Cadre - Q1 2023

Transcript

Operator (participant)

Good afternoon, and welcome to the Cadre Holdings Q1 ended March 31st 2023 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 one on your touch-tone phone. At this time, I would like to turn the conference over to Matt Berkowitz of The IGB Group for introductions and the reading of the safe harbor statement. Please go ahead, sir.

Matt Berkowitz (Senior Director of Investor Relations)

Thank you. Welcome to Cadre Holdings' Q1 conference call. Before we begin, I would like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face Cadre and industries and markets in which we operate. More information on potential factors that could affect Cadre's financial results is included from time to time in Cadre's public reports filed with the Securities and Exchange Commission. Please note that we have posted presentation materials on our website at www.cadre-holdings.com, which supplement our comments this evening and include a reconciliation of certain non-GAAP financial measures.

I would like to remind everyone that this call will be available for replay through May 23, 2023, starting at 8:00 P.M. Eastern Time tonight. A webcast replay will also be available via the link provided in today's press release, as well as on Cadre's website. At this time, I would like to turn the call over to Cadre's Chairman and CEO, Warren Kanders.

Warren Kanders (Chairman and CEO)

Good afternoon, thank you for joining Cadre's earnings call to discuss our results for the Q1 of 2023. I am joined today by Brad Williams, our President, and Blaine Browers, our Chief Financial Officer. I will keep my remarks brief for today's call, but after record results from last year, I am very happy we have carried that momentum forward in the Q1 of 2023. To a large extent, our financial results speak for themselves. Having said that, in our annual report, I wrote about our business strategy to attain and sustain exceptional results through the ongoing implementation of the Cadre operating model. This approach helps build a culture of creating value for customers and stakeholders. Driven by consistent leadership, the implementation of enterprise-wide tools and processes, product innovation, and continuous productivity improvement. The impact of that model comes through in the numbers.

Revenues up 7.7%, gross margin up 320 basis points, gross profit up 16%, and Adjusted EBITDA up 30.8%, Adjusted EBITDA margin up 300 basis points, and net cash provided by operating activities up 42.7%. Brad and Blaine will cover the ins and outs of our financial results and the qualitative discussion in a moment. These results, as in prior quarters, continue to underscore the strength of our company. We have an excellent management team focused on delivering superior operating performance day in and day out. We have successfully integrated the acquisitions we completed last year, and those transactions have been accretive. The net cash provided by operating activities figure is an important one for two reasons. First, it demonstrates our continued ability to generate cash.

Second, this cash generation, debt paydown, and delevering builds financial capacity to execute on strategic M&A opportunities when they crystallize. We presently stand at 1.2x Adjusted EBITDA to debt, which is very conservative and can possibly be considered underleveraged relative to an optimal capital structure even after we continue returning capital to our shareholders through regular quarterly dividends. The consistency of our results since we went public highlights, again, the resilience of our business across cycles. I believe it is fair to say we are in some sort of cycle at this time, which is at best described as uncertain. As we have said before, the public safety macros and the outlook for these trends is strong over the medium to long term, both in the U.S. and internationally.

Our ability to perform in this environment is a testament to the quality of our products, the strength of our brands, superior execution and deliveries, and the importance of our mission-critical safety equipment to our customers and end users. One final word about our M&A program. Our M&A pipeline is robust, and we are working on opportunities that are in existing markets and markets that would diversify our company while remaining focused on the operating metrics we talk about in our earnings presentation and have talked about since our IPO. Based on our pipeline and the level of activity we have devoted to this area, we are still hopeful we should be able to complete one or two transactions this year.

We have ample capacity under our credit facilities with PNC, Bank of America, and the rest of our bank group. At the same time, there is evidence that ongoing economic uncertainty has complicated the psychology around M&A, and we will remain patient, thorough, disciplined, and thoughtful about our approach as we evaluate deals and external macroeconomic factors sort themselves out. In conclusion, I am proud of our team in producing such an outstanding start to the year. Our backlog grew, we continued to pay down debt, and we are well-positioned to execute on the organic and inorganic opportunities ahead of us for the remainder of 2023. Like everyone, we prefer less uncertainty in the economic cycle and geopolitical environment, but we are in a solid position and are excited about our prospects.

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

Brad Williams (President)

Thank you, Warren. You'll see on slide four that on today's call, Blaine and I will provide a Q1 update and business overview, including a review of our M&A strategy and cover our financial performance and full-year outlook, followed by a Q&A session. We'll begin on slide five. As Warren discussed, we delivered another strong quarter following a record year of net sales and Adjusted EBITDA in 2022. Based on continued outstanding strategic execution from the team and sustained demand for our mission-critical safety and survivability equipment, we generated year-over-year growth in revenue, net income, and Adjusted EBITDA in the Q1 and are pleased to reaffirm guidance for the year.

In the face of persistent supply chain disruptions and inflationary pressures, we again exceeded our pricing growth target, supported by our entrenched positions in law enforcement, first responder, and military markets, as well as our commitment to innovation. As you know, we recently launched a number of new products and continue to monitor how their introduction to the market is affecting early refresh cycles. It remains too early to draw definitive conclusions, but we are pleased with our progress achieving meaningful wins and maintaining our high market share positions. We're also encouraged by new opportunities won in the tactical body armor space, where our share is much lower. Regarding our Q1 product mix, higher duty gear, Cyalume, and favorable hard armor demand resulted in continued good mix in the Q1, supporting solid margins.

Our orders backlog continues to be very strong and grew by $19.1 million since the start of the year as of March 31st. This was primarily driven by recent acquisitions as well as high demand for our EOD, armor, and crowd control products. Turning to M&A, we maintain a healthy funnel of acquisition targets and are confident that attractive opportunities in line with our key criteria will materialize this year. Blaine will touch on our strategy in more depth, but it is important to reinforce that Cadre continues to take a patient and disciplined approach to M&A. Finally, before moving on to macro tailwinds and current market trends, I'd like to highlight our continued commitment to returning capital to shareholders. Last month, we declared our seventh consecutive quarterly dividend of $0.08 a share.

Turning to slide 6, we outlined fundamental drivers of demand and visibility for our mission-critical products, which continue to underpin a long-term sustainable growth opportunity. We see these drivers supporting growth in both domestic and international markets. I'll briefly discuss the latest market trends impacting our business on slide seven, which are mostly unchanged since we discussed with you in mid-March. Police hiring remains a major challenge. One recent survey suggested police agencies reported nearly 50% more resignations in 2022 than in 2019. While officer retirements came down a bit in 2022, agencies still reported nearly 20% more in 2022 than in 2019. As a result, this report showed that total sworn staffing has dropped nearly 5% over the past three years.

At the same time, with increased public focus on crime, we expect further investments into public safety as refunding the police has become a bipartisan political and social issue. Positive for Cadre, police budgets are healthy and spend per officer continues to increase. Regarding the war in Ukraine, we do not anticipate opportunities over and above the orders that we have seen up to this point until the conflict deescalates. We will be standing by at that time ready to provide support on the EOD side where we believe there would be the largest opportunity for our company. Our supply chain and trends in the labor market have remained fairly consistent over the last couple months. We continue to experience pockets of extended lead times impacting the flow and availability of various raw materials in the Q1 and expect to continue to be the case throughout 2023.

In terms of labor trends, actually managing our workforce for the long term is a priority. We remain comfortable with our ability to attract and retain talent to meet our needs, but we also continue to weigh options to address specific challenges in Mexico related to nearshoring and minimum wage increases. Turning to an update to the consumer segment, we continue to see stable demand but are monitoring the macros. I'll now turn the call over to our CFO, Blaine Browers.

Blaine Browers (CFO)

Thanks, Brad. I'll begin my remarks by discussing our M&A strategy in the general acquisition environment. Slide eight summarizes the key criteria that drive Cadre's M&A process. As we regularly discuss, our strategic focus is on identifying acquisitions that either expand our product and technology offerings, enter new markets, and/or grow our geographic footprint.

These businesses must have high margins with leading market positions and strong recurring revenues and cash flows. We will remain patient and continue to actively evaluate a robust funnel of targets consistent with our key criteria. Amidst the challenging M&A environment driven by ongoing economic uncertainty, we're still hopeful that we should be able to close one or two transactions this year. The next two slides detail our Q1 financial performance. As you can see it on slide nine, net sales, Adjusted EBITDA, net income all improved significantly year-over-year. Was mainly driven by armor and duty gear product demand, in addition to the impact of recent acquisitions. This was partially offset by shipment timing for our EOD products. In our distribution segment, the increase was driven by agency demand for hard goods.

Q1 net income of $7 million increased both year-over-year and sequentially versus last quarter. As a reminder, last year's net loss reflected a $23.7 million stock-based compensation expense. Consistent with our relentless focus on margin expansion, gross and Adjusted EBITDA margins increased 320 and 300 basis points respectively. Illustrated on slide 10 is net sales and Adjusted EBITDA growth year-over-year, notably driven by a resilient operating model and solid Q1 product mix. Adjusted EBITDA in the Q1 increased 31% versus last year. As Brad mentioned, we've reaffirmed our full year guidance, which implies approximately 4% annual growth for both net sales and Adjusted EBITDA in 2023 based on the midpoints of our range. On slide 11, we present our capital structure as of March 31st.

Our net debt was $97.9 million. We believe that our net leverage of 1.2x provides significant financial flexibility to grow organically and more importantly, inorganically through acquisitions. We provide our 2023 guidance on slide 15. Cadre expects to generate net sales in 2023 between $463 million and $493 million, and Adjusted EBITDA in 2022 of between $76 million and $82 million. We also anticipate capital expenditures in the range of $8.5 million-$9.5 million for the year. Q1 was an outstanding start to the year with a very solid gross margin rate. We expect Q1 margin rate to be the high point for the year.

As we have progressed through the quarter and our backlog takes shape, keeping in mind that most of our businesses only have 45 to 60 days of demand visibility, we expect Q2 revenue to be similar to Q1 with gross margin rate down slightly but still above last year. We expect the back half of the year, we want margins more in line with Q2, due to consistent mix and the strong volume will drive Adjusted EBITDA rate expansion in the back half's up. I'll now turn it back to Brad for concluding comments.

Brad Williams (President)

Thank you, Blaine. We began the year with solid performance across our business segments. The continuation of the strategic execution and sustained demand for our mission-critical safety and survivability equipment that drove record net sales and Adjusted EBITDA in 2022. Supported by a broad push to prioritize public safety and favorability industry dynamics, and based on our strong Q1 results, we expect another record year in 2023 based on our guidance range. We are pleased with our progress to date as we exceeded our pricing growth target in Q1, as well as increased net sales, Adjusted EBITDA, net income, gross profit, and Adjusted EBITDA margins year-over-year. We continue to look for opportunities to achieve cost structure, operating leverage, and drive margin expansion over time.

Most importantly, we're excited about the journey we are on implementing the Cadre operating model, focused on building a culture of sustainable value creation for customers and stakeholders. Before turning to Q&A, I'd like to again highlight our commitment to executing targeted M&A. While the current environment has made deal-making particularly challenging, we continue to evaluate potential transactions consistent with our disciplined approach. As mentioned earlier, we remain confident that attractive opportunities in line with our key criteria will materialize this year. With that, operator, please open up the lines for Q&A.

Operator (participant)

At this time, I would like to remind everyone in order to ask a question, please press star then the number 1 on your touch tone phone. Your first question comes from Scott Forbes with Jefferies. Your line is open.

Scott Forbes (Equity Research Senior Associate)

Hi. just Warren, you mentioned one or two M&A deals this year. Can you talk about what the largest area of holdups are around deals getting to the finish line, and how you think about those factors alleviating as you go through the year to get those deals over the line?

Warren Kanders (Chairman and CEO)

Sure. You know, we do have a broad pipeline, both centered on the businesses that we have and then, you know, more diversified as we've discussed before. You know, really at this point I would say that, as you know, with higher interest rates, the cost of capital has gone up and that impacts pricing. The sellers, you know, are have been a little slow to reflect those economic changes. I think that as we get further into the year, there will be a better balance between the, you know, the bids and the asks. I think it's really one of, you know, price expectation at this point. I am encouraged. I am encouraged, I mean.

I mean, just for example, you know, L3Harris, you know, recently stated that they're looking at their portfolio and thinking about, you know, divesting certain aspects to pay for a transaction that they had done last year. I think you're gonna see more of the larger businesses at this moment in time, you know, really digging in and seeing what they own and how they can kind of streamline their portfolios. You know, the smaller businesses that a lot of these companies own, you know, will be quite meaningful to us can, and can really move the needle.

Those are the ones that, you know, we're actively, you know, looking at, as well as certain ones that are owned by, you know, founders and private individuals. As you know, we've been very successful in acquiring those businesses, those types of businesses over time. That's helpful. Thank you.

Operator (participant)

Your next question comes from Jeff Van Sinderen with B. Riley. Your line is open.

Jeff Van Sinderen (Senior Analyst)

Hi, everyone. Realize it's early, but just wondering if there's more color you can add in terms of what feedback you're getting on the new holster platform and the same for the newest body armor with improved coverage?

Brad Williams (President)

I'll take that. Hey, this is Brad. Feedback so far has been great as we continue to roll out the HyperX product, the tactical body armor that you're mentioning. You know, it's been out for 6 months or so, you know, we're seeing wins in that space. You know, our share of the tactical body armor market is much lower than our shares in soft body armor, for example, and also in holsters. You know, we've got quite a few wins and agencies that we've not been in, so things are looking good there. From the holster front, we still have the minimal amount of fits at this point.

As we continue to roll out a wider variety of fits across some, you know, GLOCK and SIG, you know, we'll continue to get more at bats on that one. you know, we're definitely happy with where we're at so far.

Jeff Van Sinderen (Senior Analyst)

Okay, great to hear. Any update to provide on the blast sensor contract or process? Just wondering kind of how that's moving forward. I know you commented last quarter. Also wondering if there's anything to say about other RFQs that you may have received around that product line.

Brad Williams (President)

Yeah. I'll take that one also. You know, last quarter we talked about some of the, you know, delays in the program. Everything that I reported last quarter is still in line with that discussion. One of the things I did report was Phase III blast sensor delivery at that time was scheduled for May, and we actually completed it in April. We completed that delivery early, ahead of schedule there. If you remember from last time, SOCOM has 180 days beyond May to finish their testing up and then give us feedback. Everything's on schedule with the last schedule reported.

In terms of new RFQs, there's not any RFQs at this point, but as I reported last time, we had interest from two international regions that we continue to do work with them and testing work and providing samples. You know, we definitely have a lot of activity going on in the blast sensor side of things.

Jeff Van Sinderen (Senior Analyst)

Okay, good to hear. Then just any update on international? Wondering if there's, you know, anything new you're seeing there. Maybe touch on latest initiatives to increase penetration in overseas markets.

Brad Williams (President)

Yeah. On the international front, there's a few upcoming larger tenders that are coming up in multiple categories with, you know, and I won't talk about the customer base there, but, you know, one is in the body armor side of things. We just had one of our distributors, our premier distributors in last week meeting with them, talking through that large body armor opportunity. Then there's another large holster opportunity that we expect a tender to be coming out in also. So these aren't unusual tenders. They're within the cycle that, refresh cycles that we would expect for these opportunities. You know, continuing to see an activity internationally just as we are domestically.

Jeff Van Sinderen (Senior Analyst)

Okay. Thanks for taking my questions. I'll take the rest offline.

Brad Williams (President)

Yeah, absolutely. Thank you.

Operator (participant)

Your next question comes from Matt Koranda with ROTH MKM. Your line is open.

Matt Koranda (Managing Director and Senior Research Analyst)

Hey, guys. Good evening. Thanks for taking the questions. You mentioned you're exceeding your pricing goals in the Q1. Just wondered if you could unpack or discuss some of the products where you've seen the most room for pricing action.

Brad Williams (President)

Hi, Matt. Appreciate the question. There's not one particular product where we're seeing, you know, more or less price. I mean, I think obviously some of the products we manufacture that have more exposure towards commodities. If you think on the metal side, they are, you know, they'll have more price there. You know, in general, it's been pretty consistent. We're not seeing... You know, I think we're still kind of fighting the same battle everyone's fighting, which is, you know, what happens in the coming year around inflation. How do we, you know, try to stay ahead of it or at least keep pace with it?

You know, part of that's kind of signaling to our customers of, you know, expected inflation and making sure, you know, distributors, for instance, are positioned to, you know, with their end users. Yeah, teams have done a really good job executing, but I wouldn't say anything, any one particular area sticks out.

Matt Koranda (Managing Director and Senior Research Analyst)

Fair enough on that. Just on, I think you guys said Q2 revenue probably in line with the Q1, just in terms of your near-term commentary. I guess it's hard to get a sense for us here on normal seasonality just 'cause we don't have a lot of history here. It does look like normally the last couple of years you saw a bit of an uptick. Just curious maybe if you could talk about some of the near-term product mix or demand dynamics that you see that are embedded in that commentary?

Blaine Browers (CFO)

Yeah. You know, I think the one... You know, if we were to kind of pick one quarter or kind of one seasonality aspect of the business, it would, and this isn't always true, right, historically, but more recently it's been more true than not is, you know, Q4 tends to be a little bit bigger, in particular with some of the larger EOD projects as well as some of the larger international, tenders. You know, when we kind of look through the year, you know, we have, you know, in particular around the duty gear side of the business, expect an uptick in the back half, which will drive the incremental volume. We have a large government program on the crowd control side that will, you know, ship in, Q4 as well.

In the back half of the year, you know, and this is kind of split between the two quarters, is EOD is heavier, you know, in the back half. There's a couple of those trends that are really driving that piece of it. You know, we've talked about format and, you know, not that Radar, you know, is a huge portion of the business, but, you know, Radar is disproportionately weighted, you know, towards that September to December timeframe. You know, I think going forward, Q4 will certainly be one of our larger quarters. It's difficult to say back half will be, but certainly this year it's shaped up that way.

Matt Koranda (Managing Director and Senior Research Analyst)

Okay. Excellent. I'll take the rest of mine offline. Thanks, guys.

Blaine Browers (CFO)

Thank you.

Operator (participant)

Your next question comes from Mark Smith with Lake Street Capital. Your line is open.

Mark Smith (Senior Research Analyst)

Hi, guys. Blaine, you actually just hit some of my question there, which was just, you know, if you could go over your guidance as it pertains to Q2. Sounds like revenue here is going to be flat. You know, what was the insight that you gave into gross profit margin? I believe you said Q1 would be kind of the high point. Is that right?

Blaine Browers (CFO)

Q1 is the high point for the year. You know, Q2, really Q2 through Q4, down slightly versus Q1, but still above last year was the comment there. It's still, you know, overall net positive. We just had a confluence of factors really in Q1 that contributed to a, you know, higher margin rate. Again, it'll still be incremental year-over-year.

Mark Smith (Senior Research Analyst)

Excellent. Thank you.

Blaine Browers (CFO)

You're welcome.

Operator (participant)

Your next question comes from Sheila Kahyaoglu with Jefferies. Your line is open.

Sheila Kahyaoglu (Managing Director and Equity Research Analyst)

Good afternoon, guys. Thank you so much. Just wanted to ask as a follow-up on the international opportunity, you know, how do you guys find to sell internationally? How's the profitability profile of your international business relative to U.S., if you could just talk about that for a minute?

Blaine Browers (CFO)

Sure. Yeah. What we see internationally is, let me start with the customer dynamic first. You know, in the U.S., we think law enforcement agencies, you have much, much more fragmented agencies, right? Smaller agencies. If you think about, if we just think here in Jacksonville, you know, I would guess within an hour's drive, there's probably at least half a dozen, maybe a dozen different law enforcement agencies. As you move overseas, what you tend to see is larger, right, in some cases, national police forces or larger state police forces, and in some cases, no city police forces or law enforcement agencies. You tend to have these larger tenders which attract more competition. I think it's very common in other industries I've worked in, is in more often than not in those tender situations.

In Europe, it's, you know, meet spec with lowest price. A lot of the work from our team becomes, you know, how do we entrench ourselves, differentiate our products, for those tenders to allow for that. The pricing, you know, in general, I would say is lower. Again, that's true in this industry and true in other industries I've been a part of as well as Brad. That doesn't mean they're not profitable. Because of the size of the opportunities, what you typically have on the SG&A side is less SG&A in Europe versus the U.S., right?

Just because in the U.S., you're having to reach out to a lot more distributors, a lot more law enforcement agencies to create that pool, a heavier SG&A load, whereas where you go into Europe, it's a much lighter SG&A load. You're just not having to go out and win as many customers, have as many conversations. It's a little more focused.

Sheila Kahyaoglu (Managing Director and Equity Research Analyst)

Great. Maybe just one more question, if possible, on the supply chain. You know, you guys, I think, pointed to continued extended lead times in the supply chain. How has that trended through the quarter, and is there sort of an update on when your supply chain will normalize from here?

Brad Williams (President)

I would say overall, it's been consistent with what we've been reporting. You know, we see from time to time across, you know, previously last year, we would see certain product categories or raw materials where we saw consistent issues. Now it's just kinda, you know, one-off random kinda issues that we see, you know, within various categories. They're not things that are keeping us typically from shipping. The teams have been doing a really great job managing through it. In some areas, we've added some extra safety stock and buffer inventory so that we make sure that we continue to produce, you know, for our customers. You know, your guess would be as good as ours in terms of the end in sight on these overall.

you know, the category guys are doing really well on managing it.

Sheila Kahyaoglu (Managing Director and Equity Research Analyst)

Great. Thank you so much.

Blaine Browers (CFO)

You're welcome.

Operator (participant)

Again, if you would like to ask a question at this time, please press star followed by number one on your touch-tone phone. Your next question comes from Bert Subin with Stifel. Your line is open.

Bert Subin (Equity Research Analyst)

Hey, good afternoon.

Brad Williams (President)

Hey, Bert. Bert, how you doing?

Bert Subin (Equity Research Analyst)

You guys mentioned, I think, that, you know, you've exceeded your pricing target, I think, every quarter since you went public, so that's putting you in, you know, I guess like six or seven quarters now. Can you just talk about how much you're willing to push on that part of, you know, the equation? Obviously volumes have been a little bit of a challenge. Do you think you can continue to price such that, you know, it doesn't, it doesn't ultimately impact your market share in some of these end markets?

Brad Williams (President)

Yeah, Bert. It's, it's always tricky, especially when the, you have the type of market shares that we have overall. I mean, we don't, we don't take it for granted. We, we go out to the market every day, whether it's our holster products or body armor, whatever the category is, and we fight for that share through, you know, innovation and being that trusted brand, you know, out there. What we do is we do a bottoms-up type analysis of where we feel like we're at in the market or where we're at in the market versus our, versus our competitors, and then also the features and benefits of the product.

You know, the category teams or our product teams I think do a really, really good job of making sure that our eyes are wide open, you know, where we're sitting against competition. You know, it's not infinite. Overall, there is, you know, definitely elasticity when you take a look at what goes on with the various product categories. I feel like we've got a good handle on, you know, where we need to continue to push price and where we need to back off on price overall.

Bert Subin (Equity Research Analyst)

Got it. Okay. Maybe just to follow up to some of the international questions. You know, since you did the Radar acquisition, are there any things you maybe learned that you think will make you a more successful buyer as you think about, you know, expansion in further into Europe?

Brad Williams (President)

I would say not necessarily further into Europe per se. You know, we've talked about Radar and kind of the relative size, you know, overall. For the Radar acquisition, you know, we were either gonna open our own facility and have a greenfield site or make that acquisition. You know, we decided to go down the path of making the acquisition because Radar was, you know, that type of company that fit the profile and, you know, our culture and, you know, a trusted brand in that marketplace. I would say overall, we just need to, as we acquire companies, if they're smaller companies, we just need to, you know, make sure that we're continuing to understand what support they're gonna need as they go forward.

We may not be able to move as fast with a smaller acquisition implementing our operating model versus a larger acquisition or a company that's more, let's call it professional like a Cyalume is because they've been owned by quite a few private equity companies and other private ownership as they went along. We just need to make sure we're balancing that as we go forward with our implementation of the operating model.

Bert Subin (Equity Research Analyst)

Great. Thank you very much.

Brad Williams (President)

Yep. Thanks, Bert.

Warren Kanders (Chairman and CEO)

Thank you.

Operator (participant)

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

Brad Williams (President)

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.

Operator (participant)

This concludes today's conference. Thank you. Have a great day.