. It's a part of what we selectively go after to make sure it meets our criteria from a margin and customer and defensibility standpoint in terms of the product. So, definitely, a segment that we're interested in for the right type of opportunities.
Brad E. Williams: Just being one example, and mill.
Brad E. Williams: Militaries around the world are also buying our EOD explosive ordinance disposal bumps suite. So that's another big customer base ichor from a robot standpoint. So it is a it is a part of what we do.
Brad E. Williams: Part of what we selectively.
Brad E. Williams: Go after to make sure it meets our criteria from a margin and customer and defensibility standpoint in terms of the products. So.
Brad E. Williams: Definitely a segment that we're in are interested in for the right type of opportunities and then of course, the law enforcement side of things I think everybody knows the story there in terms of.
Brad E. Williams: And then, of course, the law enforcement side of things. I think everybody knows the story there in terms of, you know, that's where a lot of the products play, the legacy products that we do have.
Brad E. Williams: That's where a lot of the products play.
Brad E. Williams: The legacy products that we do have.
Brad E. Williams: Okay.
Mark Eric Smith: Perfect. And then I just want to follow up on some of the kind of more consumer side of the business, and I know it's not as big. As you look at that business, and it sounds like there was some strength there this quarter, do you feel like any of that is being driven by maybe incremental spend for people, you know, in an election year, maybe fear-based buying, anything like that? Or is there, or is that just kind of new product and organic growth that's doing well?
Speaker Change: Perfect and then I just wanted to follow up on some of the more consumer side of the business that was not as big.
Mark Eric Smith: As you look at that business.
Mark Eric Smith: It sounds like some strength there this quarter.
Mark Eric Smith: Do you feel like any of that is being driven by maybe incremental spend for people.
Mark Eric Smith: Election year fear based buying anything like that or is there or is that just kind of a new product in organic growth that's doing well.
Brad E. Williams: Yeah, the latter, the new product in organic growth. So about three years ago, I guess now, three and a half years ago, we made a decision to reorganize our duty gear team from an engineering standpoint to put more focus on the consumer holster part of the business. Because you can imagine with the duty gear, the law enforcement side being such an important part of what we do and actually where the company started.
Mark Eric Smith: Yes.
Brad E. Williams: The new product and the organic growth so about three years ago I guess now.
Brad E. Williams: Three and a half years ago.
Brad E. Williams: We made a decision to.
Brad E. Williams: Reorganize our duty gear team from an engineering standpoint to put more focus on the consumer holster part of the business because you can imagine with the duty gear.
Brad E. Williams: <unk> purchase side being such an important part of what we do and actually where the company started.
Brad E. Williams: It would always run into conflicting priorities. So the gentleman that runs that business sat down, took a look at it, and you know, he and I met, and we decided it was the right thing to do. It's a fragmented segment on the consumer side of things.
Brad E. Williams: It would always run.
Brad E. Williams: Run into conflicting priorities so.
Brad E. Williams: The gentleman that runs that business sat down took a look at it.
Brad E. Williams: I met and we decided it's the right thing to do.
Brad E. Williams: Fragmented segment and the consumer side.
Brad E. Williams: But for us, we continue to just position ourselves in that upper price point, highly featured, strong brand type of product category. And it's really been working for us. Having engineers that wake up every day and design new holsters. As you know, we've talked about it a bunch of times. We won Guns and Ammo Holster of the year with the INCOG-X holster that we partnered with Haley Strategic on. We've launched a lot of really good products there.
Brad E. Williams: Things, but for US we continue to just position in that upper price point highly featured strong brand type of product category for us and it's really been working for us having engineers that wake up every day design New holster is as you know we've talked about it already a bunch of times, we one guns and ammo holster the year with the <unk>.
Brad E. Williams: I'll start with.
Brad E. Williams: We partnered with <unk> strategic on.
Brad E. Williams: We've launched a lot of really good products there knowing what we're good at and where we should be positioned is where we continue to.
Brad E. Williams: Knowing what we're good at and where we should be positioned is where we continue to play. And, yep, we intend on continuing to drive it. And we're seeing some good results from that, I might just add.
Brad E. Williams: Play.
Brad E. Williams: Yes, we intend on continuing to drive it.
Brad E. Williams: We're seeing some good results from that.
Blaine Browers: I might just add to that, Brad, that, you know, our marketing e-com teams have really been focused on this channel, whether it's, you know, consumer and stores or e-com, and they've done a really good job of not just growing, growing our presence but also, you know, commanding more, more visibility from the consumer. And, you know, whether that's the one-off runs, they partner, you know, primarily with duty gear and or holsters and comms, or just the constant feedback.
Speaker Change: I might just add to that Brad that our marketing and E. Commerce teams have really been focused on this channel whether it's consumer in stores or E comm and they've done a really good job of not just.
Blaine Browers: So I think we've seen a real change driven by not only the new product side, as Brad mentioned, but also our approach in the marketplace and getting a very experienced team that understands that space really, really well. And it's done a great job driving that revenue for us.
Blaine Browers: Growing growing our presence, but also commanding more more visibility from the consumer and whether thats. The one off runs they partner, primarily due to gear and our whole stores in comms or just the constant feedback. So I think we've seen a real change driven by not only the new <unk>.
Blaine Browers: <unk> side as Brad mentioned, but also our approach in the marketplace and we've got a very experienced team that understands that space really really well.
Blaine Browers: Done a great job driving that revenue for us.
Blaine Browers: Okay.
Mark Eric Smith: Perfect. Maybe one follow-up. You guys called out, you know, pricing growth exceeded your targets here in the quarter. Is there anywhere in particular, any one market where maybe you've been more successful than others or anywhere where you're maybe not able to take as much pricing, and any insight into kind of alpha in opportunities and pricing in that market would be great?
Speaker Change: Perfect maybe one follow up you guys called out pricing growth exceeded your targets here in the quarter.
Mark Eric Smith: Is there anywhere in particular or any one market, where maybe you've been more successful than others or anywhere where you are maybe not able to take as much pricing and any insight into <unk> alpha and opportunities in pricing in that market would be great.
Blaine Browers: Yeah, I would say there's not a particular product that stands out. You know, it's kind of exceeding gray, I would say it's pretty even. I think each one of the business units really focuses on, you know, between productivity and pricing is, you know, expanding margins and offsetting inflationary pressures. Yeah, I'd say there are obviously channels that are easier than others, right? Where sometimes if you're in contract pricing, or there's a state contractor, or distributor, where they have, you know, longer POs, say, you know, 90 day or 120 day POs, those will take a little bit longer to flush through.
Speaker Change: Yes, I would say, there's not a particular product that that stands out.
Blaine Browers: It was kind of exceeding great I would say, it's pretty even I think each one of those business units really focuses on between productivity and pricing as <unk>.
Blaine Browers: Expanding margins and offsetting the inflationary pressures.
Blaine Browers: Yes, I'd say theres obviously.
Blaine Browers: Channels that are easier than others, right, where sometimes if you are in contract pricing or theres, a state contract or a distributor where they have a longer PFS.
Blaine Browers: 90 day, or 120 day P O, yes, those will take a little bit longer to flush through whereas you think about E com.
Blaine Browers: Whereas you think about e-com, you know, you update the website, and the traffic flows through, but it would say there's no, no, no significant disparity. I think that's a reflection of the, you know, the teams really staying ahead of it, you know, fighting hard, and the way I say fighting is not just not just on price but really productivity and finding ways to do things a little bit better each day and, you know, taking some costs out of the product. So hopefully, that gives you a little flavor, but nothing, there's no one, there's not a particular product or channel that's three times what, you know, another channel is. It's, it's fairly level across.
Blaine Browers: Yeah, you update the website it flows through but I'd say theres no no no significant severity I think that's a reflection of the.
Blaine Browers: The teams really staying ahead of it fighting hard and when I say partner not just not just on price, but really productivity and finding ways to do things a little bit better each day.
Blaine Browers: <unk> taken some costs out of the products so.
Blaine Browers: That gives you a little flavor, but nothing there is no. One there is not a particular product or channel that is three times, what another channel as it's it's fairly level across.
Mark Eric Smith: That's perfect. Thank you.
Speaker Change: That's perfect. Thank you.
Speaker Change: Thank you Mark.
Operator: There are no further questions at this time. Mr. Brad Williams, I turn the call back over to you. Thank you.
Mark Eric Smith: There are no further question at this time, Mr. Brad Williams, I'll turn the call back over to you.
Brad E. Williams: Thank you, Operator. I'd like to thank everyone again for joining us on today's call and for your continued interest in Cadre. Thank you. This concludes today's conference call. Thank you and have a great day.
Brad E. Williams: Thank you operator, I'd like to thank everyone again for joining us on today's call and for your continued interest in country.
Speaker Change: Thank you.
Brad E. Williams: Okay.
Operator: This concludes today's conference call. Thank you, and have a great day.
Brad E. Williams: This concludes today's conference call. Thank you and have a great day.
Operator: Please wait the conference will begin shortly.
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Operator: Yes.
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Operator: Yes.