Good morning, and welcome to the Cadre Holdings second quarter 2024 conference call. Today's call is being recorded. All lines have been placed on mute. If you'd like to ask a question at the end of the prepared remarks, please press the star key, then the number one on your touch tone phone. At this time, I'd like to turn the conference over to Matt Berkowitz of The IGB Group for introductions and the reading of the Safe 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'll be making several forward-looking statements, and we make these statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. 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 comp, 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 August 26, 2024, starting at 8 P.M. Eastern Time tonight. A webcast replay will also be available via the link provided in Friday's press release, as well as on Cadre's website. At this time, I'd like to turn the call over to Cadre's Chairman and CEO, Warren Kanders. Thank you. Good morning, and thank you for joining Cadre's earnings call to discuss our results for the second quarter of 2024. I am joined today by our president, Brad Williams, and Chief Financial Officer, Blaine Browers. The effectiveness of our operating model and resilience of our businesses was evident based on our record Q2 financial performance, highlighted by substantial net sales and net income growth year-over-year. Importantly, we also saw adjusted EBITDA margin improvement, consistent with our margin expansion objectives. We have delivered an operational beat and raise quarter with Q2 results that topped expectations and increased full year net sales guidance. We are exceedingly pleased with the ongoing rollout of the Cadre operating model and continue to be excited about the potential to further enhance performance and execution throughout our organization. By leveraging superior operating tools and business processes, we are able to produce profitability improvements above our natural growth rate. Taking a step back, favorable macro trends continue to fuel global demand for our mission-critical safety equipment. A strength of our business has been its resilience through cycles, and we continue to see sustainable growth opportunity, no matter the economic, political, or geopolitical climate. Public safety spending has only trended upwards, and ongoing conflicts in Ukraine, the Middle East, and elsewhere underscore the importance of the work that we do. We are proud of the trust that our customers and our end users place in Cadre's equipment to keep them safe in life, life-threatening situations. We are confident in Cadre's forward outlook and expect to capitalize on attractive opportunities to further grow our platform and enhance our market leadership over the long term. A key component of this strategy is mergers and acquisitions, and we are committed to building on our long track record of executing accretive transactions that either expand our product suite, grow our geographic footprint, or enable us to enter new verticals. With net leverage down to 1.1 times, we have the financial strength and flexibility to get deals done. On a near-term basis, we will continue to be active in our existing law enforcement, military, and nuclear markets and see ample opportunities to accelerate growth in our existing portfolio. Based on these opportunities and the status of ongoing discussions, we believe we are well positioned to complete at least one transaction before the end of 2024, while maintaining patience and discipline. 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, followed by a Q&A session. We'll begin on slide 5. We are pleased with our strong second quarter results, driven by outstanding strategic execution by our teams globally, as well as significant demand for our mission-critical safety equipment. As Warren mentioned, we continue to make progress advancing the Cadre operating model, and our commitment to getting a little better every day is steadily improving. We saw positive portfolio mix offset by product mix in Q2, and we continued to benefit from our premium positions in the market, generating significant quarterly net sales, net income, and Adjusted EBITDA growth with strong margins. We maintained a healthy orders backlog, which was $151 million as of June 30th. As expected, we saw reductions in the EOD and duty gear backlog as large shipments were delivered in the second quarter. Turning to our M&A funnel, it remains robust. As you all know, M&A is a core focus for us to increase value... and we continue to pursue transactions aligned with our highly selective criteria, aimed at companies with strong margins, leading and defensible market positions, as well as recurring revenues and cash flows. In the near term, as Warren alluded to, we see the most actionable opportunities in our current verticals, which include the law enforcement, military, and nuclear markets. We are confident that there are plenty of targets in these areas to enable Cadre to achieve our growth objectives. Blaine will discuss our approach at greater length shortly. Thus far, this year, we've completed the acquisitions of two high-quality businesses, both of which support mission-critical initiatives with recurring revenue and compelling growth opportunities. ICOR Technology is a trusted global supplier of reliable, innovative, and cost-effective EOD robots, and Alpha Safety provides a highly engineered technical products and services focused on radiation protection and safety in mission-critical operating environments. We've been pleased with the early progress integrating both businesses, and we look forward to leveraging the Cadre operating model to continue to drive superior execution. In addition to maintaining significant financial strength and flexibility to opportunistically execute on our M&A objectives, Cadre has a proven track record of returning capital to shareholders. We've paid 11 consecutive quarterly dividends since going public and raised our dividend earlier this year to $0.35 per share on an annualized basis. Turning to slide 6, I'll briefly highlight the long-term tailwind supporting Cadre's growth opportunity across both public safety and nuclear safety sectors. Our largest market segment is law enforcement, and police protection expenditures have continued to trend upward, even during previous financial and industrial recessions. Demonstrating these significant demand drivers for our products through economic cycles, we've seen repeatedly that when it comes to funding priorities, customers lean towards safety and survivability equipment to protect first responders. Regarding our new nuclear safety vertical, it is worth highlighting again the long-term tailwinds driving growth, which we think about in terms of three key nuclear missions. Our suite of products and services addresses environmental safety, national security, and the growing global demand for nuclear energy. First, and Alpha Safety's largest by revenue, is environmental safety, which primarily relates to Department of Energy, mission-critical, and mandated cleanup efforts from decades of nuclear weapons developed and government-sponsored nuclear energy research. Second, is national security, with expanding national defense programs driving consistent and growing demand. And third, investment in nuclear is growing based on increasing global demand for sustainable and clean energy. Turning to slide 7, I'll briefly touch on a couple of trends related to officer headcount and new products. Trends in North American law enforcement hiring have remained mostly unchanged in 2024. As spend per officer remains at a stable, positive level, efforts to fill open positions are ongoing. Consistent with our focus on innovation, we've successfully launched a number of new products in the past 18 months across many of our categories. Feedback continues to be positive as customers begin to make decisions to adopt the new products. I'll now turn the call over to our CFO, Blaine Browers. Thanks, Brad. I'll kick off my comments with a review of our M&A strategy. Reiterating Brad's comments, we continue to evaluate M&A consistent with our highly selective key criteria listed on Slide 8. While we maintain a longer-term focus on opportunistically exploring new verticals to further diversify our platform, for now, our primary objective is to integrate and build out the businesses we currently own. As we've shared previously, Alpha Safety, for example, has a proven track record of executing M&A, and the platform comes with 100-plus potential targets that we continue to evaluate. We're more focused on add-on opportunities that realize synergies, enhance capabilities, and expand the customer base or expand our geographic footprint. Turning now to a summary of Cadre's financial performance, Slides 10 and 11 detail our Q2 results. As you can see on Slide 10, on both a year-over-year and sequential basis, we generated increased net sales, net income, adjusted EBITDA, and adjusted EBITDA margin. We continue to make progress driving margin expansion and generated a solid Q2 gross profit margin of 40.6%. I'd like to note that our Q2 margin was impacted by amortization of inventory step-up and intangibles related to the two new acquisitions. Including these impacts, the profit margin was 42.3%. Illustrated on Slide 11 is net sales and adjusted EBITDA growth year over year, including our updated 2024 guides, which I'll discuss in more detail in a moment. You'll see that at its midpoints, this outlook implies full-year revenue and adjusted EBITDA growth this year of 19.5% and 22.9%, respectively. We are pleased to be on track to meet our double-digit percentage growth objectives. On Slide 12, we present our capital structure as of June 30th. After completing the acquisitions of ICOR and Alpha Safety in the first quarter, our net debt was reduced by $23.3 million in Q2, and our net leverage was down to 1.1 times. This leaves the company with ample dry powder to continue to pursue acquisition opportunities. We provide our modified 2024 guidance on Slide 20, which reflects the strong demand we've seen so far this year, as well as the team's success, continue to execute on our strategic initiatives. As previously disclosed, we did experience a cyber incident in July. The guidance today includes the expected financial impacts. We now expect to generate net sales in the range of $571 million-$582 million, versus our previous outlook of $553-$572 million. We've taken a prudent approach based on the cyber incident and maintained the midpoint of our adjusted EBITDA guidance, with the current expectation that adjusted EBITDA will be in the range of $103 million-$109 million. We expect capital expenditures to be in the range of $7-$9 million, but for the incident, we would be raising our adjusted EBITDA guidance as well. We now expect Q3 revenue will be similar to 2023 Q3. We expect our gross margins will be impacted by approximately 5 points from what we've seen so far this year, as we continue to pay all employees during the incident. This leads to an expectation that Adjusted EBITDA rate for Q3 to be in the 10%-12% range. With the teams working diligently, we expect Q4 to be a very strong quarter, reflective of some catch-up following the cyber incident. I'll now turn it back to Brad for concluding comments. Thank you, Blaine. In summary, we are highly pleased with our team's continued execution, which is reflected in our strong second quarter financial results. We increased net sales, net income, and Adjusted EBITDA, while generating Adjusted EBITDA margin expansion. Complementing our core organic growth initiatives, we believe that we will see additional attractive M&A opportunities in the coming months, that enable us to expand our platform and build on our positions of strength over the long term. Supported by Cadre's entrenched positions and favorable industry trends across our law enforcement, first responder, military, and nuclear end markets, we're excited about our future prospects and look forward to continuing to deliver on our strategic objectives. With that, operator, please open the lines for Q&A. Thank you. We will now begin the question and answer session. If you've dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Larry Solow with CJS Securities. Please go ahead. Great, thanks. Good morning, everybody. I guess just on the cybersecurity breach, it sounds like demand obviously not changing or actually a little better, you're increasing your guidance. It just looks like you won't be able to meet that demand until maybe Q4, and it's gonna be at a higher cost for you guys, I guess, both on the gross margin side, and then it looks like some additional third-party costs will also increase from the SG&A. Is that kind of a fair way to look at it, going forward, and then hopefully resolve in Q4? Yeah, that's, that's correct, Larry. You know, for the vast majority of our demand, you know, it still exists. It's been consistent, and I think this, you know, is a great, you know, kind of inside view on, you know, the stickiness of that demand. So, you know, we're having some revenue shift out from Q3 to Q4, but we don't expect any, any significant loss of demand. You know, customers and end users are still big fans of the products, still world-class, premier products out there in the marketplace. So, it's really just that movement into to Q4, and, you know, we'd, we'd like to thank kind of internally, the team's execution and consistency, you know, through this process. Yeah, some margin, you know, there is some cost embedded in the guidance, Larry, as you kind of implied. And it's you know, we'll be able to more clearly articulate that as we, you know, move through Q3 and get to the Q3 earnings. Got it. And the increase on guidance, it's, you know, it's a couple percentage points, pure on the top line. Is there anything in particular that's driving that? You know, is it from the acquisitions, just a better mix across the, you know, the mix across the legacy pieces or anything, you know, that stands out there? Yeah, the acquisitions, we've been really, really pleased with out of the gates. You know, both teams, both the ICOR and Alpha teams, have exceeded our, our expectations, you know, both from a top line as well as profitability. So we're, you know, very, again, very happy with both, both those. You know, the core business, you know, we are seeing very strong demand on the armor side of the world, particularly in North America, so both the U.S. and Canada. So those are, are really, I think, kind of the three, you know, three businesses that are driving the, the majority of the lift. Got it. And then I just kind of just squeeze one more in. Just on the, on the international, you know, just more of a, you know, a broader question. Obviously, you guys are focused, you know, trying to enhance the growth there. Good growth this quarter, I think it was probably mostly because of ICOR. But, what's sort of the outlook there? You know, Europe, you're seeing spending cap on police expenditures and stuff. Is that starting to catch up a little bit more? Just, you know, what's your kind of take, internationally for you? Thanks. Hey, Larry, it's Brad. I would say it continues to be consistent with what we've been communicating from what we're seeing in Europe and other countries. Consistent demand so far, spend per officer continues to remain consistent with previous quarters, so it remains solid there, too. Awesome. Great, I appreciate the call. Thanks. Thank you. Our next question comes from the line of Jeff Van Sinderen with B. Riley Securities. Please go ahead. ... Hi, good morning, everyone. Wanted to see if you could give us any more color on the trends you're seeing with some of the newer products. Just any update there? Yeah. At this, at this point, you know, like we've talked in the past, you know, we, we feel like we're a leader in the market in terms of innovation and have been for, for many years. And, you know, as we've introduced products to, to the customer base, customer base has been, you know, very, very accepting and excited about the products that we've looked at, and that's everything from holsters to body armor that we've released. It takes this industry a while for adoption to take place. So, you know, in many of the product categories, especially, for example, like the Apex carrier system that we've talked about, we're getting lots of requests for samples to be going through wear tests and that side of things. You know, positive looks good, and we are starting to make some traction there. Okay, great. Any more you can tell us about what you're seeing in the Alpha business? Maybe how's the pipeline for potential acquisitions at Alpha evolving? How's it evolve? You said for Alpha Safety? Sorry, it broke up there for a second. Yes. Yes, sorry, for Alpha. Just, you know, any other detail you can give us on how the Alpha business is evolving, and then also how the pipeline for acquisitions at Alpha is evolving. Yeah, things are, I would say, ahead of expectations when you look at how the team's been doing, both from a performance perspective and also adopting the Cadre operating model culturally, how the team has been integrating in. I would say I can't be more than pleased with the team in Golden, Colorado, which is where the headquarters is at, and then also the teams that are dispersed across the other facilities. So all positive there as we've gotten to know that team more and more and continue to integrate. And then your question around acquisition. So, you know, we've stated quite a few times we, you know, we acquired a funnel of 100 type opportunities. You know, we're working that funnel really hard in terms of getting to know those opportunities, which ones, you know, that we will be most interested in from a priority standpoint and working those. I would say overall, we're pleased with that progress. It's going well. Okay, that's great to hear. And then if I could squeeze in one more, is there any update on the blast sensor project? Yeah, same, same update as last quarter. Overall from, you know, the timeline standpoint, continuing to wait for some additional feedback from, you know, the SOCOM folks. And then after that, look forward to seeing what the next step is with them and what that timeline will end up looking like. But so far, so far so good. You know, we've gotten some informal information at this point, and, you know, things have gone well. Okay, great. Thanks for taking my questions. You're welcome. Our next question comes from the line of Sheila Kahyaoglu with Jefferies. Please go ahead. Hey, Warren, Blaine, this is Sam Gazzaz for Sheila Kahyaoglu. I just, you know, wanted to touch a little bit here. You mentioned in the, in the slide some, some macro consumer weakness as a little bit of a headwind. Can you maybe size what percentage of sales are, are consumer-facing and how that market shook out relative to sort of total Cadre in the quarter? Yeah. Absolutely. Yeah, so I guess to start with your question on the consumer-focused revenue, it's less than 10% of Cadre overall, so it's a pretty small portion. When we look at and majority of that revenue is really on the duty gear, the holster side. And so when we look at Q2, for holster sales, we actually grew 7% year-over-year. So it was a great number. Q1 was a little bit stronger, so year to date, you know, we're at about 11% growth, year-on-year. You know, I think it's, as we kind of close the quarter there at the end, we're watching the demand. Obviously, seeing a lot of headlines with many businesses that are consumer-facing that are feeling the squeeze. So, you know, it's an area we're watching. It's an area we honestly always look at pretty closely. But again, it's not gonna be a huge driver one way or the other for the overall business. Got it. Very helpful. A little bit sequential slowdown, but, And then I guess just, just one sort of high-level question on, on the EBITDA guide. I mean, you, you're sort of seeing a little bit of a margin slowdown to H2. And how much of that is volume driven? Just because, you know, the top line also seems like it's going slow a little bit versus, you know, how is pricing and volume trending there? Yeah. Maybe starting with the pricing volume. You know, on the pricing side, the businesses have continued to execute, so they're hitting that, you know, 1% price net of material inflation. You know, we're seeing continued, you know, execution across the board in our businesses there. When we look at really the driver here in the back half, you know, any margin changes, really the cyber incident. And it's the same reason, you know, Q3 will be, you know, certainly lower, will more than make up for, you know, that adjusted EBITDA and revenue in Q4. So it's a little bit odd on the timing quarterly just because of the incident. But, I think as we move forward, you know, both for the back half or, sorry, Q4 this year and then next year, you know, we'll get back to, you know, that consistency you've seen, you know, every quarter since we've been public. Great. Thank you very much. I'll leave it there. Thank you. Our next question comes from a line of Matt Koranda with Roth Capital Partners. Please go ahead. ... Hey, guys. Just wanted to make sure I understood the sales guidance for the back half of the year. It sounds like maybe we lost some sales due to the cyber incident in the third quarter, but we're making up for it in the fourth. Any way to quantify sort of days lost in terms of sales in the third quarter? And then I think, Blaine, you mentioned on the margin impact from the event, said something in the prepared remarks about a 5-point impact on gross margins. Is that contained to the third quarter only? Just curious to try to think about sort of the gross margin puts and takes between the third and the fourth quarter. And then any thoughts on just how we're adjusting this event in the Adjusted EBITDA numbers on a go-forward basis? Yeah, maybe start with that, the easiest one, which is that how are we adjusting for... You know, at this point, you know, we're not not adjusting anything. So on the Adjusted EBITDA, it's consistent with what we've done previously, with being pretty much restricted to the stock comp, restructuring and transaction costs. You know, we're not, at this point, introducing a third bucket for adjustment or a fourth bucket for adjustment. So we'll kind of leave that where it is, just move forward and get our hands around it, and have really a more concrete number. That's something, you know, we'll certainly kind of entertain discussing. But, you know, at this point, that assumes those costs are in now. You know, we did have cyber insurance, which we expect, you know, both for the third parties as well as on the business continuity side, that we'll have claims that go in. So on the higher end of the guidance, that's you have not just the third party, but the claims for business continuity going in. But maybe going back to your first question, you know, just to be clear, no business is lost, right? It's really just shifting from Q3 to Q4 at this point. You know, all the end agencies have been very understanding of the incident and timelines. You know, our teams here have been working, you know, working ways to get, you know, hot items out to those, you know, academy classes or recruit classes as needed. So it's really just, you know, that movement into Q4. The margin comment I made, it was really relative to, you know, what gross margins will be for Q3, versus kind of what we've seen in the first half, and I said about 5 points different. So you can kind of do the math to get there, but that gives you a feel for the impact. Now, we'll get some recovery, obviously, as we move into Q4 and we get the volume leverage. So that's implied in that 5 points down, that there's a volume impact as well. So hopefully, I think I got your 3 questions there. Yeah, absolutely. That, that helps clarify things here. And then just, I guess I'm curious to get a more general update. You guys did update a little bit on Alpha and how to think about M&A there, but just anything else as we think about, I guess, the core business beyond the nuclear piece, where there might be opportunities to get something done. And it sounds like you're signaling pretty heavily that, whatever we get done this year will be firmly an add-on to either the existing core or Alpha. But, you know, just wanted to give you an opportunity to kind of discuss some of the opportunities that are out there. Hey, Matt, it's Brad. I know we've been talking, you know, past quarter that, you know, we've been excited about the opportunities that we're seeing in the Alpha funnel. We've actually, over the last few months, we've actually seen a balancing of that. So we've got opportunities within the law enforcement, military side of things, which as, as you know, we've been in that business for a very long time, and we know a lot of the assets well, and we feel like there's some, some opportunities there, which is great. And then also on the, the nuclear side. So we're, we're pleased, happy with the progress and what's, what's sitting in that funnel at the moment, and where things is, dropping more to the bottom of the funnel and becoming more, potentially actionable. So that's kind of where we sit right now. Okay. Appreciate it. I'll leave it there, guys. Thanks. Thank you. Thank you. Our next question comes from the line of Jordan Lyonnais with Bank of America. Please go ahead. Hey, good morning. Thanks for taking the question. Could you guys break out what was organic growth in the quarter? No, we didn't talk about it, Jordan. You can obviously, in the distribution side, you know, that segment stands alone. The distribution in the quarter was up, actually pretty much flat year-over-year. And then on the organic side... Organic side was up about 5% in the quarter. Got it. Thank you. And then on the federal side, we're seeing a big drop in obligation towards you guys. Is there anything coming down the pipe on the federal side that we can look to that will reaccelerate more either contract wins coming, explosive ordnance devices for Ukraine or anything in that arena? Yeah. Are you talking, Jordan, about the revenue channel? Yeah. Yeah. So one of the big changes with Alpha has been a lot of their revenue falls in that federal channel, so that's the reason you see that big uptick. One of the differences for that business compared to armor or duty gear is it's gonna feel a little bit more like EOD. And what I mean by that is it's larger orders that cover a longer period of time. We've talked about how Alpha Safety has, you know, some of the, actually maybe the best, if not, top two kind of view in their longer term, right? So they're typically booked, you know, kind of 9-12 months out, which is very different from the armor side of the world. So those orders are, they're not gonna be, you know, it's not gonna be every, you know, every quarter kind of spread out evenly. These are gonna be a little bit lumpier as we move forward. Mm-hmm. Our backlog was relatively, you know, flat from Q1 down slightly, but nothing that we're concerned about. And frankly, they have a really strong pipeline they're building out both in orders booked and orders expected for next year. But that higher federal number, you will continue to see as we move forward, primarily because of Alpha. Got it. Thank you. Absolutely. Our next question comes from the line of Mark Smith with Lake Street Capital Markets. Please go ahead. Hi, guys. Most of my questions have been asked, but I just wanted to ask about, you know, domestic law enforcement hiring and kind of what you're seeing from trends out there. It sounds like budgets look good, but are, you know, some of these departments actually able to get new hires in? Hey, Mark, it's Brad. Yeah, continue to be stable, which is great. You know, headcount numbers aren't, as we talked in the past, an exact science, but as we talked with the customer base, you know, there's some agencies that are obviously still down and others that have kind of fought back and continue to get folks in, recruit classes and in graduating classes to fill gaps. So, you know, we just continue to see it, like we've talked about in the past, as a long-term kind of tailwind for us as things continue to take hold there. Okay. And if it is, you know, just kind of what's expected, still tough to get new hires in, as we see budgets come up, are you seeing, you know, these departments maybe refresh earlier or adopt new products maybe earlier due to the fact that they've got the cash and need to spend it? Yeah, that's a big question because it depends on the agency and obviously their funding and their focus areas and priorities. I would say, you know, the core of our products, you know, the bigger categories like duty gear and armor, you know, they're needed no matter what. You know, when you start looking at other product gaps that maybe they have, that we saw some trends, you know, some this year and also last year, for example, like lighter weight shields, active shooter kits, things like that, typically, you know, if there's additional budget money and there's a focus, then you'll see expenditures in those areas. Excellent. Thank you. As a reminder, the floor is now open for your questions. To ask a question, please press star followed by the number one on your telephone keypad. Our next question comes from the line of Bert Subin with Stifel. Please go ahead. Yeah, thanks. If we think about the guide, you just, Blaine, talked about the 5% organic in the quarter, and your guide would imply about 5% organic in the back half as well. Can you just help us sort of think about, you know, how that moves directionally sort of down the road? I think you've talked about it being, like, 3%-5% organic growth longer term, but you have inflation coming down, which I imagine would, at some point, nominally hit pricing. And then you've seen your organic backlog decline on EOD. So I'm just curious, like, what the visibility and the confidence is on the organic side. Yeah. No, great, great question, Bert, and, and you're right. We've said, you know, 3%-5% over the long run. You know, we've had, you know, out of the gates or out of the gates this year and expect for the full year, you know, on the higher side of that, that guidance. You know, when it comes to. You know, certainly the news is, you know, lots of stories around inflation, you know, pressure on consumer spending, et cetera. But the one thing to keep in mind is we've never really been even a high singles when it comes to pricing or material inflation, right? For us, it's a, a different environment from companies that have more exposure to steel, copper, nickel, et cetera. So, you know, we're already on the very low end of that, you know, really low single digits to begin with. So, you know, we could have an impact moving forward, but right now, the way we view it, it's. It would not be a significant impact and deviate us from there. I think more importantly, if you did have that, you know, let's say inflation is flat or maybe slightly negative, you know, we still have that target, which we were able to achieve, you know, every quarter since we've been public, of expanding margins. That's really the focus is, with that 3%-5%, you know, how do we grow the business 10% and EBITDA organically? And I think as we continue to focus on not just price, but, you know, productivity and the operating model, we have lots of juice left to squeeze. So, you know, we're pretty bullish, not just on the 3-5, but I think more importantly on that bottom line expansion for our businesses. Got it. That helps, Blaine. And then, I guess a follow-up for you. I guess you talked about Adjusted EBITDA margins, but if we were just to put it into the context of product gross margins, you did a little over 43 there, or 43% there last year. This year you had some inventory step up, but, you know, you would've been close to 43, and then you have some, you know, obviously, the cyber incident impacting the third quarter. How should we think about gross margins? Is this... Are you on a trend toward the mid-40s? Do you think the 43 range is more normal? And what's the opportunity to get your gross margin higher as you introduce more automation? You know, we definitely feel we're still on the upward, upward trend there. You know, 43 is not, certainly not the endpoint for the company. You know, I think mid-40s and, you know, maybe, maybe even a couple points beyond for the future is really what we're striving for. You know, there are fantastic products, right? You mentioned automation. That's something the teams have been working really hard on for the last, I guess, Brad, probably about a year and a half now, maybe 2 years. You're starting to see a lot of that come to fruition, which is really new in our industry, right? It's been something that hasn't been, you know, historically done. So, not only do you get the, you know, better predictability, better outcome on quality, but you also have a, you know, lower cost basis and have the opportunity to get folks focused on more value-added parts of the business. So we're, we're very excited about the future there. And, you know, as folks who've seen the inside of our factory, when you think about automation, and, you know, I don't know that we get to, you know, automotive-level automation, but if you just kinda draw that comparison, then maybe they were the aspirational goal and where we sit today, it's, you know, very early innings for us. So as we kinda think longer term, the absolutely kinda mid, you know, high 40% gross margin is, you know, a, a very realistic target for us. Very helpful. And I guess one last one also for you, Blaine. Brad, I'm sorry. I guess all mine were for Blaine today. On the free cash side, sort of a slower first half. It looks like you're trending sort of year-over-year down in 2024. Can you just sort of help us understand what's going on with free cash, be it sort of working capital uses and where you expect that to go, I guess, looking forward? Sure. Yeah. You know, we kind of think about the first two buckets, inventory and AR. You know, excluding acquisitions, you know, the inventory side, we would expect to have cash generated for the year. Similar to AR, AR just becomes a timing right on kind of when the rest of their ship. You know, the larger piece, I think you're kind of getting at, is that AP and other liabilities, and really two big things, you know, happening in that in the first half. One is the bonus payouts, payments that go out in Q1, you know, create a pretty large dent in the first half, and that's very typical, right? We see that every year. The second piece, and this is a one-off item that does create a headwind to prior year, is cash taxes. So we did have, with the hurricane coming through last year, you know, we did have some tax actual cash tax payments defer out of 2023 into 2024, which creates about a $12 million swing from one year to the next. So, as we look in this year, we do expect that operating cash to be down year-on-year, primarily because of the cash tax impact. Very helpful. Thank you for the questions. Thank you, Bert. That concludes our Q&A session. I will now turn the call back 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.