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RF

R F INDUSTRIES LTD (RFIL)·Q2 2025 Earnings Summary

Executive Summary

  • RF Industries delivered a solid Q2 FY25: revenue $18.91M (+17.4% YoY; -1.5% QoQ), gross margin 31.5% (+160 bps YoY), and third consecutive operating profit; non-GAAP EPS was $0.07 and Adjusted EBITDA $1.12M .
  • Results beat S&P Global consensus on revenue ($17.24M*) and EPS ($0.04*); revenue surprise ~+9.7% and EPS +$0.03, aided by improved mix, operating efficiencies, and momentum in DAC cooling, small cell, and DAS . Estimates: S&P Global*.
  • Backlog ended the quarter at $15.0M and rose to $18.4M as of the call, signaling demand acceleration into 2H25; bookings were $18.7M in Q2 .
  • Qualitative guide: management expects Q3 FY25 sales roughly in line with Q2, well above last year’s Q3, highlighting sustained momentum; a credit facility refinance is targeted for Q3 or by year-end to lower interest cost and bolster liquidity .

What Went Well and What Went Wrong

What Went Well

  • Mix and efficiency drove margin/earnings upside: gross margin reached 31.5% (vs. 29.9% LY) and operating income turned positive ($106K) with Adjusted EBITDA of $1.12M; non‑GAAP EPS rose to $0.07 .
  • Demand breadth and backlog momentum: backlog increased from $15.0M at quarter-end to $18.4M by the call, with bookings of $18.7M, spread across multiple products/customers; CEO: “not one large order…several orders across several product lines” .
  • Strategic products gaining traction: DAC cooling, small cell, and DAS pipelines strengthening; CEO: “we currently have over 100 [DAS] opportunities,” and DAC “can reduce operating expenses by up to 70% over conventional HVAC” .

What Went Wrong

  • GAAP bottom line still negative: consolidated net loss of $245K (‑$0.02/share) despite operating profit, reflecting other expense and taxes .
  • Sequential dip in revenue: sales down ~1.6% QoQ to $18.91M after a strong Q1; management framed the quarter as successful but acknowledged the slight sequential decline .
  • Tariff overhang and shipment timing: tariff-related customer discussions delayed some shipments (covered by on‑hand inventory), underscoring ongoing execution required to mitigate cost/timing risks .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$16.11 $18.45 $19.20 $18.91
Gross Margin %29.9% 31.3% 29.8% 31.5%
Operating Income ($USD Thousands)(415) 96 56 106
GAAP Diluted EPS ($)(0.41) (0.02) (0.02) (0.02)
Non‑GAAP EPS ($)0.01 0.04 0.04 0.07
Adjusted EBITDA ($USD Thousands)572 908 867 1,121
  • KPIs and balance sheet | KPI | Q2 2024 | Q4 2024 | Q1 2025 | Q2 2025 | |---|---|---|---|---| | Backlog ($USD Millions, period-end) | — | 19.5 | 15.2 | 15.0 | | Bookings ($USD Millions) | — | 17.9 | 14.9 | 18.7 | | Inventory ($USD Millions) | — | 14.73 | 13.46 | 12.57 | | Cash & Equivalents ($USD Millions) | — | 0.84 | 1.27 | 3.59 | | Working Capital ($USD Millions) | — | — | — | 12.1 | | Current Ratio (x) | — | — | — | ~1.6x | | Revolver Balance ($USD Millions) | — | 8.20 | 8.05 | 8.00 |

Estimates vs. Actuals (Q2 FY25)

MetricConsensus*ActualSurprise
Revenue ($USD Millions)$17.24*$18.91 +9.7%
Primary EPS ($)$0.04*$0.07 +$0.03
EBITDA ($USD Millions)$0.671*$0.721*+$0.050

Note: Company-reported Adjusted EBITDA was $1.121M; S&P’s EBITDA series is not directly comparable to company Adjusted EBITDA . Values retrieved from S&P Global*.

No formal segment reporting; management cites momentum across DAC cooling, small cell, DAS, aerospace/industrial, and core interconnect .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 FY25None specific“Sales roughly in line with Q2” (~$18.9M reference point) Introduced directional outlook
Adjusted EBITDA Margin TargetMulti‑year“Goal of at least 10% Adjusted EBITDA margin” reiterated since FY24 year-end “Moving closer to 10%” with 6% in Q2; target maintained Maintained
Financing Costs2H FY25NoneExpect refinancing of credit facility in Q3 or by YE to reduce interest expense New initiative

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY24 and Q1 FY25)Current Period (Q2 FY25)Trend
AI/Tech & Edge Cooling (DAC)Emphasis on solutions transformation and margin focus; DAC highlighted among higher‑margin offerings DAC gaining momentum; next‑gen system with advanced controls and NEMA 4; up to 70% lower OpEx vs HVAC; edge data center opportunity tied to AI Strengthening
Small Cell & DASBuilding solutions portfolio; early momentum >100 DAS venue opportunities; small cell now a growth engine vs minimal last year Accelerating
Supply Chain & TariffsRedesigned ops to scale/drive profitability; inventory down YoY Limited vendor impact in Q2; some customer‑side shipment delays covered by inventory; diversified/mostly U.S. sourcing; actively managing tariff exposure Managed but monitored
Customer ConcentrationBroadening to Tier‑1 carriers, neutral hosts, industrial blue chips Top customer shifts quarter‑to‑quarter; multiple customers >$1M per quarter; reduced concentration risk Improving diversity
Financing/LiquidityDebt reduced in FY24; cash modest Refinancing targeted to lower interest costs; cash $3.6M; revolver ~$8M outstanding Positive setup

Management Commentary

  • “We delivered an operating profit…$106 thousand versus an operating loss of $415 thousand in the second quarter of 2024…Adjusted EBITDA was $1.1 million with a 6% margin, moving us closer to our 10% adjusted EBITDA margin goal.” — CEO Rob Dawson .
  • “Wireless DAS buildouts in stadiums and venues are accelerating, and we currently have over 100 opportunities in our sales pipeline.” — CEO Rob Dawson .
  • “Our patented [DAC] systems…can reduce operating expenses by up to 70% over conventional HVAC…often funded by operating and maintenance budgets…not correlated to CapEx spending.” — CEO Rob Dawson .
  • “As of April 30th, our backlog stood at $15 million…as of today…$18.4 million.” — CFO Peter Yin .
  • “We expect our fiscal 2025 third quarter sales to be roughly in line with second quarter sales.” — CEO Rob Dawson .

Q&A Highlights

  • Backlog breadth and durability: Backlog growth is diversified across products/customers, with mix of short book‑and‑ship and multi‑quarter projects; health indicator for sustained activity .
  • Product contribution: Small cell and DAS are increasingly material; macro tower remains competitive but RFI focuses on venues and solutions where it commands more of the bill of materials .
  • DAS pipeline conversion: >100 venue opportunities spanning stadiums, campuses, medical, and public safety, with project sizes from ~$50K to >$1M; contributing to backlog and 2H outlook .
  • Customer concentration: Largest customer rotates by quarter; multiple customers now >$1M per quarter, reducing concentration risk vs prior years .
  • EBITDA trajectory and cost levers: Path from 6% to 10% hinges on mix improvements, continued cost reductions/efficiencies, operating leverage, and lower interest via refinancing .

Estimates Context

  • S&P Global consensus vs. actual: Q2 revenue $17.24M* vs. $18.91M actual (+9.7% surprise); Primary EPS $0.04* vs. $0.07 actual (+$0.03). Company reported Adjusted EBITDA $1.12M vs. S&P EBITDA consensus/actual of $0.671M*/$0.721M* (not directly comparable) . Values retrieved from S&P Global*.
  • Implication: Street likely raises near‑term revenue/EPS for Q3 given “in‑line” sales outlook and rising backlog; mix/efficiency trends may prompt modest gross margin and EBITDA upward revisions if sustained .

Key Takeaways for Investors

  • Beat-and-raise narrative on quality: Revenue and EPS beat consensus with margin expansion; backlog inflection supports sustained demand into 2H25 . Values retrieved from S&P Global*.
  • Product-led growth vectors: DAC, small cell, and DAS are scaling with larger deployments and a broad opportunity set (venues, public safety, edge data centers) .
  • Improving resilience: Customer and product diversification is reducing concentration risk; several customers now >$1M per quarter .
  • Tariff risk manageable so far: Limited vendor impact; shipment timing managed with inventory; diversified U.S.-heavy supply chain .
  • Cash/credit optionality: Refinancing targeted in Q3 or by YE could lower interest expense and support liquidity for growth .
  • Near-term trading setup: Q3 “in-line” revenue guide and rising backlog are positive; watch for continued mix-driven margin expansion and DAC/DAS deal flow .
  • Medium-term thesis: Operating leverage plus strategic products support the 10% Adjusted EBITDA margin goal as scale builds; execution on mix, cost-out, and financing remain key .

Sources: Q2 FY25 8‑K press release and financials ; Q2 FY25 earnings call transcript ; Q1 FY25 8‑K ; Q4 FY24 8‑K . Estimates: Values retrieved from S&P Global*.