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?

Thank you, Ralph, and good morning, everyone. We are pleased to report another quarter of strong year-over-year revenue growth. Sales in the first quarter were $16.9 million, down 20% compared to the preceding fourth quarter, but up 69% compared to the first quarter last year. Q1 is typically our slowest quarter, so a sequential decrease in revenue is anticipated when comparing to Q4. The increase in sales of $6.9 million from the first quarter last year shows that we are off to a good start and continuing the strong momentum we had in fiscal 2021. Our gross profit margin was 24% compared to 25% in the preceding fourth quarter and 26% in the first quarter last year. Margin for the quarter came in lower than we'd like, but understandable given what we experienced during the quarter. The softness in our margins can be explained by the state of the supply chain as well as product mix. As we have noted previously, we continue to see cost increase, whether looking at raw materials, labor costs, or shipping costs. Added to this is product mix. Our concentrated Tier 1 business, which made up approximately 30% of our sales in Q1, has a lower margin profile when compared to the blended rate of our overall business. As we continue to work through these headwinds, we expect our overall margins to improve to more normal levels as we move through the fiscal year. We have and will continue to work with our customers on updated pricing and with our vendors to secure materials where we are able at locked-in costs. In addition, the sales team has been working hard to win higher margin business. And speaking of higher margin business, we expect our acquisition of Microlab, which we completed after the end of Q1, to be immediately accretive to our gross margin and bottom line. More on this in a moment. Our balance sheet remains strong and included cash and cash equivalents of $13.5 million and working capital of $31.3 million at the end of the quarter. We also increased our inventory position significantly, up 20% or $2.3 million from Q4 and up about 50% or $4.5 million from Q1 last year. Inventory availability is extremely important in our markets. especially in times of supply chain volatility and as our sales are increasing. We believe that our approach of targeted inventory increases allows us to better support our customers' needs and stay ahead of some of the delays and extended lead times we are seeing in similar product areas from some of our competitors. During the first quarter, we filed an S3 shelf registration statement for the potential sale of up to $100 million in our common stock. debt securities, or warrants. The shelf is intended to give the company flexibility to take advantage of our financing opportunities in the future, to fund general corporate purposes or future acquisitions, and it's effective for three years. In Q1, we also announced the acquisition of Microlab for $24,250,000. And following the close of the quarter, we closed the acquisition of On March 1st, prior to the closing, the company entered into a loan agreement providing a $3 million revolving credit facility and a $17 million term loan at 3.76% interest. At the closing of the microlab acquisition, the company funded $17 million of the purchase price in cash from the funds obtained under the term loan, and the remainder of the consideration of $7.3 million was paid with cash on hand. the company has not drawn from the $3 million revolver. Adjusted EBITDA on Q1 was $691,000 compared to an adjusted EBITDA loss of $229,000 in the first quarter last year. Primarily related to the Microlab acquisition, the company incurred one-time charges of $734,000 during the first quarter. These charges consist of legal fees, advisory fees, due diligence fees, and other similar costs. Due to the timing of the announcement and the subsequent closing of the acquisition, we will also incur additional one-time acquisition-related charges in the second quarter. Additionally, as we continue the integration of MicroLab and further consolidate our operations and physical manufacturing footprint, we anticipate other potential one-time charges that will ultimately allow us to achieve key cost synergies. Backlog was $27.9 million at January 31, 2022, on first quarter bookings of $11.5 million. As of today, backlog stands at just under $25 million. Turning to our outlook, as Rob noted, as a result of completing the microlab acquisition, we are increasing our annual revenue guidance of fiscal 2022 from at least $63 million to at least $75 million to take into account the approximate eight months of MicroLabs revenue we expect to receive this fiscal year. Any additional hybrid fiber orders from our Tier 1 customer or any new major project wins would be upside to this number. This expected increase in full-year revenue of at least 31% year-over-year represents a combination of organic and inorganic growth. With respect to the bottom line, we expect our adjusted EBITDA for the full year to also increase significantly as our overall profitability grows throughout the remainder of the fiscal year. That concludes my discussion. Operator, we're ready to take our first question.

Thank you. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone now. If you wish to leave the queue, you may press star 2. We do ask that if you are listening via speakerphone to please pick up your handset for optimum sound quality. Our first question today is coming from Aman Gulani at B. Riley Securities. Your line is live. You may begin.

Hey, guys. Thanks for taking my question here. My first question is about integration timelines for micro-labs. How should we think about the integration and then how should we think about margins throughout the year? I know you expect them to improve as supply chain sort of headwinds start to ease. But I'm trying to get a sense for, you know, how much margins will improve due to micro lab and then also, you know, as supply chains start to sort of ease up. Do you think you could get margins maybe closer to like 30% by the fourth quarter of the end of fiscal 22? Hey, Aman.

Thanks for the questions. Good morning. So first on integration timeline, yeah, I appreciate that question. We've made a ton of progress on the integration of Microlab, partially because from the time we announced the deal until it closed, there was this two-month lag that we used to our advantage and assumed that the deal was going to get the approval and get closed. So we had people on site investing in infrastructure and other key things that we needed to do with the team, org charts and other discussions all sort of played out in that timeframe. So when we officially closed that deal at the beginning of the month, of this month, we were ready to go. There's a few additional things on systems and other that need to be integrated a little further, but a meaningful amount of sort of the difficult back office stuff has already been completed and has been seamless. The team there has been great. Our team in that area that spent a lot of time on site has also been doing a great job and just combined, couldn't be happier with the progress that was made. The area that we didn't spend a ton of time truly trying to integrate fully was the, you know, the sales organizations on both sides from a customer approach. You know, I'm a recovering sales guy, so I have a a very heavy focus on customer and the customer experience, uh, that, that, you know, when you go through an acquisition that can go sideways very quickly. So we've tried to keep business as usual, uh, and keep all the relationships intact as they were prior to the deal. And then we sort of work through what makes the most sense organically over the coming months. Uh, customers have been very receptive and happy with, um, you know, this deal getting done and the combination of the two groups. So I don't have any concerns there. I just, I always think these things you have to kind of watch as you work your way through them versus making a definitive answer and getting it wrong. So because of that, that's one piece that we haven't fully integrated, but is not a concern and is happening sort of as we go forward. Every day we're getting a little closer to a clearer organization there for our customers, but really happy with the integration. And the timeline is generally complete on 90% of these items, and we've got kind of a small amount remaining out there. On the margins, so yeah, I think as the year goes on, we do believe we're marching back towards that 30% level. I recognize that we've been at that level before. It's been a little while since we were at that 30% or around that number. COVID had an impact on it, obviously, and we're still coming out of that, and we've got cost craziness and all the other things going on in the world that are impacting price points and other things in our supply chain. With all that said, it's not just overcoming that and getting where we can do price increases, we're doing them, and where we can try to get some cost savings from our suppliers, we're doing it. There's also the product mix piece, which I talked a little about and Peter spent some more time on in his comments. That product mix can swing pretty wildly for us quarter to quarter, especially when we have large tier one customers doing business, which we've generally had almost the entire time that I've been at RF Industries. You know, quarter to quarter, that can make a big difference for good, and sometimes it drags us when it becomes a major piece of what we're doing from a total blended margin perspective. But we believe that as we're getting a little better at the supply chain chaos, some of the price changes that we've made start to kick in, and the addition of Microlab, which has some solid margins above our typical blended We do think that as the year goes on, we're heading back towards that 30% number.

Got it. That's helpful. And then you did mention in your prepared remarks that you did secure a new small cell customer. Just trying to get a sense for timing on that. Is that something you expect to generate revenue from this year? And then what's the sort of opportunity to get additional orders from that customer?

Yeah, so we do. And that was specifically around a new innovative small cell product that we've been working on for some time. And we received our first order on that from a new customer. So that's something that we anticipate shipping here in the next few months. And we expect there to be more from them, but also from others on this product. And I'm not trying to be coy and refer to it as this product and not give specifics. But I think anyone who's spoken to me or listened to our calls over the last four or five years, we come out with information when we've got a definitive amount of dollars we can tie to it in a timeframe. It's harder to do that on a new product launch other than to say, It's been a very well-received product. We will be putting out some press on it soon to explain, you know, it's innovative, why we think it's innovative, what the market is saying about it, and what we expect that to drive. But in the case of the one, the initial purchase order that we received from a customer, it was a six-figure purchase order, and it's something that's going to ship here in the coming few months, and we believe it's the first of many over the course of the next several years.

Got it. That's helpful. And then, I mean, in terms of private network build-outs, are you starting to see maybe a little bit more deployments on that front now that people are starting to get back to venues and things like that?

Yeah, so we are. I think projects overall on campuses, venues have picked up. I mean, the Super Bowl was an example. I mean, that stadium probably has as much technology as almost any stadium that's out there, and connectivity is a big piece of that. So anytime that a stadium is built and or upgraded, retrofit, they're adding capacity from a wireless perspective. And so what we feel really good about those opportunities historically We feel even better about those with Microlab as part of the team. They're a typical bill of materials, typically included on the bill of materials for those large venues. So we are seeing it recover. If I look at our results over the last few years and kind of look through where Microlab has been as well, that's the kind of stuff that's been missing for a couple of years is these 100, 200, $300,000 projects or more just of our product. you know, of our product set. So we think those are coming back. We also think that, you know, as small cell deployments start to blur the lines with, you know, kind of traditional small cell in metropolitan areas, you're starting to also see, you know, companies and other private campuses put in things like private LTE and CVRS and other kinds of deployments that aren't always something that we can quantify and know for sure that our products are ending up there because a lot of times that's just another build and wireless build. We can't always know exactly where that's going, but we do believe that those two technologies and then obviously on the public side, the C-band deployments are going to increase both distributed antenna systems and small cells in venues and sort of venue-related types of deployments.

Got it. Okay, and then last question from me. What can you share in terms of build plans with your large tier one wireless customers? I mean, I know you've got significant room for growth for that one customer that had done a lot of repeat orders for hybrid fiber. I'm just trying to get a sense for you. Is the customer pushing out orders due to supply chain? What are you seeing in that regard?

Yeah, I think so. With our customers, overall and with the large tier one, we've been performing really well for them. And I think the bigger issue is really radio availability, which has nothing to do with us, but it's been heavily reported for a long time. Chipsets are hard to come by. And when you look at building a wireless network, the radio is kind of a key piece to that. And if you can't get your hands on the radio, whether that's macro or small cell or other it tends to put a delay in the overall build plan. We're either early in that plan from a procurement perspective or we're kind of the last thing that they purchase prior to deployment. So we've certainly seen some project plans shift and change But a lot of times it's been driven as much by technology change as it is supply chain kinds of difficulty in the last year or so. So we believe that as this year goes on, you're going to see anybody's build plan, regardless of which carrier you're talking about, really start to increase and hit what I call a typical generational build cycle. It's not it's not rare to have the early part of a year be a little bit strange in spend and deployment schedules. And then as the weather starts to thaw and the world sort of starts to get going on this year's budgets, it starts to really crank. And we think that's what's going to happen this year. Certainly as the year goes on and we expect the next few years to be just kind of going after it, trying to get things deployed with the pent-up demand that's been out there for the last few years.

Got it. Thank you. I'll pass it on.

Thanks, Amon.

Thank you. Once again, ladies and gentlemen, if you have any questions or comments, please press star 1 on your phone. Our next question is coming from Hal Granger at Great Quarter Research. Your line is live. You may begin.

Thank you for taking my question. I have a comment first, and that was that I know that Mark Holdsworth filed a 13D a couple of months ago and indicating that he had taken a 5.1% ownership of the company through both using Buffett's personal funds and his fund setting managers. And I just wanted to note that that's a great commitment by the chairman that is not common in companies, so kudos to you, Rob, for recruiting him to the extent that you did recruit him, and kudos to Mark for making that commitment.

Yeah, thanks. We obviously appreciate that, and it's been great to have Mark as part of the board and as the chairman, and yeah, he's obviously a believer in a whole bunch of ways, and has been very supportive and bullish on what we've done and where we're going has been a great partner for me and driving this, the, you know, the kind of the next phase of growth for the company. Yeah. So thanks for, thanks for noting that. And, and certainly thanks to him.

Yeah. And, uh, thank you. Um, I had a question about, uh, the capital structure. So, so as Peter noted, um, you filed a shelf registration, um, a few months ago. Um, which allowed you to offer bonds and also equity. When you did this acquisition, you used bank financing. And as you, I'm wondering, how was that thought process of what you would use, whether bank financing or bonds or equity? And regarding this, the micro lab acquisition, also potentially future acquisitions, And then the second part of that related to that is, in the past, you have not had any debt, which is also kind of extraordinary. But in my mind, not necessary, because I think you get a certain amount of leverage having a certain amount of debt. In the future, what are you thinking about having debt kind of as a part of your capital structure? going forward in the future?

Yeah, thanks. Good questions. Let me start with the shelf and kind of our thought process around use of funds and how we might fund future needs. So having a shelf out there is just a prudent thing to do. As you noted, the company hasn't had debt before. The company's also never had an S3 out there. So these are the things that, as we work through our next phase of growth, you know, noting that we were a $23 million a year sales in 2017. So we've come a long ways. We've done a lot, but we have a long way to go. And I think that last piece of where we're going next and the next phase of growth relates directly to having a shelf and having it available to us for whatever strategic needs might come up. With that said, I'm not terribly interested in offering additional stock at the current price point of our stock. We think we're at a major inflection point again for the fifth or sixth time in the last four and a half years where we're going through growth. We're recovering from some of the chaos of the last few years. We've just made a good acquisition. We're getting integration completed on prior acquisitions and starting to see some of the good things come out of those as well. So if our stock price were higher, I think we'd be more inclined to tap into the equity side of the needs that are out there. But you look at the, you know, relating that to the debt that we took on, you know, Peter talked about the percentage and, you know, we're sub 4%. It's 3.7% or something like that on our debt with the bank, which was great. And, you know, we were happy to get that kind of a number. We're happy we locked it in, especially with, you know, the increases that are now going on on interest rates. So, you know, we've got a good rate locked in. Debt service on that is very affordable for us. And it's a prudent thing to do. You know, we've been sitting on a lot of cash for a long time. So deploying that cash, you know, in a good acquisition that we think is not only valuable, but was very affordable and a great deal for us. allowed us to go out there and get the debt, a sub 4%, versus cost of equity in a raise being, I don't know, what, 15%, 18%, 20%, depending on what you get into there. So as our stock goes up, which we expect it should based on our performance and certainly performance in future quarters, then it becomes more interesting to potentially use equity and tap into that into that shelf to do a larger raise or use equity in a larger deal. We continue to be interested in additional acquisitions. We're not going to fumble on the micro lab one. We got to get that integration done and complete. As I mentioned, we're most of the way there already. So we continue to look for other good deals that kind of match the criteria that we've telegraphed out there to the world for the last few years exactly what we're trying to find and do. So I think the punchline to all that, Hal, is I love having the debt. I love that it's inexpensive. And I certainly love that it's inexpensive compared to doing an equity raise. But there will come a time where we decide the timing is right to look at that equity and take advantage of kind of the power that we have in the market with that shelf.

Okay, great. And finally, let me ask a more kind of general fluffy question, which is, Rob, when you think about time commitments in terms of looking at potential acquisitions and evaluating them, I think there's probably a lot of time commitment there. Also, there's a lot of time commitment integrating. Which one, is there more time commitment to find the acquisition or more time commitment integrating the acquisition?

Yeah, good question. So I think it's, you know, selfishly for me, I can say that the answer to that has evolved over the last few years as we've added some people to our team to help with integration, specifically on the operations side. But building out this leadership team with folks that I've worked with in the past at various companies and adding them to RF Industries in the last few years means that the time spent looking for acquisitions falls largely on me, on interacting with our strategic committee of our board, which includes Mark Holdsworth and Jerry Garland. We spend a lot of time talking through the acquisition pipeline So the time commitment on that is heavy at times, not always, but right now we're kind of getting back to it. When it was a little lighter commitment, frankly, as we tried to close the micro lab deal and then got that done, my focus there was getting that completed and getting the integration started. And then I was able to hand that off to the team in various different functions to take it from there. So it's a little lumpy in the way that it works. I mean, that team was head down pounding through integration stuff for a few months. Now we're starting to be able to pick our heads up and kind of look around again and resolve kind of the final ticks and tie offs of getting that integration done. So now it's operational. And for me, I'm back to spending a meaningful amount of my time looking at acquisitions. I think the good news about the way we communicate, we try to be completely direct, transparent, and it's almost impossible not to know what we're going to do next because we laid out a plan a few years ago of what we were going to do and how we were going to acquire. And we've done exactly what we said we were going to do, which I've been told is rare. And I just say, I don't think I'm smart enough to have some tricky plan. It's just say what you're going to do and then go do it. So we're back to looking at acquisitions. And that means that a lot of people are showing up with opportunities. The great thing about being acquisitive is the world starts to bring you opportunities that it's not as difficult as it was a few years ago to find them. Now there's lots of things showing up all the time coming across my desk that we can do a quick review of, and some are more interesting than others. But I love the idea that we've proven we're going to acquire, we're getting better at it. And I think the magnitude of these deals has been going up, and we expect that to continue to get some real economy to scale out of this and add some add some size to the company. We're still a small company, but man, the world starts to change when you get into these sorts of $15 to $20 million quarters versus $6, $8, $10 million quarters. It just looks and feels very different, though we still have a long way to go, and we think acquisitions are a key piece of that.

Great. Thank you very much, Rob.

Thank you, Hal. Have a good day.

Thank you. Once again, if you have any questions or comments, please press star 1 on your phone now. We have no further questions in the queue at this time. I would now like to turn the call back over to Rob for closing remarks.

Great. Thank you, Kate. Thanks, everyone, for joining our call today. We appreciate your support of RF Industries. We're excited about our start to 2022 and what lies ahead for the rest of the year. Peter and I look forward to reporting our fiscal 2022 second quarter results in June. Thank you again and have a great day.

Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect at this time and have a wonderful day. We thank you for your participation.