RF Industries Reports Record Sales of $23.8 Million and 56% Sales Growth Year Over Year for the Third Quarter of Fiscal 2022

About this update from Rf Industries, Ltd.

SAN DIEGO, CA / ACCESSWIRE / September 14, 2022 / RF Industries, Ltd , (NASDAQ:RFIL) , a national manufacturer and marketer of interconnect products and systems, today announced its unaudited financial results for the third quarter of fiscal 2022 ended July 31, 2022 . Third Quarter Fiscal 2022 Highlights and Operating Results: Net sales increased 11% sequentially and 56% year over year to $23.8 million . Microlab exceeded expectations delivering $6.5 million in sales in the quarter. Backlog of $30.6 million at July 31, 2022 on third quarter bookings of $26.8 million . As of today, backlog stands at $31.0 million . Gross profit margin was 30%, compared to 28% in the preceding second quarter, and 28% in the third quarter of fiscal 2021 (which excluded the impact of the Employee Retention Tax Credits ("ERC")). Consolidated net income was $771,000 , or $0.08 per diluted share, compared to consolidated net income of $926,000 , or $0.09 per diluted share, in the third quarter of fiscal 2021(which included the impact of the ERC). Non-GAAP net income was $1.2 million , or $0.12 per diluted share, compared to non-GAAP net income of $1.3 million , or $0.13 per diluted share, in the third quarter of fiscal 2021 (which included the impact of the ERC). Adjusted EBITDA was $2.1 million , compared to adjusted EBITDA of $1.0 million in the third quarter of fiscal 2021. Cash and cash equivalents were $5.1 million as of the end of the third quarter, and the Company's full $3.0 million revolver remains available. See "Note Regarding Use of Non-GAAP Financial Measures," "Unaudited Reconciliation of GAAP to non-GAAP Net Income" and "Unaudited Reconciliation of Net Income to Adjusted EBITDA" below for additional information. Fiscal 2022 Financial Guidance For the fiscal 2022 year ending October 31, 2022 , RF Industries expects: Full year net sales of between $83 million to $85 million , which would represent growth of at least 45% year over year. Gross margin improvement for the full year as we continue to drive margin improvement opportunities and a better product mix. Robert Dawson , President and CEO of RF Industries , commented: "We are pleased to report our highest quarterly revenue in company history. Q3 was another strong quarter of revenue growth and continued gross margin improvement that reflects both an organic increase in our overall business and higher margin revenue contribution from our successful acquisition of Microlab, which performed extremely well in the quarter. Our hybrid fiber business also remained strong, and we were pleased to announce last week another order from our newest North American Tier 1 wireless carrier customer to support their infrastructure build. "With solid bookings and backlog, we are set up for a great finish to our fiscal year as we pursue additional projects in strategic higher margin product areas. In addition, we remain committed to further M&A activity as we continue to be strategic and focused with our capital allocation as another avenue of driving increased revenue, scale and profitability." Conference Call and Webcast RF Industries will host a conference call and live webcast today at 4:30 p.m. Eastern Time ( 1:30 p.m. PT ) to discuss its third quarter fiscal 2022 financial results. To access the conference call, dial 888-506-0062 (US and Canada ) or 973-528-0011 (International) and give the participant access code 962049. In addition, a live and archived webcast of the conference call will be accessible on the investor relations section of the Company's website at www.rfindustries.com . A phone replay of the conference call will also be available beginning approximately two hours after conclusion of the call and will remain available for two weeks. To access the phone replay, dial 877-481-4010 (US and Canada ) or 919-882-2331(International). The replay access code is 46442. About RF Industries RF Industries designs and manufactures a broad range of interconnect products across diversified, growing markets, including wireless/wireline telecom, data communications and industrial. The Company's products include RF connectors , coaxial cables , data cables , wire harnesses , fiber optic cables , custom cabling , energy-efficient cooling systems and integrated small cell enclosures . The Company is headquartered in San Diego, California with additional operations in Long Island , New York , Vista, California , Milford, Connecticut , North Kingstown, Rhode Island and Parsippany, New Jersey . Please visit the RF Industries website at www.rfindustries.com . Forward-Looking Statements This press release contains forward-looking statements with respect to future events, including the Company's acquisition pipeline, as well as its ability to successfully integrate acquired businesses, improved operational efficiencies, add innovative products and solutions to its portfolio and allocate capital efficiently and effectively, which are subject to a number of factors that could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to: successfully integrating new products and teams, the duration and continuing impact of the coronavirus pandemic on the U.S. economy and the Company's customers; changes in the telecommunications industry; the Company's reliance on certain distributors and customers for a significant portion of anticipated revenues; the impact of existing and additional future tariffs imposed by U.S. and foreign nations; the Company's ability to execute on its new go-to-market strategies and channel models; its ability to expand its OEM relationships; its ability to continue to deliver newly designed and custom fiber optic and cabling products to principal customers; its ability to maintain strong margins and diversify its customer base; and its ability to address the changing needs of the market. Further discussion of these and other potential risk factors may be found in the Company's public filings with the Securities and Exchange Commission ( www.sec.gov ) including its Annual Report on Form 10-K and its Quarterly Reports on Form 10- Q. All forward-looking statements are based upon information available to the Company on the date they are published, and the Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or new information after the date of this release. Note Regarding Use of Non-GAAP Financial Measures To supplement our condensed financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures, including adjusted earnings before interest, taxes, depreciation, amortization (Adjusted EBITDA), non-GAAP net income and non-GAAP earnings per diluted share (non-GAAP EPS). We believe these financial measures provide useful information to investors with which to analyze our operating trends and performance. In computing Adjusted EBITDA, non-GAAP net income, and non-GAAP EPS, we exclude stock-based compensation expense, which represents non-cash charges for the fair value of stock options and other non-cash awards granted to employees, acquisition related costs and expenses, and severance. For Adjusted EBITDA we also exclude depreciation, amortization, and provision for income taxes. Because of varying available valuation methodologies, subjective assumptions, and the variety of equity instruments that can impact a company's non-cash operating expenses, we believe that providing non-GAAP financial measures that exclude non-cash expense and non-recurring costs and expenses allows for meaningful comparisons between our core business operating results and those of other companies, as well as providing us with an important tool for financial and operational decision-making and for evaluating our own core business operating results over different periods of time. Our Adjusted EBITDA, non-GAAP net income, and non-GAAP EPS measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. Our Adjusted EBITDA, non-GAAP Net income, and non-GAAP EPS are not measurements of financial performance under GAAP, and should not be considered as an alternative to operating or net income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. We do not consider these non-GAAP measures to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of specific adjustments to GAAP results is provided in the last two tables at the end of this press release. (tables attached) RF INDUSTRIES, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share and per share amounts) Three Months Ended Nine Months Ended July 31 , July 31 , 2022 2021 2022 2021 (unaudited) (unaudited) (unaudited) (unaudited) Net sales $ 23,842 $ 15,257 $ 62,265 $ 36,316 Cost of sales 16,594 10,198 44,853 23,881 Gross profit 7,248 5,059 17,412 12,435 Operating expenses: Engineering 791 411 2,101 1,044 Selling and general 5,369 3,452 13,838 8,099 Total operating expenses 6,160 3,863 15,939 9,143 Operating income 1,088 1,196 1,473 3,292 Other (expense) income (177 ) 2 (280 ) 2,803 Income before provision for income taxes 911 1,198 1,193 6,095 Provision for income taxes 140 272 196 727 Consolidated net income $ 771 $ 926 $ 997 $ 5,368 Earnings per share - Basic $ 0.08 $ 0.09 $ 0.10 $ 0.54 Earnings per share - Diluted $ 0.08 $ 0.09 $ 0.10 $ 0.53 Weighted average shares outstanding: Basic 10,127,244 9,979,578 10,100,767 9,955,193 Diluted 10,238,932 10,150,396 10,233,209 10,131,172 RF INDUSTRIES, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share amounts) Jul. 31, 2022 Oct. 31, 2021 ASSETS (Unaudited) (Audited) CURRENT ASSETS Cash and cash equivalents $ 5,086 $ 13,053 Trade accounts receivable, net 16,161 13,523 Inventories, net 19,161 11,179 Other current assets 6,647 2,893 TOTAL CURRENT ASSETS 47,055 40,648 Property and equipment, net 1,031 708 Operating lease right of use asset, net 13,967 1,453 Goodwill 7,682 2,467 Amortizable intangible assets, net 15,728 2,739 Non-amortizable intangible assets 1,174 1,174 Deferred tax assets 263 389 Other assets 295 70 TOTAL ASSETS $ 87,195 $ 49,648 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 6,050 $ 3,504 Accrued expenses 6,913 5,034 Current portion of Term loan 2,424 - Current portion of operating lease liabilities 1,576 832 TOTAL CURRENT LIABILITIES 16,963 9,370 Operating lease liabilities 15,263 675 Term Loan, net of debt issuance cost 13,740 - TOTAL LIABILITIES 45,966 10,045 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, authorized 20,000,000 shares of $0.01 par value; 10,156,191 and 10,058,571 shares issued and outstanding at July 31, 2022 and October 31, 2021 , respectively 102 101 Additional paid-in capital 24,929 24,301 Retained earnings 16,198 15,201 TOTAL STOCKHOLDERS' EQUITY 41,229 39,603 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 87,195 $ 49,648 RF INDUSTRIES, LTD. AND SUBSIDIARIES Unaudited Reconciliation of GAAP to Non-GAAP Net Income(In thousands, except share and per share amounts) Three Months Ended Nine Months Ended July 31 , July 31 , 2022 2021 2022 2021 Consolidated net income $ 771 $ 926 $ 997 $ 5,368 Stock-based compensation expense 191 374 498 634 Acquisition-related and other one-time charges 205 - 1,576 - Severance 45 - 45 - Non-GAAP net income $ 1,212 $ 1,300 $ 3,116 $ 6,002 Non-GAAP earnings per share: Basic $ 0.12 $ 0.13 $ 0.31 $ 0.60 Diluted $ 0.12 $ 0.13 $ 0.30 $ 0.59 Weighted average shares outstanding Basic 10,127,244 9,979,578 10,100,767 9,955,193 Diluted 10,238,932 10,150,396 10,233,209 10,131,172 RF INDUSTRIES, LTD. AND SUBSIDIARIES Unaudited Reconciliation of Net Income to Adjusted EBITDA(In thousands) Three Months Ended Nine Months Ended July 31 , July 31 , 2022 2021 2022 2021 Consolidated net income $ 771 $ 926 $ 997 $ 5,368 Stock-based compensation expense 191 374 498 634 Acquisition-related and other one-time charges 205 - 1,576 - Severance 45 - 45 - Amortization expense 427 95 850 347 Depreciation expense 110 83 305 245 Other expense (income) * 177 (1 ) 280 (2,803 ) Employee retention credit - (803 ) - (3,486 ) Employee retention credit consultant fees - 100 - 150 Provision from income taxes 140 272 196 727 Adjusted EBITDA $ 2,066 $ 1,046 $ 4,747 $ 1,182 * In the nine months ended July 31, 2021 , other income consists of the $2.8M PPP loans that were forgiven. CONTACT: RF Industries, Ltd. Peter Yin SVP/ CFO (858) 549-6340 [email protected] MKR Investor Relations Todd Kehrli Analyst/ Investor Contact (213) 277-5550 [email protected] SOURCE: RF Industries, Ltd. 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