Cadre Holdings, Inc. (CDRE) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Cadre Holdings' Fourth Quarter and Full Year ended December 31, 2021, Conference Call. Today's call is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Matt Berkowitz of The IGB Group for the introductions and the reading of the safe harbor statement. Please go ahead, sir.

Thank you, and welcome to Cadre Holdings' Fourth Quarter 2021 Conference Call. Before we begin, I would like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face Cadre in the industries and markets in which we operate. More information on potential factors that could affect Cadre's financial results is included from time to time in Cadre's public reports filed with the Securities and Exchange Commission. Please also note that we have posted presentation materials on our website at www.cadre-holdings.com, which supplement our comments this evening and include a reconciliation of certain non-GAAP financial measures. I would like to remind everyone that this call will be available for replay through March 16, 2022, starting at 8 p.m. Eastern Time tonight. A webcast replay will also be available via the link provided in today's press release as well as on Cadre's website. At this time, I would like to turn the call over to Cadre's Chairman and CEO, Warren Kanders.

Thank you very much. Good afternoon, and thank you for joining Cadre's earnings call to discuss our fourth quarter and full year ended December 31, 2021, results. I'm joined today by our President, Brad Williams; and CFO, Blaine Browers. 2021 was a momentous year for Cadre as we successfully completed our IPO, representing an important milestone in our company's 55-year history. Immediately following our public offering, we are pleased to have capitalized on an attractive opportunity to further expand our international presence and provide Cadre another European foothold to diversify our global footprint and add multiple growth avenues. We're excited about our long-term outlook and continue to actively evaluate additional accretive acquisition opportunities within our robust pipeline, while also maintaining a strong position to continue to drive profitable organic long-term growth. Before turning the call over to Brad, I'd like to mention that all those affected by the violence in Ukraine are in our thoughts today, and we continue to watch the tragedy unfolding there with great concern. Preserving human life is literally in our company's mission statement. And while we are sensitive to discussing business implications during a humanitarian crisis, we at Cadre stand ready to assist however we can as events develop. Brad, over to you.

All right. Thanks, Warren. So we're going to start on Slide 4. On today's call, we'll cover recent highlights, provide a brief review of our business, including an update on our acquisition and M&A strategy, and discuss our financial performance and 2022 outlook, and then we'll wrap things up at the end with a Q&A session. First, turning to Slide 5, I'll discuss our Q4 and full year highlights. 2021 was a record year for Cadre. We not only hit all-time highs within most of our key metrics, but delivered on our strategic objectives in a challenging supply chain and inflationary environment. Our teams around the world have done an excellent job tackling the multiple daily challenges with discipline and persistence. We truly do have an amazing team. Demand for our trusted brands remained strong with our mission-critical first responder markets. We continue to see attractive long-term tailwinds and recurring demand drivers in our entrenched domestic and higher-growth international markets. In addition to the long-term resilient demand for protective products within domestic law enforcement, the country has currently experienced a shortage of officers that will take many years to grow head count back to acceptable levels. Our year-over-year 12-month financial results demonstrate our entrenched positions within our markets as well as our strong operating cash flow generation and our focus on margin expansion. As you can see, we delivered strong year-over-year results with net sales growing 6%, gross profit margins expanding 210 basis points, adjusted EBITDA growing over 23% and adjusted EBITDA margin improving by 240 basis points. For the fourth quarter, the resilience of Cadre's operating model was evident, highlighted by continued gross margin and adjusted EBITDA margin improvements. Based on our low CapEx model, we continue to generate strong free cash flow that enables us to capitalize on attractive opportunities to create long-term shareholder value. Following our IPO in November and subsequent deleveraging, we took advantage of our strengthened balance sheet and significant financial flexibility to continue to allocate capital in a disciplined manner and drive growth for the benefit of our shareholders. Later on the call, Blaine will discuss our accretive acquisition of Radar Leather Division, a premier family-owned duty gear brand with a history of innovation spanning more than 60 years. Now turning to Slide 6. We lay out Cadre's strategic objectives focused on accelerating growth, both organically and through acquisitions, as well as continuous improving gross and adjusted EBITDA margins. We are pleased to have met and exceeded these objectives in 2021. In terms of our core revenue growth, we believe that our leading entrenched market positions across 3 of our life-saving product categories, body armor, duty gear and EOD, continue to provide global growth opportunities. To drive long-term organic revenue growth, our focus is on launching new innovative products, increasing customer wallet share and expanding our e-commerce and direct-to-consumer capabilities. In particular, international expansion is an especially important part of our organic road map. We believe that we have a significant long-term opportunity to take market share amid increasing investments in safety and survivability equipment across international markets. Turning to margins. We continue to achieve cost structure optimization to drive operating leverage, as highlighted by margin improvements in Q4 quarter-over-quarter and 2021 year-over-year. We're pleased with Cadre's continued execution, expanding margins, and we believe there is room to achieve further expansion going forward. Complementing our organic growth initiatives and focus on margins is Cadre's targeted M&A strategy. We believe our strong acquisition track record and active and robust pipeline focused on smaller add-ons and more transformational accretive opportunities positions us well to expand our product and technology offerings, enter new markets and grow our geographic footprint. Moving now to Slide 7. We'll discuss macro tailwinds driving demand and visibility for Cadre's mission-critical products, both domestically and internationally. Our largest market segment is law enforcement. And police protection expenditures have continued to trend upward even during past financial and industrial recessions. This demonstrates the significant demand drivers for our products through economic cycles as we've seen repeatedly that when prioritize spending, customers lean towards safety and survivability equipment to protect first responders. Despite defund of police protests, we've also seen major U.S. cities continue to increase police budgets. In fact, given increased crime rates today, including a 2021 homicide rate 44% higher than 2019, there is now a push to refund the police. Notably, The American Rescue Plan provides $350 billion to hire more police. We're also seeing positive demand fundamentals abroad. 2/3 of all NATO countries spend less than 2% of GDP targets on defense and security. Particularly in this current geopolitical turmoil, European leaders have advocated for significant increases in defense budgets. These developments are not necessarily tailwinds that will impact your business in the near term, but they support a long-term sustainable growth opportunity for Cadre over the next 5 to 10 years. Also note that we do not do business in Russia. Also supporting our business over the long term is the recurring demand characteristics of our life-saving products based on frequent recurring demand cycles. A combination of market segment tailwinds and recurring demand characteristics results in a solid foundation for our business with a predictable revenue stream. I'll now turn the call over to our CFO, Blaine Browers. Blaine?

Thank you, Brad. So Slide 8. Building on Brad's comment on M&A, Cadre has a successful history of acquiring, integrating and optimizing asset-light businesses with high free cash flow models. We take a very targeted approach and think about acquisitions in 3 buckets. The first bucket is focused on geographic expansion and expanding core products in new markets. The second is related to introducing new products in existing core markets and the final bucket is expanding our portfolio of safety products outside of our current law enforcement and military markets into attractive adjacencies within the safety and survivability landscape. Examples of this include fire, EMS and industrial safety. We target businesses with a #1 or #2 market position to have leading and defensible technology and strong brand recognition. From a financial perspective, it is important that a potential acquisition of recurring revenue profile, high cash generation related to EBITDA is asset-light and has an attractive return on investment capital. Our strong balance sheet and sizable cash flow enable Cadre to be opportunistic and pursue acquisitions consistent with these criteria. Additionally, believe our operating model's customer relationships and expansive channel help maximize the value created from acquisitions once completed. We have a pipeline of M&A opportunities that we continue to evaluate. Following the acquisition of Radar, which I will discuss in a moment, our team is currently in the process of actively evaluating other opportunities that we're excited about and that would enable us to expand the share of our existing customers' wallet. In terms of M&A evaluations, we do expect, in the current environment, we will see multiples compress. We are -- moving to Slide 9. We are excited to have completed the acquisition of Radar. It's a business with leading market shares and a reputation for innovation, safety and quality that specializes in the production of high-quality holsters, belts -- duty belts and other accessories. Consistent with the criteria that I've just outlined as well as the strategy we laid out with investors both during the IPO process and since, the acquisition enables us to advance the important strategic objective of furthering the penetration of our European markets, adding to our international footprint in the U.K. and Lithuania and providing multiple growth avenues. The integration process is well underway, and we're pleased with the progress we've made thus far. We welcome Pietro and Paolo Pellegrini and the rest of the Radar team to the Cadre family. We expect continued growth in the European market, leveraging the strength of Radar's brand, customer relationships and R&D along with Cadre's operating expertise and global resources. On Slide 10 and 11, we detail our full 2021 results as compared to 2019 and 2020, illustrating how our business performs in higher growth and lower growth scenarios. We continue to stay very focused on price, material inflation and supply chain constraints and are very proud of the team's ability to execute in this environment. First, if you compare 2020 and 2019, we achieved about 1% top line growth and expanded gross margins approximately 9% on a continued basis. EBITDA was up 33% in that period. Turning to the 12 months ended December 31, 2021, we achieved stronger growth, expanding sales 6% organically and increasing gross margin 6%, EBITDA expanded at 23%. Notably, our 2021 net sales and gross profits were all-time highs. Looking at Slide 11, I'd like to highlight the adjusted EBITDA conversion detailed on the bottom right of the slide. In 2021, EBITDA conversion was 96% versus 92% in the prior year. We are very proud of our successes, generating significant free cash flow. We don't have seasonality in our business, and more importantly, from a cash generation perspective, we have very low CapEx needs at approximately 1% of revenue [indiscernible]. We note that sales were down Q4 over Q4, from high demand in Q4 2020 for duty gear and crowd control products. As we continue to execute on our strategic initiatives around organic growth through new products and geographic expansion and M&A, spikes in demand should become more muted to the overall business due to the size, scale and the types of acquisitions that we expect to target. On Slide 12, we present our capital structure as of 12/31. Following the closing of the IPO, we used a portion of the proceeds to pay down debt as planned. We paid down $59.4 million of debt outstanding and on existing term loan and revolving loan under the new credit agreement we entered in the third quarter. Our net leverage was reduced to approximately 2 turns, which provides us significant financial flexibility to grow organically and more importantly, inorganically through acquisitions. Turning to our 2022 outlook on Slide 13. Cadre expects to generate net sales in 2022 between $434 million and $441 million and adjusted EBITDA in 2022 of between $70 million and $75.5 million. Additionally, we expect adjusted EBITDA conversion to be between 92% to 95% for the full year 2022. In terms of our quarterly outlook, we anticipate net sales between $101 million and $103.5 million in Q1. This is driven by project timing as well as our growth initiatives ramping up later in the year. Please note that we do not expect to provide quarterly guidance on a go-forward basis. Now I'll turn it back over to Brad for the concluding remarks.

Thank you, Blaine. Before opening the call to questions, I note that coming off a record year where we delivered on our strategic objectives in a challenging supply chain and inflationary environment. We continue to effectively manage the business against these realities, [ drilling ] on our industry leadership and remarkable team of professionals. We're extremely optimistic about our long-range -- long-term prospects underpinned by our rich history dating back to 1964 and the strong macro tailwinds driving demand and visibility for Cadre's mission-critical products, both domestically and internationally. Our focus going forward remains on accelerating growth, both organically and through acquisitions, as well as continuously improving gross and adjusted EBITDA margins. Taking advantage of our significant financial flexibility and strong cash flow generation, we are pleased to have completed our first acquisition following our recent IPO. We are currently working through a robust pipeline as we seek to further capitalize on accretive opportunities that meet our stringent criteria and create enduring value for shareholders. With that, operator, please open up the lines for Q&A.

[Operator Instructions] The first question is from the line of Matt Koranda with ROTH Capital.

It's Mike Zabran on for Matt. So regarding the geopolitical tension in Ukraine, any observations you've made in terms of change in quotation behavior for EOD equipment? And any insight on your long-term demand that could come from that?

I appreciate the question. On the EOD side, I think it's a little too early to tell if that demand can be driven by deployment of arms in the conflict zone. So it's something we're watching closely. We're staying very close to our customers and ready to serve them when the time comes. But we haven't seen too much on the EOD side. As we kind of think about the armor side of the business, we have seen requests for defensive armor in that region, both from -- primarily from NATO countries. Now none of this is really below to the point where they are firm orders, but it's something we're working to gain very closely with our end users and distributors being able to satisfy needs our customers may have.

Got it. Okay. Yes, that makes sense. And then could you just speak to the margin cadence for 2022? Should we continue to expect some sequential pressure? And maybe provide some insight on how you -- how inflationary and supply chain headwinds are factored into the guidance?

Sure. So I think as we think about the full year, we expect, as we kind of guided on the top line, lower volume in Q1, and then as we kind of move through the rest of the year, we'd expect margins to expand from there. I think on the pressures we're seeing in the market, certainly on the supply chain side, we're seeing more constraints, I think, like most companies. We haven't faced anything that's been critical or material, but it's something the teams do a really job -- a really good job of mitigating and really kind of working that angle. On the price inflation side, that's one thing we're certainly very proud of with the teams' and the company's ability to execute on that price. And I think they did an overall excellent job in 2021, as you can see from the results of staying ahead of that curve. So we're continuing to combat it both with the -- in the supply chain, but also from the price perspective and comfortable with kind of where we're at. The team has done just a great job of really getting in front of it and being proactive.

The next question is from the line of Daniel Imbro with Stephens.

First question, I want to follow up on that previous answer, just around the NATO defense request. I understand that those aren't orders yet. But I'm curious around the production side. I mean what's your capacity utilization today? And if those requests turned into orders, do you have the ability to turn on production quickly? Or would you have to maybe produce those instead of other goods, so maybe there's less upside to the guy as those turn into firm orders?

No. I appreciate the question. So overall, when you look at the type of products that we are getting inquiries on, it's really around what we call hard armor, so to be things like helmets and plates, and then also our soft armor line at this point is where we're seeing most of the activity. Some of the requests have been for inventory that we have in stock because as you can imagine from a Ukraine perspective, there's some -- potentially some urgent needs. So we've seen some of that activity for some of those products in terms of quoting. And then in other cases, in terms of capacity, we're -- in most of the locations, we're running a single ship. So we do have the capacity to be able to flex up. We've invested in a lot of capital for us over the last few years to make sure we've got cutting capacity and other capacities overall. So it just depends. I mean if some of these orders end up being come to fruition, their larger MOD type orders with large, large quantities, there's not many companies that would be able to immediately produce products like that. It would also take them over a decent lead time.

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

Yes, it's a great question. So on that one, let me just start off, just as a reminder of our current footprint that we have over in Europe, we have a facility in the U.K. from an acquisition that we made, actually 2 acquisitions of hard armor company that was early 2017, and then a soft armor company in early 2017. Both of those were in the U.K. We recently consolidated one of those facilities into the other. So we have a single location now. And then we also have a facility in Lithuania that is a armor facility. So that was our current footprint before we added the Radar business. So Radar gives us a -- really a stronghold into the European market for our holster category. That's the way you should really think about it. And when we look at the holster landscape internationally, we have a good base of the Safariland brand in that marketplace, but then also Radar and another couple of competitors make up a good portion of that market along with us. So that acquisition was really around holsters and giving us some -- the ability to be local with local customer service, some more local salespeople to work with distributors. It gives us a manufacturing footprint that we can leverage with our Safariland branded holsters that we currently make here in the U.S., that in Mexico that we ship with freight and duties and lead time. So we feel like it's just an absolutely astounding opportunity for us there to expand that holster share within the marketplace. But it's really much different in the armor world. So we don't view that acquisition as something that we would leverage from an armor perspective.

Got it. That's helpful. And then last one for me. I think in the prepared remarks, you talked about The American Rescue Plan, what is it, $350 billion for [indiscernible] funding. I'm curious, one, how long do you think that takes to get spent, over how many years? And then how much of that is in existing Cadre categories where your TAM is actually going to grow or in categories you plan on going into so that you could actually go after some of that increased spending?

It's hard to tell. But a lot of the largest gap that's out there today, as we had in the remarks, is around head count, okay? So when you look at U.S. domestic law enforcement, as we saw over the last 3 years, there's been a lot of retirements that have been going on, some early retirements. Retirements has been on schedule. The head count is, in some cases we've seen, double-digit significant anywhere from 15% to 20% down compared to what they were before 2019, for example. So we expect a lot of that funding will be not just around hiring new officers. But if you think about new officers to come in, they have to be outfitted with products, right, when they're put on the street. So they need uniforms, they need body armor, they need holsters, they need protective equipment. If they're SWAT members, they'll need hard armor, which will be helmets, plates, shields and different products like that also. So we -- based on the protective nature of our product, we see opportunities for us when there's head count that increases for us to follow that trend. But we do know that -- just like a lot of labor markets are right now, especially in this area, it is tough to recruit and have officers come in -- into that position. So we think it's going to take a significant amount of time for those head counts to lift.

The next question is from the line of Mark Smith with Lake Capital Markets.

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

Between $101 million and $103.5 million.

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

Yes. So I think the robustness of the funnel is very similar to how it's been in the past kind of 6 to 9 months for us, which is a positive. We feel the funnel is very robust. I think on the multiples, we're starting to see signs of softening. I wouldn't say it's across the board or dramatic. But I think those kind of early signs coupled with what we're seeing in the macro environment lead us to believe that we will see some future softness and a little more widespread in the future. And for us, with the balance sheet we have and be opportunistic lead us to be pretty excited about the future.

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

Yes. So we're, again, very proud of the team's ability to execute. So even going back to last year, the company and the team have been able to stay ahead of inflation and then stay ahead via price. So we've been able to not only maintain but expand margins through 2021. Certainly, what we've seen in the last 5 to 6 months, inflation picking up even more than what we saw in the first 9 months of the year. But again, that's been talked about and we are trying to stay ahead of that with incremental price increases. Again, one of the really helpful things for us as a company is the positioning and brand of our products. So we can -- we have the ability and opportunity to kind of maintain that premium in this environment because of how our products perform and generally goes into them with a strong brand name. So we're trying to stay ahead of it. We're doing our best job on the pricing. We feel we're set up well for this year. On the supply chain constraint, it's a bit of a newer story for us here in the last 6 to 7 months, similar to inflation. We didn't see a lot of supply chain constraints in the kind of first 6 to 9 months of the year. As we got into Q4, we have seen more pinch points. And has it been any 1 large supplier or 1 critical product, but it's really managing the 20s in our supply chain that's become the challenge. So the teams have done a good job up to this point of mitigating that. Where needed, we've taken inventory positions to help kind of smooth out some of that -- some of those challenges. But it's something we watch closely, like everyone, it's on everyone's radar. So we're trying to stay on top of it, stay in front of it, regularly communicating internally on challenges and how we overcome.

The next question is from the line of Bert Subin with Stifel.

So you've added Radar as of January, plus it seems like demand from Europe is generally getting better. Can you walk through what the revenue headwinds are just relative to 2021? I assume they're primarily commercial. And if that is the case, what are your expectations for that business as we go through '22?

Great. Great question, Bert. And I think you nailed the first part of it. Commercial on the first half of last year was very strong for us. We saw that drop down in the back half and -- still above historical levels, but certainly down from the first half, and that's creating some of the tough comp here as we move into the first half. Now the team is working on some growth opportunities to help offset that as we move into the back half. So I think that's kind of the first component. The second component makes it a bit of a tougher comp this year, for the full year, is really the crowd control. The demand coming out of 2020 was very strong and continued really into the first half of 2021, and we're seeing that. They're really going to get to a normal level. Still, I would say, kind of like commercial still above historical levels. I think the law enforcement [ machines ] are a little more attuned to what could happen and to be, I would say, a little add more stock on the shelves. I think previous to that, the stock probably wasn't as high as what they needed in turn for those -- that summer of 2020. Those are really kind of the big components. We always have large projects for us. We've talked about that kind of come and go in a given year, but those are the 2 biggest pieces for us.

That's helpful, Blaine. And just as a follow-up, I think, to the earlier question about The American Rescue Plan. What is your view on officer head count growth? I mean it sounds like you think it's sort of going to stay down for a period of time. If that shortage does remain intact, does that make you incrementally more interested in increasing your military pressure?

Incrementally interested in, only if the margins match what we've talked about. So one of the things we've talked about in the past is just our business so far from a military perspective is really around our bomb suites made in globally with military and then also our U.S. military branches with our holsters. So those are our 2 biggest areas that we supply the military. Those are the 2 areas that we would continue to stay focused on. If there's an opportunity outside of that in the military, we have to just really look at it closely and evaluate ,especially if it's body armor.

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

No, not necessarily geographically, but I want to make sure that we're clear just to kind of underscore something Blaine just answered a minute ago, was just around -- last year, we did not see as many issues on the supply chain side, okay? But this year, we have seen those crop off. So it's not necessarily from any one given region. It's in those areas, Blaine mentioned the 20s, which would be categories of suppliers that are smaller suppliers for us that can be as critical as a more expensive component for our finished goods. So that's an area that we're trying to manage by various suppliers and various products.

The next question is from the line of Jeff Van Sinderen with B. Riley.

Just wanted to clarify a couple of things. In terms of pricing, are there any areas where you have commitments or prices are set where you might have margin pressure?

Yes. So we do -- we do have some fixed price contracts. In a lot of cases, if we kind of think about -- there's a couple of buckets inside there. And on the EOD side, longer lead time products typically have the products ordered. We ordered -- from the supply chain at the time, we get the order. So fairly protected there, it becomes more of the ongoing multiple shipments, but it's not terribly significant there. The U.S., we do not own a lot of contracts direct with agencies. In most cases, we go through distributors. So we do have a bit of insulation there. But we also work with our distributors to pass along. And I think 1 thing we observed, it's never easy to have the price discussion, but this is an environment where, as a consumer, we're all paying more for standard things. So I won't say it's easy and expected, but certainly people understand kind of what we are really saying there. Europe, we do [indiscernible] business. They do have some contracts direct and mitigated some of the pressure through fixed supply contracts for life of those contracts. But there's nothing out there that I think that worries us greatly, and the successes we've had both last year and this year on price gives us some little optimism that we can continue staying private. Now it's a touch long. And it's kind of a day-to-day battle on there on getting price, but given the teams have just done a fantastic job of doing that.

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

There's been some orders. I would just say it's not broad-based. This isn't a case where we have $5 million or $10 million worth of shipments, moving out a month of supply chain now. The teams are really [ coming and compound ] this. So as you get in order to push out for supply chain constraints, they're looking at order points. And they've done really, really well in that area. But it's something we will watch closely. And certainly a little different -- or a lot different than what we saw in like the first kind of 6 to 9 months of last year.

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

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

The next question is from the line of Brian Gesuale of Raymond James.

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

Yes. So like you said, it's -- we're in the early phases from an acquisition standpoint. So really where we're at from a synergy standpoint is we've put together some functional teams that are working on what we call the first 100-day type basic. These are more functional type teams like IT, tax, accounting, finance, that side of things. So those teams are together and fully executing on their 100-day plan. The second area is manufacturing. We put together a small team from Cadre plus also the folks from Radar's perspective that are now teamed up together. We have a trip on the calendar now for our -- a couple of our manufacturing folks to go over and visit Radar and spend time, learning how they manufacture and digging into their processes. So that piece is well underway. They have identified various areas of products from Safariland perspective that we're targeting to take a look at for localization, which will continue to help us from a freight and duty standpoint when you look at the supply chain today. And then we've got a small supply chain team that's been put together. They're diving into any of the leverage points. In the commodities or the type of products and components that Radar uses, in raw materials versus our Safariland brand of holster so that we can look at leveraging those. And then lastly, from a product management perspective, we have both teams joined together, handling various positioning activities as we see tenders and quotes come up internationally. So that we make sure that we're positioning the Safariland brand and the Radar brands appropriately on those tenders. Our objective overall for this is to make sure that we win. Whether we win with Safariland, with the position of that product, or we win with Radar with the position of that product, either way it goes, we're happy for the win.

Great. Maybe just 1 more. I know you've answered a bunch on M&A, but can you just talk a little bit about how -- what phase of maturity some of your discussions might be? And also, if there are any type of manpower constraints on your end with integration. So in other words, if multiples came in pretty attractively here and there were a bunch of opportunities, is there any bandwidth constraints you can have?

Well, you always get -- if we're fortunate enough, you know how M&A goes versus the kind of cycles through depending on what opportunities are out there, whether they are things that we're cultivating or come through a process to us. If we had 3 or 4 all at 1 time, yes, we would have some bandwidth challenges and a lot of companies would, no matter what size you are, when you look at the lean nature of companies that are out there doing what we do and the type of operating models that we have. So I think it just depends on the number. In terms of maturity, as Blaine talked about a little bit earlier, we're excited about the funnel that we have today. We also had some good opportunities to take a look at some assets over the last 3 or 4 months. We continue to operate with some great discipline in that process with our team, making sure that we're evaluating opportunities extremely closely. And I would just say that we'll continue to work the funnel hard.

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

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

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