RF Industries Reports Sequential Sales Growth of 11% in Second Quarter of Fiscal 2021; Reiterates Guidance for Year-Over-Year Growth in Full-Year 2021 Revenue
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RF Industries Reports Sequential Sales Growth of 11% in Second Quarter of Fiscal 2021; Reiterates Guidance for Year-Over-Year Growth in Full-Year 2021 Revenue

Monday, June 14, 2021 4:01 PM
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Earnings
RF Industries, Ltd.

SAN DIEGO, CA / ACCESSWIRE / June 14, 2021 / RF Industries, Ltd, (NASDAQ:RFIL), a national manufacturer and marketer of interconnect products and systems, today announced its financial results for the second quarter of fiscal 2021 ended April 30, 2021. As noted below, these financial results include the impact of forgiveness of approximately $2.8 million in loans from the Paycheck Protection Program ("PPP") and $2.6 million in Employee Retention Tax Credits ("ERC") recognized in the second quarter.

Second Quarter Fiscal 2021 Highlights and Operating Results:

  • Net sales increased 11% sequentially to $11.1 million.
  • Backlog of $15.6 million at April 30, 2021 on second quarter bookings of $19.6 million. As of today, backlog stands at $22.8 million.
  • Gross profit margin was 43%, which includes the impact of the ERC received during the quarter. Excluding the impact of ERC, gross profit margin was 27%, up from 26% in the preceding first quarter.
  • Net income was $4.8 million, or $0.48 per diluted share, which includes the impact of ERC and the forgiveness from the PPP.
  • Operating income was $42,000, which excludes the impact of the ERC and PPP, up from an operating loss of $589,000 in the preceding first quarter.
  • Non-GAAP net income was $5.0 million, or $0.49 per diluted share, which includes the impact of ERC and forgiveness from the PPP.
  • Adjusted EBITDA was $355,000, which excludes the impact of the ERC and the forgiveness from the PPP.
  • Cash and cash equivalents were $14.8 million.

Robert Dawson, President and CEO of RF Industries, commented: 
"We are pleased to report sequential growth in both sales and profits in the second quarter. We are also starting to see signs of recovery in the wireless carrier ecosystem spend, as reflected in the sizeable orders we have recently received for our Optiflex hybrid fiber solution that brought our current backlog to the highest level in the Company's history. We expect the carrier market spend to continue to recover and grow, and we see increasing opportunities to expand further into this market with our complete product offering. Our industrial OEM customers and distribution partners are returning to more normalized levels and we anticipate sales expansion in both segments. Looking ahead, we expect to achieve sequential sales growth in the current fiscal third quarter, and continue to expect a return to year-over-year revenue growth this year."

Conference Call and Webcast 
RF Industries will host a conference call and live webcast today at 1:30 p.m. Pacific Time (4:30 p.m. ET) to discuss its second quarter fiscal 2021. To access the conference call, dial 877-407-8031 (US and Canada) or 201-689-8031(International) and ask for the RF Industries second quarter call. 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 41537.

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 and North Kingstown, Rhode Island. 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 return of delayed project-based business and the Company's long-term growth, 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: 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.

Contacts:

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]

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, 
 
 2021  2020  2021  2020 
 
 (unaudited)  (unaudited)  (unaudited)  (unaudited) 
Net sales
 $11,057  $10,390  $21,059  $22,804 
Cost of sales
  6,287   7,804   13,683   16,965 
 
                
Gross profit
  4,770   2,586   7,376   5,839 
 
                
Operating expenses:
                
Engineering
  202   528   633   1,124 
Selling and general
  1,884   2,246   4,647   4,902 
Total operating expenses
  2,086   2,774   5,280   6,026 
 
                
Operating income (loss)
  2,684   (188)  2,096   (187)
 
                
Other income
  2,809   7   2,800   18 
 
                
Income (loss) before provision (benefit) for income taxes
  5,493   (181)  4,896   (169)
Provision (benefit) for income taxes
  648   3   454   (11)
 
                
Net income (loss)
 $4,845  $(184) $4,442  $(158)
 
                
Earnings (loss) per share - Basic
 $0.49  $(0.02) $0.45  $(0.02)
Earnings (loss) per share - Diluted
 $0.48  $(0.02) $0.44  $(0.02)
 
                
Weighted average shares outstanding:
                
Basic
  9,963,291   9,704,880   9,927,776   9,633,935 
Diluted
  10,129,472   9,704,880   10,096,916   9,633,935 
 
                

RF INDUSTRIES, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)


 
 Apr. 31,
2021
  Oct. 31,
2020
 
ASSETS
 (unaudited)  (audited) 
CURRENT ASSETS      
Cash and cash equivalents
 14,762  15,797 
Trade accounts receivable, net
  6,364   5,669 
Inventories, net
  9,574   8,586 
Other current assets
  3,637   813 
TOTAL CURRENT ASSETS
  34,337   30,865 

 
        
Property and equipment, net
  814   810 
Operating right of use asset, net
  976   1,421 
Goodwill
  2,467   2,467 
Amortizable intangible assets, net
  2,929   3,181 
Non-amortizable intangible assets
  1,174   1,174 
Deferred tax assets
  -   834 
Other assets
  70   70 
TOTAL ASSETS
 42,767  40,822 

 
        
LIABILITIES AND STOCKHOLDERS' EQUITY
        
CURRENT LIABILITIES
        
Accounts payable
 1,236  1,475 
Accrued expenses
  3,240   2,573 
Current portion of PPP loans
  -   1,699 
Current portion of operating lease liabilities
  691   874 
Income taxes payable
  -   43 
TOTAL CURRENT LIABILITIES
  5,167   6,664 

 
        
Deferred tax liabilities
  2   - 
Operating lease liabilities
  358   635 
PPP loans
  -   1,089 
Other long-term liabilities
  -   370 
TOTAL LIABILITIES
  5,527   8,758 

 
        
COMMITMENTS AND CONTINGENCIES
        

 
        
STOCKHOLDERS' EQUITY
        
Common stock, authorized 20,000,000 shares of $0.01 par value;
        
10,001,056 and 9,814,118 shares issued and outstanding at
        
April 30, 2021 and October 31, 2020, respectively
  100   98 
Additional paid-in capital
  23,678   22,946 
Retained earnings
  13,462   9,020 
TOTAL STOCKHOLDERS' EQUITY
  37,240   32,064 

 
        
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 42,767  40,822 

 
        

RF INDUSTRIES, LTD. AND SUBSIDIARIES
Unaudited Reconciliation of GAAP to non-GAAP Net Income (Loss)
(In thousands, except per share amounts)


 
 Three Months Ended
April 30,
  Six Months Ended
April 30,
 

 
 2021  2020  2021  2020 
Net income (loss)
 4,845  (184) 4,442  (158)
Stock-based compensation expense
  137   97   260   283 
Acquisition-related costs
  -   14   -   42 
Non-GAAP net income (loss)
 4,982  (73) 4,702  167 

 
                
Non-GAAP net income (loss) per share:
                
Basic
 0.50  (0.01) 0.47  0.02 
Diluted
 0.49  (0.01) 0.47  0.02 

 
                
Weighted average shares outstanding
                
Basic
  9,963   9,705   9,928   9,634 
Diluted
  10,129   9,705   10,097   9,881 

 
                

RF INDUSTRIES, LTD. AND SUBSIDIARIES
Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA
(In thousands)


 
 Three Months Ended
April 30,
  Six Months Ended
April 30,
 

 
 2021  2020  2021  2020 
Net income (loss)
 4,845  (184) 4,442  (158)
Stock-based compensation expense
  137   97   260   283 
Acquisition-related costs
  -   14   -   42 
Amortization expense
  95   173   252   346 
Depreciation expense
  82   80   162   162 
Other income *
  (2,809)  (7)  (2,800)  (18)
Employee retention credit
  (2,643)  -   (2,643)  - 
Provision (benefit) from income taxes
  648   3   454   (11)
Adjusted EBITDA
 355  176  127  646 

* In the three and six months ended April 30, 2021, other income consists of the $2.8M PPP Loans that were forgiven.

SOURCE: RF Industries, Ltd.

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