RF Industries (RFIL) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 were $16.1 million, up 19.7% sequentially but down 27.8% year-over-year, reflecting lower wireless demand and distributor inventory reductions.

• Gross margin improved to 29.9%, up from 24.5% in Q1 and 27.4% year-over-year, driven by cost reductions and facility consolidation.

• Operating loss narrowed to $415,000 from $2.1 million in Q1, but down from $489,000 income year-over-year.

• Net loss was $4.3 million (or $0.41 per share), primarily due to a non-cash tax provision; non-GAAP net income was $132,000.

• Adjusted EBITDA returned positive at $572,000, up from a $1.1 million loss in Q1, but down from $1.4 million year-over-year.

Financial highlights

• Backlog increased to $20 million post-Q2, reflecting strong order flow and positive momentum.

• Cash and cash equivalents were $1.4 million as of April 30, 2024, down from $4.9 million at October 31, 2023.

• Working capital stood at $10.9 million with a current ratio of 1.6.

• Inventory was $16.4 million, down from $18.7 million last year.

• Line of credit: $10.5 million drawn, with up to $15 million available.

Outlook and guidance

• Management expects the second half of the year to outperform the first, with sequential revenue growth and gross margins at or above 30%.

• Operating expenses are targeted to remain stable or decrease, with further reductions possible.

• Focus remains on operational efficiencies, cost reductions, and higher-value product offerings.

• Plans include pursuing organic growth and potential acquisitions, with no significant capital expenditures anticipated.

• Backlog and order flow suggest continued momentum and recovery from the prior trough.