R F INDUSTRIES LTD Q1 FY2025 earnings call

Rob Dawson's Remarks - Highlighted first quarter highlights, net sales growth, gross margin in line with target, operating profit achieved, backlog of $15.2 million. Emphasized leverage in P&L, transformation from product company to solutions provider, customer diversification progress, new end market win in aerospace, and monitoring of tariffs. Anticipated fiscal 2025 revenue to be significantly higher than fiscal 2024 and focus on improving profitability. ### Ray Bibisi's Remarks - Discussed improving financial results demonstrating successful execution of strategy to expand share of bill of material. Highlighted deep engagement of sales team, collaboration with customers and engineering, creation of comprehensive solutions, and strategic investment in expanding sales team. ### Peter Yin's Remarks - Reviewed first quarter sales increase of 42.7% to $19.2 million, sequential increase of 4%. Gross profit margin improvement. Balance sheet details including cash, working capital, current ratio, borrowed amount, inventory decrease, and backlog update.

Net sales for the first quarter were $19.2 million, a significant increase of 42.7% over the first quarter of the previous year. The gross profit margin was 29.8%, in line with the target of 30%. Non-GAAP earnings per share were $0.04 and adjusted EBITDA was $867,000. The quarter ended with a backlog of $15.2 million. Sales increased by $5.7 million compared to Q1 last year. The product mix skewed more favorably toward higher value-offerings, including increased shipments of DAC thermal cooling systems and integrated small cell solutions. Custom cables, wire harnesses, and core distribution centric RF products also contributed. Revenue was up 4% sequentially and better than the guidance provided on the fourth quarter call.

- Anticipates fiscal 2025 revenue to be significantly higher than fiscal 2024. ### - Focus on improving profitability. ### - Has a heavy focus on achieving an adjusted EBITDA goal of 10% of sales or greater.

- Closely monitoring various tariff proposals being discussed and enacted by the U.S. government and other countries/regions. ### - Uncertainty regarding impact on procurement, supply chain activities, and sales of exported products. ### - Fluid nature of the tariff situation makes it too early to offer final guidance on the impact on RFI and customers.

Q: What's the update on the backlog, especially regarding the lower margin hybrid product?

A: Backlog is maintaining around $15 million. Have been drawing down long-standing items like hybrid fiber and replacing with newer product lines. Backlog can move around, not the only indicator, but $15 million is a good spot.

Q: What's the main reason for sequential increase during the seasonally slow quarter and credit to carrier OpEx?

A: Increase is close to being tied to newer product lines. Material contribution from product lines not present or not contributing materially in prior years. DAC thermal cooling side has a chunk from OpEx.

Q: Insight into gross margin profile change throughout the year?

A: Happy being around 30%, room for improvement as they optimize production and profitability opportunities. Mix can swing, newer product lines will contribute more as they mature.

Q: Credit for sales team impact and investment?

A: Longstanding sales people did well in positioning, added resources to capitalize on wins. Additional expense should be minimal.

Q: Color on move from components to integrated solutions?

A: Move started with goal of controlling bill of materials. Cracked into a few customers with product lines, on early stages of providing more value, chasing broader opportunities.

Q: Progression of adjusted EBITDA towards 10%?

A: Mix driving higher gross margin helps EBITDA. Also working on operating infrastructure to get better at pre-finishing work and using partnerships.

Q: Cash flow and debt paydown targets?

A: Made significant paydowns to loan, getting close to minimum required amount, start building cash on hand, monitoring to take advantage of performance.

Q: Microlab performance?

A: Microlab branded products have had ebb and flow. Pleased with acquisition, put them in a good position with bill of materials and approved product sets, great team has allowed consolidation of operations.