Cadre Stock

Good morning, and welcome to Cadre Holdings Second Quarter 2026 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 today's conference call to discuss Cadre's second quarter results. Before we begin, I'd like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face Cadre and the industries and markets in which we operate. 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 morning 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 August 20, 2026. A webcast replay will also be available via the link provided in yesterday'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.

Good morning, and thank you for joining Cadre's earnings call to discuss our results for the second quarter of 2026. I am joined today by our President, Brad Williams; and Chief Financial Officer, Blaine Browers. We are pleased to report another quarter of significant financial and operational progress, reflecting the strength of our brands, the resilience of our end markets and the consistent execution across the organization. During the second quarter, we generated year-over-year net sales growth of 32% and adjusted EBITDA growth of 56%, supported by strong and recurring demand for our mission-critical safety products across the law enforcement, first responder, military and nuclear markets.

Our performance through the first half of the year, combined with our record orders backlog and continued momentum reinforces our confidence in Cadre's outlook. As a result, we have raised our 2026 guidance and are on track for full year revenue and adjusted EBITDA to increase well above 20%. M&A remains a critical component of our long-term growth strategy. Since our IPO, we have taken a thoughtful and disciplined approach to building Cadre into a diversified multi-vertical provider of mission-critical safety products. Importantly, as Cadre has grown in scale, the size and breadth of opportunities we can consider has expanded as well. Earlier this year, we acquired TYR Tactical, our largest transaction since going public.

With greater scale, stronger cash flow generation, expanded capabilities and operations in more diverse markets, we can weigh a broader range of strategically significant opportunities today than we could several years ago. At the same time, our success is not dependent upon transaction size. The acquisition of Alien Gear, a recognized Holster brand during the second quarter demonstrates the value of smaller, highly complementary bolt-on acquisitions. Whether we are evaluating a larger strategic platform or a smaller add-on, the same principles guide our process. We seek businesses with leading and defensible market positions, strong margins, mission-critical products, recurring revenues and cash flows and clear opportunities to create value with the Cadre operating model. We remain patient, selective and disciplined as we advance our M&A funnel and expect at least one more acquisition in 2026.

Cadre enters the second half of the year from a position of strength. We have greater scale, a more diversified portfolio and an expanding set of organic and inorganic growth opportunities. Supported by our strong balance sheet and consistent free cash flow generation, we believe we are well positioned to enhance our market leadership moving forward and deliver sustainable long-term value for our shareholders. With that, thank you for being with us today, and I will turn the call over to Brad. Brad, over to you.

Thank you, Warren. On today's call, Blaine and I will provide a Q2 update and business overview, including recent trends and financial performance as well as our increased guidance for the remainder of 2026, followed by a Q&A session. We'll begin on Slide 5 with key takeaways from the second quarter. First and foremost, we've delivered outstanding financial results. Net sales, gross profit and adjusted EBITDA all increased significantly this quarter. Our performance reflects the strong execution and dedication of our talented teams around the world, and I want to thank our employees for their continued commitment to our customers and our mission. We delivered 5% organic top line growth in Q2, and our backlog increased to a new record level for the second consecutive quarter. Putting this backlog growth in context, it represents an important forward indicator and gives us confidence in the upwardly revised 2026 outlook that Blaine will discuss shortly.

Turning to the fourth and fifth bullet on the slide, I want to highlight 2 major wins for Cadre. First, as you will recall, our Med-Eng subsidiary was awarded a 5-year $50 million IDIQ contract last year to deliver and support the Blast Exposure Monitoring or BEMO program with the U.S. military. We are pleased to share that we obtained a second purchase order valued at $8.4 million for this program. The second purchase order brings our total to date to $18.4 million received for the BEMO program. Consistent with our commitment to innovation and mission of Together We Save Lives, this program is a testament to Med-Eng's ability to develop best-in-class products that keep users safe in the line of duty. Med-Eng is the most trusted brand in the industry and at the forefront of efforts to better understand and mitigate blast exposure in this field moving forward.

The second major win in the quarter was the selection of Safariland's SXHP ballistic panel introduced in 2025 as the ballistic package for the FBI. Chosen over 11 competing products following a rigorous evaluation process, our ballistic panel has been integrated into predictive ballistics overt armor kit. Predictive Ballistics was awarded a 5-year $61 million IDIQ contract to supply the kit, which is also available to the U.S. Marshals Service, the DEA and other Department of Justice agencies. This is an important win that expands our presence within a key customer segment and underscores our continued commitment to innovation. The selection also validates the performance of our SXHP panel, which combines a thin lightweight design with a high level of ballistic protection. We're encouraged by the strong customer feedback and the potential for broader adoption across state, local and federal law enforcement agencies.

Next, touching briefly on our nuclear vertical. Our businesses are performing well, and we expect continued strong demand moving forward. Our backlog has increased $13 million since the start -- since the end of last year, driven by continued multidirectional support across all 3 nuclear market segments, which I'll address more in a moment. Wrapping up our Q2 key takeaways, I'd like to also emphasize our commitment to further enhancing Cadre's market leadership through disciplined M&A. We maintain a robust pipeline across both public safety and nuclear and look forward to capitalizing on attractive opportunities ahead.

Turning now to Slide 6. We lay out industry tailwinds supporting Cadre's long-term growth opportunity across our 2 verticals. On the law enforcement side, we see rising safety threats globally, coupled with resilient and growing spend on life-saving equipment. In both the U.S. and in Europe, support for public safety is bipartisan. On the next slide, we outline more current dynamics in our core market. Overall, we continue to see favorable near-term trends. Last quarter, we zoomed in our company-owned distribution segment and noted some softness in demand for discretionary products. During the second quarter, we were pleased to see distribution segment demand normalize, helping drive organic growth toward the high end of our 3% to 5% range. While we continue to monitor municipal budget pressures, public safety spending has historically proven very resilient with mission-critical equipment prioritized. Consistent with that trend, we have not seen any evidence of a meaningful pullback in demand for Cadre products since they are mission critical.

Turning to Slide 8. I'd like to spend some time discussing our nuclear vertical and the robust activity we're seeing across the sector. Governments and agencies globally continue to prioritize environmental remediation and nuclear cleanup initiatives. A national defense modernization programs support sustained investment in nuclear safety infrastructure and protective solutions. For Cadre Nuclear Group, national security serves as a funded growth engine. The budget request of $32.8 billion from the National Nuclear Security Administration, part of the U.S. Department of Energy represents a 29% increase year-over-year. Weapons modernization and plutonium pit production form the core of the multibillion-dollar overhaul of the U.S. nuclear arsenal. The U.S. aims to manufacture at least 80 pits per year split between the Los Alamos National Laboratory in New Mexico and the Savannah River site in South Carolina to support new warhead designs.

The NNSA budget and PIP production mandates support demand for Cadre Pod products across containers, ventilation and containment, remote handling and criticality alarm systems. While the downblending executive order that we have spoken about previously caused some margin and mix pressure confined to one subsegment, it impacts less than 8% of our nuclear revenue. It absolutely does not reflect a break in our nuclear safety business demand. Similar to our core business, quarter-to-quarter program timing can affect segment results on a near-term basis. But overall, we continue to see very healthy multi-year demand trends. This is led by national defense priorities and persistent decade-long environmental cleanup work.

As you've heard it described by us before, the commercial nuclear renaissance is the cherry on top. We're encouraged by the accelerating investment backdrop supported by government and commercial commitments to expand nuclear capacity and rising power demand from AI and data centers. The opportunity for Cadre builds on established products and customer relationships, and we maintain a follow-the-fuel strategy. Current funnel opportunities in this area include nuclear ventilation and containment systems as well as criticality of accident alarm systems. While still early and not yet as material to revenue, we believe the nuclear energy resurgence represents attractive long-term optionality alongside the larger national defense and environmental management demand drivers.

Overall, our thesis on the nuclear opportunity is unchanged. We view nuclear safety as a set of durable end markets across 3 segments with long-term demand tied to policy and commercial tailwinds. With that, I'll now turn the call over to our CFO, Blaine Browers, to speak more about M&A, Cadre's Q1 financial results and 2026 outlook.

Thanks, Brad. Before turning to the quarter, I'll kick off my comments with a review of our M&A strategy. Over the last 4 years, we have deployed approximately $455 million across 7 transactions, including the recent acquisition of Alien Gear Holsters completed in the quarter. This activity reflects the disciplined and patient approach we have consistently applied to M&A. We're not interested in pursuing growth for its own sake, but instead selectively adding businesses that strengthen our portfolio and enhance Cadre's long-term earnings and cash flow profile. For each of these transactions, we have maintained a high bar for strategic and financial fit.

Turning to the next slide, we highlight the key criteria that guide our process when evaluating potential acquisitions. We are steadfast in our commitment to businesses with strong margins, leading and defensible market positions, recurring revenue characteristics and durable cash generation. We also look for opportunities where the Cadre operating model can drive value creation. We enter the balance of 2026 with a substantial financial flexibility and a robust pipeline of potential acquisitions. We continue to target transactions focused on complementary capabilities, new market access and greater penetration of our existing customer base.

Turning now to a summary of Cadre's financial performance, Slide 12 details our second quarter results. Q2 net sales of $207.1 million increased 32% year-over-year and 5% organically with strong growth in armor, duty gear, nuclear and distribution. Gross profit of $87.1 million was up 36% year-over-year, with gross margins expanding 120 basis points year-over-year and 209 basis points when you adjust for inventory step-up amortization. Second quarter adjusted EBITDA increased 56% year-over-year. Of note, second quarter net income includes $2 million of inventory step-up amortization and $5.9 million of contingent consideration expense. Also, FX headwinds of $6.6 million adversely impacted bottom line earnings in Q2.

As we expected, we saw a significant increase in revenue and profitability sequentially from Q1. As Brad indicated earlier, we are proud of the team's ability to execute on their demand. A few of the businesses had the opportunity to ship product earlier than expected, and they were able to take advantage of those opportunities within the quarter. We broadly saw upside in most of the core portfolio, including Armor, Duty gear and nuclear and crowd control. In addition, we are pleased to see both TYR Tactical and Alien Gear execute above our expectations in the quarter, contributing to outstanding results. Illustrated on Slide 13 is net sales and adjusted EBITDA growth year-over-year, including our upwardly revised 2026 guidance, which I'll discuss more in a moment. Our full year outlook now implies year-over-year revenue and adjusted EBITDA growth of 24.4% and 26.7%, respectively, at the midpoints.

You can see that over the last several years, Cadre has delivered consistent and stable growth. Our resilience is a key differentiator with businesses that are largely unaffected by economic, political, geopolitical and other cycles. On Slide 14, we present our capital structure as of June 30, 2026. Our net leverage was down to 2.5x. We believe Cadre's strong free cash flow generation, coupled with the strength of our balance sheet gives us ample financial flexibility to continue to pursue organic and inorganic opportunities. We provide our increased 2026 outlook on Slide 17. Net sales are now expected to be between $749 million and $769 million, and our adjusted EBITDA guidance is between $139 million and $144 million, implying adjusted EBITDA margins of 18.6%. Our guidance now fully incorporates Alien Gear and reflects our improved view of full year revenue and profitability. We still expect organic revenue growth to be in the 3% to 5% range on a full year basis. As Brad mentioned earlier in our call, our strong backlog exiting Q2 and the team's execution into Q2 gives us confidence in our full year guidance.

We expect Q3 revenue to be around $190 million with adjusted EBITDA margins of about 18%, which implies that Q4 will have a very similar profile to Q2. Overall, our businesses are performing well, and we expect continued strong demand in 2026 across our core markets in public safety and nuclear safety. I'll now turn it back to Brad for concluding comments.

Thank you, Blaine. In closing, as you can see on Slide 16, we executed well across all facets of the business during the second quarter. We exceeded our pricing target, benefited from favorable product mix and increased backlog by $13 million sequentially, supported by strong demand from -- for our EOD products. We also completed the acquisition of Alien Gear Holsters and continue to advance a healthy M&A funnel. Looking forward, we are focused on strengthening our portfolio, further implementing the Cadre operating model throughout the organization and building demand across our core markets in public safety, defense and nuclear safety. Our improved outlook for 2026 reflects our confidence in the opportunities ahead. We look forward to continuing to update you on our progress.

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

[Operator Instructions] Our first question comes from the line of Tomo Sano from JPMorgan.

Congrats on the quarter. Could you talk about breaking down the $13 million year-to-date increase in nuclear backlog across environmental management, national defense and commercial nuclear? And if you could give us more color, the key drivers in each, please?

Absolutely. Great question, Tomo. Majority of the increase we've seen through this quarter is really been in the commercial nuclear energy and environmental remediation. We've talked quite a bit previously that we started to see the funnel increase in those areas, in particular, commercial nuclear. And that's really what we're seeing is the team's hard work and efforts building that up. We've also seen a nice pickup in Europe, particularly around Northern Europe around some of the projects they have going there, which is environmental remediation. So that first part of the comment was more U.S.-based around commercial nuclear energy and the environmental remediation in the U.S., but we're also seeing strength on that environmental remediation in the U.S. when it comes to backlog.

I also would like to point out on the commercial nuclear side from revenue coming out of Europe, we did see very positive strength and momentum in the quarter on the revenue side. They had the backlog coming into the quarter. But -- so when you think about geographically, both in the U.S. as well as Europe, we are seeing that strength both really on that commercial nuclear component of it as well as the environmental remediation.

And just one follow-up. Given that mix, how should we think about nuclear margin quality in back half and beyond? And when should the Cadre operating model benefits begin to show up over the next couple of quarters?

When we think about the margins, there is a pretty large degree of mix within the nuclear platform as we've referenced prior. Looking for the back half, I would say on the U.S. side of the business, we would expect the back half to look very similar to Q2 margin. They had a little bit lower margin in Q1, so they'll first half, second half will improve between those 2. On the more European side of the business, Q2 was favorable margin or favorable mix in the quarter driven by some of the robotic arms. We don't expect that to recur. So, we expect the European side to look more like we saw in Q1, which would be slightly down on a margin basis, just really returning to normal mix.

In terms of the Cadre operating model portion of the question, so on the nuclear side of things, whether it was the acquisition we made from Carsury plc in the U.K. or the Alpha Safety acquisition, they're all in the early stages of the operating model. So most of the focus is on your standard delivery, quality, safety, inventory, that side of things. So from a cost perspective, showing up at the top level from a Cadre view, I don't expect to see that this year as they continue to progress through the model.

Our next question comes from the line of Larry Solow from CJS Securities.

Congrats guys on a really nice quarter. Just curious on what the upside in the quarter and I guess on the outlook, maybe combine that with just the bookings question in the backlog, it seems like a lot of it is going up on the ELD and sensors and robots. But just curious what's driving the upside this quarter, this year and how your general -- your law enforcement base business is doing?

Yes. On the, I guess, the Q2 stellar performance by the team, I'd really split it in half, not a 50-50 split, but really 2 components driving it. The first, the really core public safety businesses had been a part of Cadre since the beginning, the crowd control, the duty gear and armor businesses, all had very strong quarters, right? Some of that is demand that we received within the quarter that was unexpected, but a big portion of too was pull aheads where the team -- I'd say pull aheads, but really shipments earlier than expected, where we had taken a view that customer would want to order in Q3. As we progress through the quarter, the customer then changed their expectations or requested an earlier shipment and the teams were able to execute on it, which, again, we're very thankful and frankly, proud of the team for the size of that swing. of the movement.

The second component is the acquisitions, both Alien Gear and TYR really had a phenomenal quarter. And I think it gives us a lot of confidence as we get into guidance to increase that outlook based on how those businesses have performed year-to-date. So we're very excited with the quarter. The backlog complexion, it becomes a bit kind of outsized on the EOD, right? We've had a very, very significant demand on the EOD side of the world, which has really driven quite a bit. But even when you peel that back, Alair and remove that outsized impact, we're still -- compared to year-end, we're still seeing really significant 10%, 15% growth in the armor business backlog, a very sizable increase in the duty gear backlog larger than that and then an increase in nuclear, as Brad mentioned, of almost $13 million.

So, you look across there, and I would say from a backlog perspective, everyone is ahead of where we would have expected them through the year. So again, kind of going back to guidance, it gives us a lot of confidence in the back half of the year.

And I guess, Blaine, while I got you here, a question for you, I just follow up. The gross margins, 42.6% in the quarter, and I guess, 43.8% if you add back the step-up, which is a really nice year-over-year improvement. And your revenue grew a lot, but a lot of that was inorganic. And so nothing -- maybe a little bit of unusual, you said some pull forward. So maybe that help the margins a little bit? I guess how should we -- maybe you can just give us a little bit of color on the strength in this quarter and how we should think about the margins going forward?

Thanks, Larry. A few components inside the quarter on margin. One, I referenced when Tomo asked the question about revenue that the -- we had significant favorable mix in the zircoy side of the world, particularly robotic arms. So those margins were up pretty significantly, and we expect them to normalize in the back half. There was a lot of volume leverage, right? And this is true in our model where as the volume upticks, whether it's gross margin or EBITDA, there's quite a bit of leverage there. So I think as you're kind of -- you didn't ask, but kind of thinking about the back half, I think Q4 with a similar volume could have a very similar profile to Q2. But we think as we move into Q3 with a little bit lower revenue and mix returning that we'll have a little bit of kind of return -- reversion to the mean essentially.

Our next question is from the line of Sheila Kahyaoglu from Jefferies.

This is Adam Samuelson on for Sheila. So I guess the first question is just thinking about the organic growth outlook. You highlighted about 5% organic in Q2 kind of alongside the normalization in distribution demand. Can you just help us think about the underlying demand trends you're seeing across public safety and nuclear end markets and how you think -- how sustainable you think that organic growth rate is into early 2027.

This is Brad. Thanks for the question. So the outlook is positive when you look across the macros, whether it's the nuclear macros that I spent some time on the prepared remarks or from a public safety perspective. All indications have been continued focus on our products because the safety side of what those products are. So, demand seems strong. It continues to be strong. It looks good as we look forward, both on the nuclear side and also on the public safety piece. And we've shown that through the wins that we've announced over the past 6 or 8 months. I talked about FBI win that we're a part of. We've had the BEMO, the sensor win. We've also had -- that we talked about last time, which was a large ballistic seat win overall with GDLS, and we've got other ones that are queued up, too. So we're positive on the outlook.

That's helpful. And then just as we think about the revenue outlook for the balance of the year, just with the backlog that you have and momentum coming out of Q2 and that end market commentary, just help us think about kind of what occurs to get you to the high end versus the low end of the revenue guidance range at this point?

Yes. I think the -- to get to the high end, there's always a number of what we consider large orders or kind of projects. And a lot of those are binary, right, either win or you don't. And when we think about our range and putting together the kind of internal forecast and external guidance, it's really risk rating some of those opportunities. And so it's not just one macro driver or one particular business. I'd say majority of our businesses have the potential to contribute to that high-end guidance. And again, we're -- we have that positive momentum. We've seen that backlog build. So everything points in a very positive direction for us. But with that said, a lot of these are government procurement based, right?

There's always a risk that something gets delayed a week or 2 weeks, not that we won't get the award, but it gets delayed and that can shift revenue. So we're taking what we feel is a cautious approach on the outlook. I want to ensure we have high say do and try to mitigate some of those out of our control risks that could occur.

Next question will be from Jeff Van Sinderen from B. Riley Securities.

Realize it's relatively small revenues, but it sounds like Alien Gear is running strong right out of the gate for you. Can you speak about what's driving that business? And then what contribution should we be thinking about going forward from Alien?

Yes. Great question, Jeff. So definitely ahead of expectations. We were cautious. We talked about last -- we've talked previously about being cautious with the acquisition because it was a company -- Alien Gear was a company coming out of bankruptcy, a bit different situation that can send mixed signals to the customer base. So that's why we started out being cautious with some of those expectations. I feel like the Alien Gear team and the Safariland Duty Gear team have done a really, really good job communicating the fact that it's business as usual within the businesses overall as we work to do the integration work.

Our plans are not to eliminate the Alien Gear brand. We've been very, very clear on that. The Alien Gear brand, we made that acquisition because we do think it is a strong brand in the consumer market and then also within its customer base within the professional side of things. So I feel like the team has done a really nice job out of the gates with that side of things. Now where can it land? So we're in the early days of integration activities. We've already completed the -- what I call the consumer integration activity where we've taken the Alien Gear team and analyzed what Alien Gear does from a consumer side of things. We've combined the team with the Safariland consumer team, and those teams are fully integrated now and they're executing on their strategies that they've developed. So that one is done at this point.

The next one that we've also communicated, unfortunately, for the team up in Idaho, we've made an announcement that we're closing the Alien Gear facility there. That is their only manufacturing location. We completed those discussions and we'll take the next 12 to 18 months to then move that facility and integrate it into the Safariland manufacturing infrastructure where we have significant scale globally within duty gear around the world. So that one has been communicated. And then the last one is the professional side of things. That one is going to take longer as we work with both teams at Safariland and also Alien Gear through those strategies. So things are going well. And then where will we eventually land, you should expect overall, the margins that we see for the Alien Gear business to be more like Cadre type margins as we work on the various activities that I just talked about.

And then, Jeff, as far as expectations for the year for Alien Gear, we have them, they did about $4.8 million in the quarter. We haven't baked into the guide at $11 million. I think we're still -- been about a quarter with them. It's been great out of the gates, but still a bit of cautiousness to make sure there's no overhang coming out of bankruptcy.

And then can you remind us on the FBI panels? When should we expect the first panels to get delivered to the FBI? And then just wondering, are the DEA or some of these other agencies, are they aware of that product?

Absolutely. When you look at that program, as I mentioned in the prepared remarks, other agencies can buy off of that program. So that IDIQ that I mentioned covers multiple agencies. So, they are aware of that. In terms of when shipments will begin, we've already received demand on that program. So it's already started. We're not in what I would call a stabilized demand environment at this point. The Safariland team is working with predictive ballistics that won the award on nailing down what that demand looks like overall with the FBI for at least the next 6 months out. Keep in mind that $60-plus million IDIQ is over a 5.5-year period. So that's the length of time for it.

Our next question comes from the line of Andrew from Bank of America.

This is Andrew on for Ron. Given the higher margin expectations in the second half, near those 20% levels, what products are driving that expansion? Is it Armor, Duty gear or something else in particular?

No, I would say it's nothing in particular. The back half will be margin -- gross margin EBITDA rate consistent with what we saw in Q2. So when you look at the first half, that pressure is really Q1 based and really based upon volumes. So as those volumes have ticked up to normal rates, we look ahead and say, frankly, margins -- someone asked the question earlier, gross margins kind of slightly down, EBITDA margin slightly down in Q3 and then Q4, a similar profile to Q2. So when we look at it, it looks very normalized. It's just that Q1 was a bit of a tougher quarter based on volume and mix. So it's nothing abnormal. In fact, I would say it's more normal mix than abnormal.

And if I could just sneak in a second one. It seems like the M&A pipeline is strong. And obviously, the company is positioned financially to capitalize on the right opportunity. What specific add-on capabilities or market access really interest to you guys? Is there a certain region or type of product? I'd appreciate any color there.

Yes. So it's -- when we look at regions or products, so first of all, we're focused on the 2 end markets that we're in today. So on the nuclear front and also on public safety. We do get the question sometimes, are we done with public safety? The answer is no. There's plenty of additional opportunities out there in the public safety side of things. But we're looking for those same characteristics that we've talked about in the past in terms of M&A criteria. So we look for replacement cycle type revenue, recurring revenue, obviously, high margin that meets our margin thresholds. We're not scared of what we call fix-it type businesses. But if we do those, we have to make sure that we've got a clear path to the Cadre level type margins overall. High cash flow is also important on our list so that we can obviously use that to continue to fund additional M&A and pay down debt as we go along.

So that's the generic criteria that we have, and it applies whether it's on the nuclear side or the public safety side. So we're excited about the funnel. We're excited about what's in there. Keep in mind, similar to the prepared remarks that Alien Gear was a nice smaller bolt-on that we feel like we can leverage our scale that we have within the Safariland brand within Duty here and then Radar, our Holster company over in Italy. And that's also an option for us as we go forward, potential bolt-ons that we can add and feel like that we can add significant value to. So that's what we look for.

And our last question is from Matt Koranda from ROTH Capital Markets.

I guess, the 5% organic growth in the second quarter, can you just parse out, I guess, organic growth between nuclear and the public safety side of the business? And also, I guess, just further to that, I was wondering, I guess, you guys were talking last quarter about some headwinds in Container Solutions, I think, around some of the Alpha products. But it doesn't sound like maybe that's the case anymore. Maybe can you just talk a little bit about what has changed in that end market, I guess, in the last couple of months that's driving improvement?

Absolutely. Thanks for the question, Matt. On organic, public safety was just a touch below 5%. Nuclear was actually high singles, low double digits. So for nuclear, right, we had essentially 2 months and a quarter of Zircaloid and baked into the organic just those first couple of weeks of April was inorganic. And then distribution had a good quarter as well, right? So they were right there at mid-single digits. So it wasn't an outsized contribution from any one particular space, but kind of broadly strength across the public safety, nuclear and distribution side. So again, that gives us a lot of confidence that we're -- it's broad-based and it helps support the back half. It's not one particular business unit.

Okay. And then, Matt, your question on the nuclear side of things, just to kind of go back to what we talked about previously, it was with reference to Alpha Safety and a portion of the Alpha Safety business that there was an executive order around down blending that reduced some of the volume that we have in the container side of things. To be clear on that, that affects less than 8% of the revenue within our nuclear portfolio of businesses overall. There was more of an effect on mix from a margin perspective. But from a demand perspective, it's not concerning to us. When we look at the pickup in demand that we've seen in other areas.

For example, I think we may have touched on it, but manual manipulators within the Wälischmiller business in Germany is running really hot right now in terms of nuclear fuel type applications where manual manipulators are being used within those applications for hot cells. So just to put it in perspective, again, it's less than 8% that we saw the executive order effect from a top line perspective, and then we're seeing an offset within other types of applications within nuclear. And then just to keep in mind that when we're talking to the nuclear cleanup side of things, I mean, there are still -- you can take different estimates, but 50, 60-plus years of cleanup activity that still has to take place within the U.S. and within other countries. So even though the down blending executive order came out, there's still work that's being done for that cleanup. And then there's a volume of that cleanup that will continue to increase over time.

Very clear and helpful on that one, Brad. And then I guess shifting gears to the TYR. I was curious if you guys are finding any new or interesting commercial synergies now that you've been integrating that business for a bit. Just curious to hear, I guess, a little bit about the growth trajectory of that business and any successful sort of rotation activity you've had.

Yes. There's -- actually, we're having fun, quite frankly, with the TYR business and the Safariland teams coming together when you look at the strengths that both teams have and how those can be leveraged across the board. And there's 4 or 5 projects that have been kicked off among the teams that they're working together on. Some of those I can't go into great detail because it externally can affect what we're doing at both of those companies. But in general, what we're seeing is some products within the TYR portfolio that the team is working on, future steps on those products that can be sold within the Safariland channels, which would be great. So they fill some gaps within the Safariland side of things. Keeping in mind that the Safariland revenue, as we talked about in the past and the makeup -- the customer makeup of that revenue is the polar opposite of tears.

So it gives a really good opportunity to take any products that TYR has that there might be some gaps in product lines within Safariland and use those to fill those gaps. So that's one. We actually have some opportunities within the Med-Eng business. You probably wouldn't have thought that, where we have ballistics within the Med-Eng product portfolio within our bomb suits and other products. And so with TYRr's capital capabilities that we've referenced in the past, they're one of very few folks around the world that have the type of capital that they have and the capability, it gives us an opportunity also then to use TYRr to potentially be involved in various new product development projects with Med-Eng, for example, which is one active project that's going on today.

I could go on and on, Matt. There's a list of 5 or 6 items that the team has on being executed as we speak and working through. And then when we get to the point that those become visible externally, we can reference those more and talk about those.

Maybe just last one, if I could sneak one more in. On the acquisition front, maybe does the level of net leverage that you have right now constrain you to doing tuck-ins? Is that the way to think about M&A activity for the rest of the year? Or are there bigger items that you could kind of get done that maybe we're not thinking creatively enough?

Good question, Matt. We've said our upper end of leverage is really 3.5, right? So that gives us quite a bit of dry powder for acquisitions. We've also said, right, to get into that kind of 3x leverage kind of area, we have -- we have to be really comfortable with a quick kind of paydown. So I think that's a bit of status quo. We would look at it and say we've closed here, right? We've delevered from there. We've picked up the earnings the last 1.5 quarters. And -- we have lots of capability. But the right tuck-in is always compelling. Alien Gear is a great example of that where fairly small deal, just over $10 million, but really very compelling when you think about it post synergy. So we're going to be -- obviously doing our diligence, we're going to be a bit opportunistic. If the right bolt-on or tuck-in comes along, those become a very easier to do with a high level of confidence. And at the same time, we have the dry powder to look at bigger deals in the back half of the year.

I will now hand the call over to Mr. Brad Williams for closing remarks.

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 for joining the call today. You may now disconnect.

Hello, and welcome to the Cadre Holdings, Inc. Annual Meeting of Stockholders. Please note that this meeting is being recorded. [Operator Instructions] The meeting is about to begin.

Welcome to Cadre Holdings, Inc. 2026 Annual Meeting with Stockholders. Today's annual meeting is being broadcast live over the internet. I would like to turn today's webcast over to Mr. Warren B. Kanders, Chief Executive Officer and Chairman of the Board of Directors of Cadre Holdings, Inc. Please go ahead, Mr. Kanders.

I am Warren B. Kanders, Chief Executive Officer and Chairman of the Board of Directors of Cadre Holdings, Inc., and I will act as the Chairman of this annual meeting of the company's stockholders. I would like to introduce to you the other directors of the company participating in this annual meeting. Gianmaria C. Delzanno, Hamish Norton, and William Quigley, Directors of the company. Also present by means of remote communication at this meeting are Nicolas Sokolow and Mary Kissel, each nominee for election to the Board of Directors. Brad Williams, President of the Company; Blaine Browers, Chief Financial Officer of the company; Chad Barbara of KPMG LLP, the company's independent auditors for the year ended December 31, 2025.

Mr. Browers will act as the Secretary of the meeting. Mr. Browers, could you please present the notice of the annual meeting.

The notice of annual meeting dated April 24, 2026, was mailed on or about April 24, 2026, to all the stockholders of record as of the close of business on April 7, 2026, the record date for this meeting.

Is there a motion to order the notice of annual meeting filed with the records of this meeting?

I move that the notice of annual meeting be filed with the minutes of this meeting.

I second the motion.

All in favor, say, aye. Hearing no objection, the notice of the annual meeting is ordered filed with the minutes of this meeting.

Will the Secretary present the certificate of mailing of the notice of the annual meeting?

This certificate of mailing indicates that a copy of the notice of the annual meeting, proxy statement, form of proxy card and 2025 annual report were duly mailed to each stockholder of record on or about April 24, 2026.

The Secretary is directed to file the certificate of mailing with the minutes of this meeting. Mr. Browers, will you please present a certified list of stockholders of the company.

This is a certified copy of the list of stockholders of the company.

I will entertain a motion to dispense with the calling of the roll.

I move that the calling of the roll be dispensed with.

I second the motion.

All in favor, please say, aye.

Aye.

Is there any objection? Hearing no objection, it is ordered that the calling of the roll be dispensed with. In order to save time, I will entertain a motion to dispense with the reading of the minutes of the last Annual Meeting of Stockholders.

I move that the reading of the minutes of the last Annual Meeting of Stockholders be dispensed with.

I second the motion.

All in favor, please say, aye.

Aye.

Aye.

Is there any objection? Hearing no objection, it is ordered that the reading of the minutes of the last meeting of stockholders be waived. Under the powers granted to me by the bylaws of the company, I hereby designate Mr. Jonathan Zalkin as Inspector of Elections to count the votes presented to the meeting or by proxy. I've requested the Inspector of Elections to submit his oath as inspector and direct the Secretary to attach the same to the minutes of the meeting. Copies of the 2025 annual report to stockholders have already been sent to all stockholders and therefore ask for a motion to dispense with the reading of the annual report and to order that it be accepted and filed.

I move that the reading of the annual report be dispensed with and that the annual report be accepted and filed with the minutes of this meeting.

I second the motion.

Is there any objection? Seeing no objection, it is ordered that the reading of the annual report be waived in the annual report accepted and filed with the minutes of this meeting.

First item of business to be acted on at this meeting is the election of directors for the coming year. The proxy statement named as the directors to be elected at this meeting, 5 directors to hold office until the next Annual Meeting of Stockholders and until his or her successor shall have been duly elected and qualified. Will the Chairman of the Board's Nominating Corporate Governance Committee submit the names of the nominees of the Board of Directors for election as directors.

On behalf of the Board nominating Corporate Governance Committee, I nominate the following persons to be elected as directors of the company to hold office until the next Annual Meeting of Stockholders and until his or her successor shall be duly elected and qualified. Warren B. Kanders, Hamish Norton, William Quigley, Nicolas Sokolow, Mary Kissel.

I second the motion.

I order that the nominations for election of directors are closed.

We will now proceed with the next order of business, which is to consider and vote upon the ratification of the appointment of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2026. The Board of Directors recommends that you vote for ratification of the appointment of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2026. While any stockholder who desires to vote on the matters to be voted upon at the meeting, please do so now by accessing the annual meeting web page and following the on-screen instructions. Please note that you must enter the control number found on your proxy card that you previously received. The polls are now closed for each of the following matters to be voted upon at the meeting, the election of directors and the ratification of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2026.

Will the Secretary report how many stockholders are present or by proxy.

There are now present or represented by proxy holders of 37,067,682 shares of common stock out of a total of 42,797,451 shares of common stock issued and outstanding as of the record date. This constitutes more than a majority of the shares of the company's issued and outstanding common stock entitled to vote at this meeting, and therefore, a quorum is present.

I understand that the Inspector of Election has tabulated the votes. Will the Inspector of Elections please report the results?

The plurality of the votes cast at this meeting has voted for the election of each of the 5 nominees of the Board of Directors. And accordingly, Mr. Kanders, Norton, Quigley, Sokolow and Ms. Kissel have been elected as directors of the company to serve until the next Annual Meeting of Stockholders and until his or her successor shall be duly elected and qualified. Holders of shares of common stock of the company constituting a majority of the shares of common stock present or represented by proxy at this meeting with respect to such proposal entitled to vote thereon voted to ratify the appointment of KPMG LLP as the company's independent registered public accounting firm for the year ending December 31, 2026. And accordingly, such proposal was duly adopted.

That concludes the technical requirements of our meeting. Having concluded the formal business of the meeting, I will now entertain a motion to adjourn the formal portion of the meeting.

I move that the meeting be adjourned.

I second that motion.

All in favor, please say, aye.

Aye.

Aye.

Any objection? Seeing no objection, the meeting is adjourned. Thank you, ladies and gentlemen, for participating in the annual meeting.

We will now proceed to the question-and-answer session, which will not constitute part of the formal business of the meeting. Should any stockholder wish to submit a question, please click on the questions box to the right of your screen, type your question into the text box, then click the submit button. Please note that in the interest of all stockholders, we will only address those questions that are pertinent to the business of the meeting.

There are no questions, Blaine.

Thank you. Today's webcast has concluded. You may disconnect at this time. Thank you.

Good morning, and welcome to Cadre Holdings' First Quarter 2026 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 introductions and the reading of the safe harbor statement. Please go ahead, sir.

Thank you, and welcome to today's conference call to discuss Cadre's first quarter results. Before we begin, I'd like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face Cadre and the industries and markets in which we operate. 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 morning 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 26, 2026. A webcast replay will also be available via the link provided in yesterday'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.

Good morning, and thank you for joining Cadre's earnings call to discuss our results for the first quarter of 2026. I'm joined today by our President, Brad Williams; and Chief Financial Officer, Blaine Browers.

Entering 2026 with greater scale and an expanded set of growth opportunities, we are pleased to have delivered another quarter of financial and operational progress to begin the year. First quarter net sales growth of 19% year-over-year reflected continued strong and recurring demand for our suite of leading mission-critical safety products across our law enforcement, first responder, military and nuclear categories.

We ended the first quarter with record orders backlog of $355 million, which included $108 million of organic increase from Q4 to Q1. Brad and Blaine will provide additional details on the backlog, but its substantial growth signals strong demand as we progress through the remainder of the year. We are on pace for record net sales and adjusted EBITDA in 2026 with 20-plus percent growth expected based upon the midpoints of our reaffirmed guidance ranges.

Today's environment of heightened geopolitical tension and increased defense spending reinforces our belief in Cadre's growth trajectory. M&A has been and will continue to be a critical component of Cadre's long-term value creation strategy. Since our IPO, we have been very clear about our intent to build Cadre into a diversified multi-vertical provider of mission-critical safety products serving durable end markets. Thus far in 2026, we have completed two acquisitions: TYR Tactical in January and Alien Gear Holsters in April. While the former was a $175 million strategic platform and the latter a $10 million bolt-on, the same principles guide our process. Our highly selective key criteria include leading and defensible market positions, strong margins, mission-critical products as well as recurring revenues and cash flows.

Looking ahead, we see attractive opportunities in both the public safety and nuclear markets and intend to grow our portfolio of mission-critical safety businesses through patient and disciplined capital allocation. As we assess the overall operating environment in 2026 and beyond, it is important to highlight Cadre's track record of consistent and stable growth through cycles. This is the defining characteristic of the businesses we own. Based on this resilience, we are confident in Cadre's long-term outlook and remain focused on taking advantage of both organic and inorganic opportunities, supported by a strong balance sheet, robust acquisition pipeline and the continued implementation of the Cadre operating model.

In closing, I want to reiterate why this work matters. Our mission, Together, We Save Lives, is the foundation of everything we do. We feel an extraordinary sense of purpose fulfilling this mission and look forward to continuing to provide the best-in-class equipment that protects the law enforcement, military and security professionals who keep us all safe every day.

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

Thank you, Warren. On today's call, Blaine and I will provide a Q1 update and business overview, including recent trends and financial performance as well as our 2026 outlook, followed by a Q&A session.

We'll begin on Slide 5. Following a record-setting 2025, we carried this positive momentum into the new year, driven by ongoing progress embedding the Cadre operating model in everything we do together with strong and recurring demand for our suite of products across law enforcement, first responders, military and nuclear markets. We continue to successfully implement our pricing strategy in the first quarter, which is a testament to both the strength of our brands and the value our customers place in our mission-critical equipment. We experienced some headwinds year-over-year in mix for armor and nuclear, which was partially offset by lower distribution revenue in the quarter.

Turning to our orders backlog. It increased to $355 million at quarter end, which represented an all-time high. You'll hear more from me in a moment about our record backlog. But in short, it was driven by significant organic backlog growth from the blast attenuation seat contract award announced in March 2026 as well as a strong demand in duty gear and armor, the remaining growth from our acquisition of TYR Tactical.

Following our acquisition of TYR, a best-in-class brand delivering must-own tactical defense products, we completed the acquisition of Alien Gear Holsters last month. This was a compelling add-on opportunity to acquire a recognized holster brand with an established direct-to-consumer presence. Integration is underway, and we have begun working with the teams to develop strategies and action plans for functional, consumer, professional and operational integrations. We remain committed to further enhancing Cadre's market leadership through disciplined M&A and a robust pipeline across both public safety and nuclear.

As we think about capital allocation moving forward, our strong free cash flow generation enables Cadre to not only execute our M&A strategy, but also invest in organic growth initiatives and provide shareholders with consistent dividends. Our May dividend payment will mark our 17th consecutive since our IPO.

Turning to Slide 6. We continue to see a highly supportive long-term demand environment across both our public safety and nuclear safety end markets, underpinned by durable industry tailwinds. On the public safety side, rising global security threats and increasingly complex operating environments are among the many factors driving long-term resilient spend among law enforcement and military customers worldwide. At the same time, we are benefiting from replacement cycles and mission-critical demand dynamics to support steady recurring revenue streams over the long term.

Within nuclear safety, we believe the long-term outlook remains equally compelling. Governments and agencies globally continue to prioritize environmental remediation and nuclear clean-up initiatives, while national defense modernization programs support sustained investment in nuclear safety infrastructure and protective solutions. In addition, growing momentum around commercial nuclear power and energy security is creating incremental opportunities as countries increasingly view nuclear energy as a critical component of the long-term global energy mix. Collectively, these trends reinforce our confidence in the durability of demand moving forward.

The next two slides outline more current trends. First, on Slide 7, we see favorable dynamics supporting demand as we look across our core law enforcement safety end markets although there are certain near-term developments, we are monitoring. As we have discussed previously, Cadre stands to benefit from the current U.S. administration's commitment to public safety reflected in significant investment in federal agencies.

Zooming in on our company-owned Distribution segment, we have seen signs of softness in demand for discretionary-type items. For the first time since COVID and the Defund the Police movement, there has been an uptick in publicized budget challenges for various cities, which could translate into cuts in state and local law enforcement budgets. With that said, when budget challenges have happened historically, safety equipment spending has always been prioritized. Consistent with the historical trend, we have not seen any indication of a drop in spending for Cadre products given their mission-critical nature.

In our consumer channel, the strength of the Safariland brand and new product introductions are driving market share gains despite a challenging overall consumer environment. In fact, this channel is up 6.7% Q1 year-over-year. After completing our strategic planning process entering the year, we're excited about the opportunities ahead and confident in our dedicated team's ability to continue fueling growth in our consumer business. We've also taken immediate steps to kick off the Safariland and Alien Gear team to evaluate how best to optimize the positioning of these two powerful consumer brands in the marketplace.

Turning to geopolitics, today's environment of heightened tension, conflict and increased defense spending reinforces our belief in Cadre's long-term growth trajectory. However, our view of near-term opportunities has not changed. Cadre is well positioned to play a more meaningful role when hostilities end, at which point we would expect to provide various EOD offerings to address unexploded ordnance.

Turning next to the latest market trends affecting our nuclear vertical on Slide 8. We continue to see multidirectional support across our three market segments: environmental management, national security and nuclear energy.

A development to call out here is the 2027 budget submitted to Congress from the DOE. Overall, the budget was up 10%, which is positive. However, non-NNSA funding, which is mostly inclusive of clean energy spending, was down 11%. This underpins our comments from last earnings related to the administration's shifting priorities. The new budget reflects a focus on defense-related applications, which could translate to increased demand for our CAS, ventilation, containment, robotic arms and container businesses. The budget does not change the view we shared last quarter for NFT. We expect rates to hold at current levels.

Before I turn the call over to Blaine, I'd like to spend a moment to underscore the significant growth of our orders backlog since the start of the year. As you can see on Slide 9, our backlog as of March 31 was at $355 million, a record for Cadre and an increase of $166 million from the prior quarter. This was driven by a few factors. First was organic backlog growth of $108 million. As you will recall from our commentary last year, we saw a higher mix of large opportunities that have been delayed. Following a successful fourth quarter of 2025 during which our teams delivered on larger opportunities on South America, Eastern and Western Europe, UAE and parts of Asia, we made further progress in Q1 2026 as evidenced by the organic growth illustrated on the slide.

We saw an $87 million increase from the blast attenuation seat contract booked in March. As a reminder, this is a 7-year contract with General Dynamics European Land Systems, representing a key milestone and evidence of increased European defense spending. The remaining $22 million of organic backlog growth was driven primarily by strong demand for duty gear and armor products directly related to the work we communicated last year to close out various larger opportunities in our funnel. We continue to have additional larger opportunities that are still in play that we have not closed that we expect continued progress on throughout 2026 across armor, duty gear, EOD and crowd control.

Lastly, the acquisition of TYR drove another $57 million increase in orders backlog. We are excited about the opportunities that Safariland and TYR teams are currently engaged in evaluating which range from cross-selling to new products and go-to-market optimizations. The integration work with TYR is going exceptionally well, along with the progress the TYR team is making to achieve their commitments to us pre-acquisition. Taking a step back and putting the substantial backlog growth into context, it represents an important forward indicator and gives us confidence in our outlook as we progress through the remainder of 2026.

With that, I'll now turn the call over to our CFO, Blaine Browers, to speak more about M&A, Cadre's Q1 financial results and 2026 outlook.

Thanks, Brad. Before turning to the quarter, I want to briefly highlight Cadre's M&A track record to date and strong foundation we have created for the continued success in 2026 and beyond.

As you can see on Slide 10, the acquisition of Alien Gear Holsters completed in April, marked our seventh acquisition since going public. Since the start of 2024, Cadre has deployed over $400 million in targeted M&A, reflecting our conviction, financial strength and valuation discipline. Each of these seven transactions has been consistent with our thoughtful and patient approach. And more importantly, each has met our highly selective key criteria focused on strong margins, leading and defensible market positions and recurring revenues and cash flows.

On Slide 11, we provide additional details on our latest transaction, Alien Gear Holsters, which we acquired for $10.3 million through our court-supervised bankruptcy auction. A recognized holster brand, Alien Gear is a single-site business located in Idaho with fully integrated injection molding capabilities.

Turning to the next slide, we highlight the key criteria that guide our process when evaluating potential transactions. Alien Gear ticks many of the boxes that define our disciplined approach to M&A outlined on the right side of the slide. Looking ahead, we remain well positioned to capitalize on attractive growth opportunities, supported by a robust acquisition pipeline and significant financial flexibility. We anticipate additional M&A in 2026, and we'll target deals that broaden our product range and/or increase our customer wallet share.

Turning now to a summary of Cadre's financial performance. Slide 14 details our first quarter results. Q1 net sales of $155.4 million increased 19% year-over-year. Of note, the first quarter 2026 results included $2.6 million of inventory step-up amortization and $1 million of depreciation and amortization related to Zircaloy and TYR. Margins were in line with expectations in Q1. We knew coming into the quarter, we had some mix headwind in armor and nuclear that was driven by the complexion of our backlog. Right now, we expect margins to improve as we move through the year, which is a function of improving mix and leverage on increasing revenues.

Illustrated on Slide 15 is net sales and adjusted EBITDA growth year-over-year, including our 2026 guidance, which I'll discuss in more detail in a moment. Our full-year growth implies year-over-year revenue and adjusted EBITDA growth of 22.4% and 24%, respectively, at the midpoints. You can see over the last several years, Cadre has delivered consistent and stable growth. Our resilience is a key differentiator with businesses that are largely unaffected by economic, political, geopolitical and other cycles.

On Slide 16, we present our capital structure as of March 31, 2026. Our net leverage is just under 3x. After factoring in a full year of TYR earnings, our leverage is less than 2.5x. We believe Cadre's strong free cash flow generation, coupled with the strength of our balance sheet, gives us ample financial flexibility to continue to pursue organic and inorganic opportunities.

We provide our 2026 outlook on Slide 17. Net sales are expected to be between $736 million and $758 million. Our adjusted EBITDA guidance is between $136 million and $141 million, implying adjusted EBITDA margins of 18.5%. We still expect organic revenue to be in the 3% to 5% range on a full year basis. As Brad mentioned earlier in the call, our strong backlog exiting Q1 gives us confidence in our full-year guidance.

We expect Q2 revenue to be around $178 million with adjusted EBITDA margins around 17.5%, which implies the back half of the year will be about 55% of our full-year revenue. We expect the sequential increase from Q1 to Q2 to be driven by a full quarter of TYR, an uptick in Distribution, EOD and armor. Similarly, we expect adjusted EBITDA margins to increase in line with the volume throughout the rest of the year.

Overall, our businesses are performing well, and we expect continued strong demand in 2026 across our core markets in public safety and nuclear safety.

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

Thank you, Blaine. In closing, we are excited about the opportunities ahead. We continue to execute with discipline against our strategic priorities and our outlook for 2026 reflects confidence in the durability of our business, the resilience of our end markets and the effectiveness of the Cadre operating model. Across varied economic, political and geopolitical environments, we have consistently demonstrated an ability of Cadre to deliver strong, consistent results supported by our talented teams around the world. We remain focused on driving continuous improvement and building upon our market-leading positions.

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

[Operator Instructions] Your first question comes from Jeff Van Sinderen with B. Riley Securities.

I guess I wanted to start with TYR. I realize the acquisition only closed in January, but I wonder if you could speak a little bit more about some of the opportunities you're seeing there and potential synergies?

Yes. Jeff, it's Brad. As I stated a little bit earlier, the TYR acquisition is definitely meeting and exceeding expectations in many fronts, the commitments that they've made to us on a pre-acquisition basis continue to look really good. We have kicked off various projects, and I can't get into details on those externally, but those projects range anything from some new products that the teams are working on between TYR and Safariland and also our Med-Eng EOD business unit, along with other go-to-market strategies that we feel like we can use as we go forward to optimize what both companies are doing.

Okay. Great. And then given that you -- I think you mentioned you're exceeding internal targets on pricing. I guess any more you can give us on the latest you're seeing on input costs and supply chain overall?

Yes. Right now, we're not seeing any significant change on input pricing or material inflation. It's something we're staying close to. Certainly, more when you think about the sites in Europe, kind of staying close to energy prices. In many cases, we have fixed contracts that prevent us from being exposed to short-term higher energy prices. But up to this point, it has not been an impact, but something we'll follow closely.

And I think more importantly, reiterating, we will be nimble when it comes to pricing, we've had over the last 5 or 6 years, a couple of examples, whether it was COVID or tariff announcements where we had to thoughtfully readdress pricing as things change. So the team certainly has the playbook and the capability to pivot if required. But right now, we're not seeing any pressure that would change our current course.

Okay. Good to hear. And then with backlog up pretty substantially, can you remind us how we should think about conversion to revenues there over the next year or so?

Yes, it's -- I think when we think about it, the easy one is to take off the blast attenuation seats. That's that $87 million contract that the EOD business won. There could be some small shipments this year, but for the most part, that will ship out into 2027. After that, some of the nuclear businesses will carry over backlog. But when you think about the shorter-term, the armor, the duty gear, the crowd control, all and even the chemical luminescence, that will ship in the current year. So when we look at it, majority of it is going to be shippable or is shippable in this year. And keep in mind, we have the blast sensor contract that we put in for $10 million last year that is expected to completely ship this year.

So that's part of the reason, going back to comments that we feel bullish and confident in the full year guidance is we're seeing that backlog uptick and not just on blast attenuation seats, but fairly broadly across the portfolio. We've seen that increase in backlog, which is exciting for us and for the businesses to see.

Your next question comes from the line of Larry Solow from CJS Securities.

Great. Just on order and the outlook, it seems like the quarter was pretty much in line. Just a couple of questions. With the weakness you called out on the hard goods and on the distributor side, is that something new, something that concerns you?

Larry, it's Brad. Is it new? It's new since COVID and the Defund the Police that was going on. So it's the first time we've seen a bit of softness in our company-owned Distribution side of things. And keep in mind, within company-owned Distribution, there's a portion of that business -- the larger portion of that business is actually third-party products that we procure with various companies, anything from boots to uniforms to flashlights, you name it, various products like that. And then the smaller part of that business is, I'll call it, Cadre products from our Product segment.

When we look at the data around our Distribution segment, we're not seeing any weakness in the Cadre Products side of things, which is good. That goes back to what we've talked about in previous years that that's why we like the safety product side of things because typically, if there's a prioritization going on in budgets, you're going to make sure that you have folks with armor on, you're going to have holsters and other products of ours. So that's what we're seeing at the moment. We're watching it from that standpoint. But from a product segment perspective, we look good.

Okay. And the organic growth kind of assumptions you have for the year, I think were -- I don't think you break out officially, but it was like 3% to 6%. Just curious, has anything changed there? Did the acquisitions that of Carr's or TYR add any more than expected, any less? Just has anything really changed in terms of kind of organic versus acquired growth this year?

No, nothing's changed really on the organic growth side. So reaffirming guidance, still feel good about the organic side. As Brad mentioned, we'll watch the Distribution segment. The rest of the businesses are really performing well. Zircaloy, you asked about Zircaloy and TYR, largely in line with expectations. And so is TYR, but TYR, we're talking about 2 months. So we'll continue to kind of monitor progress, both in revenue in the quarters as well as backlog in their funnel and adjust. But at this time, as Brad said, they've executed right where we expected to. And we don't expect any downward pressure from them.

Got you. And then just last one for you, Blaine. Just on the guide. So it kind of implies an EBITDA margin in the back half of the year. I know you're always kind of back-end loaded. But this time, it looks like it's going to have to be like 22% -- 21%, 22%. I guess you're comfortable with that in the back half?

We are. We always have operating leverage, right, as volume comes through. And then you think about the complexion of TYR, which is more in that ZIP code or area code. So we're comfortable looking at it. We have -- when you think about -- just thinking about the blast sensor, for an example, right, that's incremental volume at nice margin with no incremental OpEx coming through. So that's where we'll get a lot of that leverage in the back half as some of these larger orders ship.

Your next question comes from the line of Matthew Koranda with ROTH Capital.

[Audio Gap] Hear what TYR and Carr contributed inorganically to sales in the quarter? And then just anything that you can call out that drove the organic headwind in the first quarter, I guess, was it more alpha or more on the core safety products side of the business?

Yes. And we missed, I think, the first part of your question, Matt, I think you're asking about TYR contribution and Zircaloy contribution in the quarter?

Yes.

Okay. Yes. So TYR, if you kind of run rate out their TTM, they were about there in the quarter and Zircaloy similarly was about the same. So kind of fairly level to expectations when you run rate them out.

When you kind of unpeel the inorganic, which we knew coming in, we had a tough comp in particular, armor and Distribution are really the drivers. And Brad talked through the Distribution challenges there. And armor is really just timing the backlog complexion or timing of the orders coming through. So no concerns on the armor side. And to reiterate what Brad said on the Distribution side is, we're not seeing softness on the Cadre-made products, it's been much more around the discretionary-type products, which is consistent with what we've seen during Defund and COVID.

Okay. And then on the 3% to 5% organic growth for the year, just wondering maybe a little bit more about the cadence of that growth for the rest of the year. I guess it implies that you see a pretty decent pickup. Maybe just anything on the seasonality of that organic growth that you expect and how the blast monitoring sensor contributes, maybe that's back half of the year, but just wanted to hear a little bit more about seasonality.

Yes. So the -- I mean you're right on the blast sensor that is going to be a back-half shipment as we expected. Kind of looking across the rest of the portfolio, armor is back-half loaded this year as well, which was right in line with expectations coming into the year. And then duty gear will be -- looks to be heavy in the last quarter of the year. So it's pretty discrete when we look at it, the places where the volume will come. And again having the backlog uptick in Q1 certainly gives us a lot of confidence in the rest of the year forecast and guidance.

Okay. And then just maybe last one on the Distribution segment. I wanted to hear when exactly did the softness, that you've observed and called out pretty clearly here, show up during the first quarter? And I guess, what have you observed quarter-to-date in that business? Is it still kind of running a little softer on a year-over-year basis? How to think about sort of some of those third-party products that you're selling and any demand changes that you've seen?

Yes. So the -- I think the good news when you look inside Q1, they stair-stepped each month on revenue. So January was a low point, picked up in February and then picked up again in March. So when we look out, that gives us some confidence there was a temporary lull in kind of early-year purchasing. And then we're obviously paying real close attention to it inside the quarter here. But nothing that would, at this point, give us any reason to doubt kind of the full year. And we've seen that recovery to a point where we're in line with guidance if it continues at the rate.

So again, it's a very -- can be a very short cycle on the Distribution side. So we'll watch it closely. But that progress where we exited Q1 at a significantly higher revenue definitely gives us a lot of confidence going into Q2 that this was -- looks to be a temporary lull, but something we'll continue to monitor.

Your next question comes from the line of Sheila Kahyaoglu with Jefferies.

This is Jack on for Sheila. I was just wondering if you could potentially provide an update on the plutonium down-blending suspension and maybe quantify the headwind if possible, and just discuss kind of the path to resumption of that business.

Yes, absolutely. So it's not changed since our last earnings update tied back to the executive order that went out. So pretty consistent with that side of things. However, what I will comment on is when you look at the long-term side of things, even though there's a bit of a lull in demand for that specific product and that application, there is a what I would call, fundamental time line mismatch that still exists between what the DOE has obligations to remove surplus plutonium by, I think it's like 2037, compared to reactor reuse scaling that is supposed to happen in the 2030 to 2040 range.

So there's going to be some portion of excess plutonium that is going to have to be dealt with. So right now, we're continuing to forecast what we have in the plan for this year. And for next year, at this moment, we're -- we continue to look at it being consistent with that. So that's the way I would look at it at the moment as we go forward.

Got it. That makes a ton of sense. And just for a follow-up, M&A has been a big piece of the Cadre story, and I know you guys have talked about it today. I think historically, you had said maybe there's 100 potential M&A targets in nuclear alone, was just wondering on that, what specific engineering capabilities or product gaps you'd be prioritizing over the medium term in the nuclear field?

Yes. No, great question. So some of the categories that we've talked about are not significantly different than some of the categories that we have today. We would just continue to build out those capabilities, whether it's geographically or within other customers that we don't reach today with certain specific product line expansion.

So I would think of it that way. So it would be continued on the engineering container side of things. We've talked about the critical alarm systems, ventilation, containment type systems. We like the outlook of those when you look at the spending that's going on. And when you look at the budget that was just submitted by the DOE, there shows a significant increase in the defense side of things in the DOE budget and a lot of those product categories are related to those applications.

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

I know that it's smaller, but just wanted to dive a little deeper into Alien Gear. This acquisition, small cost, but can you just walk us through any thoughts around maybe revenue contribution, synergies that you expect with your other holster businesses and even maybe profitability of this business?

Yes. No, great question. And keep in mind, Alien Gear is coming through a bankruptcy process. So when we kind of look backwards, like I wouldn't think about it as a direct indicator for the current year just based on some of the challenges in that process, as I'm sure everyone is aware. But when you look at the numbers for last year, they're right around $20 million and about -- a little better, but around just a little north of 10% EBITDA, which is not a bad business, but not -- certainly not at our standards.

And we look forward -- right now, Alien Gear is not incorporated into the guidance that we just closed a few weeks ago. So we want to take our time, get to know the business, understand the implications and impact the bankruptcy process has had on the business. But what we're excited about is you have the same manufacturing processes, really great focus on consumer and consumer marketing. And then we have -- we know a lot about their manufacturing processes, right? And we're excited to take some of the lessons we learned and improvements we made in our facilities and introduce those into the Alien Gear production line.

So we're looking forward to it. Great team, very happy with them out of the gates. And we're excited about what this can mean for the duty gear brands between Safariland and Alien Gear in the year.

Perfect. Then you gave some good info on kind of leverage and your comfort levels there. I'm just curious, as we think about your debt repayment, kind of how that sits as far as use of cash and maybe outlook of debt reduction, maybe over the next 12 months or so?

Yes. I mean our free cash flow, right, we have an amount on the revolver. Free cash flow will generate over the coming months and year will be directed towards that, excluding any acquisitions. And that's really been kind of our play is dividend, right? It certainly takes a priority and then the rest of the cash generated is going to be focused around either delevering or acquisitions. We're not at the top end of our leverage, but we've always said we think 2x levered is about the right number in the long term. Right now, when you factor in the TYR earnings, we're just a little bit south of 2.5. So we're not far off that long-term target. So we certainly have some flexibility out there. But when we look at that free cash flow in the absence of deals for the rest of the year, it would be really focused around paying down the debt and delevering.

Your next question comes from the line of Alex Preston with Bank of America.

I just wanted to take a step back to the FY '27 budget, right? You noted this mix between, call it, lower non-NNSA spending uplift on the defense side. I guess as you consider both your respective exposures to these line items and given the budgets are still in flux, I guess would you expect the longer-term dynamics to be more of a headwind or favorable? And going off that, to what extent is maybe the shift in administration priorities impacting opportunities you look at within nuclear going forward?

Yes. Great question. So you're right. There is the shift going on. When you look at the 2027 budget that the DOE submitted to Congress, they're showing overall up about 10%. And -- but then an 11% decline in non-NNSA funding. So the way we look at it when you break it up into the large increase side of things, which is for weapons and reactors being up 11%, we have four of our business units that are connected to those type of applications. That's our NFT, which is more of our container side of things; our robotic arms, which is the Walischmiller business; our RPS business, which is ventilation and containment; and then our PSC business, which is our critical alarm systems that we've talked about. So we feel like those four directly related to the weapons and reactor side of things, and we look forward to seeing how that translates as -- if that budget gets approved as they go forward.

And then on the environmental management side of things, that we've talked about, and we talked about last time, we talked about it a little bit this time. We feel like that one is going to be roughly flat, which is where we're sitting today as we've dialed in that forecast this year compared to last year, where we talked about a decline there in some of the container demand that we do have. So that's how we break it down, that's how we look at it. So we think it's a positive going forward because of that 10% budget increase on the weapons and reactor side of things.

Got it. And then I guess back to how you look at the portfolio going forward? Is that sort of shifting how you look at nuclear assets on the market? Or is this playing into that strategically?

Not -- well, I mean, it depends. So from an M&A perspective, yes, we want to make sure that we're looking at the macros and where the focus is as things go forward. But take environmental management, for example, even though roughly flat, as I mentioned a little bit earlier with one of the other questions, there is an obligation for the clean-up that has to take place. So right now, there's a lull in that clean-up. But as we go forward, there will have to be an inflection point where that clean-up activities begin to accelerate, I would call it, to the levels that we would expect before this year.

There are no further questions from the line at this time. I will now turn the call back over to Brad Williams for any closing remarks.

Thank you, operator. I'd like to thank everyone again for joining us on today's call, and your continued interest in Cadre Holdings. Thank you. Have a good day.

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

Ladies and gentlemen, good morning, and welcome to Cadre Holdings Fourth Quarter 2025 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 introductions and the reading of the safe harbor statement. Please go ahead, sir.

Thank you, and welcome to today's conference call to discuss Cadre's fourth quarter results. Before we begin, I'd like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face Cadre and the entries 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 of 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 morning and include a reconciliation of certain non-GAAP financial measures. I'd like to remind everyone that this call will be available for replay through March 25, 2026. A webcast replay will also be available via the link provided in yesterday'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.

Good morning, and thank you for joining Cadre's earnings call to discuss our results for the fourth quarter and full year 2025. I am joined today by our President, Brad Williams; and Chief Financial Officer, Blaine Browers. Fiscal 2025 was another year of steady progress for Cadre. Our focus remains consistent, building a company that delivers mission-critical technologies for professionals operating in demanding environments while generating disciplined and sustainable for our shareholders. Throughout the year, we made progress in 3 areas: strengthening our portfolio, integrating our businesses and continuing to build demand across our core markets in public safety, defense, and nuclear safety.

First, we extended our capabilities with the acquisition of Cars Engineering. Cars is a well-regarded provider of engineered solutions serving the nuclear safety market. The business brings deep technical expertise and long-standing customer relationships, and that fits well with our strategy of investing in specialized companies that operate in highly demanding environments. During the year, we also signed an agreement to acquire [ Tier Tactical ], a company widely recognized for its advanced protective in and strong reputation with military and law enforcement customers. That transaction closed earlier in 2026, and we are excited to welcome too to the Cadre platform.

We believe their capabilities and product portfolio are highly complementary to our existing businesses and further strengthen our position in mission-critical safety solutions. At the same time, we continue integrating the businesses we have brought into Cadre over the past several years. Building a strong portfolio is only the real first step. Real value comes from operating as a cohesive platform, aligning leadership, sharing engineering capabilities strengthening how we go to market. We made solid progress on that front in 2025.

Operationally, we also saw strong demand across many of our end markets. Our team secured a number of meaningful contract wins during the year, particularly in advanced sensor technologies and blast mitigation seating areas where performance and reliability are essential. These programs reinforce the trust our customers place in our technologies and in the Cadre brands. As a result, we continue to build backlog, providing increased doseability as we move forward. That backlog reflects both the strength of our portfolio and the long-term nature of many of our customer relationships.

Importantly, we entered the new year with a strong balance sheet. That financial strength allows us to remain disciplined, but also opportunistic, continue to invest in the businesses while pursuing acquisitions that expand our capabilities and market reach. We maintain an active M&A pipeline and are focused on opportunities that fit our strategy and meet our return thresholds.

Stepping back, what's encouraging is the consistency of our progress. Year after year, we've continued to strengthen the platform, expanding our capabilities, integrating our businesses and serving the markets where our technologies truly matter. I would like to thank our employees across the organization for their commitment and expertise as well as our customers and partners for their continued trust, and I want to thank our shareholders for their ongoing support.

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

Thank you, Warren. On today's call, Blaine and I will provide a Q4 update and business overview, including recent trends and financial performance as well as our 2026 outlook followed by a Q&A session. We'll begin on Slide 5. We delivered on our strategic objectives in the fourth quarter, driven by strong and recurring demand for our mission-critical safety products combined with the continued implementation of our operating model. Favorable mix in the quarter reflected higher duty year volume and lower distribution volume.

Orders backlog was up significantly. 2025 order growth plus the addition of Cars Engineering division in April resulted in a nearly 50% increase in our backlog versus last year. This includes the blast exposure monitoring system, or BMO, contract that we discussed last quarter. As a reminder, this is a $50 million IDIQ contract and represents a major achievement for our team and key milestone in our work with the U.S. military. Based on the expectations we have previously outlined for 2025, you'll recall that we saw a higher mix of larger opportunities that had been delayed. In fact, our [ Med Inge ], ICOR technology duty gear, defense technology and armor categories have been extremely busy and successful winning larger opportunities in South America, Eastern and Western Europe, UAE and parts of Asia.

Large opportunities typically bring challenges around visibility of closing and booking the opportunity. With that said, we continue to have additional larger opportunities that are still in play that we have not closed that we expect continued progress on and throughout 2026.

Turning to M&A execution. As you heard from Warren, we completed the acquisition of [indiscernible] last month. Its addition to our portfolio advances Cadre strategic focus on mission-critical products with high margins, strong cash flows and compelling growth tailwinds. It also opens the door to international markets and provides access to new customers based on long-standing relationships. The integration process is underway and we have started over -- our first 100 days of functional integration activities, which have included initial states, site visits by both Tier and Cadre teams.

Based on our initial diligence, we kicked off 2 projects to evaluate product opportunities to use tier capabilities within 2 different Cadre businesses. [indiscernible] has shown an impressive dedication to manufacturing processes that deliver customers best-in-class solutions. We look forward to leveraging their engineering capabilities as well as employing core Cadre operating model tools to unlock additional opportunities across the organization. While [indiscernible] is our latest acquisition, and our teams are focused on integration we are certainly not done when it comes to M&A, and we are actively evaluating a robust funnel and high-quality strategically aligned businesses to add to our portfolio.

Critical to our success is Cadre's ability to generate significant free cash flows through cycles, which enables us to both pursue acquisitions and make strategic investments in core organic growth, while also returning capital to shareholders. We paid 17 consecutive quarterly dividend since going public and recently raised our dividend of $0.40 per share on an annualized basis.

Turning to Slide 6. We continue to operate in 2 markets defined by durable long-term demand drivers. On the law enforcement side, we see rising safety threats globally coupled with resilient and growing spend on production equipment. There is bipartisan commitment to public safety in the U.S. and across Europe, supported by growing defense budgets. On the nuclear safety side, long term, demand is tied to policy and commercial tailwinds across our 3 market segments: environmental management, national security and nuclear energy.

I'll speak more about some of the dynamics we are seeing in the nuclear market in a moment. The next 2 slides outline more current developments in our business environment. Trends in North America law enforcement remained positive, highlighted by significant federal investment and government agencies. From a geopolitical perspective, global conflict is on the rise, underscoring the importance of the work that we do. As we have discussed previously, however, the opportunity for Cadre to play a more meaningful role generally comes when hostilities end, and we can provide various EOD offerings to address unexploded ordinance.

In our consumer channel, while oral consumer demand is down, we have benefited from the strength of the [ Safariland ] brand and new product introductions. During 2025, we saw growth in this channel of 7% for the full year and 15% growth in the second half of the year, both versus prior year.

Turning next to the latest market trends affecting our nuclear vertical on Slide 8. We continue to see multidirectional support driven by expanded government and commercial programs. On the National Defense front, expanding government mandates for weapons, modernization and production are driving consistent and growing demand. The broader nuclear power space also continues to support growth opportunities for Cadre and the momentum in this market segment has only grown greater. Based on our follow the fuel strategy, tied to the expanding nuclear fuel cycle, we are seeing stronger-than-expected opportunities in our funnel related to nuclear ventilation and containment systems and criticality alarm systems.

Our third nuclear market segment is environmental management, where we support nuclear material processing, handling and remediation. The development to call out in this area has been a recent executive order aimed at repurposing the U.S. paltonium stockpile to fuel nuclear reactors. Historically, alpha safety products were used to transport, stabilize plutonium to sites where it was down blended with uranium and ultimately packaged in the criticality control over packs per shipment. Following the executive order, this down lending program has slowed which has directly reduced demand for some alpha safety products.

Additionally, we've seen a shift in priorities at multiple nuclear sites toward pit production programs, with resources heavily focused on rebuilding plutonium production infrastructure, waste disposition programs are currently receiving less operational focus. And as a result, plutonium material movement has slowed. While this will have a near-term financial impact, keep in mind this development pertains to only 1 subsegment of the nuclear group. Blaine will discuss this in greater detail, but overall, the broader [indiscernible] Nuclear Group outlook remains positive.

Before I turn the call over to Blayne, I'd like to highlight another major win for Cadre's [indiscernible] in subsidiary that Warren alluded to in his introduction. Earlier this week, we announced that Med Inch has been awarded $86 million in contracts by General Dynamics European Land Systems or GDELS to provide blast attenuation seats designed to protect occupants for mine and roadside explosive threats. These are life-saving seats that highlight our differentiated expertise in blast physics and integration into military vehicles. We are honored to be awarded these contracts, which marked an important endorsement of [indiscernible] breadth of engineering and product development capabilities. Production and first delivery of the larger of the 2 programs will begin in 2026 and continue until 2031, while the second contract will run in parallel beginning in 2026 and continuing through 2029.

With that, I'll now turn the call over to our CFO, Blaine Browers, to speak more about M&A, Cadre's Q4 financial results and 2024 outlook.

Thanks, Brett. I will kick off my comments by spending a moment to underscore Cadre's M&A track record and the momentum we expect to carry into 2026. As you can see on Slide 9, the acquisition of TYR completed in February marks our sixth acquisition since going public. Each of these transactions has been in line with our thoughtful and patient approach and met our highly selective key criteria focused on strong margins, leading and defensible market positions, recurring revenues and cash flows. Looking ahead, we maintain a robust acquisition pipeline in both the public safety and nuclear markets and intend to grow our diversified portfolio of mission-critical safety businesses through disciplined capital allocation.

Turning to Slide 10. We highlight the criteria that guides our process when evaluating potential transactions. Overall, we anticipate additional M&A in 2026 and continue to see attractive opportunities to broaden our product range enter new markets and increase customer wallet share. On the next 2 slides, we have provided a broader overview of the TYR acquisition, which represents another step forward in the strategy we have articulated over the last several years. As Brad discussed, we have begun the integration process and look forward to the beginning of this next phase of growth together.

TYR brings significant hard armor capabilities via our large presses and autoclaves that will be a significant resource addition to the Cadre Armor businesses. We're excited about how the strengths of both companies will complement each other and enable new growth opportunities. Another key point to highlight is that the tier tactical customer base has minimal overlap with Cadra's existing [indiscernible] business. On Slide 11, we show TYR and Cadre Armor revenue by customer channel, which illustrates how complementary the 2 brands will be in the marketplace.

TYR served worldwide customer base, including top-tier special ops units, government agencies and militaries. You can see that 66% of its revenue is derived from international customers while U.S. federal and U.S. military totaled 27%, both areas where [ Safariland ] does not have a major foothold today.

Turning now to a summary of Cadre's financial performance. Slide 14 details our fourth quarter and full year results. Fourth quarter top and bottom line results were down versus last year's record Q4, our full year net sales, net income and adjusted EBITDA increased significantly year-over-year. In Q4, [indiscernible] product lines, saw revenue and margins in line with our expectations, but we did experience revenue timing shifts in our nuclear businesses and EOD product lines, some distribution softness and run rate and a slight impact in our chemical luminescence product due to the government shutdown.

Notably, 2025 adjusted EBITDA of $111.7 million marked a record for the third consecutive year and 2025 gross margins improved 140 basis points. Similar to what we've seen in the past, irrespective of a party, there can be uncertainty as a new administration gets their footing. We have seen similar impacts in the past but these impacts have been short-lived. We've also seen the resiliency of our business as we exit these transition periods. I would like to reiterate that we've had 2 significant wins in public safety that reinforce our optimistic view of the future with a blast sensor contract and the blast attenuation C contract, both of which have multiyear horizons for our lifesaving products and are 2 of the biggest contracts in our history.

I would also like to highlight the fact that the gross margins for the full year 2025 for public safety products, excluding distribution and nuclear, were up 188 basis points on a full year basis. which further reinforces the strong execution of the teams and sets the stage for strong EBITDA margins as we see more typical growth.

Illustrated on Slide 15 is net sales and adjusted EBITDA growth year-over-year including our 2026 guidance, which I'll discuss more in a moment. Our full year outlook implies year-over-year revenue and adjusted EBITDA growth of 22% and 24%, respectively, at the midpoint. You can see that over the last several years, Cadre has delivered consistent and stable growth. Our resilience is a key differentiator with the businesses that are largely affected by economic, geopolitical and other cycles.

On Slide 16, we present our capital structure as of December 31, 2025. After completing the acquisition of TYR Tactical, our net leverage is just under 3x and not including TYR's earnings. If you adjust for TYR's adjusted EBITDA contribution, our leverage dropped to about 2.5x. We believe Cadre strong free cash flow generation, coupled with the strength of our balance sheet gives us ample financial flexibility to continue to pursue organic and inorganic opportunities.

We provide '26 guidance on Slide 17. Net sales are expected to be between $736 million and $758 million. Our adjusted EBITDA guidance is between $136 million and $141 million, implying adjusted EBITDA margins of 18.5%. The guidance indicates organic growth for both public safety and the nuclear businesses to be in the 3% to 5% range as well as continued implementation of our pricing strategy of 1% price increase net of material inflation. Brad discussed near-term headwinds for one of our nuclear businesses, which is reflected in our guidance. From a profitability perspective, these declines represent negative mix and that impact is considered an outlook.

We believe, over time, as we realize these commercial nuclear opportunities in our funnel that our nuclear mix will return to what we've seen in the past. As we look at the quarterly cadence of revenue, similar to the past, we expect the second half of the year to be heavier with a lighter Q1. Our public safety businesses have their larger opportunities timed for later in the year. For example, the blast sensor order isn't expected to ship until later in the year as the team ramps up production on this new product line. We expect Q1 to be up year-over-year, driven by [indiscernible], but organically down in the quarter driven primarily by Armor project timing combined with Armor material constraints, lower distribution revenue and alpha project timing.

We expect Q1 to be very similar to Q3 of last year on the revenue line with margins around 39% due to volume and mix, as we've discussed. We do expect margins to climb as we exit Q1 as the mix improves and volume increases and EBITDA margins in the low teens in Q1 for the same reason. This doesn't include impact of the inventory step-up for TYR or amortization as part of the purchasing accounting. Overall, our businesses are performing well, and we expect continued strong demand in 2026 and across our core markets in public safety and nuclear safety.

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

Thank you, Blaine. We continue to execute well against our strategic priorities, and our strong 2026 outlook reflects our confidence in the businesses, fundamentals and the effectiveness of the Cadre operating model. We believe the combination of Cadre's track record of superior execution, resilience in the face of economic, political and geopolitical and other cycles as well as the dedication of our talented teams around the world will continue to drive strong results moving forward.

Beyond our core organic growth initiatives, we are actively evaluating compelling M&A opportunities and remain committed to targets with strong financial profiles, durable competitive advantages and structural growth drivers. In conclusion, we're excited to continue to build our platform and further enhance our market leadership supported by Cadre's entrenched positions and favorable industry trends across our law enforcement, first responder, military and nuclear end markets.

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

[Operator Instructions] And our first question comes from the line of Larry Solow with CJS Securities.

First kind of question, Brad, very encouraged to see the kind of organic outlook returning to a somewhat normalized rate there in the 3% to 5%. So if I do my math, if I'm very correctly, it looks like you were down about 2% organically in '25, and you kind of outlined bunch of larger orders pushed out. I'm just curious like in this environment or is it kind of a domino effect where some of the things that were pushed out from '25 into '26 or then you're seeing stock go from '26 to '27? Or doesn't -- is there any catch up? Just kind of curious on your visibility. Obviously, with geopolitical stuff, Iranian conflitct all that other stuff. Eventually, something like that probably should be good. But in the short term, government shutdown, partial shutdown. Does some of this stuff also kind of impact your visibility for the current year?

Larry, it's Brad. Thanks for the question. The good news is when you look at -- when there's large opportunities within this business or quite frankly, many other businesses have been in you have good visibility to those. So that mix of large opportunities that we talked about last year, we've closed a lot of those opportunities. They're sitting in our backlog now. We talked about blast seats we announced earlier this week. We just talked about it. That was something that we were expecting more toward the end of last year, but we've got that one in the bag now.

We also had the sensor program, which was the other one that we thought we would get earlier in the year last year, but we ended up having more toward the toward the end of the year last year. And then we have other ones that we can't disclose the customer base for competitive reasons, but there's other larger opportunities within multiple categories that they're not they're funded, but there's various details around those orders that have kept those roots from getting booked at the moment. So we continue to work those, working hard. And I'm also proud to say, I mentioned in the prepared remarks that our international teams have been closing a lot of various orders within many different countries within not just a single business unit, but multiple business units, and we're really proud of the traction that we've been making there.

Right. So it certainly sounds like a temporary thing, right? I mean, it feels like your backlog continues to grow. Question just on the nuclear front. So I guess kind of that shift in prioritization less cleanup on the plutonium side, more focused on butane build-out. I guess in theory, you're taking it from one hand and giving to the other hand, but that given the other hand, may take a little bit longer, so you have a [indiscernible] build-out, so you have a temporary short-term negative impact. Is that kind of a good way to look at that in terms of how you view it?

Yes. I think there's a timing difference when we think about like an existing revenue stream for nuclear related around that down blending and then the pickup on the commercial nuclear side, there is a timing lag just because of the size and significance of those projects were it to pick up. That's kind of point one. And then the second point, which Brad brought up is really just the mix change and the impact on margins that has that down blending is a very highly technical side of the business with margins that go with the kind of technical expertise required. So you kind of have this twofold kind of impact.

What we are excited though is how robust that commercial energy, nuclear energy funnel has become since acquisition, right? If you kind of rewind back when we started, and I think this is the great thing about the platform is we play in all 3 of these end markets. So over the long run, we're comfortable. There's plenty of revenue opportunities not only to offset that loss but really to continue to drive growth in that segment.

Got you. And if I could slip one more, just margin outlook. It looks like the implied kind of midpoint slightly up pretty flattish. Is that TYR's accretive. So is that most of that impact just on the mix side in nuclear, which is kind of dragging the margin this coming year?

That's really it. Yes, it's that mix impact.

And our next question comes from the line of Eegan McDermott with Jefferies.

It sounds like some of those bigger orders are still being push to the rate. And we've seen some recent wins. But for the remaining contracts, what gives you confidence that they're delayed and not lost at this point?

100% Confidence that they're delayed and not lost at this point. That's the type of visibility that we have to those. Can't go through the details for those specific ones, but the visibility is 100% there, especially 1 -- 2 actually larger orders in 1 of our business units that that's in our -- has been awarded to us, let's call it, right? So when we look at the products that we have that have been specified no issue there. So definitely no losses, high confidence in those. It's just a timing situation and they are both 2 different specific situations taking place.

Understood. That's helpful. And maybe if I could follow up on CapEx, guided in the $10 million to $14 million range for '26 is obviously a step-up from recent years. And maybe just some commentary on that, if you could? And should we be thinking of that as going towards capacity expansion or focused on any specific area of the business?

Really, the uplift from historical is around capacity, in particular, in the nuclear area or the nuclear businesses where we had some site build-outs. And if you go back in history, we have had periods where we're getting -- we get closer to not quite 2% of revenue, but closer to 2% revenue as we talk about. And generally, what drives that is capacity expansion buildings, and that's the case for this year. Outside of that investment in one of our sites, the -- the CapEx is very, very typical for the rest of the businesses.

And our next question comes from the line of Matt Koranda with Roth Capital.

I appreciate the detail on the organic components of the '26 outlook. Just wondering what are you factoring in from tier from a revenue contribution standpoint? It sounds like it's still going to be accretive on EBITDA margin, but I wanted to hear a little bit more about revenue and then cadence of revenue from TYR throughout the year?

Yes. Yes. Our outlook with TYR out of the gates is a conservative approach as we do with all acquisitions. So -- we haven't laid in at about $100 million on a full year basis. Given that we closed in February, that would put them in the high 80s, low 90s for baked into guidance. And then EBITDA margins, right, where we talked about in that 20% range. As we move forward in the year and you're getting a little closer to the team's process and develop more confidence in the funnel, we'll adjust accordingly from there. But we feel comfortable with where we're starting with them.

Okay. And then on the blasted contract, I was curious how that ramps up. I know you said there's contribution in '26. It sounds like probably later in the year. maybe any color on how you're thinking about the ramp-up and contribution to the sales in the back half -- and then just on a go-forward basis, I guess, is it kind of a run rate type deal through the 2 contracts terms that you gave in the press release, any additional kind of thoughts on the way to thread that into the model would be helpful.

Matt, it's Brad. So think of it this way. New program -- we wanted to get it out as soon as possible to actually getting the $86 million PO in our hands. So what the team is working on now with GDLS is the production planning side of things for 2026. So we actually have just started that here in March so that we can begin ordering parts and begin to get the supply chain cranked up. And then there's some sample deliverables as we go into the fourth quarter as we go into that phase of the project overall. So most of this revenue will be tied into 2027 and beyond for the schedule that I've mentioned earlier.

And our next question comes from the line of Jeff Van Sinderen with B. Riley Securities.

Just wanted to circle back to down lending for a moment, if we could. Would you expect down lending funding to increase again at some point or might down lending be replaced by some other sort of disposal process? And is that one that Cadre could be evolved with?

Jeff, overall, it's hard to tell what we're referencing is an executive order that went out last year. that directed -- it was really -- it was directed from the DOE to decrease the down blending of excess plutonium except in areas that are required by law. So that's you can go read the executive order, but that's roughly what the executive order says. And then what we've seen by working with some of our customers like [indiscernible] Savannah River and those folks is things have shifted more toward pit production programs like we've been talking about within our verticals with the goal of increasing pit production since the U.S. has, quite frankly, been producing 0 pits over many years since the cold war ended.

So that seems to be the focus at the moment. That does drive additional opportunities. There are different opportunities compared to what cleanup activities would look like with our high-end containers that Blaine had already mentioned that bring higher margins within that product category for us. And what it shifted to is from a commercial nuclear standpoint and more of the nuclear ventilation and containment type systems that we have within the Alpha Safety business unit and then also criticality alarm systems, which is also within the Alpha Safety business unit.

The good news is the funnel for those 2 product categories have been growing significantly since this shift has been happening. We've got various companies that are in the enrichment side of things and also fabricators, that we have an extensive list of quotes that are going on with them that we're pursuing at the moment for these offsetting type opportunities.

Okay. Good to hear. And then can you tell us a little bit more about the general dynamics attenuation product, what all you're supplying there, maybe a little more about the vehicles that the seats are going into? And also, is there potential for follow-on orders from General Dynamics, and just maybe what the overall outlook is for [indiscernible] given the recent wins?

Yes, great question. It's not a category that we've talked a lot about in the past., it is a category that we have approximately installed base, 13,000-plus seats are out there that we've designed and manufactured over time. across 15 to 18 different distinct configuration. So we've been doing this for about 18 years. So the team at [ Med inch ] has a lot of experience on the crew survivability side of things. So think of it as the product is -- it's a purpose-built blast attenuation-type set that's engineered to protect occupants of track and wheeled combat vehicles, and then also other vehicles within militaries.

So these vehicles anytime there's a blast that happens, it could be under the vehicle, it would be close to the vehicle. This is a way to protect the occupants that are sitting in these seats in the vehicle. We do have field-proven performance with various situations where vehicles that experience those type of blasts and lives have been saved due to these -- the blast seats that we have. So hopefully, that gives you a little more detail and a little more color around what we do in this category. The team -- very proud of this team. They've been working really, really hard to continue to build up the funnel and land some of these projects as they come about in these programs, and we're probably working with GDLS on this. It's a customer that we have a lot of experience with, whether it's General Dynamics, U.S.A., General Dynamics Canada, General Dynamics. Europe, obviously, the U.K. we have experience working with them overall. So we're happy to have this program.

And our next question comes from the line of Mark Smith with Lake Street.

First question for me. I just wanted to ask about Pier kind of synergies as we think about their facility and opportunities maybe with some of your current Safariland products what's maybe built into the guidance, what opportunities there are as well as maybe cross-selling opportunities and if there's anything built into the guidance for that?

Mark, it's Brad. Great question. The short answer is there's 0 built into the guidance related to TYR synergies. As you know, our first 100 days as we get [indiscernible] we focus on all the functional-related activities, IT, finance, accounting, tax, treasury, compliance, you name it. That's the immediate focus with the teams as we bring people into the Cadre organization.

We have kicked off a couple of projects. I can't go into details of those projects because it would bring up some potential competitive type situations out there, but we've kicked off 2 projects that I've approved within actually 2 separate business units. One is within our Armor business unit. In other words, with our [indiscernible] business unit to work with the TYR folks together on looking at how TYR capabilities can be used within those 2 parts of those businesses. So we're really excited about those 2 projects. We think they're very, I would call them, lower complexity projects that have higher opportunities of success as we go forward to get our feet wet with the TYR team working with our Cadre business units.

Perfect. And the second one for me is just kind of housekeeping and maybe for Blaine. Just can you just walk through a little bit more on that Q1, you gave some numbers around maybe Q1 on revenue margin. If you can just kind of review that. And then curious if there's some continued transaction costs that roll over in Q1?

Yes, absolutely. So we said revenue really in line with Q3 of last year, which was right at $155. 8 million, gross margins around 39%, with EBITDA margins in the low teens. And there will be some carryover on transaction costs into the year as we close the deal.

And our next question comes from the line of Jordan Lyonnais with Bank of America.

On the organic backlog decline, is it fair to think that most of that should be from the environmental cleanup work inside of the nuclear business and then 2 for '26, the verticals that we should see this 3% to 5% organic growth. If it's commercial versus true Defense, what [indiscernible] do you guys have around the commercial side coming through that gives you the confidence we'll see that shift to make up for the environmental down?

And your -- when you're talking backlog, Jordan, sequentially, is the question, right?

Yes.

Q4. Okay. It's kind of as we expect, there were a number of larger projects, right? Our backlog had increased coming into -- or at the end of Q3. And then as those large shipments went out. So it's due to year had some large orders, Brad mentioned on some international wins that got shipped in Q4 that lowered their backlog. Nothing alarming, but it's kind of a little bit spread amongst a lot of the businesses. Just calling attention to year-over-year, right, if we look back to where we were December of '24 we're still up organically pretty significantly. So I think kind of use that as a base point just to ground on that backlog growth on a year-on-year basis.

And then on the commercial nuclear side, we've always had these products, right, that we're talking about. So I think the how do we come for on the [indiscernible] is really relative to our past track record in this area. The real difference here is not that it's new products or new uses, it's just the sheer number that we're seeing. So if you think about ventilation containment as an example, Brad mentioned, right, that's something the business has done for many, many years, both in fuel production as well as in remediation. So this isn't a new application.

When you think about the competitor set, it's the same competitors they've competed about in the past, very similarly with the criticality accident alarm systems, same set of circumstances, same competitors same application. And that's what gives us comfort around those future wins. This isn't a new market for us by any means.

And that concludes our question-and-answer session. I will now turn the conference back over to Brad Williams for closing remarks.

I'd like to thank everyone for joining our call today and your continued support of Cadre Holdings.

Thank you. Ladies and gentlemen, this concludes today's conference call, and we thank you for your participation. You may now disconnect.

Good morning, and welcome to Cadre Holdings Third Quarter 2025 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 introductions and the reading of the safe harbor statement. Please go ahead, sir.

Thank you, and welcome to today's conference call to discuss Cadre's third quarter results.

Before we begin, I'd like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face Cadre and the industries and markets in which we operate. 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 morning and include a reconciliation of certain non-GAAP financial measures.

I'd like to remind everyone that, this call will be available for replay through November 19, 2025. A webcast replay will also be available via the link provided in yesterday'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.

Good morning, and thank you for joining Cadre's third quarter earnings call. I am joined today by our President, Brad Williams; and Chief Financial Officer, Blaine Browers.

This continues to be an exciting time for Cadre, marked by outstanding execution, disciplined growth and meaningful progress against our strategic objectives. The Cadre operating model is driving improvement every day, which is clearly reflected in another quarter of strong results.

In addition to delivering financial performance above expectations in Q3, which Brad and Blaine will outline, we continue to capitalize on Cadre's robust M&A funnel. With the agreement announced last week to acquire TYR Tactical, a leading manufacturer of mission-critical protective equipment, we again delivered on our commitment to expand our portfolio and enhance Cadre's market leadership across categories.

TYR Tactical brings world-class engineering capabilities and global reach, which importantly includes relationships with key military customers in Northern Europe that we believe will help Cadre unlock new growth opportunities in high-value end markets.

Under the leadership of Jason and Jane Beck, TYR has seen impressive growth since its founding in 2010 and shares with Cadre a long-standing commitment to innovation, quality and a life-saving mission. We are excited to partner with Jason and Jane and welcome them both as significant shareholders.

For Cadre, this agreement marks our sixth and largest acquisition since going public. Along with our recent deals in the nuclear and robotics markets, it underscores our relentless focus on disciplined M&A that strengthens our diversified platform of durable safety businesses. In total, over the past 24 months, we have deployed more than $400 million consistent with this strategy.

Looking ahead, we continue to see robust acquisition pipelines in both the public safety and nuclear markets. We will remain patient and disciplined in our approach to identify high-quality, high-margin businesses that align with our operating model and can deliver sustainable growth and strong cash flow generation over time.

Before I turn it over to Brad, I want to thank our employees for their hard work and dedication in upholding our mission. Together, we save lives. The results this quarter once again demonstrate the strength of our culture, the resilience of our businesses and our team's ability to deliver consistent execution. We are confident that the foundations we have built will continue to drive long-term value creation for our shareholders.

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

Thank you, Warren. On today's call, Blaine and I will provide a Q3 update and business overview, including recent trends, financial performance and full year outlook, followed by a Q&A session.

We'll begin on Slide 5. During the third quarter, we again delivered on our strategic objectives, advancing Cadre's track record of consistent and stable growth despite a dynamic operating environment. We continued to successfully implement our pricing strategy, which reflects both the strength of our brands and the value our customers place on our mission-critical products.

Third quarter mix was positive, driven by strong demand for EOD and favorable product mix in our nuclear categories. Importantly, our organic backlog increased by $20 million sequentially, reinforcing our confidence in the outlook for the remainder of the year.

Based on our discussion last quarter, you'll recall that we saw a higher mix of large opportunities that have been delayed. This significant backlog growth is a very promising sign reflective of our progress booking some of these previously delayed opportunities. I will speak more about this progress shortly.

In terms of capital allocation, Cadre's strong free cash flow generation enables the company to make dividend payments while also supporting core organic growth and M&A objectives. Our November dividend will mark our 16th consecutive since our IPO.

As you heard from Warren, we also delivered on our commitment to enhancing Cadre's market leadership through disciplined M&A. Our agreement to acquire TYR Tactical represents a significant step forward in advancing Cadre's strategic focus on mission-critical products with high margins, strong cash flows and compelling growth tailwinds. It further opens the door to international markets and provides access to new customers based on long-standing relationships that drive demand.

Blaine will speak more about the deal shortly, specifically about TYR's differentiated customer base and highly unique manufacturing capabilities. Overall, TYR is exactly the kind of high-quality, strategically aligned business we seek to add to our platform, one that enhances our leadership, accelerates growth and delivers long-term value for our shareholders.

Turning to Slide 6. I'd like to highlight another major win for the company. In September, Cadre's EOD business, Med-Eng, was awarded the BEMO contract, known as the Blast Exposure Monitoring System by the U.S. Department of Defense. This is a $50 million IDIQ contract signifying a major achievement for our team and a significant milestone in our work with the U.S. military. Those who have followed us since our IPO know this award has been a part of our long-term road map and something that we have been working towards since 2019.

While the formal press release has been delayed due to the government shutdown, the award information has been made public through sam.gov and the DoD website. Links are available in the materials we shared yesterday. The BEMO award builds on Med-Engs legacy as the global standard in bomb suits with market share of approximately 90%. Its reputation as the most trusted brand in the industry is based on decades of experience evaluating blast effects on personnel and protective equipment.

For the last 20 years, the team has been designing, manufacturing, testing and commercializing several generations of wearable blast sensors culminating in this latest technology. We are incredibly proud to win this award, which is a testament to Cadre's long-term commitment to innovation and also positions Med-Eng at the forefront of efforts to better understand and mitigate blast exposure in the field moving forward.

Next, on Slide 7, we lay out industry tailwinds supporting Cadre's long-term growth opportunity across both our core LE and nuclear safety sectors. On the law enforcement side, we see rising safety threats globally, coupled with resilient and growing spend on protection equipment. In both the U.S. and in Europe, support for public safety is bipartisan.

Turning to nuclear. Long-term demand continues to be driven by policy and commercial tailwinds across our 3 market segments: environmental management, national security and nuclear energy. Support across these markets continues to build both in the public and private sectors with the government clearing the path and private investment flowing in.

Landmark announcements dominate the headlines from federal partnerships to state-level investments, all reinforcing the recognition that nuclear must play a central role in achieving energy security and reliability in this year’s ahead.

Combined with nuclear material waste processing and expanding national defense initiatives, Cadre Nuclear Group is strategically positioned at the forefront of a rapidly evolving industry with large-scale and collective capabilities to support the full nuclear life cycle.

On Slide 8, I'll take a moment to zoom in on a couple of market trends and their impacts on our core law enforcement business. Trends in North America law enforcement remain positive, highlighted by significant federal investment in government agencies, including substantial focus on recruitment.

Looking at another market trend highlighted on the slide, new products and innovation drive everything we do at Cadre. We continue to hear enthusiastic feedback about new products launched over the past 24 months, including our tactical carrier system, HyperX and the Safariland SX HP package, the thinnest, lightest and most protective hybrid ballistic armor on the market.

Before I turn it over to Blaine, I would like to briefly address the macro environment. Last quarter, we spoke about how our full year outlook was slightly affected by our higher mix of large opportunities that have been delayed. There was a level of uncertainty related to timing and whether these opportunities would be booked this year or early next year.

We are pleased to report that we have made considerable progress in the third quarter booking some of these reflected in the significant backlog growth that I referred to earlier. One of those opportunities is the blast sensor 5-year IDIQ that the U.S. Department of Defense has disclosed on its website as well as sam.gov.

We received our first BEMO purchase order for approximately $10 million with shipments being planned throughout 2026. Additionally, we received large duty gear, armor, crowd control and EOD purchase orders in Q3. Our expectation has not changed that other larger opportunities we'll book in the coming quarters as we continue to track well on these opportunities.

I'll now turn the call over to our CFO, Blaine Browers, to speak to more about M&A, Cadre's Q3 financial results and 2025 outlook.

Thanks, Brad. I'll kick off my comments with a review of our latest acquisition as well as our M&A strategy more broadly. As Warren and Brad discussed, we've agreed to acquire TYR Tactical, a specialty provider of high-performance advanced tactical gear, including soft armor, hard armor and tactical nylon products to U.S. and allied militaries and law enforcement agencies around the world. It is a business that fits squarely within the strategic criteria that define our disciplined approach to M&A outlined on the right side of the slide.

Key attributes include a leading market position, strong brand recognition, differentiated manufacturing technology as well as exceptional product quality and commitment to innovation. A key point to underscore is that TYR Tactical -- is that the TYR Tactical customer base has minimal overlap with Cadre's existing Safariland armor business.

On Slide 11, we show TYR and Cadre's global armor revenue by customer channel, which illustrates how complementary the 2 brands will be in the marketplace. TYR serves a worldwide customer base, including top-tier special ops units, government agencies and militaries. You can see that 66% of its revenue is derived from international customers, while U.S. federal and U.S. military totaled 27%, both areas where Safariland does not have a major foothold today.

In addition, TYR brings significant hard armor capabilities via their large presses and autoclaves that will be a significant resource addition to the Cadre armor business. We are excited about how the strengths of both companies will complement each other and enable new growth opportunities.

In particular, we believe the Cadre operating model will unlock significant value for both brands. Taking a step back in terms of M&A strategy. This latest transaction demonstrates that we are not done building upon our leadership positions in our core law enforcement military categories despite our long-term vision to launch multiple new verticals.

We continue to see attractive opportunities to broaden our product range, enter new markets and increase customer wallet share. Overall, the M&A market remains strong, and we're excited about the prospect of add-on opportunities across both nuclear and core law enforcement targets moving forward.

Turning now to a summary of Cadre's financial performance. Slide 13 details our third quarter results. Q3 net sales of $155.9 million increased 42% year-over-year. Of note, third quarter gross margin improved 610 basis points year-over-year and 180 basis points sequentially. Year-over-year, it's driven by favorable pricing, the absence of inventory step-up amortization in the prior year and the cyber incident in 2024.

Illustrated on Slide 14 is net sales and adjusted EBITDA growth year-over-year, including our 2025 guidance, which I'll discuss more in a moment. Our full year outlook implies a year-over-year revenue and adjusted EBITDA growth of 10.5% and 8.7%, respectively, at the midpoint.

On Slide 15, we present our capital structure as of June 30, 2025, prior to the agreement to acquire TYR Tactical. Our pro forma net leverage will be around 2.7x when the deal closes. We believe Cadre's strong free cash flow generation, coupled with the strength of our balance sheet gives us ample financial flexibility to continue to pursue organic and inorganic opportunities ahead.

We are reaffirming our 2025 guidance on Slide 16. Net sales are expected to be between $624 million and $630 million. Our adjusted EBITDA guidance is between $112 million and $116 million, implying adjusted EBITDA margins of 18.2%.

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

Thank you, Blaine. We're excited -- we're executing well against our strategic priorities and our strong Q3 results underscore the effectiveness of the Cadre operating model and the dedication of our talented teams around the world.

Complementing our core organic growth initiatives, we are particularly happy about the recent progress we have made on our M&A program with the agreement to acquire TYR Tactical. We can't wait to get started and begin the integration process following the expected close in the first half of 2026.

Supported by Cadre's entrenched positions and favorable industry trends across our law enforcement, first responder, military and nuclear end markets, we're excited to continue to build our platform and further enhance our market leadership moving forward.

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

[Operator Instructions] Your first question is from the line of Larry Solow with CJS Securities.

Congrats on a good quarter. Really nice margin improvement sequentially. I think, I was just looking at because I guess year-over-year is a little tough to look at because of the cybersecurity comp. But any thoughts, any color just on the nice sequential improvement? It looks like gross margin was up almost 20 bps, which dropped to EBITDA. I imagine the operating model can't work that fast. So, I'm just curious, any thoughts on that? And just color on how Carr's is progressing under that operating model, which you obviously only have for a few months, but any thoughts on that would be great.

Yes. I appreciate the question, Larry. And when we look at the margin improvement, I'd say the really positive piece we see is it's pretty broad-based. This isn't margin driven by one particular business. So sequentially, we saw improvement really in all our major categories. And kind of within that, you're going to have some price sequentially. A lot of that's driven by productivity and then some positive mix in the quarter as well.

But again, kind of going back, it is very broad-based. This isn't a case where one particular business was driving that improvement. But it's what we really like to see, which is everyone really executing well and seeing those margins drop through.

And then Larry, it's Brad. On the Carr's side of things, you asked about the operating model and kind of where we're at on it. Really good progress. We've actually had the gentleman that leads our Cadre operating model has been over to Germany and also the U.K. meeting with Bendalls and also Walischmiller businesses, and taking a look at the progress they've made with the initial tools in the operating model. And as of the week before last, the team reported just exceptional progress. So culturally, they're excited about the tools. They're adopting the tools. It takes a while to learn these tools and master them as we go forward, but we're really excited about what's going on and the progress that's happening.

Great. And just switching gears, if I can, just on the Med-Eng, and I know you discussed this a little bit more at your Analyst Day, $50 million IDIQ. I imagine or I suppose this could expand significantly over the longer term. It's a much larger market opportunity. And I think this was an exclusive award for you, too. So, any just color on that longer-term opportunity there?

Yes, absolutely. So, if you remember back in IPO days, we had this listed as one of our kind of longer-term opportunities. And like a lot of bigger R&D projects like this with U.S. Department of Defense, things get pushed around and delayed. So that's where we kind of ended up at this point. But the good news is, at this point, it looks like that award, the $50 million IDIQ and then the initial $10 million purchase order, which is great, by the way, for those that know IDIQs, sometimes those initial purchase orders aren't that large. So that just shows you the commitment that's behind the program at this point from the DoD.

We're going to take one of these at a time. So, this obviously gives us an upper hand on any competitors out there in the marketplace that have been looking at blast sensors or working on blast sensor technology, because now with this adoption for us, it gives us that opportunity to take this technology to other countries. I won't disclose which countries have already reached out but we've had other countries reach out asking for sensors, having meetings with our technical teams, et cetera. So, we'll see where it goes, but we feel like it's a good future forward with the blast sensor program.

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

Just wanted to touch on or circle back to, I guess, gross margins, SG&A leverage. As we're thinking about Q4, anything in the expected mix of business that's likely to impact gross margin, also realizing it's early and you haven't closed the TYR acquisition yet. But assuming the closure of TYR and then second half contribution from TYR next year, among other business inputs, would you expect gross margin to increase, yes, next year, just thinking about all that together?

Yes, I appreciate the question. For gross margins in Q4, we expect them really to land somewhere between Q2 and Q3 rates, maybe a little bit on the higher end range based on what we've seen in Q3 and the backlog makeup for the rest of the year. And then, I think as you've seen before, if you look back to Q4 last year, the operating leverage can be pretty powerful, with bigger volume quarters, and that's what we kind of look out as the rest of the year. So very positive outlook for the remainder of this year.

When we layer in TYR, keep in mind, we'll have inventory step-up amortization as well as some intangibles amortization, which will impact the GAAP gross margin that we'll report. So there's probably a little bit of pressure there into next year but that's really only at that gross margin line. As we move down to adjusted EBITDA, as we've said, it will be accretive on the bottom line. So we get very excited about that and really bringing those 2 businesses together as we talked about. We think there's a tremendous value on both sides of the business. I'm looking forward to having the TYR business join the Cadre family and really the opportunity for both sides to learn from each other.

Okay. And I know you touched on this a little bit at the Analyst Day, but -- maybe you can kind of speak to the manufacturing capabilities of TYR. And on that side of the business, how close will you be to vertical integration and manufacturing once you have TYR in-house?

Yes. Great question, Jeff. So just to kind of go over the capabilities that TYR has and kind of contrast that to what our, I'll call it, our Safariland brand and a couple of other armor brands have. So first of all, it's the pressing capability, that's the biggest one from an equipment standpoint. So as raw materials become more advanced in the armor market from suppliers like Honeywell and DSM and others, as those become more advanced, they require a higher level of pressing capacity. And the reason you need that is to press materials so that you can elongate molecules and the raw materials so that you continue to have strength in materials within that process.

So just to give you an idea, Safariland capabilities from a pressing tonnage standpoint is anywhere from 250 tons to -- we maxed out around 500 tons of compressing capacity. TYR has 2 large presses at 7,000 tons, okay? So at this moment, what we've been having to do with our hard armor business, I am talking plates and shields with some of the newer materials is we have to go externally with a few other companies to press some of these materials so that we can get to the level of pressure that's needed. So, we're very, very excited about these capabilities that the TYR folks have in the Peoria facility there. And as we go forward, that pressing capability will be used by both companies.

And in terms of vertical integration, Jeff, we will be -- our vertical integration will not be any more than what it is today, right, because we press today, TYR presses today. In the armor business, if we were going to go additional vertical integration in the supply chain, that would be into the raw material side of things, ballistic materials, for example, nylon materials and that side of the supply chain, which we're definitely not in that space.

Okay, excellent. I appreciate that. It seems like overall, it gives you a pretty nice competitive advantage in manufacturing capabilities.

Your next question is from the line of Eegan McDermott with Jefferies.

Organic growth in the quarter looks to have been driven by armor and duty gear. Do you have a sense of how much of that is the step-up in demand for these end markets versus easier cyber comps?

Yes. You were a little tough to hear, but I think you were asking about organic growth for armor and duty gear, and on a year-on-year just because of the tough cyber comp. Is that correct?

That is correct. Sorry, if I'm not coming in clear...

No, no, that's all right. When we look at -- and it's a difficult number. Let's maybe start with that, trying to adjust out the cyber and spread it out. When we look year-on-year or sequentially, we did see growth in the armor business. And when you kind of spread out prior year for duty gear, our run rate was up from last year.

So, we look at that and say we're in a pretty good position. And then based on the bookings and large orders that have come in and outlook for the year, we're pretty confident we'll have organic growth in those businesses. So very excited about kind of where they position and Q3 makes it very difficult to kind of unpeel them. But I appreciate the question.

Yes. I would just add to that by saying just to underscore, last quarter, we talked about the higher number of large opportunities that we had in our funnel that the teams were working on. And we got asked quite a few questions about our confidence level in those. And I think we've shown that, right, with our increase in our backlog. The backlog increase of $20 million, $10 million of that BEMO and then another $10 million are these larger orders that we’re tracking and doing really well on.

So, the team is lining up those orders, knocking them off one by one and grabbing those wins. And as we get into the rest of the year, we've got additional opportunities that fall in that large order bucket that we spoke of last quarter, and we're still in that lead position and really excited about those when they do come through. And some of those are very noteworthy type opportunities that we can't wait to talk about externally if we win those.

That sounds great and that's helpful. If I could maybe ask a follow-up. The offset, I guess, in the quarter was order timing in the nuclear business. And with, I think, $6.5 million taken out of the nuclear backlog last quarter. Would you call out any risk in that end market in terms of demand or funding, whether it'd be U.S. or international?

No, great question. I mean this is -- you're going to be part of that Alpha Safety, if you think about that nuclear business with large opportunities, because it is more concentrated on fewer large opportunities, just naturally, we're going to see some timing around that backlog build and then backlog bleed as they execute on the projects. But when we look ahead and look at the funnel of opportunities for both the Zircaloy businesses as well as the Carr's businesses, formerly Carr's businesses and Alpha, we're still very bullish on outlook for next year and beyond.

Your next question is from the line of Matt Koranda with ROTH Capital.

Maybe just attacking sort of the growth question, because I know the comparison is a little wonky from last year, attacking it from a different angle. What was the nuclear contribution, I guess, to product revenue in the third quarter between Carr's and Alpha?

The Carr's businesses would be kind of like what you'd expect based on what we disclosed for revenue, if you kind of split it out, so that gets some just a little bit under $20 million and Alpha was slightly less in the quarter than you'd expect on a run rate basis.

Okay. That helps. And then maybe just switching gears and thinking about the guidance that's implied for the fourth quarter. Just curious how the government shutdown might impact things if the shutdown drags on deeper into the fourth quarter. Is there any impact that's contemplated in the guidance? Or how should we just be thinking about sort of delivery schedules and the disruption that could happen?

Matt, it's Brad. I appreciate the question. We have considered that in the guidance overall. There's a couple of our business units and a couple of our product lines that we're watching closely that are connected more to government being open and whether that's sign-offs on various shipments that need to go out or just the fact that with the government shutdown, if folks aren't doing training and doing work to then pull through some of the shorter cycle type businesses that we have.

So those are contemplated in the Q4 side of things. We're going to keep watching them. We've got our teams. We've got our hit list of which ones those are. The teams go through those on a weekly basis when they go through their daily management sessions daily and weekly, and they're on top of those to continue to push those as we go forward. So, at this point, we're optimistic that we've got it covered in there.

Okay. All right. Great. And then maybe just if I could sneak one more in. Great to see the PO on the blast sensor for $10 million. I know we're always asking for more detail here, but any thoughts on sort of the cadence of how that could be delivered? Is it going to be like a lumpier within 1 or 2 quarters next year or should we just be kind of thinking about a ratable delivery on that PO throughout next year?

Matt, I think we expect it to be a bit lumpier. There's kind of 2 -- I wouldn't say challenges, but 2 things you got to think about. I mean we have the first PO in the IDIQ. We'll work to deliver those as soon as possible to the end user, which likely kind of weights it towards the kind of front half to middle of the year. What we don't know yet, right, and certainly, the government shutdown is helping is kind of visibility on any follow-on orders, and that's one we'll just have to wait and see.

Your next question is from the line of Jordan Lyonnais with Bank of America.

I just want to ask on your guide, is there any downside risk just on if the government remains shut down through the rest of either the quarter or just late into November? And then two, how are you guys thinking about opportunities for next year with the DHS funding from the reconciliation bill starting to go out for the World Cup?

I'll take the first part of that. So, that's a similar question to what Matt just asked in terms of the -- what's going on from a government shutdown perspective and what's affecting us. So again, we feel like we've got any of those potential slippages covered in the Q4 guidance side of things or the full year guidance side of things. But when you look at some of those opportunities within some of the business units they do exist potential delays, but we feel like we're covered at this point.

And then on the -- your question about the DHS and World Cup. We would likely expect some uptick in spending around security. I think it's difficult for us at this point to really point to particular products, or opportunities just because it hasn't kind of gone through the funnel. But the great news is the teams are out there, staying close to our end users, our customers, our distributors and just making sure we're in a position to fulfill those needs if and when they ask. But at this point, really difficult for us to put an estimate out.

I'd just add to that. When you think about security when it comes to those kind of larger scale events like that, there's any federal folks involved, state and local, when you go head to toe when you look at those folks, right, with the TYR acquisition, Safariland products, whether it's holsters, body armor, there's helmets involved, shields involved, crowd control products, you name it, that type of stuff. That's why we continue to build out in our public safety side of things.

We've been in it for a long time, very comfortable with public safety, who's out there, who's in the market, opportunities to go after. This is squarely within what we do. So, I'm sure when that contends to move forward as it firms up with the breadth of products we have, we're going to be right in the mix of that.

Your next question is from Mark Smith with Lake Street.

I wanted to ask about input costs and inflation. Is there anything that you see kind of going up significantly? And similar with that, has anything changed in your outlook or ability to take price at and above inflation?

No. Thanks. Great question. Our inputs have tracked pretty consistently with what we've seen recently. Obviously, there's some variability coming into the year with tariffs and the likely impact. But we haven't seen any price come through from destocking from any of our suppliers. So, it's one we're staying close to but that has not been anything unexpected at this point. And we don't have any indications that next year is going to be significantly different. So, we're comfortable there, staying close to it. The other pieces we kind of look to -- kind of the 2 pieces to counteract any of that pressure if it was to occur, right?

On the price side, as you asked, nothing's changed in the dynamic. It is one, a tool we need to be and we'll continue to be thoughtful in the application of it, right? No difference in how we always approach it that we want to be thoughtful and make sure we're getting the value that the products deserve based on their performance in the field. And the second piece is really about model, right, and making sure we're leveraging those tools to offset whether it's material or labor inflation or drive increased throughput or better margins. So, as we kind of look at it, we feel pretty good about that material inflation environment as we see it today. We also feel really good about the tools we can leverage to counteract that and really maintain the business and the margins.

Okay. And then I also want to ask about new product mix, and I know this is tough with nuclear and acquired business and maybe not as much on a year-over-year comp. But just as we think about the legacy business, how have new products mixed here recently versus kind of historical averages? And then I'm curious, similar to that with TYR, if there's a history or legacy of innovation and new product mix that drives that business.

Yes. It's a tough number for us to track, but I can tell you when we look at a couple of the business specifically, compared to what we've historically done with our portfolio significantly refreshed in the last few years, we're seeing gains in those markets with those new products. So that's very exciting for us.

And on the TYR, TYR was really built on innovation. And Jason and Jane and the rest of the team have done a fantastic job of innovating both around the tactical that carrier, the nylon as well as the body armor. So, we expect as we bring these 2 teams together that we'll really get the best of both worlds and continue that innovation journey for both of us. So very excited about the future.

At this time, there are no further questions. I will now hand today's call over to Brad Williams for closing remarks.

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

This concludes the conference call. Thank you, and have a great day.

Good morning, and welcome to Cadre Holdings 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 IGB Group for introductions and the reading of the safe harbor statement. Please go ahead, sir.

Thank you, and welcome to Cadre Holdings conference call to discuss the acquisition of TYR Tactical. Before we begin, I'd like to remind everyone that during today's call, we will be making several forward-looking statements, and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to 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 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 morning. I'd like to remind everyone that a webcast replay of this call will be available via the link provided in today's press release as well as on Cadre's website.

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

Good morning, and thank you for joining Cadre's conference call to discuss our latest acquisition. I am joined today by our President, Brad Williams; and our Chief Financial Officer, Blaine Browers.

We are pleased to further strengthen Cadre's industry-leading safety platform with the agreement to acquire TYR Tactical, a manufacturer of mission-critical personal protective equipment for military and law enforcement agents globally. I wish to congratulate the entire TYR team, Jason and Jane Beck, their family and employees. I have followed Jason and his businesses for over 25 years, and I'm excited to partner with Jason and his dedicated teams. As we have mentioned before, Cadre's M&A strategy is patient, thorough and disciplined. This transaction is consistent with that approach and reflects our ongoing commitment to expanding our portfolio and enhancing the company's market leadership across categories.

A family-owned business founded by Jason and Jane Beck in 2010, TYR Tactical has established itself as a best-in-class brand, delivering must-own tactical defense products to elite military and law enforcement teams around the world. Its financial growth is underpinned by proprietary technologies, scalable manufacturing and outstanding management. Most importantly, Cadre and TYR Tactical share a long-standing commitment to innovation, quality and a life-saving mission. For decades, Jason and Jane have dedicated their lives to serving the men and women of law enforcement with gear that always exceeds mission demands. We welcome them both as significant Cadre shareholders and look forward to beginning this next chapter together.

For Cadre, this acquisition represents another step forward in the strategy we have articulated over the last several years. Our long-term vision has been to evolve from a safety and survivability equipment company into a broader industrial business that builds on our legacy while finding new, high-margin, high free cash flow businesses in verticals where we can apply our expertise.

It is also important to recognize that we are not done building upon our leadership positions in core law enforcement and military categories. We continue to see attractive opportunities to broaden our product range, enter new markets and increase customer wallet share.

At the end of the day, our life-saving mission remains central to everything we do. We are proud of the trust that users place in Cadre and even our safety focus becomes more diversified, we will remain unwavering in our commitment to delivering products and solutions that customers can rely on when it matters most.

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

Thank you, Warren. On today's call, I'll provide a brief overview of TYR Tactical, outlining products and key investment highlights, followed by a Q&A session. I'll begin on Slide 3 with a summary of the transaction and why we are so excited to acquire this business.

As you heard from Warren, TYR Tactical is a specialty provider of high-performance advanced tactical gear, including soft armor, hard armor and tactical nylon to U.S. and allied militaries and law enforcement agencies around the world. It is a business that fits squarely within the strategic criteria that define our disciplined approach to M&A, outlined on the right side of the slide. Key attributes, including a leading market position, strong brand recognition, differentiated manufacturing technology as well as exceptional product quality and commitment to innovation. The business also brings meaningful growth tailwinds with approximately $92.6 million of revenue in the year ended December 31, 2024, and a margin profile expected to be immediately accretive.

While I'll speak more in a moment about its expansive geographic footprint, the business has headquarters in Peoria, Arizona and additional facilities in El Paso, Texas; Ontario, Canada and Denmark with deeply entrenched positions globally and a sticky contract base. These dedicated facilities ensure an expedited manufacturing process and support their extensive international customer relationships.

The map on the right side of Slide 4 is an effective illustration of the company's worldwide penetration. The business services customers in nearly 40 countries with international revenue representing approximately 50% of 2024 total sales. Based on its established relationships with key European militaries and recent wins with Danish and Swedish Armed Forces, we see clear opportunities to secure additional contracts with other European and NATO militaries and law enforcement agencies moving forward.

A key point to highlight is that the TYR Tactical customer base has minimal overlap with Cadre's existing Safariland armor business. In the bottom left corner of the slide, you'll see an overview of the TYR Tactical product suite. Designed to meet the exacting needs of tactical operators in high-risk environments, its offerings include plate carriers, vests, hard armor, shields and accessories that enhance equipment operability. The business has a reputation for innovation, leading ergonomics and field-tested durability, which underpin its market-leading position.

Turning next to Slide 5. We provide a closer look at differentiated manufacturing technology and proprietary IP portfolio that TYR has developed under the leadership of co-founders, Jason and Jane Beck. Jason and Jane have built an exceptional engineering foundation supported by a substantial investment in cutting-edge pressing and autoclave systems at their Arizona headquarters. These capabilities are highly unique in the industry and allow TYR to produce defense products engineered with next-generation advanced ballistic materials. As these materials become increasingly prevalent in hard plates and shields, this engineering technology is a must-have to remain competitive.

The company's proactive R&D process has yielded a deep intellectual property portfolio with 80 patents secured across the U.S., Canada, Australia and Europe and another 27 patents pending. TYR also maintains 59 registered trademarks, protecting its key brands and product innovations worldwide. Importantly, the company has placed significant emphasis on working with female operators, resulting in patented female body armor that addresses the distinct ergonomic needs of female agents without compromising comfort or adding bulk or weight. Taken all together, their track record of product development, coupled with advanced engineering capabilities reflect a business that has invested heavily in innovation and built meaningful barriers to entry.

Before turning to Q&A, I'll spend a moment to reiterate the key investment merits that TYR Tactical brings to the table. The acquisition represents a significant step forward in advancing Cadre's strategic focus on mission-critical products with high margins, strong cash flows and compelling growth tailwinds. It establishes a foothold in international markets and provides access to new customers based on long-standing relationships that drive demand.

From the initial diligence that we have completed, TYR has shown an impressive dedication to manufacturing processes that deliver customers best-in-class solutions. We look forward to employing core Cadre operating model tools to unlock additional opportunities with TYR and other Cadre brands. Overall, this is exactly the kind of high-quality, strategically aligned business we seek to add to our platform, one that enhances our leadership, accelerates growth and delivers long-term value for our shareholders. We can't wait to get started and begin the integration process following the expected close in the first half of 2026.

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

[Operator Instructions] Your first question comes from Larry Solow from CJS Securities.

Congratulations. It sounds like strategically, certainly what you're looking for. Can you maybe give us a little more color just on the competitive environment? It sounds like most of these products are complementary to you guys. So it doesn't sound like you're competing much directly. But just maybe across their product line, it sounds like they're the leader, but can you just give us a little more color on the competitive environment and their growth history. It sounds like they're closing in on $100 million revenue in a 15-year history. How is that kind of growth shaped out over the last few years?

Larry, it's Brad. I'll take the first half of that, and then Blaine will pick up on the last piece there. But just talking about the competitive landscape typically, when we talk about competition in the market, Safariland is known for really the soft body armor side of things within, as you know, law enforcement from an armor perspective. What we typically don't have significant share in is on the tactical side of things. We've done well, as you know, in the past 24 months with a product called HyperX, which is a tactical body armor system that Safariland has.

So then to kind of contrast that, you flip it the other way, and when you look at TYR, we don't have significant customer overlap, which is great. That was one of the things that attracted us to the business. They're entrenched with militaries around the world where typically Safariland has national police forces when we have business outside the U.S. And then as you know, we're heavily concentrated in law enforcement, where they're heavily concentrated more in the federal side of things from a customer perspective.

When you look at products, the Safariland expertise is not in plates and shields, even though we have those product lines, they're important to the business that we have today, but it's not something that we've been able to continue to keep up with, with the type of investments needed to progress those product categories forward. TYR has done an amazing job, not just from a product development in those categories, but also capital equipment to make sure that we can keep up with the more advanced materials that are needed to manufacture the plates and gear at the level that's needed in the market.

And then on the growth side, Larry, they've seen pretty significant growth over the last few years as they've landed some of these large projects and large opportunities. We expect that to moderate but still to grow in the future. As we kind of move forward, we'll provide more guidance. But they've definitely been aggressive in the market and successful with their products. And we're excited to really bring them in as part of the Cadre family and look forward to some of the opportunities we can unlock between the traditional kind of armor -- Safariland armor as well as the TYR Tactical products.

Got it. I appreciate that. And if I could just squeeze in one more. It sounds like I know you didn't give the actual EBITDA number, but if I just take a guesstimate with the margin profile you discussed, your leverage, pro forma, I think, should still be just under 3. Am I in the ballpark there?

Yes, using Q3 results pro forma with TYR, would just less than 3. That's correct.

Your next question comes from the line of Matt Koranda with ROTH Capital.

Congrats. Just wanted to start with maybe the regional exposure at TYR. I know you broke out and said about 50% of sales coming internationally, but you were sort of qualitatively alluding to a fair amount in Northern Europe. Any willingness to sort of break out exposure there and then potential to cross-sell some of your core products into those customers as well to get some more growth lift out of this?

Yes, other than what we've disclosed, Matt, and thanks for the question, we'll kind of leave it to Brad's comments where he mentioned Sweden and Denmark. But they have had great success in Northern Europe and we think there's the opportunity to really leverage the best of both worlds as we continue to explore additional exposure and wins in Europe, and that's -- we primarily think about that on the armor side, but we do believe with the strong relationship TYR brings, it can and will open up opportunities for our other product lines as well.

Okay. Got it. And then I guess we're relatively close to the end of the year in '25, any willingness to just sort of put a rough number on what they're tracking toward for the year in terms of sales? I know you gave the '24 number. But how should we think about, I guess, sales this year?

Yes. We won't put a specific number on it. We're obviously getting through the process and signing the purchase agreement, and we'll look to close the first half of next year. But I would say, based on where they landed next -- or last year, they do have growth this year, but we'll -- as we move forward and get to maybe the earnings call in a couple of weeks or next week, we can discuss a little bit more. But they've been -- they've definitely been growing. We would not expect them to be flat.

Okay. Last, just a quick one on the margin front. I know you said accretive to EBITDA margins. So I assume that means probably we likely have something like a 20-handle percent EBITDA margin on this thing. How stable have margins been historically? And then just any tariff exposure or any other material kind of cost exposure we should be thinking about on this front?

Yes. On the gross margin, they have seen expansion with some of the new opportunities -- when you go down to EBITDA margins, you've obviously seen some pretty significant growth as they've leveraged their SG&A., and much like Cadre, been thoughtful about investing in the business now and why. So we're very excited. We think a lot of that culture side fits really well with us and how they think about the business.

One of the pieces we are most pleased to see is they have a focus on high-quality business going forward. And the business they win, they're not competing on price, they're bringing value to the table and pricing accordingly.

And Matt, I think you had a second question.

The other piece was just any tariff exposure that we should be considering and any material cost items that we should be thinking about in terms of input costs for TYR?

No. It's -- their supply chain is very similar to the current armor business supply chain. So there's no significant tariff exposure like to the rest of the business.

Your next question comes from the line of Sheila Kahyaoglu with Jefferies.

Congrats, guys. Maybe is there any way just to size the market for tactical and how we think about its share and the competitive dynamics a bit more?

Yes. I'll talk about the competitive dynamics, and you kind of have to look at the U.S. versus, we'll just say, Europe and kind of carve those two out.

So for the U.S. market, in the tactical space, there's a few competitors in the U.S. So we obviously have Safariland that I spoke to when Larry asked his question. You have TYR Tactical in the space. You have a company called FirstSpear that's typically in the space and another company called Crye, which are typically the ones that you would see in that tactical side of things in the market. So that's the U.S. play. Obviously, at this point, we would have two of those three with Safariland and TYR teaming up together as we go forward there.

And then internationally, it's a bit different. As you can imagine, like we've talked before, the international space is a bit more crowded because you'll have local body armor manufacturers within various countries. There are a couple of larger companies that go outside their geographic area or their headquarter area, I would call it, into larger parts of the market, and there's two there that typically compete for the majority of the market. And as you know, Safariland is a small player in that space. And then TYR has done well in pockets of Europe, like we've talked about where they've identified opportunities to really focus on the differentiation of their products and getting the value for those products.

Great. And then maybe one more, just you've deployed over $400 million in M&A over the past 24 months. How do we think about like the integration processes with the deals and capacity to continue to do deals?

Yes. We're very happy with the pace that we've been going. And like we've talked about in the past that we take that disciplined approach. So we want to make sure that we're careful as we're doing not only diligence but also pre-diligence as we're getting the companies. We've spent quite a long time talking with the TYR team with Jane and Jason overall. And for us, it's not necessarily about quantity. It's about finding those quality deals that fit with our strategy and what we want to do as we continue to move forward.

In terms of capacity, we've had the capacity for this pace. You've heard Blaine talk about previously that our goal would be we'd love to aspire to about $100 million in acquired revenue on an annual basis. And except for this year, we've really not met that goal overall. So we're happy to say this is that first opportunity that we've had with our acquisition earlier this year of the Carr's Group plus TYR, we get to that point. So we definitely have the capacity to do more. The funnel has lots of opportunities for us to do more, and we'll continue to get after it.

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

Let me add my congratulations. A couple of things. Just curious, did you say how much of the business is military? Just wondering what the concentration is there? And then also, which products you're selling into military? Is that just hard plates or hard armor? And maybe you could just touch on the threat level that we're talking about versus the existing Cadre product lines and ability to protect against threat level.

So I'll work that backwards. So threat level would be similar. They have a full range of threat levels overall, no different than Safariland on that one.

In terms of military, we did not disclose down to that level, breaking out military versus public safety. I will say when you look at their military side of things, we're not talking U.S. military. Their concentration of military is in Europe. And then as I mentioned in the U.S., it's more of the federal side of things. They also have law enforcement. It's a smaller part of the business, but the federal piece in the U.S. is the bigger part of the U.S. market that they go after. Overall, not a lot of overlap in terms of customer base. So we feel like it's a good step in the direction that we needed to continue to diversify across customers.

Okay. Great. And so it does appear to be margin accretive from the get go. Just wondering, are there other synergies that you're thinking about being able to achieve...

Yes, yes, yes. As you know, we always look for those. That's just our DNA. As we go forward, the business that Jane and Jason have built is exceptional. I've been in many, many manufacturing companies around the world in many, many different end markets, and it's one of the best operating facilities that I've seen. But it also means that there's always room to improve, as you know, and we typically find that and work with the businesses that we do acquire to find ways to continue to unlock that as we go forward. So we're excited as we continue to get to know the business. We'll get closed up hopefully in the first half of the year and then the fun begins.

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

Maybe a different way of asking law enforcement versus military, any split on kind of hard versus soft armor...

I didn't catch that last part.

I mean, maybe without kind of going to that level of detail. I think the easiest way to think about the business, it is -- majority of the revenue is international and majority is military. They still have a law enforcement -- a significant law enforcement revenue, but they've been very targeted. And I think that's what the TYR team and Jane and Jason have done a good job of is finding those opportunities where they can really create value and get those margins that -- the margins, frankly, we like to see in our side of the business. As we kind of move forward, we expect continued growth on both sides. But at this point, kind of splitting out soft versus hard is we're not going to disclose that publicly, but thank you.

Okay. I'm curious on this fairly recent Danish contract that they signed. I think it's $200 million. How much of that is really the driver of growth? And then if you can speak to potential additional contracts that are coming up or maybe even how much of the business today is on kind of firm contracts such as that Danish deal?

Yes. I mean the Danish piece is certainly a driver of their growth, they've had a lot of success in Sweden as well. And also locally, domestically, they've had great success in the federal side. So I think those are -- if you kind of think about those as three key accounts, those are absolutely important to us and to TYR. And they have not only the great relationships, but a better solution in the marketplace. So that gives us a lot of comfort as we go forward.

We look at this year -- but maybe let's talk about the backlog make-up. Their backlog is going to look quite a bit different from the Safariland armor backlog where we talked about that being 30 to 45 days of backlog. Because of these framework and larger contracts with the military, their visibility is quite a bit better. So they lean more towards that 6 months of backlog, more like the EOD or the nuclear business, which gives us a lot of comfort as we look forward for the revenue.

Excellent. And last one for me. I don't know if you guys have talked about it, are Jason and Jane or any other management members coming over, continued operational roles versus just as shareholders?

Yes, absolutely. I think Jason would be insulted if anyone thought that he was done in this market. So Jason is very excited about that next step in their journey, really when you take what they've done and create an exceptional business and join teams with the Safariland team and the rest of the Cadre brands, and he's in the business, he'll remain in the business with us and the team that he has. So we look forward to teaming up with him and having our armor folks and our engineering teams working together at Safariland with the TYR engineering teams and then also the selling teams as we continue to unravel what that looks like as we go forward into -- after the closing.

That completes our question-and-answer session. I will now turn the call back over to Brad Williams for closing remarks.

Thank you, operator, and that will conclude our call for today.

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

Good morning. I want to welcome everybody today. I'm Warren Kanders. I'm the Chairman and Chief Executive Officer of Cadre Holdings. And I'm here today with many of my colleagues, and you're going to have a wonderful morning learning about our businesses and specifically our nuclear businesses. It is a privilege to stand before so many partners, colleagues and friends.

Our world is marked by uncertainty, escalating geopolitical risks, heightening security imperatives and an urgent commitment to protect people and infrastructure at home and abroad. For us, this landscape is not a source of anxiety but of opportunity. In volatile times, resolve and focus reveal true leadership. We have built our reputation by enabling those entrusted with the toughest missions, EOD technicians, first responders, nuclear safety teams to operate with confidence and precision.

Their task is unforgiving. Our obligation to them uncompromising. This sense of duty drives our culture, sharpens our execution and ensures that what we make truly matters. As operating reality shift, so must we. Protection today extends beyond armor and suits. It is about fortifying defense systems, safeguarding energy and securing the backbone of critical infrastructure. Our foray into nuclear safety, delivering platforms for containment, detection and rapid response advances this commitment. The sustained development and our most recent award of Advanced Blast Sensors over 5 years is a natural strategic extension of our core. We win where stakes are highest.

Our vision is clear. We are transforming from a specialty safety provider into an industrial enterprise at scale, anchored in high margin, high free cash flow verticals. We will lead in protection, while play an expanding role in national security, clean energy and critical infrastructure. This ambition is matched by actionable plans. Today, you will hear how we are reinforcing the core, targeting new markets and sharpening our discipline on value creation for our shareholders.

The foundation remains our people. The Cadre, the team, those who use our products, those who design them, build them and stand with us as suppliers and partners. Our strength resides in service tenacity and reliability. These are not slogans. They are enduring commitments, and they will continue to inform every decision that we make. Thank you for your confidence and partnership. We are proud of our progress and even more determined about our future. I will now turn our presentation over to Brad, Blaine and our amazing team. Thank you for being here.

All right. Thank you, Warren. So a little different style, I'll -- I can't say [Technical Difficulty] Thanks for being here. Appreciate those in the room. Appreciate those in -- on the webcast that are here with us today, a lot of faces in the room that we know and some new faces, which is exciting and awesome.

So first thing I'm going to cover is just to give you an idea of road map for today for the agenda. But before that, I'm going to read the statement that you guys have probably never seen before. I actually know I'm not going to do that.

So just a reminder of our forward-looking type statements, and we're going to talk about forward-looking information that may not actually come true. So we'll get that one out of the way.

All right. So agenda. So 75% of what we're going to do today, or even more is going to be all about nuclear. So Blaine and I meet with probably 150, 175 folks on an annual basis talking about what we do and the most common questions we get is nuclear. Where do we play? What do we do? What products we have, what are the use cases? What are the applications? And so we brought a team of folks, a team of experts that's been in the nuclear industry for a long time. So that's where we're going to spend most of the time.

But before we get into that, we're going to talk about Cadre. So for those that didn't do their homework, the new folks, I'll spend just a couple of minutes around who we are, okay, because that is important to our story. And you heard Warren with his, I think, awesome opening that really just summarizes who we are and what we've been about. I'll hit upon some of those things, right?

So the first one, historically, an old company, right? Even though we're newer publicly traded 4 years going public in 2021. We started back in 1964, Safariland as a holster company, right? Why is that important? We have really high shares within key product categories, holsters, EOD, bomb suits, body armor, et cetera. We've amassed that share over many, many years with customers that are very loyal to what we do today, okay? so that's where we started.

Fast forward kind of in the middle of this slide, Warren's invested a couple of times in this company, as you can see up there, right? And at those times there were a lot of acquisitions, a lot of M&A, which is also part of our story today.

So what's important there is the history and the experience around M&A in the past, but also here in the present and also in the future as we go forward. Keep fast forwarding, get to the right side. Before we went public, we had some things that we needed to work on, okay? We had some holes in the dam, challenges with the foundation. We had to fix those things before coming public so that we could really become that diversified industrial type company that we really want to be and we are today, okay?

All right. So what has that done for us? So it's expanded our opportunity set, no surprise, right? So typically, law enforcement wise, a couple of billion-dollar opportunity set for us in the nuclear expanded in the $5 billion to $8 billion and we're not done as we continue to go forward. So opportunity set increased, but let's talk about who we are today, and we can talk about what we look like as we continue to go forward.

So for those who don't know, we'll talk about the right side first, 20% of the revenue comes from our company-owned distribution segment. Think of that as a one-stop shop for law enforcement agencies in the United States with 9 brick-and-mortar locations from South Carolina up to Maine. They also have e-commerce. We have sales teams within this organization also. 1/3 of the revenue comes from the left side, sold through company distribution. 2/3 of the revenue is from buyout type products to make that one-stop shop experience overall for the law enforcement community.

Left side, this is what we love. This is who we are. We love to innovate. We love to manufacture products, and 80% of revenue is there, okay? That's where everything started. That's what we found as a really solid foundation here when we started at this company as innovation was a big part of the heritage so that we can remain competitive within the market space, hold those shares and continue to grow those shares.

Now as you get on the bottom, you guys have already read those, but a couple of other key points, over 2,600 employees within the company and continue to grow as we add acquisitions. And they're located in 21 manufacturing facilities. That's just the manufacturing side. It doesn't include company-owned distribution sites, or it doesn't include any of our R&D centers that we have, a few of those, too.

Now we get to the special part down at the bottom of the slide, okay? Those over 2,600 associates within the company, there's a large majority that wake up every day and are really motivated by what we do and it's because of that special mission that you see at the bottom, together, we save lives, okay, which is incredibly important to the story. We have 2,254 saves in our SAVES CLUB.

Please don't walk away thinking that we hired a research firm to go figure out that number and estimate what we think we've saved on an annual basis, okay, which we average about 3 saves a month. These are real people. These are people we get to know. These are people we get to spend time with. I've met mothers, fathers, grandparents, children, and I'm going to show you a video here in a second, and I've spent time with 3 of the 4 saves on this video, Sean, Michelle, Charles, met their families, met their kids. That's what motivates us on a daily basis to get up and provide safety equipment to protect those that are out there protecting us.

All right, control room queue up the video, please?

[Presentation]

Real people, right? So 2058 got to come home to her family. I tell the story a lot, and I never know what an emotional response I'll have. And this is why we do what we do. Now the tough part of this presentation is the transition from this slide to the next one, okay? So for those that are cold-hearted and did not have an emotional response to that, we thought we would try something else, okay?

So Blaine is going to come up, and we're going to have a couple of slides, and we're going to talk about financials. And if you don't get a response from that, I don't know, you might as well leave.

Amazing transition. Thank you, Brad. There we go. Really compelling video. Brad's talked a lot about the mission. Brad is going to dive into more about the operating model in the upcoming slides, but we'll take a minute and just kind of talk about what we've achieved since we've IPO-ed, which is we kind of start on the top line is by our standard is very impressive, and it's just the beginning of the journey for us.

So when we look at the one, we're particularly proud of is really the kind of the quality of the business, right? And so if we look at adjusted EBITDA growth since 2020, it's 740 basis points, right? And that's -- what we talk to everyone in this room about is really that focus, what we wake up every day is around productivity, pricing, continuous improvement, right? And Brad is going to dive more into the tools. But to us, that's the focus, right? And what that allows us to do is then kind of do the fun stuff on the bottom, which is M&A.

But even in periods where we don't have an M&A, the focus is still on improving the core of the business. So we continually drive the teams. The teams do a good job of accepting that challenge and push the boundaries and innovate and grow the business. We're always going to be responsible stewards of cash. So you can see even post the Carr's acquisition, net less than 2x leverage. That's a big part of who we are.

With low CapEx, so very high free cash flow, but it's going to be about that deployment. You've seen the history with Warren and the broader company, that's a big part of who we are. So you can see all the deals we've done between 5 and 11x multiples on adjusted EBITDA, right? So very sensible deals.

And then we really focus on, when we think about those deals is not the commercial synergies, right, but thinking about the cost synergies. So that's where we like to really spend our time and our focus. We know we can control that or more likely to control that. So when we're looking at these deals, we want to know how we can make it happen, right? Because how many deals do you see are businesses that you look at that show, "Hey, for the past 10 years, growth has been 2%" but just wait next year. And for the 5 years after, it's going to be 20%. So we don't want to count on those. We certainly evaluate, but that's not how we make these deals work.

The second piece that we think is really key about the business is the resiliency, right? So when we think about our end markets and if we think about the military and LE side, right? You can't put an officer out on the street without our products, right? So even in down cycles, whether it's recession, perceived budget crunches, they're still buying our goods, right? And really the trade-off for a lot of those law enforcement officers becomes, hey, we're going to spend a little bit less on uniforms. But if I'm putting officer on the street, they have to have armor and they got to have a holster for their gun.

And even when you go back, I think in '08 and '09, that drop in spending was like 0.1%, right? So it's very, very minimal. So it's resilient through the cycle. So very proud of this. I think when we get into more detail a little bit later, you'll get a real appreciation for the nuclear side of the business, how it has a lot of those same attributes and will continue to grow. So thank you.

Great. Thanks, Blaine. All right. Well, -- that's okay. We got it back. So no one saw that next slide. So I want to have a little fun with this one. Where's Jeff at from -- there's Jeff. So Jeff, you've been asking the same question since we went public in 2021 every quarter. What's your question?

Yes. My question would be, can you update us on the Blast Sensor?

Great. Let's do an update on the Blast Sensor program. This has been something Jeff continues to ask. I think others saw it, focused on it during the IPO, focused on it for probably the -- what, the year following the IPO, maybe 1.5 years, and then that's it. It kind of dropped away, right, except for Jeff.

So really excited to announce today and share with you guys the award, the BEMO award or what we call the sensor award. So when we went public in '21, we had this in our slide deck, all right? So on the right side, is information that's become public on Sam.gov. Our press release has gotten called up in the government shutdown, right? So if you're wondering why we signed on September 26, the contract and you haven't seen anything yet, that's the reason why, okay?

So we can talk about on the left side, you can see it's an awesome amazing award for us. And we're really, really proud to take this on $50 million IDIQ contract award for the BEMO program, Blast Exposure Monitoring System is what it's called. For those who don't know the history, this is not new for Med-Eng. And those who don't know Med-Eng, it's our EOD company, leading bomb suit company in the world, okay? So militaries, law enforcement around the world. It's like the Kleenex of bomb suits. Our share is up in the upper 80%, lower 90% range.

So the team has been working on last type projects for over 20 years. And in fact, they're not just a bomb suit company. They're really known for the experts on understanding blast effects on the human body, right? So think of it that way, not just designing bomb suits, but to design those bomb suits, you have to understand those effects and what happens so that you can design better suits.

So with that, they've also been doing work for over 20 years on blast sensors, various iterations of blast sensors. And then back in 2019, we started doing work with the Department of Defense on the next-generation blast sensors. And for those who have been following us, we've been doing paid R&D work since going public on this project. So super excited about it. I'm sure you guys have more questions, just hang on to those when we get to the Q&A session and some of those, we'll be able to answer, some we may not until we get to the point that we've got an approved press release on it, but definitely exciting for the business, okay?

Thanks, Jeff, for that question. I really appreciate it.

All right. So moving on, switching gears a little bit that will tie all this together, okay? So if you guys ever wondered like when you look at diversified industrial companies, okay, and you can pick whichever ones you want, right? The ones that have outstanding returns. You look at the data that Blaine just showed since going public, all right? And what we think we've done a very good job in terms of financially how we've done things. Why? Why does that happen, okay? This is what happens.

It's because of the operating models for folks like myself and others that have worked at some of the leading diversified industrial companies, this is how you do it. This is what gets you there over time. It's not about the big grand slam. It's not about the home run. It's about that incremental progress that you work, you maintain, you keep improving over time.

For us, as we developed our operating model, the 6 categories that you see in the inner circle are what we feel are the most important things within a business. Now that would be easy. We could hire some graphics people; we could put this together. We can throw it on a website.

This is the strategy, okay? And what I tell people is, don't give me an amazing strategy and poor execution. I'd rather have a mediocre strategy and amazing execution than vice versa. So we said, all right, we got to take it from a strategy to the execution. So this is how you execute. Somebody asked me last night, what is the difference in what you guys are doing with your operating model versus others. This is one of the differences. I don't claim to know every industrial company out there and all the details of their operating models and the ones that I've been at, you guys know where I've been, IDEX, Danaher, Ingersoll Rand, they've changed over time, okay?

But what I can say, one of the challenges you've run into when you're in those companies is how do you implement this stuff, okay? These tools can be difficult, they can be confusing. It takes a major culture change in most companies to make these happen, and that doesn't happen overnight, okay? So we came up with a sequencing of [indiscernible] do this first. And any acquisition, the guys have been acquired, they know. Usually, I say this is the nonnegotiable, okay? This is what we will all do across the board.

So you start on the left, you work on tools, you work in the fundamental side of things that should be building capability, not capacity okay. I noticed a typo there last night. You move on to the second step and then you move on to the Kaizen step, right? We are still developing tools in the Kaizen step because we've had to develop everything on our own, okay?

So think of it that way. It's about the execution of these tools. It's about having your DNA throughout the company and the culture change that goes along with it.

All right. So why is this so exciting to us? So if you take this operating model that we have, and by the way, these tools are proven over many years, go check out diversified industrials, go look at what we've done. You can't see what we were doing as a private company, but I can tell you, the results are outstanding. When you look at where we were then versus where we're at now and then what you guys can see in terms of what we disclose.

So proven tools wrapped up together with these macros. And Blaine touched on those a little bit. Warren touched on them, but I'm going to hit them one more time because what it takes like 7x before people remember things, right? So you'll get it at least 3 times.

So the macros. And these are macros that you can't argue against, all right? Let's just test that a little bit, right? So let's go on the left side, rising safety threats globally. Governments face increasing complex safety type situations, okay? Is that happening today? Absolutely, okay?

The second one, you look at geopolitical tensions. Do you think, are there any intentions going on around the world? Little bit, right? A little bit going on out there, there's a lot, right? And it's just increasing, it's growing day by day, country by country. And then unfortunately, in the U.S., significant increases in active shooter situations, and that drives a whole host of things within what we do. You can imagine what that means and how that translates.

And if you move on to the middle part of it, what's budget-wise, what's going on, seeing increases in Europe in terms of their spending. When you look at whether it's protection for their law enforcement or national police forces or military, the spending is up there. Our expenditures, Blaine talked about in police protection, it's -- you can set your watch to it. It's not 10% but 3% CAGR over a long period of time that's what we like to set our watch to and then we take our operating model, and we deliver what you saw a little bit earlier that Blaine walked you through.

So that's exciting to us to take an operating model, take tailwinds that are solid and let that be the driver of what we're doing. And if that's not enough, the last one is the refresh cycles that we have in the business. So don't think of this as a -- when I was at Ingersoll-Rand, we had air compressors, people would call in and like, hey, I've had this air compressor and they give you the serial number, and it's 75 years old, okay? And it's still operating, right, long time. I may be exaggerating by about 10 years, okay? That's not our products, okay?

We have reasonable refresh cycles, 5 years, 7 years, 10 years for bomb suits. Those are things that we love, right? Because when those refreshes happen for many different reasons, which I won't get into now based on time, that drives the additional refresh for us in the business, which is helpful on top of these tailwinds that I just talked about, okay?

All right. So long-term vision, where do we go? So I think for those who know us, we're reasonable folks, right? So you're not going to see us go out and throw bunch of unrealistic huge numbers just to get your attention out there. These are our aspirations, some of these we've not gotten to it at this point, right, when you look at them. That's why they're aspirations.

So when you look at revenue, we're talking 3% to 5% organic with the type of markets that we're in, we think that's reasonable. $100 million of acquired revenue on an annual basis. Anyone keeping track? Have we met that yet? No, you guys aren't good at keeping score, but we are. So no, we haven't met that yet, all right? We'll see if we can get there from a $100 million revenue standpoint.

Margins, so Blaine talked about that. He talked about -- we've got the levers. We've got our operating model. We think going from low 40s to 45% to 50% is a reasonable ask that of our organization and what we're doing and how we do things with our operating model. So important to the business overall. And then adjusted EBITDA, how we're set up from an OpEx perspective and what flows through definitely in the mid-20s from an adjusted EBITDA margin standpoint.

And then what do we look like? We get that question a lot. Are you done with public safety? Quick answer, no. Are you done with nuclear? The answer is no. We've got more to do there. Will there be another vertical? The answer is probably at some point. Now it took us a few years to figure out what that first new vertical was, but we did it because we're cautious. We're deliberate. We like to do our homework ahead of time so that we can be confident as we go into that next vertical, and that's what we'll do on that third vertical when the time is right, okay?

All right. So with all that, that's it on the public safety side of things. The rest of what we're going to focus on is nuclear, nuclear, nuclear, okay? I'm going to introduce real quick, Eric Gasvoda. I know we've kept him kind of behind the scenes for 6 years. Yes. Eric's been here 6 years. I've known Eric for 15 to 18 years, a long time. Eric has been leading our duty gear business. So one of our most important -- that's where the company started. It's one of our biggest product categories, one of our most profitable categories for us. And it's one of the most recognized brands out there, no different than Med-Eng on the bomb suit side.

Eric has been leading duty gear. And he has done an absolute phenomenal job. He is a poster child for our operating model, and he's become not only that contributor of the duty gear, but continues to help teach, coach and show others throughout the company on how to use the operating model and implement it. So Eric is now going to lead global nuclear, he was gracious enough to leave Jacksonville, Florida and move to Golden, Colorado to go take on that responsibility. So we're excited to have him in that seat. He's only been there about 45 days. So make sure you queue up really difficult questions for him. I like to see him squirm, okay? All right. So I'm going to toss it over to. Eric?

Thank you, Brad. And luckily, I have a whole team of really smart people to support me. So if you ask me tough questions, I'll quickly pass it off to them. So everybody is here to talk about nuclear, so let's jump right into it. Just a little bit of background of what is the nuclear part of Cadre. Well, it's really made up of 2 acquisitions. The first one at the top right was in March of 2024. The company acquired a group of companies called Alpha Safety that really focused on products and nuclear engineering [Technical Difficulty] around products and engineering services.

And so today, when we look at the Nuclear Group, it's made up of about 400 employees across those geographies [Technical Difficulty] very highly technical skilled force. And that leads to 8 different sites that we have manufacturing sites in. And here they are. Alpha Safety was really based in the U.S., and that was primarily the market that the Alpha Safety company served was all around U.S. companies. And they're in interesting locations that all have history either tied to a program or a particular customer.

And Alpha Safety, one of their initiatives was how do we grow this business, how do we expand our footprint. And one of the things I looked at was the U.K. has a very similar history, similar market, similar potential. And luckily, with the Carr's acquisition, there's group of companies heavily based in Europe and the U.K. that allow us to have that footprint to be able to leverage the products and capabilities from this side of the business into the U.K. market as well as taking the newly acquired products and services back the other way.

So why Nuclear? When we think about the Nuclear business, there's really -- when they -- we're creating or investigating verticals, one of the criteria is we wanted to market or that vertical to be driven by more than just one market factor. And so there's really 3 important market factors that make up the nuclear industry as we view it today.

The first one is really about the past, environmental management. From the Manhattan project until even today, a lot of nuclear waste has been created. And something has to be done with that. And every year, there's significant investment to clean up that waste, process it and put it in repositories. And we're not done yet, and we won't be done for a couple of generations. So there's a long term, very committed investment to dealing with that nuclear waste.

The second vertical is all around national security, deterrent. As Brad said, the world has not gotten safer or calmer. There continues to be a lot of threats. And so there's an investment by the U.S. and a lot of our allies to modernize our weapons. A lot of them have been around since the '50s and '60s, and they don't just sit there on their own without any -- no change. They decay. And so there's a need to go back and revisit those and modernize them over time.

And the third piece is on nuclear energy. There's a lot of talk about clean energy that derives from nuclear. A lot of investment going on, a lot of buzz right now. That's the third part of the vertical that's pretty exciting that draws a lot of attention. And so to dive into the details about how Cadre products service those 3 verticals. I'm going to ask one of the experts that's dedicated 35 years of his career in the nuclear space and has led the Alpha Safety team since 2019, they go up here and address each one of them. So Terry?

Thank you very much, Eric. I really appreciate that introduction. Brad and [Technical Difficulty] dry the tears after the saves, didn't warn me about that. I am really pleased to be here to talk about our Nuclear Group. So why is nuclear so interesting right now? Well, it's top of mind. It's in the media. We hear about it every day. We hear about national security, geopolitical unrest.

And of course, we hear about the hyperscalers needing massive new electricity to run data centers for their AI models. And we know that winning the AI race is top of mind. It's probably one of the most important national interest that we have.

But before we can win at AI, we first have to win in energy. Training some of these AI models can take as much electricity is powering 100 American homes for a year. In the United States and even the U.K. and Germany paused development of their nuclear technologies for about a generation. So we're very behind. And it was probably for the best. The nuclear industry needed to prove to the world and our communities that we could safely manage nuclear energy and in particular, the waste.

And one of the things that Cadre Nuclear has done is they've brought together this just amazing collection of world-class nuclear environmental cleanup companies. And so what you'll hear today, first is about how we solved the nuclear environmental cleanup problem, the first problem that we needed to solve. That's where we gained all of our capability, and that's where Cadre Nuclear has brought this group together.

And so today, we're going to talk about, first, environmental cleanup. We'll talk about AI and power, and we're going to talk about national security. So after the -- I think Eric mentioned the Manhattan project. So the nation went crazy manufacturing weapons right after the Manhattan project and generated millions of drums of radioactive transuranic waste. And that took about a generation to build up that waste. And now it's going to take probably 2 generations to clean that up.

Billions are committed annually to clean up the waste sites around the country and in the U.K. Here is an example of the type of waste that we're talking about. These are just salvage drums. This is just industrial trash that was accumulated. It was deposited all around the country in Savannah Riverside, Oak Ridge, Tennessee, Idaho National Laboratory, Los Alamos, all over the country. And it has been buried for the most part, and the nation has been retrieving it and permanently disposing of it at the waste isolation pilot plant in Carlsbad, New Mexico. So this is an infographic.

And so one of the goals today is to deep dive into the whole nuclear industry. What I hope you learn is not only more about the nuclear industry and the vertical that we're in, but you'll also see really the logic of why Cadre made this investment. And when I first met Warren and Brad and Blaine, I heard all the right things, and I knew that we had an awesome new long-term partner. So just this infographic, and we have several of these infographics that are going to describe environmental cleanup, nuclear energy and national security.

So environmental cleanup is about 50% of our Cadre Nuclear business. And just starting at the top, what we're going to represent here is all of the places in this process of environmental cleanup where the Cadre Nuclear Group organizations support it. So starting with sorting and segmenting radioactive materials. This is the Wälischmiller. They take this waste, they sort it, they segregate it, and they can then process it through process treating where we have other capabilities such as radiometric instrumentation, flammable gas analysis, nondestructive assay. And this is all part of the national program to dispose of the transuranic waste that we are disposing of -- at the waste isolation pilot plant.

The Nucfil filters, those are used on virtually every radioactive waste drum that's disposed of at the waste isolation pilot plant. We've manufactured literally millions of those. And then we manufacture, and we certify the Type B shipping cast that are used to transport this radioactive material from around the country and dispose of it at the waste isolation pilot plant.

So you can see the Cadre Nuclear Group businesses have a role in just about every step in the environmental cleanup process from retrieving the waste, sorting, segmenting it, characterizing the waste for gas analysis, radiometric instrumentation, packaging the waste, certifying it transportation, the gem of a business, Bendalls Engineering in Carlisle, U.K. manufactures the shipping cast as well as our division in Carlsbad, New Mexico called EPD. And then our RPS division in Groton, Connecticut manufactures these highly engineered ventilated containment systems where they can perform much of this work and control the radioactive contamination.

So we talk about different types of waste. Primarily what we are involved is -- in is transuranic. It's the most complex waste. There's probably 10x as much low-level waste as there is transuranic, but that's really where our focus is in the higher-value transuranic waste. And this represents about 50% of the business. So we've talked a lot about national security. The reasons are well known. We know that there's geopolitical unrest.

The March 2025, the Annual Threat Assessment identified that the United States adversaries continue to undermine our interest and the interest of our allies. And we need to continue to develop and refresh our defense mechanisms. In 1992, the nation stopped producing nuclear weapons. We thought that the cold war was over. Russia's economy collapsed. But what we didn't realize, and we didn't think about then was our adversaries didn't stop manufacturing weapons.

In fact, now we have 3 new adversaries. We have China, North Korea and Iran joining Russia. So the nation has implemented a whole new weapons modernization program. And in that, by 2035, we're supposed to manufacture 80 pits. Those are the cores of a nuclear weapon. This program has started in 2017. So that's a massive multibillion-dollar initiative. And our company manufactures many of the components that are used in that manufacturing process.

Another infographic, so what we'll show here is, again, all of the areas that our Cadre Nuclear Group businesses support. On this, I'm primarily going to focus on the left side of the infographic. One of the products that we manufacture in support of the weapons modernization program are what are called savvy containers.

They are used to store the most valuable material on the planet, arguably a weapons-grade plutonium. Our PS division also makes engineered ventilated containment systems. Bendalls manufactures containers for this material. PSC, our radiometrics instrumentation company designs and delivers these instruments that can measure and quantify radionuclides in that manufacturing process. What we'll see here is on this side, that process of manufacturing nuclear weapons actually creates more waste. And so that kind of turns into our environmental business.

And that material it ends up getting disposed of at the waste isolation pilot plant. Another waste or another stream is now because of an executive order, the U.S. is taking some of the surplus plutonium and they've designated it to be used for nuclear energy. That's pretty exciting.

So again, what you see is we have a role in just about every step in these national programs of security and environmental cleanup. Nuclear energy. So we covered some pretty tough topics, right, environmental cleanup, corroding old -- very old drums, nuclear weapons, political unrest. Now we can talk about nuclear energy. And I think everyone knows and has heard the estimates are that by 2032, there could be a doubling of the electricity demand on our power grid. It's already stressed.

And so we need to create new energy and nuclear is absolutely the best. It's clean, it's safe, it's reliable, 24/7 electricity to power our homes, businesses, industry and the data centers. What we have seen is one of the most remarkable transformations in the nuclear industry. That is the partnership between public and private companies and the government.

The administration has issued a whole slew of executive orders that have reduced the red tape and commissioning nuclear power plants. Just to name a few, reinvigorating the nuclear industrial base was an executive order that came out in the spring of 2025. In that, it made sweeping changes and set goals, the first of which it says that we're in a state of peril and one of the priorities for the nation is to win at AI.

But to do that, the executive order continues is that we need to win the energy race. And so the executive order establishes that we're going to quadruple the power generated by nuclear energy by 2050 from 100 gigawatts to 400 gigawatts. So that's roughly 5 gigawatts per year for the next 25 years. That's an incredible increase in the number of nuclear power plants.

It also calls for rebuilding the supply chain. And again, that's where Cadre Nuclear is positioned perfectly. We are a nuclear company. We have developed the reps and the reputation to be able to do what we're capable of doing now to support this new wave of the nuclear renaissance. There were hundreds of nuclear power company or nuclear manufacturers up through about 1992. Then when the nation paused manufacturing nuclear power plants and nuclear kind of came out of favor, that nuclear supply chain was decimated. There's very few companies that are capable of the type of manufacturing to exacting quality assurance standards that we are capable of or our partners in the U.K., Wälischmiller or Bendalls are capable of.

And in the U.K. that supply chain was decimated even worse. There's probably just a handful or so of companies that are capable. So reinvigorating the nuclear base includes rebuilding that supply chain.

The other part of that executive order calls for rebuilding the fuel supply through enrichment services, which is a major growth area that we'll talk about next. Another reform that came from an executive order impacts directly the Nuclear Regulatory Commission. So everyone knows that previously, the regulatory red tape of a nuclear power plant was always viewed as the major hurdle and new nuclear projects, well, the executive order now calls for the regulatory -- Nuclear Regulatory Commission to take an action in 12 months, a nuclear power plant life extension and it requires them to make a determination on new build nuclear projects in 18 months.

So the government has cleared the path and set the standard for this new nuclear market. And then when you add in what's happening with the public and private investment in these hyperscalers, there's a whole number, and I'm sure all of you have seen this in the media, but Microsoft, Meta, they've joined forces with Constellation Energy and made the determination that their AI data centers are going to be fueled by clean nuclear energy. So that combination of the private investment, public investment and the government changing the regulatory environment is a clear path for a very exciting time in the nuclear industry.

Another infographic, and we will just talk about on this slide, again, primarily in the enrichment side. We start up here. Again, this demonstrates all of the areas that the Cadre Nuclear Group companies support nuclear energy. Starting with enrichment, we manufacture a line of products for sampling the enriched uranium Pareto Scientific, again, manufactures the radiometric instrumentation. RPS builds the ventilated containment buildings. And what's really important is -- and you may hear about this later, is -- right. This is happening right now. The enrichment business is impacting Cadre Nuclear Group right now.

This part, the SMRs are going to be down the road. We all know that. But the fuel has to come first. So we talk about follow the fuel. And right now, we are actively engaged in designing and implementing criticality alarm announcing systems that are necessary in the fuel enrichment process. Again, fuel fabrication, criticality alarm announcing systems, we have a capability to manufacture shipping CAAS. There's a whole new line of fuel called HALEU, high-assay low-enriched uranium. You've probably heard about this.

The prior source for the nation was Russia. That's not going to happen anymore. So we are rebuilding that industrial base of manufacturing HALEU fuel, which is what will fuel small modular reactors, and they can't transport it yet. There's not a package suitable. So we are actively engaged with many of these major developers to design a new package for transporting HALEU fuel. It's pretty exciting when your customer invites you to participate in developing new products.

Then we go to power generation. Again, the GEM and Carlyle U.K. Bendalls engineering, they are capable of manufacturing incredibly robust pressure vessels that are going to -- hopefully be used as the pressure vessel for the small modular reactors.

Wälischmiller, you'll see in this process, the wonderful manipulator arms, robotics, manufactured by Cadre Wälischmiller are used in just about every one of these processes in the fuel cycle. So that kind of wraps up the nuclear overview. We're going to turn it over now to question and answer.

Thank you so much. I and my colleagues will be in the back. We have samples of all of our products. We love to talk about the industry and Cadre Holdings and Cadre Nuclear Group. So thank you.

Thank you, Terry. Before we get into the floor back and looking at the products [Technical Difficulty] we're going to a little more detail on [Technical Difficulty] hopefully, there provides you a good overview of the product that Cadre offers supporting each one of these 3 vertical market segments.

And what's interesting about, I've only been in this group for a short time, but I can see the application of the operating model already and how it's helped benefit the company's working together on joint engineering, on approach to sales across the companies and on shared manufacturing. So these companies have only been together in a very short time and already opportunities are coming up for them to work very closely together.

So now I'd like to do is invite up the 4 panel members. I have some questions here. I'm going to grill them on.

So on the left, I have Marc. He's our Head of Business Strategy and Business Development, long history with the nuclear industry. Claudia, she runs the Wälischmiller business in Germany and has been a general manager there since 2019. Michael, who is our business development expert in the U.K., also a long history in the nuclear industry and really focused on developing the U.K. market. And then Joe, what was brought into work with the Wälischmiller robots to introduce them to the U.S. market and grow their presence.

So first, I'd like to start with a question for Marc. So you've been in the industry a long time. What kind of changes have you seen in the nuclear industry in the U.S. in particular, over the last 10 years? And how does that fit with the 3 verticals that we just talked about?

Sure. So a lot has changed recently. Terry covered some of this. But you look back 10 years ago and people in this industry, you were focused on legacy. You were focused on the cold war era, Manhattan project, waste that was generated and businesses were built that way. Now what is remarkable as you look at what is happening now, that the development of the nuclear industrial base is increasing. Why? Because now we're seeing the growth in deterrence, national security and energy. So we've moved on from this, what we call, I like to say, contain and maintain in the nuclear industry to now, let's modernize and grow is the way I'd like to describe it.

So nuclear is no longer just looked at as a liability. It's now in the intersection of energy, defense and environmental cleanup. So if you look at the 3 different verticals that we've described, all 3 of them have a different story. So environmental management is consistent. It's going to be here for a long time still. In the DOE space, that budget is somewhere around $7 billion a year in continuing to grow.

Now the priorities are shifting, and we talked a little bit about the waste side of being the focus, the higher liability waste in both the U.S. and the U.K. were primary -- that's where the Cadre Nuclear business is focused, and Terry covered some of that in his previous slides that he was showing.

If you look at the deterrent side, again, modernization, taking our legacy materials, not only our stockpiles, but changing that, it's not just to replace that stockpile, but this is a long sustaining program, meaning we're not just replacing the stockpile. This will continue because of the geopolitical tensions that we mentioned before.

And then obviously, on the energy side, you have your existing reactor fleets. Well, investment not only in increasing those licenses of those existing sites to be able to operate longer, but also the capital improvements to keep those existing sites up and running longer is happening now. And again, we participate in that part of the market.

SMRs, advanced reactors is the next generation of the theme to come and what you're now starting to see is the Nuclear Regulatory Commission, government agencies, the supply chain, the industry is now really adapting and moving forward or accelerating those programs. And as Terry mentioned, we're at the upfront part of that, which is the fuel fabrication side of things. So very exciting time to be in the industry.

So if you look at it from a nation, I can summarize it is that environmental management is really stable. It's consistent and it's running. Deterrence or national securities is strategic and very well-funded. And then energy is accelerating, accelerated growth. And it's the first time if you look at the 3 verticals within the industry, it's the first time in decades that all 3 have come together, which just proves that nuclear's central part of U.S. policy.

Great. Thank you, Mark. Claudia, same question for you from an international perspective with your history of the nuclear industry, what kind of changes have you seen over the last 10 years?

So the answer is yes, there was a change, I meant. So in the international nuclear market in -- is changed because Asia plans new builds, new nuclear power plants. Europe is back in nuclear, not Germany, it's a different story, but France and U.K. plan a lot of nuclear projects on the Middle East plant their own projects.

So -- but it is not only built a nuclear reactor that's -- it's changed because when you want a permission to build a nuclear reactor, you have to have a plan what is decommissioning and what -- and how you handle the waste, the nuclear waste. And then from my view, remote handling equipment is very important. That's really important. So we handle with this equipment, waste, and we handle nuclear solutions with this and that get more and more priority.

So that's the reason why France and Japan and U.K. invest a lot of money in research for nuclear for remote handling. I give you an example, U.K. has a research center only for remote handling equipment, robots, manipulators. And they're testing all solutions, new innovation and Cadre, that means the nuclear group want the [ help of ] technology. We do the same, and we provide that to them. So that's changed.

And I'm looking forward to see it's all the solution in remote handling, and for the past, it is -- and for the future, it's absolutely necessary that we deliver equipment that's safety and quality. That's the reason why we have the slogan quality for safety.

Thank you, Claudia. We'll stick with Europe here for a minute. Mike, you've got a lot of experience in the U.K. nuclear industry. Can you tell us a little bit about Sellafield, its history, why it's important? Why we should care and what are some of the interesting developments that are going on there?

Yes, absolutely. so definitely working. Good morning, everyone. So those that might not have come across Sellafield before, I'd say, really, the key takeaways here are that it's the 80% of the environmental management market in the U.K. It's got a 100-year plus cleanup mission ahead of it, and it takes up the lion's share of the roughly $2 billion a year that the U.K. spends on the environmental management activities. It's also one of the most beautiful parts of the country.

So getting into a little bit more detail, it's got a long and very proud history in the U.K. It was the site of the first nuclear reactor to provide energy to the grid. It's where we've done reprocessing for decades. It's where we hold our civil nuclear plutonium stockpile and it's where we do waste management and waste storage.

And Joe and I were out for a lovely dinner yesterday trying to figure out how to best put that in the context of the U.K. -- I'm sorry, the U.S. market, you might be a little bit more familiar with. And actually, it wasn't possible. You'd have to squeeze somewhere between 4 and 5 sites that are spread across the U.S. into 2 square miles in West Cumbria to get an equivalent. So it's an incredibly congested site and because of its history. It's also considered the most complex and hazardous environmental decommissioning program across the whole of Europe.

And at the heart of that are the legacy pond and silo facilities that house a lot of that nuclear waste. And that really is the focus that we have and where we talked a little bit about resilience earlier, that's where the money goes because that's where the really, really dangerous material is that we have to retrieve, and we have to make safe.

And actually, we already have a couple of key products supporting those areas. So one is some of the filtration products that we have that go on the boxes that some of this material has taken out and put into for interim storage and Bendalls has been mentioned a couple of times. They provided really important manufactured products supporting these missions. A really good notable recent one would have been some of the racks that they've produced, which have allowed material to be stored and saved Sellafield billions of pounds avoiding having to build another facility.

So I think I'm very excited to see these retrievals missions continue and to extend the role that we can play in supporting to deliver that very important mission.

Great. Thank you, Mike. Joe, so I mentioned earlier that you were brought on to really open the U.S. market to Walischmiller products. And as part of that, I think you uncovered a niche market in medical applications, which currently makes up less than 4% of the Cadre nuclear revenue. But it seems like an exciting and growing portion of the market. Can you tell us a little bit more about that and how those products are used?

Yes, definitely. So along with the three vertical pillars that you guys have talked about so far today, medical is another one that is just massive growth as an industry. The history of medical treatments using radiation has been around for actually over 100 years. The last 50 years, it's been pretty common. And we have additional technology and advancements every single year that are making this -- the demand for the product and the isotopes grow at an exponential rate. So a few years back, I started attending some of these conferences, identified this as a huge growth industry and a good opportunity for us.

And so we started getting some more interest in it and trying to understand the industry a little better. So some of the things that we're doing with radioisotopes are -- all of you would have heard of like PET scans. So they can inject an isotope into your body, and they can scan and see how your organs are operating, or they can do targeted visualization where they use a very specific isotope that will collect in an organ. And when they have that collection in there, they can get a much more detailed view of how it is actually operating, how you are going to be able to process whatever is going wrong with you.

And then we have the therapeutic applications, which everyone has heard about, which is treatment of the cancer, but in a less -- much less invasive path, instead of cutting open and trying to take out a tumor, they can actually inject or place radioisotopes into your body. And those isotopes can irradiate just very small areas, specifically like the center of a tumor without damaging the healthy cells that are around that. So this new technology and the way that people are doing this and all the new isotopes that keep coming up every 5 to 10 years, they have some new isotope that they think is going to be the solution for the world.

This is driving funding for research and a lot of new facilities that are being built in the U.S. and Canada. And we're also seeing growth all across Europe, Mexico and South America, even South Africa is getting some of this now. It's a fascinating industry that is growing at a very, very high rate. And one of the best things about being in the industry is a very stable process because we all are going to continue getting sick. So the demand is not going anywhere.

Thank you, Joe. Let's stick with manipulators for a moment. I have a question for you, Claudia. So I know one of your important customers is in the U.K. Sellafield that Mike just mentioned about, but Walischmiller has a small manufacturing site there in the U.K. with a very unique relationship with them. Can you tell us a little bit about that and maybe contrast it with the more global view of Walischmiller, the main facility in Germany?

Yes, I can do this. We have a high specialized team, a small team in Sweden, U.K. and they are specialized, and they serve -- they support and service manipulators in Sellafield. Can you imagine that we have more than 600 manipulators in operation there. There are around 350 from Sweden and 250 from Germany. So what is important in this case, important is that this team supports Sellafield in maintenance, key is spare parts, training the operator and help them when they have an issue. So we have this relationship since the '70s, it's a long time. So it's absolutely built on trust.

It's -- so the advantage is that Sweden -- the team is very close there. If they have a problem or something like this, they are so close to them. They give them directly call, can support them and that makes absolutely the difference. So they became, since 2 years expert to develop remote handling tools that support the work in hot cells. So make them safer and more efficient. So maybe they face up challenge there in Sellafield. So the small team, they are expert to deliver -- to develop a remote handling tool. They solve the problem; they develop the tool and then deliver to Sellafield. And that's great.

Fantastic. And I'm sure you're very happy to sell them spare parts for their 600 manipulators.

Yes. And you should know with each manipulator what we're selling in the world, spare parts. That's right. definitely.

Shift gears a little bit. I have a question for you, Marc. We've heard mention a couple of times, small modular reactors or SMRs and they show up in the headlines all the time. That seems to be the latest buzz around nuclear energy and clean power. But they're still years away. Why should we care now?

Sure. So if there's one thing you take away from today on the topic of SMRs and energy and new reactors, is we use a mantra. It's follow the fuel. Terry said it earlier, is that, that is the part of the nuclear fuel cycle, going back to the infographic that is happening right now. So having the sovereignty capability here in the U.S. to be able to produce our own fuel is a bipartisan mission that is in place now. The expansion of facilities, both in the enrichment side and the fuel fabrication side is happening right now, both in the U.S. and U.K., which is part of the -- we'll call the ecosystem of the new SMR AR market that's arising that any companies that are part of that early stages will be well positioned to win, we have operating reactors in this new fleet that is coming.

So the products that we have, we mentioned criticality accident and alarm systems. So again, as the enrichment facilities and fuel fabrication facilities continue to expand, we are well positioned. We have a capability that is low competition and one that we're well positioned. We've been doing for many, many years. Not only that, but also things like fuel -- excuse me, fuel transportation, that is going to be a need to be able to transport this new fuel that is being made here in the United States. So it's not that we are ignoring the SMR market. We are just getting out in front of it and being proactive to get involved early on in the most important piece of that, and that's the fuel cycle because you can't operate a reactor without the fuel. So that's our strategy.

Great. Thank you. And Mike, a similar question for you. A lot of SMR buzz in the U.S., but I think there's similar discussions in the U.K. How do you see that as being an advantage? Or how will Cadre Nuclear Group take advantage of that investment and drive some sales growth in the U.K.?

Absolutely. I think there's a short answer and that Marc has done a good job of covering the SMR, power from SMRs is perhaps a little way off, but the opportunity actually is here and now as we start laying the foundations for new nuclear. Terry earlier talked about the nuclear renaissance, and we're certainly feeling that in the U.K. We've had industry numbers published quite recently, which showed that the civil nuclear industry in the U.K. was adding almost 1,000 jobs a month, and that's unprecedented from a growth perspective.

Put that in the context of some of the major announcements, which I'm sure you've seen, GBP 2.5 billion invested in SMRs, the selection of Rolls-Royce as the preferred supplier, everything that's happening in sort of advanced reactor technologies, next-generation fuel, hundreds of millions committed last year to that. We're in a really, really kind of exciting place. But for those foundations to get themselves established, the facilities that we have that are decades old need to be modernized. They need to be able to do new things. They need to be able to deal with new enrichment levels.

We need the packages to move the material. We need the protective equipment to keep people away from harm as they're doing all this important work. We need to be able to pilot these new technologies. And I think the infographic that you saw earlier does a really good job of showing the coverage that we have in all of those areas. And like I said, really, despite the paper to power thing, in that, power is a little way off. We really are at the start of that and starting to see some really important traction in those areas across the businesses that we have.

Thank you. I'll shift the discussion a little bit. Let's talk a little bit about M&A. So Claudia, how do you think the market has viewed Cadre's entry into the nuclear business?

So I'm thinking that Cadre's entry in the nuclear market is bold and logical. So I got the feedback from our customer, and you should know that the nuclear family is very small. Everybody knows each other. And I'm working since 25 years in this business, 16 years as a Managing Director, so -- and I guess everything it's built on trust with the customer and so on. And with Cadre, that's what I'm thinking is we build the trust and get up in the next level. So the customer is very satisfied. They have to save that we deliver in the next 30 years spare parts. That's important, absolutely important.

When a nuclear facility, laboratory or so make a decision for manipulator for remote handling, then they want spare parts in the next 30 years. So that's one of the things. And with all -- and we saw this emotional film, the video, Cadre save lives, very much now. And I'm thinking with I guess all the capability, what we have now, Cadre bought Alpha Safety, Bendalls, Northwest Total, NuVision, hopefully nobody forgets it. And so in this case, we want to -- they don't buy only products, they bought a lot of long-time nuclear experience. They bought expertise. They bought, I guess, excellent engineering. And what I believe with this capability, we make the nuclear industry more safety and hopefully saving lives.

Thank you. Mike, similar question.

Yes, I was going to say I was going to pick up on something you said there, Claudia, particularly about the size of the community and the importance of trust that's built over the very many years that this community has been active. And actually, it's also a pretty significant barrier to entry. I would challenge you all to take a look at Sellafield's prequalification selection questionnaire and see how long it takes to get through that. I mean it's tough. But with good reason, right? They need to know who they're working with.

They need to have the backing of the right companies and the access to the right technologies. And certainly, the feedback that I've had is excitement around accessing some of the amazing capabilities that we have, which are over in the States. And now with local partners, trusted partners and being able to get at some of these products and get them through the distribution channels that we now have, the routes to market we now have is a really, really compelling offer altogether. So really, really optimistic on what's to come.

Great. Thank you. I will change gears one more time. As Brad introduced, I've been with Cadre for a number of years now. And one of the things that's near and dear to my heart is the operating model. I've seen how that's been able to significantly influence the performance of the duty gear business. But of course, I'm biased. So I look to Marc. You've been a part of this for almost a year now or over a year now. What kind of changes or benefits have you seen from the operating model being implemented at Alpha Safety?

Sure. So I think it's 18 months that we've had it in place now, and I find it interesting going to the different Alpha businesses and just being on the shop floor to hear the teams talking about the operating model, specifically things like 80/20 root cause, countermeasures, things of that nature to see that the system being put in place and really adopting it and really pushing it forward for the different businesses and owning it and wanting to grow into those next levels of the operating model is happening, and it's an exciting thing to see. And the way that we see that is in our management meetings that we have every month is to be able to measure those KPIs, whether it's financial pricing or engagement from the employees. That's the measuring stick to say, are we making progress? Do we see the benefits coming through? And the answer is absolutely.

Great. Thank you. So hopefully, that gives you some insight into why Cadre got in the nuclear business, what exactly we have in the nuclear business and how those products and services all fit together. And now we're going to open it up to more general Q&A with Brad and whoever he chooses to call on.

All right. So we're a little bit ahead of schedule. So we'll work through questions. We've got this group up here. By the way, didn't they do a great job. It's not easy to come up here in front of this group, so thank you, guys. Really appreciate it. This is not their day job, right? But super impressive group overall. So Q&A, again, we'll just see we've got between now and 12:30. We probably won't do Q&A that long because we're ahead of schedule, but we'll work through exhausting those questions. Anything around nuclear, Blaine is up here also. We can answer whatever questions you guys have. So we've got a couple of mics, I think, that are going to work through the audience there.

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Pretty conservative as we go forward looking at those opportunities.

So one more thing on the production. We also should mention that the U.K. is doing the same process, and they're about 5 years behind the U.S. So as we ramp up and level off, they will just be starting to ramp up there also.

Good. I'm happy to add a little bit of color to that. So yes, the major initiative is the Future Materials campus at the Atomic Weapons Establishment in Reading in the U.K. And that's a once-in-a-generation renewal of all of the capability required to design, maintain, manufacture and decommission the U.K. deterrent. And that's had some very significant funding. I think it was around GBP 15 billion over this parliament to start making that happen. So yes, very similar story in terms of how we would engage and support some of that modernization.

Jordan Lyonnais, Bank of America. When you guys are looking at the DOE's budget for environmental management cleanup, for FY '26, it's declining. So where are you guys looking that makes you excited? And two, how are you thinking about capital allocation to meet the demand on the civil side?

It's a good question. Terry, Marc, do you want to take that one? Terry, do you want to take this one?

So it's a good question. Obviously, what's happening in the targeted energy background cleanup is as the sites have been remediated, much of the cleanup initiatives have been completed. Now we're moving into new markets, cleaning up the Hanford site. Mike talked about the Sellafield site, very complex U.K. facility. In the U.S., the similar scale cleanup effort is in Richland, Washington. And we have boots on the ground currently establishing the cleanup effort that's just beginning at Hanford.

So budgets are declining slightly, but we have new opportunities and new growth as we tackle really the most difficult environmental cleanup project in the U.S. We always kind of remark that over the last 25 years of environmental cleanup in the nuclear industry, we've just been practicing to get ready to go to Hanford to do the cleanup there. It's very complex. So I don't really focus on that budget. I focus on the opportunities for cleaning up the environment and it's massive.

I think I'll add, too, is we talked about the majority of our business on the cleanup side centered around transuranic waste, TRU waste. That part of the budget is increasing because the number of shipments, the volume of TRU waste going to the Waste Isolation Pilot Plant is increasing. So the benchmark is last year, the amount of waste that was shipped to WIPP hit an all-time high.

So our products all along that way from the filters, you saw that filter, the waste itself to the transportation packages, all fit within that life cycle of transuranic waste coming from a site -- generator site to eventually the hole in the ground. So when you look at the grand scheme of things, the entirety of the budget of EM, environmental management within DOE, it may be stable or slightly declining. But looking at it from our primary market within that segment being TRU waste, that piece is increasing.

And from the international side, have a look on Fukushima. We have to clean up Fukushima and there's a lot of projects for decommissioning. And then I come back to Germany. Germany switched off their nuclear power plants. So in the future, we have to do the cleanup as well. They want in the end, greenfield. So there's a lot of work. And France, they have so many facilities to clean up.

We are involved in this, and that is -- there are so many future projects. Then U.K., yes, sure, Sellafield. And then fusion is key as well. So a lot of countries want to build up new fusion reactors. We have one in Cadarache. That's the first one, the worldwide project, a lot of countries working there together and share their know-how and want to build up their own fusion reactors. And we are involved in this. So that's good, good future.

Yes. And I think just to maybe close that one out, I think the key on this one, so we had all the process maps up there. And one of the biggest takeaways that we want to make sure we convey and hopefully, you guys have taken away from it is when you look at those process map, very detailed, and that's why we put the details together because we kept getting asked, where do you fit in these life cycles.

You see we fit in a lot of places in the life cycle. So when they're ready to spend, right, we're there. And we're not there with one product in one company. We're there with multiple products and multiple companies with these long relationships that you guys are hearing about across the board. So we're making sure that we're positioned and ready to go when they're ready to spend at those times. Okay. Terry, do you...

Yes, just a bit on that. So the waste isolation pilot plant has just invested about $600 million on increasing its ventilation, which Congress is going to be watching very closely to make sure they get a return on that investment through greater shipping. Marc mentioned that they just achieved one of the highest shipping levels since 2014. And so now that this new ventilation system is in place, I think we're already seeing the increase in shipments and all roads around the country go to WIPP, all the shipments require our products, characterization services and increased maintenance on the shipping casks. So I think that's what really is driving our business aside from the environment management [indiscernible] waste isolation pilot plant.

If you didn't make that connection, one of the sites we have is in Carlsbad, New Mexico, right, which is, what, 80 miles or so from the...

Not even about 30 miles.

About 30 miles from the WIPP location. So a lot of these locations that you see the footprint that we've obtained through acquisitions are really strategically placed. You can imagine like when Blaine and I were doing diligence on these sites, we're like, what the heck is this site. It's hard to get to. It's out in the middle of nowhere. Like why would we want to keep this site, right? That's always kind of the back of our heads when we're thinking about footprint and optimization. And there are very specific reasons why those sites are there that are very connected to these customers, which is important in what we're doing as we go forward. All right. Nelson?

Holtec [indiscernible] they are going public within the next 6 months through proxy [indiscernible] customer or none of the two?

So let me repeat the question real quick so the folks on the webcast can hear it. So the question was around Holtec and Nelson is saying that the next 6 months or so that Holtec could go public. And the question is, are they a competitor, kind of where do they fit into our landscape? And Terry or Marc? Do you want to take it?

Yes. We know Holtec very well. They are a customer and a partner. We don't compete with them at all. We are cheering for them. They're doing amazing things in SMRs, dry cask storage, Palisades Nuclear life extension, et cetera. So it will be an exciting time for them. But no, we are a customer. We are supporting them. They're manufacturing a line of containers called Type B TRU packs, and we manufactured the first 95 and we are supporting them in their delivery of those. So no, we're very connected with Holtec.

Great. Any more questions? This is a gentleman with the mustache in the back.

Matthew Koranda, ROTH Capital. Appreciate all the detail on the nuclear business, very helpful. What wasn't touched on, I guess, in the panel in the presentation was how the sales force is organized. This strikes me as a very focused sale in a lot of regards in terms of the specific end markets that you're serving in nuclear. But could you talk a little bit about sort of how you brought together the Alpha and the Carr's sales forces, how they're incentivized to cross-sell, if at all, how that would work organically?

Yes. So I'll start off, and then I'll ask each of the business unit leaders, right, to talk about how you go to market with your sales team. Okay. But first of all, we have not integrated the sales teams at this point, and we don't know that we're going to. We'll see. That's part of when you look at the operating model, we spend time, we listen. We want to get to know the businesses. We want them to work together. They've gotten together in one meeting and actually at Claudia's site in Germany as a first-time meeting for them to spend a little more time together, even though they were with Carr's Group plc, right, in the U.K., they really didn't spend a lot of time together as a nuclear group, believe it or not, okay?

So those are the beginning stages. So let's not walk away thinking that we're going to integrate them. We may, we may not. It just depends on how we go forward, all right? So that's that. And then, Marc, you'll talk about your sales team, and then we'll go to Claudia and Bendalls is not represented. Sean is not here. But Mike, could you talk about that side of things, if you would?

Sure. So when we developed Alpha Safety, which was a combination of four different business over time, the need to cross-sell and be able to educate our sales group, which reported to me that we're all in it together. There are no silos. We're one business unit, being able to bring in customers or connections and network that were very important maybe from -- for another business unit. And like Claudia said, this market, this industry is very small. Claudia and I used to be competitors, right?

So we know each other very well. I've worked with everybody and actually a couple of different companies, everybody on the stage. And we know each other. And just because the sales groups are separate, there's no reason [indiscernible] the group or we don't pick up the phone and talk about opportunities. Even if it's something that, hey, I think there might be something here for the NLT group or here's something for the Walischmiller group because I know they have a remote handling need. We're always looking at that for the greater good of the Cadre Nuclear Group. And even though it's not formally that way, everybody has that mindset.

Claudia?

Yes. How we're doing it is, the good thing is when a customer plans a budget, a project, at first planning a budget. I need the money for this to realize this project. So it's remote handling involved we got direct -- we are -- got the information very early that there is a project, and they got from us a budget price. So we can inform our partners, our colleagues now, hey, there is a project in a plant. So we give them a budget price. The project will realize in 2 years, for example, but we have a focus on this. We go to exhibitions. We are very close to this. We have a strong brand. And the first thing when customers think about remote handling, they think about Walischmiller, so they come directly to us.

And yes, we visit customers, sure. We want to keep the trust, and we want to support the customer with solutions. and that's what we're doing. And we have a strong sales team. And what is important when we go to Japan, when we go to France and so on, I hire a lot of native speakers. So we have French people, we have Japanese people. So that's easy to just enter the market and have good discussions. And we meet each other so by Teams, it's good to share the information. And I think we have strong feet in the market, so yes.

Thank you, Claudia. So Mike, you'll talk about Bendalls first.

Yes. Well, I was going to say from a business development perspective, I think that's fairly well covered. What I would offer on top of that would be to say a lot of these opportunities come to market. They're part of major programs, right? So there's prior engagement notices, there's a lot of engagement with the supply chain before you ever see a tender. And that allows for the team forming for determining how you can actually service those contracts, what routes to market are available to you, do you meet all of the different sort of requirements ahead of time.

There's a very strong social contract in the nuclear industry. We talked about how remote some of the places that we serve are. And there are communities that rely on those places, and that actually makes a difference in how different tender returns are scored. So all of these things sort of matter. And as we have more capabilities and we can create more solutions for our customers, I think that collaboration between the different entities is key. But it's not just on the technology. It's also on the delivery and making sure that we meet all of the different requirements.

Appreciate that. Joe, would you talk about -- I know U.S. market, Walischmiller, you are the salesperson there, business development person there. Like how do you approach the market in the medical side of things that you talked about?

Right. So specifically to the question that he asked too, we should also touch on the fact that when you go to, say, one large site, we can have 5, 6, 7, 8 projects at that site and the people that we are working with at site won't even know each other. And so it is a very complicated, integrated at the same time, type of system we're working with because the three pillars may all have work at the same location with different groups of people who don't know each other. So when I come in and I am looking at the very beginning of a project that will be coming out in 5, 10, 15 years, I'm setting ourselves up for this work.

But at the same time, I am finding out exactly what they're doing from the engineering team, and I can look and say, hey, you guys are looking at some pressure vessels, too. I know that I have nothing to do with these pressure vessels, but we're going to talk to Bendalls, and we're going to help you guys out because Bendalls can give you some of this pre-engineering and get us into the mix long before it becomes an actual project. And the same with the containers or any of the rad monitoring systems. All of this stuff, even though the group that I'm working with may not be the group that's going to deal with in the long run, it is dealt with and discussed in between their groups.

So as when we are in there having a discussion about remote handling, it can tie in the entire group by having these discussions and those guys talking with other people. But anyway, so what you had asked me, my specific focus is to make sure that we are the leader for this equipment, we have to get in there at the very beginning when it is initially planned. Not when they are going out to construction, we want to -- when it's a concept, when it is just getting the first couple of dollars, that's when we want to make sure that they understand what our product is, how we are -- how we have advantages over anyone else that may be doing the work and what we can do to get them to the end product to where they are actually in production.

Yes. I think from that really quick, and we'll get to the next question over here, solution selling, right, is important here. Engineering, heavily involved, right, you guys would say, across all the business units, including Bendalls that's not represented here. So that's important in this process, not just -- if you look at the public safety side of things, we'll have sales folks that go across multiple product categories, right? Because we're not going to send an armor salesperson, a duty gear salesperson, et cetera, et cetera, to an agency all at the same time, it'd be cost prohibitive also, and it makes no sense to the customer that way.

We typically aren't sending engineers out for that side of things in the public safety business. I've been in other businesses where you do have engineers going out a lot, these businesses we do, okay? So a little bit different there. So we're going to learn. We're going to listen. We're going to figure out where we think there's some synergies and if they're actually going to be a 1 plus 1 equal 3. If not, don't just integrate them or push them together for no reason. My learnings have been when you do that, you actually go backwards on the selling side of things. Okay? I think we have over here real quick, Rob.

Yes, absolutely. George [indiscernible] Capital. And Brad, you said that people ask you where your presence are, and thank you very much for printing, sketching out all these diagrams for us. So if we can just dive one level deeper, if we can look at, let's say, either nuclear energy or nuclear security, and I would love to know, let's say, in each of these links, where you have the leadership positions and where you are and also run where you can strengthen your position and where you have a void and also where are the M&A opportunities are? I mean, how big is the pipeline? So love to dive a level deeper if you guys are ready.

Yes. No, I appreciate that. That could take us a few hours because of all the diagrams. So I think maybe the best way to do is we'll just pick one, okay, based on the time we have. And so on -- let's pick national security, you guys okay with that? So on the national security front, on that one, we went through the left bottom side of that with new pit production. So being that domestically, let's talk about that for a minute, Marc, Terry, whichever one, maybe start with Marc.

And just talk about, take SAVY, which is our containers, which you see in the picture, pick a couple of products, talk about any competition. I think it's going to surprise them. I know what your answer is going to be. And then what that means because even if it's a single sourced product, it doesn't mean it's unlimited revenue and unlimited growth and opportunities, it's all about the demand that comes our way. So talk about that.

Yes. So start with SAVY, where it is the only certified container for plutonium oxide material handling. And again, you guys can have a chance to look at it.

Say that one more time.

One more time, yes, 7 or 8 times, yes. SAVY is the only certified container for handling of plutonium oxide materials.

In what country?

In the United States, but it is also used in the U.K. at AWE, Atomic Weapons Establishment, in one of their product lines is using it as well. So both countries, our SAVY line is instrumental into this portion of the infographic that you see. Everything else in there, obviously, manufacturing is -- can be a competitive market. For PSC, RPS, these are very specific. Radiometric instrumentation, sure there's competition there. But getting back to the solution-oriented provider once -- since we're in the market -- that particular market for SAVY, it just opens the door to be able to say what else can you do?

Because procurement teams and government organizations rather than sending out multiple procurements, love the fact that you'd be able to bundle those types of service offers. So even though over in this corner here, they may be more competitive -- yes, this portion of the screen right here, I'm really just focused on here, it allows that bundling effect where it does become a noncompetitive or sole source opportunity because we're able to solve multiple solutions for that particular customer. So SAVY is the, call it, the point of the spear. It allows us to get into that market and bring everything else along with it.

So then in general, Marc, just if you think about all three of the diagrams, is it safe to say that in general, competition is not heavy within our categories?

That's correct. Yes. I would say most of our product sales is very -- it's either sole sourced or very minimum competition, meaning there's only one other competitor. And the more things that are highly competitive, we don't play in those areas. We know where niches. I mentioned TRU waste several time. I mentioned -- we mentioned the energy side with criticality alarm systems or waste transportation packages. Again, there may be competition, but you can count them on one hand most of the time.

So the beauty of what we've been -- what we have is because we've been doing it for a very long time, such as NFT in our filter sales, we own over at least 95% of the market share on nuclear ventilated products because we've been doing it since the Rocky Flats days in Colorado, that started in the '80s. So once you're in that position, the barriers of entry for any alternative products or anything coming in is extremely challenging. An example of that would be robotics, starting a robotics company from scratch in the nuclear industry, probably not a wise investment.

Yes. And on the robotics side of things, right, which would be in multiple diagrams. So maybe, Claudia, you've got two main competitors, right?

Yes, we have -- we're working in a niche market, and we have not a lot of competitors. But we have a big advantage. We have each product from handling capacity from 5 kilogram to 500 kilograms. And our competitors have the smaller manipulator or the bigger ones. So we have everything that give us definitely an advantage in the market because the customer want -- they want to get it from one supplier and yes, that's good.

Yes. And with those two competitors, one is in the U.S., and one is in France, right?

That's right. One is in the U.S. and one in France.

Okay. Sorry, we don't have time to go through every one of those. But I mean, when you look at it, I think in summary, minimal competitors within a lot of these spaces, right? I think Claudia, I would say, probably has the most competitors at two, okay, when you look at all the product categories. Like a PSC has one competitor, right, essentially globally for that product category. So I think the key here is the takeaway, again, you're hearing numbers of budgets, billions of dollars, right? That billions doesn't translate into billions for us. Because when you look at those $1 billion projects, a lot of what they're doing -- sorry, getting a little feedback.

A lot of what they're doing is we're the smaller portion of that invoice value, okay, which is great because that's what we look for and we've talked about, Blaine has talked about it. We've talked about our acquisition criteria. We like that because if we're the smaller percentage of that total invoice value, guess what? We get pricing power, right? We get products, there's only one or two competitors, very niche, highly engineered, things that people are scared, quite frankly, to move away from. Do you think folks are going to move away from that container system that you see on the bottom left after how many years?

Yes, 10 years of development to get to that point.

I don't know if you heard that, 10 years of development, I know it sounds extreme to get to that point. So no different than public safety confidence in our products, right, that people are wearing those. Same thing with the container. Do you think you're going to trust some new company that has hardly any experience with a container when you're going to put plutonium in it? No, it's not going to happen, right? So that's the value that we bring to these diagrams overall. Your last part of the question was M&A. And the answer is, obviously, we can't share M&A funnel. Funnel is not dry, it's robust opportunities.

I can tell you what we're not looking at that came along with some of the Alpha Safety funnel with the acquisition, service companies, that's not high on our list. There are companies out there that are doing service type stuff, BWXT and others. That's not who we want to be, right? We're widget folks. We like to innovate. We like to manufacture. We love to engineer stuff, okay? That's who we are. We know what we're good at. That's what we're focused on. One of the things that we continue to sort through in the funnel is the next product families that we want to go after, okay? That's important to us.

Actually, can I have a quick follow-up on your last statement that is you are the widget guys, and you are focused on the next family of products. So speak about the R&D opportunities and where do you put the money? Is your R&D level in terms of the spending as a percentage of revenue, going to be meaningfully higher than in other divisions? It looks like the opportunity may call for more investment.

Yes. Blaine has been sitting over there, can't wait to answer the question. So we're going to give that one to him.

No, I mean the profile from an R&D perspective isn't that much different from the core. In fact, a lot of that is funded, right? When you get into the government side, you're looking at funded R&D. A little bit different, I think, for Claudia's manipulator business. But you do -- so it's not an outsized impact. We don't have to spend 10% of revenue on the nuclear side. So it looks, again, very much like the Med-Eng side of the business, right? They have an R&D spend generally for Cadre pre-nuclear, it was around 2% with 1 point to 50 bps funded by the U.S. government. So very similar profile, but great question.

Thank you. Appreciate it. Any others? Yes, sure.

How much should investors care about from a margin perspective, the mix between the three markets and maybe even include medical and that's a fourth. Is a margin driver over the coming 3 to 5 years reliant upon the mix of those three things? And a second unrelated question in public safety, could you spend a minute -- sorry to ruin the nuclear party, but the nuclear -- the public safety opportunity in Europe. Obviously, we're all hearing about the amount of money that's going to be spent in European defense. Things are changing over there. Curious if you see public safety as opening up new opportunities for growth that, frankly, when you came public, might not have been on the whiteboard.

Sure. So we'll have Blaine answer the first question, which is around mix across nuclear, I think, was the question. And then you can take the European one or I can follow up if you don't give the right answer.

We'll take the test. From mix, it's really more product-based rather than market, right? So if we think about like the SAVY containers, right, is a good example of kind of higher margin than average. You have the Walischmiller side of the business, again, higher than average. Their spread, if we kind of think back to law enforcement safety, is probably a little bit wider, probably more around 15 points kind of variation, not on the downside, but really on the upside. And I don't think any one of these particular though would significantly drive it one way or the other to your question.

So -- and then on the European defense side, what we've seen so far is really more of a spend on the larger programs, think vehicles, that's munitions. That's where we've seen the spend. We do think there's an opportunity as if we are able to grow boots on the ground, that's certainly an opportunity for us, whether that's number of EOD techs deployed or number of soldiers. We haven't seen a significant uptick on that side. But in the future, as they're continuing to spend more. I think that's going to be kind of like law enforcement. It's a little bit of a tougher problem to solve. It's a little bit easier, I think, to throw dollars at large programmatic spend versus the effort to have more soldiers on the ground. Is that correct or not.

No, that was correct. We travel way too much together. Just to add to that really quick, on the EOD front, though, we do get the question a lot around bomb suit demand, right, with all the conflicts that are going on over there. It's a common question. We're just waiting, quite frankly, for the conflicts to de-escalate. You can't go clean up stuff when people are shooting at you or trying to blow you up or drop bombs on your drones or whatever. So that's the environment that's going on there at the moment.

When things deescalate at some point, hopefully, for everybody there that's involved and they can get in beginning the cleanup efforts in Ukraine, for example, they're already a current customer of ours with bomb suits, you can imagine because our share is so high in bomb suits around the world with various countries. And then the -- we don't see that as a huge needle mover because there's only -- some of you guys have heard me say this, a little over 20,000 bomb techs in the world, okay. I'll say it again, a little over 20,000 bomb techs in the world and only around 10,000 suits, which means they share suits, right?

So you're not going to see this huge influx of half of this room saying, I want to go be a bomb tech and I'm going to Ukraine, I'm going to get trained. I'm going to throw on a suit and I'm going to go see what happens. But no, you're not going to do that. Where we potentially will see some demand that Blaine and I talked about quite a bit is on the de-mining side of things. So think of that as just a lower level of protection, I'll call it, just to kind of play it down there from a full-fledged bomb suit. We're not the only player in that category. So there's others in that category, but we've been doing work to prepare for any competition in that category.

And what we've done is we've taken where we typically will manufacture those de-mining suits. And we've got a couple of our other facilities that we've worked with engineering with them in our Tijuana, Mexico facility and also in our Lithuania facility as potential opportunities for us to manufacture those at some lower cost points versus in North America, which is typically where we manufacture those so that we're ready to go and we'll have the robust margins that we'd like to have or for those that know us, we won't do it. We won't go after it. If it's not within our margin wheelhouse, we'll pass up the opportunity and move on to something else. Okay. Any other questions? Yes, Mark.

Since somebody else hasn't asked it yet on the blast sensor opportunity, and maybe it's for Blaine. Just any walk-through on kind of impact to the model, immediate impact, kind of how this flows through over the next few years?

Yes, I'll take that one. So we're a little sensitive on the topic at the moment because of what we're committed to with DoD around sign off on our PR, okay? So I would just say at this point, right, it's an IDIQ. So some of you guys may look like, IDIQ doesn't mean a whole lot. All I can tell you at this point is we're working on manufacturing sensors and moving forward manufacturing those, okay? So that would translate into -- we do have demand, all right, overall.

At this point, we're not going to disclose what that demand looks like. But it's a healthy demand out of the $50 million overall that we're very, very excited about for us to move forward with. So as we get into the approvals, once they get back to work and they can answer phones and e-mails and that side of things, then we'll be able to talk about more and be able to release some of that info. But it's definitely a great opportunity. The other one that I'm surprised somebody didn't ask that's been following this is, is it single sourced or not, right?

Because throughout the entire development project, we were working through it with a competitor called [indiscernible] right? So it was us and [indiscernible] doing paid R&D work. We can't get into details either but just encourage you to go out on SAM.gov and do your own digging and see if you find someone else that got awarded the BMO IDIQ for sensors and take a look and see. All right. Any other questions? Okay. It looks like we've exhausted -- Jeff's got the last one here. Go ahead.

I just wanted to follow up a little bit on -- I know you mentioned your alarm devices and some of the gas testing devices or gas analysis devices. How many of those or how much of those devices do you actually manufacture, how much of...

Yes. Great. So I'll repeat the question just so the folks on the webcast can hear it. So in general, what Jeff is asking is for some of the nuclear products that we have, right, that we talked about today, which of those products are manufactured versus we're doing buyouts, third-party type work, that side of thing. So I'm thinking through the product categories really quick. I would say the vast majority of those product categories we manufacture. Is that fair guys, across the board when I look at -- I'm looking at faces. And when I see faces, I see manufacturing facilities and I know what we do in those.

So vast majority are not buyout type products. We're not buying and then reselling. We're engineering, we're cutting chips, we're welding. We're doing all that type of work overall. So this is definitely in our wheelhouse. Capability-wise, we have very different, obviously, than body armor, right? And body armor for those that have come to visit us at various times, you see a lot of cut and sew activity with like body armor, bomb suits, products like that, injection molding with holsters, et cetera, et cetera. With the nuclear side of things, we're into chip cutting, welding, paint, which is not foreign to a lot of us, all you guys, it's not foreign to.

And then a lot of other folks within Cadre that lead some of the businesses, it's not foreign to us either based on our diversified industrial background. We have some amazing capabilities from these folks on the stage. When I think of what we do in Germany at the Walischmiller facility, it's honestly one of the cleanest, nicest, best ran facilities I've been in, and I've been in many over a long period of time, okay? They do a phenomenal job. Terry and the team at Alpha Safety at the multiple locations, same thing, large equipment, large machining capabilities.

Bendalls, they've got machines at Bendalls that there's two of them that think we can maybe get the two machines in this entire room, okay? Large, very large CNC beds because they're working on rack systems that you heard Michael talk about and things like that. So those capabilities are really difficult to come by, right? One of the panelists talked about a reduction in the supply chain, okay? When you look at what Bendalls does in the U.K. and their capabilities and the work that they do with Sellafield and the trust that they've gained with them, it's because of those capabilities.

There's only one that I know, I can't think of the name of the company, but the one other one in Carlisle there, right, that is, I would call it a competitor to Bendalls. But even in that case, Bendalls doesn't let them down. They deliver really well on time. They've got a phenomenal engineering team. And when push comes to shove and we're doing diligence, we would hear stories from the Bendalls' team around, well, we picked up that project. Well, what do you mean? You picked it up. We picked it up because the other competitor couldn't deliver, they couldn't engineer like us.

The got awarded to them and then it got pushed over the Bendalls and they re-awarded the project. That's stuff. That means a lot. So what does that give us? Gives us pricing power, right? Do you think we've already exploited the pricing power and worked on that pricing power? Absolutely, and teaching that team on how you've got to be more bold in pricing and analyzing your pricing and how it compares and using service and delivery and relationships to make sure that you're maximizing those prices. Okay. That take care of you, Jeff? Good. Okay. Any others? All right. If that's all the questions, you'll throw back up the agenda. I don't think we really need it.

But we've got one piece left, all right? We're ahead of schedule, which is fine. Where we're going to move into now is -- is there lunch back there already or not? Yes, there is. Okay. I'm getting the thumbs up. So we got lunch back there. The intent here is Jim Duncan, if you would come up, Zach, not Michelson, other Zach, we are done. Michelson is like, oh, I don't know anything about robots, he knows enough. All right. So we've got various folks here. You guys have met the nuclear side of things, right, at least some of the team, right? We don't have everyone here. We've got a couple of other folks here. We thought this is not a place to do a trade show, but we've got a few products.

We've got a couple of mannequins. We've got an EOD mannequin for those that have never seen a bomb suit, be curious. If you notice, that's one of our values as a company. We're curious people. We ask a lot of questions, which leads us to a lot of improvements and innovation, you name it. Go take a look at the bomb suit back there. Zach is here. Zach is with a couple of our business units. So this is a great story from a guy that's a little earlier in his career. He's been at Med-Eng, done really well at Med-Eng. We said, hey, how about you work on leading the ICOR category? So he's doing both some Med-Eng category work and also the ICOR side of things, okay?

So if you guys remember, ICOR is an EOD robot company that we acquired. Zach brought a robot Mini back there. Unfortunately, for those that were at our event last year, where we let you shoot things, drive things and do all kinds of fun stuff. You can't do that in here, okay? But you can take a look at what we have, right? So Zach is here for that. Ask questions of Zach, please monopolize his time. And then Jim Duncan, for those who were there last year, you guys probably met Jim. He presented about armor and also was involved in that event. Jim leads our global armor side of things.

Another great story. Jim was here -- he was here when I got here. He was leading our VP of Sales and also Distribution. He has a background as a CEO for distribution companies within the industry, also ex-patrol guy and SWAT guy, too, right? So he fits the part. And also, we've brainwashed him and he's an operating model guy, too. So it's happened and he's there, right, overall. So Jim will be beside the tactical side of things. So any questions on whether it's holsters, even though it's not his product category, he can answer those questions, spend time on it, feel free to do that. And then we'll have the nuclear folks.

They'll be back there. It's a little bit harder on the nuclear side to bring some stuff, all right, to show you guys, but we've got some tables set up and you guys can go and ask questions there. All right. So this is going to conclude the webcast, right? So we'll wrap up the webcast side of things, and then we'll just move into the side. When you're done, asking questions, you've exhausted all that, head out. I'm sure you guys are busy. You're not going to play golf today, I don't think, it's raining out, but go do what you got to do, okay? So this will end the formal part of things. Really appreciate the attendance today. It's great to see existing faces we've met in the past, new face...

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