• Net Sales: $18.5 million in Q4, up 16% year-over-year and 10% sequentially.
• Gross Profit Margin: Increased to 31.3% in Q4 from 28.4% year-over-year.
• Operating Income: $96,000 in Q4, compared to an operating loss of $1.1 million in the previous year.
• Net Loss: $238,000 or $0.02 per diluted share in Q4, improved from a net loss of $851,000 or $0.08 per diluted share year-over-year.
• Non-GAAP Net Income: $394,000 or $0.04 per diluted share in Q4, compared to a non-GAAP net loss of $434,000 or $0.04 per diluted share in the previous year.
• Adjusted EBITDA: $908,000 in Q4, compared to negative $108,000 in Q4 2023.
• Debt Reduction: Debt reduced to just above $8 million from $14.1 million at the end of the previous fiscal year.
• Inventory: Reduced to $14.7 million from $18.7 million last year.
• Backlog: $19.5 million as of October 31, 2024, with current backlog at $14.9 million.

• Warning! GuruFocus has detected 5 Warning Signs with RFIL.

Release Date: January 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RF Industries Ltd (NASDAQ:RFIL) reported a 16% increase in net sales for the fourth quarter, reaching $18.5 million, indicating strong revenue growth.
• The company achieved an operating profit for the first time in several quarters, reflecting improved profitability.
• RF Industries Ltd (NASDAQ:RFIL) successfully reduced its debt from $14.1 million to just above $8 million, strengthening its balance sheet.
• The gross profit margin increased to 31.3%, highlighting effective cost management and operational efficiencies.
• The company has strengthened its product offerings with high-demand solutions like small cells and DAC thermal cooling systems, positioning itself as a full solutions provider.

Negative Points

• Despite improvements, RF Industries Ltd (NASDAQ:RFIL) reported a net loss of $238,000 for the fourth quarter, indicating ongoing financial challenges.
• The company faces increasing costs outside of its control, such as wage pressures and escalating insurance expenses.
• RF Industries Ltd (NASDAQ:RFIL) experienced a 10% decrease in full fiscal year sales, highlighting challenges in maintaining consistent revenue growth.
• The backlog decreased from $19.5 million to $14.9 million, which could impact future sales if not replenished.
• The company is still navigating a challenging market environment, with key markets in recovery mode, which may affect future performance.

Q & A Highlights

Q: What was the main contributor to the revitalized top line and what's driving that going into the seasonally low first quarter? A: Robert Dawson, CEO: The significant shipment of hybrid fiber from our backlog in Q4 was a major contributor. We also saw a general recovery across the board. Looking into Q1, we are seeing a product mix shift with better bookings and a stronger backlog, indicating that our long-term plans for growth in newer product areas are starting to contribute.

Q: Which products are most in demand and driving the shift in the product mix? A: Robert Dawson, CEO: There's increased customer interest and spending across the board. Key drivers include small cell and DAC thermal cooling products, which are newer areas for us. Additionally, the recovery of stadiums and large venues is boosting demand for our Microlab product line and standard interconnect offerings.

Q: Can you provide some color on the operations infrastructure you're working on and quantify expected savings? A: Robert Dawson, CEO: While we aren't providing specific dollar amounts, our goal is to achieve a stronger adjusted EBITDA margin above 10%. We're focusing on smarter procurement and exploring partnerships for preproduction work, which could be applied to legacy product lines to drive better profitability.

Q: Is there an update on back orders potentially becoming turnkey national programs? A: Robert Dawson, CEO: In Q4, we saw some success with structured agreements with key customers for DAC solutions across several markets. This is not limited to one customer, and we are seeing opportunities in different regions. As customers allocate their spending, we expect to capture more market share.

Q: Regarding facility rationalization, are there still opportunities to optimize the footprint? A: Robert Dawson, CEO: Most heavy lifting is done, with consolidation into larger, more streamlined operations on both coasts. There is room for balancing production between East and West Coast facilities to reduce shipment costs and time, which remains an opportunity for additional savings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.