RF Industries (RFIL) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 FY2024 reached $16.8 million, up 4.5% sequentially and 7.6% year over year, driven by a 39.2% rise in Custom Cabling segment sales, while RF Connector segment sales declined 7.6%.

• Gross profit margin improved to 29.5%, a 510 basis point increase year over year, due to cost reductions, facility consolidation, and a favorable product mix.

• Adjusted EBITDA was $460,000, positive for the second consecutive quarter, reversing prior year losses and signaling an inflection point.

• Net loss for Q3 2024 was $705,000 ($0.07 per share), improved from $1.6 million ($0.16 per share) last year.

• Backlog increased to $20.1 million at quarter-end, with management benefiting from stronger customer relationships and increased involvement in customer planning.

Financial highlights

• Operating loss narrowed to $419,000 from $2 million year over year.

• Non-GAAP net loss was $95,000 ($0.01 per share), versus $1.3 million ($0.12 per share) year over year.

• For the nine months ended July 31, 2024, net sales were $46.4 million, down from $56.3 million year over year; net loss was $6.4 million versus $2.2 million.

• Cash and cash equivalents stood at $1.8 million as of July 31, 2024, down from $4.9 million at October 31, 2023.

• Working capital was $11 million, with a current ratio of 1.6:1.

Outlook and guidance

• Q4 sales are expected to increase sequentially, with continued margin expansion as higher-margin products comprise a larger share of the backlog.

• Management is focused on cost-cutting, facility consolidation, and operational efficiencies to drive positive cash flow and liquidity.

• Backlog is expected to remain stable around $19–$20 million, with potential for increases as larger orders flow in.

• Management anticipates a more normalized market and build cycle in 2025, with improved visibility into customer spending.

• Company aims to diversify end markets and reduce reliance on telecom capex cycles.