RF Industries Announces Sale of Comnet Telecom Supply Subsidiary
October 31 2018 - 4:22PM
via NEWMEDIAWIRE --
RF Industries, Ltd, (NASDAQ:
RFIL), a national manufacturer and marketer of
interconnect products and systems, today announced that it has
sold its Comnet Telecom Supply, Inc. (“Comnet”) subsidiary, a
supplier of telecommunications and data products based in East
Brunswick, New Jersey, to RAP Acquisition, Inc. for $4.2 million in
cash. RAP Acquisition, Inc. is an affiliate of Robert A. Portera,
the founder of Comnet and its current President.
“The sale of Comnet is consistent with our business
transformation toward a one company culture and operating structure
to more efficiently leverage our capabilities across the entire
business,” said Robert Dawson, President and CEO of RF
Industries. “In the last year as I reviewed our business, we looked
for redundancies and synergies to streamline operations and ensure
a common sales strategy. We found that some of the characteristics
of Comnet’s business didn’t match our go-to-market strategy since
Comnet operates with a different sales model and margin profile
than the rest of the Company. We are pleased that we have reached a
positive resolution as this divestiture reflects our ongoing focus
on driving profitable growth and investing in our best
opportunities as we work to make our business more
predictable.”
“As a result of the Comnet sale, we expect to see improvement in
both our gross margins and operating margins going forward, and the
$4.2 million sale proceeds will increase our total cash available
for inorganic growth and other strategic initiatives. Lastly, we
continue to expect solid year-over-year growth in net sales and net
income for both our fiscal fourth quarter and full fiscal year
ending today, October 31, 2018.”
Comnet’s net sales for the first nine months of fiscal 2018 were
$6.3 million of the Company’s $46.6 million total, with gross
margins of 25% and operating margins of 6%. Sales growth
year-over-year for the first nine months of fiscal 2018, excluding
Comnet’s sales, was 153% as compared to 111%, including Comnet’s
results for the same period.
As a result of the transaction, Comnet’s business will be
reported as a discontinued operation going forward.
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, wire harnesses, fiber optic
cables and custom cabling. The Company is headquartered
in San Diego, California with operations in New York and
Connecticut. 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, improved margins, and improved
profitability, 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 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 Form 10-K. 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.
Contacts:
RF Industries, Ltd.
Mark Turfler
SVP/CFO
(858) 549‑6340
rfi@rfindustries.com
MKR Group Inc.
Todd Kehrli
Analyst/Investor Contact
(323) 468-2300
rfil@mkr-group.com
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