Bill Dezellem

Bill Dezellem asked about the dynamics behind the significant increase in mortgage loans held for sale in the fourth quarter and whether the reduction in Construction and Development (C&D) loans was an intentional risk mitigation strategy or part of normal portfolio management.

Answer

Scott Wylie, Chairman and CEO, and David Weber, CFO, clarified that the fluctuation in mortgage loans held for sale was purely a timing dynamic related to when sales occur, not a strategic decision to hold loans longer. David Weber, CFO, confirmed that the reduction in C&D loans was an intentional risk mitigation strategy, aiming to work down that portfolio, with many projects moving to investor real estate upon completion.

Bill Dezellem inquired about the significant increase in mortgage loans held for sale from Q3 to Q4, seeking clarification on the underlying dynamics. He also asked about the substantial reduction in Construction and Development (C&D) loans, questioning whether it was a deliberate risk mitigation strategy or part of normal portfolio management.

Answer

David L. Weber, Chief Financial Officer, explained that the increase in mortgage loans held for sale was primarily due to timing dynamics related to packaging and selling loans in the secondary market, not a strategic decision to hold them longer. Scott C. Wylie, Chairman and CEO, clarified that the reduction in C&D loans was largely an intentional risk mitigation strategy initiated 18 months prior, with many projects moving to non-owner-occupied CRE upon completion.

Bill Dezellem asked about which M&A transactions have been most disruptive and favorably impactful for First Western Financial, and if the company sees an opportunity to become the 'new bank Coloradans love.' He also inquired about transaction benefits for recruiting in the Arizona market and the timeline for redeploying the excess cash on the balance sheet.

Answer

Scott Wylie, CEO, noted that recent 'second-tier' acquisitions, like UMB buying Heartland (which acquired Citywide), have created more opportunities than earlier ones like Guaranteed Bank/Cobis. He acknowledged First Bank's strong local ties but stated First Western's focus on its niche, aiming to build emotional connections within its client base. He announced the recruitment of a top individual from First Republic to build the Arizona franchise, expressing optimism for significant growth there. David Weber, CFO, explained that liquidity is primarily earmarked for the loan portfolio, with some opportunistic bond purchases ($50 million in Q3). Scott Wylie added that loan demand trends are expected to continue, leading to a modest, moderate pace of liquidity deployment into single to low double-digit balance sheet growth, not an immediate full deployment.

Bill Dezellem from Tieton Capital Management asked about the most disruptive M&A transactions favorably impacting First Western Financial, whether the company could become the 'new bank Coloradans love,' and specific opportunities in the Arizona market. He also inquired about the timeline for redeploying excess cash on the balance sheet.

Answer

CEO Scott Wylie noted that second-tier acquisitions (like UMB buying Heartland, which acquired Citywide) have created more opportunities than earlier large bank sales. He acknowledged First Western's niche focus means it won't be a retail bank like First Bank but aims to build emotional connections within its segment. He announced the recruitment of a top First Republic talent to lead Arizona growth. CFO David Weber confirmed $50 million in Q3 bond additions but stated the primary focus is deploying liquidity into the loan portfolio, expecting continued loan demand to facilitate redeployment over several quarters, not immediately. Scott Wylie added that growth would be at a modest, moderate pace.

Bill Dezellem from Tieton Capital Management questioned what structural factors might prevent the NIM from returning to 3% or higher, why mortgage volumes were down despite hiring more MLOs, and the current business mindset of the bank's customers.

Answer

CEO Scott Wylie and CFO David Weber stated that returning to a historical NIM of around 3.15-3.20% is a matter of time and continued execution, with no major structural impediments. COO Julie Courkamp attributed the decline in mortgage volumes to market-wide factors like economic and interest rate uncertainty, not internal issues, noting the business remains contribution-positive. Scott Wylie concluded by sharing that recent feedback from market presidents indicates client caution from early in the year has shifted, and they are now 'back to doing business'.

Bill Dezellem questioned the structural factors preventing a return to a 3%+ NIM, the reasons for lower mortgage volumes despite hiring more MLOs, and the current mindset of the bank's customers.

Answer

CEO Scott Wylie and CFO David Weber stated that returning to a historical NIM of around 3.15-3.20% is a matter of time and continued organic growth. COO Julie Courkamp attributed lower mortgage volumes to industry-wide market conditions, not internal issues, and noted the business remains contribution-positive. CEO Scott Wylie shared that recent feedback from market presidents indicates customer caution has shifted, and clients are now 'back to doing business,' driving stronger pipelines.

Bill Dezellem of Tieton Capital Management questioned the structural factors preventing a return to a 3%+ NIM, the reasons for lower mortgage volumes despite hiring more MLOs, and the current sentiment of the bank's customers.

Answer

Chairman & CEO Scott Wylie stated that reaching a historic 3.15-3.20% NIM is a matter of time and continued organic growth, with no major structural impediments. COO Julie Courkamp attributed the decline in mortgage volumes to market-wide factors like economic and interest rate uncertainty, not internal issues, noting the business remains contribution-positive. Wylie also shared that feedback from market presidents indicates customer caution from early in the year has shifted, and clients are now 'back to doing business'.

Bill Dezellem of Tieton Capital Management questioned the structural factors impeding a return to a 3%+ NIM, the reasons for lower mortgage volumes despite increased MLO hiring, and the current sentiment among the bank's clients.

Answer

CEO Scott Wylie and CFO David Weber explained that returning to a historic NIM of around 3.15-3.20% is a matter of time and continued execution in a more normal interest rate environment. COO Julie Courkamp attributed the mortgage volume decline to market-wide factors like economic uncertainty, not internal issues, noting the business remains contribution-positive. Scott Wylie described client sentiment as shifting away from caution, with customers now 'back to doing business,' resulting in stronger pipelines.

Bill Dezellem from Teton Capital Management inquired about the primary swing factors that would influence whether the Côte d'Ivoire drilling program would commence earlier or later in the second half of 2026. He also asked if the exploration of a subsea completion application for Equatorial Guinea's Venus Block P was part of the initial FEED study or a separate, subsequent review.

Answer

CEO George Maxwell identified the drilling unit's arrival time as the biggest swing factor for Côte d'Ivoire, noting that all long-lead items are ready. For Equatorial Guinea, he clarified that the subsea development exploration was an expansion of the FEED study's findings, driven by complexities and risks highlighted in the initial shelf drilling plan, aiming to reduce drilling risk and optimize production efficiency with available FPSO units.

Bill Dezellem asked about the swing factors that would influence whether the Côte d'Ivoire drilling program begins earlier or later in the second half of 2026, given the FPSO's expected return in May. He also questioned if the exploration of a subsea development for Equatorial Guinea's Venus Block P was part of the initial FEED study or a separate, subsequent review.

Answer

CEO George Maxwell identified the drilling unit's arrival time as the biggest swing factor for Côte d'Ivoire, noting that long-lead items are ready. For Equatorial Guinea, he clarified that the subsea development review expanded from the FEED study, which highlighted risks with the shelf location. The new approach aims to de-risk drilling with a vertical solution from a drill ship and match it with an efficient FPSO for production, improving overall economics.

Bill Dezellem followed up by asking if Flexsteel Industries had received any feedback from retail customers indicating that the company might be gaining market share or increased business due to its comparatively lower price increases versus competitors.

Answer

Derek Schmidt (President and CEO) stated it was too early to speculate on gaining business. He mentioned that the upcoming High Point Market would provide an opportunity to gather feedback from hundreds of retailers, and it would take several more weeks to understand the consumer response to the pricing changes.

Bill Dezellem from Tieton Capital asked Flexsteel to quantify the magnitude of price increases implemented by competitors in response to the new tariffs, comparing them to Flexsteel's own 8% and 15% surcharges. He also sought a clearer explanation of how the new Section 232 tariffs impact USMCA compliant products, which were previously exempt, and whether Flexsteel anticipates gaining market share from retailers due to its comparatively lower price increases.

Answer

President and CEO Derek Schmidt first clarified that while reciprocal tariffs had an exemption for USMCA compliant products, the new Section 232 tariffs, as currently written, do not include such an exemption, thus impacting products sourced from Mexico. He expressed hope for future negotiations to secure an exemption. Regarding competitive pricing, Schmidt noted that Flexsteel's main competitors are implementing price increases as high as 21% and 25% on source products, compared to Flexsteel's 15% surcharge. He stated that this gives Flexsteel confidence in maintaining its competitive position. Schmidt indicated it's too early to speculate on gaining market share due to pricing, as the company will gather more retailer feedback at the upcoming High Point Furniture Market and monitor consumer response over the next several weeks.

Bill Dezellem of Titan Capital Management, LLC asked for details on new placements beyond post-transaction, how Fluent's first-party data acts as a differentiator, and for clarification on the calculation of the $80M Commerce Media revenue run rate and the timing of the double-digit growth guidance.

Answer

CEO Don Patrick described new solutions like loyalty programs and post-event monetization (e.g., post-receipt), and explained that Fluent's proprietary first-party data allows for superior ad targeting, which drives better results and higher revenue for partners and Fluent. CFO Ryan Perfitt clarified that the $80M run rate is an annualized figure based on current partners that accounts for seasonality, not a simple quarterly multiplication. He also corrected that the double-digit consolidated revenue growth guidance is for fiscal year 2026, not 2025.

Asked for details on the Commerce Media pipeline, the scale of 'transformative' deals, Fluent's competitive conversion rates, and the seasonality impact on Commerce Media's gross profit contribution in upcoming quarters.

Answer

The pipeline is strong enough to support forecasted triple-digit growth, and it includes potentially transformative deals that are multiples larger than current high-end partners. Fluent claims to deliver over 25% more value than competitors but doesn't disclose specific conversion rates. Regarding seasonality, Commerce Media revenue will dip sequentially in Q1 but will still grow as a percentage of the total business mix, with its margin percentage remaining consistent.

Bill Dezellem of Tieton Capital Management sought to confirm if the Petrobras contract is the second largest in company history by profit contribution, asked about the timing of revenue recognition, the adoption challenges for the Heartbeat Detector, clarification on tunnel detection funding in recent legislation, the implications of the company's SBIR-3 certification, and the status of the Hydrocon product line.

Answer

CFO Robert Curda confirmed the Petrobras contract is the second largest in Geospace's history based on expected gross margin dollar contribution. CEO Richard Kelley stated they hope to begin recognizing revenue in Q1 of the next fiscal year, but the timing is not yet finalized. Kelley explained the Heartbeat Detector faces adoption hurdles due to existing investments in other technologies at the border, but offers superior efficiency. He clarified that a $30 million legislative allocation is not exclusively for tunnel detection. Regarding the SBIR-3 certification, he acknowledged uncertainty about its power to mandate a sole-source contract and confirmed they have no visibility on the competitor bake-off. Lastly, he reaffirmed the Hydrocon product continues to be a strong performer with continued growth expected.

Asked for clarification on the concept of customers "shuffling projects" versus having pent-up demand, inquired about the specifics and goals of the new AI-powered tools, and sought confirmation on the property division's profitability when excluding corporate G&A.

Answer

Management clarified that "shuffling" refers to clients reallocating their existing employees across portfolios, not delaying a large backlog of projects. The new AI tools are intended to increase the speed of response to both client needs (sales) and candidate applications (recruiting). The company confirmed that without the corporate G&A burden, the property business would have generated a profit of $1.8 million for the quarter.

Bill Dezellem from Tieton Capital Management sought clarification on client behavior, asking if 'shuffling' projects implied delayed spending and pent-up demand. He also requested more details on the new AI-powered sales and recruiting tools and asked for confirmation of the property management division's profitability when excluding corporate G&A.

Answer

Interim Co-CEO Kelly Brown clarified that 'shuffling' refers to clients reallocating their existing employees across properties to manage costs, rather than a large-scale delay of projects, suggesting less pent-up demand than seen post-COVID. She explained the new AI tools aim to increase the speed of response to both client needs and job applicants. Interim Co-CEO & CFO Keith Schroeder confirmed that without the corporate G&A burden, the property management business would have generated approximately $1.8 million in profit for the quarter.

Bill Dezellem asked for clarification on the contrast between cautious customer sentiment and strong new logo growth. He also dug into the sequential performance of both the Professional and Property segments, trying to distinguish between seasonality and genuine green shoots. Finally, he asked about the typical business behavior during a post-recession rebound.

Answer

Executives explained that the new logo growth is sector-specific, with some areas like education moving forward while manufacturing remains cautious. The sequential growth in Professional services was a positive sign, aided by fewer project endings than usual at year-end. The outperformance in the Property segment was attributed to a combination of internal sales initiatives and restructuring. Regarding recession rebounds, they noted the current environment is atypical, but pent-up demand for necessary projects and property upgrades should eventually drive growth.

Bill Dezellem of Tieton Capital Management followed up on the apartment business's binding ratio, asking about the drivers behind its increase and its likely future direction. He also requested more detail on the comment that the company's concentrated geography is a 'harder market' and asked for confirmation that all Employee Retention Tax Credits have been received.

Answer

President & CEO Bennett Bradford Martz attributed the higher binding ratio to a combination of growing experience, seasonality in June, and some randomness, while stressing an opportunistic, not aggressive, growth strategy. He clarified that the 'harder market' refers to Southeast Florida (Tri-County), the world's peak hurricane exposure zone, where demand for quality coverage outstrips supply, creating a firmer pricing environment. Martz, with confirmation from CFO Svetlana Castle, stated that all expected Employee Retention Tax Credits have now been received.

Bill Dezellem from Tieton Capital Management asked for specific details about the new electrical infrastructure business, the scale of the new Boston Public Schools EV charging contract compared to previous phases, and the current status and business impact of state-level fluorescent bulb bans.

Answer

CEO Sally Washlow and CFO Per Brodin clarified that the electrical infrastructure work was initiated by a customer request and involves services beyond traditional lighting. They detailed that the new $6.5M Boston schools project is a significant expansion, following two prior phases at a single location that totaled approximately $2.3M. Regarding fluorescent bans, management noted it is one of several business drivers, with some state bans already active and others starting in calendar 2026.

Bill Dezellem requested clarification on the impact of federal rule changes, the timing of the business reorganization, the background of a key channel hire, details on recent project wins, the effect of tariffs on domestic manufacturing, and any final color on the nearly-completed Q1.

Answer

CEO Sally Washlow and CFO Per Brodin clarified the business was minimally impacted by federal EV funding changes like NEVI, though one project was canceled, while federal lighting projects remain strong. Washlow stated the reorganization timing was right for leveraging synergies, and the new channel lead is a returning veteran. Wins include projects for government agencies and a national bank. Brodin noted tariff impacts are uncertain but manageable.

Inquired about the specifics of the recent restructuring, whether the focus on LED growth implies challenges for the EV business, and the reasons behind the forecasting difficulty for delayed lighting projects.

Answer

The CFO detailed that the restructuring involved reducing technician staff and support roles in the maintenance division and terminating a facility lease. The CEO clarified that the EV business is expected to maintain its strong growth rate alongside the anticipated second-half growth in the LED segment. Regarding project delays, it was explained that they are due to customer-specific internal decisions which are difficult for Orion to predict, and the company's strategy is to build a larger pipeline to mitigate such impacts.

Bill Dezellem sought clarification on the strength NPKI is seeing in the pipeline sector, which seems to contradict broader industry reports of a slowdown. He also requested specific examples or case studies of large-scale customer conversions from wood to composite mats.

Answer

President and CEO Matthew Lanigan explained that NPKI is seeing a 'nice renaissance' in pipeline activity, particularly for access and laydown areas, which may differ from core pipeline construction trends. Regarding conversions, he noted that recent direct sales to utilities represent this trend, as these customers, who traditionally used timber, are now buying composite mats for their longer life and better economic returns.

Bill Dezellem from Tieton Capital Management questioned the source of NPKI's reported strength in the pipeline sector, noting it seems to contrast with broader industry trends. He also requested specific examples of large-scale customer conversions from wood to composite mats.

Answer

President and CEO Matthew Lanigan clarified that NPKI's pipeline activity, focused on access routes and laydown areas, is experiencing a 'healthy rebound.' For conversions, he pointed to direct sales to utilities who are increasingly purchasing composite mats, shifting away from traditional timber to achieve better long-term life cycle economics.

Bill Dezellem asked for an explanation for the strength NPKI is seeing in the pipeline sector, which seems to contrast with reports of a broader industry slowdown. He also requested specific examples or case studies of large customers converting from traditional wood mats to NPKI's composite mats.

Answer

President and CEO Matthew Lanigan explained that NPKI is seeing a "nice renaissance" in pipeline activity, particularly for access and maintenance projects, which is a smaller but rebounding part of their portfolio. Regarding conversions, Lanigan noted that many of the quarter's direct product sales were to utilities that have traditionally used timber mats but are now purchasing composite mats for their longer useful life and better economic return.

Bill Dezellem of Tieton Capital Management asked to identify the primary drivers of global demand and inquired about the potential to penetrate US Tier 1 carriers, including large MSOs.

Answer

CEO & Chairman Tom Stanton identified network upgrades for residential broadband as the single biggest driver, followed by the recovery and new applications in the optical segment. Regarding US Tier 1s, Stanton sees no major near-term change with telcos but noted that ADTRAN is well-positioned with products for large MSOs, has received approvals, and is "ready to go" pending a large purchase order.

Bill Dezellem of Tieton Capital Management questioned the mechanics of the tariff impact on the Signature business, its current status, and the long-term plan for the two idled rotational molding facilities, including whether they are owned or leased.

Answer

Interim CFO Daniel Hoehn explained that tariff uncertainty caused some export customers to delay purchases. President and CEO Aaron Schapper added that recent resolutions with Europe and Canada should reduce this issue going forward. Schapper also clarified that two entire rotational molding plants, which are leased, are being idled due to excess capacity from a previously stronger market, and this move aligns capacity with current customer demand.

Bill Dezellem from Tieton Capital Management asked about the drivers of the strong growth in digital originations, the sustainability of revenue growing faster than expenses, and the factors behind the strong Q3 earnings guidance.

Answer

EVP, Chief Financial & Administrative Officer Harp Rana attributed the digital growth to productive affiliates and branches booking larger, high-quality loans. President & CEO Robert Beck added this is sustainable but can be modulated to optimize risk-return. He noted that while outpacing expense growth is the goal, investments are episodic. Both executives explained the strong Q3 guidance is driven by momentum from Q2's record top-line growth, continued expense discipline, and seasonally lower net credit losses.

Asked about the growth opportunity for tool steel and related products due to tariffs, and inquired about the revenue potential from the new small modular reactor (SMR) order.

Answer

The tool steel (FEP) business, currently at $12 million in revenue, is expected to see sales and margin growth due to tariffs, though the full potential is not yet quantified. The initial SMR order is for one module with revenue on the lower end of a wide potential range, but the long-term opportunity is significant given the large number of reactors planned globally.

Asked if strong sales indicate a 'tipping point' in awareness, whether the NIAGEN IV shortage created scarcity-driven demand, the financial impact of the supply chain issues, and for confirmation that the issues are resolved.

Answer

The ingredient business has been steadily growing and is expected to continue. The IV shortage initially created some clamor but the focus is now on supplying the product. The pharma ingredient business was about $1 million per quarter in Q3/Q4 and is expected to be similar in Q1 before rising dramatically. The manufacturing supply chain issues are now completely behind them, with only a time-based expiration date issue remaining to be fully smoothed out.

Asked about future hurdles for NIAGEN IV adoption, marketing strategy, partner market share, the strategic differences in pursuing Ataxia (AT) versus Cockayne Syndrome, drivers behind B2B sales growth, and the outlook for 'Blue Hat' approval in China.

Answer

The main future hurdle for NIAGEN IV is marketing and awareness. ChromaDex will market at multiple levels, and its partners represent over 50% of the existing U.S. market. The AT program was pursued over Cockayne because it was more advanced with human clinical data. B2B growth was driven by a partner's success on Amazon. The 'Blue Hat' approval process in China remains stalled with no clear outlook.

Focused on the 1,000mg SKU's retention rates and drivers, the potential size and revenue timing of the new Vitamin Shoppe and Sprouts channels, and requested details on the planned increase in G&A spending.

Answer

Early indications show higher retention for the 1,000mg SKU, likely because consumers notice more of a difference. Revenue from the new retail partners began in Q1, but they are not expected to be a meaningful contributor to the full-year outlook yet. The planned G&A increase is for investing in infrastructure, legal, and regulatory support for new verticals.

Bill Dezellem of Higton Capital requested a detailed explanation of the new hospital bed product, including the 8-year sales cycle and its design similarities to other products. He also asked for an update on the Volvo program transition timeline and its current pace.

Answer

Executive David Duvall detailed that the new product is a composite platform supporting the patient on a hospital bed, replacing a sheet metal part with a lower-cost, higher-value solution. He confirmed the design concept is similar to underbody components for ATVs. Regarding the Volvo transition, Duvall stated it is currently underway and will phase out through 2025 into early 2026, noting that such complex transitions typically proceed slower than originally planned.

Asked a wide range of questions covering the drivers of Q1 interchange revenue and spend, details on the upcoming rewards engine and IDV product revenue model, reasons for a large expense decline, the strategy behind micro-personalization, and P2P payment capabilities.

Answer

The company explained that higher interchange revenue was due to a new Durbin-exempt partner and higher spend, which was driven by marketing and seasonality. The rewards engine is a partnership-based tech implementation allowing users to choose retailers for rewards. The IDV revenue mix varies by school size. The expense decline was due to fully amortized software. Micro-personalization aims to boost engagement via a new marketing platform and AI. A new P2P feature is now live.

Focused on a recent software impairment charge, the launch timeline for the new technology platform for both student and BaaS segments, and whether new features would be available and relevant across all business lines.

Answer

The company explained that the software impairment was an accounting decision related to the company's 2023 losses and the write-down of old technology from the T-Mobile partnership. They detailed the new platform rollout, with the student-facing BankMobile Vibe launching in the current month and the T-Mobile BaaS offering in Q2. It was confirmed that new features are being built to be available and relevant across the entire platform, not just for one vertical.

Asked about the drivers for the increase in new checking account sign-ups, the strategy for front-end customer acquisition, the reasons for higher average spend per customer, and the future outlook and opportunities for the BaaS vertical.

Answer

The increase in account sign-ups was driven by back-to-school seasonality and improved college enrollment. The company is focused on improving the entire customer acquisition funnel. Higher average spend is attributed to both inflation and increased product usage from enhanced features. The BaaS market is in a transitionary period with regulatory pressures, so while the company remains opportunistic, its primary focus is on the more stable and profitable higher education business.