Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to Cadre Holdings Second Quarter Ended June 30, 2023 Conference Call. Today's call is being recorded. All lines have been placed on mute. [Operator Instructions]

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. sir. ahead go Please

Matt Berkowitz

welcome Holdings and call. quarter to you, second Cadre conference Thank

statements these we to provisions of will These call, forward-looking like I of be we everyone several uncertainties Before Litigation would XXXX. today's These on the remind Private that begin, Reform we safe under statements the information the known of that statements Securities during making and our harbor make Act reflect understanding to industries in best forward-looking Cadre operate. subject us face estimates forward-looking today. and our risks which are and and assumptions based in statements we to markets

Securities could from note also Exchange we information this potential in which Commission. have reports time that More include on materials comments non-GAAP posted our www.cadre-holdings.com, financial evening the financial results reconciliation public at affect and time factors our a and to measures. supplement certain is website included that Please Cadre's on presentation with Cadre's of filed

to as Time replay Eastern through the in release I would XXXX available for be replay also p.m. XX, X well website. be today's remind will call like provided will at as via starting A August on available webcast tonight. Cadre's link this that press everyone

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

Warren Kanders

our quarter and Good second Williams; I XXXX. of by afternoon, and results thank President, you joined Brad for joining am Officer, Cadre's our for Financial earnings call the Blaine our to today Chief discuss Browers.

pleased demonstrated continue has bear the the very with EBITDA quarter execution, EBITDA. our on brought earnings off our and adjusted largely record be second focus team will company, before on management and track I calls. XXXX, today themes, as margins to I've the comments about by spoken our My of Coming to

about demonstrate relentless integral results. the but strategy Brad, the moment continue part of focus of improvement markets, deserves continuous implementation to of capitalize business external to on optimization performance the operating in our M&A a model, our team focus. our Blaine an growth will talk and and is opportunities, the and Cadre efforts a to-date the I particular of on which

I it and leadership, build driven bears operating creating but tools culture helps value Cadre productivity stakeholders of model a continuous last customers innovation enterprise-wide the product of by improvement. talked about repeating. for and implementation this quarter, The and constant processes,

focus through comes Here the the again, results. in

million, increased up XX.X%, margins We improved XXX XX.X%. EBITDA EBITDA While were XXX basis and income adjusted adjusted achieved for the X.X%, And revenues points record points gross of XXX%. margin gross and quarter XX.X%. share basis margin per profit adjusted record EBITDA diluted of $XX.X adjusted quarterly increased by EBITDA net increased fully grew

operating the This rate. see of of is Blaine that outcomes. natural execution exceptional operating an within management and and the business above does processes using but tools trend Brad leverage creates improvements growth profitability optimizing of momentarily, can our details job our control, team by things produce the we more cover will the to superior realm you

drive XXXX also on and macros I We applies actions driving the team business. in to the there the acquired taken always acquired quarter of views our approach The our overall Cyalume like our businesses. reinforce helped to has second would performance.

what for of doing the substantial products As the level we place accustomed environment do the have getting our capabilities sign distribution you life-saving and know, manufacturing and going almost we flatlining at to. trends are see business, mission-critical dangerous secular people we is up. covering no world, a difficult part every above and but or become demand had In even of either driving more anything the

users. equipment quality is and environment Cadre's brands, and to the deliveries, and importance to superior testament this of end a products, the the in execution our of perform our strength our to ability customers Our of

program. Finally, on some our thoughts M&A

to formal While $XX past to have on include like In we to close XX values $XXX ranging made to based something be we on our diligence figure with proposals does And north we able completing pursue. businesses, year, after to in in XX activity size or months, to remain million should different year. confident and transactions reviewed enterprise by this million. would significant the we this we opportunities, of not point from this plan announce announce the have one two

of the two, pay; a of combination and that those valuation or us, on price Interestingly, a that proprietary possibilities. any the three, of scrutiny; diligence indicates willing which is up business a expectations from of the them confidence have most two. part away none those were non-auction and traded due One, of disconnect lack seller's XX, buyer which processes, to few seller hold would some between

Having we pipeline that, M&A our disciplined working approach. said will and remain in are hard our

time, and opportunities our adjusted new that At see net same to as existing markets would with presently lower Xx profile. as we level a a in delever more and our generate to just debt transactions very bank increasing continue facility continue we with pursue company. of We cash to the as at diversify our to above EBITDA well markets conservative leverage capacity

half of In conclusion, I this quarter of results and the am year. proud for for first our the

earnings to remainder better performance focus. into and the for We exceeds increase year are able of our the guidance comes the year happy expectations our to prior be as our

out. speak are While are and will comfortable the there still remainder the against environment poses of out how challenges, resilient overall that with many macro this in the the we are we year uncertainties we certain play businesses Brad think about of will

being with With to you. that, call over for the Brad Brad. us over will turn to thank I today and you

Brad Williams

I driven followed overview in sales, session. by Warren. and a quarterly margins, highlighted again reflected X. including Blaine model. sequentially Slide our QX today's productivity both recent managing our improving by performance and and success in as Q&A income Thank gains on to Consistent of will portfolio strategic you, net market On trends the the begin implementation on our financial in second and the We'll update year-over-year. adjusted once continually Cadre on our and a business continued deliver of operating provide focus EBITDA continued objectives and premium call, products well increases results net adjusted quarter, our with by EBITDA as gross

orders mix lower the backlog $XX.X offset solid volumes. adjusted a mix channel and million product mix QX of going favorable EBITDA gear year. as by was for mix was highest public. quarter start increase distribution June and which We XX, of product of XX.X% favorable armor the maintained margin was our million duty Second quarter $XXX.X since the strong EOD since our mix, a favorable reflected

from end QX, was anticipated of and total the significant backlog the revenue. our this reflected is While in declined QX

robust, continue the discussed not current to Warren ago, As has moment dealmaking thus in far we environment opportunities been as a view pipeline of conducive M&A XXXX. our although to

approach $X.XX. declared acquisitions, discuss capacity highlight flow waiting more our to our that Cadre's bit. As steadfast and to will generate not we in of transaction. materialize this line have criteria shareholders. Blaine month, disciplined which the we'll quarterly we in free to a Last and only to capital reiterated will It do is confident provides significant mind also consecutive eighth in patient key We return dividend opportunities but with pursue year remain continues that right still remain for previously, not important as that attractive cash Cadre

products. tailwinds sustainable drivers demand intact a support opportunity markets. Slide of you'll visibility These and our see domestic X for fundamental remain on in and and growth Next both international mission-critical long-term

to Turning trends latest impacting outline the Slide X. We market our business.

mission-critical per increasing hiring we investments and to a public crime spend a safety officer. North particularly forward. of equipment, public see signs and continue major prioritize anticipate increased into refund moving While budgets the We Cadre's remain focus push healthy consistently to with challenge, remains police. American police police on further departments

become however, the other EOD deadly to see vast of the clear land opportunities bombs, geopolitical changed shells landscape, as deescalates, ordnance in and mines, byproducts. includes conflict Ukraine has the What Ukraine not category. in recent months artillery in scale which Related Cadre's unexploded our is larger unexploded for expectation we'll has

is such several that Whereas Afghanistan heavily concentration expands enough to Cadre. perform makes demining clearing take it contamination decades it having this process will mine technicians as The and largest extent extremely dangerous constraint now take of years, in be side the cycle previously Syria. than EOD and was ordnance could the The greater other mined on assumed EOD of the of Ukraine for and countries opportunity which Ukraine's expected to job.

date. Turning on lead have times and brief to raw trends force consumer we comes seen that note, chain are extended we labor Of segment, in to supply when experiencing it a our to incremental provide materials. I'll positives improvements for update

continues to the issues these being second job team do and an were in frequent less excellent proactive quarter. Our

also on direct bringing improvements In QX. terms labor we in saw talent, of

meet retaining here made and to we've with comfortable needs. our pleased our and to are the to ability attract with We progress continue be talent

The INCOG better our congested focus Species couple holsters crowded Regarding has Partners saw most various assortment QX. of we up demand tick helped The marketplace. is growth channel, Solis, commercial X, commercial of a our customer commercial the past our versus work we office in commercial reorganize engineering market differentiator. did quarter years the selling The key is and a back and to teams in positioned Haley with to Schema, new us recently and on Strategic collaboration has align and needs. and launch innovation drive innovation our sub-channels a with in second of

commercial sales XX% up channel, gear Within the were year-over-year. duty

Turning to new products.

a feedback positive tactical in platform past protection. adaptive value sizing armor a XD, market law approximately, compromising to line the HyperX enforcement has platform; without in hear our body success been that with the of continue HyperX, design We purpose-built the months. introduced holsters to for a XpertFit SafariVault and lightweight, great tactical versatile highly nine

We've customizable is This of the armor maintaining The of also tactical to that in and innovative last not to opened is a the ballistic attributed customers federal XXXX, we the armor armor many also growth tactical had while operators eyes product product bodes fit HyperX that the customer country, first experienced within same teams, with opened leading previously for half thin included of protection that to period pulling enforcement a year. a has plates system of soft not lightweight the have XX% tactical directly that the rifle visualized through compared doors profile. law hard offers around to growth increase percentage. platform wins new in category. This but this

and trained XD market development for our research, teams the partners nearly years At this testing, sizing we've in point, we launched all of officially in body to June. life extensive our approximately, US. reseller two XpertFit sales the After have

been been Our measuring techniques overwhelming to that and the best individuals thought the majority has decades. sizing in experience especially able have technology be replace that would industry never those used of with manual for

technology. our we within instances around contacting of agencies to industry buzz to this sizing into spreads We've end investment been us where seen get written are the foresight We're also the and XpertFit has asking technology. our with emerging electronic the extremely about enforcement law starting customer specifications. related As use pleased

holster increased that wins in XXXX. seeing the are family with interest we Lastly, new January and was of SafariVault launched

broader cover, see of growing self-clearing of this holster have of our over a including team our innovative lives. design new open gun muzzle commitment mission strongest family years As reflects range holster engineering optic XX together interest in to and more to seeking our engineering fits the magnetic and to holster holsters, a ever new experience SafariVault an body The carries design. on save of engineered, holsters advanced guidance robust completes we line expect due a agencies features for we of those we

over call I'll CFO, the now our Browers. turn to Blaine

Blaine Browers

Thanks remarks M&A our acquisition Brad. the discussing general environment. begin in my strategy I'll by

our X three criteria products, within transactions Investors of new those process. M&A key to or and that verticals, suite categories. enable that Those Cadre familiar will Slide Cadre's assess we grow the geographic us footprint. that drive know those expand that that will potential our enter markets summarizes will with

healthy M&A cash still margins, include our recurring market our flows. As evaluate to actively high we revenue continue key and and consistent mentioned have criteria, positions and which leading targets Brad Warren with funnel strong is and

next this late momentum to processes get to and Our or bank-led growing we early market sense anticipate year. to is pick there the year a up deals is

performance. next second detail The quarter two financial slides our

for on slide see sales and net both As net increase we quarter on X impact strong sequential duty by sales adjusted margin The the backlog acquisition. This a you armor driven products. demand the EBITDA reflects timing addition and was our mainly in margin gear by basis. and Cyalume adjusted partially to can orders gross net increased year-over-year our significant EBITDA income, in in and of EOD the offset second shipment was

Second last quarter $XX from of compared nearly or increased per to and year's net grew income million XXX%. QX QX XX% $X.XX share

of outstanding portfolio XXX margins last our manage increased These and to adjusted versus year. up premium quarter. continue products basis the in XXX and we and inflation, gross drive generated As respectively to second EBITDA margins the the period offset leverage we points, productivity same and

adjusted XX Illustrated is year-over-year. slide on net EBITDA sales and growth

can XX% versus of net year for improved performance and increased year, you our increased by margin, up management's discuss our last EBITDA a Based remainder quarter which I'll driven the gross guidance, Cadre's and full As on have the was half the second adjusted XXXX first sales moment. we see profit EBITDA in outlook adjusted year.

slide capital On XX, structure present June XXth. we our of as

we Our to through grow our one-time. significant lowered have both net leverage organically debt We and financial inorganically and flexibility net was $XX million acquisitions. maintained to

provide XX. We updated slide guidance XXXX on

full sales range our guidance midpoint net year We the the with have remaining same. tightened

be million $XXX to sales between million. We $XXX expect XXXX and net

of implies and guidance X% annual million between versus our upwardly $XX approximately of adjusted Our X%. growth range previous million EBITDA $XX revised forecast

anticipate in $X million expenditures $X range the we of million. Additionally capital now to

take Let did in QX. bit a for QX We very the of we is volume had remainder anticipated some in the more a strong coming of have half deeply year our off year. me the dive that a moment solid year. the into to fall to a start expectations the back quarter of into QX

We projects. down due to as the half to of slightly domestic still large largest to margin in that the volume second by do consistent primarily be international and quarter rates the half, compared to first driven QX to And year mix. appears expect be

above be have to would like due only we timing QX, reiterate to to days down be that also meaningful most QX EOD, XX of segment of distribution we from in And and our still in expect our volume revenue. but XX backlog our for QX businesses visibility. I to

over I'll for to turn comments. Brad, concluding now it

Brad Williams

margins pleased in in to as Thank quarterly continued operating we second highly and model reflected exceptional year-to-date, implement our with attaining are which financial results. generated EBITDA our and execution the you, strong results. adjusted Blaine. We EBITDA, quarter strategic summary, our is In record on focused we sustaining

and EBITDA safety year our our have increased Based survivability XXXX second mission-critical on continued outlook. quarter performance equipment, full demand strong we and for adjusted

sales our full net in inorganic We about deliver are to track organic and record capitalize to ahead. on and opportunities year XXXX prospects are on excited

criteria over in dynamics, Supported public a with we will is M&A further tailwinds be that enhance and line we attractive related continues macro to budgets long-term. our our this and focus materialize believe opportunities increasing safety remain confident to industry ideally Cadre year. key market grow by and the favorable leadership to positioned our platform

operator, up With lines for Q&A. that, open please the

Operator

[Operator Instructions] Stephens Imbro Your line first Daniel question Inc. comes from from of the

open. is line Your

Daniel Imbro

taking Yeah. evening, guys. Hey. Good for my questions. Thanks

Brad Williams

you How Absolutely. doing?

Daniel Imbro

line start want top outlook. to on I the

these accepting I'm exceeding quarter, obviously is are this achieved the think of or again. mentioned ones market the past I but you helped growth pricing backlog also through? you've your targets just kind curious, rolling price still increases, the further

in the Does maybe the are in think the back how what next freight half price you year top to that think costs about out you should room recent of less the of take into pricing as maybe we to kind implications through passing as moderation the inflation this or year? of about of quarters then, some that the give line? And affects

Warren Kanders

what Yeah. recent the as on inflation I as a we year has say, input certainly from moderated saw ago. even would side,

these prior increases done isn't the products are price of we've case came products. our of in that the the years through first majority the for multiple increases point some This this where at So just on like price year.

around more pricing a become material stable certainly inflation. it's and environment So

rolling spoke. we those time It's last since that through. not just that's launched So we pricing incremental the

two-ish given transportation for us to a X.X% percent cost the revenue closer in of somewhere in the think real significant revenue of it's period. I a not side, On

before regional As talked is most in a we've nature. our little bit of supply chain

it tends be to So more driven. LTL

up on have cycles. pricing certainly a create products have some be the pricing. So have typically to prices it the it but And business sticky our down headwind certain tend way doesn't historically not will in don't seen impact, we -- economic and around

Daniel Imbro

shifting It's helpful. obviously over demand a And your as then, for follow-up there's products. Europe, to

I'm the you those are long-term opportunity. curious about EOD actual seeing yet. manifest You in orders talked

have I now. that versus has can a Just that XX contracts think your you or you months new little won expectations? curious, point to? progressed Radar any what for guys owned you any new over Have how organically countries

Warren Kanders

Yeah.

think was around So I question it a mentioned kind there you also of Radar. then mixed EOD and

the line So, on business that -- normal with EOD in for orders in sized Ukraine with size for orders example. side the we have to seen come us from are EOD our

have with some leverage in overall of seen On additional have things, around there have we business local Italy. side the that in been radar team the improvements where the we

we've marketplace the focusing seen the had that focusing business, good products holster side and and opportunities also had Italian on but within local team we've So not traction we've other armor the only on of been some there.

our that been point the piece the also based price seen on then, products not premium second able we've reach of traction And features good markets to countries that Safariland we've that are products. or on those and

able So that in work past. and go new we've to we've countries in gotten into not in Radar with been the

Daniel Imbro

Great. I luck. Best back appreciate a those I in hop colors. queue. of

Warren Kanders

you. Thank

Brad Williams

you. Thank

Operator

Bank line Your America. of next Epstein of from question Ron the comes of

lien is Your open.

Unidentified Analyst

hit would opportunity war for that point wait need do incremental sales. international is the impact again years? the Do actually is This few the a for on major think come the in Ron. to end on really for could or Hi. you through Jordan anything do you there the Ukraine, you next to To see of in guys

Warren Kanders

Yeah.

come seeing in are Ukraine. through for focused there smaller orders destined EOD on We

the from focus really but safer money really end, equipment them place it of for I offensive But the to the making and certainly or the and the more necessarily it changes EOD. and de-escalation. though to to for order really for things. a a what is really get on safety to de-escalation a then allows in That side return think require defensive focus war Ukraine and weapons moving shift allows us doesn't

former that the So have but in we and have operators workforce operators some certainly of not spent are business only who in EOD time been Bosnia.

have so Ukraine governments. confident being out plays destined at how not massive good other But some feel just still in there's typically approach. examples And shipped It's for of via that products and this stage. this we

Unidentified Analyst

it. Thank Got you.

Operator

Roth from from Matt Your comes next the question Koranda of line MKM.

line open. Your is

Mike Zabran

on Mike about for Hey, Zabran are guys. Distribution XX%. bps up year-over-year margins XXX Matt. gross

weaker the and of Just range. into just XX% higher how in think feeding for guess, assume about of getting we maybe little gross the the margins think products? then we should margin something margin A around quarter did on more the I rest that? what's you the year? I into selling expansion. Are kind what's distribution color gross bit

Blaine Browers

Sure.

place different are QX. year. margins that combination QX sequentially So last as into that the went a as a On this of not of year beginning it basis, is to pricing year-over-year well

some mix well positive seeing productivity. QX are favorable We in also as and

So strongly we executing areas board and in opening to have Warren executing been three the teams see that his really the them want across to line. down the falling mentioned really bottom kind comments that's of the really and

QX towards expect back look on mix. margins slightly for QX and to the be do just we As down we based half,

line in channel we've channel mix quarter in and lift mix, favorable but also had year, some or that's the this mentioned, helped within and mentioned not half had of mix particular right? just So in Brad product the product the mix, As duty favorable a margins. to first I very we've

Mike Zabran

Got it.

quite it sense. intercompany and like bit gone to it's sales a year-over-year up sequentially. And out seems That anything makes call on Okay. then

rise? forward? we causing that rate run And this just what's should So to pull

Blaine Browers

missed So, the broke question. your little part up first on bit a of we you and

Mike Zabran

gone bit like call out intercompany on about little seems it Just usually to Anything Sorry What's drive sales? year-over-year. up that. a pull causing that it's forward?

Blaine Browers

Yeah.

strong segment. that his comments there that good So the that so really product of or is news on movements in that that's during generally in movements selling our The very, very dollar the are distribution channel intercompany is is Brad been the the pull-through right that armored in products bigger around bigger product. a mentioned positive. that HyperX ability the

seeing of some is what that So you're Yeah. there.

the model think, that. is to any with variation consistent half first a I but from probably fair it in not little half the and we more back what and saw major

Mike Zabran

yet? an it. SOCOM. update any call out? next Have anything What one Got Just just incremental the with to from are on you me. steps? the sensor Last Maybe black gotten feedback

Warren Kanders

Yeah, absolutely.

a So there. few updates

SOCOM deliverables delivery final the sensor September, meaning not engineering delivery So is program deliverables. of end due product

The told be XXXX. SOCOM. being September at is results step SOCOM released this what next final XXXX in and QX by completed the the early is expected point that's with of we're program essential So to

on at steps give given point So they'll and guidance next feedback program, been results that what those once the released the on has are.

Mike Zabran

all That's me, guys. helpful. That's for Thanks.

Warren Kanders

you. Thank

Operator

Jefferies. Wenclawiak question line comes next The Kyle from from the of

Your line is open.

Kyle Wenclawiak

Thanks for time. guys. Hi, the

Warren Kanders

Thank you. Thanks for joining.

Kyle Wenclawiak

on QX. be here performance QX watermark. in guys you was margin previously know, nice high have the said to front I the probably And Really, going

positive you there's if just was So, much to whether the can given mix all about mix equation into just thinking better pretty dig channels? and half pretty back do maybe the the QX across into opportunity

Blaine Browers

Great question.

here. is there particular with we sequentially channel also was the mix performance. of out coming saw strong That were in continue, we favorable like performance duty that pleased think it some QX I did but certainly QX, from very year-over-year, and --

big things we our for a website you about think us. sequentially. hurt year consumer before for the half box, favorable think that could we've as more back of or margin and e-com is online that side us about duty retailers So could for then that the and gear and certainly Really talked the is commercial about help if channel -- that

certainly by to of by their internally supply still chain more that's while right? ship. times one there lot And much really driven more ability distribution on the is in side in demand, to suppliers little then segment more And on product stable and driven a side. customer but market it's is distribution a your difficult more the there's variability the put segment, recent the finger That's part on the

can some a is kind has that of We favorable. push mentioned HyperX, shields off -- margins around The from now Pack [ph]. seen line have great margins. Soft traction. in Brad be us before quite been could down the We've we'll evolve and really if watch full that that above and strong bit keep So the to and increased QX. armor see demand year be with talked about expect coming move but -- one that's throughout kind right one to we from be in But more very last just continues QX. slightly will year That of slightly which certainly

Kyle Wenclawiak

Great. And then just one on the M&A pipeline.

Just curious given talked and the appreciate there. guys XX proposals really you commentary about extra the

get what proposals sense around confidence the of And Just bank trying year you the have run else levels starting in this thinking budgeting been seeing something common the about probably in this to that? there? just Thanks. anything led any on there given a about towards out processes has not you're And valuations year? closing end

Blaine Browers

Warren You of know, mentioned as we haven't that anything seen one.

Warren Kanders

Okay. Blaine. Put ahead Go that

Blaine Browers

Sure.

where And Warren bit scenarios So valuation the there. perspective. like anything a momentum decide think us in the back couple marketplace with seen And to market pull-off either we little a the more saw inquiries to wait. of starts there's that of come do we from come and feel to that's out to do and we haven't sellers

into it. of I team the number getting indicative and is very M&A takes effort the there the and seriousness diligence think out of the

QX, overpaying get or one I here QX think momentum track do for assets. to But of in Warren's feel well also and company's the you not QX some as to two like being record they'll diligent as we deals. to track appreciate line those up have very record

Brad Williams

add we're we I looking would looking for not that for hamburger high-quality businesses so helper just are here.

EBITDA can further think margin productivity. teams have gross companies performance the both drive and we margin strong So that for are operating the we and very margin where in and our looking performance

out more So interest coming remain out. there's more there's coming now. rates just Obviously, as elevated

to opportunities businesses. as interest for forth time good we that so on very carve-out their to see private and a might selling us so them and expect as rates where within and And do well companies for be consider more higher

So are looked diligent we There's that lot stuff the of we besides sale. have a lot and at careful through. for XX a come just of businesses

it opportunities pick seems we of into certainly and towards the the up that it so Now and next end excited beginning to about is this are year. year

Kyle Wenclawiak

I’ll Thank it you, there. guys. leave

Warren Kanders

as permission acquisitions other I importantly, our now say thing some I which businesses, might Blaine to a well balance refined look as think as have management think most the transactions throughout Brad given tuck-in certainly operating models, is should I our and little sheet. our at great one teams they be our have larger

Operator

Van Your question next comes of Riley. B. line the of from Jeff Sinderen

open. Your is line

Jeff Van Sinderen

an Hi, it my seeing what more more Any as platform? in might let And QX. just does add of upgrade congratulations progress everyone. on terms guess terrific on outlook there? different And me you're weapons, had color there phase the seem entering cycle in like I of sizes new holster we you be an early

Brad Williams

of cycle, we in various options, phase wouldn't mean overall. duty gear the that I plenty of upward call I early still an No, options it have category.

X So vault and poster, X we've got Series, we Series new have overall. our the

have options fits the Series. pivot to different move to to to like the and we folks vault others some continue So X within holster, as

positioned forward the But how products gives as of we're or those three replacement like for years in us that cycle we that with talked holsters. five kind seven every of there in the that the out tripping typically us past as see don't for to we've range any So pulling of I kind holster see I marketplace provide like and to options of it of we don't all to wide see customers.

Jeff Van Sinderen

And for one be then size the elements and in you're assume sort of the accretive necessarily? next come the M&A to probability other or maybe of not will then of that the Okay, you meeting to the or thoughts should fair guess getting there's on could help also fruition we latest regarding fruition. deals. thawing front. minds around just these out the deals enough. Are couple quarters next to two deals And margin around seeing I bring the on of could that valuation on any the sense that percentage that deals

Warren Kanders

this. take I'll

of was year parts two answer. cost Again, it question higher this is first the think difficult with of significantly certainly than ago. capital I a the So to are

of valuation there think of expectation, tempering terms some what I is should now look in like. right

optimistic to that will are able buy we criteria. companies that be we So our fit economic within

sizes – place, larger some smaller tuck-in that I As the think over us so ones. for are all are some are

these we we my I examples are gave remarks. at think some I actively finally, think And prepared in looking businesses.

I today least if margins where can you at the we better. would expect think that not be are

be us. like towards to expectation So our to I find answer mean is ideally we'd that companies margins accretive your the would question where

Jeff Van Sinderen

to hear. for I’ll Thanks offline. Okay. the question. taking rest take Terrific my

Operator

[Operator from Capital. Obus Instructions] of line comes Nelson Your next question of the Wynnefield

line open. Your is

Nelson Obus

quarter. Yes, like going? It looks that up I'm Nice hi, CapEx just second stepping where of is in focus half the the year. curious you're there.

Warren Kanders

The where Hi, driven Stayroad in pickup facility That one [ph] the half really of expenditures expansion. products. is the by our we facilities capital back Nelson. is produce holster

parking some building certainly over Brad upgrading people said people a That five and combination a XXX it's bad that expansion. in me -- to years if from and in XX So correct expansion. about little lot think is need the a is and expansion last went facility wrong, I I it's of

Nelson Obus

Okay. enough. Good

Warren Kanders

Thanks Nelson.

Operator

of line the comes Smith of Your next Lake question Street. Mark from

is line open. Your

Alex Sturnieks

the today. on Smith guys. Hey Alex Sturnieks line It's Mark for

Brad Williams

Alex. Hi,

Alex Sturnieks

trends question I new consumer first products. guess on so of the of maybe kind is I your of lines maybe more have So mix

mix maybe You on and bit color talked more could March, new into the look year? sales and talk a little bit remainder of the the little how might in about a a you that the of products little provide and more it bit

Brad Williams

channel for Your question was commercial us? around the

Alex Sturnieks

Yeah.

Brad Williams

Yeah.

than is us, in to the of about that margins we for for channel the see So revenue overall commercial from perspective in talked But as channel. perspective less healthy a the past, an we've really us. to just XX% little from put

been have a who talked holsters, us not through and that the before, of predominantly kind for those commercial at mix. with us channel you look which For this was is when focus,

day various and of And office every ago that everything have that sales on channel wake years into group so the of to to worked needs customers. have to a we engineering and from to various folks continue product sub-channels couple back there dive reorganizing understand up we to for a

a of backstory of little and bit little a just that's history. a So bit

got the that on to we're of our to products what inside launching waistband that products stick some feedback those high with group some starting and the functionality some we And or products. So various in that that -- now get type we're premium been been seeing could products great really innovation, space. good folks able we've of and traction various the high so outside waistband the with is, marketplace we momentum have really type either launch to we've lot have a

Alex Sturnieks

Yes, think helpful I very that’s actually.

of kind I secondly, to go over. So want

the about QX. trends QX well. are uptick of as monitoring far the from talked geographies consumer any there kind that demand seeing You consumer as you you're What to currently business? in Are type across thing? But guys as environment seeing of you

Brad Williams

little mind, keep it Blaine channel, sub-channels us. geographies Not in as channel commercial has for necessarily that for across combine. bit, in mentioned And that we a earlier various us,

brick-and-mortar box type So it's out and it's that our various retailers It's we together. dealers in other have our all e-commerce, that channel that combined dealers there. it's big are web

when sports with at QX working reports gunm indicator see end-up various just type QX higher QX, and demand a kind customers. segment, good which shooting we we looking statistics what of various the overall And sometimes and in for we accessory market at than that is We've did versus would in seeing. look seen

those the half half about part the into if a us, for lot focused of year the that of season, the for end sub-channels at look them of second you those customers for end buying about on holiday the a get be type and think in commercial of second year. as lot up and segment innovative you outlook for products of the the looking is big that of to the package the half you with I just end talked year When will second

So, the us product out of of feel continue we that to timing for of take for got the we right time us advantage in to piece like year.

Alex Sturnieks

on Thanks Yes. Congrats guys. quarter. the

Brad Williams

you. Thank

Warren Kanders

you. Thank

You’re welcome.

Operator

you. to There are Brad I back Williams, turn no further the questions at time. over this call

Brad Williams

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

Operator

concludes great have conference you and today's a Thank This call. day.

Cadre (CDRE) 8 Aug 232023 Q2 Earnings call transcript