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 margin improved to 29.5% from 24.4% year-over-year, with gross profit rising by $1.1 million to $5.0 million, aided by cost reductions and facility consolidation.

• Adjusted EBITDA was $460,000, positive for the second consecutive quarter, reversing prior year losses.

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

• Backlog remained strong at $20.1 million as of July 31, 2024, with bookings of $18.9 million in Q3.

Financial highlights

• Operating loss narrowed to $419,000 from $2.0 million year-over-year.

• Non-GAAP net loss was $95,000 ($0.01/share), a significant improvement from $1.3 million ($0.12/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.

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

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

Outlook and guidance

• Q4 sales are expected to increase sequentially from Q3, with continued margin expansion anticipated as higher-margin products comprise a larger share of backlog.

• Management expects backlog to remain stable around $19–$20 million, with potential for increases as carrier spending normalizes.

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

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

• 2025 is expected to see more normalized build patterns and improved market conditions.