RF Industries, Ltd.

Greetings. Welcome to the RF Industries First Quarter Fiscal 2022 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 you have any questions or comments, please press star 1 on your phone at any time. We do ask that if you are listening on a speakerphone to please pick up your handset for optimum sound quality. Please note this conference is being recorded. I would now like to turn the call over to your host, Mr. Todd Curley of MKR Investor Relations. Thank you. You may begin.

Thank you, operator. Good morning and welcome to RF Industries' first quarter fiscal 2022 financial results conference call. With me on today's call are RF Industries President and CEO Rob Dawson and Senior Vice President and Chief Financial Officer Peter Yin. Before I turn the call over to Rob and Peter, I'd like to cover a few quick items. This morning, RF Industries issued a press release announcing its first quarter fiscal 2022 financial results. That release is available on the company's website at rfindustries.com. This call is being broadcast live over the internet for all interested parties, and the webcast will be archived on the investor relations page of the company's website. I want to remind everyone that during today's call, management will make forward-looking statements that involve risks and uncertainties, Please note that except for the historical statements, statements on this call today may constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. 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 and actual results may differ materially from outcomes contained in any forward-looking statements. Factors that could cause these forward-looking statements to differ from actual results include delays in development, marketing, or sales of products, and other risks and uncertainties discussed in the company's periodic reports on Form 10-K and 10-Q and other filings with the Securities Exchange Commission. RF Industries undertakes no obligation to update or revise any forward-looking statements. Additionally, throughout this call will be discussing certain non gap financial measures today's earnings release and the related current report on form a K. describe the differences between our gap and non gap reporting and present the reconciliation between the two for the periods reported in the release with that i'll turn the conference over to rob Dawson President chief executive officer rob.

Thank you Todd good morning everyone. Happy St. Patrick's Day and happy first day of March madness for those of you that care about that, me included. Welcome to our first quarter fiscal 2022 earnings conference call. I'd like to start with a brief review of our first quarter results, then discuss what we're seeing now in the market and what we expect going forward. Before turning the call over to Peter to give some commentary on the financials. Starting with the first quarter, we're pleased to report our fourth consecutive quarter of strong year-over-year revenue growth. Sales for the quarter came in at $16.9 million, a 69% increase over the first quarter last year. As anticipated, revenue was down sequentially compared to the fourth quarter, but still very strong, as our fiscal first quarter is typically our slowest quarter seasonally. On the bottom line, we reported a net loss of $364,000, non-GAAP net income of $628,000, and adjusted EBITDA of $691,000. We had lots of one time and acquisition related charges in those numbers, which Peter will share more on later in the call. Our margins and bottom line continue to reflect the impact of the current state of the supply chain, as well as increased material and shipping costs. As I've noted before, this is largely impacting our concentrated tier one business and not unexpected given our hybrid fiber solution has been such a large piece of our sales. We're obviously happy to have received these multiple large orders from our Tier 1 wireless carrier customer this past fiscal year, but also had to lock in pricing at the time these deals were signed, which was before some of the supply chain related costs began to go up significantly. The good news is that we continue to work through these orders, and we expect our overall margins to improve to more normal levels as we move through the fiscal year. We believe that the first quarter was our low point for margins this year, and things will get better as the year goes on. Let me just reiterate that point. While Q1 was impacted by a tough environment and product mix, we believe that it was a low point for margins this year, and we expect increases from here. On the M&A front, we're excited to have announced earlier this month that we completed our acquisition of Microlab. Microlab designs and manufactures high-performance RF and microwave products, enabling signal distribution and deployment of in-building distributed antenna systems, wireless-based stations, and small cell networks. Their products are known worldwide for their superior quality and performance and are considered the gold standard in RF and microwave distribution systems. This acquisition is in line with our strategic plan to drive revenue growth both organically and through targeted acquisitions. It creates significant opportunity to accelerate our product roadmap and drive innovation and provides additional scale and opportunity for overall margin improvement and further revenue growth. Microlab brings us access to a new set of high-performance, network operator-approved products that we can sell to our growing customer base and through our extensive distribution channel. Their diverse portfolio includes products for wireless connectivity, public safety, and medical applications that are highly complementary to our existing portfolio and broaden our value-add offerings, particularly with our focus on the significant growth opportunities we expect to see in the small cell and DAS markets. Once we fully integrate Microlab, we anticipate realizing meaningful operating synergies and significant opportunities to drive innovation. By combining portfolios and infrastructures, we add manufacturing capacity as well as greater scale that we expect to accelerate our growth. We're also expanding our capabilities with Microlab's highly experienced product and engineering team and extending our production platform with additional automated production line and lean methods. These enhance our innovation capabilities particularly with their added expertise in distributed antenna system and small cell deployments. Microlab also strengthens our market positioning and enhances our customer partnerships. They provide us with additional strong direct and distribution relationships and give us a higher percentage of the bill of materials in carrier DAS and small cell applications. And they have a strong brand and customer list. which in combination with ours provides complimentary large and mid-tier customers and enhances our customer value proposition. The combined company is well positioned to reach a broader customer base and deepen existing relationships by cross-selling and establishing inroads with new customers while driving innovation. We expect Microlab's business to improve as we work to combine our go-to-market approach and teams and we believe that at a steady state it should generate 20 million dollars or more in annual revenue in future fiscal years that's before any major new initiatives that we help drive and with margins that are better than our overall historical blended margins we expect this acquisition to be immediately accretive to both our gross margin and bottom line plus we anticipate driving further margin expansion through increased sales growth at the combined company while realizing meaningful synergies that will benefit the bottom line profitability. Financially, this deal made a ton of sense for us. And over time, some of the other intangibles like strength of the brand, the market positioning, and the team will become more clear. Now let me quickly comment on our existing product areas and market segments and how they perform during the quarter. Our core distribution business remains healthy and diverse and continues to grow. Our RF coaxial cable and connector product and our C-Enterprise's fast-turn fiber products together make up our primary offer sold through distribution. Both of these major product areas showed meaningful year-over-year growth during the quarter, and we expect to see continued steady growth from these two areas throughout the remainder of our fiscal year as we continue to build this baseline of core revenue. Obviously, our custom cabling segment, including the OptiFlex hybrid fiber products, continues to have strong sales results. As I mentioned earlier, we continue to produce and deliver hybrid fiber cables in large volumes for our Tier 1 wireless carrier customer, while we also pursue new opportunities with other customers in the market. This is becoming a more competitive space, but our team in Long Island is performing extremely well, and we feel good about our position in the market. Turning to our small cell and DAC thermal cooling offerings, these continue to be huge opportunities that we expect will increase sales this year. The pipeline continues to build, and we have a strong backlog of orders. We have products actively shipping to several key small cell players, as well as ongoing discussions regarding future deployments with others. While spending is still not back to the full level where we expect it to be, it's getting better. From our conversations, it feels like it will continue to improve as the year goes on, and we believe that we're moving closer to a more normal generational build cycle later this year. As I mentioned on our last call, We conducted trials with a few large customers with some new and innovative products. To give a little more color, we have an innovative new small cell shroud that has been in labs with two large players in the Tier 1 wireless carrier ecosystem. During the quarter, we saw our first purchase order for this product. We think it's the first of many, and we look forward to sharing more details soon. But this is an example of what we've been working to our product roadmap. having a standard offering and then innovating in the markets where we are relevant. That was one of the primary reasons behind our acquisition of Shroff tech in 2019. And we think the addition of micro lab will further accelerate this innovation because we now have a deeper engineering and RF technical team compared to where the company has been historically. We'll definitely have more to share on future calls related to innovation and product roadmap as part of our growth plan. On the topic of acquisition, While we're laser focused on completing successful integration of micro lab, we're continuing to look for further acquisitions that fit our strategic plan of acquiring good quality companies with passive components that allow us to offer more of the bill of materials in key applications and provide us with access to new products that we can sell through both new channels and to our existing and growing distribution channel. We're focused on providing shareholder value by patiently and diligently investing capital. We believe that our approach to acquisitions and our organic investments over the last few years support this. Finally, in early February, we announced that we signed a lease on a larger building in the San Diego area. The new building will serve as our corporate headquarters and will allow us to consolidate the operations of our RF connector and cable assembly division and our C enterprises division, both of which are located in the San Diego area. We're excited about this new larger advanced production facility that provides a significant opportunity to increase our output and better support our inventory and production needs as we continue to grow. The building is currently being renovated, and we expect to move in at the end of 2022. The combined operation will include more than 150 employees and will provide a much better experience for our team and a positive cultural impact. The facility will also allow for production methodology improvements and cross-training for the team that we anticipate will drive meaningful cost-saving synergies. As we look ahead, we continue to expect our core revenue to increase throughout the year. Because of this, and as a result of completing the micro lab acquisition, we're increasing our annual revenue guidance for fiscal 2022 from greater than $63 million to greater than $75 million. which includes some expected further organic growth and approximately eight months of micro lab revenue this fiscal year. And any additional orders from our tier one carrier customer would be upside to that number. With this expected increase in full year revenue of at least 31% year over year, we expect our adjusted EBITDA for the full year to also increase significantly as our gross margins and overall profitability grow throughout the remainder of the fiscal year. Overall, We're excited about the start to 2022, and we're confident about what lies ahead for the rest of the year. Our core business continues to be diverse and growing nicely, and with the acquisition of Microlab, we're increasing our scale with higher margin business and positioning ourselves for future revenue growth. With that, I'll now turn the call over to Peter for a review and discussion of the financial results for the quarter. Peter?