RFIL earnings call analysis

NASDAQ:RFIL Q4 2025 Earnings Call Transcript Generated on 6/6/2026 John | Conference Operator: Greetings. Welcome to the RF industry's fourth quarter fiscal 2025 financial results conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Donnie Case, Ambassador Relations. You may begin. Donnie Case | Ambassador Relations: Well, thank you, John, and good afternoon, everyone, and welcome to RF Industries' fiscal fourth quarter and year-end 2025 earnings conference call. With me today are RFI's Chief Executive Officer, Rob Dawson, President and COO, Ray Babisi, and CFO, Peter Yin. We issued our press release after market today, and that release is available on our website at rfindustries.com. I want to remind everyone that during today's call, management will make forward-looking statements that involve risk and uncertainties. Please note that information on the call today may constitute forward-looking statements under the securities exchange laws. When used, the words anticipate, believe, expect, intend, future, and other similar expressions identify forward-looking statements. These forward-looking statements reflect management's current views with respect to future events and financial performance and are subject to risk and uncertainty. Actual results may differ materially from the outcomes contained in any forward-looking statements. Factors that could cause these forward-looking statements to differ from actual results include the risk and uncertainties discussed in the company's reports on Form 10-K and 10-Q and other filings with the SEC. RF Industries undertakes no obligation to update or revise any forward-looking statements. Additionally, throughout this call, we will be discussing certain non-GAAP financial measures. Today's earnings release and related current report on Form 8K describe the differences between our GAAP and non-GAAP reporting. With that, I'll now turn the conference call over to Rob Dawson, Chief Executive Officer. Please go ahead, Rob. Rob Dawson | Chief Executive Officer: Thank you, Donnie, and welcome everyone to our fourth quarter and fiscal year-end 2025 conference call. I'll start with our fourth quarter highlights and observations of what our team achieved in fiscal 25. Ray will then provide a progress update on our go-to-market strategy, and Peter will cover our financial results before opening the call to your questions. In the fourth quarter, our team kept building on the momentum we delivered throughout the year. Net sales grew 23% year-over-year to $22.7 million. Over the past several quarters, I highlighted how our strategic transformation was driving profitable growth and the operating leverage from executing our plan really showed in Q4. Gross profit margin of 37% exceeded our 30% target and adjusted EBITDA was 11.5% of net sales above our stated goal of 10%. We controlled our fixed costs while driving strong sales growth and that execution delivered a significant increase in profitability. As I mentioned, our results steadily accelerated throughout the year. And for the full fiscal year, net sales were $80.6 million, an increase of 24% compared to fiscal 2024. Gross profit margin for the year was 33% compared to 29% in the prior year. And we delivered adjusted EBITDA of $6.1 million, a huge increase compared to $838,000 in adjusted EBITDA in fiscal 2024. From both the top line and bottom line perspective, fiscal 25 felt like a breakout year for RFI. And going forward, our goal is to prove what our operating model is capable of producing. While the general overall environment continues to have its share of uncertainties and increased costs, our team will continue to execute our long-term strategic plan to further transform RFI from a product seller to a technology solutions provider. In fiscal 26, We remain intensely focused on diversifying in markets, driving further customer and market penetration, and launching new products and solutions that we believe will help deliver another year of strong sales growth and profitability. Now I'd like to walk you through how some key initiatives contributed to a successful fiscal 25 and how they set up RFI for future growth and profitability. The baseline story is the difference between being a solutions provider with technologically advanced products and systems versus our historical position as a downstream component supplier. Being a solutions provider, coupled with RFI's reputation and product approvals from key customers, has opened many new channels for growth and has resulted in considerable diversification of both customers and end markets. Ray will go into more detail on trends we're seeing in key end markets, including aerospace, stadiums and venues, and transportation. What I want to point out is that diversification not only expands opportunity, but also mitigates the risk of customer concentration. In the past, there were times when a single customer accounted for a large part of our growth during the fiscal year. While this was good for our top line and is not abnormal in a growth story, we also recognized it could be seen as a vulnerability. Since then, our team has been heavily focused on widening our horizons by innovating our product applications into new end markets and engaging new customers to drive diversification. Now our results are healthier with diversity by product, customer, and market. Three key initiatives are helping our story evolve. First is deepening our relationships with existing customers. We want to partner more closely with our customers. which allow us to add more value and likely gain a larger share of their annual spend. With our high-value proprietary offerings, we can provide tremendous performance and cost benefits to our customers. We've become very adept at partnering with our customers to identify a need and then using a key solution as the tip of the spear to elevate our relationship. Once we began working more collaboratively with the key technical and market resources within our customers on solving their pain points, we saw more opportunities to cross-sell and expand the value proposition of our relationships. Second, leveraging our successes in markets where we have a long history helps us identify needs for similar applications in other new end markets. Once we've proven our value to key current customers, our team has become skilled at aligning with new customers and partners to penetrate new market segments. We believe over time that these new markets and customers will build into healthy contributors to our sustainable growth and profitability. Finally, we're expanding the value proposition we offer to our channel partners. A solid portion of our revenue comes from partners in our distribution channel, and we continue to foster very close relationships with these key companies. As our portfolio of high-value innovative products and solutions grows, our partners' product offerings to their customers are further enhanced. This has resulted in steady recurring sales for RFI. Also, our distribution partners help open the doors to customers we're targeting. Just about every key contractor and integrator buys from distributors, and we appreciate being well aligned with each of those groups. In addition to our key distributors, we also made a strategic decision to partner with certain manufacturers that act as a channel to take us to new customers and markets. As I mentioned on last quarter's call, A major manufacturer of electronic cabinets and enclosures identified our thermal cooling systems as a solution for edge data center installations. And we're starting to see some real traction in these applications. Both of our organizations believe our combined solution addresses the critical role that cooling systems play in the performance and reliability of edge equipment. While still in its early stage, this collaboration can result in a significant new opportunity for us. It's a great example of where a customer sees a problem and comes to RFI for a solution. We look forward to sharing more about these stories in coming quarters. These go-to-market initiatives, along with our continued focus on constant improvement and operational excellence, provided great results in 2025. And we have solid momentum as we enter fiscal year 26. While we expect some of the normal seasonality in Q1, we also expect to accelerate throughout the year in a similar trajectory to fiscal 25. And with what we know today, we anticipate another year of sales growth. As I've noted before, we look at our business opportunity over the long term because results can flex from quarter to quarter depending on when orders are shipped out the door and a small movement of a shipment, even by a day or two, can have a large impact on a single quarter. Our leading indicator is having a strong and diversified pipeline to help fuel top line growth, which in turn can deliver profitability from our operating leverage. Most important, we have a great team that's firing on all cylinders. Their enthusiasm and commitment to maximizing the opportunities ahead is driving RFI forward to our full potential. Now I'll turn the call over to Ray for more detail on the tremendous progress our team has made in executing on our strategic plan. Ray Babisi | President & COO: Thank you, Rob, and good afternoon, everyone. Across our business, Q4 reinforces the progress we've made throughout the fiscal 2025. What stands out most is not just where we're seeing growth, but the consistency and discipline behind our execution. Across our targeted end markets, demand remains supported by long-term infrastructure and connectivity investments. In large infrastructure markets, including stadiums, venues, and transportation, activity remained strong throughout the year. We supported more than 130 projects across these categories, delivering a meaningful contribution to revenue compared to prior years. More importantly, this worked strengthen our credibility and visibility, positioning us for future multi-year opportunities, including major global events such as the LA Olympics and the US World Cup, as well as continued airport modernization programs. Our pipeline continues to provide strong visibility across a wide range of infrastructure-related opportunities, reinforcing our confidence in demand stability. The aerospace and defense market also remains solid. Performance here continues to be driven by close collaboration between engineering, operation, and customers to deliver solutions that meet stringent performance, quality, and compliance requirements. Intelli communications and broadband investment remains focused on densification, coverage expansion, and network reliability. our small cell, direct air cooling, and RF passive solutions continue to see consistent traction across both OEM and carrier driven programs. Across all these markets, our distribution channels continue to perform well, delivering consistent contributions based on improved product availability, strong partner engagement, and more disciplined commercial cadence. From an operational standpoint, Q4 reflected continued progress towards more predictable execution and tighter operational controls across inventory, cost, and delivery. Inventory actions were focused on aligning supply chain with demand while managing tariff and supply chain uncertainty. And our cost reduction initiatives continued to deliver tangible benefits. Process and IT improvements are strengthening forecast accuracy, visibility, and scalability across the organization. From an engineering perspective, our focus continues to be innovation aligned with market demand. A more disciplined state gauge process and cross-functional prioritization are improving on how we allocate resources to the highest value opportunities. Customers are increasingly engaging with us early in their design cycles, reflecting our evolution from a component supplier to a problem-solving partner. As Rob noted, RF Industries looks very different today than it did a few years ago. That change reflects clearer accountability, stronger cross-functional alignment, and a more disciplined operating rhythm. Looking ahead to 2026, our priorities are to build on this foundation, executing reliable advancing our product roadmap strengthening leadership and improving predictability across the business there are plenty of external variables we continue to manage but our strong pipeline disciplined operations and aligned teams position us well moving forward what gives me confidence today is the progress we've made in building a more predictable and scalable business with stronger execution better visibility and clear accountability. RF Industries is well positioned to carry momentum into 2026 and continue creating value for our customers and shareholders. Now I will turn the call over to Peter. Peter Yin | Chief Financial Officer: Thank you, Ray, and good afternoon, everyone. As Rob mentioned, we're pleased with our fourth quarter and full year results. Starting with our fourth quarter, Sales increased 23% to $22.7 million year over year and 15% on a sequential basis. Gross profit margin increased to 37% from 31% year over year. That is an improvement of approximately 600 basis point that was driven by both higher sales and a more favorable product mix. Fourth quarter operating income was $903,000 a considerable improvement from the operating income of $96,000 we reported last year. Consolidated net income was $174,000, or 2 cents per diluted share, and our non-GAAP net income was $2.1 million, or 20 cents per diluted share. Compared to a consolidated net loss of $238,000, or 2 cents per diluted share, share year over year and non-GAAP net income of $394,000 or 4 cents per diluted share for Q4 2024. Fourth quarter adjusted EBITDA was $2.6 million compared to adjusted EBITDA of $908,000 for Q4 2024. Turning to fiscal year 2025 results, Full year revenue increased 24% to $80.6 million year over year. This included finishing the year strong with shipments from our custom cabling offering to a leading aerospace company. Full year gross profit margin increased to 33% from 29% year over year. That is an improvement of approximately 400 basis points, which was primarily driven by both higher sales and a more favorable product mix. Full year operating income was $1.8 million, a significant improvement from an operating loss of $2.8 million in fiscal 2024. Full year consolidated net income was $75,000 or one cent per diluted share. And our non-GAAP net income was $4.4 million or 40 cents per diluted share compared to a consolidated net loss of $6.6 million or $0.63 per diluted share year over year, and a non-GAAP net loss of $990,000, or $0.09 per diluted share for fiscal 2024. Full-year adjusted EBITDA was $6.1 million, a substantial improvement compared to adjusted EBITDA of $838,000 in fiscal 2024. Moving to the balance sheet, our working capital and overall liquidity remain very strong. Our improved results allowed us to reduce our net debt by $4.6 million compared to last year. As of October 31, 2025, we had a total of $5.1 million of cash and cash equivalents, and we had working capital of $14.1 million and a current ratio of approximately 1.7 to 1, with current assets of $35 million and current liabilities of 20.9 million. As we discussed on the last call, we have been exploring ways to reduce our overall cost of capital. As a result of our significantly stronger financial results and outlook, I'm pleased that we were able to negotiate more favorable terms and flexibility for our revolving credit facility, reducing the minimum outstanding loan balance, interest rates, and reporting requirements. As of October 31, 2025, we had borrowed $7.8 million from our revolving credit facility. Our inventory was $13.7 million, down from $14.7 million last year. The decrease in inventory reflected further operational excellence. We continue to manage our inventory levels with discipline. balancing our ability to meet strong customer demand while optimizing supply chain operations to maximize efficiency. Moving to our backlog, as of October 31, our backlog stood at $15.5 million on bookings of $18.5 million. As of today, our backlog currently stands at $12.4 million. Our backlog is a snapshot in time and can vary based on whether based on when orders are received and when orders are fulfilled. While we view backlog as a general gauge of health, it can swing significantly at times, making it less predictable, making it a less predictable indication of our near-term sales. We are incredibly proud of the breakout year that we achieved in 2025. While understanding there is still work ahead of us, as we see room for further improvements, we enter fiscal 2026 with strong momentum, and we are optimistic about the future and our ability to drive improved profitability as we continue to grow. With that, I'll open up the call for your questions. John | Conference Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star 1 if you have a question or a comment. The first question comes from Josh Nichols with B. Riley. Please proceed. Matthew | Analyst, B. Riley Securities: Hi, this is Matthew. I'm for Josh. Thanks for taking my questions and great quarter. I guess to start off, yeah, I guess to start off, I mean, fiscal 25 came in above our expectations. You had strong momentum exiting the year. I'm just wondering how we should think about the growth trajectory for fiscal 26, especially now that we're almost through the first quarter of your fiscal 26. So I'm just wondering how things are tracking. Rob Dawson | Chief Executive Officer: Yeah, appreciate that. Thanks for the question and the comment. So I think, as I said in my commentary, our expectation for 26 is another year of growth. I think the trajectory of how we get there is going to look similar to what it was in 25. The joy of having a first quarter that includes November, December, and January means you're always going to have seasonality, almost regardless of what industries you're selling into. So we expect our first quarter probably to be our platform to start from as our lowest quarter of the year. Again, and if you look at what we did in 2025, you can see how quickly that accelerates and how the profitability really ratchets up. So while we're not giving specific guidance, I think if you look at our normal, sort of our normal quarterly quarter over quarter growth that we see in a given year, we expect something similar in 26. Matthew | Analyst, B. Riley Securities: Got it. And yeah, I mean, this school, I mean, this, this for fiscal fourth quarter was really strong and you had gross margins that expanded to 37%. So I'm just wondering, like, can you break down how much of that was mixed versus operating leverage or pricing? Rob Dawson | Chief Executive Officer: Yeah, I think it's really a nice combination of, of product and solution mix, which we're starting to see a solid impact and contribution from some of the higher margin product lines that we sell. But I can't really understate the strength of a sales number that starts to get up above 20 million bucks a quarter. I mean, we really saw it in Q4, and that's not something that we've been able to even model perfectly and say, hey, what's this going to look like if our mix does what we think it's going to do and sales go above a we started to throw a lot of cash to the bottom line. And so I think that was as much the story in Q4 as anything else was. Our sales came in a little higher than even what we expected. We had some orders that were requested to be moved in a little bit, which was great. So we benefited from that. But certainly you can really see what happens when sales creep up above 19, 20 million bucks, how much of that becomes a bottom line impact. Matthew | Analyst, B. Riley Securities: Yeah, actually expanding on that bottom line impact, I mean, similarly, EBITDA margin was, you know, like 11.5%, and that was above your 10% target. Is there sort of like a new target that you think you can hit? I mean, you're expected to grow this fiscal 26, so I'd only imagine that as you continue pushing past 20 million, it'll continue to be above that 10% target on a strong quarter. Rob Dawson | Chief Executive Officer: Yeah, I appreciate that. I think, I mean, one, I want to celebrate how great the team was to get us there in Q4. You know, we put a goal out there of getting to 10%, you know, EBITDA 10% as a percentage of sales. We put that out not long ago and said, yeah, we see an opportunity to get there. We've got to really work hard to do it both on the cost and operational excellence side, but also on the sales side. And everything kind of came together in Q4. I think the expectation for us is we've got to find ways to keep it above that 10% number. That's not an easy feat. I mean, if sales are up, that's great. But we're also up against continued cost increases and other things that are being thrown at us. So we're not putting out a specific different goal than what we already have. Our job is really to keep the profitability at as high a level as we can. again, looking at it over the long term. I mean, if you look at what we did in Q1 through 4 in 2025, you saw that number adjusted EBITDA as a percentage of sales start to crank up each quarter, even as sales didn't grow a ton until you really saw in Q4 with a higher sales number. So I anticipate sort of a similar approach to 2026 and how that's going to go. I mean, the quarter's are hard for us to dictate specifically based on customer demand and timing of shipments around projects specifically. But I think we just want to celebrate that we exceeded that 10% for a little while before we get into what are we going to do next. Matthew | Analyst, B. Riley Securities: Got it. Thank you. And last one for me, it'd be helpful if you could expand on those cost increases you mentioned. And how much of those increases do you think can be mitigated with the new products and solutions you're looking to launch this year? Rob Dawson | Chief Executive Officer: Yeah, so I think, I mean, look, it's nominal increases. It's the things that, you know, everyone's up against. We do have... A lot of people building products in the United States. We've got a healthy production team that's north of 200 folks building things in multiple locations. We're proud of that. And because of that, we need to keep those folks' wages keeping up with the world and keep them with great benefits. For a company our size, we provide what we believe are really strong health care and 401k matching and other things like that, that in a lot of cases are better than companies much larger than we are. So those are the things that we see increases on sort of annually. And the team's done a good job of managing those. We go in eyes wide open every year knowing that there's these annual renewals of certain things. And we have to do our best to mitigate that where we can. Some of that can be done with pricing, but to your point, some of that can be overcome with just a slightly better sales number with a solid product and solution mix. And so we attack an annual budget with that idea that we expect some increases and we expect that we have to overcome them because that's what we're supposed to do. It's the normal things you would see and then throw in just the general global chaos of things can change with one quick text message or tweet at this point. And so we have to always be on our toes and ready for changes to things like logistics costs and other product costs that might be unexpected at this point. Matthew | Analyst, B. Riley Securities: Got it. Thank you. And actually, just a quick follow-up on that. Can you maybe... Give us, I guess, in terms of those new products and solutions, like maybe a couple that you think are going to be the most impactful this year. Rob Dawson | Chief Executive Officer: Yeah, look, we continue to feel really good about our integrated systems product lines. DAC and small cell are both things we've talked about for a long time that we're having minimal impact on our sales and have started to really contribute more. We also still feel really good about our legacy product lines. I mean, our custom cabling business is strong and performing extremely well in things like the defense market and other industrial and OEM kind of markets. We're seeing nice, steady growth there and some great customer wins that, in some cases, we're putting out news on when those things come in. in the aerospace and defense market. So I think those three areas are probably items that are more project centric and can be kind of a meatier piece of our total sales. The everything else, which has in many cases a distribution flavor to it as well. We expect those to continue growing and being a nice workhorse in the background, putting up solid growth and profitability there. So it really has become for us sort of the combination of firing on all these different pistons. not expecting every single product line to be perfect every quarter, but expecting a nice balance from them. And when there's contribution from multiple product and solution areas that are project-centric and less seasonal, that starts to give us some predictability and smooth things out where it can. Matthew | Analyst, B. Riley Securities: Got it. Thanks for taking my questions. I'll hop back into the queue. Thanks, Matthew. John | Conference Operator: Next question is from Howard Root, private investor. Howard, please proceed. Howard Root | Private Investor: Great. Thanks for taking my questions and congratulations, not just on the quarter, but really the transformation you've done over the last couple of years here with RF Industries. It's really a great job. First, I got a couple of questions for Peter. The income taxes and the non-cash one-time charges, can you kind of give a quick explanation of what those were in the fourth quarter? Peter Yin | Chief Financial Officer: Sure, I'll tackle the tax first. Tax relates to evaluation allowance there. So not sure if that answers your question or you want me to get into a little more detail there in our footnotes to the K. We kind of have a tax provision footnote that kind of highlights that in a little more detail. Howard Root | Private Investor: I'm just going to look, going forward, the $478,000, obviously a huge number for the income taxes. What is that, you know, do you strip out the unusual stuff? What's your tax rate going forward? Peter Yin | Chief Financial Officer: So tax rate going forward, it's kind of hard to predict. They're probably in the mid-20s if that's kind of the standard corporate tax rate from state and federal. there, but we have some nuances with valuation allowance items kicking in for us. Howard Root | Private Investor: Okay. And then the non-cash, is that part of that was on the taxes side too, or is that something else? Peter Yin | Chief Financial Officer: No, the non-cash items is not part of the valuation allowance or the tax provision. So those items are kind of pointed out there. The H-55 you're seeing there, we talked a little bit about um it's related to an accrual uh for a settlement okay and then the interest rate what do you see as a decline in your interest rate kind of going forward from this new reworked line of credit yeah so we're we're you know obviously the the the refinance we've uh disclosed there so expecting a drop but from a cash perspective or interest savings we're expecting kind of at least a quarter million in interest savings for the next year. Howard Root | Private Investor: Okay, great. So then more for Rob, you know, the diversification that you've gone through is amazing. And could you put some numbers kind of around on what percentage of your revenue and just really ballpark, Rob, coming from, you know, transportation, aerospace, you know, stadium, data centers, What can you tell us in terms of where you are and types of the revenue growth from there and getting away from your base telecommunications business? Rob Dawson | Chief Executive Officer: Yeah, I appreciate the question. I think it's hard to slice that up simply because the numbers get, they share a lot of information. I think for a company our size, trying to slice into the various details, what I can tell you is, On prior years where we had major growth happening, we were seeing the wireless and telecom market in the 70% range of total sales. We're now seeing that more like 50%. About half of our sales are coming from things that I would call telecom and wireless. The remaining half is coming from, in many cases, similar applications maybe, but transportation, aerospace, and defense. industrial and other OEM, public safety, things like that. So I think the way that we disclose those results is a slightly higher level of maybe what you're asking, but hopefully that gives you some color around just the way we've seen the overall impact and contribution from those different markets. Howard Root | Private Investor: Great, yeah. And then the backlog, just to kind of explain, what part of that is seasonal? I mean, both the bookings and the backlog took a pretty big drop from Q3 to Q4, and I understand being a shareholder for a bunch of years is that part of that is seasonal. But what part of that is seasonal? What part of that might be from the transformation of the business changes how long you have backlog or what your overall level of backlog would be and when your bookings are coming in? What can you say about that in terms of what that means for your business? Rob Dawson | Chief Executive Officer: Yeah, great question on backlog. I think it's, you know, for us, it's as we've said for years, it's, you know, it's a good health indicator that we have a backlog and we've got stuff coming in there. I think we also disclose it probably deeper than most companies where we talk about, you know, end of quarter and based on the bookings that we had, what got us to that number. And then we give an update at the time of our call to make sure people are clear about to elaborate a little bit on how the business does work. And you're right with the way you're thinking about it is, you know, seasonally, we expect to have a solid booking quarter in our fiscal fourth quarter. We also expect to start eating through some of that backlog in our Q1, just around the seasonality of sort of the way most markets work. We also are trying to get better at moving our backlog out the door. You know, it doesn't hurt us to have longstanding backlogs, But it also, at times, some of that backlog can get old and tired. And we want to keep that moving similar to the way we've managed our inventory by bringing it down to a more manageable, healthier level and being faster with replenishing when we need to. Our expectation on backlog is that it sort of hits a low point in our first quarter. and then starts to work its way back up as we see the project-based work on the calendar year start to kick in when people's budgets get finalized and everyone gets settled back into their seats. I think everyone probably felt that this was a strange holiday season because you had Christmas and New Year both falling on a Thursday, which means you basically had two dead weeks from people coming to work and everyone being engaged perspective. we're finally seeing the world get back to a little more normalcy. Our expectation is that that backlog will start to move back up as it normally does this time of year. But at the same time, you can see that we've been moving some of that out the door to get to a fresher level as well. Howard Root | Private Investor: Right. And then bookings, the $18.5 million in bookings for Q4, was that kind of according to your plan? Was that ahead of your plan or a little under your plan? How did that fit with your expectations? Rob Dawson | Chief Executive Officer: Yeah, I would say it's around our plan-ish. I think it's hard to... Q4 is a tough one because of where our October year end doesn't really align with other people's budgets. So we generally see... a larger booking level happen in our third quarter is kind of just seasonally. That's what we've historically seen. It's starting to smooth out a bit, but the, you know, October, November, December, January timeframe is always any order that we expected in any of those months could be in another one. And that's just, That's just how it falls around the year end and the year beginning. So it was fine. I think we were happy with that number. And the thing that we're even happier about, though, is what we've got in our pipeline that still looks super healthy. Ray talked some about that, the different application areas and the different customer areas where we're seeing growth in the last couple of years. we've still got a really solid pipeline of opportunities that aren't going away. While those move around in those various months, as I just said, we only see us adding to that pipeline of opportunity and feel really good about it. Howard Root | Private Investor: Great. Well, I appreciate all the extra color there. And again, congratulations to you and the whole team on outstanding performance from where you were three or four years ago to where you are today. Thanks a lot. Rob Dawson | Chief Executive Officer: Great. Thank you, Howard. John | Conference Operator: Once again, if you have a question or a comment, please indicate so by pressing star one. The next question comes from Steve Cole with Mangrove. Please proceed. Steve Cole | Analyst, Mangrove Capital Partners: Hey, good morning, guys. And I, too, would like to reiterate that it's congrats on a great performance. I'm sure I agree that you should at least savor the victory at least for a day or two, maybe even a week before we start looking at the next set of targets. But I wanted to talk about a couple of things. One thing on the balance sheet is I noticed if I'm doing my math right, we're down to $3 million in net debt, which has probably been the best we've been in quite a while. How is that changing our priorities on capital allocation? Do we see we haven't done any acquisitions in a while? Do we look at share buybacks, acquisitions, dividends? Has the thought changed at all on that, or what is the thinking today on capital allocation? Rob Dawson | Chief Executive Officer: Yeah. Hey, Steve. Thanks for the question. I think the At the moment, our priority is the same as it has been. We want to get that net debt as low as we can. Obviously, performance of the business helps. But at the same time, every time the board meets, we talk about best shareholder value. And at the moment, we think the best thing for us, short of having a strategic opportunity in front of us that makes sense, we want to continue paying down that debt. That is job one. Now, We're also always looking at other opportunities to drive shareholder value and give a nice return. So all of the items that you brought up are up for discussion. Every time the board meets, we talk about those. We haven't done an acquisition in a few years that's been on purpose. And some of that was the market and some of it was us getting to a point where we could actually you know, finish the integration of the ones that we had done, we finally got a chance to do a lot of that work, which is showing through now in our operating leverage and, you know, getting our costs as low as we can. So I think if there were an opportunity that presented itself from an MIA perspective, we might alter those priorities. But at the moment, our priority continues to be debt service and getting that to as low a point as we can. Steve Cole | Analyst, Mangrove Capital Partners: Right. And if I... One follow-up just on margin for a sec. So I know obviously margin's doing very well. I guess I'm curious when we look across the base, how much of the improvement of margins coming on the booked inside versus just volume running through the plant? I know you've keyed in on that again today, kind of on a, I know it depends on mix, and we get to a certain level, a lot comes to the bottom line, but are we seeing, is that split 50, you know, if you look at, I don't know how to, phrase the question, but are we seeing a better book? Because I presume as you're getting the aerospace defense stuff, you're getting better booked in margins there, I would think. But can you put some color around that or some granularity? Rob Dawson | Chief Executive Officer: Yeah, I think the best I can do there is, you know, look, having a better product mix and solution mix with some of our newer high value, much more technology centric product areas really helps. I mean, that mix just as those areas perform better Matt will tell you that that'll start to drag your gross margins up. Once we cross, you know, 18, 19, $20 million a quarter in sales, now you start to see the impact of, you know, you fully absorb all the labor, much of which for us hits above that gross profit line. So the better we perform top line wise, almost regardless of product line and the mix, you're going to see more profitability, which for us, we live and die by the gross profit line. We manage ourselves really well below the line. It is a function of those things. Can we sell more valuable products and solutions to our customers? And can we get that high as possible? Because when we do, you really see the impact of it. So it's hard for you to ask the question. It's hard for me to give a specific answer on which percentage causes which. But I can tell you that both those things help, although we would see a solid margin improvement just with a higher sales number and a similar product mix than what we've had historically. It wouldn't be as high as 37%, but it certainly would be better. Steve Cole | Analyst, Mangrove Capital Partners: And last question, just touching on, you alluded to DAC and small cell. Obviously, it's taken a little while for them to get some traction. But talking about public safety for a minute and density, I know for a long time we're talking about you know, these buildings and venues, you know, and even elevate people had that coverage. Are we seeing, how has the regulatory landscape there changed? Or is it still a local thing? Or is there anything, you know, from a bigger picture, is that market becoming more lucrative and getting more traction as people have put requirements on the books that they're actually enforceable? Rob Dawson | Chief Executive Officer: Yeah, we like the public safety market. I mean, we have a great product offering, not just with our RF passives and some RF active gear that we have under the Microlab brand, but also our core connectivity product line fits in there as well with fiber and coax. So we like it. We've sold to it for years. Most of that gets serviced through the distribution channel, which, again, we appreciate those partnerships and getting to markets like that. I think how those decisions are made and who really dictates what, though, it's still really fragmented. You've got localized ordinances that sometimes are hard to enforce. There's certain cities in the country that have mandated public safety coverage inside buildings, and that mandate is hard to force people to do, and they're unwilling to find these building owners to make it happen. It just becomes a really challenging sort of environment. That's not new. We take part in public safety forums all year long, all the time, and have conversations about it real time. It is similar to kind of bead funding. The federal government says, hey, we need this. And then it gets left up to states and local governments. And then it just becomes a revolving door of people making decisions. And it's been challenging to pin down sort of a final addressable market there, short of saying, for us, it falls into our in-building coverage process. our distributed antenna system product areas and the way we service those applications. So I think it'll continue to get better. New buildings being built tend to have an opportunity to put in some better public safety-based you know, RF solutions. And we're right in the middle of many conversations around that. And I think our offer is really strong there. So we expect that to be an opportunity for us going forward, but it continues to be extremely fragmented from an ordinance and decision-making perspective. Steve Cole | Analyst, Mangrove Capital Partners: Thank you guys very much. Rob Dawson | Chief Executive Officer: Thanks, Steve. John | Conference Operator: We have no further questions in the queue. I will now turn the call back over to Robert Dawson for closing remarks. Rob Dawson | Chief Executive Officer: Great. Thank you, John. And thanks, everyone, for participating in today's call. We truly appreciate your support and look forward to reporting on our progress throughout fiscal 2026. Have a great day. John | Conference Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090408-00'00'

NASDAQ:RFIL Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Rob Dawson | CEO: on the capex spend of our Tier 1 carrier customers. One year later, we can proudly say that fast-growing markets like aerospace, transportation, and data centers are now contributing to our sales pipeline, in addition to our strong standing in our traditional markets. Ray will go into more detail on our product innovation go-to-market strategy and trends we're seeing across our end markets. In aerospace, we continue to win repeat orders from a leader in this market, With mission-critical components, failure is not an option, and you don't get a second chance, so our success here continues to add to our credibility and reputation. The transportation market, including both in vehicles and in transportation hubs, is a wide-open field for us. For example, we've already received a meaningful order for a terminal infrastructure project at a major U.S. airport. As you know, the current administration justifiably wants to see our airport terminals upgrade their functionality in line with world-class airports. So this could evolve into significant opportunity for us. Municipal governments also want to upgrade their transportation infrastructures with distributed antenna deployments that will improve communication connectivity and efficiencies for their bus and train systems. We've only just scratched the surface of our product applications for transportation. Our DAC, or direct air cooling system, continues to attract wide attention with a variety of applications across several end markets. As I mentioned last quarter, we launched a next-gen system that has advanced control capabilities and a NEMA certification for more rugged environments that expands our opportunity set in wireline telecom, edge data centers, energy, and transportation. More on data centers shortly. Stadium and venue build-outs are undergoing a significant revival, especially in the United States, playing host to major events like the Olympics and World Cup in coming years. With our well-established reputation in this end market, we have a pipeline of over 100 venues, including some very intriguing projects around corporate and university campuses where greater connectivity is both an essential and competitive advantage. It's exciting to be at that inflection point when our technology, know-how, and reputation create several opportunities to diversify our customer base. Yet equally important is building deeper relationships with our existing customers. Wired and wireless communication customers have been our bread and butter for many years. However, we were mostly a downstream supplier away from the center of action and key decision makers. Now that has changed dramatically with our advanced technology and problem-solving approach We've elevated our value proposition to this important customer base, which in turn has resulted in a greater share of their bill of materials, especially in our higher value solutions. While telecom CapEx spending is still short of historical levels, we've diversified our revenue sources within these organizations to capture a share of the OpEx budgets, a direct result of building and expanding our relationships. Plus, we continue to drive growth with many longstanding customers in our OEM and industrial markets, where we design and build custom assemblies and wire harnesses. The third driver is the value of partnerships, both old and new. We're proud of our longstanding relationships with all the Tier 1 carriers, the major installers and integrators, and especially our distribution partners. The trust we've earned for innovation, collaboration, and service has attracted new partners, which opens the door to additional diverse customer and market opportunities. For example, a major manufacturer of electronic cabinet and enclosures identified our DAC systems as a solution for edge data center installations, which are small decentralized facilities located closer to where data is generated and consumed. While hyperscale data centers are multibillion-dollar installations requiring technologies like liquid cooling systems, facilities on the edge also need energy-efficient cooling. RFI has a great solution for this, and we currently have market trials in process. Before I turn the call over to Ray, a final note on diversification. We've worked long and hard to diversify our supply chain, both domestically and internationally. Although our finished products are American-made, there are certain vital components that are generally available, only available, from outside of the US, which means we must deal with the uncertainty of the evolving tariff landscape. So far, our team has done a great job in mitigating tariff impacts, and we've only had nominal price increases on certain products. Putting this uncertainty aside, we're focused on what's in our control, maximizing the great opportunity ahead of us and delivering one of the best full fiscal year results in RFI's history. We now have three great quarters under our belt for fiscal 2025. And based on what we know today, we expect that our fiscal fourth quarter net sales will be similar to what we delivered in Q3. Finally, thank you to the entire RFI team for executing on the plan and keeping our momentum going. I'm honored to get to work with all of you. Great job. We will continue to stick to the strategy, work hard, be kind, and keep a sense of humor. It certainly seems like we can all use a little more kindness. Now here's Ray. Ray | COO: Thank you, Rob, and good afternoon, everyone. As you just heard, we believe we are entering an exciting period of growth and opportunity. A key driver of our performance this quarter has been the deep engagement of our sales team. Their collaboration with engineering and marketing has allowed us to deliver fully integrated solutions that address critical needs across our target markets. This quarter, we saw strong growth across aerospace, venues, telecommunication, and broadband networks, supported by consistent contributions from our distribution channels. Our target initiatives in venues and broadband delivered meaningful bookings and revenue, demonstrating the effectiveness of our market-driven strategy. Marketing and product management played a critical role in reinforcing these efforts through impactful campaigns, events, and partner engagements. These activities strengthened our presence in the market and supported pipeline conversion. On the operations side, execution remains disciplined and strategic. We increased inventory levels in certain product categories to mitigate pending tariff impacts while our ongoing cost reduction programs remain on track. At the same time, process improvements and IT enhancements are enabling real-time decision-making and building scalability to meet growing demand. From an engineering standpoint, our focus continues on small cell concealment, direct air cooling, and RF passive solutions. While aligning engineering output with market demand is still a challenge, our improved processes on stage gate discipline and ensuring resources are directed toward the highest value opportunities. As Rob mentioned earlier, the story today looks very different than it was just a year ago. I couldn't agree more. The change has been dramatic. From my vantage point, the real difference is how we are pairing advanced technology with a problem-solving approach. We're no longer just responding to customer needs or helping them anticipate and shaping the solutions that drive their success. The shift has fundamentally strengthened how customers view RFI and the role we play in their strategic planning. Looking ahead to Q4, we expect revenue to remain steady. with continued strength in small cell, DAC, aerospace, venues, and broadband markets. We are mindful of the potential tariff impacts and ongoing supply chain constraints, but our robust sales pipeline, disciplined operations, and strong cross-functional alignment position us to finish the year strong and carry momentum into 2026. Ultimately, Execution is the bridge between potential and results. As COO, I am proud of how our team continues to execute with focus, discipline, and collaboration. I now turn the call over to Peter. Peter | CFO: Thank you, Ray, and good afternoon, everyone. As Rob described, we've had strong momentum across our business for three consecutive quarters in fiscal 2025. Before I review the financials, the overall theme to note is continuous improvement both top line and bottom line. Our sales continue to increase, and this drives better margins and operating leverage as our fixed costs are spread over higher sales levels. In the third quarter, revenue grew 17.5% to $19.8 million year over year and 4.7% on a sequential basis. Gross profit margin was up 450 basis points to 34% from 29.5% year-over-year, primarily driven by an overall increase in sales as well as a higher product mix, a higher margin product mix, and our ongoing efforts to drive cost savings and operating efficiencies. Operating income was $720,000 compared to an operating loss of $419,000 we reported last year. That's over a $1.1 million improvement year over year. Consolidated net income was $392,000 or 4 cents per basic and diluted shares. And non-GAAP net income was $1.1 million or 10 cents per basic and diluted shares. This compared to a net loss of $705,000 or $0.07 per basic and diluted shares and a non-GAAP net loss of $95,000 or $0.01 per basic and diluted shares for Q3 2024. Adjusted EBITDA was $1.6 million, a significant improvement compared to adjusted EBITDA of $460,000 in Q3 2024. Our financial results this fiscal year reflect both our focus on profitability and strong execution against our plan to diversify our customer base and expand our presence in new end markets. Moving to the balance sheet, we closed the quarter with a strong balance sheet including $3 million of cash and cash equivalents, working capital of $13.1 million, and a current ratio of approximately 1.6 to 1. with current assets of $34.1 million and current liabilities of $21 million. At quarter end, we had borrowed $7.8 million on our revolving credit facility. As previously mentioned, we continue to manage our working capital to strengthen our liquidity and overall capital structure. We are actively assessing our borrowing costs and see near-term opportunities for more advertising for more advantageous financing arrangements. At the end of Q3, our inventory was $14.2 million, down from $14.7 million last year. However, our inventory is up when compared to last quarter's $12.6 million. While our inventory may fluctuate from quarter to quarter, we continue to carefully manage inventory levels while improved procurement and supply chain processes. We are very mindful of our value proposition of inventory availability and believe our current inventory level supports both our strategic business model of inventory availability and continued strategic business model of inventory availability and the continued healthy demand that we see for the balance of 2025 and beyond. Moving on to our backlog, as of July 31, Our backlog stood at $19.7 million on bookings of $24.5 million. We have been successful in working through a portion of our backlog since quarter end, and as of today, our backlog currently stands at $16.1 million. We are looking forward to closing out 2025 with solid momentum in our business. Our team's execution is printing through with strong financial results, and we are well positioned to capitalize on the opportunities that are ahead of us. With that, I'll open up the call for your questions. John | Conference Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or a comment. And the first question comes from Josh Nichols with B Reilly Securities. Please proceed. Matthew | Analyst, B. Riley Securities: Hi, this is Matthew for Josh. Thanks for taking my questions. I guess to start off, I mean, the 34% gross margin is impressive, and it's well above the 30% target. Can you help us understand how much of that improvement is driven by DAX systems and small sales versus mix? Rob Dawson | CEO: Yeah, so I think – good question, and thanks, Matthew. The mix of including those two product lines is increasing, right? So you've got those two things and some of our other high-value items We talked about, obviously, last quarter we put out some press on winning some new aerospace projects. Those are also some of the higher-value, more technical kinds of solutions. So, overall, the mix is sort of leaning towards higher-value items, which help take that up. The other piece I would just mention, and Peter mentioned it in his comments, but a higher sales number is hugely helpful for us, too, because once we absorb all those fixed costs, including the labor that we do, again, to build products in the United States, Once we do that, it's heavily profitable beyond a certain level. And so you're starting to see that operating leverage that kicks in as we move between these 18, 19-plus kind of sales levels. You get some help from that operating leverage also in addition to the mix. Matthew | Analyst, B. Riley Securities: Got it. And as a follow-up to that, you guys mentioned you expect Q4 to be a similar revenue base. So I guess I'm assuming, should gross margin, assuming that DAC and other high-value items, keep up this kind of percentage of mix and the revenue base being steady. Should we expect gross margins in Q4 to be similar to Q3? And then I guess going into fiscal 26, how should that change as you grow and that mix probably continues to shift? Rob Dawson | CEO: Yeah, I think as we've talked about in the past, the mix will change quarter to quarter, and it doesn't take much of a little movement in top-line dollars to wildly swing our margins. I mean, we're talking about 50 grand here, 70 grand there. Those kinds of numbers are material against our total dollars that are being delivered. So I think our belief is that we've moved into this world where 30% and above is where we should be all the time. I don't have specific... expectations quarter by quarter based on the fluctuations, but it's not out of the question to stay at the sort of low to mid 30 levels where we've been performing. We're happy to be at 34%, obviously. You see not just the mix, but also the leverage really kicking in. It's not out of the question to do that again, but I think from a specific commitment perspective, it's tough to nail exactly what that number will be. Short of saying, we certainly expect it to be north of 30%. Matthew | Analyst, B. Riley Securities: Very helpful. Thank you. And then based on, I guess, shifting over to the strong bookings, can you characterize the composition between, you know, I guess, traditional wireless business versus the newer end markets where you've seen strength like aerospace, transportation, and data centers? Rob Dawson | CEO: Yeah, I think we're seeing contribution from all of them. And that's the helpful part is, you know, in the past, we've had some, you know, if we go back six or seven years, we had some big quarters and some big wins. And, when you dug into our queue, you'd see some concentration within that. And I think we're seeing a different scenario play out right now. It's coming from several different areas, several different product lines, not just within one market, but within individual customers. We're selling multiple of these newer, higher value product lines as well. So I think the diversity is probably the biggest story around that. And that's also helpful quarter to quarter because we're You know, one quarter, a certain customer might be our largest, and the next quarter, there may be a different customer. And that's a world that, for a growing company, you want to be in. You want that spread out. And it's kind of a who's who of who you'd like to have for customers. You know, for a company our size, and we talk about this often internally, we don't do a lot of disclosing who all of these customers are, short of saying things like the tier one wireless carrier ecosystem or a large, well-known aerospace company. For us, those are marquee names that we're putting up. And so I think that's the helpful part is our core business in the background is cranking, doing its thing, helpful, grinding out the book and ship business and doing a great job on the wire harnesses and other custom cabling to the good industrial OEM customers we've had a long time. These newer growth markets for us are growth product lines. They're coming from a diverse set of customers on top of that. And that really is, I think, the bigger story overall. Matthew | Analyst, B. Riley Securities: Right. Yeah, I agree. And I guess you mentioned being well positioned for the Olympics and World Cup build outs. And you also mentioned a hundred plus venue pipeline. Are we talking calendar kind of Q1 2026 for meaningful bookings or could we see acceleration even sooner than that? Rob Dawson | CEO: Yeah, I think so. When we talk about the pipeline overall, the great thing about the pipeline and whether it's venues or other of the kind of newer project based product lines, They're long-term. The sales cycle can be lengthy, which is fine. It starts to sort of compound itself, though, quarter to quarter. So we're expecting contribution from those kinds of deployments and solutions, certainly into fiscal 26. In some cases, those are going to be multi-year deployments. And if you think about a brand-new stadium, for example, being built for an NFL market or being built for something like the World Cup, When they build those, the last thing really to go in, once the infrastructure of the actual building itself is put in place, then they start throwing in the wires and the antennas and the overall communications piece. So it can be certainly over several quarters for us, but we think that that pipeline that we're talking about is continuing to grow, and we feel like that's a long-term indicator of whether it happens in one quarter or six quarters, we always need to have that pipeline being added to and growing. Matthew | Analyst, B. Riley Securities: Awesome. Thank you. And last question for me. You hit 8% EBITDA margin this quarter with revenue just under $20 million. Can you walk us through the bridge to your 10% target? Is it mainly just from a higher sales base or are there more operational improvements in the works? Rob Dawson | CEO: Yeah, so we're always doing operational improvements. I mean, one of the things you heard Ray said is we're constantly working on what's next there and getting better smarter about how we do things there's always opportunity there to streamline the operations overall to get more more profitable there certainly a higher sales number as we just showed it a number just short of 20 million on its own can produce some pretty significant upside results for us so we think it's probably a mix of those two things we're obviously pushing to have higher sales numbers all the time as that's a sort of an obvious statement But also, at the same time, we do believe there's some more efficiencies that we can continue to find. And the better that we do with that product mix of driving these larger project-based kind of long-term customer relationships will help both those things. The more you can predict what you're going to ship out in a quarter or two, it makes it way easier to manage that supply chain, which is one of those examples of the kind of operating levers that we have. Matthew | Analyst, B. Riley Securities: Got it. Thanks for taking my questions and great quarter. Thanks, Matthew. John | Conference Operator: If there are any remaining questions, please indicate so by pressing star 1. Okay, we have no further questions in the queue. This completes the question and answer session of the call, and I'd like to turn the floor back to Rob Dawson for any closing remarks. Rob Dawson | CEO: Great. Thank you, John. Appreciate it. And thanks, all of you, for joining us today. Thanks for your support. As always, on our next conference call, we look forward to sharing our full fiscal year results and the initiatives for fiscal 2026. Thanks, everybody, for your time. Have a good day. John | Conference Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090409-00'00'

NASDAQ:RFIL Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Conference Operator | Operator: Greetings. Welcome to ORF Industries' second quarter fiscal 2025 Financial Results Conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Donnie Case, Investor Relations at ORF Industries. Donnie, you may begin. Donnie Case | Investor Relations, ORF Industries: Thank you, Paul. And good afternoon, everyone, and welcome to ORF Industries' second quarter 2025 earnings conference call. With me today are ORFI's Chief Executive Officer, Rob Dawson, and CFO, Peter Yin. We issued our press release after market today, and that release is available on our website at orfindustries.com. I want to remind everyone that during today's call, management will make forward-looking statements that involve risk and uncertainties. Please note that information on this call today may constitute forward-looking statements under the securities exchange laws. When used, the words anticipate, believe, expect, intend, future, and other similar expressions identify forward-looking statements. These forward-looking statements reflect management's current views with respect to future events and financial performance and are subject to risk and uncertainties. Actual results may differ materially from the outcomes contained in any forward-looking statement. Factors that could cause these forward-looking statements to differ from actual results include the risk and uncertainty discussed in the company's reports on Form 10-K and 10-Q and other filings with the FTC. ORF Industries undertakes no obligation to update or revise any forward-looking statements. Additionally, throughout this call, we will be discussing certain non-GAP financial measures. Today's earnings release and related current report on Form 8-K describes the differences between our GAP and our non-GAP reporting. With that, I'll now turn the conference call over to Rob Dawson. She's Executive Officer. Please go ahead, Rob. Rob Dawson | Chief Executive Officer, ORF Industries: Great. Thank you, Donnie. And welcome to our second quarter fiscal 2025 conference call. I'll start with our second quarter highlights and some thoughts on the current environment. And our CFO, Peter Yen, will cover our financials before opening the call up to your questions. Ray Babisi, our President and COO, won't be joining us today as he's proudly attending his son's graduation. Now let's talk about the quarter. We followed our exceptionally strong first quarter with a very successful second quarter. Fiscal second quarter net sales grew 17% to $18.9 million year over year. And gross profit was 31.5%, exceeding our target goal of 30%. For the third consecutive quarter, we delivered an operating profit, which was $106,000 versus an operating loss of $415,000 in the second quarter of 2024. And adjusted EBITDA was more than $1.1 million with a 6% margin. Moving us closer to our 10% adjusted EBITDA margin goal, we ended the quarter with a backlog of $15 million and as of today, it stands at $18.4 million, a big increase from six weeks ago. To us, this seems like night and day compared to our results in the first half of fiscal 2024. I believe we've reached the inflection point where RFI's repositioning from a products company to an integrated solutions provider for diversified end markets is printing through in our financial results. Our results are now more diverse, both by product and customer than ever before. We're driving growth in wireless, aerospace, public safety, and industrial OEM customers. While we're also identifying applications in markets like energy, transportation, wireline telecom, data centers, and new industrial use cases. We're seeing repeat and new customer wins across the board in our various product categories. Our expanded portfolio of innovative solutions has further diversified our end markets. As I mentioned on our last call, we want a large custom cabling project from a leading aerospace company. Since then, we've received multiple significant additional orders from this customer. This repeat business builds our credibility and reputation in an industry that demands the highest degree of precision. Our small cell solutions are gaining momentum as we finally start to see some larger deployments moving forward. Wireless DAS build outs in stadiums and venues continue to be opportunity. And we currently have over 100 opportunities in our sales pipeline. And our core custom and standard interconnect offer remain stable and strong. Our direct air cooling or DAC systems are also gaining momentum in the market. In this category, we're continuing to push the boundaries with new innovations to enhance efficient, cost-effective cooling solutions that can cut energy consumption while reducing repair and cost. We recently launched a next-gen system that features advanced control capabilities and anemopore certification for more rugged environments. These new developments expand our opportunity set into wireline telecom, edge data centers, as well as energy and transportation applications. To elaborate on one example application that I've mentioned in recent calls, AI is driving the overall demand for data centers and more equipment is being pushed to the edges of network into the small buildings, cabinets, and enclosures that house equipment there. This equipment must be cooled to operate effectively and consistently. And our DAC systems offer high-efficient, climate-durable cooling that is both eco-friendly and at a lower cost than traditional systems. Our patented systems are built to stand the rigor of outdoor environments. Plus, they have -the-art technology that can reduce operating expenses by up to 70% over conventional HVAC systems, as well as helping companies achieve their green initiatives. Importantly, DAC systems are often funded by operating and maintenance budgets that are not correlated to capex spending, further diversifying our revenue sources. As I mentioned earlier, wireless build-outs in stadiums and venues are regaining the momentum that was lost during the COVID pandemic and coming back in both greater size and numbers. Today, who doesn't know pro or college team looking for a new venue or to modernize their existing venue? Not to mention major upcoming events like the 2026 FIFA World Cup, where the U.S. is scheduled to host games in cities like L.A., New York, Dallas, and Miami, and the 2028 Summer Olympics in L.A. As I mentioned, we have over 100 venues in our sales pipeline and an experienced sales team dedicated to further penetrating this market. We're a technology leader developing new solutions for distributed antenna systems, or DAS, that are needed to enhance wireless capabilities in stadiums, as well as airports and other high traffic venues. On the business development front, we bolstered our sales team with seasoned and connected leaders. Through their efforts, we've migrated up the food chain with key customers and are now getting a larger share of their total purchases. And as previously mentioned, we're breaking into new markets with new customers. This diversity is huge for us. It's also important to note that our prior acquisitions have been transformative in creating new opportunities with high-value solutions. Well-established brands like Microlab have market currency, and the talented teams who've joined us in product engineering and sales are leading the charge to untapped potential. While we're certainly set up to have a breakout year, a looming question is what to expect in the back half of the fiscal year given the uncertainty around the tariff situation and its impact on the supply chain. I think the summary is that so far we've handled it with our usual calm and pragmatic approach. In a bit more detail, for quite some time we've been actively working to drive even greater diversification across our supply chain. And the majority of what we produce and deliver is domestically sourced. We do have some exposure to tariffs from certain products and components through certain suppliers in Asia, but it is limited. By all measures, RFI should be the poster child of what I think the tariffs are meant to accomplish. The majority of our products are produced in the United States by an entirely American workforce. We're very proud of our team, and I believe in the integrity and quality of what we make and how we make it. That said, what's happening with tariffs is beyond our control. We continue to tweak our supply chain and pricing policies to anticipate and manage any potential new cost pressures. And the RFI team has done a great job navigating this challenging and dynamic situation. I really appreciate their flexibility, resilience, and positive attitude. We see plenty of opportunity ahead and are prepared to seize it. RFI has fought through some tough and confusing times in the past and emerged as a stronger and smarter organization. Right now we have a far greater set of opportunities than ever before, and we're focused on making steady progress and penetrating new end markets and winning more opportunities with key customers. So in summary, our results are now more diverse by product, market, and customer than ever before. This evolution has also made our results more stable and more predictable. We have standing agreements and contracts with the who's who in our various markets. RFI has a marquee list of customers, and it's growing. Our distribution channel is growing stronger as our reputation for quality products and dependable delivery also grows. We've redeveloped product lines and launched new products with a keen focus on managing R&D and capex spend. Our portfolio of innovative solutions is growing and making an impact both in the marketplace and in our results. Operationally, we've consolidated our footprint, streamlined the company, and are continuing to identify other pockets of efficiency. We're driving profit growth through our strong operating leverage and through market execution. Our financial position has greatly improved and will continue to benefit from our intense focus on profitability. We're managing the impact of tariffs and our ability to execute is our strength. With what we know today, we expect our fiscal 2025 third quarter sales to be roughly in line with second quarter sales, which would be a significant increase over the $16.8 million that we reported in the third quarter last year. We're executing well and doing what we said we would do with enthusiasm and optimism. We've never had a greater team or platform for growth to realize RFI's full potential. With that, I'll turn the call over to Peter. Peter Yin | Chief Financial Officer, ORF Industries: Thank you, Rob, and good afternoon, everyone. As Rob mentioned, we're pleased with our second quarter performance. Second quarter sales increased .4% to $18.9 million year over year and slightly decreased .6% on a sequential basis. Second quarter gross profit margin increased to .5% from .9% year over year. The 160 basis point improvement was driven by an overall increase in sales and also reflected a better product mix and our continued efforts to drive cost savings and operating efficiencies. Second quarter operating income was $106,000, a significant improvement from the operating loss of $415,000 we reported last year. Consolidated net loss was $245,000 or 2 cents per diluted share and our non-GAAP net income was $701,000 or 7 cents per diluted share versus the comparable period net loss of $4.3 million or 41 cents per diluted share and non-GAAP net income of $132,000 or 1 cents per diluted share. Second quarter adjusted EBITDA was $1.1 million, a significant improvement compared to adjusted EBITDA of $572,000 in Q2 2024. Moving to the balance sheet, we continue to manage our working capital to strengthen our liquidity and overall capital structure. As of April 30th, we had a total of $3.6 million of cash and cash equivalents and we had working capital of $12.1 million and a current ratio of approximately 1.6 to 1 with current assets of $32.7 million and current liabilities of $20.6 million. As of April 30th, we had borrowed $8 million from our revolving credit facility. We continue to keep a close eye on our borrowing costs and see opportunities in the near term to move to a more advantageous financing structure for us as our overall performance have been improving. We're pleased with the interest we have received from various lenders to explore more favorable terms that will reduce our cost of capital and enhance our liquidity. The strong demand to engage in discussions on our credit facility is a testament to the strength of our company and our position in the market. Our inventory was $12.6 million down from $14.7 million last year. The continued decrease in inventory reflects our ongoing improvement to streamline our procurement and supply chain processes. As we close our second quarter, some shipments of inventory were delayed as we worked through the tariff impact with our customers. During our Q2, it is important to note that we did not experience a material impact related to tariffs or delayed shipments from our vendors. The majority of the delays were for inventory items where we had sufficient inventory quantities on hand to meet our current delivery dates to our customers. We continue to work with our customers and to diversify our supply chain and we believe our efforts will help to minimize our exposure on the additional tariffs that were introduced. We believe our current inventory level supports our strategic business model of inventory availability and we continue to manage this closely as we expect to see continued demand in the second half of 2025 as discussed earlier in the call. Moving on to our backlog, as of April 30th, our backlog stood at $15 million on bookings of $18.7 million and as of today, our backlog currently stands at $18.4 million. In closing, our team delivered a strong first half of fiscal 2025 and we are eager to capitalize on the opportunities before us to drive increasing value for our shareholders. With that, we'll open up the call for your questions. Conference Operator | Operator: Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star one if you wish to ask a question today and please hold while we pull for questions. And the first question today is coming from Matt Maus from B Riley. Matt, your line is live. Matt Maus | Analyst, B. Riley: Hi, this is Matthew, Oscar Josh, taking my questions. Sure, come back. So to start, I was wondering what would you credit for a lot of that backlog growth that you've been seeing in bookings? How much of that business that you think will get recognized over the next year? What would you credit for that growth? Rob Dawson | Chief Executive Officer, ORF Industries: Yeah, thanks for the question, Matt. I think the increased backlog is really spread out across several different product areas. So I think that's the best news for us is there's not a concentration challenge in there. It's not one large order. It's several orders across several product lines of varying sizes. So we're encouraged by that. I think at any time, you know, our backlog, when people ask questions about it, we say, look, it's a good health indicator. But when it was, you know, 12, 13, 14 million, I wasn't worried about it being too low at, you know, 18 or 19 million kind of where it stands now. I think it's a good indication that we've got a lot of good things going and we got a lot of business ahead of us. How much of that goes out in a short window of time really depends on the product line. You know, some of these things come and go in a six-week window. Other things maybe are projects that will be spread out over a few different quarters. So most of our backlog is really made up of those projects. What doesn't get reflected there is our book and ship business that can come and go in a day or two days, which is a material amount of our sales come in that way. So I think that the healthy thing for us is, to my earlier point, we've got a mix of short and long-term opportunities in there across a lot of customers and a lot of product areas. Matt Maus | Analyst, B. Riley: Great. Thanks. Yeah, it's great to hear about the area. So I can be helpful. Fresh between, you know, bottom like cell tower stock sales and in terms of revenue. Matt, we're not getting Rob Dawson | Chief Executive Officer, ORF Industries: any of you. You're getting cut in and out there. So maybe, I don't know, can you repeat that? Matt Maus | Analyst, B. Riley: Can you hear me now? Rob Dawson | Chief Executive Officer, ORF Industries: I think so. Let's give it a try. Matt Maus | Analyst, B. Riley: Yeah. So thanks for the color on the wind being spread out across different areas of the business. I was wondering if you could give a quick refresher on the split between things like products like the cell tower side, small sales and DAT systems in terms of revenue contribution. Rob Dawson | Chief Executive Officer, ORF Industries: Yeah, sure. So we don't report specifically how much of those contribute. I think the easier way for us to look at that is that the markets where we've been able to build, or I mean, the applications we've been able to build a full bill of materials, things like small cell and things like distributed antenna systems, we do very well in the wireless space. On the macro tower site, it's a pretty competitive side of things. We do have an offer there, you had a lot of success with, performs well in that space. Our basic coax jumpers and fiber jumpers also perform there. We don't make that a priority. I think as far as developing further into that bill of materials, we do heavily focus on venues where DASH is a big play. Small cell continues to be a big play for us. Last year, it was a minimal contributor to sales. It's become something this year that is more of a growth engine. And you start to see some of the delta year over year. Certainly a contributor there. The other place that we're seeing nice growth, as we mentioned, is in what we've historically called the OEM or industrial markets. We're starting to be able to break those out a little better into things like aerospace and defense, in addition to transportation, energy, heavy manufacturing, some of these other markets. But I think the aerospace world, we've always serviced nice key customers there. We're continuing to add good blue chip customers. We talk about some meaningful orders that we've received from one in particular over the last handful of quarters. We're hopeful those continue. I think the team's performing really well. Part of that, I think the thesis behind your question is we're getting pretty diverse in the applications we're addressing. And they're all starting to produce some meaningful contributions to total sales, in addition to our core run rate that goes through distribution that we don't always know where that's going to end up. Sometimes we can tell. A lot of times we're relying upon our great distribution channel to drive market positioning for themselves and for us. And we don't always know where that ends up. But it's getting pretty spread out across several applications and markets and customers. Matt Maus | Analyst, B. Riley: Great. And then the last point, I know you have over 100 opportunities. What is the expected rate and how soon do you expect that to continue mutually? Rob Dawson | Chief Executive Officer, ORF Industries: Yeah, so on the distributed antenna side, which again, when we look at that, it's all different kinds of venues. So we talk a lot about stadiums because those are usually the big ticket items. But you're also looking at office and education campuses. You've got medical campuses. You have regular facilities that require things like public safety to go in, in addition to several other different kinds of size, multi-tenant living opportunity kind of buildings as well. So we're always tracking a pretty healthy number of those. I think we've done a good job of adding to that. They're contributing all the time. So you could say that some of our backlog increase certainly is driven by an increase in success in that market. Our expectation of how we perform in the second half of the year and going forward is certainly rooted in the fact that we feel confident in how we're performing in that application. We have the right integrators as influencer customers. Many of them buy through our distribution channel, which is great. We've gotten approvals on the right kinds of products with the carriers and the neutral host companies. So I think for us, it's always contributing, which is a helpful piece of it. And that 100 is, has it always been at that level? It's kind of ebbed and flowed, but I think we feel like there's certainly an increase of opportunities there. And the bill of materials for us, it can be a small venue that's $50,000 or it could be a huge stadium built from scratch that's over a million bucks. Those are the kinds of things that we appreciate, kind of the diversity of those different opportunities and structure. Matt Maus | Analyst, B. Riley: Awesome. Thank you for that. And I guess last one for me, I was hoping you could expand on the wireless provider, a making up about 11% of revenue for the quarter. What is that? How much more runway is either there? It looks like last was at that level about this time last year. Rob Dawson | Chief Executive Officer, ORF Industries: Yeah. So I think that, you know, when you look at our disclosures in the queue around concentration, I think the interesting thing to note is that the top customer in Q2 was different from the top customer in Q1, which was different from who it would have been at the end of last year. This is the sort of project-based nature of certain applications where we get a nice win. That application or that deployment may happen during one quarter, maybe sprout over a few quarters, but as we start to see better execution, I think within our sales team and our technology team, we're getting into more of these kinds of mid to long-term deployments that have large dollars attached to them. So the growth that we're seeing in our business is certainly attributed to some of these larger wins. And the great thing, I think, is in the past we've had some great wins and high sales numbers. And when you looked at it, our concentration was with one customer, maybe, and a bigger chunk of total sales than what we're talking here at this 11%. That same customer in Q1 was a much smaller number, and we do expect repeat purchases from that customer. I think we're also starting to see a list of several customers every quarter putting up a million bucks in kinds of sales with us, which is a new world for us to have that many customers in addition to our distributors performing as a big piece of the total sales mix. Look, it's something to take note of, but I think if you look at the... If we were disclosing the list of all the customers that we're selling to for a company our size, it's a who's who list of who you want to do business with. And it's really a testament to how great our team is at building products, designing them, building them, getting them out the door, and the relationships that we've built to bring us up market into a different world. Matt Maus | Analyst, B. Riley: Got it. That was very helpful. Thank you. I'll jump back into the queue. Thanks, Matt. Conference Operator | Operator: Thank you. And once again, if you did have a question today, please press star one on your phone at any time to enter the queue. The next question is coming from Steven Cole from Mangrove. Steven, your line is live. Steven Cole | Analyst, Mangrove: Thank you. Good evening, I guess, from here, but good afternoon there, Rob and Peter. Indeed. A couple of quick questions. I guess I wanted to talk... For Peter, for a second, just on the credit facility, because I suspect, as you alluded to, that things are getting better. Can you kind of wrap a little bit more color around that in terms of when could we expect another agreement in place and what kind of savings on the bottom line, we might say? Peter Yin | Chief Financial Officer, ORF Industries: Yeah, so I think that is... We expect to have that here in the current Q3, if not definitely by our year end. I think that we'll share more detail there as we finalize, but we expect obviously an interest rate decrease there and savings there we think will be meaningful. Steven Cole | Analyst, Mangrove: Okay. Let me turn to another question, if I could. You guys have a 10%, I know, EBITDA target, but your gross margin, I think, was 31 and change. I'm just curious if you could maybe tie out how do we get from the 6 to the 10? Because I would imagine 31 and a half is pretty decent. You've been making some cuts in S&I. So how do we reconcile that and how much is absorption versus continued improvements and max? And is there room to actually exceed? What would have to happen to beat the 10% EBITDA target? Rob Dawson | Chief Executive Officer, ORF Industries: Yeah, good question. So I think, I mean, look, you hit on the key levers in this, which one is mix. We do think there's room for mix to get a little better. The bigger thing for us there is also continuing to take out costs and be more efficient in the way we do our production and manufacturing. The tariff changes make that a little funky and making sure we can manage through the drama around those items has been important to us. I think we've done it, but it's something that has to be noted. The last piece is just, you know, we're absorbing all labor now and we're putting up the numbers that we're putting up with the existing cost infrastructure, which you'll notice. Our S&A really isn't going up commensurate with the way sales are going up. We're managing that very well and doing a good job. So I think if we have room to push sales higher as we continue to perform in these product lines with the great customers that we've managed to line up good relationships with and do a good job of managing those kind of ongoing projects, we think sort of the combination of those three things will help push that up. Peter mentioned working on a credit facility to take some additional cost out. There's other levers that we're working on as well to try to bolster that profitability, both the gross profit line and then below the line, which will at this point all fall straight through. Steven Cole | Analyst, Mangrove: Right. And another one, just on, I know you've got to be happy with DAC and small cell and, you know, are we seeing, I know you've talked about even broader coverage there, but what is the, as you look out to this year, the back half of this year, is a comfort. I don't know, obviously I know you don't break out in the backlog percentage areas, but I presume we've seen pretty good growth in both of those areas, is that the case? And again, is that being facilitated by multiple and customers or could you give them a little bit more color there? And it sounds like a lot more comfortable than you have been or at least you're seeing it pull through better. Rob Dawson | Chief Executive Officer, ORF Industries: Yeah, so I think both those product lines, both DAC and small cell, are meaningful contributors to sales. To the earlier question around, you know, customer concentration, we don't have any concerns there. These are happening across several different customers and several regions. And as we've talked about in the past, these larger customers in particular, in many cases have regional budgets that are deployed by more localized management who are overseeing a, you know, deployment of hundreds or thousands of sites, whether that's small cell or DAC. So we feel good about the diversity, not just across multiple customers, but even within the customers where there's several regions that operate somewhat independently when it comes to technology. You know, we have to get wins in each of those markets once we've gotten the overall corporate technology approval. So both product lines are contributing, which is, you know, at a material level, which is now helpful to us. And I think we expect those to continue being, you know, some of the drivers of our growth into the back half of the year. And we're hopeful that kind of momentum can continue into fiscal 26. Steven Cole | Analyst, Mangrove: Thank you very much, guys. Rob Dawson | Chief Executive Officer, ORF Industries: Thank you, Conference Operator | Operator: Steve. Thank you. There were no other questions in queue at this time. I will now hand the call back to Rob Dawson for closing remarks. Rob Dawson | Chief Executive Officer, ORF Industries: Great. Thank you, Paul. And thanks everyone for participating in today's call. We truly appreciate your support. Have a fantastic and safe summer, and we look forward to talking with you in the fall. Have a good day. Conference Operator | Operator: Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090410-00'00'