Good morning, everybody. Welcome to the CJS Securities 26th Annual New Ideas for the New Year Conference. I'm Larry Solow, a research analyst and partner here at CJS, and I'm joined by the manager of Cadre Holdings this morning. Since we're relatively early in the day, I just want to briefly remind everyone of the format for our fireside presentations. We're going to start with a 10- to 15-minute overview from management. After that, we'll open the floor for Q&A, which I will moderate. And please feel free to submit any questions you have through the portal, and we will absolutely try to weave them into our conversation. With that said, I'm happy to welcome Cadre Holdings with us this morning.
As most of you know, Cadre is a leading global provider of highly engineered safety equipment for first responders, primarily in law enforcement, although a growing presence in the military and also on an explosive ordnance disposal, a market leader across its core categories with an expanding presence in the safe handling of materials in the nuclear markets over the last 24 months through a couple of acquisitions, so we're really happy to welcome Cadre, and with us today are Brad Williams, President and Chief Operating Officer, and Blaine Browers, CFO. Gentlemen, please take it away.
Hey, Larry, thanks a lot. Really appreciate you having us today. Thanks for the folks on the phone here that are taking interest in Cadre. So I'm going to spend probably the first 10 minutes just giving you an overview of the company, kind of from A to Z, a bit of history for those who don't know the history, what we've been doing since going public, and then what our plans are as we continue to go forward. So Larry had mentioned, but I'll just repeat, we're a global leader in the manufacturing of highly engineered safety equipment to professionals that are doing critical work. So that's important to who we are. We're not necessarily focused on a consumer, even though we have a small part of the business on the consumer side of things, which is mainly holsters, but we're focused on professionals that are doing critical work.
Even though we've only been a public company for four years, we have a heritage as a private company dating back to 1964, where we began as a holster company and have now grown into really a diversified industrial- type company, which we communicated as we went public. As I mentioned earlier, we're serving public safety in the nuclear market segments. We have over 2,600 associates around the world, with most of them dedicated to innovating and manufacturing our leading brands within 21 manufacturing sites. Our team. We're extremely proud of what we've done since going public, since our IPO. Our performance since 2020 has been outstanding with 55% plus revenue growth, 97% plus Adjusted EBITDA growth, 740 plus basis points of Adjusted EBITDA margin expansion, all while keeping our leverage really in an amazing shape for the company.
We've completed five acquisitions since our IPO that align very well with the other 12 acquisitions that we completed from 2012 as a private company. We're organized with a decentralized type business and product category structure where we have folks with extremely high integrity, a natural sense of curiosity. We strive for excellence by getting a little better every day, and we empower our folks to really get it done, get the job done in a focused process type manner. For those who don't know, many of us have backgrounds in industrial- type companies with disciplined operating models, with those practices really making it into our DNA and a lot of us have been doing this since out of college or university, 25 plus years.
We're proud of the, when you add it up, we've got hundreds of years of experience with operating models that have really led to the development of our own operating model. We call it the Cadre Operating Model. We're in the early innings of progression with our operating model, and we're extremely excited with what the operating model has unlocked within not only the companies that we found when we got here, I got here about 10 years ago, but the companies that we've added to us since going public. Our Cadre Operating Model, people ask us, like, what does it do for the company? It really unlocks that next level of potential. And it's things like material and labor productivity, the development of our associates, improving engagement throughout the company, brings strategy to life, puts innovation and innovative products in the hands of customers.
And I mean, I could spend hours on the operating model. It goes on and on, so it's a lengthy list of potential that gets unlocked within these various companies that we acquire, so I would say now let's transition to the markets and where we focus, so we have resilient end markets that provide plenty of tailwinds for the business. If I start with public safety, unfortunately, there's a rising safety threat globally with geopolitical tensions. There's a lot of civil unrest that's going on and continued active shooter type situations, especially in the U.S., so all of these combined end up driving those tailwinds for us within public safety.
In fact, when you look at spend for public safety, especially in the U.S., when you look at law enforcement budgets, you look at police protection expenditures over 10, 12, 14 years, over a long period of time, they remain consistent regardless of what's going on from a macro perspective in the markets. It could be industrial recession, financial recession, defund the police, COVID, you name it, those budgets remain very solid. Now, if there is a challenge in those budgets, our products typically get priority. And why do they get priority? Because we're making safety products that are critical to those professionals doing the type of work that they do. So the other piece that we love about the business is just the recurring refresh cycles that our products have.
Everything from holsters every five to seven years, there's changeouts to body armor, typically around five years, to bomb suits that are in that longer cycle, which is about every 10 years based on the higher value of that product. Switching to the nuclear markets, we went in the nuclear side of things to continue to diversify us into that industrial company that I mentioned earlier. We have highly engineered products also within this space that really support the full nuclear life cycle from what we think of as cleaning up the past, securing the present, and enabling the future. Now, what does all that mean? Well, it's three things that we go after within the nuclear space. One, again, we focus on cleanup, which is really about remediating the Cold War and accident type legacies.
The second one, our products and solutions assist in ensuring national security via weapons modernization type programs that are going on, especially pit or what's called nuclear core production to continue to refresh nuclear cores where there's a lot of money being spent allocated to that side of things, and then lastly, it's also around the nuclear renaissance due to increased need for power. That's everything from data centers to AI, increase in AI and the need to support AI with increased data centers to countries that are turning to different power sources with nuclear being a clean power source that continues to be turned to, so when you look at all three of those, that's why we entered in the nuclear segment.
We feel like that the three of those combined together, if there's a demand challenge within any of those three, we have fallback subsegments there to continue to support our business. We feel positive about the outcome and the outlook of the nuclear subsegments that I just mentioned. And overall, when you look at everything from the base company that we started out with before we went public to going public and the acquisitions that we continue to build out, our strategies we put in place and our operating model, we're very excited about our vision for the future, and I'll end on that. So our vision for the future is to continue to diversify. So we have public safety, we have nuclear. We'll see what the next vertical ends up being at some point in time.
Right now, our focus on M&A is within public safety and then also the nuclear segment, but we continue to evaluate additional legs as we go forward. Our vision is to grow 3%-5% on an annual basis, supplemented by $100 million in annual acquired revenue. The way we operate, and I've touched on that a bit with our operating model, our goal is to deliver mid-20s Adjusted EBITDA from the high teens that we sit at today, and all of that being supported with 45%-50% gross margins with those folks around the world that I mentioned that are innovating those products and manufacturing those products. All right, I'll stop there, Larry. Hopefully, that kind of gave folks a variety of who we are, what we're doing, and where we're going. We're excited to pick up from there and answer the questions that you have.
Awesome, Brad. Really appreciate that. Great. Let's kick off the Q&A, and again, if any of the folks out there have a question, please type it into the portal. Just a couple of, I guess, general questions for you guys that we're kind of asking all our presenters today. First one, just from a high level, how would you compare the, as we sit here today, current environment as we look forward versus where you were 12 months ago? Again, from a high level, I realize you haven't given guidance or anything for the coming year, but how would you kind of describe the current environment?
Yeah, without getting into guidance, I would say our public safety budgets continue to stay robust and spending that's going on. And one of the biggest ones that's gotten visibility out there that I think is more visible to the public is from a federal investment perspective with various federal agencies. So we're seeing continued spend there, which is great. So robust public budgets on the public safety side of things. Nuclear, as I mentioned before, from a nuclear landscape, we look at nuclear as being that 4%-6% grower over a longer period, over a three to five year type period versus public safety that 3% or plus within a given year. And the reason for that is there's a higher concentration of customers within nuclear. There's a less competitive landscape there.
And the work that goes on there really revolves around the various projects that within those three different sub-nuclear markets that I mentioned earlier. And that's how typically the revenue will end up running. So things are strong. Markets are solid for us. Business is running extremely well. Operating model, we continue to make very good traction on it, even though we're in the early days. We're in the second or third inning there. You might ask, if you've been here 10 years, Brad, why are you only in the second or third inning? If you know folks in the operating model business, you just never stop. And you're extremely hard on how you look at where you're at with an operating model and just getting a little better every day.
When we acquire companies, the acquisitions that we've made in the last 12-18 months, they've done extremely well being introduced to the operating model and starting to increase that expertise as we continue to go forward. So things are really good. We've got a nice outlook for the business.
Great. And I'm sort of going to come back to the operating model a little bit more because I know you like to chat about that and very interesting stuff. But the other kind of general high-level question, just on we're asking all our folks just on the increasing talk about the build-out of AI and just kind of what does that even mean for Cadre? Have you implemented some things using AI in the early innings? And what areas are you targeting there?
Yeah, we are. So, there's a few areas. One of the things that we've done in our three-year plans for various business units this year is we've had each of those business units take a look at AI and where they feel like AI opportunities exist within their businesses. So, I felt like that was a great step for those businesses, whether it's within manufacturing or within our products. And then we've implemented various AI solutions within, I would call it more of a transactional side of the business, IT. We've implemented some AI from a security standpoint and how email patterns are looked at so that we can reduce the amount of potential phishing exposure that we get within email and then also AI in some other transactional areas. So, for us, it's not something that we've stepped away from.
Our teams are leaning into it, but we're also very practical. You won't see us spend millions and millions and millions of dollars putting a lot of research into AI. We start with more practical tools that we can use on a daily basis and figure out how those integrate into what we do to either keep us more safe and secure from an overall infrastructure perspective or things that we can do to integrate into our daily transactional business to service customers much better.
Great. All right. Why don't we dig a little bit more into Cadre? And perhaps just for starters, you're in a couple, I think three, really four markets now. Perhaps maybe just from a high level, we describe you as a leader, but maybe you can kind of break that down a little bit and just discuss sort of the competitive landscape in your larger markets.
Yeah, absolutely. So starting with public safety, I've already alluded to some of the major product categories for us. We have a lot of brands within public safety, but the ones that carry, we don't disclose to that level, but the majority of the revenue and profitability are duty gear, which is mainly holsters in that category and what goes on the belt for law enforcement or military folks. And I'll come back to these in a minute. So that's one. The second one is body armor, which can be hard and soft armor. And the third is EOD, explosive ordnance disposal, with the main product in that category being bomb suits. And then the fourth category that we've added, as we've alluded to, which is the nuclear side of things outside of public safety. And we have lots of different product categories there.
To hit these really quick, on the holster side of things, we are the market leader in holsters around the world. We've been in that business for the life of the company. That's where the company started, Safariland. It is a premier brand in the market. Most law enforcement, military folks, it could be folks in national police forces around the world, they know that brand. It's kind of like the Kleenex brand for them. We estimate our share in the U.S. market for law enforcement and military being at least 90%. Our teams wake up every day looking at how to innovate to continue to maintain that share as we go forward. Our share outside the U.S. is much lower. We estimate it's in that 15%-20% range of holsters outside the U.S. We made an acquisition right after we did our IPO.
It was in January of 2022, a holster company in Europe called Radar. They've also been an old holster company. They've been around a long time, and we made an acquisition to continue to help us expand our shares and gives us a footprint in Europe so that we can manufacture products there locally, whether it's the Radar brand or the Safariland brand to service and go after that market segment. I mentioned earlier, refresh cycles on holsters are five to seven years, and it's really driven by gun changeouts, so every time a gun changes, the holster changes because these holsters are there to lock the weapon in place unless an officer or military personnel want to draw the weapon out. That's very critical to their safety and also the people surrounding that officer in case there's someone trying to take the weapon away. All right.
The second one is body armor. I'll just comment on the U.S. on that one also. U.S. market, our share is high 30-low 40% range. Competitive-wise, there's a main competitor in the U.S. that we compete against that has the majority of the rest of the market that we don't have. We don't participate in the military side of body armor in the U.S. We have a smaller presence outside the U.S. and Europe with body armor. We have a couple of manufacturing facilities in Europe, one in the U.K. and one in Lithuania. We do have a footprint there. The refresh cycle in the U.S. for body armor is every five years. We're typically innovating those next-generation products in the armor game. It's all about armor being lighter and highly protective.
And then also the carrier system and how you innovate that product line is also very important to the armor business. Our hard armor business is small. That's plates and shields and helmets compared to the total armor business. And somewhere along the way, I'm sure we'll talk about TYR Tactical, but TYR is a very, very nice complement to our armor business that they're playing in areas that Safariland armor does not play in. The third one I mentioned was bomb suits. So that product category, we estimate 87%-90% share globally of all militaries and any law enforcement that has an EOD team, which is not like every agency out there. There has to be a certain size for them to typically have an EOD team. So we have high share in this category.
We are known as the folks that understand the effects of blasts on the human body. So we also have a sensor part of that business. We've been working on and we announced that we won an IDIQ with the U.S. Department of Defense for our blast sensor that we've been doing paid development work with the U.S. military on for the last few years. And that IDIQ is a $50 million IDIQ, and the first PO was about $10 million for us to move forward and manufacture those sensors so that they can be put on a segment of the Department of Defense and have those blast sensors measure blasts so that blasts can be understood and how that affects traumatic brain injuries for our military folks that are out there working to protect us. All right.
And then on the nuclear front, that one's a bit different when you think of competitors and share because a lot of the product categories are very niche, smaller product categories. But then there's just quite many of those categories where there's a lot of diversity. And we can dive more in the nuclear piece as we continue to talk here.
Yeah, no, sure. Absolutely. And just outside of nuclear, just on your kind of core or legacy markets, you mentioned pretty high shares, very high shares in two of them, and then you split the share on the body armor side. But predominantly U.S., I realize the ex-U.S. market's a little more fragmented, but maybe you could just kind of discuss the opportunities outside the U.S. You mentioned TYR Tactical, I know, so we could perhaps segue right into that too, but just a little bit more on your kind of strategy to grow the international part of your businesses.
Yeah, no, I appreciate that. So that is an area of a growth area for us, and I'll call it us selectively grow. So as a company, we worked very hard over the years to make sure that our culture is of that, that we go after opportunities that meet our margin thresholds, I would call it, and where we want to be from a profitability perspective. And yes, we work very hard working on reducing costs, whether that's material, labor, costs, you name it, whether it's lean approaches, automation that we talked about a little bit earlier. But there's certain countries, there's certain regions, there's certain customers that they won't get to those margin levels because they don't value highly featured products like ours. So we go after those international markets very selectively, which is where I'll segue into TYR Tactical.
TYR Tactical, I started talking with Jane and Jason Beck, the founders of TYR Tactical back. They founded the company in 2010. I started talking with them a little over a year ago. The reason, a couple of reasons we're interested in that business, one is they are polar opposites of the Safariland side of things in terms of where their revenue concentrations are. You could look at them and be like, "Hey, you're buying another armor company. So what?" The so what is extremely exciting. Where they're at and they play, 66% of their revenue is within international. 17% of our Safariland armor revenue is international. Again, kind of polar opposites there. But they're not going after low-margin international revenue. They're very sensitive to that like we are.
And they go after high margin and very selective and particular about those end customers that they go after internationally. The second one, U.S. law enforcement that I've spoke a lot about that Safariland is in, whether it's holsters or it's body armor, bomb suits. It could be I didn't talk about EOD robots that we have from an acquisition, things like that. So the U.S. law enforcement revenue for our Safariland armor business is 75%. Okay? And TYR's is 7%. I'll repeat that. 7% for TYR and 75% for Safariland. So again, the Safariland team focuses on state and local agencies. And in the U.S., there's a little over 20,000 of those. TYR doesn't typically focus in that area. Federal. So TYR's revenue breakup is 22% of the revenue is federal. So they have contracts like ICE, FBI.
They've done very well going after the federal business with their tactical body armor products and a lot of the focus they put on innovation and patents within that space. Safariland has 8% federal revenue in armor. And then lastly, it's military, U.S. military. Safariland has zero with armor, and TYR Tactical has 5%. So that's one of the benefits that we saw. It's a great place for us to go and use, have another brand that's been growing tremendously since 2010. We disclosed they're in the $90 million-ish 2024 revenue level. So since 2010, we see that as exceptional growth with accretive Adjusted EBITDA, which is great for us. Now, the second reason, and then I'll stop, is the technology and the capital equipment that they have for hard armor.
When you're selling tactical body armor, you typically also need to make sure you have good hard armor products like plates and shields, for example. Safariland is capped out on our level of abilities in the hard armor space. Just to give you an idea, we have 850-ton is our highest pressing capability. TYR Tactical has two 7,000-ton presses that we estimate there's only five companies or less in the world that has that level of pressing capability. Now, you might say, "Well, why is higher pressing capability better or required?" It is because a lot of the new advanced ballistic materials require higher pressing capabilities to get those products to perform at the levels that we need them to in the marketplace. We were going to either have to invest in tens of millions of dollars in capital equipment to make that happen.
In this case, it was better to take all the other benefits that we get with TYR Tactical that I already mentioned, plus this pressing capability that we'll be able to move forward to leverage with the Safariland armor brand also.
Great. I appreciate that. Why don't we touch a little bit more on nuclear, which we've kind of mentioned, but obviously you've built that, stood up that kind of fourth leg, if you will, with a couple of acquisitions the last two years for Alpha Safety and Carrs. Perhaps you can kind of discuss. Nuclear is obviously a huge market. Maybe you can just delve a little bit more into your strategy, kind of the niche end markets you're targeting and the outlook there.
Yeah. Thanks for the question, Larry. When we think about nuclear, we really think about three different verticals within the nuclear markets. And that's really going to be our focus. The first vertical is environmental remediation. And when you think about the liability out there globally, not just within the U.S., it is a huge opportunity. Just in the U.S. alone, there's over $500 billion of work to be done to remediate these old sites. And oftentimes they are Cold War-era weapons production sites. And it's a unique challenge. There is not a lot of detail on what exactly is on site in a lot of these places. So don't think about it as a cleanup of coming in and taking a bulldozer and excavating dirt and leaving. A lot of this is very precise, right?
You have to determine not only if there's radioactive material there, but then you also have to do non-destructive assays to determine how do you quantify that level of radioactivity in the material, and then that dictates the disposal, so when you think about just that environmental remediation, we can provide transportation container solutions for it. We can provide ventilation containment systems when they remove the materials. We can also provide the equipment and to a degree, the personnel to perform those non-destructive assays. So for us, that's a really compelling because it's long-term. I know there's certainly a lot of excitement, I think for good reason in the nuclear industry, but this environmental remediation is going to be here for a while. It's established, and when we think about that market, it feels a lot like those core markets of stability and long-term growth for us.
So we're very excited about that. That's one. The second is really around national defense. And when you think about the Western world and what we've done around defense, we effectively shut down our plutonium pit production at the end of the Cold War. And those plutonium pits, which go in nuclear weapons, they have a finite lifespan. And we are now at the stage where it's time to really upgrade and retrofit those weapons, which has kicked off a U.S. initiative as well as some other countries around the globe to start capacity and start production around these plutonium pits. And there's a congressional mandate. There's funding around it. And certainly the current and prior administration have both been supportive of this push.
And we play in a number of areas there, again, primarily around components supporting that production, not the actual production, but equipment that surrounds that production side of it. Then the third level is really commercial nuclear energy. And for us, this covers everything from traditional commercial nuclear reactors to SMRs. And when you look back, we actually, when we acquired Alpha Safety and prior to that, making the decision to really look hard into the nuclear industry, that was really before all of this excitement around AI and the renaissance in the commercial nuclear side of things, the excitement. So when we think about those first two verticals I talked about, environmental remediation and national defense, that is really what our thesis is based on in our investment case. And those two, it works, right? We're able to generate the returns we want.
What's been exciting is now you have this new third opportunity, this new third vertical that's seeing a lot of investment. There's certainly a lot of different ideas around kind of when the first commercial SMR will be available, how quickly some of these plants will come online. But again, our products are playing in the fuel production. They're playing in the maintenance of the facilities as well as the building of the facility. So to give you another example of a piece of equipment we provide is criticality accident alarm systems. And these are customized alarm systems around the commercial nuclear sites as well as fuel production that monitor the radiation levels. And when they exceed a certain level, alarms go off and the facility shuts down.
So in addition to our storage that I talked about, our storage and containment, our ventilation and containment solutions, we're able to play in each one of these three verticals with the different businesses. So we're very excited about the long-term. As Brad mentioned earlier, 4%-6% growth over the long-term. We expect it to be, I think, a little bit lumpier, so some years, we're going to see higher growth rates out of that nuclear business, higher than the 4%-6%, and likely some a little bit lower, but there is tremendous tailwinds, and I know a lot of the focus tends to be on the commercial nuclear side, but those first two verticals, environmental remediation and national defense, I don't think should be overlooked because they can be really strong drivers in the future for us.
Gotcha. Great. We'll have a couple of minutes left, but I want to ask Blaine, while you still have the floor here. Brad mentioned you target 3%-5% sort of annual organic revenue growth. And if you look over the last 10 years, I think you're tracking right in the middle of that, about 4%. A little bit slower. Obviously, I haven't reported 2025 yet, but kind of tracking in the lower single- digits there. Can you kind of just give us a real 30-second quickly on what kind of caused that and could this linger into this coming year?
Yeah. I mean, I think jumping to the second part of your question first, we don't expect it to linger. We talked a lot about it in Q3 when we were doing the Q2 earnings call that in 2025, we saw a much higher mix or proportion of our revenue around large projects. And what we saw in kind of the back half of the year was for a variety of different reasons. No consistent reason is some orders getting pushed out. And for us, whether it happens in 2025 or 2026, I think the focus for us is, will it happen? And I'll give you one great example, which we subsequent to that call, we're able to announce, which was the blast sensor Brad talked about. And that's all delays from what we expected for when it to be awarded due to some internal procedures and processes.
But the confidence around those opportunities that pushed is very high. That blast sensor is a great example of one that we thought we'd see revenue a little bit earlier than we are going to see revenue. But the good news is we got that first PO. It's in the system, and it'll be shipped in 2026. So when we look, it seems like an aberration for 2025. The tailwinds, the strength, the positioning, the market, none of that's changed. So we're confident going into the year that we'll kind of get back on track there on revenue. And just seeing a lot of support in the marketplace for our products.
Very excited, as Brad mentioned, about the TYR Tactical acquisition, which it's in a core product, but really changes the market for us with that focus on Northern Europe militaries, very high margin focus, and then the incremental hard armor capabilities. So when we look out next year, very excited on that organic side. And then inorganically, the market still seems to be very active. I think there's, from what we're hearing, a lot of excitement around the number of assets that will come for sale in the coming year. And being at our leverage ratio, which even post-TYR, when you pro forma other EBITDA, is less than two and a half, we feel like we're very well positioned to continue to invest organically as well as have that dry powder to make acquisitions and continue to grow out the military and LE as well as the nuclear verticals.
Great. No, that was it. I appreciate those closing comments. That was kind of you kind of touched on my last couple of questions there, so I think we're just about out of time. I want to thank you both and do you have any closing remarks you'd like to share before we end this call?
No, I think we went around the world and back on Cadre Holdings. So again, we're excited about what we're doing, where we've been, and where we're going. So I appreciate the continued interest in our company.
Great. Thanks, folks. Have a great morning and great rest of the productive day. Thanks a lot.
Thank you.
Thank you.