RFIL - Earnings call transcript Q1 2018

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Operator

Welcome to the RF Industries Fiscal 2018 First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions].

As a reminder, this conference call is being recorded today, Wednesday, March 14, 2018. Please note that except for the historical statements, statements in this release, may constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. anticipates, forward-looking intends, statements. words similar or the identify expressions, used believes, future expects, other When are and These with differ forward-looking events and statements. respect statements materially to to forward-looking reflect contained future and management’s from the financial in results and actual uncertainties current outcomes views subject may risks any performance the Factors results new development, in in sales of periodic include products uncertainties cause other Company’s marketing other forward-looking and the Securities to statements Form XX-Q these could and on delays that differ Exchange actual risks and XX-K Commission. from reports and within or discussed and filings undertakes no Industries any or revise forward-looking statements. RF to obligation update I and RF Officer would Rob of to Officer; the Chief Dawson, over Financial Chief Industries. now President and turn conference Executive Mark Turfler, begin. you Rob, may

Rob Dawson

to business morning CFO, few Jake. in XXXX is our Thank With quarter and conference Company’s minutes. Mark Turfler, Welcome financial you, highlights fiscal review Good everyone. me call. a who will first

for be XX% to year. significant fiscal increased quarter first We’re all drove cost, allowing obviously income Overall, shows and that able in the and to QX we’re report compared revenue, divisions the QX extremely year sales we grew details growth. to growth year and sales to gross quarter ’XX. This in start of We net profit long-term the strategies and versus in Mark to is deliver executing improved last pleased shortly. last on in margins will this us control profitability. on more give a our solid well

models an as building the new positive of address working right bookings and with invest months. backlog The a prior XXXX the correct areas January in to channel these work million and calls, in raise including to the are higher at $X of strategies go the increase accountability help that’s As million our needs channels us one energy leverage the of January, in on mentioned. QX of and I market These October I’ve compared we’re hard $XX.X and to in all as team $XX.X to across market. discussed divisions million where XXXX, resources sales of in XX, we XX, three culture

We continue about optimistic quarter fiscal ending the do year, the we’re our momentum. of for quarter to growth as And the sales while current build same XX, to cautiously in April year. compared to we rest backlog XXXX power significant expect net second last the

and pleased quarter. share will to allowed the these quarterly I the $X.XX dividend. consecutive Additionally, review and results financial very per With XXst for of the dividend, that the that, our discussion detailed for are Mark? a call results Board to I Mark of over declare us turn now

Mark Turfler

first from it $XX.X typically webcast models are as year. Judging Thank quarter you, first Rob. last to the you And our XXXX, quarter million for are on appears our the again joining increased us million new who quarter, working Rob’s strategies net seasonally of first go-to-market today. quarter that results, compared fiscal the thank XX% weakest $X.X to and in channel sales

XX% drivers As XXXX a mix product quarter well result since QX, last a the sequentially have of net cover XXXX. Selling to accrued higher direct were matter of during margins quarter $X.X year. year for XX% general by quarter last increased in million as XXXX increase from as over as same sales quarter commission increased bonuses in net sales. of of the QX, in increase and sales the the expenses to and each fact, sales the in the The primary increase gross first for same the same

benefit swung to year. sales of declined in last the to And to compared operating in X.X% sales first positive in our fiscal of sales of the provided XX% law, only percentage The a is also tax to tax first a these this quarter year law due year. the margins blend expenses as the year-over-year tax of reduction our new of allows effective X.X% quarter new year. significantly. rate companies as However, a sales which tax last to their sales, rates quarter in compared a XX% to negative addition, Much rate of this dropped

changes also tax rate two on is old as tax which to and we rate this provision by tax tax two law, Our therefore one based $XXX,XXX. liability income We of our are over effective a we take federal now recorded month these benefit XX% lower were increase deferred XX%. tax federal on Thus, a quarter, and of the our result rate. for able our in were at the the net quarter able months reduce to at net this

for effective share or the quarter million $X.X is significantly one-time realize share of first per compared $X.X to rate to we the quarter’s last increased this $X.XX with tax of While due income lower Net first to quarter $X.XX rate reported. a forward or these in expect low do than we historically adjustments, loss per have million going year.

fact, As all income XXXX for a first the of quarter net XXXX. entire income the exceeded matter net fiscal for of

$X.X the at year of fiscal XXXX $X the Moving quarter the down sheet. on cash stood XXXX from balance of our equivalent Cash and to million, slightly at end end. million as first

Some higher support to of used and in fund necessary increase the the inventory accounts receivable cash was sales. to this

At XX, million dividends cash the first January XXXX. $XXX,XXX also end to We $XX.X to of increases compared $XX.X pay to million at the working in of capital XXXX, fiscal used quarter.

record a of have still share was program We a with payment March of to recently XXst dividend dividend X.X:X ratio remain date $X.XX Our debt. current and announced April of and we per committed XXth. our a no date outstanding and

an of and year divisions. mentioned, previously each of increase Rob at ended XXXX, experienced October four in As subsequent orders we products to services our fiscal XX,

expected amount million in filled to quarter the year XXXX. XXXX. the of current ending strong As XXXX fiscal substantial margins, filled of a largely result high as and XX, declined backlog since these of XX, the expenses to In XXXX increased is and January backlog ending the our be have $XX.X a of as upcoming increased A million year backlog current this of April orders, $X end by amount summary, to sales. sales, we October gross percentage selling by remaining end be administrative the of

First quarter capital income XXXX improved year earnings, consecutive we XXst full a working net eclipsed quarterly declared dividend. and

as result Rob. increase We This sales financial expect a quarter significant backlog. for my of second concludes the the discussion first XXXX results. a quarter strong in of

Rob Dawson

Mark. make markets growth our We on driving channel remain to Mark thunder easy. focused I’ll best leveraging serve the so review, partnerships Thanks our it key customers. stole my in on in

year to to after. Jake, that positive as the business, the We feel is the With as move we of the providing continue the backlog stronger direction through feel like by QX about expect the floor that, hard we team questions. and to and I’d open to in evidenced and work the fulfill momentum

our ready We’re first for question.

Operator

[Operator Instructions] And we Investment Martin will AIGH hear Aaron first with Partners. from

Aaron Martin

where it color you is a us specific and you’re putting products all cable there? out are a a they getting traction, In and going side them backlog product biggest particular, go you there market connector it in the can. Is need Is slew is whatever wireless are products, that products feels build any extra lines the obviously there the fulfilling. your What’s that there that together? the on divisions. out pick that on of need up Give

Rob Dawson

Thanks for the question, Aaron.

think prior in us, talked the I our year. over So business in of for all typically divisions way past showed about historical the growth four we the quarter the the

in some the saw So diversity news growth. is the we good

As career far as major it, things causing effect we of spending. that the seeing are rise are boat every

think spend, as a I nice on relevant fiber we’re job in thought of when we’ve that a field and great player team so position both do of getting done getting -- optic correctly space side. collect side they is on carrier the the done the

lion was positioning share what So we within our markets saw the in if ecosystem. upside of looking you’re the there, growth for career specifically it better drove and key little the

Aaron Martin

has of build in that of to progress in share since this is board. came credit that a been indications quarters Is additional over --there say drivers to particularly on one first an space, of the of XG you here, I anticipation that gaining loosening market in particular, investment the would continue there guys the terms under which make the finally for here? we broadly out. Is are springs In

Rob Dawson

think in think the I gigantic listen I as call and everyone’s question product And to a companies asking. the similar line so from leases that are other yes, us. a similar to I that’s our in space

we’re a XG on is lot what’s is seeing we’re goes through into component preparations cases, it’s of the what think early network of today and difference between But news to tell in a side. that XG. good is There getting the and for hard ready. very the work happening path prep I some

making the the they’re of gear a wild So or deciding radio driver that to going major we’re of deploy not is going see having technology. to active a swings when that

For seeing I we’re through a seeing like equipment us not connectors, -- components certainly building certainly is in radios I step think all direction. allow the feel it’s that passive the the to the jumpers, function. cable, to it’s XG, And some and those if it’s

Aaron Martin

finding center? your wireless the private for applications cable driving connectivity, the the other for data outside you of growth applications outside Are example that’s

Rob Dawson

the and So time I the the is you about market, of way RF business, lot talked we name at the we Industries. if look a think historically about spend talking wireless

at look the you and equipment the have today, whether business a industrial of aerospace is manufacturers. that’s way or if we OEMs, business But sense. makes that few in through significant industrial So structured amount defense

We’re seeing nice there. growth

centers businesses quarter. that of have data some also our in in key is component growth collocation a also and business We the saw that the nice

space, effectively been So thought ourselves we’ve while a in I positioning for benefiting long from is which time. think wireless where the we’re

having team our great right two the space get. a a positioned we making far growth. sure leveraging for value the good career do people and we’re as from understand in conversations OEMs, can And job away been well, functioning just doing as job, We’re is of can radio for is you which in else the we’ve what CapEx getting also way is doing years the

Aaron Martin

growth particular are bunch the driving any of it’s share gaining Are there that about? that’s you’re or individual a where what customers not OEMs

Rob Dawson

many continuing a In think some very some with I business because for longstanding long. any that just got so do a with to we’ve recurring them major drive growth. them numbers as deepen and think. them don’t don’t it’s the No, -- We’ve stream, quarter, been OEM we revenue as one service almost I we of doing customers saw

when that was what of our and And do majority conversations the doing. we tackling blocking do more. asking should be that better good, customers, with could and hey, we profitable some to make we led all do us growth, we how sure it we this can the let’s for motion, to -- year dividend, let’s So cover the return growth, in set very simple,

we’re And what and to to that. that our so love seeing working customers and good it’s seeing driving cooked growth some we but it’s say scheme really it, elaborate I I’d hard some from help. to that’s do can just being

Aaron Martin

customer distributor was that Your the XX% in revenue that Is of an or is that customer? a end quarter.

Rob Dawson

distributor. a it’s Yes,

customers our largest As are usual, distributors.

Aaron Martin

can you trends And the then right the now? sustainability seeing that you’re talk to of

Rob Dawson

So answer of a The to a is the going we of our end backlog us while. sustain I the have longer answer. bit, for little guess, that is short January is million at $XX.X

our significant And of of throughout portion that fulfill the second then out year. go quarter, of in current rest We expect now. majority quarter happening that that’s the the the a to

why to disclosed. we point, talk business -- is we can which that, been so I focused this have are focus ever this at think as in longer at consistent a term had the rarely leveraging that getting we very obviously we a historically very, a Beyond about, growth. team have it’s into backlog, drive into But the not think large

in much good which I business. call, better about what tough team on think for have we the beyond lot at executed done will more do, to the that feel how said I’ll give I on June we’ve specific be should and think QX insight. visibility I really I has plans the would a be be what answer To

Aaron Martin

example? lot so just But terms you. thank I’ll question, you offline through of with taking last safety build you And do more public mean for just way two my questions, for a and out radios, of in

Rob Dawson

not going and of or list I buy we've really coverage. radio referring are that’s net safety the but -- historical screening long way lot more spend of safety -- big was way task around a to systems. the buzz from main public And getting better now. around more Yes, distributors a gets that that’s first on public who installing way the two customers got and right radio two our systems

for maybe of those public on of college a or campus safety. It applications. Some number can be also other any

two the two big just way today to less more was about radio reference the way and of buzz systems. about safety my public So historical

Operator

now from Kohl Instructions] [Operator hear We’ll Mangrove Investments. Steve with

Steve Kohl

couple things. a on touch me of Let

speak I maybe on feeling an bit was give that First without update as through bit, momentum you more to And uptick. that work well But gain Diego if San the strategies and are those business I all, But of channels but Rob we obviously little maybe us these heard business that. got Do about some you’re getting a that’s the as those to continue expect and how and of through of opportunities. you little to know continue other traction. drive channels, to ‘XX? a could good core we’ve one

Rob Dawson

had we business nice and decent year our is is I cable saw last think San based year here the some which connectors year-over-year in Diego group, a growth and overall. historical

for continues think significant a us be to there upside. I

We realize some larger careers, positioned being and build materials part good For we position get expect companies, as job have a get to be product contractors. ourselves the together power that correctly the get business. get quality, the put of as of upside some those us good to to show we that that by to integrators, we they’re careers being and in When conversations a wining either of need list on scenario.

And in so that midst now. we’re the of

seems having as the the word little good to a quarter. and I bit a seeing that one seasonality we the like of we’re doing be as that We’re a around job business conversations the I have of will seasonality, don’t have that upside. say it to much does little first

hard of when Customers it. feel to it prospects love related there, So I our get but product. think some about points good our specifically I price we need work the to quality drive just growth they will and

are cable connectors great lot quality, vast a our cable low assemblies, great in assemblies, deployments. make are so used And which we of typically

that in one of certainly the We’re incumbents space.

So about I meaningful good there but there. really is definitely think it we feel upside

Steve Kohl

And you’ve attribute just we’ve next success designing of the question, obviously and had of growth turned the do up. more some turned obviously What as curious just as acquisition again nicely, know a part given And had with out quite limited into things. I that you you what customers to these a market is better that year, And with look are what’s of changing some testing the back guys Darren or job getting things success. and area? changing have design after things you or working in these there doing changed help

Rob Dawson

product around think a theoretically to continued conversations us then simple a the energy is in from intensity to think opportunities, to it’s that we’re thing Yes, that’s team a job really positioned our biggest to on it’s that saying I the team and products. market a level terrific already day I turning advantage in big of has every opportunities. done our if getting around a of of that’s the shelf and sales quickly. finding we is tweak design And respond or has a way or and our that have speed whether that slightly the turnaround actually making design, producing which we’re requires new And something product for

quick and doing in flexible We’re we’re that.

various Unlimited acquisition So of multiple it And quickly. years. extremely through and think scenario has team solution that as customizing many any find in the past, different can well some happening But I almost our times take of in the these need. certainly around turn that’s a responded customers locations in solutions the they the Cables has proven

Steve Kohl

it’s great in one, about last this and to haven’t create radio noticed there is long that it we odd have noticed mobile too going But changed question always I and how a mobile? were happen? while. get royalties or But and there -- I what’s to much --. didn’t for And they of Is you remember on radio tail money I royalties, talked we an since be quarter. something have can’t

Rob Dawson

that was… it that year, So expire royalties on The think last I expires.

Mark Turfler

year that it. was and expires, last Yes, that

Operator

[Operator from hear [Gregory sir. Go ahead Instructions] now Graves]. We’ll

Unidentified Analyst

it Just additional your investments those has two any a significant requirements timely is, on basis? the to Will brief capital questions backlog. require in increase one meet

Rob Dawson

So already lion built made the you which share so at. the would we’ve already those minor into results that you’re investments, see looking of

majority I -- a of built add our to equipment there what QX just of little needed needed the to we was already make think would increase and that’s bit into the sure volumes, results.

forward, I going So expenses. major expect any capital wouldn’t

Unidentified Analyst

to the of similar existing expect a backlog you into a this anything at quarter rest the demand the in relatively we year? But level would in high as keep go blip

Rob Dawson

and that knew obvious I big we door certainly, seem because say, working get but and at range, but I the is business. the back over more out large this I mentioned That I you need to million And was on and is backfill question, the years. got We didn’t produce would scenario in backlog, then to the disclose business previously, answer make love to as let’s the we amount to it yes the the customers if we mean have we our same happy, which it we’re typical the that go of it, time be that. doing. here call $X

troughs this So we then back QX, released of And to we we good jump we to really, what trying felt into really number. million about when add we’re did when we’re it, in $XX million doing. in $X producing the which

continue driving new business against and book growth. and aggressively booking We to our goals

need may it on can of is simple fast make stuff clearly we as team on at And focused very it and that the up focus, answers so the now selling team give that stuff. and to sales about backfill stuff the we team. making sell keep number need that, as to I to moment I talked as tell stay So but for we you sound, right it’s there can then as I the other can we is, can no busy. stuff we are can’t definitive where it is We

second clear when So to have that Greg call. we to a get I’ll much answer quarter

Unidentified Analyst

is a the lot area any positives. aware fill last I’ve read question need that And that a about crypto-currency products you’re of? in Do your of

Rob Dawson

We into that specifically of center a data aware and based. co-locations the I’m amount of. meaningful not product So sell do

now something. crypto in that using that that done. be is and not push into connectors couldn��t used have cables But a to being bandwidth do aware centers it those configurations, but we Somebody I’m specific don’t Clearly, there’s the of.

Operator

no to With happy in Instructions] the host remarks. back [Operator I’ll additional to your be closing questions queue, the turn for call

Rob Dawson

a Thank thank you, We to and morning. this June QX us. believing Jake. times. in shareholders would interest your Thanks in our all sharing really in of our for and Industries RF to I’ve forward look I company mentioned you joining employees, and customers couple appreciate like also of supporting call as results for the our

feel rest of have As always, out free Thanks we’ll please the for to additional questions Have good you Mark to or soon. day. this to you if any me again reach call. talk a and outside

Operator

today. does for gentleman, do your thank this and conclude We Ladies your conference you for participation.

may now disconnect. You

Rob Dawson	President and Chief Executive Officer
Mark Turfler	Chief Financial Officer
Aaron Martin	AIGH Investment Partners
Steven Kohl	Mangrove Partners

RF Industries (RFIL) 14 Mar 182018 Q1 Earnings call transcript