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DATE

Tuesday, May 12, 2026 at 10 a.m. ET

CALL PARTICIPANTS

  • Executive Chairman — Warren B. Kanders
  • President — Brad E. Williams
  • Chief Financial Officer — Blaine Browers

TAKEAWAYS

  • Net Sales -- $155.4 million, up 19% year over year, driven by continued demand in law enforcement, first responder, military, and nuclear categories.
  • Orders Backlog -- $355 million at quarter end, an all-time high, up $166 million sequentially due to $108 million organic growth and a $57 million addition from the TIER Tactical acquisition (does not total due to rounding and offsets).
  • Revenue Guidance -- Full-year net sales expected between $736 million and $758 million, implying 22.4% year-over-year growth at the midpoint.
  • Adjusted EBITDA Forecast -- Guidance range of $136 million to $141 million for the year, indicating 24% growth at the midpoint with expected full-year EBITDA margins of 18.5%.
  • Q2 Revenue Outlook -- Expected around $178 million with EBITDA margin guidance at 17.5% for the quarter.
  • Organic Revenue Growth -- Anticipated in the 3%-5% range for the full year, supported by backlog conversion and demand consistency.
  • M&A Activity -- Two acquisitions completed in the period: TIER Tactical for $175 million in January (strategic platform) and Alien Gear Holsters for $10.3 million in April (bolt-on completed via bankruptcy auction).
  • Backlog Composition -- $87 million increase attributed to a 7-year blast attenuation seat contract with General Dynamics European Land Systems; $22 million organic backlog growth from demand in duty gear and armor; $57 million from TIER Tactical acquisition (components do not sum to stated total due to offsetting adjustments).
  • Distribution Segment Performance -- Noted "signs of softness in demand for discretionary type items" in company-owned distribution, but no weakness observed in Cadre Holdings-manufactured safety products.
  • Consumer Channel -- Up 6.7% year over year in Q1, attributed to the strength of Safariland brand and new product introductions.
  • Capital Allocation -- Free cash flow is being used to fund M&A, invest in organic growth, and consistently pay dividends, with the May payment marking 17 consecutive quarters since the IPO.
  • Leverage -- Net leverage below 3x; pro forma for a full year of TIER earnings is less than 2.5x, indicating balance sheet flexibility.
  • Alien Gear Holsters Financials -- Most recent annual revenue of approximately $20 million and "just a little north of 10%" EBITDA margin, but not yet included in 2026 guidance.
  • DOE Budget Impact -- 2027 DOE budget up 10%, but non-NNSA funding down 11%, reflecting a shift to defense-related spending expected to benefit Cadre Holdings' ventilation, containment, robotic arm, and container businesses.
  • Backlog Conversion -- Majority of backlog expected to convert to revenue within the year, excluding the $87 million blast attenuation contract which mostly ships starting in 2027.
  • Input Costs -- Management reports "not seeing any significant change on input pricing or material inflation," with fixed contracts shielding European operations from energy price volatility.
  • Seasonality -- Back half of the year projected to account for about 55% of full-year revenue, with armor, blast sensor, and duty gear shipments weighted toward late quarters.
  • Plutonium Down-Blending -- Demand remains on a "bit of a lull" due to a prior executive order, but no change in near-term forecast; long-term DOE obligations for surplus plutonium remain.
  • Dividend Consistency -- The next dividend will be the 17th consecutive payment since the IPO, signaling ongoing shareholder return focus.

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RISKS

  • Brad E. Williams noted "signs of softness in demand for discretionary type items" within company-owned distribution for the first time since COVID and the defund-the-police movement. This "could translate into cuts in state and local law enforcement budgets."
  • DOE's 2027 budget includes an 11% reduction in non-NNSA funding. Brad E. Williams stated, "The new budget reflects a focus on defense related applications," resulting in potential headwinds for environmental management and clean energy–related segments.
  • Ongoing suspension of plutonium down-blending remains unresolved. Williams said, "even though there is a bit of a lull in demand for that specific product and that application."

SUMMARY

Cadre Holdings (CDRE 9.50%) delivered a first-quarter net sales increase of 19% year over year and reported a record order backlog of $355 million. Management reiterated full-year guidance for net sales growth between $736 million and $758 million and adjusted EBITDA in the $136 million-to-$141 million range. Two acquisitions, TIER Tactical and Alien Gear Holsters, were completed and integrated into the portfolio, supporting inorganic growth objectives. Anticipated back-half revenue weighting is driven by contract timing, with key contracts such as blast sensors and armor scheduled for later-year fulfillment. Strategic capital-allocation priorities remain focused on M&A, organic investments, dividend continuity, and readiness to address evolving end-market trends.

  • Management stated, "our strong backlog exiting Q1 gives us confidence in our full year guidance," underlining backlog conversion as a major factor for 2026 outlook confidence.
  • Input costs remain stable. CFO Blaine Browers said, "we are not seeing any significant change on input pricing or material inflation." Fixed contracts are helping mitigate European energy price risks.
  • Recent DOE budget changes direct more funding toward defense-related nuclear projects while decreasing allocations for clean energy. Management expects that "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."
  • Alien Gear Holsters, acquired for $10.3 million through bankruptcy proceedings, contributes approximately $20 million in annual revenue. Management cautioned that "here's not incorporated into the guidance that we just closed.”
  • Sequential performance in the distribution segment showed monthly improvement across Q1, providing management with confidence that early softness may have been temporary rather than indicative of a broad, lasting decline.
  • The company's net leverage ratio is under 3x, and management targets a long-term leverage ratio of approximately 2x.

INDUSTRY GLOSSARY

  • NNSA: National Nuclear Security Administration, the division of the U.S. Department of Energy responsible for maintaining and enhancing the safety, security, and effectiveness of the nation's nuclear weapons stockpile.
  • Blast Attenuation Seat Contract: A multi-year agreement to supply vehicle blast protection seating, referenced in the context of a $87 million order with General Dynamics European Land Systems.
  • EOD: Explosive Ordnance Disposal, referring to equipment and services addressing unexploded ordinance and related safety missions.

Full Conference Call Transcript

Warren Kanders: Good morning. And thank you for joining CADRE's earnings call to discuss our results for the first quarter of 2026. I am joined today by our President, Brad E. Williams and chief financial officer, Blaine Browers. Entering 2026 with greater scale, 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 $365 million which included a $108 million 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 multivirtual provider of mission critical safety products, serving durable end markets. Thus far in 2026, we have completed 2 acquisitions. TIER Tactical in January, 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, 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 E. Williams: Brad, over to you. Thank you, Warren. On today's call, Blaine and I will provide Q1 update and business overview, including recent trends and financial performance, as well as our 2026 outlook followed by a Q&A session. We will 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 and everything we do, together with strong and recurring demand for our suite of products across law enforcement, first responder, military, and nuclear markets.

We continued 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 will 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 seek contract award announced in March 2026 as well as a strong demand in duty gear and armor. The remaining growth from our acquisition of TIER Tactical. Following our acquisition of TIER, a best in class brand delivering must own tactical defense products, we completed the acquisition of Alien Gear last month. This was a compelling and 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 the many factors driving long term resilient spend among law enforcement and military customers worldwide. At the same time, we are benefiting from replacement 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 cleanup 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 2 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 US administration commitment to public safety reflected in significant investment in federal agencies. Zooming in our on our company owned distribution segment, 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 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 Cadbury 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% in Q1 year over year. After completing our strategic planning process entering the year, we are excited about the opportunities ahead and confident in our dedicated team's ability to continue fueling growth in our consumer business. We have also taken immediate steps to kick off the Safariland and Alien Gear team to evaluate how best to optimize the positioning of these 2 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 hostilities end, at which point we ex would expect to provide various EOD offerings to address unexploded ordinance. Turning next to the latest market trends affecting our nuclear vertical on slide 8. We continue to see multidirectional support across our 3 market segments, environmental management, national security, and nuclear energy. 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 clean energy spending, was down 11%. This underpins our comments from last earnings related to administration 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 would 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, saw a higher mix of large opportunities that have been delayed. Following a successful 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 26. 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 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, crowd control.

Lastly, the acquisition of TIER drove another $57 million increase in orders back backlog. We are excited about the opportunities that the Safariland and TIER teams are currently engaged in evaluating, which range from cross selling to new products and go to market optimizations. The integration work with TIER is going exceptionally well. Along with the progress the TIER team is making to achieve their commitments to us pre acquisition. Taking a step back and putting this 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 will now turn the call over to our CFO, Blaine Browers, to speak more about M&A CADRE's Q1 financial results and 2026 outlook.

Blaine Browers: 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 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 7 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 Alien Gear Holsters. Which we acquired for $10.3 million through a core supervised bankruptcy auction. A recognized holster brand, Alien Gears is 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 will 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 26 results included $2.6 million of inventory step up amortization and $1 million of depreciation and amortization related to Zircaloy, William, TIER. Margins were in line with expectations in Q1, We knew coming in 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 will 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 fact and after factoring in a full year of TIER 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. 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 TIER. 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 2020 across our core markets. In public safety and nuclear safety. I will now turn it back to Brad for concluding comments.

Brad E. Williams: Thank you, Blaine. In closing, we are excited about the opportunities ahead. We continue to execute with discipline against our strategic priorities, 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 and A.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star then the number 1 on your telephone keypad. To cancel your request, press star 1 again. Your first question comes from Jeff Van Sinderen with B. Riley Securities. Please ask your question.

Analyst (Jeff Van Sinderen): Good morning, everyone. I just wanted to start with TIER, realize the acquisition only closed in January, but wonder if you could speak a little bit more about some of the opportunities you are seeing there and potential synergies.

Brad E. Williams: Hey, Jeff. it is Brad. As I stated a little bit earlier, the tier acquisition is definitely meeting and exceeding expectations in many fronts. The commitments that they have made to us on a pre acquisition basis continue to look really good. We are we have kicked off various projects I cannot get into details on those externally, but those projects range anything from some new products that the teams are working on between TIER and Safariland, and also our MedInge 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.

Analyst (Jeff Van Sinderen): Okay. Great. And then given that you I think you mentioned you are exceeding internal targets on price I guess any more you can give us on the latest you are seeing on input costs and supply chain overall?

Blaine Browers: Yeah. Yeah. Right now, we are not seeing any, significant change on input pricing or material inflation. it is something we are staying close to. You know, certainly, more you know, when you think about the sites in Europe, you know, kind of staying close to energy prices, know, in many cases, we have fixed contracts that you know, prevent us from being exposed to you know, short term higher energy prices. But, up to this point, it has not been an impact, but something will fall closely. And I think, you know, more importantly, reiterating we will be nimble when it comes to pricing.

You know, we have had over the last 5 or 6 years, a couple of examples whether it was COVID or, you know, tariff announcements where we had to thoughtfully you know, readdress, you know, pricing as things change. So the team certainly has the playbook and the capability to, to pivot if required. But right now, we are not seeing, you know, any pressure that would change our current course.

Analyst (Jeff Van Sinderen): 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?

Blaine Browers: Yeah. it is you know, I think when we think about it, the easy 1 is to take off the blast attenuation seats. that is that $87 million contract. That the EOD business won. Yep. Could be some small shipments this year, but for the most part, you know, that will you know, shift out into 2027. You know, 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, you know, all in the chemical luminescence, you know, that will ship, in the current year.

So we look at it You know, majority of it is gonna be shippable or is shippable, you know, in this year. Keep in mind, we have the blast sensor contract that we put in for $10 million last year. That is expected to completely shift this year. So that yeah. it is part of the reason going back to comments that, you know, we feel bullish and confident in the full year guidance is we are seeing that backlog uptick and not just on blast attenuation seats, but fairly broadly across the portfolio, we have seen that increase in backlog, which is you know, exciting for us and, for the businesses to see.

Analyst (Jeff Van Sinderen): Absolutely. Thanks for taking my questions. I will take the rest offline.

Blaine Browers: Thanks, Jeff.

Operator: Thank you. Your next question comes from the line of Larry Solow from CJS Securities. Please go ahead.

Analyst (Larry Solow): Greg. Thanks. Good morning, guys. Just on a order and the outlook, it seems like the quarter was pretty much in line. Just a couple of questions. Was the weakness you called out on the hard goods and on the distributor side, is that something new, something that concerns you?

Brad E. Williams: Hey, Larry. it is Brad. You know, is it new? it is new since COVID and the defund the police. That was going on. So it is the first time we have seen a bit of softness in our company on distribution side of things. And keep in mind, within company owned distribution, there is a portion of that business the larger portion of that business is actually third-party products that we procure with, you know, 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 will call it, CADRE products from our product segment.

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

Analyst (Larry Solow): Okay. And the organic growth kind of or assumptions you had for the year, I think, were I do not think you would break out officially, but it was like 3% to 5%. I am just curious has anything changed there? Did the acquisitions, the cars or Tier you know, they are adding more than expected, any less? Just does anything really change in terms of kind of organic versus acquired growth this year?

Blaine Browers: No. Nothing's changed really on the organic growth side. So reaffirming guidance, still feel good about the organic side. As Brad mentioned, we will watch the, you know, distribution segment. Rest of the businesses are really performing well. Zircaloy, you asked about Zircaloy interior, you know, largely in line with expectations. And so is tier. But, you know, tier we are talking about 2 months. So, you know, we will continue to kinda monitor progress both in, you know, revenue in the quarters as well as backlog in their funnel, you know, and adjust.

But at this time, as Brad said, you know, they have executed right where we expected to and you do not do not expect any downward pressure from them.

Analyst (Larry Solow): Gotcha. And then just last 1 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 are always kind of back end loaded. But this time, it looks like it is gonna have to be, like, 22.1%, 22%. I guess you are comfortable with that. In the back half.

Blaine Browers: We are. You know, the we always have operating leverage right, as volume comes through. And then you think about the complexion of you know, TIER, which is, you know, more in that ZIP code or area code. So yeah, we are comfortable looking at it. You know, we have when you think about you know, just think about the blast sensor for an example. Right? that is you know, incremental volume at nice margin with no incremental OpEx. Coming through. So that is where we will get a lot of that leverage in the back half as some of these larger order shift.

Analyst (Larry Solow): Gotcha. Okay. Great. Thanks, guys. I appreciate the call.

Blaine Browers: Thanks, Larry. Yeah.

Operator: Your next question comes from the line of Matthew Butler Koranda with ROTH Capital. Please go ahead.

Analyst (Matthew Koranda): Hi. What TIER and CAR contributed inorganically to sales in the quarter. And then just anything that you can call out that drove the organic headwinds in the first quarter? I guess, it more alpha or more on the core safety products side of the business?

Operator: And we missed, I think, first part of your question, Matthew.

Blaine Browers: I think you are asking about TIER contribution and Zircaloy contribution in the quarter? Yes. Okay. Yeah. So tier, you know, if you kind of run right out, you know, their TTM, they were about there in the quarter. And Zircaloy, it, similarly, was about the same. So, kind of fairly level to expectations when you run rate them out. You know, when you kind of unpeel the, you know, inorganic, which you know, we knew coming in, you know, we had a tough comp, you know, in particular armor. And distribution are really the drivers and you know, Brad, you 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, you know, on the armor side. And, you know, to reiterate what Brad said on the distribution side is, we are not seeing softness on the you know, Cadre-made products. it is been much more around the discretionary type products, which is, you know, consistent with what we have seen during a defund and COVID.

Analyst (Matthew Koranda): Okay. And then on the 3% to 5% organic, growth for the year, just wondering maybe a little bit more about cadence of that growth for the rest of the year. I guess 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 is back half, of the year, but I just want to hear a little bit more about seasonality.

Blaine Browers: Yeah. So the I mean, you are right on the blast sensor. That is gonna be a back half shipment as we expected. Kind of looking, you know, across the rest of the portfolio, know, armor is back half loaded, this year as well, which you know, is right in line with expectations coming into the year. And then know, duty here will be looks to be heavy in the last quarter of the year. So you know, it is pretty discreet when we look at it, you know, on the places where the volume will come.

And, again, having the backlog uptick and Q1, you know, certainly gives us a lot of confidence in the rest of the year forecast and guidance.

Analyst (Matthew Koranda): Okay. And then just maybe last 1 on the distribution segment. Wanted to hear what exactly did the softness that you have 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? To think about sort of some of those third-party products that you are selling and any demand changes that you have seen?

Blaine Browers: Yeah. So the I think the good news when you look inside Q1, you know, 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 we look at that. It gives us some confidence there was a temporary lull in, you know, kind of early year purchasing. Yeah. And then we are obviously, you know, paying real close attention to it inside the quarter here. But, you know, nothing that would, at this point, give us any reason to doubt kind of the full year.

And we have seen that recovery to a point where you know, we are in line with you know, guidance if it continues at the rate. So, you know, again, it is a very can be a very short cycle. You know, on the distribution side, so we will 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 role, but something we will continue to monitor.

Analyst (Matthew Koranda): Alright. Helpful. I will leave it there. Thanks.

Operator: Your next question comes from the line of Sheila Karin Kahyaoglu with Jeff. Please go ahead.

Analyst (Jack): Hi. Hi. This is Jack on for Sheila. I am just wondering if you could potentially provide an update on the plutonium down blending suspension and maybe quantify the headwind if possible. Just discuss kind of the path to resumption in that business?

Brad E. Williams: Yeah. Absolutely. So it is it is not changed since our last earnings update. Tied back to the executive order that went out. So, you know, pretty consistent with that side of things. However, you know, what I will comment on is when you look at the long term side of things, even though there is a bit of a lull in demand for that specific product and that application, You know, there is a what I would call, fundamental timeline mismatch that still exists. Between what the DOE has obligations to remove surplus plutonium by, I think it is like 2037. Compared to you know, reactor reuse scaling that is supposed to happen in the 2030 to 2040 range.

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

Analyst (Jack): Got it. No. That makes a ton of sense. And just for the 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 would said maybe a 100 potential M&A targets in nuclear alone. Was just wondering, you know, on that, what specific engineering capabilities or product gaps you would be prioritizing, you know, over the medium term in the nuclear field?

Brad E. Williams: Yeah. No. Great question. So some of the categories that we have 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 is geographically or within other customer that we do not reach today with certain specific product line expansion. So I would think of it that way. So it would be continued on the engineering side of things. We have talked about the critical alarm systems, ventilation, containment type systems. You know, we would like those of those. When you look at the spending that is 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. Makes a lot of sense. Thank you very much.

Operator: Thank you. Your next question comes from the line of Mark Eric Smith with Lake Street Capital Markets. Please ask your question.

Analyst (Mark Smith): Hi, guys. I know that it is smaller, but just wanted to dive a little deeper into Alien Gear, this acquisition. You know, small cost. But can you just walk us through any thoughts around maybe revenue contribution, know, synergies that you expect with your other holster businesses and even maybe profitability of this business?

Blaine Browers: Yeah. No. Greg question. And, you know, keep in mind, Alien Gear's coming through, you know, a bankruptcy process. So, you know, when we kinda look backwards, I would not think about it as a direct indicator, you know, for the current year just based on some of the challenges in that process, as I am sure everyone's aware. But, you know, when you look at the numbers you know, for last year, they are right around $20 million and, you know, about a little better, but around just a little north of 10%,, you know, EBITDA. Which is not a bad business, but not certainly not at our standards.

And know, we look forward you know, right now, I think, here's not incorporated into the guidance that we just closed, you know, a few weeks ago. So we wanna take our time, get to know the business, understand the implications, and you know, impact the, you know, bankruptcy process. Has had on the business. But what we are excited about is you have the same manufacturing processes. Really great, you know, focus on consumer and consumer marketing. And then know, we have we know a lot about their manufacturing processes. Right? And we are 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 are looking forward to it. You know, great team. Very happy with know, them out of the gates. And we are excited about what this can mean for the duty gear brands between Safariland and Alien Gear in the year.

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

Blaine Browers: Yeah. I mean, you know, our free cash flow right? You know, we have you know, an amount on the revolver. You know, free cash flow will generate, you know, over the coming months and year will be directed towards that. You know, excluding any acquisitions. And that is really been, you know, kind of our play is, you dividend, right, certainly takes a priority. You know, and then the rest of the cash generated is gonna be focused around either delevering or, you know, acquisitions. Know, we are not at, you know, the top end of our leverage, but know, we have always said, we think 2x levered is about the right number in a long term.

You know, right now, when you factor in the tier earnings, you were just a little bit south of 2.5, so we are not far off that long term target. So we certainly have some flexibility out there. But, know, we look at that free cash flow in the absence of deals for the rest of the year. It would be you know, really focused around paying down the debt and delevering.

Analyst (Mark Smith): Perfect. Thank you.

Operator: Thank you. Thanks, Mark. Your next comes from the line of Alex Preston with Bank of America. Please go ahead.

Analyst (Alex Preston): Hey. Good morning. Thank you for taking the question. Just wanted to take a step back to the FY 2027 budget, right? You noted this mix between, call it, lower non MS NMSA 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, 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?

Brad E. Williams: Thanks. Yeah. Greg great question. So you are you are right. There is the shift going on. When you look at the 2020 budget that the DOE submitted to congress, they are showing overall up about 10%. But then a 11% decline in non NNSA funding.

So the way we look at it when you break it up into you know, the large increase side of things, which is for weapons and reactors being up 11%, we have 4 of our business units that are connected to those type of applications. that is, our you know, NFT, which is more of our container side of things, our robotic arms, which is, the Vollish Miller business, our RPS business, which is ventilation and containment and then our PSC business, which is our critical alarm systems that we have talked about.

So we feel like those 4 directly related to the weapons and reactor side of things and know, 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 have talked about and we have you know, we talked about last time, we talked about a little bit this time, feel like that 1 is gonna be roughly flat. Which is where we are sitting today as we have dialed in you know, that forecast this year compared to last year. Where we talked about, you know, a decline there in some of the, container demand that we do have.

So that is how we break it down. that is how we look at it. So we think it is a positive going forward. Because of that 10%, budget increase on the weapons and reactor side of things. Got it.

Analyst (Alex Preston): Thanks. And then I guess back to the 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 No. Playing into that strategically?

Brad E. Williams: Not well, I mean, depends. So from an M&A perspective, yes, we want to make sure that we are looking at the macros and, you know, where the focus is as things go forward. But take environmental management, for example, you know, even though roughly flat, as I mentioned a little bit earlier with 1 of the other questions, you know, there is a obligation for the cleanup that has to take place. So right now, there is a lull in that cleanup.

But as we go forward, there will have to be an inflection point where that cleanup activities, you know, begin to accelerate I would call it, you know, to the levels that we would expect, before this year.

Analyst (Alex Preston): Got it. Really appreciate the color.

Brad E. Williams: Thank you. Thank you.

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

Brad E. Williams: Thank you, operator. I would 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.

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