Cadre Holdings, Inc.

Good afternoon and welcome to Cadre Holdings' fourth quarter and full year-ended December 31st, 2022 conference call. Today's call is being recorded. All lines have been placed on mute. If you would like to ask a question at the end of the prepared remarks, you press the star key, then the number one on your touchtone zone. And at this time, I would like to turn the conference over to Mr. Matt Berkowitz of the IGD Group for introductions and the greeting of the Safe Harbor Statement. Please go ahead, Mr. Berkowitz.

Thank you and welcome to CADRE Holdings' fourth quarter and full year 2022 conference call. Before we begin, I would like to remind everyone that during today's call, we will be making several forward-looking statements and we make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to the risks and uncertainties that face CADRE 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.gov. Holdings.com would supplement our comments this evening 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 29, 2023, starting at 8 p.m. Eastern time tonight. A webcast replay will also be available via the link provided in today's press release, as well as on CADRE's website. At this time, I would like to turn the call over to CADRE's Chairman and CEO, Warren Kanders.

Good afternoon and thank you for joining CADRE's earnings call to discuss our results for the fourth quarter of 2022. I am joined today by our President Brad Williams and CFO Blaine Browers. Having now completed our first full fiscal year as a public company, we continue to make progress capitalizing on the tailwinds driving demand for our mission critical equipment and building out and implementing the CADRE operating model that you are welcome to read more about on our corporate website. Speaking generally, it is well known that police departments around the country are experiencing higher than typical attrition and retirement rates. It is also the case that public safety has solidified as a bipartisan political and social issue where significant majorities polled across almost all political, racial, and socioeconomic groups agree that more police and better funding for them is the best approach. These factors contribute to an attractive set of industry dynamics that we expect to support the ongoing development of our business. Brad and Blaine will go into the details of our results further in a moment, but we are proud of the fact that we have been able to deliver on the commitments we made to our investors at the time of our IPO and along the way since then. During 2022, we completed two acquisitions and integrated them seamlessly and without disruption to their various stakeholders. We believe we have already been able to meaningfully improve each business by bringing to bear the operating tools and best practices we employ across all of our businesses. At the same time, we are generating significant free cash flow that provides capacity to pursue additional acquisitions. We are exceeding our pricing growth targets to maintain margins in a challenging inflation environment, and we are pleased to have met earnings expectations set out for us by the equity research analysts that cover our company. Looking ahead, we are optimistic about our medium to long-term outlook. In addition to the fact that our business model benefits from strong cash flow generation, since we successfully completed a follow-on equity offering in 2022, Our balance sheet is solid and we have substantial capacity to take advantage of a confused M&A environment. Developing and executing on this element of our strategy is something that we as a team and I personally spend a substantial amount of time focusing on. To comment on the macros stating the obvious, the rise of interest rates by the Fed in response to inflation has substantially impacted psychology around transactions. Adding to that, there is significant uncertainty and concern about various geopolitical risks and the trajectory of the economy. This reminds us of why we focus on the durability and resilience of our businesses when prioritizing M&A targets and makes us grateful to be invested in the businesses we are in now. It also creates an opportunity for our company, since many other potential buyers are either more reliant on robust debt markets were generally frozen by other risk factors or portfolio issues to be active. Given the lack of M&A activity over the last six to nine months, the pent-up backlog of business owners looking to transact continues to build, and in my opinion, the longer this macro environment persists, the better it is for CADRE. Putting it in a different context to a predecessor company for CADRE and for the last decade with CADRE, I have been in these markets since 1996 and have lived through many different economic and credit cycles. What I have seen is that some of the best opportunities arise when things are dislocated or choppy. Today, we continue to see and work on compelling opportunities, and we hope to have more to report on that effort this year. Speaking about areas of focus, as we have previously discussed, in addition to acquiring businesses that complement our core, We are pursuing and prioritizing diversification plays consistent with our focus on safety. And we've gotten increasing traction on pursuing these types of businesses. Based on our pipeline and the level of activity we've devoted to this area, we believe we should be able to acquire one or two businesses this year, which have the team in place to integrate them quickly and set ourselves up for 2024 and beyond. I would add that we expect to be able to do this using the credit facilities we have in place, and our bank group is led by PNC and Bank of America, so we do not believe we have risk related to the recent freeze of conditions for regional banks. Having said all of that, we remain patient, thorough, disciplined, and thoughtful about our approach as we evaluate deals. As you probably recall, we hedged a substantial portion of our current borrowings in the beginning of last year, so our blended cost of debt, even with higher interest rates, remains slightly below 4%. Through free cash flow generation, we lowered our operating net leverage at the end of the year to approximately 1.4 times, and we expect to further delever through the year. All things considered, we are comfortable with where we stand, and are excited about our prospects this year and in the long term. Considering the state of the world, we are confident in the tailwinds and favorable industry macros that drive our business, and we believe we have solid organic drivers for our businesses that maintain a solid foundation to continue pursuing accretive acquisitions. With that, thank you for being with us today, and I will turn the call over to Brad. Brad, over to you.