Gerard J. Sweeney

Gerard J. Sweeney from ROTH Capital Partners inquired about the impact of tariffs, both from a client perspective regarding comfort and sales pickup, and internally on the company's ability to cope with variability. He also sought more details on the slower-than-anticipated RFP activity, including confidence in its development and issuance status. Additionally, he asked for clarification on the $3 million OpEx expense savings target for the second half of the fiscal year and its expected timeline.

Answer

Executive Chairman, President & CEO Jim Jenkins acknowledged that the company is getting used to the uncertain tariff environment and coping better, with ongoing Lean Six Sigma initiatives and warehousing consolidations benefiting the bottom line. He expressed optimism for a clearer competitive landscape once tariffs are finalized. Regarding RFPs, Jim Jenkins stated they are in the throes of several, expecting activity to hit late this fiscal year or early next, leveraging existing inventory and newly acquired products like helmets and boots. He also highlighted the goal of growing the service business for recurring revenue. CFO Roger Shannon explained that the $3 million OpEx savings are expected to be consistent over the rest of the year, building on the $1.1 million already achieved, with ongoing efforts beyond initial big rocks.

Gerard J. Sweeney from ROTH Capital Partners inquired about the company's and its clients' adaptation to the uncertain tariff environment, specifically regarding sales pickup and internal operational adjustments. He also sought more details on the slower-than-anticipated RFP activity and the confidence in its future development, as well as the timeline and specifics of the targeted $3 million in OpEx savings for the second half of the fiscal year.

Answer

CEO Jim Jenkins stated the company is coping better with tariff uncertainty through operational initiatives like Lean Six Sigma and warehousing consolidations, but noted end-users are still delaying purchases. He confirmed several RFPs are in progress, with activity expected to impact late fiscal year or early next year, supported by existing inventory and acquired products that don't require RFPs. Mr. Jenkins also highlighted the strategic focus on growing the recurring revenue service business. CFO Roger Shannon detailed that the $3 million in OpEx savings are expected to materialize consistently over the rest of the year, building on the $1.1 million already achieved, with ongoing efforts in warehousing and shipping consolidation.

Gerard J. Sweeney from ROTH Capital Partners, LLC asked about the impact of tariffs from both a client perspective (normalization, sales pickup) and an internal perspective (coping with variability, manpower, and daily business operations). He also sought more color on the slower-than-anticipated RFP activity and the confidence in its future development, and inquired about the specifics and timeline of the targeted $3 million in OpEx savings for the second half of the fiscal year.

Answer

CFO Roger Shannon stated that the company is adapting to the uncertain tariff environment and coping better, with ongoing operational initiatives like Lean Six Sigma, shipping cost reductions, and warehousing consolidations benefiting the bottom line. He expressed optimism that tariff finalization will lead to a more stable competitive landscape. CEO Jim Jenkins added that they are adjusting well despite challenges. Regarding RFPs, Mr. Shannon confirmed they are actively engaged in several, with activity expected to impact results by the end of this fiscal year or early next. Mr. Jenkins highlighted the availability of inventory for acquired products (helmets, gloves, boots) that don't require RFPs, driving consistent sales, and mentioned 'tariff-free sales' initiatives. He anticipates 'pops' from tenders in the UK, Europe, Asia/APAC next year and emphasized growing the recurring service business (decontamination, rental) in North America. For OpEx savings, Mr. Shannon expects the $3 million to materialize consistently over the rest of the year, with $1.1 million already achieved, and ongoing efforts in areas like warehousing consolidation and local shipping.