RF Industries Reports Sales Growth of 94% Year Over Year for the Second Quarter of Fiscal 2022 and Raises Full Year Revenue Guidance
RF Industries, Ltd. (NASDAQ: RFIL) reported a 94% increase in net sales for Q2 fiscal 2022, reaching $21.5 million. Excluding Microlab, net sales rose 64% to $18.1 million. The company’s backlog grew to $34 million, with bookings of $18.8 million. Gross profit margin improved to 28%. However, net income declined to $503,000, or $0.05 per diluted share, down from $4.8 million, or $0.48 per share year-over-year. RF Industries has raised its full-year revenue guidance to $80 million, up from $75 million.
- Net sales increased 94% year-over-year to $21.5 million.
- Backlog at $34 million with $18.8 million in bookings.
- Gross profit margin improved to 28% from 24% in the previous quarter.
- Adjusted EBITDA rose to $2.0 million compared to $355,000 in Q2 2021.
- Full-year revenue guidance increased to $80 million, up from $75 million.
- Net income dropped to $503,000 from $4.8 million in Q2 2021.
- Non-GAAP net income decreased from $5.0 million to $1.3 million year-over-year.
SAN DIEGO, CA / ACCESSWIRE / June 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 second quarter of fiscal 2022 ended April 30, 2022.
Second Quarter Fiscal 2022 Highlights and Operating Results:
- Net sales increased
94% year over year to$21.5 million ; excluding Microlab, net sales increased64% year over year to$18.1 million . - Backlog of
$27.6 million at April 30, 2022 on second quarter bookings of$18.8 million ; excluding Microlab, backlog of$22.8 million and bookings of$13 million . As of today, backlog stands at$34 million . - Gross profit margin was
28% , compared to24% in the preceding first quarter, and27% in the second quarter of fiscal 2021 (which excludes the impact of the Employee Retention Tax Credits ("ERC")). - Operating income was
$746,000 (which includes$637,000 in acquisition related and other one-time charges), compared to operating income of$42,000 in the second quarter of fiscal 2021 (which excluded the impact of the ERC and forgiveness of loans from the Paycheck Protection Program ("PPP")). - Net income was
$503,000 , or$0.05 per diluted share, compared to net income of$4.8 million , or$0.48 per diluted share, in the second quarter of fiscal 2021 (which included the positive impact of the ERC and the forgiveness from the PPP loans). - Non-GAAP net income was
$1.3 million , or$0.13 per diluted share, compared to non-GAAP net income of$5.0 million , or$0.49 per diluted share, in the second quarter of fiscal 2021 (which included the positive impact of the ERC and the forgiveness from the PPP loans). - Adjusted EBITDA was
$2.0 million , compared to an Adjusted EBITDA of$355,000 in the second quarter of fiscal 2021. - Cash and cash equivalents were
$3.8 million and the Company's full$3 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 total revenue of
$80 million , up from its previous guidance of$75 million . - Gross margins expected to increase as product mix changes and supply chain impact moderates.
- Should favorable market conditions persist, the Company expects profitability and liquidity to further improve in the second half of the fiscal year from operational efficiencies, inventory rationalization, and other key initiatives.
Robert Dawson, President and CEO of RF Industries, commented:
"Our strong sequential and year-over-year revenue growth and improved gross margins for the second quarter reflect organic growth in all our divisions, as well as the benefit of two months of higher margin revenue contribution from our successful acquisition of Microlab that we completed during the quarter. In addition to the continued growth we are generating in our core business, we are excited about the expanded customer opportunities we are already seeing with our broader product offering from Microlab that will provide additional scale and opportunity for overall margin improvement and further revenue growth.
"Yesterday we announced a significant set of orders for our Optiflex hybrid fiber cabling solution supporting a new wireless carrier customer's next generation 4G/5G infrastructure build. These kinds of new relationships demonstrate the increasing value that we're providing in the market and reiterate our expected growth opportunities. As we continue to focus on successfully executing our long-term plan to grow both organically and through strategic acquisitions, we are increasing our guidance for fiscal 2022 of annual revenue from
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 second quarter fiscal 2022 financial results. To access the conference call, dial 877-545-0523 (US and Canada) or 973-528-0016 (International) and give the participant passcode 592178. 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 conference ID is 45791.
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 ability to successfully integrate acquired businesses, improve operational efficiencies, and add innovative products and solutions to its portfolio, 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 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.
RF INDUSTRIES, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| April 30, 2022 | October 31, 2021 | |||||||
ASSETS | (unaudited) | (audited) | ||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 3,752 | $ | 13,053 | ||||
Trade accounts receivable, net | 14,706 | 13,523 | ||||||
Inventories, net | 19,168 | 11,179 | ||||||
Other current assets | 3,926 | 2,893 | ||||||
TOTAL CURRENT ASSETS | 41,552 | 40,648 | ||||||
Property and equipment, net | 981 | 708 | ||||||
Operating lease right of use asset, net | 1,568 | 1,453 | ||||||
Goodwill | 7,457 | 2,467 | ||||||
Amortizable intangible assets, net | 14,456 | 2,739 | ||||||
Non-amortizable intangible assets | 2,874 | 1,174 | ||||||
Deferred tax assets | 325 | 389 | ||||||
Other assets | 434 | 70 | ||||||
TOTAL ASSETS | $ | 69,647 | $ | 49,648 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 3,008 | $ | 3,504 | ||||
Accrued expenses | 8,097 | 5,034 | ||||||
Current portion of Term loan | 2,424 | - | ||||||
Current portion of operating lease liabilities | 1,073 | 832 | ||||||
TOTAL CURRENT LIABILITIES | 14,602 | 9,370 | ||||||
Operating lease liabilities | 524 | 675 | ||||||
Term Loan, net of debt issuance cost | 14,344 | - | ||||||
TOTAL LIABILITIES | 29,470 | 10,045 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, authorized 20,000,000 shares of 10,118,685 and 10,058,571 shares issued and outstanding at April 30, 2022 and October 31, 2021, respectively | 102 | 101 | ||||||
Additional paid-in capital | 24,648 | 24,301 | ||||||
Retained earnings | 15,427 | 15,201 | ||||||
TOTAL STOCKHOLDERS' EQUITY | 40,177 | 39,603 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 69,647 | $ | 49,648 | ||||
RF INDUSTRIES, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
| Three Months Ended | Six Months Ended | |||||||||||||||
| April 30, | April 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Net sales | $ | 21,505 | $ | 11,057 | $ | 38,423 | $ | 21,059 | ||||||||
Cost of sales | 15,425 | 6,287 | 28,259 | 13,683 | ||||||||||||
Gross profit | 6,080 | 4,770 | 10,164 | 7,376 | ||||||||||||
Operating expenses: | ||||||||||||||||
Engineering | 857 | 202 | 1,310 | 633 | ||||||||||||
Selling and general | 4,477 | 1,884 | 8,470 | 4,647 | ||||||||||||
Total operating expenses | 5,334 | 2,086 | 9,780 | 5,280 | ||||||||||||
Operating income | 746 | 2,684 | 384 | 2,096 | ||||||||||||
Other (expense) income | (107 | ) | 2,809 | (102 | ) | 2,800 | ||||||||||
Income before provision for income taxes | 639 | 5,493 | 282 | 4,896 | ||||||||||||
Provision for income taxes | 136 | 648 | 56 | 454 | ||||||||||||
Net income | $ | 503 | $ | 4,845 | $ | 226 | $ | 4,442 | ||||||||
Earnings per share - Basic | $ | 0.05 | $ | 0.49 | $ | 0.02 | $ | 0.45 | ||||||||
Earnings per share - Diluted | $ | 0.05 | $ | 0.48 | $ | 0.02 | $ | 0.44 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 10,107,687 | 9,963,291 | 10,087,309 | 9,927,776 | ||||||||||||
Diluted | 10,243,636 | 10,129,472 | 10,229,704 | 10,096,916 | ||||||||||||
RF INDUSTRIES, LTD. AND SUBSIDIARIES
Unaudited Reconciliation of GAAP to Non-GAAP Net Income
(In thousands, except per share amounts)
| Three Months Ended | Six Months Ended | |||||||||||||||
| April 30, | April 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income | $ | 503 | $ | 4,845 | $ | 226 | $ | 4,442 | ||||||||
Stock-based compensation expense | 168 | 137 | 307 | 260 | ||||||||||||
Acquisition-related and other one-time charges | 637 | - | 1,371 | - | ||||||||||||
Non-GAAP net income | $ | 1,308 | $ | 4,982 | $ | 1,904 | $ | 4,702 | ||||||||
Non-GAAP earnings per share: | ||||||||||||||||
Basic | $ | 0.13 | $ | 0.50 | $ | 0.19 | $ | 0.47 | ||||||||
Diluted | $ | 0.13 | $ | 0.49 | $ | 0.19 | $ | 0.47 | ||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 10,107,687 | 9,963,291 | 10,087,309 | 9,927,776 | ||||||||||||
Diluted | 10,243,636 | 10,129,472 | 10,229,704 | 10,096,916 | ||||||||||||
RF INDUSTRIES, LTD. AND SUBSIDIARIES
Unaudited Reconciliation of Net Income to Adjusted EBITDA
(In thousands)
| Three Months Ended | Six Months Ended | ||||||||||||||||
| April 30, | April 30, | ||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||
Net income | $ | 503 | $ | 4,845 | $ | 226 | $ | 4,442 | |||||||||
Stock-based compensation expense | 168 | 137 | 307 | 260 | |||||||||||||
Acquisition-related and other one-time charges | 637 | - | 1,371 | - | |||||||||||||
Amortization expense | 328 | 95 | 423 | 252 | |||||||||||||
Depreciation expense | 110 | 82 | 195 | 162 | |||||||||||||
Other expense (income) * | 107 | (2,809 | ) | 102 | (2,800 | ) | |||||||||||
Employee retention credit | - | (2,643 | ) | - | (2,643 | ) | |||||||||||
Provision from income taxes | 136 | 648 | 56 | 454 | |||||||||||||
Adjusted EBITDA | $ | 1,989 | $ | 355 | $ | 2,680 | $ | 127 | |||||||||
| * In the three and six months ended April 30, 2021, other income consists of the | |||||||||||||||||
CONTACT:
RF Industries, Ltd.
Peter Yin
SVP/ CFO
(858) 549-6340
rfi@rfindustries.com
MKR Investor Relations
Todd Kehrli
Analyst/ Investor Contact
(213) 277-5550
rfil@mkr-group.com
SOURCE: RF Industries, Ltd.
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