via NEWMEDIAWIRE --
RF Industries, Ltd, (NASDAQ:
RFIL), a national manufacturer and marketer of
interconnect products and systems, today announced its financial
results for the first quarter of fiscal 2020 ended January 31,
2020.
First Quarter Fiscal 2020 Highlights and Operating
Results:
- Net sales increased 17% year over year to $12.4 million
- Net income was $26,000, or $0.00 per diluted share
- Non-GAAP net income was $241,000, or $0.02 per diluted
share
- Adjusted EBITDA was $471,000
- Declared $0.02 per share dividend, the Company’s 39th
consecutive quarterly dividend
Robert Dawson, President and CEO of RF Industries,
commented:
“Our first quarter is typically our lightest quarter, though we
did grow 17% over last year. In addition to the usual seasonal
factors, the softer industry-wide spending by wireless carriers
contributed to lower project sales than originally expected.
Fortunately, our distribution business continues to be diverse and
healthy and, while spend from the wireless carriers was extremely
light during the quarter, we are seeing signs of improvement in our
second quarter. Our bookings have picked up across all divisions
and backlog has increased in the second quarter to date. Looking
forward, we maintain a solid balance sheet with no debt and a
strong cash position. While we are unsure of the full
economic impact of the coronavirus and we acknowledge that it may
present a short-term speed bump in our growth, we are focused on
mitigating the impact. We will continue to execute on our
long-term growth plan through active management and strong customer
relationships.”
First Quarter Fiscal 2020 Results
Net sales in the first quarter of fiscal 2020 were $12.4
million, an increase of 17%, or $1.8 million, compared to $10.6
million in the first quarter of fiscal 2019. The year-over-year
increase in net sales reflects sales contribution from the
Company’s acquisition of Schroff Technologies and C
Enterprises.
Gross profit for the first quarter was $3.3 million compared to
$3.1 million in the first quarter last year. Gross margins were
26.2% of net sales, compared to 29.5% of net sales in the fiscal
2019 first quarter. The decline in margins was primarily due to
product mix at the Custom Cabling segment driven by lower margins
at the C Enterprises subsidiary.
Total operating expenses increased $0.9 million to $3.3 million
(26.2% of net sales) compared to $2.4 million (22.2% of net sales)
in the first quarter last year primarily due to the absorption of
the additional selling and general expenses of newly acquired
Schroff Technologies and C Enterprises. Total operating expenses in
the current quarter included 1) $187,000 in stock-based
compensation expense, an increase of $73,000 over the first quarter
last year, due in part to compensation costs related to the
Company’s recently hired Chief Revenue Officer, 2) $173,000 of
amortization expense, an increase of $104,000 over last year, as a
result of the acquisition of Schroff Technologies and 3)
acquisition-related costs of $28,000, also due to the Schroff
Technologies acquisition, an increase of $24,000 over last
year.
Net income for the first quarter of fiscal 2020 was $26,000, or
$0.00 per diluted share, compared to $640,000, or $0.07 per diluted
share, in the first quarter last year.
Non-GAAP net income for the first quarter fiscal 2020 was
$241,000, or $0.02 per diluted share, compared to $758,000, or
$0.08 per diluted share in the first quarter last year. For the
first quarter fiscal 2020, non-GAAP adjustments included $187,000
in stock based compensation expense, an increase of $73,000
compared to $114,000 in the first quarter last year. Non-GAAP net
income for the first quarter fiscal 2020 also included a $28,000
adjustment for acquisition related costs and expenses associated
with the acquisition of Schroff Technologies compared to $4,000 in
the first quarter last year.
Adjusted EBITDA for the first quarter fiscal 2020 was $471,000,
compared to $1,041,000 in the first quarter last year. For the
first quarter fiscal 2020, adjusted EBITDA included $187,000
stock-based compensation expense, and $28,000 in
acquisition-related costs and expenses, as described above.
Adjusted EBITDA for the first quarter fiscal 2020 also included
$173,000 amortization expense, an increase of $104,000 compared to
$69,000 in the first quarter last year primarily due to the impact
of acquiring Schroff Technologies.
Balance Sheet Data; Dividends
At January 31, 2020, the Company reported working capital of
$23.8 million, including cash and cash equivalents of $14.4
million, a current ratio of 5.4-to-1 and no outstanding
debt.
At its March 5, 2020 meeting, the Company’s Board of Directors
declared a quarterly cash dividend of $0.02 per common share,
payable on April 15, 2020 to stockholders of record on March 31,
2020.
Cash dividends are made at the discretion of the Board of
Directors, subject to applicable laws, and depend on a number of
factors, including the Company's financial condition, results of
operations, capital requirements, plans for future acquisitions,
contractual restrictions, general business conditions and other
factors considered relevant by our Board of Directors.
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 first
quarter 2020 financial results. To access the conference call, dial
888-394-8218 (US and Canada) or 323-794-2591 (International). The
conference ID is 2522210. 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
844-512-2921 (US and Canada) or 412-317-6671 (International). The
replay conference ID is 2522210.
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 higher sales, increased future
demand for the Company's products, and future net sales goals,
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:
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;
uncertainty regarding the impact of the Coronavirus outbreak on its
supply chain; 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, and acquisition related costs
and expenses. 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.
(tables attached)
RF INDUSTRIES, LTD. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(UNAUDITED) (In thousands, except share and per share amounts) |
|
|
|
|
|
Three Months Ended |
January 31, |
2020 |
|
2019 |
|
|
|
|
Net sales |
$ 12,414 |
|
$ 10,647 |
Cost of sales |
9,161 |
|
7,502 |
|
|
|
|
Gross profit |
3,253 |
|
3,145 |
|
|
|
|
Operating expenses: |
|
|
|
Engineering |
596 |
|
320 |
Selling and general |
2,656 |
|
2,039 |
Total operating expenses |
3,252 |
|
2,359 |
|
|
|
|
Operating income |
1 |
|
786 |
|
|
|
|
Other income |
11 |
|
22 |
|
|
|
|
Income before provision/(benefit) for
income taxes |
12 |
|
808 |
Provision/(benefit)
for income taxes |
(14) |
|
168 |
|
|
|
|
Net income |
$ 26 |
|
$ 640 |
|
|
|
|
Net income per share -
Basic |
$ 0.00 |
|
$ 0.07 |
Net income per share -
Diluted |
$ 0.00 |
|
$ 0.06 |
|
|
|
|
Weighted average shares outstanding: |
|
|
|
Basic |
9,564,533 |
|
9,309,454 |
Diluted |
9,873,336 |
|
9,838,154 |
RF INDUSTRIES, LTD. AND
SUBSIDIARIES |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(in thousands, except share and per share amounts) |
|
|
|
Jan.
31, |
|
Oct.
31, |
|
2020 |
|
2019 |
|
ASSETS |
(unaudited) |
|
(audited) |
|
CURRENT ASSETS |
|
|
|
|
Cash and cash equivalents |
$ 14,390 |
|
$ 12,540 |
|
Trade accounts receivable, net |
5,745 |
|
12,190 |
|
Inventories, net |
8,390 |
|
8,245 |
|
Other current assets |
721 |
|
685 |
|
TOTAL CURRENT ASSETS |
29,246 |
|
33,660 |
|
|
|
|
|
|
Property and equipment, net |
867 |
|
839 |
|
Right of use asset, net |
2,024 |
|
-- |
|
Goodwill |
2,753 |
|
1,340 |
|
Amortizable intangible assets, net |
3,700 |
|
1,092 |
|
Non-amortizable intangible assets |
1,174 |
|
657 |
|
Other assets |
68 |
|
112 |
|
TOTAL ASSETS |
$ 39,832 |
|
$ 37,700 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Accounts payable |
$ 1,220 |
|
$ 2,406 |
|
Accrued expenses |
3,311 |
|
3,653 |
|
Income taxes payable |
-- |
|
21 |
|
Other current liabilities |
933 |
|
-- |
|
TOTAL CURRENT LIABILITIES |
5,464 |
|
6,080 |
|
|
|
|
|
|
Deferred tax liabilities |
18 |
|
-- |
|
Operating lease liabilities |
1,191 |
|
-- |
|
Other
long-term liabilities |
1,215 |
|
87 |
|
TOTAL LIABILITIES |
7,888 |
|
6,167 |
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
Common stock, authorized 20,000,000 shares of $0.01
par value; |
|
|
|
|
9,745,135 and 9,462,267 shares
issued and outstanding at |
|
|
|
|
January 31, 2020 and October 31,
2019, respectively |
98 |
|
95 |
|
Additional paid-in capital |
22,524 |
|
21,949 |
|
Retained earnings |
9,322 |
|
9,489 |
|
TOTAL STOCKHOLDERS' EQUITY |
31,944 |
|
31,533 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 39,832 |
|
$ 37,700 |
|
RF INDUSTRIES, LTD. AND SUBSIDIARIES |
Unaudited Reconciliation of GAAP to non-GAAP Net Income |
(In thousands, except per share amounts) |
|
|
|
|
|
Three Months Ended January 31, |
|
2020 |
|
2019 |
Net
income |
$ 26 |
|
$ 640 |
Stock-based compensation expense |
187 |
|
114 |
Acquisition-related costs |
28 |
|
4 |
Non-GAAP net
income |
$ 241 |
|
$ 758 |
|
|
|
|
Non-GAAP net
income per share: |
|
|
|
Basic |
$ 0.03 |
|
$ 0.08 |
Diluted |
$ 0.02 |
|
$ 0.08 |
|
|
|
|
Weighted
average shares outstanding |
|
|
|
Basic |
9,565 |
|
9,309 |
Diluted |
9,873 |
|
9,838 |
RF INDUSTRIES, LTD. AND SUBSIDIARIES |
Unaudited Reconciliation of Net Income to Adjusted EBITDA |
(In thousands) |
|
|
|
|
|
Three Months Ended January 31, |
|
2020 |
|
2019 |
Net income |
$ 26 |
|
$ 640 |
Stock-based compensation expense |
187 |
|
114 |
Acquisition-related costs |
28 |
|
4 |
Amortization expense |
173 |
|
69 |
Depreciation expense |
82 |
|
68 |
Other
income |
(11) |
|
(22) |
Provision for income taxes |
(14) |
|
168 |
Adjusted
EBITDA |
$ 471 |
|
$ 1,041 |
Contacts: RF Industries
Ltd.Mark Turfler SVP/CFO (858)
549-6340 rfi@rfindustries.com |
|
MKR Investor
RelationsTodd Kehrli Analyst/Investor Contact (323)
468-2300 rfil@mkr-group.com |
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