Cadre (US:CDRE)2023-05-13 17:54Financial Data and Key Metrics Changes - Revenues increased by 7.7%, gross margin improved by 320 basis points, gross profit rose by 16%, and adjusted EBITDA grew by 30.8% [13][16][31] - Net cash provided by operating activities surged by 42.7% [13][21] - Net income for Q1 was $7 million, showing year-over-year and sequential growth [21] Business Line Data and Key Metrics Changes - The Consumer segment continues to see stable demand, with a strong orders backlog growing by $19.1 million since the start of the year, driven by recent acquisitions and high demand for EOD, Armor, and crowd control products [9][27] - The introduction of new products is being monitored, with early refresh cycles showing positive results [7] Market Data and Key Metrics Changes - Police budgets remain healthy, with increased spending per officer, which is expected to drive further investments in public safety [29] - The ongoing war in Ukraine is not anticipated to create additional opportunities until the conflict de-escalates [29] Company Strategy and Development Direction - The company maintains a robust M&A pipeline and is focused on strategic acquisitions that expand product offerings and geographic footprint while ensuring high margins and strong cash flows [20][24] - The company is committed to returning capital to shareholders, having declared its seventh consecutive quarterly dividend of $0.08 per share [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic uncertainties and highlighted the importance of mission-critical safety equipment [14][25] - The company expects another record year in 2023, reaffirming guidance for approximately 4% annual growth in both net sales and adjusted EBITDA [31][34] Other Important Information - The company is actively managing workforce challenges, particularly in Mexico, related to near-shoring and minimum wage increases [9] - The capital structure remains conservative, with net debt at $97.9 million and a net leverage of 1.2 times adjusted EBITDA [32] Q&A Session Summary Question: What are the holdups around M&A deals? - Management indicated that higher interest rates have increased the cost of capital, affecting pricing and slowing down sellers' responses [36][49] Question: Any updates on international opportunities? - Management noted upcoming larger tenders in body armor and holster categories, indicating continued activity in international markets [53] Question: Can you discuss pricing actions in Q1? - The company exceeded pricing growth targets, with no specific product standing out, but overall pricing remains consistent amid inflation challenges [54] Question: What is the outlook for Q2 revenue? - Revenue is expected to be flat compared to Q1, with gross margin rates anticipated to be slightly lower but still above last year [58] Question: How does the profitability profile of international business compare to the U.S.? - International business tends to have a lighter SG&A load compared to the U.S., which requires more outreach to numerous smaller agencies [79][89]