RF Industries, Ltd. Q1 FY2026 earnings call

1. Q1 2026 off to great start, net sales $19 million. 2. Meaningful expansion in profitability with gross margin, operating income, and adjusted EBITDA improvements. 3. Backlog increased to $18.6 million from $12.4 million in mid-January. 4. Worked way up the food chain with largest communications companies as solutions provider. 5. State-of-the-art systems like direct air cooling and small cell gaining traction. 6. Custom cabling solutions team winning repeat orders. 7. Refined go-to-market strategy targeting new markets. 8. Diversified supply chain with redundant manufacturing sources. 9. Improved free cash flow, reduced net debt, healthy balance sheet. 10. Diversified revenue streams across markets, product areas, and customers. 11. Focus on engineering and product management for faster time to market. 12. Operations enhancing process efficiency, improving visibility, reinforcing execution discipline.

Net sales were $19 million in the quarter. Compared to first quarter last year with similar net sales, gross profit margin improved 250 basis points to 32.3%, operating income tripled to $177,000, and adjusted EBITDA increased 22% to nearly $1.1 million. The net sales in Q1 this year reflected a greater diversity of products, customers, and end markets.

1. Expect revenue growth to accelerate in the back half of fiscal 2026. 2. Trajectory of growth similar to 2025 with expected sequential growth and acceleration from Q2 versus Q1. 3. Backlog increase supports the growth outlook. 4. Diversified product lines across customers and markets contribute to growth.

1. Factors that could cause forward-looking statements to differ from actual results include risks and uncertainties discussed in the company's reports on Form 10-K and 10-Q and other filings with the SEC. 2. Tariff environment evolution could impact operations and margins.

Q: Coming off a breakout fiscal 25 revenue of 24%, how are thinking about the full year growth trajectory for fiscal 26 and where do you see the most meaningful drivers?

A: Expect trajectory similar to 2025, expect to accelerate through the year, backlog increase supports, drivers across various product lines with diversity smoothing out results.

Q: How durable are the factors driving gross margin improvement and how should we see that flowing throughout the rest of the year?

A: Margins went up almost three full points, factors like good pricing for value, product mix, and higher sales numbers helping, confident in staying above 30% level.

Q: Composition of backlog and what's driving most of that replenishment?

A: Backlog has healthy mix, increase seen in integrated systems, custom cabling, small cell, DAC thermal cooling, custom cabling in aerospace and industrial markets.

Q: Update on DAC thermal cooling in terms of customer interest in the NEMA 4 product?

A: DAC thermal cooling seeing significant growth, customers making installations and trials, performing great in edge data center applications, expected to be meaningful part of growth later this year and subsequent years.