• Net Sales: $19.2 million, a 42.7% increase year-over-year.
• Gross Profit Margin: 29.8%, up from 24.5% year-over-year.
• Operating Income: $56,000, compared to an operating loss of $2.1 million last year.
• Net Loss: $245,000 or $0.02 per diluted share.
• Non-GAAP Net Income: $397,000 or $0.04 per diluted share.
• Adjusted EBITDA: $867,000, improved from a loss of $1.1 million in Q1 2024.
• Backlog: $15.2 million as of January 31, 2025.
• Cash and Cash Equivalents: $1.3 million as of January 31, 2025.
• Working Capital: $11.7 million with a current ratio of approximately 1.7:1.
• Inventory: $13.5 million, down from $18 million last year.
• Revolving Credit Facility Borrowing: $8.1 million as of January 31, 2025.

• Warning! GuruFocus has detected 3 Warning Signs with RFIL.

Release Date: March 17, 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 significant increase in net sales, reaching $19.2 million, a 42.7% rise compared to the previous year.
• The company achieved an operating profit for the second consecutive quarter, demonstrating improved profitability despite challenging market conditions.
• RF Industries Ltd (NASDAQ:RFIL) has successfully diversified its customer base, reducing reliance on large Tier 1 wireless carriers and expanding into new markets such as aerospace.
• The company's gross profit margin improved to 29.8%, up from 24.5% year-over-year, driven by a better product mix and cost-saving initiatives.
• RF Industries Ltd (NASDAQ:RFIL) has a strong backlog of $15.2 million, indicating healthy demand and future revenue potential.

Negative Points

• Despite improvements, RF Industries Ltd (NASDAQ:RFIL) reported a net loss of $245,000 or $0.02 per diluted share for the first quarter.
• The company faces ongoing risks and uncertainties related to tariffs, which could impact procurement and supply chain activities.
• RF Industries Ltd (NASDAQ:RFIL) has borrowed $8.1 million from its revolving credit facility, indicating reliance on external financing.
• The company's inventory levels decreased to $13.5 million from $18 million last year, which may impact its ability to meet increased demand.
• RF Industries Ltd (NASDAQ:RFIL) is still navigating the challenges of transitioning from a product company to a solutions provider, which may involve execution risks.

Q & A Highlights

Q: Can you provide an update on the backlog, particularly regarding the lower-margin hybrid products? A: Robert Dawson, CEO: The backlog has been stable around $15 million. We've been drawing down older hybrid fiber items and replacing them with newer product lines like DAC and small cell solutions. The backlog is a good indicator, but not the only one. We aim to keep it above $10 million and below $20 million for optimal visibility.

Q: What contributed to the sequential sales increase during the typically slow first quarter? A: Robert Dawson, CEO: The increase is largely due to new product lines, particularly DAC thermal cooling systems and small cell solutions. These have started contributing significantly, with some impact from carrier OpEx spending. The growth is not solely from traditional distribution-centric products.

Q: How do you see the gross margin evolving throughout the year? A: Robert Dawson, CEO: We're targeting around a 30% gross margin, with potential for improvement as we optimize production and mature our new product lines. The mix of newer products can influence margins positively as we refine our offerings.

Q: Has the new sales team contributed to recent growth, and will you invest more in expanding it? A: Robert Dawson, CEO: Yes, the new sales team has played a role, but long-standing relationships and strategic positioning have been crucial. We don't plan a significant increase in sales team spending but will continue to leverage existing resources to capitalize on current successes.

Q: Can you elaborate on the shift from components to integrated solutions and potential new market opportunities? A: Robert Dawson, CEO: The shift aims to control more of the bill of materials and add value. This strategy has opened doors to new markets like aerospace. We are exploring similar opportunities across other sectors, leveraging our solutions to address broader market needs.

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