RFIL - Earnings call transcript Q3 2024

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Operator

Greetings. Welcome to RF Industries Third Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Margaret Boyce, Investor Relations at RF Industries. Margaret, you may begin.

Margaret Boyce

Paul. you, Thank and XXXX everyone, RF Third Industries Good Call. welcome Fiscal Earnings Quarter afternoon, to With call Bibisi; on Dawson; Yin. me today's President Officer, Chief and Rob Executive COO, Ray and Peter are CFO, RF Industries'

financial historical and issued except will is today on may These laws. statements risks to make that release to statements, other anticipate, remind forward-looking We today. intend, constitute that management's for during future I'd risks forward-looking the at performance available uncertainties. statements. QX Securities and and statements with and statements forward-looking after our earnings statements believe, and call When market uncertainties. our Exchange this today's that That under views are rfindustries.com. everyone similar website future forward-looking the to current Please words like subject used, note release call identify reflect expressions on the respect expect, involve management events

statements. in update the differ Actual revise actual materially may on forward-looking with any uncertainties differ the to forward-looking results Industries XX-Q results could discussed no outcomes include from undertakes company's and statements. other risks and from contained cause Form the RF to reports statements and filings these any Factors SEC. in obligation the XX-K forward-looking that or

GAAP current throughout call, on our XX-K reporting. report non-GAAP related earnings Form be between we and discussing will release certain the Additionally, the this and Today's non-GAAP financial measures. describe differences

With Rob ahead. I'll that turn go please CEO, Dawson. Rob, said, now our over conference the to

Robert Dawson

financials discuss our with progress our market we hearing comments before COO; President questions. opportunity, what highlights our Ray open quarter with call. Peter and and Ray XXXX our here Margaret, and CFO. today conference we're and will our call the your start our and cover on to to welcome sales third will fiscal from customers, and some our quarter I'll you, Thank Peter Yin, third Bibisi, I'm

the and X% on $XX.X reported the to third almost results in sales our year-over-year. We're pleased momentum quarter second sequentially that quarter. X% continue build up that of were Net we million

margin gross a roughly period for XX.X%, was with prior quarter. last basis profit improvement quarter the Our point the comparable year the and in versus third line XXX

we're XX% for quarters which shift to X to in near-term the close higher solutions. very target product our reflects gross a for row, our margin, value, higher-margin Importantly, mix

in Our was a sharp quarters adjusted we territory from during X reversal the a EBITDA for challenging a positive in experienced XXXX. losses row,

future we carrier I and their into hardship an major other continue over before, several tap As believe point where for spending now to created vendors. this and at even inflection potential. mentioned greater is our Tier capital downstream can cutbacks The the RFI and quarters, X last meaningful progress XXXX business in wireless had considerable deliver ecosystem

about but see needs and in spending cautious companies to continue to allocate continue resources significant being they operations large maintenance. telecom projects, CapEx major to We for address critical

Regardless always to of and overall effective infrastructure technologies upgraded are their sustainable. cost CapEx next-generation spend, with companies is want that ensure telecom

to need for product our Fortunately, replacements proof line future Cooling the upgrades meets required cooling they Air and standards Direct DAC their or the infrastructure.

heat can networks. discussed we've edge the inside generate previously, networking at buildings, of substantial equipment boxes and small As enclosures the

their help environments, high the the and systems technology AI equipment having to centers, and can offer than lower our green are have pushed traditional over eco-friendly that reduce of This operating to built on initiatives. that huge being state-of-the-art operate HVAC to outdoor cooling they systems must achieve companies is plus XX% the is expenses cooled that by rigor the and patented These can cost systems. up stand conventional efficient, with effectively data DAC be to is network. consistently, both climate-durable systems And impact more of equipment edges and

us make Our our diverse and team continues in to therefore, less more our business spend. on end to reliant work hard CapEx and on applications markets evolving

think some taken market is when the at products arrived meeting the time us point I we are. finally and foresight, While where our

As reduction that operating our significant moment, created expense series initiatives for executed leverage in we of has a this prepared business. we

we we've and capacity increases, to complex have products, given large serve higher RFI portfolio demand visibility to a investment. relevance material scale As incremental levels greater little-to-no business and customer of relationships our customers much has at This organizations. ever our decision-making high-value had. been and able we've than With within stronger with build

-- key help them customers some to partner some with are now asking us new challenges fact, In solve solutions. to with

now chain and a beginning clearer which an the and these future directly customers, me new our we reversal Ray into and as how to much giving performing the can exactly of us and insight is margins. treat In or help, supply After for which a welcome team of some forecast, coming incumbent, us telling timing improves to well they're they're roles. or us amount cases, to definitely to control ability orders, our improving pathway

will continues CapEx we has our negative needed lower solutions, RF to bill carrier densification quarterly on X performance spending additional the impacted be issues And see real XXXX. products I and believe and years in a them swings since forward much of wireless XG potential an some and have passives had a and cell us Microlab of continue we CapEx pause lines performance impact Microlab overall bandwidth to level coverage. As spending our in in give look acquired materials for hope on to large we improved product sales, Densification definitely XG wild networks, had like while ago, some our deployments recovery. small offering, the with along of opportunity.

materials bill and demand increases stadiums of as activities. venue Microlab deployment wireless industry-leading in passives we anticipated for RF critical densification that can has wireless an other leverage

ahead, team talented is product our a current value company to quarter customers' strong needs. quarter for Looking with leaner, to a to QX. deliver and I We're compared more creation and company we know results improved our fiscal stakeholders. answer deliver expect fourth we what another sales to and and execution as and of believe in on great current focused With totally increased our our offering future position efficient solution relevant a today,

I'd like Ray from to to he's our share to turn customers. the hearing what call Ray? over now

Ray Bibisi

Thank you, good afternoon. Rob, and

that our we're to top pleased more work line ahead the potential. optimize there's direction, headed is know right in our we While

Rob momentum we mentioned, and have cell had As customers offering. across some with our wins product significant line gaining DAC small and multiple we're our regions, in

well us involved the table efforts focused into to our and we solutions, This planning visibility that the value Right process, potential. is products improved both of long-term now opportunities large which project bring now, their turnkey deploying products giving expand our time programs. customers as our have are For regional customers probability becoming forward our Tier key several reflects cultivating programs new lines. with in strong market our that in are that X to strengthen relationships X national customers' as technology

these regions. heat continue For small DAC customer, there orders that we markets over a have wireless to top-tier Last challenges. years, announced been example, on meaningful carrier mostly of customers of $X.X quantities are in systems DAC one this deploying and other has discussions we from is million into DAC that month, major testing a few in

better be a with win new contributions. orders a mix there cascade effect of believe in we increasing into high-margin we As can regions, bookings

opportunity we mutually solutions in beneficial. that have the some to are on weigh involved are in that planning with process key Now new the customers, we

and product line. Fortunately, complementary new identified sharing coming who for and another have enhance an specific look quarters. lines response new we or product we develop customer us some we cost conversations, in outstanding more trends. give Through overall can in of can customer We these powerful engineers effectively team or potential offering a and have to new an requests of opportunity products these market these to solutions quickly forward believe the unique of

operations streamline call our better opportunities we Peter? improvement more turn our our efforts our an I'll are side, more and to on the greater current financials. the to of leverage utilization cost over through identifying facilities. update deliver Peter our This On efficient now continue to production to infrastructure. continuous continue will as operating for savings functions

Peter Yin

with afternoon, good results our pleased We're quarter continued, encouraged operating everyone. Starting with are income to Ray, you, trends. third the Thank see positive demand and and statement.

up $XX.X were X.X% to net year-over-year. Third and sequentially sales quarter increased million X.X%

XXX Third XX.X%, The basis XX.X% margin the points primarily mix, increase was result efficiencies margin cost increased consolidation along with to increased year-over-year. an in of facility quarter from product favorable improvement from and gross initiatives. profit gross more a reduction

net share or $X.XX $XX,XXX in compared was from significant share, $X.XX net loss share diluted loss prior diluted non-GAAP $X.X to from Operating a $XXX,XXX, $XXX,XXX share of a loss $X.XX improvement net was loss $X the an or year. per Consolidated loss $X.XX diluted year-over-year. was improvement diluted of $X.X per million per Non-GAAP year-over-year. a or million a loss per million or

We're Third of excited an quarter adjusted positive improvement EBITDA was EBITDA year-over-year. to significant versus see year-over-year. loss adjusted $XXX,XXX $XXX,XXX

Moving to the balance sheet.

had of a ratio of liabilities million cash equivalents of million total of $XX.X and $XX and of working and As capital a $X.X X.X:X, of XXXX, we current $XX.X July approximately a current current million cash XX, assets with of had million. and

our quarter, last $XX allow depending we X-year up term borrowing will March, entered mentioned credit to that a on of line in we As million that a into has base.

outstanding due current a the the been to However, balance loan, has the structure of as liability. classified

the of $X.X million. we credit line down third quarter, paid our During

We million XX, as compared XXXX, the July to XXXX, million were of of credit. our need. of will operational As from April fund believe the sufficient anticipated to amount borrowings $X.X be line our available liquidity us outstanding to of $XX.X

rightsizing and inventory the around continue inventory our improve to capabilities On system front, we've chain. as we our supply processes been

third million quarter, believe our the decrease level, inventory million inventory of availability. At year-end. approximately our business reduced Even with decrease $XX million, the was a $X.X inventory of the of supports sequentially that end strategic $X.X we and of from model a

over year. to demand continue to manage closely coming see this in expect increased we normalizes gradually as the key as We markets spending

Moving momentum on, new we are businesses. build around seeing

was as of July quarter backlog $XX.X million of XXXX, XX, million. bookings third on $XX.X Our

currently down backlog we our today, a inventory million. delivered our paid $XX.X We and credit, expenses. quarter. managed stands our third of of As line In solid reduced level at summary,

leverage, has believe delivering operating As we forward financial improving our go substantial for we look results forward, to stakeholders. we and our model

that, up call your the for I'll open With questions.

Operator

Riley. for [Operator from Nichols Instructions] The from first is question coming Josh B. today

Josh Nichols

forward. up product good see it to from going like bumping And that XX% against margins you're high-margin lines bigger these expecting contribution the sounds It's level.

the or you margin over that a continue look XX-plus that where saying currently? percent were at profile think could to fair quarters is you overall, to the at and Or are that be going couple of they do they're this backlog they to from think you If expand around that assessment next the level?

Robert Dawson

Jeff. Thanks, Yes.

mix the we're XX%, of getting going a what is goal out do that given feel be at pretty a function to I think of decent just comfortable it have really we of that We quarter. there. spot which ships a in to

to So the are those over you products. we've with -- few some new announcements I a portion backlog some if months in, higher-margin think our They're orders of starting the build with around made the those lines. coming substantial product of last

today, our has spot So more, room comfortable, as room we're expectation margins I think we we're sales that is we just well. on good Again, recognize automatically impact in do higher there's there's think a for of to a a positive while our and number, expand. sort for

us a So around comments, I also expansion expect growth margin just be that give should from help at perspective, the we another which sales of my end QX shared overall. sequential to some

Josh Nichols

of Nice a little to that today. provide you little When you you how have Could if $XX wondering provide see bit in you around that favorably, I'm the see million to dig context offerings, backlog what's a a the you're trending to could backlog could and net close lower just like bit Yes, margin today. versus margin look bit color. backlogs you more just at little been the further. higher

Robert Dawson

sure. Yes,

thing and at otherwise. think long our time sat that X of market they just overall for and challenges had guess certain look last, X in and set or our certain hold through finally it's the customers I that I work as around interest probably, their moving. to own back one conditions shipments were a asking rates us that backlog things that's quarters, we you So if

and So I on newer replacing see in shipping margin of think side. we've of should this out some we're last started help those with lines items quarter them that the some the product evolution us that where to an of

million some or it I So at while between it's growth. the million million look they're mid-XXs, we kind dollars is range. increase, $XX couple higher kind you think, showed shipped Keeping $XX-plus sales $XX.X we mean the million helpful. Obviously, seeing roughly the million a I than And of it's it out. $XX.X moving quarter of that's think around booked in that whether third that during what I million, stable. or $XX of

it us in see it higher I freshen sales things and an there, So from opportunity out sitting the think that, starting should of but help that some backlog numbers to some see we for of did see that time. been to some up give coming have we're

Josh Nichols

you the chance continued and this $XX Or do of large $XX take could you a based conversations talked with you're that about now, headwinds million, you're buildout of seeing densification from there's these on better of think level? expect backlog place, of seeing which carriers, that, long on time to in the cell significantly orders? been alleviated million has have remain flow around that And say it come. increase that with Is Yes. you finally good what here some visibility some to been right, having CapEx the that fair kind small

Robert Dawson

Yes.

around a next, backlog. in $XX is good there, it look, a range, past comes know the not where things with million expect there for some Language gauge the in It nice $XX in we've need orders to perfect that drop in doesn't I've the it's probably our said, if health fine. in be see a that to sitting think have that's that got be it hand. we're indicator to million we don't million, stated while I going past $XX down I what today. significant but to or

for expectations spend we getting and XXXX made visibility that comments and come that there. are I'll say thing some I made, was in our of other as the start around the orders to The that Ray is more

even quarters, more supply what we much as So the doing be keep and it's our possible, do. going well early drawn that we to so obviously, to customers, several they're just do of place ask as to over the if out orders supposed chain can oiled course

I up. there's So to think spike chances for it

X And be it wouldn't was that can but were held of spectacular, a me be but and for as it orders. new moment, backlog wherever $XX at that. lion's stress be the million ship a being would we're we'd we it it next lower have we love consistent saying, a there's it obviously, million keeping false can. bucks positive, -- function back "Hey, So higher, pretty that want to order, times it think call where be if the don't of it I also quarters orders months." but it a couple can can here's if replaced kind to share the out and of any and be should At with over short-to-midterm that than I seeing of the go out few

Josh Nichols

normalize some year of, see the last of be sequentially. last or so then CapEx you question, the given little to is magnitude about and bit the thinking about fiscal guess, And think been in seasonal Good carriers, you're constraints. like just ordering But the of fourth anything, would increase? for sales shipping thinking we to as expect that impact overall the with have that up just the quarter. and of I things again patterns anomalies, in terms there XQ guess, Anything a start sales like about to I

Robert Dawson

Yes.

is we're there's of Customers integrate. that materials customers I again. do being good So supplied and get have on these depends of for think I orders wanting I we some supplied really that by much to a think key -- number How shipped, things. In cases, us. X some to could certain then timing applications materials we going it, comfort would, I we sales expand if have put it's on to that

timing it. can the impact of also an have on So that

the I a call spring, The didn't around frame. seasonality, of in, been this season carrier big year into has of the kind build see kind think seasonality. weird this it, upswing summer time and early market really kind late of

seeing. what us be patterns kind going that It some more have I many we're build think normal with more a understandable XXXX might of like there's through been sounds little some times. look of to

while we I been indicator most the If has there's can looking is strong have first for seasonally, quarter a that out the out the of the orders, little start operational always backlog other and I quarter, our first remaining kinds we days. think because to that these seeing smoothing can we we just more some less us continue start business try of bit. think challenging to

impact So don't think there's us the not radically anything such But that. significant or that impact I way one as other. should as QX far goes, from there's

Operator

[Operator coming Instructions] Mangrove. from from Steve question The next Kohl will be

Steven Kohl

questions, guess, to I at. had couple I Rob, I'm of trying get a

to we're news coming when seeing see not pushing to see comfort line. obviously we're what to tipping where see good leverage greater proportion bottom the where to we up seeing you to this we but into start point little we still margins profitability give on to XX%, getting you're bit a more So seeing when of we're a -- accelerating? the Can that start start

just what I looking that, you've that to you the And way. we out into and near-to-intermediate mentioned can revenues is that. mix help But you give And curious I for? something you I'm some 'XX. color we that. guidance got us appreciate your when know Or give should I And on term know will obviously, -- what going you're out if look look don't you're the seeing?

Robert Dawson

Yes, good question.

saw days, had to to I frame past, a think time the in want the numbers we some that there. million the a $XX-plus -- call whatever kind be We've number as you we working we So to leverage. in to had million what the -- we've old that, really be stated to of be breakeven, and used been then $XX see we down from from should where better number

million enough flow to perspective, start taken a you have does $XX we've as to us what overall. of a see huge big we margin saw, impact jump that for million but out see kind that $XX.X expense in sales, think not the can from we I that a

We line there's from there perspective, up of to be believe acceleration I we and sales to that on like it, $XX.X million modeling acceleration, to million basis do can I expect that but through a the Between think push happens at bottom just the I that's plus quarterly in $XX-plus a back if kind real number feel significant prints an million, $XX a think we $XX million change impact. number. what where call

down And up conversations gross $XX operating sales because of to come building that facility profit light a things. million It's drastically can lot covered we in P&L back kicks to certainly CapEx. quarter, does We're happens look on It the of cost, below can and you our will our once really us. if you affordability we've the But get fixed that, we a pretty mix people a a we've done our light get expense. a on for lot cover there's the not costs these line change also when help. Once simple we're R&D, and leverage. down labor the our having then costs on really

color best different can start can we'll a I to a really think give think million, I So number overall is look. I $XX-plus if we push see

Steven Kohl

give a about update? us stuff mention facility me the just could there do hubs? I And West snapshot East Coast, is I'm have facility. can you Coast you the quick just where and a you've that of we the major And some we are of Can the consolidation give consolidations. X Or missing? but other maybe is have maybe on we know what you I quick today? talked know

Robert Dawson

Yes. Sure.

facilities So we size. of X have of total a

now, facility, are work assemblies, where our cables. assemblies, San the facility right in primary Peter I cable data cable the on which and that RF goes have fiber sitting and is We Diego headquarters the

side cable the more things, it's of largely influenced. So distribution assembly

facility a we Tech that the have what in business to We and Microlab Shroff business. with legacy Jersey combined legacy moved a New was the that facility was

have the both RF have in of there on market produced us York New cell and DAC in out So servicing in well a passives We then we small assembly. Island, as as the facility for our Milford, area. Metro Connecticut pretty are and Yaphank, and product out of lines York that is location-wise New Long being key custom

more in some hybrid lines So with custom as businesses and with made facility which time is we've product our Long X for owned the fiber, quite regionalized Island well. exception of work

So we have overall. those X facilities

Steven Kohl

positive. talked Obviously, getting the you you volatility at venue I about mentioned the more of the Is And the of areas, better? a help likes in sure needs closer We some to bit, being but last seeing? CommScope But kind corner I'm the look you encouragement what the look I kind move market, a better expect? we we what for fiber know getting than some guys of more day-to-day basis, you venue market Microlab on see question being is, do there's are the state to the they're what and you of but you'd optimism, landscape cable. when know too. some kind laying are at still a cautious happen can other from the macro you turning positive, ecosystem into still that us

Robert Dawson

Yes.

companies interesting that's business, few strategically, the key watch a referenced, as decision we part, that's wireless last key think product as of piece Andrew product divest in I that old and CommScope on that we line legacy made some months. the view lines an the you both. kind its and And indicators. competitive but still critical think I complementary focused decision related a their the of to certainly

spending interest overall, think spending supposed to rate it's are largely locations, their spending spend those. equipment will when wanting debt-based financing whoever is help of that's think the or centers or densification wireless, pushed at bring I rural and look to data cuts the being kinds the more patterns. Internet increasing the market, BEAD to edges with of and whether the capacity general in But carriers whether just certainly to I all Those you carrier that's

hey, generally, customer starting specifics little perspective, help. what do while rates CapEx look down a the XXXX come just normalized. every are, like a think from think market that here's have like more we to we from on, hearing interest that's I I the are is And looks predictions don't So a

probably but is There's in will word to always is the maybe more I any build what spending overused, that make in that again, think cycle. a us, means pause And cycle sense. carrier

still happening, to I positioned a and one well continue critical needs is we're for and think the densification that. piece

So to I facilities step why in the on pause. the better venue certainly side, be understand a needs of within experience or sort large It's another but there venues within there has was gotten that.

If you've in been to of there's any got have large coverage it. up away, events, events whether that's that's of on there otherwise, a that the go exceeds short show or people that concerts a lot capacity it put then for time or in where place you sporting to period really a and

some others, that there's need lot things still to a done than And the of docket but better happen. places have on

sort like During environments one venues, lot of is 'XX, were venues large otherwise. of push enterprise-level smaller see being and safety is get didn't buildings weren't Clearly, up. a we environments, that. locations believe touched in we as campus forward heavy that. that education office a of There like There we public a the lot

So some product little forward, we're but boats hopeful that distressed I some a doesn't that to all have think that us. going bring the better of of hearing going guarantee rise more up little anything, a be can been areas that for that piece we're for it's

Operator

like remarks. would for now RF I Industries call at closing hand There Dawson, the this back were time. no Rob to CEO to other at questions

Robert Dawson

a everyone, to thank and our you, QX joining today. Paul, sharing day. Great. Have in forward for you, We here good months. results us few a Thank look

Operator

Thank you. This does today's conference. conclude

You Thank may your time. disconnect you participation. your lines at for this

RF Industries (RFIL) 16 Sep 242024 Q3 Earnings call transcript