RF Industries achieves 17.5% sales growth, operating profit of $719,000, and strong future outlook driven by market diversification and strategic partnerships.

John - (00:00:28)

Greetings. Welcome to the RF Industries 3rd Quarter Fiscal 2025 Financial Results Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Donny Case. Investor Relations. You may begin.

Donny Case - Investor Relations - (00:00:57)

Oh thank you John and good afternoon everyone and welcome to RF Industries Fiscal Third Quarter 2025 Earnings Conference Call. With me today are RF Industries' Chief Executive Officer Bob Dawson, President and COO Ray Babisi and CFO Peter Yin. We issued our press release after market today and that release is available on our website@rfindustries.com I want to remind everyone that during today's call management will make forward looking statements that involve risks and uncertainty. Please note that information on this call today may constitute forward looking statements under the securities Exchange Laws. When used, the words anticipate, believe, expect, intend, future and other similar expressions identify forward looking statements. These forward looking statements reflect management's current views with respect to future events and financial performance and are subject to risks and uncertainties. Actual results may differ materially from the outcomes contained in any forward looking statements. Factors that could cause these forward looking statements to differ from actual results include the risks and uncertainties discussed in the Company's reports on Form 10K and 10Q and other filings with the SEC. RF Industries undertakes no obligation to update or revise any forward looking statements. Additionally, throughout this call we will be discussing certain non GAAP financial measures. Today's earnings release and related current report on Form 8K describe the differences between our GAAP and non GAAP reporting. With that, I'll now turn the conference over to Rob Dawson, Chief Executive Officer. Go ahead Rob.

Rob Dawson - Chief Executive Officer - (00:02:42)

Thank you Donnie and Welcome to our third quarter fiscal 2025 conference call. I'll start with our third quarter highlights and some thoughts on the current environment. Our COO Ray Babisi will expand on our go to market strategy and trends we're seeing in newer markets and our CFO Peter Yin will cover our financials before opening the call to your questions. Now to the third quarter. Our team continued to deliver strong Results for the third consecutive quarter of fiscal 2025. Third quarter net sales grew 17.5% year over year to $19.8 million. Gross profit margin was 34% which is a 450 basis point improvement over Q3 last year and 400 basis points above our target margin. Goal of 30%. We realized an operating profit of $719,000 versus a loss of $419,000 for a comparable period, which puts us in positive territory for four quarters in a row. Adjusted EBITDA of $1.6 million was 8% of net sales in the quarter, which is an important metric we use to evaluate our operational efficiency. While this metric may vary from quarter to quarter depending on product mix and shipments, achieving 8% adjusted EBITDA as a percentage of net is within reach. Even through challenging times, we've been laser focused on profitability. We now have a cost structure that gives us the operating leverage to continue improving profitability without diminishing quality, which we believe is the true path to value creation. Finally, we ended the quarter with a backlog of $19.7 million on third quarter bookings of $24.5 million. As of today, the backlog stands at 16.1 million our team's commitment to strong execution is reflected in our financial results and we're all energized by the opportunity we see ahead for those who followed RFI for a while. First, thank you. Second, you've witnessed how our long term strategy has transformed our company from a component supplier to a technology solutions provider. You also know this was no easy feat, but our commitment to delivering on what we said we would do has always been our focus. Now I want to spend some time on why we think RFI is in a great position to grow profitably going forward. The top line story here has three important 1. Diversification in products, customers and end markets 2. Deeper relationships with our traditional customers and 3. The value of new partnerships. On our third quarter call last year I talked about how our team was working hard to evolve our business to be more diverse in our products, end markets and applications and less reliant on the capex spend of our tier one carrier customers. One year later, we can proudly say that fast growing markets like aerospace, transportation and data centers are now contributing to our sales pipeline. In addition to our strong standing in our traditional markets. Ray will go into more detail on our product innovation, go to market strategy and trends we're seeing across our end markets. In aerospace, we continue to win repeat orders from a leader. In this market with mission critical components, failure is not an option and you don't get a second chance. So our success here continues to add to our credibility and reputation. The transportation market, including both in vehicles and in transportation hubs, is a wide open field for us. For example, we've already received a meaningful order for a terminal infrastructure project at a major US Airport. As you know, the current administration, justifiably, wants to see our airport terminals upgrade their functionality in line with world class airports, so this could evolve into significant opportunity for us. Municipal governments also want to upgrade their transportation infrastructures with distributed antenna deployments that will improve communication, connectivity and efficiencies for their bus and train systems. We've only just scratched the surface of our product applications for transportation. Our DAC or Direct Air Cooling system continues to attract wide attention with a variety of applications across several end markets. As I mentioned last quarter we launched a next gen system that has advanced control capabilities and ANEMA certification for more rugged environments that expands our opportunity set in wireline, Telecom, edge data centers, energy and transportation More on data centers shortly. Stadium and venue buildouts are undergoing a significant revival, especially in the United States, playing host to major events like the Olympics and World cup in coming years. With our well established reputation in this end market, we have a pipeline of over 100 venues, including some very intriguing projects around corporate and university campuses where greater connectivity is both an essential and competitive advantage. It's exciting to be at that inflection point when our technology know how and reputation create several opportunities to diversify our customer base. Yet equally important is building deeper relationships with our existing customers. Wired and wireless communication customers have been our bread and butter for many years. However, we were mostly a downstream supplier away from the center of action and key decision makers. Now that has changed dramatically with our advanced technology and problem solving approach. We've elevated our value proposition to this important customer base which in turn has resulted in a greater share of their bill of materials, especially in our higher value solutions. While telecom capex spending is still short of historical levels, we've diversified our revenue sources within these organizations to capture a share of the OPEX budgets, a direct result of building and expanding our relationships. Plus we continue to drive growth with many long standing customers in our OEM and industrial markets where we design and build custom assemblies and wire harnesses. The third driver is the value of partnerships both old and new. We're proud of our long standing relationships with all the Tier one carriers, the major installers and integrators, and especially our distribution partners. The trust we've earned for innovation, collaboration and service has attracted new partners which opens the door to additional diverse customer and market opportunities. For example, a major manufacturer of electronic cabinet and enclosures identified our.