Cadre Holdings Inc (CDRE) 2024 Q2 法說會逐字稿

Good morning and welcome to the Cadre Holdings second quarter 2024 conference call. Today's call is being recorded. (Operator Instructions)

早安，歡迎參加幹部控股 2024 年第二季電話會議。今天的通話正在錄音。（操作員說明）

At this time, I'd like to turn the conference over to Matt Berkowitz of the IGB group for introductions and the reading of the Safe Harbour Statement. Please go ahead, sir.

現在，我想將會議交給 IGB 小組的 Matt Berkowitz 進行介紹並宣讀安全港聲明。請繼續，先生。

Thank you and welcome to today's conference call to discuss Cadre second quarter results. Before we begin, I'd like to remind everyone that during today's call, we'll 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.

謝謝並歡迎參加今天的電話會議，討論幹部第二季業績。在開始之前，我想提醒大家，在今天的電話會議中，我們將做出一些前瞻性聲明，並且我們是根據 1995 年私人證券訴訟改革法案的安全港條款做出這些聲明的。這些前瞻性陳述反映了我們基於對當今已知資訊的理解的最佳估計和假設。

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

這些前瞻性陳述受到 Cadre 以及我們經營所在產業和市場所面臨的風險和不確定性的影響。有關可能影響 Cadre 財務業績的潛在因素的更多信息，不時包含在 Cadre 根據證券交易委員會發布的公開報告中。另請注意，我們已在網站 www.cadre-holdings.com 上發布了演示材料，以補充我們今天早上的評論，並包括某些非公認會計準則財務指標的調節表。

I'd like to remind everyone that this call will be available for replay through August 26, 2024, starting at 8:00 PM Eastern time tonight. A webcast replay will also be available via the link provided in Friday's press release, as well as on Cadre's website. At this time, I'd like to turn the call over to Cadre's chairman and CEO, Warren Kanders.

我想提醒大家，本次電話會議將在 2024 年 8 月 26 日（東部時間今晚 8:00 開始）之前進行重播。還可以透過週五新聞稿中提供的連結以及幹部網站上的連結進行網路廣播重播。現在，我想將電話轉給 Cadre 董事長兼執行長 Warren Kanders。

Thank you. Good morning and thank you for joining cadre's earnings call to discuss our results for the second quarter of 2024. I am joined today by our President, Brad Williams; and Chief Financial Officer, Blaine Browers.

謝謝。早安，感謝您參加幹部財報電話會議，討論我們 2024 年第二季的業績。今天我們的總統布拉德威廉斯也加入了我的行列。財務長布萊恩‧布勞斯 (Blaine Browers)。

The effectiveness of our operating model and resilience of our businesses was evident based on our record Q2 financial performance, highlighted by substantial net sales and net income growth year-over-year. Importantly, we also saw adjusted EBITDA margin improvement, consistent with our margin expansion objectives. We have delivered an operational beat-and-raise quarter with Q2 results that topped expectations and increased full year net sales guidance.

從我們創紀錄的第二季財務業績來看，我們的營運模式的有效性和業務的彈性是顯而易見的，尤其是淨銷售額和淨利潤同比大幅增長。重要的是，我們也看到調整後的 EBITDA 利潤率有所改善，這與我們的利潤率擴張目標一致。我們已經實現了一個運作良好的季度，第二季度的業績超出了預期，並提高了全年淨銷售指引。

We are exceedingly pleased with the ongoing rollout of the Cadre operating model and continue to be excited about the potential to further enhance performance and execution throughout our organization. By leveraging superior operating tools and business processes, we are able to produce profitability improvements above our natural growth rate.

我們對 Cadre 營運模式的持續推出感到非常高興，並對進一步提高整個組織的績效和執行力的潛力感到興奮。透過利用卓越的營運工具和業務流程，我們能夠實現高於自然成長率的獲利能力提高。

Taking a step back, favorable macro trends continue to fuel global demand for our mission critical safety equipment. A strength of our business has been its resilience through cycles and we continue to see sustainable growth opportunity, no matter the economic, political, or geopolitical climate. Public safety spending has only trended upwards and ongoing conflicts in Ukraine, the Middle East, and elsewhere underscore the importance of the work that we do.

退一步來說，有利的宏觀趨勢繼續推動全球對我們的關鍵任務安全設備的需求。我們業務的優勢在於其在各個週期中的彈性，無論經濟、政治或地緣政治氣候如何，我們都將繼續看到永續成長的機會。公共安全支出呈上升趨勢，烏克蘭、中東和其他地區持續不斷的衝突凸顯了我們所做工作的重要性。

We are proud of the trust that our customers and our end users place in Cadre's equipment to keep them safe in life-threatening situations. We are confident in Cadre's forward outlook and expect to capitalize on attractive opportunities to further grow our platform and enhance our market leadership over the long term.

我們為客戶和最終用戶對 Cadre 設備的信任而感到自豪，以確保他們在危及生命的情況下保持安全。我們對 Cadre 的前景充滿信心，並期望利用有吸引力的機會進一步發展我們的平台並增強我們的長期市場領導地位。

A key component of this strategy is mergers and acquisitions and we are committed to building on our long track record of executing accretive transactions that either expand our product suite, grow our geographic footprint, or enable us to enter new verticals. With net leverage down to 1.1 times, we have the financial strength and flexibility to get deals done.

這項策略的關鍵組成部分是併購，我們致力於建立我們執行增值交易的長期記錄，這些交易要么擴大我們的產品系列，擴大我們的地理足跡，要么使我們能夠進入新的垂直領域。隨著淨槓桿率降至 1.1 倍，我們擁有完成交易的財務實力和靈活性。

On a near term basis, we will continue to be active in our existing law enforcement, military, and nuclear markets and see ample opportunities to accelerate growth in our existing portfolio. Based on these opportunities and the status of ongoing discussions, we believe we are well positioned to complete at least one transaction before the end of 2024 while maintaining patience and discipline.

短期內，我們將繼續活躍於現有的執法、軍事和核子市場，並看到加速現有投資組合成長的充足機會。基於這些機會和正在進行的討論的狀態，我們相信我們有能力在 2024 年底之前完成至少一項交易，同時保持耐心和紀律。

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

感謝您今天與我們在一起，我會將電話轉給布拉德。布拉德，交給你了。

Thank you, Warren. On today's call, Blaine and I will provide a Q2 update and business overview, including recent trends of financial performance, followed by a Q&A session. We'll begin on slide five. We are pleased with our strong second quarter results driven by outstanding strategic execution by our teams globally, as well as significant demand for our mission-critical safety equipment. As Warren mentioned, we continue to make progress advancing the Cadre operating model, and our commitment to getting a little better every day is steadily improving.

謝謝你，沃倫。在今天的電話會議上，布萊恩和我將提供第二季度的最新情況和業務概述，包括財務業績的最新趨勢，然後進行問答環節。我們將從第五張投影片開始。我們對第二季的強勁業績感到滿意，這得益於我們全球團隊出色的策略執行力，以及對我們關鍵任務安全設備的巨大需求。正如 Warren 所提到的，我們在推進 Cadre 營運模式方面不斷取得進展，並且我們對每天變得更好的承諾正在穩步提高。

We saw positive portfolio mix offset by product mix in Q2, and we continue to benefit from our premium positions in the market, generating significant quarterly net sales, net income, and adjusted EBITDA growth with strong margins. We maintained a healthy orders backlog, which was $151 million as of June 30. As expected, we saw reductions in the EOD and duty gear backlog as large shipments were delivered in the second quarter.

我們在第二季度看到積極的投資組合被產品組合所抵消，並且我們繼續受益於我們在市場中的優質地位，產生了顯著的季度淨銷售額、淨利潤和調整後的EBITDA 增長，利潤率強勁。截至 6 月 30 日，我們保持健康的積壓訂單，達到 1.51 億美元。正如預期的那樣，隨著第二季度大量發貨，我們看到了 EOD 和值班裝備積壓的減少。

Turning to our M&A funnel, it remains robust. As you all know, M&A is a core focus for us to increase value, and we continue to pursue transactions aligned with our highly selected criteria aimed at companies with strong margins, leading and defensible market positions, as well as recurring revenues and cash flows. In the near term, as Warren alluded to, we see the most actionable opportunities in our current verticals, which include the law enforcement, military, and nuclear markets. We are confident that there are plenty of targets in these areas to enable Cadre to achieve our growth objectives.

談到我們的併購管道，它仍然強勁。眾所周知，併購是我們增加價值的核心重點，我們將繼續尋求符合我們精心挑選的標準的交易，這些交易針對的是利潤豐厚、市場地位領先且穩固的公司，以及經常性收入和現金流的公司。正如沃倫所提到的，短期內，我們在當前的垂直領域中看到了最具可操作性的機會，其中包括執法、軍事和核子市場。我們相信，這些領域有許多目標可以幫助 Cadre 實現我們的成長目標。

Blaine will discuss our approach at greater length shortly. Thus far this year, we've completed the acquisitions of two high-quality businesses, both of which support mission-critical initiatives with recurring revenue and compelling growth opportunities. ICOR technology is a trusted global supplier of reliable, innovative, and cost-effective EOD robots. And Alpha Safety provides a highly engineered technical product and services focused on radiation protection and safety in mission-critical operating environments. We've been pleased with the early progress integrating both businesses, and we look forward to leveraging the Cadre operating model to continue to drive superior execution.

布萊恩很快就會更詳細地討論我們的方法。今年到目前為止，我們已經完成了對兩家優質企業的收購，這兩家企業都透過經常性收入和引人注目的成長機會來支持關鍵任務計劃。ICOR technology 是值得信賴的全球供應商，提供可靠、創新且經濟高效的排爆機器人。Alpha Safety 提供高度工程化的技術產品和服務，專注於關鍵任務操作環境中的輻射防護和安全。我們對整合兩項業務的早期進展感到滿意，並期待利用 Cadre 營運模式繼續推動卓越的執行。

In addition to maintaining significant financial strength and flexibility to opportunistically execute on our M&A objectives, Cadre has a proven track record of returning capital to shareholders. We've paid 11 consecutive quarterly dividends since going public, and raised our dividend earlier this year to $0.35 per share on an annualized basis.

除了保持強大的財務實力和靈活性以機會主義地執行我們的併購目標外，Cadre 在向股東返還資本方面擁有良好的記錄。自上市以來，我們已連續支付 11 個季度股息，並在今年稍早將年化股息提高至每股 0.35 美元。

Turning to slide six, I'll briefly highlight the long-term tailwind supporting Cadre's growth opportunity across both public safety and nuclear safety sectors. Our largest market segment is law enforcement, and police protection expenditures have continued to trend upward even during previous financial and industrial recessions.

轉向第六張投影片，我將簡要地強調支持幹部在公共安全和核安全領域成長機會的長期順風。我們最大的市場領域是執法，即使在先前的金融和工業衰退期間，警察保護支出也持續呈上升趨勢。

Demonstrating the significant demand drivers for our products through economic cycles, we've seen repeatedly that when it comes to funding priorities, customers lean towards safety and survivability equipment to protect first responders.

我們多次看到，在資金優先事項方面，客戶傾向於安全和生存設備來保護急救人員，這證明了我們的產品在整個經濟週期中具有重要的需求驅動力。

Regarding our new nuclear safety vertical, it is worth highlighting again the long-term tailwinds driving growth, which we think about in terms of three key nuclear missions. Our suite of products and services addresses environmental safety, national security, and the growing global demand for nuclear energy.

關於我們新的核安全垂直領域，值得再次強調推動成長的長期有利因素，我們從三個關鍵核任務的角度來考慮這一點。我們的產品和服務套件致力於解決環境安全、國家安全以及全球不斷增長的核能需求。

First, and Alpha Safety's largest by revenue, is environmental safety, which primarily relates to Department of Energy mission-critical and mandated cleanup efforts from decades of nuclear weapons-developed and government-sponsored nuclear energy research.

首先，也是阿爾法安全公司收入最大的部分是環境安全，它主要涉及能源部數十年來核武開發和政府資助的核能研究的關鍵任務和強制清理工作。

Second is national security, with expanding national defense programs driving consistent and growing demand. And third, investment in nuclear is growing based on increasing global demand for sustainable and clean energy.

其次是國家安全，不斷擴大的國防計畫推動了持續成長的需求。第三，由於全球對永續和清潔能源的需求不斷增長，對核能的投資也不斷增長。

Turning to slide seven, I'll briefly touch on a couple of trends related to officer headcount in new products. Trends in North American law enforcement hiring have remained mostly unchanged in 2024. As spend per officer remains at a stable, positive level, efforts to fill open positions are ongoing. Consistent with our focus on innovation, we've successfully launched a number of new products in the past 18 months across many of our categories. Feedback continues to be positive as customers begin to make decisions to adopt the new products.

轉向第七張投影片，我將簡要介紹與新產品中的官員人數相關的幾個趨勢。2024 年，北美執法人員招募趨勢基本維持不變。由於每位官員的支出保持在穩定、積極的水平，填補空缺職位的努力仍在繼續。與我們對創新的關註一致，我們在過去 18 個月內成功推出了許多類別的新產品。隨著客戶開始決定採用新產品，回饋仍然積極。

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

我現在將把電話轉給我們的財務長 Blaine Browers。

Thanks, Brad. I'll kick off my comments with a review of our M&A strategy. Reiterating Brad's comments, we continue to evaluate M&A consistent with our highly selected key criteria listed on slide eight. While we maintain a longer-term focus on opportunistically exploring new verticals to further diversify our platform, for now, our primary objective is to integrate and build out the businesses we currently own.

謝謝，布拉德。我將首先回顧我們的併購策略。重申布拉德的評論，我們將繼續根據幻燈片八中列出的我們精心挑選的關鍵標準來評估併購。雖然我們長期關注機會主義探索新的垂直領域以進一步實現我們平台的多元化，但目前我們的主要目標是整合和建立我們目前擁有的業務。

As we've shared previously, Alpha Safety, for example, has a proven track record of executing M&A, and the platform comes with 100-plus potential targets that we continue to evaluate. We're more focused on add-on opportunities that realize synergies, enhance capabilities, and expand the customer base or expand our geographic footprint.

例如，正如我們之前分享的那樣，Alpha Safety 在執行併購方面擁有良好的記錄，而該平台附帶了我們繼續評估的 100 多個潛在目標。我們更專注於實現協同效應、增強能力、擴大客戶群或擴大我們的地理足跡的附加機會。

Turning now to a summary of Cadre expansion performance, slides 10 and 11 detail our Q2 results. As you can see on slide 10, on both a year-over-year and sequential basis, we generated increased net sales, net income, adjusted EBITDA, and adjusted EBITDA margins. We continue to make progress driving margin expansion and generated a solid Q2 gross profit margin of 40.6%. I'd like to note that our Q2 margin was impacted by amortization of inventory step-up and intangibles related to the two new acquisitions. Including these impacts, the profit margin was 42.3%.

現在轉向幹部擴展績效摘要，投影片 10 和 11 詳細介紹了我們第二季的結果。正如您在幻燈片 10 中看到的那樣，無論是同比還是環比，我們的淨銷售額、淨利潤、調整後 EBITDA 和調整後 EBITDA 利潤率均有所增加。我們繼續在推動利潤率擴張方面取得進展，第二季毛利率穩定達到 40.6%。我想指出的是，我們第二季的利潤率受到與兩項新收購相關的庫存增加和無形資產攤銷的影響。包括這些影響，利潤率為42.3%。

Illustrated on slide 11 is net sales and adjusted EBITDA growth year-over-year, including our updated 2024 guides, which I'll discuss in more detail in a moment. You'll see that at midpoint, this outlook implies full-year revenue and adjusted EBITDA growth this year of 19.5% and 22.9%, respectively. We are pleased to be on track to meet our double-digit percentage growth objectives.

第 11 張投影片顯示的是淨銷售額和調整後 EBITDA 年成長，包括我們更新的 2024 年指南，我稍後將更詳細地討論。您會發現，在中期，這一前景意味著今年全年收入和調整後 EBITDA 成長率分別為 19.5% 和 22.9%。我們很高興能夠實現兩位數的成長目標。

On slide 12, we present our capital structure as of June 30. After completing the acquisitions of ICOR and Alpha Safety in the first quarter, our net debt was reduced by $23.3 million in Q2, and our net leverage was down to 1.1 times. This leaves the company with ample dry powder to continue to pursue acquisition opportunities.

在投影片 12 上，我們展示了截至 6 月 30 日的資本結構。在第一季完成對 ICOR 和 Alpha Safety 的收購後，第二季我們的淨債務減少了 2,330 萬美元，淨槓桿率降至 1.1 倍。這使得該公司有足夠的乾粉繼續尋求收購機會。

We provide our modified 2024 guidance in slide 20, which reflects the strong demand we've seen so far this year, as well as the team's success to continue to execute on our strategic initiatives. As previously disclosed, we did experience a cyber incident in July. The guidance today includes the expected financial impact. We now expect to generate net sales in the range of $571 million to $582 million versus our previous outlook of $553 million to $572 million.

我們在投影片 20 中提供了修改後的 2024 年指導，這反映了我們今年迄今為止看到的強勁需求，以及團隊在繼續執行我們的策略舉措方面所取得的成功。正如之前所披露的，我們確實在 7 月經歷了一次網路事件。今天的指導包括預期的財務影響。我們現在預計淨銷售額將在 5.71 億美元至 5.82 億美元之間，而先前的預期為 5.53 億美元至 5.72 億美元。

We've taken a prudent approach based on the cyber incident and maintained the midpoint of our adjusted EBITDA guides with the current expectation that adjusted EBITDA will be in the range of $103 million to $109 million. We expect capital expenditures to be in the range of $7 million to $9 million. But for the incident, we would be raising our adjusted EBITDA guides as well.

我們根據網路事件採取了謹慎的態度，維持了調整後 EBITDA 指南的中點，目前預計調整後 EBITDA 將在 1.03 億美元至 1.09 億美元之間。我們預計資本支出將在 700 萬至 900 萬美元之間。但對於這一事件，我們也將提高調整後的 EBITDA 指南。

We now expect Q3 revenue will be similar to 2023 Q3. We expect our gross margins will be impacted by approximately 5 points from what we've seen so far this year as we continue to pay all employees during the incident. This leads to an expectation that adjusted EBITDA rate for Q3 to be in the 10% to 12% range. With the teams working diligently, we expect Q4 to be a very strong quarter reflected of us in catch-up following the cyber incident.

我們現在預計第三季營收將與 2023 年第三季相似。我們預計，由於我們在事件期間繼續向所有員工支付工資，因此我們的毛利率將受到今年迄今為止約 5 個百分點的影響。這導致第三季調整後 EBITDA 率預計在 10% 至 12% 範圍內。由於團隊的努力工作，我們預計第四季度將是一個非常強勁的季度，反映出我們在網路事件之後的追趕。

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

現在我將把它轉回布拉德以徵求結論意見。

Thank you, Blaine. In summary, we are highly pleased with our team's continued execution, which is reflected in our strong second quarter financial results. We increased net sales, net income, and adjusted EBITDA while generating adjusted EBITDA margin expansion.

謝謝你，布萊恩。總而言之，我們對團隊的持續執行力感到非常滿意，這反映在我們強勁的第二季財務表現中。我們增加了淨銷售額、淨利潤和調整後 EBITDA，同時擴大了調整後 EBITDA 利潤率。

Complementing our core organic growth initiatives, we believe that we will see additional attractive M&A opportunities in the coming months that enable us to expand our platform and build on our positions of strength over the long term.

作為我們核心有機成長計畫的補充，我們相信未來幾個月我們將看到更多有吸引力的併購機會，使我們能夠擴大我們的平台並長期鞏固我們的優勢地位。

Supported by Cadre's entrenched positions and favorable industry trends across our law enforcement, first responder, military, and nuclear end markets, we're excited about our future prospects and look forward to continuing to deliver on our strategic objectives.

在 Cadre 在執法、急救、軍事和核終端市場中的穩固地位和有利的行業趨勢的支持下，我們對未來前景感到興奮，並期待繼續實現我們的戰略目標。

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

那麼，接線員，請打開問答線。

(Operator Instructions) Larry Solow, CJS Securities.

（操作員指令）Larry Solow，CJS 證券。

Great. Thanks. Good morning, everybody. I guess just on the cybersecurity bridge, so it sounds like demand is obviously not changing or actually a little better. You're increasing your guidance. It just looks like you won't be able to meet that demand until maybe Q4, and it's going to be at a higher cost for you guys, I guess, both on the gross margin side.

偉大的。謝謝。大家早安。我想只是在網路安全橋上，所以聽起來需求顯然沒有變化，或者實際上更好了一點。你正在增加你的指導。看起來你可能要到第四季才能滿足這一需求，而且我想，對你們來說，無論是在毛利率方面，這都會付出更高的成本。

And then it looks like some additional third-party costs will also increase from the SG&A. Is that kind of a fair way to look at it going forward and then hopefully resolve in Q4?

然後，看起來 SG&A 也會增加一些額外的第三方成本。這是一種公平的方式來看待未來並希望在第四季度得到解決嗎？

That's correct, Larry. From the vast majority of our demand, it still exists. It's been consistent. And I think this is a great kind of inside view on the stickiness of that demand. So we're having some revenue shift out from Q3 to Q4, but we don't expect any significant loss of demand.

沒錯，拉里。從我們絕大多數的需求來看，它還是存在的。一直是一致的。我認為這是對這種需求黏性的一種很好的內部觀點。因此，我們的部分收入從第三季度轉移到第四季度，但我們預計需求不會有任何重大損失。

Customers -- end users are still big fans of the products, still world-class premier products out there in the marketplace. So it's really just that movement into Q4. And we'd like to thank kind of internally the team's execution and consistency through this process. There is some cost embedded in the guidance, Larry, as you kind of implied. And we'll be able to more clearly articulate that as we move through Q3 and get to the Q3 earnings.

客戶－最終用戶仍然是這些產品的忠實粉絲，仍然是市場上世界一流的優質產品。所以這其實只是進入第四季的走勢。我們要感謝團隊在這個過程中的執行力和一致性。拉里，正如您所暗示的那樣，指南中包含了一些成本。當我們進入第三季並獲得第三季收益時，我們將能夠更清楚地闡明這一點。

Got it. And the increase on guidance, it's a couple percentage points here on the top line. Is there anything in particular that's driving that? Is it from the acquisitions, just a better mix across the legacy pieces or anything that stands out there?

知道了。指導意見的增加，在頂線上增加了幾個百分點。有什麼特別的因素在推動這股趨勢嗎？是來自收購，還是對遺留產品的更好組合，還是其他突出的東西？

Yeah, the acquisitions we've been really, really pleased with out of the gate. Both teams, both the ICOR and Alpha teams have exceeded our expectations. Both from top line as well as profitability. So we're very, again, very happy with both of those. The core business, we are seeing very strong demand on the armor side of the world, particularly in North America, so both the US and Canada. So those are really, I think, kind the three businesses that are driving the majority of the list.

是的，我們對這些收購非常非常滿意。ICOR 和 Alpha 團隊都超出了我們的期望。無論是從營收或獲利能力來看。所以我們對這兩者都非常非常滿意。就核心業務而言，我們看到世界各地對裝甲的需求非常強勁，特別是在北美，美國和加拿大也是如此。因此，我認為，這些確實是推動名單大部分的三項業務。

Got it. And I just kind of just squeeze one more in. Just on the international -- just more of a broader question. Obviously, you guys are focused, trying to enhance the growth there. Good growth this quarter. I think it was probably mostly because of ICOR. But what's sort of the outlook there? Is Europe, you're seeing spending on police expenditures and stuff. Is that starting to catch up a little bit more? What's your kind of take internationally for you? Thanks.

知道了。我只是再擠一個進去。就國際而言——只是一個更廣泛的問題。顯然，你們都很專注，並努力促進那裡的成長。本季成長良好。我認為這可能主要是因為 ICOR。但那裡的前景如何？在歐洲，你會看到警察開支和其他方面的支出。這是否開始趕上一點了？您對國際化有何看法？謝謝。

Hey, Larry. It's Brad. I would say it continues to be consistent with what we've been communicating from what we're seeing in Europe and other countries. Consistent demand so far. Spend for officer continues to remain consistent with previous quarters. So it remains solid there, too.

嘿，拉里。這是布拉德。我想說，這仍然與我們在歐洲和其他國家所看到的情況所傳達的訊息一致。迄今為止需求一致。官員支出繼續與前幾季度保持一致。所以它也在那裡保持堅固。

Awesome. Great. I appreciate the call. Thanks.

驚人的。偉大的。我很感謝您的來電。謝謝。

Jeff Van Sinderen, B.Riley Securities

Jeff Van Sinderen，B.Riley 證券

Hi. Good morning, everyone. Wanted to see if you could give us any more color on the trends you're seeing with some of the newer products. Any update there?

你好。大家早安。想看看您是否可以給我們更多關於您所看到的一些新產品趨勢的資訊。有更新嗎？

Yeah. At this point, like we've talked in the past, we feel like we're a leader in the market in terms of innovation and have been for many years. And as we've introduced products to the customer base, customer base has been very accepting and excited about the products that we've looked at. And that's everything from holsters to body armor that we've released.

是的。在這一點上，就像我們過去所說的那樣，我們覺得我們在創新方面是市場的領導者，而且多年來一直如此。當我們向客戶群推出產品時，客戶群對我們所關注的產品非常接受並且感到興奮。這就是我們發布的從皮套到防彈衣的一切。

It takes this industry a while for adoption to take place. So in many of the product categories, especially, for example, like the Apex carrier system that we've talked about, we're getting lots of requests for samples to be going through wear tests and that side of things. So positive looks good, and we are starting to make some traction there.

這個行業需要一段時間才能被採用。因此，在許多產品類別中，尤其是像我們討論過的 Apex 承載系統一樣，我們收到了大量要求樣品進行磨損測試等方面的請求。因此，積極的一面看起來不錯，我們正開始在這方面取得一些進展。

Okay, great. And then any more you can tell us about what you're seeing in the alpha business? Maybe how's the pipeline for potential acquisitions at Alpha evolving?

好的，太好了。您還能告訴我們您在阿爾法業務中看到的情況嗎？也許 Alpha 的潛在收購管道進展如何？

How's it evolved? You said for Alpha safety? -- Sorry, it broke up there for a second.

它是如何演變的？你說為了阿爾法的安全？ ——抱歉，暫時中斷了。

Yes. Yes. Sorry for Alpha. Just any other detail you can give us on how the Alpha business is evolving and then also how the pipeline for acquisitions at Alpha is evolving?

是的。是的。對不起阿爾法。您能否向我們提供有關 Alpha 業務如何發展以及 Alpha 收購管道如何發展的任何其他詳細資訊？

Yeah, things are, I would say, ahead of expectations when you look at how the team's been doing, both from a performance perspective and also adopting the Cadre operating model culturally, how the team has been integrating in.

是的，我想說，當你看看團隊的表現時，無論是從績效角度還是從文化上採用幹部營運模式，以及團隊如何融入，事情都超出了預期。

I would say I can't be more than pleased with the team in Golden, Colorado, which is where the headquarters is at, and then also the teams that are dispersed across the other facilities. So all positive there as we've gotten to know that team more and more and continue to integrate.

我想說，我對總部所在的科羅拉多州戈爾登的團隊以及分散在其他設施的團隊感到非常滿意。因此，隨著我們越來越了解該團隊並繼續整合，一切都是積極的。

And then your question around acquisitions. So we've stated quite a few times we acquired also a funnel of 100 type opportunities. We're working that funnel really hard in terms of getting to know those opportunities, which ones that we will be most interested in from a priority standpoint and working those. And I would say overall, we're pleased with that progress. It's going well.

然後是關於收購的問題。因此，我們已經多次說過，我們還獲得了 100 個機會的漏斗。我們正在努力了解這些機會，從優先的角度來看我們最感興趣的機會，並利用這些機會。我想說，總的來說，我們對這項進展感到滿意。進展順利。

Okay, that's great to hear. And then if I could squeeze in one more. Is there any update on the Blast sensor project?

好的，很高興聽到這個消息。然後如果我能再擠進去一個。Blast 感光元件專案有任何更新嗎？

Yeah, same update as last quarter. Overall, from the timeline standpoint, continuing to wait for some additional feedback from the SOCOM folks. And then after that, look forward to seeing what the next step is with them and what that timeline will end up looking like. But so far, so good. We've gotten some informal information at this point, and things have gone well.

是的，與上季相同的更新。總體而言，從時間表的角度來看，繼續等待特種作戰司令部人員的一些額外回饋。然後，期待看到他們的下一步是什麼以及時間表最終會是什麼樣子。但到目前為止，一切都很好。目前我們已經獲得了一些非正式訊息，一切進展順利。

Okay, great. Thanks for taking my questions.

好的，太好了。感謝您回答我的問題。

You're welcome.

不客氣。

Sheila Kahyaoglu, Jefferies.

希拉·卡哈奧格魯，杰弗里斯。

Hey, Warren Kanders. Sam Gatz is on for Sheila. I just wanted to touch a little bit here. You mentioned in the slide some macro consumer weakness. That was a little bit of a headwind. Can you maybe size what percentage of sales are consumer facing and how that market shook out relative to sort of total Cadre in the quarter?

嘿，沃倫·坎德斯。山姆·蓋茲（Sam Gatz）替補希拉（Sheila）。我只是想在這裡接觸一點。您在幻燈片中提到了宏觀消費者的一些弱點。這有點逆風。您能否估算一下消費者所面臨的銷售額的百分比以及該市場相對於本季總幹部的變化情況？

Yeah, absolutely. So I guess to start with your question on the consumer-focused revenue, it's less than 10% of Cadre overall. So it's a pretty small portion. When we look at -- and the majority of that revenue is really on the duty gear, the holster side. And so when we look at Q2 for holster sales, we actually grew 7% year-over-year. So it was a great number. Q1 was a little bit stronger.

是的，絕對是。所以我想先從你關於以消費者為中心的收入的問題開始，它不到 Cadre 整體收入的 10%。所以這是一個很小的部分。當我們觀察時，大部分收入其實來自執勤裝備，也就是皮套方面。因此，當我們查看第二季的皮套銷售額時，我們實際上比去年同期成長了 7%。所以這是一個很大的數字。Q1稍微強一點。

So year-to-date, we're at about 11% growth year-on-year. I think it's -- as we kind of close the quarter there at the end, we're watching the demand. Obviously, seeing a lot of headlines with many businesses that are consumer facing that film squeeze.

今年迄今為止，我們的年成長率約為 11%。我認為，當我們在本季末結束時，我們正在觀察需求。顯然，看到許多頭條新聞，許多企業的消費者都面臨薄膜擠壓。

So it's an area we're watching. It's an area we all -- honestly, we always look at pretty closely. But again, it's not going to be a huge driver one way or the other for the overall business.

所以這是我們正在關注的一個領域。這是我們所有人的一個領域——老實說，我們總是非常密切地關注。但同樣，它不會以某種方式成為整個業務的巨大推動力。

Got it. Very helpful. A little bit of sequential slowdown. And then I guess just one sort of high-level question on the EBITDA guide. I mean, you're sort of seeing a little bit of a margin slowdown to H2. And how much of that is volume- driven just because the top line also seems like it's going to slow a little bit versus how is pricing and volume trending there?

知道了。非常有幫助。略有連續放緩。然後我想這只是 EBITDA 指南中的一個高級問題。我的意思是，你會看到下半年的利潤率略有下降。其中有多少是銷售驅動的，僅僅因為營收似乎也會放緩一點，而那裡的定價和銷售趨勢如何？

Yeah. Maybe starting with the pricing and volume. On the pricing side, the businesses have continued to execute. So they're hitting that 1% price net in material inflation. We're seeing continued execution across the board in our businesses there. When we look at the -- really, the driver here in the back half in any margin changes, really the cyber incident.

是的。也許從定價和數量開始。在定價方面，企業繼續執行。因此，他們的物質通膨達到了 1% 的淨價格。我們看到我們在那裡的業務持續全面執行。當我們看到後半部分的驅動程式發生任何邊緣變化時，確實是網路事件。

And it's the same reason Q3 will be certainly lower. We'll more than make up for that adjusted EBITDA and revenue in Q4. So we just -- it's a little bit odd the timing quarterly just because of the incident. But I think as we move forward, both for the back half -- or sorry, Q4 this year and then next year, we'll get back to that consistency you've seen every quarter and then follow.

這也是第三季肯定會更低的原因。我們將在第四季度彌補調整後的 EBITDA 和收入。所以我們只是——因為這件事，每季的時間安排有點奇怪。但我認為，隨著我們向前邁進，無論是後半段，還是對不起，今年第四季和明年，我們都會恢復到每個季度看到的一致性，然後遵循。

Great. Thank you very much. I'll leave it there.

偉大的。非常感謝。我會把它留在那裡。

Matt Koranda, ROTH Capital Partners.

馬特‧科蘭達，羅仕資本合夥人。

Hey, guys. Just wanted to make sure I understood the sales guidance for the back half of the year. It sounds like maybe we lost some sales due to the cyber incident in the third quarter, but we're making up for it in the fourth. Any way to quantify sort of days lost in terms of sales in the third quarter?

嘿，夥計們。只是想確保我了解下半年的銷售指導。聽起來我們可能因為第三季的網路事件而損失了一些銷售額，但我們將在第四季度彌補這一損失。有什麼方法可以量化第三季銷售損失的天數嗎？

And then I think, Blaine, you mentioned on the margin impact from the event. Said something in the prepared remarks about a 5 point impact on gross margins. Is that contained to the third quarter only? Just curious to try to think about sort of the gross margin puts and takes between the third and the fourth quarter. And then any thoughts on just how we're adjusting this event in the adjusted EBITDA numbers on a go- forward basis?

然後我想，布萊恩，你提到了這事件的利潤影響。在準備好的評論中說了一些關於對毛利率影響5點的內容。只限於第三季嗎？只是好奇地想嘗試一下第三季和第四季之間的毛利率變動。那麼對於我們如何在未來調整後的 EBITDA 數字中調整這一事件有什麼想法嗎？

Maybe start with that. The easiest one, which is that, how are we adjusting for it? At this point, we're not adjusting anything. So in the adjusted EBITDA, consistent with what we've done previously, we're pretty much restricted to the stock comp restructuring and transaction costs. We're not, at this point, introducing a third bucket for adjustment or a fourth bucket for adjustment. So we'll kind of leave that where it is.

也許就從那開始吧。最簡單的一個，就是我們要如何調整？此時，我們不會調整任何內容。因此，在調整後的 EBITDA 中，與我們先前所做的一致，我們幾乎僅限於股票重組和交易成本。目前，我們不會引入第三個調整桶或第四個調整桶。所以我們會把它留在原處。

Let's move forward and get our hands around it and have really a more concrete number. That's something we'll certainly kind of entertain discussing, but at this point, that assumes those costs are in now. We did have cyber insurance, which we expect both for the third parties, as well as on the business continuity side, that will have claims that go in.

讓我們繼續前進並解決這個問題並獲得一個更具體的數字。我們肯定會樂於討論這一點，但目前，假設這些成本現在已經存在。我們確實有網路保險，我們預計第三方以及業務連續性方面都會有索賠。

So on the higher end of the digest, you have not just the third party, but the claims for business continuity going in. Maybe going back to your first question, just to be clear, no business is lost. It's really just shifting from Q3 to Q4 at this point.

因此，在摘要的高端，您不僅有第三方，還有業務連續性的聲明。也許回到你的第一個問題，要明確的是，沒有任何業務損失。此時實際上只是從第三季轉移到第四季。

All the end agencies have been very understanding of the incident and timelines. Our teams here have been working ways to get hot items out to those academy classes or recruit classes as needed. So it's really just that movement into Q4.

所有終端機構都非常了解事件和時間表。我們的團隊一直在努力將熱門項目提供給這些學院班級或根據需要招募班級。所以這實際上只是進入第四季的變化。

The margin comment I made was really relative to -- what gross margins will be for Q3 versus kind of what we've seen in the first half. And I said about 5 points difference. So you can kind of do the math to get there, but it gives you a feel for the impact.

我所做的利潤率評論實際上是相對於第三季的毛利率與我們上半年看到的毛利率有關的。我說的是5分左右的差距。因此，您可以透過數學計算來實現這一目標，但它可以讓您感受到影響。

Now, we'll get some recovery, obviously, is moving to Q4, and we get the volume leverage. So that's implied in that 5 points down that there's a volume impact as well. So hopefully, I think I got your three questions there.

現在，我們將得到一些復甦，顯然，正在進入第四季度，我們得到了成交量槓桿。因此，這 5 個百分點的下降意味著銷售量也會受到影響。希望我能解答你的三個問題。

Yeah, absolutely. That helps clarify things here. And then just, I guess I'm curious to get a more general understanding of, you guys did update a little bit on Alpha and how to think about M&A there. But just anything else as we think about, I guess, the core business beyond the nuclear piece where there might be opportunities to get something done.

是的，絕對是。這有助於澄清這裡的事情。然後，我想我很想對你們有一個更全面的了解，你們確實更新了一些關於 Alpha 的信息，以及如何思考那裡的併購。但我想，當我們思考其他任何事情時，除了核心業務之外，可能還有機會完成一些事情。

And it sounds like you're signaling pretty heavily that whatever we get done this year will be firmly an add- on to either the existing core or alpha. But I just wanted to give you an opportunity to kind of discuss some of the opportunities that are out there.

聽起來你似乎在強烈暗示我們今年所做的一切都將是對現有核心或 alpha 的堅定補充。但我只是想給你們一個機會來討論一些現有的機會。

Hey, Matt, it's Brad. I know we've been talking past quarter that we've been excited about the opportunities that we're seeing in the alpha funnel. We've actually, over the last few months, we've actually seen a balancing of that.

嘿，馬特，我是布萊德。我知道我們上個季度一直在談論我們對在阿爾法漏斗中看到的機會感到興奮。事實上，在過去的幾個月裡，我們實際上已經看到了這種平衡。

So we've got opportunities within the law enforcement, military side of things, which is, as you know, we've been in that business for a very long time. And we know a lot of the assets well, and we feel like there's some opportunities there, which is great. And then also on the nuclear side.

所以我們在執法、軍事方面都有機會，正如你所知，我們已經從事這個行業很長一段時間了。我們對很多資產都很了解，我們覺得那裡有一些機會，這很好。然後還有核子方面。

So we're pleased, happy with the progress and what's what's sitting in that funnel at the moment and where things is dropping more to the bottom of the funnel and becoming more potentially actionable. So that's kind of where we sit right now.

因此，我們對進展感到滿意，對目前漏斗中的內容以及事情正在更多地落入漏斗底部並變得更具潛在可操作性感到滿意。這就是我們現在所處的位置。

Okay. Appreciate it. I'll leave it there, guys. Thanks.

好的。欣賞它。我會把它留在那裡，夥計們。謝謝。

Jordan Lyonnais, Bank of America.

喬丹·里昂，美國銀行。

Hey, good morning. Thanks for taking the question. Could you guys spike out what was organic growth in the quarter?

嘿，早安。感謝您提出問題。你們能否指出本季的有機成長是多少？

No, we we didn't talk about it. You can obviously in the distribution side, that segment stands alone. The distribution in the quarter was. Actually, pretty much flat year on year. And then on the. Organic side -- organic side was up about 5% in the quarter.

不，我們沒有談論過它。顯然，在分銷方面，該部分是獨立的。本季的分配情況是。事實上，與去年同期相比幾乎持平。然後就了。有機方面—本季有機方面上漲了約 5%。

Thank you. And then on the federal side, we're seeing a big drop in obligation towards you guys. Is there anything coming down the pipe on the federal side that we can look to that will reaccelerate more either contract requirements coming, explosive ordnance devices for Ukraine or anything in that arena?

謝謝。然後在聯邦方面，我們看到對你們的義務大幅下降。我們可以期待聯邦方面有什麼事情可以重新加速合約要求的到來、烏克蘭的爆炸性彈藥裝置或該領域的任何事情嗎？

Yeah. Are you talking, Jordan, about the revenue channel?

是的。喬丹，你是在談論收入管道嗎？

Yeah.

是的。

So one of the big changes with Alpha has been a lot of their revenue falls in that federal channel. So that's the reason you see that they got sick. One of the differences for that business compared to armor or duty gear is it's going to feel a little bit more like EOT.

因此，Alpha 的重大變化之一是他們在聯邦管道的收入大幅下降。這就是你看到他們生病的原因。與裝甲或執勤裝備相比，該業務的區別之一是它感覺更像 EOT。

So it's going to be what I mean by that is it'll it's their larger orders that cover a longer period of time. We've talked about the safety has, you know, some of the maybe the best, if not, top to kind of view in their longer term. So they're typically booked kind of nine to 12 months out, which is very different from the armor side of the world.

所以我的意思是，他們的訂單量更大，覆蓋的時間更長。我們已經討論過安全性，你知道，從長遠來看，一些可能是最好的（如果不是的話）最重要的觀點。因此，它們通常會在 9 到 12 個月後預訂，這與裝甲方面的情況非常不同。

So those orders are they're not going to be it's not going to be every quarter kind of spread out evenly. These are going to be a little bit lumpier to move forward. I'll be backlogged was relatively flat from Q1 down slightly, but nothing that we're concerned about.

因此，這些訂單不會均勻分佈在每季。這些進展將會變得更加困難。我的積壓量與第一季相比相對持平，略有下降，但我們沒有什麼擔心的。

And frankly, they have a really strong pipeline. They're building out both in orders booked and orders expected for next year. But that higher federal number, you will continue to see as move forward primarily because Alpha.

坦白說，他們擁有非常強大的管道。他們正在增加明年的預訂訂單和預期訂單。但更高的聯邦數字，你將繼續看到主要是因為阿爾法的進步。

Got it. Thank you.

知道了。謝謝。

Mark Smith, Lake Street Capital Markets.

馬克史密斯，湖街資本市場。

Hi, guys. Most of my questions have been asked, but I just wanted to ask about domestic law enforcement hiring and kind of what you're seeing from trends out there. It sounds like budgets look good, but are some of these departments actually able to get new hires in?

嗨，大家好。我的大部分問題都被問到了，但我只想問一下國內執法部門的招聘情況以及你從那裡看到的趨勢。聽起來預算看起來不錯，但其中一些部門真的能夠招募新員工嗎？

Hey, Mark, Brad. Yeah. Continue to be stable, which is great. Headcount numbers aren't as we talked in the past aren't, an exact science. But as we talked with customer base, there's some agencies that are obviously still down and others that have kind of fought back and continue to get folks in recruit classes and in graduating classes to fill gaps. So we just continue to see it like we've talked about in the past is a long term kind of tailwind for us as things continue to take hold there.

嘿，馬克，布拉德。是的。繼續保持穩定，這很好。員工人數並不像我們過去所說的那樣，是一門精確的科學。但當我們與客戶群交談時，有些機構顯然仍然處於低迷狀態，而另一些機構則進行了反擊，並繼續讓人們參加招募班和畢業班來填補空缺。因此，我們繼續認為，就像我們過去談到的那樣，隨著事情繼續在那裡發展，這對我們來說是一種長期的順風。

Okay, and and if it is, -- just kind of what's expected, still tough to get new hires in as we see budgets come up, or are you seeing these departments maybe refresh earlier or adopt new products maybe earlier due to the fact that they've they've got the cash and need to spend it?

好吧，如果是的話，——這就是預期的情況，當我們看到預算增加時，仍然很難招募新員工，或者你是否看到這些部門可能會更早更新或更早採用新產品，因為事實上他們有現金並且需要花掉嗎？

Yeah, that's a that's a big question because it depends on the agency and obviously their funding and their focus areas and priorities. I would say the core of our products, the bigger categories like duty gear and armor, they're needed no matter what.

是的，這是一個大問題，因為這取決於該機構，顯然取決於他們的資金以及他們的重點領域和優先事項。我想說的是我們產品的核心，更大的類別，如執勤裝備和裝甲，無論如何，它們都是需要的。

You know, when you start looking at other product gaps that maybe they have that we saw some trends some this year and also last year, for example, like lighter weight shields, active shooter kits, things like that. Typically if there's additional budget money and there's a focus, then you'll see expenditures in those areas.

你知道，當你開始觀察其他產品的差距時，我們可能看到了今年和去年的一些趨勢，例如，重量更輕的盾牌、主動射擊套件等。通常，如果有額外的預算資金並且有重點，那麼您會看到這些領域的支出。

Excellent, thank you.

太棒了，謝謝。

(Operator Instructions) Bert Subin, Stifel Nicolaus.

（操作員說明）Bert Subin，Stifel Nicolaus。

Yeah, thanks. If we think about the guide, you just plain talked about the 5% organic in the quarter and your guy would imply about 5% organic in the back half as well. Can you just help us sort of think about how that moves directionally, sort of down the road?

是的，謝謝。如果我們考慮一下指南，您只是簡單地談到了本季度的 5% 有機率，而您的人會暗示後半部分也有 5% 的有機率。你能幫助我們思考一下它是如何定向發展的嗎？

I think you've talked about it being like 3% to 5% organic growth longer term, but you have inflation coming down, which I imagine would at some point nominally hit pricing. And then you've seen your organic backlog decline on EOD. So I'm just curious, like what the visibility and the confidence is on the organic side.

我想你已經談到了長期有機成長 3% 到 5%，但通膨正在下降，我想這在某種程度上會影響定價。然後您會發現 EOD 時的有機積壓訂單有所下降。所以我只是很好奇，例如有機方面的可見度和信心。

Yeah, no. Great question, Bernie. And you're right. We've said 3% to 5% over the long run. We've had out of the gates or out of the gates this year and expect for the full year. On the higher side of that, that guidance, when it comes to, you know, certainly the news is, lots of stories around inflation, pressure on consumer spending, et cetera.

是的，不。好問題，伯尼。你是對的。我們說過長遠來看是3%到5%。今年我們已經走出了大門或走出了大門，並期待全年。從更積極的方面來說，當涉及到，你知道的，當然是新聞時，該指導有很多關於通貨膨脹、消費者支出壓力等的故事。

But the one thing to keep in mind is we've never really been even high signals when it comes to pricing or material inflation. Right. For us, it's a different environment from companies that more exposure to steel, copper, nickel, et cetera.

但要記住的一件事是，在定價或物質通膨方面，我們從未真正發出過高訊號。正確的。對我們來說，這是一個與更多接觸鋼鐵、銅、鎳等的公司不同的環境。

So, you know, we're already on the very low end of that really low single digits to begin with. So we could have an impact moving forward. But right now, the way we're viewing it, it would not be a significant impact and deviate us from there. I think more importantly, if you did have that, let's say inflation is flat or maybe slightly negative, -- we still have that target, which we may want to achieve every quarter since it's been public of expanding margins.

所以，你知道，我們一開始就已經處於非常低的個位數的低端。因此我們可以對未來產生影響。但現在，從我們的角度來看，它不會產生重大影響，也不會偏離我們的目標。我認為更重要的是，如果你確實做到了這一點，假設通膨持平或可能略有負值，我們仍然有這個目標，我們可能希望每個季度都能實現這一目標，因為它已經公開宣布擴大利潤率。

Now, that's really the focus is with that 3% to 5%. How do we grow the business? 10% and EBITDA organically. And I think we need to focus on not just price, but productivity and operating model. We've lots of juice left to squeeze. So we're pretty bullish not just on the 3% to 5%., but I think more importantly, on that bottom line expansion for our businesses.

現在，真正的焦點是那 3% 到 5%。我們如何發展業務？10% 和有機 EBITDA。我認為我們不僅需要關注價格，還需要關註生產力和營運模式。我們還有很多果汁需要榨。因此，我們不僅看好 3% 到 5%，而且我認為更重要的是，看好我們業務的底線擴張。

Got it, that health plane. And then I guess a follow up for you. I guess you talk, you've talked about adjustability, but the margins, but if we were just to put it into the context of product gross margins, you did a little over 43% there or 43% there last year.

明白了，那架健康飛機。然後我想你會有後續行動。我猜你談到了可調整性，但談到了利潤率，但如果我們只是將其納入產品毛利率的背景下，你的表現略高於 43%，去年的表現是 43%。

This year, you had some inventory step up, but, you would have been close to 43%. And then you have some obviously the cyber has been impacting the third quarter. How should we think about gross margins? Is this a you want to trend toward the mid 40s? Do you think the 43 range is more normal? And what's the opportunity to get your gross margin higher as you introduce more automation?

今年，庫存增加，但接近 43%。然後你可以看到網路明顯對第三季產生了影響。我們該如何看待毛利率？這是您想要的 40 年代中期趨勢嗎？你覺得43這個範圍比較正常嗎？隨著自動化程度的提高，提高毛利率的機率是什麼？

We definitely feel we're still in the upward upward trends there. 43 is not certainly not the end point for the company. I think mid 40s and maybe maybe even a couple of points beyond for the future is really what we're striving for. There are fantastic products. Right. You mentioned automation.

我們確實覺得我們仍然處於上升趨勢。 43年並不是公司的終點。我認為 40 年代中期，甚至可能是未來幾個百分點，這才是我們真正努力的目標。有很棒的產品。正確的。您提到了自動化。

We've been working really hard on for the last, I guess, probably about a year and a half now, maybe two years. You're starting to see a lot of that come to fruition, which is really new in our industry. It's been something that hasn't been historically done.

我想，過去我們一直在努力工作，大概一年半了，也許兩年了。你開始看到很多成果都取得了成果，這在我們的產業中確實是新鮮事。這是歷史上從未做過的事。

So not only do you get the better predictability, better outcome on quality, but you also have a lower cost basis and have the opportunity to get folks focused on more value added parts of the business. So we're we're very excited about the future there. Folks have seen the inside of our factory. When you think about automation and I don't know that we get to automotive level automation, but if you just kind of draw that comparison that maybe they were the aspirational goal and where we sit today, it's very early innings for us. So as we kind of think longer term, you absolutely can admit, you know, high 40% gross margin is a very realistic target for us.

因此，您不僅可以獲得更好的可預測性、更好的品質結果，而且還可以降低成本，並有機會讓人們專注於業務的更多增值部分。所以我們對那裡的未來感到非常興奮。人們參觀了我們工廠的內部。當你想到自動化時，我不知道我們是否達到了汽車等級的自動化，但如果你只是進行比較，也許它們是我們的理想目標，也是我們今天所處的位置，那麼這對我們來說還處於早期階段。因此，當我們從長遠考慮時，你絕對可以承認，40% 的高毛利率對我們來說是一個非常現實的目標。

Very helpful. And I guess one last one also for you, Blaine and Brad, I'm sorry, I guess all mine were for Blaine today. On the free cash side, sort of a slower first half. It looks like you're trending sort of year of year down in '24. You just sort of help us understand what's going on with free cash, be it for working capital uses and where you expect that to go. I guess looking forward.

非常有幫助。我想最後一張也是給你們的，布萊恩和布萊德，對不起，我想我今天所有的都是給布萊恩的。在自由現金方面，上半年有點慢。看起來你的趨勢在 24 年逐年下降。您只是幫助我們了解自由現金的情況，無論是用於營運資金用途還是您期望其去向。估計很期待吧

Sure. Yeah. We kind of think about the first two buckets, inventory and AR. Excluding acquisitions, the inventory side, we expect to have cash generated for the year. Similar to AR, AR just becomes a timing right on kind of when the revenue shift. The larger piece, I think you’re kind of getting at is that AP and other liabilities.

當然。是的。我們會考慮前兩個面向：庫存和擴增實境。排除收購和庫存方面，我們預計今年將產生現金。與 AR 類似，AR 只是收入變化的時機。我認為您所理解的更大的部分是 AP 和其他負債。

And really two big things happening in that in the first half. One is the bonus payments that go out in Q1 created a pretty large dent in the first half, and that’s very typical right. We see that every year.And then second piece, and this is a one-off item that does create a headwind to prior year is cash taxes. So we did have -- with the hurricane coming through last year, we did have some tax actual cash tax payments defer out of ‘23 into ‘24, which creates about a $12 million swing from one year to the next. So as we look in this year, we do expect that operating cash to be down year-on-year, primarily because of the cash tax impact

上半場確實發生了兩件大事。一是第一季發放的獎金在上半年造成了相當大的影響，這是非常典型的權利。我們每年都會看到這一點。因此，隨著去年颶風的到來，我們確實將一些稅收實際現金稅款從 23 歐元推遲到了 24 歐元，這造成了從一年到下一年約 1200 萬美元的波動。因此，就我們今年而言，我們確實預計營運現金將同比下降，這主要是由於現金稅的影響

Very helpful. Thank you for the questions.

非常有幫助。謝謝你的提問。

Thank you, Bert.

謝謝你，伯特。

That concludes our Q&A session. I will now turn the call back over to Brad Williams for closing remarks.

我們的問答環節到此結束。現在，我將把電話轉回給布拉德威廉斯（Brad Williams），讓他發表結束語。

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

謝謝你，接線生。我要再次感謝大家參加今天的電話會議，並感謝大家對 Cadre 的持續關注。

This concludes today's call. You may now disconnect.

今天的電話會議到此結束。您現在可以斷開連線。